Exhibit 10.1
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED HEREUNDER MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
SIONIX CORPORATION
SECURED CONVERTIBLE PROMISSORY NOTE
$____________ ____________ __, 2006
SIONIX CORPORATION, a Utah corporation (the "COMPANY"), for value
received, promises to pay to ________________, or its assigns (the "HOLDER"),
the principal sum of ____________ Dollars ($_______), plus simple interest
thereon at the rate of ten percent (10.00%) per annum (the "BASE RATE"), and
such interest to be payable monthly in arrears, the first such payment to be due
and payable on the first day of the first full month following the date hereof,
until the whole amount of the principal amount outstanding remaining unpaid
shall become due and payable, provided that, upon an Event of Default (as
defined below), the interest rate shall increase to the lower of twelve percent
(12%) per annum or the maximum amount allowed by law to be charged for interest
hereunder (the "DEFAULT RATE"), and continuing up through the date on which such
Event of Default is cured to Holder's satisfaction, after which the interest
rate shall return to the Base Rate.
This Note will automatically mature and the entire outstanding
principal amount, together with accrued interest, shall become due and payable
after the earlier of (i) the first anniversary of the date hereof, (ii) an Event
of Default, or (iii) the closing of any equity or equity-related financing by
the Company in which the gross proceeds to the Company are at least Two Million
Five Hundred Thousand Dollars ($2,500,000) (the "MATURITY DATE"), unless, prior
to such time, this Note shall have been converted into shares of the Company's
capital stock pursuant to SECTION 1 hereof.
Payments of both principal and interest are to be made at the address
of the Holder set forth in Section 8(d) below or at such other place in the
United States as the Holder shall designate to the Company in writing in lawful
money of the United Sates of America. Interest on this Note shall be computed on
the basis of a 360-day year consisting of twelve 30-day months.
This Note is one of a series of notes issued pursuant to that certain
Secured Convertible Note Purchase Agreement (the "AGREEMENT"), dated as of even
date herewith, between the Company, the initial Holder and the other Purchasers
party thereto. This Note shall be referred to herein as the "NOTE" and all Notes
issued under the Agreement shall be referred to as the "NOTES"). The following
is a statement of the rights of the Holder and the conditions to which this Note
is subject, and to which the Holder, by the acceptance of this Note, agrees:
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1. CONVERSION.
(a) OPTIONAL CONVERSION. At any time prior to the Maturity
Date, the outstanding principal balance and accrued and unpaid interest of this
Note may be converted in whole or in part, at the option of the Holder, into (i)
shares of common stock of the Company ("COMMON STOCK") at a conversion price of
five cents ($0.05) per share (the "CONVERSION PRICE") or (ii) shares of any
equity security issued by the Company at a conversion price equal to the price
at which such security is sold to any other party; provided however, that the
Conversion Price shall be adjusted in accordance with SECTION 1(b), (c), (d) AND
(e) hereof, and the Company shall deliver notice of such adjustment to the
Holder in accordance with SECTION 1(f) of this Note.
(b) ADJUSTMENTS TO CONVERSION PRICE. In the event the Company
shall at any time after the Closing (as defined in the Agreement) issue
Additional Shares of Common Stock (defined herein), without consideration or for
a consideration per share less than the applicable Conversion Price in effect
immediately prior to such issue ("DILUTIVE ISSUANCE"), then the Conversion Price
shall be adjusted to the lowest issuance of each Dilutive Issuance, PROVIDED
THAT if such issuance or deemed issuance was without consideration, then the
Company shall be deemed to have received an aggregate of one tenth of one cent
($.001) of consideration for all such Additional Shares of Common Stock issued
or deemed to be issued. For purposes of the foregoing paragraph, "ADDITIONAL
SHARES OF COMMON STOCK" shall mean any issuances of equity securities (or
securities convertible into equity securities) of the Company, other than the
following:
(i) shares of Common Stock issued or issuable by
reason of a dividend, stock split, split-up or other distribution of shares of
Common Stock as described in Section 1(c), (d) or (e) hereof;
(ii) up to 14,229,200 shares of Common Stock actually
issued upon the exercise of stock options;
(iii) up to an additional 13,981,770 shares of Common
Stock (for a total of 28,210,970 including the stock option grants set forth in
(ii) above) actually issued upon the exercise, exchange or conversion of
options, warrants, convertible and other securities outstanding as of the date
hereof and as set forth on Schedule 4.2 of the Agreement, in each case provided
such issuance is pursuant to the terms of such option or convertible security;
(iv) shares of the Company's Common Stock issued in
connection with a financing with a commercial bank or other lending institution
as approved by the Board of Directors of the Company;
(v) shares of Common Stock of the Company issued
pursuant to a merger or consolidation with another party so long as the Company
is the surviving entity, and provided that such merger or acquisition does not
result in the transfer of fifty percent (50%) or more of the outstanding
securities of the Company; or
(vi) shares of Common Stock issued in connection with
a transaction where all of the Holders have indicated in writing that the
transaction should be exempt from the anti-dilution adjustment provisions
hereof.
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(c) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Company, at any time before the Maturity Date shall split, subdivide or combine
the outstanding shares of Common Stock into a different number of shares of
Common Stock, then (i) in the case of a split or subdivision, the Conversion
Price for such securities shall be proportionately decreased and the shares of
Common Stock issuable upon conversion of this Note shall be proportionately
increased, and (ii) in the case of a combination, the Conversion Price shall be
proportionately increased and the securities issuable upon conversion of this
Note shall be proportionately decreased.
(d) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR
PROPERTY. If, while this Note or any portion hereof remains outstanding and
unexpired, the holders of Common Stock, as applicable, shall have received, or,
on or after the record date fixed for the determination of eligible
stockholders, shall have become entitled to receive, without payment therefor,
additional shares of Common Stock, as applicable, by way of dividend, then and
in each case, this Note shall represent the right to convert, in addition to the
number of shares of the security receivable upon exercise of this Note, and
without payment of any additional consideration therefor, the amount of such
additional shares of Common Stock, as applicable, that such holder would hold on
the date of such conversion had it been the holder of record of that number of
shares of Common Stock, as applicable, receivable upon exercise of this Note on
the date hereof and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and/or all other
additional stock available by it as aforesaid during such period, giving effect
to all adjustments called for during such period by the provisions of this
SECTION 1.
(e) RECLASSIFICATION, ETC. If the Company, at any time while
this Note or any portion thereof remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the securities
as to which conversion rights under this Note exist into the same or a different
number of securities of any other class or classes, this Note shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Note immediately prior to such
reclassification or other change and the Conversion Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this
SECTION 1.
(f) REGISTRATION STATEMENT. Pursuant to Section 2.4(b) of the
Investor Rights Agreement, in the event that the registration statement required
to be filed by the Company thereunder is not declared effective within one
hundred eighty (180) days following the Closing, the Conversion Price shall be
reduced by $0.0025 per share for each thirty (30) day period that the
effectiveness of the registration statement is delayed, but in no event shall
this provision cause the Conversion Price to be reduced below $0.04 per share.
(g) NOTICES. Whenever the Conversion Price or number of shares
purchasable hereunder shall be adjusted pursuant to SUBSECTION 1(b), (c), (d),
(e) OR (f) hereof, the Company shall promptly issue a certificate to the Holder,
signed by the Chief Financial Officer of the Company, setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which the adjustment was calculated and the Conversion
Price and number of shares issuable hereunder after giving effect to such
adjustment.
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2. MECHANICS OF CONVERSION.
(a) FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of this Note. In lieu of any fractional shares
to which the Holder would otherwise be entitled, the Company shall pay cash
equal to such fraction multiplied by the Conversion Price.
(b) STOCK CERTIFICATES. The Company shall, as soon as
practicable thereafter, issue and deliver to the holder of this Note, or to its
nominee or nominees, a certificate or certificates for the number of shares of
Common Stock to which it shall be entitled as aforesaid. Such conversion shall
be deemed to have been made, as applicable, immediately prior to the close of
business on the date of the closing of the transaction which causes the
automatic conversion set forth above in SECTION 1. The person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holders of such shares of Common
Stock on such date.
3. SECURITY. This Note is secured under that certain Security Agreement
of even date herewith between the Company, the initial Holder and the other
Purchasers party thereto (the "SECURITY AGREEMENT"). Reference is hereby made to
the Security Agreement for a description of the nature and extent of the
security for this Note and the rights with respect to such security of the
Holder of this Note.
4. DEFAULT AND REMEDIES.
(a) EVENT OF DEFAULT. An "EVENT OF DEFAULT" shall exist under
this Note upon the happening of any of the following events or conditions,
without demand or notice from the Holder:
(i) failure to make any payments required hereunder
within three (3) business days of (A) such payment becoming due, or (B)
following notice given in accordance with the terms of this Note;
(ii) failure to observe or perform any of the
agreements, warranties, representations or covenants in this Note, the
Agreement, the Security Agreement or the Investor Rights Agreement, which
failure results in a material adverse effect upon Company and is not cured
within thirty (30) days after the receipt of written notice thereof by the
Holder or the holder of any of the Notes;
(iii) any petition in bankruptcy being filed by or
against Company or any proceedings in bankruptcy, insolvency or under any other
laws relating to the relief of debtors, being commenced for the relief or
readjustment of any indebtedness of Company, either through reorganization,
composition, extension or otherwise, and which, in the case of any involuntary
proceedings shall be acquiesced to by Company or shall continue for a period of
ninety (90) days undismissed, undischarged or unbonded;
(iv) the making by Company of an assignment for the
benefit of creditors, which assignment results in a material adverse effect upon
Company and is not cured within thirty (30) days after the receipt of written
notice thereof by the Holder or the holder of any of the Notes;
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(v) the appointment of a receiver of any property of
Company which shall not be vacated or removed within ninety (90) days after
appointment; or
(vi) upon the date thirty (30) days following the
occurrence of any event of default under the terms of any of the Company's
indebtedness or the acceleration of any indebtedness of the Company, which
occurrence or acceleration results in a material adverse effect upon Company.
(b) REMEDIES. Upon the occurrence of an Event of Default under
Section 4(a) hereof, at the option and upon the declaration of the Holder of the
Note, the entire unpaid principal and accrued and unpaid interest on this Note
shall, without presentment, demand, protest, or notice of any kind, all of which
are hereby expressly waived, be forthwith due and payable, and Holder may
immediately and without expiration of any period of grace, enforce payment of
all amounts due and owing under this Note and exercise any and all other
remedies granted to it at law, in equity or otherwise.
5. CHARGES, TAXES AND EXPENSES. Issuance of a certificate for shares of
Common Stock upon the conversion of this Note shall be made without charge to
the Holder for any issue or transfer tax or other incidental expense in respect
of the issuance of such certificate, all of which taxes and expenses shall be
paid by the Company, and such certificate shall be issued in the name of the
Holder, or such certificates shall be issued in such name or names as may be
directed by the Holder; PROVIDED, HOWEVER, that in the event certificates for
shares of Common Stock (or replacement Notes) are to be issued in a name other
than the name of the Holder, this Note when surrendered for exercise or transfer
shall be accompanied by the Assignment Form attached hereto duly executed by the
Holder; and PROVIDED FURTHER, that upon any transfer involved in the issuance or
delivery of any certificates for shares of Common Stock or replacement Notes,
the Company may require, as a condition thereto, the payment of a sum sufficient
to reimburse it for any transfer tax incidental thereto. Any transfer shall be
subject to (i) the transferee's agreement in writing to be subject to the
applicable terms of this Note and (ii) compliance with all applicable state and
federal securities laws (including the delivery of investment representation
letters, legal opinions and market stand-off agreements reasonably satisfactory
to the Company, if such are requested by the Company). The Holder agrees that
Holder shall execute such documents, and perform such acts, which are reasonably
required to assure that the conversion hereof is consummated in compliance with
all applicable laws.
6. NO RIGHTS AS STOCKHOLDER. This Note does not entitle the Holder to
any voting rights or other rights as a stockholder of the Company prior to the
conversion hereof.
7. LOSS, THEFT OR DESTRUCTION OF NOTE. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft or destruction of this
Note and of indemnity or security reasonably satisfactory to it, the Company
will make and deliver a new Note which shall carry the same rights to interest
(unpaid and to accrue) carried by this Note, stating that such Note is issued in
replacement of this Note, making reference to the original date of issuance of
this Note (and any successors hereto) and dated as of such cancellation.
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8. MISCELLANEOUS.
(a) ISSUE DATE; GOVERNING LAW. The provisions of this Note
shall be construed and shall be given effect in all respect as if it had been
issued and delivered by the Company on the earlier of the date hereof or the
date of issuance of any Note for which this Note is issued in replacement. This
Note shall be binding upon any successors or assigns of the Company. This Note
shall constitute a contract under the laws of the State of New York and for all
purposes shall be construed in accordance with and governed by the laws of said
state.
(b) RESTRICTIONS. The Holder acknowledges that the shares of
capital stock acquired upon the conversion of this Note will be subject to
restrictions upon its resale imposed by state and federal securities laws.
(c) ASSIGNMENT. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part by the Holder to any person or entity without the
prior written consent of the Company except (assuming compliance with applicable
state and federal securities laws) in connection with an assignment in whole to
an affiliate of the Holder or to a successor corporation to the Holder resulting
from a merger or consolidation of the Holder with or into another corporation or
the sale of all or substantially all of the Holder's properties and assets.
Effective upon any such assignment, the person or entity to whom such rights,
interests and obligations were assigned shall have and exercise all of the
Holder's rights, interest and obligations hereunder as if such person or entity
were the original Holder of this Note.
(d) NOTICES. Any notice, request or other communications
required or permitted hereunder shall be given upon personal delivery or upon
the seventh day following mailing by registered airmail (or certified first
class mail if both the addresser and addressee are located in the United
States), postage prepaid and addressed to the parties as follows:
To the Company: SIONIX CORPORATION
X.X. Xxx 00000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, President and CEO/COO
To Holder: At the address listed on such Holder's
signature page to the Agreement
or to such other single place as any single addressee shall designate by written
notice to the other addressees.
(e) CHOICE OF VENUE; WAIVER OF RIGHT TO JURY TRIAL.
(i) THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE DEEMED MADE, EXECUTED, PERFORMED AND CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE OR ANY OTHER DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF
NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS NOTE, EACH PARTY HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
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UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH
PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK
PERSONAL JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM IN ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE OR ANY OTHER DOCUMENT
BROUGHT IN ANY OF THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL
JURISDICTION OVER SUCH PARTY. EACH PARTY FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ANY SUCH PARTY AT ITS ADDRESS FOR NOTICES AS PROVIDED
HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
COMMENCED HEREUNDER OR UNDER ANY OTHER DOCUMENT THAT SUCH SERVICE OF PROCESS WAS
IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
PARTY UNDER THIS NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY IN ANY
OTHER JURISDICTION.
(ii) EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
NOTE OR ANY OTHER DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (i) ABOVE
AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(iii) EACH OF THE PARTIES TO THIS NOTE HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS NOTE, THE OTHER DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(f) ENFORCEMENT. The Company shall pay all reasonable fees and
expenses incurred by the Holder in the enforcement in any of the Company's
obligations hereunder not performed when due. In the event of a dispute with
regard to the interpretation of this Note, the prevailing party shall be
entitled to collect the cost of attorney's fees, litigation expenses or such
other expenses as may be incurred in the enforcement of the prevailing party's
rights hereunder.
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(g) AMENDMENT OR WAIVER. Holder acknowledges and agrees that the holders of a
majority-in-interest of the then outstanding principal amount of the Notes
issued under the Agreement will have the right and power to diminish or
eliminate all rights of Holder hereunder.
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IN WITNESS WHEREOF, the undersigned has caused this Secured Convertible
Promissory Note to be executed by its officer thereunto duly authorized.
COMPANY:
SIONIX CORPORATION
By:________________________
Name:
Title:
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NOTICE OF CONVERSION
(To convert the foregoing Note into shares of Common Stock or any equity
securities of the Company, execute this form and supply required information.)
To: SIONIX CORPORATION
(1) The undersigned hereby elects to convert the attached Secured Convertible
Promissory Note (the "Note") into:
__________ shares of Common Stock of SIONIX CORPORATION pursuant
to Section 1(a) and the other applicable terms of the
attached Note at a Conversion Price of $ _______ per
share (originally $0.05); or
__________ shares of ___________ of SIONIX CORPORATION pursuant
to Section 1(a) and the other applicable terms of
such Note at a Conversion Price of $ _____ per share.
(2) In converting this Note, the undersigned hereby confirms and acknowledges
that the securities being issued hereby are being acquired solely for the
account of the undersigned and not as a nominee for any other party, or for
investment, and that the undersigned will not offer, sell or otherwise dispose
of any such securities, except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any applicable state
securities laws.
(3) Please issue a certificate or certificates representing said securities in
the name of the undersigned:
_________________________________
(Name)
(4) Capitalized terms used herein shall have the meanings ascribed to them in
the Note.
____________________________ _________________________________
(Date) (Signature)
_________________________________
(Print Name)
ASSIGNMENT FORM
(To be signed only upon assignment of the Note)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto the assignee named below all of the rights of the undersigned represented
by the attached Note with respect to the amount of principal covered by the Note
set forth below:
(Name and Address of Assignee Must be Printed or Typewritten)
Social Security No. Address Principal
Name of Assignee or Tax ID No. Amount
-------------- -------------- --------------------- ---------------
and does hereby irrevocably constitute and appoint _________ Attorney to
transfer said Note on the books of the Company, with full power of substitution
in the premises.
Dated:
-------------------------
Signature of Registered Holder
Note: The signature on this assignment must correspond with the names as it
appears upon the face of the Note in every particular, without alteration or
enlargement or any change whatever.