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FORM OF SENIOR CONVERTIBLE NOTE

Convertible Promissory Note

FORM OF SENIOR CONVERTIBLE NOTE | Document Parties: ALPHA INNOTECH CORP | SECURITIES COMMISSION You are currently viewing:
This Convertible Promissory Note involves

ALPHA INNOTECH CORP | SECURITIES COMMISSION

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Title: FORM OF SENIOR CONVERTIBLE NOTE
Governing Law: California     Date: 8/14/2006
Industry: Biotechnology and Drugs     Sector: Healthcare

FORM OF SENIOR CONVERTIBLE NOTE, Parties: alpha innotech corp , securities commission
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EXHIBIT 4.1

FORM OF SENIOR CONVERTIBLE NOTE

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE 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 OR EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3 AND 14 HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE COMMON STOCK ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii) OF THIS NOTE.

ALPHA INNOTECH CORP.

SENIOR CONVERTIBLE NOTE

 

 

     

Issuance Date: July      , 2006

  

Principal: U.S. $             



FOR VALUE RECEIVED, ALPHA INNOTECH CORP., a Delaware corporation (the "Company" ), hereby promises to pay to the order of                                                   or registered assigns ( "Holder" ) the amount set out above as the Principal (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the "Principal" ) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to pay interest ( "Interest" ) on any outstanding Principal at the rate of 3% per annum, compounded annually (the "Interest Rate" ) unless otherwise provided herein, from the date set out above as the Issuance Date (the "Issuance Date" ) until the same becomes due and payable, whether upon, the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This Senior Convertible Note (including all Senior Convertible Notes issued in exchange, transfer or replacement of, the "Note" ) is one of an issue of Senior Convertible Notes (collectively, the " Notes " and such other Senior Convertible Notes, the "Other Notes" ) issued on the Issuance Date pursuant to the Securities Purchase Agreement (as defined below). Certain capitalized terms are defined in Section 23.

1. MATURITY . On the Maturity Date, the Holder shall surrender this Note to the Company and the Company shall pay to the Holder an amount in cash representing all outstanding Principal and accrued and unpaid Interest, if any. The "Original Maturity Date" shall be July      , 2011, as may be extended at the sole option of the Holder in the event that, and for so long as, an Event of Default (as defined in Section 4(a)) shall have occurred and be continuing or any event shall have occurred and be continuing which with the passage of time and the failure to cure would result in a Conversion Failure.

2. INTEREST; INTEREST DATE . Interest on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 365-day year and actual days elapsed and shall be payable on the Maturity Date (the " Interest Date ").

3. CONVERSION OF NOTES . This Note shall be convertible into shares of the Company’s common stock, par value $0.01 per share (the "Common Stock" ), on the terms and conditions set forth in this Section 3.

(a) Conversion Right . Subject to the provisions of Section 3(d), at any time or times on or after the Issuance Date, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall pay to the Holder an amount in cash equal to the value of such fractional share based on the closing price of the Common Stock on the last trading day prior to

the conversion. The Company shall pay any and all documentary, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount. The Company shall not, however, be required to pay any such tax which may be payable in respect of any transfer of Securities involved in the issue and delivery of the Common Stock in any name other than that of the Holder.

(b) Conversion Rate . The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "Conversion Rate" ).

(i) "Conversion Amount" means the Principal to be converted, redeemed or otherwise with respect to which this determination is being made, plus all accrued and unpaid Interest on the Principal being converted.

(ii) "Conversion Price" means, subject to adjustment as provided herein, $1.60.

(c) Mechanics of Conversion .

(i) Optional Conversion . To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date" ), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 4:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the "Conversion Notice" ) to the Company and (B) if required by Section 3(c)(iii), deliver this Note to a common carrier for delivery to the Company as soon as practicable on or following such date (or a customary indemnification undertaking with respect to this Note in the case of its loss, theft or destruction). On or before the close of the business on the first Business Day following the date of receipt of a Conversion Notice, the Company shall transmit by facsimile a confirmation of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the "Transfer Agent" ). On or before the second Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date" ), the Company’s transfer agent shall issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically surrendered for conversion as required by Section 3(c)(iii) and the outstanding Principal of this Note is greater than the Principal being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder a new Note representing the outstanding Principal not converted and otherwise in substantially the same form as this Note. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

(ii) Book-Entry . Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice)

 

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requesting physical surrender and reissue of this Note. The Holder and the Company shall maintain records showing the Principal converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note upon conversion.

(d) Principal Market Regulation . The Company shall not be obligated to issue any shares of Common Stock upon conversion of this Note if the issuance of such shares of Common Stock would exceed that number of shares of Common Stock which the Company may issue upon conversion of the Notes without breaching the Company’s obligations under the rules or regulations of the Principal Market (the "Exchange Cap" ), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the Principal Market for issuances of Common Stock in excess of such amount (Company shall be required to obtain such approval if the issuance would exceed that number of shares of Common Stock which the Company may issue upon conversion of the Notes if it breaches the Company’s obligations under the Exchange Cap ) or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of the Notes representing at least a majority of the principal amounts of the Notes then outstanding. Until such approval or written opinion is obtained, no purchaser of the Notes pursuant to the Securities Purchase Agreement (the "Purchasers" ) shall be issued, upon conversion of Notes, shares of Common Stock in an amount greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the principal amount of Notes issued to such Purchaser pursuant to the Securities Purchase Agreement on the Issuance Date and the denominator of which is the aggregate principal amount of all Notes issued to the Purchasers pursuant to the Securities Purchase Agreement on the Issuance Date (with respect to each Purchaser, the "Exchange Cap Allocation" ). In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser’s Notes, the transferee shall be allocated a pro rata portion of such Purchaser’s Exchange Cap Allocation, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated to such transferee.

(e) Mandatory Conversion . If the closing price of the Common Stock has been at or above $2.50 (as adjusted for stock splits, stock dividends, recapitalizations and like transactions), for at least 30 consecutive Business Days, then any remaining Principal and accrued and unpaid Interest under the Note shall automatically convert into Common Stock in accordance with this Section 3; provided that Holder shall not have to complete such conversion until such time as: (i) the amount of Common Stock outstanding is equal to the Required Reserve Amount; and (ii) conversion would not be impaired pursuant to Section 3(d) hereof.

4. RIGHTS UPON EVENT OF DEFAULT .

(a) Event of Default . Each of the following events shall constitute an "Event of Default" :

(i) default in the payment of the Principal and unpaid accrued Interest of this Note within five (5) Business Days of becoming due and payable;

 

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(ii) any other default by the Company of the performance of any of its obligations or any breach by the Company of any representations or covenants (provided that a default of any such covenant is not otherwise defined as an Event of Default under this Section 4(a)) hereunder or under the Securities Purchase Agreement (provided that the representations and warranties under the Securities Purchase Agreement shall only survive for one year from the date of execution of the Securities Purchase Agreement) upon 10 days notice from the Holder to the Company;

(iii) the Company shall make an assignment for the benefit of creditors, file a petition in bankruptcy, consent to entry of an order for relief against it in an involuntary case, be adjudicated insolvent or bankrupt, petition or apply to any tribunal for the appointment of any receiver, trustee or similar official for it or a substantial part of its assets, or commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; there shall occur the appointment of a receiver, trustee, assignee, liquidator, custodian or similar official of it or a substantial part of its assets; or there shall have been filed any such petition or application or any such proceeding shall have been commenced against it, which remains undismissed for a period of 60 days or more; the Company by any act or omission shall indicate its consent to, approval of or acquiescence in any such petition, application or proceeding or the appointment of any trustee for it or any substantial part of any of its properties; or

(iv) a court of competent jurisdiction shall enter an order or decree under any Bankruptcy Law that is for relief against the Company in an involuntary case, appoints a receiver, trustee, assignee, liquidator or similar official of the Company or for any substantial part of its property, or orders the liquidation of the Company; and the order or decree remains unstayed and in effect for 30 days.

(b) Redemption Right Upon Event of Default . Promptly after the occurrence of an Event of Default with respect to this Note or any Other Note, the Company shall deliver written notice thereof via facsimile and overnight courier (an "Event of Default Notice" ) to the Holder and the holders of the Other Notes. At any time after the earlier of the Holder’s receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem all or any portion of the Notes by delivering written notice thereof (the "Event of Default Redemption Notice" ) to the Company, which Event of Default Redemption Notice shall indicate the portion of the Notes that the Holder is electing to cause to be redeemed. Notwithstanding the immediately preceding sentence to the contrary, in the case of an Event of Default pursuant to Section 4(a)(iii) above, all amounts of Principal and Interest accrued under this Note shall be deemed automatically due, payable, and collectible, without need for any Notice.

(c) Default Rate of Interest . Notwithstanding the immediately preceding terms of this section, upon the occurrence of an Event of Default, all amounts due and owing under this Note shall bear interest at a rate of ten percent (10%) per annum from the date of such default until all such amounts are paid in full.

5. RIGHTS UPON CERTAIN CORPORATE EVENTS . Prior to the consummation of any recapitalization, reorganization, consolidation, merger, spin-off or other business

 

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combination (including, without limitation, a Change of Control (defined below)) pursuant to which holders of Common Stock are entitled to receive securities or other assets with respect to or in exchange for Common Stock (a "Corporate Event" ), the Company shall make appropriate provision at the Holder’s option to insure that the Holder will thereafter have the right to receive upon a conversion of this Note: (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Note); or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Holders with Notes representing a majority in interest of the Principal outstanding (the " Required Holders "). The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Note. Each of the following events shall constitute a "Change of Control" :

(i) any sale of all or substantially all of the assets of the Company to a third party;

(ii) any merger of the Company with or into another corporation in which holders of Common Stock immediately prior to the consummation of the merger do not control 50% of the voting power of the surviving corporation; or

(iii) the acquisition by any "person" or "group" of persons (as such terms are used in Section 13(d) and 14(d) of the Securities and Exchange Act of 1934, as amended, and the related regulations) who have an expressed intent to control the affairs of the Company of more than 50% of the outstanding Common Stock of the Company.

6. ADJUSTMENT OF CONVERSION PRICE UPON SUBDIVISION OR COMBINATION OF COMMON STOCK . If the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time on or after the Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.

7. PREPAYMENT . With respect to each Holder, this Note may only be prepaid (notwithstanding acceleration or other remedy following an Event of Default) in whole or in part beginning on the second anniversary of the Issuance Date; provided, however, that if the Note is prepaid prior to the third anniversary of the Issuance Date, the Company shall pay to the Holder

 

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a fee equal to 3% of the Principal then outstanding and prepaid (the " Prepayment Fee ") with such Prepayment Fee declining 1% per year to par at Maturity Date. The Company will provide the Holder with prior written notice (" Prepayment Notice ") of its intent to pre-pay the Note at least 20 days before the Company’s intended date of prepayment (" Intended Prepayment Date "). Upon receipt of a Prepayment Notice, the Holder may exercise any of the conversion rights available to the Holder pursuant to this Note by providing notice to the Company at least 5 days before the Intended Prepayment Date.

8. NONCIRCUMVENTION . The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note.

9. RESERVATION OF AUTHORIZED SHARES . The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common Stock for each of the Notes equal to 100% of the Conversion Rate with respect to the Conversion Amount of each such Note as of the Issuance Date. Thereafter, the Company, so long as any of the Notes are outstanding, shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Notes, 100% of the number of shares of Common Stock as shall from time to time be necessary to effect the conversion of all of the Notes then outstanding (the "Required Reserve Amount" ).

10. HOLDER’S REDEMPTIONS . In the event that the Holder has sent an Event of Default Redemption Notice to the Company pursuant to Section 4(b) (a "Redemption Notice" ), or if the note is deemed automatically redeemed due to a default under Section 4(a)(iii) to the Holder shall promptly submit this Note to the Company. The Company shall deliver the applicable Event of Default Redemption Price to the Holder within 10 Business Days after the Company’s receipt of the Holder’s Redemption Notice. In the event of a redemption of less than all of the Conversion Amount of this Note, the Company shall promptly cause to be issued and delivered to the Holder a new Note representing the outstanding Principal which has not been redeemed. In the event that the Company does not pay the Event of Default Redemption Price (the "Redemption Price" ), to the Holder (or deliver any Common Stock to be issued pursuant to a Redemption Notice) within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price (and issues any Common Stock required pursuant to a Redemption Notice) in full, the Holder shall have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note representing the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price (or any Common Stock required to be issued pursuant to a Redemption Notice) has not been paid. Upon the Company’s receipt of such notice: (x) the Redemption Notice shall be null and void with respect to such Conversion Amount; and (y) the Company shall immediately return this Note, or issue a new Note to the Holder representing such Conversion Amount.

 

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11. STATUS OF DEBT .

(a) Agreement to Eliminate Senior Debt to Third Parties . By issuing this Note, the Company for itself and its successors and assigns, and for its Subsidiaries and the successors and assigns of such Subsidiaries, agrees, and the Holder, by its acceptance of this Note, shall be deemed to have agreed, that this Note shall be subject to the provisions of this Section 11 and, to the extent and in the manner hereinafter set forth in this Section 11, the indebtedness represented by this Note and the payment of the Principal and Interest, any redemption amount, liquidated damages, fees, expenses or any other amounts in respect of this Note are subordinate in right of payment only to the prior payment in full in cash of (i) all Senior Debt now outstanding and (ii) the Future Permitted Senior Debt (as defined in Section 13(b) below). The Holder shall be entitled to receive payment in full in cash before any of the Subordinated Indebtedness or any other Indebtedness save Senior Debt or Future Permitted Senior Debt (including interest after the commencement of any proceeding under any Bankruptcy Law at the agreed upon rate before any other creditor or Credit Party shall be entitled to receive any payment with respect to any indebtedness other than the Senior Debt or the Future Permitted Senior Debt (" Holder’s Rights ").

(b) Liquidation; Dissolution; Bankruptcy .

(i) The holders of Senior Debt and Future Permitted Senior Debt shall be entitled to receive payment in full in cash of all Senior Debt or Future Permitted Senior Debt (including interest after the commencement of any proceeding under any Bank


 
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