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Exhibit
10.14
NEITHER
THIS SECURITY NOR THE SECURITY INTO WHICH THIS SECURITY IS
CONVERTIBLE 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, 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.
SECURED CONVERTIBLE PROMISSORY NOTE
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$_________
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________,
20__
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FOR
VALUE RECEIVED, DRTATTOFF, LLC, a California limited liability
company located at 8447 Wilshire Boulevard, Suite 102, Beverly
Hills CA 90211 (the “
Borrower ”)
hereby promises to pay to the order of _________________ (the
“
Holder ”),
the principal sum of _________________ Dollars ($_________), upon
the following terms:
1
.
Security .
This Note is secured as set forth in the Pledge and Security
Agreement of even date herewith.
2.
Interest Rate .
Interest shall accrue on the unpaid principal balance of this Note
from the date of issuance until paid or converted in full at the
rate of ten percent (10%) per year, calculated on a 365/366 day
year, as applicable, provided, however, that upon an Event of
Default, interest shall accrue as provided in Section 8
hereof.
3.
Payment Terms .
The
Borrower agrees to pay the unpaid principal balance of this Note
and all accrued and unpaid interest on the date that is the earlier
of (i) six months from the date of issuance, or (ii) five (5)
business days from the date of closing by Borrower of equity
financing in the aggregate of not less than $5.0 million (the
“
Maturity Date ”),
unless previously converted in accordance with Section 5 hereof.
Borrower may prepay all or any part of interest or principal at any
time without penalty.
4.
Manner and Place of Payment; Holidays
.
All payments on this Note shall be made in coin or currency which,
at the time or times of payment, constitute legal tender for public
or private debts in the United States of America. All payments on
this Note shall be made to Holder at the address stated above, or
at such other address as Holder shall designate in writing. If the
prescribed date of payment of any of the principal or interest
hereon is a Saturday, Sunday or legal holiday, such payment shall
be due on the next succeeding business day.
5.
Conversion Rights.
(i)
Conversion .
The Holder, at its option, so long as any portion of this Note
remains outstanding, may elect to convert any outstanding and
unpaid principal portion of this Note, and any accrued and unpaid
interest (the date of giving of such notice of conversion being a
“
Conversion Date ”)
into units of membership interests of the Company (“
Units ”)
as such interests exist on the date of issuance of this Note, or
any shares of capital stock or securities of Borrower into which
such Units shall hereafter be changed or reclassified, at the
conversion price as defined in Section 5(ii) hereof (the
“
Conversion Price ”),
determined as provided herein. Upon delivery to the Borrower of a
completed Notice of Conversion, a form of which is annexed hereto,
Borrower shall issue and deliver to the Holder within three (3)
business days after the Conversion Date (such third day being the
“
Delivery Date ”)
a certificate evidencing the Units issuable for the portion of the
Note converted in accordance with the foregoing. The Units issuable
upon conversion of this Note shall be determined by dividing that
portion of the principal of the Note and interest, if any, to be
converted, by the Conversion Price. On the Conversion Date any and
all obligations of the Borrower with respect to the portion of the
Note so converted shall be deemed satisfied, and the Borrower will
have no further obligation under the Note with respect to such
converted portion in any way other than to issue the Units and
Warrants (as set forth in Section 6 below).
(ii)
Conversion Price .
Subject to adjustment as provided in Section 5(iii) hereof, the
Conversion Price per Unit shall be $1.00. Fractional Units will not
be issued and will instead be rounded up to the nearest whole
Unit.
(iii)
Adjustment .
The Conversion Price and number and kind of shares or other
securities to be issued upon conversion determined pursuant to
Section 5(i), shall be subject to adjustment from time to time upon
the happening of certain events while this conversion right remains
outstanding, as follows:
A.
Merger, Sale of Assets, etc .
If the Borrower at any time shall consolidate with or merge into or
sell or convey all or substantially all its assets to any other
corporation, this Note, as to the unpaid principal portion thereof
and accrued interest thereon, shall thereafter be deemed to
evidence the right to purchase such number and kind of shares or
other securities and property as would have been issuable or
distributable on account of such consolidation, merger, sale or
conveyance, upon or with respect to the securities subject to the
conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance. The foregoing provision
shall similarly apply to successive transactions of a similar
nature by any such successor or purchaser.
B.
Reclassification, etc .
If the Borrower at any time shall, by reclassification or
otherwise, change the Units into the same or a different number of
securities of any class or classes that may be issued or
outstanding, this Note, as to the unpaid principal portion thereof
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 Units issuable
immediately prior to such reclassification or other
change.
C.
Splits, Combinations and Dividends .
If the Units are subdivided or combined into a greater or smaller
number of Units, or if a dividend is paid on the Units in the form
of additional Units, the Conversion Price shall be proportionately
reduced in case of subdivision of Units or Unit dividend or
proportionately increased in the case of combination of Units, in
each such case by the ratio which the total number of Units
outstanding immediately after such event bears to the total number
of Units outstanding immediately prior to such event.
(iv)
Method of Conversion .
This Note may be converted by the Holder in whole or in part as
described in Section 5(i) hereof. Upon partial conversion of this
Note, a new Note containing the same date and provisions of this
Note shall, at the request of the Holder, be issued by the Borrower
to the Holder for the principal balance of this Note and interest
which shall not have been converted or paid.
(v)
Registration Rights .
The Holder is entitled to the registration rights set forth
in
Annex A attached
hereto and made a part hereof.
6.
Warrant Coverage .
(i)
Upon Conversion .
In the event this Note is converted, in whole or in part, in the
manner set forth in Section 5 herein, then Holder shall also
receive at the time of conversion a Unit purchase warrant
(“
Warrant ”)
to purchase ½ Unit, or the equivalent thereof, at an
exercise price of $1.00 per Unit, subject to adjustment in
accordance with the Warrant agreement, for each Unit issued upon
conversion of the Note.
(ii)
At Maturity .
In the event all or a portion of this Note remains outstanding on
the Maturity Date, then Holder shall receive on such date a Warrant
to purchase one (1) Unit, or the equivalent thereof, at an exercise
price of $1.00 per Unit, for each Unit which would have been issued
had the principal balance and accrued and unpaid interest
outstanding on the Maturity Date been converted in accordance with
Section 5 herein.
(iii)
Expiration Date .
All Warrants will expire five years from the date of this
Note.
7.
Events of Default and Acceleration
.
Time is of the essence of this Note. The occurrence of any of the
following events shall constitute an “
Event of Default ”
hereunder: (i) Borrower's failure to pay timely any amount due
hereunder, and such failure continues for ten (10) business days;
(ii) bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any bankruptcy
law or any law for the relief of debtors shall be instituted by or
against Borrower and, if instituted against Borrower, Borrower
shall by any action or answer approve of, consent to or acquiesce
in any such proceedings or admit the material allegations of, or
default in answering a petition filed in any such proceeding or
such proceedings shall not be dismissed within ninety (90) calendar
days thereafter; (iii) any material breach by Borrower, that
remains uncured for greater than 5 days after receipt of written
notice of same, of any of the terms of this Note (other than
payment obligations) or the Warrants issued by Borrower in
connection with this Note; (iv) dissolution of the Borrower; or (v)
cessation or liquidation of the Borrower's business or suspension
of the Borrower's business for more than forty-five consecutive
days. If any such Event of Default occurs, Holder may, then or at
any time thereafter, and at its option, accelerate maturity and
cause the entire unpaid principal balance of this Note, together
with interest accrued hereon, to become immediately due and
payable. If Holder waives Holder's right to accelerate maturity as
a result of an Event of Default hereunder, either one or more times
or repeatedly, nevertheless Holder shall not be deemed to have
waived the right to require strict compliance with the terms of
this Note thereafter.
8.
Interest After Event of Default, Acceleration or
Maturity .
Upon an occurrence of an Event of Default hereunder, the entire
unpaid balance of said principal sum and interest then accrued
shall bear interest, while such Event of Default continues both
before and after judgment, at ten percent (10%) per year on the
unpaid balance until paid, calculated on a 365/366 day year, as
applicable.
9.
Application of Payments .
All sums paid hereon shall be applied first to the payment of
accrued interest due on the unpaid principal balance and the
remainder to the reduction of unpaid principal.
10.
Attorney's Fees and Expenses .
In the event that Holder or other holder of this Note brings suit
hereon, or employs an attorney or incurs expenses to compel payment
of this Note or any portion of the indebtedness evidenced hereby,
or to cure any Event of Default under this Note, whether through
suit, probate, insolvency, reorganization, bankruptcy or any other
legal or informal proceeding, the Borrower and all endorsers,
guarantors and sureties agree additionally to pay all reasonable
attorney's fees, court costs and other reasonable expenses thereby
incurred by Holder or other holder of this Note.
11.
Waiver .
Except as may be required by law, Borrower and all guarantors of
this Note, both before and after maturity, hereby expressly (i)
waive all protest, notice of protest, demand for payment,
presentment for payment, notice of intention to accelerate
maturity, notice of acceleration of maturity, notice of dishonor,
bringing of suit, and diligence in taking any action to collect any
amounts called for hereunder and in the handling of properties,
rights or collateral at any time existing in connection herewith;
(ii) consent to and waive notice of any one or more renewal,
extension or modification of this Note, whether made to or in favor
of the Borrower or any other person or persons, regardless whether
such renewal, extension or modification modifies the terms,
interest rate or time for payment of the Note and regardless of the
length of term of the renewal, extension or modification; (iii)
consent to and waive notice of any substitution, exchange or
release of any security hereafter given for this Note; (iv) consent
to and waive notice of the release of any party primarily or
secondarily liable hereon; (v) consent to and waive notice of any
other indulgences, none of which shall otherwise affect the
liability of any of said parties for the indebtedness evidenced by
this Note; and (vi) agree that it will not be necessary for Holder,
in order to enforce payment of this Note, first to institute suit
against or to exhaust Holder's remedies against Borrower or any
other party liable hereunder, or to proceed against any other
security for this Note.
12.
Parties in Interest .
This Note may be assigned by Holder at any time upon notice to and
with written consent of Borrower. This Note may not be assigned by
Borrower without the prior written consent of Holder. This Note
will be binding in all respects upon Borrower and inure to the
benefit of Holder and its permitted successors and
assigns.
13.
Definitions .
The terms "Borrower" and "Holder" and other nouns and pronouns
include the singular and/or the plural, as appropriate. The terms
"Borrower" and "Hold
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