EXHIBIT 4.9
FORM OF CONVERTIBLE NOTE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”). THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES AGREES FOR THE BENEFIT OF THE
COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT, OR (C) IF REGISTERED
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
IN ADDITION, A SECURITIES PURCHASE AGREEMENT, DATED AS OF THE
DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT
ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL
AGREEMENTS AMONG THE PARTIES, INCLUDING, WITHOUT LIMITATION,
PROVISIONS WHICH (A) LIMIT THE CONVERSION RIGHTS OF THE HOLDER, (B)
SPECIFY VOLUNTARY AND MANDATORY REPAYMENT, PREPAYMENT AND
REDEMPTION RIGHTS AND OBLIGATIONS AND (C) SPECIFY EVENTS OF DEFAULT
FOLLOWING WHICH THE REMAINING BALANCE DUE AND OWING HEREUNDER MAY
BE ACCELERATED.
No. 1
$2,500,000
CONVERTIBLE NOTE
of
HepaLife Technologies, Inc.
HepaLife Technologies, Inc., a Florida corporation
(together with its successors, the “Company”), for
value received hereby promises to pay to:
GCA Strategic Investment Fund Limited
(the “Holder”) and registered assigns, the
principal sum of Two Million Five Hundred Thousand ($2,500,000) or,
if less, the principal amount of this Note then outstanding, on the
Maturity Date by wire transfer of immediately available funds to
the Holder in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of
public and private debts. The Maturity Date is May 11,
2009.
Upon an Event of Default, and until such Default
has been cured, interest shall accrue at a rate of 18% per annum
(“Default Interest”). All payments of principal
and interest hereunder shall be made for the benefit of the Holder
pursuant to the terms of the Agreement (hereafter defined).
This Convertible Note (this “Convertible
Note”) is issued by the Company pursuant to that certain
Securities Purchase Agreement dated as of the date hereof between
the Company and the Purchaser named therein (the
“Agreement”). The Agreement contains certain
additional agreements among the parties with respect to the terms
of this Convertible Note, including,
1
without limitation, provisions which (A) limit
the conversion rights of the Holder, (B) specify voluntary and
mandatory redemption rights and obligations and (C) specify
Events of Default following which the remaining balance due and
owing hereunder may be accelerated. All such provisions
are an integral part of this Convertible Note and are
incorporated herein by reference. This Convertible Note is
transferable and assignable to one or more Persons, in
accordance with the limitations set forth in the Agreement.
The Company shall keep a register (the
“Register”) in which shall be entered the names and
addresses of the registered holder of this Convertible Note and
particulars of this Convertible Note held by such holder and of all
transfers of this Convertible Note. References to the Holder
or “Holders” shall mean the Person listed in the
Register as registered holder of such Convertible Notes. The
ownership of this Convertible Note shall be proven by the
Register.
1.
Certain Terms Defined. All terms
defined in the Agreement and not otherwise defined herein shall
have for purposes hereof the meanings provided for in the
Agreement.
2.
Covenants. The Company covenants and
agrees to observe and perform each of its covenants, obligations
and undertakings contained in the Agreement, which obligations and
undertakings are expressly assumed herein by the Company and made
for the benefit of the holder hereof.
3.
Payment of Principal.
3.1
Prepayment of Note . For so long as no
Event of Default shall have occurred and is continuing and the
Company is not in receipt of a Notice of Conversion from the Holder
of the Note, the Company may, at its option, prepay, in whole or in
part, this Convertible Note for a pre-payment price (the
“Prepayment Price”) equal to the greater of (A) the
outstanding principal amount of the Note plus all accrued and
unpaid interest if any, and any outstanding liquidated damages, if
any, and (B)(x) the number of shares of Common Stock into which
this Convertible Note is then convertible, times (y) the VWAP, as
reported by Bloomberg L.P., of the Common Stock for the five (5)
Trading Days immediately preceding the date that this Convertible
Note is noticed for prepayment, plus accrued and unpaid interest.
Any partial prepayment of the Convertible Note, at any time
after issuance, shall be credited to the principal amount of the
Convertible Note on a dollar for dollar basis. The Company
shall not be entitled to send any notice of prepayment and begin
the prepayment procedure unless it has (i) the appropriate
Prepayment Price, in cash, available in a demand or other
immediately available account in a bank or similar financial
institution or equivalent means acceptable to Holder or (ii)
immediately available credit facilities, in the amount of the
appropriate Prepayment Price, with a bank or similar financial
institution on the date the prepayment notice is sent to the
Holders of this Convertible Note. Provided, however, the
Company will process any Notice of Conversion received prior to the
issuance of a notice of prepayment; and further provided that,
after a notice of prepayment has been
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issued, the Holder may issue a Notice of
Conversion which will not be honored unless the Company fails to
make the prepayment payment when due. In the event of such
failure, the Notice of Conversion will be honored as of the date
of the Notice of Conversion.
3.2
Payment on Maturity Date . The Company
shall repay the remaining unpaid balance of this Convertible Note
on the Maturity Date.
4.
Conversion .
4.1
Conversion of Convertible Note.
Subject to Section 5 hereof, the Holder shall have
the right, at its option, at any time from and after the date of
this Convertible Note, to convert the outstanding principal
amount of the Convertible Note. This Convertible Note
shall be convertible into that number of fully paid and
nonassessable shares of Common Stock (as such shares shall then
be constituted) determined pursuant to this Section 4.1.
The number of shares of Common Stock to be issued upon
each conversion of this Convertible Note shall be determined by
dividing the Conversion Amount (as defined below) by the
Conversion Price in effect on the date (the “Conversion
Date”) a Notice of Conversion is delivered to the Company,
as applicable, by the Holder by facsimile or other reasonable
means of communication dispatched prior to 5:00 p.m., E.S.T.
The term “Conversion Amount” means, with
respect to any conversion of this Convertible Note, the sum of
(1) the principal amount of this Convertible Note to be
converted in such conversion plus (2) accrued and unpaid
interest, if any, on such principal amount at the interest rates
provided in this Convertible Note to the Conversion Date plus
(3) Default Interest, if any, on the interest referred to in the
immediately preceding clause (2) plus (4) at the Holder’s
option, any amounts owed to the Holder pursuant to Section 4.3
hereof, Section 10.1 of the Agreement or Section 10.4 of the
Agreement.
4.2
Conversion Price . At the option of
the Holder, any portion or all of the outstanding principal
amount of this Convertible Note shall be converted into a number
of shares of Common Stock at the conversion price (the
“Conversion Price”) equal to 95% of the volume
weighted average prices (“VWAP”), as reported on
Bloomberg, L.P., or any third party quotation service, for the
five (5) trading days immediately prior to the date of the
related notice of conversion.
4.3
Authorized Shares.
(a)
Consistent with Section 7.11 of the Agreement,
the Company (i) shall promptly irrevocably instruct the
Company's transfer agent to issue certificates for the Common
Stock issuable upon conversion of this Convertible Note and (ii)
agrees that its issuance of this Convertible Note shall
constitute full authority to its officers and agents who are
charged with the duty of executing stock certificates to execute
and issue the necessary certificates for shares of Common Stock
in accordance with the terms and conditions of this Convertible
Note.
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(b)
If at any time the Holder submits a Notice of
Conversion and (x) the Company does not have sufficient
authorized but unissued shares of Common stock available to
effect such conversion in full in accordance with Article 4 or
(y) the Company is prohibited by the OTC Bulletin Board or the
Market on which the Common Shares are listed and traded at that
time to effect such conversion in full, without shareholder
approval, the Company shall issue to the Holder all of the
shares of Common Stock which are then available to effec
