Document:

exv10w30

Exhibit 10.30

EXHIBIT A TO SECURITIES PURCHASE AGREEMENT

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

Original Issue Date: May ___, 2009

Original Conversion Price (subject to adjustment herein): $1.22

SERIES B 15% CUMULATIVE CONVERTIBLE DEBENTURE

DUE MAY __, 2013

     THIS DEBENTURE is one of a series of duly authorized and validly issued Series B 15%
Cumulative Convertible Debentures of Concentric Energy Corp., a Nevada corporation, (the
“Company”), having its principal place of business at 3550 Sabin Brown Road, Suite 3,
Wickenburg, AZ 85390, designated as its Series B 15% Cumulative Convertible Debenture due March 31,
2013 (this debenture, the “Debenture” and, collectively with the other debentures of such
series, the “Debentures”). This Debenture is one of a series of the same class of
debentures issued pursuant to a Securities Purchase Agreement dated as of May ___, 2009.

     FOR
VALUE RECEIVED, the Company promises to pay to                 or its registered
assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal
sum of                
on May ___, 2013 (the “Maturity Date”) or such earlier date as this
Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the
Holder on the aggregate unconverted and then outstanding principal amount of this Debenture in
accordance with the provisions hereof. This Debenture is subject to the following additional
provisions:

          Section 1. Definitions. For the purposes hereof, in addition to the terms
defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined herein shall have
the meanings set forth in the Purchase Agreement and (b) the following terms shall have the
following meanings:

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     “Actual Aggregate Sales Price” shall have the meaning set forth in Section
5(c).

     “Aggregate VWAP Price” shall have the meaning set forth in Section 5(c).

     “Alternate Consideration” shall have the meaning set forth in Section 5(f).

     “Bankruptcy Event” means any of the following events: (a) the Company or any
Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof
commences a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction relating to the Company or any Significant Subsidiary thereof; (b) there
is commenced against the Company or any Significant Subsidiary thereof any such case or
proceeding that is not dismissed within 60 days after commencement; (c) the Company or any
Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief
or other order approving any such case or proceeding is entered; (d) the Company or any
Significant Subsidiary thereof suffers any appointment of any custodian or the like for it
or any substantial part of its property that is not discharged or stayed within 60 calendar
days after such appointment; (e) the Company or any Significant Subsidiary thereof makes a
general assignment for the benefit of creditors; (f) the Company or any Significant
Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or (g) the Company or any Significant Subsidiary
thereof, by any act or failure to act, expressly indicates its consent to, approval of or
acquiescence in any of the foregoing or takes any corporate or other action for the purpose
of effecting any of the foregoing.

     “Base Conversion Price” shall have the meaning set forth in Section 5(b).

     “Base Interest Rate” shall have the meaning set forth in Section 2(a).

     “Business Day” means any day except any Saturday, any Sunday, any day which
shall be a federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

     “Buy-In” shall have the meaning set forth in Section 4(e)(v).

     “Change of Control Transaction” means the occurrence after the date hereof of
any of (i) the Company merges into or consolidates with any other Person, or any Person
merges into or consolidates with the Company and, after giving effect to such transaction,
the stockholders of the Company immediately prior to such transaction own less than 51% of
the aggregate voting power of the Company or the successor entity of such transaction, or
(ii) the Company sells or transfers all or substantially all of its assets to another Person
and the stockholders of the Company immediately prior to such

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transaction own less than 51% of the aggregate voting power of the acquiring entity
immediately after the transaction, or (iii) a replacement at one time of more than one-half
of the members of the Company’s board of directors which is not approved by a majority of
those individuals who were members of the board of directors immediately prior to such
replacement, or (iv) shares representing greater than 50% of the voting power of the Company
are transferred to Persons, who prior to such transfer, owned less than 50.1% of the voting
power of the Company or (v) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set forth in
clauses (i) through (iv) above.

     “Conversion Date” shall have the meaning set forth in Section 4(a).

     “Conversion Price” shall have the meaning set forth in Section 4(b).

     “Conversion Shares” means, collectively, the shares of Common Stock issuable
upon conversion of this Debenture in accordance with the terms hereof.

     “Debenture Register” shall have the meaning set forth in Section 2(c).

     “Dilutive Issuance” shall have the meaning set forth in Section 5(b).

     “Dilutive Issuance Notice” shall have the meaning set forth in Section 5(b).

     “Event of Default” shall have the meaning set forth in Section 8.

     “Exempt Issuance” means an issuance by the Company of shares or Common Stock or
any security exchangeable or convertible into shares of Common Stock, whether debt or equity
or a combination thereof, (i) pursuant to any stock based incentive plan of the Company
existing on the date hereof or approved by the stockholders of the company after the date
hereof, which together do not reserve for issuance more than 17.5% of the Company’s fully
diluted equity, or (ii) pursuant to any issued and outstanding option, warrant or other
convertible security or (iii) in connection with or pursuant to any strategic acquisition,
the terms of which have been negotiated on an arm’s length basis with an unaffiliated third
party.

     “Fundamental Transaction” shall have the meaning set forth in Section 5(f).

     “Interest Conversion Rate” shall be equal to the Conversion Price.

     “Interest Conversion Shares” shall have the meaning set forth in Section 2(b).

     “Interest Payment Date” shall have the meaning set forth in Section 2(b).

     “Interest Share Amount” shall have the meaning set forth in Section 2(b).

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     “Late Fees” shall have the meaning set forth in Section 2(d).

     “Mandatory Default Amount” means the sum of 135% of the outstanding principal
amount of this Debenture, plus 100% of all accrued and unpaid interest, liquidated damages,
step up interest and other fees or assessments hereon.

     “New York Courts” shall have the meaning set forth in Section 9(d).

     “Notice of Conversion” shall have the meaning set forth in Section 4(a).

     “Original Issue Date” means the date of the first issuance of the Debentures,
regardless of any transfers of any Debenture and regardless of the number of instruments
which may be issued to evidence such Debentures.

     “Purchase Agreement” means the Securities Purchase Agreement, dated as of March
31, 2009 among the Company and the original Holder(s), as amended, modified or supplemented
from time to time in accordance with its terms.

     “Principal Amount” shall have the meaning ascribed to such term in the
Securities Purchase Agreement.

     “Registration Statement” means a registration statement that registers the
resale of all Conversion Shares and Interest Conversion Shares of the Holder, names such
Holder as a “selling stockholder” therein, and meets the requirements of the Purchase
Agreement.

     “Right of First Refusal” shall have the meaning set forth in Section 3(d)

     “Securities Act” means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.

     “Share Delivery Date” shall have the meaning set forth in Section 4(e).

     “Step-up Interest Rate” shall have the meaning set forth in Section 8(b).

     “Subsidiary” shall have the meaning set forth in the Purchase Agreement.

     “Subscription Amount” shall have the meaning ascribed to such term in the
Securities Purchase Agreement.

     “Trading Day” means a day on which the principal Trading Market is open for
business.

     “Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the American Stock

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Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange or the OTC Bulletin Board.

     “Transaction Documents” shall have the meaning set forth in the Purchase
Agreement.

     “VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted for
trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City
time) to 4:02 p.m. (New York City time)); (b)  if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for
trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in
the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the
Common Stock so reported; or (d) in all other cases, the fair market value of a share of
Common Stock as determined by an independent appraiser selected in good faith by the Holder
and reasonably acceptable to the Company.

     “Warrants” shall have the meaning set forth in the Purchase Agreement.

     Section 2. Interest.

     a) Payment of Interest in Cash or Kind:  On the Maturity Date (or following the
acceleration of this Debenture upon an Event of Default), the Company shall pay interest to
the Holder on the aggregate unconverted and then outstanding principal amount of this
Debenture at the rate of 15% per annum (the “Base Interest Rate”), payable, at the option of
the Holder, in cash or duly authorized, validly issued, fully paid and non-assessable shares
of Common Stock at the Interest Conversion Rate (the dollar amount to be paid in shares, the
“Interest Share Amount”). The number of shares of Common Stock to be applied against
such Interest Share Amount shall be equal to the quotient of (x) the applicable Interest
Share Amount divided by (y) the then Conversion Price (the “Interest Conversion
Shares”).

     b) Interest Calculations. Interest shall be calculated on the basis of a
365-day year and shall accrue daily commencing on the Original Issue Date and shall be
compounded quarterly on January 1, April 1, July 1 and October 1, beginning on the first
such date after the Original Issue Date until payment in full of the principal sum, together
with all accrued and unpaid interest, liquidated damages and other amounts which may become
due hereunder, has been made. Interest shall cease to accrue with respect to any principal
amount converted, provided that the Company actually delivers the Conversion Shares within
the time period required by Section 4(e)(ii) herein. Payment of interest in

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shares of Common Stock shall otherwise occur pursuant to Section 4(e)(ii) herein and,
solely for purposes of the payment of interest in shares, the Maturity Date shall be deemed
the Conversion Date.

     c) Late Fee. All overdue accrued and unpaid interest to be paid hereunder
shall entail a late fee at an interest rate equal to the lesser of 18% per annum or the
maximum rate permitted by applicable law (“Late Fees”) which shall accrue daily from
the date such interest is due hereunder through and including the date of payment in full.
If any Interest Conversion Shares are issued to the Holder, but are not applied against an
Interest Share Amount, then the Holder shall promptly return such excess shares to the
Company.

     d) Prepayment. The Company shall have the right, at its option, to prepay in
cash the entire amount of this Debenture upon not less than 30 calendar days written prior
notice and not more than 60 calendar days written notice, delivered to the Holder. In the
event that the Company determines to prepay this Debenture, such prepayment shall include
the entire outstanding principal amount of the Debenture and all outstanding or accrued
interest, and all penalties, liquidated damages, step up interest and other fees or
assessments as shall be determined in accordance with this Debenture, plus a prepayment
premium equal to the greater of (i) the interest computed from Original Issue Date to the
second annual anniversary of the Original Issue Date minus the interest computed from the
Original Issue Date to the prepayment date on the then outstanding principal amount of the
Debenture, or (ii) 25% of the interest computed as due and accruable from the date of
prepayment to the Maturity Date on the then outstanding principal amount of the Debenture.
The Company shall not have the right, without the written consent of the Holder, to prepay
less than the entire principal amount of this Debenture, together with all other amounts as
provided in this section.

     Section 3. Registration of Transfers and Exchanges; Right of First Refusal

     a) Different Denominations. This Debenture is exchangeable for an equal
aggregate principal amount of Debentures of different authorized denominations, as requested
by the Holder surrendering the same. No service charge will be payable for such
registration of exchange.

     b) Investment Representations. This Debenture has been issued subject to
certain investment representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement
and applicable federal and state securities laws and regulations.

     c) Reliance on Debenture Register. Prior to due presentment for transfer to the
Company of this Debenture, the Company and any agent of the Company may treat the Person in
whose name this Debenture is duly registered on the Debenture Register as the owner hereof
for the purpose of receiving payment as herein provided and for all

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other purposes, whether or not this Debenture is overdue, and neither the Company nor
any such agent shall be affected by notice to the contrary.

     d) Right of First Refusal to Purchase Debenture. In the event that the Holder
of this Debenture desires to sell or transfer this Debenture to a third party other than an
Affiliate for consideration or receives a bona fide written offer from a third party other
than an Affiliate for the purchase of this Debenture, Holder shall provide the Company with
written notice of such intent at least 15 Business Days prior to the intended date of
transfer (“Transfer Notice”). The Transfer Notice shall describe all of the material
terms of such intended transfer, including without limitation, the name of the intended
purchaser, the amount and type of consideration to be paid and the intended closing date.
The Company shall have the right, exercisable within 10 Business Days of the date of the
Transfer Notice, to notify the Holder that it intends to purchase the Debenture in
accordance with this Section 3(d). In the event that the Company elects to exercise its
right of first refusal hereunder, the purchase price shall be at a price equal to the
purchase price set forth in the Transfer Notice plus a 10% premium to such price. Payment of
the purchase price and the purchase of this Debenture by the Company shall otherwise be made
in compliance with the terms sets forth in the Transfer Notice.

     Section 4. Holder’s Right to Mandatory Redemption.

	 	a)	 	In the event that the Company is a party to a transaction
involving a Change of Control or Fundamental Transaction that occurs while 33%
or more of the Debentures remain outstanding, the Holder may upon 10 days
written notice require the Company to redeem the Debentures for the Mandatory
Default Amount. In the event that the Company breaches any material term,
covenant or representation in that certain Exclusive Marketing Agreement
between the Company and Traxys North America LLC, dated May ___, 2009, and such
breach has not been cured within 30 days after written notice of such breach
has been given to the Company, then the Holder upon 3 days written notice
require the Company to redeem the Debentures for the Mandatory Default Amount.

     Section 5. Conversion.

     a) Voluntary Conversion. At any time after the 120th day following
the Original Issue Date and until this Debenture is no longer outstanding, this Debenture
shall be convertible, in whole or in part, into shares of Common Stock at the option of the
Holder, at any time and from time to time (subject to the conversion limitations set forth
in Section 4(c) hereof). The Holder shall effect conversions by delivering to the Company a
Notice of Conversion, the form of which is attached hereto as Annex A (a “Notice
of Conversion”), specifying therein the principal amount of this Debenture to be
converted and the date on which such conversion shall be effected (such date, the

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“Conversion Date”). If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed
delivered hereunder. To effect conversions hereunder, the Holder shall not be required to
physically surrender this Debenture to the Company unless the entire principal amount of
this Debenture, plus all accrued and unpaid interest thereon, has been so converted.
Conversions hereunder shall have the effect of lowering the outstanding principal amount of
this Debenture in an amount equal to the applicable conversion. The Holder and the Company
shall maintain records showing the principal amount(s) converted and the date of such
conversion(s). The Company may deliver an objection to any Notice of Conversion within 1
Business Day of delivery of such Notice of Conversion. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and determinative in the absence
of manifest error. The Holder, and any assignee by acceptance of this Debenture, acknowledge
and agree that, by reason of the provisions of this paragraph, following conversion of a
portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may
be less than the amount stated on the face hereof.

     b) Interest Upon Conversion. All unpaid and accrued interest (as calculated
pursuant to Section 2(b)) with respect to any portion of this Debenture that is converted by
the Holder pursuant to Section 4(a) above shall be due and payable within five (5) Business
Days following the applicable Conversion Date. Such interest shall be payable in Interest
Conversion Shares (as provided in Section 2(a) above); provided, however,
that if the Conversion Date is the Maturity Date (or following the acceleration of this
Debenture upon an Event of Default), interest shall be payable, at the option of the Holder,
in the form of either cash or in Interest Conversion Shares (as provided in Section 2(a)
above). Payment of interest in shares of Common Stock shall otherwise occur pursuant to
Section 4(e)(ii) herein.

     c) Conversion Price. The conversion price in effect on any Conversion Date
shall be equal to $1.22, subject to adjustment herein (the “Conversion Price”).

     d) Mechanics of Conversion.

     i. Conversion Shares Issuable Upon Conversion of Principal Amount. The
number of Conversion Shares issuable upon a conversion hereunder shall be determined
by the quotient obtained by dividing (x) the outstanding principal amount of this
Debenture to be converted by (y) the Conversion Price.

     ii. Delivery of Certificate Upon Conversion. Not later than five
Business Days after each Conversion Date (the “Share Delivery Date”), the
Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or
certificates representing the number of Conversion Shares and Interest Conversion
Shares being acquired upon the conversion of this Debenture and (B),

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if the Conversion Date is the Maturity Date (or following the acceleration of
this Debenture upon an Event of Default), a bank check in the amount of accrued and
unpaid interest (if the Holder has elected to be paid accrued interest in cash).

     iii. Failure to Deliver Certificates. If in the case of any Notice of
Conversion such certificate or certificates are not delivered to or as directed by
the applicable Holder by the seventh Business Day after the Conversion Date, the
Holder shall be entitled to elect by written notice to the Company at any time on or
before its receipt of such certificate or certificates, (A) to treat such failure as
an Event of Default or (B) to rescind such Conversion, in which event the Company
shall promptly return to the Holder any original Debenture delivered to the Company
and the Holder shall promptly return to the Company the Common Stock certificates
representing the principal amount of this Debenture unsuccessfully tendered for
conversion to the Company.

     iv. Obligation Absolute; Partial Liquidated Damages. The Company’s
obligations to issue and deliver the Conversion Shares and Interest Conversion
Shares upon conversion of this Debenture in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by the Holder to
enforce the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same, or
any setoff, counterclaim, recoupment, limitation or termination, or any breach or
alleged breach by the Holder or any other Person of any obligation to the Company or
any violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such obligation
of the Company to the Holder in connection with the issuance of such Conversion
Shares; provided, however, that such delivery shall not operate as a
waiver by the Company of any such action the Company may have against the Holder.
In the event the Holder of this Debenture shall elect to convert any or all of the
outstanding principal amount hereof, the Company may not refuse conversion based on
any claim that the Holder or anyone associated or affiliated with the Holder has
been engaged in any violation of law, agreement or for any other reason, unless an
injunction from a court, on notice to Holder, restraining and or enjoining
conversion of all or part of this Debenture shall have been sought and obtained, and
the Company posts a surety bond for the benefit of the Holder in the amount of 150%
of the outstanding principal amount of this Debenture, which is subject to the
injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds of which shall be
payable to such Holder to the extent it obtains judgment. In the absence of such
injunction, the Company shall issue Conversion Shares and Interest Conversion Shares
or, if applicable, cash, upon a properly noticed conversion. If the Company fails
for any reason to deliver to the Holder such certificate or certificates pursuant to
Section 4(e)(ii) by the third Business Day after the Conversion Date, the Company
shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for
each $1000 of principal amount

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being converted, $10 per Business Day (increasing to $20 per Business Day on
the fifth Business Day after such liquidated damages begin to accrue) for each
Business Day after such third Business Day until such certificates are delivered.
Nothing herein shall limit a Holder’s right to pursue actual damages or declare an
Event of Default pursuant to Section 8 hereof for the Company’s failure to deliver
Conversion Shares within the period specified herein and such Holder shall have the
right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the Holder from seeking
to enforce damages pursuant to any other Section hereof or under applicable law.

     v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. In addition to any other rights available to the Holder, if the
Company fails for any reason to deliver to the Holder such certificate or
certificates by the Share Delivery Date pursuant to Section 4(e)(ii), and if after
such Share Delivery Date the Holder is required by its brokerage firm to purchase
(in an open market transaction or otherwise), or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by
such Holder of the Conversion Shares which the Holder was entitled to receive upon
the conversion relating to such Share Delivery Date (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder (in addition to any other remedies
available to or elected by the Holder) the amount by which (x) the Holder’s total
purchase price (including any brokerage commissions) for the Common Stock so
purchased exceeds (y) the product of (1) the aggregate number of shares of Common
Stock that such Holder was entitled to receive from the conversion at issue
multiplied by (2) the actual sale price at which the sell order giving rise to such
purchase obligation was executed (including any brokerage commissions) and (B) at
the option of the Holder, either reissue (if surrendered) this Debenture in a
principal amount equal to the principal amount of the attempted conversion or
deliver to the Holder the number of shares of Common Stock that would have been
issued if the Company had timely complied with its delivery requirements under
Section 4(e)(ii). 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 conversion
of this Debenture with respect to which the actual sale price of the Conversion
Shares (including any brokerage commissions) giving rise to such purchase obligation
was a total of $10,000 under clause (A) of the immediately preceding sentence, the
Company shall be required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect of
the Buy-In and, upon request of the Company, evidence of the amount of such loss.
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 Company’s failure
to timely deliver certificates representing shares of Common Stock upon conversion
of this Debenture as required pursuant to the terms hereof.

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     vi. Reservation of Shares Issuable Upon Conversion. The Company
covenants that it will at all times reserve and keep available out of its authorized
and unissued shares of Common Stock for the sole purpose of issuance upon conversion
of this Debenture and payment of interest on this Debenture, each as herein
provided, free from preemptive rights or any other actual contingent purchase rights
of Persons other than the Holder (and the other holders of the Debentures), not less
than such aggregate number of shares of the Common Stock as shall (subject to the
terms and conditions set forth in the Purchase Agreement) be issuable (taking into
account the adjustments of Section 5) upon the conversion of the outstanding
principal amount of this Debenture and payment of interest hereunder. The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly authorized, validly issued, fully paid and nonassessable and, if the
Registration Statement is then effective under the Securities Act, shall be
registered for public sale in accordance with such Registration Statement.

     vii. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of this Debenture. As to any
fraction of a share which Holder would otherwise be entitled to purchase upon such
conversion, the Company shall at its election, either pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.

     viii. Transfer Taxes. The issuance of certificates for shares of the
Common Stock on conversion of this Debenture shall be made without charge to the
Holder hereof for any documentary stamp or similar taxes that may be payable in
respect of the issue or delivery of such certificates, provided that the Company
shall not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in a
name other than that of the Holder of this Debenture and the Company shall not be
required to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax has
been paid.

     ix. Registration Rights. The Holder (and any permitted transferee or
assignee) of this Debenture shall be entitled to the registration rights with
respect to the shares of Common Stock underlying this Debenture as described in the
Purchase Agreement.

     x. Trading. The Company shall use commercially reasonable efforts to
have its Common Stock listed for trading on a Trading Market within 180 calendar
days after the Original Issue Date.

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     Section 6. Certain Adjustments.

     a) Stock Dividends and Stock Splits. If the Company, at any time while this
Debenture is outstanding: (A) pays a stock dividend or otherwise makes a distribution or
distributions payable in shares of Common Stock on shares of Common Stock or any Common
Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common
Stock issued by the Company upon conversion of, or payment of interest on, the Debentures);
(B) subdivides outstanding shares of Common Stock into a larger number of shares; (C)
combines (including by way of a reverse stock split) outstanding shares of Common Stock into
a smaller number of shares; or (D) issues, in the event of a reclassification of shares of
the Common Stock, any shares of capital stock of the Company, then the Conversion Price
shall be multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding any treasury shares of the Company) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made pursuant to this Section
shall become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination or
re-classification.

     b) Subsequent Equity Sales. If, at any time while this Debenture is
outstanding, the Company or any Subsidiary, as applicable, sells or grants any option to
purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or
announces any sale, grant or any option to purchase or other disposition), any Common Stock
or Common Stock Equivalents (excluding the Warrants issued (i) contemporaneously with the
issue of any of these Debentures, or (ii) due to the repricing as a result of a Dilutive
Issuance as hereinafter defined of the Warrants issued contemporaneously with the issue of
any of these Debentures (for the purpose of clarity this exclusion is intended to assure
that no circular price adjustment will occur as a consequence of the issue of or price
adjustments made to the Warrants issued contemporaneously with these Debentures)) entitling
any Person to acquire shares of Common Stock at an effective price per share that is lower
than the then Conversion Price (such lower price, the “Base Conversion Price” and
such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time, whether by operation of
purchase price adjustments, reset provisions, floating conversion, exercise or exchange
prices or otherwise, or due to warrants, options or rights per share which are issued in
connection with such issuance, be entitled to receive shares of Common Stock at an effective
price per share that is lower than the Conversion Price, such issuance shall be deemed to
have occurred for less than the Conversion Price on such date of the Dilutive Issuance),
then the Conversion Price shall be reduced to equal the Base Conversion Price; provided,
however, the Base Conversion Price shall not be adjusted to less then $0.10. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.
Notwithstanding the foregoing, no adjustment will be made under this Section 5(b) in respect
of an Exempt Issuance. If the Company enters into a variable rate transaction, the

12

 

Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the
lowest possible conversion price at which such securities may be converted or exercised. The
Company shall notify the Holder in writing, no later than one (1) Business Day following the
issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(b),
indicating therein the applicable issuance price, or applicable reset price, exchange price,
conversion price and other pricing terms (such notice, the “Dilutive Issuance
Notice”). For purposes of clarification, whether or not the Company provides a Dilutive
Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance,
the Holder is entitled to receive a number of Conversion Shares based upon the Base
Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the
Holder accurately refers to the Base Conversion Price in the Notice of Conversion. Holder
acknowledges that the issuance to Traxys North America, LLC of certain $1 warrants as an
engagement fee on or subsequent to the issuance of this debenture will not result in a
“Dilutive Issuance” or in the adjustments described in this subsection. In addition, Holder
acknowledges that the issuance of $1 warrants to Holders of this Series B Debentures will
not result in a “Dilutive Issuance” or in the adjustments described in this subsection.

     c) Purchase of Debentures by Founder. The Company has agreed to accept as
payment of the Subscription Amount for the purchase of a Debenture by its founder, Ralph
Kettell, marketable securities at an amount equal to the aggregate VWAP of the respective
securities on the trading day preceding the Closing Date, or at up to a 12% discount to
their aggregate VWAP, at the sole discretion of the Company, (such ultimate valuation being
referred to as the “Aggregate VWAP Price”). If the aggregate realized price from
the sale of such securities net of any execution costs or trading commissions (the
“Actual Aggregate Sales Price”), which sales will occur over a period of not more
than 120 days from the Closing Date, (i) exceeds the Aggregate VWAP Price, Mr. Kettell shall
be issued an additional Debenture in the principal amount equal to the difference between
the Actual Aggregate Sales Price and the Aggregate VWAP Price, or (ii) is less than the
Aggregate VWAP Price, Mr. Kettell shall be issued in exchange for his original Debenture a
new Debenture in the principal amount equal to the Actual Aggregate Sales Price.

     d) Subsequent Rights Offerings. If the Company, at any time while the
Debenture is outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common
Stock at a price per share that is lower than the VWAP on the record date referenced below,
then the Conversion Price shall be multiplied by a fraction of which the denominator shall
be the number of shares of the Common Stock outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the numerator shall be the number of shares of the
Common Stock outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares so offered
(assuming delivery to the Company in full of all consideration payable upon exercise of such
rights, options or warrants) would purchase

13

 

at such VWAP. Such adjustment shall be made whenever such rights or warrants are
issued, and shall become effective immediately after the record date for the determination
of stockholders entitled to receive such rights, options or warrants.

     e) Pro Rata Distributions. If the Company, at any time while this Debenture is
outstanding, distributes to all holders of Common Stock (and not to the Holders) evidences
of its indebtedness or assets (including cash and cash dividends) or rights or warrants to
subscribe for or purchase any security (other than the Common Stock, which shall be subject
to Section 5(b)), then in each such case the Conversion Price shall be adjusted by
multiplying such Conversion Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a fraction of which
the denominator shall be the VWAP determined as of the record date mentioned above, and of
which the numerator shall be such VWAP on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so distributed
applicable to one (1) outstanding share of the Common Stock as determined by the Board of
Directors of the Company in good faith. In either case the adjustments shall be described
in a statement delivered to the Holder describing the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to one (1) share of
Common Stock. Such adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned above.

     f) Fundamental Transaction. If, at any time while this Debenture is
outstanding, (A) the Company effects any merger or consolidation of the Company with or into
another Person, (B) the Company effects any sale of all or substantially all of its assets
in one transaction or a series of related transactions, (C) any tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other securities, cash or
property, or (D) the Company effects any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property (in any such case, a “Fundamental
Transaction”), then, upon any subsequent conversion of this Debenture, the Holder shall
have the right to receive, for each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental Transaction, the same
kind and amount of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of one (1) share of Common Stock (the
“Alternate Consideration”). For purposes of any such conversion, the determination
of the Conversion Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect of one (1)
share of Common Stock in such Fundamental Transaction, and the Company shall apportion the
Conversion Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be received in a
Fundamental Transaction,

14

 

then the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any conversion of this Debenture following such Fundamental Transaction. To
the extent necessary to effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a new debenture
consistent with the foregoing provisions and evidencing the Holder’s right to convert such
debenture into Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this Section 5(f) and insuring that this
Debenture (or any such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.

     g) Calculations. All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this
Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock
(excluding any treasury shares of the Company) issued and outstanding.

     h) Notice to the Holder.

     i. Adjustment to Conversion Price. Whenever the Conversion Price is
adjusted pursuant to any provision of this Section 5, the Company shall promptly
deliver to each Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.

     ii. Notice to Allow Conversion by Holder. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on the Common Stock,
(B) the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to all
holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the approval of any
stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the assets
of the Company, of any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property or (E) the Company shall authorize
the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be filed at each
office or agency maintained for the purpose of conversion of this Debenture, and
shall cause to be delivered to the Holder at its last address as it shall appear
upon the Debenture Register, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of
which the holders of the Common Stock of record to be entitled to such

15

 

dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale, transfer
or share exchange is expected to become effective or close, and the date as of which
it is expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange, provided that the failure to deliver such notice or any defect
therein or in the delivery thereof shall not affect the validity of the corporate
action required to be specified in such notice. The Holder is entitled to convert
this Debenture during the 20-day period commencing on the date of such notice
through the effective date of the event triggering such notice.

iii. the Company shall provide written notice to the Holders if it has not paid
any or all (i) State of Nevada (or other applicable state) filing fees or (ii) fees
owed to the Federal Bureau of Land Management, by the date which is 15 calendar days
prior to the date when such fees are required to be paid.

          Section 7. [RESERVED]

          Section 8. Negative Covenants. As long as any portion of this Series B
Debenture remains outstanding, unless the holders of at least 66 2/3% in principal amount of the
then outstanding Series B Debentures shall have otherwise given prior written consent, the Company
shall not, and shall not permit any of its subsidiaries (whether or not a Subsidiary on the
Original Issue Date) to, directly or indirectly:

     a) enter into any transaction with any Affiliate of the Company unless such transaction
is made on an arm’s-length basis and expressly approved by a majority of the disinterested
directors of the Company (even if less than a quorum otherwise required for board approval);

     b) issue or agree to issue any securities of the Company including securities which are
intended to be Exempt Issuances at a price of less than $0.10 per share; or

     c) enter into any agreement with respect to any of the foregoing.

          Section 8. Events of Default.

     a) “Event of Default” means, wherever used herein, any of the following events
(whatever the reason for such event and whether such event shall be voluntary or involuntary
or effected by operation of law or pursuant to any judgment, decree or order of any court,
or any order, rule or regulation of any administrative or governmental body):

	 	i.	 	any default in the payment of (A) the principal amount of
any Debenture or (B) interest, liquidated damages and other amounts owing to
a Holder on any

16

 

	 	 	 	Debenture, as and when the same shall become due and payable (whether on a
Conversion Date or the Maturity Date or by acceleration or otherwise) which
default, solely in the case of an interest payment or other default under clause
(B) above, is not cured within 10 Business Days;
	 
	 	ii.	 	the Company shall withdraw that registration statement on
Form S-1 filed with the Commission pursuant to that certain Registration
Rights Agreement, dated as of July 31, 2008, between the Company and the
investors party thereto,
	 
	 	iii.	 	the Company shall fail to observe or perform any other
covenant or agreement contained in the Debentures (other than a breach by the
Company of its obligations to deliver shares of Common Stock to the Holder
upon conversion, which breach is addressed in clause (xi) below) which
failure is not cured, if possible to cure, within the earlier to occur of (A)
60 calendar days after notice of such failure sent by the Holder or by any
other Holder, or (B) 90 Business Days after the Company has become or should
have become aware of such failure;
	 
	 	iv.	 	a default or event of default (subject to any grace or cure
period provided in the applicable agreement, document or instrument) shall
occur under any of the Transaction Documents;
	 
	 	v.	 	any representation or warranty made in this Debenture, any
other Transaction Documents, any written statement pursuant hereto or thereto
or any other report, financial statement or certificate made or delivered to
the Holder or any other Holder shall be untrue or incorrect in any material
respect as of the date when made or deemed made;
	 
	 	vi.	 	the Company or any Significant Subsidiary shall be subject
to a Bankruptcy Event;
	 
	 	vii.	 	the Company or any Subsidiary shall default on any of its
obligations under any lease, mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under which
there may be issued, or by which there may be secured or evidenced, any
indebtedness for borrowed money or money due under any long term leasing or
factoring arrangement that (a) involves an obligation greater than $150,000,
whether such indebtedness now exists or shall hereafter be created, and (b)
results in such indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise become due and payable;
	 
	 	viii.	 	the Company shall fail to timely pay any (i) State of
Nevada (or other applicable state) filing fees or (ii) fees owed to the
Federal Bureau of Land Management or (iii) taxes due and payable to the U.S.
government or any

17

 

	 	 	 	state, when required to be paid, other than those fees being disputed in good
faith by the Company, or shall fail to provide written notice to the Holders if
it has not paid such fees by the date which is 15 calendar days prior to the
date when such fees are required to be paid;
	 
	 	ix.	 	subject to the Company’s obligation to use commercially
reasonable efforts to have its Common Stock traded on a Trading Market, if,
while this Debenture remains outstanding, and subsequent to attaining an
initial listing or quotation on a Trading Market , the Company’s Common Stock
ceases to be traded on a Trading market for 10 consecutive Business Days or
more during any 12 month period;
	 
	 	x.	 	the Company shall fail for any reason to deliver
certificates to a Holder prior to the 10th Business Day after a Conversion
Date pursuant to Section 4(e) or the Company shall provide at any time notice
to the Holder, including by way of public announcement, of the Company’s
intention to not honor requests for conversions of any Debentures in
accordance with the terms hereof;
	 
	 	xi.	 	any monetary judgment, writ or similar final process shall
entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $100,000, and such
judgment, writ or similar final process shall remain unvacated, unbonded or
unstayed for a period of 90 calendar days; or
	 
	 	xii.	 	a lien shall be placed on any material property of the
Company and shall not be discharged within 30 days thereafter, except a
mortgage lien in connection with a Company financing.

     b) Remedies Upon Event of Default. If any Event of Default occurs and remains
uncured for 120 days, the Holder may, at its sole election, provide to the Company a notice
of acceleration of this Debenture, upon which acceleration the outstanding principal amount
of this Debenture, plus accrued but unpaid interest, liquidated damages, step up interest
and other amounts owing in respect thereof through the date of acceleration, shall become,
at the Holder’s election, immediately due and payable in cash at the Mandatory Default
Amount. Commencing 5 days after the occurrence of any Event of Default that results in the
eventual acceleration of this Debenture, the step up interest rate on this Debenture, which
interest rate shall be in addition to Base Interest Rate, shall be equal to (i) 4% per annum
for the initial 180 calendar days following the date of the Event of Default and (ii) at the
rate of 8% per annum commencing on a date which is 181 calendar days from the date of the
Event of Default (the “Step-up Interest Rate”). Such interest shall be calculated on the
basis of a 365-day year and shall accrue daily commencing on the date of the Event of
Default and shall be compounded quarterly on January 1, April 1, July 1 and October 1,
beginning on the first such date after the date of the Event of Default until payment in
full of the

18

 

Mandatory Default Amount. Upon the payment in full of the Mandatory Default Amount, the
Holder shall promptly surrender this Debenture to or as directed by the Company. In
connection with such acceleration described herein, the Holder need not provide, and the
Company hereby waives, any presentment, demand, protest or other notice of any kind, and the
Holder may immediately and without expiration of any grace period enforce any and all of its
rights and remedies hereunder and all other remedies available to it under applicable law.
Such acceleration may be rescinded and annulled by Holder at any time prior to payment
hereunder and the Holder shall have all rights as a holder of the Debenture until such time,
if any, as the Holder receives full payment pursuant to this Section 8(b). No such
rescission or annulment shall affect any subsequent Event of Default or impair any right
consequent thereon.

      Section 10. Miscellaneous.

     a) Notices. Any and all notices or other communications or deliveries to be
provided by the Holder hereunder, including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by facsimile, or sent by a nationally
recognized overnight courier service, addressed to the Company, at the address set forth
above, or such other facsimile number or address as the Company may specify for such purpose
by notice to the Holder delivered in accordance with this Section 9. Any and all notices or
other communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number or address of such Holder
appearing on the books of the Company, or if no such facsimile number or address appears, at
the principal place of business of the Holder. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section 9 prior to 5:30 p.m. (New York City time), (ii) the date
immediately following the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified in this Section 9 between 5:30 p.m. (New
York City time) and 11:59 p.m. (New York City time) on any date, (iii) the second Business
Day following the date of mailing, if sent by nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such notice is required to be
given.

     b) Absolute Obligation. Except as expressly provided herein, no provision of
this Debenture shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, liquidated damages and accrued interest, as
applicable, on this Debenture at the time, place, and rate, and in the coin or currency,
herein prescribed. This Debenture is a direct debt obligation of the Company. This
Debenture ranks pari passu with all other Debentures now or hereafter issued
under the terms set forth herein.

     c) Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in exchange and substitution

19

 

for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution
for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this
Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such
loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably
satisfactory to the Company.

     d) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Debenture shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without regard to
the principles of conflict of laws thereof. Each party agrees that all legal proceedings
concerning the interpretation, enforcement and defense of the transactions contemplated by
any of the Transaction Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in
the state and federal courts sitting in the City of New York, Borough of Manhattan (the
“New York Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of such New York Courts, or such New
York Courts are improper or inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Debenture and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any other manner permitted by applicable
law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding arising out of or
relating to this Debenture or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Debenture, then the
prevailing party in such action or proceeding shall be reimbursed by the other party for its
attorneys fees and other costs and expenses incurred in the investigation, preparation and
prosecution of such action or proceeding.

     e) Amendment, Modification, Waiver. For so long as any Principal Amount of
these Debentures are outstanding, the Company, with the affirmative vote of the Holders of
66 2/3% in principal amount of the then outstanding Debentures, may alter or change the
powers, preferences or rights given to, or alter or amend the terms of the Debentures, or
waive an occurrence of an Event of Default. Any waiver by the Company or the Holder of a
breach of any provision of this Debenture shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other provision of this
Debenture. The failure of the Company or the Holder to insist upon strict adherence to any
term of this Debenture on one or more occasions shall not be considered a waiver or deprive
that party of the right thereafter to insist upon strict

20

 

adherence to that term or any other term of this Debenture. Any waiver by the Company
or the Holder must be in writing.

     f) Severability. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any provision is
inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all
other Persons and circumstances. If it shall be found that any interest or other amount
deemed interest due hereunder violates the applicable law governing usury, the applicable
rate of interest due hereunder shall automatically be lowered to equal the maximum rate of
interest permitted under applicable law. The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or
other law which would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on this Debenture as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the performance of this
Debenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantage of any such law, and covenants that it will not, by resort to any such
law, hinder, delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has been enacted.

     g) Next Business Day. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the next succeeding
Business Day.

     h) Headings. The headings contained herein are for convenience only, do not
constitute a part of this Debenture and shall not be deemed to limit or affect any of the
provisions hereof.

     i) Assumption.  Any successor to the Company or any surviving entity in a
Fundamental Transaction shall (i) assume, prior to such Fundamental Transaction, all of the
obligations of the Company under this Debenture and the other Transaction Documents pursuant
to written agreements in form and substance satisfactory to the Holder (such approval not to
be unreasonably withheld or delayed) and (ii) issue to the Holder a new debenture of such
successor entity evidenced by a written instrument substantially similar in form and
substance to this Debenture, including, without limitation, having a principal amount and
interest rate equal to the principal amount and the interest rate of this Debenture and
having similar ranking to this Debenture, which shall be satisfactory to the Holder (any
such approval not to be unreasonably withheld or delayed).  The provisions of this Section
9(i) shall apply similarly and equally to successive Fundamental Transactions and shall be
applied without regard to any limitations of this Debenture.

*********************

21

 

     IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly
authorized officer as of the date first above indicated.

	 	 	 	 	 
	 	CONCENTRIC ENERGY CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Facsimile No. for delivery of Notices: 928-684-2510

22

 

ANNEX A

NOTICE OF CONVERSION

     The undersigned hereby elects to convert principal and interest under the 15% Cumulative
Convertible Debenture due May ___, 2013 of Concentric Energy Corp., a Nevada corporation (the
“Company”), into shares of common stock (the “Common Stock”), of the Company
according to the conditions hereof, as of the date written below. If shares of Common Stock are to
be issued in the name of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by the Company in accordance therewith. No fee will be charged to the holder
for any conversion, except for such transfer taxes, if any.

     By the delivery of this Notice of Conversion the undersigned represents and warrants to the
Company that its ownership of the Common Stock does not exceed the amounts specified under Section
4 of this Debenture, as determined in accordance with Section 13(d) of the Exchange Act.

     The undersigned agrees to comply with the prospectus delivery requirements under the
applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.

Conversion calculations:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Date to Effect Conversion:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Principal Amount of Debenture	 	 
	 	 	 	 	to be Converted:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Payment of Interest in
Common Stock yes: o no: o
	 	 	 	 	If yes, $                      of Interest Accrued on Account as of the Conversion Date.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Number of shares of Common Stock to be issued:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Signature(s):	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Name(s):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Address for Delivery of Common Stock Certificates:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Or	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	DWAC Instructions:	 	Broker No:
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Account No:
	 

	 	 	 	 	 	 	 	 	 	 

23

 

Schedule 1

CONVERSION SCHEDULE

The Series A 15% Cumulative Convertible Debentures due on May ___, 2013 in the aggregate principal
amount of $450,000 are issued by Concentric Energy Corp. This Conversion Schedule reflects
conversions made under Section 4 of the above referenced Debenture.

Dated:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Aggregate	 	 
	 	 	 	 	 	 	 	 	Principal	 	 
	 	 	 	 	 	 	 	 	Amount	 	 
	 	 	 	 	 	 	 	 	Remaining	 	 
	 	 	 	 	 	 	 	 	Subsequent to	 	 
	 	 	 	 	 	 	 	 	Conversion	 	 
	Date of Conversion	 	 	 	 	 	(or original	 	 
	(or for first entry,	 	Amount of	 	Principal	 	 
	Original Issue Date)	 	Conversion	 	Amount)	 	Company Attest
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

24exv10w31

Exhibit 10.31

EXHIBIT B TO SECURITIES PURCHASE AGREEMENT

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

CONCENTRIC ENERGY CORP.

	 	 	 
	Warrant
Shares:
               

	 	Initial Exercise Date: May 21, 2009
	 
	 	 
	 

	 	Termination Date: May 21, 2013

          THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,
                 (the “Holder”) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after the date
hereof (the “Initial Exercise Date”) and on or prior to the close of business on the four
year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter,
to subscribe for and purchase from Concentric Energy Corp., a Nevada corporation (the
“Company”), up to                
shares (the “Warrant Shares”) of Common Stock. The
purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).

     Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase Agreement (the
“Purchase Agreement”), dated May ___, 2009, among the Company and the purchasers signatory
thereto.

     Section 2. Exercise.

     a) Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company (or

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such other office or agency of the Company as it may designate by notice in writing to
the registered Holder at the address of the Holder appearing on the books of the Company) of
a duly executed facsimile copy of the Notice of Exercise Form annexed hereto; and, within 3
Business Days of the date said Notice of Exercise is delivered to the Company, the Company
shall have received payment of the aggregate Exercise Price of the shares thereby purchased
by wire transfer or cashier’s check drawn on a United States bank or the exercise shall be
effected under Section 1(c), at the Holder’s election. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically surrender this Warrant to the
Company until the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant
to the Company for cancellation within 3 Business Days of the date the final Notice of
Exercise is delivered to the Company. Partial exercises of this Warrant resulting in
purchases of a portion of the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased. The Holder and the
Company shall maintain records showing the number of Warrant Shares purchased and the date
of such purchases. The Company shall deliver any objection to any Notice of Exercise Form
within 1 Business Day of receipt of such notice. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and determinative in the absence
of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following the purchase of a
portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase
hereunder at any given time may be less than the amount stated on the face hereof.

     b) Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $1.00, subject to adjustment hereunder (the “Exercise Price”).

     c) Cashless Exercise. If at any time after the earlier of (i) the one year
anniversary of the date of the Purchase Agreement and (ii) the completion of the
then-applicable holding period required by Rule 144, or any successor provision then in
effect, there is no effective Registration Statement registering, or no current prospectus
available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be
exercised in whole or in part at such time by means of a “cashless exercise” in which the
Holder shall be entitled to receive a certificate for that number of Warrant Shares equal to
the quotient obtained by dividing [(A-B) (X)] by (A), where:

	 	(A)	= the VWAP on the Business Day immediately preceding the date
of such election;
	 
	 	(B)	= the Exercise Price of this Warrant, as adjusted; and
	 
	 	(X)	= the number of Warrant Shares sought to be issued upon
exercise of this Warrant in accordance with the terms of this Warrant, in whole
or in part, by means of a cash exercise rather than a cashless exercise.

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     Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant
shall be automatically exercised via cashless exercise pursuant to this Section 2(c). The
“VWAP” shall mean, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted for
trading as reported by Bloomberg L.P. (based on a Business Day from 9:30 a.m. (New York City
time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or
quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then
reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid price per share
of the Common Stock so reported; or (d) in all other cases, the fair market value of a share
of Common Stock as determined by an independent appraiser selected in good faith by the
Holders of a majority in interest of the Shares then outstanding and reasonably acceptable
to the Company, the fees and expenses of which shall be paid by the Company.

     d) Mechanics of Exercise.

     i.
Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s prime broker with the
Depository Trust Company through its Deposit Withdrawal Agent Commission
(“DWAC”) system if the Company is then a participant in such system
and either (A) there is an effective Registration Statement permitting the
resale of the Warrant Shares by the Holder or (B) the shares are eligible
for resale without volume or manner-of-sale limitations pursuant to Rule
144, and otherwise by physical delivery to the address specified by the
Holder in the Notice of Exercise within 3 Business Days from the delivery to
the Company of the Notice of Exercise Form, surrender of this Warrant (if
required) and payment of the aggregate Exercise Price as set forth above
(the “Warrant Share Delivery Date”). This Warrant shall be deemed
to have been exercised on the date the Exercise Price is received by the
Company. The Warrant Shares shall be deemed to have been issued, and Holder
or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the
date the Warrant has been exercised by payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all taxes
required to be paid by the Holder, if any, pursuant to Section 2(e)(vi)
prior to the issuance of such shares, have been paid. If the Company fails
for any reason to deliver to the Holder certificates evidencing the Warrant
Shares subject to a Notice of Exercise by the Warrant Share Delivery Date,
the Company shall pay to the Holder, in cash, as liquidated damages and not
as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the VWAP of the

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Common Stock on the date of the applicable Notice of Exercise), $10 per
Business Day (increasing to $20 per Business Day on the fifth Business Day
after such liquidated damages begin to accrue) for each Business Day after
such Warrant Share Delivery Date until such certificates are delivered.

     ii. Delivery of New Warrants Upon Exercise. If this Warrant
shall have been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time of
delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase
the unpurchased Warrant Shares called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.

     iii. Rescission Rights. If the Company fails to cause the
Transfer Agent to transmit to the Holder a certificate or the certificates
representing the Warrant Shares pursuant to Section 2(e)(i) by the Warrant
Share Delivery Date, then, the Holder will have the right to rescind such
exercise.

     iv. Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise. In addition to any other rights available
to the Holder, if the Company fails to cause the Transfer Agent to transmit
to the Holder a certificate or the certificates representing the Warrant
Shares pursuant to an exercise on or before the Warrant Share Delivery Date,
and if after such date the Holder is required by its broker to purchase (in
an open market transaction or otherwise) or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a “Buy-In”), then the Company shall
(A) 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 (1)
the number of Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue times (2) the price at which
the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares 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 Company 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 shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under clause
(A) of the immediately preceding sentence the Company shall be required to

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pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In
and, upon request of the Company, evidence of the amount of such loss.
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 Company’s failure to timely deliver certificates
representing shares of Common Stock upon exercise of the Warrant as required pursuant to
the terms hereof.

     v. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of
this Warrant. As to any fraction of a share which Holder would otherwise be
entitled to purchase upon such exercise, the Company shall, at its election,
either pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up to the
next whole share.

     vi. Charges, Taxes and Expenses. Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder or in such
name or names as may be directed by the Holder; provided,
however, that in the event certificates for Warrant Shares are to be
issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form
attached hereto duly executed by the Holder and the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.

     vii. Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.

     Section 3. Certain Adjustments.

     a) Stock Dividends and Splits. If the Company, at any time while this Warrant
is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions
on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the

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number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number of shares of
Common Stock outstanding immediately after such event and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise
Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section
3(a) shall become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination or
re-classification.

	 	b)	 	Subsequent Equity Sales. If the Company or any
Subsidiary thereof, as applicable, at any time while this Warrant is
outstanding, shall sell or grant any option to purchase, or sell or grant any
right to reprice, or otherwise dispose of or issue (or announce any offer,
sale, grant or any option to purchase or other disposition, other than the
extension of the exercise dates of any warrants outstanding at the date hereof)
any Common Stock or Common Stock Equivalents entitling any Person to
acquire shares of Common Stock, at an effective price per share less than the then
Exercise Price (such lower price, the “Base Share Price” and such
issuances collectively, a “Dilutive Issuance”) (if the holder of the
Common Stock or Common Stock Equivalents so issued shall at any time, whether
by operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights per share which are issued in connection with such issuance,
be entitled to receive shares of Common Stock at an effective price per share
which is less than the Exercise Price, such issuance shall be deemed to have
occurred for less than the Exercise Price on such date of the Dilutive
Issuance), then the Exercise Price shall be reduced to equal the Base Share
Price. Additionally, the number of Warrant Shares issuable hereunder shall be
increased such that the aggregate Exercise Price payable hereunder, after
taking into account the decrease in the Exercise Price, shall be equal to the
aggregate Exercise Price prior to such adjustment (full ratchet anti-dilution).
For example, if the number of Warrant Shares is 10,000 and the Base Share Price
of the Common Stock or Common Stock Equivalents is reduced to $0.75 which as a
result would reduce the Base Conversion Price of the Common Stock underlying
the Debenture from $1.22 to $0.75, then the Warrant Exercise Price would be
reduced to $0.75 and contemporaneously the number of Warrant Shares would be
increased by multiplying the number of Warrant Shares prior to adjustment by
the quotient of the Warrant Exercise Price prior to reduction divided by the
Warrant Exercise Price after reduction, or 10000*$1.00/$0.75 to 13,333 Warrant
Shares such the aggregate Exercise Prices before and after the adjustment are
equal ($1.00 * 10,000 = $0.75 * 13,333). Such adjustment shall be made
whenever such Common Stock or Common Stock Equivalents are issued.
Notwithstanding the foregoing, no adjustments shall be made, paid or issued
under this Section 3(b) in respect of an Exempt Issuance (as defined herein).
The Company shall notify the Holder, in writing, no later than the Business Day
following the issuance of any Common Stock or Common Stock Equivalents subject
to this Section

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	 	 	 	3(b), indicating therein the applicable issuance price, or applicable reset
price, exchange price, conversion price and other pricing terms (such notice,
the “Dilutive Issuance Notice”). For purposes of clarification, whether
or not the Company provides a Dilutive Issuance Notice pursuant to this Section
3(b), upon the occurrence of any Dilutive Issuance, after the date of such
Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares
based upon the Base Share Price regardless of whether the Holder accurately
refers to the Base Share Price in the Notice of Exercise. For the purposes of
this Warrant, “Exempt Issuance” shall mean an issuance by the Company of shares
or Common Stock or any security exchangeable or convertible into shares of
Common Stock, whether debt or equity or a combination thereof, (i) pursuant to
any stock based incentive plan of the Company existing on the date hereof or
approved by the stockholders of the company after the date hereof, to the extent
only that shares reserved for issuance thereunder do not exceed 17.5% of the
Company’s fully diluted equity or (ii) pursuant to any issued and outstanding
option, warrant or other convertible security as of the date hereof or (iii) in
connection with or pursuant to any strategic acquisition, determined in good
faith by the company, the terms of which have been negotiated on an arm’s length
basis with an unaffiliated third party. Holder acknowledges and agrees that the
issuance to Traxys North America, LLC of certain $1 warrants as an engagement
fee on or subsequent to the issuance of this debenture will not result in a
“Dilutive Issuance” or in the adjustments described in this subsection. In
addition, Holder acknowledges that the issuance of $1 warrants to Holders of
this Series B Debentures will not result in a “Dilutive Issuance” or in the
adjustments described in this subsection.

     c) [Reserved] 

     d) Subsequent Rights Offerings. If the Company, at any time while the Warrant
is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and
not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the VWAP at the record date mentioned below, then, the Exercise
Price shall be multiplied by a fraction, of which the denominator
shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants
plus the number of additional shares of Common Stock offered for subscription or purchase,
and of which the numerator shall be the number of shares of the Common Stock outstanding on
the date of issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered (assuming receipt by the
Company in full of all consideration payable upon exercise of such rights, options or
warrants) would purchase at such VWAP. Such adjustment shall be made whenever such rights
or warrants are issued, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or warrants.

     e) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to Holders of the
Warrants) evidences of its indebtedness or assets (including cash and cash dividends) or

7

 

rights or warrants to subscribe for or purchase any security other than the Common
Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the VWAP determined as of the record date
mentioned above, and of which the numerator shall be such VWAP on such record date less the
then per share fair market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case the adjustments
shall be described in a statement provided to the Holder of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable to one share
of Common Stock. Such adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned above.

     f) Fundamental Transaction. If, at any time while this Warrant is outstanding,
(i) the Company effects any merger or consolidation of the Company with or into another
Person, (ii) the Company effects any sale of all or substantially all of its assets in one
or a series of related transactions, (iii) any tender offer or exchange offer (whether by
the Company or another Person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or property or (iv)
the Company effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property (each “Fundamental Transaction”), then, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise immediately prior to the
occurrence of such Fundamental Transaction, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a
result of such merger, consolidation or disposition of assets by a
holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such
event. For purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction. To the extent necessary to
effectuate the foregoing provisions, any successor to the Company or surviving entity in
such Fundamental Transaction shall issue to the Holder a new warrant consistent with the
foregoing provisions and evidencing the Holder’s right to exercise such warrant into
Alternate Consideration. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or surviving entity
to comply with the provisions of this Section 3(e) and insuring that this Warrant (or any
such replacement security) will be similarly adjusted upon any

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subsequent transaction analogous to a Fundamental Transaction. Notwithstanding anything
to the contrary and after such date that the Common Stock is quoted or listed for trading on
a Trading Market, in the event of a Fundamental Transaction that is (1) an all cash
transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act,
or (3) a Fundamental Transaction involving a person or entity not traded on a national
securities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, or the
Nasdaq Capital Market, the Company or any successor entity shall pay at the Holder’s option,
exercisable at any time concurrently with or within 30 days after the consummation of the
Fundamental Transaction, an amount of cash equal to the value of this Warrant as determined
in accordance with the Black Scholes Option Pricing Model obtained from the “OV” function on
Bloomberg L.P. using (A) a price per share of Common Stock equal to the VWAP of the Common
Stock for the Business Day immediately preceding the date of consummation of the applicable
Fundamental Transaction, (B) the risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of the date of consummation
of the applicable Fundamental Transaction, (C) an expected volatility equal to the 100 day
volatility obtained from the “HVT” function on Bloomberg L.P. determined as of the Business
Day immediately following the public announcement of the applicable Fundamental Transaction
and (D) a remaining option time equal to the time between the date of the public
announcement of such transaction and the Termination Date.

     g) Purchase of Debentures by Founder. The Company has agreed to accept as
payment of the Subscription Amount for the purchase of a Debenture by its founder, Ralph
Kettell, marketable securities at an amount equal to the aggregate VWAP of the respective
securities on the trading day preceding the Closing Date, or at up to a 12% discount to
their aggregate VWAP, at the sole discretion of the Company, (such ultimate valuation being
referred to as the “Aggregate VWAP Price”). If the aggregate realized price from
the sale of such securities net of any execution costs or trading commissions (the
“Actual Aggregate Sales Price”), which sales will occur over a period of not more
than 120 days from the Closing Date, (i) exceeds the Aggregate VWAP Price, Mr. Kettell shall
be issued a Warrant to purchase up to a number of shares of Common Stock equal to 200% of
the difference between the Actual Aggregate Sales Price and the Aggregate VWAP Price divided
by $1.22, with an exercise price equal to $1.00, subject to adjustment therein, or (ii) is
less than the Aggregate VWAP Price, Mr. Kettell shall be issued in exchange for his original
Warrant a new Warrant to purchase up to a number of shares of Common Stock equal to 200% of
the Actual Aggregate Sales Price divided by $1.22, with an exercise price equal to $1.00,
subject to adjustment therein.

     h) Calculations. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this
Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock
(excluding treasury shares, if any) issued and outstanding.

     i) Notice to Holder.

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     i. Adjustment to Exercise Price. Whenever the Exercise Price is
adjusted pursuant to any provision of this Section 3, the Company shall
promptly mail to the Holder a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts requiring
such adjustment. If the Company enters into a Variable Rate Transaction,
despite the prohibition thereon in the Purchase Agreement, the Company shall
be deemed to have issued Common Stock or Common Stock Equivalents at the
lowest possible conversion or exercise price at which such securities may be
converted or exercised.

     ii. Notice to Allow Exercise by Holder. If (A) the Company
shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants
to subscribe for or purchase any shares of capital stock of any class or of
any rights, (D) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company, then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are
to be determined; (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is expected that
holders of the Common Stock of record shall be entitled to exchange
their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer or share exchange; or (z) the date on which termination of the
Warrant shall be effective; provided that the failure to mail such notice or
any defect therein or in the mailing thereof shall not affect the validity
of the corporate action required to be specified in such notice. The Holder
is entitled to exercise this Warrant during the period commencing on the
date of such notice to the effective date of the event triggering or
described in such notice.

     Section 4. Transfer of Warrant; Right of First Refusal.

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     a) Transferability. Subject to compliance with any applicable securities laws
and the conditions set forth in Sections 4(d) and 4(e) hereof and to the provisions of
Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. The Warrant, if properly assigned, may be exercised by a new holder
for the purchase of Warrant Shares without having a new Warrant issued.

     b) New Warrants. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any
transfer which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. 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 Warrant Shares issuable pursuant thereto.

     c) Warrant Register. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the name
of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.

     d) Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall not be
either (i) registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws or (ii) eligible for resale
without volume or manner-of-sale restrictions pursuant to Rule 144, the Company may require,
as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as
the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

     e) Right of First Refusal to Purchase Warrant. Notwithstanding anything to the
contrary contained herein, in the event that the Holder of this Warrant desires to sell or
transfer this Warrant to a third party other than an Affiliate for consideration or receives
a bona fide written offer from a third party other than an Affiliate for the

11

 

purchase of this Warrant, Holder shall provide the Company with written notice of such
intent at least 15 Business Days prior to the intended date of transfer (“Transfer
Notice”). The Transfer Notice shall describe all of the material terms of such intended
transfer, including without limitation, the name of the intended purchaser, the amount and
type of consideration to be paid and the intended closing date. The Company shall have the
right, exercisable within 10 Business Days of the date of the Transfer Notice, to notify the
Holder that it intends to purchase the Warrant in accordance with this Section 4(e). In the
event that the Company elects to exercise its right of first refusal hereunder, the purchase
price shall be at a price equal to the purchase price set forth in the Transfer Notice plus
a 10% premium to such price. Payment of the purchase price and the purchase of this Warrant
by the Company shall otherwise be made in compliance with the terms sets forth in the
Transfer Notice.

     Section 5. Miscellaneous.

     a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights or other rights as a stockholder of the Company prior to the
exercise hereof as set forth in Section 2(e)(i).

     b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate relating to the
Warrant Shares, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it (which, in the case of the Warrant, shall not include the
posting of any bond), and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or
stock certificate.

     c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein shall not be
a Business Day, then, such action may be taken or such right may be exercised on the next
succeeding Business Day.

     d) Authorized Shares.

          The Company covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants that its issuance
of this Warrant shall constitute full authority to its officers who are charged with
the duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights under
this Warrant. The Company will take all such reasonable action as may be necessary
to assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the Trading
Market upon which the

12

 

Common Stock may be listed. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant, be
duly authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with such
issue).

     Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms 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 Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (i) not increase
the par value of any Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (ii) take all such action
as may be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this
Warrant.

     Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     e) Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.

     f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered, will have restrictions upon resale imposed
by state and federal securities laws.

     g) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that
all rights hereunder terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable

13

 

attorneys’ fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.

     h) Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement.

     i) Limitation of Liability. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of Holder, shall give rise to any liability
of Holder for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the Company.

     j) Remedies. The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific performance of
its rights under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the defense in any action for
specific performance that a remedy at law would be adequate.

     k) Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of and be binding
upon the successors of the Company and the successors and permitted assigns of Holder. The
provisions of this Warrant are intended to be for the benefit of all Holders from time to
time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

     l) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and Holders holding Warrants at least equal
to 67% of the Warrant Shares issuable upon exercise of all then outstanding Warrants.

     m) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of this Warrant.

     n) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Pages Follow)

14

 

          IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized as of the date first above indicated.

	 	 	 	 	 
	 	CONCENTRIC ENERGY CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	Andrew K. Simpson
 	 
	 	 	Title:  	CEO 	 
	 

15

 

NOTICE OF EXERCISE

     TO: CONCENTRIC ENERGY CORP.

          (1) The undersigned hereby elects to purchase                      Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.

          (2) Payment shall take the form of (check applicable box):

o in lawful money of the United States; or

o [if permitted] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth in
subsection 2(c).

          (3) Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:

                                                            

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery
of a certificate to:

                                                            

                                                            

                                                            

          (4) Accredited Investor. The undersigned is an “accredited investor” as defined in
Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

	 	 	 	 	 	 	 
	Name of Investing Entity:	 	 
	 	 	 	 
	Signature of Authorized Signatory of Investing Entity:	 	 
	 

	 	 	 	 	 	 
	Name of Authorized Signatory:	 	 
	 	 	 	 	 
	Title of Authorized Signatory:	 	 
	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 	 	 

16

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

          FOR VALUE RECEIVED, [          ] all of or [                    ] shares of the foregoing Warrant and all rights
evidenced thereby are hereby assigned to

	 	 	 	 	 
	 
 

	 	whose address is
	 	  

	 	 	 	 	 
	 

	 	 	 	. 
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 

Dated:                                         ,                     

	 	 	 	 	 	 	 
	 

	 	Holder’s Signature: 
	 	 
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Holder’s Address:
	 	 
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 
 

	 	 
	 
	 	 	 	 	 	 
	Signature Guaranteed:

	 	 	 	 	 	 
	 	 	 	 	 

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.

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