EXHIBIT 10.12
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS IN RELIANCE ON EXEMPTIONS FROM REGISTRATION
REQUIREMENTS UNDER SAID LAWS, INCLUDING IN PARTICULAR SECTION 10-5-9(13) OF THE
GEORGIA SECURITIES ACT OF 1973, AS AMENDED. ACCORDINGLY, NO INTEREST IN THIS
NOTE MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (II) AN EXEMPTION
FROM REGISTRATION UNDER SAID ACT WHERE THE PAYEE HAS FURNISHED TO THE PAYOR AN
OPINION OF ITS COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
BioShield Technologies, Inc.
NON-NEGOTIABLE INTEREST BEARING PROMISSORY NOTE
$__________________ __________________, 1998
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, BioShield Technologies, Inc., a
Georgia corporation (the "Payor"), having its principal offices at 0000
Xxxxxxxxxxxxx Xxxxxxxxx, Xxxxx X000, Xxxxxxxx, Xxxxxxx, 00000, hereby promises
to pay to ________________ (the "Payee") having an address at
__________________________________________________________ on the earlier to
occur of (i) the date of a closing following the date that the U.S. Securities
and Exchange Commission declares effective the Company's registration statement
on Form SB-2 or another equivalent form (the "Effective Date") for the sale of
the Company's common stock, no par value (the "Common Stock"), in an initial
public offering (the "IPO") or (ii) ______________________, 2001 (the "Maturity
Date"), at the Payee's address set forth hereinabove, or at such other place as
the Payee shall hereafter specify in writing, the principal sum of
_______________ ($_______________________). Such principal amount and
interest, payable as specified below, shall be payable not later than 12:00
o'clock noon, New York City time, on the date when due, in such currency of the
United States of America as at the time shall be the legal tender for the
payment of public and private debts and in funds immediately available at such
payment office or in Common Stock as provided in Paragraphs 1.3 and 1.4 to the
extent applicable.
This Note is part of a unit or units (the "Units") and one of a series of
notes (the "Bridge Notes") being issued pursuant to the Payor's Confidential
Private Offering Memorandum dated January 15, 1998, together with the exhibits
(the "Memorandum") relating to the Payor's offering of up to two hundred (200)
Units, each Unit consisting of (i) a Bridge Note in the principal amount of
$5,000 and (ii) a warrant to purchase up to 5,000 shares of the Common Stock.
This Note shall rank pari passu with all other Bridge Notes.
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Reference to the Memorandum shall in no way impair the absolute and
unconditional obligation of the Payor to pay both principal and interest hereon
as provided herein.
1. Interest and Payment.
1.1 The principal amount hereof outstanding from time to time shall
bear simple interest (computed on the basis of a 360-day year, using the
number of days actually elapsed) from the date hereof at the annual rate of
(i) 10% from the date hereof until twelve (12) calendar months from the
date hereof (the "First Anniversary Date"), (ii) 13% from the First
Anniversary Date until twenty-four (24) calendar months from the date
hereof (the "Second Anniversary Date"), and (iii) 15% from the Second
Anniversary Date until thirty-six (36) calendar months from the date hereof
(the "Third Anniversary Date"). It is expressly understood that no
acceleration of this Note shall occur by reason of a failure of the Company
to make any interest payment due under this Note.
1.2 Interest as described in Section 1.1 herein shall be payable
annually until the Maturity Date commencing on the First Anniversary Date,
and any accrued and unpaid interest shall be payable in full on the
Maturity Date (or on any such earlier date of payment as provided in
Section 3).
1.3 In the event that the principal amount due under this Note
together with accrued and unpaid interest is not paid in full in cash prior
to the First Anniversary Date, the Second Anniversary Date or the Third
Anniversary Date, respectively, then the interest payment due on the
respective Anniversary Date shall be payable by the Company in Common Stock
("Interest Payment Conversions") based upon a price per share ("Interest
Exercise Price") of $1.00 per share as regards the interest payment due on
the First Anniversary Date, $2.00 per share as regards the interest payment
due on the Second Anniversary Date, and $3.00 per share as regards the
interest payment due on the Third Anniversary Date. The Interest Exercise
Price shall be subject to adjustment as described below.
1.4 If the principal and accrued interest have not been paid in full
on or before the Maturity Date, then the principal amount due to the Payee
hereunder shall automatically be converted into Common Stock at a price
equal (the "Maturity Date Exercise Price") to $1.00 per share, the accrued
and unpaid interest shall automatically convert into Common Stock at the
respective Interest Exercise Price and the Unit Warrants issued as a part
of the Units shall automatically terminate and shall be null and void and
of no value (collectively, "Payoff Conversions"). The Maturity Date
Exercise Price shall be subject to adjustment as described below.
1.5 If payment of the principal amount hereof or interest accrued
thereon is not made when due and payable (including by the issuance of
Common Stock pursuant to Sections 1.3 and 1.4), or upon acceleration as
expressly provided herein, then interest shall accrue on such unpaid amount
from the date of nonpayment to the date of payment at the rate of 12% per
annum for the first twelve (12) calendar months of such nonpayment,
increasing to 15% per annum thereafter.
1.6 If any payment under this Note becomes due on a Saturday, Sunday
or any other day on which banks in New York City are required or permitted
to be closed then such payment shall be made on the next succeeding day
which is not a Saturday, Sunday, or any other day on which such banks are
required or permitted to be closed and any principal amount due shall
continue to bear interest until such payment is made.
1.7 In the event that a court of competent jurisdiction shall finally
determine that the Payor shall have paid or agreed to pay hereunder
interest in excess of the maximum rate permitted by law, it is the express
intent of the Payor and the Payee (as indicated by his acceptance of this
Note) that all such excess amounts paid shall be applied to reduce the
outstanding principal amount of this Note, and the provisions of this Note
immediately shall be deemed reformed and amounts thereafter collectible
hereunder reduced, without necessity of execution of a new document, so as
to comply with the determination of such court, but so as to permit the
recovery of the fullest amount otherwise provided for in this Note.
1.8 In the event the Company (i) declares a dividend on the
outstanding Common Stock payable in shares of its capital stock, (ii)
subdivide the outstanding Common Stock, (iii) combine the outstanding
Common Stock into a smaller number of shares, or (iv) issue any shares of
its capital stock by reclassification of the Common Stock (including any
such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then, in each case, the
Interest Exercise Price and the Maturity Date Exercise Price in effect at
the time of the record date for such dividend or of the effective date of
such subdivision, combination, or reclassification, shall be
proportionately adjusted so that the Payee after such time shall be
entitled to receive the aggregate number and kind of shares which, if such
interest payment had been made immediately prior to such time, he would
have receive after such payment and been entitled to receive by virtue of
such dividend, subdivision, combination, or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur.
2. Replacement of Note. In case this Note is mutilated, destroyed, lost
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or stolen, the Payor shall, at its sole expense, execute, register and deliver,
a new Note, in exchange and substitution for this Note, if mutilated, or in lieu
of and substitution for this Note, if destroyed, lost or stolen. In the case of
destruction, loss or theft, the Payee shall furnish to the Payor indemnity
reasonably satisfactory to the Payor, and in any such case, and in the case of
mutilation, the Payee shall also furnish to the Payor evidence to its reasonable
satisfaction of the mutilation, destruction, loss or theft of this Note and of
the ownership thereof. Any replacement Note so issued shall be in the same
outstanding principal amount as this Note and dated the date to which interest
shall have been paid on this Note, or if no interest shall have yet been paid,
dated the date of this Note.
3. Prepayment. At the option of the Payor, this Note may be prepaid in
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whole at any time, or in part from time to time, without penalty or premium. Any
such prepayments by Payor shall be made pro rata to all holders of Bridge Notes
issued pursuant to the Memorandum. Each partial prepayment of this Note shall
first be applied to interest accrued and unpaid through the date of prepayment
and then to principal. Upon any such prepayment, any accrued and unpaid
interest (other than that payable by delivery of Common Stock under paragraph
1.3) will be payable by Payor in cash.
4. Events of Default. If any of the following Events of Default shall
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occur:
4.1 The failure by the Payor to make payment, when due, of the
principal due under this Note at the Maturity Date or to issue Common Stock
when due pursuant to Section 1.3 or 1.4 hereof, following the elapse of 30
days from the date on which the Payor receives written notice of such
default; or
4.2 The dissolution of the Payor or any vote in favor thereof by
the Board of Directors and shareholders of the Payor; or
4.3 The Payor's insolvency, assignment for the benefit of creditors,
application for or appointment of a receiver, liquidator, assignee, trustee
or sequestrator (or other similar official) of the Payor, admission in
writing that the Payor cannot pay its debts as they become due, or filing
of a voluntary or involuntary petition under any provision of the Federal
Bankruptcy Code or amendments thereto or any other federal or state statute
affording relief to debtors; or there shall be commenced against the Payor
any such proceeding or filed against the Payor any such application or
petition which proceeding, application or petition is not dismissed or
withdrawn within ninety (90) days of commencement or filing, as the case
may be; or
5. Unconditional Obligation; Fees, Waivers, Other.
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5.1 The holder of this Note agrees to pay, on demand, all costs and
expenses paid or incurred by Purchaser in seeking to collect this Note,
including, without limitation, reasonable attorneys fees actually incurred,
and disbursements paid or incurred by Xxxxx, with interest thereon at the
Default Rate until paid in full.
5.2 No forbearance, indulgence, delay or failure to exercise any
right or remedy with respect to this Note shall operate as a waiver, nor as
an acquiescence in any default, nor shall any single or partial exercise of
any right or remedy preclude any other of further exercise thereof or the
exercise of any other right or remedy.
5.3 This Note may not be modified or discharged (other than by
payment of this Note), except by a writing duly executed by the Payor and
the Payee.
5.4 The Payor hereby expressly waives demand and presentment for
payment, notice of nonpayment, notice of dishonor, protest, notice of
protest, bringing of suit, and diligence in taking any action to collect
amounts called for hereunder, and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereon, regardless of and
without any notice, diligence, act or omission with respect to the
collection of any amount called for hereunder or in connection with any
right, lien, interest or property at any and all times which the Payee had
or is existing as security for any amount called for hereunder.
6. Suits for Enforcement of Remedies. If any one or more Events of
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Default shall occur and be continuing, the Payee may proceed to protect and
enforce such holder's rights either by suit in equity or by action at law, or
both, whether for the specific performance of any covenant, condition or
agreement contained in this Note or in any agreement or document referred to
herein or in aid of the exercise of any power granted in this Note or in any
agreement or document referred to herein, or proceed to enforce the payment of
this Note or to enforce any other legal or equitable right of the Payee. No
right or remedy herein or in any other agreement or instrument conferred upon
the holder of this Note is intended to be exclusive of any other right or
remedy, and each and every such right or remedy shall be cumulative and shall be
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise.
7. Restriction on Transfer. By its acceptance of this Note the Payee
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acknowledges that this Note is non-negotiable and, as such, non-transferable,
has not been registered or qualified under the securities laws of the United
States of America or any state thereof. By its acceptance of this Note the Payee
acknowledges and represents that this Note has been acquired for investment and,
even if this Note is subsequently amended to be negotiable, no interest in this
Note may be offered for sale, sold, delivered after sale, transferred, pledged,
or hypothecated in the absence of registration and qualification of this Note
under applicable federal and state securities laws or an opinion of counsel of
the Payee reasonably satisfactory to the Payor that such registration and
qualification are not required. The Payee will also be required to execute a
lock-up agreement, to the extent required by the Company's underwriter, the
National Association of Securities Dealers, Inc., or any state regulatory
authority in the IPO, the terms of which will require, among other things, Payee
to refrain from offering for sale, selling, soliciting an offer to buy,
contracting to sell, granting any option for the sale of or otherwise
transferring or disposing of, directly or indirectly, any shares of Common Stock
received pursuant to this Note or pursuant to the Unit Warrants for a period not
to exceed twelve (12) months after the closing of the IPO.
8. Miscellaneous.
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8.1 The headings of the various paragraphs of this Note are for
convenience of reference only and shall in no way modify any of the terms
or provisions of this Note.
8.2 All notices required or permitted to be given hereunder shall be
in writing and shall be deemed to have been duly given when personally
delivered or sent by registered or certified mail, return receipt
requested, postage prepaid, to the address of the intended recipient set
forth in the preamble to this Note or at such other address as the intended
recipient shall have hereafter given to the other party hereto pursuant to
the provisions hereof.
8.3 This Note and the obligations of the Payor and the rights of the
Payee shall be governed by and construed in accordance with the laws of the
State of Georgia without giving effect to choice of law principles.
8.4 The Payor (a) agrees that any legal suit, action or proceeding
arising out of or relating to this Note will be instituted exclusively in
Superior Court of Xxxxxx County of Georgia or in the United States District
Court for the Northern District of Georgia (b) waives any objection which
the Payor may have now or hereafter to the venue of any such suit, action
or proceeding, and (c) irrevocably consents to the jurisdiction of the
Superior Court of Xxxxxx County and the United States District Court for
the Northern District of Georgia in any such suit, action or proceeding.
The Payor further agrees to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding in the
United States District Court for the Northern District of Georgia and
agrees that service of process upon the Payor mailed by certified mail to
the Payor's address will be deemed in every respect effective service of
process upon the Payor, in any suit, action or proceeding.
8.5 This Note shall bind the Payor and its successors and assigns.
BIOSHIELD TECHNOLOGIES, INC.
By:___________________________________
Name: Xxxxxxx X. Xxxxx
Title: President
