Document:

Form of Series B Warrant

 Exhibit 10.9 
 THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. 
 SERIES B WARRANT TO PURCHASE 
 SHARES OF COMMON STOCK 
 OF 
 NOVARAY
MEDICAL, INC. 
 Expires: October 27, 2014 
  

			
	No.: W-B-10-01	 	Number of Shares: 1,833,333
	 Date of Issuance: March 11, 2010
	 

 FOR VALUE RECEIVED, the undersigned, NOVARAY MEDICAL, INC., a Delaware
corporation (together with its successors and assigns, the “Issuer”), hereby certifies that VISION OPPORTUNITY MASTER FUND, LTD. or its registered assigns is entitled to subscribe for and purchase, during the Term (as
hereinafter defined), up to one million eight hundred thirty three thousand three hundred thirty three (1,833,333) shares (subject to adjustment as hereinafter provided) of the duly authorized, validly issued, fully paid and non-assessable
Common Stock of the Issuer, at an exercise price per share equal to the Warrant Price then in effect, subject, however, to the provisions and upon the terms and conditions hereinafter set forth. Capitalized terms used in this Warrant and not
otherwise defined herein shall have the respective meanings specified in Section 8 hereof. 
 1.
Term. The term of this Warrant shall commence on the date hereof and shall expire at 6:00 p.m., Eastern Time, on October 27, 2014 (such period being the “Term”). 
 2. Method of Exercise; Payment; Issuance of New Warrant; Transfer and Exchange. 
 (a) Time of Exercise. The purchase rights represented by this Warrant may be exercised in whole or in part during the Term.

 (b) Method of Exercise. The Holder hereof may exercise this Warrant, in whole or in part, by the surrender of this
Warrant (with the exercise form attached hereto duly executed) at

  

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the principal office of the Issuer, and by the payment to the Issuer of an amount of consideration therefor equal to the Warrant Price in effect on the date of such exercise multiplied by the
number of shares of Warrant Stock with respect to which this Warrant is then being exercised, payable at such Holder’s election (i) by certified or official bank check or by wire transfer to an account designated by the Issuer,
(ii) by “cashless exercise” in accordance with the provisions of subsection (c) of this Section 2, or (iii) by a combination of the foregoing methods of payment selected by the Holder of this
Warrant. 
 (c) Cashless Exercise. Notwithstanding any provisions herein to the contrary and commencing one (1) year
following the Original Issue Date if the Per Share Market Value of one share of Common Stock is greater than the Warrant Price (at the date of calculation as set forth below), the Holder may exercise this Warrant by a cashless exercise and shall
receive the number of shares of Common Stock equal to an amount (as determined below) by surrender of this Warrant at the principal office of the Issuer together with the properly endorsed Notice of Exercise in which event the Issuer shall issue to
the Holder a number of shares of Common Stock computed using the following formula: 
  

					
		 	X = Y	 	- (A)(Y)
		 		 	       B
			
	Where	 	X =	 	the number of shares of Common Stock to be issued to the Holder.
			
		 	Y =	 	the number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being
exercised.
			
		 	A =	 	the Warrant Price.
			
		 	B =	 	the Per Share Market Value of one share of Common Stock.

 (d) Issuance of Stock Certificates. In the event of any exercise of this Warrant in accordance with and subject to the terms and conditions hereof, certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder hereof within a reasonable time, not exceeding three (3) Trading Days after such exercise (the “Delivery Date”) or, at the request of the
Holder (provided that a registration statement under the Securities Act providing for the resale of the Warrant Stock is then in effect and the Holder so requests in writing of the Issuer), issued and delivered to the Depository Trust Company
(“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) within a reasonable time, not exceeding three (3) Trading Days after such exercise, and the
Holder hereof shall be deemed for all purposes to be the holder of the shares of Warrant Stock so purchased as of the date of such exercise. Notwithstanding the foregoing to the contrary, the Issuer or its transfer agent shall only be obligated to
issue and deliver the shares to the DTC on a holder’s behalf via DWAC if the Issuer and its transfer agent are participating in DTC through the DWAC system. The Holder shall deliver this original Warrant, or an indemnification undertaking in a
form reasonably satisfactory to the Issuer with respect to such Warrant in the case of its loss, theft or destruction, at such time that this Warrant is fully

  

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exercised. With respect to partial exercises of this Warrant, the Issuer shall keep written records for the Holder of the number of shares of Warrant Stock exercised as of each date of exercise.

 (e) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights
available to the Holder, if the Issuer fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Stock pursuant to an exercise on or before the Delivery Date, and if after such date the Holder
is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Stock which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Issuer shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of shares of Warrant Stock that the Issuer was required to deliver to the Holder in connection with the exercise at issue times (B) the Warrant Price, as may be
adjusted in accordance with this Warrant, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of shares of Warrant Stock for which such exercise was not honored or deliver to the Holder the
number of shares of Common Stock that would have been issued had the Issuer timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of the Warrant for shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Issuer shall be
required to pay the Holder $1,000. The Holder shall provide the Issuer written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the
Issuer. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the
Issuer’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof. 
 (f) Transferability/Exchangeability of Warrant. Subject to Section 2(h) hereof, this Warrant may be transferred by a Holder, in whole or in part, without the consent of the
Issuer. If transferred pursuant to this paragraph, this Warrant may be transferred on the books of the Issuer by the Holder hereof in person or by duly authorized attorney, upon surrender of this Warrant at the principal office of the Issuer,
properly endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. This Warrant is exchangeable at the principal office of the
Issuer for Warrants to purchase the same aggregate number of shares of Warrant Stock, each new Warrant to represent the right to purchase such number of shares of Warrant Stock as the Holder hereof shall designate at the time of such exchange. All
Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of shares of Warrant Stock issuable pursuant thereto. 
 (g) Continuing Rights of Holder. The Issuer will, at the time of or at any time after each exercise of this Warrant, upon the request
of the Holder hereof, acknowledge in writing the extent, if any, of its continuing obligation to afford to such Holder all rights to which such

  

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Holder shall continue to be entitled after such exercise in accordance with the terms of this Warrant; provided that if any such Holder shall fail to make, or the Issuer shall fail to
honor, any such request, the failure shall not affect the continuing obligation of the Issuer to afford such rights to such Holder. 
 (h) Compliance with Securities Laws. 
 (i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Warrant Stock to be issued upon exercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder will not
offer, sell or otherwise dispose of this Warrant or any shares of Warrant Stock to be issued upon exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under the Securities Act and any applicable
state securities laws. 
 (ii) Except as provided in paragraph (iii) below, this Warrant and all
certificates representing shares of Warrant Stock issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form: 
 “THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.” 
 (iii) The Issuer agrees to reissue this Warrant or certificates representing any of the Warrant Stock, without the legend set forth above if at such time, prior to making any transfer of any such
securities, the Holder shall give written notice to the Issuer describing the manner and terms of such transfer. Such proposed transfer will not be effected until: (a) either (i) the Issuer has received an opinion of counsel reasonably
satisfactory to the Issuer, to the effect that the registration of such securities under the Securities Act is not required in connection with such proposed transfer, or (ii) a registration statement under the Securities Act covering such
proposed disposition has been filed by the Issuer with the Securities and Exchange Commission and has become effective under the Securities Act, and (b) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to
the Issuer, to the effect that registration or qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or
“blue sky” laws has been effected or a valid exemption exists with respect thereto. The Issuer will respond to any such notice from a holder within five (5) Trading Days. In the case

  

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of any proposed transfer under this Section 2(h), the Issuer will pay the expenses of and use reasonable efforts to comply with any such applicable state securities or
“blue sky” laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, or (y) to take any action that would subject it to tax or to the general service of process in any
state where it is not then subject. The restrictions on transfer contained in this Section 2(h) shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this
Warrant. Whenever a certificate representing the Warrant Stock is required to be issued to a Holder without a legend, at the request of the Holder, in lieu of delivering physical certificates representing the Warrant Stock, the Issuer shall cause
its transfer agent to electronically transmit the Warrant Stock to the Holder by crediting the account of the Holder’s Prime Broker with DTC through its DWAC system (to the extent not inconsistent with any provisions of this Warrant or the
Purchase Agreement). 
 (i) Accredited Investor Status. In no event may the Holder exercise this Warrant in whole or in
part unless the Holder is an “accredited investor” as defined in Regulation D under the Securities Act. 
 3.
Stock Fully Paid; Reservation and Listing of Shares; Covenants. 
 (a) Stock Fully Paid. The Issuer represents,
warrants, covenants and agrees that all shares of Warrant Stock which may be issued upon the exercise of this Warrant or otherwise hereunder will, when issued in accordance with the terms of this Warrant, be duly authorized, validly issued, fully
paid and non-assessable and free from all taxes, liens and charges. The Issuer further covenants and agrees that during the period within which this Warrant may be exercised, the Issuer will at all times have authorized and reserved for the purpose
of the issuance upon exercise of this Warrant a number of authorized but unissued shares of Common Stock equal to at least one hundred ten percent (110%) of the number of shares of Common Stock issuable upon exercise of this Warrant without
regard to any limitations on exercise. 
 (b) Reservation. If any shares of Common Stock required to be reserved for
issuance upon exercise of this Warrant or as otherwise provided hereunder require registration or qualification with any Governmental Authority under any federal or state law before such shares may be so issued, the Issuer will in good faith use
best efforts as expeditiously as possible at its expense to cause such shares to be duly registered or qualified. If the Issuer shall list any shares of Common Stock on any securities exchange or market it will, at its expense, list thereon, and
maintain and increase when necessary such listing of, all shares of Warrant Stock from time to time issued upon exercise of this Warrant or as otherwise provided hereunder (provided that such Warrant Stock has been registered pursuant to a
registration statement under the Securities Act then in effect), and, to the extent permissible under the applicable securities exchange rules, all unissued shares of Warrant Stock which are at any time issuable hereunder, so long as any shares of
Common Stock shall be so listed. The Issuer will also so list on each securities exchange or market, and will maintain such listing of, any other securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this
Warrant if at the time any securities of the same class shall be listed on such securities exchange or market by the Issuer. 
  

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 (c) Covenants. The Issuer shall not by any action including, without limitation,
amending the Certificate of Incorporation or the by-laws of the Issuer, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder hereof
against dilution (to the extent specifically provided herein) or impairment. Without limiting the generality of the foregoing, the Issuer will (i) not permit the par value, if any, of its Common Stock to exceed the then effective Warrant Price,
(ii) not amend or modify any provision of the Certificate of Incorporation or by-laws of the Issuer in any manner that would materially and adversely affect the rights of the Holders of the Warrants, (iii) take all such action as may be
reasonably necessary in order that the Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock, free and clear of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the exercise of
this Warrant, and (iv) use best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be reasonably necessary to enable the Issuer to perform its obligations under
this Warrant. 
 (d) Loss, Theft, Destruction, Mutilation of Warrants. Upon receipt of evidence satisfactory to the
Issuer of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory to the Issuer or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same number of shares
of Common Stock. 
 (e) Payment of Taxes. The Issuer will pay any documentary stamp taxes attributable to the initial
issuance of the Warrant Stock issuable upon exercise of this Warrant; provided, however, that the Issuer shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any
certificates representing Warrant Stock in a name other than that of the Holder in respect to which such shares are issued. 
 4. Adjustment of Warrant Price and Number of Shares Issuable Upon Exercise. The Warrant Price and the number of shares of Warrant Stock that may be purchased upon exercise of this Warrant shall be subject to adjustment from
time to time as set forth in this Section 4. The Issuer shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 4 in accordance with the notice provisions
set forth in Section 5. 
 (a) Recapitalization, Reorganization, Reclassification, Consolidation, Merger
or Sale. 
 (i) In case the Issuer after the Original Issue Date shall do any of the following (each, a
“Triggering Event”): (a) consolidate or merge with or into any other Person and the Issuer shall not be the continuing or surviving Person of such consolidation or merger, or (b) permit any other Person to
consolidate with or merge into the Issuer and the Issuer shall be the continuing or surviving Person but, in connection

  

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with such consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchanged for Securities of any other Person or cash or any other property, or (c) transfer all or
substantially all of its properties or assets to any other Person, or (d) effect a capital reorganization or reclassification of its Capital Stock, then, and in the case of each such Triggering Event, proper provision shall be made to the
Warrant Price and the number of shares of Warrant Stock that may be purchased upon exercise of this Warrant so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant shall be entitled upon the
exercise hereof at any time after the consummation of such Triggering Event, to the extent this Warrant is not exercised prior to such Triggering Event, to receive at the Warrant Price as adjusted to take into account the consummation of such
Triggering Event, in lieu of the Common Stock issuable upon such exercise of this Warrant prior to such Triggering Event, the Securities, cash and property to which such Holder would have been entitled upon the consummation of such Triggering Event
if such Holder had exercised the rights represented by this Warrant immediately prior thereto (including the right of a shareholder to elect the type of consideration it will receive upon a Triggering Event), subject to adjustments (subsequent to
such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 4. Immediately upon the occurrence of a Triggering Event, the Issuer shall notify the Holder in writing of such
Triggering Event and provide the calculations in determining the number of shares of Warrant Stock issuable upon exercise of the new warrant and the adjusted Warrant Price. Upon the Holder’s request, the continuing or surviving Person as a
result of such Triggering Event shall issue to the Holder a new warrant of like tenor evidencing the right to purchase the adjusted number of shares of Warrant Stock and the adjusted Warrant Price pursuant to the terms and provisions of this
Section 4(a)(i). Notwithstanding the foregoing to the contrary, this Section 4(a)(i) shall only apply if the surviving entity pursuant to any such Triggering Event has a class of equity securities registered
pursuant to the Exchange Act, and its common stock is listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board. In the event that the surviving entity pursuant to any such Triggering Event is
not a public company that is registered pursuant to the Exchange Act, or its common stock is not listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board, then the Holder shall have the right
to demand that the Issuer pay to the Holder an amount in cash equal to the value of this Warrant calculated in accordance with the Black-Scholes formula. 
 (ii) In the event that the Holder has elected not to exercise this Warrant prior to the consummation of a Triggering Event, so long as the surviving entity pursuant to any Triggering Event is a company
that has a class of equity securities registered pursuant to the Exchange Act, and its common stock is listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board, the surviving entity and/or
each Person (other than the Issuer) which may be required to deliver any shares of Warrant Stock (including all Securities, cash or property) upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and
reasonably satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer under this Warrant (and if the Issuer shall survive the consummation of such

  

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Triggering Event, such assumption shall be in addition to, and shall not release the Issuer from, any continuing obligations of the Issuer under this Warrant) and (B) the obligation to
deliver to such Holder such Securities, cash or property as, in accordance with the foregoing provisions of this subsection (a). 
 (b) Stock Dividends, Subdivisions and Combinations. If at any time the Issuer shall: 
 (i) make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, shares of Common Stock, 

(ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or 
 (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, 
 then (1) the number of shares of Common Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive
after the happening of such event, and (2) the Warrant Price then in effect shall be adjusted to equal (A) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment. 
 (c) Certain Other Distributions. If at any time the Issuer shall make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive any dividend or
other distribution of: 
 (i) cash, 
 (ii) any evidences of its indebtedness, any shares of stock of any class or any other Securities or property of any nature
whatsoever (other than cash, Common Stock Equivalents or Additional Shares of Common Stock), or 
 (iii) any
warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or Additional Shares of
Common Stock), then (1) the number of shares of Common Stock for which this Warrant is exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which shall be the Per Share Market Value of Common Stock at the date of taking such record and (B) the

  

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denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good
faith by the Board of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (2) the Warrant Price then in effect shall be adjusted to
equal (A) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this
Warrant is exercisable immediately after such adjustment. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4(c) and, if the outstanding shares of Common
Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the
meaning of Section 4(b). 
 (d) Warrant Price Adjustments. The Warrant Price shall be subject to
adjustment from time to time as follows: 
 (i)(A) In the event the Issuer shall issue or sell any Additional
Shares of Common Stock (otherwise than as provided in Sections 4(a) through (c)), at a price per share less than the Exercise Price then in effect, or without consideration, then the Exercise Price upon each such issuance
shall be reduced to a price equal to the consideration per share paid (if any) for such Additional Shares of Common Stock. 
 (B) No adjustment of the Warrant Price pursuant to this Section 4(d) shall be made in an amount less than one cent per share, provided that any adjustments that are not required to be
made by reason of this sentence shall be carried forward and shall be either taken into account in any subsequent adjustment made prior to one (1) year from the date of the event giving rise to the adjustment being carried forward, or shall be
made at the end of one (1) year from the date of the event giving rise to the adjustment being carried forward. Except to the limited extent provided for in Sections 4(d)(i)(E)(3) and 4(d)(i)(E)(4), no adjustment of
such Warrant Price pursuant to this Section 4(d)(i) shall have the effect of increasing the Warrant Price above the Warrant Price in effect immediately prior to such adjustment. 
 (C) For purposes of this Section 4(d)(i), in the case of the issuance of Additional Shares of Common Stock
for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by the Issuer for any underwriting or otherwise in connection with
the issuance and sale thereof. 
 (D) For purposes of this Section 4(d)(i), in the case of the
issuance of the Additional Shares of Common Stock for a consideration in whole or in part other than 
  

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cash, the consideration other than cash shall be deemed to be the fair value thereof as determined by the Board irrespective of any accounting treatment. 
 (E) In the case of the issuance (whether before, on or after the Original Issue Date) of Common Stock Equivalents, the
following provisions shall apply for all purposes of this Section 4(d)(i): 
 (1) The
aggregate maximum number of shares of Common Stock deliverable upon exercise (assuming the satisfaction of any conditions to exercisability, including, without limitation, the passage of time, of such options to purchase or rights to subscribe for
Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in Sections 4(d)(i)(C) and
4(d)(i)(D)), if any, received by the Issuer upon the issuance of such options or rights plus the minimum exercise price provided in such options or rights for the Common Stock covered thereby. 
 (2) The aggregate maximum number of shares of Common Stock deliverable upon conversion of, or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability, including, without limitation, the passage of time, for any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the
consideration, if any, received by the Issuer for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received
by the Issuer upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in Sections 4(d)(i)(C) and
4(d)(i)(D)) 
 (3) In the event of any change in the number of shares of Common Stock deliverable
or in the consideration payable to the Issuer upon exercise of such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities, including, but not limited to, a change resulting from the antidilution
provisions thereof, the Warrant Price, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common
Stock or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such securities. 
 (4) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable
securities, the Warrant Price, to the extent in any way affected by or computed using such options, rights or securities or options or rights related to such securities, shall be recomputed to reflect the issuance of 
  

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only the number of shares of Common Stock (and convertible or exchangeable securities that remain in effect) actually issued upon the exercise of such options or rights, upon the conversion or
exchange of such securities or upon the exercise of the options or rights related to such securities. 
 (5) The
number of shares of Common Stock deemed issued and the consideration deemed paid therefor pursuant to Sections 4(d)(i)(E)(1) and 4(d)(i)(E)(2) shall be appropriately adjusted to reflect any change, termination or
expiration of the type described in either Section 4(d)(i)(E)(3) or 4(d)(i)(E)(4). 
 (ii) Termination. Notwithstanding anything else contained herein, the right to any adjustments to the Warrant Price pursuant to this Section 4(d) shall terminate upon the earlier of: (i) the expiration of the
Term; or (ii) the occurrence of a Triggering Event. In addition, no adjustment to the Warrant Price shall be made for all or any portion of this Warrant that is exercised prior to any issuance of Additional Shares of Common Stock that would
require an adjustment pursuant to this Section 4(d). 
 (e) Other Provisions applicable to Adjustments
under this Section. The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect provided for in this
Section 4: 
 (i) Computation of Consideration. Except as otherwise provided, to the
extent that any Additional Shares of Common Stock or any Common Stock Equivalents (or any warrants or other rights therefor) shall be issued for cash consideration, the consideration received by the Issuer therefor shall be the amount of the cash
received by the Issuer therefor, or, if such Additional Shares of Common Stock or Common Stock Equivalents are offered by the Issuer for subscription, the subscription price, or, if such Additional Shares of Common Stock or Common Stock Equivalents
are sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends and without taking into
account any compensation, discounts or expenses paid or incurred by the Issuer for and in the underwriting of, or otherwise in connection with, the issuance thereof). In connection with any merger or consolidation in which the Issuer is the
surviving Person (other than any consolidation or merger in which the previously outstanding shares of Common Stock of the Issuer shall be changed to or exchanged for the stock or other securities of another Person), the amount of consideration
therefore shall be, deemed to be the fair value, as determined reasonably and in good faith by the Board, of such portion of the assets and business of the nonsurviving Person as the Board may determine to be attributable to such shares of Common
Stock or Common Stock Equivalents, as the case may be. The consideration for any Additional Shares of Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by the
Issuer for issuing such warrants or other rights plus the additional consideration payable to the Issuer upon exercise of such warrants or other rights. The consideration for any Additional Shares of Common Stock issuable pursuant to the terms of
any Common 
  

 11 

 
Stock Equivalents shall be the consideration received by the Issuer for issuing warrants or other rights to subscribe for or purchase such Common Stock Equivalents, plus the consideration paid or
payable to the Issuer in respect of the subscription for or purchase of such Common Stock Equivalents, plus the additional consideration, if any, payable to the Issuer upon the exercise of the right of conversion or exchange in such Common Stock
Equivalents. In the event of any consolidation or merger of the Issuer in which the Issuer is not the surviving Person or in which the previously outstanding shares of Common Stock of the Issuer shall be changed into or exchanged for the stock or
other securities of another Person, or in the event of any sale of all or substantially all of the assets of the Issuer for stock or other securities of any Person, the Issuer shall be deemed to have issued a number of shares of its Common Stock for
stock or securities or other property of the other Person computed on the basis of the actual exchange ratio on which the transaction was predicated, and for a consideration equal to the fair market value on the date of such transaction of all such
stock or securities or other property of the other Person. In the event any consideration received by the Issuer for any securities consists of property other than cash, the fair market value thereof at the time of issuance or as otherwise
applicable shall be as determined in good faith by the Board. In the event Common Stock is issued with other shares or securities or other assets of the Issuer for consideration which covers both, the consideration computed as provided in this
Section 4(e)(i) shall be allocated among such securities and assets as determined in good faith by the Board. 
 (ii) When Adjustments to Be Made. The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur,
except that any adjustment of the number of shares of Common Stock for which this Warrant is exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided
for in Section 4(b)) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than one percent (1%) of the shares of Common Stock for
which this Warrant is exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made (x) as soon
as such adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment, or (y) on the date of exercise. For the purpose of any adjustment, any specified
event shall be deemed to have occurred at the close of business on the date of its occurrence. 
 (iii) Fractional Interests. In computing adjustments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest one one-hundredth (1/100th) of a share. 
 (iv) When Adjustment Not Required. If the Issuer shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such 
  

 12 

 
dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect
thereof shall be rescinded and annulled. 
 (h) Form of Warrant after Adjustments. The form of this Warrant need not be
changed because of any adjustments in the Warrant Price or the number and kind of Securities purchasable upon the exercise of this Warrant. 
 (i) Escrow of Warrant Stock. If after any property becomes distributable pursuant to this Section 4 by reason of the taking of any record of the holders of Common Stock, but prior to the
occurrence of the event for which such record is taken, and the Holder exercises this Warrant, any shares of Common Stock issuable upon exercise by reason of such adjustment shall be deemed the last shares of Common Stock for which this Warrant is
exercised (notwithstanding any other provision to the contrary herein) and such shares or other property shall be held in escrow for the Holder by the Issuer to be issued to the Holder upon and to the extent that the event actually takes place, upon
payment of the current Warrant Price. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be cancelled by the Issuer and escrowed
property returned. 
 5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share Number shall be
adjusted pursuant to Section 4 hereof (for purposes of this Section 5, each an “Adjustment”), the Issuer shall cause its Chief Financial Officer to prepare and execute a certificate
setting forth, in reasonable detail, the event requiring the Adjustment, the amount of the Adjustment, the method by which such Adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and
the Warrant Price and Warrant Share Number after giving effect to such Adjustment, and shall cause copies of such certificate to be delivered to the Holder of this Warrant promptly after each Adjustment. Any dispute between the Issuer and the Holder
of this Warrant with respect to the matters set forth in such certificate may at the option of the Holder of this Warrant be submitted to an Independent Appraiser mutually selected by the Holder and the Issuer. The Independent Appraiser shall be
instructed to deliver a written opinion as to such matters to the Issuer and such Holder within thirty (30) days after submission to it of such dispute. Such opinion shall be final and binding on the parties hereto. The costs and expenses of
the initial firm selected as Independent Appraiser shall be paid equally by the Issuer and the Holder. 
 6. Fractional
Shares. No fractional shares of Warrant Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Issuer shall round the number of shares to be issued upon exercise down to the nearest whole
number of shares. 
 7. Ownership Cap and Exercise Restriction. Notwithstanding anything to the contrary set forth
in this Warrant, at no time may a Holder of this Warrant exercise this Warrant if the number of shares of Common Stock to be issued pursuant to such exercise would exceed, when aggregated with all other shares of Common Stock owned by such Holder
and its affiliates at such time, the number of shares of Common Stock which would result in such Holder and its affiliates beneficially owning (as determined in accordance with Section 13(d) of the Exchange 
  

 13 

 
Act and the rules thereunder) in excess of 4.99% of the then issued and outstanding shares of Common Stock; provided, however, that upon a holder of this Warrant providing the
Issuer with sixty-one (61) days notice (pursuant to Section 12 hereof) (the “Waiver Notice”) that such Holder would like to waive this Section 7 with regard to any or all shares
of Common Stock issuable upon exercise of this Warrant, this Section 7 will be of no force or effect with regard to all or a portion of the Warrant referenced in the Waiver Notice; provided, further, that during the
sixty-one (61) day period prior to the Expiration Date of this Warrant the Holder may waive this Section 7 upon providing the Waiver Notice at any time during such sixty-one (61) day period, provided,
further, that any Waiver Notice during the sixty-one (61) day period prior to the Expiration Date will not be effective until the Expiration Date. 
 8. Definitions. For the purposes of this Warrant, the following terms have the following meanings: 
 “Additional Shares of Common Stock” means any shares of Common Stock issued (or deemed to have been
issued pursuant to Section 4(d)(i)(E)) by the Issuer after the Original Issue Date other than: (a) shares of Common Stock issued pursuant to a transaction described in Section 4(c) hereof; (b) up to
3,750,000 shares of Common Stock (as adjusted for any stock splits, stock dividends, combinations, recapitalizations or the like) issued or deemed issued to employees, officers, or directors (if in transactions with primarily non-financing purposes)
of the Issuer directly or pursuant to a stock option plan or restricted stock purchase plan approved by the Board; (c) shares of Common Stock issued or issuable (I) in a bona fide, firmly underwritten public offering under the Securities
Act at an offering price of at least $3.00 per share (as adjusted to reflect any stock split, stock dividend, combination, recapitalization and the like with respect to the Common Stock) resulting in gross proceeds (before underwriting discounts,
commissions, expenses and fees) of at least Twenty Million Dollars ($20,000,000) in the aggregate, or (II) upon exercise of warrants or rights granted to underwriters in connection with such a public offering; (d) shares of Common Stock
issued pursuant to the conversion or exercise of convertible or exercisable securities outstanding as of the Original Issue Date or subsequently issued after the Original Issue Date in accordance with Section 5 of the Certificate of
Designations for the Series A-1 or Series B Preferred Stock of the Issuer or pursuant to the Purchase Agreement under which the Preferred Stock was issued or pursuant to the Exchange Agreement (as defined in the Purchase Agreement); (e) shares
of Common Stock issued or issuable in connection with a bona fide business acquisition of or by the Issuer, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise, each as approved by the Board; (f) up to
500,000 shares of Common Stock (as adjusted for any stock splits, stock dividends, combinations, recapitalizations or the like) issued or issuable to persons or entities with which the Issuer has business relationships provided such issuances are
for other than primarily equity financing purposes; (g) shares of Common Stock issued or issuable in connection with any transaction where such securities so issued are excepted from the definition “Additional Shares of Common Stock”
by the affirmative vote of at least a majority of the then outstanding shares of Preferred Stock; (h) up to 1,332,000 shares of Common Stock (as adjusted for any stock splits, stock dividends, combinations, recapitalizations or the like) issued
or issuable to Triple Ring Technologies, Inc. pursuant 
  

 14 

 
to warrants issued by the Issuer as of the date hereof as such warrants may be amended by vote of the Audit Committee of the Issuer; (i) shares of Common Stock (as adjusted for any stock
splits, stock dividends, combinations, recapitalizations or the like) issued or deemed issued to Marc Whyte pursuant to the terms of a Second Amendment to Executive Employment Agreement, by and between the Company and Marc Whyte, including any
shares of Common Stock issued or deemed issued pursuant to warrants, options, or other equity awards issued or granted in accordance with such amendment; or (j) shares of Common Stock (as adjusted for any stock splits, stock dividends,
combinations, recapitalizations or the like) issued or deemed issued to Edward Solomon pursuant to the terms of a Second Amendment to Executive Employment Agreement, by and between the Company and Edward Solomon, including any shares of Common Stock
issued or deemed issued pursuant to warrants, options, or other equity awards issued or granted in accordance with such amendment. 
 “Board” shall mean the Board of Directors of the Issuer. 
 “Capital Stock” means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any
limited liability company, and (iv) all equity or ownership interests in any Person of any other type. 
 “Certificate of Incorporation” means the Certificate of Incorporation of the Issuer as in effect on the Original Issue Date, and as hereafter from time to time amended, modified, supplemented or restated in
accordance with the terms hereof and thereof and pursuant to applicable law. 
 “Common
Stock” means the Common Stock of the Issuer, par value $0.0001 per share, and any other Capital Stock into which such stock may hereafter be changed. 
 “Common Stock Equivalent” means any Convertible Security or warrant, option or other right to
subscribe for or purchase any Additional Shares of Common Stock or any Convertible Security. 
 “Convertible Securities” means evidences of indebtedness, shares of Capital Stock or other Securities which are or may be at any time convertible into or exchangeable for Additional Shares of Common Stock. The term
“Convertible Security” means one of the Convertible Securities. 
 “Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute then in effect. 
 “Expiration Date” means October 27, 2014. 
  

 15 

 “Governmental Authority” means any governmental,
regulatory or self-regulatory entity, department, body, official, authority, commission, board, agency or instrumentality, whether federal, state or local, and whether domestic or foreign. 
 “Holders” mean the Persons who shall from time to time own any Warrant. The term “Holder”
means one of the Holders. 
 “Independent Appraiser” means a nationally recognized or
major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Issuer) that is regularly engaged in the business of
appraising the Capital Stock or assets of corporations or other entities as going concerns, and which is not affiliated with either the Issuer or the Holder of any Warrant. 
 “Issuer” means NovaRay Medical, Inc., a Delaware corporation, and its successors. 
 “Majority Holders” means at any time the Holders of Warrants exercisable for a majority of the shares
of Warrant Stock issuable under the Warrants at the time outstanding. 
 “Original Issue
Date” means the date this Warrant is issued to the Holder as set forth above. 
 “OTC
Bulletin Board” means the over-the-counter electronic bulletin board. 
 “Other
Common” means any other Capital Stock of the Issuer of any class which shall be authorized at any time after the date of this Warrant (other than Common Stock) and which shall have the right to participate in the distribution of
earnings and assets of the Issuer without limitation as to amount. 
 “Person” means an
individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint venture, Governmental Authority or other entity of whatever nature. 
 “Per Share Market Value” means on any particular date (a) the last closing bid price per share
of the Common Stock on such date on the OTC Bulletin Board or another registered national stock exchange on which the Common Stock is then listed, or if there is no such price on such date, then the closing bid price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on the OTC Bulletin Board or any registered national stock exchange, the last closing bid price for a share of Common Stock in the over-the-counter
market, as reported by the OTC Bulletin Board or in the National Quotation Bureau Incorporated or similar organization or

  

 16 

 
agency succeeding to its functions of reporting prices) at the close of business on such date, or (c) if the Common Stock is not then reported by the OTC Bulletin Board or the National
Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the “Pink Sheet” quotes for the applicable Trading Days preceding such date of determination, or (d) if the Common
Stock is not then publicly traded the fair market value of a share of Common Stock as determined by an Independent Appraiser selected in good faith by the Majority Holders; provided, however, that the Issuer, after receipt of the
determination by such Independent Appraiser, shall have the right to select an additional Independent Appraiser, in which case, the fair market value shall be equal to the average of the determinations by each such Independent Appraiser; and
provided, further that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period. The determination of fair market value by an
Independent Appraiser shall be based upon the fair market value of the Issuer determined on a going concern basis as between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and shall be final
and binding on all parties. In determining the fair market value of any shares of Common Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to
the existence or absence of, or any limitations on, voting rights. 
 “Preferred Stock”
means shares of the Issuer’s Series B Convertible Preferred Stock, par value $0.0001 per share issued to the Purchasers pursuant to the Purchase Agreement. 
 “Purchase Agreement” means the Series B Convertible Preferred Stock and Warrant Purchase Agreement
dated as of October 27, 2009, among the Issuer and the Purchasers. 
 “Purchasers”
means the purchasers of the Series B Convertible Preferred Stock and the Warrants issued by the Issuer pursuant to the Purchase Agreement. 
 “Securities” means any debt or equity securities of the Issuer, whether now or hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security,
and any option, warrant or other right to purchase or acquire any Security. “Security” means one of the Securities. 
 “Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute then in effect. 
 “Subsidiary” means any corporation at least 50% of whose outstanding Voting Stock shall at the time
be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries. 
 “Term” has the meaning specified in Section 1 hereof. 
 “Trading Day” means (a) a day on which the Common Stock is traded on the OTC Bulletin Board, or (b) if the Common Stock is not traded on the OTC Bulletin Board, a day on
which the Common Stock is quoted in the over-the-counter market as

  

 17 

 
reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the
Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York
are authorized or required by law or other government action to close. 
 “Voting Stock”
means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the Board (or other governing body) of such
corporation, other than Capital Stock having such power only by reason of the happening of a contingency. 
 “Warrants” means the Warrants issued and sold pursuant to the Purchase Agreement, including, without limitation, this Warrant, and any other warrants of like tenor issued in substitution or exchange for any thereof
pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or of any of such other Warrants. 
 “Warrant Price” initially means $1.50, as such price may be adjusted from time to time as shall result from the adjustments specified in this Warrant, including Section 4 hereto. 
 “Warrant Share Number” means at any time the aggregate number of shares of Warrant Stock which may at
such time be purchased upon exercise of this Warrant, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof. 
 “Warrant Stock” means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants and/or Securities, cash and property to which such Holder would have been entitled upon the occurrence of certain events set forth in Section 4. 
  

 18 

 9. Other Notices. In case at any time: 
 (a) the Issuer shall make any distributions to the holders of Common Stock; or 
 (b) the Issuer shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of Capital
Stock of any class or other rights; or 
 (c) there shall be any reclassification of the Capital Stock of the Issuer; or

 (d) there shall be any capital reorganization by the Issuer; or 
 (e) there shall be any (i) consolidation or merger involving the Issuer or (ii) sale, transfer or other disposition of all or
substantially all of the Issuer’s property, assets or business (except a merger or other reorganization in which the Issuer shall be the surviving corporation and its shares of Capital Stock shall continue to be outstanding and unchanged and
except a consolidation, merger, sale, transfer or other disposition involving a wholly-owned Subsidiary); or 
 (f) there shall
be a voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any partial liquidation of the Issuer or distribution to holders of Common Stock; 
 then, in each of such cases, the Issuer shall give written notice to the Holder of the date on which (i) the books of the Issuer shall close or a record shall be taken for such dividend, distribution
or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be, shall take place. Such notice also shall specify the date as of which the
holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their certificates for Common Stock for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be. Such notice shall be given at least twenty (20) days prior to the action in question and not less than ten (10) days prior to
the record date or the date on which the Issuer’s transfer books are closed in respect thereto. This Warrant entitles the Holder to receive copies of all financial and other information distributed or required to be distributed to the holders
of the Common Stock. 
 10. Amendment and Waiver; Failure or Indulgence Not Waiver. Any term, covenant, agreement
or condition in this Warrant may be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instruments executed by the Issuer and
the Majority Holders; provided, however, that no such amendment or waiver shall reduce the Warrant Share Number, increase the Warrant Price (except as provided herein), shorten the period during which this Warrant may be exercised or modify
any provision of this Section 10 without the consent of the Holder of this Warrant. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of this Warrant unless
the same consideration is also offered to all holders of the Warrants. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver

  

 19 

 
thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege, nor shall any waiver
by the Holder of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion. 
 11. Governing Law; Jurisdiction. This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result
in the application of the substantive law of another jurisdiction. This Warrant shall not be interpreted or construed with any presumption against the party causing this Warrant to be drafted. The Issuer and the Holder agree that venue for any
dispute arising under this Warrant will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not
the proper venue. The Issuer and the Holder irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York. The Issuer and the Holder consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 11
shall affect or limit any right to serve process in any other manner permitted by law. The Issuer and the Holder hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Warrant or the Purchase
Agreement, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party. The parties hereby waive all rights to a trial by jury. 
 12. Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by
telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications shall be: 
  

			
	If to the Issuer:	  	NovaRay Medical, Inc.
		  	39655 Eureka Drive
		  	Newark, California 94560
		  	Attn: Chief Executive Officer
		  	Facsimile: (510) 291-3001
		
	 with copies (which copies
 shall not constitute notice) to:
	  	
		  	Morrison & Foerster, LLP
		  	755 Page Mill Road
		  	Palo Alto, California 94304-1018
		  	Attn: Michael C. Phillips
		  	Facsimile: (650) 494-0792

  

 20 

			
	If to any Holder:	  	At the address of such Holder set forth on Exhibit A to the Purchase Agreement, with copies to Holder’s counsel as set forth on Exhibit A or as specified in writing by such
Holder

 Any party hereto may from time to time change its address for notices by giving written notice of such
changed address to the other party hereto. 
 13. Warrant Agent. The Issuer may, by written notice to each Holder
of this Warrant, appoint an agent having an office in New York, New York for the purpose of replacing this Warrant pursuant to Section 3(d) hereof, or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such agent. 
 14. Remedies. The Issuer
stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Issuer in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to
the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise. 
 15. Successors and Assigns. This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the
successors and assigns of the Issuer, the Holder hereof and (to the extent provided herein) the Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any such Holder or Holder of Warrant Stock. 
 16. Modification and Severability. If, in any action before any court or agency legally empowered to enforce any provision
contained herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make it enforceable by such court or agency. If any such provision is not enforceable as set forth in the
preceding sentence, the unenforceability of such provision shall not affect the other provisions of this Warrant, but this Warrant shall be construed as if such unenforceable provision had never been contained herein. 
 17. Headings. The headings of the Sections of this Warrant are for convenience of reference only and shall not, for any
purpose, be deemed a part of this Warrant. 
 18. Registration Rights. The Holder of this Warrant is entitled to
the benefit of certain piggyback registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant pursuant to the Purchase Agreement and the registration rights with respect to the shares of Warrant Stock
issuable upon the exercise of this Warrant by any subsequent Holder may only be assigned in accordance with the terms and provisions of the Purchase Agreement and Section 2(e) hereof. 
 19. Enforcement Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant,
the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 
  

 21 

 20. Binding Effect. The obligations of the Issuer and the Holder set forth
herein shall be binding upon the successors and assigns of each such party, whether or not such successors or assigns are permitted by the terms hereof. 
 [remainder of page intentionally left blank] 
  

 22 

 IN WITNESS WHEREOF, the Issuer has executed this Series B Warrant as of the day and year
first above written. 
  

			
	NOVARAY MEDICAL, INC.
		
	By:	 	  

	Name:	 	
	Title:	 	

  

 23 

 EXERCISE FORM 
 SERIES B WARRANT 
 NOVARAY MEDICAL, INC. 
 The undersigned [    ], pursuant to the provisions of the within Warrant, hereby elects to purchase
                     shares of Common Stock of NovaRay Medical, Inc. covered by the within Warrant. 
  

							
	Dated:                     	 		 	Signature	 	  

				
		 		 	Print name:	 	  

				
		 		 	Address	 	  

				
		 		 		 	  

 Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise:
                             
 The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended. 
 The undersigned intends that payment of the Warrant Price shall be made as (check one): 
  

					
	Cash Exercise   ̈	 	Cashless Exercise   ̈	 	

 If the Holder has elected a Cash Exercise, the Holder shall pay the sum of
$         by certified or official bank check (or via wire transfer) to the Issuer in accordance with the terms of the Warrant. 
 If the Holder has elected a Cashless Exercise, a certificate shall be issued to the Holder for the number of shares equal to the whole number portion of the product of the calculation set forth below,
which is                     . The Issuer shall pay a cash adjustment in respect of the fractional portion of the product of the calculation
set forth below in an amount equal to the product of the fractional portion of such product and the Per Share Market Value on the date of exercise, which product is
                        . 
  

			
	         X = Y
	 	- (A)(Y)
	 	       B

 Where:

 The number of shares of Common Stock to be issued to the Holder
                     (“X”). 
 The number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised
                             (“Y”). 
 The Warrant Price
                    (“A”). 
 The Per Share Market Value of one share of Common Stock                             
(“B”). 

 ASSIGNMENT 
 FOR VALUE RECEIVED, [                    ] hereby sells, assigns and transfers unto
                             the within Warrant and all rights evidenced thereby and does irrevocably
constitute and appoint                              , attorney, to transfer the said Warrant on the
books of the within named corporation. 
  

							
	Dated:                     	 		 	Signature	 	  

				
		 		 	Print Name:	 	  

				
		 		 	Address	 	  

				
		 		 		 	  

  
  
 PARTIAL ASSIGNMENT 
 FOR VALUE RECEIVED,
[                    ] hereby sells, assigns and transfers unto
                             the right to purchase
                     shares of Warrant Stock evidenced by the within Warrant together with all rights therein, and does irrevocably constitute
and appoint                     , attorney, to transfer that part of the said Warrant on the books of the within named corporation.

  

							
	Dated:                     	 		 	Signature	 	  

				
		 		 	Print Name:	 	  

				
		 		 	Address	 	  

				
		 		 		 	  

  
  
 FOR USE BY THE ISSUER ONLY: 
 This Warrant No.
W[                    ] canceled (or transferred or exchanged) this      day of
        ,         ,                      shares
of Common Stock issued therefor in the name of                             , Warrant No.
W-                     issued for
                             shares of Common Stock in the name ofSecond Amendment to Executive Employment Agreement with Marc Whyte

 Exhibit 10.10 
 SECOND AMENDMENT TO EXECUTIVE EMPLOYMENT 
 AGREEMENT

 This Second Amendment to Executive Employment Agreement (the “Amendment”) is entered into as of March 11, 2010, by and
between NovaRay Medical, Inc., a Delaware corporation with its principal place of business at 39655 Eureka Drive, Newark, California 94560 (“Company”) and Marc C. Whyte (“Executive”) (collectively, the “parties”). All
capitalized terms not otherwise defined herein shall have the meaning ascribed to them in that certain Executive Employment Agreement dated as of December 19, 2007 with Executive as amended by the Amendment to Executive Employment Agreement
dated as of July 2, 2009 with Executive (the “Agreement”). 
 RECITALS 
 WHEREAS, the Company and Executive entered into the Agreement; 
 WHEREAS, the Company and Executive desire to amend the Agreement to be as set forth herein. 
 NOW,
THEREFORE, in compliance with Section 16 of the Agreement and in consideration of the mutual promises and covenants set forth herein and in the Agreement and Statement of Work, the Client and the Company hereby agree as follows: 
 Section 4.1 of the Agreement is hereby amended to read in its entirety: 
 “Salary. As compensation for the proper and satisfactory performance of all duties to be performed by Executive hereunder, Company shall pay to Executive a base salary of $310,000.00 per year,
less applicable withholdings (the “Base Salary”). Until the receipt of gross proceeds from equity or debt or other financing obtained by Company of at least Five Million Dollars ($5,000,000) in the aggregate after July 7, 2009, eighty
percent (80%) of the Base Salary or $10,333 for each applicable semi-monthly pay period, less applicable withholdings, shall be paid in accordance with the Company’s regularly established payroll practice. The remaining $2,584 for each
applicable semi-monthly pay period, less applicable withholdings and applicable withholdings, shall be paid in the event of (i) a receipt of gross proceeds from equity or debt or other financing obtained by Company of at least Five Million
Dollars ($5,000,000) in the aggregate after July 7, 2009, (ii) a termination of Executive’s employment under the Agreement by the

 
Company without Cause or (iii) a termination of Executive’s employment under the Agreement by Executive for Good Reason but in no event later than March 15 of the year following
the year of each such applicable semi-monthly pay period. After the receipt of gross proceeds from equity or debt or other financing obtained by Company of at least Five Million Dollars ($5,000,000) in the aggregate after July 7, 2009, the Base
Salary shall be paid in accordance with the Company’s regularly established payroll practice. In the event Executive’s employment under this Agreement is terminated by either party, for any reason, Executive will be entitled to receive
such amount of his salary earned as provided in this Section through the date of such termination.” 
 Section 4.2 of the Agreement is
hereby amended to read in its entirety: 
 Incentive Compensation. 
  

	 	(a)	Discretionary Incentive Compensation. Executive may be granted incentive compensation in the Company’s discretion. If Company, in its sole and absolute
discretion, grants Executive incentive compensation, the terms, amount and payment of such incentive compensation will be determined solely by Company. Such incentive compensation may be payable in either cash or stock of the Company or any
combination thereof at the election of the Company, in its sole discretion, and pursuant to terms and conditions established by the Board of Directors of the Company. 

  

	 	(b)	Debt or Equity Financing. In the event the Company receives aggregate gross proceeds not less than $5,000,000 from debt or equity financings after July 7,
2009 and prior to December 31, 2010 (excluding proceeds from funds managed by Vision Capital Advisors, LLC), Executive shall receive incentive compensation set forth in Section 4.2(c) below for raising such additional debt or equity
financing provided that Executive is employed with the Company at the time of such receipt of gross proceeds. 

  

	 	(c)	Calculation. In the event the Company receives aggregate gross proceeds not less than $5,000,000 from equity financings after July 7, 2009 and prior to
December 31, 2010 (excluding proceeds from funds managed by Vision Capital Advisors, LLC), such compensation will be initially based on a percentage of Executive’s Base Salary listed in Table 1 below taking into account the amount raised,
the pre-money valuation and the date by which such amount is raised. In the event the Company receives aggregate gross proceeds not less than $5,000,000 from straight debt financings after July 7, 2009 and prior to December 31, 2010
(excluding proceeds from funds managed by Vision Capital Advisors, LLC), such compensation will be initially based on a percentage of Executive’s Base Salary listed in the $42.5M pre-money valuation row in Table 1 below and the date by which
such amount is raised. 

 In the event the Company receives aggregate gross proceeds not less than $5,000,000 from
convertible debt financings after July 7, 2009 and prior to December 31, 2010 (excluding proceeds from funds managed by Vision Capital Advisors, LLC), such compensation will be initially based on a percentage of Executive’s Base
Salary listed in Table 1 below taking into account the amount raised, the pre-money valuation and the date by which such amount is raised assuming conversion of such convertible debt. In the event such converted pre-money valuation is unknown,
the Board of Directors of the Company will determine the appropriate percentage of Executive’s Base Salary upon which the incentive compensation, if any, will be initially based. Any incentive compensation payable by the Company pursuant to
this Section 4.2(c) will be paid, as determined by the Board of Directors of the Company, in its sole discretion, in either (i) cash or (ii) a combination of cash and up to the percentage of such incentive compensation in Incentive
Stock Options issued pursuant to the Company’s 2008 Stock Incentive Plan in lieu of cash as set forth in Table 1 below with the value of such options determined by the Black Scholes valuation method used by the Company to value stock options in
its audited financial statements. Any incentive compensation payable pursuant to this Section 4.2(c) in cash will be paid to Executive as soon as administratively practicable following the applicable date set forth in Table 1 below but in no
event later than March 15, 2011. Any incentive compensation payable pursuant to this Section 4.2(c) in stock options will be granted to Executive at the first meeting of the Compensation Committee of the Board of Directors following the
applicable date set forth in Table 1 below but in no event later than March 15, 2011. 
 Table 1 
  

																									
	 	  	Total Amount Raised and Timing	 	 	 	 
	 	  	If By 3/31/10
$5,000,000	 	 	If By 6/30/10
$5.0m - $10.0m
	 	 	If By 9/30/10
$7.5m - $15.0m
	 	 	If By 12/31/10
$12.5m - $20.0m	 
	 Pre-money valuation:
	  	% of Base
Salary	 	 	% Stock
Options	 	 	% of Base
Salary	 	 	% Stock
Options	 	 	% of Base
Salary	 	 	% Stock
Options	 	 	% of Base
Salary	 	 	% Stock
Options	 
	 Below  $35.4M
	  	5.0	% 	 	70.0	% 	 	7.5	% 	 	60.0	% 	 	7.5	% 	 	40.0	% 	 	10.0	% 	 	30.0	% 
	 $35.4 - $42.4M
	  	10.0	% 	 	70.0	% 	 	15.0	% 	 	60.0	% 	 	15.0	% 	 	40.0	% 	 	25.0	% 	 	30.0	% 
	             $42.5M
	  	15.0	% 	 	70.0	% 	 	25.0	% 	 	60.0	% 	 	25.0	% 	 	40.0	% 	 	30.0	% 	 	30.0	% 
	 Above  $42.5M
	  	25.0	% 	 	70.0	% 	 	32.5	% 	 	60.0	% 	 	32.5	% 	 	40.0	% 	 	35.0	% 	 	30.0	% 

  

	 	(d)	Sale Bonus. In the event of the liquidation, dissolution or winding up of the affairs of the Company (including in connection with a permitted sale of all or
substantially all of the Company’s assets or in connection with a liquidation, dissolution or winding up of the affairs of the Company described in Section 4 of the Certificate of Designation of the Relative Rights and Preferences of the
Series B-1 Convertible 

	 	Participating Preferred Stock of the Company), whether voluntary or involuntary, the Company shall pay Executive 3.75% of the Series B-1 Liquidation Preference Amount
(as defined in such Certificate of Designation) after an amount equal to the original purchase price of the Company’s Series B-1 Preferred Stock then outstanding is paid to the holders of such Series B-1 Preferred Stock (the “Sale
Bonus”); provided that Executive is employed with the Company sixty (60) days prior to such liquidation, dissolution or winding up. The Sale Bonus will be paid in cash to Executive as soon as administratively practicable following the date
of such liquidation, dissolution or winding up of the affairs of the Company but in no event later than March 15 of the year following the year in which such liquidation, dissolution or winding up occurs or the year in which Executive
employment is terminated, whichever is earlier.” 

 Section 4.3 of the Agreement is hereby amended to read in its
entirety: 
 Stock Options and Warrants. Executive may be granted stock options from time to time in the discretion of the
Company subject to the terms and conditions of a Company approved stock option plan and pursuant to the stock option agreement under which such options are granted. The Company shall grant Executive stock options pursuant to the Stock Option
Agreement attached hereto as Exhibit A. The Company shall grant Executive warrants to purchase shares of the Company’s Common Stock pursuant to the warrant agreement set forth in Exhibit B attached hereto. Prior to the completion of any future
financings, the Board will convene for purposes of increasing the number of stock options through additional issuances to the target percentage of 6.0% of the outstanding as converted securities of the Company (including common stock plus
convertible preferred stock of the Company on an as converted basis), post such new financing and increasing the amount of warrants through additional issuances to the target percentage of 7.5% of the issued and outstanding warrants of the Company,
post such new financing.” 
 Section 7.2 of the Agreement is hereby amended to read in its entirety: 
 “Termination Without Cause By Company/Severance. Company may terminate Executive’s employment under this Agreement without Cause at
any time. In the event of such termination, Executive will receive the Standard Entitlements plus the following Severance Pay: (a) twelve (12) months of Executive’s Base Salary then in effect on the date of termination; provided,
however, that for purposes of this Section 7.2 (and any other section in this Agreement that refers to this Section 7.2), “Base Salary” will mean the greater of the Executive’s base salary then in effect or $310,000, and
twelve (12) months of Executive’s health care benefits then in effect on the date of termination provided the cost to the Company of such health care benefits does not exceed the cost in effect on the date of termination (the
“Severance Pay”) and (b) the vesting of any stock options held by Executive at the time of such termination will accelerate as to the number

 
of shares that otherwise would have vested and been exercisable as of the date that is twenty-four (24) months from the date of termination. The Severance Pay will be payable upon
termination. Executive’s receipt of the Severance Benefits will be contingent upon: (x) Executive’s compliance with all surviving provisions of this Agreement as specified in subparagraph 15.7 below; (y) Executive’s
execution of a full general release in a form provided by the Company, releasing all claims, known or unknown, that Executive may have against Company arising out of or any way related to Executive’s employment or termination of employment with
Company; and (z) Executive’s agreement to act as a consultant for Company for up to a maximum of sixty (60) calendar days immediately following the date of termination, without additional compensation, if requested to do so by
Company. The Severance Benefits described herein will be paid or will commence, as applicable, as soon as administratively practicable but within ten (10) calendar days following the Executive’s “separation from service” within
the meaning of Section 409A of the Code. 
 Section 7.4(c) of the Agreement is hereby amended to read in its entirety: 
 “(c) 280G. If, due to the benefits provided under subparagraph 7.4(a) above and/or any other benefits, Executive is subject to any excise tax due to
characterization of any amounts payable under subparagraph 7.4(a) and/or any other benefits as excess parachute payments pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the Company, in its sole
discretion, may elect to reduce the amounts payable under subparagraph 7.4(a) and/or any other benefits in order to avoid any “excess parachute payment” under Section 280G(b)(1) of the Code; provided, however, that any such reduction
shall be made in the order that least diminishes the economic value of such payments and benefits.” 
 The Company and Executive hereby
acknowledge and consent to the foregoing amendments to the Agreement as set forth herein. 
 Except as amended herein, all other terms and
provisions of the Agreement shall remain in full force and effect. 
 This Amendment shall be effective upon its execution by the Company and
Executive. 
 This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the
same counterpart. In the event that any signature is delivered by facsimile or electronic transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the
same force and effect as if such facsimile or electronic signature were the original thereof. 

 IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the date first written above.

  

					
	Dated: March 11, 2010	 	 /s/ Marc C. Whyte

		 	 Marc C. Whyte

		
	Dated: March 11, 2010	 	 NovaRay Medical, Inc.

			
		 	By:	 	 /s/ Lynda Wijcik

		 		 	Lynda Wijcik
		 		 	Chairman of the Board of Directors
		 		 	NovaRay Medical, Inc.

  

 IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the date first written above.

  

					
	Dated: March 11, 2010	 	 /s/ Marc C. Whyte

		 	Marc C. Whyte
		
	Dated: March 11, 2010	 	NovaRay Medical, Inc.
			
		 	By:	 	 /s/ Lynda Wijcik

		 		 	Lynda Wijcik
		 		 	Chairman of the Board of Directors
		 		 	NovaRay Medical, Inc.

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