Exhibit 4.1
“ NEITHER THE ISSUANCE AND
SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES UNDERLYING THESE SECURITIES HAVE 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 OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES
.”
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Principal
Amount: $
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Issue Date: June
, 2009
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CONVERTIBLE
NOTE
FOR VALUE RECEIVED, COMMONWEALTH
BIOTECHNOLOGIES, INC., a Virginia corporation (hereinafter called
“Borrower”), hereby promises to pay to
,
with an address of
(the
“Holder”), without demand, the sum of
Dollars
($ ),
with simple and unpaid interest thereon, on December 31, 2009
(the “Maturity Date”), if not paid sooner.
This Note has been entered into
pursuant to the terms of a Subscription Agreement between the
Borrower, the Holder and certain other subscribers of the
Borrower’s convertible notes, dated of even date herewith
(the “Subscription Agreement”), and shall be governed
by the terms of such Subscription Agreement. Unless otherwise
separately defined herein, all capitalized terms used in this Note
shall have the same meaning as is set forth in the Subscription
Agreement. The following terms shall apply to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1 Interest Rate . Interest
payable on this Note shall accrue at the annual rate of eight
percent (8%) and be payable on the Maturity Date, accelerated
or otherwise, when the principal and remaining accrued but unpaid
interest shall be due and payable, or sooner as described
below.
1.2 Payment Grace Period .
The Borrower shall have a five (5) day grace period to pay any
monetary amounts due under this Note, after which grace period a
default interest rate of twelve percent (12%) per annum shall
apply to such payment.
1.3. Conversion Privileges .
The conversion rights of the Holder as set forth in Article II of
this Note shall remain in full force and effect immediately from
the date hereof and until the Note is paid in full regardless of
the occurrence of an Event of Default. The principal amount of the
Note and the remaining accrued but unpaid interest shall be payable
in full on the Maturity Date, unless previously paid or converted
into Common Stock in accordance with Article II hereof.
ARTICLE II
CONVERSION RIGHTS
The Holder shall have the right to
convert the entire principal amount under this Note and the accrued
but unpaid interest thereon into shares of the Borrower’s
Common Stock as set forth below.
2.1. Conversion into the
Borrower’s Common Stock .
(a) The Holder shall have the right
from and after the date of the issuance of this Note and then at
any time until this Note is fully paid, to convert any outstanding
and unpaid principal portion of this Note, and accrued interest, at
the election of the Holder (the date of giving of such notice of
conversion being a “Conversion Date”) into fully paid
and nonassessable shares of Common Stock as such stock exists on
the date of issuance of this Note, or any shares of capital stock
of Borrower into which such Common Stock shall hereafter be changed
or reclassified, at the Conversion Price as defined in
Section 2.1(b) hereof, determined as provided herein. Upon
delivery to the Borrower of a completed Notice of Conversion, a
form of which is annexed hereto as Exhibit A, Borrower shall issue
and deliver to the Holder within three (3) business days after
the Conversion Date (such third day being the “Delivery
Date”) that number of shares of Common Stock for the portion
of the Note converted in accordance with the foregoing. At the
election of the Holder, the Borrower will deliver accrued but
unpaid interest on the Note, if any, through the Conversion Date
directly to the Holder on or before the Delivery Date. The number
of shares of Common Stock to be issued upon each conversion of this
Note shall be determined by dividing that portion of the
outstanding principal amount of the Note and accrued but unpaid
interest, if any, to be converted, by the Conversion
Price.
(b) Subject to adjustment as
provided for in Section 2.1(c) hereof, the Conversion Price
per share of Common Stock shall be $0.50 (“Conversion
Price”).
(c) The Conversion Price and the
number and kind of shares or other securities to be issued upon
conversion of this Note, shall be subject to adjustment from time
to time upon the happening of certain events while this conversion
right remains outstanding, as follows:
A. Merger, Sale of Assets,
etc . If the Borrower at any time shall consolidate with or
merge into or sell or convey all or substantially all its assets to
any other corporation, this Note, as to the unpaid principal
portion thereof and accrued interest thereon, shall thereafter be
deemed to evidence the right to purchase such number and kind of
shares or other securities and property as would have been issuable
or distributable on account of such consolidation, merger, sale or
conveyance, upon or with respect to the securities subject to the
conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance. The foregoing provision
shall similarly apply to successive transactions of a similar
nature by any such successor or purchaser. Without limiting the
generality of the foregoing, the anti-dilution provisions of this
Section shall apply to such securities of such successor or
purchaser or surviving entity of the surviving corporation after
any such consolidation, merger, sale or conveyance.
B. Reclassification, etc . If
the Borrower at any time shall, by reclassification or otherwise,
change the Common Stock into the same or a different number of
securities of any class or classes of the Borrower’s capital
stock that may be issued or outstanding, this Note, as to the
unpaid principal amount thereof and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase an adjusted
number of such securities and kind of securities as would have been
issuable as the result of such change with respect to the shares of
Common Stock subject to the conversion of this Note immediately
prior to such reclassification or other change.
2
C. Stock Splits, Combinations and
Dividends . If the shares of Common Stock are subdivided or
combined into a greater or smaller number of shares of Common
Stock, or if a dividend is paid on the Common Stock in shares of
Common Stock, the Conversion Price shall be proportionately reduced
in case of subdivision of shares or stock dividend or
proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of
Common Stock outstanding immediately after such event bears to the
total number of shares of Common Stock outstanding immediately
prior to such event.
D. Other Corporate Events .
Prior to the consummation of any recapitalization, reorganization,
consolidation, merger, spin-off or other business combination
pursuant to which holders of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for
Common Stock (a “Corporate Event”), the Borrower shall
make appropriate provision to insure that the Holder will
thereafter have the right to receive upon a conversion of this
Note, (i) in addition to the shares of Common Stock receivable
upon such conversion, such securities or other assets to which the
Holder would have been entitled with respect to such shares of
Common Stock had such shares of Common Stock been held by the
Holder upon the consummation of such Corporate Event, or
(ii) in lieu of the shares of Common Stock otherwise
receivable upon such conversion, such securities or other assets
received by the holders of Common Stock in connection with the
consummation of such Corporate Event in such amounts as the Holder
would have been entitled to receive had this Note initially been
issued with conversion rights for the form of such consideration
(as opposed to shares of Common Stock) at a conversion price for
such consideration commensurate with the Conversion Price.
Provision made pursuant to the preceding sentence shall be in a
form and substance reasonably satisfactory to the holders of Notes
representing at least 70% of the aggregate principal amount of the
Notes then outstanding.
(d) Whenever the Conversion Price is
adjusted pursuant to Section 2.1(c) above, the Borrower shall
promptly provide notice to the Holder setting forth the Conversion
Price after such adjustment and setting forth a statement of the
facts requiring such adjustment.
(e) The Borrower will reserve from
its authorized and unissued shares of Common Stock, the number of
shares of Common Stock during the time periods and in the amounts
described in the Subscription Agreement. The Borrower represents
that upon issuance
