Document:

Filed by sedaredgar.com - Banyan Corporation - Exhibit 10.1

BANYAN CORPORATION 
2008-2 STOCK AWARD PLAN 

          This
Banyan Corporation 2008-2 Stock Award Plan (the "Plan") is designed to retain
directors, executives and selected employees and reward them for making major
contributions to the success of the Company. These objectives are accomplished
by making long-term incentive awards under the Plan thereby providing
Participants with a proprietary interest in the growth and performance of the
Company. 

         
1.          
Definitions. 

         
(a)           "Board" - The
Board of Directors of the Company. 

         
(b)           "Code" - The
Internal Revenue Code of 1986, as amended from time to time. 

         
(c)           "Committee" -
The Compensation Committee of the Company's Board, or such other committee of
the Board that is designated by the Board to administer the Plan, composed of
not less than two members of the Board all of whom are disinterested persons, as
contemplated by Rule 16b-3 ("Rule 16b-3") promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). 

         
(d)           "Company" -
Banyan Corporation and its subsidiaries including subsidiaries of subsidiaries.

         
(e)           "Exchange Act" -
The Securities Exchange Act of 1934, as amended from time to time. 

         
(f)           "Fair Market
Value" - The fair market value of the Company's issued and outstanding Stock as
determined in good faith by the Board or Committee. 

         
(g)           "Participant" -
A director, officer, or employee of the Company to whom an Award has been made
under the Plan. 

         
(h)           "Securities Act"
- The Securities Act of 1933, as amended from time to time. 

         
(i)           "Stock Award
Agreement" - An agreement between the Company and a Participant that sets forth
the terms, conditions and limitations applicable to a Stock Award. 

         
(j)           "Stock" -
Authorized and issued or unissued shares of Common Stock, no par value of the
Company. 

         
(k)           "Stock Award" -
A Stock Award made under the Plan in stock or denominated in units of stock for
which the Participant is not obligated to pay additional consideration. 

         
2.          
Administration. The Plan shall be administered by the Board; provided
however, that the Board may delegate such administration to the Committee.
Subject to the provisions of the Plan, the Board and/or the Committee shall have
authority to (a) grant, in its discretion, Stock Awards; (b) determine in good
faith the Fair Market Value of the Stock covered by any Stock Award; (c)
determine which eligible persons shall receive Stock Awards and the number of
shares, restrictions, terms and conditions to be included in such Stock Awards;
(d) construe and interpret the Plan; (e) promulgate, amend and rescind rules and
regulations relating to its administration, and correct defects, omissions and
inconsistencies in the Plan or any Stock Award; (f) consistent with the Plan and
with the consent of the Participant, as appropriate, amend any outstanding Stock
Award or amend the date thereof; (g) determine the duration and purpose of
leaves of absence which may be granted to Participants without constituting
termination of their employment for the purpose of the Plan or any Stock Award;
and (h) make all other determinations necessary or advisable for the Plan's
administration. The interpretation and construction by the Board of any
provisions of the Plan or selection of Participants shall be conclusive and
final. No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock Award
made thereunder. 

         
3.           Eligibility.

         
(a)           General.
Any director, officer, or employee of the Company is eligible to receive a Stock
Award.

         
(b)           Consultants.
Any Consultant to the Company may be a Participant; provided,
however, that the Consultant is a natural person, provides bona fide
services to the Company that are not in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities; and, provided,
further, the Consultant otherwise is an “employee” as defined in Section A 1
(a) of the General Instructions to Form S-8 under the Securities Act.

         
4.          
Stock. 

         
(a)           Authorized
Stock. Stock subject to Stock Awards may be either unissued or reacquired
Stock. 

         
(b)           Number of
Shares. Subject to adjustment as provided in Section 5(i) of the Plan, the
total number of shares of Stock which may be granted directly by Stock Awards
shall not exceed One Hundred Seventy Five Million (175,000,000) shares. If any
Stock Award shall for any reason terminate or expire, any shares allocated
thereto upon such expiration or termination shall again be available for Stock
Awards with respect thereto under the Plan as though no Stock Award had
previously occurred with respect to such shares.

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(c)           Reservation
of Shares. The Company shall reserve and keep available at all times during
the term of the Plan such number of shares as shall be sufficient to satisfy the
requirements of the Plan. If, after reasonable efforts, which efforts shall not
include the registration of the Plan or Stock Awards under the Securities Act,
the Company is unable to obtain authority from any applicable regulatory body,
which authorization is deemed necessary by legal counsel for the Company for the
lawful issuance of shares hereunder, the Company shall be relieved of any
liability with respect to its failure to issue and sell the shares for which
such requisite authority was so deemed necessary unless and until such authority
is obtained. 

         
5.           Stock
Awards. 

         
(a)           General
Conditions. All or part of any Stock Award under the Plan may be subject to
conditions established by the Board or the Committee, and set forth in the Stock
Award Agreement, which may include, but are not limited to, continuous service
with the Company, achievement of specific business objectives, increases in
specified indices, attaining growth rates and other comparable measurements of
Company performance. Such Awards may be based on Fair Market Value or other
specified valuation. All Stock Awards will be made pursuant to the execution of
a Stock Award Agreement substantially in the form attached hereto as Exhibit A.

         
(b)           Insiders;
Control Securities. Any Participant subject to Section 16(a) of the Exchange
Act (generally any dirctor, officer or principal shareholder) shall comply with
the requirements of Section 16(b) of the Exchange Act (generally by holding the
Stock subject a Stock Award for at least six months from the date of the Stock
Award). The amount of securities of the Company that may be sold by any
Participant that holds “control securities” and any other person with whom he or
she is acting in concert for the purpose of selling securities of the Company,
may not exceed, during any three month period, the amount specified in Rule
144(e) of the General Rules and Regulations under the Securities Act (generally
one percent of the shares outstanding as shown by the most recent report or
statement published by the Company). The Participant shall have the burden of
proving to the satisfaction of the Company, at Participant’s cost, any exemption
to the requirements of this paragraph, including any exemption pursuant to Rule
16b-3 of the General Rules and Regulations under the Exchange Act and any
exception to Rule 144(e).

         
(c)           Cancellation
and Rescission of Stock Awards. Unless the Stock Award Agreement specifies
otherwise, the Board or Committee, as applicable, may cancel any unexpired,
unpaid, or deferred Stock Awards at any time if the Participant is not in
compliance with all other applicable provisions of the Stock Award Agreement,
the Plan and with the following conditions: 

         
(i)           A Participant
shall not render services for any organization or engage directly or indirectly
in any business which, in the judgment of the chief executive officer of the
Company or other senior officer designated by the Board or Committee, is or
becomes competitive with the Company, or which organization or business, or the

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rendering of services to such organization or business, is or
becomes otherwise prejudicial to or in conflict with the interests of the
Company. For Participants whose employment has terminated, the judgment of the
chief executive officer shall be based on the Participant's position and
responsibilities while employed by the Company, the Participant's
post-employment responsibilities and position with the other organization or
business, the extent of past, current and potential competition or conflict
between the Company and the other organization or business, the effect on the
Company's customers, suppliers and competitors and such other considerations as
are deemed relevant given the applicable facts and circumstances. A Participant
who has retired shall be free, however, to purchase as an investment or
otherwise, stock or other securities of such organization or business so long as
they are listed upon a recognized securities exchange or traded
over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than ten percent (10%) equity
interest in the organization or business. 

         
(ii)           A Participant
shall not, without prior written authorization from the Company, disclose to
anyone outside the Company, or use in other than the Company's business, any
confidential information or material, as defined in the Company's Proprietary
Information and Invention Agreement or similar agreement regarding confidential
information and intellectual property, relating to the business of the Company,
acquired by the Participant either during or after employment with the Company.

         
(iii)           A Participant,
pursuant to the Company's Proprietary Information and Invention Agreement, shall
disclose promptly and assign to the Company all right, title and interest in any
invention or idea, patentable or not, made or conceived by the Participant
during employment by the Company, relating in any manner to the actual or
anticipated business, research or development work of the Company and shall do
anything reasonably necessary to enable the Company to secure a patent where
appropriate in the United States and in foreign countries. 

         
(iv)           In performing
its duties, the Participant agrees to adhere to and to act in accordance with
all applicable laws, rules and regulations, the policies and procedures of the
Company in effect from time to time, all written and oral instructions received
from an authorized officer or employee of the Company, and high ethical
standards. 

         
(v)           Upon delivery of
a Stock Award, the Participant shall certify on a form acceptable to the
Committee that he or she is in compliance with the terms and conditions of the
Plan. Failure to comply with all of the provisions of this Section 5 prior to,
or during the six months after, any Stock Award shall cause such Stock Award to
be rescinded. The Company shall notify the Participant in writing of any such
rescission within two years after such exercise, payment or delivery. Within ten
days after receiving such a notice from the Company, the Participant shall pay
to the Company the amount of any gain realized or payment received as a result
of the rescinded Stock Award. Such payment shall be made either in cash or by
returning to the Company the number of 

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shares of Stock that the Participant received in connection
with the rescinded exercise, payment or delivery. 

         
(d)          
Nonassignability. 

         
(i)          Except pursuant to
Section 5(e)(iii) and except as set forth in Section 5(d)(ii), no Stock Award or
any other benefit under the Plan shall be assignable or transferable, or payable
to or exercisable by, anyone other than the Participant. 

         
(ii)           Where a
Participant terminates employment and retains a Stock Award pursuant to Section
5(e)(ii) in order to assume a position with a governmental, charitable or
educational institution, the Board or Committee, in its discretion and to the
extent permitted by law, may authorize a third party (including but not limited
to the trustee of a "blind" trust), acceptable to the applicable governmental or
institutional authorities, the Participant and the Board or Committee, to act on
behalf of the Participant with regard to such Stock Award. 

         
(e)           Termination
of Employment. If the employment or service to the Company of a Participant
terminates, other than pursuant to any of the following provisions under this
Section 5(e), all unexercised, deferred and unpaid Stock Awards shall be
cancelled immediately, unless the Stock Award Agreement provides otherwise. 

         
(i)           Retirement
Under a Company Retirement Plan. When a Participant's employment terminates
as a result of retirement in accordance with the terms of a Company retirement
plan, the Board or Committee may permit the Participant’s Stock Award to
continue in effect beyond the date of retirement in accordance with the
applicable Stock Award Agreement and the exercisability and vesting of any such
Stock Award may be accelerated. 

         
(ii)           Rights in
the Best Interests of the Company. When a Participant resigns from the
Company and, in the judgment of the Board or Committee, the acceleration and/or
continuation of outstanding Stock Awards would be in the best interests of the
Company, the Board or Committee may (A) authorize, where appropriate, the
acceleration and/or continuation of all or any part of any Stock Award issued
prior to such termination and (B) permit the exercise, vesting and payment of
such Stock Award for such period as may be set forth in the applicable Stock
Award Agreement, subject to earlier cancellation pursuant to Section 8 or at
such time as the Board or Committee shall deem the continuation of all or any
part of the Participant's Stock Award is not in the Company's best interest.

         
(iii)           Death or
Disability of a Participant.

         
(A)           In the event of
a Participant's death, the Participant's estate or beneficiaries shall have a
period up to the expiration date specified in the Stock Award Agreement within
which to receive or exercise any outstanding Stock Award held by the Participant
under such terms as may be specified in the applicable Stock Award Agreement.
Rights 

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to any such outstanding Stock Award shall pass by will or the
laws of descent and distribution in the following order: (I) to beneficiaries so
designated by the Participant; if none, then (II) to a legal representative of
the Participant; if none, then (III) to the persons entitled thereto as
determined by a court of competent jurisdiction. Any Stock Award so passing
shall be made at such times and in such manner as if the Participant were
living. 

         
(B)           In the event a
Participant is deemed by the Board or Committee to be unable to perform his or
her usual duties by reason of mental disorder or medical condition which does
not result from facts which would be grounds for termination for cause, a Stock
Award and rights to any such Stock Award may be paid to or exercised by the
Participant, if legally competent, or a committee or other legally designated
guardian or representative if the Participant is legally incompetent by virtue
of such disability. 

         
(C)           After the death
or disability of a Participant, the Board or Committee may in its sole
discretion at any time terminate restrictions in a Stock Award Agreement. 

         
(D)           In the event of
uncertainty as to interpretation of or controversies concerning this Section 5,
the determinations of the Board or Committee, as applicable, shall be binding
and conclusive. 

         
6.           Investment
Intent. All Stock Awards under the Plan are intended to be exempt from
registration under the Securities Act provided by Rule 701 thereunder. Unless
and until the issuance of Stock subject to the Plan are registered under the
Securities Act or shall be exempt pursuant to the rules promulgated thereunder,
each Stock Award under the Plan shall provide that the purchases or other
acquisitions of Stock thereunder shall be for investment purposes and not with a
view to, or for resale in connection with, any distribution thereof. Further,
unless the issuance and sale of the Stock have been registered under the
Securities Act, each Stock Award shall provide that no shares shall be issued
under such Stock Award unless and until (a) all then applicable requirements of
state and federal laws and regulatory agencies shall have been fully complied
with to the satisfaction of the Company and its counsel, and (b) if requested to
do so by the Company, the person exercising the rights under the Stock Award
shall (i) give written assurances as to knowledge and experience of such person
(or a representative employed by such person) in financial and business matters
and the ability of such person (or representative) to evaluate the merits and
risks of exercising the Option, and (ii) execute and deliver to the Company a
letter of investment intent and/or such other form related to applicable
exemptions from registration, all in such form and substance as the Company may
require. If shares are issued upon exercise of any rights under a Stock Award
without registration under the Securities Act, subsequent registration of such
shares shall relieve the purchaser thereof of any investment restrictions or
representations made upon the exercise of such rights.

         
7.           Amendment,
Modification, Suspension or Discontinuance of the Plan. The Board may,
insofar as permitted by law, from time to time, with respect to any shares at
the time not subject to outstanding Stock Award, suspend or terminate the Plan
or revise or amend it in any respect whatsoever, except that no such revision or
amendment 

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shall (a) increase the number of shares subject to the Plan,
(b) materially increase the benefits to Participants, or (c) change the class of
persons eligible to receive a Stock Award under the Plan; provided,
however, no such action shall alter or impair the rights and obligations
under any Stock Award outstanding as of the date thereof without the written
consent of the Participant thereunder. No Stock Award may be issued while the
Plan is suspended or after it is terminated, but the rights and obligations
under any Stock Award issued while the Plan is in effect shall not be impaired
by suspension or termination of the Plan. 

          In the
event of any change in the outstanding Stock by reason of a stock split, stock
dividend, combination or reclassification of shares, recapitalization, merger,
or similar event, the Board or the Committee may adjust proportionally: (a) the
number of shares of Stock (i) reserved under the Plan, and (ii) covered by
outstanding Stock Awards; (b) the Stock prices related to outstanding Stock
Awards; and, (c) the appropriate Fair Market Value and other price
determinations for such Stock Awards. In the event of any other change affecting
the Stock or any distribution (other than normal cash dividends) to holders of
Stock, such adjustments as may be deemed equitable by the Board or the
Committee, including adjustments to avoid fractional shares, shall be made to
give proper effect to such event. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board or the Committee shall be authorized to issue or assume
stock options, whether or not in a transaction to which Section 424(a) of the
Code applies, and other Stock Awards by means of substitution of new Stock Award
Agreements for previously issued Stock Awards or an assumption of previously
issued Stock Awards. 

         
8.           Tax
Withholding. The Company shall have the right to deduct applicable taxes
from any Stock Award withhold, at the time of delivery or exercise of a Stock
Award or vesting of shares under such Stock Award, an appropriate number of
shares for payment of taxes required by law or to take such other action as may
be necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. If Stock is used to satisfy tax withholding, such
stock shall be valued based on the Fair Market Value when the tax withholding is
required to be made. 

         
9.           Notice.
Any written notice to the Company required by any of the provisions of the Plan
shall be addressed to the chief personnel officer or to the chief executive
officer of the Company, and shall become effective when the office of the chief
personnel officer or the chief executive officer receives it. 

         
10.          
Governing Law. The Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by the Code or the
securities laws of the United States, shall be governed by the law of the State
of Oregon and construed accordingly. 

         
11.           Effective and
Termination Dates. The Plan shall become effective on the date it is
approved by Board. The Plan shall terminate ten years later, subject to earlier
termination by the Board pursuant to Section 7.

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          The
undersigned certifies that the foregoing is a true and correct copy of the
Banyan Corporation 2008-2 Stock Award Plan as adopted by its Board of Directors on
July 22, 2008. 

  /s/Michael Gelmon

Michael Gelmon, 

Chief
Executive Officer 

 

 

-8- 

EXHBIT A 
FORM OF 
STOCK AWARD AGREEMENT

          Banyan
Corporation (the "Company") hereby grants to ___________ (“Employee”),
_____________ shares of the Common Stock, no par value of the Company (the
“Stock”). This Stock Award is subject to the restrictions as set forth below and
to all the terms and conditions of the Banyan Corporation 2008-2 Stock Award
Plan, (the “Plan”) which are incorporated herein by this reference, and neither
this Stock Award nor the Stock may be assigned or transferred except as provided
in the Plan.

          This
Stock Award is subject to following additional restrictions:

[Any additional restrictions to be inserted here] 

          By
signing below, Employee certifies that Employee is in compliance with the terms
and conditions of the Plan.

Dated: __________, _______

"Company" 

By:
_______________________________
       [Type
name and title of Authorized Officer]

"Employee" 

By:________________________________
                   
[Type name of Participant] 

 

 

-9-EXHIBIT 4.1

   

  

  THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM REGISTRATION.  THE COMPANY MAY REFUSE TO AUTHORIZE ANY TRANSFER OF THE SECURITIES IN RELIANCE ON AN EXEMPTION FROM REGISTRATION UNTIL IT HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

THE COMPANY IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OF STOCK OR MORE THAN ONE SERIES OF ANY CLASS OF STOCK.  THE DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF THE SHARES OF EACH CLASS OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH RIGHTS, ARE SET FORTH IN THE ARTICLES OF INCORPORATION OF THE COMPANY.  A COPY OF SAID ARTICLES OF INCORPORATION WILL BE FURNISHED FREE OF CHARGE TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.

THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE HOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.  

BIOFORCE NANOSCIENCES HOLDINGS, INC.

CONVERTIBLE SECURED PROMISSORY NOTE

Principal Amount:  $300,000.00

  

July 21, 2008

BioForce Nanosciences Holdings, Inc. (the “Company”) for value received, promises to pay to the order of FCPR SGAM AI Biotechnology Fund (the “Purchaser”), the principal amount set forth above plus interest thereon calculated from the date hereof until paid in full at eight percent (8%) per annum compounded annually.  In the Event of Default (as defined below) interest shall be calculated at fifteen percent (15%) per annum, compounded annually, until the Note is paid in full. Except in the Event of Default, principal and interest accrued hereunder but unpaid will be due and payable in lawful money of the United States in full on July 21, 2009 (the “Maturity Date”), unless  (i) this Note has been previously converted pursuant to Section 2 hereof, in which case all outstanding principal and accrued interest under this Note shall be satisfied in full by virtue of such conversion and the issuance and delivery of fully paid and non-assessable debt or equity securities to the Purchaser as set forth in Section 2 hereof, (ii) this Note has been previously redeemed pursuant to Section 4 or Section 5 hereof, in which case all accrued interest shall be paid on the redemption date.

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

1.

Definitions.  As used in this Note, the following terms, unless the context otherwise requires, have the following meanings:

1.1.

 “Common Stock” shall mean the Common Stock, $0.001 par value per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed.

1.2.

“Conversion Price” means the Warrant Price as defined in Warrant to Purchase Shares of Common Stock (the “Warrant”) issued to the Purchaser by the Company on the date of this note, and pursuant to the Convertible Secured Promissory Note and Warrant Purchase Agreement between the Company, the Purchaser, and other parties as of the same date.  If the Warrant is no longer outstanding as of the date of conversion of this Note, the Conversion Price shall be the Warrant Price that would have been in effect on the date of conversion of the Note had the Warrant still been outstanding.

1.3.

“Financing” shall mean the Company's sale or issuance, from and after the date hereof, of its equity securities, or debt securities convertible into Common Stock, for cash (excluding securities issued upon the exercise of options or upon the exercise of warrants or other convertible debt securities of the Company outstanding on the date hereof or upon the conversion of the Notes) in one transaction or a series of transactions occurring after the date hereof, which results in the receipt by the Company of at least $1,000,000 in proceeds from one or more investors.

1.4.

 “Financing Price” shall mean the price per share or other unit at which the Company sells its equity securities, or debt securities convertible into Common Stock, in the first Financing following the date hereof.

1.5.

“Financing Securities” shall mean the class or series of equity or debt securities that the Company issues or sells in connection with the first Financing following the date hereof.

1.6.

“Note” shall mean this convertible secured promissory note. 

1.7.

“Person” shall mean any individual, corporation, partnership, joint venture, trust, business association, organization, governmental authority or other entity.

2.

Conversion.

2.1.

Voluntary Conversion by the Purchaser. At any time prior to this Note being paid in full, the Purchaser shall have the right, but not the obligation, to convert all but not less than all of the principal and interest due under this Note into shares of the Company’s Common Stock at the Conversion Price.  Upon a voluntary conversion pursuant to this Section 2.1, the Purchaser shall provide the Company written notice of its intent to convert.  The Company shall then issue the Common Stock upon surrender of this Note for conversion at the principal office of the Company. 

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2.2.

Voluntary Conversion Associated with Subsequent Financing.  At any time prior to this Note being paid in full, if the Company consummates an equity financing, or a debt financing where that debt is convertible into equity securities, the Purchaser may exchange the Note for the securities issued in such financing on the terms of the subsequent offering.  The Company shall provide the Purchaser of notice of any debt or equity offerings while this Note is outstanding.  If the Purchaser wishes to convert this Note under Section 2.2, the Purchaser shall provide the Company with written notice of its intent to convert within fifteen days of receipt of notice from the Company of a subsequent financing.  The Company shall then issue the applicable debt or equity securities upon surrender of this Note for conversion at the principal office of the Company. 

2.3.

Mandatory Conversion.  This Note shall automatically convert simultaneous with the closing of a Financing.  Upon a mandatory conversion pursuant to this Section 2.3, the Company shall provide the Purchaser notice thereof and the Purchaser shall surrender of this Note for conversion at the principal office of the Company.  The Purchaser shall have the option of converting this note into i) Financing Securities at the Financing Price, or ii) shares of the Company’s Common Stock at the then applicable Conversion Price, and will provide the Company with written notice of which conversion option it chooses within five business days of receipt of notice from the Company that a Financing has occurred.

2.4.

No Fractional Shares.  No fractional shares will be issued on conversion of this Note.  If on any conversion of this Note a fraction of a share results, the Company will pay the cash value of that fractional share, calculated on the basis of the applicable Conversion Price.

2.5.

Fully Paid Shares.  All shares of Common Stock or Financing Securities issued or transferred upon the conversion of this Note shall be validly issued, fully paid, non-assessable and free and clear of any claims, liens or encumbrances.

2.6.

Certain Representations.  The Company hereby represents and warrants that it has taken all necessary corporate action and obtained all necessary consents and approvals to authorize the issuance of this Note. 

2.7.

No Rights as Stockholder.  Except in the event of conversion, this Note does not by itself entitle the Purchaser to any voting rights or other rights as a stockholder of the Company.  In the absence of conversion of this Note, no provisions of this Note, and no enumeration herein of the rights or privileges of the Purchaser shall cause such Purchaser to be a stockholder of the Company or for any purpose by virtue hereof.

 

-3-

3.

Securities Law Matters.  The Purchaser is an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) and has such knowledge or experience in financial and business matters to enable the Purchaser to evaluate the merits and risks of acquiring the Note. The Purchaser has had the opportunity to discuss with the Company’s management, the Company’s business and financial affairs. The Purchaser is acquiring this Note for the Purchaser’s own account for investment and with no intention of distributing or reselling such Note or any part thereof in any transaction which would constitute a “distribution” within the meaning of the Securities Act.  The Purchaser acknowledges that (i) this Note and the Conversion Securities have not been registered under the Securities Act or any state securities law, (ii) the Purchaser must continue to bear the economic risk of the investment in this Note and the Conversion Securities unless such securities are subsequently registered under the Securities Act and applicable state securities law or such registration is not required, and (iii) there is not now, and in the future there may not be, any public market for this Note or the Conversion Securities. The Purchaser understands and acknowledges that this Note and the Conversion Securities shall have a restrictive legend to reflect the facts set forth in subsections (i) and (ii). The Purchaser understands that this Note is a speculative investment which involves a high degree of risk of loss of its investment therein and that it may not be possible to liquidate such investment in the Company in case of emergency, if at all. The Purchaser has had the opportunity to ask all questions and receive all answers concerning the Company and the terms and conditions of the purchase of this Note which the Purchaser deems necessary in order to make an informed decision to purchase this Notes.

4.

Redemption.  The Company can redeem all of the outstanding Notes at any time, other than upon a change of control as described below, upon thirty (30) days notice at a redemption price equal to 120% of the then outstanding principal amount plus accrued interest and other charges. Holders of the Notes called for redemption may exercise their right to convert any or all of their Notes pursuant to Section 2 at any time prior to the close of business on the date set for redemption.

5.

Liquidation. In the event of a liquidation, dissolution or winding up of the Company prior to the Maturity Date, the Purchaser will have the right to receive immediately an amount equal to the 120% of the outstanding principal amount plus accrued, unpaid interest of this Note held by the Purchaser.  Holders of the Notes may exercise their right to convert any or all of their Notes pursuant to Section 2 at any time prior to the close of business on the date set for liquidation.

6.

Collateral.  As security for this Note, Company hereby grants to Purchaser a security interest in all of its assets, including assets of its subsidiary, BioForce Nanosciences, Inc., including but not limited to accounts receivable, inventory, property and equipment, and intangible assets including intellectual property.  This security interest ranks pari-passu with the security interest granted to the purchasers of $300,000 of the Company’s convertible secured promissory notes which were issued on June 10, 2008.  A UCC-1 Financing Statement in a form acceptable to the Purchaser, and any other documents reasonably requested by Purchaser to perfect their security interest, appropriately completed by and duly executed by the Company, shall be filed with the appropriate governmental agency.

 

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7.

Registration Rights.  If at any time when there is not an effective Registration Statement covering the shares of Common Stock issuable upon the conversion of this Note (the “Conversion Shares”), the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, the Company shall send to each Holder written notice of such determination and, if within thirty (30) days after receipt of such notice, or within such shorter period of time as may be specified by the Company in such written notice as may be necessary for the Company to comply with its obligations with respect to the timing of the filing of such registration statement, any such Holder shall so request in writing, (which request shall specify the Conversion Shares intended to be disposed of by the Purchasers), the Company will cause the registration under the Securities Act of all Conversion Shares which the Company has been so requested to register by the Holder, to the extent requisite to permit the disposition of the Conversion Shares so to be registered, provided that if at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to such Holder and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Conversion Shares in connection with such registration, and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Conversion Shares being registered pursuant to this Section 7 for the same period as the delay in registering such other securities. The Company shall include in such registration statement all or any part of such Conversion Shares such Holder requests to be registered; provided, however, that the Company shall not be required to register any Conversion Shares pursuant to this Section 7 that are eligible for sale pursuant to Rule 144(k) of the Securities Act.  In the case of an underwritten public offering, if the managing underwriter(s) or underwriter(s) should reasonably object to the inclusion of the Conversion Shares in such registration statement, then if the Company after consultation with the managing underwriter should reasonably determine that the inclusion of such Conversion Shares would materially adversely affect the offering contemplated in such registration statement, and based on such determination recommends inclusion in such registration statement of fewer or none of the Conversion Shares of the Holders, then (x) the number of Conversion Shares of the Holders included in such registration statement shall be reduced pro-rata among such Holders (based upon the number of Conversion Shares requested to be included in the registration), if the Company after consultation with the underwriter(s) recommends the inclusion of fewer Conversion Shares, or (y) none of the Conversion Shares of the Holders shall be included in such registration statement, if the Company after consultation with the underwriter(s) recommends the inclusion of none of such Conversion Shares; provided, however, that if securities are being offered for the account of other persons or entities as well as the Company, such reduction shall not represent a greater fraction of the number of Conversion Shares intended to be offered by the Holders than the fraction of similar reductions imposed on such other persons or entities (other than the Company).  Nothing in this section shall limit the registration rights that the Purchase may have under any other agreement.

8.

Events of Default; Remedies.  The term “Event of Default” shall mean the occurrence of any one or more of the following:

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8.1.

The failure of the Company to pay any amounts due hereunder when due and such failure continues for a period of fourteen (14) days after written notice thereof by the Purchaser;

8.2.

A material breach by the Company of any other term or provision of this Note, or the Convertible Secured Promissory Note and Warrant Purchase Agreement dated June July 21, 2008, that remains uncured twenty one (21) days after the Company becomes aware of such breach; 

8.3.

The Company shall have entered against it by a court having jurisdiction thereof a decree or order for relief in respect to the Company under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or a receiver, liquidator, assignee, custodian, trustee, sequestrator or other similar official shall be appointed for the Company or for any substantial part of the Company’s property, or the winding up or liquidation of the Company’s affairs shall have been ordered; or the Company shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for such relief in an involuntary case under any such law, or any such involuntary case shall commence, and not be dismissed within sixty (60) days, or the Company shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official for the Company or for any substantial part of the Company’s property, or make any general assignment for the benefit of creditors; or

Upon the occurrence and continuance of an Event of Default, the Purchaser is entitled to declare all or any portion of the outstanding principal amount of the Note (together with all accrued but unpaid interest thereon and all other amounts due in connection therewith) due and payable and demand immediate payment thereof.

9.

Convertible Secured Promissory Note and Warrant Purchase Agreement.  Except as otherwise expressly provided herein, this Note shall be subject to the terms and conditions of the Convertible Secured Promissory Note and Warrant Purchase Agreement, by and among the Company and the Purchaser and dated as of July 21, 2008.

[signatures appear on the following page]

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IN WITNESS WHEREOF, each party has caused this Note to be signed in its name on the date first written above.

Company: 

BIOFORCE NANOSCIENCES HOLDINGS, INC.

By:  __/s/ Gregory D. Brown_____________________

Name:_Gregory D. Brown_______________________

Title:_Chief Financial Officer____________________    

Purchaser:

FCPR SGAM AI Biotechnology Fund

 

By:_/s/ Midori Yokoyama______________________ 

 Name:_Midori Yokoyama_____________________

 Title:_Partner_______________________________    

 

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