Contract
Exhibit
4.3
THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”). NO
INTEREST IN THIS NOTE MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT
APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE
ACT), OR (iii) AN EXEMPTION FROM REGISTRATION UNDER THE ACT WHERE THE
HOLDER HAS FURNISHED TO THE COMPANY AN OPINION OF ITS COUNSEL THAT AN EXEMPTION
FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
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$_______
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October
__, 2009
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FOR VALUE
RECEIVED, the undersigned, HemoBioTech, a Delaware corporation (the “Company” or “Payor”), having its
executive office and principal place of business at 0000 Xxxxxx
Xxxxxx Xx., Xxxxx 0000 Xxxx, Xxxxxx, Xxxxx 00000, hereby promises to
pay to ______________________ (“Payee”), having an address at
_____________________________ ___________________ at Payee’s address set forth
above (or at such other place as Payee may from time to time hereafter direct by
notice in writing to Payor), the principal sum of ______________________________
and 00/100 ($_______) Dollars, in such coin or currency of the United States of
America as at the time shall be legal tender for the payment of public and
private debts with simple and unpaid interest, thereon, payable in coin or
currency, or, at the Company’s discretion, in the form of Common Stock at a
conversion price equal to that of the price used in the Private Placement (as
defined below), on the first to occur of the following
dates: (i): October ___, 2010 (twelve months after the date of
issuance) (the “Maturity Date”); (ii)
the consummation of any $1.5 million financing (“ Financing” by the Company (the
“Consummation
Date”); (iii) the date on which the outstanding principal amount and
any accrued and unpaid interest on this Note is prepaid in full as hereinafter
permitted (the “Prepayment Date”);
and (iv) any other date on which any principal amount of, or accrued unpaid
interest on, this Note is declared to be, or becomes, due and payable pursuant
to its terms prior to the Maturity Date (the “Acceleration
Date”).
This note
(the “Note”) is being issued in connection with a bridge financing (the “Bridge
Offering”) by the Company of $350,000 of Bridge Offering Notes being offered on
a “best efforts” basis. For each $1 principal amount of Bridge Notes issued the
Holder shall receive four (4) shares of Common Stock of the
Company. The Bridge Offering is being made only to Investors who
qualify as “accredited investors” as such term is defined in Rule 501 of
Regulation D under the Securities Act of 1933, as amended (the “Securities Act”). The
Company also expects to effect a private placement (the “Private Placement”)
to be sold only to accredited investors. The Holders will be required to convert
their Notes (but not the shares of Common Stock included with the Notes in a
unit), into the securities offered in the proposed Private Placement unless
earlier prepaid by the Company.
All of
the proceeds of the Bridge Offering will be used by the Company for general
corporate purposes, including working capital.
The
following terms shall apply to this Note:
1. Interest
And Payment.
1.1. The
principal amount of this Note outstanding from time to time shall bear simple
interest at the annual rate (the "Note Rate") of ten
percent (10%) from the date hereof through the earliest to occur of (i) the
Maturity Date; (ii) the Consummation Date; (iii) the Prepayment Date; or
(iv) the Acceleration Date. Interest shall be payable, at the
Company’s option in either cash or shares of Common Stock valued at the average
of the closing bid price for the Company’s Common Stock for the five (5) days
prior to the date of payment as reported by the OTC Bulletin Board (the “Market
Value”).
1.2. Interest
accrued on this Note shall be payable not later than, on the earliest to occur
of (i) the Maturity Date; (ii) the Consummation Date; (iii) the Prepayment Date;
or (iv) the Acceleration Date.
1.3. All
payments made by the Payor on this Note shall be applied first to the payment of
accrued unpaid interest on this Note and then to the reduction of the unpaid
principal balance of this Note.
1.4. In
the event that the date for the payment of any amount payable under this Note
falls due on a Saturday, Sunday or public holiday under the laws of the State of
New York, the time for payment of such amount shall be extended to the next
succeeding business day and interest at the Note Rate shall continue to accrue
on any principal amount so effected until the payment thereof on such extended
due date.
2. Replacement
and Substitute Of Note.
2.1. In
the event that this Note is mutilated, destroyed, lost or stolen, 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, Payee shall furnish to Payor indemnity reasonably satisfactory to
Payor, and in any such case, and in the case of mutilation, Payee shall also
furnish to 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.
2.2. Every
Note issued pursuant to the provisions of Section 2.1 above in substitution for
this Note shall constitute an additional contractual obligation of the Payor,
whether or not this Note shall be found at any time or be enforceable by
anyone.
3. Prepayment.
The
principal amount of this Note may be prepaid in whole at any time, upon 20 days
prior written notice, without penalty or premium, together with unpaid interest
thereon accrued through the Prepayment Date. The Payor has the option
to pay accrued and unpaid interest in cash or in shares of Common Stock at a 25%
discount to the then current Market Value. During the 20 days notice
period, Payee may covert this Note into shares of the Company’s Common Stock at
a 25% discount to the then current Market Value. Each partial
prepayment of this Note shall first be applied to interest accrued through the
Prepayment Date and then to principal.
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4. Covenants
of Payor.
Payor
covenants and agrees that, so long as this Note remains outstanding and unpaid,
in whole or in part:
4.1. Payor
will not sell, transfer or dispose of a material part of its
assets;
4.2. Payor
will not make any loan to any person who is or becomes a shareholder or
executive employee of Payor, other than for reasonable advances for expenses in
the ordinary course of business;
4.3. Payor
will promptly pay and discharge all lawful taxes, assessments and governmental
charges or levies imposed upon it, its income and profits, or any of its
property, before the same shall become in default, as well as all lawful claims
for labor, materials and supplies which, if unpaid, might become a lien or
charge upon such properties or any part thereof; provided, however, that Payor
or such subsidiary shall not be required to pay and discharge any such tax,
assessment, charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings and Payor or such subsidiary,
as the case may be, shall set aside on its books adequate reserves with respect
to any such tax, assessment, charge, levy or claim so contested;
4.4. Payor
will do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises and
substantially comply with all laws applicable to Payor as its counsel may
advise;
4.5. Payor
will at all times maintain, preserve, protect and keep its property used or
useful in the conduct of its business in good repair, working order and
condition (except for the effects of reasonable wear and tear in the ordinary
course of business) and will, from time to time, make all necessary and proper
repairs, renewals, replacements, betterments and improvements
thereto;
4.6. Payor
will keep adequately insured, by financially sound reputable insurers, all
property of a character usually insured by similar corporations and carry such
other insurance as is usually carried by similar corporations;
4.7. Payor
will, promptly following the occurrence of an Event of Default or of any
condition or event which, with the giving of notice or the lapse of time or
both, would constitute an Event of Default, furnish a statement of Xxxxx's Chief
Executive Officer or Chief Financial Officer to Payee setting forth the details
of such Event of Default or condition or event and the action which Payor
intends to take with respect thereto; and
4.8. Payor
will, and will cause to, at all times, maintain books of account in
which all of its financial transactions are duly recorded in conformance with
generally accepted accounting principles.
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4.9. Payor
shall initially reserve out of its authorized and unissued Common Stock shares
of Common Stock equal to the number of shares issuable upon conversion of the
Notes. So long as the Notes are outstanding, the Payor shall take all action
necessary to reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the conversion of the
Notes.
5. Events of
Default.
If any of
the following events (each an "Event of Default")
occurs:
5.1. The
dissolution of Payor or any vote in favor thereof by the board of directors and
shareholders of Payor; or
5.2. Payor
makes an assignment for the benefit of creditors, or files with a court of
competent jurisdiction an application for appointment of a receiver or similar
official with respect to it or any substantial part of its assets, or Payor
files a petition or a petition is instituted against Payor seeking relief under
any provision of the Federal Bankruptcy Code or any other federal or state
statute now or hereafter in effect affording relief to debtors, or any such
application or petition is filed against Payor, which application or petition is
not dismissed or withdrawn within sixty (60) days from the date of its filing;
or
5.3. Payor
fails to pay the principal amount, or interest on, or any other amount payable
under, this Note as and when the same becomes due and payable; or
5.4. Xxxxx
admits in writing its inability to pay its debts as they mature; or
5.5. Payor
sells all or substantially all of its assets or merges or is consolidated with
or into another corporation; other than a merger with or into a publicly traded
corporation, or
5.6. A
proceeding is commenced to foreclose a security interest or lien in any property
or assets of Payor as a result of a default in the payment or performance of any
debt (in excess of $50,000 and secured by such property or assets) of Payor or
of any subsidiary of Payor; or
5.7. A
final judgment for the payment of money in excess of $50,000 is entered against
Payor by a court of competent jurisdiction, and such judgment is not discharged
(nor the discharge thereof duly provided for) in accordance with its terms, nor
a stay of execution thereof procured, within sixty (60) days after the date such
judgment is entered, and, within such period (or such longer period during which
execution of such judgment is effectively stayed), an appeal therefrom has not
been prosecuted and the execution thereof caused to be stayed during such
appeal; or
5.8. An
attachment or garnishment is levied against the assets or properties of Payor or
any subsidiary of Payor involving an amount in excess of $50,000 and such levy
is not vacated, bonded or otherwise terminated within sixty (60) days after the
date of its effectiveness; or
5.9. Payor
defaults in the due observance or performance of any covenant, condition or
agreement on the part of Payor to be observed or performed pursuant to the terms
of this Note or the Stock and Note Purchase Agreement (other than the default
specified in Section 5.3 above) and such default continues uncured for a period
of thirty (30) days;
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then,
upon the occurrence of any such Event of Default and at any time thereafter, the
holder of this Note shall have the right (at such holder's option) to declare
the principal of, accrued unpaid interest on, and all other amounts payable
under this Note to be forthwith due and payable, whereupon all such amounts
shall be immediately due and payable to the holder of this Note, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived; provided, however, that in case of the occurrence of an
Event of Default under any of the sections above, such amounts shall become
immediately due and payable without any such declaration by the holder of this
Note; and in addition
The
occurrence of any of the following events of default (“Event of Default”),
unless timely cured as set forth herein, shall, at the option of the Payee
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, all of which hereby are expressly waived, except as set
forth below:
5.10. Any
material representation or warranty of the Payor made herein, in the Stock and
Note Purchase Agreement, or in any agreement, statement or certificate given in
writing pursuant hereto or in connection therewith shall be false or misleading
in any material respect as of the date made and the Closing Date.
5.11. A
default by the Payor of a material term, covenant, warranty or undertaking of
any other agreement to which the Payor and the Payee are parties, or agreement
made by Payor in favor of Payee, or the occurrence of any default under any such
other agreement which is not cured after any required notice and/or cure period
and which default may materially adversely affect the Payor’s ability to pay
this Note or satisfy its liability under any other obligation to the Payee or
the occurrence of an “Event of Default” under any such other
agreement.
5.12. If
Payor fails to pay the principal amount, or interest on, or any other amount
payable under, this Note as and when the same becomes due and payable (as
specified in Section 5.3 above) the Note Rate shall increase from 10% per annum
to 15% per annum.
6. Suits for
Enforcement and Remedies.
If any
one or more Events of Default shall occur and be continuing, the Payee may
proceed to (i) protect and enforce Payee'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, (ii) enforce
the payment of this Note, or (iii) enforce any other legal or equitable
right of the holder of this Note. 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.
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7. Unconditional
Obligation; Fees, Waivers, Other.
7.1. The
obligations to make the payments provided for in this Note are absolute and
unconditional and not subject to any defense, set-off, counterclaim, rescission,
recoupment or adjustment whatsoever.
7.2. If,
following the occurrence of an Event of Default, Payee shall seek to enforce the
collection of any amount of principal of and/or interest on this Note, there
shall be immediately due and payable from Payor, in addition to the then unpaid
principal of, and accrued unpaid interest on, this Note, all costs and expenses
incurred by Payee in connection therewith, including, without limitation,
reasonable attorneys' fees and disbursements.
7.3. No
forbearance, indulgence, delay or failure to exercise any right or remedy with
respect to this Note shall operate as a waiver or as acquiescence in any
default, nor shall any single or partial exercise of any right or remedy
preclude any other or further exercise thereof or the exercise of any other
right or remedy.
7.4. This
Note may not be modified or discharged (other than by payment or exchange)
except by a writing duly executed by Xxxxx and Xxxxx.
7.5. 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
Payee had or is existing as security for any amount called for
hereunder.
8. Conversion
and Exchange
8.1. This
Note (but not the shares of Common Stock issued together with the Note as part
of the Bridge Offering) shall be convertible, at the Payor’s option, into the
securities issued in the proposed Private Placement on the same terms and
conditions as the Private Placement. The Payor shall continue to pay
interest on this Note through the date the exchange (the “Exchange”) takes place
(the “Exchange Date”).
8.2. The
Exchange Date shall take place simultaneously with the initial Closing of the
Private Placement, unless otherwise agreed to by the parties.
8.3. On
the Exchange Date, Payee shall tender to Payor this Note for cancellation
against receipt by Payee of the securities issued in the Private Placement,
registered in the name of Holder.
8.4. Interest
on this Note shall not accrue from and after the Exchange Date and the person or
persons entitled to receive securities issued in the Private Placement upon such
Exchange shall be treated for all purposes as having been the record holder or
holders thereof at such time. The issuance of securities upon
exchange of this Note shall be made without charge to the holder of this Note
for any tax in respect of the issuance of such certificates.
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8.5. Payor
shall at all times keep available out of its authorized but unissued shares of
Common Stock, solely for effecting the Exchange of this Note, the full number of
whole shares then deliverable upon conversion of the entire principal amount of
this Note, and accrued and unpaid interest thereon, at the time outstanding.
Payor shall take at all times such corporate action as shall be necessary in
order that Payor may validly and legally issue fully paid and nonassessable
shares of Common Stock in accordance with the provisions of this Article
8.
8.6. In
no event shall Payor take any of the following actions prior to the Exchange
Date. Thereafter, in the event of:
(1) any
taking by Payor of a record of any of the holders of any class of securities for
any purpose, including, but not limited to, determining the holders who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive an other right; or
(2) any
meeting of holders of any class of securities of Payor or any action by holders
of any class of securities of Payor without a meeting; or
(3) any
capital reorganization of Payor, any reclassification of recapitalization of the
capital stock of Payor or any transfer of all or substantially all of the assets
of Payor to or consolidation or merger of Payor with or into any other person;
or
(4) any
proposed issue or grant by Payor to the holders of Common Stock of any shares of
stock of any class or any other securities (including but not limited to
convertible securities), or any right or option to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities;
or
then and
in such event, Payor will mail or cause to be mailed to the holder of record of
this Note a notice specifying (i) the date on which any such record is or was to
be taken and the purpose therefor, (ii) the date and purpose of any shareholders
meeting or proposed shareholders action without meeting, (iii) the date on which
any such sale, reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock are to surrender or exchange such shares of Common Stock for securities or
other property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up and (iv) the amount and character of any stock or other securities,
or rights or options with respect thereto, proposed to be issued or granted, the
date of such proposed issue or grant and the persons or class of persons to whom
such proposed issue or grant is to be offered or made. Such notice shall be
mailed at least fifteen (15) days prior to the record date, shareholders meeting
(or shareholders action without meeting) or other event specified in this
Section 8.6.
9. Restriction
on Transfer.
This Note
has been acquired for investment, and this Note has not been registered under
the securities laws of the United States of America or any state
thereof. Accordingly, no interest in this Note may be offered for
sale, sold or transferred in the absence of registration and qualification of
this Note, under applicable federal and state securities laws or an opinion of
counsel of Payee reasonably satisfactory to Payor that such registration and
qualification are not required.
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10. Miscellaneous.
10.1. 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.
10.2. 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),
facsimile transmission or overnight courier to the address of the intended
recipient as 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 of this Note.
10.3. 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.
10.4. The
Payor may not delegate its obligations under this Note and such attempted
delegations shall be null and void. The Payee may not assign, pledge
or otherwise transfer this Note without the prior written consent of the Payor
(which consent shall not be unreasonably withheld except in such instance where
the proposed assignee or transferee is a direct or indirect competitor or owns
any interest in any business that competes, directly or indirectly, with the
Payor). This Note inures to the benefit of Payee, its successors and
its assignee of this Note and binds the Payor, and its successors and assigns,
and the terms “Payee” and “the Payor” whenever occurring herein shall be deemed
and construed to include such respective successors and assigns. Any
assignment or transfer made in violation of this Section 10.4 shall be
void ab
initio.
10.5. If
default is made in the payment of this Note, Payor shall pay the Payee hereof
reasonable costs of collection, including reasonable attorneys’
fees.
10.6. Governing
Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles that would result in the application of the substantive laws
of another jurisdiction. Any action brought by either party against
the other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the City of New York, County of New York. Both parties and the
individual signing this Note on behalf of the Payor agree to submit to the
personal jurisdiction of such courts. The parties to this Agreement hereby
irrevocably waive any objection to jurisdiction and venue in any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens. The parties executing this Agreement and the other
agreements referred to herein or delivered in connection herewith on behalf of
the Payor agree to submit to the jurisdiction of such courts and hereby
irrevocably waive trial by jury. The prevailing party shall be
entitled to recover from the other party its reasonable attorneys’ fees, costs
and expenses. In the event that any provision of this Note 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 unenforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Payee
from bringing suit or taking other legal action against the Payor in any other
jurisdiction where the Payor holds assets to collect on the Payor’s obligations
to the Payee, to realize on any collateral or any other security for such
obligations, or to enforce a judgment in another court in favor of the
Payee.
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10.7. 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 Payor to the Payee and thus refunded to the
Payor.
IN WITNESS
WHEREOF, Xxxxx has caused this Note to be signed in its name by an
authorized officer as of the ___ day of October, 2009.
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By:
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Name:
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Xxxxxx
X. Xxxxxx, Ph.D.
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Title:
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President
& Chief Executive Officer
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WITNESS:
_________________________________
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