Exhibit 10.2
THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION THEREFROM.
UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF HTE
SECURITIES MUST NOT TRADE THE SECURITIES BEFORE November 16,
2009
THE OBLIGATIONS
DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT DATED AS OF
THE DATE HEREOF AND EXECUTED BY THE COMPANY FOR THE BENEFIT OF
HOLDER. ADDITIONAL RIGHTS OF HOLDER ARE SET FORTH IN THE
SECURITY AGREEMENT
OCCULOGIX, INC.
12% CONVERTIBLE SECURED NOTE DUE
2011
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No.
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July 15,
2009
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U.S.$__________
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1. Note.
This Note is one of a duly authorized series of
12% Convertible Subordinated Notes due 2011 (the
“Note”) of OccuLogix, Inc., dba TearLab Corporation, a
Delaware corporation (including any successor corporation, the
“Company”). Capitalized terms used and not
otherwise defined herein, shall have the respective meanings given
to those terms in Section 6 hereof.
2. Principal
and Interest.
(a) The
Company for value received, hereby promises to pay to
_____________, or its registered assigns, the principal sum of U.S
$______________ on July 15, 2011 (the “Final Maturity
Date”) and all accrued and unpaid interest
thereon. Interest is payable in cash.
(b) This
Note shall bear interest at the rate equal to 12% per annum (the
“Interest Rate”).
(c) Interest
on this Note shall be computed (i) for any full quarterly
period for which a particular Interest Rate is applicable, on the
basis of a 360-day year of twelve 30-day months and (ii) for
any period for less than a full quarterly period for which a
particular Interest Rate is applicable, on the basis of a 30-day
month and, for such periods of less than a month, the actual number
of days elapsed over a 30-day month. "
(d) Interest
shall be due and payable on this Note as follows:
(1) The
Holder of this Note as of the close of business on the business day
immediately prior to the Final Maturity Date shall be entitled
(except as otherwise indicated in this Section 2) to receive
and shall receive, as the registered Holder as of such date,
interest on this Note on the Final Maturity Date.
(2) In
the event that this Note is converted pursuant to Section 3,
the Holder who converts this Note shall not be entitled to accrued
and unpaid interest through the Conversion Date, or otherwise, on
such Note, such amounts being deemed to have been paid by receipt
of shares of Common Stock in full rather than canceled,
extinguished or forfeited.
(e) Payment
of the principal of (and premium, if any, on) this Note shall be
made upon the surrender of this Note to the Company, at its chief
executive office (or such other office within the United States as
shall be designated by the Company to the holder hereof) (the
“Designated Office”), 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. Payment of principal (and premium, if any),
interest and all other amounts payable with respect to the Notes
(i) shall be made by check mailed to a Holder that holds an
aggregate principal amount of Notes of $500,000 or less or (ii)
shall be made by wire transfer in immediately available funds to a
Holder that holds an aggregate principal amount of Notes in excess
of $500,000; provided that if the Holder entitled thereto
shall not have furnished wire instructions in writing to the
Company on or prior to the third Business Day immediately prior to
the date on which the Company makes such payment, such payment may
be made by U.S. dollar check mailed to the address of the Holder
entitled thereto as such address shall appear in the Note
Register.
3.
Conversion .
(a) Conversion
and Warrant.
(1) The
full principal amount of this Note and accrued and unpaid interest
may be converted into Common Stock at any time after August 31,
2009 and prior to the close of business on the Final Maturity Date,
at the Conversion Price then in effect, at the election of a
Majority in Interest (as defined below); provided , however,
that if conversion of the Note pursuant this provision would result
in the issuance by the Company of more than 19.9% of the voting
stock of the Company (calculated immediately prior to the issuance
of this Note, according to NASDAQ Stock Market Rules), then the
Company shall convert only that part of the Notes, on a pro rata
basis, which will result in the issuance by the Company of no more
than 19.9% of the voting stock of the Company, and issue a
replacement Note for any balance that is not converted, with the
same terms as this Note. In the event that less than
100% of the principal and accrued interest under the Note is
converted into shares of common stock, then accrued interest or
other fees will be converted into shares first, and then principal
will be converted into shares, provided that the aggregate amount
of shares issued upon conversion of interest, fees and principal
does not exceed the 19.9% limitation described
above. The Company agrees to seek shareholder approval
for the conversion of all principal and interest of Notes issued
pursuant to the Purchase Agreement at its next annual stockholder
meeting following the date hereof.
(2) In
consideration for the purchase by the Holder of this Note, the
Company will issue to Holder the right to receive a warrant in the
form attached to the Purchase Agreement as Exhibit B
(the “Warrant”) to purchase shares of Common
Stock. The Warrant will have an aggregate exercise price
equal to 10% of the initial principal amount of this
Note. The Warrant will be issued on the Conversion
Date.
(b) The
number of shares of Common Stock issuable upon conversion of this
Note shall be determined by dividing the principal amount of this
Note, or the part of the principal amount to be converted, plus the
accrued but unpaid interest, by the Conversion Price in effect on
the Conversion Date. The initial conversion price will
be equal to the volume weighted average price of the Common Stock
of the Company for the ten Trading Days prior to August 31, 2009,
less a 20% discount (the “Initial Conversion Price”),
provided that the Initial Conversion Price will not be below $0.25
per share and will not exceed $2.40 per share (in each case, as
such per share amount is adjusted for stock splits,
recapitalizations, and the like). The Initial Conversion
Price is subject to adjustment as provided in Section 3(d) (as
such price may be adjusted, the “Conversion
Price”). To convert the Note, the Holders of a
Majority in Interest shall: (i) send by facsimile (or
otherwise deliver) a copy of the fully executed conversion notice
in the form attached as Exhibit A hereto (the
“Conversion Notice”) to the Company. The
Holder shall surrender or cause to be surrendered this Note,
duly endorsed or assigned to the Company or in blank, as soon as
practicable thereafter to the Company, and pay any transfer taxes
or other applicable taxes or duties, if required. The
Company shall not be obligated to issue shares of Common Stock upon
a conversion unless either this Note is delivered to the Company as
provided above, or the Holder notifies the Company or the transfer
agent for the Common Stock that this Note has been lost, stolen or
destroyed and delivers the documentation to the Company required by
Section 7(c)(4) hereof.
(c) As
promptly as practicable on or after the Conversion Date, the
Company shall issue and deliver to the Holder or its nominee that
number of shares of Common Stock issuable upon conversion of the
portion of this Note being converted, and (y) cash in lieu of
any fractional shares, less any applicable
withholding. If the Company’s transfer agent is
participating in the Depository Trust Company’s
(“DTC”) Fast Automated Securities Transfer program, and
so long as the certificates for the Common Stock to be issued upon
conversion of the Note or Notes are not required to bear a legend
and the Holder is not then required to return such certificate for
the placement of a legend thereon and the Holder has provided the
Company with information required by DTC relating to the DTC
account of the Holder or such Holder’s nominee, the Company
shall cause its transfer agent to electronically transmit the
Common Stock issuable upon conversion to the Holder by crediting
the account of the Holder or its nominee with DTC through its
Deposit Withdrawal Agent Commission system (such transfer, a
“DTC Transfer”). If the aforementioned
conditions for a DTC Transfer are not satisfied, the Company shall
deliver to the Holder physical certificates representing the Common
Stock issuable upon conversion. Further, even if the
aforementioned conditions to a DTC Transfer are satisfied, the
Holder may instruct the Company in writing to deliver to the Holder
physical certificates representing the Common Stock issuable upon
conversion in lieu of delivering such shares by way of DTC
Transfer.
(1) The
Holder is not entitled to any rights of a holder of Common Stock
until this Note has been converted into Common Stock.
(2) This
Note shall be deemed to have been converted immediately prior to
the close of business on the day that the Holders of a Majority in
Interest deliver notice to the Company in accordance with the
foregoing provisions (such day, the “Conversion Date”),
and at such time the rights of the Holder of this Note as the
Holder hereof shall cease, and the Person or Persons entitled to
receive the shares of Common Stock issuable upon conversion shall
be deemed to be a stockholder of record on the Conversion Date;
provided , however , that no surrender of this Note
on any date that is not a Business Day shall be effective to
constitute the person or persons entitled to receive the shares of
Common Stock upon such conversion as the record holder or holders
of such shares of Common Stock on such date, but such surrender
shall be effective to constitute the person or persons entitled to
receive such shares of Common Stock as the record holder or holders
thereof for all purposes at the close of business on the next
succeeding Business Day.
(3) If
the Holder converts more than one Note at the same time, the number
of shares of Common Stock issuable upon the conversion shall be
based on the aggregate principal amount of Notes
converted.
(4) The
Company will not issue fractional shares of Common Stock upon
conversion of this Note. In lieu thereof, the Company
will pay an amount in cash for the current market value of the
fractional shares. The current market value of a
fractional share shall be determined (calculated to the nearest
1/1000 th of a share) by multiplying the Trading Price of
the Common Stock on the Trading Day immediately prior to the
Conversion Date by such fractional share and rounding the product
to the nearest whole cent.
(d) Adjustment
of Conversion Price. The Conversion Price will be
subject to adjustments from time to time as follows:
(1) [Reserved]
(2) In
case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in
shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the Conversion Record Date
shall be reduced by multiplying such Conversion Price by a
fraction:
(A) the
numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the Conversion Record Date
fixed for the determination of the holders entitled to such
dividend or distribution; and
(B) the
denominator of which shall be the sum of such number of shares
referred to in (A) above and the total number of shares
constituting such dividend or other distribution.
Such reduction in the Conversion Price shall
become effective immediately after the opening of business on the
day following the Conversion Record Date. If any
dividend or distribution of the type described in this
Section 3(d)(1) is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price
that otherwise would then be in effect if such dividend or
distribution had not been declared.
(3) In
case the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be
proportionately reduced, and conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased,
such reduction or increase, as applicable, to become effective
immediately after the opening of business on the day following the
day upon which such subdivision or combination becomes
effective.
(4) In
case the Company shall issue rights or warrants to all or
substantially all holders of its outstanding shares of Common Stock
entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the Current Market Price on the
Conversion Record Date fixed for the determination of the
stockholders entitled to receive such rights or warrants, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect at
the opening of business on the day after such Conversion Record
Date by a fraction:
(A) the
numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the Conversion Record Date,
plus the number of shares which the aggregate offering price of the
total number of shares so offered for subscription or purchase
would purchase at such Current Market Price; and
(B) the
denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the Conversion Record Date,
plus the total number of additional shares of Common Stock so
offered for subscription or purchase.
Such adjustment shall become effective
immediately after the opening of business on the day following the
Conversion Record Date fixed for determination of the stockholders
entitled to receive such rights or warrants. To the
extent that shares of Common Stock are not delivered pursuant to
such rights or warrants, upon the expiration or termination of such
rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price that otherwise would then be in effect had the
adjustments made upon the issuance of such rights or warrants been
made on the basis of the delivery of only the number of shares of
Common Stock actually delivered. In the event that such
rights or warrants are not so issued, the Conversion Price shall
again be adjusted to be the Conversion Price that otherwise would
then be in effect if the Conversion Record Date had not been
fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase Common Stock at
less than such Current Market Price, and in determining the
aggregate offering price of such shares of Common Stock, there
shall be taken into account any consideration received for such
rights or warrants, the value of such consideration if other than
cash to be determined by the Board of Directors.
(5) (A) In
case the Company shall, by dividend or otherwise, distribute to all
or substantially all holders of its Common Stock shares of any
class of Capital Stock of the Company (other than any dividends or
distributions to which Section 3(d)(1) applies) or evidences
of its indebtedness, cash or other assets, including securities,
but excluding (i) any rights or warrants referred to in
Section 3(d)(4) and (ii) dividends or distributions of
stock, securities or other property or assets (including cash) in
connection with a reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance to which
Section 3(h) applies (such Capital Stock, evidences of its
indebtedness, cash, other assets or securities being distributed
hereinafter in this Section 3(d)(5) called the
“Distributed Assets”), then, in each such case, subject
to clauses (B) and (C) of this Section 3(d)(5), the
Conversion Price shall be reduced so that the same shall be equal
to the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on the Conversion
Record Date with respect to such distribution by a
fraction:
(i) the
numerator of which shall be the Current Market Price (as defined in
Section 3(d)(11)) on such date less the fair market value (as
determined by the Board of Directors, whose determination shall be
conclusive and set forth in a board resolution) on such date of the
portion of the Distributed Assets so distributed applicable to one
share of Common Stock (determined on the basis of the number of
shares of Common Stock outstanding on the Conversion Record Date);
and
(ii) the
denominator of which shall be such Current Market Price.
Such reduction in the Conversion Price shall
become effective immediately prior to the opening of business on
the day following the Conversion Record Date. However,
in the event that the then fair market value (as so determined) of
the portion of the Distributed Assets so distributed applicable to
one share of Common Stock is equal to or greater than the Current
Market Price on the Conversion Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that the
Holder of this Note shall have the right to receive upon conversion
hereof (or any portion hereof) the amount of Distributed Assets the
Holder would have received had the Holder converted this Note (or
portion hereof) immediately prior to such Conversion Record
Date. In the event that such dividend or distribution is
not so paid or made, the Conversion Price shall again be adjusted
to be the Conversion Price that otherwise would then be in effect
if such dividend or distribution had not been declared.
(B) If
the Board of Directors determines the fair market value of any
Distributed Assets with respect to any distribution for purposes of
this Section 5 by reference to the actual or when issued
trading market for any Distributed Assets comprising all or part of
such distribution, it must in doing so consider the prices in such
market over the same period (the “Reference Period”)
used in computing the Current Market Price to the extent possible,
unless the Board of Directors in a board resolution determines in
good faith that determining the fair market value during the
Reference Period would not be in the best interest of the
Holders.
(6) The
Company may make such reductions in the Conversion Price, in
addition to those required by Sections 3(d)(1), 3(d)(3), 3(d)(4) or
3(d)(5), as the Board of Directors considers to be advisable to
avoid or diminish any income tax to holders of Common Stock or
rights to purchase Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any even
treated as such for income tax purposes or otherwise.
(7) To
the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period
of time if the period is at least 20 days and the reduction is
irrevocable during the period and the Board of Directors determines
in good faith that such reduction would be in the best interests of
the Holder, which determination shall be conclusive and set forth
in a Board Resolution. Whenever the Conversion Price is reduced
pursuant to the preceding sentence, the Company shall mail to the
Holder of this Note, at the Holder’s address as it appears in
the Note Register, a notice of the reduction at least 15 days prior
to the date the reduced Conversion Price takes effect, and such
notice shall state the reduced Conversion Price and the period
during which it will be in effect.
(8) No
adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in
such price; provided , however , that any adjustments
which by reason of this Section 3(d)(8) are not required to be
made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this
Section 3 shall be made by the Company in good faith and shall
be made to the nearest cent or to the nearest one hundredth of a
share, as applicable. No adjustment need be made for a
change in the par value or no par value of the Common
Stock.
(9) Whenever
the Conversion Price is adjusted as provided in Section 3(d),
the Company shall compute the adjusted Conversion Price in
accordance with Section 3(d) and shall prepare a certificate
signed by an officer of the Company setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon
which such adjustment is based, and shall promptly deliver such
certificate to the Holder of this Note.
(10) For
purposes of this Section 3(d), the number of shares of Common
Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares
of Common Stock. The Company will not pay any dividend
or make any distribution on shares of Common Stock held in the
treasury of the Company.
(11) For
purposes hereof:
(A) “Conversion
Record Date” shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or
other property or in which the Common Stock (or other applicable
security) is exchanged for or converted into any combination of
cash, securities or other property, the date fixed for
determination of stockholders entitled to receive such cash,
securities or other property (whether such date is fixed by the
Board of Directors or by statute, contract or
otherwise).
(B) “Current
Market Price” shall mean the average of the daily Trading
Prices per share of Common Stock (or such other security as
specified herein) for the ten consecutive Trading Days immediately
prior to the date in question; provided , however ,
that if:
(i)
the “ex” date (as hereinafter defined) for any event
(other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Sections 3(d)(1), 3(d)(3), 3(d)(4) or 3(d)(5)
occurs during such ten consecutive Trading Days, the Trading Price
for each Trading Day prior to the “ex” date for such
other event shall be adjusted by multiplying such Trading Price by
the same fraction by which the Conversion Price is so required to
be adjusted as a result of such other event;
(ii)
the “ex” date for any event (other than the issuance or
distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to 3(d)(1), 3(d)(3),
3(d)(4) or 3(d)(5) occurs on or after the “ex” date for
the issuance or distribution requiring such computation and prior
to the day in question, the Trading Price for each Trading Day on
and after the “ex” date for such other event shall be
adjusted by multiplying such Trading Price by the reciprocal of the
fraction by which the Conversion Price is so required to be
adjusted as a result of such other event; and
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