Contract
Exhibit 4.3
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. 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 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ADVANCE
NANOTECH, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
Issue Date: ______
FOR VALUE RECEIVED, ADVANCE NANOTECH,
INC., a Delaware corporation (hereinafter called “Borrower” or the “Company”),
hereby promises to pay to the holders identified in Annex A (the
“Holders”), at the respective address set forth in Annex A hereto, or
order, without demand, the principal amount, as set forth opposite each Holder’s
respective name in Annex A hereto, up to
a maximum aggregate principal amount of $800,000 (the “Principal”), with accrued
and unpaid interest thereon, on June 30, 2009 (the “Maturity Date”), if not paid
sooner.
This Note
has been entered into pursuant to the terms of a subscription agreement between
the Borrower and the Holders, dated of even date herewith (the “Subscription
Agreement”), and shall be governed by the terms of such Subscription
Agreement. Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement. The following terms shall apply to
this Note:
ARTICLE
I
GENERAL
PROVISIONS
1.1 Payment Grace
Period. The Borrower shall have a ten (10) business day grace
period to pay any monetary amounts due under this Note, after which grace period
and during the pendency of an Event of Default (as defined in Article III) a
default interest rate of three percent (3%) per month above the rate otherwise
applicable under this Note shall apply to the amounts owed
hereunder.
1.2. Interest
Rate.
(a) Interest
payable on this Note shall accrue at the rate specified on Annex A hereto,
beginning, with respect to the Principal advanced by any Holder, on the “Funding
Date” set forth opposite such Xxxxxx’s respective name in Annex A hereto.
Interest will be payable on the last business day of each month hereafter and on
the Maturity Date, accelerated or otherwise, when the principal and remaining
accrued but unpaid interest shall be due and payable, or sooner as described
below.
(b) Interest
will be payable in cash.
1.3. Payment in Full on Maturity
Date. This Note shall be payable in full on the Maturity Date;
provided, however, that the Borrower retains the right to prepay amounts under
this Note without penalty.
1.4 Change of
Control. Within three (3) business days after the consummation
of a Change of Control, the Company will repurchase all of the then-outstanding
interests in the Note at a purchase price in cash equal to not less than, (a) if
the Change of Control occurs on or before 90 days after the Issue Date, 125% of
the aggregate principal amount of this Note repurchased plus accrued and unpaid
interest to the date of repurchase, (b) if the Change of Control occurs after 90
days and on or before 180 days after the Issue Date, 112.5% of the aggregate
principal amount of this Note repurchased plus accrued and unpaid interest to
the date of repurchase or (c) if the Change of Control occurs after 180 days and
on or before 365 days after the Issue Date, 100% of the aggregate principal
amount of this Note repurchased plus accrued and unpaid interest to the date of
repurchase. As used herein, “Change of Control” means the occurrence
of any of the following: (1) the direct or indirect sale, lease, transfer,
conveyance or other disposition, in one transaction or a series of related
transactions, of all or substantially all of the properties or assets of the
Company to any “person” (as that term is used in Section 13(d) of the 1934 Act);
(2) the adoption of a plan relating to the liquidation or dissolution of the
Company; or (3) the consummation of any transaction (including, without
limitation, any merger or consolidation), the result of which is that any
“person” (as defined above), becomes the Beneficial Owner, directly or
indirectly, of more than 50% of the then-outstanding common stock of the
Company; provided, however, that a “person” shall not include any
Subscriber. As used herein, “Beneficial Owner” has the meaning
assigned to such term in Rule 13d-3 and Rule 13d-5 under the 1934 Act, except
that in calculating the beneficial ownership of any particular “person” (as
defined above), such “person” will be deemed to have beneficial ownership of all
securities that such “person” has the right to acquire by conversion or exercise
of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time.
ARTICLE
II
[RESERVED]
ARTICLE
III
EVENT
OF DEFAULT
The
occurrence of any of the following events of default (“Event of Default”) shall,
at the option of any Holder hereof, make all sums of principal and interest then
remaining unpaid hereon and all other amounts payable hereunder immediately due
and payable, upon demand, without presentment, or grace period, all of which
hereby are expressly waived, except as set forth below:
3.1 Failure to Pay Principal or
Interest. The Borrower fails to pay any installment of
principal, interest or other sum due under this Note when due and such failure
continues for a period of ten (10) business days after the due
date. The ten (10) day period described in this Section 3.1 is the
same ten (10) business day period described in Section 1.1 hereof.
3.2 Breach of
Covenant. The Borrower breaches any material covenant or other
material term or condition of the Subscription Agreement or this Note in any
material respect and such breach, if subject to cure, continues for a period of
fifteen (15) business days after written notice to the Borrower from any
Holder. Notwithstanding the forgoing, this provision shall not apply
to delayed registration under the Subscription Agreement for which liquidated
damages shall be the sole remedy.
3.3 Breach of Representations
and Warranties. Any material representation or warranty of the
Borrower made herein or in the Subscription Agreement shall be false or
misleading in any material respect as of the date made and the Closing
Date.
2
3.4 Receiver or
Trustee. The Borrower shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or
trustee for it or for a substantial part of its property or business; or such a
receiver or trustee shall otherwise be appointed without the consent of the
Borrower is not dismissed within sixty (60) days of appointment.
3.5 Judgments. Any
money judgment shall be entered or filed against Borrower or any of its property
or other assets for more than $250,000, and shall remain unpaid, unvacated,
unbonded or unstayed for a period of forty-five (45) days.
3.6 Bankruptcy. Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings or
relief under any bankruptcy law or any substantially similar law, or the
issuance of any notice in relation to such event, for the relief of debtors
shall be instituted by or against the Borrower and if instituted against
Borrower are not dismissed within sixty (60) days of initiation.
3.7 [Reserved].
3.8 Non-Payment. A
default by the Borrower under any one or more obligations in an aggregate
monetary amount in excess of $250,000 for more than ninety (90) days after the
due date, unless the Borrower is contesting the validity of such obligation in
good faith.
3.9 [Reserved].
3.10 [Reserved].
3.11 [Reserved].
3.12 Cross
Default. A default by the Borrower of a material term,
covenant, warranty or undertaking of any other agreement to which the Borrower
and any Holder are parties, or the occurrence of a material event of default
under any such other third party agreement which is not cured after any required
notice and/or cure period.
ARTICLE
IV
SECURITY
INTEREST
4. Security
Interest. This Note is secured by a first priority
security interest granted to the Collateral Agent for the benefit of the Holders
pursuant to a Pledge and Security Agreement, as delivered by Borrower to the
Holders. The Borrower shall not, and shall not permit Owlstone
Nanotech Inc. or any other subsidiary of the Borrower or affiliate of the
Borrower to, grant or suffer to exist any lien which secures indebtedness or
obligations of the Borrower or such subsidiary or affiliate and purports to rank
senior to or pari passu
with to the security interest relating to the debt evidenced by this
Note.
ARTICLE
V
MISCELLANEOUS
3
5.1 Failure or Indulgence Not
Waiver. No failure or delay on the part of any 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.
5.2 Notices. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be: (i) if to the Borrower to: Advance
Nanotech, Inc., 000 Xxxxx Xxxx., Xxxxx 000, Xxxxxxxxxx, Xxx Xxxx 00000, Attn:
Xxxxxx Xxxx, telecopier: 000-000-0000, and (ii) if to any Holder, to the name,
address and telecopy number set forth opposite such Holder’s name in Annex A
hereto.
5.3 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. Each Holder by acceptance hereof confirms such Xxxxxx’s
agreement to the terms and conditions set forth herein.
5.4 Assignability. This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of each Holder and its successors and
assigns.
5.5 Cost of
Collection. If default is made in the payment of this Note,
Borrower shall pay the Holders hereof reasonable costs of collection, including
reasonable attorneys' fees.
5.6 Governing
Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Note shall be brought
only in the state courts of New York in the County of New York or in the federal
courts located in the State and County of New York. Subject to the
foregoing, the parties to this Note hereby irrevocably waive any objection to
jurisdiction and venue of any action instituted hereunder and shall not assert
any defense based on lack of jurisdiction or venue or based upon forum non
conveniens. The Company and each Holder waive
trial by jury. The prevailing party shall be entitled to recover from the other
party its reasonable attorney's fees and costs. In the event that any
provision of this Note or any other agreement delivered in connection herewith
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 any agreement.
4
5.7 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 permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Borrower to the applicable Holder pursuant
to this Note and thus refunded to the Borrower.
5.8. 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.
5.9 [Reserved].
5.10 Remedies. This
Note shall be deemed an unconditional obligation of Borrower for the payment of
money, without limitation to any other remedies available to any
Holder.
5.11 Non-Business
Days. Whenever any payment to be made shall be due on a
Saturday, Sunday or a public holiday under the laws of the State of New York,
such payment may be due on the next succeeding business day and such next
succeeding day shall be included in the calculation of the amount of accrued
interest payable on such date.
5.12 [Reserved].
[THIS
SPACE INTENTIONALLY LEFT BLANK]
5
IN WITNESS WHEREOF, Xxxxxxxx
has caused this Note to be signed in its name by an authorized officer as of the
9th day of April, 2009.
By:________________________________
Name:
Xxxxxx X. Xxxx
Title: Chief
Financial Officer
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INVESTOR
DETAILS
PRINCIPAL
AMOUNT OF NOTE = __________________ (the “Purchase
Price”)
Choose One:
Option 1:
Option 2:
|
Signature
|
Signature
(if purchasing jointly)
|
|
|
Name
Typed or Printed
|
Name
Typed or Printed
|
|
|
Entity
Name
|
Entity
Name
|
|
|
Address
|
Address
|
|
|
City,
State and Zip Code
|
City,
State and Zip Code
|
|
|
Telephone-Business
|
Telephone-Business
|
|
|
Telephone-Residence
|
Telephone-Residence
|
|
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Facsimile-Business
|
Facsimile-Business
|
|
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Facsimile-Residence
|
Facsimile-Residence
|
|
|
Tax
ID # or Social Security #
|
Tax
ID # or Social Security #
|
|
|
Email
Address
|
Name in which Note should be
issued: ________________________________
Dated: ________________,
2009
7
ANNEX
A
HOLDERS
|
Name
and Address
|
Principal
|
Funding
Date
|
Initial
Interest
Rate
or OID Per Month
|
