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Exhibit 10.1
NEITHER THIS NOTE NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER
HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES, OR DELIVERY TO THE
COMPANY OF AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE COMPANY THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE WITH THE ACT OR UNLESS SOLD IN FULL
COMPLIANCE WITH RULE 144 UNDER THE ACT.
CONVERTIBLE PROMISSORY NOTE
Duska Therapeutics, Inc. a Nevada Corporation
whose address is Two Bala Plaza, Suite 300, Bala Cynwyd,
Pennsylvania 19004 (the " Company "), for value received,
hereby promises to pay to ICON Capital Partners, L.P. or their
permitted assignees (each, a " Holder " and together, the "
Holders "), the principal amount of One Hundred Thousand
Dollars ($100,000) in accordance with the terms hereof.
1. Maturity . Except to the extent converted into
Conversion Units (as defined below) pursuant to Section 3
hereof, the principal amount of this Promissory Note (this "
Note ") shall be due and payable on November 24, 2007
(the " Maturity Date ").
2. Payments . Except in the event the Holders elect to
convert the principal amount hereof pursuant to Section 3
hereof into Conversion Units pursuant to Section 3 hereof,
those amounts shall be paid on the Maturity Date. All payments of
principal and other amounts payable on or in respect of this Note
or the indebtedness evidenced hereby shall be made to the Holders
in U.S. dollars, by wire transfer, certified check or Company
check. This Note may be prepaid by the Company, at any time, in
whole or in part, from time to time, without penalty, at the
principal amount hereunder. Payment of this Note shall not be
secured by any of the Company’s assets.
3. Conversion . At the option of the Holders, upon the
consummation of any equity or equity linked financing of the
Company of at least $5,000,000 (the " Offering "), this Note
shall be automatically converted into the units of common stock and
warrants (the " Conversion Units ") being offered by the
Company pursuant to the Offering (the " Exchange "). The
number of Conversion Units to be issued upon conversion shall equal
the principal being converted divided by the price per Conversion
Unit in the Offering. The common stock and warrants comprising the
Conversion Units shall have the same terms as those offered in the
Offering. By electing to convert all or a portion of the principal
balance of this Note into Conversion Units, each Holder shall be
deemed to have irrevocably subscribed for Conversion Units. At any
time prior to the Exchange, the principal amount of this Note can
be fully converted into shares of the Company’s common stock,
$.001 par value per share, by dividing the principal amount under
the Note by $0.40, subject to adjustments as provided herein.
4. Warrant Coverage . Each Holder will receive, in the
form attached hereto as Exhibit A , a warrant to purchase
(the " Warrant "), in accordance with such Holder’s
pro rata share, fully paid and nonassessable shares of common stock
of the Company at a price equal to $0.40 (the " Exercise
Price ") if exercised before August 24, 2012.
5. Registration Rights . In the event that the Company
has not repaid this Note by the Maturity Date, the Company shall
prepare promptly and file with the Securities and Exchange
Commission (the " SEC ") as soon as practicable, but in no
event later than the thirtieth (30 th ) day
following the Maturity Date (the " Filing
Date "), a Registration Statement (the " Registration
Statement ") on Form SB-2 (or, if Form SB-2 is not then
available, on such form of Registration Statement as is then
available) to effect a registration of all of the securities
underlying the Warrants. The Company shall use its best efforts to
cause the Registration Statement required to be filed pursuant to
this Section to become effective as soon as practicable, but in no
event later than the ninetieth (90 th ) day (or 120 days if such
Registration Statement is reviewed by the SEC) following the Filing
Date (the " Registration Deadline "). If the Registration
Statement has not been declared effective by the Registration
Deadline, the Company shall pay to the Holders an amount equal to
1.5% of the amount outstanding hereunder for each 30 day period
beyond the Registration Deadline, provided that no more than
$20,000 in such fees shall be payable .
6. Right of First Refusal . At any time while this Note
remains outstanding, but in no event later than the date that is
six months after the date hereof, subject to the terms and
conditions specified in this Section 7, the Holders shall have
a right to participate with respect to the issuance or possible
issuance of any equity or equity-linked securities or debt which is
convertible into equity or in which there is an equity component
(as the case may be, " Additional Securities ") on the same
terms and conditions as offered by the Company to the other
purchasers of such Additional Securities. Each time the Company
proposes to offer any Additional Securities, the Company shall make
an offering of such Additional Securities to each Holder in
accordance with the following provisions:
(1) At least 10 days prior to the issuance of any Additional
Securities, the Company shall deliver a notice (the " Issuance
Notice ") to each Holder stating (a) its bona fide
intention to offer such Additional Securities, (b) the number
of such Additional Securities to be offered, (c) the price and
terms, if any, upon which it proposes to offer such Additional
Securities, and (d) the anticipated closing date of the sale
of such Additional Securities.
(2) By written notification received by the Company, within 10
business days after giving of the Issuance Notice, each Holder may
elect to purchase or obtain, at the price and on the terms
specified in the Issuance Notice, up to that number of such
Additional Securities which equals such Holder’s Pro Rata
Amount (as defined below). The " Pro Rata Amount " for such
Holder shall equal that portion of the Additional Securities that
the Company proposes to offer which equals the proportion that the
number of shares of common stock that such Holder owns or has the
right to acquire bears to the total number of shares of common
stock then outstanding (assuming in each case the full conversion,
exercise or exchange of all Convertible Securities and Purchase
Rights then outstanding).
7. Covenants of the Company .
(a) The Company shall not, without the prior written consent of
a majority in interest of the Holders (such consent not to be
unreasonably withheld), incur or suffer to exist any new
indebtedness for borrowed money that ranks senior to this Note.
(b) The Company shall not, without the prior approval of the
Holders, create any sub-committee of the Board of Directors that is
permitted to take action on behalf of the Company without the prior
authorization and approval of the Board of Directors.
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(c) Within 4 days following the execution of and
delivery of this Note, the Company shall file with the Securities
and Exchange Commission a statement on form 8-K (including the
transaction documents of this financing as exhibits thereto)
disclosing the details of this transaction.
8. Board Representation . Upon the execution and delivery
of this Note, ICON Capital P
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