EXHIBIT A TO
AMENDMENT NO. 2
TO SUBSCRIPTION AND PURCHASE AGREEMENT
INTERIM CONVERTIBLE
SECURED PROMISSORY NOTE
THIS INTERIM CONVERTIBLE SECURED
PROMISSORY NOTE (this “ Note ”) is hereby
issued by Clearant, Inc., a Delaware corporation (“
Borrower ”) to CPI Investments, Inc., an Arizona
corporation (“ Lender ”), as of the date first
listed above (the “ Closing Date ”) pursuant to
the Subscription and Purchase Agreement between the Borrower and
Lender dated as of July 8, 2008, as amended (the “
Subscription Agreement ”). Capitalized terms used
herein but not defined shall have the meaning ascribed to such
terms in the Subscription Agreement.
FOR VALUE RECEIVED , Borrower
hereby unconditionally promises to pay, on the Maturity Date, to
the order of Lender in lawful money of the United States of America
and in immediately available funds, the then outstanding Principal
Amount (as defined below), together with accrued and unpaid
interest thereon, in the manner set forth herein. For the purposes
of this Note, “ Principal Amount ” shall mean
One Million Four Hundred Thousand Dollars ($1,400,000), less any
amount converted into shares of Common Stock, pursuant to the terms
of Article 5 hereof, plus any accrued but unpaid interest
accreted on an annual basis. Borrower further agrees to pay
interest on the Principal Amount outstanding from time to time,
which interest shall accrue and accrete per annum at the rate equal
to twelve (12%) percent, commencing on the date of this Note.
Interest shall be calculated on the basis of a 365-day (or 366-day,
as the case may be) year, for the actual number of days elapsed and
shall be paid monthly one (1) month in arrears.
All closings evidenced by this Note
and all payments (including those described in Article 1)
shall be endorsed by the holder hereof on a grid schedule, or on a
continuation thereof (the " Grid ”); provided, that
failure to make such notations or any error in such notations shall
not affect the obligations of Borrower under this Note.
ARTICLE 1
REPAYMENT
1.1 Maturity Date; Payment on Demand . Subject to the
terms of this Section 1.1, the outstanding Principal Amount
and all unpaid interest accrued thereon shall be payable and due on
July 8, 2012 (as extended or accelerated pursuant to this
Section 1.1, the “ Maturity Date ”).
Notwithstanding the foregoing, if there has been an Event of
Default by the Borrower, the outstanding Principal Amount and any
and all interest or other amounts accrued hereunder but remaining
unpaid, shall become immediately due and payable. The existence or
occurrence of any of the following events shall constitute an event
of default (“ Event of Default ”): (i) the
failure by Borrower to make any payment of principal, interest or
other amounts due under this Note in accordance with the terms of
this Note; or (ii) any “event of default” as
defined in Section 5.1 of the Security Agreement (as defined
in Article 2 below). This Note shall survive and continue
until the Principal Amount and any and all interest and other
amounts accrued and owing hereunder, but remaining unpaid, has been
fully-paid hereunder. From and after the date upon which any Event
of Default has occurred and for so long as it is continuing, the
Principal Amount shall bear interest at the rate of sixteen percent
(16%) per annum.
1.2 Prepayment . Borrower may prepay this Note, in whole
or in part, and any time on or after July 8, 2011. Any
conversion of any Principal Amount into Common Stock pursuant to
Section 5.1 below shall not be deemed a “prepayment”
for purposes of this Section 1.2.
1.3 Payment of Interest . Regardless of whether
Lender elects to convert as set forth in Article 5 hereof or
to demand payment as set forth in Section 1.1 above, payment
of interest shall only be made in cash, and such amounts shall not
be convertible as set forth herein.
ARTICLE 2
SECURITY AGREEMENT
2.1 This Note is entitled to the benefit of that certain
Security Agreement, dated as of even date herewith and attached
hereto as Schedule A , between Lender (aka
“ Secured Party ”) and Borrower (aka, “
Debtor ”), as the same may from time to time be
amended or supplemented (as amended, the “ Security
Agreement ”), pursuant to which Lender is granted a first
priority security interest in the Collateral (as such term is
defined in the Security Agreement). This Note shall be subject to
the terms and conditions set forth in such Security Agreement.
ARTICLE 3
PLACE OF PAYMENT; APPLICATION OF PAYMENTS
3.1 Place of Payment . All amounts payable hereunder
shall be payable to Lender in lawful money of the United States, at
such bank account as shall be designated by Lender in immediately
available funds.
3.2 Application of Payments . Payment on this Note shall
be applied first to any expenses of collection, then to accrued
interest, and thereafter to the Principal Amount.
ARTICLE 4
BORROWER DEFAULT; LENDER DEFAULT
4.1 Borrower Default . Upon the occurrence of an Event of
Default of the Borrower (as defined in Section 1.1 above) the
unpaid Principal Amount, all unpaid accrued interest thereon and
all other amounts owing hereunder may, at the option of Lender,
become immediately due and payable to Lender.
4.2 Lender Default . In the event that one or more of the
closings of the Tranches contemplated in the Subscription Agreement
do not occur as a result of the Lender’s failure to timely
deliver consideration for the Notes as set forth in the
Subscription Agreement (the " Lender Default ”), then,
upon the commencement of any such Lender Default, interest hereon
shall cease to accrue for the lesser of (i) a period of six
(6) months or (ii) until such time as the Lender Default
is cured.
ARTICLE 5
CONVERSION
5.1 Mechanics of Conversion; Conversion Amount .
5.1.1 At any time prior to three
(3) years from the Closing Date, upon the issuance of a
written demand for conversion from Lender (the “ Demand
Notice ”), Lender may, at its sole option, elect to
convert all or any portion of the outstanding Principal Amount as
of such date into shares of Borrower’s Common Stock (the
“ Common Stock ”), the definitive terms of which
are set forth in the SEC Reports, in accordance with this
Article 5. The Demand Notice shall state the date of the
conversion (the “ Conversion Date ”), provided,
that such date shall be more than five (5) days from the date
of the Demand Notice. The number of shares of Common Stock
(calculated to the nearest whole share rounding up on an
as-converted common-equivalent basis) (the " Conversion
Amount ”) to which Lender shall be entitled to receive
upon such conversion of all or any portion of the outstanding
Principal Amount shall be equal to the Principal Amount that Lender
specifies in the Demand Notice divided by $0.11 (the “
Conversion Price ”). Should the Company, at any time
after the date hereof, subdivide or combine the outstanding Common
Stock or issue a stock dividend with respect to the Common Stock,
the Conversion Price in effect immediately prior to such
subdivision or the issuance of such dividend shall be
proportionately adjusted, in each case effective at the close of
business on the date of such subdivision, dividend or combination,
as the case may be.
5.1.2 No later than three
(3) days after the Conversion Date, in consideration for the
conversion of all or any portion of the
