Document:

Exhibit 4.3

 

Genworth Life and Annuity Insurance Company

 

Funding Agreement

 

POLICYHOLDER: 
Genworth Global Funding Trust 2008-36, its successors and permitted assignees

 

POLICY NUMBER: GS-R6052

 

EFFECTIVE DATE: July 10,
2008

 

ISSUE STATE:  Virginia

 

Genworth
Life and Annuity Insurance Company (“GLAIC”) (which term includes its
successors and permitted assignees) and the Policyholder hereby agree to the
terms of this funding agreement (this “Policy”).  This Policy, including the attached
Accumulation Fund Schedule, and any amendments thereto, constitutes the entire
contract between GLAIC and the Policyholder.  
This Policy is delivered in the Issue State and governed by the laws of
that state.

 

In witness whereof, GLAIC
and the Policyholder have agreed to this Policy as of the Effective Date and
caused the same to be in full force and effect.

 

 

	
  /s/ Thomas E. Duffy

  	
   

  	
  /s/Pamela S. Schutz

  
	
  Secretary

  	
  President

  

 

 

Genworth Life and Annuity
Insurance Company

6610 West Broad Street

Richmond, VA  23230

1-800-635-8056

 

 

Table of Contents

 

	
  Section 1 –
  Accumulation Fund – Establishment and Operation

  
	
   

  
	
  Section 2 –
  Payments From the Accumulation Fund

  
	
   

  
	
  Section 3 –
  Termination of Agreement

  
	
   

  
	
  Section 4 –
  General Provisions

  
	
   

  
	
  Section 5 –
  Definitions

  

 

 

SECTION 1 – ACCUMULATION
FUND – ESTABLISHMENT AND OPERATION

 

1.1               POLICY PAYMENTS. 
The Policyholder agrees to pay to GLAIC in the currency specified in the
Accumulation Fund Schedule (the “Specified Currency”), and by wire transfer,
the Net Deposit Amount on the Deposit Date. 
Regardless of the Effective Date of the Policy or the Deposit Date
specified in the Accumulation Fund Schedule, this Policy shall become effective
only upon the receipt by GLAIC, or its designee, of the Net Deposit Amount.

 

1.2               ESTABLISHMENT OF THE ACCUMULATION
FUND.  Upon the receipt by GLAIC of the Net Deposit
Amount, GLAIC will establish an Accumulation Fund.  The Accumulation Fund is a general account
record that reflects the Fund Balance under this Policy.  GLAIC is neither a trustee nor a fiduciary
with respect to the Accumulation Fund. 
The Net Deposit Amount is allocated to GLAIC’s general account for
investment but all funds received under this Policy will become the exclusive
property of GLAIC without any duty or requirement for segregation or separate
investment.  The Fund Balance is not
affected by the investment results of the assets held in the general account.

 

1.3               INTEREST ON THE
ACCUMULATION FUND.  The Guaranteed Rate for the Accumulation Fund
is effective until the Fund Balance is paid in full to the Policyholder.  Interest is credited based upon the
methodology specified in the Accumulation Fund Schedule.

 

1.4               VALUE OF THE
ACCUMULATION FUND.  The Fund Balance on any given day equals the Deposit
Amount plus interest, if any, credited thereon at the Guaranteed Rate, less any
payments made under Section 2 of the Policy.

 

SECTION 2 – PAYMENTS
FROM THE ACCUMULATION FUND

 

2.1               PERIODIC PAYMENTS. 
GLAIC will pay the Policyholder the amounts specified in the Accumulation
Fund Schedule as Periodic Payouts, including the Maturity Payout, on the dates specified
(subject to Section 4.7).  Such
payment amounts are adjusted to reflect any other payment payable under this Section of
the Policy.  The interest factor used in
making such adjustments is the Guaranteed Rate.

 

2.2               OPTIONAL REPAYMENT. 
If so indicated in the Accumulation Fund Schedule, GLAIC shall pay to
the Policyholder the amount the Policyholder needs to redeem or repay any notes
or other instruments issued by the Policyholder and backed by this Policy,
pursuant to any limited right of redemption or repayment contained in such note
or instrument.  GLAIC may require
reasonable evidence that the redemption or repayment request satisfies all the
terms and conditions described in the prospectus, prospectus supplement and/or
pricing supplement applicable to such note or other instrument.  Additional restrictions, if any, on the
Policyholder’s reimbursement rights under this Section may be included in
the Accumulation Fund Schedule.

 

1

 

2.3               OPTIONAL
REDEMPTION.  If so indicated in the Accumulation Fund
Schedule, GLAIC may elect to pay
the Policyholder all or any part of the Fund Balance on the Call Dates
specified in the Accumulation Fund Schedule. 
Unless otherwise provided in the Accumulation Fund Schedule, GLAIC will
give the Policyholder at least thirty-five (35) calendar days and no more than
seventy-five (75) calendar days notice of its intent to make such pre-payment.  No adjustment will be made to the amount of
such payment, unless such adjustment is specifically provided for in the
Accumulation Fund Schedule.

 

2.4               MATURITY
PAYMENTS.  GLAIC shall pay the Policyholder the Fund
Balance on the Maturity Date.

 

2.5               FORM OF
PAYMENT.  All payments GLAIC makes to the Policyholder
will be made in the Specified Currency, by wire transfer, unless otherwise
agreed in writing by the parties hereto. Unless otherwise stated in the
Accumulation Fund Schedule, all payments GLAIC makes will be net of any
applicable withholding or deduction for or on account of any present or future
taxes, duties, levies, assessments or other governmental charges of whatever
nature imposed or levied by or on behalf of any governmental authority having
the power to tax.  Unless otherwise
specified in the Accumulation Fund Schedule, such net payments fully satisfy
GLAIC’s obligation to the Policyholder with respect to the full amount due.

 

SECTION 3 –
TERMINATION OF AGREEMENT

 

3.1               AUTOMATIC
TERMINATION/ACCELERATION.  This Policy terminates
with respect to the Accumulation Fund when the Fund Balance is zero and GLAIC’s
obligations hereunder shall automatically accelerate upon the occurrence of an
Event of Default described in Section 3.3(a).

 

3.2               EARLY
TERMINATION/ACCELERATION.  The Policyholder may
accelerate this Policy by giving GLAIC not less than two (2) Business Days’
written notice upon the occurrence of an Event of Default specified in Section 3.3
b., c. or d. below.  GLAIC may accelerate
this Policy, in whole but not in part, by giving the Policyholder not less than
forty-five (45) days’, but no more than seventy-five (75) days’, prior written
notice of the occurrence of a Tax Event as described in Section 3.4,
provided, however that this Policy shall not be terminated until the Fund
Balance has been paid to the Policyholder in full.

 

3.3               EVENTS OF DEFAULT. 
An Event of Default occurs if:

 

a.          GLAIC is dissolved or a resolution is
passed or proceeding is instituted for the winding-up, liquidation or similar
arrangement of GLAIC (other than pursuant to a consolidation, amalgamation or
merger);

 

b.         GLAIC breaches any material obligation,
representation or certification contained herein, provided that there is no
bona fide dispute as to whether such breach has occurred and that such breach
continues for fifteen (15) Business Days following the Policyholder’s written
notice to GLAIC of such breach;

 

2

 

c.   GLAIC fails
to make any required Periodic Payout (other than the Maturity Payout) described
in the Accumulation Fund Schedule or any other payment described in Sections
2.2 or 2.3 of this Policy or any other funding agreement GLAIC issues in
connection with the Program, and such failure continues for seven (7) Business
Days after the due date thereof;

 

d.   GLAIC fails
to make the Maturity Payout described in the Accumulation Fund Schedule or in any
other funding agreement GLAIC issues in connection with the Program and such
failure is continuing as of the end of the Business Day following the due date
thereof.

 

3.4               TAX EVENT.  A “Tax Event” occurs if GLAIC has received an
opinion of independent legal counsel stating in effect that there is more than
an insubstantial risk that as a result of 
any amendment to, or change (including any announced prospective change)
in, the laws (or regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or any amendment to, or
change in, an interpretation or application of any such laws or regulations by
any governmental authority in the United States, which amendment or change is
enacted, promulgated, issued or announced on or after the Deposit Date, the
Policyholder is or will be within ninety (90) days of the date thereof, (1) subject
to an entity level U.S. federal income tax with respect to interest accrued or
received on this Policy or (2) subject to more than a de minimis amount of
taxes, duties or other governmental charges.

 

Notwithstanding
anything to the contrary in this Section 3, if GLAIC shall comply in all
respects with the requirements of this Section 3, but an event of default
has occurred with respect to the notes backed by the Policy and as a result
payments with respect to the notes have been accelerated, otherwise than by
reason of any default under this Policy by GLAIC, no Event of Default (as defined
above) under this Policy shall be deemed to have occurred, no payments with
respect to this Policy shall be accelerated and GLAIC will remain obligated to
make payments under this Policy as if no Event of Default had occurred with
respect to the notes.

 

SECTION 4 – GENERAL
PROVISIONS

 

4.1               PAYMENT UPON
TERMINATION.  Unless otherwise specified in the Accumulation
Fund Schedule, GLAIC shall pay the Policyholder the Fund Balance on the
Maturity Date.  Such payment fully
discharges GLAIC’s obligation to the Policyholder under this Policy.

 

4.2               DISCLAIMER OF
RESPONSIBILITY.  GLAIC’s only liability
is as set out in this Policy, including the Accumulation Fund Schedule attached
hereto.  In performing its obligations
under this Policy, GLAIC is not acting as a fiduciary or agent for the
Policyholder or anyone else regardless of whether or not they are directly or
indirectly associated with the Policyholder.

 

4.3               NOTICES.  All agreements, notices, directions,
consents, elections or other communication (“Notices”) required by this Policy
must be in writing, directed to the applicable address designated on the face
page.  Any such Notices may be given by
facsimile transmission or other acceptable electronic means.  All Notices are effective when received.

 

3

 

4.4               AMENDMENTS.  This Policy may be amended only by mutual
written agreement between the parties hereto.

 

4.5               CONFLICT.  To the extent that there is a conflict in
terms between the Policy and the Accumulation Fund Schedule, the Accumulation
Fund Schedule will control the conduct of the parties.

 

4.6               TRANSFERABILITY/ASSIGNMENT.  This Policy and the Accumulation Fund
established pursuant to it may solely be sold, assigned, transferred or pledged
in accordance with, and for the purposes contemplated by, the documents and
agreements governing the establishment and operation of the Program.  GLAIC will maintain a record of ownership of
this Policy on its books and records.

 

4.7               PAYMENTS BY
GLAIC.  When this Policy provides that GLAIC will
make a payment to the Policyholder, such payment shall be made to the
Policyholder or to the agent the Policyholder designates.  Unless otherwise specified in the
Accumulation Fund Schedule, if a payment date is not a Business Day, GLAIC will
pay such amount on the next Business Day.

 

4.8     WAIVER BY GLAIC.  At the Policyholder’s request, GLAIC may
waive any terms, conditions or adjustments provided for in this Policy.  Any such waiver is subject to any limitations
GLAIC specifies in making the waiver and does not require GLAIC to grant
similar future waivers to the Policyholder or anyone else.  A failure or delay in exercising a right
under this Policy does not waive GLAIC’s right or ability to assert such right
in the future.

 

4.9               MUTUAL REPRESENTATIONS.  The parties mutually represent and warrant,
each to the other, that:

 

a.          This Policy is its legal, valid and
binding obligation, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditor’s rights, and subject, as to enforceability, to general principals of
equity, regardless of whether enforcement is sought in proceeding in equity or
law;

 

b.         It has the power to enter into this
Policy and to consummate the transactions contemplated hereby;

 

c.          All information provided in connection
with this Policy is, to the best of its knowledge and belief, true, correct and
complete;

 

d.         The execution and the delivery of this
Policy and the performance of obligations hereunder do not and will not
constitute or result in a default, breach or violation, of the terms or
provisions of its certificate, articles or charter of incorporation,
declaration of trust, by-laws or any agreement, instrument, mortgage, judgment,
injunction or order applicable to it or any of its property.

 

4

 

4.10        TAX
PROVISIONS.  The Policyholder and each transferee and
assignee of this Policy, to the extent required by law, agree to provide GLAIC
with any properly completed tax forms that are needed for GLAIC to satisfy its
tax reporting obligations with respect to amounts held under this Policy.  This Policy is intended to be ignored for
U.S. federal, state and local income and franchise tax purposes. To the extent
it cannot be ignored, GLAIC and the Policyholder and each transferee and
assignee of this Policy agree to treat this Policy as GLAIC’s debt obligation
for U.S. federal, state and local income and franchise tax purposes.

 

SECTION 5 –
DEFINITIONS

 

5.1     POLICY DEFINITIONS. 
The following terms have the meanings indicated:

 

“Accumulation
Fund” is the
accounting record GLAIC will establish under this Policy as described in Section 1.2.

 

“Accumulation
Fund Schedule” is
attached to this Policy and establishes the terms of the Accumulation Fund.

 

“Business
Day” is any day,
other than Saturday or Sunday, that is neither a legal holiday nor a day on
which commercial banks are authorized or required by law, regulation or
executive order to close, or are otherwise closed, in each Business Day City
specified in the Accumulation Fund Schedule.

 

“Call
Date” is the day
or days prior to the Stated Maturity Date, if any, specified in the
Accumulation Fund Schedule attached to this Policy, on which GLAIC may elect to
pay the Policyholder all or any part of the Fund Balance.  If no Call Date is indicated in an
Accumulation Fund Schedule, GLAIC will pay to the Policyholder the Fund Balance
prior to the Stated Maturity Date only to the extent provided in Section 3.2.

 

“Deposit
Amount” is the
amount GLAIC credits to the Accumulation Fund on the Deposit Date as set forth
in the Accumulation Fund Schedule.

 

“Deposit
Date” is the
date, specified in the Accumulation Fund Schedule, on which GLAIC receives the
Net Deposit Amount.

 

“Event
of Default” has
the meaning described in Section 3.3.

 

“Fund
Balance” is the
value of the Accumulation Fund, determined pursuant to Section 1.4.

 

“Guaranteed
Rate” is the
interest rate, if any, applied to the Accumulation Fund, as stated in the
Accumulation Fund Schedule.

 

“Indenture” is that certain indenture agreement,
made between the Policyholder and the Indenture Trustee related to the notes to
be supported by this Policy as such agreement may be amended, supplemented or
replaced from time to time.

 

5

 

“Indenture
Trustee” is the
party specified as trustee under the Indenture, or its successor.

 

“Maturity
Date” is the
earlier of (i) the Stated Maturity Date and (ii) each date on which
the Fund Balance is payable in full to the Policyholder pursuant to an Event of
Default, Optional Repayment, Optional Redemption or otherwise.  Unless otherwise indicated in the
Accumulation Fund Schedule, if any of the foregoing dates is not a Business
Day, the Maturity Date is the next following Business Day.  Interest accrues during such delay only if
specified in the Accumulation Fund Schedule.

 

“Net
Deposit Amount”
is the amount GLAIC receives from the Policyholder on the Deposit Date as set
forth in the Accumulation Fund Schedule.

 

“Program” is the Genworth Global Funding program,
as described in the prospectus relating thereto, including the applicable
prospectus supplement or pricing supplement or in any amendment thereto.

 

“Stated
Maturity Date” is
the date, as set forth on the Accumulation Fund Schedule, when the Fund Balance
is originally due and payable to the Policyholder.

 

“Tax
Event” has the
meaning described in Section 3.4.

 

5.2               OTHER DEFINITIONS.  Other
capitalized terms appearing in this Policy have the meanings indicated on the
Policy’s face page or in the Accumulation Fund Schedule.

 

6

 

GLAIC

Accumulation
Fund Schedule – Fixed Rate

 

Policy
Number: GS-R6052

 

	
  Deposit
  Date:

  	
   

  	
  July 10, 2008 or
  the date the deposit is actually received by GLAIC

  
	
   

  	
   

  	
   

  
	
  Specified
  Currency:

  	
   

  	
  United
  States Dollars

  
	
   

  	
   

  	
   

  
	
  Deposit
  Amount:

  	
   

  	
  $2,120,000.00

  
	
   

  	
   

  	
   

  
	
  Net
  Deposit Amount:

  	
   

  	
  $2,067,000.00

  
	
   

  	
   

  	
   

  
	
  Stated
  Maturity Date:

  	
   

  	
  July 15, 2028

  
	
   

  	
   

  	
   

  
	
  Guaranteed
  Rate:

  	
   

  	
  6.15%

  
	
   

  	
   

  	
   

  
	
  Crediting
  Period:

  	
   

  	
  The
  first Crediting Period shall be a long period commencing on the Deposit Date
  to but excluding January 15, 2009. 
  Each subsequent Crediting Period shall be the semi-annual period
  occurring between the 15th of each January and July thereafter.  The final Crediting Period will be the
  period from and including January 15, 2028, to but excluding July 15,
  2028.

  
	
   

  	
   

  	
   

  
	
  Interest
  Crediting:

  	
   

  	
  Interest is credited
  based upon a 30/360 basis, applied to
  the Fund Balance each day.

  
	
   

  	
   

  	
   

  
	
  Periodic
  Payouts:

  	
   

  	
  On
  the 15th of each January and July,
  GLAIC will pay the Policyholder all accrued and unpaid interest (if such date
  is not a Business Day, the Periodic Payout will be made on the next following
  Business Day, and in such cases the amount of interest shall not be adjusted
  for non-Business Days) (each, an “Interest Payment Date”); provided, however, that
  the final Periodic Payout shall be on the Maturity Date, on which date all
  accrued and unpaid interest will be paid.

  
	
   

  	
   

  	
   

  
	
  Optional
  Repayment:

  	
   

  	
  Optional
  Repayments under Section 2.2 of the Policy may be made solely with
  respect to the “Survivor’s Option” described in Pricing Supplement No. 041
  dated June 30, 2008 to the Prospectus Supplement dated December 9,
  2005 related to the Program.

  
	
   

  	
   

  	
   

  
	
  Call
  Terms:

  	
   

  	
  Under
  Section 2.3 of the Policy, GLAIC may elect to pay the Policyholder all
  of the Fund Balance on July 15, 2012, or as of any date thereafter when
  a Periodic Payout is due (the “Call Dates”).

  
	
   

  	
   

  	
   

  
	
  Maturity
  Payout:

  	
   

  	
  On the
  Maturity Date, GLAIC will pay to the Policyholder the Fund Balance. If such
  date is not a Business Day, the Maturity Payout will be made on the next
  following Business Day; provided, however, that interest shall not accrue beyond the
  Maturity Date.

  

 

 

	
  Business
  Day City(s):

  	
   

  	
  New
  York, New York

  
	
   

  	
   

  	
   

  
	
  Other
  Terms:

  	
   

  	
  None

  

 

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

 

The calculation of the Guaranteed Rate and all
other payment terms of this Policy will be determined in the manner described
in the “Description of the Notes” section in the Prospectus Supplement.

 

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

 

	
  GENWORTH LIFE AND
  ANNUITY

  	
   

  	
  GENWORTH GLOBAL FUNDING
  TRUST 2008-36

  
	
  INSURANCE
  COMPANY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Pamela C. Asbury

  	
   

  	
  By*:

  	
  /s/ Patricia M. Child

  
	
   

  	
  Pamela C. Asbury

  	
   

  	
   

  	
  Patricia M. Child

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Official Title:

  	
  Vice President

  	
   

  	
  Official Title:  

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:   

  	
  July 8, 2008

  	
   

  	
  Date:       

  	
  July 8, 2008

  
									

 

* It is expressly
understood and agreed that (a) this Policy is executed and delivered by
U.S. Bank National Association (“USB”) not individually or personally, but
solely as Trustee of the Genworth Global Funding Trust 2008-36 in the exercise
of powers and authority conferred and vested in it (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by USB but is made and intended for the purpose of binding only the
Trust, (c) nothing herein contained shall be construed as creating any
liability on USB individually or personally, to perform any covenant either
express or implied contained herein, all such liability, if any being expressly
waived by the parties hereto and by any person claiming by, through or under
the parties hereto and (d) under no circumstances shall USB be personally
liable for the payment of any indebtedness or expenses of the Trust or be
liable for the breach or failure of any obligation, representation, warrant or
covenant made or undertaken by the Trust under this Policy or any other related
documents.

 

*********************Exhibit 4.1

 

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

 

COMMON
STOCK PURCHASE WARRANT

 

To Purchase                       Shares
of Common Stock of

 

CRDENTIA
CORP.

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received,                          
               
                               
                                                 
, a                                                                      
(the “Holder”), is entitled, upon
the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or
prior to the close of business on the fifth anniversary of the Initial Exercise
Date (the “Termination Date”) but not
thereafter, to subscribe for and purchase from Crdentia Corp., a Delaware
corporation (the “Company”), up to                            shares
(the “Warrant Shares”) of Common
Stock, par value $0.001 per share, of the Company (the “Common
Stock”).  The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).

 

Section 1.               Definitions.  Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the “Purchase Agreement”),
dated as of July 2, 2008, among the Company and the investor signatories
thereto.

 

Section 2.               Exercise.

 

(a)           Exercise of Warrant.  Exercise of the purchase rights represented
by this Warrant may be made, in whole or in part, at any time or times on or
after the Initial Exercise Date and on or before the Termination Date by
delivery to the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the address of
such Holder appearing on the books of the Company) of a duly executed facsimile
copy of the Notice of Exercise Form annexed hereto; provided, however,
within five Trading Days of the date said Notice of Exercise is delivered to
the Company, if this Warrant is exercised in full, the Holder shall have
surrendered this Warrant to the Company and the Company shall 

 

1

 

have received
payment of the aggregate Exercise Price of the shares thereby purchased by wire
transfer or cashier’s check drawn on a United States bank.  Notwithstanding anything herein to the
contrary, the Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full.  Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number of
Warrant Shares purchased.  The Holder and
the Company shall maintain records showing the number of Warrant Shares purchased
and the date of such purchases.  The Company
shall deliver any objection to any Notice of Exercise Form within one
Business Day of receipt of such notice. 
In the event of any dispute or discrepancy, the records of the Holder
shall be controlling and determinative in the absence of manifest error.  The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following the purchase of a portion of the Warrant Shares hereunder,
the number of Warrant Shares available for purchase hereunder at any given time
may be less than the amount stated on the face hereof.

 

(b)           Exercise Price.  The exercise price of the Common Stock under
this Warrant shall be $0.35 per share, subject to adjustment hereunder (the “Exercise Price”).

 

(c)           Mechanics of
Exercise.

 

i.              Authorization
of Warrant Shares.  The Company
covenants that all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of the purchase
rights represented by this Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

 

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

 

iii.            Delivery
of New Warrants Upon Exercise.  If
this Warrant shall have been exercised in part, the Company shall, at the
request of a Holder and upon 

 

2

 

surrender of
this Warrant, at the time of delivery of the certificate or certificates
representing the Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

 

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

 

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

 

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

 

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

 

(d)           Call Provisions.  Subject to the provisions of this subsection
(d), from time to time and at any time that the closing bid of a share of
Common Stock is traded on the Over-The-Counter Bulletin Board (or such other of
exchange or stock market on which the Common Stock may then be listed or
quoted) equal or exceeds $0.70 (adjusted for any stock split, or reverse stock
split, stock dividend or under a classification or combination of the Common
Stock for at least thirty (30) consecutive trading days, the Company, upon
twenty (20) days prior written notice (the “Notice
Period”) given to the Holder, may require the Holder to exercise
the Warrant in whole or in part at the Exercise Price.  In the event the Holder shall fail to
exercise the Warrant at the Exercise Price within the Notice Period, the
Company shall have the right, without further notice to call this Warrant at a
redemption price equal to $0.01 per share of Common Stock then purchasable
pursuant to this Warrant. 
Notwithstanding any such notice by the Company, the Holder shall have
the right to exercise this Warrant in whole or in part prior to the end of the
Notice Period.  The provisions of this
subsection (d) shall be binding upon any transferee of the Warrant.

 

3

 

Section 3.               Certain
Adjustments.

 

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

 

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

 

(c)           Fundamental Transaction.  If, at any time while this Warrant is
outstanding, (A) the Company effects any merger or consolidation of the
Company with or into another Person, (B) the Company effects any sale of
all or substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (D) the Company effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property (in any such case, a “Fundamental Transaction”),
then the Company, or such successor or purchasing corporation, as the case may
be, shall duly execute and deliver to the holder of this Warrant a new Warrant
(in form and substance satisfactory to the holder of this 

 

4

 

Warrant), or the Company shall make appropriate provision without the
issuance of a new Warrant, so that the holder of this Warrant shall have the
right to receive upon exercise of this Warrant, at a total purchase price not
to exceed that payable upon the exercise of the exercisable but unexercised
portion of this Warrant, and in lieu of the shares of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such Fundamental
Transaction by a holder of the number of shares of Common Stock then
purchasable under this Warrant.  Such new
Warrant shall provide for adjustments that shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 3.  The terms of any agreement pursuant to which
a Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 3(c) and
insuring that this Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.

 

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

 

(e)           Voluntary Adjustment By Company.  The Company may at any time during the term
of this Warrant reduce the then current Exercise Price to any amount and for
any period of time deemed appropriate by the Board of Directors of the Company.

 

(f)            Notice to Holders.

 

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

 

ii.             Notice
to Allow Exercise by Holder.  If (A) the
Company shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock; (C) the Company shall authorize
the granting to all holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to
which the Company is a party, any sale or transfer of all or substantially all
of the assets of the Company, of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property; (E) the
Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company; then, in each case, the Company
shall cause to be mailed to the Holder at its last address as it shall appear
upon the Warrant Register of the Company, at least twenty (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 

 

5

 

date as of
which the holders of the Common Slack of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange; provided that the failure to mail
such notice or any defect therein or in the mailing thereof shall not affect
the validity of the corporate action required to be specified in such
notice.  The Holder is entitled to
exercise this Warrant during the 20-day period commencing on the date of such
notice to the effective date of the event triggering such notice.

 

Section 4.               Transfer
of Warrant.

 

(a)           Transferability.  Subject to compliance with any applicable
securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof
and to the provisions of Section 4.1 of the Purchase Agreement,
this Warrant and all rights hereunder are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company, together
with a written assignment of this Warrant substantially in the form attached
hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  A
Warrant, if properly assigned, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant issued.

 

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

 

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

 

(d)           Transfer Restrictions.  If, at the time of the surrender of this
Warrant in connection with any transfer of this Warrant, the transfer of this
Warrant shall not be registered pursuant to an effective registration statement
under the Securities Act and under applicable state securities or “blue sky”
laws, the Company may require, as a condition of allowing such transfer (i) that
the Holder or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form, substance
and scope customary for 

 

6

 

opinions of counsel in comparable transactions) to the effect that such
transfer may be made without registration under the Securities Act and under
applicable state securities or “blue sky” laws, (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company, and (iii) that the transferee be an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a) (8) promulgated
under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under
the Securities Act.

 

Section 5.               Miscellaneous.

 

(a)           Title to Warrant.  Prior to the Termination Date and subject to
compliance with applicable laws and Section 4 of this Warrant, this
Warrant and all rights hereunder are transferable, in whole or in part, at the
office or agency of the Company by the Holder in person or by duly authorized
attorney, upon surrender of this Warrant together with the Assignment Form annexed
hereto properly endorsed.  The transferee
shall sign an investment letter in form and substance reasonably satisfactory
to the Company.

 

(b)           No Rights as Shareholder Until Exercise.  This Warrant does not entitle the Holder to
any voting rights or other rights as a shareholder of the Company prior to the
exercise hereof.  Upon the surrender of
this Warrant and the payment of the aggregate Exercise Price, the Warrant
Shares so purchased shall be and be deemed to be issued to such Holder as the
record owner of such shares as of the close of business on the later of the
date of such surrender or the date of such payment.

 

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

 

(d)           Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall
be a Saturday, Sunday or a legal holiday, then such action may be taken or such
right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.

 

(e)           Authorized Shares.

 

i.              The Company
covenants that during the period the Warrant is outstanding, it will reserve
from its authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant.  The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to 

 

7

 

execute and issue the necessary certificates
for the Warrant Shares upon the exercise of the purchase rights under this
Warrant.  The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which the Common
Stock may be listed.

 

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

 

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

 

(f)            Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be determined in
accordance with Section 5.8 of the Purchase Agreement.

 

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

 

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

 

8

 

appellate proceedings, incurred by the Holder in collecting any amounts
due pursuant hereto or in otherwise enforcing any of its rights, powers or
remedies hereunder.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

[Signature Page Follows]

 

9

 

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

 

	
  Dated:
  July 2, 2008

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CRDENTIA CORP.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Kaiser

  
	
   

  	
  Name:

  	
  John Kaiser

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  

 

10

 

NOTICE
OF EXERCISE

 

TO:         CRDENTIA CORP.

 

(1)           The
undersigned hereby elects to purchase                            Warrant
Shares of the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.  Payment shall take the form of lawful money
of the United States.

 

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

 

 

(3)           The Warrant Shares
shall be delivered to the following:

 

 

 

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

 

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:

 

	
  Signature of Authorized Signatory of
  Investing Entity:

  	
   

  
	
  Name of Authorized Signatory:

  	
   

  
	
  Title of Authorized Signatory:

  	
   

  
	
  Date:

  	
   

  
					

 

 

ASSIGNMENT
FORM

 

(To assign the foregoing Warrant, execute
this form and supply required information.

Do not use this form to exercise the
Warrant.)

 

FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to                   
          
                             
                                                       
                                                                ,
whose address is                     
              

 

                                                                                                                                 .

 

 

	
  Dated:

  	
   

  
	
   

  
	
  Holder’s
  Signature:

  	
   

  
	
   

  	
   

  
	
  Holder’s
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature
  Guaranteed:

  	
   

  
			

 

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

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