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CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE

AGREEMENT

Dated as of November 17, 2008

among

BIOFORCE NANOSCIENCES HOLDINGS, INC.

and

THE PURCHASERS LISTED ON EXHIBIT A

CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT

This CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT (the “Agreement”) is dated as of November 17, 2008 by and among BioForce Nanosciences Holdings, Inc., a Nevada corporation (the “Company”), and each of the Purchasers of Units, as described below, whose names are set forth on Exhibit A hereto (individually, a “Purchaser” and collectively, the “Purchasers”).

The parties hereto agree as follows:

ARTICLE I

Purchase and Sale of Units

Section 1.1

Purchase and Sale of Notes.  Upon the following terms and conditions, the Company shall issue and sell to the Purchasers, and each of the Purchasers shall purchase from the Company, the number of units (the “Units”), consisting of: (i) Twenty Five Thousand Dollars ($25,000) in face amount of the Company’s convertible secured promissory notes (the “Notes”), in substantially the form attached hereto as Exhibit B-1, convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and (ii) Thirty One Thousand Two Hundred and Fifty (31,250) warrants, in substantially the form attached hereto as Exhibit B-2 (the " Warrant"),  set forth opposite such Purchaser’s name on Exhibit A hereto.  The Company and the Purchasers are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration afforded by Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), or Section 4(2) of the Securities Act.  

Section 1.2

Warrants.  Each of the Warrants shall have a term of five (5) years, have an exercise price per share equal to the Warrant Price (as defined in the applicable Warrant) and shall be exercisable as stated in the applicable Warrant.

Section 1.3

Conversion Shares. The Company has authorized and has reserved and covenants to continue to reserve, free of preemptive rights and other similar contractual rights of stockholders, a number of shares of Common Stock equal to one hundred twenty percent (120%) of the number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Notes and exercise of the Warrants then outstanding.  Any shares of Common Stock issuable upon conversion of the Notes and exercise of the Warrants (and such shares when issued) are herein referred to as the “Conversion Shares” and the "Warrant Shares", respectively.  The Conversion Shares and the Warrant Shares are sometimes collectively referred to as the “Shares”.

  

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Section 1.4

Purchase Price and Closing.  Subject to the terms and conditions hereof, in consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Company agrees to issue and sell to the Purchasers and the Purchasers, severally but not jointly, agree to purchase the Units for Twenty Five Thousand Dollars ($25,000) per unit, and for an aggregate purchase price of Fifty Thousand Dollars ($50,000) (the “Purchase Price”).  The closing of the purchase and sale of the Units to be acquired by the Purchasers from the Company under this Agreement shall take place at the offices of the Company, 1615 Golden Aspen Drive, Suite 101, Ames, IA 50010 (the “Closing”) at 10:00 a.m., New York time (i) on or before November 17, 2008; provided, that all of the conditions set forth in Article IV hereof and applicable to the Closing shall have been fulfilled or waived in accordance herewith, or (ii) at such other time and place or on such date as the Purchasers and the Company may agree upon (the "Closing Date").  Subject to the terms and conditions of this Agreement, at the Closing the Company shall deliver or cause to be delivered to each Purchaser (x) a Note corresponding to the number of Units set forth opposite the name of such Purchaser on Exhibit A hereto, (y) Warrants corresponding to the number of Units as is set forth opposite the name of such Purchaser on Exhibit A attached hereto and (z) any other documents required to be delivered pursuant to Article IV hereof.  At the Closing, each Purchaser shall deliver its Purchase Price in the manner indicated on Exhibit A.  

ARTICLE II

  

Representations and Warranties

Section 2.1

Representations and Warranties of the Company.  The Company hereby represents and warrants to the Purchasers, as of the date hereof and the Closing Date (except as set forth on the Disclosure Schedule prepared in connection with this Agreement (the “Disclosure Schedule”) with each numbered section of the Disclosure Schedule corresponding to the section number herein), as follows:

(a)

Organization, Good Standing and Power.  The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted.  The Company does not have any subsidiaries except as set forth in the Company’s Form 10-KSB for the year ended December 31, 2007, including the accompanying financial statements (the “Form 10-KSB”), or in the Company’s Form 10-Q for the fiscal quarter ended June 30, 2008 (the “Form 10-Q”).  The Company and each such subsidiary is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary except for any jurisdiction(s) (alone or in the aggregate) in which the failure to be so qualified will not have a Material Adverse Effect (as defined in Section 2.1(c) hereof) on the Company’s financial condition.

 

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(b)

Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Notes, and the Warrants (collectively the “Transaction Documents”) and to issue and sell the Notes, Shares and Warrants in accordance with the terms hereof.  The execution, delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action, or will be so authorized prior to the Closing, and no further consent or authorization of the Company or its Board of Directors or stockholders will be required as of the Closing.  This Agreement has been duly executed and delivered by the Company, and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application. 

 

(c)

Capitalization.  The authorized capital stock of the Company and the shares thereof currently issued and outstanding as of the date hereof are set forth in Section 2.1(c) of the Disclosure Schedule.  All of the outstanding shares of the Common Stock and Series A Convertible Preferred Stock (the “Preferred Shares”) have been duly and validly authorized.  Except as set forth on the Disclosure Schedule hereto, no shares of Common Stock are entitled to preemptive rights or registration rights and there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company.  There are no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, securities or rights convertible into shares of capital stock of the Company.  The Company is not a party to any agreement granting registration or anti-dilution rights to any person with respect to any of its equity or debt securities.  The Company is not a party to, and it has no knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of the Company.  The offer and sale of all capital stock, convertible securities, rights, warrants, or options of the Company issued prior to the Closing complied with all applicable Federal and state securities laws, and no stockholder has a right of rescission or claim for damages with respect thereto which would have a Material Adverse Effect (as defined below).  The Company has furnished or made available to the Purchasers true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (the “Articles”), and the Company’s Bylaws as in effect on the date hereof (the “Bylaws”).  For the purposes of this Agreement, “Material Adverse Effect” means any material adverse effect on the business, operations, properties, prospects, or financial condition of the Company and its subsidiaries and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to perform any of its obligations under this Agreement in any material respect.

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(d)

Issuance of Shares.  The Notes and the Warrants to be issued at the Closing have been duly authorized by all necessary corporate action, or will be so authorized prior to the Closing.  When the Conversion Shares and the Warrant Shares are issued in accordance with the terms of the Notes and the Warrants, respectively, such shares will be duly authorized by all necessary corporate action and validly issued and outstanding, fully paid and nonassessable, and the holders shall be entitled to all rights accorded to a holder of Common Stock. 

(e)

No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated herein and therein do not and will not (i) violate any provision of the Company’s Articles or Bylaws, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company is a party or by which it or its properties or assets are bound, (iii) create or impose a lien, mortgage, security interest, charge or encumbrance of any nature on any property of the Company under any agreement or any commitment to which the Company is a party or by which the Company is bound or by which any of its respective properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including Federal and state securities laws and regulations) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries are bound or affected, except, in all cases other than violations pursuant to clauses (i) and (iv) above, for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect.  The business of the Company and its subsidiaries is not being conducted in violation of any laws, ordinances or regulations of any governmental entity, except for possible violations which singularly or in the aggregate do not and will not have a Material Adverse Effect.  The Company is not required under Federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under the Transaction Documents, or issue and sell the Notes, the Warrants, the Conversion Shares and the Warrant Shares in accordance with the terms hereof or thereof (other than any filings which may be required to be made by the Company with the Commission or state securities administrators subsequent to the Closing, and any registration statement which may be filed pursuant hereto); provided that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of the Purchasers herein.  

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(f)

Commission Documents, Financial Statements.  The Company is a voluntary filer pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act, including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act (all of the foregoing including filings incorporated by reference therein being referred to herein as the “Commission Documents”).  The Company has delivered or made available to each of the Purchasers true and complete copies of the Commission Documents.  The Company has not provided to the Purchasers any material non-public information or other information which, according to applicable law, rule or regulation, was required to have been disclosed publicly by the Company but which has not been so disclosed, other than with respect to the transactions contemplated by this Agreement.  At the times of their respective filings, the Form 10-KSB and the Form 10-Q complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such documents, and, as of their respective dates, none of the Form 10-KSB and the Form 10-Q contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the Commission Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial position of the Company and its subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

(g)

Subsidiaries.  The Disclosure Schedule hereto sets forth each subsidiary of the Company, showing the jurisdiction of its incorporation or organization and showing the percentage of each person’s ownership.  For the purposes of this Agreement, “subsidiary” shall mean any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power (absolutely or contingently) for the election of directors or other persons performing similar functions are at the time owned directly or indirectly by the Company and/or any of its other subsidiaries.  All of the outstanding shares of capital stock of each subsidiary have been duly authorized and validly issued, and are fully paid and nonassessable.  There are no outstanding preemptive, conversion or other rights, options, warrants or agreements granted or issued by or binding upon any subsidiary for the purchase or acquisition of any shares of capital stock of any subsidiary or any other securities convertible into, exchangeable for or evidencing the rights to subscribe for any shares of such capital stock.  Neither the Company nor any subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of the capital stock of any subsidiary or any convertible securities, rights, warrants or options of the type described in the preceding sentence.  Neither the Company nor any subsidiary is party to, nor has any knowledge of, any agreement 
restricting the voting or transfer of any shares of the capital stock of any subsidiary.

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(h)

No Material Adverse Change.  Since June 30, 2008, the Company has not experienced or suffered any Material Adverse Effect. 

(i)

No Undisclosed Liabilities.  Neither the Company nor any of its subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) other than those incurred in the ordinary course of the Company’s or its subsidiaries respective businesses since June 30, 2008 and which, individually or in the aggregate, do not or would not have a Material Adverse Effect on the Company or its subsidiaries.

(j)

No Undisclosed Events or Circumstances.  No event or circumstance has occurred or exists with respect to the Company or its subsidiaries or their respective businesses, properties, prospects, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

(k)

Indebtedness.  The Form 10-KSB or Form 10-Q sets forth as of a recent date all outstanding secured and unsecured Indebtedness of the Company or any subsidiary, or for which the Company or any subsidiary has commitments.  For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $25,000 due under leases required to be capitalized in accordance with GAAP.  Neither the Company nor any subsidiary is in default with respect to any Indebtedness.

(l)

Title to Assets.  Each of the Company and the subsidiaries has good and marketable title to all of its real and personal property reflected in the Form 10-KSB or Form 10-Q, free and clear of any mortgages, pledges, charges, liens, security interests or other encumbrances, except for those disclosed in the Form 10-KSB or Form 10-Q, statutory liens for which the payment of current taxes are not yet delinquent, or such that, individually or in the aggregate, do not cause a Material Adverse Effect.  All leases of the Company and each of its subsidiaries are valid and subsisting and, to its knowledge, in full force and effect.

(m)

Actions Pending.  There is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or any other proceeding pending or, to the knowledge of the Company, threatened against the Company or any subsidiary which questions the validity of this Agreement or any of the other Transaction Documents or the transactions contemplated hereby or thereby or any action taken or to be taken pursuant hereto or thereto.  Except as set forth in the Form 10-KSB or Form 10-Q, there is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or any other proceeding pending or, to the knowledge of 
the Company, threatened, against or involving the Company, any subsidiary or any of their respective properties or assets.  There are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or regulatory body against the Company or any subsidiary or any officers or directors of the Company or subsidiary in their capacities as such.

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(n)

Compliance with Law.  The business of the Company and the subsidiaries has been and is presently being conducted in accordance with all applicable federal, state and local governmental laws, rules, regulations and ordinances, except for such noncompliance that, individually or in the aggregate, would not cause a Material Adverse Effect.  The Company and each of its subsidiaries have all franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(o)

Taxes.  The Company and each of the subsidiaries has accurately prepared and filed all federal, state and other tax returns required by law to be filed by it, has paid or made provisions for the payment of all taxes shown to be due and all additional assessments, and adequate provisions have been and are reflected in the financial statements of the Company and the subsidiaries for all current taxes and other charges to which the Company or any subsidiary is subject and which are not currently due and payable.  None of the federal income tax returns of the Company or any subsidiary have been audited by the Internal Revenue Service.  The Company has no knowledge of any additional assessments, adjustments or contingent tax liability (whether federal or state) of any nature whatsoever, whether pending or threatened against the Company or any subsidiary for any period, nor of any basis for any such assessment, adjustment or contingency.

(p)

Certain Fees.  No brokers, finders or financial advisory fees or commissions will be payable by the Company or any subsidiary or any Purchaser with respect to the transactions contemplated by this Agreement.

(q)

Disclosure.  Neither this Agreement or the Disclosure Schedule nor any other documents, certificates or instruments furnished to the Purchasers by or on behalf of the Company or any subsidiary in connection with the transactions contemplated by this Agreement contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made herein or therein, in the light of the circumstances under which they were made herein or therein, not misleading.  It is understood that this representation is qualified by the fact that the Company has not delivered to the Purchasers, and has not been requested to deliver, a private placement or similar memorandum or any written disclosure of the types of information customarily furnished to purchasers of securities.   

(r)

Operation of Business.  The Company and each of the subsidiaries owns or possesses all patents, trademarks, domain names (whether or not registered) and any patentable improvements or copyrightable derivative works thereof, websites and intellectual property rights relating thereto, service marks, trade names, copyrights, licenses and 
authorizations as set forth in the Form 10-KSB or Form 10-Q, and all rights with respect to the foregoing, which are necessary for the conduct of its business as now conducted without any conflict with the rights of others.

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(s)

Environmental Compliance.  The Company and each of its subsidiaries have obtained all material approvals, authorization, certificates, consents, licenses, orders and permits or other similar authorizations of all governmental authorities, or from any other person, that are required under any  Environmental Laws.  The Form 10-KSB or Form 10-Q describes all material permits, licenses and other authorizations issued under any Environmental Laws to the Company or its subsidiaries.  “Environmental Laws” shall mean all applicable laws relating to the protection of the environment including, without limitation, all requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, releases or threatened releases of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous substances, chemical substances, pollutants, contaminants or toxic substances, material or wastes, whether solid, liquid or gaseous in nature.  The Company has all necessary governmental approvals required under all Environmental Laws and used in its business or in the business of any of its subsidiaries.  The Company and each of its subsidiaries are also in compliance with all other limitations, restrictions, conditions, standards, requirements, schedules and timetables required or imposed under all Environmental Laws.  Except for such instances as would not individually or in the aggregate have a Material Adverse Effect, there are no past or present events, conditions, circumstances, incidents, actions or omissions relating to or in any way affecting the Company or its subsidiaries that violate or may violate any Environmental Law after the Closing Date or that may give rise to any environmental liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation (i) under any Environmental Law, or (ii) based on or related to the manufacture, processing, distribution, use, treatment, storage (including without limitation underground storage tanks), disposal, transport or handling, or the emission, discharge, release or threatened release of any hazardous substance.  

 

(t)

Books and Record Internal Accounting Controls.  The books and records of the Company and its subsidiaries accurately reflect in all material respects the information relating to the business of the Company and the subsidiaries, the location and collection of their assets, and the nature of all transactions giving rise to the obligations or accounts receivable of the Company or any subsidiary.  The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate actions is taken with respect to any differences.

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(u)

Material Agreements.  Neither the Company nor any subsidiary is a party to any written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement, a copy of which would be required to be filed with the Commission as an exhibit to a registration statement on Form S-3 or applicable form (collectively, “Material Agreements”) if the Company or any subsidiary were registering securities under the Securities Act.  The Company and each of its subsidiaries has in all material respects performed all the obligations required to be performed by them to date under the foregoing agreements, have received no notice of default and are not in default under any Material Agreement now in effect, the result of which could cause a Material Adverse Effect.  No written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement of the Company or of any subsidiary limits or shall limit the payment of dividends on the Company’s Preferred Shares, other preferred stock, if any, or its Common Stock.  

(v)

Transactions with Affiliates.  Except as set forth in the Commission Documents, there are no loans, leases, agreements, contracts, royalty agreements, management contracts or arrangements or other continuing transactions between (a) the Company or any subsidiary on the one hand, and (b) on the other hand, any officer, employee, consultant or director of the Company, or any of its subsidiaries, or any person owning any capital stock of the Company or any subsidiary or any member of the immediate family of such officer, employee, consultant, director or stockholder or any corporation or other entity controlled by such officer, employee, consultant, director or stockholder, or a member of the immediate family of such officer, employee, consultant, director or stockholder.

(w)

Securities Act of 1933.  Based in material part upon the representations herein of the Purchasers, the Company has complied and will comply with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Notes, Shares and Warrants hereunder.  Neither the Company nor, to its knowledge, anyone acting on its behalf, directly or indirectly, has or will, prior to the Closing Date sell, offer to sell or solicit offers to buy any of the Notes, Shares or Warrants to, or solicit offers with respect thereto from, or enter into any preliminary conversations or negotiations relating thereto with, any person, or has taken or will, prior to the Closing Date, take any action so as to bring the issuance and sale of any of the Notes, Shares and Warrants under the registration provisions of the Securities Act and applicable state securities laws, and neither the Company nor any of its affiliates, nor, to its knowledge, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of any of the Notes, Shares and Warrants. 

(x)

Governmental Approvals.  Except for the filing of any notice prior or subsequent to the Closing Date that may be required under applicable state and/or Federal securities laws (which if required, shall be filed on a timely basis), including the filing of a Form D, no authorization, consent, approval, license, exemption of, filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, is or will be necessary for, or in connection with, the execution or delivery of the Notes and the Warrants, or for the performance by the Company of its obligations under the Transaction Documents.

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(y)

Employees.  Neither the Company nor any subsidiary has any collective bargaining arrangements or agreements covering any of its employees.  Neither the Company nor any subsidiary has any employment contract, agreement regarding proprietary information, non-competition agreement, non-solicitation agreement, confidentiality agreement, or any other similar contract or restrictive covenant, relating to the right of any officer, employee or consultant to be employed or engaged by the Company or such subsidiary.  No officer, consultant or key employee of the Company or any subsidiary whose termination, either individually or in the aggregate, could have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the Company or any subsidiary.

(z)

Absence of Certain Developments.  Except as set forth in the Form 10-KSB, the Form 10-Q or on Schedule 2.1(c) hereto, since June 30, 2008, neither the Company nor any subsidiary has:

(i)

issued any stock, bonds or other corporate securities or any rights, options or warrants with respect thereto;

(ii)

borrowed any amount or incurred or become subject to any liabilities (absolute or contingent) except current liabilities incurred in the ordinary course of business which are comparable in nature and amount to the current liabilities incurred in the ordinary course of business during the comparable portion of its prior fiscal year, as adjusted to reflect the current nature and volume of the Company’s or such subsidiary’s business;

(iii)

discharged or satisfied any lien or encumbrance or paid any obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business;

(iv)

declared or made any payment or distribution of cash or other property to stockholders with respect to its stock, or purchased or redeemed, or made any agreements so to purchase or redeem, any shares of its capital stock;

(v)

sold, assigned or transferred any other tangible assets, or canceled any debts or claims, except in the ordinary course of business;

(vi)

sold, assigned or transferred any patent rights, trademarks, trade names, copyrights, trade secrets or other intangible assets or intellectual property rights, or disclosed any proprietary confidential information to any person except to customers in the ordinary course of business or to the Purchasers or their representatives;

(vii)

suffered any substantial losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of prospective business;

(viii)

made any changes in employee compensation except in the ordinary course of business and consistent with past practices;

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(ix)

made capital expenditures or commitments therefore that aggregate in excess of $100,000;

(x)

entered into any other transaction other than in the ordinary course of business, or entered into any other material transaction, whether or not in the ordinary course of business;

(xi)

made charitable contributions or pledges in excess of $25,000;

(xii)

suffered any material damage, destruction or casualty loss, whether or not covered by insurance;

(xiii)

experienced any material problems with labor or management in connection with the terms and conditions of their employment;

(xiv)

effected any two or more events of the foregoing kind which in the aggregate would be material to the Company or its subsidiaries; or

(xv)

entered into an agreement, written or otherwise, to take any of the foregoing actions.

(aa)

Public Utility Holding Company Act and Investment Company Act Status.  The Company is not a “holding company” or a “public utility company” as such terms are defined in the Public Utility Holding Company Act of 1935, as amended.  The Company is not, and as a result of and immediately upon the Closing will not be, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

(bb)

ERISA.  No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan (as defined below) by the Company or any of its subsidiaries which is or would be materially adverse to the Company and its subsidiaries.  The execution and delivery of this Agreement and the issuance and sale of the Notes and Warrants will not involve any transaction which is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as amended, provided that, if any of the Purchasers, or any person or entity that owns a beneficial interest in any of the Purchasers, is an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to which the Company is a “party in interest” (within the meaning of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met.  As used in this Section 2.1(ac), the term “Plan” shall mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company or any subsidiary or by any trade or business, whether or not incorporated, which, together with the Company or any subsidiary, is under common control, as described in Section 414(b) or (c) of the Code.

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(cc)

Dilutive Effect.  The Company understands and acknowledges that its obligation to issue Conversion Shares upon conversion of the Notes in accordance with this Agreement and its obligations to issue the Warrant Shares upon the exercise of the Warrants in accordance with this Agreement and the Warrants, is, in each case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interest of other stockholders of the Company.

(dd)

No Integrated Offering.  Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Shares pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Shares pursuant to Rule 506 under the Securities Act, or any applicable exchange-related stockholder approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of the Shares to be integrated with other offerings.  The Company does not have any registration statement pending before the Commission or currently under the Commission’s review and since July 21, 2008, the Company has not offered or sold any of its equity securities or debt securities convertible into shares of Common Stock.

(ee)

Sarbanes-Oxley Act.  The Company is in compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations promulgated thereunder, that are effective, and intends to comply with other applicable provisions of the Sarbanes-Oxley Act, and the rules and regulations promulgated thereunder, upon the effectiveness of such provisions.

(ff)

Independent Nature of Purchasers.  The Company acknowledges that the obligations of each Purchaser under the Transaction Documents are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under the Transaction Documents.  The Company acknowledges that the decision of each Purchaser to purchase securities pursuant to this Agreement has been made by such Purchaser independently of any other purchase and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or of its Subsidiaries which may have made or given by any other Purchaser or by any agent or employee of any other Purchaser, and no Purchaser or any of its agents or employees shall have any liability to any Purchaser (or any other person) relating to or arising from any such information, materials, statements or opinions.  The Company acknowledges that nothing contained herein, or in any Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.  The Company acknowledges that each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  The Company acknowledges that for reasons of administrative convenience only, the Transaction Documents have been prepared by counsel and such counsel does not represent the Purchasers, who have retained their own individual counsel with respect to the transactions contemplated hereby.  The Company acknowledges that it has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers.  The Company acknowledges that such procedure with respect to the Transaction Documents in no way creates a presumption that the Purchasers are in any way acting in concert or as a group with respect to the Transaction Documents or the transactions contemplated hereby or thereby. 

 

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(gg)

Transfer Agent.  The name, address, telephone number, fax number, contact person and email address of the Company’s transfer agent is set forth on Schedule 2.1(gg) hereto.

Section 2.2

Representations and Warranties of the Purchasers.  Each of the Purchasers hereby makes the following representations and warranties to the Company with respect solely to itself and not with respect to any other Purchaser:

(a)

Organization and Standing of the Purchasers.  If the Purchaser is an entity, such Purchaser is a corporation or partnership duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.

(b)

Authorization and Power.  Each Purchaser has the requisite power and authority to enter into and perform this Agreement and to purchase the Notes and Warrants being sold to it hereunder.  The execution, delivery and performance of this Agreement by such Purchaser and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate or partnership action, and no further consent or authorization of such Purchaser or its Board of Directors, stockholders, or partners, as the case may be, is required.  This Agreement has been duly authorized, executed and delivered by such Purchaser and constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with the terms thereof.

(c)

No Conflicts.  The execution, delivery and performance of this Agreement and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto do not and will not (i) result in a violation of such Purchaser’s charter documents or bylaws or other organizational documents or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of any agreement, indenture or instrument or obligation to which such Purchaser is a party or by which its properties or assets are bound, or result in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such Purchaser).  Such Purchaser is not required under any foreign, Federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or 
make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or to purchase the Notes or acquire the Warrants in accordance with the terms hereof or thereof, provided that to the extent a representation made in this sentence relies on a relevant representation or agreement of the Company, such Purchaser is assuming and relying upon the accuracy of the relevant representations and agreements of the Company herein.

14

 

(d)

Acquisition for Investment.  Each Purchaser is acquiring the Notes and the Warrants solely for its own account for the purpose of investment and not with a view to or for sale in connection with distribution.  Each Purchaser does not have a present intention to sell the Notes or the Warrants, nor a present arrangement (whether or not legally binding) or intention to effect any distribution of the Notes or the Warrants to or through any person or entity; provided, however, that by making the representations herein and subject to Section 2.2(h) below, such Purchaser does not agree to hold the Notes, Shares or Warrants for any minimum or other specific term and reserves the right to dispose of the Notes, Shares or Warrants at any time in accordance with the applicable provisions of the Transaction Documents and Federal, foreign and state securities laws applicable to such disposition.  Each Purchaser acknowledges that it is able to bear the financial risks associated with an investment in the Notes and the Warrants and that it has been given full access to such records of the Company and the subsidiaries and to the officers of the Company and the subsidiaries and received such information as it has deemed necessary or appropriate to conduct its due diligence investigation and has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company’s stage of development so as to be able to evaluate the risks and merits of its investment in the Company.

(e)

Status of Purchasers.  Such Purchaser is an “accredited investor” as defined in Regulation D promulgated under the Securities Act.  Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act and such Purchaser is not a broker-dealer.  Such Purchaser has not been formed for the specific purpose of acquiring the Notes and the Warrants.

(f)

Opportunities for Additional Information.  Each Purchaser acknowledges that such Purchaser has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company concerning the financial and other affairs of the Company, and to the extent deemed necessary in light of such Purchaser’s personal knowledge of the Company’s affairs, such Purchaser has asked such questions and received answers to the full satisfaction of such Purchaser, and such Purchaser desires to invest in the Company.

(g)

No General Solicitation.  Each Purchaser acknowledges that the Notes and the Warrants were not offered to such Purchaser by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which such Purchaser was invited by any of the foregoing means of communications.

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(h)

Rule 144.  Such Purchaser understands that the Notes, Shares and Warrants must be held indefinitely unless such Notes, Shares and Warrants are registered under the Securities Act or an exemption from registration is available.  Such Purchaser acknowledges that such Purchaser is familiar with Rule 144 of the rules and regulations of the Commission, as amended, promulgated pursuant to the Securities Act (“Rule 144”), and that such person has been advised that Rule 144 permits resales only under certain circumstances.  Such Purchaser understands that to the extent that Rule 144 is not available, such Purchaser will be unable to sell any Notes, Shares and Warrants without either registration under the Securities Act or the existence of another exemption from such registration requirement.  Such Purchaser acknowledges that the Company has no obligation to register or qualify the Notes, Shares and Warrants for resale except as set forth in the Transaction Documents.  Such Purchaser further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Notes, Shares and Warrants, and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.

(i)

General.  Such Purchaser understands that the Notes and the Warrants are being offered and sold in reliance on a transactional exemption from the registration requirement of Federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of such Purchaser to acquire the Notes and the Warrants.

(j)

Independent Investment.  Except as may be disclosed in any filings with the Commission by the Purchasers under Section 13 and/or Section 16 of the Exchange Act, no Purchaser has agreed to act with any other Purchaser for the purpose of acquiring, holding, voting or disposing of the Notes and the Warrants purchased hereunder for purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting independently with respect to its investment in the Notes and the Warrants.

(k)

Trading Activities

..  No Purchaser nor any of its affiliates has an open short position in the Common Stock and each Purchaser agrees that it shall not, and that it will cause its affiliates not to, engage in any short sales with respect to the Common Stock.

(l)

Foreign Investors.

If a Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Code), such Purchaser hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Notes and the Warrants or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Notes and the Warrants, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Units, the Notes and the Warrants.  The Purchaser’s subscription and payment for and continued beneficial ownership of the Notes and the Warrants will not violate any applicable securities or other laws of the Purchaser’s jurisdiction.

 

16

 

(n)

Residence.

If the Purchaser is an individual, then such Purchaser resides in the state or province identified in the address of the Purchaser set forth on Exhibit A; if the Purchaser is a partnership, corporation, limited liability company or other entity, then the office or offices of the Purchaser in which its principal place of business is located is identified in the address or addresses of the Purchaser set forth on Exhibit A.

ARTICLE III

Covenants

Section 3.1

Covenants of the Company.  The Company covenants with each of the Purchasers as follows, which covenants are for the benefit of the Purchasers and their permitted assignees (as defined herein):

 

a. 

Securities Compliance.  The Company shall notify the Commission in accordance with their rules and regulations, of the transactions contemplated by any of the Transaction Documents, including filing a Form D with respect to the Notes, Warrants, and Shares as required under Regulation D, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Notes, the Warrants, and the Shares to the Purchasers or subsequent holders. 

b.

Registration and Listing.  The Company shall comply in all respects with its reporting and filing obligations under the Exchange Act, to comply with all requirements related to any registration statement filed pursuant to this Agreement, and to not take any action or file any document (whether or not permitted by the Securities Act or the rules promulgated thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under the Exchange Act or Securities Act, except as permitted herein or therein.  The Company will take all action necessary to continue the listing or trading of its Common Stock on the OTC Bulletin Board or other exchange or market on which the Common Stock is trading.  Subject to the terms of the Transaction Documents, the Company further covenants that it will take such further action as the Purchasers may reasonably request, all to the extent required from time to time to enable the Purchasers to sell the Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act.  Upon the request of the Purchasers, the Company shall deliver to the Purchasers a written certification of a duly authorized officer as to whether it has complied with such requirements.

c.

Inspection Rights.  The Company shall permit, during normal business hours and upon reasonable request and reasonable notice, each Purchaser or any employees, agents or representatives thereof, so long as such Purchaser shall be obligated hereunder to purchase the Notes or shall beneficially own any Notes, or shall own Conversion Shares which, in the aggregate, represent more than 2% of the total combined voting power of all voting securities then outstanding, for purposes reasonably related to such Purchaser’s interests as a stockholder to examine and make reasonable copies of and extracts from the records and books of account of, and visit and inspect the properties, assets, operations and business of the Company and any subsidiary, and to discuss the affairs, finances and accounts of the Company and any subsidiary with any of its officers, consultants, directors, and key employees. 

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d.

Compliance with Laws.  The Company shall comply, and cause each subsidiary to comply, with all applicable laws, rules, regulations and orders, noncompliance with which could have a Material Adverse Effect.

e.

Keeping of Records and Books of Account.  The Company shall keep and cause each subsidiary to keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and its subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made.

f.

Reporting Requirements.  If the Commission ceases making periodic reports filed under the Exchange Act available via the Internet, then at a Purchaser’s request the Company shall furnish the following to such Purchaser so long as such Purchaser shall beneficially own any Notes that have not been fully converted or any Warrants that have not been fully exercised: (i) Quarterly Reports filed with the Commission on Form 10-QSB as soon as practical after the document is filed with the Commission, and in any event within five (5) business days after the document is filed with the Commission; (ii) Annual Reports filed with the Commission on Form 10-KSB as soon as practical after the document is filed with the Commission, and in any event within five (5) business days after the document is filed with the Commission; and (iii) Copies of all notices and information, including without limitation notices and proxy statements in connection with any meetings, that are provided to holders of shares of Common Stock, within five (5) business days after the document is filed with the Commission.  

g.

Other Agreements.  The Company shall not enter into any agreement in which the terms of such agreement would restrict or impair the right or ability to perform of the Company or any subsidiary from performing under any Transaction Document.

h.

Subsequent Financings.   The Company shall not issue any Indebtedness ranking either senior to or pari-passu with the Notes while at least 50% of the original principal amount of the Notes remains outstanding without the consent of the holders of at least 75% of the principal amount of the then outstanding Convertible Notes.

i.

 Distributions.  So long as any Notes or Warrants remain outstanding, the Company agrees that it shall not (i) declare or pay any dividends or make any distributions to any holder(s) of Common Stock or (ii) purchase or otherwise acquire for value, directly or indirectly, any Common Stock or other equity security of the Company.

j.

Use of Proceeds.  The net proceeds from the sale of the Shares hereunder shall be used by the Company for working capital, sales and marketing, and general corporate purposes, and not to redeem any Common Stock or securities convertible, exercisable or exchangeable into Common Stock or to settle any outstanding litigation.  

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k.

Reservation of Shares.  So long as any of the Notes or Warrants remain outstanding, the Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than one hundred twenty percent (120%) the aggregate number of shares of Common Stock needed to provide for the issuance of the Conversion Shares and the Warrant Shares.

l.

Transfer Agent Instructions.  The Company shall issue irrevocable instructions to its transfer agent, and any subsequent transfer agent, to issue certificates, registered in the name of each Purchaser or its respective nominee(s), for the Conversion Shares and the Warrant Shares in such amounts as specified from time to time by each Purchaser to the Company upon conversion of the Notes or exercise of the Warrants in the form of Exhibit C attached hereto (the “Irrevocable Transfer Agent Instructions”).  Prior to registration of the Conversion Shares and the Warrant Shares under the Securities Act, all such certificates shall bear the restrictive legend specified in Section 5.1 of this Agreement.  The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 3.1(l) will be given by the Company to its transfer agent and that the Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement.  If a Purchaser provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that a public sale, assignment or transfer of the Shares may be made without registration under the Securities Act or the Purchaser provides the Company with reasonable assurances that the Shares can be sold pursuant to Rule 144 without any restriction as to the number of securities acquired as of a particular date that can then be immediately sold, the Company shall permit the transfer, and, in the case of the Conversion Shares and the Warrant Shares, promptly instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by such Purchaser and without any restrictive legend.  The Company acknowledges that a breach by it of its obligations under this Section 3.1(l) will cause irreparable harm to the Purchasers by vitiating the intent and purpose of the transaction contemplated hereby.  Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 3.1(l) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 3.1(l), that the Purchasers shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

m.

Disposition of Assets.  So long as the Notes remain outstanding, neither the Company nor any Subsidiary shall sell, transfer or otherwise dispose of any of its properties, assets and rights including, without limitation, its software and intellectual property, to any person except for sales to customers in the ordinary course of business or with the prior written consent of the holders of a majority of the Notes then outstanding.  

n.

Reporting Status.  So long as a Purchaser beneficially owns any of the Shares, the Company shall timely file all reports required to be filed with the Commission pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such.

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o.

Disclosure of Material Information.  The Company covenants and agrees that neither it nor any other person acting on its behalf has provided or will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.  The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company.

p.

Pledge of Securities.  The Company acknowledges and agrees that the Shares may be pledged by a Purchaser in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Common Stock.  The pledge of Common Stock shall not be deemed to be a transfer, sale or assignment of the Common Stock hereunder, and no Purchaser effecting a pledge of Common Stock shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document; provided that a Purchaser and its pledgee shall be required to comply with the provisions of Article V hereof in order to effect a sale, transfer or assignment of Common Stock to such pledgee. At the Purchasers' expense, the Company hereby agrees to execute and deliver such documentation as a pledgee of the Common Stock may reasonably request in connection with a pledge of the Common Stock to such pledgee by a Purchaser.

Section 3.2

Covenants of the Purchasers. 

a.

Trading Activities.  Each of the Purchasers covenants with the Company that for so long as such Purchaser owns the Warrants or the Shares, and for a period of six (6) months thereafter, (i) such Purchaser’s trading activities with respect to the Shares shall be in compliance with all applicable federal, state and foreign securities laws, and (ii) such Purchaser agrees that it shall not, and it will cause its Affiliates (as defined below) not to, engage in any short sales with respect to the Common Stock.

b.

Confidentiality.  Each Purchaser agrees that such Purchaser will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of the Transaction Documents, unless such confidential information (i) is known or becomes known to the public in general (other than as a result of a breach of this Section 3.2(b) by such Purchaser), (ii) is or has been independently developed or conceived by the Purchaser without use of the Company’s confidential information, or (iii) is or has been made known or disclosed to the Purchaser by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that a Purchaser may disclose confidential information (x) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (y) to any Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Purchaser in the ordinary course of business, provided that such Purchaser informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (z) as may otherwise be required by law, provided that the Purchaser promptly notifies the Company of such disclosure and takes reasonable steps to 
minimize the extent of any such required disclosure.  For purposes of this Agreement, “Affiliate” means, with respect to any specified person or entity (collectively, a “Person”), any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person, or, in the case of natural persons, any Immediate Family Member of such Person.  For purposes of this Agreement, “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a natural person referred to herein.

 

20

 

 

Section 3.3

Restrictions on Transfer.

a. 

The Notes, the Warrants and the Shares shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement (including without limitation Section 5.1), which conditions are intended to ensure compliance with the provisions of the Securities Act.  A transferring Purchaser will cause any proposed purchaser, pledgee, or transferee of the Notes, the Warrants and the Shares held by such Purchaser to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement and to provide information reasonably requested by the Company about such purchaser, pledgee or transferee.  The Purchasers consent to the Company making a notation in its records and giving instructions to any transfer agent in order to implement the restrictions on transfer set forth in this Section 3.3.

 

ARTICLE IV 

CONDITIONS

Section 4.1

Conditions Precedent to the Obligation of the Company to Sell the Shares.  The obligation hereunder of the Company to issue and sell the Notes and the Warrants to the Purchasers is subject to the satisfaction or waiver, at or before the Closing, of each of the conditions set forth below.  These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion.

(a)

Accuracy of Each Purchaser’s Representations and Warranties.  The representations and warranties of each Purchaser shall be true and correct in all respects as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all respects as of such date.

(b)

Performance by the Purchasers.  Each Purchaser shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Purchaser at or prior to the Closing.

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(c)

No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement. 

(d)

Delivery of Purchase Price.  The Purchase Price for the Units has been delivered to the Company at the Closing Date.

(e)

Delivery of Transaction Documents.  The Transaction Documents have been duly executed and delivered by the Purchasers to the Company. 

(f)

Qualifications.  All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Notes and the Warrants pursuant to this Agreement shall be obtained and effective as of the Closing.

Section 4.2

Conditions Precedent to the Obligation of the Purchasers to Purchase the Units.  The obligation hereunder of each Purchaser to acquire and pay for the Units is subject to the satisfaction or waiver, at or before the Closing, of each of the conditions set forth below.  These conditions are for each Purchaser’s sole benefit and may be waived by such Purchaser at any time in its sole discretion.

(a)

Accuracy of the Company’s Representations and Warranties.  Each of the representations and warranties of the Company in this Agreement shall be true and correct in all respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that are expressly made as of a particular date), which shall be true and correct in all respects as of such date.

(b)

Performance by the Company.  The Company shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing. 

(c)

No Suspension, Etc.  Trading in the Company’s Common Stock shall not have been suspended by the Commission or the OTC Bulletin Board (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the applicable Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg Financial Markets (“Bloomberg”) shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by Bloomberg, or on the New York Stock Exchange, nor shall a banking moratorium have been declared either by the United States or New York State authorities, nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity or crisis of such magnitude in its effect on, or any material adverse change in any financial market which, in each case, in the judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Notes and Warrants.

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(d)

No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

(e)

No Proceedings or Litigation.  No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any subsidiary, or any of the officers, directors or affiliates of the Company or any subsidiary seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions.

(f)

Certificates.  The Company shall have executed and delivered to the Purchasers the certificates (in such denominations as such Purchaser shall request) for the Notes and the Warrants being acquired by such Purchaser at the Closing (in such denominations as such Purchaser shall request). 

(g)

Resolutions.  The Board of Directors of the Company shall have adopted resolutions consistent with Section 2.1(b) hereof in a form reasonably acceptable to such Purchaser (the "Resolutions").

(h)

Reservation of Shares.  As of the Closing Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes and the exercise of the Warrants, a number of shares of Common Stock equal to one hundred twenty percent (120%) of the aggregate number of Conversion Shares issuable upon conversion of the Notes outstanding on the Closing Date and the number of Warrant Shares issuable upon exercise of the number of Warrants assuming such Warrants were granted on the Closing Date. 

(i)

Secretary’s Certificate.  The Company shall have delivered to such Purchaser a secretary’s certificate, dated as of the Closing Date, as to (i) the Resolutions, (ii) the Articles, (iii) the Bylaws, and (iii) the authority and incumbency of the officers of the Company executing the Transaction Documents and any other documents required to be executed or delivered in connection therewith.

(j)

Officer’s Certificate.  The Company shall have delivered to the Purchasers a certificate of an executive officer of the Company, dated as of the Closing Date, confirming the accuracy of the Company’s representations, warranties and covenants as of such Closing Date and confirming the compliance by the Company with the conditions precedent set forth in Section 4.2 as of the Closing Date.

(k)

Material Adverse Effect.  No Material Adverse Effect shall have occurred at or before the Closing Date. 

(i)

Qualifications.  All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Notes and the Warrants pursuant to this Agreement shall be obtained and effective as of the Closing.

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ARTICLE V

Stock Certificate Legend

Section 5.1

Legend.  Each certificate representing the Notes and Warrants, and, if appropriate, securities issued upon conversion thereof, shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):

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

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

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

The Company agrees to reissue certificates representing any of the Shares, without the legend set forth above if at such time, prior to making any transfer of any such securities, such holder thereof shall give written notice to the Company describing the manner and terms of such transfer and removal as the Company may reasonably request.  Such proposed transfer and removal will not be effected until: (a) either (i) the Company has received a written opinion of

legal counsel who shall, and whose legal opinion shall be, reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
registration of such Shares under the Securities Act is not required in
connection with such proposed transfer, (ii) a registration statement under the
Securities Act covering such proposed disposition has been filed by the Company
with the Commission and has become effective under the Securities Act, (iii) the
Company has received other evidence reasonably satisfactory to the Company that
such registration and qualification under the Securities Act and state
securities laws are not required, or (iv) the holder provides the Company with
reasonable assurances reasonably satisfactory to counsel to the Company, that
such security can be sold pursuant to Rule 144 under the Securities Act; and (b)
either (i) the Company has received a written opinion of legal counsel who
shall, and whose legal opinion shall be reasonably satisfactory to the Company,
addressed to the Company to the effect that registration or qualification under
the securities or "blue sky" laws of any state is not required in connection
with such proposed disposition, or (ii) the Company has received other evidence
reasonably satisfactory to the Company that compliance with applicable state
securities or "blue sky" laws has been effected or a valid exemption exists with
respect thereto. The Company will respond to any such notice from a holder
within five (5) business days. In the case of any proposed transfer under this
Section 5.1, the Company will use commercially reasonable efforts to comply with
any such applicable state securities or "blue sky" laws, but shall in no event
be required, (x) to qualify to do business in any state where it is not then
qualified, (y) to take any action that would subject it to tax or to the general
service of process in any state where it is not then subject, or (z) to comply
with state securities or "blue sky" laws of any state for which registration by
coordination is unavailable to the Company. The restrictions on transfer
contained in this Section 5.1 shall be in addition to, and not by way of
limitation of, any other restrictions on transfer contained in any other section
of this Agreement. Whenever a certificate representing the Shares is required to
be issued to a Purchaser without a legend, in lieu of delivering physical
certificates representing the applicable Shares (provided that a registration
statement under the Securities Act providing for the resale of the Shares is
then in effect and such request is in connection with a sale), the Company shall
cause its transfer agent to electronically transmit such Shares to a Purchaser
by crediting the account of such Purchaser's Prime Broker with the Depository
Trust Company ("DTC") through its Deposit Withdrawal Agent Commission ("DWAC")
system (to the extent not inconsistent with any provisions of this Agreement)
provided that the Company and the Company's transfer agent are participating in
DTC through the DWAC system.

24

 

 

ARTICLE VI

  

Indemnification

Section 6.1

General Indemnity.  The Company agrees to indemnify and hold harmless the Purchasers (and their respective directors, officers, managers, partners, members, shareholders, affiliates, agents, successors and assigns) from and against any and all losses, liabilities, deficiencies, costs, damages and expenses (including, without limitation, reasonable attorneys’ fees, charges and disbursements) incurred by the Purchasers solely as a result and to the extent of a material inaccuracy in or breach of the representations, warranties or covenants made by the Company herein.  Each Purchaser severally but not jointly agrees to indemnify and hold harmless the Company and its directors, officers, affiliates, agents, successors and assigns from and against any and all losses, liabilities, deficiencies, costs, damages and expenses 
(including, without limitation, reasonable attorneys’ fees, charges and disbursements) incurred by the Company solely as result and to the extent of a material inaccuracy in or breach of the representations, warranties or covenants made by such Purchaser herein.  In addition, each Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising from the transactions contemplated by this Agreement (and the costs and expenses of defending against such liability or asserted liability) for which each Purchaser or any of its officers, employees, or representatives is responsible.  The maximum aggregate liability of each Party pursuant to its indemnification obligations under this Article VI shall not exceed the portion of the Purchase Price paid by such Purchaser hereunder. /P>

25

 

Section 6.2

Indemnification Procedure.  Any party entitled to indemnification under this Article VI (an “indemnified party”) will promptly give written notice to the indemnifying party of any matters giving rise to a claim for indemnification; provided, that the failure of any party entitled to indemnification hereunder to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Article VI except to the extent that the indemnifying party is actually prejudiced by such failure to give notice.  In case any action, proceeding or claim is brought against an indemnified party in respect of which indemnification is sought hereunder, the indemnifying party shall be entitled to participate in and, unless in the reasonable judgment of the indemnified party a conflict of interest between it and the indemnifying party may exist with respect of such action, proceeding or claim, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party.  In the event that the indemnifying party advises an indemnified party that it will contest such a claim for indemnification hereunder, or fails, within thirty (30) days of receipt of any indemnification notice to notify, in writing, such person of its election to defend, settle or compromise, at its sole cost and expense, any action, proceeding or claim (or discontinues its defense at any time after it commences such defense), then the indemnified party may, at its option, defend, settle or otherwise compromise or pay such action or claim.  In any event, unless and until the indemnifying party elects in writing to assume and does so assume the defense of any such claim, proceeding or action, the indemnified party’s costs and expenses arising out of the defense, settlement or compromise of any such action, claim or proceeding shall be losses subject to indemnification hereunder.  The indemnified party shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the indemnified party which relates to such action or claim.  The indemnifying party shall keep the indemnified party fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.  If the indemnifying party elects to defend any such action or claim, then the indemnified party shall be entitled to participate in such defense with counsel of its choice at its sole cost and expense.  The indemnifying party shall not be liable for any settlement of any action, claim or proceeding effected without its prior written consent, which consent shall not be unreasonably withheld.  Notwithstanding anything in this Article VI to the contrary, the indemnifying party shall not, without the indemnified party’s prior written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof which imposes any future obligation on the indemnified party or which does not include, as an unconditional term thereof, the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such claim.  The indemnification required by this Article 
VI shall be made by periodic payments of the amount thereof during the course of investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred, so long as the indemnified party irrevocably agrees to refund such moneys if it is ultimately determined by a court of competent jurisdiction that such party was not entitled to indemnification.  The indemnity agreements contained herein shall be in addition to (a) any cause of action or similar rights of the indemnified party against the indemnifying party or others, and (b) any liabilities the indemnifying party may be subject to pursuant to the law.

26

 

ARTICLE VII

  

Miscellaneous

Section 7.1

Fees and Expenses.  Except as otherwise set forth in this Agreement and the other Transaction Documents, each party shall pay the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement, provided that the Company shall pay the Purchasers’ attorneys' fees and expenses (including disbursements and out-of-pocket expenses) incurred in connection with (i) the preparation, negotiation, execution and delivery of this Agreement and the other Transaction Documents and the transactions contemplated thereunder, which payment shall be made at Closing, and (ii) any amendments, modifications or waivers of this Agreement or any of the other Transaction Documents requested by the Company.    The Company shall also pay to the Purchasers all reasonable fees and expenses incurred by the Purchasers in connection with the enforcement of this Agreement or any of the other Transaction Documents, including, without limitation, all reasonable attorneys' fees and expenses. 

Section 7.2

Specific Enforcement, Consent to Jurisdiction; Waiver of Jury Trial.  

(a)

The Company and the Purchasers acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement or the other Transaction Documents were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement or the Registration Rights Agreement and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.

(b)

Each of the Company and the Purchasers (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Delaware and the courts of the State of Delaware for the purposes of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Transaction Documents or the transactions contemplated hereby or thereby and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper.  Each of the Company and the Purchasers consents to process being 
served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing in this Section 7.2 shall affect or limit any right to serve process in any other manner permitted by law. 

27

 

(c)

Waiver of Jury Trial.  EACH OF THE PARTIES HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 7.3

Entire Agreement; Amendment.  This Agreement and the Transaction Documents contains the entire understanding and agreement of the parties with respect to the matters covered hereby and, except as specifically set forth herein or in the Transaction Documents, neither the Company nor any of the Purchasers makes any representations, warranty, covenant or undertaking with respect to such matters and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein.  No provision of this Agreement may be waived or amended other than by a written instrument signed by the Company and the holders of at least seventy-five percent (75%) of the Preferred Shares then outstanding, and no provision hereof may be waived other than by an a written instrument signed by the party against whom enforcement of any such amendment or waiver is sought.  No such amendment shall be effective to the extent that it applies to less than all of the holders of the Preferred Shares then outstanding.  No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents or holders of Preferred Shares, as the case may be.

Section 7.4

Notices.  Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telex (with correct answer back received), telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The addresses for such communications shall be:

		
	If to the Company:

	BioForce Nanosciences Holdings, Inc. 

1615 Golden Aspen Drive, Suite 101

Ames, Iowa, 50010

Attn: Chief Executive Officer

Tel. No.: (515) 233-8333

Fax No.:  (515) 233-8337

	 	 

28

 

		
	If to any Purchaser:

	At the address of such Purchaser set forth on Exhibit A to this Agreement

	 	 

Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto.

Section 7.5

Waivers.  No waiver by either party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

Section 7.6

Headings.  The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof.

Section 7.7

Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.  

Section 7.8

No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

Section 7.9

Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction.  This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

Section 7.10

Survival.  The representations and warranties of the Company and the Purchasers shall survive the execution and delivery hereof and the Closing until the first anniversary of the Closing Date, except the agreements and covenants set forth in Articles I, III, V, VI and VII of this Agreement shall survive the execution and delivery hereof and the Closing hereunder.

Section 7.11

Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

Section 7.12

Publicity.  The Company agrees that it will not disclose, and will not include in any public announcement, the name of the Purchasers without the consent of the 

29

 

Purchasers unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement.

Section 7.13

Severability.  The provisions of this Agreement and the Transaction Documents are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement or the Transaction Documents shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement or the Transaction Documents and such provision shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

Section 7.14

Further Assurances.  From and after the date of this Agreement, upon the request of any Purchaser or the Company, each of the Company and the Purchasers shall execute and deliver such instrument, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement, the Notes, the Conversion Shares, the Warrants, and the Warrant Shares.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

30

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.

		
	 	BIOFORCE NANOSCIENCES HOLDINGS, INC. 

	 	 
	 	 
	 	By:  /s/ Gregory D. Brown

	 	      Name: Gregory D. Brown

      Title:  Chief Financial Officer

		
	 	PURCHASER

	 	 
	 	 
	 	 
	 	By:

/s/ Jean-Yves Nothias

Name: Jean-Yves Nothias

Title:   Managing Partner

	

	 
	 	 
	 	 
	 	 
	 	 
	 	 
	

	 
	 	 
	 	 
	 	 
	 	 

EXHIBIT A to the

CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT FOR 

BIOFORCE NANOSCIENCES HOLDINGS, INC.

  

Number of

Name and Address of Purchaser

Units Purchased

Purchase Price (1)

FCPR SGAM AI Biotechnology Fund

2.00

$50,000.00

Immeuble SGAM

170 Place Henri Renault

Paris La Defense, Cedex, France 92043

(1)  Wire transfer will be made in immediately available funds to an account designated by the Company

EXHIBIT B-1 to the 

CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT FOR 

BIOFORCE NANOSCIENCES HOLDINGS, INC.

FORM OF CONVERTIBLE SECURED PROMISSORY NOTE

­

EXHIBIT B-2 to the 

CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT FOR 

BIOFORCE NANOSCIENCES HOLDINGS, INC.

FORM OF WARRANT

­

EXHIBIT C to the 

CONVERTIBLE SECURED PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT FOR 

BIOFORCE NANOSCIENCES HOLDINGS, INC.

TRANSFER AGENT INSTRUCTIONS

­EXHIBIT 4.8

 

 

 

IDACORP, INC.

 

TO

 

DEUTSCHE BANK TRUST COMPANY AMERICAS,

 

Trustee

 

 

 

            SUPPLEMENTAL INDENTURE

 

Dated as of               

 

TO

 

INDENTURE

 

Dated as of February 1, 2001

 

SENIOR DEBT SECURITIES

 

 

 

 

 

          
SUPPLEMENTAL INDENTURE dated as of                       
made and entered into by and between IDACORP, INC., a corporation of the State
of Idaho (hereinafter, subject to Article XI of the Indenture, called the “Issuer”
or the “Company”), having its principal office at 1221 West Idaho Street,
Boise, Idaho 83702-5627, and DEUTSCHE BANK TRUST COMPANY AMERICAS, formerly
known as Bankers Trust Company, a banking corporation organized and existing
under the laws of the State of New York, as Trustee (hereinafter, subject to Article VII
of the Indenture, called the “Trustee”), having its principal office at 60 Wall
Street, New York, New York 10005, as Trustee under the Indenture for Senior
Debt Securities dated as of February 1, 2001 executed and delivered by
IDACORP, Inc.

 

WHEREAS the Indenture dated as
of February 1, 2001 (herein with all indentures supplemental thereto
called the “Indenture”) provides for the issuance of notes, debentures or other
evidences of its indebtedness in one or more series (hereinafter called the “Securities”),
unlimited in aggregate principal amount;

 

WHEREAS the Indenture provides
in Article III thereof that, prior to the issuance of Securities of any
series, the form of such Securities and the terms applicable to such series
shall be established in, or pursuant to, the authority granted in a resolution
of the Board of Directors (delivered to the Trustee in the form of a Board
Resolution) or established in one or more indentures supplemental thereto;

 

WHEREAS the Issuer desires by
this            Supplemental
Indenture, among other things, to establish the form of the Securities of a
series, to be titled “                    
Notes, Series      ” of the Issuer, and to
establish the terms applicable to such series, pursuant to Sections 3.1 and
10.1(e) of the Indenture;

 

WHEREAS the execution and
delivery of this           
Supplemental Indenture by the parties hereto are in all respects authorized by
the provisions of the Indenture; and

 

WHEREAS all things necessary
have been done to make this           
Supplemental Indenture a valid agreement of the Issuer, in accordance with its
terms.

 

NOW, THEREFORE, THIS               
SUPPLEMENTAL INDENTURE WITNESSETH:

 

For and in consideration of the
premises, it is mutually covenanted and agreed, as follows:

 

 

ARTICLE I.

                          
Notes, Series      

 

SECTION 1.        The title of the series of the Securities established by this
          
Supplemental Indenture shall be “                
Notes, Series      , due                     ”
of the Issuer (hereinafter called the “Series      
Notes”).  The Series      
Notes shall be substantially in the form set forth in Exhibit A hereto
(which is hereby incorporated herein and made a part hereof), subject to
changes in the form thereof made by the Issuer and acceptable to the Trustee.

 

SECTION 2.        The Series       Notes shall
be issued from time to time in an aggregate principal amount not to exceed $              .

 

SECTION 3.        The Series       Notes may be
issued in whole or in part as one or more Global Securities and The Depository
Trust Company, or a nominee thereof, shall be the Depository for such Global
Security or Global Securities, except in each case as otherwise provided in an
Issuer Order with respect to any Series      
Notes.  The Depository for such Global
Security or Global Securities representing Series      
Notes may surrender one or more Global Securities representing Series      
Notes in exchange in whole or in part for individual Series      
Notes on such terms as are acceptable to the Issuer and such Depository and
otherwise subject to the terms of Section 2.4 of the Indenture.

 

SECTION 4.        The Issuer hereby appoints, or confirms the appointment of,
Deutsche Bank Trust Company Americas as the initial Trustee, Securities
Registrar and Paying Agent, subject to the provisions of the Indenture with
respect to resignation, removal and succession, and subject, further, to the
right of the Issuer to appoint additional agents (including Paying
Agents).  An Authenticating Agent may be
appointed for the Series       Notes under the
circumstances set forth in, and subject to the provisions of, the Indenture.

 

SECTION 5.        The terms of the Series      
Notes shall be as set forth in Exhibit A hereto, and shall include the
payment and other terms reflected on the respective Series      
Notes as actually executed, authenticated and delivered under the
Indenture.  Notwithstanding the
foregoing, specific terms of particular Series      
Notes (any redemption, sinking fund or other repayment terms that differ from
the provisions of Article XIV or XV of the Indenture and any terms for
satisfaction and discharge of the Indenture that differ from the provisions of Article XII
of the Indenture) may be determined in accordance with or pursuant to the
Issuer Order with respect thereto, as referred to in Section 3.3 of the
Indenture.

 

2

 

ARTICLE II.

Miscellaneous Provisions

 

SECTION 1.        The recitals contained herein shall be taken as the
statements of the Issuer, and the Trustee assumes no responsibility for the
correctness of the same.  The Trustee
makes no representation as to the validity of this           
Supplemental Indenture.  The Indenture,
as supplemented by this           
Supplemental Indenture, is in all respects hereby adopted, ratified and
confirmed.

 

SECTION 2.        The titles of the several Articles of this           
Supplemental Indenture shall not be deemed to be any part hereof.

 

SECTION 3.        This             
Supplemental Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

 

IN WITNESS WHEREOF, the parties
hereto have caused this           
Supplemental Indenture to be duly executed.

 

	
   

  	
  IDACORP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

3

 

	
  STATE OF
  IDAHO

  	
  )

  
	
   

  	
  ) ss.:

  
	
  COUNTY OF
  ADA

  	
  )

  

 

 

At Boise, ID, on this        
day of                  
20     , before me, a Notary Public in and for the
County of Ada and State of Idaho, personally appeared                 ,
the               ,
of IDACORP, Inc., to me personally known, who executed the foregoing
instrument on behalf of said corporation, and acknowledged the same to be his
free act and deed in his said capacity and the free act and deed of IDACORP, Inc.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
  My Commission
  Expires:

  	
   

  	
   

  	
   

  
					

 

4

 

EXHIBIT A

 

 

FORM OF NOTE

 

Registered

No.

CUSIP

 

 

[LEGENDS, IF
ANY]

 

IDACORP, Inc.

 

                    
Note, Series     

 

[            %
Fixed Rate Note]

 

	
  Original
  Issue Date:

  	
  Principal
  Amount:

  
	
  Interest
  Accrual Date:

  	
  Issue Price:

  
	
  Interest Payment
  Dates:

  	
   

  
	
  Maturity
  Date:

  	
   

  
	
  Redemption
  Date(s):

  	
  Redemption
  Price(s):

  
	
  Repayment Date(s):

  	
  Repayment Price(s):

  

 

IDACORP, Inc., an Idaho corporation (the “Company”, which term
includes any successor issuer under the Indenture hereinafter referred to), for
value received hereby promises to pay to                                 
or registered assigns, the principal sum of                       
Dollars ($                  )
on the “Maturity Date”, as set forth above, and to pay interest hereon as
described herein.

 

The principal of (and premium, if any) and interest on this Note are
payable by the Company in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public and
private debts.

 

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH BELOW, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS IF SET FORTH AT THIS PLACE.

 

Unless the certificate of authentication hereon has been manually
executed by or on behalf of the Trustee under the Indenture, this Note shall
not be entitled to any benefit under the Indenture, or be valid or obligatory
for any purpose.

 

IN WITNESS WHEREOF, IDACORP, Inc. has caused this instrument to be
signed in its corporate name by the signatures or facsimile signatures of its
President or a Vice President, and its Treasurer or an Assistant Treasurer, and
its corporate seal or a facsimile hereof to be hereon impressed, engraved or
imprinted and attested by such signature or facsimile signature of its
Secretary or an Assistant Secretary.

 

IDACORP, Inc.

 

                     
Note, Series     

 

1.             This Note is one of
a duly authorized issue of debt securities (hereinafter called the “Securities”)
of the Company of the series hereinafter specified, all such Securities issued
and to be issued under an Indenture dated as of February 1, 2001 between
the Company and Deutsche Bank Trust Company Americas, formerly known as Bankers
Trust Company, as Trustee (herein called the “Trustee”, which term includes any
successor trustee under the Indenture), as amended and supplemented by the
First Supplemental Indenture dated as of February 1, 2001 and the             
Supplemental Indenture dated as of                     
(herein called, the “Indenture”), to which Indenture reference is hereby made
for a statement of rights and limitations of rights thereunder of the Holders
of the Securities and of the rights, obligations, duties and immunities of the
Trustee and of the Company, and the terms upon which the Securities are and are
to be authenticated and delivered.  As
provided in the Indenture, the Securities may be issued in one or more series
which different series may be issued in various aggregate principal amounts,
may mature at different times, may bear interest, if any, at different rates,
may be subject to different redemption provisions, if any, may be subject to
different sinking, purchase or analogous funds, if any, may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided or permitted.  This Note
is one of a series designated as                 
Note, Series      , [due                         ]
(the “Series                
Notes”) limited to $                    
in aggregate principal amount.  The Series     
 Notes may be issued at various times
with different maturity dates and different principal repayment provisions, may
bear interest at different rates, and may otherwise vary, all as provided in
the Indenture.

 

2.             A.  The record date (the “Regular Record Date”)
with respect to any Interest Payment Date (as defined below) shall be the close
of business on [the last day of the calendar month] [the fifteenth day of the
calendar month] preceding such Interest Payment Date, whether or not such date
shall be a Business Day (unless otherwise set forth herein).  Interest that is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
person in whose name this Note is registered at the close of business on the Regular
Record Date immediately preceding such Interest Payment Date; provided,
however, that the first payment of interest on any Note with an Original Issue
Date between a Regular Record Date and the succeeding Interest Payment Date
will be made on the Interest Payment Date following the immediately succeeding
Regular Record Date to the registered owner on such immediately succeeding
Regular Record Date; and provided, further, that interest payable at Maturity
will be payable to the person to whom principal shall be payable. “Maturity”
means the date on which the principal amount hereof becomes due and payable,
whether at Stated Maturity or earlier by declaration of acceleration, call for
redemption or otherwise.  Notwithstanding
the foregoing, any interest that is payable but not punctually paid or duly
provided for on any Interest Payment Date shall forthwith cease to be payable
to the registered owner hereof on such Regular Record Date, and may be paid to
the person in whose name this Note is registered at the close of business on a
subsequent record date established by notice given by mail, by or on behalf of
the Company to such Holder not less than fifteen days preceding such subsequent
record date, such record date to be not less than ten days preceding the date
for payment of such defaulted interest, or may be paid as more fully provided
in the Indenture.  “Business Day” means
any day, other than a 

 

A-2

 

Saturday or
Sunday, that is not a day on which banking institutions are authorized or required
by law or regulation to be closed in The City of New York.

 

B.            The Company promises to pay interest
on the principal amount from its Original Issue Date at the rate per annum
stated on the face hereof until the principal amount hereof is paid or made available
for payment.  Unless otherwise provided
herein, the Company will pay interest semi-annually each                   
and                   
(each an “Interest Payment Date”), commencing (except as set forth above in the
case of a Note with an Original Issue Date between a Regular Record Date and an
Interest Payment Date) with the Interest Payment Date immediately following the
Original Issue Date and at Maturity.  If
any Interest Payment Date would otherwise be a day that is not a Business Day,
such Interest Payment Date shall be postponed to the next day that is a
Business Day, and no interest shall accrue by reason of such delayed
payment.  Each payment of interest in
respect of an Interest Payment Date shall include interest accrued to but
excluding such Interest Payment Date. 
Interest on Fixed Rate Series      
Notes shall be computed on the basis of a 360-day year of twelve 30-day months
(unless otherwise specified herein).

 

3.             Payments of
interest (other than interest payable at Maturity) will be made by mailing a
check to the Holder at the address of the Holder appearing on the Securities
Register of the Company on the applicable Regular Record Date, unless otherwise
determined by the Company.  The principal
amount hereof and any premium and the interest payable at Maturity will be paid
at Maturity against presentation of this Note at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of
New York, or as otherwise provided in the Indenture.

 

4.             If specified above,
this Note may be redeemed, as a whole or from time to time in part, at the
option of the Company, on not less than 30 days’ prior notice given as provided
in the Indenture, on any Redemption Date(s) and at the related Redemption
Price(s) (expressed as a percentage of the principal amount hereof) set
forth on the face hereof, together with interest accrued and unpaid hereon to
such Redemption Date.  If no such
Redemption Date is set forth on the face hereof, this Note may not be so redeemed
prior to the Maturity Date specified on the face hereof.  If fewer than all the Outstanding Series      
Notes of like tenor and terms are to be redeemed, the particular Series      
Notes to be redeemed shall be selected by the Trustee not more than 60 days
prior to the Redemption Date from the Outstanding Series      
Notes of like tenor or terms not previously called for redemption.  Such selection shall be of principal amounts
in increments of $1,000.  Subject to the
immediately preceding sentence, such selection shall be made by lot.  The notice of such redemption shall specify
which Series       Notes are to be
redeemed.  In the event of redemption of
this Note in part only, a new Note or Notes of this series of like tenor or
terms for the unredeemed portion hereof will be issued to the Holder hereof
upon the cancellation hereof.

 

5.             If specified above,
this Note will be subject to repayment at the option of the Holder hereof on
the Repayment Date(s) and at the related Repayment Price(s) (expressed
as a percentage of the principal amount hereof) indicated on the face
hereof.  If no such Repayment Date is set
forth on the face hereof, this Note may not be so repaid prior to the Maturity
Date specified on the face hereof.  On
each Repayment Date, if any, this Note shall be repayable in whole or in part
at the option of the Holder hereof at the applicable Repayment Price set forth
on 

 

A-3

 

the face
hereof, together with interest accrued and unpaid hereon to such Repayment
Date. In order for this Note to be repaid in whole or in part at the option of
the Holder hereof, the Paying Agent must receive not less than 30 but not more
than 45 days prior to the Repayment Date (i) the Note with the form
entitled “Option to Elect Repayment” below duly completed or (ii) a
facsimile transmission or a letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or a trust company in the United States of America setting
forth the name of the Holder of the Note, the principal amount of the Note, the
certificate number of the Note or a description of the Note’s tenor or terms,
the principal amount of the Note to be repaid, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Note to be
repaid with the form entitled “Option to Elect Repayment” on the reverse of the
Note duly completed will be received by such Paying Agent no later than five
Business Days after the date of such facsimile transmission or letter and such
Note and form duly completed are received by such Paying Agent by such fifth
Business Day.  Exercise of such repayment
option shall be irrevocable.  Such option
may be exercised by the Holder for less than the entire principal amount
provided that the principal amount remaining outstanding after repayment is an
authorized denomination.

 

6.             If an Event of
Default with respect to the Series       Notes
shall occur and be continuing, the principal of all of the Series      
Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.

 

7.             The Indenture
permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of
the Holders of the Securities under the Indenture at any time by the Company
with the consent of the Holders of not less than a majority in principal amount
of the Securities at the time Outstanding of all series to be affected thereby
(voting as one class).  The Indenture
also contains provisions permitting the Holders of a majority in aggregate
principal amount of the Securities of any series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive past defaults
or certain Events of Default under the Indenture, with certain exceptions as
therein provided, and their consequences with respect to such series, prior to
the acceleration with respect to the Securities of such series.  In the case of any such waiver, the Holder of
this Note shall be restored to his former position and rights hereunder, such
default shall cease to exist and be deemed to have been cured and not to have
occurred, and any related Event of Default shall be deemed to have been cured,
and not to have occurred for every purpose of the Indenture; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.

 

8.             No reference herein
to the Indenture and no provision of this Note or of the Indenture shall affect
or impair the obligation of the Company, which is unconditional and absolute,
to pay the principal of and premium, if any, and interest on this Note at the
places, at the times, at the rates, in the amounts and in the coin or currency
as prescribed herein and in the Indenture.

 

9.             Series      
Notes will be issued in denominations of $1,000 and integral multiples of
$1,000 in excess thereof.

 

A-4

 

10.           As provided in the
Indenture and subject to certain limitations therein set forth, this Note is
transferable on the Securities Register of the Company, upon surrender of this
Note for registration of transfer at the office or agency of the Company to be
maintained for that purpose in The City of New York.  Every Note presented for registration of
transfer shall (if so required by the Company or the Securities Registrar) be
duly endorsed, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed, by the
Holder hereof or its attorney duly authorized in writing, and thereupon one or
more new Series       Notes of like tenor and
terms of authorized denominations and for the same aggregate principal amount
will be issued to the designated transferee or transferees.

 

The Company shall not be
required (i) to issue, register the transfer of or exchange Series      
Notes to be redeemed for a period of fifteen days preceding the date of the
mailing of the notice of redemption or (ii) to register the transfer of or
to exchange any such Note or portion thereof selected for redemption, except
the unredeemed portion of any such Note being redeemed in part.

 

No service charge shall be made
for any such registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.  Prior
to due presentment of a Note for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the person in whose name
a Note is registered as the owner hereof for all purposes whether or not such
Note be overdue and neither the Company, the Trustee nor any such agent shall
be affected by notice to the contrary.

 

11.           Unless otherwise
defined herein, all terms used in this Note which are defined in the Indenture
shall have the meaning assigned to them in the Indenture.

 

12.           This Note shall for
all purposes be governed by, and construed in accordance with, the laws of the
State of Idaho.

 

	
   

  	
  IDACORP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

A-5

 

Trustee’s Certificate of Authentication

 

Dated:

 

This is one of the Securities of the series
designated herein referred to in the within- mentioned Indenture.

 

DEUTSCHE BANK TRUST COMPANY
AMERICAS,

as Trustee

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  

 

A-6

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the
undersigned hereby sells, assigns and transfers unto

 

	
   

  	
   

  
	
  Please insert social security

  or other identifying number

  

  Please print or typewrite

  name and address of assignee

  
	
   

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  the within Note, of IDACORP, Inc. and does hereby irrevocably constitute
  and appoint                                       
  attorney to transfer the said Note on the books of the within-mentioned
  Company, with full power of substitution in the premises.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice: The signature on this

  assignment must correspond with the

  name as written upon the face of the

  Note in every particular without

  alteration or enlargement or any change

  whatsoever.

  
							

 

A-7

 

OPTION TO ELECT REPAYMENT*

 

	
  The undersigned hereby irrevocably requests and instructs the Company
  to repay the within Note (or portion hereof specified below) pursuant to its
  terms at a price equal to the applicable Repayment Price thereof together
  with interest to the Repayment Date, to the undersigned at                                                                                                                                                         

  
	
   

  
	
   

  

Please print or typewrite name and address of
the undersigned

 

If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof that the Holder elects to have repaid                                                           
and specify the denomination or denominations (which shall be in authorized
denominations) of the Series       
Notes to be issued to the Holder for the portion of the within Note not being
repaid (in the absence of any such specification, one such Note will be issued
for the portion not being repaid):                                                     .

 

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  
	
   

  
	
  * Note:

  	
  This option
  is not available to a holder unless this Note contains an express
  provision granting to the holder hereof an option to elect repayment.

  
						

 

A-8

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