Contract
Exhibit 10.30
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. 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
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO PARENT
THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, XXXX THERAPEUTICS, INC., a California corporation (the “Parent””), hereby
promises to pay to CALLIOPE CAPITAL CORPORATION, c/o United Corporate Services, Inc. 000 Xxxxxx
Xxxx, Xxxxx X Xxxxx Xxxxxxxx 00000 (the “Holder”) or its registered assigns or successors in
interest, sum of Seven Hundred Fifty Thousand Dollars ($750,000), together with any accrued and
unpaid interest hereon, on July 30, 2010 (the “Maturity Date”) if not indefeasibly sooner paid in
full.
Capitalized terms used herein without definition shall have the meanings ascribed to such
terms in that certain Security Agreement dated as of the date hereof by and between the Parent and
the Holder (as amended, modified and/or supplemented from time to time, the “Security Agreement”).
The following terms shall apply to this Secured Convertible Term Note (this “Note”):
ARTICLE I
CONTRACT RATE AND AMORTIZATION
CONTRACT RATE AND AMORTIZATION
1.1 Contract Rate. Subject to Sections 4.2 and 5.10, interest payable on the
outstanding principal amount of this Note (the “Principal Amount”) shall accrue at a rate per annum
equal to the “prime rate” published in The Wall Street Journal from time to time (the
“Prime Rate”), plus two percent (2.0%) (the “Contract Rate”). The Contract Rate shall be increased
or decreased as the case may be for each increase or decrease in the Prime Rate in an amount equal
to such increase or decrease in the Prime Rate; each change to be effective as of the day of the
change in the Prime Rate. The Contract Rate shall not at any time be less than ten percent (10.0%)
per annum nor more than thirteen percent (13.0%) per annum. Interest shall be (i) calculated on
the basis of a 360 day year, and (ii) payable monthly, in arrears, commencing on September 1, 2007,
on the first business day of each consecutive calendar month thereafter through and including the
Maturity Date, and on the Maturity Date, whether by acceleration or otherwise.
1.2 Contract Rate Payments. The Contract Rate shall be calculated on the last
business day of each calendar month hereafter (other than for increases or decreases in the Prime
Rate which shall be calculated and become effective in accordance with the terms of Section
1.1) until the Maturity Date and shall be subject to adjustment as set forth herein.
Secured Convertible Term Note
1.3 Principal Payments. Amortizing payments of the Principal Amount shall be made by
the Parent on November 1, 2007 and on the first business day of each succeeding month thereafter
through and including the Maturity Date (each, an “Amortization Date”). Subject to Article III
below, commencing on the first Amortization Date, the Parent shall make monthly payments to the
Holder on each Amortization Date, each such payment in the amount of $22,727.27 together with any
accrued and unpaid interest on such portion of the Principal Amount plus any and all other unpaid
amounts which are then owing under this Note, the Security Agreement and/or any other Ancillary
Agreement (collectively, the “Monthly Amount”). Any outstanding Principal Amount together with any
accrued and unpaid interest and any and all other unpaid amounts which are then owing by the Parent
to the Holder under this Note, the Security Agreement and/or any other Ancillary Agreement shall be
due and payable on the Maturity Date.
ARTICLE II
CONVERSION AND REDEMPTION
CONVERSION AND REDEMPTION
2.1 Payment of Monthly Amount.
(a) Payment in Cash or Common Stock. If the Monthly Amount (or a portion of such
Monthly Amount if not all of the Monthly Amount may be converted into shares of Common Stock
pursuant to Section 3.2) is required to be paid in cash pursuant to Section 2.1(b), then the Parent
shall pay the Holder an amount in cash equal to 100% of the Monthly Amount (or such portion of such
Monthly Amount to be paid in cash) due and owing to the Holder on the Amortization Date. If the
Monthly Amount (or a portion of such Monthly Amount if not all of the Monthly Amount may be
converted into shares of Common Stock pursuant to Section 3.2) is required to be paid in shares of
Common Stock pursuant to Section 2.1(b), the number of such shares to be issued by the Parent to
the Holder on such Amortization Date (in respect of such portion of the Monthly Amount converted
into shares of Common Stock pursuant to Section 2.1(b)), shall be the number determined by dividing
(i) the portion of the Monthly Amount converted into shares of Common Stock, by (ii) the then
applicable Fixed Conversion Price. For purposes hereof, subject to Section 3.6 hereof, the initial
“Fixed Conversion Price” means $1.18.
(b) Monthly Amount Conversion Conditions. Subject to Sections 2.1(a), 2.2, and 3.2
hereof, the Holder shall convert into shares of Common Stock all or a portion of the Monthly Amount
due on each Amortization Date if the following conditions (the “Conversion Criteria”) are
satisfied: (i) the average closing price of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market for the five (5) consecutive trading days immediately preceding such Amortization
Date shall be greater than or equal to one hundred fifteen percent (115%) of the Fixed Conversion
Price and (ii) the amount of such conversion does not exceed twenty five percent (25%) of the
average dollar trading volume of the Common Stock for the period of twenty-two (22) consecutive
trading days immediately preceding and including such Amortization Date. If subsection (i) of the
Conversion Criteria is met but subsection (ii) of the Conversion Criteria is not met as to the
entire Monthly Amount, the Holder shall convert only such part of the Monthly Amount that meets subsection (ii) of the
Conversion Criteria. Any portion of the Monthly Amount due on an Amortization Date that the Holder
has not been able to convert into shares of Common Stock due to the failure to meet the Conversion
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Criteria, shall be paid in cash by the Companies, jointly and severally, at the rate of 100% of the
Monthly Amount otherwise due on such Amortization Date, within three (3) business days of such
Amortization Date.
2.2 No Effective Registration. Notwithstanding anything to the contrary herein, the
Parent shall not be permitted to pay any part of its obligations to the Holder hereunder in shares
of Common Stock if (i) there fails to exist an effective current Registration Statement (as defined
in the Registration Rights Agreement) covering the resale of the shares of Common Stock to be
issued in connection with such payment and there fails to exist an exemption from registration for
resale available pursuant to Rule 144 of the Securities Act and in respect of the Common Stock to
be issued in connection with such payment or (ii) an Event of Default (as hereinafter defined)
exists and is continuing, unless such Event of Default is cured within any applicable cure period
or otherwise waived in writing by the Holder.
2.3 Optional Redemption in Cash. The Parent may prepay this Note (“Optional
Redemption”) by paying to the Holder a sum of money equal to (i) one hundred twenty five percent
(125%) of the Principal Amount outstanding at such time together with accrued but unpaid interest
thereon and any and all other sums due, accrued or payable to the Holder arising under this Note,
the Security Agreement or any other Ancillary Agreement if prepaid on or before July 1, 2008; (ii)
one hundred fifteen percent (115%) of the Principal Amount outstanding at such time together with
accrued but unpaid interest thereon and any and all other sums due, accrued or payable to the
Holder arising under this Note, the Security Agreement or any other Ancillary Agreement if prepaid
after July 1, 2008 but on or before July 1, 2009; or (iii) one hundred ten percent (110%) of the
Principal Amount outstanding at such time together with accrued but unpaid interest thereon and any
and all other sums due, accrued or payable to the Holder arising under this Note, the Security
Agreement or any other Ancillary Agreement if prepaid after July 1, 2009 but before the Maturity
Date (each of the foregoing (i), (ii) and (iii) a “Redemption Amount”) outstanding on the
Redemption Payment Date (as defined below). The Companies shall deliver to the Holder a written
notice of redemption (the “Notice of Redemption”) specifying the date for such Optional Redemption
(the “Redemption Payment Date”), which date shall be ten (10) business days after the date of the
Notice of Redemption (the “Redemption Period”). A Notice of Redemption shall not be effective with
respect to any portion of this Note for which the Holder has previously delivered a Notice of
Conversion (as hereinafter defined) or for conversions elected to be made by the Holder pursuant to
Article III during the Redemption Period. The Redemption Amount shall be determined as if the
Holder’s conversion elections had been completed immediately prior to the date of the Notice of
Redemption. On the Redemption Payment Date, the Redemption Amount must be paid in good funds to
the Holder. In the event the Companies fail to pay the Redemption Amount on the Redemption Payment
Date as set forth herein, then such Redemption Notice will be null and void.
ARTICLE III
HOLDER’S CONVERSION RIGHTS
HOLDER’S CONVERSION RIGHTS
3.1 Optional Conversion. Subject to the terms set forth in this Article III, the
Holder shall have the right, but not the obligation, to convert all or any portion of the issued
and outstanding Principal Amount and/or accrued interest and fees due and payable into fully paid
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3
and nonassessable shares of Common Stock at the Fixed Conversion Price. The shares of Common Stock
to be issued upon such conversion are herein referred to as, the “Conversion Shares.”
3.2 Conversion Limitation. Notwithstanding anything herein to the contrary, in no
event shall the Holder be entitled to convert any portion of this Note in excess of that portion of
this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially
owned by the Holder and its Affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted portion of the Note or the unexercised
or unconverted portion of any other security of the Holder subject to a limitation on conversion
analogous to the limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the conversion of the portion of this Note with respect to which the determination of
this proviso is being made, would result in beneficial ownership by the Holder and its Affiliates
of any amount greater than 9.99% of the then outstanding shares of Common Stock (whether or not, at
the time of such exercise, the Holder and its Affiliates beneficially own more than 9.99% of the
then outstanding shares of Common Stock). As used herein, the term “Affiliate” means any person or
entity that, directly or indirectly through one or more intermediaries, controls or is controlled
by or is under common control with a person or entity, as such terms are used in and construed
under Rule 144 under the Securities Act. For purposes of the second preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided in
clause (1) of such sentence. For any reason at any time, upon written or oral request of the
Holder, the Parent shall within one (1) business day confirm orally and in writing to the Holder
the number of shares of Common Stock outstanding as of any given date. The limitations set forth
herein (x) may be waived by the Holder upon provision of no less than sixty-one (61) days prior
written notice to the Parent and (y) shall automatically become null and void (i) following notice
to the Parent upon the occurrence and during the continuance of an Event of Default (as defined in
the Security Agreement), or (ii) upon receipt by the Holder of a Notice of Redemption, except that
at no time shall the Parent be obligated to issue any shares of Common Stock pursuant to the terms
of this Note, the Security Agreement, any Ancillary Agreement (as defined in the Security
Agreement) or if the issuance of such shares of Common Stock would exceed the aggregate number of
shares of Common Stock which the Parent may issue pursuant to the terms of this Note, the Security
Agreement, any Ancillary Agreement without violating the rules or regulations of the Principal
Market (the “Exchange Cap”), except that such limitation shall not apply in the event that the
Parent obtains the approval of its stockholders as required by the applicable rules or regulations
of the Principal Market for issuances of Common Stock in excess of such amount.
3.3 Mechanics of Xxxxxx’s Conversion. In the event that the Holder elects to convert this
Note into Common Stock, the Holder shall give notice of such election by delivering an executed and
completed notice of conversion in substantially the form of Exhibit A hereto (appropriate
completed) (“Notice of Conversion”) to the Parent and such Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal Amount, accrued interest and fees that are being
converted. On each Conversion Date (as hereinafter defined) and in accordance with its Notice of
Conversion, the Holder shall make the appropriate reduction to the Principal Amount, accrued
interest and fees as entered in its records and shall provide written notice thereof to the Parent
within two (2) business days after the Conversion Date. Each date on which
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a Notice of Conversion
is delivered or telecopied to the Parent in accordance with the provisions hereof shall be deemed a
Conversion Date (the “Conversion Date”). Pursuant to the terms of the Notice of Conversion, the
Parent will issue instructions to the transfer agent accompanied by an opinion of counsel within
two (2) business days of the date of the delivery to the Parent of the Notice of Conversion and
shall cause the transfer agent to transmit the certificates representing the Conversion Shares to
the Holder by crediting the account of the Holder’s designated broker with the Depository Trust
Corporation (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system within three
(3) business days after receipt by the Parent of the Notice of Conversion (the “Delivery Date”).
In the case of the exercise of the conversion rights set forth herein the conversion privilege
shall be deemed to have been exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the Parent of the Notice of
Conversion. The Holder shall be treated for all purposes as the record holder of the Conversion
Shares, unless the Holder provides the Parent written instructions to the contrary.
3.4 Late Payments. The Parent understands that a delay in the delivery of the
Conversion Shares in the form required pursuant to this Article beyond the Delivery Date could
result in economic loss to the Holder. As compensation to the Holder for such loss, in addition to
all other rights and remedies which the Holder may have under this Note, applicable law or
otherwise, the Parent shall pay late payments to the Holder for any late issuance of Conversion
Shares in the form required pursuant to this Article II upon conversion of this Note, in the amount
equal to $500 per business day after the Delivery Date. The Parent shall, make any payments
incurred under this Section in immediately available funds upon demand.
3.5 Conversion Mechanics. 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 and interest
and fees to be converted, if any, by the then applicable Fixed Conversion Price. In the event of
any conversions of a portion of the outstanding Principal Amount pursuant to this Article III, such
conversions shall be deemed to constitute conversions of the outstanding Principal Amount applying
to Monthly Amounts for the remaining Amortization Dates in chronological order.
3.6 Adjustment Provisions. The Fixed Conversion Price and number and kind of shares
or other securities to be issued upon conversion determined pursuant to this Note shall be subject
to adjustment from time to time upon the occurrence of certain events during the period that this
conversion right remains outstanding, as follows:
(a) Reclassification. If the Parent 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 Amount 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 (i) immediately prior to or (ii) immediately after, such reclassification or other
change at the sole election of the Holder.
(b) Stock Splits, Combinations and Dividends. If the shares of Common Stock are
subdivided or combined into a greater or smaller number of shares of
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Common Stock, or if a dividend
is paid on the Common Stock or any preferred stock issued by the Parent in shares of Common Stock,
the Fixed 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.
3.7 Reservation of Shares. During the period the conversion right exists, the Parent
will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of Conversion Shares upon the full conversion of this Note and the Warrants. The
Parent represents that upon issuance, the Conversion Shares will be duly and validly issued, fully
paid and non-assessable. The Parent 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 the Conversion
Shares upon the conversion of this Note.
3.8 Registration Rights. The Holder has been granted registration rights with respect
to the Conversion Shares as set forth in the Registration Rights Agreement.
3.9 Issuance of New Note. Upon any 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 Parent to the Holder for the principal balance of this Note and interest which shall not
have been converted or paid. Subject to the provisions of Article IV of this Note, the Parent
shall not pay any costs, fees or any other consideration to the Holder for the production and
issuance of a new Note.
3.10 Rights of Shareholders. No Holder shall be entitled to vote or receive dividends
or be deemed the holder of the Note Shares or any other securities of the Parent which may at any
time be issuable upon conversion of this Note for any purpose, nor shall anything contained herein
be construed to confer upon the Holder, as such, any of the rights of a shareholder of the Parent
or any right to vote for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate action (whether upon the
recapitalization, issuance of shares, reclassification of shares, change of nominal value,
consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise, in each case, until the Delivery Date applicable to
the respective Note Shares purchasable upon the conversion hereof shall have occurred as provided
herein.
ARTICLE IV
EVENTS OF DEFAULT
EVENTS OF DEFAULT
4.1 Events of Default. The occurrence of an Event of Default under the Security
Agreement shall constitute an event of default (“Event of Default”) hereunder.
4.2 Default Interest. Following the occurrence and during the continuance of an Event
of Default, the Parent shall pay additional interest on the outstanding principal balance of this
Note in an amount equal to one percent (1%) per month, and all outstanding Obligations,
Secured Convertible Term Note
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including unpaid interest, shall continue to accrue interest at such additional interest rate from the date
of such Event of Default until the date such Event of Default is cured or waived.
4.3 Default Payment. Following the occurrence and during the continuance of an Event
of Default, the Holder, at its option, may elect, in addition to all rights and remedies of the
Holder under the Security Agreement and the Ancillary Agreements and all obligations of the Parent
under the Security Agreement and the Ancillary Agreements, to accelerate the maturity of all
obligations hereunder (“Default Payment”). The Default Payment shall be one hundred twenty percent
(120%) of the outstanding principal amount of the Note, plus accrued but unpaid interest and all
other fees then remaining unpaid, and all amounts payable hereunder. The Default Payment shall be
applied first to any fees due and payable to the Holder pursuant to the Notes and/or the Ancillary
Agreements, then to accrued and unpaid interest due on the Notes, the Security Agreement and then
to the outstanding principal balance of the Notes. The Default Payment shall be due and payable
immediately on the date that the Holder has demanded payment of the Default Payment pursuant to
this Section 4.3.
ARTICLE V
MISCELLANEOUS
MISCELLANEOUS
5.1 Conversion Privileges. The conversion privileges set forth in Article III shall
remain in full force and effect immediately from the date hereof until the date this Note is
indefeasibly paid in full and irrevocably terminated.
5.2 Cumulative Remedies. The remedies under this Note shall be cumulative.
5.3 Failure or Indulgence Not Waiver. No failure or delay on the part of the 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.
5.4 Notices. Any notice herein required or permitted to be given shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the party notified, (b) when
sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not,
then on the next business day, (c) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of receipt.
All communications shall be sent to the Parent at the address provided for the Parent in
the Security Agreement executed in connection herewith, and to the Holder at the address
provided in the Security Agreement for the Holder, with a copy to Laurus Capital Management, LLC,
Attn: Portfolio Services, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
facsimile number (000) 000-0000, or at such other address as the Parent or the Holder may designate
by ten days advance written notice to the other parties hereto. A Notice of Conversion shall be
deemed given when made to the Parent pursuant to the Security Agreement.
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5.5 Amendment Provision. The term “Note” and all references 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, and any successor instrument as such successor
instrument may be amended or supplemented.
5.6 Assignability. This Note shall be binding upon the Parent and its subsidiaries,
successors and assigns, and shall inure to the benefit of the Holder and its successors and
assigns, and may be assigned by the Holder in accordance with the requirements of the Security
Agreement. The Parent may not assign any of its obligations under this Note without the prior
written consent of the Holder, any such purported assignment without such consent being null and
void.
5.7 Cost of Collection. In case of any Event of Default under this Note, the Parent
shall, pay the Holder the Holder’s reasonable costs of collection, including reasonable attorneys’
fees.
5.8 Governing Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(b) THE PARENT HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE PARENT, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,
PERTAINING TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY AGREEMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS NOTE, THE SECURITY AGREEMENT OR ANY OF THE OTHER ANCILLARY
AGREEMENTS PROVIDED, THAT THE PARENT ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY
HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND
FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE
THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE
OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE HOLDER. THE PARENT EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE PARENT
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS. THE PARENT HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT
AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARENT AT
THE ADDRESS SET FORTH IN THE SECURITY AGREEMENT AND THAT SERVICE SO
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MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF THE PARENT’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID
(c) THE PARENT DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, EACH PARENT HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
THE HOLDER, AND THE PARENT ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, THE SECURITY AGREEMENT, ANY
OTHER ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
5.9 Severability. In the event that any provision of this Note is invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other provision of this Note.
5.10 Maximum Payments. Nothing contained herein shall be deemed to 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 rate permitted by such law, any payments in excess of such maximum
rate shall be credited against amounts owed by the Parent to the Holder and thus refunded to the
Parent.
5.11 Security Interest . The Holder has been granted a security interest in certain
assets of the Parent as more fully described in the Security Agreement dated as of the date hereof.
5.12 Construction. Each party acknowledges that its legal counsel participated in the
preparation of this Note and, therefore, stipulates that the rule of construction that ambiguities
are to be resolved against the drafting party shall not be applied in the interpretation of this
Note to favor any party against the other.
5.13 Registered Obligation. This Note is intended to be a registered obligation
within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i) and the Parent (or its agent)
shall register this Note (and thereafter shall maintain such registration) as to both
principal and any stated interest. Notwithstanding any document, instrument or agreement relating
to this Note to the contrary, transfer of this Note (or the right to any payments of principal or
stated interest thereunder) may only be effected by (i) surrender of this Note and either the
reissuance by the Parent of this Note to the new holder or the issuance by the Parent of a new
instrument to the new holder, or (ii) transfer through a book entry system maintained by the Parent
(or its agent), within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).
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IN WITNESS WHEREOF, the Parent has caused this Secured Convertible Term Note to be signed in
its name effective as of this 30th day of July, 2007.
| XXXX THERAPEUTICS, INC. |
||||
| By: | /s/ Xxxx X. Xxxxx | |||
| Name: | Xxxx X. Xxxxx | |||
| Title: | Chief Executive Officer | |||
WITNESS:
/s/ Xxxxx X. Xxxx |
||
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EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Holder in order to convert all or part of
the Secured Convertible Term Note into Common Stock)
the Secured Convertible Term Note into Common Stock)
[Name and Address of Parent]
The undersigned hereby converts $ of the principal due on [specify applicable
Repayment Date] under the Secured Convertible Term Note dated as of , 200___ (the “Note”)
issued by Xxxx Therapeutics, Inc. (the “Parent”) by delivery of shares of Common Stock of the
Parent (“Shares”) on and subject to the conditions set forth in the Note.
1.
|
Date of Conversion | |||||
2.
|
Shares To Be Delivered: | |||||
| [HOLDER] | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
Secured Convertible Term Note
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