Contract
EXHIBIT 10.38
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.
THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
Original Issue Date: June 20, 2016
Principal Amount: $551,600.00
Original Conversion Price (subject to adjustment herein): $0.14
SECURED CONVERTIBLE NOTE
DUE JUNE 20, 2019
THIS CONVERTIBLE NOTE is one of a series of duly authorized and validly issued
Notes of EMERALD MEDICAL APPLICATIONS CORP., a Delaware corporation, (the
"Borrower"), having its principal place of business at c/o Law Office of Xxxxxxx
Xxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, fax: 000-000-0000, due June 20,
2019(this note, the "Note" and, collectively with the other notes of such
series, the "Notes").
FOR VALUE RECEIVED, Borrower promises to pay to ALPHA CAPITAL ANSTALT or its
registered assigns (the "Holder"), with an address at: Xxxxxxxxxxx 00, 0000
Xxxxx, Xxxxxxxxxxxxx, Xxx: 000-000-0000000, or shall have paid pursuant to the
terms hereunder, the principal sum of Five Hundred Fifty One Thousand Six
Hundred Dollars ($551,600.00) on June 20, 2019 (the "Maturity Date") or such
earlier date as this Note is required or permitted to be repaid or such later
date if extended by the Holder 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.
The Holder of this Note has been granted a security interest in assets of
Xxxxxxxx.
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, (a) capitalized terms not otherwise
defined herein shall have the meanings set forth in the Purchase Agreement and
(b) the following terms shall have the following meanings:
"Additional Interest" shall have the meaning set forth in Section 4(a).
"Alternate Consideration" shall have the meaning set forth in Section 5(d).
"Asset Disposition" means the sale, transfer, lease, license, contribution or
other conveyance of assets of Borrower in one or more dispositions not in the
ordinary course of business that results in net cash proceeds to Borrower of
$10,000 or more, in the aggregate.
"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, (e) Borrower or any Subsidiary thereof
makes a general assignment for the benefit of creditors, (f) Borrower or any
Subsidiary thereof calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts or (g) Borrower or any
Subsidiary thereof, by any act or failure to act, expressly indicates its
consent to, approval of or acquiescence in any of the foregoing or takes any
corporate or other action for the purpose of effecting any of the foregoing.
"Beneficial Ownership Limitation" shall have the meaning set forth in Section
4(d).
"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 required by law or other governmental
action to close.
"Buy-In" shall have the meaning set forth in Section 4(c)(v).
"Change of Control Transaction" means, other than by means of conversion or
exercise of the Notes and the Securities issued together with the Notes, the
occurrence after the date hereof of any of (a) an acquisition after the date
hereof by an individual or legal entity or "group" (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of Borrower, by contract
or otherwise) of in excess of 50% of the voting securities of Borrower, (b)
Borrower merges into or consolidates with any other Person, or any Person merges
into or consolidates with Borrower and, after giving effect to such transaction,
the stockholders of Borrower immediately prior to such transaction own less than
50% of the aggregate voting power of Borrower or the successor entity of such
transaction, (c) Borrower sells or transfers all or substantially all of its
assets to another Person and the stockholders of Borrower immediately prior to
such transaction own less than 50% of the aggregate voting power of the
acquiring entity immediately after the transaction, (d) a replacement at one
time or within a three year period of more than one-half of the members of the
Board of Directors which is not approved by a majority of those individuals who
are members of the Board of Directors on the Original Issue Date (or by those
individuals who are serving as members of the Board of Directors on any date
whose nomination to the Board of Directors was approved by a majority of the
members of the Board of Directors who are members on the date hereof), or (e)
the execution by Borrower of an agreement to which Xxxxxxxx is a party or by
which it is bound, providing for any of the events set forth in clauses (a)
through (d) above.
"Closing Price" means on any particular date (a) the last reported closing bid
price per share of Common Stock on such date on the Trading Market (as reported
by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (b) if there is no such
price on such date, then the closing bid price on the Trading Market on the date
nearest preceding such date (as reported by Bloomberg L.P. at 4:15 p.m. (New
York City time)), or (c) if the Common Stock is not then listed or quoted on a
Trading Market and if prices for the Common Stock are then reported in the "pink
sheets" published by OTC Markets Group, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (d) if the shares of Common
Stock are not then publicly traded the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the
Holder and reasonably acceptable to Borrower, the fees and expenses of which
shall be paid by Borrower.
"Conversion" shall have the meaning ascribed to such term in Section 4.
"Conversion Date" shall have the meaning set forth in Section 4(a).
"Conversion Price" shall have the meaning set forth in Section 4(b).
"Conversion Shares" means, collectively, the shares of Common Stock issuable
upon conversion of this Note in accordance with the terms hereof.
"Dilutive Issuance" shall have the meaning set forth in Section 5(e).
"Equity Conditions" means, during the period in question, (a) Borrower shall
have duly honored all conversions scheduled to occur or occurring by virtue of
one or more Notices of Conversion of the applicable Holder on or prior to the
dates so requested or required, if any, (b) Borrower shall have paid all
liquidated damages and other amounts owing to the applicable Holder in respect
of this Note and the other Transaction Documents, (c) there is an effective
registration statement pursuant to which the Holders are permitted to utilize
the prospectus thereunder to resell all of the Conversion Shares and Warrant
Shares issuable pursuant to the Transaction Documents (and Xxxxxxxx believes, in
good faith, that such effectiveness will continue uninterrupted for the
foreseeable future), and Company counsel has delivered to the Company's transfer
agent and Holder a standing, written unqualified opinion that resales may then
be made by the Holder of all of the Holders Conversion Shares and Warrant Shares
pursuant to such effective registration statement, (d) the Common Stock is
listed or traded on a Trading Market, (e) there is a sufficient number of
authorized, but unissued and otherwise unreserved, shares of Common Stock for
the issuance of all of the shares then issuable pursuant to the Transaction
Documents, (f) an Event of Default has not occurred, whether or not such Event
of Default has been cured, (g) there is no existing event which, with the
passage of time or the giving of notice, would constitute an Event of Default,
(h) the issuance of the shares in question to the applicable Holder would not
exceed the Beneficial Ownership Limitation, (i) there has been no public
announcement of a pending or proposed Fundamental Transaction or Change of
Control Transaction that has not been consummated, and (j) the applicable Holder
is not in possession of any information provided by Borrower that constitutes,
or may constitute, material non-public information.
"Event of Default" shall have the meaning set forth in Section 8(a).
"Fundamental Transaction" shall have the meaning set forth in Section 5(d).
"Interest Payment Date" shall have the meaning set forth in Section 2(a).
"Interest Share Amount" shall have the meaning set forth in Section 2(a).
"Mandatory Default Amount" means the sum of (a) the greater of (i) the
outstanding principal amount of this Note divided by the Conversion Price on the
date the Mandatory Default Amount is either (A) demanded (if demand or notice is
required to create an Event of Default) or otherwise due or (B) paid in full,
whichever has a lower Conversion Price, multiplied by the VWAP on the date the
Mandatory Default Amount is either (x) demanded, (y) due, or (z) paid in full,
whichever is highest, or (ii) 120% of the outstanding principal amount of this
Note plus (b) all other amounts, costs, expenses and liquidated damages due in
respect of this Note.
"New York Courts" shall have the meaning set forth in Section 9(d).
"Note Register" shall have the meaning set forth in Section 3(c).
"Notice of Conversion" shall have the meaning set forth in Section 4(a).
"Offer Notice" shall have the meaning set forth in Section 6.
"Original Issue Date" means the date of the first issuance of the Notes,
regardless of any transfers of any Note and regardless of the number of
instruments which may be issued to evidence such Notes.
"Other Holder" means a holder of one or more Other Notes (collectively, "Other
Holders").
"Other Notes" means Notes nearly identical to this Note issued to other Holders
pursuant to the Purchase Agreement.
"Permitted Indebtedness" means (a) any liabilities for borrowed money or amounts
owed not in excess of $100,000 in the aggregate (other than trade accounts
payable and insurance premium financing incurred in the ordinary course of
business which shall be deemed Permitted Indebtedness), (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
consolidated balance sheet (or the notes thereto) not affecting more than
$100,000 in the aggregate, except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; (c) the present value of any lease payments not in excess of
$100,000 due under leases required to be capitalized in accordance with GAAP;
and (d) any liabilities for borrowed money that are junior to this Note pursuant
to an intercreditor agreement acceptable to Holder and the holders of which are
not granted any security interest.
"Permitted Lien" means the individual and collective reference to the following:
(a) Liens for taxes, assessments and other governmental charges or levies not
yet due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of Borrower) have been
established in accordance with GAAP, (b) Liens imposed by law which were
incurred in the ordinary course of Borrower's business, such as carriers',
warehousemen's and mechanics' Liens, statutory landlords' Liens, and other
similar Liens arising in the ordinary course of Borrower's business, and which
(x) do not individually or in the aggregate materially detract from the value of
such property or assets or materially impair the use thereof in the operation of
the business of Borrower and its consolidated Subsidiaries or (y) are being
contested in good faith by appropriate proceedings, which proceedings have the
effect of preventing for the foreseeable future the forfeiture or sale of the
property or asset subject to such Lien, and (c) Liens in connection with
Permitted Indebtedness under clauses (a) and (b) thereunder, and Liens incurred
in connection with Permitted Indebtedness under clause (c) thereunder, provided
that such Liens are not secured by assets of Borrower or its Subsidiaries other
than the assets so acquired or leased.
"Purchase Agreement" means the Securities Purchase Agreement, dated as of June
20, 2016 among Borrower and the original Holders, as amended, modified or
supplemented from time to time in accordance with its terms and the Settlement
Agreement dated as of June [RC], 2017 among Borrower and the original Holders.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"Share Delivery Date" shall have the meaning set forth in Section 4(c)(ii).
"Successor Entity" shall have the meaning set forth in Section 5(d).
"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 OTC Bulletin Board, the OTCQB,
or the OTCQX (or any successors to any of the foregoing).
"VWAP" means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if any of the NASDAQ markets or exchanges is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is
not then listed or quoted for trading on the OTC Bulletin Board and if prices
for the Common Stock are then reported on the OTCQX, OTCQB or OTC Pink
Marketplace maintained by the OTC Markets Group, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the volume weighted
average price of the Common Stock on the first such facility (or a similar
organization or agency succeeding to its functions of reporting prices), or
(d) in all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Purchasers
of a majority in interest of the Securities then outstanding and reasonably
acceptable to Borrower, the fees and expenses of which shall be paid by
Borrower.
Section 2. Interest.
a) Interest in Cash or in Kind. Holders shall be entitled to receive, and
Borrower shall pay, cumulative interest on the outstanding principal amount of
this Note compounded monthly at the annual rate of eight percent (8%) (as
subject to increase as set forth in this Note) from the Original Issue Date
through the Maturity Date. Interest shall be payable on each six month
anniversary of the Original Issue Date and on the Maturity Date when all amounts
outstanding in connection with this Note shall be due and payable (each an
"Interest Payment Date") (if any Interest Payment Date is not a Trading Day, the
applicable payment shall be due on the next succeeding Trading Day) in cash or
at the election of the Borrower, such interest may be paid in duly authorized,
validly issued, fully paid and non-assessable shares of Common Stock, or a
combination thereof (the amount to be paid in shares of Common Stock, the "Interest Share Amount"). The Interest Share Amount will be determined by
dividing the amount of interest on the subject Interest Payment Date by an
amount equal to 80% of the average of the daily VWAPs for the five Trading Days
preceding the relevant Interest Payment Date. The Holders shall have the same
rights and remedies with respect to the delivery of any such shares as if such
shares were being issued pursuant to Section 4. Borrower may not pay interest by
delivery of an Interest Share Amount without the consent of the Holder in the
event that the Equity Conditions are not in effect on each day from sixty (60)
Trading Days prior to the relevant Interest Payment Date through the date the
Interest Share Amount is delivered to the Holder.
b) Payment Grace Period. Except as set forth herein, the Borrower shall not have
any grace period to pay any monetary amounts due under this Note.
c) Conversion Privileges. The Conversion Rights set forth in Section 4 shall
remain in full force and effect immediately from the date hereof and until the
Note is paid in full regardless of the occurrence of an Event of Default. This
Note shall be payable in full on the Maturity Date, unless previously converted
into Common Stock in accordance with Section 4 hereof.
d) Application of Payments. Interest on this Note shall be calculated on the
basis of a 360-day year and the actual number of days elapsed. Payments made in
connection with this Note shall be applied first to amounts due hereunder other
than principal and interest, thereafter to interest and finally to principal.
e) Pari Passu. Except as otherwise set forth herein, all payments made on this
Note and the Other Notes and all actions taken by the Borrower with respect to
this Note and the Other Notes, including but not limited to Optional Redemption,
shall be made and taken pari passu with respect to this Note and the Other
Notes. Notwithstanding anything to the contrary contained herein or in the
Transaction Documents, it shall not be considered non-pari passu for a Holder or
Other Holder to elect to receive interest paid in shares of Common Stock or for
the Borrower to actually pay interest in shares of Common Stock to such electing
Holder or Other Holder, nor for a Holder of a Note or Other Note to accept a
prepayment provided a prepayment offer was made to the Holder and holders of
Other Notes on a pari passu basis.
f) Xxxxxx and Place of Payment. Principal and interest on this Note and other
payments in connection with this Note shall be payable at the Holder'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 Xxxxxx in this Note, Borrower shall instead make
its payment pursuant to the assignee's instructions upon receipt of written
notice thereof. Except as set forth herein, this Note may not be prepaid or
mandatorily converted without the consent of the Holder.
g) Extension of Maturity Date. The Holder of this Note, by written notice given
at any time prior to the then in effect Maturity Date may at such Holder's
discretion extend the Maturity Date and Interest Payment Date one or more times,
provided the latest such extended date is not later than eighteen (18) months
after the Original Issue Date.
Section 3. Registration of Transfers and Exchanges.
a) Different Denominations. This Note is exchangeable for an equal
aggregate principal amount of Notes of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be payable
for such registration of transfer or exchange.
b) Investment Representations. This Note has been issued subject to
certain investment representations of the original Holder set forth in the
Purchase Agreement and may be transferred or exchanged only in compliance with
the Purchase Agreement and applicable federal and state securities laws and
regulations.
c) Reliance on Note Register. Prior to due presentment for transfer to
Borrower of this Note, Borrower and any agent of Borrower may treat the Person
in whose name this Note is duly registered on the Note Register as the owner
hereof for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Note is overdue, and neither Borrower nor any such
agent shall be affected by notice to the contrary.
Section 4. Conversion.
a) Voluntary Conversion. At any time after the Original Issue Date
until this Note is no longer outstanding, this Note shall be convertible, in
whole or in part, into shares of Common Stock at the option of the Holder, at
any time and from time to time (subject to the conversion limitations set forth
in Section 4(d) hereof). The Holder shall effect conversions by delivering to
Borrower a Notice of Conversion, the form of which is attached hereto as Annex A
(each, a "Notice of Conversion"), specifying therein the principal amount of
this Note and accrued interest, if any, to be converted at the election of the
Holder and the date on which such conversion shall be effected (such date, the "Conversion Date"). If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the date that such Notice of Conversion
is deemed delivered hereunder. The interest on the Principal Xxxxxx converted
prior to the Maturity Date shall be automatically increased by an amount equal
to One Hundred and Eight Dollars ($108) for each One Thousand Dollars ($1,000)
of principal amount being converted (prorated for lesser amounts of Principal
Amount) less the amount of interest actually paid on such Principal Amount
("Additional Interest"). To effect conversions hereunder, the Holder shall not
be required to physically surrender this Note to Borrower unless the entire
principal amount of this Note has been so converted. Conversions of principal
hereunder shall have the effect of lowering the outstanding principal amount of
this Note in an amount equal to the applicable conversion. The Holder and
Borrower shall maintain records showing the principal amount(s) converted and
the date of such conversion(s). Borrower may deliver an objection to any Notice
of Conversion within one (1) Business Day of delivery of such Notice of
Conversion. In the event of any dispute or discrepancy, the records of the
Holder shall be controlling and determinative in the absence of manifest error.
The Holder, and any assignee by acceptance of this Note, acknowledge and agree
that, by reason of the provisions of this paragraph, following conversion of a
portion of this Note, the unpaid and unconverted principal amount of this Note
may be less than the amount stated on the face hereof.
b) Conversion Price. The conversion price for the principal and
interest in connection with voluntary conversions by the Holder shall be the
lesser of $0.14 subject to adjustment as described herein ("Conversion Price").
c) Mechanics of Conversion.
i. Conversion Shares Issuable Upon Conversion of Principal Amount. The
number of Conversion Shares issuable upon a conversion hereunder shall be
determined by the quotient obtained by dividing (x) the outstanding principal
amount of this Note to be converted plus interest, if any, elected by the Holder
to be converted by (y) the Conversion Price.
ii. Delivery of Certificate Upon Conversion. Not later than five (5)
Trading Days after each 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 which, on or after the earlier
of (i) the six month anniversary of the Original Issue Date or (ii) the
Effective Date, shall be free of restrictive legends and trading restrictions
(other than those which may then be required by the Purchase Agreement)
representing the number of Conversion Shares being acquired upon the conversion
of this Note. On or after the earlier of (i) the six-month anniversary of the
Original Issue Date or (ii) the Effective Date, Borrower shall use its
commercially reasonable efforts to deliver any certificate or certificates
required to be delivered by Borrower under this Section 4(c) electronically
through the Depository Trust Company or another established clearing corporation
performing similar functions.
iii. Failure to Deliver Certificates. If, in the case of any Notice of
Conversion, such certificate or certificates are not delivered to or as directed
by the applicable Holder by the Share Delivery Date, the Holder shall be
entitled to elect by written notice to Borrower at any time on or before its
receipt of such certificate or certificates, to rescind such Conversion, in
which event Borrower shall promptly return to the Holder any original Note
delivered to Borrower and the Holder shall promptly return to Borrower the
Common Stock certificates issued to such Holder pursuant to the rescinded
Conversion Notice.
iv. Obligation Absolute. Borrower's obligations to issue and deliver the
Conversion Shares upon conversion of this Note in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by
the Holder to enforce the same, any waiver or consent with respect to any
provision hereof, the recovery of any judgment against any Person or any action
to enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other Person
of any obligation to Borrower or any violation or alleged violation of law by
the Holder or any other Person, and irrespective of any other circumstance which
might otherwise limit such obligation of Borrower to the Holder in connection
with the issuance of such Conversion Shares; provided, however, that such
delivery shall not operate as a waiver by Borrower of any such action Borrower
may have against the Holder. In the event the Holder of this Note shall elect to
convert any or all of the outstanding principal amount hereof, Borrower may not
refuse conversion based on any claim that the Holder or anyone associated or
affiliated with the Holder has been engaged in any violation of law, agreement
or for any other reason, unless an injunction from a court, on notice to Holder,
restraining and or enjoining conversion of all or part of this Note shall have
been sought and obtained, and Borrower posts a surety bond for the benefit of
the Holder in the amount of 150% of the outstanding principal amount of this
Note, which is subject to the injunction, which bond shall remain in effect
until the completion of arbitration/litigation of the underlying dispute and the
proceeds of which shall be payable to the Holder to the extent it obtains
judgment. In the absence of such injunction, Borrower shall issue Conversion
Shares or, if applicable, cash, upon a properly noticed conversion. If Borrower
fails for any reason to deliver to the Holder such certificate or certificates
pursuant to Section 4(c)(ii) by the Share Delivery Date, Borrower shall pay to
the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000
of principal amount being converted, $10 per Trading Day (increasing to $20 per
Trading Day on the fifth (5th) Trading Day after such liquidated damages being
to accrue) for each Trading Day after such Share Delivery Date until such
certificates are delivered or Holder rescinds such conversion. Nothing herein
shall limit a Holder's right to pursue actual damages or declare an Event of
Default pursuant to Section 8 hereof for Borrower's failure to deliver
Conversion Shares within the period specified herein and the Holder shall have
the right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief. The exercise of any such rights shall not prohibit the Holder
from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.
v. Compensation for Buy-In on Failure to Timely Deliver Certificates
Upon Conversion. In addition to any other rights available to the Holder, if
Borrower fails for any reason to deliver to the Holder such certificate or
certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if
after such Share Delivery Date the Holder is required by its brokerage firm to
purchase (in an open market transaction or otherwise), or the Holder or Holder's
brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Conversion Shares which the Holder
was entitled to receive upon the conversion relating to such Share Delivery Date
(a "Buy-In"), then Borrower shall (A) pay in cash to the Holder (in addition to
any other remedies available to or elected by the Holder) the amount, if any, by
which (x) the Holder's total purchase price (including any brokerage
commissions) for the Common Stock so purchased exceeds (y) the product of (1)
the aggregate number of shares of Common Stock that the Holder was entitled to
receive from the conversion at issue multiplied by (2) the actual sale price at
which the sell order giving rise to such purchase obligation was executed
(including any brokerage commissions) and (B) at the option of the Holder,
either reissue (if surrendered) this Note in a principal amount equal to the
principal amount of the attempted conversion (in which case such conversion
shall be deemed rescinded) or deliver to the Holder the number of shares of
Common Stock that would have been issued if Borrower had timely complied with
its delivery requirements under Section 4(c)(ii). For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of this Note with respect to
which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000
under clause (A) of the immediately preceding sentence, Borrower shall be
required to pay the Holder $1,000. The Holder shall provide Borrower written
notice indicating the amounts payable to the Holder in respect of the Buy-In
and, upon request of Borrower, evidence of the amount of such loss. Nothing
herein shall limit a Xxxxxx's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to Xxxxxxxx's failure
to timely deliver certificates representing shares of Common Stock upon
conversion of this Note as required pursuant to the terms hereof.
vi. 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 (and the other
holders of the Notes), not less than such aggregate number of shares of the
Common Stock as shall (subject to the terms and conditions set forth in the
Purchase Agreement) be issuable (taking into account the adjustments and
restrictions of Section 5) upon the conversion of the then outstanding principal
amount of this Note and interest which has accrued and would accrue on such
principal amount, assuming such principal amount was not converted through three
years after the Original Issue Date. 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.
vii. 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.
viii. 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 Holder of this Note
so converted and Borrower shall not be required to issue or deliver such
certificates unless or until the Person or Persons requesting the issuance
thereof shall have paid to Borrower the amount of such tax or shall have
established to the satisfaction of Borrower that such tax has been paid.
Borrower shall pay all Transfer Agent fees required for same-day processing of
any Notice of Conversion.
d) Xxxxxx's Conversion Limitations. Borrower shall not effect any
conversion of this Note, and a Holder shall not have the right to convert any
portion of this Note, to the extent that after giving effect to the conversion
set forth on the applicable Notice of Conversion, the Holder (together with the
Holder's Affiliates, and any Persons acting as a group together with the Holder
or any of the Holder's Affiliates) would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by
the Holder and its Affiliates shall include the number of shares of Common Stock
issuable upon conversion of this Note with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which are
issuable upon (i) conversion of the remaining, unconverted principal amount of
this Note beneficially owned by the Holder or any of its Affiliates and (ii)
exercise or conversion of the unexercised or unconverted portion of any other
securities of Borrower subject to a limitation on conversion or exercise
analogous to the limitation contained herein (including, without limitation, any
other Notes or the Warrants) beneficially owned by the Holder or any of its
Affiliates. Except as set forth in the preceding sentence, for purposes of this
Section 4(d), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this Section 4(d)
applies, the determination of whether this Note is convertible (in relation to
other securities owned by the Holder together with any Affiliates) and of which
principal amount of this Note is convertible shall be in the sole discretion of
the Holder, and the submission of a Notice of Conversion shall be deemed to be
the Holder's determination of whether this Note may be converted (in relation to
other securities owned by the Holder together with any Affiliates) and which
principal amount of this Note is convertible, in each case subject to the
Beneficial Ownership Limitation. To ensure compliance with this restriction, the
Holder will be deemed to represent to Borrower each time it delivers a Notice of
Conversion that such Notice of Conversion has not violated the restrictions set
forth in this paragraph and Borrower shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a determination as to
any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 4(d), in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as stated in the most recent of the
following: (i) Borrower's most recent periodic or annual report filed with the
Commission, as the case may be, (ii) a more recent public announcement by
Borrower, or (iii) a more recent written notice by Borrower or Borrower's
transfer agent setting forth the number of shares of Common Stock outstanding.
Upon the written or oral request of a Holder, Borrower shall within two Trading
Days confirm orally and in writing to the Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of Borrower, including this Note, by the Holder or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was
reported. The "Beneficial Ownership Limitation" shall be 4.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon conversion of this Note held by
the Holder. The Holder may decrease the Beneficial Ownership Limitation at any
time and the Holder, upon not less than 61 days' prior notice to Borrower, may
increase the Beneficial Ownership Limitation provisions of this Section 4(d),
provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon conversion of this Note
held by the Holder and the Beneficial Ownership Limitation provisions of this
Section 4(d) shall continue to apply. Any such increase will not be effective
until the 61st day after such notice is delivered to Borrower. The Beneficial
Ownership Limitation provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of
this Section 4(d) to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership Limitation
contained herein or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this Note.
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 or any Common Stock Equivalents (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by Borrower upon conversion
of the Notes), (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 Rights Offerings. In addition to any adjustments pursuant
to Section 5(a) above, if at any time Borrower grants, issues or sells any
Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the "Purchase Rights"), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete conversion of this Note (without regard
to any limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder's right to participate in any
such Purchase Right would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such shares of
Common Stock as a result of such Purchase Right to such extent) and such
Purchase Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).
c) Pro Rata Distributions. During such time as this Note is outstanding, if
Borrower shall declare or make any dividend whether or not permitted, or makes
any other distribution of its assets (or rights to acquire its assets) to
holders of shares of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (a "Distribution"), at any time after the issuance of this
Note, then, in each such case, the Holder shall be entitled to participate in
such Distribution to the same extent that the Holder would have participated
therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Note (without regard to any limitations on
exercise hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the participation in
such Distribution (provided, however, to the extent that the Holder's right to
participate in any such Distribution would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the beneficial ownership
of any shares of Common Stock as a result of such Distribution to such extent)
and the portion of such Distribution shall be held in abeyance for the benefit
of the Holder until such time, if ever, as its right thereto would not result in
the Holder exceeding the Beneficial Ownership Limitation).
d) Fundamental Transaction. If, at any time while this Note is
outstanding, (i) Borrower, directly or indirectly, in one or more related
transactions effects any merger or consolidation of Borrower with or into
another Person, (ii) Borrower, directly or indirectly, effects any sale, lease,
license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions,
(iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by Borrower or another Person) is completed pursuant to which holders
of Common Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more
of the outstanding Common Stock, (iv) Borrower, directly or indirectly, in one
or more related transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property, (v) Borrower, directly or indirectly, in one or
more related transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby
such other Person acquires more than 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement or other
business combination) (each a "Fundamental Transaction"), then, upon any
subsequent conversion of this Note, the Holder shall have the right to receive,
for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction (without
regard to any limitation in Section 4(d) on the conversion of this Note), the
number of shares of Common Stock of the successor or acquiring corporation or of
Borrower, if it is the surviving corporation, and any additional consideration
(the "Alternate Consideration") receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this
Note is convertible immediately prior to such Fundamental Transaction (without
regard to any limitation in Section 4(d) on the conversion of this Note). For
purposes of any such conversion, the determination of the Conversion Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one (1) share of Common
Stock in such Fundamental Transaction, and Borrower shall apportion the
Conversion Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any conversion of this Note following such Fundamental
Transaction. Borrower shall cause any successor entity in a Fundamental
Transaction in which Borrower is not the survivor (the "Successor Entity") to
assume in writing all of the obligations of Borrower under this Note and the
other Transaction Documents (as defined in the Purchase Agreement) in accordance
with the provisions of this Section 5(d) pursuant to written agreements in form
and substance reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction and shall, at
the option of the holder of this Note, deliver to the Holder in exchange for
this Note a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Note which is convertible
for a corresponding number of shares of capital stock of such Successor Entity
(or its parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon conversion of this Note (without regard to any limitations on
the conversion of this Note) prior to such Fundamental Transaction, and with a
conversion price which applies the conversion price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such
conversion price being for the purpose of protecting the economic value of this
Note immediately prior to the consummation of such Fundamental Transaction), and
which is reasonably satisfactory in form and substance to the Holder. Upon the
occurrence of any such Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Note and the other Transaction
Documents referring to the "Company" shall refer instead to the Successor
Entity), and may exercise every right and power of Borrower and shall assume all
of the obligations of Borrower under this Note and the other Transaction
Documents with the same effect as if such Successor Entity had been named as
Borrower herein.
e) Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or
after the date hereof, the Company issues or sells, or in accordance with this
Section 5 is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by or
for the account of the Company, but excluding any Exempt Issuance issued or sold
or deemed to have been issued or sold) for a consideration per share (the "New
Issuance Price") less than a price equal to the Conversion Price in effect
immediately prior to such issue or sale or deemed issuance or sale (such
Conversion Price then in effect is referred to as the "Applicable Price") (the
foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance,
the Conversion Price then in effect shall be reduced to the New Issuance Price.
For all purposes of the foregoing (including, without limitation, determining
the adjusted Conversion Price and consideration per share under this
Section 5(e)), the following shall be applicable:
Issuance of Options. If the Company in any manner grants or sells any options
(other than options that qualify as Exempt Issuances) and the lowest price per
share for which one share of Common Stock is issuable upon the exercise of any
such option or upon conversion, exercise or exchange of any Common Stock
Equivalents issuable upon exercise of any such option is less than the
Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such option for such price per share. For purposes of this
Section 5(e)(i), the "lowest price per share for which one share of Common Stock
is issuable upon the exercise of any such options or upon conversion, exercise
or exchange of any Common Stock Equivalents issuable upon exercise of any such
option" shall be equal to (1) the lower of (x) the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock upon the granting or sale of such option, upon
exercise of such option and upon conversion, exercise or exchange of any Common
Stock Equivalent issuable upon exercise of such option and (y) the lowest
exercise price set forth in such option for which one share of Common Stock is
issuable upon the exercise of any such options or upon conversion, exercise or
exchange of any Common Stock Equivalents issuable upon exercise of any such
option minus (2) the sum of all amounts paid or payable to the holder of such
option (or any other Person) upon the granting or sale of such option, upon
exercise of such option and upon conversion, exercise or exchange of any Common
Stock Equivalent issuable upon exercise of such option plus the value of any
other consideration received or receivable by, or benefit conferred on, the
holder of such option (or any other Person). Except as contemplated below, no
further adjustment of the Conversion Price shall be made upon the actual
issuance of such shares of Common Stock or of such Common Stock Equivalents upon
the exercise of such options or upon the actual issuance of such shares of
Common Stock upon conversion, exercise or exchange of such Common Stock
Equivalents.
Issuance of Common Stock Equivalents. If the Company in any manner issues or
sells any Common Stock Equivalents (other than Common Stock Equivalents that
qualify as Exempt Issuances) and the lowest price per share for which one share
of Common Stock is issuable upon the conversion, exercise or exchange thereof is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of
the issuance or sale of such Common Stock Equivalents for such price per share.
For the purposes of this Section 5(e)(ii), the "lowest price per share for which
one share of Common Stock is issuable upon the conversion, exercise or exchange
thereof" shall be equal to (1) the lower of (x) the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to one
share of Common Stock upon the issuance or sale of the Common Stock Equivalent
and upon conversion, exercise or exchange of such Common Stock Equivalent and
(y) the lowest conversion price set forth in such Common Stock Equivalent for
which one share of Common Stock is issuable upon conversion, exercise or
exchange thereof minus (2) the sum of all amounts paid or payable to the holder
of such Common Stock Equivalent (or any other Person) upon the issuance or sale
of such Common Stock Equivalent plus the value of any other consideration
received or receivable by, or benefit conferred on, the holder of such Common
Stock Equivalent (or any other Person). Except as contemplated below, no further
adjustment of the Conversion Price shall be made upon the actual issuance of
such shares of Common Stock upon conversion, exercise or exchange of such Common
Stock Equivalents, and if any such issue or sale of such Common Stock
Equivalents is made upon exercise of any Options for which adjustment of this
Note has been or is to be made pursuant to other provisions of this Section
5(e), except as contemplated below, no further adjustment of the Conversion
Price shall be made by reason of such issue or sale.
Change in Option Price or Rate of Conversion. If the purchase or exercise price
provided for in any options, the additional consideration, if any, payable upon
the issue, conversion, exercise or exchange of any Common Stock Equivalents, or
the rate at which any Common Stock Equivalents are convertible into or
exercisable or exchangeable for shares of Common Stock increases or decreases at
any time, the Conversion Price in effect at the time of such increase or
decrease shall be adjusted to the Conversion Price which would have been in
effect at such time had such options or Common Stock Equivalents provided for
such increased or decreased purchase price, additional consideration or
increased or decreased conversion rate, as the case may be, at the time
initially granted, issued or sold. For purposes of this Section 5(e)(iii), if
the terms of any option or Common Stock Equivalent that was outstanding as of
the date of issuance of this Note are increased or decreased in the manner
described in the immediately preceding sentence, then such option or Common
Stock Equivalent and the shares of Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such increase or decrease. No adjustment pursuant to this Section 5(e)
shall be made if such adjustment would result in an increase of the Conversion
Price then in effect.
(iv) Calculation of Consideration Received. If any option and/or Common Stock
Equivalent and/or Adjustment Right is issued in connection with the issuance or
sale or deemed issuance or sale of any other securities of the Company (as
determined by the Holder, the "Primary Security", and such option and/or Common
Stock Equivalent and/or Adjustment Right, the "Secondary Securities"), together
comprising one integrated transaction, the consideration per share of Common
Stock with respect to such Primary Security shall be deemed to be equal to the
difference of (x) the lowest price per share for which one share of Common Stock
was issued in such integrated transaction (or was deemed to be issued pursuant
to Section 5(e)(i) or 5(e)(ii) above, as applicable) solely with respect to such
Primary Security, minus (y) with respect to such Secondary Securities, the sum
of (I) the Black Scholes Consideration Value of each such option, if any, (II)
the fair market value (as determined by the Holder) or the Black Scholes
Consideration Value, as applicable, of such Adjustment Right, if any, and (III)
the fair market value (as determined by the Holder) of such Common Stock
Equivalent, if any, in each case, as determined on a per share basis in
accordance with this Section 5(e)(iv). If any shares of Common Stock, options or
Common Stock Equivalents are issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor (for the purpose of
determining the consideration paid for such Common Stock, option or Common Stock
Equivalent, but not for the purpose of the calculation of the Black Scholes
Consideration Value) will be deemed to be the net amount of consideration
received by the Company therefor. If any shares of Common Stock, options or
Common Stock Equivalents are issued or sold for a consideration other than cash
(for the purpose of determining the consideration paid for such Common Stock,
option or Common Stock Equivalent, but not for the purpose of the calculation of
the Black Scholes Consideration Value), the amount of such consideration
received by the Company will be the fair value of such consideration, except
where such consideration consists of publicly traded securities, in which case
the amount of consideration received by the Company for such securities will be
the arithmetic average of the VWAPs of such security for each of the five (5)
Trading Days immediately preceding the date of receipt. If any shares of Common
Stock, Options or Common Stock Equivalents are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the
surviving entity (for the purpose of determining the consideration paid for such
Common Stock, option or Common Stock Equivalent, but not for the purpose of the
calculation of the Black Scholes Consideration Value), the amount of
consideration therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such shares of Common Stock, options or Common Stock Equivalents, as the case
may be. The fair value of any consideration other than cash or publicly traded
securities (for the purpose of determining the consideration paid for such
Common Stock, option or Common Stock Equivalent, but not for the purpose of the
calculation of the Black Scholes Consideration Value) will be determined jointly
by the Company and the Holder. If such parties are unable to reach agreement
within ten (10) days after the occurrence of an event requiring valuation (the
"Valuation Event"), the fair value of such consideration will be determined
within five (5) Trading Days after the tenth (10th) day following such Valuation
Event by an independent, reputable appraiser jointly selected by the Company and
the Holder. The determination of such appraiser shall be final and binding upon
all parties absent manifest error and the fees and expenses of such appraiser
shall be borne by the Company.
f) 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.
g) Notice to the Holder.
i. Adjustment to Conversion Price. Whenever the Conversion Price is
adjusted pursuant to any provision of this Section 5, Borrower shall promptly
deliver to each Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
ii. Notice to Allow Conversion by Xxxxxx. If (A) Borrower shall declare
a dividend (or any other distribution in whatever form) on the Common Stock, (B)
Borrower shall declare a special nonrecurring cash dividend on or a redemption
of the Common Stock, (C) Borrower shall authorize the granting to all holders of
the Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any
stockholders of Borrower shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which
Borrower is a party, any sale or transfer of all or substantially all of the
assets of Borrower, or any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property or (E) Borrower shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of Borrower, then, in each case, Borrower shall cause to be filed at
each office or agency maintained for the purpose of conversion of this Note, and
shall cause to be delivered to the Holder at its last address as it shall appear
upon the Note Register, at least twenty (20) calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange, provided that the
failure to deliver such notice or any defect therein or in the delivery thereof
shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided hereunder constitutes, or
contains, material, non-public information regarding Borrower or any of the
Subsidiaries, Borrower shall simultaneously file such notice with the Commission
pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to
convert this Note during the 20-day period commencing on the date of such notice
through the effective date of the event triggering such notice except as may
otherwise be expressly set forth herein.
Section 6. Mandatory Repayment. Upon any Asset Disposition by Borrower or a
Subsequent Financing, Borrower shall, within two (2) Business Days of Borrower's
receipt of the proceeds of such Asset Disposition or Subsequent Financing, offer
in writing (the "Offer Notice") to the Holder and Other Holders the right to
receive their Pro-Rata Portions of the net proceeds of such Asset Disposition or
Subsequent Financing to be applied in satisfaction of an amount of Principal
Amount and/or accrued Interest Amount designated by Holder at the rate of $1.20
for each $1.00 of satisfied Principal Amount, and dollar for dollar for Interest
Amount satisfied by such payment. A Holder and Other Holders must notify the
Borrower within five (5) Business Days of receipt of the Offer Notice if such
Holder or Other Holder elects to exercise the right to receive its Pro-Rata
Portion of such net proceeds. Such proceeds must be paid to each electing Holder
and Other Holder within two (2) Business Days after Holder or Other Holder
elects in writing to receive such net proceeds. For purposes of this Section 6,
the Outstanding Equity Line is deemed a Subsequent Financing.
Section 7. Negative Covenants. As long as at least $100,000 in the
aggregate of principal amount of this Note and the Other Notes remains
outstanding, unless the holders of at least 51% in principal amount of the then
outstanding Notes shall have otherwise given prior written consent, Borrower
shall not, and shall not permit any of the Subsidiaries to, directly or
indirectly:
a) other than Permitted Indebtedness, enter into, create, incur, assume,
guarantee or suffer to exist any indebtedness for borrowed money of any kind,
including, but not limited to, a guarantee, on or with respect to any of its
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom;
b) other than Permitted Liens, enter into, create, incur, assume or suffer to
exist any Liens of any kind, on or with respect to any of its property or assets
now owned or hereafter acquired or any interest therein or any income or profits
therefrom;
c) amend its charter documents, including, without limitation, its certificate
of incorporation and bylaws, in any manner that materially and adversely affects
any rights of the Holder;
d) repay, repurchase or offer to repay, repurchase or otherwise acquire more
than a deminimis number of shares of its Common Stock or Common Stock
Equivalents other than as to the Conversion Shares or Warrant Shares as
permitted or required under the Transaction Documents;
e) redeem, defease, repurchase, repay or make any payments in respect of, by the
payment of cash or cash equivalents (in whole or in part, whether by way of open
market purchases, tender offers, private transactions or otherwise), all or any
portion of any Indebtedness (other than the Notes if on a pro-rata basis),
whether by way of payment in respect of principal of (or premium, if any) or
interest on, such Indebtedness, the foregoing restriction shall also apply to
Permitted Indebtedness from and after the occurrence of an Event of Default;
f) declare or make any dividend or other distribution of its assets or rights to
acquire its assets to holders of shares of Common Stock, preferred stock, or any
other equity security by way of return of capital or otherwise including,
without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction;
g) enter into any transaction with any Affiliate of Borrower which would be
required to be disclosed in any public filing with the Commission, unless such
transaction is made on an arm's-length basis and expressly approved by a
majority of the disinterested directors of Borrower (even if less than a quorum
otherwise required for board approval); or
h) enter into any agreement with respect to any of the foregoing.
Section 8. Events of Default.
a) "Event of Default" means, wherever used herein, any of the
following events (whatever the reason for such event and whether such event
shall be voluntary or involuntary or effected by operation of law or pursuant to
any judgment, decree or order of any court, or any order, rule or regulation of
any administrative or governmental body):
i. any default in the payment of (A) the principal or interest amount
of this Note or (B) liquidated damages and other amounts owing to a Holder on
any Note, as and when the same shall become due and payable (whether on a
Conversion Date or the Maturity Date or by acceleration or otherwise) which
default, solely in the case of a default under clause (B) above, is not cured
within 3 Trading Days after Borrower has become or should have become aware of
such default;
ii. Borrower shall fail to observe or perform any other covenant or
agreement contained in the Notes (other than a breach by Borrower of its
obligations to deliver shares of Common Stock to the Holder upon conversion,
which breach is addressed in clause (ix) below) which failure is not cured, if
possible to cure, within the earlier to occur of (A) five (5) Trading Days after
written notice of such failure sent by the Holder or by any Other Holder to
Borrower and (B) ten (10) Trading Days after Borrower has become or should have
become aware of such failure;
iii. a default or event of default (subject to any grace or cure period
provided in the applicable agreement, document or instrument) shall occur under
(A) any of the Transaction Documents, including but not limited to failure to
strictly comply with the provisions of the Registration Rights Agreement and
Warrants, or (B) any other material agreement, lease, document or instrument to
which Borrower or any Subsidiary is obligated (and not covered by clause (vi)
below), which, in the case of subsection (B), would reasonably be expected to
have a Material Adverse Effect;
iv. any representation or warranty made in this Note, any other
Transaction Documents, any written statement pursuant hereto or thereto or any
other report, financial statement or certificate made or delivered to the Holder
or any Other Holder shall be untrue or incorrect in any material respect as of
the date when made or deemed made;
v. Borrower or any Subsidiary shall be subject to a Bankruptcy Event;
vi. Borrower or any Subsidiary shall default on any of its obligations
under any mortgage, credit agreement or other facility, indenture agreement,
factoring agreement or other instrument under which there may be issued, or by
which there may be secured or evidenced, any indebtedness for borrowed money or
money due under any long term leasing or factoring arrangement that (a) involves
an obligation greater than $100,000, whether such indebtedness now exists or
shall hereafter be created, and (b) results in such indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise
become due and payable;
vii. Borrower shall be a party to any Change of Control Transaction or
Fundamental Transaction;
viii. Borrower does not meet the current public information requirements
under Rule 144;
ix. Borrower shall fail for any reason to deliver certificates to a
Holder prior to the fifth (5th) Trading Day after a Conversion Date pursuant to
Section 4(c) or Borrower shall provide at any time notice to the Holder,
including by way of public announcement, of Xxxxxxxx's intention to not honor
requests for conversions of any Notes in accordance with the terms hereof;
x. any Person shall breach any material term of any agreement delivered
to the initial Holders pursuant to Section 2.2(a) of the Purchase Agreement;
xi. any monetary judgment, writ or similar final process shall be
entered or filed against Borrower, any subsidiary or any of their respective
property or other assets for more than $100,000, and such judgment, writ or
similar final process shall remain unvacated, unbonded or unstayed for a period
of 90 calendar days;
xii. any dissolution, liquidation or winding up by Borrower or a material
Subsidiary of a substantial portion of their business;
xiii. cessation of operations by Borrower or a material Subsidiary;
xiv. an event resulting in the Common Stock no longer being listed or quoted on
a Trading Market, or notification from a Trading Market that the Borrower is not
in compliance with the conditions for such continued quotation and such
non-compliance continues for twenty (20) days following such notification;
xv. a Commission or judicial stop trade order or suspension from the Borrower's
Principal Trading Market;
xvi. the Borrower effectuates a reverse split of its Common Stock without ten
(10) days prior written notice to the Holder;
xvii. a failure by Borrower to notify Holder of any material event of which
Borrower is obligated to notify Holder pursuant to the terms of this Note or any
other Transaction Document;
xviii. a default by the Borrower of a material term, covenant, warranty or
undertaking of any other agreement to which the Borrower and Holder are parties,
or the occurrence of an event of default under any such other agreement to which
Borrower and Holder are parties which is not cured after any required notice
and/or cure period;
xix. the occurrence of an Event of Default under any Other Note;
xx. any material provision of any Transaction Document shall at any time for any
reason (other than pursuant to the express terms thereof) cease to be valid and
binding on or enforceable against the Borrower, or the validity or
enforceability thereof shall be contested by Borrower, or a proceeding shall be
commenced by Borrower or any governmental authority having jurisdiction over
Borrower or Holder, seeking to establish the invalidity or unenforceability
thereof, or Borrower shall deny in writing that it has any liability or
obligation purported to be created under any Transaction Document;
xxi. the failure by Borrower or any material Subsidiary to maintain any material
intellectual property rights, personal, real property, equipment, leases or
other assets which are necessary to conduct its business (whether now or in the
future) and such breach is not cured with twenty (20) days after the first day
of such occurrence; or
xxii. the restatement after the date hereof of any financial statements filed by
the Borrower with the Commission for any date or period from and after the
Original Issue Date and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the unrestated financial statements,
have constituted a Material Adverse Effect. For the avoidance of doubt, any
restatement related to new accounting pronouncements shall not constitute a
default under this Section.
In the event more than one grace, cure or notice period is applicable to an
Event of Default, then the shortest grace, cure or notice period shall be
applicable thereto.
b) Remedies Upon Event of Default, Fundamental Transaction and Change
of Control Transaction. If any Event of Default or a Fundamental Transaction or
a Change of Control Transaction occurs, the outstanding principal amount of this
Note, liquidated damages and other amounts owing in respect thereof through the
date of acceleration, shall become, at the Holder's election, immediately due
and payable in cash at the Mandatory Default Amount. Commencing 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 equal to the lesser of
15% per annum or the maximum rate permitted under applicable law. Upon the
payment in full of the Mandatory Default Amount, the Holder shall promptly
surrender this Note to or as directed by Xxxxxxxx. 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
Xxxxxx 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 8(b). No such rescission or annulment
shall affect any subsequent Event of Default or impair any right consequent
thereon.
Section 9. Security Interest/Waiver of Automatic Stay. This Note is secured by a
security interest granted to the Holder pursuant to a Security Agreement, as
delivered by Borrower to Holder. The Borrower acknowledges and agrees that
should a proceeding under any bankruptcy or insolvency law be commenced by or
against the Borrower or a Subsidiary, or if any of the Collateral (as defined in
the Security Agreement) should become the subject of any bankruptcy or
insolvency proceeding, then the Holder should be entitled to, among other relief
to which the Holder may be entitled under the Transaction Documents and any
other agreement to which the Borrower or a Subsidiary and Holder are parties
(collectively, "Loan Documents") and/or applicable law, an order from the court
granting immediate relief from the automatic stay pursuant to 11 U.S.C. Section
362 to permit the Holder to exercise all of its rights and remedies pursuant to
the Loan Documents and/or applicable law. THE BORROWER EXPRESSLY WAIVES THE
BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, THE
BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362
NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE
(INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105) SHALL STAY, INTERDICT,
CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY
OF ITS RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. The
Borrower hereby consents to any motion for relief from stay that may be filed by
the Holder in any bankruptcy or insolvency proceeding initiated by or against
the Borrower and, further, agrees not to file any opposition to any motion for
relief from stay filed by the Holder. The Borrower represents, acknowledges and
agrees that this provision is a specific and material aspect of the Loan
Documents, and that the Holder would not agree to the terms of the loan
Documents if this waiver were not a part of this Note. The Borrower further
represents, acknowledges and agrees that is waiver is knowingly, intelligently
and voluntarily made, that neither the Holder nor any person acting on behalf of
the Holder has made any representations to induce this waiver, that the Borrower
has been represented (or has had the opportunity to by represented) in the
signing of this Note and the Loan Documents and in the making of this waiver by
independent legal counsel selected by the Borrower and that the Borrower has
discussed this waiver with counsel.
Section 10. 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, or facsimile, 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
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: Emerald Medical
Applications Corp., Inc., c/o of Law Office of Xxxxxxx Xxxxx, 00 Xxxx Xxxxxx,
Xxx Xxxx, XX 00000, Attn: Xxxx Xxxx, CEO, fax: 000-000-0000 , with a copy by fax
only to: Law Office of Xxxxxxx Xxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attn:
Xxxxxxx Xxxxx, Esq., fax: 000-000-0000, and (ii) if to the Holder, to: the
address and fax number indicated on the front page of this Note, with an
additional copy by fax only to (which shall not constitute notice): Grushko &
Xxxxxxx, P.C., 000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx 00000, xxxxxxxxx:
(000) 000-0000. For so long as any notice may or be required to be given to the
Company pursuant to this Note, Borrower will maintain an address for notice
purposes in New York, New York.
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. This Note ranks paripassu with all other Notes now or
hereafter issued under the terms set forth herein.
c) Lost or Mutilated Note. If this Note shall be mutilated, lost,
stolen or destroyed, Xxxxxxxx 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 any of the Transaction Documents
(whether brought against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the "New
York Courts"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this 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.
If any party shall commence an action or proceeding to enforce any provisions of
this Note, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys fees and other costs and
expenses incurred in the investigation, preparation and prosecution of such
action or proceeding. This Note shall be deemed an unconditional obligation of
Borrower for the payment of money and, without limitation to any other remedies
of Holder, may be enforced against Borrower by summary proceeding pursuant to
New York Civil Procedure Law and Rules Section 3213 or any similar rule or
statute in the jurisdiction where enforcement is sought. For purposes of such
rule or statute, any other document or agreement to which Holder and Borrower
are parties or which Borrower delivered to Holder, which may be convenient or
necessary to determine Holder's rights hereunder or Xxxxxxxx's obligations to
Holder are deemed a part of this Note, whether or not such other document or
agreement was delivered together herewith or was executed apart from 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. Borrower
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive Borrower from paying all or any portion of the principal of
or interest on this Note as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Note, and Borrower (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantage of any such law, and covenants that it will
not, by resort to any such law, hinder, delay or impede the execution of any
power herein granted to the Holder, but will suffer and permit the execution of
every such as though no such law has been enacted.
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 Xxxxxxxx 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, Xxxxxxxx has caused this Note to be signed in its name by an
authorized officer as of the _____ day of June, 2017.
EMERALD MEDICAL APPLICATIONS CORP.
By: ___________________________________
Name:
Title:
WITNESS:
______________________________________
ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the Convertible Note
due June 20, 2019of Emerald Medical Applications Corp., a Delaware corporation
(the "Company"), into shares of common stock (the "Common Stock"), of Borrower
according to the conditions hereof, as of the date written below. If shares of
Common Stock are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by Borrower in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents and
warrants to Borrower that its ownership of the Common Stock does not exceed the
amounts specified under Section 4 of this Note, as determined in accordance with
Section 13(d) of the Exchange Act.
The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock.
Conversion calculations:
Date to Effect Conversion: ____________________________
Principal Amount of Note to be Converted: $__________________
Additional Interest to be Converted: $_______________
Number of shares of Common Stock to be issued: ______________
Signature: _________________________________________
Name: ____________________________________________
Address for Delivery of Common Stock Certificates: __________
_____________________________________________________
_____________________________________________________
Or
DWAC Instructions: _________________________________
Broker No:_____________
Account No: _______________
