ADAMIS PHARMACEUTICALS CORPORATION 10% SENIOR SECURED CONVERTIBLE NOTE
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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS SECURITY MAY BE PLEDGED TO AN ACCREDITED INVESTOR IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Original
Issue Date: January 11, 2010
Original
Conversion Price (subject to adjustment herein): $0.20
Original
Principal Amount: $____________
ADAMIS
PHARMACEUTICALS CORPORATION
10%
SENIOR SECURED CONVERTIBLE NOTE
THIS NOTE
is one of a series of duly authorized and validly issued 10% Senior Secured
Convertible Notes of ADAMIS PHARMACEUTICALS CORPORATION, a Delaware corporation
(the “Company”), having its
principal place of business at 0000 Xxx Xxx Xxxxxxx Xx., #000, Xxx Xxx, XX
00000, designated as its 10% Senior Secured Convertible Notes (this Note, the
“Note” and,
collectively with the other Notes of such series, the “Notes”).
FOR VALUE
RECEIVED, the Company promises to pay to the order of _____________________ or
its registered assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum of
US$_______________ on the date which is nine (9) months following the Original
Issue Date hereof (the “Maturity Date”) or
such earlier date as this Note is required or permitted to be repaid as provided
hereunder, and to pay accrued and unpaid interest to the Holder on the aggregate
unconverted and then outstanding principal amount of this Note in accordance
with the provisions hereof.
The
Company’s obligations under this Note shall be, effective as of the Original
Issue Date, secured by the Collateral (as defined in the Security Agreement),
pursuant to the terms of the Security Documents. This Note shall
constitute “Senior Indebtedness” under and as defined in the G-Max
Note.
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)
initially capitalized terms not otherwise defined herein shall have the meanings
set forth in the Purchase Agreement (including without limitation those
incorporated therein by reference) and (b) the following terms shall have the
following meanings:
1
“Alternate
Consideration” shall have the meaning set forth in Section
5(e).
“Buy-In” shall have
the meaning set forth in Section 4(d)(v).
“Common Stock
Equivalents” mean Convertible Securities and/or Options.
“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 issued or issuable upon
conversion or redemption of this Note in accordance with the terms hereof,
including without limitation shares of Common Stock issued or issuable as
interest hereunder or as damages under the Transaction Documents.
“Default Conversion
Price” shall mean the lesser of (a) the Conversion Price otherwise in
effect at the time of the applicable Conversion Date and (b) 50% of the average
of the three (3) lowest Closing Bid Prices during the twenty (20) consecutive
Trading Days immediately preceding the applicable Conversion Date.
“Event of Default”
shall have the meaning set forth in Section 8.
“G-Max Note” means that certain convertible
promissory note issued by the Company on or about December 29, 2009 to The G-Max
Trust in the original principal amount of $500,000.
“Late Fees” shall have
the meaning set forth in Section 2(b).
“Mandatory Default
Amount” means the sum of (i) the greater of (A) 120% of the
outstanding principal amount of this Note, plus 100% of accrued and unpaid
interest hereon, or (B) the outstanding principal amount of this Note, plus all
accrued and unpaid interest hereon, 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 price, multiplied by the VWAP on the date the Mandatory
Default Amount is either (x) demanded or otherwise due or (y) paid in full,
whichever has a higher VWAP, and (ii) 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 2(a).
“Notice of Conversion”
shall have the meaning set forth in Section 4(a).
“Original Issue Date”
means the date of the issuance of this Note, regardless of any transfers of any
Note and regardless of the number of instruments which may be issued to evidence
this Note.
2
“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Notes, (b) the
Indebtedness existing on the Closing Date, provided that the terms of any such
Indebtedness have not been changed in a manner substantially adverse to either
the Company or the Holder from the terms existing on the Closing Date, (c) lease
obligations and purchase money indebtedness of up to $200,000, in the aggregate,
incurred in connection with the acquisition of capital assets and lease
obligations with respect to newly acquired or leased assets, and (d) Indebtedness
that (i) is expressly subordinate to the Notes pursuant to a written
subordination agreement with the Purchasers that is acceptable to the Requisite
Purchasers in their sole and absolute discretion, (ii) matures on a date no
earlier than 91 days following the Maturity Date, (iii) is unsecured, and (iv)
is approved in advance in writing by the Requisite Purchasers (which approval
may be denied in the Purchasers’ sole and absolute discretion, provided that the
Purchasers shall not unreasonably withhold approval for up to $500,000 in the
aggregate of such Indebtedness incurred after the Original Issue
Date).
“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 the Company) have been established in
accordance with GAAP; (b) Liens imposed by law which were incurred in the
ordinary course of the Company’s business, such as carriers’, warehousemen’s and
mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in
the ordinary course of the Company’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 the
Company 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 created pursuant to the Security
Documents entered into in connection with the issuance of the
Notes.
“Purchase Agreement”
means the Securities Purchase Agreement pursuant to which this Note was issued,
dated on or about the date hereof, among the Company and the original purchasers
of Notes, as amended, modified or supplemented from time to time in accordance
with its terms.
“Share Delivery Date”
shall have the meaning set forth in Section 4(d).
Section
2. Interest; Late
Fees.
a) Interest. Interest
shall accrue daily and compound monthly on the outstanding principal amount of
this Note at a rate per annum equal to 10% and shall be due and payable on the
first Business Day of each month in cash. On the Maturity Date, the
Company shall pay to the Holder all accrued but unpaid interest
hereunder. Interest shall be calculated on the basis of a 360-day
year and actual days elapsed. Interest hereunder will be paid to the
Person in whose name this Note is registered on the records of the Company
regarding registration and transfers of this Note (the “Note
Register”).
3
b) Late
Fees. All overdue accrued and unpaid amounts to be paid
hereunder shall entail a late fee at an interest rate equal to the lesser of 24%
per annum or the maximum rate permitted by applicable law (“Late Fees”) which
shall accrue daily from the date such amount is due hereunder through and
including the date of actual payment in full.
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 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, assigned, pledged 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 the Company
of this Note, the Company and any agent of the Company 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 the Company 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(c)
hereof). The Holder shall effect conversions by delivering to the
Company a Notice of Conversion, the form of which is attached hereto as Annex A (a “Notice of
Conversion”), specifying therein the principal amount of this Note to be
converted, including accrued but unpaid interest thereon, and the date on which
such conversion shall be effected (such date, which date shall be no earlier
than the date on which the Company is deemed to receive the Notice of
Conversion, 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. To effect conversions hereunder, the
Holder shall not be required to physically surrender this Note to the Company
unless the entire principal amount of this Note, plus all accrued and unpaid
interest thereon, has been so converted. Conversions hereunder shall have the
effect of lowering the outstanding principal amount of this Note in an amount
equal to the applicable conversion. The Holder and the Company shall
maintain records showing the principal amount(s) converted and the date of such
conversion(s). 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.
4
b) Conversion
Price. The conversion price shall be equal to $0.20, subject
to adjustment herein (the “Conversion
Price”).
c) Conversion Limitation –
Holder’s Restriction on Conversion. Notwithstanding anything to the
contrary contained herein, the Company shall not effect any conversion of this
Note, and the Holder shall not have the right to convert any portion of this
Note (or otherwise acquire Conversion Shares with respect to this Note), to the
extent that after giving effect to the issuance of Common Stock upon such
conversion (or other issuance), the Holder Group would beneficially own in
excess of the Maximum Ownership Percentage of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock upon such conversion (including for such purpose the shares of
Common Stock issuable upon such conversion or issuance) (“Beneficial Ownership
Limitation”). For purposes of calculating the Beneficial
Ownership Limitation, the number of shares of Common Stock beneficially owned by
the Holder Group shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder (including
without limitation Regulation 13D-G), provided, however, that such
beneficial ownership shall exclude any shares of Common Stock issuable upon
conversion, exchange or exercise of (or purchase of Common Stock under) any
Convertible Securities or Options outstanding at the time of determination and
beneficially owned by the Holder Group which contain a limitation on conversion,
exchange, exercise or purchase analogous to the Beneficial Ownership Limitation
contained herein. To the extent that the Beneficial Ownership
Limitation contained herein applies, the determination of whether and to what
extent this Note is convertible (vis-à-vis other Convertible Securities or
Options, including without limitation other Notes, beneficially owned by the
Holder Group) shall be on the basis of first submission to the Company for
conversion, exchange, exercise or purchase, as the case may be, or as otherwise
determined 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 and to
what extent this Note is convertible (vis-à-vis such other Convertible
Securities or Options), in each case subject to the Beneficial Ownership
Limitation. In determining the number of outstanding shares of Common
Stock for purposes of calculating the Beneficial Ownership Limitation, the
Holder may rely on the number of outstanding shares of Common Stock as reflected
in (i) the Company’s most recent Periodic Report containing such information,
(ii) a more recent public announcement by the Company, or (iii) any other notice
or disclosure by the Company or the Company’s Transfer Agent setting forth the
number of shares of Common Stock outstanding, and the Holder may rely on
knowledge it may have concerning any shares of Common Stock issued which are not
reflected in the preceding clauses (i) through (iii) (e.g., issuances to the Holder
upon a prior Note conversion since the date as of which such number of
outstanding shares of Common Stock was reported). Upon the written or
oral request of the Holder, the Company shall within two (2) Business Days
confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. Each delivery of a Notice of Conversion by the
Holder will constitute a representation by the Holder that it has evaluated the
limitation set forth in this Section 4(c) and determined, based on this Section
4(c), that the issuance of the full
number of Conversion Shares requested in such Notice of Conversion is permitted
under this Section 4(c), and the Company shall have no obligation to verify or
confirm such determination. No conversion of this Note in violation of
this Section 4(c) but otherwise in accordance with this Note shall affect the
status of the Conversion Shares as validly issued, fully-paid and
nonassessable. By written notice to the Company, the Holder may at
any time and from time to time increase or decrease the Maximum Ownership
Percentage to any other percentage specified in such notice (or specify that the
Beneficial Ownership Limitation shall no longer be applicable), provided, however, that (A)
any such increase (or inapplicability) shall not be effective until the
sixty-first (61st) day after such notice is delivered to the Company, (B) any
such increase or decrease shall apply only to the Holder and not to any other
holder of Notes, and (C) the Maximum Ownership Percentage shall not be less than
4.9%. The provisions of this Section 4(c) shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of
this Section 4(c) to correct this provision (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 Beneficial Ownership
Limitation contained in this Section shall apply to a successor Holder of this
Note. If at any time the Beneficial Ownership Limitation makes this
Note unconvertible in whole or in part, the Company shall not by reason thereof
be relieved of its obligation to issue shares of Common Stock at any time or
from time to time thereafter upon conversion of this Note as and when shares of
Common Stock may be issued in compliance with such
limitation.
5
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 any accrued but unpaid interest thereon, by (y) the Conversion
Price.
ii. Delivery of Certificate Upon
Conversion. Not later than three Trading Days after each Conversion Date
(the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the
Holder a certificate or certificates representing the Conversion Shares which,
on or after the Legend Removal Date and provided that the Conversion Shares may
be sold without restrictions pursuant to the provisions of Rule 144, 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 date which is six months following the Original Issue Date on which
this Note is issued (or six months following the date that the New Note is
issued, in the event the Merger occurs and the holding period for this Note may
not be tacked to the holding period of the New Note under applicable securities
laws), the Company shall use its best efforts to deliver any certificate(s) or
shares required to be delivered by the Company under this Section 4
electronically through the Depository Trust Company or another established
clearing corporation performing similar functions (provided
that to the extent reasonably requested the Holder may be required to covenant
to the Company in writing that it will sell such shares only in compliance with
Rule 144 or Section 4(1) of the Securities Act if such shares are not registered
for resale under the Securities Act). The Company’s obligation in the
immediately preceding sentence shall not apply with respect to a Holder that is
an Affiliate.
iii. Failure to Deliver
Certificates. If in the case of any Notice of Conversion such
certificate(s) or shares are not delivered to or as directed by the applicable
Holder by the third Trading Day after the Conversion Date, the Holder shall be
entitled to elect by written notice to the Company at any time on or before its
receipt of such certificate or certificates, to rescind such Conversion, in
which event the Company shall promptly return to the Holder any original Note
delivered to the Company and the Holder shall promptly return to the Company the
Common Stock certificates representing the principal amount of this Note
unsuccessfully tendered for conversion to the Company.
iv. Obligation Absolute; Partial
Liquidated Damages. The Company’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 the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of such Conversion Shares; provided, however, that such
delivery shall not operate as a waiver by the Company of any such action the
Company may have against the Holder. In the event the Holder of this
Note shall elect to convert any or all of the outstanding principal amount
hereof, the Company may not refuse conversion based on any claim that the Holder
or anyone associated or affiliated with the Holder has been engaged in any
violation of law, agreement or for any other reason, unless an injunction from a
court, on notice to the Holder, restraining and or enjoining conversion of all
or part of this Note shall have been sought and obtained, and the Company posts
a surety bond for the benefit of the Holder in the amount of 150% of the
outstanding principal amount of this 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, the Company shall issue Conversion Shares or, if applicable, cash,
upon a properly noticed conversion. If the Company fails for any
reason to deliver to the Holder such certificate(s) or shares pursuant to
Section 4(d)(ii) by the second Trading Day after the Share Delivery Date, the
Company shall pay to the Holder, in cash, as liquidated damages and not as a
penalty, for each $1,000 of principal
amount being converted, $10 per Trading Day (increasing to $20 per Trading Day
on the fifth Trading Day after such liquidated damages begin to accrue) for each
Trading Day after such second Trading Day after the Share Delivery Date until
such certificates are delivered. Nothing herein shall limit a
Xxxxxx’s right to pursue actual damages or declare an Event of Default pursuant
to Section 8 hereof for the Company’s failure to deliver Conversion Shares
within the period specified herein and 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.
6
v. Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Conversion. In addition to
any other rights available to the Holder, if the Company fails for any reason to
deliver to the Holder such certificate(s) or shares by the Share Delivery Date
pursuant to Section 4(d)(ii), and if after such Share Delivery Date the Holder
is required by its brokerage firm to purchase (in an open market transaction or
otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by 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 the
Company shall (A) pay in cash to the Holder (in addition to any other remedies
available to or elected by the Holder) the amount by which (x) the Holder’s
total purchase price (including any brokerage commissions) for the Common Stock
so purchased exceeds (y) the product of (1) the aggregate number of shares of
Common Stock that 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 or deliver to the Holder the number of shares of Common
Stock that would have been issued if the Company had timely complied with its
delivery requirements under Section 4(d)(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, the Company shall be
required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the amount of such
loss. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon conversion of this Note as required pursuant to the
terms hereof, provided that the liquidated damages provided for in subsection
4(d)(iv) above
with respect to Conversion Shares subject to a Buy-In shall cease accruing on
the date on which the Company pays the Holder such Buy-In amount payable
pursuant to this paragraph if the Holder elects to then cancel such conversion
pursuant to clause (B) above.
vi. Reservation of Shares
Issuable Upon Conversion. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock for the sole purpose of issuance upon conversion of this Note and payment
of interest on this Note, each as herein provided, free from preemptive rights
or any other actual contingent purchase rights of Persons other than the Holder
(and the other holders of the 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 of Section 5) upon the conversion of the outstanding principal
amount of this Note and payment of interest hereunder. The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly authorized, validly issued, fully paid and
nonassessable.
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, the Company
shall at its election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Conversion Price
or round up to the next whole share.
viii. Transfer
Taxes. The issuance of certificates for shares of the Common
Stock on conversion of this 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 the Company shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate upon conversion in
a name other than that of the Holder of this Note and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
Section
5. Certain
Adjustments.
a) Stock Dividends and Stock
Splits. If the Company, at any time while this Note is
outstanding: (A) pays a stock dividend or otherwise makes a distribution or
distributions payable in shares of Common Stock on shares of Common Stock as a
class or any Common Stock Equivalents (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon conversion of, or
payment of interest on, the Notes); (B) subdivides outstanding shares of Common
Stock into a larger number of shares; (C) combines (including by way of a
reverse stock split) outstanding shares of
Common Stock into a smaller number of shares; or (D) issues, in the event of a
reclassification of shares of the Common Stock, any shares of capital stock of
the Company, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding any
treasury shares of the Company) outstanding immediately before such event and of
which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to this
Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
7
b) Subsequent Equity
Sales. The Conversion Price is subject to Full Ratchet
Anti-Dilution Adjustment. Any issuance of any La Jolla Common Stock
pursuant to or contemplated by the Merger Agreement, and the Reverse Stock Split
(as defined in the Merger Agreement), shall constitute and be deemed a
Subsequent Issuance of Company Common Stock for purposes of the Full Ratchet
Anti-Dilution Adjustment, and the Subsequent Issuance Price in connection
therewith shall equal the Adamis Discounted Share Price (as defined in the
Merger Agreement) (e.g., if the Adamis
Discounted Share Price is less than the Conversion Price, the Conversion Price
shall be reduced to equal such Adamis Discounted Share Price).
c) Subsequent Rights
Offerings. If the Company, at any time while the Note is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share that is lower than the VWAP on the record date
referenced below, then the Conversion Price shall be multiplied by a fraction of
which the denominator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional shares of Common Stock offered for subscription or purchase, and
of which the numerator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares
issued (assuming delivery to the Company in full of all consideration payable
upon exercise of such rights, options or warrants) would purchase at such
VWAP. Such adjustment shall be made whenever such rights or warrants
are issued, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants.
d) Pro Rata
Distributions. If the Company, at any time while this Note is
outstanding, distributes to all holders of Common Stock (and not to the Holders
in their capacity as holders of Notes) evidences of its indebtedness or assets
(including cash and cash dividends) or rights or warrants to subscribe for or
purchase any security (other than the Common Stock, which shall be subject to
Section 5(b)), then in each such case the Conversion Price shall be adjusted by
multiplying such Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the VWAP determined as of the
record date mentioned above, and of which the numerator shall be such VWAP
on such record date less the then fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to
1 outstanding share of the Common Stock as determined by the Board of Directors
of the Company in good faith. In either case the adjustments shall be
described in a statement delivered to the Holder describing the portion of
assets or evidences of indebtedness so distributed or such subscription rights
applicable to 1 share of Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective immediately
after the record date mentioned above.
8
e) Fundamental
Transaction. If, at any time while this Note is outstanding, the Company
effects or there otherwise occurs 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, the same
kind and amount of securities, cash or property as it would have been entitled
to receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of 1 share of
Common Stock (the “Alternate
Consideration”). For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of 1 share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Conversion Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any
different components of the Alternate Consideration. If holders of
Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, 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. To the extent necessary
to effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a new
Note consistent with the foregoing provisions and evidencing the Holder’s right
to convert such Note into Alternate Consideration. The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such successor or surviving entity to comply with the
provisions of this Section 5(e) and insuring that this Note (or any such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction. Without limiting the
foregoing, the Company shall cause La Jolla, effective immediately the upon the
consummation of the Merger in accordance with the terms of the Merger Agreement,
to (i) assume all obligations under this Note (provided that the Company shall
remain liable hereunder), (ii) issue to the Holder a new Note payable by La
Jolla and convertible into La Jolla Common Stock in substitution and exchange
for this Note (“New
Note”), (iii) enter into a security agreement and such other security
documents (including without limitation UCC-1 financing statements) as may
reasonably requested by the Requisite Purchasers to cause the New Note to be
secured by a first priority perfected lien on all the assets of La Jolla and its
subsidiaries (in addition to the assets of the Company and its Subsidiaries
other than Biosyn), and (iv) cause each of its subsidiaries to enter into a
security agreement and such other security documents (including without
limitation UCC-1 financing statements) and a subsidiary guarantee as
may
reasonably requested by the Requisite Purchasers to cause the New Note to be
guaranteed by, and secured by a first priority perfected lien on, all the assets
of La Jolla’s subsidiaries (including without limitation the Company and its
Subsidiaries other than Biosyn). Such New Note shall be identical to
this Note in all respects except that the Common Stock into which the New Note
is convertible shall refer to the La Jolla Common Stock and the Conversion Price
shall equal the Conversion Price in effect at such time (subject to any Full
Ratchet Anti-Dilution Adjustment pursuant to Section 5(b) above), provided that
such Conversion Price shall be further appropriately and equitably adjusted to
provide the Holder with the same economic effect as contemplated by this Note
before the Merger. Any New Note issued hereunder is in substitution
for and not in satisfaction of this Note. Such New Note shall not
constitute a novation or satisfaction and accord of this Note. The
Company (and La Jolla following the Merger) hereby acknowledges and agrees that
such New Note shall amend, restate, modify, renew and continue the terms and
provisions contained in the Note and shall not extinguish or release the
Company, La Jolla or any of their Subsidiaries under any Transaction Document or
otherwise constitute a novation of their obligations thereunder. To
the extent permitted under applicable securities laws, the holding period of the
New Note shall be tacked to the holding period of this Note for purposes of Rule
144. The Company shall not amend the Merger Agreement or any document
entered into in connection therewith with the prior written consent of the
Requisite Purchasers.
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 the Company) issued and
outstanding.
i. Adjustment to Conversion
Price. Whenever the Conversion Price is adjusted pursuant to
any provision of this Section 5, the Company shall promptly deliver to each
Holder a notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment.
ii. Notice to Allow Conversion
by Xxxxxx. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock as a class, (B) the
Company shall declare a special nonrecurring cash dividend on or a redemption of
the Common Stock as a class, (C) the Company shall authorize the granting to all
holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property or (E) the
Company shall authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, then, in each case, the Company shall
cause to be filed at each office or agency maintained for the purpose of
conversion of this Note, and shall cause to be delivered to the Holder at its
last address as it shall appear upon the Note Register, at least 15 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. The Holder is entitled to convert
this Note during the 15-day period commencing on the date of such notice through
the effective date of the event triggering such notice.
9
Section
6. No
Prepayment/Redemption. The Company may not prepay or redeem this Note in
whole or in part without the prior written consent of the Holder, and to the
extent the Company agrees with any other holder of Notes to prepay or redeem
such holder’s Notes in whole or in part, the Company shall offer such prepayment
or redemption of this Note on a pro rata basis on the same terms and conditions
as agreed upon for such other Notes. Notwithstanding anything
contained herein, the Company shall redeem this Note to the extent required
pursuant to Section 7(d)(ii)(D) of the Purchase Agreement.
Section
7. Negative Covenants.
As long as any portion of this Note remains outstanding, unless the holders of
at least 67% in principal amount of the then outstanding Notes shall have
otherwise given prior written consent, the Company shall not, and shall not
permit any of its subsidiaries (whether or not a Subsidiary on any Closing Date)
to, directly or indirectly:
a) other than Permitted Indebtedness, enter into, create,
incur, assume, guarantee or suffer to exist any Indebtedness for 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 (for clarification,
amendments effected as necessary or appropriate to consummate the Merger as
contemplated on the Original Issue Date in connection with the Merger shall not
constitute changes materially and adversely affecting the
Holders);
10
d) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of
shares of its Common Stock or Common Stock Equivalents other than as to the
Conversion Shares as permitted or required under the Transaction Documents and
other than the repurchase of shares at a nominal price from current or former
officers, directors or key employees of the Company pursuant to the terms of
written agreements existing on the Original Issue Date of this
Note;
e) repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness
(except for the Notes in accordance with the terms of the Notes), other than
regularly scheduled principal and interest payments as such terms are in effect
as of the Closing Date;
f) repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness
to any current or former employees, officers or directors of the
Company;
g) pay
cash dividends or distributions on any equity securities of the
Company;
h) enter
into any transaction with any Affiliate of the Company 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 directors of the Company other than the Affiliate who is a party
to the transaction (even if less than a quorum otherwise required for board
approval); or
i) enter
into any agreement with respect to any of the foregoing.
Section
8. Events of
Default.
a) “Event of Default”
means, wherever used herein, any of the following events (whatever the reason
for such event and whether such event shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):
i. any
default in the payment of (A) the principal amount of any Note or (B) interest,
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 an interest payment or other default under clause (B) above, is not cured
within 5 Trading Days;
11
ii. the
Company shall fail to observe or perform in any material respect any other
covenant or agreement contained in the Notes (other than a breach by the Company
of its obligations to deliver shares of Common Stock to the Holder upon
conversion, which breach is addressed in clause (xiii) below) which failure is
not cured, if possible to cure, within the earlier to occur of (A) 10 Trading
Days after notice of such failure sent by the Holder or by any other Holder and
(B) 10 Trading Days after the Company has become or should have become aware of
such failure, or the Company shall be in default under the G-Max
Note;
iii. a
material default or material event of default (subject to any grace or cure
period provided in the applicable agreement, document or instrument) shall occur
under any of the Transaction Documents;
iv. any
representation or warranty made in this Note, any other Transaction Document,
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. the
Company or any Significant Subsidiary shall be subject to a Bankruptcy
Event;
vi. the
Company 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, or money due under any long term
leasing or factoring arrangement, including without limitation the G-Max Note,
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. if
at any time the capital stock issuable upon conversion of this Note shall not be
eligible for listing or quotation for trading on an Eligible Market and shall
not be eligible to resume listing or quotation for trading thereon within five
(5) Trading Days;
viii. the
Company shall be a party to any Change of Control Transaction or Fundamental
Transaction or shall agree to sell or dispose of all or in excess of 33% of its
assets (other than inventory in the ordinary course of business) in one
transaction or a series of related transactions (whether or not such sale would
constitute a Change of Control Transaction), except for the Merger provided the
terms hereof and the other Transaction Documents are complied
with;
12
ix. if
at any time after three months following the Closing Date the Company (or La
Jolla following the Merger assuming this Note is then convertible into shares of
La Jolla Common Stock) is not subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act or has failed to file all reports required to be
filed thereunder during the then preceding 12 months (or such shorter period
that the Company was required to file such reports);
x. if
at any time after six months following the Closing Date, all the shares of
Common Stock (or La Jolla Common Stock following the Merger) issued or issuable
upon conversion of this Note (including any New Note for which this Note is
exchanged) are not either (i) freely tradable pursuant to an effective
Registration Statement which contains a current and available Prospectus
covering the resale of such shares by the Holder, or (ii) freely tradable
pursuant to Rule 144 without any volume restrictions, manner of sale
requirements or notice requirements (or may be sold pursuant to Rule 144 with
volume restrictions, manner of sale requirements or notice requirements if the
Holder is an Affiliate of the Company), which shall be confirmed by counsel to
the Company (reasonably acceptable to the Holder) in a legal opinion in form and
substance typically provided under Rule 144 and reasonably acceptable to the
Holder;
xi. if
any of the Security Documents ceases to be in full force and effect (including
failure to create a valid and perfected first priority lien
(except money, deposit accounts and insurance policies may not be
perfected) on and security interest in substantially all the Collateral (as
defined in the Security Agreement) and Intellectual Property of the Company and
its Subsidiaries) at any time for any reason;
xii. any
material adverse change in the value of a material portion of the Collateral or
Intellectual Property from the value as of the Closing Date;
xiii. the
Company shall fail for any reason to deliver certificates to a Holder prior to
the fifth Trading Day after a Conversion Date pursuant to Section 4(d) or the
Company shall provide at any time notice to the Holder, including by way of
public announcement, of the Company’s intention to not honor requests for
conversions of any Notes in accordance with the terms hereof;
xiv. any
monetary judgment, writ or similar final judicial or arbitration process shall
be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $100,000, and such judgment,
writ or similar final process shall remain unvacated, unbonded or unstayed for a
period of 45 calendar days; or
xv. if
Xxxxxx X. Xxxxx ceases to (a) serve in the capacity with the Company in which he
serves as of the Closing Date and (b) perform the duties consistent with such
capacity for similarly situated companies, provided that if such
cessation is due to death, permanent disability, voluntary termination or
termination by the Company for cause, then (A) an Event of Default shall not be
deemed to have occurred unless and until the Company shall have failed to retain
a replacement reasonably acceptable to the Requisite Purchasers within 60 days
following such death, permanent disability, voluntary termination or termination
by the Company for cause, and (B) following any such acceptable replacement this
clause shall apply to such replacement in lieu of such person.
13
b) Remedies Upon Event of
Default. While an Event of Default occurs and is continuing, the
outstanding principal amount of this Note, plus accrued but unpaid interest,
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. Notwithstanding any
such election to accelerate, upon any Event of Default (i) the outstanding
principal amount hereunder shall be automatically increased to equal 120% of the
outstanding principal hereunder, and (ii) the Conversion Price hereunder shall
be automatically adjusted to equal the Default Conversion
Price. After the occurrence and during the continuance of any Event
of Default, the interest rate on this Note shall accrue at an interest rate
equal to the lesser of 24% 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 the
Company. In connection with such acceleration described herein, the
Holder need not provide, and the Company hereby waives, any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable
law. Such acceleration may be rescinded and annulled by 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. For clarification and without limiting any of the foregoing,
if an Event of Default occurs pursuant to Section 8(a)(x) above, the Conversion
Price hereunder shall automatically be irrevocably adjusted to equal the Default
Conversion Price and the outstanding principal amount hereunder shall be
automatically and irrevocably increased to equal 120% of the outstanding
principal hereunder.
Section
9. Miscellaneous.
a) Notices. Any
and all notices or other communications or deliveries to be provided by the
Holder hereunder, including, without limitation, any Notice of Conversion, shall
be in writing and delivered personally, by facsimile, by email, or sent by a
nationally recognized overnight courier service, addressed to the Company, at
the address set forth above, or such other facsimile number, email address or
mailing address as the Company may specify for such purpose by notice to the
Holder delivered in accordance with this Section 9. Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, by email
or sent by a nationally recognized overnight courier service
addressed to each Holder at the facsimile number or address of the Holder
appearing on the books of the Company, or if no such facsimile number or address
appears, at the principal place of business of the Holder. Except as
may otherwise be provided herein, any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered via
facsimile or by email prior to 4:30 p.m. (New York City time) on a Trading
Day, with
electronic confirmation of such delivery, (ii) the first Trading Day immediately
following the date of transmission, if such notice or communication is delivered
via facsimile or by email not on a Trading Day or between 4:30 p.m. (New York
City time) and 11:59 p.m. (New York City time) on any date, with
electronic confirmation of such delivery, (iii) the second Business Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The address, facsimile and email address for
such notices and communications shall be as set forth on the signature pages
attached to the Purchase Agreement.
14
b) Absolute Obligation.
Except as expressly provided herein, no provision of this Note shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, liquidated damages and accrued interest, as applicable, on
this Note at the time, place, and rate, and in the coin or currency, herein
prescribed. This Note is a direct debt obligation of the
Company. This Note ranks pari passu 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, the Company 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 the Company.
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 either 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
reasonable attorney’s fees and other reasonable costs and expenses reasonably
incurred in the investigation, preparation and prosecution of such action or
proceeding.
15
e) Waiver. Any
waiver by the Company 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 the Company 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. Any waiver by the Company
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. If it shall be found that any interest or
other amount deemed interest due hereunder violates the applicable law governing
usury, the applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under applicable law.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on this 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 indenture, and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefits or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impeded
the execution of any power herein granted to the Holder, but will suffer and
permit the execution of every such as though no such law has been
enacted.
g) Next Business
Day. Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
h) Headings. The
headings contained herein are for convenience only, do not constitute a part of
this Note and shall not be deemed to limit or affect any of the provisions
hereof.
i) Assumption. Any
successor to the Company or any surviving entity in a Fundamental Transaction
shall (i) assume, prior to such Fundamental Transaction, all of the obligations
of the Company under this Note and the other Transaction Documents pursuant to
written agreements in form and substance satisfactory to the Holder (such
approval not to be unreasonably withheld or delayed) and (ii) issue to the
Holder a new Note of such successor entity evidenced by a written instrument
substantially similar in form and substance to this Note, including, without
limitation, having a principal amount and interest rate equal to the principal
amount and the interest rate of this Note and having similar ranking to this
Note, which shall be reasonably satisfactory to the Holder (any such approval
not to be unreasonably withheld or delayed). The provisions of this
Section 9(i) shall apply similarly and equally to successive Fundamental
Transactions and shall be applied without regard to any limitations of this
Note.
j) Usury. This
Note shall be subject to the anti-usury limitations contained in the Purchase
Agreement.
*********************
16
ADAMIS
PHARMACEUTICALS CORPORATION
|
|||
By:
|
/s/
Xxxxxx X. Xxxxx
|
||
Name:
|
Xxxxxx
X. Xxxxx
|
||
Title:
|
CEO
|
ANNEX
A
NOTICE
OF CONVERSION
The
undersigned hereby elects to convert principal under the 10% Senior Secured
Convertible Note due _______________________ of ADAMIS PHARMACEUTICALS
CORPORATION, a Delaware corporation (the Company”), into
shares of common stock (the “Common Stock”), of
the Company according to the conditions hereof, as of the date written
below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the issuance shall comply with the transfer
restrictions in the Purchaser Agreement and the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion,
except for such transfer taxes, if any.
By the
delivery of this Notice of Conversion the undersigned represents and warrants to
the Company that its ownership of the Common Stock does not exceed the amounts
specified under Section 4 of this 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 pursuant to any prospectus.
Conversion
calculations:
Date
to Effect Conversion:
|
Principal
Amount of Note to be Converted:
|
Interest
Accrued on Account of
Conversion at Issue:
|
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:
|