Document:

ex10-5.htm

Exhibit 10.5

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of the 21st day of January 2014, by and between Silver Horn Mining Ltd., a Delaware corporation (the “Seller”), and Auracana LLC, a Massachusetts limited liability Companies (the “Purchaser”).

W I T N E S S E T H:

 

WHEREAS, the Seller owns 100% of the issued and outstanding capital stock of (i) H-Hybrid Technologies, Inc., a Florida corporation (“Hybrid”) and (ii) RZ Acquisition Corp., a New York corporation (“RZ” and, together with Hybrid, the “Companies”);

WHEREAS, Hybrid is the licensee of three patents and one patent applied for but not yet issued relating to automotive fuel additives and has been an inactive subsidiary of the Seller since 2011;

  

WHEREAS, in 2010, the Seller received possession of all of the assets (the “Assets”) of RootZoo Inc., a Delaware corporation (“Rootzoo”) and subsequently assigned the Assets to RZ,

WHEREAS, the Assets include only (i) debt and (ii) the unlikely prospect of collection of a small portion of settlement proceeds, if any, of a pending putative class action lawsuit (the “Lawsuit”) filed by Rootzoo and other plaintiffs against Facebook Inc. in 2009;

WHEREAS, Glenn Kesner, the president of the Purchaser, served as an officer and director of the Seller from February 2010 through May 2011 and during this time provided services to the Seller in connection with the Lawsuit;

WHEREAS, Purchaser, as the owner of 3 million shares of the Seller’s Series A Convertible Preferred Stock, is entitled to a super majority of the Seller’s voting power and is the controlling stockholder of the Seller,

WHEREAS, the Seller desires to engage in the development and exploration of mineral properties (the “Current Business”),

WHEREAS, the Seller believes that the businesses, assets and liabilities of the Companies are not related to the Current Business and that sale of the Companies to the Purchaser is in the best interest of the Seller and its stockholders,

WHEREAS, as compensation for services provided by Mr. Kesner and to enable the Seller to devote all of its resources to pursuit of the Current Business, the Seller desires to sell to the Purchaser 100% of the Seller’s equity in the Companies (the “Securities”), on and subject to the terms of this Agreement, and

 

WHEREAS, the Purchaser desires to purchase the Securities from the Seller on and subject to the terms of this Agreement.

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

1. Sale of the Securities. Subject to the terms and conditions of this Agreement, and in reliance upon the representations, warranties, covenants and agreements contained in this Agreement, the Seller shall sell the Securities to the Purchaser, and the Purchaser shall purchase the Securities from the Seller, for a total purchase price of $1.00 (the “Purchase Price”).

 

2. Closing.

 

(a) The purchase and sale of the Securities shall take place at a closing (the “Closing”), to be held at the offices of the Seller on the date hereof (or such other time as the parties may agree).

  

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(b) At the Closing the Purchaser shall pay to the Seller the Purchase Price for the Securities by cash, check or wire transfer of immediately available funds.

 

(c) At and at any time after the Closing, the parties shall duly execute, acknowledge and deliver all such further assignments, conveyances, instruments and documents, and shall take such other action consistent with the terms of this Agreement to carry out the transactions contemplated by this Agreement.

 

(d) All representations, covenants and warranties of the Purchaser and Seller contained in this Agreement shall be true and correct on and as of the Closing with the same effect as though the same had been made on and as of such date.

 

3. Representations and Warranties of the Purchaser. The Purchaser hereby makes the following represents and warranties to the Seller:

(a) Purchaser has the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby and otherwise to carry out its obligations hereunder. No consent, approval, or agreement of any individual or entity is required to be obtained by the Purchaser in connection with the execution and performance by the Purchaser of this Agreement or the execution and performance by the Purchaser of any agreements, instruments, or other obligations entered into in connection with this Agreement. This Agreement constitutes valid and legally binding obligations of Purchaser, enforceable against him in accordance with its respective terms, except as such Agreement may be subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws and equitable principles relating to or affecting or qualifying the rights of creditors generally and general principles of equity. The execution, delivery and performance of this Agreement by Purchaser, and the consummation of the transactions contemplated hereby and thereby do not and will not violate any applicable law of any governmental body having jurisdiction over Purchaser or any of his properties.

(b) Purchaser represents that it is an “accredited investor” as such term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and that the Purchaser is able to bear the economic risk of an investment in the Securities. Purchaser hereby acknowledges and represents that (i) Purchaser has knowledge and experience in business and financial matters, prior investment experience, including investment in securities that are non-listed, unregistered and/or not traded on a national securities exchange or the Purchaser has employed the services of a “purchaser representative” (as defined in Rule 501 of Regulation D), attorney and/or accountant to read all of the documents furnished or made available by the Seller to the Purchaser to evaluate the merits and risks of such an investment on the Purchaser’s behalf and (ii) the Purchaser recognizes the highly speculative nature of this investment.

(c) The Purchaser will not sell or otherwise transfer any Securities without registration under the Securities Act or an exemption therefrom, and fully understands and agrees that the Purchaser must bear the economic risk of its purchase because, among other reasons, the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under the applicable securities laws of such states, or an exemption from such registration is available. In particular, the Purchaser is aware that the Securities are “restricted securities,” as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144 are met.

(d) The Purchaser understands and agrees that the certificates for the Securities shall bear substantially the following legend until (i) such securities shall have been registered under the Securities Act and effectively disposed of in accordance with a registration statement that has been declared effective or (ii) in the opinion of counsel for RZ or Hybrid, as applicable, such securities may be sold without registration under the Securities Act, as well as any applicable “blue sky” or state securities laws:

  

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	 	THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.	 

 

(e) The Purchaser is aware of the Companies’ business affairs and financial conditions and has reached an informed and knowledgeable decision to purchase the Securities.

(f) The Purchaser is not relying on the Seller or any of its employees, agents, sub-agents or advisors with respect to the legal, Tax (as defined in Section 5), economic and related considerations involved in this investment. The Purchaser has relied on the advice of, or has consulted with, only its attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, the “Advisors”). 

(g) The Purchaser has carefully considered the potential risks relating to the Companies and a purchase of the Securities, and fully understands that the Securities are a speculative investment that involves a high degree of risk of loss of the Purchaser entire investment. Among other things, the Purchaser has carefully reviewed each of the Seller’s filings (the “Filings”) with the Securities and Exchange Commission and has considered each of the risks described under the heading “Risk Factors” in the Filings.

(h) Purchaser is proceeding on the assumption that the Seller is in possession of material, non-public information concerning the Companies which is not or may not be known to the Purchaser and that the Seller has not disclosed to the Purchaser.

(i) Purchaser is voluntarily assuming all risks associated with the purchase of the Securities and expressly warrants and represents that (i) Purchaser is not relying on any disclosure or non-disclosure made or not made, or the completeness thereof, in connection with or arising out of the purchase of the Securities and (ii) Purchaser waives and releases any claim that it might have against the Seller or any of Seller’s respective partners, representatives, attorneys, independent contractors, agents and affiliates whether under applicable securities law or otherwise, based on Seller’s knowledge, possession, or nondisclosure to Purchaser of any material, non-public information concerning the Companies.

4. Representations and Warranties of the Seller. Seller hereby makes the following representations and warranties to the Purchaser:

 

(a) Seller owns the Securities free and clear of all any and all liens, claims, encumbrances, preemptive rights, right of first refusal and adverse interests of any kind.

 

(b) Seller has the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby and otherwise to carry out Seller’s obligations hereunder. No consent, approval or agreement of any individual or entity is required to be obtained by the Seller in connection with the execution and performance by the Seller of this Agreement or the execution and performance by the Seller of any agreements, instruments or other obligations entered into in connection with this Agreement.

 

(c) No bankruptcy, receivership or debtor relief proceedings are pending or, to the Seller’s knowledge, threatened against the Seller.

  

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(d) Except for the Securities, the Seller or its Affiliates do not own any shares of common stock of either of the Companies or securities convertible or exercisable into shares of common stock of the Companies. Immediately following the sale of the Securities to the Purchaser, the Purchaser shall own 100% of the issued and outstanding shares of common stock or securities convertible or exercisable into shares of common stock of the Companies. For the purposes of this Section 4(d), “Affiliate” means, with respect to any specified Person, any other Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person. “Person” means an association, a corporation, an individual, a partnership, a limited liability company, a trust or any other entity or organization.

 

5. Indemnification by Seller.

(a) Subject to the limitations set forth this Section 5, the Seller agrees to indemnify and hold harmless Purchaser, its directors, officers and Affiliates and their successors and assigns (each a “Purchaser Indemnified Party”) from and against any and all Losses of the Purchaser Indemnified Parties, to the extent directly or indirectly resulting or arising from or based upon:

(i) breach of any representation or warranty set forth in this Agreement; and

 

  

(ii) all Taxes to the extent resulting from or relating to the ownership, management or use of and the operation of the Companies prior to and including the Closing Date.

 

  

(b) Notwithstanding the foregoing, the Seller shall not have any liability to any Purchaser Indemnified Party with respect to legal fees incurred by plaintiffs’ attorneys in connection with the Lawsuit.

(c) “Loss” means any action, cost, damage, disbursement, expense, liability, loss, deficiency, diminution in value, obligation, penalty or settlement of any kind or nature, whether foreseeable or unforeseeable, including but not limited to, interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses incurred in the investigation, collection, prosecution and defense of claims and amounts paid in settlement, that may be imposed on or otherwise incurred or suffered by the specified Person.

(d) “Tax” (and, with correlative meaning, “Taxes”) means any federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, escheat, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value added, transfer, stamp, or environmental tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, addition to tax or additional amount imposed by any governmental authority.

6. Future Cooperation. The Seller agrees to reasonably cooperate with the Purchaser and the Companies, and their respective financial and legal advisors, in connection with any business matters for which the Seller’s assistance may be required and in any claims, investigations, administrative proceedings or lawsuits which relate to the Purchaser or the Companies and for which the Seller may possess relevant knowledge or information.

 

7. Termination. This Agreement may be terminated at any time by mutual consent of the parties hereto, provided that such consent to terminate is in writing and is signed by all of the parties hereto.

 

8. Legal Representation. THE PURCHASER HAS RETAINED INDEPENDENT COUNSEL TO ADVISE HIM IN CONNECTION WITH THIS AGREEMENT AND THE PURCHASE OF THE SECURITIES. The Purchaser recognizes there are important legal consequences associated with this Agreement and the matters herein, and acknowledges that he has been advised by the Seller to retain independent legal counsel and has not been advised in connection with this Agreement by Harvey Kesner (“HK”) or any other person, other than the attorney or advisor of his choice, which shall not be and is not HK or any of his respective partners, members, employees and/or agents.

  

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9. Miscellaneous.

 

(a) Entire Agreement. This Agreement constitutes the entire agreement of the parties, superseding and terminating any and all prior or contemporaneous oral and written agreements, understandings or letters of intent between or among the parties with respect to the subject matter of this Agreement. No part of this Agreement may be modified or amended, nor may any right be waived, except by a written instrument which expressly refers to this Agreement, states that it is a modification or amendment of this Agreement and is signed by the parties to this Agreement, or, in the case of waiver, by the party granting the waiver. No course of conduct or dealing or trade usage or custom and no course of performance shall be relied on or referred to by any party to contradict, explain or supplement any provision of this Agreement, it being acknowledged by the parties to this Agreement that this Agreement is intended to be, and is, the complete and exclusive statement of the Agreement with respect to its subject matter. Any waiver shall be limited to the express terms thereof and shall not be construed as a waiver of any other provisions or the same provisions at any other time or under any other circumstances.

 

(b) Severability. If any section, term or provision of this Agreement shall to any extent be held or determined to be invalid or unenforceable, the remaining sections, terms and provisions shall nevertheless continue in full force and effect.

 

(c) Notices. All notices provided for in this Agreement shall be delivered to the addresses listed on the signature pages hereto, and shall be in writing signed by the party giving such notice, and delivered personally or sent by overnight courier, mail or messenger against receipt thereof or sent by registered or certified mail, return receipt requested, or by facsimile transmission or similar means of communication if receipt is confirmed or if transmission of such notice is confirmed by mail as provided in this Section 8(c). Notices shall be deemed to have been received on the date of personal delivery or telecopy or attempted delivery.

 

(d) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York applicable to agreements executed and to be performed wholly within such State, without regard to any principles of conflicts of law. Each of the parties hereby irrevocably consents and agrees that any legal or equitable action or proceeding arising under or in connection with this Agreement shall be brought in the federal or state courts located in the County of New York in the State of New York, by execution and delivery of this Agreement, irrevocably submits to and accepts the jurisdiction of said courts, (iii) waives any defense that such court is not a convenient forum, and (iv) consent to any service of process made either (x) in the manner set forth in Section 8(c) of this Agreement (other than by telecopier), or (y) any other method of service permitted by law.

 

(e) Waiver of Jury Trial. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF ANY SUIT, ACTION OR PROCEEDING TO ENFORCE THIS AGREEMENT OR ANY OTHER ACTION OR PROCEEDING WHICH MAY ARISE OUT OF OR IN ANY WAY BE CONNECTED WITH THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS.

 

(f) Parties to Pay Own Expenses. Each of the parties to this Agreement shall be responsible and liable for its own expenses incurred in connection with the preparation of this Agreement, the consummation of the transactions contemplated by this Agreement and related expenses.

 

(g) Successors. This Agreement shall be binding upon the parties and their respective heirs, executors, administrators, legal representatives, successors and assigns; provided, however, that neither party may assign this Agreement or any of its rights under this Agreement without the prior written consent of the other party.

 

(h) Further Assurances. Each party to this Agreement agrees, without cost or expense to any other party, to deliver or cause to be delivered such other documents and instruments as may be reasonably requested by any other party to this Agreement in order to carry out more fully the provisions of, and to consummate the transaction contemplated by, this Agreement.

  

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(i) Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

(j) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties with the advice of counsel to express their mutual intent, and no rules of strict construction will be applied against any party.

 

(k) Headings. The headings in the Sections of this Agreement are inserted for convenience only and shall not constitute a part of this Agreement.

 

(l) Amendment; Waiver. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed by the Seller and the Purchaser.

 

[SIGNATURE PAGE FOLLOWS]

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

SELLER:

SILVER HORN MINING LTD.

By: /s/ Patrick Avery

Name: Patrick Avery

Title: Chief Executive Officer

Address: 18 Falcon Hills Dr., Highlands Ranch, Colorado 80126

PURCHASER:

AURACANA LLC

By: /s/ Glenn Kesner

Name: Glenn Kesner

Title: President

Address:ex4-1.htm

 

THIS NOTE AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS METASTAT, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT THE REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

 

 

METASTAT, INC.

 

Additional 2014 Convertible Promissory Note

 

 

 

	U.S. $ ________ 	Issuance Date: January _, 2014
	No.: ________ 	Maturity Date: June 30, 2014

 

FOR VALUE RECEIVED, MetaStat, Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of ______________ or any permitted holder of this Additional 2014 Convertible Promissory Note (the “Payee”), at the principal office of the Payee set forth herein, or at such other place as the Payee may designate in writing to the Company, the principal sum of ________________________ ($_____________), with interest on the unpaid principal balance hereof at a rate equal to eight percent (8%) per annum commencing on the date hereof, in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debts and in immediately available funds, as provided in this Additional 2014 Convertible Promissory Note (this “Additional 2014 Note”). Concurrently with the issuance of this Additional 2014 Note, the Company is issuing separate Additional 2014 Notes (the “Other Additional 2014 Notes”) to separate payees.

 

1.           Automatic Conversion of Principal and Interest upon Qualified Financing.  Upon the closing by the Company of an equity or equity based financing or a series of equity or equity based financings following the Issuance Date (a “Qualified Financing”) resulting in gross proceeds to the Company of at least $5,000,000 in the aggregate and the Company, prior to or concurrent with the completion of the Qualified Financing, (the “Qualified Financing Threshold Amount”), the outstanding principal amount of this Additional 2014 Note together with all accrued and unpaid interest hereunder (the “Outstanding Balance”) shall automatically convert, without any action on the part of the Payee, into such securities, including Warrants of the Company as are issued in the Qualified Financing, the amount of which shall be determined in accordance with the following formula: (the Outstanding Balance as of the closing of the Qualified Financing) x (1.15) / (the per security price of the securities sold in the Qualified Financing). For purposes of determining whether the Qualified Financing Threshold Amount has been satisfied, such amount shall include (i) the Outstanding Balance of this Additional 2014 Note and the Other Additional 2014 Notes (each pursuant to the formula stated above), (ii) the outstanding principal amount of the 2013 Notes (as defined in Section 4 below), and (iii) the outstanding principal amount of the 2014 Notes (as defined in Section 4 below) together with all accrued and unpaid interest thereunder (pursuant to the same formula as stated above and therein). Upon such automatic conversion, the Payee shall be deemed to be a purchaser in the Qualified Financing and shall be granted all rights afforded to an investor in the Qualified Financing.

 

  

  

  

 

2.           Voluntary Conversion of Principal and Interest. Subject to the terms and conditions of this Section 2 and provided this Additional 2014 Note remains outstanding and has not been converted pursuant to Section 1, the Payee shall have the right, at the Payee’s option, to convert the Outstanding Balance (the “Conversion Option”) into such number of fully paid and non-assessable shares of the Company’s common stock (the “Conversion Shares”) as is determined in accordance with the following formula:  (the Outstanding Balance as of the date of the exercise of the Conversion Option) / ($1.50).  If the Payee desires to exercise the Conversion Option, the Payee shall, by personal delivery or nationally-recognized overnight carrier, surrender the original of this Additional 2014 Note and give written notice to the Company (the “Conversion Notice”), which Conversion Notice shall (a) state the Payee’s election to exercise the Conversion Option, and (b) provide for a representation and warranty of the Payee to the Company that, as of the date of the Conversion Notice, the Payee has not assigned or otherwise transferred all or any portion of the Payee’s rights under this Additional 2014 Note to any third parties.  The Company shall, as soon as practicable thereafter, issue and deliver to the Payee the number of Conversion Shares to which the Payee shall be entitled upon exercise of the Conversion Option.

 

3.           Warrants.  In consideration of the loan evidenced by this Additional 2014 Note, the Payee shall be issued warrants to purchase shares of common stock, at an exercise price of $2.10 per share with a term of five years, equal to 25% of the principal amount invested in this Additional 2014 Note divided by $1.50.

 

4.           Seniority and Ranking. This Additional 2014 Note shall rank pari passu to the Company’s currently issued and outstanding (i) convertible promissory notes with an original principal amount of $1,487,000 (the “2013 Notes”) and (ii) convertible promissory notes with an original principal amount of $500,000 (the “2014 Notes”) and senior to the Company’s issued and outstanding equity securities; provided, however, this Additional 2014 Note shall rank pari-passu with respect to the Other Additional 2014 Notes, up to an aggregate principal amount of $1,000,000, inclusive of this Additional 2014 Note.

 

5.           Additional Indebtedness. The Company shall not, without first obtaining the consent from the holders of at least a majority of the then outstanding Additional 2014 Notes, (which consent will not be unreasonably withheld), incur any new indebtedness that ranks senior to the Additional 2014 Notes, while this Additional 2014 Note is outstanding; provided, however, that with respect to the issuance of Additional 2014 Notes or any indebtedness incurred in the ordinary course of business, the consent of the Payee will not be required.

 

  

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6.           Principal and Interest Payments.

 

(a)           In the event a Qualified Financing is not completed and the Payee has not exercised the Conversion Option, the Company shall repay the entire principal balance then outstanding under this Additional 2014 Note no later than June 30, 2014 (the “Maturity Date”).

 

(b)           Interest on the outstanding principal balance of this Additional 2014 Note shall accrue at a rate of eight percent (8%) per annum commencing on the date hereof, which interest shall be computed on the basis of the actual number of days elapsed and a year of three hundred and sixty-five (365) days.  In the event a Qualified Financing is not completed and the Payee has not exercised the Conversion Option, all accrued and unpaid interest due under this Additional 2014 Note shall be payable on the Maturity Date by the Company in cash.  Furthermore, upon the occurrence of an Event of Default (as defined below), then to the extent permitted by applicable law, the Company will pay interest to the Payee on the then outstanding principal balance of the Additional 2014 Note from the date of the Event of Default until this Additional 2014 Note is paid in full at the rate of twelve percent (12%) per annum.

 

(c)           At the Company’s sole option, the Company may prepay all or a portion of the outstanding principal amount of this Additional 2014 Note and/or all or a portion of the accrued and unpaid interest hereon (the “Prepayment Amount”) at any time prior to the Maturity Date in cash. Any payments made under this Additional 2014 Note shall be applied first to the accrued and unpaid interest, if any, and the remainder to the unpaid principal amount.  Notwithstanding the foregoing, the holder of this Additional 2014 Note shall retain the right to convert this Additional 2014 Note, for a period of ten (10) business days following the Company’s notice of its intention to prepay this Additional 2014 Note.

 

7.           Non-Business Days.  Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment may be due on the next succeeding business day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

 

8.           Events of Default.  The occurrence of any of the following events shall be an “Event of Default” under this Additional 2014 Note:

 

(a)           the Company shall fail to make the payment of any principal amount outstanding for a period of three (3) business days after the date such payment shall become due and payable hereunder; or

 

(b)           the Company shall fail to make the payment of any accrued and unpaid interest for a period of three (3) business days after the date such interest shall become due and payable hereunder; or

 

  

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(c)           the holder of any indebtedness of the Company shall accelerate any payment of any amount or amounts of principal or interest on any such indebtedness (the “Indebtedness”) (other than with respect to this Additional 2014 Note and notes of like tenor) prior to its stated maturity or payment date, the aggregate principal amount of which Indebtedness is in excess of $250,000, whether such Indebtedness now exists or shall hereinafter be created, and such accelerated payment entitles the holder thereof to immediate payment of such Indebtedness which is due and owing and such indebtedness has not been discharged in full or such acceleration has not been stayed, rescinded or annulled within twenty (20) business days of such acceleration; or

 

(d)           A judgment or judgments for the payment of money shall be rendered against the Company for an amount in excess of $500,000 in the aggregate (net of any applicable insurance coverage) for all such judgments that shall remain unpaid for a period of sixty (60) consecutive days or more after its entry or issue or that shall not be discharged, released, dismissed, stayed or bonded (due to an appeal or otherwise) within the sixty (60) consecutive day period after its entry or issue; or

 

(e)           the Company shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Federal Bankruptcy Code, as amended (the “Bankruptcy Code”) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, or (v) acquiesce in writing to any petition filed against it in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic); or

 

(f)           a proceeding or case shall be commenced in respect of the Company without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of forty-five (45) consecutive days or any order for relief shall be entered in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic) against the Company or any of its subsidiaries and shall continue undismissed, or unstayed and in effect for a period of forty-five (45) consecutive days.

 

  

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9.           Remedies Upon An Event of Default.  If an Event of Default shall have occurred and shall be continuing, the Payee of this Additional 2014 Note may at any time at its option, (a) declare, by providing the Company with not less than five (5) days prior written notice, the entire unpaid principal balance of this Additional 2014 Note together with all interest accrued and unpaid hereon, due and payable, and upon the Company’s receipt of such notice, the same shall be accelerated and so due and payable; provided, however, that upon the occurrence of an Event of Default described in (i) Sections 7(e) and (f), without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Company, the outstanding principal balance and accrued and unpaid interest hereunder shall be immediately due and payable, and (ii) Sections 7(a) through (d) the Payee may exercise or otherwise enforce any one or more of the Payee’s rights, powers, privileges, remedies and interests under this Additional 2014 Note or applicable law.  No course of delay on the part of the Payee shall operate as a waiver thereof or otherwise prejudice the right of the Payee.  No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.  Notwithstanding anything to the contrary contained in this Additional 2014 Note, Payee agrees that its rights and remedies hereunder are limited to receipt of cash or shares of the Company’s common stock in the amounts described herein.

 

10.           Replacement.  Upon receipt of a duly executed and notarized written statement from the Payee with respect to the loss, theft or destruction of this Additional 2014 Note (or any replacement hereof), and without requiring an indemnity bond or other security, or, in the case of a mutilation of this Additional 2014 Note, upon surrender and cancellation of such Additional 2014 Note, the Company shall issue a new Additional 2014 Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Additional 2014 Note.

 

11.           Parties in Interest; Transferability.  This Additional 2014 Note shall be binding upon the Company and its successors and assigns and the terms hereof shall inure to the benefit of the Payee and its successors and permitted assigns. This Additional 2014 Note may not be transferred or sold, pledged, hypothecated or otherwise granted as security by the Payee without the prior written consent of the Company, which consent will not be unreasonably withheld.

 

12.           Amendments.   This Additional 2014 Note may be amended, modified or terminated only by a written instrument executed by the Company and the holders holding a majority of the aggregate principal amount of this Additional 2014 Note and the Other Additional 2014 Notes. Any amendment, modification or termination so effected shall be binding upon the Company, the Payee and all of their respective successors and permitted assigns whether or not such party, assignee or other stockholder entered into or approved such amendment, modification or termination.

 

13.           Notices.  Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.

 

  

5

  

 

	
Address of the Payee:

	
______________________

	
  

	
______________________

	 	
______________________

	 	
______________________

Attention:

Tel. No.:

Fax No.:

 

 

	
Address of the Company:

	

MetaStat, Inc.

8 Hillside Ave., Suite 207

Montclair, NJ 07042

Attention: Chief Executive Officer

Office: (973) 744-7618

Fax: (832) 442-3452

 

14.           Governing Law. This Additional 2014 Note shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the choice of law provisions.  This Additional 2014 Note shall not be interpreted or construed with any presumption against the party causing this Additional 2014 Note to be drafted.

 

15.           Headings.  Article and section headings in this Additional 2014 Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Additional 2014 Note for any other purpose.

 

16.           Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief.  The remedies provided in this Additional 2014 Note shall be cumulative and in addition to all other remedies available under this Additional 2014 Note, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Payee’s right to pursue actual damages for any failure by the Company to comply with the terms of this Additional 2014 Note.  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable and material harm to the Payee and that the remedy at law for any such breach may be inadequate.  Therefore the Company agrees that, in the event of any such breach or threatened breach, the Payee shall be entitled, in addition to all other available rights and remedies, at law or in equity, to seek and obtain such equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.

 

17.           Failure or Delay Not Waiver.  No failure or delay on the part of the Payee in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

  

6

  

 

18.           Enforcement Expenses.  The Company agrees to pay all reasonable costs and expenses of enforcement of this Additional 2014 Note, including, without limitation, reasonable attorneys’ fees and expenses.

 

19.           Binding Effect.  The obligations of the Company and the Payee set forth herein shall be binding upon the successors and permitted assigns of each such party.

 

20.           Compliance with Securities Laws.  The Payee acknowledges and agrees that this Additional 2014 Note and the securities issuable upon the conversion of this Additional 2014 Note, is being, and will be, acquired solely for the Payee’s own account and not as a nominee for any other party, and for investment purposes only and not with a view to the resale or distribution of any part thereof, and that the Payee shall not offer, sell or otherwise dispose of this Additional 2014 Note or the securities issuable upon the conversion of this 2014 Note other than in compliance with applicable federal and state laws.  The Payee understands that this Additional 2014 Note and the securities issuable upon the conversion of this Additional 2014 Note are “restricted securities” under applicable federal and state securities laws and that such securities have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”).  The Payee represents and warrants to the Company that the Payee is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act.  This Additional 2014 Note and any Additional 2014 Note issued in substitution or replacement therefore, and the securities issuable upon the conversion of this Additional 2014 Note, shall be stamped or imprinted with a legend in substantially the following form:

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS METASTAT, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT THE REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

 

21.           Severability.  The provisions of this Additional 2014 Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Additional 2014 Note in any jurisdiction.

 

  

7

  

 

22.           Consent to Jurisdiction.  Each of the Company and the Payee (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Additional 2014 Note and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper.  Each of the Company and the Payee consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address set forth in Section 13 hereof and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing in this Section 22 shall affect or limit any right to serve process in any other manner permitted by applicable law.

 

23.           Waivers.  Except as otherwise specifically provided herein, the Company hereby waives presentment, demand, notice of nonpayment, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Additional 2014 Note, and does hereby consent to any number of renewals or extensions of the time for payment hereof and agrees that any such renewals or extensions may be made without notice and without affecting its liability herein, AND DOES HEREBY WAIVE TRIAL BY JURY.  No delay or omission on the part of the Payee in exercising its rights under this Additional 2014 Note, or course of conduct relating hereto, shall operate as a waiver of such rights or any other right of the Payee, nor shall any waiver by the Payee of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

IN WITNESS WHEREOF, the Company has executed and delivered this Additional 2014 Note as of the date first written above.

 

	 	METASTAT, INC.	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:  Oscar L. Bronsther, M.D.	 
	 	 	Title:  Chief Executive Officer	 
	 	 	 	 

	 	
ACCEPTED AND AGREED:

	 
	 	 	 
	 	PAYEE	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	Name:	 
	 	 	
Title:

	 
	 	 	 	 

 

 

 

9

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