Exhibit 4.12
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE COMPANY THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. IN ADDITION, A SECURITIES PURCHASE AGREEMENT, DATED AS OF THE
DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTIES,
INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH (A) LIMIT THE CONVERSION RIGHTS
OF THE HOLDER, (B) SPECIFY VOLUNTARY AND MANDATORY REPAYMENT, PREPAYMENT AND
REDEMPTION RIGHTS AND OBLIGATIONS AND (C) SPECIFY EVENTS OF DEFAULT FOLLOWING
WHICH THE REMAINING BALANCE DUE AND OWING HEREUNDER MAY BE ACCELERATED.
No. 1 $1,250,000
12% CONVERTIBLE NOTE
of
Miracor Diagnostics, Inc., a Utah corporation (together with its
successors, the "Company"), for value received hereby promises to pay to:
GLOBAL CAPITAL FUNDING GROUP, L.P.
(the "Holder") and registered assigns, the principal sum of One Million Two
Hundred Fifty Thousand Dollars ($1,250,000) or, if less, the principal amount of
this Note then outstanding, on the Maturity Date by wire transfer of immediately
available funds to the Holder in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, which shall begin to accrue on
the date of this Note, quarterly in arrears, on (i) the last day of March, June,
September and December of each year until the Maturity Date, commencing
September 30, 2003 (unless such day is not a Business Day, in which event on the
next succeeding Business Day) (each an "Interest Payment Date"), (ii) the
Maturity Date, (iii) each Conversion Date, as hereafter defined, and (iv) the
date the principal amount of the Convertible Note shall be declared to be or
shall automatically become due and payable, on the principal sum hereof
outstanding in like coin or currency, at the rates per annum set forth below,
from the most recent Interest Payment Date to which interest has been paid on
this Convertible Note, or if no interest has been paid on this Convertible Note,
from the date of this Convertible Note until payment in full of the principal
sum hereof has been made. The Maturity Date is June 17, 2007.
The interest rate shall be twelve percent (12%) per annum (the
"Interest Rate") or, if less, the maximum rate permitted by applicable law. Past
due amounts (including interest, to the extent permitted by law) will also
accrue interest at the Interest Rate plus 2% per annum or, if less, the maximum
rate permitted by applicable law, and will be payable on demand ("Default
Interest"). Interest on this Convertible Note will be calculated on the basis of
a 360-day year of twelve 30 day months. All payments of principal and interest
hereunder shall be made in cash for the benefit of the Holder pursuant to the
terms of the Agreement (hereafter defined). At the option of the Holder,
interest may be paid in cash or in shares of Common Stock.
This Convertible Note (this "Convertible Note") is one of a duly
authorized issuance of $1,250,000 aggregate principal amount Convertible Note
made by the Company referred to in that certain Securities Purchase Agreement
dated as of the date hereof between the Company and the Purchaser named therein
(the "Agreement"). The Agreement contains certain additional agreements among
the parties with respect to the terms of this Convertible Note, including,
without limitation, provisions which (A) limit the conversion rights of the
Holder, (B) specify voluntary and mandatory redemption rights and obligations
and (C) specify Events of Default following which the remaining balance due and
owing hereunder may be accelerated. All such provisions are an integral part of
this Convertible Note and are incorporated herein by reference. This Convertible
Note is transferable and assignable to one or more Persons, in accordance with
the limitations set forth in the Agreement.
The Company shall keep a register (the "Register") in which shall be
entered the names and addresses of the registered holder of this Convertible
Note and particulars of this Convertible Note held by such holder and of all
transfers of this Convertible Note. References to the Holder or "Holders" shall
mean the Person listed in the Register as registered holder of such Convertible
Notes. The ownership of this Convertible Note shall be proven by the Register.
1) CERTAIN TERMS DEFINED. All terms defined in the Agreement and not
otherwise defined herein shall have for purposes hereof the meanings provided
for in the Agreement.
2) COVENANTS. The Company covenants and agrees to observe and perform
each of its covenants, obligations and undertakings contained in the Agreement,
which obligations and undertakings are expressly assumed herein by the Company
and made for the benefit of the holder hereof.
3) PAYMENT OF PRINCIPAL.
a) PREPAYMENT OF NOTE. For so long as no Event of Default shall
have occurred and is continuing and the Company is not in
receipt of a Notice of Conversion from the Holder of the Note,
the Company may, at its option, prepay, in whole or in part,
this Convertible Note for a pre-payment price (the "Prepayment
Price") equal to the outstanding principal amount of the Note,
plus all accrued and unpaid interest. The Company shall not be
entitled to send any notice of prepayment and begin the
prepayment procedure unless it has (i) the full amount of the
Prepayment Price, in cash, available in a demand or other
immediately available account in a bank or similar financial
institution or (ii) immediately available credit facilities,
in the full amount of the Prepayment Price, with a bank or
similar financial institution on the date the prepayment
notice is sent to the Holders of this Convertible Note.
Provided, however, the Company will process any Notice of
Conversion received prior to the issuance of a notice of
prepayment; and further provided that, after a notice of
prepayment has been issued, the Holder may issue a Notice of
Conversion which will not be honored unless the Company fails
to make the prepayment payment when due. In the event of such
failure, the Notice of Conversion will be honored as of the
date of the Notice of Conversion
b) PAYMENT ON MATURITY DATE. The Company shall repay the
remaining unpaid balance of this Convertible Note along with
any unpaid interest on the Maturity Date.
4) CONVERSION.
a) CONVERSION OF CONVERTIBLE NOTE. Subject to Section 5 hereof, the
Holder shall have the right, at its option, at any time from and after
the third anniversary of the date of issuance of this Convertible Note,
convert the principal amount of this Convertible Note, or any portion
of such principal amount, into that number of fully paid and
nonassessable shares of Common Stock (as such shares shall then be
constituted) determined pursuant to this Section 4.1; provided,
however, this Convertible Note shall be immediately convertible, at the
option of the Holder, upon an Event of Default. The number of shares of
Common Stock to be issued upon each conversion of this Convertible Note
shall be determined by dividing the Conversion Amount (as defined
below) by the Conversion Price in effect on the date (the "Conversion
Date") a Notice of Conversion is delivered to the Company, as
applicable, by the Holder by facsimile or other reasonable means of
communication dispatched prior to 5:00 p.m., E.S.T. The term
"Conversion Amount" means, with respect to any conversion of this
Convertible Note, the sum of (1) the principal amount of this
Convertible Note to be converted in such conversion plus (2) accrued
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and unpaid interest, if any, on such principal amount at the interest
rates provided in this Convertible Note to the Conversion Date plus (3)
Default Interest, if any, on the interest referred to in the
immediately preceding clause (2) plus (4) at the Holder's option, any
amounts owed to the Holder pursuant to Section 4.3 hereof, Section 10.1
of the Agreement or Section 10.4 of the Agreement.
b) CONVERSION PRICE. At the option of the Holder, any portion or all of
the outstanding principal amount of this Convertible Note shall be
converted into a number of shares of Common Stock at the conversion
price (the "Conversion Price") equal to $0.25.
c) AUTHORIZED SHARES.
i) Consistent with Section 7.11 of the Agreement, the Company
(i) shall promptly irrevocably instruct the Company's transfer agent to
issue certificates for the Common Stock issuable upon conversion of
this Convertible Note and (ii) agrees that its issuance of this
Convertible Note shall constitute full authority to its officers and
agents who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for shares of Common Stock
in accordance with the terms and conditions of this Convertible Note.
ii) If at any time a Holder of this Convertible Note submits a
Notice of Conversion (x) the Company does not have sufficient
authorized but unissued shares of Common Stock available to effect such
conversion in full in accordance with the provisions of this Article 4
or (y) the Company is prohibited by the applicable rules of the OTC
Bulletin Board or the National Market on which the Common Shares are
listed and traded at that time to effect such conversion in full as
provided in subsection (d) below, without stockholder approval (each, a
"Conversion Default"), the Company shall issue to the Holder all of the
shares of Common Stock which are then available to effect such
conversion. The portion of this Convertible Note which the Holder
included in its Conversion Notice and which exceeds the amount which is
then convertible into available shares of Common Stock (the "Excess
Amount") shall, notwithstanding anything to the contrary contained
herein, not be convertible into Common Stock in accordance with the
terms hereof until (and at the Holder's option at any time after) the
date additional shares of Common Stock are authorized by the Company,
or its stockholders, as applicable. The Company shall pay to the Holder
payments ("Conversion Default Payments") for a Conversion Default in
the amount of (N/365) x .24 x the Excess Amount on the Conversion Date
in respect of the Conversion Default (the "Conversion Default Date"),
where N = the number of days from the Conversion Default Date to the
date (the "Authorization Date") that the Company, or its stockholders,
as applicable, authorizes a sufficient number of shares of Common Stock
to effect conversion of the full outstanding principal balance of this
Convertible Note. The Company shall use its best efforts to authorize,
or cause its stockholders to authorize within 40 days of the occurrence
of a Conversion Default, a sufficient number of shares of Common Stock
as soon as practicable following the earlier of (i) such time that the
Holder notifies the Company or that the Company otherwise becomes aware
that there are or likely will be insufficient shares to allow full
conversion thereof and (ii) a Conversion Default. The Company shall
send notice to the Holder of the authorization of additional shares of
Common Stock, the Authorization Date and the amount of Holder's accrued
Conversion Default Payments. The accrued Conversion Default Payments
for each calendar month shall be paid in cash or shall be convertible
into Common Stock (at such time as there are sufficient authorized
shares of Common Stock) at the Market Price, at the Holder's option, as
follows:
(1) In the event the Holder elects to take such
payment in cash, cash payment shall be made to Holder by the
fifth Business Day of the month following the month in which
it has accrued; and
(2) In the event the Holder elects to take such
payment in Common Stock, the Holder may convert such payment
amount into Common Stock at the Market Price (as in effect at
the time of conversion) at any time after the fifth Business
Day of the month following the month in which it has accrued
(at such time as there are sufficient authorized shares of
Common Stock) in accordance with the terms of this Article 4.
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(c) The Holder's election pursuant to this Section 4.3 shall
be made in writing to the Company at any time prior to 5:00 p.m.,
E.S.T., on the third Business Day of the month following the month in
which Conversion Default payments have accrued. If no election is made,
the Holder shall be deemed to have elected to receive cash. Nothing
herein shall limit the Holder's right to pursue actual damages (to the
extent in excess of the Conversion Default Payments) due to the
Company's failure to maintain a sufficient number of authorized shares
of Common Stock.
(d) In no event shall the Company issue more than the Maximum
Number of Shares upon conversion of this Convertible Note, unless the
Company shall have obtained approval by the stockholders of the Company
("Stockholder Approval") or a waiver of such requirement by the OTC
Bulletin Board or the National Market on which the Common Shares are
listed and traded at that time. Once the Maximum Number of Shares has
been issued (the date of which is hereinafter referred to as the
"Maximum Conversion Date"), unless the Company shall have obtained
Stockholder Approval or a waiver of such requirement by the OTC
Bulletin Board or the National Market on which the Common Shares are
listed and traded at that time within 40 days of the Maximum Conversion
Date, the Company shall pay to the Holder within five (5) Business Days
of the expiration of such 40 day period, the Redemption Price plus
accrued and unpaid Default Interest, if any. The Maximum Number of
Shares shall be subject to adjustment from time to time for stock
splits, stock dividends, combinations, capital reorganizations and
similar events relating to the Common Stock occurring after the date
hereof as contemplated by Article XI of the Agreement. In the event
that the Company obtains Stockholder Approval, approval of the OTC
Bulletin Board or the National Market on which the Common Shares are
listed and traded at that time, or otherwise is able to increase the
number of shares to be issued above the Maximum Number of Shares (such
increased number being the "New Maximum Number of Shares"), the
references to Maximum Number of Shares above shall be deemed to be,
instead, references to the New Maximum Number of Shares.
d) METHOD OF CONVERSION.
(a) Notwithstanding anything to the contrary set forth herein,
upon conversion of this Convertible Note in accordance with the terms
hereof, the Holder shall not be required to physically surrender this
Convertible Note to the Company unless the entire unpaid principal
amount of this Convertible Note is so converted. Rather, records
showing the principal amount converted (or otherwise repaid) and the
date of such conversion or repayment shall be maintained on a ledger
substantially in the form of Annex A attached hereto (a copy of which
shall be delivered to the Company or transfer agent with each Notice of
Conversion). It is specifically contemplated that the Holder hereof
shall act as the calculation agent for conversions and repayments. In
the event of any dispute or discrepancies, such records maintained by
the Holder shall be controlling and determinative in the absence of
manifest error or failure of Holder to record the principal amount
converted (or otherwise repaid) from time to time, in which events the
record of the Company shall be controlling and determinative. The
Holder and any assignee, by acceptance of this Convertible Note,
acknowledge and agree that, by reason of the provisions of this
paragraph, following a conversion of a portion of this Convertible
Note, the principal amount represented by this Convertible Note will be
the amount indicated on ANNEX A attached hereto (which may be less than
the amount stated on the face hereof).
(b) The Company shall not be required to pay any tax which may
be payable in respect of any transfer involved in the issuance and
delivery of shares of Common Stock or other securities or property on
conversion of this Convertible Note in a name other than that of the
Holder (or in street name), and the Company shall not be required to
issue or deliver any such shares or other securities or property unless
and until the person or persons (other than the Holder or the custodian
in whose street name such shares are to be held for the Holder's
account) requesting the issuance thereof shall have paid to the Company
the amount of any such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
(c) Subject to Section 5 hereof, upon receipt by the Company
of a Notice of Conversion, the Holder shall be deemed to be the holder
of record of the Common Stock issuable upon such conversion, the
outstanding principal amount and the amount of accrued and unpaid
interest on this Convertible Note shall be deemed reduced to reflect
such conversion, and, unless the Company defaults on its obligations
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under this Article 4, all rights with respect to the portion of this
Convertible Note being so converted shall forthwith terminate except
the right to receive the Common Stock or other securities, cash or
other assets, as herein provided, on such conversion. Subject to
Section 5 hereof, if the Holder shall have given a Notice of Conversion
as provided herein, the Company's obligation to issue and deliver the
certificates for shares of Common Stock shall be absolute and
unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any
provisions thereof, the recovery of any judgment against any person or
any action by the Holder to enforce the same, any failure or delay in
the enforcement of any other obligation of the Company to the Holder of
record, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder of any
obligation to the Company, and subject to Section 4.4(a) irrespective
of any other circumstance which might otherwise limit such obligation
of the Company to the Holder in connection with such conversion. The
date of receipt (including receipt via telecopy) of such Notice of
Conversion shall be the Conversion Date so long as it is received
before 5:00 p.m., E.S.T., on such date.
(d) Notwithstanding the foregoing, if a Holder has not
received certificates for all shares of Common Stock prior to the
expiration of the Deadline with respect to a conversion of any portion
of this Convertible Note for any reason, then (unless the Holder
otherwise elects to retain its status as a holder of Common Stock by so
notifying the Company), the Holder shall regain the rights of a Holder
of this Convertible Note with respect to such unconverted portions of
this Convertible Note and the Company shall, as soon as practicable,
return such unconverted Convertible Note to the holder or, if the
Convertible Note has not been surrendered, adjust its records to
reflect that such portion of this Convertible Note not been converted.
In all cases, the Holder shall retain all of its rights and remedies
including, without limitation, the right to receive Conversion Default
Payments to the extent required thereby for such Conversion Default and
any subsequent Conversion Default.
(e) In lieu of delivering physical certificates representing
the Common Stock issuable upon conversion, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC")
Fast Automated Securities Transfer program, upon request of the Holder
and its compliance with the provisions contained in Section 4.1 and in
this Section 4.4, the Company shall use its best efforts to cause its
transfer agent to electronically transmit the Common Stock issuable
upon conversion to the Holder by crediting the account of Holder's
Prime Broker with DTC through its Deposit Withdrawal Agent Commission
System.
5) REDEMPTION BY COMPANY.
a) MANDATORY REDEMPTION. In accordance with the provisions of the
Purchase Agreement, the Company may be required under certain
circumstances, to redeem in whole or in part, the remaining unpaid
principal amount of this Convertible Note, for cash at a redemption
price (the "Redemption Price") equal to the greater of (A) the
applicable Prepayment Price and (B) (x) the number of shares of Common
Stock into which this Convertible Note is then convertible, times (y)
the average Closing Bid Price of Common Stock for the five (5) Trading
Days as reported by Bloomberg L.P. immediately preceding the date that
this Convertible Note is called for redemption, plus accrued and unpaid
interest.
b) MECHANICS OF REDEMPTION. The Company shall effect each such
redemption within 10 business days of receiving a notice to redeem by
facsimile with a copy by either overnight or 2-day courier from the
Holder of this Convertible Note. Such redemption notice shall indicate
whether the Company is required to redeem all or part of such portion
of the Convertible Note and the applicable Redemption Price.
c) PAYMENT OF REDEMPTION PRICE. The Redemption Price shall be paid to
the Holder of this Convertible Note within 10 business days of the
delivery of the notice of such redemption to such Holder.
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6) MISCELLANEOUS. This Convertible Note shall be deemed to be a
contract made under the laws of the State of California, and for all
purposes shall be governed by and construed in accordance with the laws
of said State. The parties hereto, including all guarantors or
endorsers, hereby waive presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Convertible Note, except as
specifically provided herein, and asset to extensions of the time of
payment, or forbearance or other indulgence without notice. The Company
hereby submits to the exclusive jurisdiction of the United States
District Court for the State of California and any state court sitting
in San Diego, California for purposes of all legal proceedings arising
out of or relating to this Convertible Note. The Company irrevocably
waives, to the fullest extent permitted by law, any objection which it
may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient
forum. The Company hereby irrevocably waives any and all right to trial
by jury in any legal proceeding arising out of or relating to this
Convertible Note.
The Holder of this Convertible Note by acceptance of this Convertible
Note agrees to be bound by the provisions of this Convertible Note which are
expressly binding on such Holder.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: June 17, 2003
MIRACOR DIAGNOSTICS, INC.
By:
Name:_____________________________
Title:____________________________
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