Section 1.3 General Payment Terms. Principal and Interest due hereunder shall be paidin the lawful currency of the United States of America at such address as the OOGEDT may designate.Section 1.4 Mandatory Repayment. The Principal, together with all accrued and unpaidInterest on the Principal balance, shall be due and payable upon demand by the OOGEDT upon theoccurrence of an Event of Default (as hereinafter defined) in accordance with the terms hereinafterset forth and the terms of the Fund Agreement. In the event of any conflict between the termshereof and the terms of the Fund Agreement with respect to mandatory repayment, the terms of theFund Agreement shall control.Section 1.5 Optional Prepayment. The Company may pay, at its option, all sums ofunpaid Principal and accrued but unpaid Interest at any time on or after eighteen (18) monthsfollowing the Effective Date if the Company elects to terminate the Fund Agreement in accordancewith Section 2.13 of the Fund Agreement.Section 1.6 Cancellation of Note. This Note shall be canceled, the Principal andInterest evidenced hereby shall be forgiven in its entirety and the Company shall be released ofall covenants, liabilities and obligations under this Article I on and after the earlier of(a) the date ten (10) years after the Effective Date and (b) the consummation of a QualifyingLiquidation Event (as hereinafter defined).Section 1.7 Qualifying Liquidation Event. “Qualifying Liquidation Event”means (a) the sale, conveyance, or other disposition of all or substantially all of the assets ofthe Company and its subsidiaries (taken as a whole) to persons who are not then Company Associates(as hereinafter defined) or Company Affiliates, or (b) the sale of the Company’s then-outstandingequity securities by the Company’s stockholders or the Company’s merger into or consolidation withany other entity, in each such case, in which more than fifty percent (50%) of the voting power ofthe Company is transferred to persons who are not then Company Associates or Company Affiliates.“Company Affiliate” means a person who or that directly, or indirectly through one or moreintermediaries, controls the Company or is controlled by, or is under Common control with, such aperson.Section 1.8 Events of Default.(a) The occurrence or existence of any “Event of Default” under Section 2.07(B) of theFund Agreement shall constitute an “Event of Default” hereunder.(b) Upon the occurrence of any Event of Default, the OOGEDT shall have the right to (i)declare all sums of unpaid Principal and accrued but unpaid Interest and all other amounts properlypayable under the Note immediately due and payable and (ii) unless otherwise limited hereunder orunder the Fund Agreement, exercise any and all other rights available to it hereunder or under theFund Agreement or at law or in equity, all of which rights and powers may be exercised cumulativelyand not alternatively. Notwithstanding the foregoing, in the event that the OOGEDT shall receiveany amounts of compensatory damages as a result of a claim of an event of default under the FundAgreement, such amounts (“Damage Payments”) shall be
 
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deemed to reduce the amount of Principal thenoutstanding under the Note on a dollar for dollar basis. In the event that, following any Event of Default hereunder, the OOGEDTreceives a Damage Payment or payment of any sum of then unpaid Principal and accrued but unpaidInterest on the Note, the OOGEDT hereby irrevocably elects to convert that number of shares ofSeries B Preferred Stock then held by the OOGEDT into shares of Common Stock of the Company in anamount equal to (1) the total number of the shares of Series B Preferred Stock then held by theOOGEDT multiplied by (2) the quotient obtained by dividing the amount of (A) any such DamagePayment or (B) any such repayment by the Company of Principal and interest on the Note, as the casemay be, by the aggregate amount of Principal and interest outstanding and unpaid under the Noteimmediately prior to the receipt by the OOGEDT of such Damage Payment or Principal and interestrepayment, as the case may be.Section 1.9 Usury. Notwithstanding any provision to the contrary contained herein,the Fund Agreement or any other agreement entered into in connection with this Note or as securitytherefor or otherwise, it is expressly provided that in no case or event shall the aggregate of (a)all Interest on the unpaid balance of Principal, accrued or paid from the date hereof and (b) theaggregate of any other amounts accrued or paid pursuant hereto, which under applicable laws are ormay be deemed to constitute interest upon the indebtedness evidenced hereby from the date hereof,ever exceed the Ceiling Rate (as hereinafter defined). In this connection, the Company and theOOGEDT stipulate and agree that it is their common and overriding intent to contract in strictcompliance with applicable usury laws. In furtherance thereof, none of the terms hereof shall everbe construed to create a contract to pay, as consideration for the use, forbearance or detention ofmoney, interest at a rate in excess of the Ceiling Rate. The Company or other parties now orhereafter becoming liable for payment of the indebtedness evidenced by the Note shall never beliable for interest in excess of the Ceiling Rate. If, for any reason whatever, the interest paidor received on the Note during its full term produces a rate which exceeds the Ceiling Rate, theOOGEDT shall credit against the principal of this Note (or, if such indebtedness shall have beenpaid in full, shall refund to the payor of such interest) such portion of said interest as shall benecessary to cause the interest paid on this Note to produce a rate equal to the Ceiling Rate. Allsums contracted for, charged or received by the OOGEDT or the holder of this Note for the use,forbearance or detention of the indebtedness evidenced hereby shall, to the extent required toavoid or minimize usury and to the extent permitted by applicable law, be amortized, prorated,allocated and spread throughout the full stated term of this Note so that the interest rate doesnot exceed the Ceiling Rate. The provisions of this Section 1.9 shall control allagreements, whether now or hereafter existing and whether written or oral, between the Company andany holder of this Note. As used herein, the term “Ceiling Rate” means, on any day, themaximum nonusurious rate of interest permitted for that day by whichever of applicable federal orTexas laws permits the higher interest rate, stated as a rate per annum.Section 1.10 Cost of Collection. If the OOGEDT retains an attorney in connection withany Event of Default or to collect, enforce or defend this Note or any papers intended to secure orguarantee it in any lawsuit or in any probate, reorganization, bankruptcy or other proceeding, orif the Company sues the OOGEDT in connection herewith or any such papers and does not prevail, thenthe Company agrees to pay to the OOGEDT, in addition to the Principal and Interest, all reasonablecosts and expenses incurred by the OOGEDT in trying to collect this Note or in any such suit orproceeding, including reasonable attorneys’ fees.
 
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Section 1.11 Waivers. Except for any notices that are specifically required byanother provision hereof, the Company and any and all endorsers, guarantors and sureties severallywaive notice (including, but not limited to, notice of intent to accelerate and notice ofacceleration, notice of protest and notice of dishonor), demand, presentment for payment, protest,diligence in collecting and the filing of suit for the purpose of fixing liability and consent thatthe time of payment hereof may be extended and re-extended from time to time without notice to anyof them. Each such person agrees that his, her or its liability on or with respect to this Noteshall not be affected by any release of or change in any guaranty or security at any time existingor by any failure to perfect or maintain perfection of any lien against or security interest in anysuch security or the partial or complete unenforceability of any guaranty or other suretyobligation, in each case in whole or in part, with or without notice and before or after the termhereof.Section 1.12 Federal Tax Classification. It is expressly provided that the promise topay to the order of the OOGEDT that is evidenced by this Note is not intended to be classified asindebtedness for U.S. federal income purposes unless and until an Event of Default occurs and theOOGEDT declares payable all sums of unpaid Principal. The Company and any and all endorsers,guarantors and sureties agree to report the Note consistent with this Section 1.12 for allU.S. federal income tax purposes except as otherwise required by law.**ARTICLE II****RIGHT TO PURCHASE**Section 2.1 Right to Purchase. This Article II consists of the Right toPurchase, which certifies that, for the value received, the OOGEDT is entitled to purchase from theCompany up to the number of shares set forth in Section 2.3 below (subject to adjustment inaccordance with the provisions hereof) of either (a) shares of common stock of the Company, $0.001par value per share (“Common Stock”), or (b) shares (“Next Financing Shares”) ofthe same class of capital stock or series of preferred stock as shall be issued in the FirstQualifying Financing Transaction (as hereinafter defined).Section 2.2 Purchase Price. The price per share (the “Purchase Price”) ofCommon Stock or Next Financing Shares, as the case may be, purchased hereunder shall be $0.001 pershare.Section 2.3 Number of Shares.(a) The number of shares of Common Stock or Next Financing Shares (in the case of Sections2.3(a)(ii)(A) and (B) below) to be issued upon the OOGEDT’s exercise of this Right to Purchaseshall be equal to the quotient obtained by dividing:(i) The total amount of the Award disbursed as of the date of the exercise, by
 
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(ii) Either:(A) if the First Qualifying Financing Transaction is closed and consummated on orbefore ninety (90) days after the Effective Date, then the Stock Price (as hereinafterdefined) of such First Qualifying Financing Transaction; or(B) if the First Qualifying Financing Transaction is closed and consummated afterninety (90) days following the Effective Date and on or prior to the date eighteen (18)months after the Effective Date, then eight-tenths (0.80) multiplied by the Stock Price ofsuch First Qualifying Financing Transaction; or(C) if no First Qualifying Financing Transaction is closed and consummated on or beforethe date eighteen (18) months after the Effective Date or the OOGEDT exercises its Right toPurchase prior to the closing and consummation of a First Qualifying Financing Transaction,then $100.00.(b) No fractional shares shall be issued upon the exercise of this Right to Purchase. Insteadof any fractional share that would otherwise be issuable upon a conversion hereunder, the Companyshall pay the OOGEDT a cash amount in respect of such fractional share based upon the applicableStock Price of the whole shares of Common Stock or Next Financing Shares, as the case may be,issuable to the OOGEDT upon such exercise.(c) The Company shall (i) notify the OOGEDT in writing of the terms of the First QualifyingFinancing Transaction as soon as practicable prior to the anticipated closing of such transaction;(ii) deliver all material closing documentation regarding the First Qualifying FinancingTransaction to the OOGEDT so that the OOGEDT actually receives such documentation within three (3)business days of the closing of the First Qualifying Financing Transaction; and (iii) and providepromptly such additional information to the OOGEDT as the OOGEDT may reasonably request.(d) “Stock Price” means, as applicable:(i) With respect to Common Stock, (A) if Common Stock is sold in the First QualifyingFinancing Transaction, the price per share at which such Common Stock is sold in the FirstQualifying Financing Transaction; (B) if Common Stock is not sold in the First QualifyingFinancing Transaction, the price per share of capital stock that is sold in the FirstQualifying Financing Transaction as determined by dividing (1) the total amount received bythe Company as consideration for the sale of such capital stock, plus the minimum aggregateamount of additional consideration payable to the Company upon the conversion or exchange ofall such capital stock into Common Stock, if any, by (2) the total maximum number of sharesof Common Stock issuable upon the conversion or exchange of such capital stock; or (C) ifthere has been no First Qualifying Financing Transactions, then $100.00 per share; and(ii) With respect to Next Financing Shares, the lesser of (i) the average price pershare of Next Financing Shares, if any, that are sold to Company Associates and/or CompanyAffiliates in the First Qualifying Financing Transaction and (ii) the average price pershare of Next Financing Shares that are sold to investors other thanCompany Associates and/or Company Affiliates in the First Qualifying FinancingTransaction.
 
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(e) “Company Associates” means, as of any particular date, the shareholders of theCompany (including the holders of Common Stock, preferred stock, or other capital stock of theCompany), debtholders of the Company, and holders of convertible securities or holders of any rightto purchase or acquire any capital stock of the Company.(f) “Company Affiliate” means a person who or that directly, or indirectly through oneor more intermediaries, controls the Company or is controlled by, or is under common control with,such a person.(g) “Associate Debt” means debt of the Company outstanding on the date of the FirstQualifying Financing Transaction (regardless of whether such debt is evidenced by a promissorynote, a convertible promissory note or any other form or instrument) that is owed to any CompanyAffiliate or any person (or any affiliate of such person) that is purchasing capital stock from theCompany in the First Qualifying Financing Transaction.(h) “Stock Acquisition” means the sale by the Company’s shareholders of all of theissued and outstanding shares of capital stock of the Company to an acquiring person or entity.(i) “First Qualifying Financing Transaction” means the earlier of (i) a QualifyingLiquidation Event and (ii) the first issuance and sale of Common Stock of the Company or otherclasses or series of authorized capital stock of the Company (excluding, however, (A) anysecurities of the Company, other than capital stock, that are convertible into or exchangeable orexercisable for capital stock of the Company, such as warrants, options, or convertible debt, and(B) any capital stock issued in exchange for the retirement or partial retirement of any AssociateDebt, including without limitation any capital stock issued in exchange for any future promise toretire or partially retire any Associate Debt) to occur following the Effective Date in a publicoffering or private placement, for an aggregate amount of cash consideration received by theCompany from persons other than Company Associates or Company Affiliates equal to or greater thanFive Hundred Thousand Dollars ($500,000); provided, however, that, with respect toclause (ii) above, the cash proceeds received as consideration by the Company in the FirstQualifying Financing Transaction shall not be directly used in any single transaction or any seriesof related transactions to make payments on any Associate Debt (unless the Company receives cashproceeds in the First Qualifying Financing Transaction in excess of Five Hundred Thousand Dollars($500,000), in which case such excess amount may be used to make payments on Associate Debt).
 
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Section 2.4 Purchase Procedure.(a) The purchase rights represented by this Right to Purchase are exercisable by the OOGEDT orits assignee, in whole or in part, at any time on or after the Vesting Date (as hereinafterdefined) and on or before the earlier of ninety (90) days after (a) the First Qualifying FinancingTransaction and (b) the date thirty (30) months after the Effective Date, by delivering to theprincipal office of the Company, or at such other office or agency as the Company maydesignate by notice in writing to the OOGEDT, a duly executed Notice of Purchase in the formattached hereto as Exhibit A and, upon payment of the per share Purchase Price multipliedby the total number of shares thereby purchased (the “Aggregate Purchase Price”) (at thesole option of the OOGEDT, to be paid by cash or by check or bank draft payable to the order of theCompany, by cashless exercise as described below or by cancellation of indebtedness of the Companyto the OOGEDT), whereupon the OOGEDT shall be entitled to receive a certificate for the number ofshares of Common Stock or Next Financing Shares, as the case may be, so purchased. The OOGEDT, inits sole discretion, shall elect whether to purchase Common Stock or Next Financing Shares upon itsexercise of the purchase rights hereunder.(b) “Vesting Date” means the earlier of (i) the date eighteen (18) months after theEffective Date; (ii) the date on which the First Qualifying Financing Transaction is closed andconsummated; or (iii) the date on which any of the following events occur: (A) any capitalreorganization or any reclassification of the capital stock of the Company; (B) any consolidationor merger of the Company; (C) the disposition or transfer of assets of the Company other than inthe ordinary course of the Company’s business; (D) any dividend or other distribution to theholders of capital stock of the Company in the form of any asset, including without limitationsecurities of the Company; or (E) the dissolution, liquidation or winding up of the Company; or(iv) the date of a Stock Acquisition.Section 2.5 Cashless Exercise. In lieu of paying the Purchase Price, the OOGEDT mayexercise its purchase rights hereunder by cashless exercise, which shall be effected by convertingthe Right to Purchase (the “Conversion Right”) into shares of Common Stock or NextFinancing Shares, as the case may be, as follows. Upon exercise of the Conversion Right withrespect to a particular number of shares of Common Stock or Next Financing Shares, as the case maybe (the “Converted Right”), the Company shall deliver to the OOGEDT (without payment by theOOGEDT of any cash, cancellation of indebtedness or delivery of any other consideration) thatnumber of shares of Common Stock or Next Financing Shares, as the case may be, equal to thequotient obtained by dividing (a) the difference between (i) the product of the Stock Price of ashare of Common Stock or Next Financing Shares, as the case may be, and the number of such sharesinto which the Converted Right could have been exercised hereunder and (ii) the Aggregate PurchasePrice that would have been payable upon such exercise of the Converted Right, by (b) the applicableStock Price.Section 2.6 Issuance of Shares. The issuance of Next Financing Shares upon exerciseof the purchase rights under this Right to Purchase shall be upon and subject to the same terms andconditions (other than price and timing) applicable to the First Qualifying Financing Transactionand, subject to Section 3.4 below, the OOGEDT shall be entitled to all the same rights andpreferences with respect to each share of Next Financing Shares held by the OOGEDT to which allother holders of shares of the same class and series of stock are entitled. All shares of CommonStock or Next Financing Shares, as the case may be, issued to the OOGEDT upon a purchase hereundershall be validly issued, fully paid, non-assessable and free from all taxes, liens and charges. Incase the OOGEDT shall exercise this Right to Purchase with respect to less than all of the sharesthat may be purchased hereunder, or if future disbursements of the Award are made under the FundAgreement following any exercise hereof, this Right to Purchase shall thereafter represent theright to purchase the balance of such shares and any additional shares represented by suchadditional Award disbursement. The issuance of certificates for shares uponexercise of this Right to Purchase shall be made without charge to the holder thereof for anyissuance tax in respect thereof or other cost incurred by the Company in connection with suchexercise and the related issuance of the shares. Notwithstanding anything to the contrary providedherein, the OOGEDT shall not be required to execute, join or become a party to any other agreement,including any shareholders agreement, in connection with the issuance to the OOGEDT of NextFinancing Shares or Common Stock.
 
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Section 2.7 Reservation of Shares. The Company shall at all times reserve and keepavailable out of its authorized but unissued Common Stock, and once designated, Next FinancingShares, solely for the purpose of issuance upon the exercise of this Right to Purchase, the maximumnumber of shares issuable upon the exercise of this Right to Purchase. If at any time the numberof authorized but unissued shares shall not be sufficient to permit exercise of this Right toPurchase, the Company shall take such corporate action as may be necessary to increase itsauthorized but unissued shares of Common Stock and Next Financing Shares to such number of sharesas shall be sufficient for such purpose.Section 2.8 Certain Adjustments. The number of shares of Common Stock or NextFinancing Shares, as the case may be, purchasable hereunder and the Purchase Price shall be subjectto adjustment from time to time as hereinafter provided.(a) In case of (i) any capital reorganization or any reclassification of the capital stock ofthe Company, (ii) any consolidation or merger of the Company, (iii) the disposition or transfer ofassets of the Company other than in the ordinary course of the Company’s business, (iv) anydividend or other distribution to the holders of capital stock of the Company in the form ofadditional shares of capital stock of the Company or its subsidiaries, property of the Company orits subsidiaries (other than cash) or rights, options or warrants to purchase or otherwise acquireshares of capital stock of the Company or its subsidiaries, or (v) the dissolution, liquidation orwinding up of the Company, this Right to Purchase shall thereafter be exercisable for and theOOGEDT shall thereafter be entitled to purchase (and it shall be a condition to the consummation ofany such transaction or event that appropriate provision shall be made so that the OOGEDT shallthereafter be entitled to purchase) the kind and amount of shares of stock and other securities andproperty receivable in such transaction by a holder of the number of shares of Common Stock or NextFinancing Shares, as the case may be, for which this Right to Purchase entitled the OOGEDT topurchase immediately prior to such capital reorganization, reclassification of capital stock,non-surviving combination or disposition or other transaction; and in any such case appropriateadjustments shall be made in the application of the provisions of this paragraph with respect torights and interests thereafter purchasable upon the exercise of this Right to Purchase and thePurchase Price. In the case of a capital reorganization or reclassification, the number of sharesthat the OOGEDT is entitled to purchase hereunder shall be proportionately increased in the case ofa split or subdivision or proportionately decreased in the case of a combination and the PurchasePrice shall be proportionately decreased in the case of a split or subdivision or proportionatelyincreased in the case of a combination.
 
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(b) In the case of any cash dividends declared or paid on the Common Stock or the NextFinancing Shares, as the case may be, of the Company prior to the exercise of this Right toPurchase, the OOGEDT shall be entitled, upon exercise of this Right to Purchase, toreceive the value of any such dividends to the full extent as if the OOGEDT had exercised thisRight to Purchase as of the date of declaration or payment of any such dividend. The OOGEDT, inits sole discretion, shall elect one of the two following methods for the Company to pay the valueof such dividends to the OOGEDT: (i) in cash or (ii) by adjusting this Right to Purchase torepresent the right to acquire, in addition to the number of shares receivable upon exercisehereof, and without payment of any additional consideration therefor, the amount of such othershares of Common Stock or the Next Financing Shares, as the case may be, of the Company that suchholder could have purchased with such cash dividend at the Stock Price on the date of such exercisehad it received such cash dividends on the date of their distribution and had thereafter retainedsuch shares and/or all other additional stock available by it as aforesaid during such period,giving effect to all adjustments called for during such period by the provisions hereof.(c) Notice of Adjustments or Dividends. Upon any event that has the effect of causingan adjustment of shares of securities purchasable (or payment of dividends) upon exercise of thisRight to Purchase, a certificate, signed by (i) an authorized officer of the Company or (ii) anindependent firm of certified public accountants selected by the Company at its own expense,setting forth in reasonable detail the events requiring the adjustment and the method by which suchadjustment was calculated, shall promptly be mailed to the OOGEDT and shall specify the adjustedPurchase Price and the number of shares of securities (and payment of dividends) purchasable uponexercise of this Right to Purchase after giving effect to the adjustment.Section 2.9 Stock Certificate Legend. Each certificate representing shares of CommonStock or Next Financing Shares issued pursuant to this Right to Purchase shall be imprinted with alegend in substantially the following form:THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVENOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE“ACT”), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OROTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLESTATE SECURITIES LAWS, OR UNLESS SUCH OFFER, SALE, ASSIGNMENT, PLEDGE,HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION OR ISOTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH LAWS, AS THE SAME MAY BE AMENDED FROMTIME TO TIME.THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF AN INVESTMENTUNIT AND AN EMERGING TECHNOLOGY FUND SECURITY AND AWARD AGREEMENT, EACH DATED AS OF                    ,           , BY AND BETWEEN THE COMPANY AND THE STATE OF TEXAS, ACTING BYAND THROUGH THE OFFICE OF GOVERNOR ECONOMIC DEVELOPMENT AND TOURISM, WHICHINVESTMENT UNIT AND AGREEMENT CONTAIN, AMONG OTHER PROVISIONS, RESTRICTIONS ON THETRANSFER, SALE, OR OTHER DISPOSITION OF THE SHARES EVIDENCED BY THISCERTIFICATE. A COPY OF SUCH INVESTMENT UNIT AND AGREEMENT HAS BEEN FILED, AND ISAVAILABLE FOR REVIEW BY THE RECORD HOLDER OF THIS CERTIFICATE, AT THE PRINCIPALOFFICE OF THE COMPANY.
 
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Section 2.10 No Impairment. So long as this Right to Purchase is outstanding andunexercised, the Company shall not, by amendment of its certificate of formation (or otherformation document) or bylaws or through any reorganization, transfer of assets, consolidation,merger, dissolution, issue or sale of securities or any other voluntary action avoid or seek toavoid the observance or performance of any of the terms to be observed or performed hereunder bythe Company, but shall at all times in good faith assist in the carrying out of all the provisionsof this section and in the taking of all such action as may be necessary or appropriate in order toprotect the rights of the OOGEDT hereunder against impairment.**ARTICLE III****MISCELLANEOUS**Section 3.1 Representations and Covenants of the Company.(a) The Company shall comply with the Act, all applicable state securities laws, and all otherapplicable laws and regulations in respect of the issuance of this Unit and the issuance of anysecurities issued or issuable under Article II hereof, and shall timely make all requiredfilings and reports under such laws and regulations.(b) The Company represents that it has the power to issue this Unit and to carry out theobligations hereunder, and the execution, delivery and performance by the Company of this Unit hasbeen duly authorized by all necessary corporate action.(c) The Company shall maintain or cause to be maintained books, records, documents and otherevidence pertaining to compliance with the requirements contained in this Unit, and during all suchtime when the OOGEDT is holding this Unit or any securities issued upon the exercise of the Rightto Purchase under Article II hereof, upon request shall allow or cause the entity which ismaintaining such items to allow the OOGEDT, or auditors for the OOGEDT, including the State Auditorfor the State of Texas, to inspect, audit, copy, or abstract, all of its books, records, papers, orother documents relevant to this Unit and the securities issued or issuable upon exercise of theRight to Purchase under Article II hereof. The Company shall use or cause the entity thatis maintaining such books and records to use generally accepted accounting principles in themaintenance of such books and records, and shall retain or cause to be retained all of such books,records, documents and other evidence for a period of seven (7) years from and after the later of(i) the date that the Fund Agreement is terminated or the Fund Agreement’s term expires and (ii)unless the Right to Purchase hereunder expires without having been exercised, the date on which theOOGEDT fully divested all rights and ownership of all stock that was issued upon the OOGEDT’sexercise of its Right to Purchase under Article II hereof.
 
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Section 3.2 Representations and Covenants of the OOGEDT. The OOGEDT, by acceptance ofthis Right to Purchase, agrees that the right to purchase shares of Common Stock, Next FinancingShares or other securities to be issued upon exercise hereof are being acquired for the OOGEDT’sown account to be held on behalf of the State of Texas pursuant to the provisions of Chapter 490 ofthe Texas Government Code and that the OOGEDT shall not offer, sell or otherwise dispose of thisRight to Purchase or any shares issuable hereunder except under circumstances that will not resultin a violation of the Act or any securities laws of any state. Otherwise, the OOGEDT is permittedat any time and without limitation to offer, sell or otherwise dispose of this Right to Purchaseand any securities issued hereunder in a manner that is in compliance with the Act and anyapplicable state securities laws of, including making such offers, sales or dispositions under Rule144 of the Act. Prior to any offer, sale, or other disposition of this Right to Purchase and anysecurities issued hereunder, the OOGEDT shall provide the Company with fifteen (15) days writtennotice thereof.Section 3.3 Notices. Any notice, request or other communication required or permittedhereunder shall be in writing and shall be deemed to have been duly given if personally deliveredor mailed by registered or certified mail, postage prepaid, or by recognized overnight courier orpersonal delivery at the respective addresses of the parties as set forth herein or on the registermaintained by Company. The Company and the OOGEDT may by notice so given change the OOGEDT’s andCompany’s respective address for future notice hereunder. Notice shall conclusively be deemed tohave been given when received. The current addresses for notice are as follows:       To OOGEDT: Financial Services    ETF Compliance    PO Box 12878    Austin, TX 78711-2878    Email: ETF.Compliance@governor.state.tx.us         *with a concurrent copy to*:         ATTN: Emerging Technology Fund Award Program    General Counsel    Office of the Governor    P.O Box 12428    Austin, Texas 78711    Phone: 512-463-1788    Fax: 512-463-1932       To Company: John Porter    Chief Executive Officer    First Detect    401 Congress Avenue, Suite 1650    Austin, Texas  78701    Phone: (512) 485-9530    Fax: (512) 485-9531
 
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Section 3.4 No Rights as Shareholder. Nothing in the Unit shall be construed asconferring on the OOGEDT or any other person any voting rights or other rights as a shareholder ofthe Company. Further, from and after any exercise of the Right to Purchase under ArticleII hereof, so long as the OOGEDT holds such capital stock, the OOGEDT shall grant a revocableproxy (the “Proxy”) of all its voting rights to the then-current Chief Executive Officer(or, if no Chief Executive Officer is then serving, President) of the Company with respect to eachmatter that is presented for a vote to holders of capital stock held by the OOGEDT, substantiallyin the form attached hereto as Exhibit B (which form shall provide, among other things,that such Proxy shall be voted in proportionate accordance to the votes of such other holders(holding shares of the same class and series of stock as the OOGEDT) on the matter). It is thegeneral intent of the OOGEDT not to revoke the Proxy unless the OOGEDT’s rights and interests wouldbe adversely and disproportionately effected in connection with a matter on which the OOGEDTotherwise would have the right to vote, and any such determination regarding whether any suchmatter has or would have an adverse or disproportionate effect on the OOGEDT’s rights and interestsshall be made in the sole discretion of the OOGEDT. Notwithstanding anything to the contraryherein, in the Fund Agreement or in connection with the OOGEDT’s grant of the Proxy, upon exerciseof the Right to Purchase hereunder, the OOGEDT shall become the record holder of the Common Stockor Next Financing Shares, as the case may be, and shall have all legal and beneficial ownershiprights thereto at all times (except as is specifically set forth in the Proxy). In addition,notwithstanding the OOGEDT’s grant of the Proxy, the Company shall provide the OOGEDT with allnotices to which holders of Common Stock or Next Financing Shares, as the case may be, areentitled, including without limitation all notices of shareholders’ meetings and all notices of anyvotes upon any matters submitted for a vote of the holders of Common Stock or the Next FinancingShares, as the case may be, which notices shall be delivered by the Company to the OOGEDT on orbefore such date as shall provide the OOGEDT with adequate time to revoke the Proxy prior to suchmeeting or vote if the OOGEDT so chooses.Section 3.5 Right of First Offer. If the OOGEDT shall decide at any time that itwants to sell, transfer or assign all or any portion of its Common Stock or Next Financing Shares(as the case may be, the “Offered Shares”) to any person or entity that is not anotherTexas state agency, the OOGEDT shall first provide the Company with a written offer to sell theOffered Shares to the Company at a specified price per share. The Company shall then have thirty(30) days to accept or reject such offer with respect to all but not less than all of the OfferedShares. If the Company irrevocably accepts the offer within the applicable time period, theCompany shall have an additional thirty (30) days to complete the purchase of the Offered Shares.The Company shall be permitted to assign its purchase right under this Section 3.5 to oneor more of its directors or executive officers, but this right shall be otherwise non-assignable bythe Company. If the Company rejects the offer or fails to accept the offer within the applicabletime period with respect to all of the Offered Shares, then the OOGEDT may sell all or a portion ofthe Offered Shares that have been offered but not accepted for purchase by the Company within onehundred eighty (180) days of such rejection or expiration of the time period for response to anyperson or entity; provided, that the OOGEDT does not sell any of the Offered Shares for less thanone hundred percent (100%) of the per share price the OOGEDT offered to the Company. If the OOGEDTdoes not sell the Offered Shares within the time period and for the price indicated above, it mustcomply again with the provisions of this Section 3.5 before selling all or any portion ofthe Offered Shares.
 
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Section 3.6 Unit Register. The Company shall maintain at its principal executiveoffice books for the registration and the registration of transfer of the Unit. The Company maydeem and treat the OOGEDT as the absolute owner hereof (notwithstanding any notation of ownershipor other writing thereon made by anyone) for all purposes, and neither the Company nor the OOGEDTshall be affected by any notice to the contrary.Section 3.7 Transfers. The Company shall not close its books against the transfer ofthis Unit or of any shares issued or issuable upon the exercise of the Right to Purchase underArticle II hereof in any manner which interferes with the timely exercise of the Right toPurchase.Section 3.8 Assignment. Except as specifically set forth in Section 3.5. theCompany shall not assign this Unit or any of its rights or obligations hereunder without the priorwritten consent of the OOGEDT. Except as otherwise required by Section 3.5 above, theOOGEDT may assign this Unit and any of its rights or obligations hereunder without the consent ofthe Company but must first provide the Company with fifteen (15) days written notice of suchassignment. Subject to the foregoing, this Unit and all terms, provisions and obligations setforth herein shall be binding upon and shall inure to the benefit of the parties and theirrespective successors and assigns and all other state agencies and any other agencies, departments,divisions, governmental entities, public corporations and other entities that shall be successorsto any of the parties or that shall succeed to or become obligated to perform or become bound byany of the covenants, agreements or obligations hereunder of any of the parties hereto.Section 3.9 Governing Law and Venue. This Unit shall be governed by and construed inaccordance with the laws of the State of Texas and the United States of America from time to timein effect, without regard to any otherwise applicable conflict of law rules or requirements. TheCompany and all endorsers, guarantors and sureties irrevocably agree that any action, claim, suit,litigation or other proceeding (collectively, “Litigation”) arising out of or in any wayrelating to this Unit, or the matters referred to therein, shall be commenced exclusively in theTravis County District Court or the United States District Court for the Western District of Texas,Austin Division, and hereby irrevocably and unconditionally consents to the exclusive jurisdictionof those courts for the purpose of prosecuting and/or defending such Litigation. The Company andall endorsers, guarantors and sureties hereby waive and agree not to assert by way of motion, as adefense, or otherwise, in any Litigation that (a) the Company is not personally subject to thejurisdiction of the above-named courts, (b) the Litigation is brought in an inconvenient forum or(c) the venue of the Litigation is improper.Section 3.10 Replacement. Upon receipt of evidence reasonably satisfactory to theCompany of the loss, theft, destruction or mutilation of this Unit and, in the case of any suchloss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to theCompany, or in the case of any such mutilation, upon surrender and cancellation of the mutilatedUnit, the Company shall execute and deliver, in lieu thereof, a new Unit of like date and tenor.Section 3.11 Saturdays, Sundays, Holidays, etc. If the last or appointed day for thetaking of any action or the expiration of any right required or granted herein shall be a Saturdayor a Sunday or shall be a legal holiday, then such action may be taken or such right may beexercised on the next succeeding day not a legal holiday.
 
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Section 3.12 Proceeds. This Unit, the securities issuable upon exercise of the Rightto Purchase under Article II hereof, and all amounts of cash or other benefits earned orreceived by the OOGEDT hereunder or by sale hereof, are held for and on behalf of the State ofTexas. Any and all cash received by the OOGEDT under or by sale of this Unit or the securitiesissuable under the Right to Purchase shall be deposited into the Emerging Technology Fund inaccordance with Chapter 490 of the Texas Government Code.Section 3.13 Severability. If any one or more of the provisions contained herein, orthe application thereof in any circumstance, is held invalid, illegal or unenforceable in anyrespect for any reason, the validity, legality and enforceability of any such provision in everyother respect and of the remaining provisions hereof shall not be in any way impaired, unless theprovisions held invalid, illegal or unenforceable shall substantially impair the benefits of theremaining provisions hereof.Section 3.14 Further Assurances. The Company and the OOGEDT shall execute suchdocuments and perform such further acts (including, without limitation, obtaining any consents,exemptions, authorizations or other actions by, or giving any notices to, or making any filingswith, any governmental authority or any other person, and otherwise fulfilling, or causing thefulfillment of, the various obligations made herein), as may be reasonably required or desirable tocarry out or to perform the provisions of this Unit and to consummate and make effective aspromptly as possible the transactions contemplated by this Unit.Section 3.15 Agreement by OOGEDT. Receipt of this Unit by the OOGEDT shall constituteacceptance of and agreement to the foregoing terms and conditions.Section 3.16 Amendment. Any term of this Unit may be amended and the observance ofany term of this Unit may be waived (either generally or in a particular instance and eitherretroactively or prospectively) only with the written consent of the Company and the OOGEDT.Section 3.17 Headings. The section headings in this Unit are inserted for purposes ofconvenience only and shall have no substantive effect.Section 3.18 Survival. The warranties, representations and covenants contained in ormade pursuant to this Unit shall survive the execution and delivery of this Unit and shall surviveany breach, expiration or termination of the Fund Agreement. Notwithstanding anything herein tothe contrary, this Unit, including without limitation the Right to Purchase under ArticleII hereof, shall survive the repayment of the Note.Section 3.19 Exhibits. The exhibits referred to herein are hereby incorporated fullyherein by this reference.[*Remainder of page intentionally left blank*.]
 
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IN WITNESS WHEREOF, the Company has caused this Investment Unit to be signed by its dulyauthorized officers in Austin, Texas as of the date and year first written above.       1st Detect Corporation              John Porter    Chief Executive Officer  
 
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**EXHIBIT A**