Exhibit 10.11
Execution Copy
THIS INSTRUMENT WAS ORIGINALLY
ISSUED ON MARCH 4, 2004, AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
THIS INSTRUMENT IS SUBJECT TO THE
TERMS AND CONDITIONS OF THAT CERTAIN SUBORDINATION AGREEMENT DATED
MARCH 4, 2004, AMONG COMMERCE BANK, N.A., C3 CAPITAL PARTNERS,
L.P., WALCO INTERNATIONAL, INC., CHEMDEX, INC. AND SPARHAWK
LABORATORIES, INC. (THE ‘‘SUBORDINATION
AGREEMENT’’).
1
SPARHAWK LABORATORIES,
INC.
UNSECURED SUBORDINATED
NOTE
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March 4, 2004
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$350,000.00
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FOR VALUE RECEIVED, Sparhawk
Laboratories, Inc. (the ‘‘Company’’) hereby
promises to pay to Chemdex, Inc., a Kansas corporation
(‘‘Chemdex’’), the principal amount of
$350,000.00 together with interest thereon calculated from the date
hereof in accordance with the provisions of this Note.
1.
Payment of
Interest . Interest shall
accrue at the rate of 13% per annum (computed on the basis of a
365-day year and the actual number of days elapsed in any year) on
the unpaid principal amount of this Note outstanding from time to
time, or (if less) at the highest rate then permitted under
applicable law. The Company shall pay to Chemdex all interest
accrued on the outstanding principal amount of this Note during the
twelve (12) months immediately preceding the anniversary of the
date of this Note on each of the first, second, third, fourth and
fifth anniversaries of the date of this Note; provided, however,
the Company shall have the right on each of the first, second,
third and fourth anniversaries of the date of this Note to add all
or a portion of such accrued interest to the outstanding principal
amount of this Note on such anniversary date. Any portion of
the accrued interest that is not paid to Chemdex on the first,
second, third or fourth anniversaries of the date of this Note
shall automatically be added to the outstanding principal amount of
this Note and shall bear interest at the same rate at which
interest is then accruing on the outstanding principal amount of
this Note. All unpaid interest that is added to the
outstanding principal amount of this Note shall become due and
payable in full on the fifth anniversary of the date of this Note,
as provided in Section 2(a) below. Interest shall accrue
on the outstanding principal amount of this Note until such time as
payment therefore is actually remitted to Chemdex.
2.
Payment of Principal on
Note.
(a)
Scheduled
Payment . Subject to any
voluntary prepayment permitted pursuant to Section 2(b) below,
all outstanding principal on this Note shall be due and payable in
full upon the fifth anniversary of the date of this
Note.
(b)
Prepayments
. Subject
to the terms of the Subordination Agreement, the Company may make
prepayments of principal of this Note (each a
‘‘Prepayment’’) at any time and from time
to time, in each case without premium or penalty, provided that, in
connection with the Prepayment of the entire unpaid principal
balance of this Note, the Company shall also pay all accrued
interest to, but not including, the date of such Prepayment.
The Company agrees, upon Chemdex’s request from time to time,
to furnish Chemdex with a written accounting of the outstanding
principal amount of and accrued interest due on this
Note.
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3.
Cancellation
. After all principal and
accrued interest at any time owed on this Note have been paid in
full, this Note shall be surrendered to the Company for
cancellation and shall not be reissued.
4.
Payments . All payments to be made to Chemdex shall
be made in the lawful money of the United States of
America.
5.
Place of Payment
. Payments of principal and
interest shall be remitted to Chemdex at the address specified
below for notices, or to such other address or to the attention of
such other person as specified by prior written notice to the
Company.
6.
Business Days
. If any payment is due, or
any time period for giving notice or taking action expires, on a
day which is a Saturday, Sunday or legal holiday in the State of
Kansas, the payment shall be due and payable on, and the time
period shall automatically be extended to, the next business day
immediately following such Saturday, Sunday or legal holiday, and
interest shall continue to accrue at the required rate hereunder
until any such payment is made.
7.
Usury Laws
. It is the intention of the
Company and Chemdex to conform strictly to all applicable usury
laws now or hereafter in force, and any interest payable under this
Note shall be subject to reduction to the amount not in excess of
the maximum legal amount allowed under the applicable usury laws as
now or hereafter construed by the courts having jurisdiction over
such matters. If the maturity of this Note is accelerated by
reason of an election by Chemdex resulting from an Event of
Default, or otherwise then earned interest may never include more
than the maximum amount permitted by law, statute, rule or
regulation, computed from the date hereof until payment, and any
interest in excess of the maximum amount permitted by law, statute,
rule or regulation shall be canceled automatically and, if
theretofore paid, shall at the option of Chemdex either be refunded
to the Company or credited on the principal amount of this Note, or
if this Note has been paid, then the excess shall be refunded to
the Company. The aggregate of all interest (whether
designated as interest, fees, or otherwise) contracted for,
chargeable, or receivable under this Note shall under no
circumstances exceed the maximum legal rate upon the unpaid
principal balance of this Note remaining unpaid from
