Exhibit No. 10.4
Form 8-K
Viral Genetics, Inc.
File No. 000-26875
DEBT RESTRUCTURING AGREEMENT
THIS DEBT RESTRUCTURING AGREEMENT, dated as of May 22, 2003 (the
"Agreement"), is made by and among VIRAL GENETICS, INC., a Delaware corporation
having its principal place of business in South Pasadena, California (the
"Borrower") and Xxxx Xxxxxxxxx, Trustee, THE XXXXXX TRUST (the "Lender") for the
purpose of amending and continuing the obligations represented by the Original
Notes referenced below effective as of April 1, 2003.
W I T N E S S E T H:
WHEREAS, pursuant to certain promissory notes, to wit:
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Original Principal Unpaid Principal at March 31, Maturity Date
2003
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$ 150,000 $ 150,000 12/31/04
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$ 60,000 $ 60,000 12/31/04
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$ 40,000 $ 40,000 12/31/04
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$ 120,000 $ 120,000 12/31/04
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$ 150,000 $ 15,095 Demand
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(collectively the "Original Notes") Borrower is indebted to Lender as of March
31, 2003 in the amount of $460,539 representing the principal and accrued
interest on the Original Notes as of such date; and
WHEREAS, Borrower and Lender desire to amend and exchange the Original
Notes to make the Borrower responsible for payment, extend the maturity date,
and allow Lender the option of exchanging the resulting debt obligation for
securities of the Borrower.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
ARTICLE I
The Term Loan
1.1. Restructuring of Debt. The outstanding principal and accrued interest
on the Original Notes as of March 31, 2003 of $460,539 is hereby restated and
exchanged with Borrower effective April 1, 2003 as a single term loan that
accrues interest at the rate of five percent (5%) per annum with all principal
and accrued interest due and payable on March 31, 2008 (the "Term Loan"). The
Term Loan shall be represented by the "Term Note" in the form attached hereto as
Exhibit A. Each payment of principal (including any prepayment) and payment of
interest and fees, and any other amount required to be paid to the Lender with
respect to the Term Note, shall be made to the Lender at it address set forth
below on the date such payment is due. Upon execution of this Agreement, Lender
is delivering to Borrower the Original Notes.
1.2. Manner of Payment.
(a) Payment of principal, interest, and any other amount required to
be paid to the Lender with respect to the Term Loan, shall be made to the
Lender in U.S. dollars and in immediately available funds on the date such
payment is due.
(b) The Term Loan may be prepaid by Borrower at any time without
penalty upon not less than 30 days advance written notice from Borrower to
Lender specifying the date of prepayment (the "Prepayment Date"). Prior to
the Prepayment Date the Lender may, at its option, give written notice of
exchange of the Term Loan for securities of the Borrower as provided in
Section 1.3, below, in which event payment shall be made by exchange
pursuant to Section 1.3.
(c) In the event that any payment hereunder or under the Term Note
becomes due and payable on a day other than a business day, then such due
date shall be extended to the next succeeding business day; provided that
interest shall continue to accrue during the period of any such extension.
"Business day" means any day which is not a Saturday, Sunday or a day on
which banks in the state of California are authorized or obligated by law,
executive order or governmental decree to be closed.
1.3. Exchange of Loan Obligation. The Term Loan plus all accrued interest
on the Term Loan (the "Loan Obligation"), may be exchanged at the election of
the Lender at any time prior to the earlier of the Prepayment Date or March 31,
2008, by Lender giving written notice to Borrower specifying the date of
exchange (the "Exchange Date") not less than 30 days nor more than 60 days prior
to Exchange Date, for one share of Borrower's voting common stock and one
warrant to purchase one share of Borrower's voting common stock in the form
attached hereto as Exhibit B ("Warrant") for each $0.30 of the Loan Obligation
(the "Exchange Price"). The common stock and Warrant are collectively referred
to as the "Borrower Securities." An election made by the Lender to exchange the
Loan Obligation for Borrower Securities cannot be revoked by Lender without the
written consent of Borrower.
(a) On the Exchange Date the Lender shall deliver to the Borrower the
Term Note and all other instruments evidencing the Loan Obligation to the
Borrower marked "paid in full," and the Borrower shall issue and deliver to
the Lender the Borrower Securities.
(b) In the event the Company should at any time or from time to time
hereafter fix a record date for the effectuation of a split or subdivision
of the outstanding shares of common stock or the determination of holders
of common stock entitled to receive a dividend or other distribution
payable in additional shares of common stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of common stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such
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holder for the additional shares of common stock or the Common Stock
Equivalents (including the additional shares of common stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date
of such dividend distribution, split or subdivision if no record date is
fixed), the Exchange Price shall be appropriately decreased so that the
number of shares of common stock and Warrants issuable on exchange of the
Loan Obligation shall be increased in proportion to such increase in the
aggregate of shares of common stock outstanding and those issuable with
respect to such Common Stock Equivalents.
(c) If the number of shares of common stock outstanding at any time or
from time to time hereafter is decreased by a combination of the
outstanding shares of common stock, then, following the record date of such
combination, the Exchange Price shall be appropriately increased so that
the number of shares of common stock and Warrants issuable on exchange of
the Loan Obligation shall be decreased in proportion to such decrease in
outstanding shares.
(d) Whenever there is an adjustment in the Exchange Price under
paragraphs (b) or (c) of this Section 1.3, there will be an inverse
proportionate adjustment in the then exercise price of the Warrants.
ARTICLE II
Representations and Warranties of Borrower
The Borrower represents and warrants that:
2.1. Organization and Authority.
(a) The Borrower is a corporation duly organized and validly existing
under the laws of the jurisdiction of its formation;
(b) The Borrower has the power and authority to execute, deliver and
perform this Agreement, the Term Note, and all other Loan Obligations; and
(c) Each of the Agreement and Term Note is and shall be the legal,
valid and binding obligation or agreement of the Borrower enforceable
against the Borrower in accordance with its terms, subject to the effect of
any applicable bankruptcy, moratorium, insolvency, reorganization or other
similar law affecting the enforceability of creditors' rights generally and
to the effect of general principles of equity (whether considered in a
proceeding at law or in equity).
2.2. Loan Documents. The execution, delivery, (or, as the case may be,
reaffirmation) and performance by the Borrower of this Agreement and the Term
Note:
(a) has been duly authorized by all requisite corporate action of the
Borrower required for the lawful execution, delivery, reaffirmation and
performance thereof;
(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any governmental authority or arbitral authority binding
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on the Borrower or its properties, or (iii) the certificate of
incorporation or bylaws of the Borrower;
(c) does not and will not be in conflict with, result in a breach of
or constitute an event of default, or an event which, with notice or lapse
of time or both, would constitute an event of default, under any contract,
indenture, agreement or other instrument or document to which the Borrower
is a party, or by which the properties or assets of the Borrower are bound
and such conflict, breach or event of default could reasonably be expected
to result in a material adverse effect on the business, properties or
financial condition of the Borrower; and
(d) does not and will not result in the creation or imposition of any
lien upon any of the properties or assets of the Borrower.
2.3. Reports/ Untrue Statement. Borrower has delivered to Lender a copy of
Borrower's annual report on Form 10-KSB for the year ended December 31, 2002,
and quarterly report on Form 10-QSB for the quarter ended March 31, 2003
(collectively the "Reports"). Neither this Agreement nor any of the Reports
contains any misrepresentation or untrue statement of material fact or omits to
state a material fact necessary, in light of the circumstances under which it
was made, in order to make any such warranty, representation or statement
contained therein not misleading.
ARTICLE III
Representations and Warranties of Lender
The Lender represents and warrants that:
3.1. Authority.
(a) The Lender has the power and authority to execute, deliver and
perform this Agreement; and
(b) This Agreement is and shall be the legal, valid and binding
obligation or agreement of the Lender enforceable against the Lender in
accordance with its terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally and to the
effect of general principles of equity (whether considered in a proceeding
at law or in equity).
3.2. Loan Documents. The execution, delivery, (or, as the case may be,
reaffirmation) and performance by the Lender of this Agreement:
(a) does not violate any provisions of (i) applicable law, rule or
regulation, or (ii) any judgment, writ, order, determination, decree or
arbitral award of any governmental authority or arbitral authority binding
on the Lender or its properties; and
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(b) does not and will not be in conflict with, result in a breach of
or constitute an event of default, or an event which, with notice or lapse
of time or both, would constitute an event of default, under any contract,
indenture, agreement or other instrument or document to which the Lender is
a party, or by which the properties or assets of the Lender are bound and
such conflict, breach or event of default could reasonably be expected to
result in a material adverse effect on the business, properties or
financial condition of the Lender.
3.3. Accredited Investor. Lender is an "accredited investor" as that term
is defined in Rule 501 of regulation D promulgated under the Securities Act of
1933.
ARTICLE IV
Events of Default and Acceleration
4.1. Events of Default. If any one or more of the following events (herein
called "Events of Default") shall occur for any reason whatsoever (and whether
such occurrence shall be voluntary or involuntary or come about or be effected
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any governmental
authority), that is to say:
(a) if default shall be made in the due and punctual payment of the
principal or interest of the Term Loan, when and as the same shall be due
and payable at maturity, by acceleration or otherwise; or
(b) if a default shall be made in the performance or observance of, or
shall occur under, any covenant, agreement or provision contained in this
Agreement (other than as described in clause (a) above) and such default
shall continue for 30 or more days after the earlier of receipt of notice
of such default by the Borrower from the Lender; or
(c) if any representation, warranty or other statement of fact
contained in this Agreement or in any writing, certificate, report or
statement at any time furnished to the Lender by or on behalf of the
Borrower shall be false or misleading in any material respect when given;
or
(d) if the Borrower shall be unable to pay its debts generally as they
become due, admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any insolvency
statute, make an assignment for the benefit of its creditors, commence a
proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its
property, or file a petition or answer seeking liquidation, reorganization
or arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute; or
(e) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Borrower or of the whole or any substantial part of its
properties and such order, judgment or decree continues unstayed and in
effect for a period of sixty (60) days, or approve a petition filed against
the Borrower seeking liquidation, reorganization or arrangement or similar
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relief under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state, which petition is not
dismissed within sixty (60) days; or if, under the provisions of any other
law for the relief or aid of debtors, a court of competent jurisdiction
shall assume custody or control of the Borrower or of the whole or any
substantial part of its properties, which control is not relinquished
within sixty (60) days; or if there is commenced against the Borrower any
proceeding or petition seeking reorganization, arrangement or similar
relief under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state which proceeding or
petition remains undismissed for a period of sixty (60) days; or if the
Borrower takes any action to indicate its consent to or approval of any
such proceeding or petition; or
(f) if (i) one or more judgments or orders where the amount not
covered by insurance (or the amount as to which the insurer denies
liability) is in an aggregate amount in excess of $1,000,000 is rendered
against the Borrower, or (ii) there is any attachment, injunction or
execution against the Borrower's properties for any amount in excess of
$1,000,000 in the aggregate; and such judgment, attachment, injunction or
execution remains unpaid, unstayed, undischarged, unbonded or undismissed
for a period of thirty (30) days; or
(g) if any "person" or "group" (each as used in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934), either (A) becomes the
"beneficial owner" (as defined in Rule 13d-3 of the Securities Exchange Act
or 1934), directly or indirectly, of voting stock of the Borrower (or
securities convertible into or exchangeable for such voting stock)
representing 50% or more of the combined voting power of all voting stock
of the Borrower (on a fully diluted basis), or (B) otherwise has the
ability, directly or indirectly, to elect a majority of the board of
directors of the Borrower;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,
(x) the Lender, at its option, declare by notice to the Borrower the
Term Loan to be immediately due and payable, and the same, including all
interest accrued thereon and all other obligations of the Borrower to the
Lender, shall forthwith become immediately due and payable without
presentment, demand, protest, notice or other formality of any kind, all of
which are hereby expressly waived, anything contained herein or in any
instrument evidencing the Term Loan to the contrary notwithstanding;
provided, however, that notwithstanding the above, if there shall occur an
Event of Default under clause (d) or (e) above, then the Term Loan shall be
immediately due and payable without the necessity of any action by the
Lender; and
(y) The Lender shall have all of the rights and remedies available
under this Agreement, the Term Note or under any applicable law.
4.2. Cumulative Rights. No right or remedy herein conferred upon the Lender
is intended to be exclusive of any other rights or remedies contained herein or
in the Term Note, and every such right or remedy shall be cumulative and shall
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be in addition to every other such right or remedy contained herein and therein
or now or hereafter existing at law or in equity or by statute, or otherwise.
4.3. No Waiver. No course of dealing between the Borrower and any Lender,
or any failure or delay on the part of the Lender in exercising any rights or
remedies under this Agreement or the Term Note or otherwise available to it
shall operate as a waiver of any rights or remedies and no single or partial
exercise of any rights or remedies shall operate as a waiver or preclude the
exercise of any other rights or remedies hereunder or of the same right or
remedy on a future occasion.
ARTICLE V
Miscellaneous
5.1. Assignment. The Lender may assign to one or more persons all or a
portion of its rights, obligations or rights and obligations under this
Agreement (including, without limitation, all or a portion of its Term Note).
Upon execution, delivery, and acceptance of such assignment, the assignee
thereunder shall be a party hereto and, to the extent of such assignment, have
the obligations, rights, and benefits of the Lender hereunder and the assigning
Lender shall, to the extent of such assignment, relinquish its rights and be
released from its obligations under this Agreement. Upon the consummation of any
assignment pursuant to this Section, the assignor and the Borrower shall make
appropriate arrangements so that, if required, new notes are issued to the
assignor and the assignee. If the assignee is not incorporated under the laws of
the United States of America or a state thereof, it shall deliver to the
Borrower and the Agent certification as to exemption from deduction or
withholding of taxes that may be required by the Internal Revenue Cod of 1986.
5.2. Notices. Any notice shall be conclusively deemed to have been received
by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of delivery to such telefacsimile number for
such party, and the receipt of such message is verified by the sender's
telefacsimile machine, or (iii) on the fifth business day after the day on which
mailed, if sent prepaid by certified or registered mail, return receipt
requested, in each case delivered, transmitted or mailed, as the case may be, to
the address or telefacsimile number, as appropriate, set forth below or such
other address or number as such party shall specify by notice hereunder:
(a) if to the Borrower: Viral Genetics, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx, President
Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
(b) if to the Lender: Xxxx Xxxxxxxxx, Trustee
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx, President
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Telephone: (000) 000-0000
Telefacsimile: (000) 000-0000
5.3. Survival. All covenants, agreements, representations and warranties
made herein shall survive the making by the Lender of the Term Loan and the
execution and delivery to the Lender of this Agreement and the Term Note and
shall continue in full force and effect so long as the Term Loan remain
outstanding.
5.4. Amendments. No amendment, modification or waiver of any provision of
this Agreement or the Term Note and no consent by the Lender to any departure
there from by the Borrower shall be effective unless such amendment,
modification or waiver shall be in writing and signed by the Lender, and the
same shall then be effective only for the period and on the conditions and for
the specific instances and purposes specified in such writing.
5.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
5.6. Termination. The termination of this Agreement shall not affect any
rights of the Borrower or Lender, or any obligation of the Borrower or Lender
arising prior to the effective date of such termination, and the provisions
hereof shall continue to be fully operative until all transactions entered into
or rights created or obligations incurred prior to such termination have been
fully disposed of, concluded or liquidated and the obligations arising prior to
or after such termination have been irrevocably paid in full.
5.7. Severability. If any provision of this Agreement or the Term Note
shall be determined to be illegal or invalid as to one or more of the parties
hereto, then such provision shall remain in effect with respect to all parties,
if any, as to whom such provision is neither illegal nor invalid, and in any
event all other provisions hereof shall remain effective and binding on the
parties hereto.
5.8. Entire Agreement. This Agreement, together with the exhibits hereto,
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto.
5.9. Governing Law; Waiver of Jury Trial.
(a) THIS AGREEMENT AND THE TERM NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE
NOTWITHSTANDING ITS EXECUTION AND DELIVERY OUTSIDE SUCH STATE.
(b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY
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STATE OR FEDERAL COURT SITTING IN THE STATE OF CALIFORNIA, UNITED STATES OF
AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER
EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS
PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND
HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN
SECTION 5.2 HEREIN, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER
THE APPLICABLE LAWS IN EFFECT IN THE STATE OF CALIFORNIA.
(D) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR THE TERM NOTE OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE
FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, THE BORROWER AND THE
LENDER HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
5.10. Third Party Beneficiaries. No Person other than the parties hereto
shall be entitled to claim any right or benefit under this Agreement, including,
without limitation, the status of third-party beneficiary of this Agreement and
nothing in this Agreement, express or implied, is intended to confer upon any
other Person any rights or remedies of any nature whatsoever under or by reason
of this Agreement
5.11. Rules of Interpretation.
(a) The headings and subheadings used herein are solely for
convenience of reference and shall not constitute a part of any such
document or affect the meaning, construction or effect of any provision
thereof.
(b) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
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schedules are references to articles, sections, paragraphs, clauses,
annexes, appendices, exhibits and schedules in or to this Agreement.
(c) All definitions set forth herein shall apply to the singular as
well as the plural form of such defined term, and all references to the
masculine gender shall include reference to the feminine or neuter gender,
and vice versa, as the context may require.
(d) When used herein, words such as "hereunder", "hereto", "hereof"
and "herein" and other words of like import shall, unless the context
clearly indicates to the contrary, refer to the whole of this Agreement and
not to any particular article, section, subsection, paragraph or clause
thereof.
(e) References to "including" means including without limiting the
generality of any description preceding such term.
IN WITNESS WHEREOF, the parties hereto have caused this instrument, made as
of May 22, 2003, to be executed and delivered by a duly authorized officer and
individually on June 4, 2003.
VIRAL GENETICS, INC.
By: /s/ Xxxx Xxxxxxxxx, President
THE XXXXXX TRUST
By: /s/ Xxxx Xxxxxxxxx, Trustee
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EXHIBIT A
Form of Term Note
Promissory Note
$460,539.00 South Pasadena, California
April 1, 2003
FOR VALUE RECEIVED, VIRAL GENETICS, INC., a Delaware corporation having its
principal place of business located in South Pasadena, California (the
"Borrower"), hereby promises to pay to the order of [______________________,
Executor of the Estate of Dr. Xxxxx Zhabilov and his successors in office]
located in ____________________, California (the "Lender") at the time set forth
in the Debt Restructuring Agreement dated as of May 22, 2003 between the
Borrower and Lender and as further amended, supplemented or replaced from time
to time (the "Agreement" -- all capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Agreement), in lawful money
of the United States of America, in immediately available funds, the principal
amount of FOUR HUNDRED SIXTY THOUSAND FIVE HUNDRED THIRTY NINE AND N0/100'S
DOLLARS ($460,539.00) on March 31, 2008 or such earlier date as may be required
or permitted pursuant to the terms of the Agreement, and to pay interest from
the date hereof on the unpaid principal amount hereof, in like money, on the
date and at the rate provided in Article II of the Agreement. All or any portion
of the principal amount or accrued interest of the Term Note may be prepaid or
required to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of the
Agreement the then remaining principal amount and accrued but unpaid interest
shall become immediately due and payable, without presentation, demand, protest
or notice of any kind, all of which are hereby waived by the Borrower.
In the event any amount evidenced by this Note is not paid when due at any
stated or accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest, all costs of collection, including reasonable attorneys'
fees, and interest due hereunder thereon at the rate set forth above.
This Note is issued in replacement of the Original Notes in favor of the
Lender and does not constitute a novation of the indebtedness evidenced thereby.
This Note is the Term Note referred to in the Agreement and is issued
pursuant to and entitled to the benefits and security of the Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions upon Term Loan evidenced hereby is made and is to be repaid.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
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to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issued against any other of them and is returned satisfied or
until it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, also their right, if
any, to require the holder hereof to hold as security for this Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
This Note shall be governed by, and construed in accordance with, the law
of the State of California.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made, executed
and delivered by its duly authorized representative as of the date and year
first above written, all pursuant to authority duly granted.
VIRAL GENETICS, INC.
By: ________________________________
Xxxx Xxxxxxxxx, President
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EXHIBIT B
Form of Warrant
VIRAL GENETICS, INC.
Warrant for the Purchase of
Shares of Common Stock
Par Value $0.0001
WARRANT AGREEMENT
THE HOLDER OF THIS WARRANT, BY ACCEPTANCE HEREOF, BOTH WITH RESPECT TO THE
WARRANT AND COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANT, AGREES AND
ACKNOWLEDGES THAT THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR OTHER COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS
OF THE APPLICABLE STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE
STATUTES.
This is to certify that, for value received, _____________________________
(the "Holder") is entitled to purchase from VIRAL GENETICS, INC., a Delaware
corporation (the "Company"), on the terms and conditions hereinafter set forth,
all or any part of ______________________ shares ("Warrant Shares") of the
Company's common stock, par value $0.0001 (the "Common Stock"), at the purchase
price of [$0.40] per share ("Warrant Price"). Upon exercise of this warrant in
whole or in part, a certificate for the Warrant Shares so purchased shall be
issued and delivered to the Holder. If less than the total warrant is exercised,
a new warrant of similar tenor shall be issued for the unexercised portion of
this warrant. By acceptance hereof, the Holder agrees to be bound by the terms
and conditions of this warrant.
This warrant is granted subject to the following further terms and
conditions:
1. This warrant shall vest and be exercisable immediately, and shall expire
at 5:00 pm Pacific Time on the date that is five years from the date this
warrant is signed. In order to exercise this warrant with respect to all or any
part of the Warrant Shares for which this warrant is at the time exercisable,
Holder must take the following actions:
(a) Deliver to the Corporate Secretary of the Corporation an executed
notice of exercise in substantially the form of notice attached to this
Agreement (the "Exercise Notice") in which there is specified the number of
Warrant Shares that are to be purchased under the exercised warrant.
(b) Pay the aggregate Warrant Price for the purchased shares through one or
more of the following alternatives:
(i) full payment in cash or by check made payable to the
Corporation's order;
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(ii) full payment in shares of Common Stock valued at Fair Market
Value on the Exercise Date (as such term is defined below);
(iii)full payment through a combination of shares of Common Stock
valued at Fair Market Value on the Exercise Date and cash or
check payable to the Company's order; or
(iv) full payment effected through a broker-dealer sale and remittance
procedure pursuant to which Holder shall provide concurrent
irrevocable written instructions (i) to a brokerage firm to
effect the immediate sale of the purchased shares and remit to
the Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Warrant Price
payable for the purchased shares and (ii) to the Company to
deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction.
(c) Furnish to the Corporation appropriate documentation that the person or
persons exercising the warrant (if other than Holder) have the right to exercise
this warrant.
(d) For purposes of this Agreement, the Exercise Date shall be the date on
which the executed Exercise Notice shall have been delivered to the Company.
Except to the extent the sale and remittance procedure specified above is
utilized in connection with the warrant exercise, payment of the Warrant Price
for the purchased shares must accompany such Exercise Notice.
(e) For all valuation purposes under this Agreement, the Fair Market Value
per share of Common Stock on any relevant date shall be determined in accordance
with the following provisions:
(i) If the Common Stock is not at the time listed or admitted to
trading on any national securities exchange but is traded on the
Nasdaq National Market, the Fair Market Value shall be the mean
between the highest "bid" and lowest "offered" quotations of a
share of Common Stock on such date (or if none, on the most
recent date on which there were bid and offered quotations of a
share of Common Stock), as reported by the Nasdaq National Market
or any successor system.
(ii) If the Common Stock is at the time listed or admitted to trading
on any national securities exchange, then the Fair Market Value
shall be the closing selling price per share on the date in
question on the securities exchange, as such price is officially
quoted in the composite tape of transactions on such exchange. If
there is no reported sale of Common Stock on such exchange on the
date in question, then the Fair Market Value shall be the closing
selling price on the exchange on the last preceding date for
which such quotation exists.
(iii)If the Common Stock is not listed on such date on any national
securities exchange nor included in the Nasdaq National Market,
but is traded in the over-the-counter market, the highest "bid"
quotation of a share of Common Stock on such date (or if none, on
the most recent date on which there were bid quotations of a
share of Common Stock), as reported on the Nasdaq Smallcap Market
or the NASD OTC Bulletin Board, as applicable.
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(f) Upon such exercise, the Company shall issue and cause to be delivered
with all reasonable dispatch (and in any event within three business days of
such exercise) to or upon the written order of the Holder at its address, and in
the name of the Holder, a certificate or certificates for the number of full
Warrant Shares issuable upon the exercise together with such other property
(including cash) and securities as may then be deliverable upon such exercise.
Such certificate or certificates shall be deemed to have been issued and the
Holder shall be deemed to have become a holder of record of such Warrant Shares
as of the Exercise Date.
2. The Warrant Shares have not and may not be registered as of the date of
exercise of this warrant under the Securities Act or the securities laws of any
state. This warrant and the Warrant Shares issuable on exercise of the warrant,
when and if issued, are and may be "restricted securities" as defined in Rule
144 promulgated by the Securities and Exchange Commission and must be held
indefinitely unless subsequently registered under the Securities Act and any
other applicable state registration requirements, or an exemption from such
registration requirements for resale is available. The Company is under no
obligation to register the securities under the Securities Act or under
applicable state statutes. In the absence of such a registration or an available
exemption from registration, sale of the Warrant Shares will be prohibited. The
Holder shall confirm to the Company the representations set forth above in
connection with the exercise of all or any portion of this warrant.
3. The Company, during the term of this Agreement, will obtain from the
appropriate regulatory agencies any requisite authorization in order to issue
and sell such number of shares of its Common Stock as shall be sufficient to
satisfy the requirements of the Agreement.
4. The number of Warrant Shares purchasable upon the exercise of this
warrant and the Warrant Price per share shall be subject to adjustment from time
to time subject to the following terms. If the outstanding shares of Common
Stock of the Company are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, the Company or its successors and assigns shall make an appropriate and
proportionate adjustment in the number or kind of shares, and the per-share
Warrant Price thereof, which may be issued to the Holder under this Agreement
upon exercise of the warrants granted under this Agreement. The purchase rights
represented by this warrant shall not be exercisable with respect to a fraction
of a share of Common Stock. Any fractional shares of Common Stock arising from
the dilution or other adjustment in the number of shares subject to this warrant
shall be rounded up to the nearest whole share.
5. The Company covenants and agrees that all Warrant Shares which may be
delivered upon the exercise of this warrant will, upon delivery, be free from
all taxes, liens, and charges with respect to the purchase thereof; provided,
that the Company shall have no obligation with respect to any income tax
liability of the Holder.
6. The Company agrees at all times to reserve or hold available a
sufficient number of shares of Common Stock to cover the number of Warrant
Shares issuable upon the exercise of this and all other warrants of like tenor
and other convertible securities then outstanding.
7. This warrant shall not entitle the Holder hereof to any voting rights or
other rights as a shareholder of the Company, or to any other rights whatsoever,
except the rights herein expressed, and no dividends shall be payable or accrue
in respect of this warrant or the interest represented hereby or the Warrant
Shares purchasable hereunder until or unless, and except to the extent that,
this warrant shall be exercised.
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8. The Company may deem and treat the registered owner of this warrant as
the absolute owner hereof for all purposes and shall not be affected by any
notice to the contrary.
9. In the event that any provision of this Agreement is found to be invalid
or otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid or
unenforceable provision were not contained herein.
10. This Agreement shall be governed by and construed in accordance with
the internal laws of the state of Delaware, without regard to the principles of
conflicts of law thereof.
11. In case this warrant shall be mutilated, lost, stolen, or destroyed,
the Company may at its discretion issue and deliver in exchange and substitution
for and on cancellation of the mutilated warrant, or in lieu of and substitution
for the warrant lost, stolen, or destroyed, a new warrant of like tenor and
representing an equivalent right or interest; but only on receipt of evidence
satisfactory to the Company of such loss, theft, or destruction of this warrant
and indemnity satisfactory to the Company. The Holder shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
12. This Agreement shall be binding on and inure to the benefit of the
Company and the person to whom a warrant is granted hereunder, and such person's
heirs, executors, administrators, legatees, personal representatives, assignees,
and transferees.
IN WITNESS WHEREOF, the Company has caused this warrant to be executed by
the signature of its duly authorized officer, effective this _____ day of
_______________________ 200__.
VIRAL GENETICS, INC.
By____________________________________
Duly Authorized Officer
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Exercise Notice
(to be signed only upon exercise of warrant)
TO: VIRAL GENETICS, INC.
The Holder of the attached warrant hereby irrevocable elects to exercise
the purchase rights represented by the warrant for, and to purchase thereunder,
________________________________ shares of common stock of Viral Genetics, Inc.,
and herewith makes payment therefor, and requests that the certificate(s) for
such shares be delivered to the Holder at:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
If acquired without registration under the Securities Act of 1933, as
amended ("Securities Act"), the Holder represents that the Common Stock is being
acquired without a view to, or for, resale in connection with any distribution
thereof without registration or other compliance under the Securities Act and
applicable state statutes, and that the Holder has no direct or indirect
participation in any such undertaking or in the underwriting of such an
undertaking. The Holder understands that the Common Stock has not been
registered, but is being acquired by reason of a specific exemption under the
Securities Act as well as under certain state statutes for transactions by an
issuer not involving any public offering and that any disposition of the Common
Stock may, under certain circumstances, be inconsistent with these exemptions.
The Holder acknowledges that the Common Stock must be held and may not be sold,
transferred, or otherwise disposed of for value unless subsequently registered
under the Securities Act or an exemption from such registration is available.
The Company is under no obligation to register the Common Stock under the
Securities Act, except as provided in the Agreement for the warrant. The
certificates representing the Common Stock will bear a legend restricting
transfer, except in compliance with applicable federal and state securities
statutes.
The Holder agrees and acknowledges that this purported exercise of the
warrant is conditioned on, and subject to, any compliance with requirements of
applicable federal and state securities laws deemed necessary by the Company.
DATED this ________ day of ________________________________, __________.
______________________________________
Signature
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Transfer Form
FOR VALUE RECEIVED, _________________________________________________
hereby sell, assign, and transfer unto
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________,
warrants to purchase shares of the Common Stock of Viral Genetics, Inc.,
represented by the within instrument, and do hereby irrevocably constitute and
appoint:
________________________________________________________________________________
to transfer said warrants stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated _______________________________________, _______________.
________________________________
In presence of
________________________________________
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