EXHIBIT 10.12
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT").
THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT,
OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE
CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE
TRANSACTIONS THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S
UNDER SAID ACT.
CALLABLE SECURED CONVERTIBLE NOTE
Irvine, California
May 23, 2005
$119,200
FOR VALUE
RECEIVED, CALBATECH, INC., a Nevada corporation
(hereinafter called the "Borrower"), hereby
promises to pay to the
order of AJW Partners, LLC or registered
assigns (the "Holder") the
sum of $119,200, on May 23, 2008 (the
"Maturity Date"), and to pay
interest on the unpaid principal balance
hereof at the rate of ten
percent (10%) (the "Interest Rate") per
annum from May 23, 2005 (the
"Issue Date") until the same becomes due
and payable, whether at
maturity or upon acceleration or by
prepayment or otherwise. Any
amount of principal or interest on this
Note which is not paid when
due shall bear interest at the rate of
fifteen percent (15%) per
annum from the due date thereof until the
same is paid ("Default
Interest"). Interest shall commence accruing
on the Issue Date,
shall be computed on the basis of a 365-day
year and the actual
number of days elapsed and shall be payable
quarterly provided that
no interest shall be due and payable for
any month in which the
Trading Price (as such term is defined
below) is greater than
$.205875 for each Trading Day (as such term
is defined below) of the
month. All payments due hereunder (to the
extent not converted into
common stock, $.001 par value per share
(the "Common Stock") in
accordance with the terms hereof) shall be
made in lawful money of
the United States of America provided that
interest due and payable
for the first eight (8) months following
the Issue Date shall be paid
on the date hereof. All payments shall be made at such
address as
the Holder shall hereafter give to the
Borrower by written notice
made in accordance with the provisions of
this Note. Whenever
any
amount expressed to be due by the terms of
this Note is due on any
day which is not a business day, the same
shall instead be due on the
next succeeding day which is a business day
and, in the case of any
interest payment date which is not the date
on which this Note is
paid in full, the extension of the due date
thereof shall not be
taken into account for purposes of
determining the amount of interest
due on such date. As used in this Note, the term
"business day"
shall mean any day other than a Saturday,
Sunday or a day on which
commercial banks in the city of New York,
New York are authorized or
required by law or executive order to
remain closed.
Each
capitalized term used herein, and not
otherwise defined, shall have
the meaning ascribed thereto in that
certain Securities Purchase
Agreement, dated May 23, 2005, pursuant to
which this Note was
originally issued (the "Purchase
Agreement").
This Note is
free from all taxes, liens, claims and encumbrances
with respect to the issue thereof and shall
not be subject to
preemptive rights or other similar rights
of shareholders of the
Borrower and will not impose personal
liability upon the holder
thereof. The obligations of the Borrower
under this Note shall be
secured by that certain Security Agreement
and Intellectual Property
Security Agreement, each dated May 23, 2005
by and between the
Borrower and the Holder.
The following
terms shall apply to this Note:
ARTICLE I. CONVERSION RIGHTS
1.1 Conversion Right. The Holder shall have the
right
from time to time, and at any time on or
prior to the earlier of (i)
the Maturity Date and (ii) the date of
payment of the Default Amount
(as defined in Article III) pursuant to
Section 1.6(a) or Article
III, the Optional Prepayment Amount (as
defined in Section 5.1 or any
payments pursuant to Section 1.7, each in
respect of the remaining
outstanding principal amount of this Note
to convert all or any part
of the outstanding and unpaid principal
amount of this Note into
fully paid and non-assessable shares of
Common Stock, as such Common
Stock exists on the Issue Date, or any
shares of capital stock or
other securities of the Borrower into which
such Common Stock shall
hereafter be changed or reclassified at the
conversion price
(the
"Conversion Price") determined as provided
herein (a "Conversion");
provided, however, that in no event shall
the Holder be entitled to
convert any portion of this Note in excess
of that portion of this
Note upon conversion of which the sum of
(1) the number of shares of
Common Stock beneficially owned by the
Holder and its affiliates
(other than shares of Common Stock which
may be deemed beneficially
owned through the ownership of the
unconverted portion of the Notes
or the unexercised or unconverted portion
of any other security of
the Borrower (including, without
limitation, the warrants issued by
the Borrower pursuant to the Purchase
Agreement) subject to a
limitation on conversion or exercise
analogous to the limitations
contained herein) and (2) the number of
shares of Common Stock
issuable upon the conversion of the portion
of this Note with respect
to which the determination of this proviso
is being made, would
result in beneficial ownership by the
Holder and its affiliates of
more than 4.99% of the outstanding shares
of Common Stock and
provided further that the Holder shall not
be entitled to convert any
portion of this Note during any month
immediately succeeding a
Determination Date on which the Borrower
exercises its prepayment
option pursuant to Section 5.2 of this
Note. For purposes of
the
proviso to the immediately preceding
sentence, beneficial ownership
shall be determined in accordance with
Section 13(d) of the
Securities Exchange Act of 1934, as
amended, and Regulations 13D-G
thereunder, except as otherwise provided in
clause (1) of such
proviso. The number of shares of Common
Stock to be issued upon each
conversion of this Note shall be determined
by dividing the
Conversion Amount (as defined below) by the
applicable Conversion
Price then in effect on the date specified
in the notice of
conversion, in the form attached hereto as
Exhibit A (the "Notice of
Conversion"), delivered to the Borrower by
the Holder in accordance
with Section 1.4 below; provided that the
Notice of Conversion is
submitted by facsimile (or by other means
resulting in, or reasonably
expected to result in, notice) to the
Borrower before 6:00 p.m., New
York, New York time on such conversion date
(the "Conversion Date").
The term "Conversion Amount" means, with
respect to any conversion of
this Note, the sum of (1) the principal
amount of this Note to be
converted in such conversion plus (2)
accrued and unpaid interest, if
any, on such principal amount at the
interest rates provided in this
Note to the Conversion Date plus (3)
Default Interest, if any, on the
amounts referred to in the immediately
preceding clauses (1) and/or
(2) plus (4) at the Holder's option, any
amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof
or pursuant to Section
2(c) of that certain Registration Rights
Agreement, dated as of May
23, 2005, executed in connection with the
initial issuance of this
Note and the other Notes issued on the
Issue Date (the "Registration
Rights Agreement"). The term "Determination Date"
means the last
business day of each month after the Issue
Date.
1.2 Conversion Price.
(a) Calculation of
Conversion Price. The
Conversion
Price shall be the lesser of (i) the
Variable Conversion Price (as
defined herein) and (ii) the Fixed
Conversion Price (as defined
herein) (subject, in each case, to
equitable adjustments for stock
splits, stock dividends or rights offerings
by the Borrower relating
to the Borrower's securities or the
securities of any subsidiary of
the Borrower, combinations,
recapitalization, reclassifications,
extraordinary distributions and similar
events). The
"Variable
Conversion Price" shall mean the Applicable
Percentage (as defined
herein) multiplied by the Market Price (as
defined herein).
"Market
Price" means the average of the lowest
three (3) Trading Prices (as
defined below) for the Common Stock during
the twenty (20) Trading
Day period ending one Trading Day prior to
the date the Conversion
Notice is sent by the Holder to the
Borrower via facsimile (the
"Conversion Date"). "Trading Price" means, for any
security as of
any date, the intraday trading price on the
Over-the-Counter Bulletin
Board (the "OTCBB") as reported by a
reliable reporting service
("Reporting Service") mutually acceptable
to Borrower and Holder and
hereafter designated by Holders of a
majority in interest of the
Notes and the Borrower or, if the OTCBB is
not the principal trading
market for such security, the intraday
trading price of such security
on the principal securities exchange or
trading market where such
security is listed or traded or, if no
intraday trading price of such
security is available in any of the
foregoing manners, the average of
the intraday trading prices of any market
makers for such security
that are listed in the "pink sheets" by the
National Quotation
Bureau, Inc. If the Trading Price cannot be
calculated for such
security on such date in the manner
provided above, the Trading Price
shall be the fair market value as mutually
determined by the Borrower
and the holders of a majority in interest
of the Notes being
converted for which the calculation of the
Trading Price is required
in order to determine the Conversion Price
of such Notes.
"Trading
Day" shall mean any day on which the Common
Stock is traded for any
period on the OTCBB, or on the principal
securities exchange or other
securities market on which the Common Stock
is then being traded.
"Applicable Percentage" shall mean 50.0%.
The "Fixed
Conversion
Price" shall mean $.14.
(b) Conversion Price
During Major Announcements.
Notwithstanding anything contained in
Section 1.2(a) to the contrary,
in the event the Borrower (i) makes a
public announcement that it
intends to consolidate or merge with any
other corporation (other
than a merger in which the Borrower is the
surviving or continuing
corporation and its capital stock is
unchanged) or sell or transfer
all or substantially all of the assets of
the Borrower or (ii) any
person, group or entity (including the
Borrower) publicly announces a
tender offer to purchase 50% or more of the
Borrower's Common Stock
(or any other takeover scheme) (the date of
the announcement referred
to in clause (i) or (ii) is hereinafter
referred to as the
"Announcement Date"), then the Conversion
Price shall, effective upon
the Announcement Date and continuing
through the Adjusted Conversion
Price Termination Date (as defined below),
be equal to the lower of
(x) the Conversion Price which would have
been applicable for a
Conversion occurring on the Announcement
Date and (y) the Conversion
Price that would otherwise be in effect.
From and after the Adjusted
Conversion Price Termination Date, the
Conversion Price shall be
determined as set forth in this Section
1.2(a). For purposes
hereof,
"Adjusted Conversion Price Termination
Date" shall mean, with respect
to any proposed transaction or tender offer
(or takeover scheme) for
which a public announcement as contemplated
by this Section 1.2(b)
has been made, the date upon which the
Borrower (in the case of
clause (i) above) or the person, group or
entity (in the case of
clause (ii) above) consummates or publicly
announces the termination
or abandonment of the proposed transaction
or tender offer (or
takeover scheme) which caused this Section
1.2(b) to become
operative.
1.3 Authorized Shares.
The Borrower covenants
that during
the period the conversion right exists, the
Borrower will reserve
from its authorized and unissued Common
Stock a sufficient number of
shares, free from preemptive rights, to
provide for the issuance of
Common Stock upon the full conversion of
this Note and the other
Notes issued pursuant to the Purchase
Agreement. The
Borrower is
required at all times to have authorized
and reserved two times the
number of shares that is actually issuable
upon full conversion of
the Notes (based on the Conversion Price of
the Notes or the Exercise
Price of the Warrants in effect from time
to time) (the "Reserved
Amount"). The Reserved Amount shall be
increased from time to time
in accordance with the Borrower's
obligations pursuant to Section
4(h) of the Purchase Agreement.
The Borrower
represents that upon
issuance, such shares will be duly and
validly issued, fully paid and
non-assessable. In addition, if the Borrower shall
issue any
securities or make any change to its
capital structure which would
change the number of shares of Common Stock
into which the Notes
shall be convertible at the then current
Conversion Price, the
Borrower shall at the same time make proper
provision so that
thereafter there shall be a sufficient
number of shares of Common
Stock authorized and reserved, free from
preemptive rights, for
conversion of the outstanding Notes.
The Borrower (i)
acknowledges
that it has irrevocably instructed its
transfer agent to issue
certificates for the Common Stock issuable
upon conversion of this
Note, and (ii) agrees that its issuance of
this 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 Note.
If, at any time
a Holder of this Note submits a Notice of
Conversion, and the Borrower does not have
sufficient authorized but
unissued shares of Common Stock available
to effect such conversion
in accordance with the provisions of this
Article I (a "Conversion
Default"), subject to Section 4.8, the
Borrower shall issue to the
Holder all of the shares of Common Stock
which are then available to
effect such conversion. The portion of this 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 Borrower to permit such conversion, at
which time the Conversion
Price in respect thereof shall be the
lesser of (i) the Conversion
Price on the Conversion Default Date (as
defined below) and (ii) the
Conversion Price on the Conversion Date
thereafter elected by the
Holder in respect thereof. In addition, the Borrower shall
pay to
the Holder payments ("Conversion Default
Payments") for a Conversion
Default in the amount of (x) the sum of (1)
the then outstanding
principal amount of this Note plus (2)
accrued and unpaid interest on
the unpaid principal amount of this Note
through the Authorization
Date (as defined below) plus (3) Default
Interest, if any, on the
amounts referred to in clauses (1) and/or
(2), multiplied by (y) .24,
multiplied by (z) (N/365), where N = the
number of days from the day
the holder submits a Notice of Conversion
giving rise to a Conversion
Default (the "Conversion Default Date") to
the date (the
"Authorization Date") that the Borrower
authorizes a sufficient
number of shares of Common Stock to effect
conversion of the full
outstanding principal balance of this Note.
The Borrower shall
use
its best efforts to authorize a sufficient
number of shares of Common
Stock as soon as practicable following the
earlier of (i) such time
that the Holder notifies the Borrower or
that the Borrower otherwise
becomes aware that there are or likely will
be insufficient
authorized and unissued shares to allow
full conversion thereof and
(ii) a Conversion Default. The Borrower 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 applicable
Conversion Price, at the
Borrower's option, as follows:
(a) In the event
Holder elects to take such payment
in cash, cash payment shall be made to
Holder by the fifth (5th) day
of the month following the month in which
it has accrued; and
(b) In the event
Holder elects to take such payment
in Common Stock, the Holder may convert
such payment amount into
Common Stock at the Conversion Price (as in
effect at the time of
conversion) at any time after the fifth day
of the month following
the month in which it has accrued in
accordance with the terms of
this Article I (so long as there is then a
sufficient number of
authorized shares of Common Stock).
The Holder's
election shall be made in writing to the
Borrower at any time prior to 6:00 p.m.,
New York, New York time, on
the third 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) for the
Borrower's failure to maintain a sufficient
number of authorized
shares of Common Stock, and each holder
shall have the right to
pursue all remedies available at law or in
equity (including degree
of specific performance and/or injunctive
relief).
1.4 Method of Conversion.
(a) Mechanics of
Conversion. Subject to
Section 1.1,
this Note may be converted by the Holder in
whole or in part at any
time from time to time after the Issue
Date, by (A) submitting to the
Borrower a Notice of Conversion (by
facsimile or other reasonable
means of communication dispatched on the
Conversion Date prior to
6:00 p.m., New York, New York time) and (B)
subject to Section
1.4(b), surrendering this Note at the
principal office of the
Borrower.
(b) Surrender of Note
Upon Conversion.
Notwithstanding anything to the contrary
set forth herein, upon
conversion of this Note in accordance with
the terms hereof, the
Holder shall not be required to physically
surrender this Note to the
Borrower unless the entire unpaid principal
amount of this Note is so
converted. The Holder and the Borrower shall
maintain records
showing the principal amount so converted
and the dates of such
conversions or shall use such other method,
reasonably satisfactory
to the Holder and the Borrower, so as not
to require physical
surrender of this Note upon each such
conversion. In the
event of
any dispute or discrepancy, such records of
the Borrower shall be
controlling and determinative in the
absence of manifest error.
Notwithstanding the foregoing, if any
portion of this Note is
converted as aforesaid, the Holder may not
transfer this Note unless
the Holder first physically surrenders this
Note to the Borrower,
whereupon the Borrower will forthwith issue
and deliver upon the
order of the Holder a new Note of like
tenor, registered as the
Holder (upon payment by the Holder of any
applicable transfer taxes)
may request, representing in the aggregate
the remaining unpaid
principal amount of this Note. The Holder and any assignee,
by
acceptance of this Note, acknowledge and
agree 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
represented by this Note may be less than
the amount stated on the
face hereof.
(c) Payment of Taxes.
The Borrower shall not
be
required to pay any tax which may be
payable in respect of any
transfer involved in the issue and delivery
of shares of Common Stock
or other securities or property on
conversion of this Note in a name
other than that of the Holder (or in street
name), and the Borrower
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 Borrower the amount
of any such tax or shall
have established to the satisfaction of the
Borrower that such tax
has been paid.
(d) Delivery of Common
Stock Upon Conversion.
Upon
receipt by the Borrower from the Holder of
a facsimile transmission
(or other reasonable means of
communication) of a Notice of
Conversion meeting the requirements for
conversion as provided in
this Section 1.4, the Borrower shall issue
and deliver or cause to be
issued and delivered to or upon the order
of the Holder certificates
for the Common Stock issuable upon such
conversion within two (2)
business days after such receipt (and,
solely in the case of
conversion of the entire unpaid principal
amount hereof, surrender of
this Note) (such second business day being
hereinafter referred to as
the "Deadline") in accordance with the
terms hereof and the Purchase
Agreement (including, without limitation,
in accordance with the
requirements of Section 2(g) of the
Purchase Agreement that
certificates for shares of Common Stock
issued on or after the
effective date of the Registration
Statement upon conversion of this
Note shall not bear any restrictive
legend).
(e) Obligation of
Borrower to Deliver Common Stock.
Upon receipt by the Borrower 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 Note shall be
reduced to reflect such conversion, and,
unless the Borrower defaults
on its obligations under this Article I,
all rights with respect to
the portion of this 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. If
the
Holder shall have given a Notice of
Conversion as provided herein,
the Borrower's obligation to issue and
deliver the certificates for
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 provision
thereof, the recovery of any
judgment against any person or any action
to enforce the same, any
failure or delay in the enforcement of any
other obligation of the
Borrower 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 Borrower, and
irrespective of any other circumstance
which might otherwise limit
such obligation of the Borrower to the
Holder in connection with such
conversion. The Conversion Date specified in
the Notice of
Conversion shall be the Conversion Date so
long as the Notice of
Conversion is received by the Borrower
before 6:00 p.m., New York,
New York time, on such date.
(f) Delivery of Common
Stock by Electronic Transfer.
In lieu of delivering physical certificates
representing the Common
Stock issuable upon conversion, provided
the Borrower's transfer
agent is participating in the Depository
Trust Company ("DTC") Fast
Automated Securities Transfer ("FAST")
program, upon request of the
Holder and its compliance with the
provisions contained in Section
1.1 and in this Section 1.4, the Borrower
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 ("DWAC") system.
(g) Failure to Deliver
Common Stock Prior to
Deadline. Without in any way limiting the
Holder's right to pursue
other remedies, including actual damages
and/or equitable relief, the
parties agree that if delivery of the
Common Stock issuable upon
conversion of this Note is more than two
(2) business days after the
Deadline (other than a failure due to the
circumstances described in
Section 1.3 above, which failure shall be
governed by such Section)
the Borrower shall pay to the Holder $2,000
per day in cash, for each
day beyond the Deadline that the Borrower
fails to deliver such
Common Stock. Such cash amount shall be paid to
Holder by the fifth
day of the month following the month in
which it has accrued or, at
the option of the Holder (by written notice
to the Borrower by the
first day of the month following the month
in which it has accrued),
shall be added to the principal amount of
this Note, in which event
interest shall accrue thereon in accordance
with the terms of this
Note and such additional principal amount
shall be convertible into
Common Stock in accordance with the terms
of this Note.
1.5 Concerning the Shares.
The shares of Common
Stock
issuable upon conversion of this Note may
not be sold or transferred
unless (i) such shares are sold pursuant
to an effective
registration statement under the Act or
(ii) the Borrower or its
transfer agent shall have been furnished
with an opinion of
counsel
(which opinion shall be in form, substance
and scope customary for
opinions of counsel in comparable
transactions) to the effect that
the shares to be sold or transferred may be
sold or transferred
pursuant to an exemption from such
registration or (iii) such shares
are sold or transferred pursuant to Rule
144 under the Act (or a
successor rule) ("Rule 144") or (iv) such
shares are transferred to
an "affiliate" (as defined in Rule 144) of
the Borrower who agrees to
sell or otherwise transfer the shares only
in accordance with this
Section 1.5 and who is an Accredited
Investor (as defined in the
Purchase Agreement). Except as otherwise provided in
the Purchase
Agreement (and subject to the removal
provisions set forth below),
until such time as the shares of Common
Stock issuable upon
conversion of this Note have been
registered under the Act as
contemplated by the Registration Rights
Agreement or otherwise may be
sold pursuant to Rule 144 without any
restriction as to the number of
securities as of a particular date that can
then be immediately sold,
each certificate for shares of Common Stock
issuable upon conversion
of this Note that has not been so included
in an effective
registration statement or that has not been
sold pursuant to an
effective registration statement or an
exemption that permits removal
of the legend, shall bear a legend
substantially in the following
form, as appropriate:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
THE SECURITIES MAY NOT
BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION
OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR
OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT UNLESS SOLD
PURSUANT TO RULE 144 OR REGULATION S UNDER SAID ACT."
The legend set
forth above shall be removed and the
Borrower shall issue to the Holder a new
certificate therefor free of
any transfer legend if (i) the Borrower or
its transfer agent shall
have received an opinion of counsel, in
form, substance and scope
customary for opinions of counsel in
comparable transactions, to the
effect that a public sale or transfer of
such Common Stock may be
made without registration under the Act and
the shares are so sold or
transferred, (ii) such Holder provides the
Borrower or its transfer
agent with reasonable assurances that the
Common Stock issuable upon
conversion of this Note (to the extent such
securities are deemed to
have been acquired on the same date) can be
sold pursuant to Rule 144
or (iii) in the case of the Common Stock
issuable upon conversion of
this Note, such security is registered for
sale by the Holder under
an effective registration statement filed
under the Act or otherwise
may be sold pursuant to Rule 144 without
any restriction as to the
number of securities as of a particular
date that can then be
immediately sold. Nothing in this Note shall (i)
limit the
Borrower's obligation under the
Registration Rights Agreement or (ii)
affect in any way the Holder's obligations
to comply with applicable
prospectus delivery requirements upon the
resale of the securities
referred to herein.
1.6 Effect of Certain Events.
(a) Effect of Merger,
Consolidation, Etc. At
the
option of the Holder, the sale, conveyance
or disposit
