Exhibit 10.69
THIS NOTE AND THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON
CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
ACCENTIA BIOPHARMACEUTICALS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECOND AMENDED AND RESTATED
SECURED CONVERTIBLE TERM NOTE
FOR VALUE RECEIVED, ACCENTIA
BIOPHARMACEUTICALS, INC., a Florida (the
“Company” ), promises to pay to LAURUS MASTER
FUND, LTD., c/o M&C Corporate Services Limited, P.O. Box 309
GT, Ugland House, South Church Street, George Town, Grand Cayman,
Cayman Islands, Fax: 345-949-8080 (the “Holder”
) or its registered assigns or successors in interest, the sum of
Ten Million Dollars ($10,000,000), together with any accrued and
unpaid interest hereon, on April 29, 2006 (the
“Maturity Date” ) if not sooner indefeasibly
paid in full; provided , however , if the Parent
shall have consummated the initial public offering of Common Stock
on or prior to March 31, 2006, the Maturity Date shall be
April 29, 2008. This Note amends and restates in its entirety,
and is given in substitution for and not in satisfaction of that
certain promissory note in the original principal amount of
$5,000,000 issued by the Company in favor of the Holder on
April 29, 2005. This Second Amended and Restated Secured
Convertible Term Note amends and restates in its entirety (and is
given in substitution for and not in satisfaction of) that certain
$5,000,000 Secured Convertible Term Note made by the Company in
favor of the Holder on April 29, 2005 and amended and restated
on or about August 16, 2005 increasing the stated principal
amount to $10,000,000.
Capitalized terms used herein
without definition shall have the meanings ascribed to such terms
in that certain Securities Purchase Agreement dated as of the date
hereof by and between the Company and the Holder (as amended,
modified and/or supplemented from time to time, the
“Purchase Agreement” ).
The following terms shall apply to
this Second Amended and Restated Secured Convertible Term Note
(this “Note” ):
ARTICLE I
CONTRACT RATE AND
AMORTIZATION
1.1 Contract Rate . Subject
to Sections 4.2 and 5.10, interest payable on the outstanding
principal amount of this Note (the “Principal
Amount” ) shall accrue at a rate per annum equal to the
greater of (i) “prime rate” published in The
Wall Street Journal from time to time (the “Prime
Rate” ), plus four percent (4.0%) and (ii) ten
percent (10.0%) (the “Contract Rate” ). The
Contract Rate shall be increased or decreased as the case may be
for each increase or decrease in the Prime Rate in an amount equal
to such increase or decrease in the Prime Rate; each change to be
effective as of the day of the change in the Prime Rate. The
Contract Rate
shall not at any time be less than ten percent
(10.0%). Interest shall be (i) calculated on the basis of a
360 day year, and (ii) payable monthly, in arrears, commencing
on May 4, 2005, on the first business day of each consecutive
calendar month thereafter through and including the Maturity Date,
and on the Maturity Date, whether by acceleration or
otherwise.
1.2 Contract Rate Payments .
The Contract Rate shall be calculated on the last business day of
each calendar month hereafter (other than for increases or
decreases in the Prime Rate which shall be calculated and become
effective in accordance with the terms of Section 1.1) until
the Maturity Date (each a “Determination Date” )
and shall be subject to adjustment as set forth herein.
1.3 Principal Payments .
Amortizing payments of the aggregate principal amount outstanding
under this Note at any time (the “Principal
Amount” ) shall be made by the Company on
November 1, 2005 and on the first business day of each
succeeding month thereafter through and including the Maturity Date
(each, an “Amortization Date” ). Subject to
Article III below, commencing on the first Amortization Date, the
Company shall make monthly payments to the Holder on each Repayment
Date, each such payment in the amount of $322,580.64 together with
any accrued and unpaid interest on such portion of the Principal
Amount plus any and all other unpaid amounts which are then owing
under this Note, the Purchase Agreement and/or any other Related
Agreement (collectively, the “Monthly Amount” ).
Any outstanding Principal Amount together with any accrued and
unpaid interest and any and all other unpaid amounts which are then
owing by the Company to the Holder under this Note, the Purchase
Agreement and/or any other Related Agreement shall be due and
payable on the Maturity Date.
ARTICLE II
CONVERSION AND
REDEMPTION
2.1 Payment of Monthly Amount
.
(a) Payment in Cash or Common
Stock . If the Monthly Amount (or a portion of such Monthly
Amount if not all of the Monthly Amount may be converted into
shares of Common Stock pursuant to Section 3.2) is required to
be paid in cash pursuant to Section 2.1(b), then the Company
shall pay the Holder an amount in cash equal to the Monthly Amount
(or such portion of such Monthly Amount to be paid in cash) due and
owing to the Holder on the Amortization Date. If the Monthly Amount
(or a portion of such Monthly Amount if not all of the Monthly
Amount may be converted into shares of Common Stock pursuant to
Section 3.2) is required to be paid in shares of Common Stock
pursuant to Section 2.1(b), the number of such shares to be
issued by the Company to the Holder on such Amortization Date (in
respect of such portion of the Monthly Amount converted into shares
of Common Stock pursuant to Section 2.1(b)), shall be the
number determined by dividing (i) the portion of the Monthly
Amount converted into shares of Common Stock, by (ii) the then
applicable Fixed Conversion Price. For purposes hereof, subject to
Section 3.6 hereof, the initial “Fixed Conversion
Price” means $6.80 per share.
(b) Monthly Amount Conversion
Conditions . Subject to Sections 2.1(a), 2.2, and 3.2 hereof,
the Holder shall convert into shares of Common Stock all
or
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a portion of the Monthly Amount due on each
Amortization Date if the following conditions (the
“Conversion Criteria” ) are satisfied:
(i) the average closing price of the Common Stock as reported
by Bloomberg, L.P. on the Principal Market for the five
(5) trading days immediately preceding such Amortization Date
shall be greater than or equal to 125% of the Fixed Conversion
Price and (ii) the amount of such conversion does not exceed
twenty five percent (25%) of the aggregate dollar trading
volume of the Common Stock for the period of twenty-two
(22) trading days immediately preceding such Amortization
Date. If subsection (i) of the Conversion Criteria is met but
subsection (ii) of the Conversion Criteria is not met as to
the entire Monthly Amount, the Holder shall convert only such part
of the Monthly Amount that meets subsection (ii) of the
Conversion Criteria. Any portion of the Monthly Amount due on an
Amortization Date that the Holder has not been able to convert into
shares of Common Stock due to the failure to meet the Conversion
Criteria, shall be paid in cash by the Company within three
(3) business days of such Amortization Date.
2.2 No Effective Registration
. Notwithstanding anything to the contrary herein, none of the
Company’s obligations to the Holder may be converted into
Common Stock unless (a) an effective current Registration
Statement (as defined in the Registration Rights Agreement)
covering the shares of Common Stock to be issued in connection with
satisfaction of such obligations exists and (b) no Event of
Default (as hereinafter defined) exists and is continuing, unless
such Event of Default is cured within any applicable cure period or
otherwise waived in writing by the Holder.
2.3 Optional Redemption in
Cash . The Company may prepay this Note ( “Optional
Redemption” ) by paying to the Holder a sum of money
equal to one hundred thirty percent (130%) of the Principal
Amount outstanding at such time together with accrued but unpaid
interest thereon and any and all other sums due, accrued or payable
to the Holder arising under this Note, the Purchase Agreement or
any other Related Agreement (the “Redemption
Amount” ) outstanding on the Redemption Payment Date (as
defined below). The Company shall deliver to the Holder a written
notice of redemption (the “Notice of Redemption”
) specifying the date for such Optional Redemption (the
“Redemption Payment Date” ), which date shall be
seven (7) business days after the date of the Notice of
Redemption (the “Redemption Period” ). A Notice
of Redemption shall not be effective with respect to any portion of
this Note for which the Holder has previously delivered a Notice of
Conversion (as hereinafter defined) or for conversions elected to
be made by the Holder pursuant to Section 3.3 during the
Redemption Period. The Redemption Amount shall be determined as if
the Holder’s conversion elections had been completed
immediately prior to the date of the Notice of Redemption. On the
Redemption Payment Date, the Redemption Amount must be paid in good
funds to the Holder. In the event the Company fails to pay the
Redemption Amount on the Redemption Payment Date as set forth
herein, then such Redemption Notice will be null and
void.
ARTICLE III
HOLDER’S CONVERSION
RIGHTS
3.1 Optional Conversion .
Subject to the terms set forth in this Article III, the Holder
shall have the right, but not the obligation, to convert all or any
portion of the issued and outstanding Principal Amount and/or
accrued interest and fees due and payable into fully
paid
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and nonassessable shares of Common Stock at the
Fixed Conversion Price. The shares of Common Stock to be issued
upon such conversion are herein referred to as, the
“Conversion Shares.”
3.2 Conversion Limitation .
Notwithstanding anything contained herein to the contrary, the
Holder shall not be entitled to convert pursuant to the terms of
this Note an amount that would be convertible into that number of
Conversion Shares which would (a) exceed the difference
between (i) 4.99% of the outstanding shares of Common Stock
and (ii) the number of shares of Common Stock beneficially
owned by the Holder or (b) exceed twenty five percent
(25%) of the aggregate dollar trading volume of the Common
Stock for the five (5) day trading periods up to and including
the delivery date of a Notice of Conversion to the Borrower. For
purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d)
of the Exchange Act and Regulation 13d-3 thereunder. The Conversion
Shares limitation described in this Section 3.2 shall
automatically become null and void without any notice to the
Company upon the occurrence and during the continuance of an Event
of Default, or upon 75 days prior notice to the Company.
Notwithstanding anything contained herein to the contrary, the
provisions of this Section 3.2 are irrevocable and may not be
waived by the Holder or the Company.
3.3 Mechanics of Holder’s
Conversion . In the event that the Holder elects to convert
this Note into Common Stock, the Holder shall give notice of such
election by delivering an executed and completed notice of
conversion in substantially the form of Exhibit A hereto
(appropriate completed) ( “Notice of Conversion”
) to the Company and such Notice of Conversion shall provide a
breakdown in reasonable detail of the Principal Amount, accrued
interest and fees that are being converted. On each Conversion Date
(as hereinafter defined) and in accordance with its Notice of
Conversion, the Holder shall make the appropriate reduction to the
Principal Amount, accrued interest and fees as entered in its
records and shall provide written notice thereof to the Company
within two (2) business days after the Conversion Date. Each
date on which a Notice of Conversion is delivered or telecopied to
the Company in accordance with the provisions hereof shall be
deemed a Conversion Date (the “Conversion Date”
). Pursuant to the terms of the Notice of Conversion, the Company
will issue instructions to the transfer agent accompanied by an
opinion of counsel within one (1) business day of the date of
the delivery to the Company of the Notice of Conversion and shall
cause the transfer agent to transmit the certificates representing
the Conversion Shares to the Holder by crediting the account of the
Holder’s designated broker with the Depository Trust
Corporation ( “DTC” ) through its Deposit
Withdrawal Agent Commission ( “DWAC” ) system
within three (3) business days after receipt by the Company of
the Notice of Conversion (the “Delivery Date” ).
In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been
exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the
Company of the Notice of Conversion. The Holder shall be treated
for all purposes as the record holder of the Conversion Shares,
unless the Holder provides the Company written instructions to the
contrary.
3.4 Late Payments . The
Company understands that a delay in the delivery of the Conversion
Shares in the form required pursuant to this Article beyond the
Delivery Date
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could result in economic loss to the Holder. As
compensation to the Holder for such loss, in addition to all other
rights and remedies which the Holder may have under this Note,
applicable law or otherwise, the Company shall pay late payments to
the Holder for any late issuance of Conversion Shares in the form
required pursuant to this Article II upon conversion of this Note,
in the amount equal to $500 per business day after the Delivery
Date. The Company shall make any payments incurred under this
Section in immediately available funds upon demand.
3.5 Conversion Mechanics .
The number of shares of Common Stock to be issued upon each
conversion of this Note shall be determined by dividing that
portion of the principal and interest and fees to be converted, if
any, by the then applicable Fixed Conversion Price. In the event of
any conversions of a portion of the outstanding Principal Amount
pursuant to this Article III, such conversions shall be deemed to
constitute conversions of the outstanding Principal Amount applying
to Monthly Amounts for the remaining Amortization Dates in
chronological order.
3.6 Adjustment Provisions .
The Fixed Conversion Price and number and kind of shares or other
securities to be issued upon conversion determined pursuant to this
Note shall be subject to adjustment from time to time upon the
occurrence of certain events during the period that this conversion
right remains outstanding, as follows:
(a) Reclassification . If the
Company at any time shall, by reclassification or otherwise, change
the Common Stock into the same or a different number of securities
of any class or classes, this Note, as to the unpaid Principal
Amount and accrued interest thereon, shall thereafter be deemed to
evidence the right to purchase an adjusted number of such
securities and kind of securities as would have been issuable as
the result of such change with respect to the Common St
