“THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 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 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.”
SECURED NOTE
Principal Amount: $300,000.00
Issue Date: December ,
2008
FOR
VALUE RECEIVED, STEM CELL INNOVATIONS, INC., a Delaware corporation
(hereinafter called “Borrower”), hereby promises to pay
to ALPHA CAPITAL ANSTALT, Pradfant 7, 9490 Furstentums, Vaduz,
Lichtenstein, Fax: 011-42-32323196 (the “Holder”),
without demand, the principal sum of Three Hundred Thousand Dollars
($300,000) (“Principal Amount”) or so much thereof as
shall be advanced by Holder to Borrower pursuant to this Note (each
such advance a “Loan” and all advances collectively the
“Loans”), with unpaid interest thereon, on December
, 2009 (the “Maturity
Date”), if not paid sooner.
This
Note has been entered into pursuant to the terms of a subscription
agreement between the Borrower and the Holder of promissory notes
dated of even date herewith (the “Subscription
Agreement”). Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as
is set forth in the Subscription Agreement. The following terms
shall apply to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1
Interest .
(a) Rate of Interest . Except as
otherwise provided herein, each Loan under this Note shall bear
interest on the outstanding principal amount thereof, for each day
from and including the day the proceeds of each Loan, respectively,
are paid to or as directed by the Borrower, but excluding the date
the principal amount thereof shall be paid in full, at a rate equal
to fifteen percent (15%) per annum. The aggregate amount of accrued
interest on each Loan under this Note, net of the Initial Interest
Payment to the extent such Initial Interest Payment shall have been
previously paid to Holder, shall be payable on the Maturity Date,
as set forth below.
(b) Computation of Interest .
Interest in respect of this Note shall be calculated on the basis
of a 360-day year for the actual days elapsed for each Loan,
respectively, the aggregate amount of which shall be the accrued
interest due under this Note. Each determination of an interest
rate or fee by the Holder pursuant to any provision of this Note
shall be conclusive and binding on the Borrower in the absence of
manifest error.
1.2
Default Interest Rate . The Borrower shall not have any
grace period to pay any monetary amounts due under this Note. After
the Maturity Date, accelerated or otherwise, and during the
pendency of an Event of Default (as defined in Article III) a
default interest rate of eighteen percent (18%) per annum shall
apply to the amounts owed hereunder.
ARTICLE II
PREPAYMENT AND EXTENSION
2.1.
Prepayment . This Note may be paid prior to the Maturity
Date, without penalty, upon three days written notice to Holder.
Interest shall accrue through the actual payment date.
2.2.
Loan Procedures .
(a) Drawing Notice . Borrower will
give notice to Holder of its request that a Loan be made to it
hereunder before 11:00 A.M., New York City time, at least one
(1) Business Day prior to the date that the Loan is requested
to be made, by delivering a notice to the Holder in a form
substantially similar to Exhibit A hereto (“Drawing
Notice”), such notice to specify: (i) the principal
amount of the Loan in U.S. dollars (which will be a minimum of
$50,000); (ii) the account to which the Loan proceeds are to
be paid; and (iii) that no default and/or Event of Default or
an event which with the passage of time or the giving of notice
would be an Event of Default has occurred or is continuing on such
date or after giving effect to the making of the Loan requested to
be made on such date. Borrower may not deliver more than four
(4) Drawing Notices.
(b) This Note evidences Loans made by
Holder to Borrower, from time to time. The unpaid principal balance
of this Note at any time shall be the aggregate principal amount of
the Loans made by Holder to Borrower, less the total amount of
principal payments made hereon by Borrower. The date and amount of
each such Loan and each payment on account of principal thereof may
be endorsed by Holder on the grid attached to and made a part of
this Note, and when so endorsed shall represent evidence thereof
binding upon Borrower in the absence of manifest error. Any failure
by Holder to so endorse shall in no way mitigate or discharge the
obligation of Borrower to repay any Loans actually made.
ARTICLE III
EVENT OF DEFAULT
The
occurrence of any of the following events of default (“Event
of Default”) shall, at the option of the Holder hereof, make
all sums of principal and accrued interest then remaining unpaid
hereon and all other amounts payable hereunder immediately due and
payable, upon demand, without presentment or grace period, all of
which hereby are expressly waived, except as set forth
below:
3.1
Failure to Pay Principal or Interest . The Borrower fails to
pay any principal, interest or other sum due under this Note when
due.
3.2
Breach of Covenant . The Borrower breaches any material
covenant or other material term or condition of the Subscription
Agreement or this Note in any material respect and such breach, if
subject to cure, continues for a period of ten (10) business
days after written notice to the Borrower from the
Holder.
3.3
Breach of Representations and Warranties . Any material
representation or warranty of the Borrower made herein, in any
Transaction Document, or in any agreement, statement or certificate
given in writing pursuant hereto or in connection herewith or
therewith shall be false or misleading in any material respect as
of the date made and as of the Closing Date.
3.4
Liquidation . Any dissolution, liquidation or winding up of
Borrower or any substantial portion of its business.
3.5
Cessation of Operations . Any cessation of operations by
Borrower or Borrower admits it is otherwise generally unable to pay
its debts as such debts become due.
3.6
Maintenance of Assets . The failure by Borrower to maintain
any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business
(whether now or in the future).
3.7
Receiver or Trustee . The Borrower shall make an assignment
for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial
part of its property or business; or such a receiver or trustee
shall otherwise be appointed.
3.8
Judgments . Any money judgment, writ or similar final
process shall be entered or filed against Borrower or any
subsidiary of Borrower or any of their property or other assets for
more than $100,000.
3.9
Bankruptcy . Bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings or relief under any
bankruptcy law or any law, or the issuance of any notice in
relation to such event, for the relief of debtors shall be
instituted by or against the Borrower.
3.10
Delisting . Failure of the Borrower’s Common Stock to
be listed for trading or quotation on a Principal Market for ten
(10) or more consecutive days.
3.11
Non-Payment . A default by the Borrower
