NEITHER THIS
CONVERTIBLE DEMAND PROMISSORY NOTE NOR THE SECURITIES FOR WHICH IT
MAY BE EXCHANGED HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY STATE AND NEITHER THIS NOTE NOR SUCH SECURITIES MAY BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND LAWS UNLESS MAKER RECEIVES AN OPINION
OF COUNSEL REASONABLY ACCEPTABLE TO IT THAT SUCH REGISTRATION IS
NOT REQUIRED.
AMENDED AND
RESTATED
CONVERTIBLE DEMAND PROMISSORY
NOTE
Houston, Texas
$[_______] Issue Date: March 1,
2008
FOR VALUE RECEIVED , the undersigned, Omnimmune Corporation,
a Texas corporation (“Maker”), promises to pay to
[____________________________________], a [_____________________]
(“Payee”; Payee and any subsequent holder(s) hereof are
individually and collectively referred to as “Holder”),
or order, the sum of [___________] Dollars ($[_______]), together
with interest thereon from and after the date hereof until paid in
full, all as hereinafter provided.
1.
Interest and Principal Payments .
(a)
Payment in Cash or Common Stock . This Note is
payable in either:
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Immediately
available funds on written demand by Holder at any time on or after
the earlier of either:
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(A) the date on
which Maker either (1) shall have closed on a Qualified Financing
(as defined below) or (2) otherwise shall have cash on hand in an
amount equal to not less than Ten Million Dollars ($10,000,000);
or
(B) February
28, 2013 (the “Maturity Date”); or
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Shares of
Maker’s Common Stock at any time at the option of the Holder
in accordance with Section 2 below.
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(b)
Interest . From and including the date hereof to
and including the date this Note is paid or otherwise discharged,
the unpaid principal amount of this Note shall bear simple interest
per annum at ten percent (10%), computed on the basis of a year of
three hundred sixty (360) days.
(c)
Tender . All payments of principal and interest
shall be made in lawful money of the United States of America
(except as otherwise provided in Sections 1(a), above, and 2,
below) and shall be made to Holder at Holder’s address set
forth in Section 7 or at such other place as Holder may designate
to Maker in writing.
(d)
Maker’s Right of Prepayment Without Penalty
. It is agreed and understood by Holder that Maker
reserves the right and option at any time after the date hereof and
during the term of this Note to prepay the principal and interest
hereunder without penalty; provided, however , that Maker
may only exercise its right to prepay this Note after having first
delivered to Holder ten (10) days prior written notice of its
intent to do so, during which period Holder may elect to convert
this note to Common Stock in accordance with the terms
hereof.
(a) Definitions
. For purposes of this Note, the following terms and
phrases shall have the meaning ascribed thereto:
“Common
Stock” shall have the meaning ascribed thereto in
Maker’s Articles of Incorporation, as amended; and
“Qualified Financing” shall mean the
closing of any equity financing (including any debt financing that
is convertible into Maker’s capital stock) completed by Maker
after the date hereof involving the sale and issuance (or any
series of integrated sales and issuances) by Maker to third parties
of shares of its capital stock resulting in net proceeds to Maker
of not less than Ten Million Dollars ($10,000,000).
(b) Conversion
. At any time at the option of Holder upon five (5)
day’s prior written notice, Holder may convert the entire
outstanding principal due hereunder into Omnimmune Common Stock by
the cancellation of this Note in exchange for the issuance of that
number of shares of Common Stock as shall equal (i) the then
outstanding principal amount of the Note on the date fixed for any
such conversion; divided by (ii) $0.1781 (the
“Conversion Price”), as adjusted for the split of
Common Stock at a split ratio of 2.8072-for-1, effective as of
March 26, 2008.
(c) Payment of
Interest . Upon conversion of this Note, Maker shall
be forever released from all its obligations and liabilities under
this Note, except that Maker shall be obligated to pay Holder,
within thrity (30) days after the date of such conversion, any
interest accrued and unpaid to and including the date of such
conversion, and no more.
(d) Holder’s
Right to Receive Warrant Conditional Upon Conversion of 25% of
Principal . If, at any time during the term of this
Note, Holder elects to convert at least a minimum of 25% of the
principal amount due and owing hereunder into Common Stock
according to the provisions hereof, in addition to the certificate
or certificates representing the shares delivered to Holder upon
conversion of this Note into Common Stock, Maker shall deliver that
certain Warrant, in the form attached hereto, evidencing
Holder’s rights to purchase an additional [________] shares
of Common Stock at an exercise price of $0.1781, subject to
adjustment in accordance with Section 2(e) hereof, upon the terms
and conditions set forth therein. Following the
foregoing issuance, regardless of any future conversion elections
by the Holder in accordance with the provisions hereof, Holder
shall not be entitled to receive any additional Warrant(s) pursuant
hereto.
If, at any time
during the term of this Note prior to the issuance of the Warrant
referenced above, Holder elects not to convert at least 25% of the
principal amount due and owing hereunder according to the
provisions hereof, any and all rights of Holder to receive such
Warrant shall terminate and Holder shall have no further rights to
receive such Warrant, nor shall Maker be obligated to issue such
Warrant.
Upon conversion
as aforesaid, the stock certificate or certificates and the Warrant
so delivered shall be registered in the name of
Holder. To the extent of the amount which Holder elects
to convert to Common Stock hereunder, this Note shall be deemed to
have been paid and such certificate or certificates and, if Holder
elects to convert 25% of the principal amount due hereunder, the
Warrant shall be deemed to have been issued, and Holder shall be
deemed to have become a holder of record for all purposes as of the
date on which said notice, together with the release or partial
release of this Note and such other documentation evidencing its
payment, either partially or in full, is received by the
Company.
(e) Conversion
Price and Warrant Adjustments .
(1)
Capital Adjustments
. In case Maker shall at
any time after March 26, 2008: (i) declare a dividend on the
outstanding Common Stock payable in shares of its capital stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then, in
each case, the Conversion Price, the number of shares of Common
Stock subject to the Warrant and the exercise price of the Warrant
in effect, at the time of the record date for such dividend or of
the effective date of such subdivision or combination, shall be
proportionately adjusted so that the Holder shall be entitled to
receive the aggregate number and kind of shares upon conversion
hereof as in effect immediately prior to such dividend, subdivision
or combination, which, if the Note had been converted immediately
prior to such time, the Holder would have owned upon such
conversion and been entitled to pursuant to the Warrant, if
applicable. Such adjustment shall be made successively
whenever any event listed above shall occur. Any
adjustment under this paragraph shall become effective at the close
of business on the date the dividend, subdivision or combination
becomes effective.
(2)
Merger, Consolidation or Sale of
Assets . If
Maker is a party to a reorganization, a merger or consolidation
with or into another corporation, or the sale of Maker’s
properties and assets as, or substantially as, an entirety to any
other person, then, as a part of such transaction, lawful provision
shall be made so that this Note and the underlying Warrant shall
pertain and apply to the securities and/or other property to which
the holder of the number of shares of Common Stock of Maker then
covered by this Note and the Warrant would have been entitled had
this Note been converted in whole immediately prior to the
effective date of such reorganization, merger, consolidation or
sale. In any such case, appropriate adjustment shall be
made in the application of the provisions of this Note with respect
to the rights and interests of the Holder after the reorganization,
merger, consolidation or sale to the end that the provisions of
this Note shall be applicable after that event, as near as
reasonably may be, in relation to any securities or other property
deliverable after that event upon conversion of this
Note. Maker shall not effect any such reorganization,
merger, consolidation or sale unless upon or prior to the
consummation thereof the successor corporation, or if Maker shall
be the surviving corporation but is not the issuer of the shares of
stock or other securities or property to be delivered to holders of
shares of the Common Stock outstanding at the effective time
thereof, then such issuer, shall assume by written instrument the
obligation to deliver to the Holder such shares of stock,
securities, cash or other property as the Holder shall be entitled
to in accordance with the foregoing provisions.
(3)
De Minimis Adjustments
. No adjustment in the
Conversion Price shall be required unless such adjustment would
require an increase or decrease of at least $0.01 in the Conversion
Price and no adjustment in the number of shares of Common Stock
subject to the Warrant shall be required unless such adjustment
would required an increase or decrease of at least one whole share;
provided, however , that any adjustment less than this
amount which is not made shall be carried forward and shall be made
at the time of and together with any subsequent adjustment which,
on a cumulative basis, amounts to an adjustment of at least this
amount.
(4)
Notice to Holder of
Adjustment . Whenever the Conversion Price
and/or number of shares of Common Stock subject to the Warrant are
adjusted as herein provided, Maker shall cause to be mailed to the
Holder a notice (i) stating that the Conversion Price and/or number
of shares of Common Stock subject to the Warrant have been
adjusted, (ii) setting forth the Conversion Price and/or number of
shares of Common Stock subject to the Warrant as adjusted, and
(iii) showing in reasonable detail the computations and the facts
upon which such adjustment is based.
3.
Exchange Procedures; Reservation of Shares; Taxes
.
(a) Delivery of
Certificate . In the case of Holder's election to
convert this Note into Maker’s Common Stock as provided under
Section 2, Holder shall deliver a written notice of such election
to Maker in which Holder shall so indicate such
election. Any conversion shall be deemed to have been
made at the close of business on the date the recipient is deemed
to have received such notice. Upon the exchange of this
Note for shares of Common Stock, Maker shall, as soon as
practicable, take all such steps as may be necessary to issue such
Stock, in exchange for this Note, and thereafter deliver to Holder
a certificate or certificates for the number of shares of Stock to
which Holder shall be entitled against receipt of this Note, duly
endorsed for cancellation.
(b) Noteholder Not
Deemed a Stockholder . Unless and until this Note is
converted or exchanged into Common Stock as set forth herein,
Holder shall not be entitled to vote or receive dividends or be
deemed the holder of Common Stock of the Company for any purpose
(other than to the extent that Holder may previously own shares of
Common Stock of the Company, prior to or exclusive from the
conversion of this Note), nor shall anything contained in this Note
be construed to confer upon the Holder any of the rights of a
stockholder of the Company or any right to vote, give or withhold
consent to any corporate actions (whether any reorganization, issue
of stock, reclassification of stock, consolidation, merger,
conveyance or otherwise), receive notice of meetings, receive
dividends or subscription rights, or otherwise, prior to the
issuance of record to the Holder of the Common Stock which it is
then entitled to receive upon the due exercise of its right to
convert this Note, as aforesaid.
(c) Reservation of
Shares . Maker covenants that, at the exchange date,
it will make available out of its authorized Common Stock, solely
for the purpose of issue upon exchange of this Note for Common
Stock, such number of shares of Common Stock as shall then be
issuable upon the exchange of this Note.
(d) Validity of
Issuance . Maker covenants that all shares of Common
Stock issued hereunder shall, at the time of delivery, be duly and
validly issued, fully paid and nonassessable.
(e) Taxes
. Holder shall pay any documentary, stamp or similar
issue or transfer tax due on the issue of Common Stock upon the
conversion of such Holder’s Note. Holder shall
also pay any tax which is due because the Common Stock is issued in
a name other than Payee’s name and any income taxes, capital
gains taxes or other similar taxes.
(f)
No Fractional Shares
. Instead of any
fractional shares of any Common Stock which would otherwise be
issuable upon conversion of this Note, Maker shall pay in cash the
amount of outstanding principal that is not so converted, such
payment to be in the form a check payable to Holder. The
holder of fractional interests shall not be entitled to any rights
as security holders of Maker in respect of such fractional
interests.
4.
Events of Default . The occurrence or
existence of any one of the following events or conditions shall
constitute an “Event of Default”:
(a) Maker
shall fail to pay the principal of, or interest on, this Note when
the same becomes due and payable in accordance with the terms
hereof and such amount remains unpaid for ten (10) days after the
due date thereof;
(b) Maker
fails to observe or perform any other covenant or agreement on the
part of Maker contained in this Note which failure continues for a
period of sixty (60) days after the date of written notice thereof
from Holder; or
(c) Maker
makes a general assignment for the benefit of its creditors or
applies to any tribunal for the appointment of a trustee or
receiver of a substantial part of the assets of Maker, or commences
any proceedings relating to Maker under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debts,
dissolution or other liquidation law of any jurisdiction; or any
such application is filed, or any such proceedings are commenced
against Maker and Maker indicates its consent to such proceedings,
or an order or decree is entered by a court of competent
jurisdiction appointing such trustee or receiver, or adjudicating
Maker bankrupt or insolvent, or approving the petition in any such
proceedings, and such order or decree remains unstayed and in
effect for ninety (90) days.
5.
Remedies .
(a) If
an Event of Default occurs and is continuing, Holder may, by notice
in writing to Maker, declare the entire unpaid principal of the
Note to be due and payable immediately, and upon any such
declaration the principal and unpaid interest on the Note shall
become and be immediately due and payable, and Holder may thereupon
proceed to protect and enforce its rights either by suit in equity
or by action at law or by other appropriate proceedings, whether
for specific performance (to the extent permitted by law) of any
covenant or agreement contained herein or in aid of the exercise of
any power granted herein, or proceed to enforce the payment of this
Note or to enforce any other legal or equitable right of
Holder.
(b) In
the event this Note is placed in the hands of an attorney for
collection or for enforcement, or in the event that Holder incurs
any costs incident to the collection of any indebtedness evidenced
hereby, Maker agrees to pay all reasonable attorneys’ fees
and expenses, all court and other costs and the reasonable costs of
any other collection efforts. Forbearance to exercise
the remedies set forth herein with respect to any failure or breach
of Maker shall not constitute a waiver by Holder of any of such
remedies.
6.
Expenses . Each of Maker
