Contract
Exhibit
4.4
THIS
NOTE
AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), APPLICABLE
STATE SECURITIES LAWS, OR APPLICABLE LAWS OF ANY FOREIGN JURISDICTION. THIS
NOTE
AND SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO
DISTRIBUTION OR RESALE, AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED,
RENOUNCED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS
AND
IN THE ABSENCE OF COMPLIANCE WITH APPLICABLE LAWS OF ANY FOREIGN JURISDICTION,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS
NOT REQUIRED AND SUCH FOREIGN JURISDICTION LAWS HAVE BEEN
SATISFIED.
SENIOR
CONVERTIBLE PROMISSORY NOTE
[City,
State]
| $_________ |
___________ ___,
2005
|
1. Principal
and Interest
INNOVIVE
PHARMACEUTICALS, INC. (the “Company”), a Delaware corporation, for value
received, hereby promises to pay to the order of ______________________,
or
assigns (“Holder”), in lawful money of the United States of America at the
address for notices to Holder set forth below (or such other address as Holder
shall provide to the Company pursuant hereto), the principal amount of
____________ dollars ($___________), together with interest as set forth
below.
The
Company promises to pay interest, compounded semi-annually, on the unpaid
principal amount from the date hereof until such principal amount is paid
in
full at the rate of five percent (5%), or such lesser rate as shall be the
maximum rate allowable under applicable law. Interest from the date hereof
shall
be computed on the basis of a 360-day year of twelve 30-day months, and shall
be
accrued and added to principal. Unless converted or prepaid earlier as set
forth
below, all unpaid principal and unpaid accrued interest on this Note shall
be
due and payable on the first anniversary of the final closing of the Company’s
sale of Bridge Notes (as defined below) (the “Due Date”). Notwithstanding the
foregoing, at the option of the Company, by written notice to the Holder
prior
to the Due Date, the Company may extend the Due Date until the date that
is one
year following the initial Due Date (the “Extended Term”); provided, that,
during the Extended Term, the interest rate hereunder shall be eight percent
(8%), or such lesser rate as shall be the maximum rate allowable under
applicable law.
This
Note
is being issued pursuant to that certain Note and Warrant Purchase Agreement
between the Company and the Holder (the “Purchase Agreement”), and is subject to
its terms.
2. Prepayment.
2.1 All
unpaid principal and unpaid accrued interest of this Note may be prepaid
without
penalty, in whole or in part, at any time upon thirty (30) days written notice
to Xxxxxx.
2.2 Any
prepayment of this Note will be credited first against accrued interest,
then
principal. Upon payment in full of the amount of all principal and interest
payable hereunder, this Note shall be surrendered to the Company for
cancellation.
3. Conversion.
3.1 All
unpaid principal and accrued unpaid interest on this Note shall be automatically
converted into the securities (the “Securities”) issued in the Company’s next
equity financing (or series of related equity financings) involving the
Company’s sale of securities to venture capital, institutional or private
investors in which at least $5,000,000 in gross cash proceeds (before brokers’
fees or other transaction related expenses) are received by the Company
(excluding any such proceeds resulting from any conversion of notes of like
tenor issued pursuant to agreements substantially similar to the Purchase
Agreement (“Bridge Notes”)) (an “Qualified Financing”), at a conversion price
equal to ninety percent (90%) of the lowest per unit price for Securities
paid
in cash by investors in such Qualified Financing, and upon such other terms,
conditions and agreements as may be applicable in such Qualified
Financing,
to which terms,
conditions and agreements Holder
will evidence its consent by execution of appropriate documentation.
For
example, if the Company sells securities consisting of a class of preferred
stock with a warrant to purchase shares of common stock in a Qualified
Financing, the Holder will receive such preferred stock and such warrants
upon
conversion.
3.2 Immediately
prior to the occurrence of a Sale of the Company (as defined below), all
unpaid
principal and accrued unpaid interest on this Note shall be automatically
converted into shares of the Company’s Common Stock at a conversion price per
share equal to the Sale Conversion Price (as defined below). The Company
shall
not issue fractional shares but shall round up the number of shares issued
to
the next whole number. Any conversion effected in accordance with this Section
3.2 shall be binding upon the Holder hereof. “Sale of the Company” shall mean a
transaction (or series of like transactions) with one or more non-affiliates,
pursuant to which such party or parties acquire (i) capital stock of the
Company
possessing the voting power to elect a majority of the board of directors
of the
Company (whether by merger, consolidation, sale or transfer of the Company’s
capital stock or otherwise) or (ii) all or substantially all of the Company’s
assets determined on a consolidated basis. The “Sale Conversion Price” shall
mean a per share price equal to the quotient obtained by dividing (a) the
aggregate proceeds received in a Sale of the Company less any convertible
debt
of the Company then outstanding by (b) the number of shares of the Company’s
Common Stock then outstanding on a fully-diluted basis.
3.3 Upon
conversion of this Note, the applicable amount of outstanding principal and
accrued unpaid interest of the Note shall be converted without any further
action by the Holder and whether or not the Note is surrendered to the Company
or its transfer agent. The Company shall not be obligated to issue certificates
evidencing the shares of the securities issuable upon such conversion unless
the
Note is either delivered to the Company or its transfer agent, or the Holder
notifies the Company or its transfer agent that such Note has been lost,
stolen
or destroyed and executes an agreement satisfactory to the Company to indemnify
the Company from any loss incurred by it in connection with such Note. The
Company shall, as soon as practicable after such delivery, or such agreement
and
indemnification, issue and deliver to such Holder of such Note, a certificate
or
certificates for the securities to which the Holder shall be entitled, a
check
payable to the Holder in the amount of any cash amounts payable as the result
of
a conversion into fractional shares of the Securities, as determined by the
Board of Directors. Such conversion shall be deemed to have been made
concurrently with the close of the Qualified Financing or immediately prior
to
the occurrence of a Sale of the Company, as applicable. The person or persons
entitled to receive securities issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such securities on such
date.
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4. Attorney’s
Fees.
If the
indebtedness represented by this Note or any part thereof is collected in
bankruptcy, receivership or other judicial proceedings or if this Note is
placed
in the hands of attorneys for collection after default, the Company agrees
to
pay, in addition to the principal and interest payable hereunder, reasonable
attorneys’ fees and costs incurred by Xxxxxx.
5. Notices.
Any
notice, other communication or payment required or permitted hereunder shall
be
in writing and shall be deemed to have been given upon delivery to the address
provided pursuant to the Purchase Agreement. In the case of notice to either
party, copies should be sent to X. Xxxxx Xxxxxxxx, Esq., Wyrick, Xxxxxxx,
Xxxxx
& Xxxxxx, 0000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000. The Company
shall notify the Holder in writing at least five (5) days prior to the closing
of a Qualified Financing.
6. Notice
of Proposed Transfers.
Prior
to any proposed transfer of this Note or the Securities, unless there is
in
effect a registration statement under the Securities Act of 1933, as amended
(the “Securities Act”), covering the proposed transfer, the holder hereof shall
give written notice to the Company of such xxxxxx’s intention to effect such
transfer. Each such notice shall describe the manner and circumstances of
the
proposed transfer in sufficient detail, and shall, if the Company so requests,
be accompanied (except in transactions in compliance with Rule 144) by an
unqualified written opinion of legal counsel, who shall be reasonably
satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company’s counsel, to the effect that
the proposed transfer of the Note or Securities may be effected without
registration under the Securities Act; provided, however, no such opinion
of
counsel shall be necessary for a transfer without consideration by a Holder
to
any affiliate of such Xxxxxx, or a transfer by a Holder which is a partnership
to a partner of such partnership or a retired partner of such partnership
who
retires after the date hereof, or to the estate of any such partner or retired
partner or the transfer by gift, will or intestate succession of any partner
to
his spouse or lineal descendants or ancestors, if the transferee agrees in
writing to be subject to the terms hereof to the same extent as if such
transferee were the original Holder hereunder. Each certificate evidencing
Securities or the Note transferred as above provided shall bear an appropriate
restrictive legend, except that the Note or certificate shall not bear such
restrictive legend if in the opinion of counsel for the Company such legend
is
not required in order to establish compliance with any provisions of the
Securities Act.
7. Acceleration.
This
Note shall become immediately due and payable if (i) the Company commences
any
proceeding in bankruptcy or for dissolution, liquidation, winding-up,
composition or other relief under state or federal bankruptcy laws; or (ii)
there is any material breach of any material covenant, warranty, representation
or other term or condition of this Note or the Purchase Agreement at any
time
which is not cured within the time periods permitted therein, or if no cure
period is provided therein, within sixty (60) days after the date on which
the
Company receives notice of such breach.
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8. No
Dilution or Impairment.
The
Company will not, by amendment of its Articles of Incorporation or Bylaws
or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or
seek to avoid the observance or performance of any of the terms of this Note,
but will at all times in good faith assist in the carrying out of all such
terms
and in the taking of all such action as may be necessary or appropriate in
order
to protect the rights of the Holder of this Note against dilution or other
impairment.
9. Waivers.
The
Company hereby waives presentment, demand for performance, notice of
non-performance, protest, notice of protest and notice of dishonor. No delay
on
the part of Holder in exercising any right hereunder shall operate as a waiver
of such right or any other right. This Note is being delivered in and shall
be
construed in accordance with the laws of the State of New York, without regard
to the conflicts of laws provisions thereof.
10. No
Shareholder Rights.
Nothing
contained in this Note shall be construed as conferring upon the Holder or
any
other person the right to vote or to consent or to receive notice as a
shareholder of the Company.
11. Amendment.
Any
term of this Note may be amended with the written consent of the Company
and the
holders of not less than sixty-six and two-thirds percent (66⅔%) of the then
outstanding principal amount of the other notes (the “Bridge Notes”) issued
pursuant to a Note and Warrant Purchase Agreement substantially similar to
the
Purchase Agreement, even without the consent of the Holder hereof. Any amendment
effected in accordance with this Section 11 shall be binding upon each holder
of
any Bridge Note, each future holder of all such Bridge Notes, and the Company;
provided,
however,
that no
special consideration or inducement may be given to any such holder in
connection with such consent that is not given ratably to all such holders,
and
that such amendment must apply to all such holders ratably in accordance
with
the principal amount of their then outstanding Bridge Notes. The Company
shall
promptly give notice to all holders of outstanding Bridge Notes of any amendment
effected in accordance with this Section 11.
ISSUED
as
of the date first above written.
By:____________________________
Name:__________________________
Title:___________________________
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