Exhibit 4.1.3
NEITHER THESE SECURITIES NOR THE
SECURITIES ISSUABLE UPON CONVERSION OF THESE SECURITIES HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND
THE SECURITIES ISSUABLE UPON CONVERSION OF THESE SECURITIES MAY BE
PLEDGED IN A MANNER CONSISTENT WITH THE SECURITIES ACT IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH
SECURITIES.
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No. __
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$___________
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Original Issue Date: January 12,
2007
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SYNOVA HEALTHCARE GROUP,
INC.
6.5% SENIOR CONVERTIBLE
PROMISSORY NOTE DUE JANUARY 12, 2012
THIS NOTE is one of a series of duly
authorized and issued notes of Synova Healthcare Group, Inc., a
Nevada corporation (the “Company” ), designated
as its 6.5% Senior Convertible Promissory Notes due
January 12, 2012, in the original aggregate principal amount
of fifteen million dollars ($
) (collectively, the “Notes” and each Note
comprising the Notes, a “Note” ).
FOR VALUE RECEIVED, the Company
promises to pay to
or its registered assigns (the “Investor” ), the
principal sum of
dollars ($
), on January 12, 2012 or such earlier date as this Note is
required to be repaid as provided hereunder (the “Maturity
Date” ), and to pay interest to the Investor on the
principal amount of this Note outstanding from time to time in
accordance with the provisions hereof. All holders of Notes are
referred to collectively, as the “Investors.”
This Note is subject to the following additional
provisions:
1. Definitions . In addition
to the terms defined elsewhere in this Note: (a) capitalized
terms that are used but not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement, dated as of
January 12, 2007, among the Company and the Investors
identified therein (the “Purchase Agreement” ),
and (b) the following terms have the meanings indicated
below:
“ Bankruptcy Code
” means Title 11 of the United States Code (11 U.S.C. 101 et
seq.), as amended from time to time (including any successor
statute) and all rules and regulations promulgated
thereunder.
“Bankruptcy
Event” means any of
the following events: (a) the Company or any Subsidiary
commences a case or other proceeding under any Bankruptcy Law
relating to the Company or any Subsidiary thereof; (b) there
is commenced against the Company or any Subsidiary any such case or
proceeding that is not dismissed within 60 days after commencement;
(c) the Company or any subsidiary is adjudicated by a court of
competent jurisdiction insolvent or bankrupt or any order of relief
or other order approving any such case or proceeding is entered;
(d) the Company or any Subsidiary suffers any appointment of
any custodian or the like for it or any substantial part of its
property that is not discharged or stayed within 60 days;
(e) under applicable law the Company or any Subsidiary makes a
general assignment for the benefit of creditors; (f) the
Company or any Subsidiary fails to pay, or states that it is unable
to pay or is unable to pay, its debts generally as they become due;
(g) the Company or any Subsidiary calls a meeting of its
creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or (h) the Company or any
Subsidiary, by any act or failure to act, expressly indicates its
consent to, approval of or acquiescence in any of the foregoing or
takes any corporate or other action for the purpose of effecting
any of the foregoing.
“ Bankruptcy Law
” means the Bankruptcy Code of the United States and all
other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership,
insolvency, fraudulent conveyance or transfer, reorganization, or
similar state or Federal debtor relief laws, statutes, rules,
regulations, orders, or ordinances of the United States or other
applicable jurisdictions from time to time in effect and affecting
the rights of creditors generally.
“Change of
Control” means the
occurrence of any of the following in one or a series of related
transactions: (i) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in
Rule 13d-5(b)(1) under the Exchange Act) of more than one-third of
the voting rights or equity interests in the Company other than
pursuant to the Transaction Documents; (ii) a replacement of
more than one-half of the members of the Company’s board of
directors in a twelve month period in a single election of
directors that is not approved by those individuals who are members
of the board of directors on the date hereof (or other directors
previously approved by such individuals); (iii) a Fundamental
Transaction (as defined in Section 10(c)), a merger or
consolidation of the Company or any Subsidiary or a sale of more
than one-half of the assets of the Company in one or a series of
related transactions, unless following such transaction or series
of transactions, the holders of the Company’s securities
prior to the first such transaction continue to hold at least
two-thirds of the voting rights and equity interests in the
surviving entity or acquirer of such assets; (iv) a
recapitalization, reorganization or other transaction involving the
Company or any Subsidiary that constitutes or results in a transfer
of more than one-third of the voting rights or equity interests in
the Company, unless following such transaction or series of
transactions, the holders of the Company’s securities prior
to the first such transaction continue to hold at least two-thirds
of the voting rights and equity interests in the surviving entity
or acquirer of such assets and one-half or more of the Board of
Directors of the Company remain the same; (v) consummation of
a “Rule 13e-3 transaction” as defined in Rule 13e-3
under the Exchange Act with respect to the Company, or
(vi) the execution by the Company or its controlling
shareholders of an agreement providing for or reasonably likely to
result in any of the foregoing events.
2
“Closing
Price” means, for
any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed
or quoted on an Eligible Market, the closing bid price per share of
the Common Stock for such date (or the nearest preceding date) on
the primary Eligible Market on which the Common Stock is then
listed or quoted; (b) if prices for the Common Stock are then
reported in the “Pink Sheets” published by the Pink
Sheets, LLC (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share
of the Common Stock so reported; or (c) in all other cases,
the fair market value of a share of Common Stock as determined by
an independent qualified appraiser selected in good faith and paid
for by a majority in interest of the Investors.
“Common
Stock” means the
common stock of the Company, $0.001 par value per share, and any
securities into which such common stock may hereafter be
reclassified.
“Conversion
Date” means the
date a Conversion Notice together with the Conversion Schedule is
delivered to the Company in accordance with Section
5(a).
“Conversion
Notice” means a
written notice in the form attached hereto as Exhibit A
.
“Conversion
Price” means $1.00,
subject to adjustment from time to time pursuant to
Section 10.
“Default”
means any event or condition which
constitutes an Event of Default or that upon notice, lapse of time
or both would, unless cured or waived, become an Event of
Default.
“ EBITDA ” means
the net income of the Company from continuing operations before
interest expense (income), income taxes, depreciation and
amortization expense, adding back non-cash charges including,
without limitation, compensation charges for equity grants and
charges for unconsolidated losses (gains), determined using the
financial statements of the Company contained in the Quarterly
Report on Form 10-QSB (or Form 10-Q) or Annual Report on Form
10-KSB (or Form 10-K) of the Company for the applicable
quarter.
“ EBITDA Target ”
means for each date specified below, the target rolling twelve
month EBITDA specified below:
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At 12 Months Ended
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($2.8 million)
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December 31,
2007
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($2 million)
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March 31,
2008
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$0
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June 30,
2008
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$1 million
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September 30,
2008
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$2 million
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December 31,
2008
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$3 million
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March 31,
2009
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$4 million
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June 30,
2009
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$5 million
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September 30,
2009
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$6.5 million
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December 31,
2009 and thereafter.
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3
“Eligible
Market” means
whichever of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ Global Select Market, the NASDAQ Global
Market, the NASDAQ Capital Market or OTC Bulletin Board on which
the Common Stock is listed or quoted for trading on the date in
question.
“Equity Conditions Are
Satisfied” means,
as of any date of determination, that each of the following
conditions is (or would be) satisfied on such date, if the Company
were to issue on such date all of the Underlying Shares then
issuable upon (1) conversion in full of the outstanding
principal amount of all Notes, and (2) the payment of accrued
and unpaid interest on such Interest Payment Date under all the
Notes of the Company: (i) the number of authorized but
unissued and otherwise unreserved shares of Common Stock is
sufficient for such issuance, (ii) the Common Stock is listed
or quoted (and is not suspended from trading) on an Eligible Market
and such shares of Common Stock are approved for listing on such
Eligible Market upon issuance, (iii) such Common Stock is
registered for resale under the Registration Statement and the
prospectus under such Registration Statement is available for the
sale of all Registrable Securities held by the Investor,
(iv) such issuance would be permitted in full without
violating Section 5(b) hereof or the rules or regulations of
the Eligible Market on which such shares are listed or quoted,
(v) both immediately before and after giving effect thereto,
no Default shall or would exist, and (vi) no public
announcement of a pending or proposed Change of Control transaction
has occurred that has not been consummated.
“Event Equity
Value” means the
average of the Closing Prices for the five consecutive Trading Days
immediately preceding either: (a) the date of an Event Notice
or the date the Company becomes obligated to pay the Event Price
under Section 7(b), as applicable, or (b) the date on
which the Event Price with respect thereto (together with any other
payments, expenses and liquidated damages then due and payable
under the Transaction Documents) is paid in full, whichever is
greater.
“Event of
Default” means any
one of the following events (whatever the reason and whether it
shall be voluntary or involuntary or effected by operation of law
or pursuant to any judgment, decree or order of any court, or any
order, rule or regulation of any administrative or governmental
body):
(i) any default in the payment (free
of any claim of subordination), when the same becomes due and
payable (whether on a Prepayment Date, the Maturity Date or by
acceleration or prepayment or otherwise), of (a) liquidated
damages in respect of this Note, or (b) principal under or
interest in respect of this Note.
(ii) the Company or any Subsidiary
(1) fails to pay when due or there is an acceleration of any
monetary obligation (regardless of amount) under any currently
existing or hereafter arising debenture (other than a Note) or any
mortgage, credit agreement or other facility, indenture agreement,
factoring agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced, any
Indebtedness or under any long term leasing or factoring
arrangement, if the aggregate amount of the obligations and
liabilities of the Company and the subsidiaries thereunder exceed
$50,000 (each of the foregoing a “Material Debt
Agreement” ), or (2) fails to observe or perform any
other obligation under any Material Debt Agreement, and such
failure results in the obligations thereunder becoming or being
declared due and payable prior to the date on which they would
otherwise become due and payable.
4
(iii) the occurrence or entering
into by the Company or any subsidiary, or consummation of, any
Change of Control.
(iv) the Company shall fail to
observe or perform any covenant, condition or agreement contained
in any Transaction Document (other than those specified in clause
(i) above and clause (xviii) below), and such failure
shall continue unremedied for a period of five Trading Days after
the earliest of (i) the date on which written notice of such
default is first given to the Company by the Investor (it being
understood that no prior notice need be given in the case of a
default that cannot reasonably be cured within five Trading Days),
or (ii) the date the Company discovers or such default or
reasonably should have discovered such default.
(v) the Company creates or suffers
to exist any Lien (other than judgment liens which are covered by
clause (x) below) upon any of its properties, except in
accordance with Section 5.4 of the Purchase
Agreement.
(vi) the occurrence and continuance
of an Event of Default under any other Note.
(vii) any prepayment by the Company
of any other Note or any other Indebtedness issued by it or any
issuance of securities in exchange for any Notes issued by it
(other than Underlying Shares upon conversion of such Notes in
accordance with their terms as in effect on the Original Issue Date
thereof), except in each case (i) if the Company offers to the
Investor in writing the same prepayment of this Note and all other
Notes then held by such Investor on the same economic terms on
which the Company prepays or offers to prepay (whichever is more
favorable to the holder of such Note) such Notes and (ii) in
accordance with the prepayment provisions of Section 12 of
this Note.
(viii) any of the Company’s
representations and warranties set forth in any Transaction
Document shall be incorrect as of the date made or as of the
Original Issue Date.
(ix) the occurrence of a Bankruptcy
Event.
(x) one or more judgments for the
payment of money in an aggregate amount in excess of $50,000 shall
be rendered against the Company or any subsidiary or any
combination thereof (which shall not be fully covered by insurance
without taking into account any applicable deductibles) and which
shall remain undischarged or unbonded for a period of 30
consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of the Company or any subsidiary
to enforce any such judgment.
(xi) any Transaction Document shall
cease, for any reason, to be in full force and effect, or the
Company shall so assert in writing or shall disavow any of its
obligations thereunder.
5
(xii) the Common Stock shall not be
listed or quoted, or is suspended from trading, on an Eligible
Market for a period of three Trading Days (which need not be
consecutive Trading Days).
(xiii) the Company fails to deliver
a stock certificate evidencing Underlying Shares to an Investor
within five Trading Days after a Conversion Date or in the case of
exercises under a Warrant, within five Trading days after a Date of
Exercise under, and as such term is defined in, such Warrant, or
the conversion or exercise rights of the Investors pursuant to the
terms hereof or the terms of the Warrants are otherwise suspended
for any reason (other than as a result of the limitations set forth
in Section 5(b)).
(xiv) the Company fails to have
available and reserved for the benefit of the holders of Notes and
Warrants a number of authorized but unissued and otherwise
unreserved shares of Common Stock sufficient to issue Underlying
Shares upon any conversion of Notes or upon any exercise of
Warrants.
(xv) the Company effects or publicly
announces its intention to effect any exchange, recapitalization or
other transaction that effectively requires or rewards physical
delivery of certificates evidencing the Common Stock, unless
following such transaction, the holders of the Company’s
securities prior to the first such transaction continue to
beneficially own at least two-thirds of the voting rights and
equity interests in the surviving entity or acquirer.
(xvi) Intentionally
omitted.
(xvii) a Registration Statement
under the Registration Rights Agreement is not effective as to all
Registrable Securities (as defined in the Registration Rights
Agreement), and available for use by the holders of Registrable
Securities, for in excess of an aggregate of 30 Trading Days (which
need not be consecutive Trading Days) during the Effectiveness
Period (as defined in the Registration Rights
Agreement).
(xviii) the Company fails to make
any cash payment required under the Transaction Documents (other
than as set forth in paragraph (i) above).
(xix) Intentionally
omitted.
(xx) the Company’s EBITDA is
less than the EBITDA Target at the end of any calendar quarter
commencing with the quarter ended December 31, 2007;
provided , however , that failure to meet the EBITDA
Target shall not constitute an Event of Default if: (a) the
VWAP of the Common Stock for 20 Trading Days during any 30
consecutive Trading Day period during the applicable calendar
quarter was greater than 200% of the Conversion Price (subject to
adjustment pursuant to Section 10), and (b) the average
daily trading volume for the Common Stock for the 30 Trading Day
period referenced in clause (a) above was 150,000
shares.
(xxi) the Company closes its
stockholder books or records in any manner which prevents the
timely exercise of the Warrant, pursuant to the terms
thereof.
6
“Indebtedness”
of any Person shall mean, without
duplication, (a) all obligations of such Person for borrowed
money or with respect to deposits or advances of any kind,
(b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations
of such Person upon which interest charges are customarily paid,
(d) all obligations of such Person under conditional sale or
other title retention agreements relating to property or assets
purchased by such Person, (e) all obligations of such Person
issued or assumed as the deferred purchase price of property or
services (other than unsecured accounts payable incurred in the
ordinary course of business and no more than ninety (90) days
past the due date set forth in the invoice therefor), (f) all
Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed,
(g) all obligations of such Person in respect of interest rate
protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements that exceed
amounts necessary to hedge the Company’s cross-currency
exposure and (h) all obligations of such Person as an account
party in respect of letters of credit and bankers’
acceptances. The Indebtedness of any Person shall include the
Indebtedness of any partnership in which such Person is a general
partner.
“Original Issue
Date” has the
meaning set forth on the face of this Note.
“Proceeding” means a claim, suit, arbitration, investigation
or proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or
threatened.
“Registration
Statement” shall
have the meaning set forth in the Purchase Agreement.
“Trading
Day” means
(i) a day on which the Common Stock is traded on an Eligible
Market, (ii) if the Common Stock is not listed on an Eligible
Market, a day on which the Common Stock is traded in the Pink
Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices), or (iii) if the Common Stock
is not reported by the Pink Sheets LLC (or any similar organization
or agency succeeding to its functions of reporting prices) then
Trading Day shall mean a Business Day.
“Underlying
Shares” means the
shares of Common Stock issuable upon conversion of the Notes and
payment of interest thereunder.
“VWAP”
means, with respect to any date of
determination, the daily volume weighted average price (as reported
by Bloomberg using the VAP function) of the Common Stock on such
date of determination, or if there is no such price on such date of
determination, then the daily volume weighted average price on the
date nearest preceding such date.
2. Interest .
(a) The Company shall pay interest
to the Investor on the aggregate unconverted and then outstanding
principal amount of this Note at the rate of 6.5% per annum,
payable quarterly in cash, in arrears on each three month
anniversary of the Original Issue Date (each, an “Interest
Payment Date” ), except if such date is not a Trading
Day, in which case such interest shall be payable on the next
succeeding Trading Day; provided, further that, during
7
the continuance of an Event of
Default, this Note shall bear interest at the rate of
12.0% per annum. Interest shall be calculated on the basis of
a 360-day year for the actual number of days elapsed and shall
accrue daily commencing on the Original Issue Date.
(b) Notwithstanding the foregoing,
subject to the conditions and limitations set forth below, in lieu
of paying accrued interest in cash the Company may, at its option,
on each Interest Payment Date, pay accrued interest on this Note in
kind by increasing the unpaid principal amount of this Note, and
interest shall thereafter accrue on this Note on quarterly
compounded basis. The Company must deliver written notice to the
Investor indicating the manner in which it intends to pay interest
at least ten Trading Days prior to each Interest Payment Date, but
the Company may indicate in any such notice that the election
contained therein shall continue for subsequent Interest Payment
Dates until rescinded. Failure to timely provide such written
notice shall be deemed an irrevocable election by the Company to
pay such interest in cash. All interest payable in respect of the
Notes on any Interest Payment Date must be paid in the same
manner.
3. Registration of Notes .
The Company shall maintain a register (the “
Register ”) for the recordation of the names
and addresses of the holders of each Note and the principal amount
of the Notes held by such holders (the “ Registered
Notes ”). The entries in the Register shall be
conclusive and binding for all purposes absent manifest error. The
Company and the holders of the Notes shall treat each Person whose
name is recorded in the Register as the owner of a Note for all
purposes, including, without limitation, the right to receive
payments of principal and interest hereunder, notwithstanding
notice to the contrary. A Registered Note may be assigned or sold
in whole or in part only by registration of such assignment or sale
on the Register. Upon its receipt of a request to assign or sell
all or part of any Registered Note by a holder, the Company shall
record the information contained therein in the Register and issue
one or more new Registered Notes in the same aggregate principal
amount as the principal amount of the surrendered Registered Note
to the designated assignee or transferee pursuant to
Section 4.
4. Registration of Transfers and
Exchanges . The Company shall register the transfer of any
portion of this Note in the Register upon surrender of this Note to
the Company at its address for notice set forth herein. Upon any
such registration or transfer, a new Note, in substantially the
form of this Note (any such new debenture, a “New
Note” ), evidencing the portion of this Note so
transferred shall be issued to the transferee and a New Note
evidencing the remaining portion of this Note not so transferred,
if any, shall be issued to the transferring Investor. The
acceptance of the New Note by the transferee thereof shall be
deemed the acceptance by such transferee of all of the rights and
obligations of a holder of a Note. The Company agrees that its
prior consent is not required for the transfer of any portion of
this Note; provided , however, that the Company shall be
entitled to reasonable assurance, including an opinion of counsel
reasonably acceptable to the Company, that such transfer complies
with applicable federal and state securities laws. This Note is
exchangeable for an equal aggregate principal amount of Notes of
different authorized denominations, as requested by the Investor
surrendering the same. No service charge or other fee will be
imposed in connection with any such registration of transfer or
exchange.
8
5. Conversion .
(a) At the Option of the
Investor . All or any portion of the principal amount of this
Note then outstanding together with any accrued and unpaid interest
hereunder shall be convertible into shares of Common Stock at the
Conversion Price (subject to limitations set forth in
Section 5(b)), at the option of the Investor, at any time and
from time to time from and after the Original Issue Date. The
Investor may effect conversions under this Section 5(a) by
delivering to the Company a Conversion Notice together with a
schedule in the form of Schedule 1 attached hereto (the
“Conversion Schedule” ). If the Investor is
converting less than all of the principal amount represented by
this Note, or if a conversion hereunder may not be effected in full
due to the application of Section 5(b), the Company shall
honor such conversion to the extent permissible hereunder and shall
promptly deliver to the Investor a Conversion Schedule indicating
the principal amount which has not been converted.
(b) Certain Conversion
Restrictions . Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be
acquired by an Investor upon each conversion of Notes (or otherwise
in respect hereof) shall be limited to the extent necessary to
ensure that, following such conversion (or other issuance), the
total number of shares of Common Stock then beneficially owned by
such Investor and its Affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with such
Investor’s for purposes of Section 13(d) of the Exchange
Act, does not exceed 9.9% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the
shares of Common Stock issuable upon such conversion) (subject to
change as described below, the “ Maximum Percentage
”). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. This
provision shall not restrict the number of shares of Common Stock
which an Investor may receive or beneficially own in order to
determine the amount of securities or other consideration that such
Investor may receive in the event of a Fundamental Transaction
(defined below) involving the Company. For any reason at any time,
upon the written or oral request of the Investor, the Company shall
within one (1) Business Day confirm orally and in writing to
the Investor the number of shares of Common Stock then outstanding.
This restriction may not be waived, and notwithstanding anything to
the contrary in any Transaction Document, may not be amended by
agreement of the parties. To the extent that the limitation
contained in this Section 5(b) applies, the determination of
whether this Note is convertible (in relation to other securities
owned by such Investor together with any Affiliates) and of which a
portion of this Note is convertible shall be in the sole discretion
of a Investor, and the submission of a Conversion Notice shall be
deemed to be each Investor’s determination of whether this
Note is convertible (in relation to other securities owned by such
Investor together with any Affiliates) and of which portion of this
Note is convertible, in each case subject to such aggregate
percentage limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination other than its
obligation in this Section 5(b) above to, upon the
Investor’s request, confirm orally and in writing to the
Investor the number of shares of Common Stock then
outstanding.
6. Mechanics of Conversion
.
(a) The number of Underlying Shares
issuable upon any conversion hereunder shall equal the outstanding
principal amount of this Note to be converted, divided by the
Conversion Price on the Conversion Date, plus (if indicated in the
applicable Conversion
9
Notice) the amount of any accrued
but unpaid interest on this Note through the Conversion Date,
divided by the Conversion Price on the Conversion Date.
(b) The Company shall, by the third
Trading Day following each Conversion Date, issue or cause to be
issued and cause to be delivered to or upon the written order of
the Investor and in such name or names as the Investor may
designate a certificate for the Underlying Shares issuable upon
such conversion, free of restrictive legends if at such time a
Registration Statement is then effective and available for use by
the Investor. The Investor, or any Person so designated by the
Investor to receive Underlying Shares, shall be deemed to have
become holder of record of such Underlying Shares as of such
Conversion Date. The Company shall use its best efforts to deliver
Underlying Shares hereunder electronically (via a DWAC)
th