Exhibit 4.01
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER
SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO AMNIS
SYSTEMS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
CONVERTIBLE NOTE
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FOR VALUE RECEIVED, AMNIS SYSTEMS INC., a Delaware corporation
(hereinafter called "Borrower"), hereby promises to pay to________________
________________________________________________________________________________
(the "Holder") or order, without demand, the sum of ____________________________
($____________), with simple interest accruing at the annual rate of 12%, on
June 18, 2004 (the "Maturity Date").
This Note has been entered into pursuant to the terms of a
subscription agreement between the Borrower and the Holder, dated of even date
herewith (the "Subscription Agreement"), and shall be governed by the terms of
such Subscription Agreement. Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement. The following terms shall apply to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1 Payment Grace Period. The Borrower shall have a ten (10)
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business day grace period to pay any monetary amounts due under this Note, after
which grace period a default interest rate of fifteen percent (15%) per annum
shall apply to the amounts owed hereunder.
1.2 Conversion Privileges. The Conversion Privileges set forth in
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Article II shall remain in full force and effect immediately from the date
hereof and until the Note is paid in full. The Note shall be payable in full on
the Maturity Date, unless previously converted into Common Stock in accordance
with Article II hereof; provided, that if the Borrower violates or breaches in
any material respect any of its covenants or agreements to register the
Registrable Securities pursuant to Section 10 of the Subscription Agreement, the
Borrower may not pay this Note after the Maturity Date, without the consent of
the Holder.
1.3 Interest Rate. Simple interest payable on this Note shall
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accrue at the annual rate of twelve percent (12%) and be payable upon each
Conversion, and on the Maturity Date, accelerated or otherwise, when the
principal and remaining accrued but unpaid interest shall be due and payable, or
sooner as described below.
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ARTICLE II
CONVERSION RIGHTS
The Holder shall have the right to convert the principal due under
this Note into Shares of the Borrower's Common Stock, $.0001 par value per share
("Common Stock") as set forth below.
2.1. Conversion into the Borrower's Common Stock.
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(a) The Holder shall have the right from and after the issuance of
this Note and then at any time until this Note is fully paid, to convert any
outstanding and unpaid principal portion of this Note, and accrued interest, at
the election of the Holder (the date of giving of such notice of conversion
being a "Conversion Date") into fully paid and nonassessable shares of Common
Stock as such stock exists on the date of issuance of this Note, or any shares
of capital stock of Borrower into which such Common Stock shall hereafter be
changed or reclassified, at the conversion price as defined in Section 2.1(b)
hereof (the "Conversion Price"), determined as provided herein. Upon delivery to
the Borrower of a Notice of Conversion as described in Section 9 of the
Subscription Agreement of the Holder's written request for conversion, Borrower
shall issue and deliver to the Holder within three business days from the
Conversion Date ("Delivery Date") that number of shares of Common Stock for the
portion of the Note converted in accordance with the foregoing. At the election
of the Holder, the Borrower will deliver accrued but unpaid interest on the Note
in the manner provided in Section 1.3 through the Conversion Date directly to
the Holder on or before the Delivery Date (as defined in the Subscription
Agreement). The number of shares of Common Stock to be issued upon each
conversion of this Note shall be determined by dividing that portion of the
principal of the Note and interest to be converted, by the Conversion Price.
(b) Subject to adjustment as provided in Section 2.1(c) hereof,
the Conversion Price per share of Common Stock shall be the lower of (i) $.385
("Maximum Base Price") or (ii) seventy percent (70%) of the average of the three
lowest intraday trading prices for the Common Stock on the Principal Market for
the twenty (20) trading days prior to but not including the Conversion Date.
Principal Market shall mean the OTC Pink Sheets, NASD OTC Bulletin Board, NASDAQ
SmallCap Market, NASDAQ National Market System, American Stock Exchange, or New
York Stock Exchange, as applicable, or if not then trading on any of the
foregoing, such other principal market or exchange where the Common Stock is
listed or traded (whichever of the foregoing is at the time the principal
trading exchange or market for the Common Stock). Intraday trading price shall
mean the intraday trading price as reported by Bloomberg Financial.
(c) The Maximum Base Price and number and kind of shares or other
securities to be issued upon conversion determined pursuant to Section 2.1(a),
shall be subject to adjustment from time to time upon the happening of certain
events while this conversion right remains outstanding, as follows:
X. Xxxxxx, Sale of Assets, etc. If the Borrower at any time
shall consolidate with or merge into or sell or convey all or substantially all
its assets to any other corporation, this Note, as to the unpaid principal
portion thereof and accrued interest thereon, shall thereafter be deemed to
evidence the right to purchase such number and kind of shares or other
securities and property as would have been issuable or distributable on account
of such consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance. The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or conveyance.
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B. Reclassification, etc. If the Borrower at any time shall,
by reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid principal portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase an adjusted number of such
securities and kind of securities as would have been issuable as the result of
such change with respect to the Common Stock immediately prior to such
reclassification or other change.
C. Stock Splits, Combinations and Dividends. If the shares
of Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Conversion Price shall be proportionately reduced in case
of subdivision of shares or stock dividend or proportionately increased in the
case of combination of shares, in each such case by the ratio which the total
number of shares of Common Stock outstanding immediately after such event bears
to the total number of shares of Common Stock outstanding immediately prior to
such event.
(d) During the period the conversion right exists, Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. Borrower represents that upon issuance, such shares will be duly and
validly issued, fully paid and non-assessable. Xxxxxxxx agrees that its issuance
of this Note shall constitute full authority to its officers, agents, and
transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.
2.2 Method of Conversion. This Note may be converted by the
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Holder in whole or in part as described in Section 2.1(a) hereof and the
Subscription Agreement. Upon partial conversion of this Note, a new Note
containing the same date and provisions of this Note shall, at the request of
the Holder, be issued by the Borrower to the Holder for the principal balance of
this Note and interest which shall not have been converted or paid.
2.3 Maximum Conversion. The Holder shall not be entitled to
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convert on a Conversion Date that amount of the Note in connection with that
number of shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock beneficially owned by the Holder and its
affiliates on a Conversion Date, (ii) any Common Stock issuable in connection
with the unconverted portion of the Note, and (iii) the number of shares of
Common Stock issuable upon the conversion of the Note with respect to which the
determination of this provision is being made on a Conversion Date, which would
result in beneficial ownership by the Holder and its affiliates of more than
9.99% of the outstanding shares of Common Stock of the Company on such
Conversion Date. For the purposes of the provision to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder. Subject to the foregoing, the Holder shall not be limited to
aggregate conversions of only 9.99% and aggregate conversion by the Holder may
exceed 9.99%. The Holder shall have the authority and obligation to determine
whether the restriction contained in this Section 2.3 will limit any conversion
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of the
Notes are convertible shall be the responsibility and obligation of the Holder.
The Holder may void the conversion limitation described in this Section 2.3 upon
75 days prior written notice to the Borrower. The Holder may allocate which of
the equity of the Company deemed beneficially owned by the Holder shall be
included in the 9.99% amount described above and which shall be allocated to the
excess above 9.99%.
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ARTICLE III
EVENT OF DEFAULT
The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums of principal
and interest then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable, upon demand, without presentment, or
grace period, all of which hereby are expressly waived, except as set forth
below:
3.1 Failure to Pay Principal or Interest. The Borrower fails to
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pay any installment of principal, interest or other sum due under this Note when
due and such failure continues for a period of ten (10) days after the due date.
The ten (10) day period described in this Section 3.1 is the same ten (10)
business day period described in Section 1.1 hereof.
3.2 Breach of Covenant. The Borrower breaches any material
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covenant or other term or condition of the Subscription Agreement or this Note
in any material respect and such breach, if subject to cure, continues for a
period of ten (10) business days after written notice to the Borrower from the
Holder.
3.3 Breach of Representations and Warranties. Any material
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representation or warranty of the Borrower made herein, in the Subscription
Agreement, or in any agreement, statement or certificate given in writing
pursuant hereto or in connection therewith shall be false or misleading in any
material respect as of the date made and the Closing Date.
3.4 Receiver or Trustee. The Borrower shall make an assignment
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for the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business; or such a receiver or trustee shall otherwise be appointed.
3.5 Judgments. Any money judgment, writ or similar final process
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shall be entered or filed against Borrower or any of its property or other
assets for more than $100,000, and shall remain unvacated, unbonded or unstayed
for a period of forty-five (45) days.
3.6 Bankruptcy. Bankruptcy, insolvency, reorganization or
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liquidation proceedings or other proceedings or relief under any bankruptcy law
or any law for the relief of debtors shall be instituted by or against the
Borrower and if instituted against Borrower are not dismissed within 45 days of
initiation.
3.7 Delisting. Delisting of the Common Stock from the OTC
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Bulletin Board or such other principal exchange on which the Common Stock is
listed for trading; failure to comply with the requirements for continued
listing on the OTC Bulletin Board for a period of three consecutive trading
days; or notification from the OTC Bulletin Board or any Principal Market that
the Borrower is not in compliance with the conditions for such continued listing
on the OTC Bulletin Board or other Principal Market.
3.8 Stop Trade. An SEC stop trade order or Principal Market
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trading suspension that lasts for five or more consecutive trading days.
3.9 Failure to Deliver Common Stock or Replacement Note.
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Borrower's failure to timely deliver Common Stock to the Holder pursuant to and
in the form required by this Note and Section 9 of the Subscription Agreement,
or, if required, a replacement Note.
3.10 Non-Registration Event. The occurrence of a Non-Registration
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Event as described in Section 10.4 of the Subscription Agreement except that for
purposes of this Section, a Non-Registration Event
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in connection with the Filing Date shall be deemed to have occurred if the
registration statement described in Section 10.1(iv) of the Subscription
Agreement is not filed on or before the Filing Date as defined in Section
10.1(iv) of the Subscription Agreement.
3.11 Cross Default. A default by the Borrower of a material term,
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covenant, warranty or undertaking of any other agreement to which the Borrower
and Holder are parties, or the occurrence of a material event of default under
any such other agreement, in each case, which is not cured after any required
notice and/or cure period.
ARTICLE IV
MISCELLANEOUS
4.1 Failure or Indulgence Not Waiver. No failure or delay on the
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part of Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
4.2 Notices. All notices, demands, requests, consents, approvals,
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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 the Borrower to: Amnis Systems Inc.,
0000 Xxxxxxxx Xxxxxx, Xxxx Xxxx, XX 00000, Attn: Xxxx Xxxxxxxx or Xxxxx
Xxxxxxxx, telecopier number: (000) 000-0000, with a copy by telecopier only to:
Xxxxxx, Parachini, Steinberg, 000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, XX
00000, Attn: Xx Xxxxxxx, Esq., telecopier number: (000) 000-0000, and (ii) if to
the Holder, to the name, address and telecopy number set forth on the front page
of this Note, with a copy by telecopier only to Grushko & Xxxxxxx, P.C., 000
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, telecopier number: (212)
697-3575.
4.3 Amendment Provision. The term "Note" and all reference
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thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented.
4.4 Assignability. This Note shall be binding upon the Borrower
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and its successors and assigns, and shall inure to the benefit of the Holder and
its successors and assigns.
4.5 Cost of Collection. If default is made in the payment of this
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Note, Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.
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4.6 Governing Law. This Note shall be governed by and construed
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in accordance with the laws of the State of New York. Any action brought by
either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. Both parties and the individual
signing this Agreement on behalf of the Borrower agree to submit to the
jurisdiction of such courts. The prevailing party shall be entitled to recover
from the other party its reasonable attorney's fees and costs.
4.7 Maximum Payments. Nothing contained herein shall be deemed to
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establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
4.8 Redemption. This Note may not be redeemed or paid before the
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Maturity Date without the consent of the Holder.
4.9 Shareholder Status. The Holder shall not have rights as a
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shareholder of the Borrower with respect to unconverted portions of this Note,
except that from and after the Delivery Date, the Holder shall have rights as a
shareholder of the Borrower with respect to Common Stock to be delivered on such
Delivery Date.
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IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed in its name
by an authorized officer on this 18th day of June, 2002.
AMNIS SYSTEMS INC.
By:________________________________
Name:
Title:
WITNESS:
_______________________________
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NOTICE OF CONVERSION
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(To be executed by the Registered Holder in order to convert the Note)
The undersigned hereby elects to convert $_________ of the principal and
$_________ of the interest due on the Note issued by AMNIS SYSTEMS INC. on June
____, 2002 into Shares of Common Stock of AMNIS SYSTEMS INC. (the "Company")
according to the conditions set forth in such Note, as of the date written
below.
Date of Conversion:____________________________________________________________
Conversion Price:______________________________________________________________
Shares To Be Delivered:________________________________________________________
Signature:_____________________________________________________________________
Print Name:____________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________
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