SENIOR CONVERTIBLE NOTE
Exhibit
10.2
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. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
Original
Conversion Price: (subject to adjustment herein):
$2.50
$1,000,000
SENIOR CONVERTIBLE NOTE
THIS SENIOR CONVERTIBLE NOTE is a duly authorized and validly
issued Senior Convertible Note (this “Note”) of AzurRx
BioPharma, Inc., a Delaware corporation, (the “Company”), having its
principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ pursuant to that certain Note Purchase
Agreement, dated February 14, 2019, by and between the Company and
the Holder (as hereinafter defined), as amended, modified or
supplemented from time to time in accordance with its terms (the
“Purchase
Agreement”).
FOR
VALUE RECEIVED, the Company promises to pay to ADEC Private Equity
Investments, LLC, a Delaware limited liability company (together
with its its registered assigns, the “Holder”), or shall have
paid pursuant to the terms hereunder, the principal sum of
$1,000,000.00 (the “Principal Amount”),
together with all accrued but unpaid interest thereon, on the
earlier to occur of (i) ten (10) Business Days following the
receipt by the Company or ABS of the 2019 Tax Credit, or (ii)
December 31, 2019 (the “Repayment Date”). 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 shall have the
meanings set forth in the Purchase Agreement and (b) the following
terms shall have the following meanings:
“Alternate Consideration”
has the meaning set forth in Section 5(d).
“Bankruptcy Event” means
any of the following events: (a) the Company or any Significant
Subsidiary (as such term is defined in Rule 1-02(w) of Regulation
S-X) thereof commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction relating to the Company or any Significant
Subsidiary thereof, (b) there is commenced against the Company or
any Significant Subsidiary thereof any such case or proceeding that
is not dismissed within 60 days after commencement, (c) the Company
or any Significant Subsidiary thereof is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such
case or proceeding is entered, (d) the Company or any Significant
Subsidiary thereof suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not
discharged or stayed within 60 calendar days after such
appointment, (e) the Company or any Significant Subsidiary thereof
makes a general assignment for the benefit of creditors, (f) the
Company or any Significant Subsidiary thereof calls a meeting of
its creditors with a view to arranging a composition, adjustment or
restructuring of its debts, (g) the Company or any Significant
Subsidiary thereof admits in writing that it is generally unable to
pay its debts as they become due, (h) the Company or any
Significant Subsidiary thereof, by any act or failure to act,
expressly indicates its consent to, approval of or acquiescence in
any of the foregoing or takes any corporate or other action for the
purpose of effecting any of the foregoing.
“Beneficial Ownership
Limitation” has the meaning set forth in Section
4(d).
“Buy-In” has the meaning
set forth in Section 4(c)(v).
“Change of Control” means
the occurrence after the date hereof of any of (a) 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 35% of the voting securities
of the Company (other than by means of conversion or exercise of
the Debenture and the Securities issued together with the
Debenture), (b) the Company merges into or consolidates with any
other Person, or any Person merges into or consolidates with the
Company and, after giving effect to such transaction, the
stockholders of the Company immediately prior to such transaction
own less than 50% of the aggregate voting power of the Company or
the successor entity of such transaction, (c) the Company sells or
transfers all or substantially all of its assets to another Person
and the stockholders of the Company immediately prior to such
transaction own less than 50% of the aggregate voting power of the
acquiring entity immediately after the transaction, (d) a
replacement at one time or within a three year period of more than
one-half of the members of the Board of Directors which is not
approved by a majority of those individuals who are members of the
Board of Directors on the Original Issue Date (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 (e) 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 in clauses (a) through
(d) above.
“Conversion” has the
meaning ascribed to such term in Section 4.
“Conversion Date” has the
meaning set forth in Section 4(a).
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“Conversion Price” has the
meaning set forth in Section 4(b).
“Conversion Schedule”
means the Conversion Schedule in the form of Schedule 1 attached
hereto.
“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of this Note in accordance with the terms hereof.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Note Register” means the
records of the Company regarding registration and transfers of this
Note.
“Effectiveness Date” has
the meaning set forth in the Registration Rights
Agreement.
“Effectiveness Period” has
the meaning set forth in the Registration Rights
Agreement.
“Event of
Default” has the meaning
set forth in Section 7(a).
“Fundamental Transaction”
has the meaning set forth in Section 5(d).
“New York Courts” has the
meaning set forth in Section 9(d).
“Notice of Conversion” has
the meaning set forth in Section 4(a).
“Permitted Indebtedness ”
means (a) the Indebtedness evidenced by the Note, (b) Indebtedness
evidenced by the other Notes issued in connection with the Purchase
Agreement on the date of this Note, (c) Indebtedness that (i) is
expressly subordinate to the Note and the other Transaction
Documents pursuant to a subordination agreement in form and
substance reasonably satisfactory to the Holder, and (ii) matures
at a date later than the 91st day following the
Repayment Date, and (d) other unsecured Indebtedness, in addition
to the Indebtedness listed above, in an aggregate principal amount
not to exceed $100,000 at any time outstanding.
“Permitted Lien” means the
individual and collective reference to the following: (a) Liens for
taxes, assessments and other governmental charges or levies not yet
due or Liens for taxes, assessments and other governmental charges
or levies being contested in good faith and by appropriate
proceedings for which adequate reserves (in the good faith judgment
of the management of the Company) have been established in
accordance with GAAP, (b) Liens imposed by law which were incurred
in the ordinary course of the Company’s business, such as
carriers’, warehousemen’s and mechanics’ Liens,
statutory landlords’ Liens, and other similar Liens arising
in the ordinary course of the Company’s business, and which
(x) do not individually or in the aggregate materially detract from
the value of such property or assets or materially impair the use
thereof in the operation of the business of the Company and its
consolidated Subsidiaries or (y) are being contested in good faith
by appropriate proceedings, which proceedings have the effect of
preventing for the foreseeable future the forfeiture or sale of the
property or asset subject to such Lien, (c) Liens incurred in
connection with Permitted Indebtedness under clauses (a) and (b)
thereunder, and (d) Liens in connection with equipment leases in
effect on the Original Issue Date.
“Refund Notice” means the
notice that the Company provides to the Purchaser of the receipt by
the Company or ABS of the 2019 Tax Credit.
“Share Delivery Date” has
the meaning set forth in Section 4(c)(ii).
“Successor Entity” has the
meaning set forth in Section 5(d).
“2019 Tax Credit” means
the French research and development tax credits for the 2018 tax
year, which the Company or ABS is expected to receive within nine
(9) months following December 31, 2018.
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Section 2.
Interest;
Prepayment.
a) Interest. The Principal Amount
and any other payments due directly and/or indirectly shall bear
simple interest at a rate equal to ten percent (10%) per annum,
based upon a 360-day year (the “Interest Rate”), payable
in arrears. Interest shall be payable at such time as all
outstanding Principal Amount owed under this Note shall be fully
repaid, but unless earlier paid in accordance with the terms of
this Note, shall be paid in full on the Repayment
Date.
b) Prepayment. The Note may be
prepaid by the Company at 100% of the outstanding principal and
interest at any time; provided,
however, that in the event the Company elects to prepay any
amount due under the terms of the Note, the Company shall provide
written notice of its intent to prepay all amounts due under the
terms of the Note at least ten (10) Business Days prior to such
prepayment date, during which period the Holder shall have the
right to convert as more particularly set forth in Section 4 of
this Note, and, provided,
further, that in the event the Company elects to prepay this
Note in its entirety on or before December 31, 2019, together with
a prepayment of the entire amount of all outstanding principal and
interest on any other Note issued to the Holder in connection with
the Purchase Agreement on the date of this Note, the Interest Rate
to be applied in connection with any such prepayment shall be
reduced to six percent (6%) per annum solely for the purposes of
such prepayment.
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 payable for
such registration of transfer or exchange.
b) Investment Representations and
Warranties. This Note has been issued subject to certain
representations and warranties 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 for transfer to the Company 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. Conversion.
a) Voluntary Conversion. At any
time prior to Repayment Date, this Note shall be convertible, in
whole or in part, into shares of Common Stock at the sole option of
the Holder, at any time and from time to time (subject to the
conversion limitations set forth in Section 4(d) hereof). The
Holder shall effect conversions by delivering to the Company a
Notice of Conversion, the form of which is attached hereto as
Annex A (each, a
“Notice of
Conversion”), specifying therein the amount of this
Note to be converted and the date on which such conversion shall be
effected (such date, the “Conversion Date”). If no
Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion is
deemed delivered hereunder. No ink-original Notice of Conversion
shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Notice of Conversion form be
required. To effect
conversions hereunder, the Holder shall not be required to
physically surrender this Note to the Company unless the entire
principal amount of this Note, together with accrued but unpaid
interest due thereon (the “Outstanding Amount”) has
been so converted, in which case the Holder shall surrender this
Note as promptly as is reasonably practicable after such conversion
without delaying the Company’s obligation to deliver the
shares on the Share Delivery Date. Partial conversions hereunder
shall have the effect of lowering the outstanding principal amount
of this Note in an amount equal to the applicable conversion. The
Holder and the Company shall maintain records showing the principal
amount(s) converted and the date of such conversion(s). The Company
may deliver an objection to any Notice of Conversion within one (1)
Business Day of delivery of such Notice of Conversion. In the event
of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error.
The Holder, and any assignee by
acceptance of this Note, acknowledges and agrees that, by reason of
the provisions of this paragraph, following conversion of a portion
of this Note, the unpaid and unconverted principal amount of this
Note may be less than the amount stated on the face
hereof.
b) Conversion Price. The
conversion price shall be equal to $2.50 per share, subject to
adjustment herein (the “Conversion Price”). For
purposes of clarification, whether or not the Company provides a
notice of adjustment of the Conversion Price pursuant to Section
5(g), the Holder shall receive a number of Conversion Shares and
retain the principal amount based upon the Conversion Price as it
may be adjusted pursuant to Section 5, regardless of whether the
Holder accurately refers to such price or principal amount of this
Note converted in any Notice of Conversion.
c)
Mechanics of
Conversion.
i. Conversion Shares Issuable Upon
Conversion. The number of Conversion Shares issuable upon a
conversion hereunder shall be determined by the quotient obtained
by dividing (x) the outstanding amount of this Note to be converted
by (y) the Conversion Price.
ii. Delivery of Conversion Shares Upon
Conversion. Not later than the earlier of (i) three (3)
Trading Days and (ii) the number of Trading Days comprising the
Standard Settlement Period (as defined below) after each Conversion
Date (the “Share
Delivery Date”), the Company shall deliver, or cause
to be delivered, to the Holder (A) the Conversion Shares which, on
or after the earlier of (i) the six month anniversary of the
Original Issue Date or (ii) the Effective Date, shall be free of
restrictive legends and trading restrictions (other than those
which may then be required by the Purchase Agreement) representing
the number of Conversion Shares being acquired upon the conversion
of this Note. On or after the earlier of (i) the six month
anniversary of the Original Issue Date or (ii) the Effective Date,
the Company shall deliver any Conversion Shares required to be
delivered by the Company under this Section 4(c) electronically
through the Depository Trust Company or another established
clearing corporation performing similar functions. As used herein,
“Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of
Conversion.
iii. Failure
to Deliver Conversion Shares. If, in the case of any Notice
of Conversion, such Conversion Shares are not delivered to or as
directed by the applicable Holder by the Share Delivery Date, the
Holder shall be entitled to elect by written notice to the Company
at any time on or before its receipt of such Conversion Shares, to
rescind such Conversion, in which event the Company shall promptly
return to the Holder any original Note delivered to the Company and
the Holder shall promptly return to the Company the Conversion
Shares issued to such Holder pursuant to the rescinded Notice of
Conversion.
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iv. Obligation Absolute; Partial
Liquidated Damages. The Company’s obligations to issue
and deliver the Conversion Shares upon conversion of this Note in
accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the
same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other
Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to the Holder in
connection with the issuance of such Conversion Shares;
provided,
however, that such
delivery shall not operate as a waiver by the Company of any such
action the Company may have against the Holder. In the event the
Holder of this Note shall elect to convert any or all of the
outstanding amount hereof, the Company may not refuse conversion
based on any claim that the Holder or anyone associated or
affiliated with the Holder has been engaged in any violation of
law, agreement or for any other reason, unless an injunction from a
court, on notice to Holder, restraining and or enjoining conversion
of all or part of this Note shall have been sought and obtained,
and the Company posts a surety bond for the benefit of the Holder
in the amount of 150% of the outstanding principal amount of this
Note, which is subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the
underlying dispute and the proceeds of which shall be payable to
the Holder to the extent it obtains judgment. In the absence of
such injunction, the Company shall issue Conversion Shares or, if
applicable, cash, upon a properly noticed conversion. If the
Company fails for any reason to deliver to the Holder such
Conversion Shares pursuant to Section 4(c)(ii) by the Share
Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of
principal amount being converted, $10 per Trading Day (increasing
to $20 per Trading Day on the fifth (5th) Trading Day after
such liquidated damages begin to accrue) for each Trading Day after
such Share Delivery Date until such Conversion Shares are delivered
or Holder rescinds such conversion. Nothing herein shall limit a
▇▇▇▇▇▇’s right to pursue actual damages or declare an Event
of Default pursuant to Section 7 hereof for the Company’s
failure to deliver Conversion Shares within the period specified
herein and the Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the
Holder from seeking to enforce damages pursuant to any other
Section hereof or under applicable law.
v. Compensation for Buy-In on Failure to
Timely Deliver Conversion Shares Upon Conversion. In
addition to any other rights available to the Holder, if the
Company fails for any reason to deliver to the Holder such
Conversion Shares by the Share Delivery Date pursuant to Section
4(c)(ii), and if after such Share Delivery Date the Holder is
required by its brokerage firm to purchase (in an open market
transaction or otherwise), or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Conversion Shares which
the Holder was entitled to receive upon the conversion relating to
such Share Delivery Date (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder (in addition to any
other remedies available to or elected by the Holder) the amount,
if any, by which (x) the Holder’s total purchase price
(including any brokerage commissions) for the Common Stock so
purchased exceeds (y) the product of (i) the aggregate number of
shares of Common Stock that the Holder was entitled to receive from
the conversion at issue multiplied by (ii) the actual sale price at
which the sell order giving rise to such purchase obligation was
executed (including any brokerage commissions) and (B) at the
option of the Holder, either reissue (if surrendered) this Note in
a principal amount equal to the principal amount of the attempted
conversion (in which case such conversion shall be deemed
rescinded) or deliver to the Holder the number of shares of Common
Stock that would have been issued if the Company had timely
complied with its delivery requirements under Section 4(c)(ii). For
example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of this Note with respect to which the actual
sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of
$10,000 under clause (A) of the immediately preceding sentence, the
Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In and, upon request of
the Company, evidence of the amount of such loss. Nothing herein
shall limit a ▇▇▇▇▇▇’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely
deliver Conversion Shares upon conversion of this Note as required
pursuant to the terms hereof.
vi. Reservation of Shares Issuable Upon
Conversion. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued
shares of Common Stock for the sole purpose of issuance upon
conversion of this Note, each as herein provided, free from
preemptive rights or any other actual contingent purchase rights of
Persons other than the Holder (and the other holders of the Notes),
not less than such aggregate number of shares of the Common Stock
as shall (subject to the terms and conditions set forth in the
Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 5) upon the conversion of
the then outstanding principal amount of this Note. The Company
covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid
and nonassessable and, if the Registration Statement is then
effective under the Securities Act, shall be registered for public
resale in accordance with such Registration Statement (subject to
such Holder’s compliance with its obligations under the
Registration Rights Agreement).
vii. Fractional
Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of this Note.
As to any fraction of a share which the Holder would otherwise be
entitled to purchase upon such conversion, the Company shall at its
election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Conversion Price or round up to the next whole share.
viii. Transfer
Taxes and Expenses. The issuance of Conversion Shares on
conversion of this Note shall be made without charge to the Holder
hereof for any documentary stamp or similar taxes that may be
payable in respect of the issue or delivery of such Conversion
Shares, provided that the Company shall not be required to pay any
tax that may be payable in respect of any transfer involved in the
issuance and delivery of any such Conversion Shares upon conversion
in a name other than that of the Holder of this Note so converted
and the Company shall not be required to issue or deliver such
Conversion Shares unless or until the Person or Persons requesting
the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the
Company that such tax has been paid. The Company shall pay all
Transfer Agent fees required for same-day processing of any Notice
of Conversion and all fees to the Depository Trust Company (or
another established clearing corporation performing similar
functions) required for same-day electronic delivery of the
Conversion Shares.
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d) ▇▇▇▇▇▇’s
Conversion Limitations. The Company shall not effect any
conversion of this Note, and a Holder shall not have the right to
convert any portion of this Note, to the extent that after giving
effect to the conversion set forth on the applicable Notice of
Conversion, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with
the Holder or any of the Holder’s Affiliates (such Persons,
“Attribution
Parties”)) would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the
number of shares of Common Stock issuable upon conversion of this
Note with respect to which such determination is being made, but
shall exclude the number of shares of Common Stock which are
issuable upon (i) conversion of the remaining, unconverted
principal amount of this Note beneficially owned by the Holder or
any of its Affiliates or Attribution
Parties and (ii) exercise or conversion of the unexercised
or unconverted portion of any other securities of the Company
subject to a limitation on conversion or exercise analogous to the
limitation contained herein (including, without limitation, any
other Notes or the Warrants) beneficially owned by the Holder or
any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 4(d), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. To the extent
that the limitation contained in this Section 4(d) applies, the
determination of whether this Note is convertible (in relation to
other securities owned by the Holder together with any Affiliates
and Attribution Parties) and of
which principal amount of this Note is convertible shall be in the
sole discretion of the Holder, and the submission of a Notice of
Conversion shall be deemed to be the Holder’s determination
of whether this Note may be converted (in relation to other
securities owned by the Holder together with any Affiliates
or Attribution Parties) and
which principal amount of this Note is convertible, in each case
subject to the Beneficial Ownership Limitation. To ensure
compliance with this restriction, the Holder will be deemed to
represent to the Company each time it delivers a Notice of
Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Company shall have
no obligation to verify or confirm the accuracy of such
determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated
thereunder. For purposes of
this Section 4(d), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding
shares of Common Stock as stated in the most recent of the
following: (i) the Company’s most recent periodic or annual
report filed with the Commission, as the case may be, (ii) a more
recent public announcement by the Company, or (iii) a more recent
written notice by the Company or the Company’s transfer agent
setting forth the number of shares of Common Stock outstanding.
Upon the written or oral request of a Holder, the Company shall
within two Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case,
the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of
securities of the Company, including this Note, by the Holder or
its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 19.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon
conversion of this Note held by the Holder (a “Beneficial Ownership
Change”); provided, however, the foregoing
limitation shall not apply in the event the Company’s
stockholders approve the Beneficial Ownership Change, as required
by Rule 5635 of the Nasdaq Stock Market. The Beneficial Ownership
Limitation provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with
the terms of this Section 4(d) to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation contained herein or to
make changes or supplements necessary or desirable to properly give
effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of this Note.
Section
5.
Certain
Adjustments.
a) Stock Dividends and Stock
Splits. If the Company, at any time while this Note is
outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on
shares of Common Stock or any Common Stock Equivalents (which, for
avoidance of doubt, shall not include any shares of Common Stock
issued by the Company upon conversion of, or payment of interest
on, the Notes), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of
a reverse stock split) outstanding shares of Common Stock into a
smaller number of shares or (iv) issues, in the event of a
reclassification of shares of the Common Stock, any shares of
capital stock of the Company, then the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number
of shares of Common Stock (excluding any treasury shares of the
Company) outstanding immediately before such event, and of which
the denominator shall be the number of shares of Common Stock
outstanding immediately after such event, and the number of shares
issuable upon conversion of this Note shall be proportionally
adjusted such that the aggregate Conversion Price of this Note
shall remain unchanged. Any adjustment made pursuant to this
Section shall become effective immediately after the record date
for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination
or re-classification.
b) Subsequent Rights Offerings.
In addition to any adjustments
pursuant to Section 5(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase
stock, warrants, securities or other property pro rata to the
record holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete conversion of this Note
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
c) Pro Rata Distributions. During
such time as this Note is outstanding, if the Company shall declare
or make any dividend or other distribution of its assets (or rights
to acquire its assets) to holders of shares of Common Stock, by way
of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction)
(a “Distribution”), at any
time after the issuance of this Note, then, in each such case, the
Holder shall be entitled to participate in such Distribution to the
same extent that the Holder would have participated therein if the
Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Note (without regard to any
limitations on conversion hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
5
d) Fundamental Transaction. If, at
any time while this Note is outstanding, (i) the Company, directly
or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person,
(ii) the Company, directly or indirectly, effects any sale, lease,
license, assignment, transfer, conveyance or other disposition of
all or substantially all of its assets in one or a series of
related transactions, (iii) any, direct or indirect, purchase
offer, tender offer or exchange offer (whether by the Company or
another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for
other securities, cash or property and has been accepted by the
holders of 50% or more of the outstanding Common Stock, (iv) the
Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or
other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires
more than 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with
the other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent conversion of
this Note, the Holder shall have the right to receive, for each
Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction
(without regard to any limitation in Section 4(d) and Section 4(e)
on the conversion of this Note), the number of shares of Common
Stock of the successor or acquiring corporation or of the Company,
if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which this Note is
convertible immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 4(d) and Section 4(e)
on the conversion of this Note). For purposes of any such
conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one (1) share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any conversion of this
Note following such Fundamental Transaction. The Company shall
cause any successor entity in a Fundamental Transaction in which
the Company is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this
Note and the other Transaction Documents (as defined in the
Purchase Agreement) in accordance with the provisions of this
Section 5(e) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction
and shall, at the option of the holder of this Note, deliver to the
Holder in exchange for this Note a security of the Successor Entity
evidenced by a written instrument substantially similar in form and
substance to this Note which is convertible for a corresponding
number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon conversion of this Note (without regard to any
limitations on the conversion of this Note) prior to such
Fundamental Transaction, and with a conversion price which applies
the conversion price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of
such shares of capital stock, such number of shares of capital
stock and such conversion price being for the purpose of protecting
the economic value of this Note immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Note and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Note and
the other Transaction Documents with the same effect as if such
Successor Entity had been named as the Company herein.
e) Calculations. All calculations
under this Section 5 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 5, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding any treasury shares of
the Company) issued and outstanding.
f) Notice to the
Holder.
i. Adjustment to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to any provision
of this Section 5, the Company shall promptly deliver to each
Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts
requiring such adjustment.
ii. Notice to Allow Conversion by
▇▇▇▇▇▇. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock of rights or warrants
to subscribe for or purchase any shares of capital stock of any
class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially
all of the assets of the Company, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash
or property or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, then, in each case, the
Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of this Note, and shall cause to be
delivered to the Holder at its last address as it shall appear upon
the Note Register, at least twenty (20) calendar days prior to the
applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to
convert this Note during the 20-day period commencing on the date
of such notice through the effective date of the event triggering
such notice except as may otherwise be expressly set forth
herein.
6
iii. Notice
of 2019 Tax Credit and Change of Control. The Company shall
provide the Holder with a Refund Notice no later than five (5)
calendar days following either (A) the receipt by the Company or
ABS of the 2019 Tax Credit, or (B) the execution of a definitive
agreement that, upon consummation of the transactions contemplated
thereby, would result in a Change of Control.
Section
6. Negative
Covenants. So long as any principal amount of the Note is
then outstanding, unless the Holder shall have otherwise given
prior written consent, the Company shall not, and shall not permit
any of the Subsidiaries to, directly or indirectly:
a) other
than Permitted Indebtedness, enter into, create, incur, assume,
guarantee or suffer to exist any indebtedness for borrowed money of
any kind, including, but not limited to, a guarantee, 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;
b) other
than Permitted Liens, enter into, create, incur, assume or suffer
to exist any 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;
c) amend
its charter documents, including, without limitation, its
certificate of incorporation and bylaws, in any manner that
adversely affects any rights of the Holder as a holder of the
Note;
d) repay, repurchase
or offer to repay, repurchase or otherwise acquire more than a
de minimis number of shares of its
Common Stock or Common Stock Equivalents other than as to (i) the
Note or the Conversion Shares as permitted or required under the
Transaction Documents and (ii) repurchases of Common Stock or
Common Stock Equivalents of departing officers and directors of the
Company, provided that such repurchases shall not exceed an
aggregate of $100,000 for all officers and directors during the
term of this Note;
e) repay,
repurchase or offer to repay, repurchase or otherwise acquire any
indebtedness, other than the Note if on a pro-rata basis and other
than regularly scheduled principal and interest payments as such
terms are in effect as of the Original Issue Date, provided that
such payments shall not be permitted if, at such time, or after
giving effect to such payment, any Event of Default exists or occur
as a result thereof;
f) pay
cash dividends or distributions on any equity securities of the
Company;
g) enter into any
transaction with any Affiliate of the Company which would be
required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s-length basis and
expressly approved by a majority of the disinterested directors of
the Company (even if less than a quorum otherwise required for
board approval);
h) enter
into any agreement with respect to any of the foregoing; or
i) other
than Permitted Indebtedness, enter into, create, incur, assume,
guarantee or suffer to exist any indebtedness for borrowed money of
any kind, including, but not limited to, a guarantee, 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
Section
7.
Events of Default.
a) “Event of Default” means,
wherever used herein, any of the following events (whatever the
reason for such event and whether such event 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 amount due under any Note or (B)
liquidated damages and other amounts owing to a Holder on any Note,
as and when the same shall become due and payable (whether on a
Conversion Date or the Repayment Date or by acceleration or
otherwise) which default, solely in the case of a default under
clause (B) above, is not cured in five (5) Trading
Days;
ii. the
Company shall breach, or fail to observe or perform, any covenant
or agreement (including, without limitation, negative covenants and
Section 2.4 of the Purchase Agreement) contained in the Note (other
than a breach by the Company of its obligations to deliver shares
of Common Stock to the Holder upon conversion, which breach is
addressed in clause (viii) below) or in any Transaction Document,
which breach or failure is not cured, but only if a cure period is
expressly provided for such breach or failure) within the earlier
to occur of (A) five (5) Trading Days
after notice of such failure sent by the Holder or by any other
Holder to the Company and (B) ten (10) Trading Days after the
Company has become or should have become aware of such
failure;
iii. any
representation or warranty made in this Note, any other Transaction
Documents, any written statement pursuant hereto or thereto or any
other report, financial statement or certificate made or delivered
to the Holder or any other Holder shall be untrue or incorrect in
any material respect as of the date when made or deemed
made;
7
iv. the Company or any
Significant Subsidiary (as such term is defined in Rule 1-02(w) of
Regulation S-X) shall be subject to a Bankruptcy
Event;
v. the Company or any
Subsidiary shall default on 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 that (a) involves an obligation
greater than $100,000, whether such indebtedness now exists or
shall hereafter be created, and (b) results in such indebtedness
becoming or being declared due and payable prior to the date on
which it would otherwise become due and payable, which default is
not cured within five (5) Trading Days;
vi. the Common Stock
shall not be eligible for listing or quotation for trading on a
Trading Market and shall not be eligible to resume listing or
quotation for trading thereon within five (5) Trading
Days;
vii. the
Company shall fail for any reason to deliver Conversion Shares to a
Holder prior to the fifth (5th) Trading Day after a Conversion Date
pursuant to Section 4(c) or the Company shall provide at any time
notice to the Holder, including by way of public announcement, of
the Company’s intention to not honor requests for conversions
of the Note in accordance with the terms hereof;
viii. any
Change in Control shall occur; or
ix. any event that
materially impairs or delays the payment of the 2019 Tax Credit to
the Company or ABS.
b) Remedies Upon Event of Default.
If any Event of Default occurs, the outstanding principal amount of
this Note, liquidated damages and other amounts owing in respect
thereof through the date of acceleration, shall become, at the
Holder’s election, immediately due and payable in cash.
Commencing five (5) days after the occurrence of any Event of
Default that results in the eventual acceleration of this Note (or,
with respect Event of Default referred to in Section 7(a)(i),
commencing immediately subject to all applicable cure periods), the
(i) interest rate on this Note shall accrue at an interest rate
equal to the lesser of 16% per annum or the maximum rate permitted
under applicable law. Upon the payment in full of all amounts due
under the terms of this Note, the Holder shall promptly surrender
this Note to or as directed by the Company. In connection with such
acceleration described herein, 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 acceleration may be rescinded and annulled by
▇▇▇▇▇▇ at any time prior to payment hereunder and the Holder shall
have all rights as a holder of the Note until such time, if any, as
the Holder receives full payment pursuant to this Section 7(b). No
such rescission or annulment shall affect any subsequent Event of
Default or impair any right consequent thereon.
Section 8.
Miscellaneous.
a) Notices. Any and all notices or
other communications or deliveries to be provided by the Holder
hereunder, including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by facsimile, by
email attachment, or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth
above, or such other facsimile number, email address, or address as
the Company may specify for such purposes by notice to the Holder
delivered in accordance with this Section 9(a). 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, by email attachment, or sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile
number, email address or address of the Holder appearing on the
books of the Company, or if no such facsimile number or email
attachment or address appears on the books of the Company, at the
principal place of business of such Holder, as set forth in the
Purchase Agreement. 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 number or email attachment
to the email address set forth on the signature pages attached
hereto prior to 5:30 p.m. (New York City time) on any Trading Day,
(ii) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile
number or email attachment to the email address set forth on the
signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (New York City time) on any Trading Day,
(iii) the second Trading Day following the date of mailing, if sent
by U.S. 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, liquidated damages and
accrued interest, as applicable, 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, reasonably
satisfactory to the Company.
d) 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 conflict of laws thereof.
Each party agrees that all legal proceedings concerning the
interpretation, 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, (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 such New York
Courts, 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 other manner permitted by applicable 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 any 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 in the investigation, preparation and
prosecution of such action or proceeding.
8
e) 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 on any other occasion. Any waiver by the
Company or the Holder must be in writing.
f) 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 the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under
applicable law. 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 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 Note, 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 impede 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.
g) Remedies, Characterizations, Other
Obligations, Breaches and Injunctive Relief. The remedies
provided in this Note shall be cumulative and in addition to all
other remedies available under this Note and any of the other
Transaction Documents at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing
herein shall limit the Holder’s right to pursue actual and
consequential damages for any failure by the Company to comply with
the terms of this Note. The Company covenants to the Holder that
there shall be no characterization concerning this instrument other
than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments, conversion and the like (and
the computation thereof) shall be the amounts to be received by the
Holder and shall not, except as expressly provided herein, be
subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and
that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or
threatened breach, the Holder shall be entitled, in addition to all
other available remedies, to an injunction restraining any such
breach or any such threatened breach, without the necessity of
showing economic loss and without any bond or other security being
required. The Company shall provide all information and
documentation to the Holder that is requested by the Holder to
enable the Holder to confirm the Company’s compliance with
the terms and conditions of this Note.
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.
Section 9. Disclosure. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Note, unless the Company has in good faith determined that
the matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its Subsidiaries,
the Company shall within two (2) Business Days after such receipt
or delivery publicly disclose such material, nonpublic information
on a Current Report on Form 8-K or otherwise. In the event that the
Company believes that a notice contains material, non-public
information relating to the Company or its Subsidiaries, the
Company so shall indicate to the Holder contemporaneously with
delivery of such notice, and in the absence of any such indication,
the Holder shall be allowed to presume that all matters relating to
such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries.
*********************
(Signature Pages Follow)
9
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.
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/s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
Chief Executive Officer
Email
and ▇▇▇▇▇▇▇▇▇ ▇▇. for delivery of Notices:
▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
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10
ANNEX
A
NOTICE
OF CONVERSION
The undersigned
hereby elects to convert principal and accrued but unpaid interest
under the Senior Convertible Note, due on or before the earlier to
occur of (i) ten (10) Business Days following the receipt by the
Company or ABS of the 2019 Tax Credit, or (ii) December 31, 2019,
of AzurRx BioPharma, Inc., a Delaware corporation (the
“Company”), into shares of
common stock (the “Common Stock”), of the
Company according to the conditions hereof, as of the date written
below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by
the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if
any.
By the delivery of
this Notice of Conversion the undersigned represents and warrants
to the Company that its ownership of the Common Stock does not
exceed the amounts specified under Section 4 of this Note, as
determined in accordance with Section 13(d) of the Exchange
Act.
The undersigned
agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of
the aforesaid shares of Common Stock.
Conversion
calculations:
Date to
Effect Conversion:
Amount
of Note to be Converted:
Applicable
Conversion Price:
Number
of shares of Common Stock to be issued:
Signature:
Name:
Address
for Delivery of Common Stock Certificates:
Or
DWAC
Instructions:
Broker
No:
Account
No:
11