EXHIBIT 4.10
THIS CONVERTIBLE SUBORDINATED PROMISSORY
NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR THE SECURITIES,
BLUE SKY OR OTHER APPLICABLE LAWS OF ANY
STATE, OR ANY OTHER RELEVANT
JURISDICTION, AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS IT IS (A) REGISTERED
AND/OR QUALIFIED PURSUANT TO THE
RELEVANT PROVISIONS OF U.S. FEDERAL
SECURITIES LAWS, THE SECURITIES, BLUE SKY,
OR OTHER APPLICABLE LAWS OF ANY STATE, OR
OTHER RELEVANT JURISDICTION OR (B)
EXEMPT FROM SUCH REGISTRATION OR
QUALIFICATION. THEREFORE, NO SALE, PLEDGE OR
OTHER TRANSFER OF THIS SECURITY SHALL BE
MADE, NO ATTEMPTED SALE, PLEDGE OR
OTHER TRANSFER SHALL BE VALID, AND THE
ISSUER SHALL NOT BE REQUIRED TO GIVE ANY
EFFECT TO ANY SUCH TRANSACTION UNLESS (A)
SUCH TRANSACTION SHALL HAVE BEEN DULY
REGISTERED UNDER THE SECURITIES ACT AND
QUALIFIED OR APPROVED UNDER THE
SECURITIES, BLUE SKY, OR OTHER APPLICABLE
LAWS OF ANY STATE, OR OTHER RELEVANT
JURISDICTION, OR (B) THE OBLIGOR SHALL HAVE
BEEN SATISFIED THAT SUCH
REGISTRATION, QUALIFICATION OR APPROVAL IS
NOT REQUIRED.
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
$50,000 - Principal Amount
Issue Date - September 2, 2003
FOR VALUE
RECEIVED, Crdentia Corp, a Delaware corporation ("Obligor"),
hereby promises to pay to the order of The
DeLuca Trust, Joseph M. DeLuca,
Trustee, dated 1/7/2000 or its assigns
("Holder"), in lawful money of the United
States at the address of Holder set forth
below, the principal sum of Fifty
Thousand dollars ($50,000), together with
interest thereon from the date of this
Promissory Note (the "Note") on the unpaid
principal balance. Interest shall
accrue at a rate of ten percent (10%) per
annum, simple interest, and shall be
payable quarterly. Subject to the
conversion provisions set forth herein, unpaid
principal together with all accrued and
unpaid interest shall be due and payable
in full on September 2, 2004 (the "Due
Date"). This Note may be prepaid, in
whole or in part, at any time without
premium or penalty.
This Note
is being issued as one of a series of convertible subordinated
promissory notes (collectively, the
"Notes") issued by the Obligor on or about
the date hereof pursuant to certain
Subscription Agreements among the Obligor
and the holders of the Notes. Any of the
terms of this Note may be waived or
modified only in writing, signed by the
Obligor and the holders of sixty six and
two-thirds percent (66 2/3%) of the
aggregate principal amount of all then
outstanding notes issued by the Obligor
pursuant to the Subscription Agreements.
The
outstanding principal balance plus accrued and unpaid interest on
this
Note shall be converted at Holder's option
and in Holder's sole discretion prior
to the Due Date into shares of the
Obligor's Common Stock (the "Common Stock").
The number of shares of Common Stock shall
be equal to the quotient obtained by
dividing (a) the aggregate outstanding
principal due, plus accrued and unpaid
interest on this Note on the date of
conversion by (b) the Conversion Price. For
purposes of this Note, the "Conversion
Price" shall mean the lesser of (x) one
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dollar and fifty cents ($1.50) or (y) the
per share price of the Obligor's
equity securities issued upon the closing
of the Obligor's next private equity
financing (the "New Financing"). If Obligor
shall issue after the Issue Date any
Additional Stock for a consideration per
share less than the Conversion Price in
effect immediately prior to the issuance of
such Additional Stock, the
Conversion Price in effect immediately
prior to such issuance shall be forthwith
adjusted to the price paid per share for
such Additional Stock. For purposes of
this Note, Additional Stock shall mean any
shares of Common Stock issued by
Obligor after the Issue Date other than:
(a) Common Stock issued pursuant to the
conversion of the Notes or the conversion
of exercise of any convertible or
exercisable instrument outstanding prior to
the Issue Date, (b) Common Stock
issuable or issued to employees,
consultants, directors or vendors of Obligor
pursuant to a stock plan or restricted
stock plan, (c) Common Stock issued or
issuable in a public offering, (d) Common
Stock issued in connection with the
acquisition of another corporation or
entity by Obligor and (e) Common Stock
issued in connection with strategic
alliances or to strategic corporate partners
or to parties that are providing Obligor
with equipment loans, real property
leases, loans, credit lines, guarantees of
indebtedness, licensing agreements,
consulting agreements, cash price
reductions or similar transactions.
In the
event that Obligor completes a New Financing prior to the Due
Date,
the outstanding principal balance plus
accrued and unpaid interest on this Note
shall be converted at Holder's option and
in Holder's sole discretion into the
equity securities issued in the New
Financing. The number of shares of equity
securities shall be equal to the quotient
obtained by dividing (a) the aggregate
outstanding principal due, plus accrued and
unpaid interest on this Note on the
date of such conversion by (b) the per
share price of such equity securities
issued in the New Financing.
No
fractional shares will be issued upon conversion of this Note. In
lieu
of any fractional share to which Holder
would otherwise be entitled, Obligor
will pay to Holder in cash that amount of
the unconverted principal and interest
balance of this Note. Upon conversion of
this Note into such equity securities,
Holder shall surrender this Note, duly
endorsed, at the principal offices of the
Obligor or any transfer agent for the
Obligor. At its expense, Obligor will, as
soon as practicable thereafter, issue and
deliver to Holder a certificate for
the number of shares of equity securities
to which Holder is entitled upon such
conversion, together with any other
securities and property to which Holder is
entitled upon such conversion under the
terms of this Note, including a check
payable to Holder for any cash amounts
payable as described above. Upon
conversion of this Note into such equity
securities, Obligor will be forever
released from all its obligations and
liabilities under this Note, including
without limitation the obligation to pay
the principal and interest amounts.
If any
payment of principal or interest on this Note shall become due on
a
Saturday, Sunday, or a public holiday under
the laws of the State of California,
such payment shall be made on the next
succeeding business day and such
extension of time shall be included in
computing interest in connection with
such payment.
The
indebtedness evidenced by this Note is hereby expressly
subordinated,
to the extent and in the manner hereinafter
set forth, in right of payment to
the prior payment in full of all the
Obligor's Senior Debt. For purposes of this
Note, "Senior Debt" shall mean the
principal of (and premium, if any) and unpaid
2
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interest on, or other payment obligation
with respect to (a) all indebtedness of
the Obligor to commercial banks, equipment
lessors and other traditional lending
institutions for money borrowed by the
Obligor whether or not secured, and (b)
any such indebtedness to commercial banks
or any debentures, notes or other
evidence of indebtedness issued in exchange
for such indebtedness.
Notwithstanding anything herein to the
contrary, no payment of principal or
interest shall be made on this Note if, but
only as long as, there exists any
default, or the existence of any event
which, with the giving of notice, would
constitute a default, in the payment of
Senior Debt, as determined by the terms
of any such Senior Debt. Holder shall
execute, at or following the date hereof,
as the case may be, all subordination
documents required by
