Exhibit 4.2
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE 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 AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
CONVERTIBLE PROMISSORY NOTE
$5,000,000 January 24, 2006
FOR VALUE RECEIVED, the undersigned, Biophan Technologies, Inc., a
corporation organized under the laws of the State of Nevada, with its principal
offices at 000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxxxxx, Xxx Xxxx 00000
("Debtor"), hereby promises to pay to Biomed Solutions, LLC, a limited liability
corporation organized under the laws of the State of New York, with its
principal offices 000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxxxxx, Xxx Xxxx
00000 ("Creditor"), the principal sum of five million dollars ($5,000,000.00) or
such lesser amount as shall have been advanced pursuant to the Line of Credit
Agreement, together with interest thereon at a rate of eight percent (8%) per
annum, in lawful money of the United States of America.
1. Repayment. The entire amount of principal and interest due under
this Note shall be payable within fifteen (15) business days after demand
therefor, which demand may be made at any time after eighteen (18) months has
elapsed from the date of the issuance of this Note. Debtor may prepay all or any
part of this Note at any time without premium or penalty, provided that Debtor
has provided fifteen (15) days' prior written notice (the "Notice Period") of
its intent to prepay and Creditor has not elected to convert all or part of the
outstanding obligation prior to the expiration of the Notice Period.
2. Interest Calculations. Interest under this Note shall be
compounded monthly. Partial payments shall be applied first to accrued and
unpaid interest and then to principal.
3. Events of Default. Upon the occurrence and during the continuance
of any of the following events (each of which shall be an "Event of Default"),
Creditor may declare the principal of and interest on this Note to be due and
payable upon thirty (30) days' prior written notice, and the principal of and
interest on this Note shall, upon such declaration, become due and payable,
anything in this Note to the contrary notwithstanding:
(a) Debtor fails to pay any principal of or interest on this Note
when due; or
-2-
(b) Debtor is dissolved or liquidated; or
(c) Xxxxxx makes an assignment for the benefit of creditors,
commences (as the debtor) a case in bankruptcy, or commences
(as the debtor) any proceeding under any other insolvency law;
or
(d) A case in bankruptcy or any proceeding under any other
insolvency law is commenced against Xxxxxx (as the debtor) and
a court having jurisdiction in the premises enters a decree or
order for relief against Debtor as the debtor in such case or
proceeding, and such case or proceeding is continued for sixty
(60) days, or Debtor consents to or admits the material
allegations against it in any such case or proceeding; or
(e) A trustee, receiver or agent (however named) is appointed or
authorized to take charge of substantially all of the property
of Debtor for the purpose of enforcing a lien against such
property or for the purpose of general administration of such
property for the benefit of creditors.
4. Conversion.
(a) Investment by the Creditor. The entire principal amount of and
accrued interest on this Note may, at the Creditor's option,
be converted into shares of the Debtor's common stock (the
"Note Shares") at any time prior to payment in full. The
number of Note Shares to be issued upon such conversion shall
be equal to the quotient obtained by dividing (i) the
principal and interest amount of this Note that the Creditor
desires to convert by (ii) the Conversion Price (defined
below), rounded to the nearest whole share. The Note Shares
shall bear registration rights as set forth in the Line of
Credit Agreement.
(b) Conversion Price. The Conversion Price for each Advance (as
defined in the Line of Credit Agreement) shall be $1.46.
(c) Mechanics and Effect of Conversion. No fractional shares of
the Debtor's common stock will be issued upon conversion of
this Note. In lieu of any fractional share to which the
Creditor would otherwise be entitled, the Debtor will pay to
the Creditor in cash the amount of the unconverted principal
and interest balance of this Note that would otherwise be
converted into such fractional share. Upon conversion of this
Note pursuant to this Section 4, the Creditor shall surrender
this Note, duly endorsed, along with written notice of
Creditor's intent to convert, at the principal offices of the
Debtor or any transfer agent of the Debtor. At its expense,
the Debtor will, as soon as practicable thereafter, issue and
deliver to such Creditor, at such principal office, a
certificate or certificates for the number of shares to which
such Creditor is entitled upon such conversion, together with
other securities and property to which the Creditor is
entitled upon such conversion under the terms of this Note,
including a check payable to the Creditor for any cash amounts
payable as described herein. Upon conversion of this Note, the
Debtor will be forever released from all of its obligations
and liabilities under this Note with regard to that portion of
the principal amount and accrued interest being converted,
including, without limitation, the obligation to pay such
portion of the principal amount and accrued interest.
-3-
5. Severability. The invalidity, illegality or unenforceability of
any provision of this Note shall not render invalid, illegal or unenforceable
any other provision hereof.
6. No Waiver of Remedies. No failure or delay on the part of
Creditor in the exercise of any power or right in this Note shall operate as a
waiver thereof, and no exercise or waiver of any single power or right, or the
partial exercise thereof, shall affect Creditor's rights with respect to any and
all other rights and powers.
7. Maximum Interest. This Note is subject to the express condition
that at no time shall Debtor be obligated or required to pay interest on the
unpaid principal balance due hereunder at a rate which is in excess of the
maximum interest rate permitted under applicable law. If by the terms of this
Note, Debtor is at any time required or obligated to pay interest on the unpaid
principal balance due hereunder at a rate in excess of such maximum rate, then
for such time as the rate of interest under this Note would be deemed excessive,
its application shall be suspended and there shall be charged instead interest
at such maximum rate.
8. Notices. Any and all notices to be delivered in connection
herewith shall be in writing and shall be deemed given when delivered if
delivered personally, ten days after being sent if properly sent by airmail, or
three days after being sent if properly sent by recognized express courier
service guaranteeing delivery during such period, in each case addressed to the
other party at the address set forth above or such other address as any party
may furnish by notice to the other as herein provided.
9. Successors and Assigns. This Note shall inure to the benefit of
Creditor, any holder of this Note and their respective successors and permitted
assigns. Whenever Debtor or Creditor is referred to in this Note, such
references shall be deemed references to its successors and permitted assigns
and, in the case of Creditor, any other holder of this Note. Neither party may
assign its rights or obligations under this Note without the prior written
consent of the other party.
10. Headings and Captions. Any headings or captions preceding the
text of the separate sections hereof are intended solely for convenience of
reference and shall not constitute a part of this Note, nor shall they affect
its meaning, construction or effect.
11. Governing Law; Jurisdiction. This Note shall be construed and
interpreted in accordance with the laws of New York without reference to New
York's choice of law rules. Debtor and Creditor agree that any litigation in
connection with this Note shall be commenced and conducted by any of them only
in New York in the County of Monroe, or in the U.S. District Court whose
jurisdiction includes such county, which courts shall have exclusive
jurisdiction thereof. Debtor and Creditor submit to the venue of such courts and
agree that service of process upon them shall be valid if delivered to the
applicable address specified herein.
-4-
BIOPHAN TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxxxx
---------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President and Chief Financial Officer