Contract
Exhibit 6.3
THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. IN ADDITION TO OTHER RESTRICTIONS ON TRANSFER SET FORTH HEREIN, THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
CONVERTIBLE PROMISSORY NOTE
| $[___] | [ISSUE DATE] |
FOR VALUE RECEIVED, Aeris Biotechnologies, Inc., a Delaware corporation (the “Company”), promises to pay to [_____] (“Investor”), or its registered assigns, in lawful money of the United States of America, the principal sum of [_____] dollars ($[___]), or such lesser amount as shall equal the outstanding principal amount hereof, together with interest from the date of this Convertible Promissory Note (this “Note”) on the unpaid principal balance at a rate equal to [__]% per annum. Unless converted into equity securities pursuant to Section 5 hereof, all unpaid principal, together with any then unpaid and accrued interest and other amounts payable hereunder, shall be due and payable on the earlier of (i) [DATE] (the “Maturity Date”) or (ii) when, upon the occurrence and during the continuance of an Event of Default, such amounts are declared due and payable by Investor or made automatically due and payable, in each case, in accordance with the terms hereof.
The following is a statement of the rights of Investor and the conditions to which this Note is subject, and to which Investor, by the acceptance of this Note, agrees:
1. Payments.
(a) Interest. Unless converted into equity securities pursuant to Section 5 hereof, accrued interest on this Note shall be payable at maturity.
(b) Voluntary Prepayment. This Note may not be prepaid without the written consent of the Investor.
2. Events of Default. The occurrence of any of the following shall constitute an “Event of Default” under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any principal payment on the due date hereunder or (ii) any interest payment or other payment required under the terms of this Note on the date due and such payment shall not have been made within ten (10) business days of the Company’s receipt of written notice to the Company of such failure to pay; or
(b) Voluntary Bankruptcy or Insolvency Proceedings. The Company shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its or any of its creditors, (iii) be dissolved or liquidated, (iv) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it or (v) take any action for the purpose of effecting any of the foregoing; or
(c) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company, or of all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or any of its subsidiaries, if any, or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within 90 days of commencement.
3. Rights of Investor upon Default. Upon the occurrence of an Event of Default described in Section 2(a) and at any time thereafter during the continuance of such Event of Default, Investor may by written notice to the Company, declare all outstanding Obligations payable by the Company hereunder to be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding. Upon the occurrence of any Event of Default described in Sections 2(b) and 2(c), immediately and without notice, all outstanding Obligations payable by the Company hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or to the contrary notwithstanding. In addition to the foregoing remedies, upon the occurrence and during the continuance of any Event of Default, Investor may exercise any other right, power or remedy permitted to it by law, either by suit in equity or by action at law, or both.
4. Security. This Note is a general unsecured obligation of the Company.
5. Conversion Upon Qualified Financing.
(a) Automatic Conversion Upon a Qualified Financing. If a Qualified Financing occurs prior to the Maturity Date or an earlier conversion of this Note in accordance with the terms hereof, then the entire outstanding principal amount of this Note and all accrued and unpaid interest on this Note shall automatically convert into Qualified Shares issued in such Qualified Financing at the Conversion Price.
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(b) Conversion Procedure. Upon the conversion of this Note, Investor shall execute and deliver to the Company all transaction documents entered into by other purchasers participating in the Qualified Financing. Investor shall also deliver the original of this Note (or a notice to the effect that the original Note has been lost, stolen or destroyed and an agreement acceptable to the Company whereby the holder agrees to indemnify the Company from any loss incurred by it in connection with this Note) at the closing of the Qualified Financing for cancellation; provided, however, that upon the closing of the Qualified Financing, this Note shall be deemed converted and of no further force and effect, whether or not it is delivered for cancellation as set forth in this sentence. The Company shall, as soon as practicable thereafter, at its expense issue and deliver to such Investor a certificate or certificates for the number of Qualified Shares to which Investor shall be entitled upon such conversion.
(c) Fractional Shares; Interest; Effect of Conversion. No fractional securities shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional securities to the Investor upon the conversion of this Note, the Company shall pay to Investor an amount equal to the product obtained by multiplying the Conversion Price by the fraction of a unit of the security not issued pursuant to the previous sentence. In addition, to the extent not converted into Qualified Shares, the Company shall pay to Investor any interest accrued on the amount converted and on the amount to be paid to the Company pursuant to the previous sentence. Upon conversion of this Note in full and the payment of the amounts specified in this paragraph, the Company shall be forever released from all its obligations and liabilities under this Note and this Note shall be deemed of no further force or effect, whether or not the original of this Note has been delivered to the Company for cancellation.
6. Definitions. As used in this Note, the following capitalized terms have the following meanings:
“Applicable Discount” shall mean 50%.
“Conversion Price” shall mean the share price per share determined by multiplying (i) the Applicable Discount by (ii) the per share price of the Qualified Shares sold in the Qualified Financing.
“Event of Default” has the meaning given in Section 2 hereof.
“Investor” shall mean the Person specified in the introductory paragraph of this Note or any Person who shall at the time be the registered holder of this Note.
“Obligations” shall mean and include all loans, advances, debts, liabilities and obligations, howsoever arising, owed by the Company to Investor of every kind and description, now existing or hereafter arising under or pursuant to the terms of this Note, including, all interest, fees, charges, expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by the Company hereunder and thereunder, in each case, whether direct or indirect, absolute or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under Title 11 of the United States Code (11 U. S. C. Section 101 et seq.), as amended from time to time (including post-petition interest) and whether or not allowed or allowable as a claim in any such proceeding.
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“Person” shall mean and include an individual, a partnership, a corporation (including a business trust), a joint stock company, a limited liability company, an unincorporated association, a joint venture or other entity or a governmental authority.
“Qualified Financing” is a transaction or series of transactions completed after the date hereof pursuant to which the Company issues and sells Qualified Shares for an aggregate amount of at least $[___] (excluding any and all indebtedness that is converted into equity securities, or otherwise cancelled in consideration for the issuance of such equity securities, including conversion of the Note) with the principal purpose of raising capital.
“Qualified Shares” shall mean a new or existing class of shares of capital stock of the Company (whether common, preferred or otherwise) designated or to be designated by the Company, offered, issued and sold in a Qualified Financing.
7. Miscellaneous.
(a) Successors and Assigns; Transfer of this Note or Securities Issuable on Conversion Hereof.
(i) Subject to the restrictions on transfer described in this Section 7(a), the rights and obligations of the Company and Investor shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties hereto.
(ii) Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, in whole or in part, by the Company without the prior written consent of the Investor.
(b) Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the Company and the Investor.
(c) Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and shall be faxed, mailed or delivered to each party as follows: (i) if to Investor, at such Investor’s address or facsimile number set forth in the Company’s records, or at such other address as such Investor shall have furnished to the Company in writing, or (ii) if to the Company, at 0000 Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx, XX 00000, or at such other address as the Company shall have furnished to Investor. All such notices and communications will be deemed effectively given the earlier of (i) when received if delivered personally, (ii) one business day after being deposited with an overnight courier service of recognized standing or (iii) four days after being deposited in the U.S. mail, first class with postage prepaid.
(d) Payment. Unless converted into the Company’s equity securities pursuant to the terms hereof, payment shall be made in lawful tender of the United States.
(e) Usury. In the event any interest is paid on this Note which is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.
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(f) Waivers. The Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.
(g) Governing Law; Jurisdiction. This Note and all actions arising out of or in connection with this Note shall be governed by, and construed in accordance with, the laws of the State of Texas applicable to contracts made and to be performed wholly within said State, without giving effect to the conflict of laws principles thereof. The Company and the Investor each irrevocably and unconditionally submits to the exclusive jurisdiction of the United States District Court for the District including Plano, Texas or, if such court will not accept jurisdiction, any court of competent civil jurisdiction sitting in Collin County, Texas. In any action, suit or other proceeding, the Company and the Investor each hereto irrevocably and unconditionally waives and agrees not to assert by way of motion, as a defense or otherwise any claims that it is not subject to the jurisdiction of the above courts, that such action or suit is brought in an inconvenient forum or that the venue of such action, suit or other proceeding is improper.
(h) WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE INVESTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH OF THE COMPANY AND THE INVESTOR EACH AGREES THAT THE COMPANY OR THE INVESTOR MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT BETWEEN THE COMPANY AND THE INVESTOR IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY ACTION OR PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS NOTE SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
(i) Counterparts. This Note may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Note.
(j) No Rights as Member or Shareholder. This Note does not entitle the Investor to any voting rights or other rights as a shareholder of the Company prior to the conversion hereof.
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The Company has caused this Note to be issued as of the date first written above.
| Aeris Biotechnologies, Inc. | |||
| By: | |||
| Name: | |||
| Title: | |||
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