Document:

Unassociated Document

    NOTE
      AND WARRANT PURCHASE AGREEMENT

     

    THIS
      NOTE
      AND WARRANT PURCHASE AGREEMENT (this "Agreement"),
      is
      executed as of November 27, 2007, by and among Eugene Science, Inc., a Delaware
      corporation (the "Company"),
      and
      the purchaser set forth on the signature page attached hereto (the “Purchaser”).

     

    WHEREAS,
      the Company wishes to sell and issue, and the Purchaser wishes to purchase,
      the
      Company’s 10% senior secured note with an aggregate principal amount of
      $600,000, and warrants to purchase the number of shares of Common Stock (as
      defined below) set forth on the signature page hereto, which warrants shall
      be
      exercisable for three years at a purchase price of $0.25 per share;
      and

     

    WHEREAS,
      the Purchaser is willing to provide such financing on the terms and subject
      to
      the conditions set forth herein.

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements set forth
      herein, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the Company and the Purchaser,
      intending to be legally bound, agree as follows:

     

    ARTICLE
      1

    DEFINITIONS

     

    1.1 Defined
      terms.
      Certain
      capitalized terms used in this Agreement shall have the specific meanings
      defined below:

     

    “Business
      Day”
shall
      mean a day other than a Saturday, Sunday, or other day on which commercial
      banks
      are authorized or required by law to close.

     

    “Closing
      Date”
shall
      mean November 27, 2007 or any other date mutually agreed to by the Company
      and
      the Purchasers.

     

    “Indebtedness”
shall
      mean (a) all indebtedness for borrowed money or other obligations, extensions
      of
      credit, commitments or liabilities, whether current or long term, contingent
      or
      matured, secured or unsecured, (b) all indebtedness of the deferred purchase
      price of property or services whether represented by a note, promise to pay
      or
      security agreement, (c) all indebtedness created or arising under any
      conditional sale or other title retention agreement (even though the rights
      and
      remedies of the seller or lender under such agreement in the event of default
      may be limited to repossession or sale of such property), (d) all indebtedness
      secured by a purchase money mortgage or other lien to secure all or part to
      the
      purchase price of property subject to such mortgage or lien regardless of
      whether the indebtedness secured thereby shall have been assumed by the Company
      or is non recourse to the credit of the Company, (e) all obligations under
      leases that have been or must be, in accordance with United States Generally
      Accepted Accounting Principles, recorded as capital leases in respect of which
      the Company is liable as lessee, (f) any liability in respect of banker’s
      acceptances or letters of credit, and (g) without duplication all indebtedness
      that is guaranteed by the Company or that the Company has agreed (contingently
      or otherwise) to purchase or otherwise acquire or in respect of which the
      Company has otherwise assured a creditor against loss.

     

    “SEC
      Documents”
shall
      mean complete and accurate copies of the Company’s (i) Annual Report on Form
      10-KSB for the fiscal year ended December 31, 2006, together with all
      amendments, supplements and exhibits thereto (the “Form
      10-KSB”),
      as
      filed with the Securities and Exchange Commission (the “Commission”),
      (ii)
      Quarterly Report on Form 10-QSB for the quarterly period ended September 30,
      2007, together with all amendments, supplements and exhibits thereto, as filed
      with the Commission, and (iii) other reports filed by the Company with the
      Commission since December 31, 2006, together with all amendments, supplements
      and exhibits thereto, each as made available through the Commission’s website,
      www.sec.gov.

    
      
        
        

      

      
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    ARTICLE
      2

    THE
      CLOSING

     

    2.1 Closing.
      According to the terms and subject to the conditions of this Agreement, the
      Company shall deliver to the Purchaser on the Closing Date: (a) a 10% senior
      secured note in the form attached hereto as Exhibit
      A
      with an
      aggregate principal amount of $600,000 (the “Note”),
      and
      (b) warrants to purchase a number of shares of the Company’s common
      stock, $0.001 par value per share (“Common
      Stock”), equal
      to
      the quotient obtained by dividing (i) an amount equal to 65% of the principal
      amount of the Note by (ii) an exercise price of $0.25, in the form set forth
      in
Exhibit
      B
      (the
“Warrant”).
      For
      example, if the principal amount of the Note is $600,000, then the Company
      shall
      issue to the Purchaser a Warrant to purchase 1,560,000 shares of
      Common
      Stock (($600,000*0.65)/$0.25). The Purchaser shall deliver to the Company on
      the
      Closing Date, via wire transfer to the account set forth in Exhibit
      C,
      the
      purchase price set forth on the signature page hereto.

     

    2.2 Interest.
      The
      Note shall bear interest ("Interest")
      from
      the Closing Date until the Maturity Date at the rate of 10% per annum
      (calculated on the basis of the actual number of days elapsed over a year of
      360
      days). 

     

    2.3 Prepayment
      of the Note.
      The
      Company may from time to time prepay all or any portion of the Note and all
      accrued but unpaid interest thereon without premium or penalty of any type.
      The
      Company shall give the Purchaser at least three Business Days prior written
      notice of its intention to prepay the Note, specifying the date of payment
      and
      the total amount of the Note and the accrued but unpaid interest to be paid
      on
      such date. In the event that the Company elects to partially prepay the Note,
      such prepayment will be made pro rata based on the principal balance of the
      Note
      held by the Purchaser. 

     

    2.4 Maturity
      Date.
      Unless
      the Note is earlier accelerated or prepaid pursuant to the terms hereof, the
      Note and all accrued interest thereon shall be due and payable in full on May
      27, 2008, the 6 month anniversary of the Closing Date (the “Maturity
      Date”);
      provided,
      however,
      that
      the Maturity Date of the Note may be extended as set forth in Section 2.5 below.
      

     

    2.5 Payment
      Extension Options.
      In the
      event that the Company does not pay the Note in full by May 27, 2008, the
      Maturity Date shall be extended to November 27, 2008, so long as the interest
      due as of May 27, 2008 is paid by the Company and the Company issues to the
      Purchaser a Warrant to purchase a number of shares of
      Common
      Stock equal to the quotient obtained by dividing (i) an amount equal to 12.5%
      of
      the outstanding principal amount of the Note, less any amount of such Note
      prepaid by the Company prior to May 27, 2008, by (ii) an exercise price of
      $0.25. For example, if the principal amount of the Note is $600,000, then the
      Company shall issue to the Purchaser an additional Warrant to purchase 300,000
      shares of
      Common
      Stock (($600,000*.125)/$0.25).

     

    
      
        
        

      

      
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    ARTICLE
      3

    CONDITIONS
      PRECEDENT TO THE LOAN

     

    (a) Conditions
      on the Closing Date.
      The
      obligation of the Purchaser to purchase the Note pursuant to Section 2.1 shall
      be subject to the condition that: (i) the Company shall have duly executed
      and
      delivered to the Purchaser the Note and Warrants; (ii) the representations
      and
      warranties made by the Company in Section 4 hereof shall be true and
      correct at the Closing Date, with the same force and effect as if they had
      been
      made on and as of such date, the business and assets of the Company shall not
      have been adversely affected in any material way prior to the Closing Date,
      and
      the Company shall have performed and complied with all obligations and
      conditions herein required to be performed or complied with by it on or prior
      to
      the Closing Date; (iii)
      all
      corporate and other proceedings in connection with the transactions contemplated
      at the Closing Date, and all documents and instruments incident to such
      transactions, shall be reasonably satisfactory in substance and form to the
      Purchaser, which shall have received all such counterpart originals or certified
      or other copies of such documents as they may reasonably request; (iv) the
      Company shall have reserved for issuance shares of Common Stock issuable upon
      conversion of the Note or exercise of the Warrants; (v) all authorizations,
      approvals, or permits, if any, of any governmental authority or regulatory
      body
      of the United States or of any state or foreign government that are required
      in
      connection with and prior to the lawful sale and issuance of the Note and
      Warrants pursuant to this Agreement shall have been duly obtained and shall
      be
      effective on and as of the Closing Date; and (vi) no order enjoining the sale
      of
      the Note and Warrants shall have been issued and no proceedings for such purpose
      shall be pending or, to the Company’s knowledge, threatened by any governmental
      authority having jurisdiction over this transaction and at the Closing Date
      the
      sale and issuance of the Note and Warrants shall be legally permitted by all
      laws and regulations to which the Purchaser and the Company are
      subject.

     

    ARTICLE
      4

    CREATION
      OF SECURITY INTEREST

     

    4.1 Grant
      of Security Interest.
      The
      Company’s obligations under the Note shall be secured by a security interest of
      first priority in all right, title and interest of the Company in and to the
      property described in Attachment
      1
      of, and
      granted in accordance with the terms and form of, the Security Agreement
      attached hereto as Exhibit
      C
      (the
“Security
      Agreement”).
      The
      Company may not grant a security interest in, or otherwise pledge, any of its
      assets to any third party, other than the Purchaser, without the prior written
      consent of the Purchaser.
      If this
      Agreement is terminated, the Purchaser’s interests in the Collateral (as defined
      in the Security Agreement) shall continue until the Company’s obligations
      hereunder are repaid in full. Upon payment in full of the Company’s obligations
      hereunder, the Purchaser shall release its interest in the Collateral and all
      rights therein shall revert to the Company.

     

    4.2 Authorization
      to File Financing Statements.
      The
      Company hereby authorizes the Purchaser, and grants the Purchaser a power of
      attorney, to file financing statements and such other documents, upon prior
      notice to the Company, with all appropriate jurisdictions to perfect or protect
      the Purchaser’s interests or rights hereunder.
      Upon
      termination of the Purchaser’s interests in the Collateral in accordance with
      Section 4.1, the Purchaser will promptly file a termination statement
      terminating any financing statement filed hereunder, and if the Purchaser does
      not file such termination statement as and when required, the Purchaser hereby
      authorizes the Company to file such termination statement.

     

    ARTICLE
      5

    COMPANY’S
      REPRESENTATIONS AND WARRANTIES

     

    5.1 Due
      Authorization.
      The
      Company has full right, power and authority to enter into this Agreement, to
      make the borrowings hereunder and execute and deliver the Note as provided
      herein and to perform all of its duties and obligations under this Agreement
      and
      the Note. The execution and delivery of this Agreement will not, nor will the
      observance or performance of any of the matters and things herein or therein
      set
      forth, violate or contravene any provision of law or the Company's bylaws or
      certificate of incorporation. All necessary and appropriate corporate action
      on
      the part of the Company has been taken to authorize the execution and delivery
      of this Agreement. 

     

    
      
        
        

      

      
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    5.2 Enforceability.
      This
      Agreement has been validly executed and delivered by the Company and constitutes
      a legal, valid and binding obligation of the Company enforceable against the
      Company in accordance with its respective terms, subject to applicable
      bankruptcy, insolvency, reorganization or similar laws relating to or affecting
      the enforcement of creditors’ right and to the availability of the remedy of
      specific performance.

     

    5.3 Compliance
      with Laws.
      The
      nature and transaction of the Company's business and operations and the use
      of
      its properties and assets do not, and during the term of this Agreement shall
      not, violate or conflict with in any material respect any applicable law,
      statute, ordinance, rule, regulation or order of any kind or
      nature.

     

    5.4 Absence
      of Conflicts.
      The
      execution, delivery and performance by the Company of this Agreement, and the
      transactions contemplated hereby, do not constitute a breach or default, or
      require consents under, any agreement, permit, contract or other instrument
      to
      which the Company is a party, or by which the Company is bound or to which
      any
      of the assets of the Company is subject, or any judgment, order, writ, decree,
      authorization, license, rule, regulation, or statute to which the Company is
      subject, and except as set forth herein, will not result in the creation of
      any
      lien upon any of the assets of the Company. 

     

    5.5 Indebtedness.
      Except
      for Indebtedness reflected in the SEC Documents or Indebtedness incurred by
      the
      Company in the ordinary course of its business since the filing of the SEC
      Documents, the Company has no material Indebtedness outstanding at the date
      hereof and will incur no material Indebtedness prior to the Closing
      Date.

     

    5.6 Litigation.
      Except
      as set forth in the SEC Documents, there is no action, suit, proceeding or
      investigation pending or, to the Company’s knowledge, currently threatened
      against the Company or any of its subsidiaries that questions the validity
      of
      this Agreement or the right of the Company to enter into it, or to consummate
      the transactions contemplated hereby, or that could reasonably be expected
      to
      result, either individually or in the aggregate, in a material adverse effect
      on
      the Company.

     

    5.7 Authorized
      Capital Stock.
      The
      authorized capital stock of the Company consists of 480,000,000 shares of Common
      Stock and 20,000,000 shares of preferred stock, $0.001 par value per share
      (“Preferred
      Stock”).
      As of
      November 15, 2007, 40,315,705 shares of Common Stock and no shares of Preferred
      Stock were validly issued and outstanding, fully paid and nonassessable and
      no
      shares of Common Stock or Preferred Stock have been issued since then. Except
      as
      disclosed in the SEC Documents, there are no outstanding options, warrants
      and
      convertible securities of the Company, or any other rights to acquire securities
      of the Company. The principal stockholders of the Company are as set forth
      in
      the Form 10-KSB.

     

    5.8 Material
      Contracts.
      Except
      as set forth in the SEC Documents, the Company is not a party to or otherwise
      bound by any contract that is material to its financial condition, operations,
      business or assets, and the Company is not a party to or otherwise bound by
      any
      contract that may materially and adversely affect its ability to consummate
      the
      transactions contemplated hereby.

     

    5.9 Validity
      of Securities.
      The
      sale of the Note and Warrants, and the issuance of shares of Common Stock upon
      conversion of the Note (the “Conversion
      Shares”)
      or
      exercise of the Warrants (the “Warrant
      Shares”)
      (the
      Note, Warrants, the Conversion Shares and Warrant Shares shall be referred
      to
      herein as the “Securities”),
      are
      not subject to any preemptive rights or rights of first refusal and, when
      issued, sold and delivered in compliance with the provisions of this Agreement,
      will be duly and validly issued, fully paid and nonassessable, and will be
      free
      of any liens, encumbrances or restrictions on transfer; provided,
      however,
      that
      the Securities may be subject to restrictions on transfer under state
      and/or federal securities laws as set forth herein or as otherwise required
      by
      such laws at the time a transfer is proposed.

     

    
      
        
        

      

      
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    5.10 Compliance
      with Other Instruments.
      The
      Company is not in violation of any term of (i) its Certificate of
      Incorporation or Bylaws, (ii) any mortgage, indenture, contract, agreement
      or instrument, or (iii) any judgment, decree or order, or any statute, rule
      or regulation applicable to it or its properties, the violation of which, in
      the
      case of clause (ii), could have a material adverse effect on the business,
      operations, affairs, financial condition or prospects of the Company, or any
      of
      its properties or assets, or in any material impairment of the right or ability
      of the Company to carry on its business as now conducted or as proposed to
      be
      conducted, or in any material liability on the part of the Company (a
“Material
      Adverse Effect”).
      The
      execution, delivery, and performance of and compliance with this Agreement
      and
      the issuance and sale of the Securities pursuant hereto will not result in
      any
      violation of any term of (i) the Certificate of Incorporation or Bylaws of
      the Company, as each is then in effect, (ii) any mortgage, indenture,
      contract, agreement, instrument, or (iii) any judgment, decree, order,
      statute, rule or regulation, or be in conflict with or constitute a default
      under any such term, or result in the creation of any mortgage, pledge, lien,
      encumbrance, or charge upon any of the properties or assets of the Company;
      and
      there is no term of the Certificate of Incorporation or Bylaws, or any mortgage,
      indenture, contract, agreement, instrument, or any judgment, decree, order,
      statute, rule or regulation, which could reasonably be likely to have a Material
      Adverse Effect.

     

    5.11 Title
      to Properties and Assets; Liens, etc.
      The
      Company has good and marketable title to its properties and assets, in each
      case
      subject to no mortgage, pledge, lien, encumbrance, or charge, other than
      (a) liens resulting from taxes which have not yet become delinquent, or
      (b) minor liens, encumbrances, or defects of title which do not,
      individually or in the aggregate, materially detract from the value of the
      property subject thereto or have a Material Adverse Effect. With respect to
      the
      properties and assets it leases, the Company is in compliance with such leases
      and it holds a valid leasehold free of any liens, claims or encumbrances that
      impair its present use of such leased properties and assets.

     

    5.12 Affiliates.
      Except
      as set forth in the SEC Documents, the Company (i) has no subsidiaries,
      (ii) does not presently own or control, directly or indirectly, any equity
      interest in any corporation, association, partnership, limited liability company
      or other business entity and (iii) is not, directly or indirectly, a
      participant in any joint venture, partnership or similar
      arrangement.

     

    5.13 Registration
      Rights.
      Except
      as set forth in the SEC Documents, the Company is not under any obligation
      to
      register any of its presently outstanding securities or any of its securities
      which may hereafter be issued.

     

    5.14 Full
      Disclosure.
      The
      Company has provided the Purchasers with all the information that the Purchasers
      have reasonably requested for deciding whether to purchase the Securities.
      To
      the Company’s knowledge, neither this Agreement, the representations and
      warranties by the Company contained herein, the Exhibits hereto, nor any other
      written statement or certificate delivered or to be furnished to the Purchasers
      in connection herewith, when read together, contains any untrue statement of
      a
      material fact or knowingly omits to state a material fact necessary in order
      to
      make the statements contained herein or therein not misleading.

     

    5.15 Changes.
      Since
      the date of the last SEC Document, there has not been: 

     

    (a) any
      change in the assets, liabilities, financial condition, or operating results
      of
      the Company from that reflected in the Company’s balance sheets as at December
      31, 2006 and September 30, 2007, each as set forth in the SEC Documents, except
      changes in the ordinary course of business that have not been, in the aggregate,
      materially adverse; or

     

    (b) to
      the
      Company’s knowledge, any other event or condition of any character that might
      materially and adversely affect the business, properties, prospects, or
      financial condition of the Company (as such business is presently conducted
      and
      as it is proposed to be conducted).

    
      
        
        

      

      
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    5.16 Proprietary
      Information.
      The
      Company has taken all reasonable security measures to protect the secrecy,
      confidentiality, and value of all trade secrets, know-how, inventions, designs,
      processes, and technical data required to conduct its business.

     

    5.17 Patents,
      Trademarks, etc.
      Except
      as set forth in the SEC Documents, the Company has sufficient title and
      ownership of all material patents, patent applications, licenses, trademarks,
      service marks, trade names, inventions, processes, formulae, trade secrets,
      franchises, copyrights and other proprietary rights necessary for the operation
      of its business as now conducted and as proposed to be conducted (“Intellectual
      Property”)
      with
      no known infringement of or conflict with the rights of others. To the Company’s
      knowledge, such ownership and title are exclusive and not subject to termination
      without the Company’s consent. Except for commercial software and applications
      generally available to the public there are no outstanding options, licenses,
      or
      agreements of any kind relating to the foregoing proprietary rights, nor is
      the
      Company bound by or a party to any options, licenses or agreements of any kind
      with respect to the material patents, trademarks, service marks, trade names,
      copyrights, trade secrets, licenses, information, proprietary rights or
      processes of any other person or entity. The Company is not aware of any third
      party that is infringing or violating any of its patents, licenses, trademarks,
      service marks, trade names, inventions, processes, formulae, trade secrets,
      franchises, copyrights or other proprietary rights. The Company has not received
      any communications alleging that the Company has violated or, by conducting
      its
      business as proposed, would violate any of the patents, trademarks, service
      marks, trade names, copyrights or trade secrets or other proprietary rights
      of
      any other person or entity.

     

    5.18 Offering.
      Assuming the accuracy of the representations and warranties of the Purchasers
      contained in Article 6 hereof, the offer, issue, and sale of the Securities:
      (a) are and will be exempt from the registration and prospectus delivery
      requirements of the Securities Act of 1933, as amended (the “1933
      Act”),
      and
      neither the Company nor any authorized agent acting on its behalf will take
      any
      action hereafter that would cause the loss of such exemption; and (b) have
      been registered or qualified (or are exempt from registration and qualification)
      under the registration, permit, or qualification requirements of all applicable
      state securities laws.

     

    ARTICLE
      6

    PURCHASER’S
      REPRESENTATIONS AND WARRANTIES

     

    6.1 Due
      Authorization.
      The
      Purchaser has full power and authority and has taken all action necessary to
      authorize the Purchaser to execute, deliver and perform the Purchaser’s
      obligations under this Agreement. This Agreement is the legal, valid and binding
      obligation of the Purchaser in accordance with its terms.

     

    6.2 Accredited
      Investor.
      The
      Purchaser is an “accredited investor” as that term is defined in Regulation D
      promulgated under the 1933 Act.

     

    6.3 Investment
      Experience.
      The
      Purchaser has not authorized any person to act as such Purchaser’s Purchaser
      Representative (as that term is defined in Regulation D of the General Rules
      and
      Regulations under the 1933 Act) in connection with this transaction. The
      Purchaser has such knowledge and experience in financial, investment and
      business matters that the Purchaser is capable of evaluating the merits and
      risks of the prospective investment in the securities of the Company. The
      Purchaser has consulted with such independent legal counsel or other advisers
      as
      the Purchaser has deemed appropriate to assist the Purchaser in evaluating
      the
      proposed investment in the Company. If other than an individual, the Purchaser
      also represents that it has not been organized for the purpose of acquiring
      the
      Securities.

    
      
        
        

      

      
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    6.4 Adequate
      Means.
      The
      Purchaser (i) has adequate means of providing for the Purchaser’s current
      financial needs and possible contingencies; and (ii) can afford (a) to hold
      unregistered securities for an indefinite period of time as required; and (b)
      sustain a complete loss of the entire amount of the subscription.

     

    6.5 Access
      to Information.
      The
      Purchaser has been afforded the opportunity to ask questions of, and receive
      answers from the officers and/or directors of the Company acting on its behalf
      concerning the terms and conditions of this transaction and to obtain any
      additional information, to the extent that the Company possesses such
      information or can acquire it without unreasonable effort or expense, necessary
      to verify the accuracy of the information furnished; and has had such
      opportunity to the extent the Purchaser considers it appropriate in order to
      permit the Purchaser to evaluate the merits and risks of an investment in the
      Company. It is understood that all documents, records and books pertaining
      to
      this investment have been made available for inspection, and that the books
      and
      records of the Company will be available upon reasonable notice for inspection
      by investors during reasonable business hours at its principal place of
      business. The foregoing shall in no way be deemed to limit the ability of the
      Purchaser to rely on the representations and warranties set forth herein or
      incorporated herein by reference.

     

    6.6 No
      Resale.
      The
      Securities being purchased hereunder are being acquired solely for the account
      of the Purchaser, for the Purchaser’s investment and not with a view to, or for
      resale in connection with, any distribution in any jurisdiction where such
      sale
      or distribution would be precluded. 

     

    6.7 Restricted
      Securities.
      The
      Purchaser understands that the Securities are characterized as “restricted
      securities” under the federal securities laws inasmuch as they are being
      acquired from the Company in a transaction not involving a public offering
      and
      that under such laws and applicable regulations such securities may be resold
      without registration under the 1933 Act only in certain limited circumstances.
      In this connection, the Purchaser represents that it is familiar with Rule
      144
      under the 1933 Act, and understands the resale limitations imposed thereby
      and
      by the 1933 Act.

     

    6.8 Further
      Limitations on Disposition.
      Without
      in any way limiting the representations set forth above, the Purchaser further
      agrees not to make any disposition of all or any portion of the Securities
      other
      than the Note unless and until the transferee has agreed in writing for the
      benefit of the Company to the representations contained in this Section 6.8;
      provided,
      that
      this Section 6.8 shall not apply to the disposition of all or any portion of
      the
      Securities if:

     

    (a) there
      is
      then in effect a registration statement under the 1933 Act covering such
      proposed disposition and such disposition is made in accordance with such
      registration statement; and

     

    (b) (i)
      the
      Purchaser shall have notified the Company of the proposed disposition and shall
      have furnished the Company with a reasonably detailed statement of the
      circumstances surrounding the proposed disposition and shall furnish transferor
      representations as may reasonably be requested by the Company, and (ii) if
      reasonably requested by the Company, the Purchaser shall have furnished the
      Company with an opinion of counsel, reasonably satisfactory to the Company,
      that
      such disposition will not require registration of such shares under the 1933
      Act. 

     

    Notwithstanding
      the provisions of paragraphs (a) and (b) above, no such registration statement
      or opinion of counsel shall be necessary for a transfer if the Purchaser is
      a
      partnership, limited liability company or corporation to a partner, member
      or
      shareholder of such partnership, limited liability company or corporation as
      the
      case may be or a retired partner or member of such partnership or limited
      liability company who retires after the date hereof, or to the estate of any
      such partner or member or retired partner or member or the transfer by gift,
      will or intestate succession of any partner to his spouse or to the siblings,
      lineal descendants or ancestors of such partner or his spouse, if the transferee
      agrees in writing to be subject to the terms hereof to the same extent as if
      he,
      she or it were an original Purchaser hereunder.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    6.9 Legend.
      The
      Purchaser hereby acknowledges and agrees that the Company may insert the
      following or similar legend on the face of the certificates evidencing the
      Note,
      the Warrants, the Warrant Shares or the Conversion Shares purchased by the
      Purchaser if required in compliance with the 1933 Act or state securities
      laws:

     

    “These
      securities have not been registered under the Securities Act of 1933, as amended
      (the “Securities Act”), or any state securities laws and may not be sold or
      otherwise transferred or disposed of except pursuant to an effective
      registration statement under the Securities Act and any applicable state
      securities laws, or an opinion of counsel satisfactory to counsel to the issuer
      that an exemption from registration under the Securities Act and any applicable
      state securities laws is available.”

    

    6.10 General
      Solicitation.
      The
      Purchaser is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.

     

    ARTICLE
      7

    COVENANTS

     

    7.1 Registration
      Rights.

     

    (a) If
      the
      Company prepares and files a Registration Statement under the 1933 Act or
      otherwise registers securities under the 1933 Act as to any of its securities
      (other than under a Registration Statement pursuant to Form S-8 or Form S-4)
      (each such filing, a "Registration
      Statement"),
      it
      will give written notice by registered mail, at least 20 days prior to the
      filing of such Registration Statement to the Purchaser of its intention to
      do
      so. The Company shall include all Warrant Shares (the “Registrable
      Securities”)
      in
      such Registration Statement with respect to which the Company has received
      written requests for inclusion therein within 15 days of actual receipt of
      the
      Company's notice.

     

    (b) In
      the
      event of an underwritten registered offering, if the managing underwriter(s)
      advise the Company in writing that in their opinion the number of Registrable
      Securities exceeds the number of Registrable Securities which can be sold
      therein without adversely affecting the marketability of the offering, the
      Company will include in such registration the number of Registrable Securities
      requested to be included which in the opinion of such underwriter(s) can be
      sold
      without adversely affecting the marketability of the offering, pro rata among
      the respective holders thereof on the basis of the amount of Registrable
      Securities owned by each such holder. 

     

    7.2 Restriction
      on Debt Issuances.
      So long
      as any amounts remain outstanding under the Notes, the Company shall not,
      without the prior consent of the Purchasers, issue or sell more than $3,000,000
      of debt in the aggregate (including the Note and the senior secured promissory
      notes issued pursuant to those certain Note and Warrant Purchase Agreements
      dated as of July 2, 2007 and August 24, 2007), except for Permitted
      Indebtedness, so long as any of the principal amount or interest on the Note
      remains unpaid unless (a) the proceeds of the issuance or sale of the Company’s
      debt, directly from the gross proceeds of the issuance or sale, will be used
      to
      repay all outstanding principal and accrued interest owed under the Note or
      (b)
      the debt issued and sold by the Company is a subordinated convertible debenture
      which will mature no earlier than six months after the Maturity Date.
“Permitted
      Indebtedness”
means
      indebtedness to trade creditors incurred in the ordinary course of business,
      and
      extensions, refinancings and renewals of any items of any existing
      indebtedness.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    7.3 Restriction
      on Payments.
      So long
      as any amounts remain outstanding under the Note, the Company shall not, without
      the prior consent of the Purchasers, make any payments to its officers,
      directors, stockholders or related parties, whether for accrued and unpaid
      salaries or otherwise, in excess of $200,000 in the aggregate.

     

    7.4 Observation
      Rights.
      So long
      as any amounts remain outstanding under the Note, and subject to the limitations
      set forth in this Section 7.4, the Company shall permit a representative of
      the
      Purchaser to be present in a nonvoting observer capacity at all meetings of
      the
      Company’s board of directors (the “Board”)
      or any
      committee thereof, including any telephonic meetings, and the Company will
      give
      the Purchaser’s designated representative notice of such meetings, by telecopy
      or by such other means as such notices are delivered to the members of the
      Board
      at the same time notice is provided or delivered to the Board; provided,
      however,
      that
      (a) such representative shall agree to hold in confidence and trust and to
      act
      in a fiduciary manner with respect to all information so provided, and (b)
      the
      Company reserves the right to withhold any information and to exclude such
      representative from any meeting or portion thereof if, in the reasonable good
      faith judgment of the Board, access to such information or attendance at such
      meeting is reasonably likely to (i) adversely affect the attorney-client
      privilege between the Company and its counsel with respect to any matter, (ii)
      result in a conflict of interest between the Company and the Purchaser, or
      (iii)
      result in a violation of a confidentiality agreement between the Company and
      a
      third party. The Purchaser, on behalf of itself and its representative, agrees
      that it shall not use any information obtained by it pursuant to its rights
      under this Section 7.4 except relative to its interests in the Company hereunder
      and otherwise only as expressly authorized in writing by the Company. The
      Purchaser, and its representative, shall use the same degree of care to protect
      the Company’s confidential information as the Purchaser uses to protect its own
      confidential information of like nature, but in no circumstances with less
      than
      reasonable care. 

     

    ARTICLE
      8

    MISCELLANEOUS

     

    8.1 Successors
      and Assigns.
      Subject
      to the exceptions specifically set forth in this Agreement, the terms and
      conditions of this Agreement shall inure to the benefit of and be binding upon
      the respective executors, administrators, heirs, successors and assigns of
      the
      parties. This Agreement may be assigned solely by the Purchaser.

     

    8.2 Titles
      and Subtitles.
      The
      titles and subtitles of the Sections of this Agreement are used for convenience
      only and shall not be considered in construing or interpreting this
      agreement.

     

    8.3 Notices.
      Any
      notice, request or other communication required or permitted hereunder shall
      be
      in writing and shall be delivered personally or by facsimile (receipt confirmed
      electronically) or shall be sent by a reputable express delivery service or
      by
      certified mail, postage prepaid with return receipt requested, addressed as
      follows:

     

        if
      to the
      Company, to:

     

    Eugene
      Science, Inc

    8th
      Floor, LG Palace Building

    165-8
      Donggyo-Dong, Mapo-Gu

    Seoul,
      Korea

    Attn: Chief
      Executive Officer

    Fax: 82-2-338-6096
      

     

        if
      to the
      Purchaser, to
      the
      addresses set forth in the signature page.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Any
      party
      hereto may change the above specified recipient or mailing address by notice
      to
      the other parties given in the manner herein prescribed. All notices shall
      be
      deemed given on the day when actually delivered as provided above (if delivered
      personally or by facsimile, provided that any such facsimile is received during
      regular business hours at the recipient's location) or on the day shown on
      the
      return receipt (if delivered by mail or delivery service).

     

    8.4 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the domestic
      laws of the State of California without giving effect to any choice of law
      or
      conflict of law provision or rule (whether of the State of California or any
      other jurisdiction) that would cause the application of the laws of any
      jurisdiction other than the State of California. The parties hereto hereby
      agree
      that any suit or proceeding arising under this Agreement, or in connection
      with
      the consummation of the transactions contemplated hereby, shall be brought
      solely in a federal or state court located in the County of Orange, State of
      California. The prevailing party in any suit or proceeding shall be entitled
      to
      its reasonable attorneys’ fees and costs. 

     

    8.5 Waiver
      and Amendment.
      Any
      term of this Agreement may be amended, waived or modified with the written
      consent of the Company and the Purchasers.

     

    8.6 Remedies.
      The
      rights and remedies of the Purchaser described herein shall be cumulative and
      not restrictive of any other rights or remedies available under any other
      instrument, at law or in equity. 

     

    8.7 Counterparts.
       This
      Agreement may be executed in one or more identical counterparts each of which
      when taken together shall constitute one and the same Agreement. 

     

    [Remainder
      of Page Intentionally Left Blank; Signature Page Follows] 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the undersigned have caused this Note and Warrant Purchase
      Agreement to be signed in their names on the date first set forth
      above.

    

    
      	
              The
                Warrants are to be issued in:

            	
                          

              Print
                Name of Investor

            
	
              ____
                individual name

            	
              Principal
                Amount of Note: $  .00

               

               

            
	
               

              ____
                tenants in the entirety

            	
              Purchaser
                price paid:  
                $  .00 

            
	
               

               

               

              ____
                corporation (an officer must sign)

            	
               

                              

              Signature
                of Authorized Person

            
	
               

               

              ____
                partnership (all general partners must sign)

            	
               

                              

              Name
                of Authorized Signatory

            
	
               

               

              ____
                trust

            	 
	
               

               

              ____
                limited liability company

            	
               

              Address
                of Investor:

                          

                          

              Facsimile
                No.:    

            

    

     

    

    EUGENE
      SCIENCE, INC.

    

                                    

    Name: Seung
      Kwon Noh

    Title: Chief
      Executive Officer

     

     

    

      Signature
        Page to Note and Warrant Purchase Agreement

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A

    10%
      SENIOR NOTE

     

    See
      attached.

     

    
      
        
        

      

      
        
          EXHIBIT
            A

        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

    COMMON
      STOCK PURCHASE WARRANT

     

    See
      attached.

     

    
      
        
        

      

      
        
          EXHIBIT
            B

        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    SECURITY
      AGREEMENT

     

    See
      attached.

     

    

    
      
        
        

      

      
        
          EXHIBIT
            C

        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

    WIRE
      TRANSFER INSTRUCTIONS

    

    Wiring
      instructions for incoming wires:

    

    Bank
      routing # ________________

    

    Bank
      Name: WOORI
      BANK HAPCHONG DONG BR 

    

    Bank
      Address: ______________

    

    Beneficiary:
      Eugene
      Science, Inc.

    

    ACCOUNT
      #
1081-300-353029

     

    Swift
      Code: HVBKKRSE

     

    
      
        
        

      

      
        
          EXHIBIT
            DUnassociated Document

    THE
      SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE UNITED
      STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE
      PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED
      BY
      THE REGISTERED HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON
      STATUTORY EXEMPTIONS UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE STATE
      SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
      ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
      1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
      COMMISSION.

     

    

    SECURED
      SENIOR PROMISSORY NOTE

    Seoul,
      Korea

    November
      27, 2007

    

    FOR
      VALUE
      RECEIVED, Eugene Science,
      Inc., a
Delaware
      corporation ("Borrower"),
      hereby promises to pay to the order of ________________
      ("Lender"),
      in
      lawful money of the United States at the address of Lender set forth herein,
      the
      principal amount of $_______ (the “Note”),
      together with interest. This secured senior promissory note (this "Note")
      has
      been executed by Borrower on the date set forth above (the "Effective
      Date")
      pursuant to the Note and Warrant Purchase Agreement entered into as of the
      date
      hereof between Lender and Borrower (the "Purchase
      Agreement").
      Capitalized terms used but not defined herein shall have the meanings assigned
      to such terms in the Purchase Agreement.

     

    1. Interest.
      This
      Note shall bear interest at a
      rate
      of 10%
      per
      annum (“Interest
      Rate”)
      from
      the Effective Date and continuing until payment in full of this
      Note.

     

    2. Maturity
      Date.
      All or
      any portion of this Note, all accrued interest hereon and all other sums due
      hereunder, shall be due and payable on demand by Lender on May 27,
      2008
      (the “Maturity
      Date”),
      subject to one
      extension of 6 months of
      the
      Maturity Date as set forth in the Purchase Agreement. 

     

    3. Application
      of Payments.
      

     

    3.1. Except
      as
      otherwise expressly provided herein, payments under this Note shall be applied
      (i) first to the repayment of any sums incurred by Lender for the payment of
      any
      expenses in enforcing the terms of this Note, (ii) then to the payment of
      accrued but unpaid interest due under this Note and (iii) then to the payment
      of
      outstanding principal due under this Note.

     

    3.2. Upon
      payment in full of this Note and applicable accrued and unpaid interest hereon,
      this Note shall be marked "Paid in Full" and returned to Borrower.

     

    4. Waiver
      of Notice.
      Borrower hereby waives diligence, notice, presentment, protest and notice of
      dishonor.

     

    5. Optional
      Conversion.
      At any
      time prior to May 27, 2008, upon 10 days prior written notice to Borrower
      (“Conversion
      Date”),
      Lender shall have the right, in its sole discretion, to covert all outstanding
      principal and accrued interest under this Note existing as of close of business
      on the Conversion Date into shares of the Company’s Common Stock (“Common
      Stock”)
      at the
      conversion price set forth below. If Lender elects to convert this Note into
      shares of Common Stock, the number of shares of Common Stock to be issued upon
      such conversion shall be equal to the quotient obtained by dividing (a) the
      outstanding principal and accrued but unpaid interest due on this Note on the
      Conversion Date by (b) $0.65.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6. Transfer.
      This
      Note may be transferred by Lender at any time, provided that such transfer
      complies with applicable securities laws
      and the
      limitations on transfer set forth in Section 6.8 of the Purchase
      Agreement.

     

    7. Events
      of Default.
      The
      occurrence of any of following events (each an "Event
      of Default"),
      not
      cured in any applicable cure period, shall constitute an Event of Default of
      Borrower:

     

    7.1. The
      failure to make when due any payment described in this Note or the Purchase
      Agreement, whether on or after the Maturity Date, by acceleration or otherwise;
      and

     

    7.2. A
      breach
      of any representation, warranty, covenant or other provision of this Note or
      the
      Purchase Agreement, which, if capable of being cured, is not cured within 10
      days following notice thereof to the Company;

     

    7.3. (i)
      The
      application for the appointment of a receiver or custodian for Borrower or
      the
      property of Borrower, (ii) the entry of an order for relief or the filing of
      a
      petition by or against Borrower under the provisions of any bankruptcy or
      insolvency law, (iii) any assignment for the benefit of creditors by or against
      Borrower, or (iv) the insolvency of Borrower.

     

    Upon
      the
      occurrence of any Event of Default that is not cured within any applicable
      cure
      period, if any,
      the
      Lender may elect, by written notice delivered to Borrower, to take at any time
      any or all of the following actions: (i)
      declare this Note, and all notes issued pursuant to the Purchase Agreement,
      to
      be forthwith due and payable, whereupon the entire outstanding principal due
      under this Note, together with all accrued and unpaid interest thereon, and
      all
      other cash obligations hereunder, shall become forthwith due and payable,
      without presentment, demand, protest or any other notice of any kind, all of
      which are hereby expressly waived by Borrower, anything contained herein to
      the
      contrary notwithstanding, and (ii) exercise any and all other remedies provided
      hereunder or available at law or in equity.
      In
      addition to the foregoing, Borrower may be required to issue warrants to Lender
      as set forth in Section 2.6 of the Purchase Agreement,
      which
      issuance would not preclude Lender from taking any and all actions whether
      at
      law or equity to enforce its rights.
      

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    8. Miscellaneous.

     

    8.1. Successors
      and Assigns.
      Subject
      to the exceptions specifically set forth in this Note, the terms and conditions
      of this Note shall inure to the benefit of and be binding upon the respective
      executors, administrators, heirs, successors and assigns of the
      parties.

     

    8.2. Loss
      or Mutilation of Note.
      Upon
      receipt by Borrower of evidence satisfactory to Borrower of the loss, theft,
      destruction or mutilation of this Note, together with indemnity reasonably
      satisfactory to Borrower, in the case of loss, theft or destruction, or the
      surrender and cancellation of this Note, in the case of mutilation, Borrower
      shall execute and deliver to Lender a new promissory note of like tenor and
      denomination as this Note.

     

    8.3. Notices.
      Any
      notice, demand, offer, request or other communication required or permitted
      to
      be given pursuant to the terms of this Note shall be in writing and shall be
      deemed effectively given the earlier of (i) when received, (ii) when delivered
      personally, (iii) one business day after being delivered by facsimile (with
      receipt of appropriate confirmation), (iv) one business day after being
      deposited with an overnight courier service, or (v) four days after being
      deposited in the U.S. mail, First Class with postage prepaid, and addressed
      to
      the recipient at the addresses set forth in the Purchase Agreement unless
      another address is provided to the other party in writing.

     

    8.4 Governing
      Law.
      This
      Note shall be governed in all respects by the laws of the State of California
      as
      applied to agreements entered into and performed entirely within the State
      of
      California by residents thereof, without regard to any provisions thereof
      relating to conflicts of laws among different jurisdictions. The parties hereto
      hereby agree that any suit or proceeding arising under this Agreement, or in
      connection with the consummation of the transactions contemplated hereby, shall
      be brought solely in a federal or state court located in the County of Orange
      and State of California. 

     

    8.5 Waiver
      and Amendment.
      Any
      term of this Note may be amended, waived or modified only with the written
      consent of Borrower and Lender.

     

    8.6 Remedies;
      Costs of Collection; Attorneys' Fees.
      No
      delay or omission by Lender in exercising any of its rights, remedies, powers
      or
      privileges hereunder or at law or in equity and no course of dealing between
      Lender and the undersigned or any other person shall be deemed a waiver by
      Lender of any such rights, remedies, powers or privileges, even if such delay
      or
      omission is continuous or repeated, nor shall any single or partial exercise
      of
      any right, remedy, power or privilege preclude any other or further exercise
      thereof by Lender or the exercise of any other right, remedy, power or privilege
      by Lender. The rights and remedies of Lender described herein shall be
      cumulative and not restrictive of any other rights or remedies available under
      any other instrument, at law or in equity. If an Event of Default occurs,
      Borrower agrees to pay, in addition to the Note and interest payable thereon,
      reasonable attorneys' fees and any other reasonable costs incurred by Lender in
      connection with its pursuit of its remedies under this Note.

     

    [Remainder
      of Page Intentionally Left Blank; Signature Page Follows] 

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, Borrower has caused this Note to be signed on the Effective
      Date.

    

    

    
      	 	BORROWER:
	 	
            
	 	EUGENE SCIENCE INC.
	 	
            
	 	
               

              
                

              
By:  Seung
              Kwon Noh
	 	    Chief
              Executive Officer

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