FORM OF NOTE
EXHIBIT 4.4
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES
LAWS, BUT HAS BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR PURPOSES OF
INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS UNDER THE 1933 ACT, AND UNDER
ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR ASSIGNED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER PROVISIONS
OF THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT; AND IN THE CASE OF AN EXEMPTION, ONLY IF THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
TRANSACTION DOES NOT REQUIRE REGISTRATION OF THIS NOTE.
MOLECULAR DIAGNOSTICS, INC.
___________ __, 2004 Chicago, Illinois
$ .00
10% CONVERTIBLE PROMISSORY NOTE
Molecular Diagnostics, Inc., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to ____________________, or
registered assigns (the "Holder") on December 31, 2008 (the "Maturity Date"), at
the Holder's address on the books of the Company (the "Holder's Address"), the
principal sum of ____________ Thousand Dollars ($____,000) in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest on
the outstanding principal sum hereof at the rate of ten percent (10%) per annum
(the "Note"). Principal shall be payable on the Maturity Date in like coin or
currency to the Holder hereof at the office of the Company as hereinafter set
forth, provided that any payment otherwise due on a Saturday, Sunday or legal
Bank holiday may be paid on the following business day. Interest accrued through
December 31, 2006 shall be payable on a semi-annual basis on June 30 and
December 31 in shares of common stock of the Company at the moving average last
sales price of the Company's common stock for the 20 trading days immediately
preceding the interest payment date. Interest accrued from January 31, 2007
through December 31, 2008 shall be payable on a semi-annual basis on June 30 and
December 31 in like coin or currency to the Holder hereof at the Holder's
Address, provided that any payment otherwise due on a Saturday, Sunday or legal
Bank holiday may be paid on the following business day. In the event that for
any reason whatsoever any interest or other consideration payable with respect
to this Note shall be deemed to be usurious by a court of competent jurisdiction
under the laws of the State of Illinois or the laws of any other state governing
the repayment hereof, then so much of such interest or other consideration as
shall be deemed to be usurious shall be held by the holder as security for the
repayment of the principal amount hereof and shall otherwise be waived. This
Note is one of a series of Notes aggregating up to $4,000,000 in principal. Any
conversion of this Note is subject to filing the Certificate of Amendment as set
forth in Section 3 of the Subscription Agreement of even date herewith.
1. TRANSFERS OF NOTE TO COMPLY WITH THE 1933 ACT
The Holder agrees that this Note may not be sold, transferred,
pledged, hypothecated or otherwise disposed of except as follows: (1) to a
person whom the Note may legally be transferred without registration and without
delivery of a current prospectus under the 1933 Act with respect thereto and
then only against receipt of an agreement of such person to comply with the
provisions of this Section 1 with respect to any resale or other disposition of
the Note; or (2) to any person upon delivery of a prospectus then meeting the
requirements of the 1933 Act relating to such securities and the offering
thereof for such sale or disposition, and
thereafter to all successive assignees.
2. PREPAYMENT; AUTOMATIC CONVERSION; CONVERSION
The principal amount of this Note may be prepaid by the Company, in
whole or in part without premium or penalty, at any time. Upon any prepayment of
the entire principal amount of this Note, all accrued, but unpaid interest shall
be paid to the Holder on the date of prepayment.
At any time prior to or at the time of repayment of this Note by the
Company, the Holder may elect to convert some or all of the principal and
interest owing on this Note into shares of the Company's common stock, subject
to the restrictions contained herein. The conversion rate shall equal the amount
to be converted, divided by $.10 per share. Such election to convert shall be
evidenced by completion of the conversion notice attached hereto and delivery of
such notice to the Company. The Holder's right to convert the obligations due
under this Note to common stock shall supercede the Company's right to repay
such obligations in cash, subject to the restrictions contained herein.
At anytime prior to the Maturity Date, this Note is automatically
converted into shares of common stock of the Company in the event that (i) if
the closing sales price of the Company's common stock is equal to or in excess
of $.30 for a period of twenty (20) consecutive trading days; (ii) the daily
average trading volume for those twenty (20) days is equal to or in excess of
250,000; (iii) the Common Stock underlying the Notes and Warrants is registered
for resale under the 1933 Act; (iv) the Company has sufficient shares of Common
Stock authorized to issue for the converted notes; and (v) Xxxxxxx Xxxxxxxx'x
secured convertible promissory note has been converted to equity or paid in
full.
In the event the Company intends to prepay any or all of the
outstanding principal or interest on this Note, the Company must provide written
notice to the Holder at least ten (10) days prior to the proposed prepayment
date ("Prepayment Date"). If the Holder wishes to convert any or all of the
outstanding principal or interest on this Note rather than receiving payment in
cash, the Holder must notify the Company no later than five (5) days prior to
the Prepayment Date by delivering to the Company a completed copy of the
conversion notice attached hereto. If the Holder wishes to convert any or all of
the outstanding principal or interest on this Note prior to the Maturity Date,
rather than receiving payment in cash, the Holder must notify the Company no
later than five (5) days prior to the Maturity Date by delivering to the Company
a completed copy of the conversion notice attached hereto.
In the event the Holder elects to convert a portion of the principal
or interest on this Note, or the Company prepays any portion of the principal or
interest on this Note, the Holder shall deliver this Note to the Company and the
Company shall issue a new Note to the Holder evidencing the reduction of
principal or interest.
3. SECURITY. This Note is subject to a General Security Agreement of
even date between the Company and the Holder.
4. COVENANTS OF COMPANY
The Company covenants and agrees that, so long as any principal of,
or interest on, this Note shall remain unpaid, unless the Holder shall otherwise
consent in writing, it will comply with the following terms:
(a) REPORTING REQUIREMENTS. The Company will furnish to the Holder:
(i) as soon as possible, and in any event within ten (10) days after
obtaining knowledge of the occurrence of (A) an "Event of Default," as
hereinafter defined, (B) an event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default, or (C) a material adverse
change in the condition or operations, financial or otherwise, of the Company,
taken as whole, the written statement of the Chief Executive Officer or the
Chief Financial Officer of the Company, setting forth the details of such Event
of Default, event or material adverse change and the action which the Company
proposes to take with respect thereto;
(ii) promptly after the sending or filing thereof, copies of all
financial statements, reports, certificates of its Chief Executive Officer,
Chief Financial Officer or accountants and other information which the Company
or any subsidiary sends to any holders (other than the Notes) of its securities;
(iii) promptly after the commencement thereof, notice of each
action, suit or proceeding before any court or other governmental authority or
other regulatory body or any arbitrator as to which there is a reasonable
possibility of a determination that would (A) materially impact the ability of
the Company or any subsidiary to conduct its business, (B) materially and
adversely affect the business, operations or financial condition of the Company
taken as a whole, or (C) impair the validity or enforceability of the Notes or
the ability of the Company to perform its obligations under the Notes.
(b) COMPLIANCE WITH LAWS. The Company will comply, in all material
respects with all applicable laws, rules, regulations and orders, except to the
extent that noncompliance would not have a material adverse effect upon the
business, operations or financial condition of the Company taken as a whole.
(c) PRESERVATION OF EXISTENCE. The Company will maintain and
preserve, and cause each subsidiary, if any, to maintain and preserve, its
existence, and become or remain duly qualified and in good standing in each
jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, operations or financial condition of the
Company, taken as a whole.
(d) MAINTENANCE OF PROPERTIES. The Company will maintain and
preserve, all of its properties which are necessary in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and comply, at all times with the provisions of all leases to which it is a
party as lessee or under which it occupies property, so as to prevent any
forfeiture or material loss thereof or thereunder.
(e) MAINTENANCE OF INSURANCE. The Company will maintain, with
responsible and reputable insurers, insurance with respect to its properties and
business, in such amounts and covering such risks, as is carried generally in
accordance with sound business practice by companies in similar businesses in
the same localities in which the Company is situated.
(f) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The Company will keep
adequate records and books of account, with complete entries made in accordance
with generally accepted accounting principles, reflecting all of its financial
and other business transactions.
(g) COMPLIANCE WITH THE SECURITIES EXCHANGE ACT OF 1934. The Company
shall comply in all respects with the requirements of the Securities Exchange
Act of 1934, including the filing of all reports due thereunder.
(h) RESERVATION OF COMMON STOCK. Subject to filing the Certificate
of Amendment as set forth in Section 3 of the Subscription Agreement of even
date herewith, the Company further covenants and agrees that the Company will at
all times have authorized and reserved, free from preemptive rights, a
sufficient number of shares of its common stock to provide for the conversion of
this Note in full.
5. EVENTS OF DEFAULT AND REMEDIES
(a) Any one or more of the following events which shall have
occurred and be continuing shall constitute an event of default ("Event of
Default"):
(i) Default in the payment of interest upon this Note, as and
when the same shall become due; or
(ii) Default in the payment of the principal of this Note, as
and when the same shall become due; or
(iii) The Company shall fail to perform or observe any
affirmative covenant contained in this Note or the subscription agreement
executed by the Company and the Holder as of the date hereof and such Default,
if capable of being remedied, shall not have been remedied ten (10) days after
written notice thereof shall have been given by the Holder to the Company; or
(iv) The Company or any subsidiary (A) shall institute any
proceeding or voluntary case seeking to adjudicate it bankrupt or insolvent, or
seeking dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of any order for relief or the appointment of a receiver,
trustee, custodian or other similar official for such the Company or any
subsidiary or for any substantial part of its property, or shall consent to the
commencement against it of such a proceeding or case, or shall file an answer in
any such case or proceeding commenced against it consenting to or acquiescing in
the commencement of such case or proceeding, or shall consent to or acquiesce in
the appointment of such a receiver, trustee, custodian or similar official; (B)
shall be unable to pay its debts as such debts become due, or shall admit in
writing its inability to apply its debts generally; (C) shall make a general
assignment for the benefit of creditors; or (D) shall take any action to
authorize or effect any of the actions set forth above in this subsection 3
(iv); or
(v) Any proceeding shall be instituted against the Company
seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for the
Company or for any substantial part of its property, and either such proceeding
shall not have been dismissed or shall not have been stayed for a period of
sixty (60) days or any of the actions sought in such proceeding (including,
without limitation, the entry of any order for relief against it or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property) shall occur; or
(vi) One or more final judgments or orders for the payment of
money in excess of $100,000 in the aggregate shall be rendered against the
Company, and either (A) enforcement proceedings shall have been commenced by any
creditor upon any such judgment or order, or (B) there shall be any period of
thirty (30) days during which enforcement of any such judgment or order shall
not be discharged, stayed or fully satisfied.
(b) If an Event of Default described above has occurred, then the
Holder may, without further notice to the Company, declare the principal amount
of this Note at the time outstanding, together with accrued unpaid interest
thereon, and all other amounts payable under this Note to be forthwith due and
payable, whereupon such principal, interest and all such amounts shall become
and be forthwith due and payable.
(c) The Company covenants that in case the principal of, and accrued
interest on, the Note becomes due and payable by declaration or otherwise, then
the Company will pay in cash to the Holder of this Note, the whole amount that
then shall have become due and payable on this Note for principal or interest,
as the case may be, and in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
fees and disbursements of the Holder's legal counsel. In case the Company shall
fail forthwith to pay such amount, the Holder may commence an action or
proceeding at law or in equity for the collection of the sums so due and unpaid,
and may prosecute any such action or proceeding to judgment or final decree
against Company or other obligor upon this Note, wherever situated, the monies
adjudicated or decreed to be payable.
6. MISCELLANEOUS
(a) This Note has been issued by the Company pursuant to
authorization of the Board of Directors of the Company.
(b) The Company may consider and treat the entity in whose
name this Note shall be registered as the absolute owner thereof for all
purposes whatsoever (whether or not this Note shall be overdue) and the Company
shall not be affected by any notice to the contrary. Subject to the limitations
herein stated, the registered owner of this Note shall have the right to
transfer this Note by assignment, and the transferee thereof shall, upon his
registration as owner of this Note, become vested with all the powers and rights
of the transferor. Registration of any new owners shall take place upon
presentation of this Note to the Company at its principal offices, together with
a duly authenticated assignment. In case of transfer by operation of law, the
transferee agrees to notify the Company of such transfer and of his address, and
to submit appropriate evidence regarding the transfer so that this Note may be
registered in the name of the transferee. This Note is transferable only on the
books of the Company by the holder hereof, in person or by attorney, on the
surrender hereof, duly endorsed. Communications sent to any registered owner
shall be effective as against all holders or transferees of the Note not
registered at the time of sending the communication.
(c) Payments of principal and interest shall be made as
specified above to the registered owner of this Note. No interest shall be due
on this Note for such period of time that may elapse between the maturity of
this Note and its presentation for payment.
(d) The Holder shall not, by virtue, hereof, be entitled to
any rights of a shareholder in the Company, whether at law or in equity, and the
rights of the Holder are limited to those expressed in this Note.
(e) Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Note,
and (in the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Note, if mutilated,
the Company shall execute and deliver a new Note of like tenor and date.
(f) This Note shall be construed and enforced in accordance
with the laws of the State of Illinois. The Company and the Holder hereby
consent to the jurisdiction of the Courts of the State of Illinois and the
United States District Courts situated therein in connection with any action
concerning the provisions of this Note instituted by the Holder against the
Company.
IN WITNESS WHEREOF, Molecular Diagnostics, Inc. caused this Note to
be signed in its name by its Chief Executive Officer.
Molecular Diagnostics, Inc.
By:
-------------------
Xxxxx X. X'Xxxxxxx
Chief Executive Officer
NOTICE OF CONVERSION
(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 Molecular Diagnostics, Inc.
into Shares of Common Stock according to the conditions set forth in such Note,
as of the date written below. The undersigned further affirms that as of the
date hereof, the representations and warranties made by the undersigned in the
subscription agreement of even date with the promissory note being converted,
are true and correct as if such representations and warranties were made as of
the date hereof.
Date of Conversion:_____________________________________________________________
Conversion Price: $_____ per share
Shares To Be Delivered:_________________________________________________________
Signature:______________________________________________________________________
Print Name:_____________________________________________________________________
Address:________________________________________________________________________
