Document:

ex4-2.htm

Exhibit 4.2

 

	Warrant No. A1015	2,500,000 Shares
	 	 

Issued June 14, 2010

 OCTUS, INC.

 

WARRANT TO PURCHASE

SHARES OF COMMON STOCK

THE SECURITIES REPRESENTED HEREBY, INCLUDING THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT").  NO TRANSFER OF SUCH SECURITIES WILL BE PERMITTED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER, SATISFACTORY EVIDENCE IS PROVIDED TO THE CORPORATION THAT THE TRANSFER IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION, REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT.  SUCH TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE SECURITIES LAWS.  THE CORPORATION MAY REQUIRE THE HOLDER TO BEAR THE COSTS AND EXPENSES ASSOCIATED WITH:  (1) THE LEGAL OPINION REFERRED TO ABOVE AND (2) ANY OTHER ACTIONS REQUIRED TO COMPLY WITH THE ACT AND APPLICABLE STATE SECURITIES LAWS.

THESE SECURITIES, INCLUDING THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF, ARE SUBJECT TO, AND TRANSFERABLE ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF A SUBSCRIPTION AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE CORPORATION.  SUCH SUBSCRIPTION AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR A MARKET STAND-OFF AGREEMENT AND CERTAIN OTHER RESTRICTIONS ON THE SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THESE SECURITIES.

THIS CERTIFIES THAT, for value received, EAM Inc. ("Holder") is entitled to purchase Two Million Five Hundred Thousand (2,500,000) fully paid and non-assessable shares of the unregistered, restricted Common Stock ("Common Stock") of OCTUS, INC., a Nevada corporation (the "Company").

1.           Exercise of Warrant.  The terms and conditions upon which this Warrant may be exercised and the Common Stock covered hereby (the "Warrant Stock") may be purchased are as follows:

 

2.1           Term. This Warrant may be exercised in whole or in part at any time after the date set forth above but in no case may this Warrant be exercised later than 5:00 p.m., Davis, California, U.S.A. local time at anytime prior to eighteen (18) months from the issuance of this Warrant, after which time this Warrant shall terminate and shall be void and of no further force or effect.

3.2           Purchase Price.  The per-share purchase price for the shares of Stock to be issued upon exercise of this Warrant shall be One Cent ($0.01), subject to adjustment as provided in Section 2.

 

  

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4.3           Method of Exercise.

5.4.1           Cash Exercise.  The purchase rights represented by this Warrant may be exercised by Holder, in whole or in part, by the surrender of this Warrant at the principal office of the Company, located at the address set forth on the signature page hereof, accompanied by the form of Notice of Cash Exercise attached hereto as Exhibit "A", and by the payment to the Company, by cash or by certified, cashier's or other check acceptable to the Company, of an amount equal to the aggregate purchase price of the shares of Warrant Stock purchased.

6.5.2           Net Issue Exercise.  In lieu of exercising this Warrant pursuant to Section 1.3.1, Holder may elect to receive shares equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant at the principal office of the Company together with the form of Notice of Exercise of Common Stock Warrant Pursuant to Net Issue ("Cashless") Exercise Provisions attached hereto as Exhibit "B", in which event the Company shall issue to Holder a number of shares of the Company's Common Stock computed using the following formula:

X = Y (A-B)

        A

Where X = the number of shares of Warrant Stock to be issued to Holder.

  Y = the number of shares of Warrant Stock purchasable under

 this Warrant (at the date of such calculation).

  A = the fair market value of one share of the Company's

 Common Stock (at the date of such calculation).

  B = Warrant Price (as adjusted to the date of such

 calculation).

7.6.3           Fair Market Value.  For purposes of this Section 1.2, fair market value of one share of the Company's Common Stock shall be determined in good faith by the Company's Board of Directors.

8.7           Issuance of Shares.  In the event of any exercise of the rights represented by this Warrant, certificates for the shares of Common Stock so purchased shall be delivered to Holder within a reasonable time and, unless this Warrant has been fully exercised or has expired, a new Warrant representing the remaining unexercised number of shares shall also be issued to Holder at such time.

9.           Certain Adjustments.

 

  

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10.8           Merger; Consolidation or Sale of Assets. If at any time there shall be a capital reorganization (other than a combination or subdivision of Warrant Stock otherwise provided for in this Warrant), or a merger or consolidation of the Company with or into another corporation, or the sale of the Company's properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation or sale, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified in this Warrant and upon payment of the purchase price, the number of shares of stock or other securities or property of the Company or the successor corporation resulting from such reorganization, merger, consolidation or sale to which a holder of the Common Stock deliverable upon exercise of this Warrant would have been entitled under the provisions of the agreement in such reorganization, merger, consolidation or sale if this Warrant had been exercised immediately before that reorganization, merger, consolidation or sale. In any such case, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the reorganization, merger, consolidation or sale to the end that the provisions of this Warrant (including adjustment of the purchase price then in effect and the number of shares of Warrant Stock) shall be applicable after that event, as nearly as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.

 

11.9           Splits and Subdivisions.  In the event the Company should at any time or from time to time fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of the holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as the "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the purchase price set forth in Section 1.2 shall be appropriately decreased and the number of shares of Warrant Stock shall be appropriately increased in proportion to such increase of outstanding shares.

12.10           Combination of Shares.  If the number of shares of Common Stock outstanding at any time after the date of this Warrant is decreased by a combination of the outstanding shares of Common Stock, the purchase price set forth in Section 1.2 shall be appropriately increased and the number of shares of Warrant Stock shall be appropriately decreased in proportion to such decrease in outstanding shares.

13.4           Certificate as to Adjustments.  In the case of each adjustment or readjustment of the purchase price and the number of shares pursuant to this Section 2, the Company will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based to be delivered to the Holder. The Company will, upon the written request at any time of the Holder, furnish or cause to be furnished to such Holder a certificate setting forth:

14.4.3           Such adjustments and readjustments;

15.4.4           The purchase price at the time in effect; and,

	
  

	
16.4.5

	
The number of shares of Warrant Stock and the amount, if any, of other property at the time receivable upon the exercise of the Warrant.

  

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17.           Fractional Shares.  No fractional shares shall be issued in connection with any exercise of this Warrant.  In lieu of the issuance of fractional shares, the Company shall round up or round down such fractional shares, as the Company deems appropriate, to the nearest whole share of Common Stock or Holder may purchase a whole share by delivering payment equal to the appropriate portion of the purchase price.

18.           Reservation of Stock.  The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant, such number of its shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of the entire Warrant, in addition to such other remedies as shall be available to the Holder, the Company will use its reasonable best efforts to take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

19.           No Stockholders' Rights Until Exercise.  Prior to the exercise of this Warrant, the Holder shall not be entitled, by virtue of holding this Warrant, to any rights of a stockholder of the Company.

20.           Transfers and Exchanges.

21.11           Restrictions on Transfer.  This Warrant and the shares of Warrant Stock receivable upon exercise of this Warrant are subject to certain restrictions and limitations on transfer, as set forth in the Subscription Agreement executed by Holder, including, without limitation, a market standoff agreement in connection with any registration of the Company's securities under the Act.

22.12           Transfer.  This Warrant is transferable on the books of the Company at its principal office by the registered Holder upon surrender of this Warrant properly endorsed, subject to compliance with federal and state securities laws.  The Company shall issue and deliver to the transferee a new Warrant or Warrants representing the Warrants so transferred.  Upon any partial transfer, the Company will issue and deliver to Holder a new Warrant or Warrants with respect to the portion of the Warrant not so transferred.  Notwithstanding the foregoing, Holder shall not be entitled to transfer a number of shares or an interest in this Warrant representing less than five percent (5%) of the aggregate shares initially covered by this Warrant (as presently constituted, with appropriate adjustment being made in the event of stock splits, combinations, reorganizations and the like occurring after the issue date hereof).  Any transferee shall be subject to the same restrictions on transfer with respect to this Warrant as Holder.

23.13           Securities Laws.  If required by the Company, in connection with each issuance of shares of Warrant Stock upon exercise of this Warrant, Holder will give: (a) assurances in writing, satisfactory to the Company, that such shares are not being purchased with a view to the distribution thereof in violation of applicable laws, (b) sufficient information, in writing, to enable the Company to rely on exemptions from the registration or qualification requirements of applicable laws, if available, with respect to such exercise, and (c) its cooperation to the Company in connection with such compliance.  Holder acknowledges and agrees that any certificates representing shares of Warrant Stock shall bear legends similar to those set forth on the first page of this Warrant and any legends required by applicable state securities laws.

 

  

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24.           Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to the Company, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.

25.           Miscellaneous.

26.14           GOVERNING LAWS.  THE INTERNAL LAWS OF THE STATE OF NEVADA, U.S.A. (IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS WARRANT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE COMPANY AND HOLDER.

27.15           Binding Upon Successors and Assigns.  Subject to, and unless otherwise provided in, this Warrant, each and all of the covenants, terms, provisions, and agreements contained in this Warrant shall be binding upon, and inure to the benefit of, the permitted successors, executors, heirs, representatives, administrators and assigns of the Company and Holder.

28.16           Severability.  If any one or more provisions of this Warrant, or the application thereof, shall for any reason and to any extent be invalid or unenforceable, the remainder of this Warrant and the application of such provisions to other persons or circumstances shall be interpreted so as best to reasonably effect the intent of the Company and Holder.  The Company and Holder further agree to replace any such void or unenforceable provisions of this Warrant with valid and enforceable provisions which will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provisions.

29.17           Notices.  All notices, consents, waivers or demands of any kind which the Company or Holder may be required or may desire to serve on the other in connection with this Warrant shall be in writing and shall be delivered by personal service or sent by telecopy or registered or certified mail, return receipt requested, with postage fully prepaid.  All such communications shall be addressed as follows:

If to the Company: At the address set forth below.

	
  

	
If to Holder:    At the address set forth in the Company's stock record books.

Except as may otherwise be provided in this Warrant, all such communications shall be deemed to have been duly given when transmitted by facsimile with verified receipt by the transmitting facsimile, when personally delivered, two (2) days after being delivered to an air courier (e.g. Federal Express) upon proof of delivery, or, in the case of a mailed notice, five (5) days after being deposited certified or registered mail, postage prepaid.  The Company or Holder may change its address for such communications by giving notice to the other as provided in this Section.

 

  

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30.18           No Endorsement.  Holder understands that no federal or state securities administrator has made any finding or determination relating to the fairness of investment in the Company or the purchase of this Warrant or the Common Stock issuable upon the exercise of this Warrant and that no federal or state securities administrator has recommended or endorsed the offering of securities by the Company under this Warrant.

31.19           Amendments and Waivers. Any term of the Warrant may be amended and the observance of any term of the Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the Holder.

 

	 	 	 	
OCTUS, INC.

 

	 
	
 

	 	 	
By:  

	 
	
 

	 	 	
Christian Soderquist, Chief Executive Officer

	 
	
 

	 	 	
 

Address:

OCTUS, INC.

803 Second Street, Suite 303

Davis, CA  95616

	 

 

Agreed and Accepted:

HOLDER: EAM Inc.

 

By: Gregory Galanis, Chief Executive Officer and Secretary

90 Adelaide Street West Suite 800

Toronto ON M5H-3V9

 

  

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EXHIBIT A

 

NOTICE OF CASH EXERCISE

OCTUS, INC.

803 Second Street, Suite 303

Davis, CA  95616

Ladies and Gentlemen:

The undersigned hereby elects to purchase, pursuant to the provisions of the Warrant dated June 14, 2010 held by the undersigned, 2,500,000 shares of the unregistered, restricted Common Stock of OCTUS, INC., a Nevada corporation, at One Cent ($0.01) per share.  The undersigned confirms and acknowledges the investment representations and warranties made in the Subscription Agreement executed by the undersigned, and accepts such shares subject to the restrictions contained therein.

 

	
For joint ownership BOTH parties should sign and date below.

 

 

 

	 	 	For corporations, partnerships, trusts or other entities, one or more signatories, as appropriate, should sign and date below.	 
	
 

	 	 	
EAM Inc. 

	 
	
Signature

	 	 	
Name of Entity

	 
	
 

	 	 	
 

	 
	 	 	 	 	 
	Name of Signatory	 	 	Signature	 
	 	 	 	 	 
	Date:   	 	 	Gregory Galvanis, CEO & Secretary  	 
	 	 	 	Name and Title of Signatory	 
	 	 	 	 	 
	Second Signature (if required)	 	 	Date:   June 14, 2010	 
	 	 	 	 	 
	 	 	 	 	 
	Name of Second Signatory	 	 	Second Signature (if required)	 
	 	 	 	 	 
	Date:  	 	 	 	 
	 	 	 	Name and Title of Second Signatory	 
	 	 	 	 	 
	 	 	 	Date:	 
	 	 	 	 	 
	
ACCEPTED AND AGREED:

OCTUS , INC.

	 	 	 	 
	 	 	 	 	 
	By:	 	 	 	 
	
Christian Soderquist

Chief Executive Officer

	 	 	 	 

 

  

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EXHIBIT B

NOTICE OF EXERCISE OF COMMON STOCK WARRANT

PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS

 

OCTUS, INC.

803 Second Street, Suite 303

Davis, CA  95616

 

Ladies and Gentlemen:

The undersigned, registered Holder of the Common Stock Warrant delivered herewith ("Warrant"), hereby irrevocably exercises such Warrant for, and purchases thereunder, shares of the unregistered, restricted Common Stock of Octus, Inc., a Nevada corporation, as provided below.  Capitalized terms used herein, unless otherwise defined herein, shall have the meanings given in the Warrant.  The number of shares of Common Stock being purchased pursuant to this Notice of Exercise is 2,500,000, thereby leaving a remainder of -0- shares (if any).  Such exercise shall be pursuant to the net issue exercise provisions of Section 1.3.2 of the Warrant; therefore, Holder makes no payment with this Notice of Exercise.  The number of shares to be issued pursuant to this exercise shall be determined by reference to the formula in Section 1.3.2 of the Warrant which, by reference to Section 1.3.3, requires the use of the current per share fair market value of the Company's Common Stock.  The current fair market value of one share of the Company's Common Stock shall be determined in the manner provided in Section 1.3.3, which amount has been determined by the Company to be $0.10, which figure is acceptable to Holder for calculations of the number of shares of Common Stock issuable pursuant to this Notice of Exercise.  Holder requests that the certificates for the purchased shares of Common Stock be issued in the name of and delivered to Investor Company.  To the extent the foregoing exercise is for less than the full number of shares purchasable under the Warrant, a replacement Warrant representing the remainder of the shares (and otherwise of like form, tenor and effect) shall be delivered to Holder along with the share certificate evidencing the Common Stock issued in response to this Notice of Exercise.

Octus, Inc.

Notice of Exercise of Common Stock Warrant

 

 

	
For joint ownership BOTH parties should sign and date below.

 

 

 

	 	 	For corporations, partnerships, trusts or other entities, one or more signatories, as appropriate, should sign and date below.	 
	
 

	 	 	
EAM Inc. 

	 
	
Signature

	 	 	
Name of Entity

	 
	
 

	 	 	
 

	 
	 	 	 	 	 
	Name of Signatory	 	 	Signature	 
	 	 	 	 	 
	Date:   	 	 	Gregory Galvanis, CEO & Secretary  	 
	 	 	 	Name and Title of Signatory	 
	 	 	 	 	 
	Second Signature (if required)	 	 	Date:  June 2, 2010	 
	 	 	 	 	 
	 	 	 	 	 
	Name of Second Signatory	 	 	Second Signature (if required)	 
	 	 	 	 	 
	Date:  	 	 	 	 
	 	 	 	Name and Title of Second Signatory	 
	 	 	 	 	 
	 	 	 	Date:	 
	 	 	 	 	 
	
ACCEPTED AND AGREED:

OCTUS , INC.

	 	 	 	 
	 	 	 	 	 
	By:	 	 	 	 
	
Christian Soderquist

Chief Executive Officer

	 	 	 	 

 

8ex10-1.htm

Exhibit 10.1

 

 

OCTUS, INC.

 

CONVERTIBLE SECURED NOTE AND

WARRANT PURCHASE AGREEMENT

 

THIS CONVERTIBLE SECURED NOTE AND WARRANT PURCHASE AGREEMENT (the “Agreement”) is dated as of June 14, 2010 (the “Agreement Date”), and is entered into by and among Octus, Inc., a Nevada corporation (the “Company”) and the investors listed in Schedule 1 attached hereto (each, an “Investor” and collectively, the “Investors”).

 

BACKGROUND

 

A.  The Company desires to obtain funding from the Investors through the issuance of the Notes and Warrants described in this Agreement, and the Investors desire to extend such a loan to the Company.

 

AGREEMENT

 

THE PARTIES AGREE AS FOLLOWS:

 

	
  

	
1.

	
THE LOANS AND THE WARRANT

 

1.1           The Loan.  Subject to the terms of this Agreement, in consideration for the purchase price set forth on Schedule 1, the Company agrees to sell to each Investor a convertible secured promissory note in substantially the form separately delivered by the Company to the Investors (individually a “Note” and collectively, the “Notes”) in the form attached hereto as Schedule A, with an aggregate principal amount set forth opposite each Investor’s name on Schedule 1 (the “Loan Amount”), and warrants to purchase the number of shares of Common Stock (the “Warrant Shares”) set forth opposite the Investor’s name on Schedule A, pursuant to the form of Warrant separately delivered by the Company to the Investors and in the form attached hereto as Schedule B (the “Warrant”).  The Notes shall be convertible into shares (the “Conversion Shares”) of common stock of the Company (“Common Stock”), in the circumstances and on the terms set forth in the Notes.  Each Note shall be secured by way of security interest in all of the assets of the Company granted by the Company to the Investors on a pari-passu basis in the form attached hereto as Schedule C which security shall be subordinate to the Company’s senior lender on the basis set out in Schedule C  (in each case, a Security Agreement). The registration of the security interests granted pursuant to each Security Agreement shall be completed by the Company at its cost. The Notes, the Conversion Shares, the Warrant and the Warrant Shares will sometimes be referred to collectively as the “Securities.”

 

  

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2.

	
THE CLOSING

 

2.1           Closing Date.

(a)  The closing of the issuance of the Securities and the delivery of each Security Agreement (the “Initial Closing”) shall be held on the Agreement Date or such other date as the Investors and the Company mutually agree.

(b)      The Company may sell additional Notes, in principal amounts so as not to exceed an aggregate of $800,000 principal amount (including the Notes issued at the Initial Closing), in a subsequent closing or closings (each, a “Subsequent Closing”) on or before June 30, 2010.  Such new investors shall be added to Schedule 1 without having to obtain the signature, consent or approval of any of the previous Investors.  Each subsequent investor shall execute a counterpart of this Agreement and shall be an Investor hereunder subject to all the terms and conditions hereof.

 

(c)      Unless the context otherwise requires, the term “Closing” shall refer, with respect to each Investor, to any specific closing at which such Investor extended a loan and acquired the Note.  The date of any Closing is referred to herein as a “Closing Date.”

 

2.1           Delivery.  At the Closing, (i) the Investors and the Company will deliver to each other this executed Agreement; (ii) the Company shall deliver to each Investor the Note, the Warrants and the Security Agreement; (iii) the Investors shall deliver the Loan Amount either in cash or by wire transfer to an account designated by the Company; and (iv) the Company and the Investors shall deliver to each other the instruments set forth in Section 5 below.

 

	
  

	
3.

	
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to the Investors as follows:

 

3.1           Definitions.  As used herein, the following terms will have the following meanings:

 

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled by, or is under common control with, such Person.

“Control” (including the terms “controlling”, “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Company’s Knowledge” means the actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.

“Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

 

  

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The Company hereby represents and warrants to the Holder as follows:

3.2           Organization and Standing. The Company is a corporation duly organized and existing under the laws of the State of Nevada.  The Company is in good standing in the State of Nevada. The Company does not have any subsidiaries.

 

3.3           Corporate Power. The Company has all requisite corporate power to enter into this Agreement, to sell the Securities as provided herein and to carry out and perform its obligations under the terms of this Agreement. The execution and delivery of this Agreement by the Company has been authorized by all necessary corporate action on the part of the Company. Upon their issuance and delivery pursuant to this Agreement, the Notes and Warrants will be validly issued, fully paid and nonassessable and will be free of any liens or encumbrances other than those created hereunder or by the actions of the Investor; provided, however, that the Notes and Warrants are subject to restrictions on transfer under state and/or federal securities laws.

 

3.4           Capitalization.

 

(a)           As of April 15, 2010, the Company’s outstanding capital stock is as follows (The following representation shall in no way limit the Company’s ability to issue additional shares of common stock or other Company securities in the future.):

 

	
  

	
-

	
Common stock, $0.001 par value, 100,000,000 shares authorized, approximately 44,867,072 shares issued and outstanding.

	
  

	
-

	
Series A preferred stock, $0.001 par value, 300,000 shares authorized, no shares issued or outstanding.

	
  

	
-

	
Series B preferred stock, $0.001 par value, 910,000 shares authorized, no shares issued or outstanding.

	
  

	
-

	
Series C 6% cumulative preferred stock, $0.001 par value, 250,000 shares authorized, no shares issued and outstanding.

	
  

	
-

	
Undesignated preferred stock, $0.001 par value, 540,000 shares authorized, no shares issued or outstanding.

(b)           No Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company.  Except as described in the SEC Filings (as defined below) or as contemplated by this Agreement, there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company is or may be obligated to issue any equity securities of any kind.  Notwithstanding the foregoing, the Company may in the future make equity awards to employees, consultants or other third parties. Except as described in the SEC Filings, there are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among the Company and any of the security holders of the Company relating to the securities of the Company held by them.  No Person has the right to require the Company to register any securities of the Company under the Securities Act of 1933 as amended (the “1933 Act”), whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person.

 

  

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(c)           The issuance and sale of the Notes and Warrants hereunder will not obligate the Company to issue shares of Common Stock or other securities to any other Person (other than the Investors) and will not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security.

 

(d)           Except as described in the SEC Filings, the Company does not have outstanding stockholder purchase rights or “poison pill” or any similar arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events.

 

3.5           Delivery of SEC Filings; Business.  The Company has made available to the Investors through the EDGAR system, true and complete copies of the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (as amended as of the date hereof, the “10-K”), and all other reports filed by the Company with the Securities and Exchange Commission (the “SEC”) pursuant to the Securities Exchange Act of 1934, as amended (“1934 Act”) since the filing of the 10-K and prior to the date hereof (collectively, the “SEC Filings”).   The Company is engaged in all material respects only in the business described in the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business of the Company.  As of the date of such SEC Filings, the Company was a “shell company” as defined in the regulations promulgated under the 1934 Act.

 

3.6           Use of Proceeds.  The net proceeds of the sale of the Notes and the Warrants hereunder shall be used by the Company for working capital and general corporate purposes, and will not be used to pay arrear salaries.

 

3.7           No Material Adverse Change.  Since December 31, 2008, except as identified and described in the SEC Filings, there has not been:

 

(i)           any change in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, except for changes in the ordinary course of business which have not had and could not reasonably be expected to have a material adverse effect, individually or in the aggregate;

(ii)           any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company, or any redemption or repurchase of any securities of the Company;

(iii)           any material damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company;

(iv)           any waiver, not in the ordinary course of business, by the Company of a material right or of a material debt owed to it;

 

  

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(v)           any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and which is not material to the assets, properties, financial condition, operating results or business of the Company (as such business is presently conducted and as it is proposed to be conducted);

(vi)           any change or amendment to the Company's articles of incorporation or Bylaws, each as amended (true and complete copies of which have been made available to the Investor), or material change to any material contract or arrangement by which the Company is bound or to which any of their respective assets or properties is subject;

(vii)           any material transaction entered into by the Company other than in the ordinary course of business;

(viii)           the loss of the services of any key employee, or material change in the composition or duties of the senior management of the Company;

(ix)           the loss or threatened loss of any customer which has had or could reasonably be expected to have a material adverse effect; or

(x)           any other event or condition of any character that has had or could reasonably be expected to have a material adverse effect.

3.8           Tax Matters.  The charges, accruals and reserves on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company nor, to the Company’s Knowledge, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment, tax, penalty or interest which would not have a material adverse effect on the Company.  All taxes and other assessments and levies that the Company is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due.  There are no tax liens or claims pending or, to the Company’s Knowledge, threatened against the Company or any of its respective assets or property.  There are no outstanding tax sharing agreements or other such arrangements between the Company and any other corporation or entity.

 

3.9           Title to Properties.  Except as disclosed in the SEC Filings, the Company has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and except as disclosed in the SEC Filings, the Company holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them.

 

3.10           Intellectual Property.  As of April 15, 2010, there are no patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that the Company owns or has the rights to use (collectively, the “Intellectual Property Rights”).

 

  

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3.11           Litigation.  Except as disclosed in the SEC Filings, there are no pending actions, suits or proceedings against or affecting the Company, or any of its properties; and to the Company’s Knowledge, no such actions, suits or proceedings are threatened or contemplated.  Except as may be disclosed in the Company’s filings with the SEC, neither the Company, nor any director or officer thereof, is or since January 1, 2003 has been the subject of any action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the Company’s Knowledge, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company.  The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act or the 1934 Act.

 

3.12           Financial Statements.  To the Company’s Knowledge, the financial statements included in each SEC Filing present fairly, in all material respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (“GAAP”) (except as may be disclosed therein or in the notes thereto, and, in the case of quarterly financial statements, as permitted by Form 10-Q under the 1934 Act).  To the Company’s Knowledge, except as set forth in the financial statements of the Company included in the SEC Filings filed prior to the date hereof, the Company has not incurred any liabilities, contingent or otherwise, that are required by GAAP to be included in the Company’s financial statements, except those incurred in the ordinary course of business, consistent (as to amount and nature) with past practices since the date of such financial statements, none of which, individually or in the aggregate, have had or could reasonably be expected to have a material adverse effect.

 

3.13           Brokers and Finders.  Brokerage or finder’s fees or commissions may be payable by the Company to brokers, financial advisors or consultants, finders, placement agents, investment bankers, banks or other Persons with respect to the transactions contemplated by this Agreement.  The Investors shall have no obligation with respect to any fees or with respect to any claims (other than such fees or commissions owed by an Investor pursuant to written agreements executed by such Investor which fees or commissions shall be the sole responsibility of such Investor) made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.

 

3.14           No Directed Selling Efforts or General Solicitation.  Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Notes and Warrants.

 

3.15           No Integrated Offering.  Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Securities under the 1933 Act.

 

  

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3.16           Private Placement.  The offer and sale of the Notes and Warrants to the Investors as contemplated hereby is exempt from the registration requirements of the 1933 Act.

 

3.17           Transactions with Affiliates.  Except as disclosed in the SEC Filings, none of the officers or directors of the Company and, to the Company’s Knowledge, none of the employees of the Company is presently a party to any transaction with the Company (other than as holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the Company’s Knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

	
  

	
4.

	
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

 

Each Investor represents to the Company individually as follows:

 

4.1           Purchase for Own Account.  Each Investor represents that it is acquiring the Securities solely for its own account and beneficial interest for investment and not for sale or with a view to distribution of the Securities or any part thereof, has no present intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to anticipate a change in such intention.

 

4.2           Information and Sophistication.  Each Investor acknowledges that it has received all the information it has requested from the Company and that it considers necessary or appropriate for deciding whether to acquire the Securities.  Each Investor represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and to obtain any additional information necessary to verify the accuracy of the information given the Investor.  Such Investor further represents that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risk of such investment.

 

4.3           Ability to Bear Economic Risk.  Each Investor acknowledges that an investment in the Securities involves a high degree of risk, and represents that it is able, without materially impairing its financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of its investment.

 

4.4           Further Limitations on Disposition.  Without in any way limiting the representations set forth above, each Investor further agrees not to make any disposition of all or any portion of the Securities unless and until:

 

(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; or

 

  

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(b)           The Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under the 1933 Act or any applicable state securities laws.

 

4.5           Experience.  Each Investor is an “accredited investor” as such term is defined in Rule 501 of Regulation D under the 1933 Act, and each Investor agrees to provide such additional customary investor questionnaires or other information as the Company may reasonably request in order to establish applicable exemptions for the issuance of the Notes and Warrants under applicable federal and state securities laws.  If Investor is a limited partnership, limited liability corporation or similar entity, then Investor represents and warrants that all equity owners of the Investor are accredited investors. “Accredited investor” means any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person.

 

4.6           No Broker Liabilities.  No person has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or valid claim against the Investor or the Company for any commission fee or other compensation as a finder or broker because of any act or omission of such Investor or any agent for the Investor.

 

4.7           Power and Authority.  Each Investor has the full power and authority to enter into this Agreement and perform the transactions contemplated by this Agreement.  This Agreement, when executed and delivered by the Investor, shall constitute valid and binding obligations of the Investor enforceable in accordance with its terms, subject to the laws of general application relating to bankruptcy, insolvency, the relief of debtors and to rights to indemnity.

 

4.8           No Conflicts.  The execution and delivery of and performance of the transactions contemplated by this Agreement is not in conflict with or will not result in any material breach of any terms, conditions or provisions of, or constitute a material default under its corporate charter or other organizational document, as applicable, or any indenture, lease, agreement, order, judgment or other instrument to which such Investor is a party.

 

	
  

	
5.

	
CONDITIONS TO CLOSING

 

5.1           Conditions to the Investors’ Obligations at the Closing.  The Investors’ obligations to purchase the Notes and Warrants at the Closing are subject to the satisfaction, at or prior to the Closing Date, of the following conditions:

 

(a)           Representations and Warranties True; Performance of Obligations.  The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects as of the Closing Date with the same force and effect as if they had been made as of the Closing Date, and the Company shall have performed all obligations and conditions herein required to be performed or observed by it on or prior to the Closing.

 

  

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(b)           Corporate Documents.  The Company shall have delivered to the Investors or their counsel copies of all corporate documents of the Company as the Investors shall reasonably request together with the Notes, the Warrants and the Security Agreement with evidence of registration thereof..

 

5.2           Conditions to Obligations of the Company.  The Company’s obligation to issue and sell the Notes and Warrants at the Closing is subject to the satisfaction, on or prior to such Closing, of the following conditions:

 

(a)           Representations and Warranties True.  The representations and warranties in Section 4 made by the Investors acquiring Notes and Warrants shall be true and correct in all material respects at the date of the Closing, with the same force and effect as if they had been made on and as of said date.

 

(b)           Performance of Obligations.  The Investors shall have performed and complied with all agreements and conditions herein required to be performed or complied with by such Investors on or before the Closing.

 

(c)           Documents The Investors shall have delivered to the Company or its counsel copies of such instruments relating to the transactions contemplated by this Agreement as the Company shall reasonably request.

 

	
  

	
6.

	
REGISTRATION RIGHTS.

 

6.1           Piggyback Registration Rights.  So long as shares of the Company’s Common Stock received by an Investor hereunder upon conversion of the Note or upon the exercise of the Warrant are “restricted securities” under the 1933 Act and cannot be sold without volume restrictions pursuant to SEC Rule 144 (with respect to the Warrant, assuming net exercise of the Warrant), and during such period, if the Company files a registration statement pursuant to the 1933 Act relating to an offering for its own account or for the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form S-8 (each as promulgated under the Act) or their then-equivalents), then the Company will promptly give to the Investor written notice thereof (which will include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and will, subject to the provisions below, include in such registration and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all of the Warrant Shares and any Conversion Shares specified by the Investor in a written request delivered to the Company within 15 days after such written notice from the Company.

 

  

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6.2           Procedures.  If the Company requests, the Investor shall execute such customary agreements and instruments as other security holders whose securities are included in such registration execute in connection with the inclusion of securities in such registration.  The Investor agrees to provide such information and execute such instruments as the Company reasonably requests relating to the preparation of any such registration statement and the inclusion of information concerning Investor in the registration statement.  All fees and expenses incident to the performance of or compliance with the filing of the registration statement shall be borne by the Company whether or not any registrable securities are sold pursuant to the registration statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the OTC Bulletin Board or other exchange or quotation service on which the Common Stock of the Company is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for registrable securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the registrable securities included in the registration statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) 1933 Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other persons retained by the Company in connection with the filing of the registration statement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the filing of the registration statement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the registrable securities on any securities exchange, if applicable. In no event shall the Company be responsible for any broker or similar commissions or, except to the extent provided for hereunder, any legal fees or other costs of the Investor.

 

	
  

	
7.

	
INDEMNIFICATION.

 

7.1           Survival. The representations and warranties contained in Sections 3 and 4 hereof shall survive until the second anniversary of the date hereof.

 

7.2           Company’s Indemnification of Investor.  To the extent permitted by law, the Company shall defend, indemnify and hold harmless the Investor from and against any and all losses, claims, judgments, liabilities, demands, charges, suits, penalties, costs or expenses, including court costs and attorneys’ fees resulting from any claim, demand, suit, action or proceeding brought by any third party (“Claims and Liabilities”) with respect to or arising from (i) the material breach of any warranty or any inaccuracy of any representation made by the Company in this Agreement, or (ii) the material breach of any covenant or agreement made by the Company in this Agreement.

 

7.3           Purchaser’s Indemnification of Company.  To the extent permitted by law, each Investor, severally and not jointly, shall defend, indemnify and hold harmless the Company and its directors, officers, employees and agents from and against any and all Claims and Liabilities with respect to or arising from such Investor’s (i) the material breach of any warranty or any inaccuracy of any representation made by the Investor in this Agreement, or (ii) the material breach of any covenant or agreement made by the Investor in this Agreement.

 

  

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7.4           Claims Procedure.  Promptly after the receipt by any indemnified party (the “Indemnitee”) of notice of the commencement of any action or proceeding against such Indemnitee, such Indemnitee shall, if a claim with respect thereto is or may be made against any indemnifying party (the “Indemnifying Party”) pursuant to this Section, give such Indemnifying Party written notice of the commencement of such action or proceeding and give such Indemnifying Party a copy of such claim and/or process and all legal pleadings in connection therewith.  The failure to give such notice shall not relieve any Indemnifying Party of any of its indemnification obligations contained in this Section, except where, and solely to the extent that, such failure actually and materially prejudices the rights of such Indemnifying Party.  Such Indemnifying Party shall have, upon request within thirty (30) days after receipt of such notice, the right to defend, at its own expense and by its own counsel reasonably acceptable to the Indemnitee, any such matter involving the asserted liability of the Indemnitee; provided, however, that if the Indemnitee determines that there is a reasonable probability that a claim may materially and adversely affect it, other than solely as a result of money payments required to be reimbursed in full by such Indemnifying Party under this Section or if a conflict of interest exists between Indemnitee and the Indemnifying Party, the Indemnitee shall have the right to defend, compromise or settle such claim or suit; and, provided, further, that such settlement or compromise shall not, unless consented to in writing by such Indemnifying Party, which shall not be unreasonably withheld, be conclusive as to the liability of such Indemnifying Party to the Indemnitee.  In any event, the Indemnitee, such Indemnifying Party and its counsel shall cooperate in the defense against, or compromise of, any such asserted liability, and in cases where the Indemnifying Party shall have assumed the defense, the Indemnitee shall have the right to participate in the defense of such asserted liability at the Indemnitee’s own expense.  In the event that such Indemnifying Party shall decline to participate in or assume the defense of such action, prior to paying or settling any claim against which such Indemnifying Party is, or may be, obligated under this Section  to indemnify an Indemnitee, the Indemnitee shall first supply such Indemnifying Party with a copy of a final court judgment or decree holding the Indemnitee liable on such claim or, failing such judgment or decree, the terms and conditions of the settlement or compromise of such claim.  An Indemnitee’s failure to supply such final court judgment or decree or the terms and conditions of a settlement or compromise to such Indemnifying Party shall not relieve such Indemnifying Party of any of its indemnification obligations contained in this Section, except where, and solely to the extent that, such failure actually and materially prejudices the rights of such Indemnifying Party.  If the Indemnifying Party is defending the claim as set forth above, the Indemnifying Party shall have the right to settle the claim only with the consent of the Indemnitee.

 

  

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8.              MARKET STAND-OFF.  EACH INVESTOR AGREES that as long as the directors and executive officers of the Company have entered into similar arrangements, the Investor shall not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to, any Common Stock or other securities of the Company held by the Investor (the "Restricted Securities"), during the 180-day period following the effective date of a registration statement of the Company filed under the 1933 Act (or such other period as the Company and the managing underwriter may request in order to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711 or any successor provisions).  The Investor agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the managing underwriter which are consistent with the foregoing or which are necessary to give further effect thereto.  In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Investor's Restricted Securities until the end of such period.  The underwriters of the Company's stock are intended third party beneficiaries of this Section and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

9.  MISCELLANEOUS

 

9.1           Reservation of Shares.  The Company shall at all times reserve and keep available out of its authorized but unissued shares sufficient shares to effect the conversion of the Notes and exercise of the Warrants.

 

9.2           Successors and Assigns.  Subject to the restrictions on transfer set forth above, the rights and obligations of Company and the Investors under this Agreement shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

9.3           Assignment.  The Investors may assign their rights and obligations hereunder without the prior written consent of the Company, provided that the Investor provides prior notice to the Company of any such assignment.  The Company may assign this Agreement and its rights hereunder without the prior consent of the Investors in connection with a merger, consolidation, sale of all or substantially all of the Company’s assets or similar transaction.

 

9.4           Waivers.  The terms of this Agreement shall be construed in accordance with the laws of the State of California applicable to contracts entered into in California by California residents and wholly to be performed within California.

 

9.5           Amendment or Waiver.  Any term of this Agreement may be amended or waived with the written consent of Company and the Investors.  Any amendment or waiver effected in accordance with this Section shall be binding upon the Investors and the Company.

 

9.6           Notices. Any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given (i) at the time of personal delivery, if delivery is in person; (ii) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; (iii) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries when addressed to the party to be notified; or (iv) one (1) business day after transmission by telecopier with confirmation of successful transmission.  Notices shall be delivered (i) if to the Investor, to the address and contact information for Investor set forth in the Company’s books and records, and (ii) if to the Company, to 803 Second Street, Suite 303, Davis, CA 95616, attention: Chief Executive Officer, or at such other address as any party may designate by giving written notice to the other party.

 

  

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9.7           Severability.  In the event any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal, or unenforceable in whole or in part or in any respect, or in the event any one or more of the provisions of this Agreement operate or would prospectively operate to invalidate this Agreement, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement.  In such instance, this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein and the remaining provisions of this Agreement shall remain operative and in full force and effect and in no way shall be affected, prejudiced or disturbed thereby.

 

9.8           Delays or Omissions.  No delay or omission on the part of the Investor in exercising any right under this Agreement shall operate as a waiver of such right or of any other right of the Investor, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion.

 

9.9           Headings.  The headings in this Agreement are for convenience of reference only and shall not define or limit any terms or provisions hereof.

 

9.10         Entire Agreement. This Agreement constitutes the entire agreement between the parties, and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein.

 

9.11         Risk Factors.  Each Investor acknowledges having received and reviewed a copy of the SEC Filings, including without limitation the “Risk Factors” section of the 10-K.  The Investor acknowledges that the investment in the Company represented by the Securities is highly risky.  Due to these factors, and others described in such documents, the purchase of the Securities offered hereby involves an extreme degree of risk. The Securities should only be purchased by Investors who can afford to sustain a total loss of their investment and who have no need for liquidity with respect to this investment.

 

9.12         No Tax Representations. Each Investor represents, warrants and acknowledges that the Holder is not relying on the Company for any tax advice concerning the federal or state income or other tax consequences of the Investor’s acquisition, holding or disposition of the Note, Warrant or other Securities, and that the Investor has consulted such advisors as Investor deems necessary or appropriate to understand the tax consequences of the investment represented by the Securities.

 

  

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9.13         Expenses.  Except as provided for above, each party hereto shall be responsible for its own fees and expenses incurred in connection with the negotiation, execution and consummation of the transactions contemplated by this Agreement.

 

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

 

IN WITNESS WHEREOF, the parties have executed this Convertible Note and Warrant Purchase Agreement as of the date first written above.

 

COMPANY: OCTUS, INC.

 

 

 

 

 

By: Christian Soderquist

Its: Chief Executive Officer

 

 

INVESTOR: EAM INC.

 

 

 

By: Gregory Galanis

Its: Chief Executive Officer and Secretary

 

  

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SCHEDULE 1

LIST OF INVESTORS

 

Investors

 

	
Name

	  	
Principal Loan Amount

	
Warrant Shares

	
EAM INC.

	  	
$500,000

	
2,500,000

 

15

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