This debenture has not been registered under the Securities Act of 1933 or
any applicable state securities laws, and may not be offered for sale,
sold, transferred, pledged or hypothecated without an effective
registration statement under the Securities Act and under any applicable
state securities laws, or an opinion of counsel, satisfactory to
Borrower, that an exemption from such registration is available.
DEBENTURE
Series 2001-A Dated: August __, 2001
Certificate No. __
Amount $___________
FOR GOOD AND VALUABLE CONSIDERATION, BioTime, Inc. a California
corporation ("Borrower"), promises to pay to the order of _________________ or
the subsequent registered holder the principal sum of ___________________AND
NO/100 DOLLARS ($__________), together with interest thereon, all as provided
below:
1. Series 2001-A Debenture. This Debenture is one of a duly authorized
series of Debentures of like tenor and effect issued by Borrower referred to
herein as the "Series 2001-A Debentures." Up to $5,000,000 of the Series 2001-A
Debentures (of which this Debenture is a part) may be issued by Borrower.
2. Equal Rank. All Series 2001-A Debentures rank equally and ratably
without priority over one another.
3. Maturity. Subject to the other provisions of this Debenture, the
principal amount of this Debenture shall be due and payable in full on August 1,
2004 (the "Maturity Date").
4. Manner of Payment/Crediting of Payments. The Borrower will pay
interest and principal on this Debenture to the person who is the registered
holder of this Debenture at the close of business on the date immediately
preceding the next interest payment date specified in this Debenture, or the
Maturity Date, as applicable, even if such Debenture is canceled or transferred
on the interest payment date or Maturity Date. The Borrower will pay principal
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Borrower may pay
principal and interest by check payable in such money, and any such check may be
mailed to a holder's registered address.
5. Interest.
(a) Interest on the principal amount of this Debenture outstanding
from time to time shall accrue at the rate of ten percent (10.00%) per annum
(computed on the basis of a 365 day year). Interest accrued on this Debenture
shall be due and payable on February 1 and August 1 each year.
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(b) In the event that any payment of principal or interest is not
paid within five (5) days from on the date on which the same is due and payable,
such payment shall continue as an obligation of the Borrower, and interest
thereon from the due date of such payment shall accrue until paid in full at the
lesser of (i) fifteen percent (15%) per annum, or (ii) the highest interest rate
permitted under applicable law (the "Default Rate"). From and after the Maturity
Date or upon acceleration of this Debenture, the entire unpaid principal balance
with all unpaid interest accrued thereon, and any and all other fees and charges
then due at such maturity, shall bear interest at the Default Rate.
6. Prepayment. Principal and interest accrued on this Debenture may be
prepaid in part or in full at any time and from time to time at Borrower's
option, without penalty, premium or discount, upon ten (10) days prior notice to
the holder.
7. Transfer of Debenture
(a) Borrower may deem and treat the person or persons in whose
name this Debenture shall be registered upon the books and records of Borrower
as (i) the absolute owner of this Debenture (regardless of whether this
Debenture shall be past due, and notwithstanding any notation of ownership,
endorsement, or other writing on this Debenture) and (ii) the person entitled to
receive payment of or on account of principal and interest due or payable under
this Debenture, and for all other purposes; and Borrower shall not be affected
by any notice to the contrary unless such notice of transfer is given pursuant
to Section 7(c). All such payments shall be valid and effectual to satisfy and
discharge the liability on this Debenture to the extent of all sums so paid.
(b) Borrower shall not be bound to recognize any equitable or
other claim or interest in this Debenture on the part of any person other than
the person or persons in whose name this Debenture shall be registered upon the
books and records of Borrower, and Borrower shall not be liable for any
registration of transfer of any Debenture which is registered or to be
registered in the name of a fiduciary or the nominee of a fiduciary upon
instruction from such fiduciary, unless made with the actual knowledge that a
fiduciary or nominee is committing a breach of trust in requesting such
registration or transfer, or with such knowledge of such facts that its
participation therein amounts to bad faith.
(c) The transfer of this Debenture is registrable by the
registered holder in person, or by his attorney duly authorized in writing, on
the books and records of the Borrower at the address designated in Section 7(d),
as such address may be changed from time to time as provided therein, subject to
the terms, conditions, and restrictions of transfer set forth in this Debenture,
but without payment of any charge other than a sum sufficient to reimburse
Borrower for any tax or other governmental charge incident thereto. Such
registration of transfer shall be effected only upon compliance with the
provisions of this Section 7, and upon surrender and cancellation of this
Debenture. Upon any such registration of transfer, a new Debenture or Debentures
of the same aggregate principal amount will be issued to the persons entitled
thereto in exchange for this Debenture. All Debentures presented for
registration of transfer, if so required by Borrower, shall
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be accompanied by a written instrument or instruments of transfer, in form
reasonably satisfactory to Borrower, duly executed by the registered holder or
by his duly authorized attorney, with all signatures acknowledged by a notary
public. In all cases of transfer by an attorney, the original power of attorney,
duly approved, or a copy thereof, duly certified, shall be deposited and remain
with the Borrower. In case of transfer by executors, administrators, guardians
or other legal representatives, duly authenticated evidence of their authority
shall be produced, and may be required to be deposited and remain with the
Borrower in its discretion.
(d) Borrower shall keep and maintain a register or registers in
which Borrower shall register Debentures and the transfer of Debentures. All
payments of principal, interest, and any other amount due or that becomes due
under this Debenture, shall be paid to the holder by check mailed to the holder
at his or her address of record. The holder may change the address for payment
or for notice by delivery of written notice to Borrower. The address for notice
to Borrower shall be 935 Pardee Street, Berkeley, California 94710; Attention:
Chief Financial Officer. Borrower may change its address for notice by written
notice to holder.
(e) This Debenture may not be sold, pledged, hypothecated,
negotiated, assigned, or otherwise transferred except pursuant to an effective
registration statement under the Securities Act of 1933, as amended, and
pursuant to effective registration or qualification under applicable state
securities or "blue sky" laws, unless an exemption from such registration and
qualification is available. Borrower will make a stop transfer notation in the
register maintained pursuant to this Section 7 with respect to such restrictions
on transfer. Borrower may require, as a condition to registration of transfer,
that the transferor or transferee deliver to Borrower an opinion of counsel, in
form and substance reasonably acceptable to Borrower, to the effect that such
transfer is exempt from the registration and qualification provisions of the
Securities Act of 1933, as amended, and applicable state securities or "blue
sky" laws.
8. Default.
(a) Subject to the provisions of this Section 8, the unpaid
principal balance of this Debenture, together with all accrued interest thereon,
shall, at the option of the holder of this Debenture, become immediately due and
payable upon the occurrence of any of the following events (each an "Event of
Default"): (i) the default of Borrower in the payment of any interest due under
this Debenture if such default continues for ten (10) calendar days; (ii) the
default of Borrower in the payment of any principal due under this Debenture;
(iii) the failure of Borrower for a period of 30 days after notice from
Debenture holders to observe or perform in any material respect any of the
provisions of this Debenture, other than payment of interest or principal; (iv)
Borrower instituting or consenting to any proceeding under any Debtor Relief Law
(as defined below) with respect to Borrower or any part of Borrower's property
or assets, or Borrower becoming the subject of any order for relief in a
proceeding under any Debtor Relief Law; (v) the institution of any case or
proceeding under any Debtor Relief Law with respect to Borrower or any part of
Borrower's property or assets without the consent of Borrower if such case or
proceeding continues undismissed or unstayed for sixty (60) calendar days; (vi)
the issuance or levy of any judgment, writ, warrant of
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attachment or execution or similar process against property or assets of
Borrower in the amount of $25,000 or more, if such process is not released,
vacated or fully bonded within 60 calendar days after its issue or levy; (vii)
Borrower making an assignment for the benefit of creditors; (viii) the
dissolution or liquidation of Borrower, or (ix) Borrower defaults in the payment
of principal or interest on any obligation for money owed in excess of $100,000
if such default continues for a period of ten calendar days. As used in this
Debenture, the term "Debtor Relief Law" shall mean the Bankruptcy Code of the
United States of America, as amended, or any other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief law affecting the rights of
creditors generally.
(b) If an Event of Default specified in clause (iv), (v), (vii),
or (viii) of paragraph (a) of this Section 8 occurs, the unpaid principal
balance of this Debenture, together with all accrued interest thereon shall
become and be immediately due and payable without any declaration or other act
on the part of any Debenture holder.
(c) Neither the holder of this Debenture nor the holder of any
other Series 2001-A Debentures shall institute any suit or proceeding for the
enforcement of the payment of principal or interest under any of the Series
2001-A Debentures unless the holders of more than fifty percent (50%) in
principal amount of all then-outstanding Series 2001-A Debentures join in such
suit or proceeding. Holders of more than fifty percent (50%) in principal amount
of the then outstanding Series 2001-A Debentures may direct the time, method and
place of conducting any proceeding for any remedy available to them or
exercising any power conferred on them by the Debentures. Notwithstanding the
preceding provisions of this paragraph, (i) any Debenture holder may file a
claim on their own behalf in any proceeding to which Borrower is subject under
the United States Bankruptcy Code or any other Debtor Relief Law; and (ii) if an
Event of Default arising from the failure of Borrower to pay interest or
principal occurs and continues for a period of thirty days without the
commencement of any lawsuit or other proceeding by holders of more than fifty
percent (50%) in principal amount of the then outstanding Series 2001-A
Debentures, any Debenture holder may commence a lawsuit to enforce payment of
principal and interest then due on the holder's Debenture (but not accelerate
the Maturity Date of such holder's Debenture or any other Series 2001- A
Debentures).
(d) The Borrower will furnish to any holder upon written request
and without charge a copy of the list of the names and addresses of the
registered holders of Series 2001-A Debentures for a purpose reasonably related
to the interest of the holder as a Debenture holder.
9. Mutilated or Missing Debentures. In case any of the certificates
evidencing the Debentures shall be mutilated, lost, stolen or destroyed, the
Borrower may in its discretion issue and deliver in exchange and substitution
for and upon cancellation of the mutilated Debenture, or in lieu of and
substitution for the Debenture lost, stolen or destroyed, a new Debenture of
like tenor, but only upon receipt of evidence reasonably satisfactory to the
Borrower of such loss, theft or destruction of such Debenture and an indemnity
or bond, if requested, also reasonably satisfactory to the Borrower. An
applicant for such a substitute Debenture shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Borrower may
prescribe.
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10. Law Governing. This Debenture shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
entered into in the State of California, by residents of the State of California
and intended to be performed entirely within the State of California.
11. Financial Covenants. Commencing on October 1, 2001 until such time,
subsequent to the date of original issue of this Debenture, as Borrower (a)
obtains at least $5,000,000 in additional cash in the aggregate through one or
more sales of equity securities (including, but not limited to, the sale of
capital stock, the sale or exercise of options, warrants or other rights to
acquire capital stock, and the conversion or exchange of any debt security or
evidence of indebtedness for capital stock), or (b) pays in full the outstanding
principal balance of, and all interest accrued on, the Series 2001-A Debentures,
Borrower's total cash payments during any calendar quarter (ie. the three month
periods ending March 31, June 30, September 30, and December 31 of each year),
including, without limitation, payment on account of operating expenses but
excluding interest payable on the Series 2001-A Debentures, shall not exceed
$450,000 in excess of all revenues collected by Borrower in cash during such
calendar quarter. For the purpose of this Section, revenues shall include
royalties, license fees, and other proceeds from the sale or licensing of any
tangible or intangible property, but shall not include interest, dividends, and
any monies borrowed or the proceeds from the issue or sale of any debt or equity
security. Until such time as Borrower pays in full the outstanding principal
balance of, and all interest accrued on, the Series 2001-A Debentures, Borrower
shall not declare or pay any cash dividend on its capital stock or redeem or
repurchase any shares of its capital stock.
12. Amendments, Supplements and Waiver.
(a) Except as provided in the next succeeding paragraph, this
Debenture and the other Series 2001-A Debentures may be amended or supplemented
with the consent of the holders of at least a majority in principal amount of
the Debentures then outstanding, and any existing default or compliance with any
provision of the Series 2001-A Debentures, including this Debenture, may be
waived with the consent of the holders of a majority in principal amount of the
then outstanding Series 2001-A Debentures. If any such amendment or waiver
pertains to or affects some but not all of the Series 2001-A Debentures, such
consent need be obtained only from the holders of the Debentures so affected. If
any such amendment or waiver would affect all of the Series 2001-A Debentures
but would do so in a manner that differs materially between the Debentures so
affected, then the consent of holders of a majority in principal amount of
Debenture affected in a like manner must be obtained to give effect to the
amendment or waiver.
(b) Without the written consent of each holder affected, an
amendment or waiver may not (with respect to any Debenture held by a
non-consenting holder of Debentures) (i) reduce the principal amount or change
the fixed maturity of any Debenture; (ii) reduce the rate of or change the time
for payment of interest on any Debenture; (iii) waive an Event of Default
arising from the failure of Borrower to pay principal of or interest on the
Debentures (except a rescission of acceleration of the Debentures by the holders
of at least a majority in aggregate principal amount of the Debentures and a
waiver of the payment default that resulted from such acceleration); (iv) make
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any Debenture payable in money other than that stated in the Debentures; or (v)
make any change in the provisions of the Debentures relating to waivers of past
defaults or the rights of holders of Debentures to receive payments of principal
of or interest on the Debentures, or make any change in the foregoing amendment
and waiver provisions.
(c) Notwithstanding the foregoing, without the consent of any
holder of Debentures, the Borrower may amend or supplement the Debentures to (i)
cure any ambiguity, defect or inconsistency, (ii) to provide for uncertificated
Debentures in addition to or in place of certificated Debentures, (iii) to
provide for the assumption of the Borrower's obligations to holders of
Debentures in the case of a merger or consolidation, (iv) to provide any
collateral for the benefit of the holders of Debentures, (v) to make any change
that would provide any additional rights or benefits to the holders of
Debentures or that does not adversely affect the legal rights of any such
holder, and (vi) to comply with the Trust Indenture Act of 1939, if such law
becomes applicable to the Debentures.
13. Release of Shareholders, Officers and Directors. This Debenture is
the obligation of Borrower only, and no recourse shall be had for the payment of
this Debenture or the interest thereon against any shareholder, officer or
director of Borrower, either directly or through Borrower, by virtue of any
statute for the enforcement of any assessment or otherwise, all such liability
of shareholders, directors and officers as such being released by holder by the
acceptance of this Debenture.
14. Fees and Charges of Attorneys and Others. In the event that the
holders of the Series 2001-A Debentures employ attorneys, accountants,
appraisers, consultants, or other professional assistance, in connection with
any of the following, then, the reasonable amount of costs, expenses, and fees
incurred by such Debenture holders shall be payable on demand; provided, that
Borrower shall not be obligated to pay the fees and expenses of more than one
firm of attorneys, accountants, appraisers, consultants and other professionals
representing all of the Debenture holders as a group. Costs, expenses, and
reasonable fees of professionals covered by this provision include such charges
for the following:
(a) The preparation, modification, or renewal of the Series 2001-A
Debentures and that certain Warrant Agreement, of even date, executed by
Borrower in connection with the issuance of common stock purchase warrants to
the persons to whom the 2001-A Debentures were originally issued and sold (the
"Warrant Agreement")..
(b) Any litigation, dispute, proceeding or action, whether
instituted by the Debenture holders, Borrower, or any other person, relating to
the Series 2001-A Debentures, including representation of Debenture holders in
any bankruptcy, insolvency, or reorganization case or proceeding instituted by
or against Borrower, and any attempt by Debenture holders to enforce any rights
against Borrower under the Series 2001-A Debentures;
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(c) In the event of any controversy, claim, or dispute relating to
the Series 2001-A Debentures, including but not limited to any action to
construe or enforce the terms of the Series 2001-A Debentures, the prevailing
party shall be entitled to recover its reasonable costs, expenses, and attorney
fees;
(d) In the event of bankruptcy or insolvency proceedings (whether
state or federal) instituted by or against Borrower, the Debenture holders may
recover all costs, expenses, and reasonable attorney fees incurred to protect or
defend their rights under the Debentures, and other documents underlying the
loan transactions whether such costs, expenses, and attorney fees be contractual
or bankruptcy related, including costs, expenses, and attorney fees for
meetings, sessions, matters, proceedings and litigation involving issues solely
distinct to federal bankruptcy law, rules and proceedings as well as other
federal and state litigation and proceedings; and
(e) The preparation and filing of all reports required to be filed
by Debenture holders under the Securities Exchange Act of 1934, as amended,
during the term of this Debenture in connection with the ownership, acquisition,
or disposition of the warrants, common shares, or other equity securities issued
by Borrower pursuant to the Warrant Agreement.
15. Miscellaneous.
(a) Borrower waives (i) presentment, demand, protest, notice of
dishonor, and all other notices; (ii) any release or discharge arising from any
extension of time, or discharge of a prior party; and (iii) any other cause of
release or discharge other than actual payment in full of all indebtedness
evidenced by or arising under this Debenture.
(b) The rights and remedies of the holder as provided in this
Debenture and in law or equity shall be cumulative and concurrent, and may be
pursued singularly, successively, or together at the sole discretion of the
holder subject to the provisions of Section 8, and may be exercised as often as
occasion therefor shall occur; and the failure to exercise any such right or
remedy shall in no event be construed as a waiver or a release of any such right
or remedy.
(c) The terms, covenants, and conditions contained in this
Debenture shall be binding upon the heirs, executors, administrators,
successors, and assigns of Borrower, and shall inure to the benefit of the
heirs, executors, administrators, successors and assigns of holder.
(d) If any provisions of this Debenture would require the Borrower
to pay interest on the indebtedness evidenced by or arising under this Debenture
at a rate exceeding the highest rate
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allowable by applicable law, Borrower shall instead pay interest under this
Debenture at the highest rate permitted by applicable law.
IN WITNESS WHEREOF, Borrower has signed and sealed this Debenture on
the date first set forth above.
BIOTIME, INC.
By:_______________________________
Title: ___________________________
By:_______________________________
Title: ___________________________
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