Exhibit 10.32
XECHEM INTERNATIONAL, INC.
(A DELAWARE CORPORATION)
CONVERTIBLE PROMISSORY NOTE
(THE "NOTE")
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH
A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. THEY MAY
NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED OR OTHERWISE
DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT TO
THESE SECURITIES UNDER THE SECURITIES ACT
OF 1993, AS AMENDED, AND APPLICABLE STATE
LAWS OR AN OPINION OF COUNSEL
SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY THAT SUCH REGISTRATION IS
REQUIRED UNDER SUCH ACT AND APPLICABLE
LAWS.
$3,000,000
____________, 2004
FOR VALUE RECEIVED, Xechem International,
Inc., a Delaware corporation organized
under the laws of the State of Delaware
(the "COMPANY"), promises to pay to the
order of Alembic Limited (the "HOLDER"),
the principal sum of Three Million
Dollars ($3,000,000), or such lesser
principal sum as may be then owed by the
Company to Holder, in legal and lawful
money of the United States of America,
together with interest from the date hereof
on the principal amount from time to
time remaining unpaid as provided below.
Payment for all amounts due hereunder
shall be made at the principal office of
Holder at the address of Holder set
forth below, or such other address as the
Holder may hereafter direct in
writing.
By acceptance of this Note, Holder hereby
agrees to lend to the Company on the
terms and conditions set forth herein an
aggregate amount of $3,000,000. The
loan will be advanced in six installments
of $500,000 (each, an "ADVANCE") on
the following dates (each an "ADVANCE
DATE"): (i) the date hereof and (ii) on
the same day of the month on each of the
next successive five months. The Holder
shall fund the installments to the Company
in immediately available funds by
wire transfer as designated by the Company.
If the Holder fails to fund an
Advance by the applicable Advance Date, the
Company shall have the right to stop
any further funding of this loan, and
notwithstanding Section 4 below, shall
have a right to prepay the outstanding
principal amounts due under this Note.
The following is a statement of the rights
of the Holder of this Note and the
conditions to which this Note is subject,
and to which the Holder hereof, by the
acceptance of this Note agrees:
1. INTEREST/DEBT
SERVICE. This Note shall bear simple interest at the per
annum rate of eight percent (8%) on the
unpaid principal balance of this Note
commencing on the date of this Note until
paid in full. Unless this Note is
prepaid or converted as provided herein,
the unpaid principal amount of this
Note shall be due and payable in one lump
sum on the fourth anniversary of the
date first set forth above (the "MATURITY
DATE"). Accrued and unpaid interest
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on the Note shall be payable annually on
each anniversary of the date of this
Note, and on the Maturity Date. All past
due principal and interest shall bear
interest from maturity until paid at the
rate of ten percent (10%) per annum.
Payments hereunder shall be applied first
to accrued and unpaid interest and
then to the unpaid principal balance of
this Note.
2. EVENTS OF
DEFAULT. The occurrence of any of the following events shall
constitute an event of default under the
Note (an "Event of Default"):
2.1 FAILURE TO PAY. The Company shall fail to pay any accrued
interest
when due or any principal on the Maturity
Date as required under the terms of
this Note and such default shall continue
for a period of more than ten (10)
days after the applicable payment date.
2.2 VOLUNTARY BANKRUPTCY OR INSOLVENCY PROCEEDINGS. The Company
shall
(i) apply for or consent to the appointment
of a receiver, trustee, liquidator
or custodian of itself or of all or a
substantial part of its property, (ii) be
unable, or admit in writing its inability,
to pay its debts generally as they
mature, (iii) make a general assignment for
the benefit of its or any of its
creditors, (iv) be dissolved or liquidated
in full or in part, (v) commence a
voluntary case or other proceeding seeking
liquidation, reorganization or other
relief with respect to itself or its debts
under any bankruptcy, insolvency or
other similar law now or hereafter in
effect or consent to any such relief or to
the appointment of or taking possession of
its property by any official in an
involuntary case or other proceeding
commenced against it, or (vi) take any
action for the purpose of effecting any of
the foregoing.
2.3 INVOLUNTARY BANKRUPTCY OR INSOLVENCY PROCEEDINGS. Proceedings
for
the appointment of a receiver, trustee,
liquidator or custodian of the Company
of all or a substantial part of the
property thereof, or an involuntary case or
other proceedings seeking liquidation,
reorganization or other relief with
respect to the Company or the debts thereof
under any bankruptcy, insolvency or
other similar law now or hereafter in
effect shall be commenced and an order for
relief entered or such proceeding shall not
be dismissed, discharged or stayed
within sixty (60) days of commencement, or
any action under the laws of the
state of the Company's organization
analogous to any of the foregoing shall be
taken with respect to the Company and shall
continue undismissed, or unstayed
and in effect, for a period of sixty (60)
days.
2.4 REMEDIES. Upon the occurrence of an Event of Default referred
to
above, the principal amount and accrued but
unpaid interest then outstanding
under this Note shall upon notice to the
Company by Holder shall be paid in cash
immediately to the Holder within a period
not exceeding seven (7) days from the
date of Notice without other or further
presentment, demand, protest or other
formalities of any kind, all of which are
hereby expressly waived by the
Company.
The Holder may institute such actions or proceedings in law or
equity
as it shall deem expedient for the
protection of its rights and may prosecute
and enforce its claims against all assets
of the Company, and in connection with
any such action or proceeding shall be
entitled to receive from the Company
payment of the principal amount of this
Note plus accrued interest to the date
of payment plus reasonable expenses of
collection, including, without
limitation, attorneys' fees and expenses.
No remedy herein conferred upon the
holder of this Note is intended to be
exclusive of any other remedy, and each
and every such remedy shall be
2
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cumulative and shall be in addition to
every other remedy given hereunder or now
or hereafter existing at law or in equity
or by statute or otherwise.
3. WAIVERS.
Unless otherwise specifically set forth in this Note, the
Company and each surety, endorser,
guarantor and other person liable upon this
Note waives (i) all notices, demands and
presentments for payments, and (ii) all
notices of non-payment, default, intention
to accelerate maturity, acceleration
of maturity, protest and dishonor.
4. PREPAYMENT.
The Company shall not have the right to prepay any part of
the outstanding principal balance of this
Note and/or accrued interest hereunder
at any time by wire transfer or delivery of
good funds to Holder.
5.
CONVERSION.
5.1 VOLUNTARY CONVERSION. Any Holder of this Note has the right,
at
the Holder's option, exercisable on a
Conversion Date (as defined below), to
convert this Note in accordance with the
provisions of SECTION 5.2 hereof, in
whole or in part, into fully paid and
nonassessable shares of common stock of
the Company (the "COMMON Stock"). This Note
is only convertible on (i) the first
anniversary of the date of this Note (the
"FIRST CONVERSION DATE"), (ii) the
second anniversary of the date of this Note
(the "SECOND CONVERSION DATE"),
(iii) the third anniversary of the date of
this Note (the "THIRD CONVERSION
DATE") and (iv) the fourth anniversary of
the date of this Note (the "FOURTH
CONVERSION DATE" and together with the
First, Second and Third Conversion Dates,
collectively, the "CONVERSION DATES" and
each individually, a "CONVERSION
DATE"). The number of shares of Common
Stock of the Company into which this Note
may be converted ("CONVERSION SHARES") on a
Conversion Date shall be determined
by dividing the aggregate of (i) the
outstanding principal amount elected by the
Holder to be converted, plus (ii) the
accrued and unpaid interest through the
Conversion Date, by the Conversion Price
(as defined below) in effect at the
time of such conversion. The Conversion
Price shall be equal to the product of
(A) the average closing price per share of
the Company's Common Stock as
reported on the OTC Bulletin Board (or such
other market on which such shares of
Common Stock are then listed) for the
thirty (30) trading days immediately
preceding the date of the applicable
Conversion Date; multiplied by (B) 70% on
the First Conversion Date, 60% on the
Second Conversion Date, 50% on the Third
Conversion Date and 40% on the Fourth
Conversion Date. The daily "closing price"
for purposes of this Note shall be the
average of the bid and the ask for a
share of Common Stock on the OTC Bulletin
Board.
5.2 CONVERSION PROCEDURE. The Holder may c
