Document:

Exhibit
10.18

 

THE SECURITIES REPRESENTED BY THIS NOTE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1953, AS AMENDED (THE” SECURITIES
ACT”) OR THE LAWS OF ANY STATE.  THIS
NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY BE PLEDGED, HYPOTHECATED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED ONLY IF REGISTERED AND QUALIFIED
PURSUANT TO THE RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF
THE COMPANY IS PROVIDED AN OPINION OF COUNSEL WHICH OPINION IS SATISFACTORY IN
FORM AND SUBSTANCE TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION AND
QUALIFICATION IS NOT REQUIRED.

 

SECURED
CONVERTIBLE PROMISSORY NOTE

 

	
  $[50,000]

  	
  March 16,
  2004

  

 

For value
received, RevCare, Inc., a Nevada corporation (the “Company”),
the principal offices of which are located at 5400 Orange Avenue, Suite 200,
Cypress, California 90630, for value received hereby promises to pay to FBR
Financial Services Partners, L.P. (the “Holder”), the principal sum of Fifty
Thousand Dollars ($50,000), plus interest thereon from the date hereof until
paid on the terms and conditions set forth herein; provided, however,
that in the event this Note is converted into Stock (as defined below) as
provided herein, any obligation of the Company with respect to payment of such
amount shall be terminated as provided in this Note.  Payment for all amounts due hereunder shall
be made by mail or by wire to the address of the Holder.

 

The following
is a statement of the rights of the Holder and the conditions to which this
Note is subject, and to which the Holder hereof by the acceptance of this Note,
agrees:

 

1.                                       Maturity
Date.  The unpaid principal balance
of this Note and all accrued but unpaid interest shall be due and payable on
the earlier of (i) [November 1, 2005]
or (ii) when declared due and payable by the Holder upon the occurrence of an
Event of Default (as defined below) (the occurrence of any event under either
subclause (i) or (ii) shall constitute the “Maturity Date”),
unless this Note is earlier converted or paid in accordance with the terms
hereof.

 

2.                                       Interest.  This Note shall bear interest as the rate of
the prime rate of interest plus four percent (4%) per annum, compounded quarterly.
 Interest will compound on the first day
of the quarter subsequent to the quarter earned.  The outstanding amount of the loan including interest
will be calculated using the following formula.

 

C0*
(1+R / M) ^ N

 

Where;

 

C0 = the principal
sum of Fifty Thousand Dollars ($50,000).

 

R   =
the prime rate of interest plus four percent (4%) per annum.

 

M = the number of compounding periods per
year.

 

N   = the number of compounding periods since the inception
of the note.

 

 

The interest shall be paid on the Maturity
Date.  Prime shall be defined as the base
rate on corporate loans posted by at least 75% of the nation’s 30 largest banks
as posted daily in the Wall Street Journal.

 

3.                                       Security
Interest.   Payment of this note is secured by a security interest
in certain collateral, pursuant to the terms and conditions of that certain
Amended and Restated Security Agreement entered into among the Company, the
Holder and the other lenders named therein concurrently with the execution of
this Note (the “Security Agreement”).

 

4.                                       Events
of Default.   If any of the following
events specified in this Section 4 shall occur (herein individually
referred to as an “Event of Default”),
the Holder may, so long as such condition exists, declare the entire
outstanding principal and any accrued and unpaid interest thereon due and
payable within 30 days, by notice in writing to the company:

 

(a)  The institution by the Company of proceedings
to be adjudicated as bankrupt or insolvent, or the consent by it to the institution
or bankruptcy or insolvency proceedings against it or the filing by it of a
petition or answer or consent seeking reorganization or release under the
federal Bankruptcy Act, or any other similar federal or state bankruptcy or
insolvency law, or the consent by it to the filing of any such petition or the
appointment of a receiver, liquidator, assignee, trustee or other similar
official of the Company, or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors or the taking of
corporate action by the Company in furtherance of any such action; or

 

(b)  If, within thirty (30) days after the
commencement of an action against the Company (and service of process in
connection therewith on the Company) seeking any bankruptcy, insolvency,
reorganization, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such action shall not have been resolved in
favor of the Company or all orders or proceedings thereunder affecting the
operations or the business of the Company stayed, or if the stay of any such
order or proceeding shall thereafter be set aside, or if, within thirty (30)
days after the appointment without the consent or acquiescence of the Company
of any trustee, receiver or liquidator of the Company or of all or any
substantial part of the properties of the Company, such appointment shall not
have been vacated; or

 

(c)  If the Company fails to pay (i) any interest
or principal when due and payable hereunder, or (ii) any obligations other than
interest and principal payable hereunder within five (5) days of the date
written notice of demand for payment is received; or

 

(d)  Upon the occurrence of an event of default
under the Security Agreement, should such default not be cured within five (5)
days of the date written notice thereof is given to the Company;

 

(e)  Upon the occurrence of an event of default as
defined in any material agreement or instrument to which the Company or the
subsidiaries is bound, beyond any period of grace;

 

(f)  Upon the incurrence of any indebtedness by
the Company or any of its subsidiaries other than (i) to pay off indebtedness owed
by the Company its then existing lenders, NA or (ii) indebtedness not to exceed
$5,000,000 in any single transaction or series of related transactions; or

 

(g)  any sale, merger or similar transaction or
series of related transactions in which the holders of the outstanding voting
equity securities of the Company immediately prior to such

 

2

 

transaction or series of related transactions
own less than a majority of the outstanding voting equity securities of the
Company (or the successor entity) upon the closing of such transaction or
series of related transactions, or

 

(h)  the sale of all or substantially all of the
Company’s assets.

 

5.                                       Prepayment.
  Subject to the earlier conversion of
this Note pursuant to Section 6, all or any portion of the unpaid
principal balance outstanding under this Note may be prepaid at any time during
the term of this Note at the option of the Company.  In the event Company elects to prepay this
Note, notice of such election shall be given to the Holder not less the sixty
(60) days prior to the date of prepayment. 
Each such notice shall state the amount of principal to be paid in cash,
the date on which such prepayment will occur and the place at which Holder is
to surrender this Note to the Company. 
Such notice by the Company shall be delivered to the Holder at the
address last shown on the records of the Company for the Holder or given by the
Holder to the Company for the purpose of notice.  In the event only a portion of this Note is
prepaid, the Company shall at the time of prepayment and receipt of this Note,
deliver to the Holder a new Note evidencing the remaining unpaid principal balance
of this Note, which Note shall in all other respects be identical with this
Note.

 

6.                                       Optional
Conversion.   All or any portion of
the unpaid principal balance and any accrued but unpaid interest outstanding
under this Note may be converted (the “Optional Conversion”) at any time at the
option of the Holder into fully paid and nonassessable shares of capital common
stock of the Company (the “Stock”).  The number of shares of Stock into which this
Note is to be converted shall be determined by dividing said unpaid principal
balance and all accrued but unpaid interest by the Conversion Price.  The Conversion Price shall be calculated at
the time of the Optional Conversion based on a company valuation of 90% of 12
times the average prior 12 months monthly revenue prior to the Optional
Conversion, the result will then be divided by the number of then outstanding
shares on a fully converted basis.

 

7.                                       Conversion
Procedure.

 

7.1  Notice
of Conversion.  If the Holder desires
to convert the Note, this Holder shall provide written notice to the Company RevCare
Inc., 5400 Orange Avenue, Suite 200, Cypress, California 90630, Attention:
Manuel Occiano, Chief Executive Officer, notifying the Company of the requested
conversion to be effected.  Within ten
(10) days of receipt of such notice, the Company shall respond to the Holder’s
request in writing, specifying the number of shares of Stock to be issued upon
conversion, the date on which such conversion will occur and calling upon the
Holder to surrender to the Company, in the manner and at the place designated
this Note.  Such response by the Company
shall be delivered to the Holder at the address last shown on the records of
the Company for the Holder or given by the Holder to the Company for the
purpose of notice.

 

7.2  Mechanics
and Effect of Conversion.  No
fractional shares of Stock shall be issued upon conversion of this Note.  In lieu of the Company issuing any fractional
shares to the Holder upon the conversion of this Note, the Company shall pay to
the Holder the amount of outstanding principal or interest that is not so
converted.  Upon the conversion of this
Note, the Holder shall surrender this Note, duly endorsed, at the principal
office of the Company.  Upon conversion of
this Note, the Company shall be forever released from all its obligations and
liabilities under this Note.

 

7.3  Delivery
of Stock Certificate.  As promptly as
practicable after the conversion of this Note, the Company at its expense will
issue and deliver to the Holder a certificate or certificates for the number of
full shares of Stock issuable upon such conversion (bearing such legends as are
required by applicable state and federal securities laws in the opinion of
counsel to the Company), together with any

 

3

 

other securities and property to which the Holder is entitled upon such
conversion under the terms of this Note, including a check payable to the
Holder for any fractional shares as described above.  In the event only a portion of this Note is
converted the Company shall, at the time of delivery of the stock certificate
or certificates, deliver to the Holder a new Note evidencing the remaining
unpaid principal balance of this Note, which Note shall in all other respects
be identical with this Note.

 

7.4  Identical
Terms.  Subject to the Holder’s
execution of any necessary investment documents executed by the other investors
in the Financing, any shares of Stock received by the Holder pursuant to the
conversion of this Note shall have the same rights, preferences and privileges
granted to the other investors in the Financing and under such investment
documents.

 

8.               Investment
Representations.  The Holder hereby
makes the representations, warranties and covenants set forth on the
Representation Statement attached hereto as Attachment A, as of the date hereof
and as of the date of any conversion of this Note, as though such
representations, warranties and covenants were fully set forth herein.

 

9.                                       Assignment.  Subject to the restrictions on transfer
described in Section 11 below, the rights and obligations of the Company
and the Holder shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.

 

10.                                 Amendments; Waivers.  Any term of this Note may be amended or
waived with the written consent of the Company and the Holder.  Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon the Holder, such
future Holder and the Company.  No
waivers of, or exceptions to, any term, condition or provision of the Note, in
any one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision and shall not be
valid unless in writing.

 

11.         Transfers.  This Note may not be transferred or assigned
in whole or in part without compliance with all applicable federal and state
securities laws by the transferor and the transferee (including the delivery of
investment representation letters).  Subject to compliance with such applicable
federal and state securities laws, title to this Note may be transferred by
endorsement and delivery in the same manner as a negotiable instrument
transferable by endorsement and delivery.

 

12.         Attorneys’ Fees;
Waivers.  The Company agrees to pay
the Holder’s reasonable costs incurred in collecting and enforcing the Note,
including reasonable attorneys’ fees. 
The Company hereby waives demand, notice, presentment, protest, and
notice of dishonor.

 

13.         Governing Law.  This Agreement shall be governed by and
construed under the laws of the State of California (irrespective of its
conflict of laws principles).

 

14.         Subordination.  This Note and the rights of the Holder
hereunder and under the Security Agreement are subordinate to the rights of
Bridge Bank, N.A. pursuant to the terms of a Subordination Agreement (the “Subordination Agreement”). Nothing contained in this Note
shall directly or indirectly modify the provisions of the Subordination
Agreement in any manner which might terminate or impair the subordination of
the Subordinated debt is (as defined in the Subordination Agreement) or the
subordination of the security interest or lien that the Holder may have in any
property of Maker or its subsidiaries.

 

15.         Intercreditor
Agreement.  This Agreement and the
rights of Holder hereunder are subject to the terms of an Amended and Restated
Intercreditor Agreement of August 29, 2003, as such agreement may be
amended from time to time (the “Intercreditor Agreement”).  Nothing contained in this Note

 

4

 

shall directly or indirectly modify the provisions of the Intercreditor
Agreement in any manner which might terminate or impair the parties’ rights
under each agreement and in the event of any conflict between this Note and the
Intercreditor Agreement, the Intercreditor Agreement shall control.

 

16.                                 Miscellaneous.  Holder will receive copies of all forms 10-K,
10-Q and 8-K (or equivalents within 5 days of filling with the Securities and
Exchange Commission, while any debt to lender is outstanding.

 

17.                                 Use of Proceeds.
 The proceeds of this Note shall be used
for working capital.

 

IN WITNESS WHEREOF, the Company has caused this Secured Promissory Note
to be issued in Cypress, CA as of the date set forth above.

 

	
   

  	
  REVCARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Manuel Occiano

  	
   

  
	
   

  	
  Name:

  	
  Manuel Occiano

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  

 

Acknowledged:

 

Holder:

 

	
   

  	
   

  
	
  FBR FINANCIAL SERVICES Partners, LP

  	
   

  
	
   

  
	
  By:

  	
    /s/ George
  L. McCabe Jr.

  	
   

  
	
  Name:

  	
  George L. McCabe Jr.

  	
   

  
	
  Title:

  	
  MANAGING DIRECTOR

  	
   

  
						

 

DO NOT
DESTROY THIS ORIGINAL NOTE When paid, said original Note must be surrendered to
the Company for cancellation and retention.

 

5

 

ATTACHMENT
A

 

REPRESENTATION
STATEMENT

 

The undersigned Holder represents, covenants and agrees as follows:

 

1.                                       Purchase for
Own Account.  The Secured Convertible
Promissory Note issued by Revcare, Inc., a Delaware corporation (the “Company”) to be acquired by Holder (the “Note”) and the
shares of capital stock of the Company issued upon conversion of the Note (the
“Shares”) (collectively, the “Securities”) will be acquired for Investment for Holder’s
own account, not as a nominee or agent, and not with a view to the public
resale or distribution thereof within the meaning of the Securities Act of
1933, as amended, (the “1933 Act”), and
Holder has no present intention of selling, granting any participation in, or
otherwise distributing the same Holder also represents that Holder has not been
formed for the specific purpose of acquiring the Securities.

 

2.                                       Disclosure of
Information.  Holder believes it has
received or has had full access to all the information it considers necessary
or appropriate to make an informed investment decision with respect to the
Securities to be received by Holder under the Note.  Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the investment in the Securities and to obtain additional
information to the extent the Company possessed such information or could
acquire it without unreasonable effort on expense) necessary to verify any
information furnished to Holder or to which Holder had access.

 

3.                                       Investment
Experience.  Holder understands that
the investment in the Securities involves substantial risk.  Holder has experience as an investor in
securities and acknowledges that Holder is able to fend for itself, can bear
the economic risk of Holder’s investment in the Securities and has such
knowledge and experience in financial or business matters that Holder is
capable of evaluating the merits and risks of this investment in the Securities
and protecting its own interests in connection with this investment.

 

4.                                       Accredited
Investor Status.  Holder is an
“accredited investor” within the meaning of Regulation D promulgated under the
1933 Act.

 

5.                                       Restricted
Securities.  Holder understands that
the Securities will be characterized as “restricted securities” under the 1933
act in as much as they are being acquired from the Company in a transaction not
involving a public offering and that under the 1933 Act and applicable
regulations thereunder, such securities may be resold without registration
under the 1933 Act only in certain limited circumstances.  In this connection, Holder represents that
Holder is familiar with Rule 144 promulgated by the Securities and Exchange
Commission, as presently in effect, and understands the resale limitations
imposed thereby and by the 1933 Act. Holder understands that the Company is
under no obligation to register any of the Securities.

 

6.                                       Legends.  It is understood that the certificates
evidencing the Securities will bear the legends set forth below:

 

(a)                                  THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR AN EXEMPTION THEREFROM.  THE ISSUER OF

 

6

 

THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER
OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.

 

(b)                                 Any legend required by
the laws of the State of California, including any legend required by the
California Department of Corporations and Sections 417 and 418 of the
California Corporations Code or any other state securities laws.

 

The legend set forth in (a) above shall be removed by the Company from
any certificate evidencing the Securities upon delivery to the Company of an
opinion by counsel, reasonably satisfactory to the Company, that a registration
statement under the 1933 Act is at that time in effect with respect to the
legended security or that such security can be freely transferred in a public
sale without such a registration statement being in effect; provided, however,
that no opinion of counsel shall be required for such a transfer in compliance
with Rule 144.

 

7.                                       “Market Stand
Off” Agreement.  If requested by the
Company and an underwriter of shares of the common stock of the Company, Holder
herby agrees not to sell or otherwise transfer or dispose of any shares of the
common stock (or other securities of the Company then owned by Holder (other
than those included in the registration) during the one hundred eighty (180)
day period (or such shorter period as is permitted or requested by the
underwriter) following the effective date of a registration statement of the
Company filed under the 1933 Act.  In
order to enforce the above covenant, the Company shall have the right to place
restrictive legends of the certificates representing the registrable securities
subject to this Section 7 and to impose stop-transfer instructions with
respect to the shares (or securities) subject to the foregoing restriction.

 

	
   

  	
  HOLDER
    FBR FINANCIAL PARTNERS, LP

  
	
  3-16-04

  	
   

  	
   

  
	
  (Date)

  	
   

  	
  /s/ George
  L. McCabe

  	
   

  
	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GEORGE L. McCABE,
  JR

  	
   

  
	
   

  	
  (Print Name)

  	
   

  

 

7Exhibit 10.19

 

THIS WARRANT AND
THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE
144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

WARRANT TO PURCHASE STOCK

 

Issuer: Revcare, Inc., a
Nevada corporation (the “Company”)

 

Number of Shares:
100,000, as the same may be from time to time adjusted pursuant to Article 2
hereof.

 

Class of Stock:
Common

 

Exercise Price:
$.25 per share as the same may be from time to time adjusted pursuant to Article 2
hereof.

 

Issue Date: August 5,
2004

 

Expiration Date: August 5,
2011

 

THIS WARRANT
CERTIFIES THAT, for the agreed upon value of $1.00 and for other good and
valuable consideration, BRIDGE BANK, NATIONAL ASSOCIATION (“Holder”) is
entitled to purchase the number of fully paid and nonassessable Shares of the
Company at the Exercise Price per Share set forth above (the “Shares”), subject
to the provisions and upon the terms and conditions set forth in this Warrant.

 

ARTICLE 1                                   EXERCISE.

 

1.1                                  Method
of Exercise. This Warrant is exercisable, in whole or in part and in 50,000
share increments, at any time and from time to time on or before the Expiration
Date set forth above. Holder may exercise this Warrant by delivering a duly
executed Notice of Exercise, in substantially the form attached as Appendix 1,
to the principal office of Company. Unless Holder is exercising the conversion right
set forth in Section 1.2, Holder shall also deliver to Company a check for
the aggregate Exercise Price for Shares being purchased.

 

1.2                                  Conversion
Right. In lieu of exercising this Warrant as specified in Section 1.1,
Holder may from time to time convert this Warrant, in whole or in part in
50,000 share increments, into a number of Shares determined by dividing (a) the
aggregate fair market value of Shares or other securities otherwise issuable
upon exercise of this Warrant minus the aggregate Exercise Price of such Shares
by (b) the fair market value of one Share. The fair market value of Shares
shall be determined pursuant to Section 1.3.

 

1.3                                  Fair
Market Value. If the Shares are traded in a public market, the fair market
value of the Shares shall be the closing price of the Shares (or the closing
price of the Company’s stock into which the Shares are convertible) reported
for the business day immediately before Holder delivers its Notice of Exercise
to the Company. If the Shares are not traded in a public market, the Board of
Directors of Company shall determine fair market value in its reasonable good
faith judgment. The foregoing notwithstanding, if Holder advises the Board of
Directors in writing that Holder disagrees with such determination, then
Company and Holder shall promptly agree upon a reputable investment banking
firm to undertake such valuation. If the valuation of such investment banking
firm is greater than that determined by the Board of Directors, then all fees
and expenses of such investment banking firm shall be paid by Company. In all
other circumstances, such fees and expenses shall be paid by Holder.

 

1.4                                  Delivery
of Certificate and New Warrant. Promptly after Holder exercises or converts
this Warrant, Company shall deliver to Holder certificates for Shares acquired
and, if this Warrant has not been fully exercised or converted and has not
expired, a new Warrant representing Shares not so acquired.

 

1.5                                  Replacement
of Warrants. On receipt of evidence reasonably satisfactory to Company of
the loss, theft, destruction or mutilation of this Warrant and, in the case of
loss, theft or destruction, on

 

1

 

delivery of an
indemnity agreement reasonably satisfactory in form and amount to Company or,
in the case of mutilation, on surrender and cancellation of this Warrant,
Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.

 

1.6                                 Repurchase
on Sale, Merger, or Consolidation of Company. For the purpose of this
Warrant, “Acquisition” means any sale, license, or other disposition of all or
substantially all of the assets of Company, or any reorganization,
consolidation, or merger of Company where the holders of Company’s securities
before the transaction beneficially own less than 50% of the outstanding voting
securities of the surviving entity after the transaction. Upon the closing of
any Acquisition, the successor entity shall assume the obligations of this
Warrant, and this Warrant shall be exercisable for the same securities, cash,
and property as would be payable for Shares issuable upon exercise of the
unexercised portion of this Warrant as if such Shares were outstanding on the
record date for the Acquisition and subsequent closing, and the Exercise Price
shall be adjusted accordingly; provided that if pursuant to such
Acquisition the entire outstanding class of Shares issuable upon exercise of
the unexercised portion of this Warrant are cancelled and the total
consideration payable to the holders of such class of Shares consists entirely
of cash, then, upon payment to the holder of this Warrant of an amount equal to
the amount such holder would receive if such holder held Shares issuable upon
exercise of the unexercised portion of this Warrant and such Shares were
outstanding on the record date for the Acquisition less the aggregate
Exercise Price of such Shares, this Warrant shall be cancelled.

 

ARTICLE 2                                   ADJUSTMENTS.

 

2.1                                  Stock
Dividends, Splits, Etc. If Company declares or pays a dividend on its
common stock (or Shares if Shares are securities other than common stock)
payable in common stock or other securities, subdivides the outstanding common
stock into a greater amount of common stock, or, if Shares are securities other
than common stock, subdivides Shares in a transaction that increases the amount
of common stock into which Shares are convertible, then upon exercise of this
Warrant, for each Share acquired, Holder shall receive, without cost to Holder,
the total number and kind of securities to which Holder would have been
entitled had Holder owned Shares of record as of the date the dividend or subdivision
occurred.

 

2.2                                  Reclassification,
Exchange or Substitution. Except in the case of an Acquisition to which Section 1.6
is applicable, upon any reclassification, exchange, substitution, or other
event that results in a change of the number and/or class of the securities
issuable upon exercise or conversion of this Warrant, Holder shall be entitled
to receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received for Shares if this
Warrant had been exercised immediately before such reclassification, exchange,
substitution, or other event. Company or its successor shall promptly issue to
Holder a new Warrant for such new securities or other property. The new Warrant
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 2 including,
without limitation, adjustments to the Exercise Price and to the number of
securities or property issuable upon exercise of the new Warrant. The provisions
of this Section 2.2 shall similarly apply to successive reclassifications,
exchanges, substitutions, or other events.

 

2.3                                  Adjustments
for Combinations, Etc. If the outstanding Shares are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
the Exercise Price shall be proportionately increased and the number of Shares
as to which this warrant is exercisable shall be proportionately decreased.

 

2.4                                  Adjustments
for Diluting Issuances. The Exercise Price and the number of Shares
issuable upon exercise of this Warrant or, if Shares are Preferred Stock, the
number of shares of common stock issuable upon conversion of Shares, shall be
subject to adjustment, from time to time in the manner set forth on Exhibit A
in the event of Diluting Issuances (as defined on Exhibit A).

 

2.5                                  No
Impairment. Company shall not, by amendment of its Articles/Certificate of
Incorporation or through a 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 to be observed or performed under this Warrant by Company, but shall at
all times in good faith assist in carrying out of all the provisions of this Article 2
and in taking all such action as may be

 

2

 

necessary or
appropriate to protect Holder’s rights under this Article against
impairment. If Company takes any dilutive action affecting Shares or its common
stock other than as described above that adversely affects Holder’s rights
under this Warrant, the Exercise Price shall be adjusted downward and the
number of Shares issuable upon exercise of this Warrant shall be adjusted
upward in such a manner that such dilutive action is offset and the aggregate
Exercise Price of this Warrant is unchanged.

 

2.6                                  Fractional
Shares. No fractional Shares shall be issuable upon exercise or conversion
of the Warrant and the number of Shares to be issued shall be rounded down to
the nearest whole Share. If a fractional share interest arises upon any
exercise or conversion of the Warrant, Company shall eliminate such fractional
share interest by paying Holder an amount computed by multiplying the
fractional interest by the fair market value of a full Share.

 

2.7                                  Certificate
as to Adjustments. Upon each adjustment of the Exercise Price, Company at
its expense shall promptly compute such adjustment, and furnish Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and
the facts upon which such adjustment is based. Company shall, upon written
request, furnish Holder a certificate setting forth the Exercise Price in
effect upon the date thereof and the series of adjustments leading to such
Exercise Price.

 

ARTICLE 3                                   COVENANTS
OF COMPANY

 

3.1                                  Valid
Issuance. Company shall take all steps necessary to insure that all Shares
which may be issued upon the exercise of this Warrant, and all securities, if
any, issuable upon conversion of Shares, shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws.

 

3.2                                  Notice
of Certain Events. If Company proposes at any time (a) to declare any
dividend or distribution upon its common stock, whether in cash, property,
stock, or other securities and whether or not a regular cash dividend; (b) to
offer for subscription pro rata to the holders of any class or series of its stock
any additional shares of stock of any class or series or other rights; (c) to
effect any reclassification or recapitalization of common stock; (d) to merge
or consolidate with or into any other corporation, or sell, lease, license, or
convey all or substantially all of its assets, or to liquidate, dissolve or
wind up; or (e) offer holders of registration rights the opportunity to
participate in an underwritten public offering of the Company’s securities for
cash, then, in connection with each such event, Company shall give Holder (1)
in the case of the matters referred to in (a) and (b) above at least 20 days
prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights (and specifying the date on
which the holders of common stock will be entitled thereto) or for determining
rights to vote, if any, in respect of the matters referred to in (c) and (d)
above; (2) in the case of the matters referred to in (c) and (d) above at least
20 days prior written notice of the date when the same will take place (and specifying
the date on which the holders of common stock will be entitled to exchange
their common stock for securities or other property deliverable upon the
occurrence of such event); and (3) in the case of the matter referred to in (e)
above, the same notice as is given to the holders of such registration rights.

 

3.3                                  Information.
So long as the Holder holds this Warrant and/or any of the Shares, Company
shall deliver to Holder (a) promptly, copies of all notices or other written
communications to which Holder would be entitled if it held Shares as to which
this Warrant was then exercisable and (b) such other financial statements
required under and in accordance with any loan documents between Holder and
Company, or if there are no such requirements or if the subject loan(s) are no
longer outstanding, then within 45 days after the end of each of the first
three quarters of each fiscal year, Company’s quarterly, unaudited financial
statements and within 90 days after the end of each fiscal year, Company’s
annual, audited financial statements.

 

3.4                                  Notice
of Expiration. Company shall give Holder written notice of Holder’s right
to exercise this Warrant in the form attached as Appendix 2 not more than 90
days and not less than 15 days before the Expiration Date and, in the case of
an Acquisition to which the proviso of Section 1.6 shall be applicable, 15
days notice of such Acquisition. If the notice is not so given, the Expiration
Date shall automatically be extended until 15 days after the date Company
delivers the notice to Holder.

 

3.5                                  Registration
Rights. The Company agrees that the Shares shall have the registration
rights set forth on Exhibit B hereto.

 

3

 

ARTICLE 4                                   MISCELLANEOUS.

 

4.1                                  Legends.
This Warrant and the Shares (and the securities issuable, directly or
indirectly, upon conversion of Shares, if any) shall be imprinted with a legend
in substantially the following form:

 

THIS SECURITY HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED.

 

4.2                                  Compliance
with Securities Laws on Transfer. This Warrant and the Shares issuable upon
exercise of this Warrant (and the securities issuable, directly or indirectly,
upon conversion of Shares, if any) may not be transferred or assigned in whole
or in part without compliance with applicable federal and state securities laws
by the transferor and the transferee (including, without limitation, the
delivery of investment representation letters and legal opinions reasonably
satisfactory to Company, as reasonably requested by Company). Company shall not
require Holder to provide an opinion of counsel if the transfer is to an
affiliate of Holder or if there is no material question as to the availability
of current information as referenced in Rule 144(c), Holder represents that it
has complied with Rule 144(d) and (e) in reasonable detail, the selling broker
represents that it has complied with Rule 144(f), and the Company is provided
with a copy of Holder’s notice of proposed sale.

 

4.3                                  Transfer
Procedure. Subject to the provisions of Section 4.3 Holder may
transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable, directly or indirectly, upon
conversion of Shares, if any) at any time to any other transferee acceptable to
Company (which acceptance shall not be unreasonably withheld or delayed) by
giving Company notice of the portion of the Warrant being transferred setting
forth the name, address and taxpayer identification number of the transferee
and surrendering this Warrant to Company for reissuance to the transferee(s) (and
Holder if applicable). Unless Company is filing financial information with the
SEC pursuant to the Securities Exchange Act of 1934, Company shall have the
right to refuse to transfer any portion of this Warrant to any person who
directly competes with Company.

 

4.4                                  Notices.
All notices and other communications from Company to Holder, or vice versa,
shall be in writing and shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, or by overnight courier, at such address as may have been furnished to
Company or Holder, as the case may be, in writing by Company or such Holder from
time to time.

 

4.5                                  Attorneys
Fees. In the event of any dispute between the parties concerning the terms
and provisions of this Warrant, the party prevailing in such dispute shall be
entitled to collect from the other party all costs incurred in such dispute,
including reasonable attorneys’ fees.

 

4.6                                  Governing
Law. This Warrant shall be governed by and construed in accordance with the
laws of the State of California, without giving effect to its principles
regarding conflicts of law.

 

4

 

IN
WITNESS WHEREOF, Company has caused this Warrant to be duly executed by its
authorized officers, all as of the day and year first above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  REVCARE, INC., a Nevada
  corporation

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Manuel Occiano

  	
   

  
	
   

  	
  Name:

  	
  MANUEL OCCIANO

  	
   

  
	
   

  	
  Title:

  	
  PRESIDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lee A. Shodiss

  	
   

  
	
   

  	
  Name:

  	
  LEE A. SHODISS

  	
   

  
	
   

  	
  Title:

  	
  SVP

  	
   

  
								

 

5

 

APPENDIX 1

 

Notice of Exercise

 

1.                                       The
undersigned hereby elects to purchase             shares
of the Common Stock of                                                pursuant
to the terms of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full.

 

1.                                       The
undersigned hereby elects to convert the attached Warrant into Shares/cash
[strike one] in the manner specified in the Warrant. This conversion is
exercised with respect to
                                           
of the Shares covered by the Warrant.

 

2.                                       Please
issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name as is specified below:

 

Name:
                                               

 

Address:
                                            

 

3.                                       The
undersigned represents it is acquiring the shares solely for its own account
and not as a nominee for any other party and not with a view toward the resale
or distribution thereof except in compliance with applicable securities laws.

 

 

	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  (Date)

  

 

1

 

APPENDIX 2

 

Notice that Warrant Is About to Expire

 

[Insert Date of Notice]

 

To:                           Bridge
Bank, National Association

Attn: Mike Field

2120 El Camino
Real

Santa Clara, CA
95050

 

The Warrant issued to you
described below will expire on
                                  

 

Issuer:

 

Issue Date:

 

Class of Security
Issuable:

 

Exercise Price per
Share:

 

Number of Shares
Issuable:

 

Procedure for
Exercise:

 

Please contact                     
at (       )
               
with any questions you may have concerning exercise of the Warrant. This is
your only notice of pending expiration.

 

 

	
   

  	
  (Name of Issuer)

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  

 

1

 

EXHIBIT A

 

Anti-Dilution Provisions

 

(For Common Stock Warrants Where

 

Anti-Dilution Protection is inadequate or Non-existent)

 

In the event of
the issuance (a “Diluting Issuance”) by Company, after the Issue Date of the
Warrant, of Common Stock (or options or other rights to subscribe thereto or
securities convertible into or exchangeable for Common Stock) at a price per
share less than the Exercise Price or less than the fair market value of the
Common Stock at the date of such issuance, then the number of Shares issuable
upon exercise of the Warrant and the Exercise Price, shall be adjusted as a
result of Diluting Issuances in accordance with the following (provided
that under no circumstances shall the aggregate Exercise Price payable by
Holder upon exercise of the Warrant increase as a result of any adjustment
arising from a Diluting Issuance):

 

1.             Definitions.
As used in these Antidilution Provisions, the following terms have the
following respective meanings:

 

(a)                                   “Option”
means any right, option, or warrant to subscribe for, purchase, or otherwise
acquire common stock or Convertible Securities.

 

(b)                                  “Convertible
Securities” means any evidences of indebtedness, shares of stock, or other securities
directly or indirectly convertible into or exchangeable for common stock.

 

(c)                                   “Issue”,
means to grant, issue, self, assume, or fix a record date for determining
persons entitled to receive, any security (including Options), whichever of the
foregoing is the first to occur. Any variation of the term “Issue” including,
without limitation, “Issuable”, “Issuance” or “Issued” shall have the same meaning
as set forth in this section 1 (c).

 

(d)                                  “Additional
Common Shares” means all common stock (including reissued shares) issued (or deemed
to be issued pursuant to Section 2) after the date of the Warrant.
Additional Common Shares does not include, however, any common stock issued in
a transaction described in Sections 2.1 and 2.2 of the Warrant; any common
stock Issued upon conversion of preferred stock outstanding on the date of the
Warrant; the Shares; or common stock Issued as incentive or in a nonfinancing
transaction to employees, officers, directors, or consultants to Company.

 

(e)                                   The
shares of common stock ultimately Issuable upon exercise of an Option
(including the shares of common stock ultimately Issuable upon conversion or
exercise of a Convertible Security Issuable pursuant to an Option) are deemed
to be Issued when the Option is Issued. The shares of common stock ultimately
Issuable upon conversion or exercise of a Convertible Security (other than a
Convertible Security Issued pursuant to an Option) shall be deemed Issued upon
Issuance of the Convertible Security.

 

2.             Deemed
Issuance of Additional Common Shares. The shares of common stock ultimately
Issuable upon exercise of an Option (including the shares of common stock
ultimately Issuable upon conversion or exercise of a Convertible Security
Issuable pursuant to an Option) are deemed to be Issued when the Option is
Issued. The shares of common stock ultimately Issuable upon conversion or
exercise of a Convertible Security (other than a Convertible Security Issued
pursuant to an Option) shall be deemed Issued upon Issuance of the Convertible
Security. The maximum amount of common stock Issuable is determined without
regard to any future adjustments permitted under the instrument creating the
Options or Convertible Securities.

 

3.             Adjustment
of Exercise Price for Diluting Issuances

 

3.1                    Weighted
Average Adjustment. if Company issues Additional Common Shares after the
date of the Warrant and the consideration per Additional Common Share
(determined pursuant to Section 9) is less than the Exercise Price in
effect immediately before such Issue, the Exercise Price shall be reduced,
concurrently with such Issue, to a price (calculated to the nearest hundredth
of a cent) determined by multiplying the Exercise Price by a fraction:

 

 

(a)                                    the
numerator of which is the amount of such common stock outstanding immediately before
such Issue plus the amount of common stock that the aggregate consideration
received by Company for the Additional Common Shares would purchase at the
Exercise Price in effect immediately before such Issue, and

 

(b)                                   the
denominator of which is the amount of common stock outstanding immediately
before such Issue plus the number of such Additional Common Shares.

 

3.2                    Adjustment
of Number of Shares. Upon each adjustment of the Exercise Price, the number
of Shares issuable upon exercise of the Warrant shall be increased to equal the
quotient obtained by dividing (a) the
product resulting from multiplying (i) the number of Shares issuable upon
exercise of the Warrant and (ii) the Exercise Price, in each case as in effect
immediately before such adjustment, by (b) the adjusted Exercise Price.

 

3.3                    Securities
Deemed Outstanding. For the purpose of this Section 3, all securities
issuable upon exercise of any outstanding Convertible Securities or Options,
warrants, or other rights to acquire securities of Company shall be deemed to
be outstanding.

 

4.             No
Adjustment for Issuances Following Deemed Issuances. No adjustment to the
Exercise Price shall be made upon the exercise of Options or conversion of
Convertible Securities.

 

5.             Adjustment
Following Changes in Terms of Options or Convertible Securities. If the
consideration payable to, or the amount of common stock Issuable by, Company
increases or decreases, respectively, pursuant to the terms of any outstanding
Options or Convertible Securities, the Exercise Price shall be recomputed to
reflect such increase or decrease. The recomputation shall be made as of the
time of the Issuance of the Options or Convertible Securities. Any changes in
the Exercise Price that occurred after such Issuance because other Additional
Common Shares were Issued or deemed Issued shall also be recomputed.

 

6.             Recomputation
Upon Expiration of Options or Convertible Securities. The Exercise Price
computed upon the original Issue of any Options or Convertible Securities, and
any subsequent adjustments based thereon, shall be recomputed when any Options
or rights of conversion under Convertible Securities expire without having been
exercised. In the case of Convertible Securities or Options for common stock, the
Exercise Price shall be recomputed as if the only Additional Common Shares Issued
were the shares of common stock actually Issued upon the exercise of such
securities, if any, and as if the only consideration received therefor was the
consideration actually received upon the Issue, exercise or conversion of the
Options or Convertible Securities. In the case of Options for Convertible
Securities, the Exercise Price shall be recomputed as if the only Convertible
Securities Issued were the Convertible Securities actually Issued upon the
exercise thereof, if any, and as if the only consideration received therefor
was the consideration actually received by Company (determined pursuant to Section 9),
if any, upon the Issue of the Options for the Convertible Securities.

 

7.             Limit
on Readjustments. No readjustment of the Exercise Price pursuant to
Sections 5 or 6 shall increase the Exercise Price more than the amount of any
decrease made in respect of the Issue of any Options or Convertible Securities.

 

8.             30
Day Options. In the case of any Options that expire by their terms not more
than 30 days after the date of Issue thereof, no adjustment of the Exercise
Price shall be made until the expiration or exercise of all such Options.

 

9.             Computation
of Consideration. The consideration received by Company for the Issue of
any Additional Common Shares shall be computed as follows:

 

(a)                                    Cash
shall be valued at the amount of cash received by Company, excluding amounts paid
or payable for accrued interest or accrued dividends.

 

(b)                                   Property.
Property other than cash shall be computed at the fair market value thereof at the
time of the Issue as determined in good faith by the Board of Directors of
Company.

 

 

(c)                                    Mixed
Consideration. The consideration for Additional Common Shares Issued
together with other property of Company for consideration that covers both
shall be determined in good faith by the Board of Directors of Company.

 

(d)                                   Options
and Convertible Securities. The consideration per Additional Common Share
for Options and Convertible Securities shall be determined by dividing:

 

(i)                 the total amount,
if any, received or receivable by Company for the Issue of the Options or
Convertible Securities, plus the minimum amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
Company upon exercise of the Options or conversion of the Convertible
Securities, by

 

(ii)              the maximum amount
of common stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of such
number) ultimately Issuable upon the exercise of such Options or the conversion
of such Convertible Securities.

 

 

EXHIBIT B

 

REGISTRATION RIGHTS AGREEMENT

 

This
REGISTRATION RIGHTS AGREEMENT, dated as of August 5, 2004, is between
Bridge Bank, National Association (“Purchaser”) and the Company whose name
appears on the last page of this Agreement.

 

Recitals

 

A.                                     Concurrently
with the execution of this Agreement, the Purchaser is purchasing from the Company
a Warrant to Purchase Stock (the “Warrant”) pursuant to which Purchaser has the
right to acquire from the Company the Shares (as defined in the Warrant).

 

B.                                       By
this Agreement, the Purchaser and the Company desire to set forth the
registration rights of the Shares all as provided herein.

 

NOW, THEREFORE, in consideration of the mutual
promises, covenants and conditions hereinafter set forth, the parties hereto
agree as follows:

 

1.                                         Registration
Rights.

 

1.1                                            Definitions.
For purposes of this Section 1:

 

(a)                                          The
term “register,” “registered,” and “registration” refer to a registration effected
by preparing and filing a registration statement or similar document in
compliance with the Securities Act of 1933, as amended (the “Securities Act”),
and the declaration or ordering of effectiveness of such registration statement
or document;

 

(b)                                         The
term “Registrable Securities” means (i) the Shares (if Common Stock) or all
shares of Common Stock of the Company issuable or issued upon conversion of the
Shares and (ii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, any stock referred to in (i).

 

(c)                                          The
terms “Holder” or “Holders” means the Purchaser or qualifying transferees under
subsection 1.8 hereof who hold Registrable Securities.

 

(d)                                         The
term “SEC” means the Securities and Exchange Commission.

 

1.2                                            Company
Registration.

 

(a)                                          Registration.
If at any time or from time to time, the Company shall determine to register
any of its securities, for its own account or the account of any of its
shareholders, other than a registration on Form S-1 or S-8 relating solely to
employee stock option or purchase plans, or a registration on Form S-4 relating
solely to an SEC Rule 145 transaction, or a registration on any other form
(other than Form S-1, S-2, S-3 or S-18, or their successor forms) or any
successor to such forms, which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities, the Company will:

 

(i)                                              promptly
give to each Holder written notice thereof (which shall include a list of the
jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws); and

 

(ii)                                           include
in such registration (and compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within 30 days after receipt of such written notice from the
Company, by any Holder or Holders, except as set forth in subsection 1.2(b)
below.

 

(b)                                         Underwriting.
if the registration of which the Company gives notice is for a registered
public offering involving an underwriting, the Company shall so advise the
Holders as a part

 

 

of the written
notice given pursuant to subsection 1.2(a)(i). In such event the right of
any Holder to registration pursuant to this subsection 1.2 shall be conditioned
upon such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company.

 

1.3                                             Expenses
of Registration. All expenses incurred in connection with any registration,
qualification or compliance pursuant to this Section 1 including without
limitation, all registration, filing and qualification fees, printing expenses,
fees and disbursements of counsel for the Company and expenses of any special
audits incidental to or required by such registration, shall be borne by the
Company except the Company shall not be required to pay underwriters’ fees,
discounts or commissions relating to Registrable Securities. All expenses of
any registered offering not otherwise borne by the Company shall be borne pro
rata among the Holders participating in the offering and the Company.

 

1.4                                             Registration
Procedures. In the case of each registration, qualification or compliance
effected by the Company pursuant to this Registration Rights Agreement, the
Company will keep each Holder participating therein advised in writing as to
the initiation of each registration, qualification and compliance and as to the
completion thereof. Except as otherwise provided in subsection 1.3, at its
expense the Company will:

 

(a)                                         Prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective, and, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration statement
effective for up to 120 days.

 

(b)                                        Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such registration
statement.

 

(c)                                         Furnish
to the Holders such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.

 

(d)                                        Use
its best efforts to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any such
states or jurisdictions.

 

(e)                                         In
the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the managing
underwriter of such offering. Each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement.

 

(f)                                           Notify
each Holder of Registrable Securities covered by such registration statement at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act or the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.

 

 

1.5                                             Indemnification.

 

(a)                                         The
Company will indemnify each Holder of Registrable Securities and each of its
officers, directors and partners, and each person controlling such Holder, with
respect to which such registration, qualification or compliance has been
effected pursuant to this Registration Rights Agreement, and each underwriter,
if any, and each person who controls any underwriter of the Registrable
Securities held by or issuable to such Holder, against all claims, losses,
expenses, damages and liabilities (or actions in respect thereto) arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statement therein not misleading, or any
violation or alleged violation by the Company of the Securities Act, the
Securities Exchange Act of 1934, as amended, (“Exchange Act”) or any state
securities law applicable to the Company or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any such state law and relating
to action or inaction required of the Company in connection with any such
registration, qualification of compliance, and will reimburse each such Holder,
each of its officers, directors and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such
underwriter, within a reasonable amount of time after incurred for any
reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action; provided, however, that the indemnity agreement contained in this subsection 1.5(a)
shall not apply to amounts paid in settlement of any such claim, loss, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld); and provided
further, that the Company will not be liable in any such case to the extent
that any such claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by an instrument duly executed by such Holder or underwriter specifically
for use therein,

 

(b)                                        Each
Holder will, if Registrable Securities held by or issuable to such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company’s securities covered by such
a registration statement, each person who controls the Company within the
meaning of the Securities Act, and each other such Holder, each of its
officers, directors and partners and each person controlling such Holder,
against all claims, losses, expenses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company, such Holders, such directors, officers, partners,
persons or underwriters for any reasonable legal or any other expenses incurred
in connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
such Holder specifically for use therein; provided, however, that the indemnity
agreement contained in this subsection 1.5(b) shall not apply to amounts
paid in settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Holder, (which consent shall
not be unreasonably withheld); and provided further, that the total amount for
which any Holder shall be liable under this subsection 1.5(b) shall not in
any event exceed the aggregate proceeds received by such Holder from the sale
of Registrable Securities held by such Holder in such registration.

 

(c)                                         Each
party entitled to indemnification under this subsection 1.5 (the “Indemnified
Party”) shall give notice to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any

 

 

litigation resulting
therefrom; provided that counsel for the Indemnifying Party, who shall conduct
the defense of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld), and the Indemnified
Party may participate in such defense at such party’s expense; and provided
further, that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations hereunder,
unless such failure resulted in prejudice to the Indemnifying Party; and
provided further, that an Indemnified Party (together with all other
Indemnified Parties which may be represented without conflict by one counsel)
shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the Indemnifying Party, if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between such Indemnified Party
and any other party represented by such counsel in such proceeding. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or litigation.

 

1.6                                             Information
by Holder. Any Holder or Holders of Registrable Securities included in any
registration shall promptly furnish to the Company such information regarding
such Holder or Holders and the distribution proposed by such Holder or Holders
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to herein.

 

1.7                                             Rule
144 Reporting. With a view to making available to Holders the benefits of certain
rules and regulations of the SEC which may permit the sale of the Registrable
Securities to the public without registration, the Company shall at all times:

 

(a)                                         make
and keep public information available, as those terms are understood and
defined in SEC Rule 144, after 90 days after the effective date of the first
registration filed by the Company for an offering of its securities to the
general public;

 

(b)                                        file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements); and

 

(c)                                         so
long as a Holder owns any Registrable Securities, to furnish to such Holder
forthwith upon request a written statement by the Company as to its compliance
with the reporting requirements of said Rule 144 (at any time after 90 days
after the effective date of the first registration statement filed by the
Company for an offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by the
Company as the Holder may reasonably request in complying with any rule or regulation
of the SEC allowing the Holder to sell any such securities without
registration.

 

1.8                                             Transfer
of Registration Rights. Holders’ rights to cause the Company to register their
securities and keep information available, granted to them by the Company under
subsections 1.2 and 1.7 may be assigned to a transferee or assignee of a Holder’s
Registrable Securities not sold to the public, provided, that the Company is
given written notice by such Holder at the time of or within a reasonable time
after said transfer, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such registration
rights are being assigned. The Company may prohibit the transfer of any Holders’
rights under this subsection 1.8 to any proposed transferee or assignee
who the Company reasonably believes is a competitor of the Company.

 

2.                                         General.

 

2.1                                             Waivers
and Amendments. With the written consent of the record or beneficial
holders of at least a majority of the Registrable Securities, the obligations
of the Company and the rights of the Holders of the Registrable Securities
under this agreement may be waived (either generally or in a particular
instance, either retroactively or prospectively, and either for a specified
period of time or indefinitely), and with the same consent the Company, when
authorized by resolution of its Board of

 

 

Directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement;
provided, however, that no such modification, amendment or waiver shall reduce
the aforesaid percentage of Registrable Securities without the consent of all
of the Holders of the Registrable Securities. Upon the effectuation of each
such waiver, consent, agreement of amendment or modification, the Company shall
promptly give written notice thereof to the record holders of the Registrable
Securities who have not previously consented thereto in writing. This Agreement
or any provision hereof may be changed, waived, discharged or terminated only
by a statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in this subsection 2.1.

 

2.2                                             Governing
Law. This Agreement shall be governed in all respects by the laws of the
State of California as such laws are applied to agreements between California
residents entered into and to be performed entirely within California.

 

2.3                                             Successors
and Assigns. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.

 

2.4                                             Entire
Agreement. Except as set forth below, this Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.

 

2.5                                             Notices,
etc. All notices and other communications required or permitted hereunder
shall be in writing and shall be mailed by first class mail, postage prepaid,
certified or registered mail, return receipt requested, addressed (a) if to
Holder, at such Holder’s address as set forth below, or at such other address
as such Holder shall have furnished to the Company in writing, or (b) if to the
Company, at the Company’s address set forth below, or at such other address as
the Company shall have furnished to the Holder in writing.

 

2.6                                             Severability.
In case any provision of this Agreement shall be invalid, illegal, or unenforceable,
the validity, legality and enforceability of the remaining provisions of this
Agreement or any provision of the other Agreement s shall not in any way be
affected or impaired thereby.

 

2.7                                             Titles
and Subtitles. The titles of the sections and subsections of this Agreement
are for convenience of reference only and are not to be considered in
construing this Agreement.

 

2.8                                             Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one
instrument.

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.

 

	
  COMPANY:

  	
  REVCARE, INC. a Nevada
  corporation

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Manuel Occiano

  	
   

  
	
   

  	
  Name:

  	
  MANUEL OCCIANO

  	
   

  
	
   

  	
  Title: Chairman of the
  Board, President or Vice

  
	
   

  	
  President

  
					

 

 

	
   

  	
  By

  	
  /s/ Alan Harrer

  	
   

  
	
   

  	
  Name:

  	
  Alan Harrer

  	
   

  
	
   

  	
  Title: Chief Financial
  Officer, Secretary,

  
	
   

  	
  Assistant Treasurer or
  Assistant Secretary

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

	
  PURCHASER:

  	
  BRIDGE BANK, NATIONAL
  ASSOCIATION

  
	
   

  
	
   

  	
  By

  	
  /s/ Lee A. Shodiss

  	
   

  
	
   

  	
  Name:

  	
  LEE
  A. SHODISS

  	
   

  
	
   

  	
   

  	
  SVP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

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