8% SENIOR SECURED NOTE DUE JUNE 15, 2005
Exhibit
10.4
EXHIBIT
A
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
Original
Issue Date: March 15, 2005
$200,000.00
8%
SENIOR SECURED NOTE DUE JUNE 15, 2005
THIS NOTE
is a duly authorized and issued 8% Senior Secured Note of Grant Life Sciences,
Inc., a Nevada corporation, having a principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, (the “Company”),
designated as its 8% Senior Secured Note, due June 15, 2005 (the “Note(s)”).
FOR VALUE
RECEIVED, the Company promises to pay to DCOFI MASTER LDC or its registered
assigns (the “Holder”), the
principal sum of $200,000.00 on June 15, 2005 or such earlier date as the Notes
are required or permitted to be repaid as provided hereunder (the “Maturity
Date”), and
to pay interest to the Holder on the aggregate outstanding principal amount of
this Note in accordance with the provisions hereof. This Note is subject to the
following additional provisions:
Section
1. Definitions. For the
purposes hereof, in addition to the terms defined elsewhere in this Note: (a)
capitalized terms not otherwise defined herein have the meanings given to such
terms in the Purchase Agreement, and (b) the following terms shall have the
following meanings:
“Alternate
Consideration” shall
have the meaning set forth in Section 4(c).
“Business
Day” means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday in the United States or a day on which banking institutions in the State
of New York are authorized or required by law or other government action to
close.
“Change
of Control Transaction” means
the occurrence of any of (i) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act) of effective control (whether through legal
or beneficial ownership of capital stock of the Company, by contract or
otherwise) of in excess of 33% of the voting securities of the Company, or (ii)
a replacement at one time or within a three year period of more than one-half of
the members of the Company's board of directors which is not approved by a
majority of those individuals who are members of the board of directors on the
date hereof (or by those individuals who are serving as members of the board of
directors on any date whose nomination to the board of directors was approved by
a majority of the members of the board of directors who are members on the date
hereof), or (iii) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in (i) or (ii).
“Common
Stock” means
the common stock, $.001 par value, of the Company and stock of any other class
into which such shares may hereafter have been reclassified or changed.
“Event
of Default” shall
have the meaning set forth in Section 8.
“Exchange
Act” means
the Securities Exchange Act of 1934, as amended.
“Fundamental
Transaction” shall
have the meaning set forth in Section 4(c) hereof.
“Late
Fee” shall
have the meaning set forth in Section 2(c) hereof.
“Original
Issue Date” shall
mean the date of the first issuance of the Notes regardless of the number of
transfers of any Note and regardless of the number of instruments which may be
issued to evidence such Note.
“Penalty
Warrants” means
warrants to purchase 250,000 shares of Common Stock issuable to the Holder in
accordance with the terms herein.
“Person” means a
corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.
“Purchase
Agreement” means
the Securities Purchase Agreement, dated as of March 15, 2005, to which the
Company and the original Holder are parties, as amended, modified or
supplemented from time to time in accordance with its terms.
“Securities
Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Trading
Day” means a
day on which (i) the New York Stock Exchange is open for business, if the Common
Stock is not publicly traded or (ii) if the Company’s Common Stock is publicly
traded, the Common Stock is traded on a Trading Market.
“Trading
Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq SmallCap Market, the American
Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the
OTC Bulletin Board.
“Transaction
Documents” shall
have the meaning set forth in the Purchase Agreement.
Section
2. Interest
and Prepayments.
a) Payment
of Interest in Cash. The
Company shall pay interest to the Holder on the aggregate and outstanding
principal amount of this Note at the rate of 8% per annum, payable monthly in
arrears, in cash on the last day of each month, beginning on the first such date
after the Original Issue Date and on the Maturity Date (except that, if any such
date is not a Business Day, then such payment shall be due on the next
succeeding Business Day).
b) Late
Fee. All
overdue accrued and unpaid interest to be paid hereunder shall entail a late fee
at the rate of 20% per annum (or such lower maximum amount of interest permitted
to be charged under applicable law) (“Late
Fee”) which
will accrue daily, from the date such interest is due hereunder through and
including the date of payment.
c) Optional
Prepayment. The
Company shall have the right to prepay, in cash, all or a portion of the Notes
at any time at (i) 100% of the principal amount thereof plus accrued interest to
the date of repayment if in the first 60 days and (ii) 106% of the principal
amount thereof plus accrued interest to the date of repayment if after 60
days.
d) Mandatory
Prepayment. In the
event that the Company receives proceeds of at least $2,000,000 from the sale of
Common Stock, preferred stock, or debt securities of the Company, the Company
shall be required to redeem the Notes at (i) 100% of the principal amount
thereof plus accrued interest to the date of repayment if in the first 60 days
and (ii) 106% of the principal amount thereof plus accrued interest to the date
of repayment if after 60 days.
Section
3. Registration
of Transfers and Exchanges.
a) Different
Denominations. This
Note is exchangeable for an equal aggregate principal amount of Notes of
different authorized denominations, as requested by the Holder surrendering the
same. No service charge will be made for such registration of transfer or
exchange.
b) Investment
Representations. This
Note has been issued subject to certain investment representations of the
original Holder set forth in the Purchase Agreement and may be transferred or
exchanged only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations.
c) Reliance
on Note Register. Prior
to due presentment to the Company for transfer of this Note, the Company and any
agent of the Company may treat the Person in whose name this Note is duly
registered on the Note Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this Note
is overdue, and neither the Company nor any such agent shall be affected by
notice to the contrary.
Section
4. Intentionally
Omitted.
Section
5. Intentionally
Omitted.
Section
6. Penalty
Warrant Issuance. In
addition to all of the remedies available to the Holder pursuant to Section 8,
in the event that the principal amount of the Note, together with all accrued,
but unpaid, interest is not paid within two (2) Trading Days of the Maturity
Date, the Company shall issue the Penalty Warrants to the Holder.
Section
7. Negative
Covenants. So long
as any portion of this Note is outstanding, the Company will not and will not
permit any of its Subsidiaries to directly or indirectly:
a) enter
into, create, incur, assume or suffer to exist any indebtedness or liens of any
kind, on or with respect to any of its property or assets now owned or hereafter
acquired or any interest therein or any income or profits therefrom that
is senior
to, or pari passu with, in
any respect, the Company’s obligations under the Notes;
b) amend its
certificate of incorporation, bylaws or other charter documents so as to
adversely affect any rights of the Holder;
c) repay,
repurchase or offer to repay, repurchase or otherwise acquire any of its Common
Stock, Preferred Stock, or other equity securities; or
d) enter
into any agreement with respect to any of the foregoing.
Section
8. Events
of Default.
a) “Event
of Default”,
wherever used herein, means any one of the following events (whatever the reason
and whether it shall be voluntary or involuntary or effected by operation of law
or pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body):
i. any
default in the payment of (A) the principal of amount of any Note, or (B)
interest (including Late Fees) on, or damages in respect of, any Note, in each
case free of any claim of subordination, as and when the same shall become due
and payable (whether on the Maturity Date or by acceleration or otherwise) which
default, solely in the case of an interest payment or other default under clause
(B) above, is not cured, within 2 Trading Days;
ii. the
Company shall fail to observe or perform any other covenant or agreement
contained in this Note or any of the other Transaction Documents which failure
is not cured, if possible to cure, within the earlier to occur of
(A) 5
Trading
Days after notice of such default sent by the Holder or by any other
Holder and (B)
10 Trading Days after the Company shall become or should have become aware of
such failure;
iii. a default
or event of default (subject to any grace or cure period provided for in the
applicable agreement, document or instrument) shall occur under (A) any of the
Transaction Documents other than the Notes, or (B) any other material agreement,
lease, document or instrument to which the Company or any Subsidiary is
bound;
iv. any
representation or warranty made herein, in any
other Transaction Document, in any written statement pursuant hereto or thereto,
or in any other report, financial statement or certificate made or delivered to
the Holder or any other holder of Notes shall be
untrue or incorrect in any material respect as of the date when made or deemed
made;
v. (i) the
Company or any of its Subsidiaries shall commence, or there shall be commenced
against the Company or any such Subsidiary, a case under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any successor
thereto, or the Company or any Subsidiary commences any other proceeding under
any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Company or any Subsidiary
thereof or (ii) there is commenced against the Company or any Subsidiary thereof
any such bankruptcy, insolvency or other proceeding which remains undismissed
for a period of 60 days; or (iii) the Company or any Subsidiary thereof is
adjudicated by a court of competent jurisdiction insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or (iv) the Company or any Subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property which
continues undischarged or unstayed for a period of 60 days; or (v) the Company
or any Subsidiary thereof makes a general assignment for the benefit of
creditors; or (vi) the Company shall fail to pay, or shall state that it is
unable to pay, or shall be unable to pay, its debts generally as they become
due; or (vii) the Company or any Subsidiary thereof shall call a meeting of its
creditors with a view to arranging a composition, adjustment or restructuring of
its debts; or (viii) the Company or any Subsidiary thereof shall by any act or
failure to act expressly indicate its consent to, approval of or acquiescence in
any of the foregoing; or (ix) any corporate or other action is taken by the
Company or any Subsidiary thereof for the purpose of effecting any of the
foregoing;
vi. the
Company or any Subsidiary shall default in any of its obligations under any
mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced any indebtedness for borrowed money or money due
under any long term leasing or factoring arrangement of the Company in an amount
exceeding $150,000, whether such indebtedness now exists or shall hereafter be
created and such default shall result in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise become
due and payable;
vii. if any of
the Company’s Common Stock is registered with the Commission, the Common Stock
shall not be eligible for quotation on or quoted for trading on a Trading Market
and shall not again be eligible for and quoted or listed for trading thereon
within five Trading Days;
viii. the
Company shall be a party to any Change of Control Transaction or Fundamental
Transaction, shall agree to sell or dispose of all or in excess of 33% of its
assets in one or more transactions (whether or not such sale would constitute a
Change of Control Transaction) or shall redeem or repurchase more than a de
minimis number of its outstanding shares of Common Stock or other equity
securities of the Company (other than repurchases of shares of Common Stock or
other equity securities of departing officers and directors of the Company;
provided such repurchases shall not exceed $100,000, in the aggregate, for all
officers and directors during the term of this Note);
b) Remedies
Upon Event of Default. If any
Event of Default occurs, the full principal amount of this Note, together with
interest and other amounts owing in respect thereof, to the date of acceleration
shall become, at the Holder’s election, immediately due and payable in cash. The
aggregate amount payable upon an Event of Default shall be equal to the
Mandatory Prepayment Amount. Commencing 5 days after the occurrence of any Event
of Default that results in the eventual acceleration of this Note, the interest
rate on this Note shall accrue at the rate of 20% per annum, or such lower
maximum amount of interest permitted to be charged under applicable law. All
Notes for which the full Mandatory Prepayment Amount hereunder shall have been
paid in accordance herewith shall promptly be surrendered to or as directed by
the Company. The Holder need not provide and the Company hereby waives any
presentment, demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law. Such declaration may be rescinded and annulled by ▇▇▇▇▇▇ at any
time prior to payment hereunder and the Holder shall have all rights as a Note
holder until such time, if any, as the full payment under this Section shall
have been received by it. No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon.
Section
9. Miscellaneous.
a) Notices. Any and
all notices or other communications or deliveries to be provided by the Holders
hereunder shall be in writing and delivered personally, by facsimile, sent by a
nationally recognized overnight courier service, addressed to the Company, at
the address set forth above, facsimile number
▇▇▇-▇▇▇-▇▇▇▇, Attn: General Counsel, or such
other address or facsimile number as the Company may specify for such purposes
by notice to the Holders delivered in accordance with this Section. Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, sent by a
nationally recognized overnight courier service addressed to each Holder at the
facsimile telephone number or address of such ▇▇▇▇▇▇ appearing on the books of
the Company, or if no such facsimile telephone number or address appears, at the
principal place of business of the Holder. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior to
5:30 p.m. (New York City time), (ii) the date after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 5:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the second Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given.
b) Absolute
Obligation. Except
as expressly provided herein, no provision of this Note shall alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
principal of, interest and liquidated damages (if any) on, this Note at the
time, place, and rate, and in the coin or currency, herein prescribed. This Note
is a direct debt obligation of the Company. This Note ranks pari passu with all
other Notes now or hereafter issued under the terms set forth
herein.
c) Lost
or Mutilated Note. If this
Note shall be mutilated, lost, stolen or destroyed, the Company shall execute
and deliver, in exchange and substitution for and upon cancellation of a
mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost,
stolen or destroyed but only upon receipt of evidence of such loss, theft or
destruction of such Note, and of the ownership hereof, and indemnity, if
requested, all reasonably satisfactory to the Company.
d) Security
Interest/Subordination. This
Note is a direct debt obligation of the Company and, pursuant to the Security
Agreement is secured by a first priority perfected security interest in all of
the assets of the Company for the benefit of the Holders.
e) Governing
Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Note shall be governed by and construed and enforced in accordance with
the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by any of the Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the “New
York Courts”). Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the New
York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction Documents),
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Note and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Note or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of this Note, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its
attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
f) Waiver. Any
waiver by the Company or the Holder of a breach of any provision of this Note
shall not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Note. The failure of
the Company or the Holder to insist upon strict adherence to any term of this
Note on one or more occasions shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Note. Any waiver must be in writing.
g) Severability. If any
provision of this Note is invalid, illegal or unenforceable, the balance of this
Note shall remain in effect, and if any provision is inapplicable to any person
or circumstance, it shall nevertheless remain applicable to all other persons
and circumstances. If it shall be found that any interest or other amount deemed
interest due hereunder violates applicable laws governing usury, the applicable
rate of interest due hereunder shall automatically be lowered to equal the
maximum permitted rate of interest. The Company covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law or other law which would prohibit or forgive the Company from
paying all or any portion of the principal of or interest on this Note as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this indenture, and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impeded the execution of any power herein
granted to the Holder, but will suffer and permit the execution of every such as
though no such law has been enacted.
h) Next
Business Day.
Whenever any payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.
i) Headings. The
headings contained herein are for convenience only, do not constitute a part of
this Note and shall not be deemed to limit or affect any of the provisions
hereof.
*********************
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly
authorized officer as of the date first above indicated.
| GRANT LIFE SCIENCES, INC. | ||
| /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ | ||
| Name: ▇▇▇▇ ▇▇▇▇▇▇▇ | ||
|
Title:
Chief Executive Officer |
||