Contract
Exhibit
10.1
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE ?SECURITIES ACT?), OR THE SECURITIES LAWS OF ANY STATE, AND IS BEING
OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF
THE SECURITIES ACT AND SUCH LAWS. THIS SECURITY MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE
SECURITIES ACT OR SUCH OTHER LAWS.
(Xxx
Xxxxxxxx Xxxxxx, Attorney-in-Fact For the Trust Under the Will of Xxxx
Xxxxxxxxxxx)
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$200,000.00
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Orlando,
Florida
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March
23, 2004 [sic]
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FOR
VALUE
RECEIVED, CONSTELLATION BIOMETRICS CORPORATION, a Florida corporation (?
Constellation ? or ?Maker?), xxxxxx promises to pay to the order of XXX XXXXXXXX
XXXXXX, ATTORNEY-IN-FACT FOR THE TRUST UNDER THE WILL OF XXXX XXXXXXXXXXX
(?Holder?), or any subsequent Holder of this Note (the ?Note?) at such location
as Holder shall designate by written notice to Maker, the principal sum of
Two
Hundred Thousand Dollars ($200,000), with interest from the date such principal
amount was received by Maker until the date paid.
1. Interest.
The
principal balance of this Note outstanding from time to time shall bear interest
from the date such principal amount was received by Maker at five percent (8%),
compounded every thirty (30) days, until paid in full. Such interest shall
be
calculated on the basis of a three hundred sixty-five (365) day year, actual
number of days elapsed.
2. Payment.
The
outstanding principal balance, together with any and all accrued unpaid interest
and any other amounts due and owing under this Note, shall be due and payable
on
the date (the ?Maturity Date?) that is the earlier of:
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A.
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The
date that Sequiam Corporation receives financing from Instream Capital,
LLC in an amount greater than $3,000,000 and in turn pays its debt
to
Constellation, or;
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B.
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If
Sequiam Corporation does not close new financing on or before May
10, 2005
then it will repay its indebtedness to Constellation using 10% of
its
revenues from the sales if its primary products ?BioLock? and ?BioVault?
and Maker will remit such proceeds to Holder with seven (7) days
of
receipt.
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All
payments hereunder shall be due and payable in lawful money of the United States
of America and without setoff, deduction or counterclaim of any kind whatsoever.
Unless otherwise specifically provided herein, all payments hereon shall be
applied first to interest and then to principal.
3. Warrants.
Upon
receipt of the principal amount of this Note, Maker may lend all or part of
the
loan proceeds to Sequiam Corporation. Sequiam. In consideration of such loan
Sequiam Corporation shall issue to Constellation a warrant (the ?Warrant?)
to
purchase Six Hundred Thousand (600,000) shares of common stock of Maker at
a
purchase price of $0.33 per share, at any time during the "Exercise Period"
(defined below). As used herein, the "Exercise Period" shall mean the period
beginning on March 23, 2005 and expiring on March 23, 2010.
At such
time that Sequiam Corporation repays its debt to Laurus Master Fund, the Warrant
will be amended to reduce the purchase price of the shares to $0.14 per share.
Maker shall assign this Warrant to Holder in consideration of this
loan.
4. Prepayment.
Maker
may at any time prepay this Note, in whole or in part, without fee, charge,
premium or penalty. Holder shall apply payments to the outstanding principal,
interest and other amounts due hereunder in any manner determined, in Xxxxxx's
sole and absolute discretion.
5. Disbursements.
Loan
proceeds of $200,000 will be disbursed on March 23, 2005, (the ?Execution
Date?).
6. Use
of
Proceeds.
Loan
proceeds from the principal amount of this Note will not be used to pay accrued
officers?
salaries
or shareholder loans.
7. Piggy-back
Registration Rights.
In the
event that from the period beginning on the Execution Date and continuing for
a
period of twelve (12) months thereafter, Maker shall file a registration
statement with the SEC registering the sale or resale of any of Maker's debt
or
equity securities, Maker shall also include in such registration statement
the
shares of common stock to be issued upon exercise of the warrants as described
in Section 3
above.
It
shall
be a condition precedent to the obligations of Maker to take any action pursuant
to this Section 7
that the
Holder shall furnish to Maker such information regarding itself, the securities
held by it, and the intended method of disposition of such securities as shall
be required to effect the registration of Holder?s common stock.
Maker
shall bear and pay all expenses incurred in connection with any registration,
filing or qualification of the common stock with respect to the registrations
pursuant to the Section 7
for the
Holder, including (without limitation) all registration, filing and
qualification fees, printers? and accounting fees relating or apportionable
thereto, but excluding underwriting discounts and commissions relating to the
sale of the common stock.
8. Collateral.
Patents
owned by Maker that are presently collateralized under Maker?s loan agreement
and secured convertible term note with Laurus Master Fund, Ltd. will be given
as
collateral to secure this Promissory Note whenever the Laurus note is satisfied
and if this Promissory Note remains unpaid at that time.
9. Terms.
As long
as this Note remains outstanding, Maker agrees that: (a) if it enters into
a
subsequent debt financing with a non-affiliated third party lender; and (b)
such
subsequent debt financing contains terms and conditions which are more favorable
to the non-affiliated third party lender than the terms and conditions set
forth
in this Note (the ?Improved Terms?), then the terms and conditions of this
Note
shall, simultaneously with the closing of such subsequent financing, be adjusted
to reflect the Improved Terms.
10. Representations
Regarding Private Placement.
Holder
hereby represents and warrants to Maker, with the intent that the Maker will
rely thereon in making and delivering the Note, the Warrant, and the shares
of
common stock to be issued upon the exercise of the Warrant, that as of the
date
of this Note and as of each date the Warrant, or any portion thereof, is
exercised:
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(a) Accredited
Investor.
The
Holder, and each of the beneficiaries for whom the Holder is purchasing the
Note
and the Warrant and the shares of Common Stock to be issued upon the exercise
of
the Warrant (collectively, the ?Securities?), is an ?accredited investor? as
that term is defined in Regulation D promulgated under the Securities Act by
virtue of being (initial all applicable responses):
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_____
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A
small business investment company licensed by the U.S. Small Business
Administration under the Small
Business Investment Company Act of 1958,
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_____
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A
business development company as defined in the Investment
Company Act of 1940,
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_____
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A
national or state-chartered commercial bank, whether acting in an
individual
or fiduciary capacity,
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_____
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An
insurance company as defined in Section 2(13) of the Securities
Act,
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_____
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An
investment company registered under the Investment
Company Act of 1940,
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_____
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An
employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974,
where the investment decision is made by a plan fiduciary, as defined
in
Section 3(21) of such Act, which is either a bank, insurance company,
or
registered investment advisor, or an employee benefit plan which
has total
assets in excess of $5,000,000,
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_____
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A
private business development company as defined in Section 202(a)(22)
of
the Investment
Advisors Act of 1940,
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An
organization described in Section 501(c)(3) of the Internal
Revenue Code,
a
corporation or a partnership with total assets in excess of
$5,000,000,
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_____
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A
natural person (as opposed to a corporation, partnership, trust or
other
legal entity) whose net worth, or joint net worth together with his/her
spouse, exceeds $1,000,000,
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_____
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Any
trust, with total assets in excess of $5,000,000, not formed for
the
specific purpose of acquiring the securities offered, whose purchase
is
directed by a sophisticated person as described in Section 506(b)(2)(ii)
of Regulation D,
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_____
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A
natural person (as opposed to a corporation, partnership, trust or
other
legal entity) whose individual income was in excess of $200,000 in
each of
the two most recent years (or whose joint income with such person's
spouse
was at least $300,000 during such years) and who reasonably expects
an
income in excess of such amount in the current year, or
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_____
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A
corporation, partnership, trust or other legal entity (as opposed
to a
natural person) and
all
of
such entity's equity owners fall into one or more of the categories
enumerated above;
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(b) Experience.
The
Holder is sufficiently experienced in financial and business matters to be
capable of evaluating the merits and risks of its investments, and to make
an
informed decision relating thereto, and to protect its own interests and that
of
its beneficiaries in connection with the purchase of the
Securities;
(c) Own
Account.
The
Holder is purchasing the Securities as principal for its own account and that
of
its beneficiaries. The Holder is purchasing the Securities for investment
purposes only and not with an intent or view towards furthering sale or
distribution (as such term is used in Section 2(11) of the Securities Act)
thereof, and has not pre-arranged any sale with any other
purchaser;
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(d) Exemption.
The
Holder understands that the offer and sale of the Securities is not being
registered under the Securities Act based on the exemption from registration
provided by Rule 506 promulgated under Section 4(2) of the Securities Act and
that the Company is relying on such exemption;
(e) Importance
of Representations.
The
Holder understands that the Securities are being offered and sold to it in
reliance on an exemption from the registration requirements of the Securities
Act, and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
of
the Holder set forth herein in order to determine the applicability of such
safe
harbor and the suitability of the Holder to acquire the Securities;
(f) No
Registration.
The
Securities have not been registered under the Securities Act and may not be
transferred, sold, assigned, hypothecated or otherwise disposed of unless such
transaction is the subject of a registration statement filed with and declared
effective by the Securities and Exchange Commission (the ?SEC?) or unless an
exemption from the registration requirements under the Securities Act, such
as
Rule 144, is available. The Holder represents and warrants and hereby agrees
that all offers and sales of the Securities shall be made only pursuant to
such
registration or to such exemption from registration;
(g) Risk.
The
Holder acknowledges that the purchase of the Securities involves a high degree
of risk, is aware of the risks and further acknowledges that it can bear the
economic risk of the Securities, including the total loss of its
investment;
(h) Current
Information.
The
Holder has been furnished with or has acquired copies of all requested
information concerning the Company, including a copy of the most recent audited
financial statements of the Company;
(i) Independent
Investigation.
The
Holder, in making the decision to purchase the Securities, has relied upon
independent investigations made by it and its purchaser representatives, if
any,
and the Holder and such representatives, if any, have prior to any sale to
it,
been given access and the opportunity to examine all material contracts and
documents relating to this offering and an opportunity to ask questions of,
and
to receive answers from, the Company or any person acting on its behalf
concerning the terms and conditions of this offering. The Holder and its
advisors, if any, have been furnished with access to all materials relating
to
the business, finances and operation of the Company and materials relating
to
the offer and sale of the Securities which have been requested. The Holder
and
its advisors, if any, have received complete and satisfactory answers to any
such inquiries;
(j) No
Recommendation or Endorsement.
The
Holder understands that no federal, state or provincial agency has passed on
or
made any recommendation or endorsement of the Securities;
(k) The
Holder.
If the
Holder is a partnership, corporation or trust, the person executing this Note
on
its behalf represents and warrants that:
(i)
he
or she
has made due inquiry to determine the truthfulness of the representations and
warranties made pursuant to this Note, and
(ii) he
or she
is duly authorized (and if the undersigned is a trust, by the trust agreement)
to make this investment and to enter into and execute this Note on behalf of
such entity; and
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(l) Non-Affiliate
Status.
The
Holder is not an affiliate of the Company nor is any affiliate of the Holder,
including any beneficiaries of Holder, an affiliate of the Company.
11. No
Waiver.
No
delay or omission on the part of Holder in exercising any right or remedy under
this Note shall operate as a waiver of that right or remedy on any future
occasion or of any other rights under this Note.
12. Attorneys
Fees.
If
Holder institutes any collection effort, of any nature whatsoever, for any
amount due and payable hereunder following and during the occurrence of a
default, then Maker shall pay to Holder forthwith any and all reasonable costs
and expenses of collection actually incurred by Xxxxxx, including without
limitation, reasonable attorneys fees, whether or not suit or other action
or
proceeding is instituted.
13. Usury.
Notwithstanding any provision of this Note to the contrary, the total liability
for payments in the nature of interest shall not exceed the limits imposed
by
the applicable usury laws of the State of California. If, from any circumstances
whatsoever, fulfillment of any provision hereof or of any other agreement,
evidencing or securing the debt, at the time performance of such provisions
shall be due, shall involve the payment of interest in excess of that authorized
by law, and if from any circumstances, Holder shall ever receive as interest
an
amount which would exceed the highest lawful rate applicable to the Maker,
such
amount which would be excessive interest shall be applied to the reduction
of
the principal balance of the debt evidenced hereby and not to the payment of
interest.
14. Severability.
The
provisions of this Note are intended by Maker to be severable and divisible
and
the invalidity or unenforceability of a provision or term herein shall not
invalidate or render unenforceable the remainder of this Note or any part
thereof.
15. Amendments.
The
obligations of Maker and rights of Holder under this Note may be waived,
altered, amended, modified, or cancelled, in whole or in part, only by the
express written consent of Holder.
16. Transferability.
This
Note is not transferable prior to the Maturity Date and thereafter without
Maker?s prior written consent.
17. Governing
Law.
This
Note shall be governed by and construed and interpreted in accordance with
the
internal laws of the State of Florida, without giving effect to any principle
or
doctrine regarding conflicts of laws.
IN
WITNESS WHEREOF, each of Maker and Xxxxxx has executed and delivered this Note
as of the date first written above.
CONSTELLATION
BIOMETRICS CORPORATION,
a
Florida
corporation
By:
/s/
Xxxx Xxxxxxxxxxx
Xxxx
Xxxxxxxxxxx, Secretary
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Maker?s
Address for Notice:
Sequiam
Corporation
000
Xxxxxxx Xxxx
Orlando,
Florida 32809
Tel:
000-000-0000
Attn:
Chief Financial Officer
/s/
Xxx Xxxxxxxx Xxxxxx
XXX
XXXXXXXX XXXXXX, Attorney-in-Fact
For
the
Trust under the will of Xxxx Xxxxxxxxxxx
Holder?s
Address for Notice:
Xxxxxxx
Xxxxxxxxx Xxxxxx Xxxxx & Xxxxxxx, LLP
Xxx
Xxxxx
Xxxxxxxx
White
Plains, New York 10601
Tel:
000-000-0000
Attn:
Xxx
Xxxxxxxx Xxxxxx, Trustee
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