Common use of Conversion of Principal and Interest Clause in Contracts

Conversion of Principal and Interest. (a) Subject to the terms and conditions hereof, the Payee, at its sole option, may deliver to the Maker a notice in the form attached hereto as Exhibit A (a “Conversion Notice”) and an updated Loan Schedule, at any time and from time to time after the date hereof and prior to the payment of the principal amount and all accrued interest thereon (the date of the delivery of a Conversion Notice, except as otherwise set forth in the last sentence of this paragraph, a “Conversion Date”), to convert all or any portion of the outstanding principal amount of this Note plus accrued and unpaid interest thereon, for a number of Shares equal to the quotient obtained by dividing the dollar amount of such outstanding principal amount of this Note plus the accrued and unpaid interest thereon being converted by the Conversion Price (as defined in Section 17). Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note plus all accrued and unpaid interest thereunder in an amount equal to the applicable conversion, which shall be evidenced by entries set forth in the Conversion Notice and the Loan Schedule. (b) Upon any issuance by the Maker of any of its equity securities, including Common Stock, for cash consideration, indebtedness or a combination thereof after the date hereof (a “Subsequent Equity Financing”), the Payee shall have the option to convert the outstanding principal and accrued but unpaid interest of this Note into the number of fully paid and non-assessable shares of securities issued in the Subsequent Equity Financing (“Conversion Securities”) equal to the product of unpaid principal, together with the balance of unpaid and accrued interest and other amounts payable hereunder multiplied by 1.1, divided by the price per share paid by the investors for the Conversion Securities. At least two (2) Trading Days prior to the closing of the Subsequent Equity Financing, the Maker shall deliver to the Payee a written notice of its intention to effect a Subsequent Equity Financing (“Pre-Notice”), which Pre-Notice shall ask the Payee if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”). Upon the request of the Payee, and only upon a request by the Payee, for a Subsequent Financing Notice, the Maker shall promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to the Payee. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent EquityFinancing, the amount of proceeds intended to be raised thereunder and the person or persons through or with whom such Subsequent Equity Financing is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment. If the Payee desires to participate in such Subsequent Equity Financing, it must provide written notice to the Maker by not later than 5:30 p.m. (New York City time) on the second (2nd) Trading Day after receipt of the Pre-Notice that the Payee is willing to participate in the Subsequent Equity Financing. If the Maker receives no such notice from the Payee as of such second (2nd) Trading Day, the Payee shall be deemed to have notified the Maker that it does not elect to participate. The Payee, by acceptance of this Note, agrees with the Maker that, if this Note is converted pursuant to this Section 2(b), then, as a condition to the issuance of the Conversion Securities, the Payee shall deliver the original of this Note to the Maker with appropriate endorsements at the closing of such Subsequent Equity Financing and shall execute and deliver to the Maker the applicable definitive agreements for the Subsequent Equity Financing; provided, however, this Note shall for all purposes be deemed paid and cancelled regardless of whether the Payee delivers the original of this Note or approves or executes the such financing agreements.