Exhibit 4.3
THIS TERM NOTE AND THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS TERM NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS TERM NOTE AND THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS TERM NOTE MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS TERM NOTE UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO CORGENIX MEDICAL CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED CONVERTIBLE TERM
NOTE
FOR VALUE RECEIVED, CORGENIX MEDICAL
CORPORATION, a Nevada corporation (the “ Borrower
”), hereby promises to pay to [NAME], [ADDRESS] (the “
Holder ”) or its registered assigns or successors in
interest, or order, the sum of
Dollars
($ )
(the “ Principal Amount ”), together with any
accrued and unpaid interest thereon, on December 28 , 2008 (the “ Maturity Date
”) if not sooner paid.
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 between the Borrower, the Holder,
(“ ”)
and
(“ ”)
(the “ Purchase Agreement ”).
On the date hereof, the Borrower is
issuing to
and
pursuant to the Purchase agreement an identical secured convertible
term note in the original principal amount of
Dollars
($ ).
The following terms shall apply to
this Term Note:
ARTICLE I
INTEREST & AMORTIZATION
1.1
(a)
Interest Rate
. Subject to Sections 1.1(b),
4.12 and 5.6 hereof, interest payable on this Term Note shall
accrue for the Principal Amount at a rate per annum (the “
Interest Rate ”) equal to the greater of (x) the
“prime rate” published in The Wall Street
Journal from time to time (the “ Prime Rate
”), plus three percent (3%), or (y) twelve percent
(12%). The Prime 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 such
rate. Interest shall accrue from the date hereof and shall be
calculated on the basis of a 360 day year. Interest shall be
payable monthly, in arrears, commencing on January 1 , 2006 and on the first day of
each consecutive calendar month thereafter (each, a “
Repayment Date ”) and on the Maturity Date, whether by
acceleration or otherwise.
(b)
Interest Rate
Adjustment . The
Interest Rate shall be subject to adjustment on the last business
day of each month hereafter until the Maturity Date (each a “
Determination Date ”). If on any Determination
Date (i) the Borrower shall have registered under the
Securities Act of 1933, as amended (the “ Securities
Act ”), the shares of Common Stock underlying each of the
conversion of this Term Note and the exercise of the Warrant on a
registration statement declared effective by the Securities and
Exchange Commission (the “ SEC ”), and
(ii) the market price (the “ Market Price
”) of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market (as defined below) for the
five (5) consecutive trading days immediately preceding
such Determination Date exceeds the then applicable Fixed
Conversion Price by at least twenty five percent (25%), the
Interest Rate for the succeeding calendar month shall automatically
be reduced by 25 basis points (25 b.p.) (0.25%) for each
incremental twenty five percent (25%) increase in the Market Price
of the Common Stock above the then applicable Fixed Conversion
Price. Notwithstanding the foregoing (and anything to the
contrary contained herein), in no event shall the Interest Rate be
less than zero percent (0%).
1.2
Minimum Monthly Principal
Payments . Payments
of the Principal Amount shall begin on June 1, 2006 and shall
recur on each succeeding Repayment Date thereafter until the
Principal Amount has been repaid in full, whether by the payment of
cash or by the conversion of such principal into Common Stock
pursuant to the terms hereof. Subject to Section 2.1 and
Article III below, on each Repayment Date, the Borrower shall
make payments to the Holder in the amount of $32,954.53 (the
“ Monthly Principal Amount ”), together with any
accrued and unpaid interest then due on the Principal Amount plus
any and all other amounts which are then owing under this Term Note
that have not been paid (the Monthly Principal Amount, together
with such accrued and unpaid interest and such other amounts,
collectively, the “ Monthly Amount ”). Any
Principal Amount that remains outstanding on the Maturity Date
shall be due and payable on the Maturity Date.
ARTICLE II
CONVERSION REPAYMENT
2.1
(a)
Payment of Monthly Amount in Cash
or Common Stock .
If the Monthly Amount (or a portion of such Monthly Amount if such
portion of the Monthly Amount would have been converted into shares
of Common Stock but for Section 3.2) is required to be paid in
cash pursuant to Section 2.1(b), then the Borrower shall pay
the Holder an amount equal to 110% of the Monthly Amount due and
owing to the Holder on the Repayment Date in cash. 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 Borrower to the Holder on such Repayment
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 (x) the portion of the Monthly
Amount converted into shares of Common
2
Stock, by (y) the then applicable Fixed
Conversion Price. For purposes hereof, the initial “
Fixed Conversion Price ” means $0.30.
(b)
Monthly Amount Conversion
Guidelines .
Subject to Sections 2.1(a), 2.2 and 3.2 hereof, the Holder shall
convert into shares of Common Stock all or a portion of the Monthly
Amount due on each Repayment Date according to the following
guidelines (collectively, the “ Conversion Criteria
”): (i) the average closing price of the Common Stock as
reported by Bloomberg, L.P. on the Principal Market for the
five (5) consecutive trading days immediately preceding
such Repayment Date shall be greater than or equal to 115% 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 twenty two (22) trading
day period immediately preceding the applicable Repayment
Date. If the Conversion Criteria are not met, the Holder
shall convert only such part of the Monthly Amount that meets the
Conversion Criteria. Any part of the Monthly Amount due on a
Repayment Date that the Holder has not been able to convert into
shares of Common Stock due to failure to meet the Conversion
Criteria, shall be paid by the Borrower in cash at the rate of 110%
of the Monthly Amount otherwise due on such Repayment Date, within
three (3) business days of the applicable Repayment
Date.
(c)
Application of Conversion
Amounts . Any
amounts converted by the Holder pursuant to
Section 2.1(b) shall be deemed to constitute payments of,
or applied against, (i) first, outstanding fees,
(ii) second, accrued interest on the Principal Amount, and
(iii) third, the Principal Amount.
2.2
No Effective
Registration .
Notwithstanding anything to the contrary herein, no amount payable
hereunder may be converted into Common Stock unless (a) either
(i) an effective current Registration Statement (as defined in
the Registration Rights Agreement) covering the shares of Common
Stock to be issued in satisfaction of such obligations exists, or
(ii) an exemption from registration of the Common Stock is
available pursuant to Rule 144(k) of the Securities Act, and
(b) no Event of Default hereunder exists and is continuing,
unless such Event of Default is cured within any applicable cure
period or is otherwise waived in writing by the Holder in whole or
in part at the Holder’s option.
2.3
Optional Redemption of Principal
Amount . The
Borrower will have the option of prepaying the outstanding
Principal Amount (“ Optional Redemption ”), in
whole or in part, by paying to the Holder a sum of money equal to
one hundred twenty five percent (125%) of the portion of the
Principal Amount to be redeemed, together with accrued but unpaid
interest thereon and any and all other sums due, accrued or payable
to the Holder arising under this Term Note, the Purchase Agreement
or any Related Agreement (the “ Redemption Amount
”) on the Redemption Payment Date (as defined below).
The Borrower shall deliver to the Holder a notice of redemption
(the “ Notice of Redemption ”) specifying the
date for such Optional Redemption (the “ Redemption
Payment Date ”), which date shall be not less than ten
(10) business days after the date of the Notice of Redemption
(the “ Redemption Period ”). A Notice of
Redemption shall
3
not be effective with respect to any portion of
the Principal Amount for which the Holder has a pending election to
convert pursuant to Section 3.1, or for conversions initiated
or made by the Holder pursuant to Section 3.1 during the
Redemption Period. The Redemption Amount shall be determined
as if such 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 shall be paid in
good funds to the Holder. In the event the Borrower fails to
pay the Redemption Amount on the Redemption Payment Date as set
forth herein, then such Notice of Redemption will be null and
void.
ARTICLE III
CONVERSION RIGHTS
3.1
Holder’s Conversion
Rights . Subject to
Section 2.2, the Holder shall have the right, but not the
obligation, to convert all or any portion of the then aggregate
outstanding Principal Amount of this Term Note, together with
interest and fees due hereon, into shares of Common Stock, subject
to the terms and conditions set forth in this
Article III. The Holder may exercise such right by
delivery to the Borrower of a written Notice of Conversion pursuant
to Section 3.3. 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 Term Note an amount that
would be convertible into that number of Conversion Shares which
would exceed the difference between 4.99% of the issued and
outstanding shares of Common Stock and the number of shares of
Common Stock beneficially owned by such Holder or issuable upon
exercise of Warrants held by such Holder. For the 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 Holder may void
the Conversion Share limitation described in this Section 3.2
upon 75 days prior notice to the Borrower or without any notice
requirement upon an Event of Default.
3.3
Mechanics of Holder’s
Conversion .
(a) In the event that the Holder elects to convert any amounts
outstanding under this Term Note into Common Stock, the Holder
shall give notice of such election by delivering an executed and
completed notice of conversion (a “ Notice of
Conversion ”) to the Borrower, which Notice of Conversion
shall provide a breakdown in reasonable detail of the Principal
Amount, accrued interest and fees 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 Borrower within two (2) business days after the Conversion
Date. Each date on which a Notice of Conversion is delivered
or telecopied to the Borrower in accordance with the provisions
hereof shall be deemed a “ Conversion Date
”. A form of No
