NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO BORROWER.
Issuance Date: February 29, 2016
Principal Amount: $400,000
8% CONVERTIBLE NOTE
DUE February 28, 2017
FOR VALUE RECEIVED, the undersigned, Theranostics Health, Inc., a Delaware corporation (the “Borrower”), promises to pay to Amarantus Bioscience Holdings, Inc. or its assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of Four Hundred Thousand Dollars ($400,000) on February 28, 2017 (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest, if any, to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof.
This Note is subject to the following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note, the following terms shall have the following meanings:
“Bankruptcy Event” means any of the following events: (a) Borrower or any Subsidiary thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to Borrower or any Subsidiary thereof, (b) there is commenced against Borrower or any Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) Borrower or any Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) Borrower or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, or (e) Borrower or any Subsidiary thereof makes a general assignment for the benefit of creditors.
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Change of Control Event” means: except for the acquisition of substantially all the assets of Borrower by Avant Diagnostics, Inc., (i) any acquisition of Borrower by means of merger, securities purchase or other form of reorganization in which Borrower's outstanding equity interests are exchanged for securities or other consideration issued, or caused to be issued, by the acquiring person or any one or more of its subsidiaries or affiliates, unless Borrower's security holders immediately prior to such merger, securities purchase or reorganization hold more than 50% of the voting power of the surviving or acquiring person immediately after such merger, securities purchase or reorganization in the same relative proportions, or (ii) the sale of all or substantially all of the assets of Borrower.
“Common Stock” means the voting common stock of the Borrower.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock
“Conversion” shall have the meaning ascribed to such term in Section 4.
“Conversion Date” shall have the meaning set forth in Section 4.
“Conversion Price” means $40.64 which Conversion Price shall be adjusted as provided in Section 5.
“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.
“Event of Default” shall have the meaning set forth in Section 7(a).
“New York Courts” shall have the meaning set forth in Section 11(d).
“Notice of Conversion” shall have the meaning set forth in Section 4(a).
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTCQB, or the OTCQX (or any successors to any of the foregoing).
Section 2. Interest.
a) Interest. The Holder shall be entitled to receive, and Borrower shall pay, simple interest on the outstanding principal amount of this Note at the annual rate of eight (8%) percent per annum payable in cash on the Maturity Date.
b) Payment Grace Period. The Borrower shall have a ten Business Day grace period to pay any monetary amounts due under this Note except as specifically set forth herein.
c) Calculations. Interest shall be calculated on the basis of a 365-day year, and shall accrue daily commencing on the date hereof until payment in full of the outstanding principal, together with all accrued and unpaid interest and other amounts which may become due hereunder, has been made.
d) Manner and Place of Payment. Principal and interest on this Note and other payments in connection with this Note shall be payable at the Borrower’s offices as designated above in lawful money of the United States of America in immediately available funds without set-off, deduction or counterclaim. Upon assignment of the interest of Holder in this Note, Borrower shall instead make its payment pursuant to the assignee’s instructions upon receipt of written notice thereof.
Section 3. Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Investor Representations annexed hereto as Exhibit A and may be transferred or exchanged only in compliance with the terms contained herein and applicable federal and state securities laws and regulations to a successor Holder who provides the same investment representations to the Borrower.
Section 4. Conversion.
a) Voluntary Conversion.
i. At Holder’s Option. This Note shall be convertible at any time, in whole and not in part, into the Conversion Shares at the option of the Holder. The Holder shall effect conversion by delivering to Borrower written notice of Conversion (the “Notice of Conversion”) which Notice of Conversion shall be accompanied by this Note. The Conversion Date shall be the date that such Notice of Conversion and this Note is deemed delivered hereunder.
ii. At Holder’s Option. At the option of the Holder at any time after March 31, 2016 if on such date Borrower is not then subject to a legally binding obligation to sell substantially all of its assets to Avant Diagnostics, Inc., this Note shall be convertible, in whole and not in part, into the Conversion Shares based on the then applicable Conversion Price. The Borrower shall effect conversion by delivering to Holder written a Notice of Conversion which Notice of Conversion. Upon delivery of this shall this Note to Borrower, Borrower shall issue to the Holder the Conversion Shares. The Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder
b) Mandatory Conversion. This Note shall automatically convert into the Conversion Shares on the earliest of the date upon the occurrence of a Change of Control Event.
c) Mechanics of Conversion.
i. Conversion Shares Issuable Upon Conversion. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Note and accrued but unpaid interest thereon to be converted by (y) the Conversion Price.
ii. Delivery of Certificate Upon Conversion. Not later than five Trading Days after the Conversion Date (the “Share Delivery Date”), Borrower shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the Conversion Shares.
iii. Reservation of Shares Issuable Upon Conversion. Borrower covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder, not less than one hundred (100%) percent of the aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the then outstanding principal amount plus accrued interest of this Note at the Conversion Price (as adjusted from time to time). Borrower covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.
iv. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, Borrower shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.
v. Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, Borrower shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the original Holder of this Note and Borrower shall not be required to issue or deliver such certificates to such other person unless or until such other person shall have paid to Borrower the amount of such tax or shall have established to the satisfaction of Borrower that such tax has been paid.
Section 5. Certain Adjustments.
a) Stock Dividends and Stock Splits. If Borrower, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock o, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of Borrower, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of Borrower) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b) Subsequent Equity Sales. If the Borrower or any Subsidiary thereof, as applicable, at any time while this Note is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents other than pursuant to an Exempt Issuance (as defined below), at an effective price per share less than the Conversion Price then in effect (such lower price, the “Base Share Price” and such issuances (excluding any an Exempt Issuance),collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation of each Dilutive Issuance the Conversion Price shall be reduced and only reduced as set forth below and the number of Conversion Shares issuable hereunder shall be increased such that the aggregate Conversion Price payable hereunder, after taking into account the decrease in the Conversion Price, shall be equal to the aggregate Conversion Price prior to such adjustment.
(i) If the Dilutive Issuance, together with all other Dilutive Issuances, is for consideration of less than One Million Dollars ($1,000,000), the Conversion Price shall be adjusted to the product of (w) the sum of Six Million Dollars ($6,000,000) plus the consideration received by the Borrower with respect to such Dilutive Issuances of Common Stock and that would be received by the Borrower upon the exercise of any Common Stock Equivalents divided (x) by the number of shares of Common Stock outstanding after the issuance of shares of Common Stock pursuant to a Dilutive Issuance and that would be outstanding upon the exercise of Common Stock Equivalents that constitute a Dilutive Issuance.
(ii) If the Dilutive Issuance, together with all other Dilutive Issuances, is for consideration of One Million Dollars ($1,000,000) or more, the Conversion Price shall be adjusted to equal the Base Share Price.
(iii) If the Dilutive Issuance is Common Stock that is issued to a creditor of the Borrower or any Subsidiary who has claims against the Borrower or any Subsidiary as of the date hereof in full or partial satisfaction of the claims of such creditor, the Base Share Price shall be the value of such shares of Common Stock as agreed upon by the Borrower or any Subsidiary and such creditor and the consideration received by the Borrower with respect to such Dilutive Issuance shall be (y) the number of shares of Common Stock so issued multiplied by (z) such agreed upon Base Share Price.
b) The Borrower shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Borrower provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Conversion Price as adjusted pursuant to this Section 5(b) regardless of whether the Holder accurately refers to the Conversion Price as adjusted pursuant to this Section 5(b) in the Notice of Conversion. Notwithstanding the foregoing, no adjustments shall be made to the Conversion Price or the number of Conversion Shares to be issued under this Section 5(b) in respect of an Exempt Issuance. “Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Borrower pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors of the Borrower or a majority of the members of a committee of non-employee directors of the Borrower established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Notes issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Note, provided that such securities have not been amended since the date of this Note to increase the number of such securities or to decrease the Conversion Price, exchange price or conversion price of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Borrower, provided that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating entity or an owner of an asset in a business synergistic with the business of the Borrower and shall provide to the Borrower additional benefits in addition to the investment of funds, but shall not include a transaction in which the Borrower is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.
c) Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of Borrower) issued and outstanding.
d) Notice to the Holder. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, Borrower shall promptly deliver to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
Section 6. Prepayment. The Borrower shall have the option of paying the principal sum of this Note to Holder in advance in full or in part at any time and from time to time without premium or penalty; provided, however, that together with such payment in full the Borrower shall pay to the Holder all interest and all other amounts owing pursuant to this Note and remaining unpaid.
Section 7. Events of Default.
a) “Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
i. any default in the payment of the principal amount or interest and other amounts owing under this Note, as and when the same shall become due and payable (whether by acceleration or otherwise) which default is not cured within ten (10) Trading Days; or
ii. the Borrower or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event.
b) Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, interests and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash. Commencing on the Maturity Date and also five (5) days after the occurrence of any Event of Default interest on this Note shall accrue at an interest rate of 10%. Upon the payment in full, the Holder shall promptly surrender this Note to or as directed by Borrower. In connection with such acceleration described herein, the Holder need not provide, and Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receives full payment pursuant to this Section 7(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
Section 8. Borrower’s Representations. The Borrower is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full power and authority to own, lease, license and use its properties and assets and to carry out the business in which it proposes to engage. The Borrower has the requisite corporate power and authority to execute, deliver and perform its obligations under this Note and to issue this Note. All necessary proceedings of the Borrower have been duly taken to authorize the execution, delivery, and performance of this Note. When this Note is executed and delivered by the Borrower, it will constitute the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.
Section 9. Miscellaneous.
a) Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, facsimile or email, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery, delivery by email or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, 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: (i) if to Borrower, to: Theranostics Health, Inc., Attn: Kevin Quinn, member of the Board of Directors, ____________, __________ MD _____, Facsimile (___) ___-____, email: firstname.lastname@example.org, and (ii) if to the Holder, as indicated in Exhibit A.
b) Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of Borrower, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of Borrower.
c) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, Borrower shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to Borrower.
d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by the Note (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. Each party shall be responsible for its own legal fees and costs in the event any party shall commence an action or proceeding to enforce any provisions of this Note.
e) Waiver. Any waiver by Borrower or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of Borrower or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by Borrower or the Holder must be in writing.
f) Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.
g) Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.
h) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
i) Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
j) Amendment. Unless otherwise provided for hereunder, this Note may not be modified or amended or the provisions hereof waived without the written consent of Borrower and the Holder.
k) Facsimile Signature. In the event that the Borrower’s signature is delivered by facsimile transmission, PDF, electronic signature or other similar electronic means, such signature shall create a valid and binding obligation of the Borrower with the same force and effect as if such signature page were an original thereof.
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer as of the 29th day of February, 2016.
|THERANOSTICS HEALTH, INC.|
Investment Representations for Accredited Investor
The Holder hereby acknowledges, agrees with and represents, warrants and covenants to the Borrower, as follows:
(a) Accredited Investor. The Holder is an “accredited investor” as that term is defined in Regulation D promulgated under the Securities Act by virtual of being (initial all applicable responses below):
|[__]||an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with his or her spouse, presently exceeds $1,000,000. For purposes of calculating net worth under this paragraph, (i) the primary residence shall not be included as an asset, (ii) to the extent that the indebtedness that is secured by the primary residence is in excess of the fair market value of the primary residence, the excess amount shall be included as a liability, and (iii) if the amount of outstanding indebtedness that is secured by the primary residence exceeds the amount outstanding 60 days prior to the execution of this Subscription Agreement, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability.|
|[__]||an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year|
|[__]||a bank as defined in section 3(a)(2) of the Act, or a savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; an insurance company as defined in section 2(a)(13) of the Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.|
|[__]||a private business development company as defined in section 202(a)(22) of the Investment Advisors Act of 1940.|
|[_X_]||a corporation, partnership, Massachusetts business trust, or nonprofit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the securities being offered and with total assets in excess of $5,000,000.|
|[__]||a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Note, whose purchase is directed by a “sophisticated investor” as defined in Regulation 506(b)(2)(ii) under the Act.|
|[__]||an entity in which all of the equity owners are “accredited investors” within one or more of the above categories.|
(b) Experience. The Holder is sufficiently experienced in financial and business matters to be capable of evaluating the merits and risks of its investments, and to make an informed decision relating thereto, and to protect its own interests in connection with the purchase of the Note.
(c) Own Account. The Holder is purchasing the Note as principal for its own account, for investment purposes only and not with an intent or view towards further sale or distribution (as such term is used in Section 2(11) of the Securities Act) thereof, and has not pre-arranged any sale with any other person and has no plans to enter into any such agreement or arrangement.
(d) Exemption. The Holder understands that the offer and sale of the Note is not being registered under the Securities Act or any state securities laws and is intended to be exempt from registration provided by Rule 506 promulgated under Regulation D and/or Section 4(a)(2) of the Securities Act;
(e) Importance of Representations. The Holder understands that the Note are being offered and sold to it in reliance on an exemption from the registration requirements of the Securities Act, and that the Borrower is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Holder set forth herein in order to determine the applicability of such safe harbor and the suitability of the Holder to acquire the Note;
(f) No Registration. The Note have not been registered under the Securities Act or any state securities laws and may not be transferred, sold, assigned, hypothecated or otherwise disposed of unless registered under the Securities Act and applicable state securities laws or unless an exemption from such registration is available (including, without limitation, under Rule 144 of the Securities Act, as such rule may be amended, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect (“Rule 144”)). The Holder represents and warrants and hereby agrees that all offers and sales of the Note and the Note shall be made only pursuant to such registration or to such exemption from registration.
(g) Risk. The Holder acknowledges that the purchase of the Note involves a high degree of risk, is aware of the risks and further acknowledges that it can bear the economic risk of the Note, including the total loss of its investment. The Holder has adequate means of providing for its financial needs and foreseeable contingencies and has no need for liquidity of its investment in the Note for an indefinite period of time.
(h) Borrower Information. The Holder and its representatives have received all the documents requested by the Holder, have carefully reviewed them and understand the information contained therein.
(i) Independent Investigation. The Holder, in making the decision to purchase the Note subscribed for, has relied upon independent investigations made by it and its representatives, if any, and the Holder and such representatives, if any, have prior to any sale to it been given access and the opportunity to examine all material contracts and documents relating to this investment and an opportunity to ask questions of, and to receive answers from, the Borrower or any person acting on its behalf concerning the terms and conditions of this investment. The Holder and its advisors, if any, have been furnished with access to all materials relating to the business, finances and operation of the Borrower and materials relating to the offer and sale of the Note which have been requested. The Holder and its advisors, if any, have received complete and satisfactory answers to any such inquiries.
(j) No Recommendation or Endorsement. The Holder understands that no federal, state or other regulatory authority has passed on or made any recommendation or endorsement of the Note. Any representation to the contrary is a criminal offense.
(k) No Representation. In evaluating the suitability of an investment in the Borrower, the Holder has not relied upon any representation or information (oral or written) other than as stated in the Note.
(l) No Tax, Legal, Etc. Advice. The Holder is not relying on the Borrower or any of its employees or agents with respect to the legal, tax, economic and related considerations of an investment in the Note, and the Holder has relied on the advice of, or has consulted with, only its own advisers.
(m) No Advertisement or General Solicitation. Holder acknowledges that it is not aware of, is in no way relying on, and did not become aware of the offering of the Note through or as a result of any form of general solicitation or general advertising, including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio, or through any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
|Amarantus Bioscience Holdings, Inc.|
|Gerald Commissiong, President & CEO|
Address: 655 Montgomery Street
San Francisco, CA 94111
Email Address: email@example.com
Tax ID: ____________________________