THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION
STATEMENT IS NOT REQUIRED UNDER THE SECURITIES ACT AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER OR UNDER APPLICABLE STATE SECURITIES LAWS.
December 26, 2000 $700,000
CYTOMEDIX, INC.
10.0% CONVERTIBLE SECURED PROMISSORY NOTE
DUE APRIL 15, 2001
CYTOMEDIX, INC., a Delaware corporation (along with its subsidiaries, the
"Company"), promises to pay to BRISTOL INVESTMENT FUND, Ltd. or its permitted
assigns (the "Holder"), the principal sum of Seven Hundred Thousand Dollars and
No/100 ($700,000) on April 15, 2001 (the "Maturity Date"), together with accrued
interest thereon.
Pursuant to this promissory note (the "Note"), the Holder is hereby funding
Seven Hundred Thousand Dollars ($700,000) in immediately available funds to the
Company on the date of execution hereof.
Interest on the principal amount of this Note shall accrue at the rate of ten
percent (10.0%) per annum from the original date of issuance of this Note.
Interest accrued on the outstanding principal balance of this Note shall be
payable in cash or other immediately available funds to the Holder monthly in
arrears, with the first interest payment to be made on the date of the execution
of this Note and with each subsequent interest payment due on the like date of
each consecutive month thereafter. Any amount of principal or interest on this
Note which is not paid when due shall bear additional interest at the rate of
five percent (5.0%) per annum ("Default Interest"). Any unpaid interest accrued
on the outstanding principal balance of this Note shall be payable in cash or
other immediately available funds to the Holder upon the earlier of (i) the
Maturity Date, (ii) upon acceleration of all amounts due and owing hereunder in
accordance with the terms hereinafter set forth, or (iii) the date on which
Holder elects to convert the principal amount of this Note into shares in
accordance with the terms hereinafter set forth. Interest will be computed on
the basis of a 360-day year. All payments shall be made at such address as the
Holder shall hereafter give to the Company by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to be due by the
terms of this Note is due on any day which is not a business day,
the same shall instead be due on the next succeeding day which is a business day
and, in the case of any interest payment date which is not the date on which
this Note is paid in full, the extension of the due date thereof shall not be
taken into account for purposes of determining the amount of interest due on
such date. As used in this Note, the term "business day" shall mean any day
other than a Saturday, Sunday or a day on which commercial banks in the city of
Chicago, Illinois are authorized or required by law or executive order to remain
closed. This Note shall be secured pursuant to the terms of that certain
Security Agreement by and between the Company and the Holder of even date
herewith. Each capitalized term used herein, and not otherwise defined, shall
have the meaning ascribed thereto in that certain Securities Purchase Agreement,
dated December 26, 2000, pursuant to which this Note was originally issued (the
"Purchase Agreement").
The principal amount of this note may not be paid before the Maturity Date
without the prior written consent of the Holder.
This Note is being issued pursuant to an exemption from registration under
the Securities Act and the rules and regulations promulgated thereunder.
1. CONVERSION.
(a) The Holder may convert all or any part of the principal amount of
this Note, but not any accrued interest, into shares of the Company's common
stock, $.0001 par value per share (the "Common Stock"), at any time after the
execution hereof and until all principal and interest due hereunder is repaid in
full (the "Conversion Period"), at a conversion price equal to the lesser of (i)
$1.00 per share, as adjusted as provided herein (the "Fixed Conversion Price"),
and (ii) a price per share equal to eighty percent (80%) of the average of the
three lowest intraday sale prices as reported by Bloomberg Financial Markets or
an equivalent, reliable reporting service mutually acceptable to and hereafter
designated by Holders of a majority in interest of the Notes and the Company
("Bloomberg") (as equitably adjusted for stock splits or combinations or other
events referenced in Section 2 hereof) during the twenty (20) Trading Days (as
defined below) immediately preceding the date on which this Note is surrendered
for conversion (the "Market Conversion Price"), provided, however, that in no
event shall the Holder be entitled to convert any portion of this Note in excess
of that portion of this Note upon conversion of which the sum of (1) the number
of shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unconverted portion of the Notes or the unexercised
or unconverted portion of any other security of the Company (including, without
limitation, the warrants issued by the Company pursuant to the Purchase
Agreement) subject to a limitation on conversion or exercise analogous to the
limitations contained herein) and (2) the number of shares of Common Stock
issuable upon the conversion of the portion of this Note with respect to which
the determination of this proviso is being made, would at the time of conversion
result in beneficial ownership by the Holder and its affiliates of more than
4.9% of the outstanding shares of Common Stock. For purposes of the proviso to
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulations 13D-G thereunder, except as otherwise provided in
clause (1) of such proviso. Notwithstanding anything to the contrary contained
herein, the limitation on exercise of this Note set forth herein may not be
amended without (i) the written
2
consent of the holder hereof and the Company and (ii) the approval of a majority
of shareholders of the Company. The shares of such Common Stock, or other
securities into which this Note may be converted as a result of transactions
contemplated by Section 2, issuable upon conversion of this Note are referred to
herein as the "Shares." "Trading Day" shall mean any day on which the Common
Stock is traded for any period on the Over-the-Counter Bulletin Board, or on the
principal securities exchange or other securities market on which the Common
Stock is then being traded.
(b) The Company shall at all times cause to be reserved for issuance
such number of authorized and unissued shares of Common Stock as shall be
sufficient for conversion of this Note. As of the date of issuance of this Note,
1,400,000 (2x currently required) authorized and unissued shares of Common Stock
have been duly reserved for issuance upon conversion of this Note and the other
Notes issued pursuant to the Purchase Agreement (the "Reserved Amount"). The
Reserved Amount shall be increased from time to time in accordance with the
Company's obligations pursuant to Section 4(h) of the Purchase Agreement. The
Company represents that upon issuance, such shares will be duly and validly
issued, fully paid and non-assessable. In addition, if the Company shall issue
any securities or make any change to its capital structure which would change
the number of shares of Common Stock into which the Notes shall be convertible
at the then current Conversion Price, the Company shall at the same time make
proper provision so that thereafter there shall be a sufficient number of shares
of Common Stock authorized and reserved, free from preemptive rights, for
conversion of the outstanding Notes. The Company (i) acknowledges that it has
irrevocably instructed its transfer agent to issue certificates for the Common
Stock issuable upon conversion of this Note and (ii) agrees that its issuance of
this Note shall constitute full authority to its officers and agents who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock in accordance with the terms
and conditions of this Note.
If, at any time a Holder of this Note submits a Notice of Conversion,
and the Company does not have sufficient authorized but unissued shares of
Common Stock available to effect such conversion in accordance with the
provisions of this Section 1 (a "Conversion Default"), subject to Section 13(w),
the Company shall issue to the Holder all of the shares of Common Stock which
are then available to effect such conversion. The portion of this Note which the
Holder included in its Conversion Notice and which exceeds the amount which is
then convertible into available shares of Common Stock (the "Excess Amount")
shall, notwithstanding anything to the contrary contained herein, not be
convertible into Common Stock in accordance with the terms hereof until (and at
the Holder's option at any time after) the date additional shares of Common
Stock are authorized by the Company to permit such conversion, at which time the
Conversion Price in respect thereof shall be the lesser of (i) the Conversion
Price on the Conversion Default Date (as defined below) and (ii) the Conversion
Price on the Conversion Date thereafter elected by the Holder in respect
thereof. In addition, the Company shall pay to the Holder payments ("Conversion
Default Payments") for a Conversion Default in the amount of (x) the sum of (1)
the then outstanding principal amount of this Note plus (2) accrued and unpaid
interest on the unpaid principal amount of this Note through the Authorization
Date (as defined below) plus (3) Default Interest, if any, on the amounts
referred to in clauses (1) and/or (2), multiplied by (y) .24, multiplied by (z)
(N/365), where N = the number of days from the day the holder submits a Notice
of Conversion giving rise to a Conversion Default (the "Conversion Default
Date") to the date (the "Authorization Date") that the
3
Company authorizes a sufficient number of shares of Common Stock to effect
conversion of the full outstanding principal balance of this Note. The Company
shall use its best efforts to authorize a sufficient number of shares of Common
Stock as soon as practicable following the earlier of (i) such time that the
Holder notifies the Company or that the Company otherwise becomes aware that
there are or likely will be insufficient authorized and unissued shares to allow
full conversion thereof and (ii) a Conversion Default. The Company shall send
notice to the Holder of the authorization of additional shares of Common Stock,
the Authorization Date and the amount of Holder's accrued Conversion Default
Payments. The accrued Conversion Default Payments for each calendar month shall
be paid in cash or shall be convertible into Common Stock (at such time as there
are sufficient authorized shares of Common Stock) at the applicable Conversion
Price, at the Holder's option, as follows:
(1) In the event Holder elects to take such payment in cash, cash
payment shall be made to Holder by the fifth (5th) day of the month following
the month in which it has accrued; and
(2) In the event Holder elects to take such payment in Common
Stock, the Holder may convert such payment amount into Common Stock at the
Conversion Price (as in effect at the time of conversion) at any time after the
fifth day of the month following the month in which it has accrued in accordance
with the terms of this Article I (so long as there is then a sufficient number
of authorized shares of Common Stock).
The Holder's election shall be made in writing to the Company at any
time prior to 9:00 p.m., New York time, on the third day of the month following
the month in which Conversion Default payments have accrued. If no election is
made, the Holder shall be deemed to have elected to receive cash. Nothing herein
shall limit the Holder's right to pursue actual damages (to the extent in excess
of the Conversion Default Payments) for the Company's failure to maintain a
sufficient number of authorized shares of Common Stock, and each holder shall
have the right to pursue all remedies available at law or in equity (including
degree of specific performance and/or injunctive relief).
(c) The Company shall deliver a certificate or certificates for the
Shares as soon as practicable after surrender of this Note for conversion (and
in any event within three (3) business days (the "Deadline")), but the person or
persons to whom such certificates are issuable shall be considered the holder of
record of such shares from the time this Note is surrendered. Except as
described herein, this Note is not otherwise convertible into any other shares
of the Company's capital stock.
(d) In lieu of delivering physical certificates representing the Common
Stock issuable upon conversion, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer ("FAST") program, upon request of the Holder and its compliance with
the provisions contained in Section 1.1 and in this Section 1.4, the Company
shall use its best efforts to cause its transfer agent to electronically
transmit the Common
4
Stock issuable upon conversion to the Holder by crediting the account of
Holder's Prime Broker with DTC through its Deposit Withdrawal Agent Commission
("DWAC") system.
(e) Without in any way limiting the Holder's right to pursue other
remedies, including actual damages and/or equitable relief, the parties agree
that if delivery of the Common Stock issuable upon conversion of this Note is
more than two (2) days after the Deadline (other than a failure due to the
circumstances described in Section 1.3 above, which failure shall be governed by
such Section) the Company shall pay to the Holder $1,500 per day in cash, for
each day beyond the Deadline that the Company fails to deliver such Common
Stock. Such cash amount shall be paid to Holder by the fifth day of the month
following the month in which it has accrued or, at the option of the Holder (by
written notice to the Company by the first day of the month following the month
in which it has accrued), shall be added to the principal amount of this Note,
in which event interest shall accrue thereon in accordance with the terms of
this Note and such additional principal amount shall be convertible into Common
Stock in accordance with the terms of this Note.
(f) The certificates representing the Common Stock issued upon
conversion of this Note shall bear a legend substantially similar to the
following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act") or
under any applicable state securities law, and may not be offered or
sold except (1) pursuant to an effective registration statement under
the Act or (2) upon the delivery by the holder to the Company of an
opinion of counsel reasonably satisfactory to the Company that an
exemption from registration under such Act is available."
2. ANTI-DILUTION.
(a) Stock Splits and Combinations. If the Company shall combine all of
its outstanding shares of Common Stock into a smaller number of shares, the
number of Shares shall be proportionately decreased and the Fixed Conversion
Price in effect immediately prior to such combination shall be proportionately
increased, as of the effective date of such combination, as follows: (i) the
number of Shares purchasable immediately prior to the effective date of such
combination shall be adjusted so that the Holder of this Note, if converted on
or after that date, shall be entitled to receive the number and kind of Shares
which the Holder of this Note would have owned and been entitled to receive as a
result of the combination had the Note been converted immediately prior to that
date, and (ii) the Fixed Conversion Price in effect immediately prior to such
adjustment shall be adjusted by multiplying such Fixed Conversion Price by a
fraction, the numerator of which is the aggregate number of Shares purchasable
upon conversion of this Note immediately prior to such adjustment, and the
denominator of which is the aggregate number of Shares purchasable upon
conversion of this Note immediately thereafter. If the Company shall subdivide
all of its outstanding shares of Common Stock, the number of Shares shall be
proportionally increased and the Fixed Conversion Price in effect prior to such
subdivision shall be proportionately decreased, as of the effective date of such
subdivision, as follows: (i) the number of Shares purchasable upon the
conversion of this Note immediately prior to the effective date of such
subdivision, shall be
5
adjusted so that the Holder of this Note, if converted on or after that date,
shall be entitled to receive the number and kind of Shares which the Holder of
this Note would have owned and been entitled to receive as a result of the
subdivision had the Note been converted immediately prior to that date, and (ii)
the Fixed Conversion Price in effect immediately prior to such adjustment shall
be adjusted by multiplying the Fixed Conversion Price by a fraction, the
numerator of which is the aggregate number of Shares purchasable upon conversion
of this Note immediately prior to such adjustment, and the denominator of which
is the aggregate number of Shares purchasable upon conversion of this Note
immediately thereafter. A like and equitable adjustment shall be made in the
event that a stock combination or subdivision is effectuated and the number of
Shares issued hereunder is to be determined by reference to the Market
Conversion Price.
(b) Stock Dividends and Distributions. If the Company shall fix a
record date for the holders of its Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock, then the
number of Shares shall be proportionately increased and the Fixed Conversion
Price in effect prior to the time of such issuance or the close of business on
such record date shall be proportionately decreased, as of the time of such
issuance, or in the event such record date is fixed, as of the close of business
on such record date, as follows: (i) the number of Shares purchasable
immediately prior to the time of such issuance or the close of business on such
record date shall be adjusted so that the Holder of this Note, if converted
after that date, shall be entitled to receive the number and kind of Shares
which the Holder of this Note would have owned and been entitled to receive as a
result of the dividend or distribution had the Note been converted immediately
prior to that date, and (ii) the Fixed Conversion Price in effect immediately
prior to such adjustment shall be adjusted by multiplying such Fixed Conversion
Price by a fraction, the numerator of which is the aggregate number of shares of
Common Stock purchasable upon conversion of this Note immediately prior to such
adjustment, and the denominator of which is the aggregate number of shares of
Common Stock purchasable upon conversion of this Note immediately thereafter. A
like and equitable adjustment shall be made in the event that a stock dividend
or distribution is effectuated and the number of Shares issued hereunder is to
be determined by reference to the Market Conversion Price.
(c) Other Dividends and Distributions. If the Company shall fix a
record date for the holders of Common Stock entitled to receive a dividend or
other distribution payable in securities of the Company other than shares of
Common Stock, then lawful and adequate provision shall be made so that the
Holder of this Note shall be entitled to receive upon conversion of this Note,
for the conversion price in effect prior thereto, in addition to the number of
Shares immediately theretofore issuable upon conversion of this Note, the kind
and number of securities of the Company which the Holder would have owned and
been entitled to receive had the Note been converted immediately prior to that
date.
(d) Reclassification, Exchange and Substitution. If the Common Stock is
changed into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than by
a subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this Section
2), then the Holder of this Note shall be entitled to receive upon conversion of
this Note, in lieu of the Shares immediately theretofore issuable upon
conversion of this Note, for the aggregate
6
conversion price in effect prior thereto, the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other change, by the holders of the number of Shares for which this Note
could have been converted immediately prior to such recapitalization,
reclassification or other change (in any event, subject to further anti-dilution
protection as provided in this Section 2).
(e) Reorganizations, Mergers, Consolidations or Sales of Assets. If any
of the following transactions (each, a "Special Transaction") shall become
effective: (i) a capital reorganization, share exchange, or exchange offer
(other than a recapitalization, subdivision, combination, reclassification or
exchange of shares provided for elsewhere in this Section 2), (ii) a
consolidation or merger of the Company with and into another entity, or (iii) a
sale or conveyance of all or substantially all of the Company's assets, then as
a condition of any Special Transaction, lawful and adequate provision shall be
made so that the Holder of this Note shall thereafter have the right to purchase
and receive upon conversion of this Note, in lieu of the Shares immediately
theretofore issuable upon conversion of this Note, for the conversion price in
effect immediately prior to such conversion, such shares of stock, other
securities, cash or other assets as may be issued or payable in and pursuant to
the terms of such Special Transaction to the holders of shares of Common Stock
for which this Note could have been converted immediately prior to such Special
Transaction; provided, however, that notwithstanding anything to the contrary
herein, upon consummation of the transactions contemplated by the Exchange
Agreement (as defined below) this Note shall be convertible into shares of
common stock of Cytomedix NV. In connection with any Special Transaction,
appropriate provision shall be made with respect to the rights and interests of
the Holder of this Note to the end that the provisions of this Note (including,
without limitation, provisions for adjustment of the Fixed Conversion Price and
the number of Shares issuable upon the conversion of this Note) shall thereafter
be applicable, as nearly as may be practicable, to any shares of stock, other
securities, cash or other assets thereafter deliverable upon the conversion of
this Note. The Company shall not effect any Special Transaction unless prior to,
or simultaneously with the closing thereof, the successor entity and the issuer
of the securities into which Note is convertible (if other than the Company), if
any, resulting from such Special Transaction shall assume by a written
instrument executed and mailed by certified mail or delivered to the Holder of
this Note at the address of the Holder appearing on the books of the Company,
the obligation of the Company or such successor corporation to deliver to the
Holder such shares of stock, securities, cash or other assets, as in accordance
with the foregoing provisions, which the Holder shall have the right to
purchase.
(f) Other Issuances. In the event that the Company shall at any time
after the date of original issuance of this Note issue any shares of Common
Stock, including shares of Common Stock issued or issuable upon the conversion
or exercise of securities convertible into or exercisable for Common Stock,
without consideration or at a price per share ("Issuance Price") less than the
applicable conversion price, then, in each and any such event (an "Adjustment
Event"): (i) the number of Shares purchasable immediately prior thereto (the
"Initial Number") shall be increased so that the Holder shall be entitled, upon
conversion of this Note, to receive the number of shares of Common Stock
determined by multiplying the Initial Number by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such Adjustment Event plus the number of additional shares of Common
Stock issued in such Adjustment Event and the denominator of which shall be the
number of shares of Common Stock outstanding immediately
7
prior to such Adjustment Event plus the number of shares of Common Stock which
the aggregate issuance price of the total number of shares of Common Stock
issued in such Adjustment Event would purchase at the applicable conversion
price; provided, however, that no adjustment shall be made for the issuance of
shares of Common Stock in connection with a Special Transaction, as described in
Section 2(e); and (ii) the applicable conversion price shall be reduced to the
Issuance Price.
(g) Liquidation. If the Company shall, at any time prior to the end of
the Conversion Period, dissolve, liquidate or wind up its affairs, the Holder
shall have the right, but not the obligation, to convert this Note. Upon such
conversion, the Holder shall have the right to receive, in lieu of the Shares
that the Holder otherwise would have been entitled to receive upon such
conversion, the same kind and amount of assets as would have been issued,
distributed or paid to the Holder upon any such dissolution, liquidation or
winding up with respect to such Shares had the Holder been the holder of record
of such Shares on the date for determining those entitled to receive any such
distribution. If any such dissolution, liquidation or winding up results in any
cash distribution in excess of the applicable conversion price, the Holder may,
at the Holder's option, convert this Note without making payment of the
applicable conversion price and, in such case, the Company shall, upon
distribution to the Holder, consider the applicable conversion price, to have
been paid in full, and in making settlement to the Holder shall deduct an amount
equal to the applicable conversion price, from the amount payable to the Holder.
(h) Notice. Whenever this Note or the number of Shares is to be
adjusted as provided herein, the Company shall forthwith as soon as reasonably
practicable, and in any case within three (3) business days of such adjustment,
cause to be sent to the Holder a notice stating in reasonable detail the
relevant facts and any resulting adjustments and the calculation thereof.
(i) Fractional Interests. The Company shall not be required to issue
fractions of shares of Common Stock upon the conversion of this Note. If any
fraction of a share of Common Stock would be issuable upon the conversion of
this Note, the Company shall, upon such issuance, purchase such fraction for an
amount in cash equal to the current value of such fraction, computed on the
basis of the last reported closing price of the Common Stock on the securities
exchange or quotation system on which the shares of Common Stock are then listed
or traded, as the case may be, if any, on the last business day prior to the
date of conversion upon which such a sale shall have been effected, or, if the
Common Stock is not so listed or traded on an exchange or quotation system, as
the Board of Directors of the Company may in good faith determine.
(j) Effect of Alternate Securities. If at any time, as a result of an
adjustment made pursuant to this Section 2, the Holder of this Note shall
thereafter become entitled to receive any securities of the Company other than
shares of Common Stock, then the number of such other securities receivable upon
conversion of this Note shall be subject to adjustment from time to time on
terms as nearly equivalent as practicable to the provisions with respect to
shares of Common Stock contained in this Section 2.
(k) Successive Application. The provisions of this Section 2 shall
apply from time to time to successive events covered by this Section 2. Upon the
occurrence of any event
8
contemplated by this Section 2, all references to Common Stock and to the
Company and to other defined terms herein shall be equitably adjusted to protect
the interests of the Holder.
(l) Exception to Adjustments. Notwithstanding anything herein or in any
Warrant to the contrary, no adjustment to the Fixed Conversion Price shall be
made with respect to the issuance of securities by the Company, all of the net
proceeds of which are used to repurchase, in whole or in part, the Notes as
contemplated by Section 4(e) of the Purchase Agreement.
3. TRADING MARKET LIMITATIONS. Unless permitted by the applicable rules and
regulations of the principal securities market on which the Common Stock is then
listed or traded, in no event shall the Company issue upon conversion of this
Note and the other Notes issued pursuant to the Purchase Agreement more than the
maximum number of shares of Common Stock that the Company can issue pursuant to
any rule of the principal United States securities market on which the Common
Stock is then traded (the "Maximum Share Amount"), which, as of the Issue Date
shall be 2,106,721 shares (19.99% of the total shares outstanding on the Issue
Date), subject to equitable adjustment from time to time for stock splits, stock
dividends, combinations, capital reorganizations and similar events relating to
the Common Stock occurring after the date hereof. Once the Maximum Share Amount
has been issued (the date of which is hereinafter referred to as the "Maximum
Conversion Date"), if the Company fails to eliminate any prohibitions under
applicable law or the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
the Company or any of its securities on the Company's ability to issue shares of
Common Stock in excess of the Maximum Share Amount (a "Trading Market Prepayment
Event"), in lieu of any further right to convert this Note, and in full
satisfaction of the Company's obligations under this Note, the Company shall pay
to the Holder, within fifteen (15) business days of the Maximum Conversion Date
(the "Trading Market Prepayment Date"), an amount equal to 120% times the sum of
(a) the then outstanding principal amount of this Note immediately following the
Maximum Conversion Date, plus (b) accrued and unpaid interest on the unpaid
principal amount of this Note to the Trading Market Prepayment Date, plus (c)
Default Interest, if any, on the amounts referred to in clause (a) and/or (b)
above, plus (d) any optional amounts that may be added thereto at the Maximum
Conversion Date by the Holder in accordance with the terms hereof (the then
outstanding principal amount of this Note immediately following the Maximum
Conversion Date, plus the amounts referred to in clauses (b), (c) and (d) above
shall collectively be referred to as the "Remaining Convertible Amount"). With
respect to each Holder of Notes, the Maximum Share Amount shall refer to such
Holder's pro rata share thereof determined in accordance with Section 13(w)
below. In the event that the sum of (x) the aggregate number of shares of Common
Stock issued upon conversion of this Note and the other Notes issued pursuant to
the Purchase Agreement plus (y) the aggregate number of shares of Common Stock
that remain issuable upon conversion of this Note and the other Notes issued
pursuant to the Purchase Agreement, represents at least one hundred percent
(100%) of the Maximum Share Amount (the "Triggering Event"), the Company will
use its best efforts to seek and obtain Stockholder Approval (or obtain such
other relief as will allow conversions hereunder in excess of the Maximum Share
Amount) as soon as practicable following the Triggering Event and before the
Maximum Conversion Date. As used herein, "Stockholder Approval" means approval
by the stockholders of the Company to authorize the issuance of the full number
of shares of Common Stock which would be issuable upon full conversion of the
then outstanding Notes but for the Maximum Share Amount.
9
4. EVENTS OF DEFAULT. The occurrence of any one or more of the following
shall constitute an "Event of Default" hereunder:
(a) nonpayment by the Company of any portion of the principal or
interest due under any Note or to any holder of the Company's indebtedness for
borrowed money or capitalized lease obligations as and when due;
(b) default in the payment of any other fees, costs or expenses
required to be paid by the Company under this Note, the Registration Rights
Agreement, the Warrant to be delivered in connection herewith, or any other
agreement or document contemplated in connection herewith (collectively, the
"Loan Documents");
(c) default in the performance, or breach, of any covenant or agreement
of the Company in this Note or any Loan Document (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and the continuance of such default or breach
for a period of ten (10) calendar days after there has been given to the Company
a written notice specifying such default or breach and requiring it to be
remedied;
(d) any representation or warranty in this Note or any Loan Document in
any other certificate, agreement, instrument, or statement contemplated by or
made or delivered pursuant to or in connection with this Note or any Loan
Document, shall prove to have been incorrect in any material respect when made;
(e) the rendering against the Company of a final judgment, decree or
order for the payment of money in excess of $50,000 (unless the payment of such
judgment in excess of $50,000 is fully insured or bonded) and the continuance of
such judgment, decree or order unsatisfied and in effect for any period of
thirty (30) consecutive days without a stay of execution;
(f) the Company (i) suspending or discontinuing its business, (ii)
making an assignment for the benefit of creditors, (iii) generally not paying
its debts as such they become due, (iv) admitting in writing an inability to pay
its debts as they become due, (v) filing a voluntary petition in bankruptcy or
having a petition in bankruptcy filed against it, (vi) becoming insolvent, (vii)
filing any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment of its debts or for liquidation,
dissolution or other similar relief, (viii) petitioning or applying to any court
for any receiver, custodian, or trustee for all or substantially all of its
assets or be the subject of any such proceeding filed against it, (ix) filing an
answer admitting or not contesting the material allegations of any such petition
filed against it or any order, judgment, or decree approving such petition in
any such proceeding, (x) seeking, approving, consenting to, or acquiescing in
any such proceeding for the appointment of any such trustee, receiver,
custodian, liquidator or agent for it or any substantial part of its property or
if an order is entered appointing any such trustee, receiver, custodian,
liquidator or agent, or (xi) taking any formal action for the purpose of
effectuating any of the foregoing;
(g) an order for relief being entered under the United States
bankruptcy laws or if any other decree or order is entered by a court having
jurisdiction (i) adjudging the Company
10
bankrupt or insolvent, (ii) approving as properly filed a petition seeking
reorganization, liquidation, arrangement, adjustment or composition of the
Company or its property under the United States bankruptcy laws or any other
applicable federal or state law, (iii) appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) for the
Company or for any substantial part of the Company's property or (iv) ordering
the winding up or liquidation of the affairs of the Company;
(h) any judgment or decree of $50,000 or more against the Company
remaining unpaid, unstayed on appeal, undischarged, unbonded or undismissed for
a period of ten (10) days;
(i) a Change of Control (as defined below) shall occur;
(j) an adverse change shall occur in the financial, business or
operational condition of the Company as compared to the status of the Company,
as applicable, as of the date of this Note, which adverse change materially
impacts the ability of the Company to honor its obligations under this Note or
any of the Loan;
(k) any of the following shall occur: (i) entry of a court order which
enjoins, restrains or in any way prevents the Company from conducting all or any
material part of its business affairs in the ordinary course of business, or
(ii) withdrawal or suspension of any material license required for the conduct
of any material part of the business of the Company, or (iii) any material asset
of the Company is subject to an order or writ granting a motion or action to
replevy, sequester, garnish, attach or levy against such asset, or (iv) any
assets of the Company having a fair market value of $100,000 or more in the
aggregate are subject to an order or writ granting a motion or action to
replevy, sequester, garnish, attach or levy against such assets; or
(l) any lien of the Holder hereunder or under the Security Agreement
shall not constitute a perfected first and prior lien and security interest in
the collateral thereby encumbered, subject only to Permitted Liens (as defined
in the Security Agreement).
Upon the occurrence of an Event of Default, at the option of the
Holder, either (A) the then applicable Conversion Price, if higher, shall be
reduced to $.50 per share or (B) the Notes shall become immediately due and
payable and the Company shall pay to the Holder, in full satisfaction of its
obligations hereunder, an amount equal to the greater of (i) 120% times the sum
of (w) the then outstanding principal amount of this Note plus (x) accrued and
unpaid interest on the unpaid principal amount of this Note to the date of
payment (the "Mandatory Prepayment Date") plus (y) Default Interest, if any, on
the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to
the Holder pursuant to Sections 1(b) and 1(e) hereof (the then outstanding
principal amount of this Note to the date of payment plus the amounts referred
to in clauses (x), (y) and (z) shall collectively be known as the "Default Sum")
or (ii) the "parity value" of the Default Sum to be prepaid, where parity value
means (a) the highest number of shares of Common Stock issuable upon conversion
of such Default Sum in accordance with Article I, treating the Trading Day
immediately preceding the Mandatory Prepayment Date as the "Conversion Date" for
purposes of determining the lowest applicable Conversion Price, unless the
Default Event arises as a result of a breach in respect of a specific Conversion
Date in which case such Conversion Date shall be the Conversion Date),
11
multiplied by (b) the highest Closing Price for the Common Stock during the
period beginning on the date of first occurrence of the Event of Default and
ending one day prior to the Mandatory Prepayment Date (the "Default Amount") and
all other amounts payable hereunder shall immediately become due and payable,
all without demand, presentment or notice, all of which hereby are expressly
waived, together with all costs, including, without limitation, legal fees and
expenses, of collection, and the Holder shall be entitled to exercise all other
rights and remedies available at law or in equity. If the Company fails to pay
the Default Amount within five (5) business days of written notice that such
amount is due and payable, then the Holder shall have the right at any time, so
long as the Company remains in default (and so long and to the extent that there
are sufficient authorized shares), to require the Company, upon written notice,
to immediately issue, in lieu of the Default Amount, the number of shares of
Common Stock of the Company equal to the Default Amount divided by the
Conversion Price then in effect.
"Change of Control" means the sale, conveyance or disposition of all or
substantially all of the assets of the Company, the effectuation of a
transaction or series of related transactions in which more than 50% of the
direct or indirect voting power of the Company is disposed of or the
consolidation, merger or other business combination of the Company or its sole
shareholder with or into any other individual, corporation, limited liability
company, partnership, association, trust or other entity or organization;
provided, however, that the consummation of the transactions contemplated by the
Exchange Agreement (as defined in the Security Agreement) shall not be deemed a
Change in Control if all of the conditions thereto in the Security Agreement are
satisfied.
5. CERTAIN COVENANTS. In addition to the covenants contained in the
Security Agreement, until such time as the Company shall have no further
obligation under this Note, the Company shall be subject to the following:
(a) Distributions on Capital Stock. So long as the Company shall have
any obligation under this Note, the Company shall not without the Holder's
written consent (a) pay, declare or set apart for such payment, any dividend or
other distribution (whether in cash, property or other securities) on shares of
capital stock other than dividends on shares of Common Stock solely in the form
of additional shares of Common Stock or (b) directly or indirectly or through
any subsidiary make any other payment or distribution in respect of its capital
stock except for distributions pursuant to any shareholders' rights plan which
is approved by a majority of the Company's disinterested directors.
(b) Restriction on Stock Repurchases. So long as the Company shall have
any obligation under this Note, the Company shall not without the Holder's
written consent redeem, repurchase or otherwise acquire (whether for cash or in
exchange for property or other securities or otherwise) in any one transaction
or series of related transactions any shares of capital stock of the Company or
any warrants, rights or options to purchase or acquire any such shares, except
for any such repurchases made by the Company in connection with the termination
of employment of any of its employees.
(c) Borrowings. So long as the Company shall have any obligation under
this Note, the Company shall not, without the Holder's written consent, create,
incur, suffer to exist any
12
liability for borrowed money or capitalized lease obligation except as set forth
in the Security Agreement.
(d) Sale of Assets. So long as the Company shall have any obligation
under this Note, the Company shall not, without the Holder's written consent,
sell, lease or otherwise dispose of its assets, except as set forth in the
Security Agreement.
(e) Advances and Loans. So long as the Company shall have any
obligation under this Note, the Company shall not, without the Holder's written
consent, lend money, give credit or make advances to any person, firm, joint
venture or corporation, including, without limitation, officers, directors,
employees, subsidiaries and affiliates of the Company, except as set forth in
the Security Agreement.
(f) Contingent Liabilities. So long as the Company shall have any
obligation under this Note, the Company shall not, without the Holder's written
consent, assume, guarantee, endorse, contingently agree to purchase or otherwise
become liable upon the obligation of any person, firm, partnership, joint
venture or corporation, except by the endorsement of negotiable instruments for
deposit or collection and except assumptions, guarantees, endorsements and
contingencies (a) in existence or committed on the date hereof and (b) similar
transactions in the ordinary course of business.
6. REGISTRATION RIGHTS.
(a) Registration Rights Agreement. The Holder shall have the
registration rights set forth in that certain Registration Rights Agreement
between the Company and the other signatories thereto of even date herewith (the
"Registration Rights Agreement").
(b) Exchange Agreement. Upon consummation the of transactions
contemplated by the Exchange Agreement, all obligations of the Company under the
Registration Rights Agreement shall become obligations of Cytomedix, Inc.
7. EXCHANGE PRIVILEGE. Subject to the provisions of the last paragraph of
this Section, the Holder at its option may surrender this Note for exchange at
the principal office of the Company and, without expense (except for any stamp
tax or other governmental charge with respect to any transfer involved therein),
receive in exchange therefor notes, in denominations designated by the Holder
and payable to such person or persons as may be designated by such Holder and
for the same aggregate principal amount as the then unpaid principal balance of
this Note. Every instrument made and delivered in exchange for this Note shall
in all other respects be in the same form and have the same terms, on a pro rata
basis, as this Note.
8. BOARD OF DIRECTORS; INSPECTION. Until the Company has performed all of
its obligations hereunder, the Holder shall be entitled to send a representative
(the "Holder Representative") to attend all meetings of the Board of Directors
of the Company, but such Holder Representative shall not be considered an
elected member of the Board of Directors of the Company. The Company will ensure
that meetings of the Board of Directors of the Company are held at least
13
once each calendar quarter and provide the Holder Representative with written
notice of all Board of Director meetings as such notice is provided for in the
Bylaws of the Company, as well as copies of all materials provided to the
directors. The Company will reimburse the Holder Representative for his
reasonable travel expenses, including the cost of airfare and any necessary
meals and lodging, incurred in connection with attending such meetings or
performing such other business on behalf of the Company. The Company will notify
the Holder in writing five (5) business days prior to the effectiveness of any
action to be taken by written consent of directors or stockholders, and will
provide reasonable opportunity for consultation with the Holder with regard to
the matters covered thereby during such five-day period prior to the
effectiveness of such consents.
The Company will, upon reasonable prior notice to the Company, permit
authorized representatives of the Holder to visit and inspect during the
Company's usual business hours any of the properties of the Company, including
its books of account, and to discuss its affairs, finances and accounts with its
agents, officers and independent accountants, all at such reasonable times and
as often as may be reasonably requested, in all cases so as not to interfere
with the Company's operations or personnel Use of Proceeds.
9. USE OF PROCEEDS. The Company shall use the proceeds obtained from the
sale of this Note (the "Proceeds") solely for the negotiation and consummation
of the Curative Health Systems acquisition and to pay all fees of the Holder in
connection with the negotiation and consummation of the Note and the Loan
Documents. The closing of the transactions contemplated by this Note and the
Loan Documents is subject to the Holder's satisfaction that the Proceeds have
been escrowed subject to their use solely for the purposes set forth in this
Section 8.
10. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Note, together with any
attached schedules, exhibits and other documents delivered pursuant hereto,
constitutes the entire agreement of the parties and supersedes all prior
agreements and undertakings, both written and oral, between the parties, or any
of them, with respect to the subject matter hereof. This Note may not be
modified, amended, supplemented, canceled or discharged, except by written
instrument executed by the Company and the Holder. No failure to exercise, and
no delay in exercising, any right, power or privilege under this Note shall
operate as a waiver, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude the exercise of any other right, power or
privilege. No waiver of any breach of any provision shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other provision,
nor shall any waiver be impled from any course of dealing between the Company
and the Holder. No extension of time for performance of any obligations or other
acts hereunder or under any other agreement shall be deemed to be an extension
of the time for performance of any other obligations or any other acts.
11. REPRESENTATIONS OF THE COMPANY. The Company represents and warrants to
Holder as follows:
(a) The execution and delivery of this Note and the performance by the
Company of its obligations hereunder have been duly authorized by all necessary
corporate action on part of the Company in accordance with its Bylaws and
Certificate of Incorporation.
14
(b) This Note has been duly executed and delivered by the Company and
constitutes the legal, valid, binding and enforceable obligation of the Company,
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies or by other equitable principles of general
application.
(c) Upon issuance thereof in accordance with the terms hereof and
payment of the Conversion Price therefor, all of the Shares will, upon issuance,
be duly authorized, validly issued and outstanding, fully paid and
non-assessable, and free from all taxes, liens and charges with respect to the
issuance thereof.
(d) Except for filings under applicable state and federal securities
laws, the Company has obtained all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations hereunder.
(e) There are no state statutes or other "anti-takeover" laws
applicable to the Company, to the issuance of this Note by the Company, or to
the issuance of the Shares upon conversion of this Note, which would have, among
other things, the effect of nullifying the transactions contemplated by this
Note, or affecting the Holder's voting rights or other rights as a shareholder
following such conversion, or, to the extent there are such applicable state
statutes or other "anti-takeover" laws, the Company and its Board of Directors
have taken all steps necessary under such statutes or laws to render them
inapplicable to the Company, the issuance of this Note, and the issuance of the
Shares upon conversion of this Note.
(f) There is no litigation pending, or, to the knowledge of the
Company, threatened, against the Company which, if adversely decided or
resolved, would have a Material Adverse Effect, as defined in the Purchase
Agreement.
12. NEGATIVE COVENANT.
Until the Company shall have no further obligations under the terms of this
Note, without the prior written consent of Holder, and subject to the exceptions
described in this Note and the Loan Documents, the Company shall not issue,
sell, offer to sell or enter into any agreement to sell or offer to sell any
equity or debt securities, including convertible securities, unless the proceeds
from any such issuance are to be used to pay, in full, the principal and accrued
interest on this Note, on and as of the date of closing of any such transaction.
13. MISCELLANEOUS.
(a) Usury. Nothing herein contained, nor any transaction related
hereto, shall be construed or so operate as to require the Company to pay
interest at a greater rate than is now lawful in such case to contract for, or
to make any payment, or to do any act contrary to law. Should any interest or
other charges paid by the Company, or parties liable for the payment of this
Note, in
15
connection with the loan evidenced by this Note, or any document delivered in
connection with said loan, result in the computation or earning of interest in
excess of the maximum legal rate of interest which is legally permitted by law,
then any and all such excess of the maximum legal rate of interest which is
legally permitted by law, then any and all such excess shall be and the same is
hereby waived by the Holder hereof, and any and all such excess shall be
automatically credited against and in reduction of the balance due under this
Note, and the portion of said excess which exceeds the balance due under this
Note shall be paid by the Holder to the Company.
(b) Ownership. The Holder shall be deemed to be the owner of this Note
for all purposes, and the full payment of interest and principal under this Note
to the Holder shall constitute the full and complete discharge of the Company
for such purposes.
(c) Assignment. This agreement and the rights, obligations and duties
of the Company hereunder shall not be assignable or otherwise transferable by
Company. The Holder may, upon notice to Company, transfer or assign any or all
of its rights and obligations under this Note, subject to the restrictions on
transfer in the Securities Purchase Agreement.
(d) Modification. No term or provision contained herein may be
modified, amended or waived except by written agreement or consent signed by the
party to be bound thereby.
(e) Binding Effect and Benefit. This agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto, their heirs,
executors, administrators, personal representatives, successors in interest and
permitted assigns.
(f) Attorneys' Fees. In the event the Holder shall employ legal counsel
to protect its rights hereunder or to enforce any term or provision hereof or
under any of the Loan Documents, such reasonable attorneys' fees and other legal
expenses shall be payable by Company to the Holder upon demand. The Company
shall pay all fees and expenses of the Holder in connection with the negotiation
and consummation of this Note and the Loan Documents.
(g) Further Assurances. Company agrees that from time to time
hereafter, upon request, it will, at its sole expense, execute, acknowledge and
deliver such other instruments and documents and take such further action as may
be reasonably necessary to carry out the intent of this agreement and the Loan
Documents.
(h) Governing Law; Waiver of Jury Trial. THIS NOTE SHALL BE
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) OF
THE STATE OF ILLINOIS. AS PART OF THE CONSIDERATION FOR NEW VALUE THIS DAY
RECEIVED, THE COMPANY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS. EACH OF THE COMPANY AND THE HOLDER
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY SUIT OR
PROCEEDING ARISING OUT OF OR RELATED TO THIS NOTE OR THE OTHER LOAN DOCUMENTS.
THE COMPANY WAIVES ANY OBJECTION WHICH THE COMPANY MAY
16
HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO
ANY SUIT OR PROCEEDING INSTITUTED BY THE HOLDER UNDER THIS NOTE OR THE OTHER
LOAN DOCUMENTS IN ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
HOLDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION WHICH HAS JURISDICTION OVER THE COMPANY OR
ITS PROPERTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER TO ENTER
INTO THIS NOTE AND THE OTHER LOAN DOCUMENTS, MAKE THE LOANS AND EXTEND THE OTHER
FINANCIAL ACCOMMODATIONS CONTEMPLATED HEREUNDER AND THEREUNDER.
(i) Incorporation by Reference. All exhibits and documents referred to
in this agreement shall be deemed incorporated herein by any reference thereto
as if fully set out.
(j) Counterparts. This agreement may be executed in one or more
counterparts (all counterparts together reflecting the signature of all parties)
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
(k) Consent to Jurisdiction and Service of Process. Company hereby
irrevocably (i) consents to the jurisdiction of the courts of the State of
Illinois and of any federal court located in Illinois in connection with any
action or proceeding arising out of or relating to this agreement, or any other
document or exhibit relating hereto or delivered in connection therewith and
(ii) consents that service of legal process in any such action or proceeding may
be made in any manner permitted by the rules of practice and procedure
applicable to such courts.
(l) Non-Cumulative Remedies. The enumeration of the Holder's rights and
remedies set forth in this agreement is not intended to be exhaustive and the
exercise by the Holder of any right or remedy shall not preclude the exercise of
any other rights or remedies, all of which shall be cumulative, and shall be in
addition to any other right or remedy given hereunder, under the Loan Documents
or under any other agreement between the Company and the Holder or which may now
or hereafter exist in law or in equity or by suit or otherwise. No delay or
failure to take action on the part of the Holder in exercising any right, power
or privilege shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between the Company and the Holder or the Holder's employees shall be effective
to change, modify or discharge any provision of this agreement or to constitute
a waiver of any Event of Default.
(m) Indemnification of the Holder. From and at all times after the date
of this Note, and in addition to all of the Holder's other rights and remedies
against the Company, the Company agrees to hold the Holder harmless from, and to
indemnify the Holder against, all losses, damages, costs and expenses
(including, but not limited to, attorneys' fees, costs and expenses) incurred by
the Holder from and after the date hereof, whether direct, indirect or
consequential, as a
17
result of or arising from or relating to any suit, action or proceeding by any
Person, whether threatened or initiated, asserting a claim for any legal or
equitable remedy against any Person under any statute or regulation, including,
but not limited to, any federal or state securities laws, or under any common
law or equitable cause or otherwise, arising from or in connection with the
negotiation, preparation, execution or performance of, this Note and the other
Loan Documents; provided, however, that the foregoing indemnification shall not
protect Holder from loss, damage, cost or expense directly attributable to
Holder's willful misconduct or gross negligence. All of the foregoing losses,
damages, costs and expenses of the Holder shall be payable by the Company upon
demand by the Holder.
(n) Survival of Agreements. All agreements, covenants, representations
and warranties contained herein or made in writing by or on behalf of the
Company in connection with the transactions contemplated hereby shall survive
the execution and delivery of this Note and the other Loan Documents.
(o) Headings and Captions. Subject headings and captions are included
for convenience purposes only and shall not affect the interpretation of this
agreement.
(p) Notice. All notices, requests, demands and other communications
permitted or required hereunder shall be in writing, and either (i) delivered in
person, (ii) sent by express mail or other overnight delivery service providing
receipt of delivery, (iii) mailed by certified or registered mail, postage
prepaid, return receipt requested or (iv) sent by telex, telegraph or other
facsimile transmission as follows:
18
If to Company addressed or delivered in person to:
Cytomedix, Inc.
Three Parkway North, Suite 250 North
Deerfield, IL 60015
Attention: President and Chief Executive Officer
Telephone: 847-405-7800
Facsimile: 847-405-7801
With a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W., Suite 1300
Washington, DC 20004-2505
Attention: Stuart Kurlander, Esq.
Telephone: 202-637-2200
Facsimile: 202-637-2001
If to the Holder, addressed or delivered in person to:
Bristol Investment Fund, Ltd.
c/o Olympia Capital (Cayman) Limited
Williams House
20 Reid Street
Hamilton HM 11, Bermuda
Telephone: 441-292-1018
Facsimile: 441-298-5031
With a copy to:
Bristol DLP, LLC
Investment Manager
11777 San Vicente Blvd., Suite 702
Los Angeles, CA 90049
Attention: Diana Derycz Kessler, Esq.
Telephone: 310-826-0696
Facsimile: 310-826-0696
or to such other address as either party may designate by notice in accordance
with this Section.
Any such notice or communication, if given or made by prepaid,
registered or certified mail or by recorded express delivery, shall be deemed to
have been made when actually received, but not later than three (3) business
days after the same was properly posted or given to
19
such express delivery service and if made properly by telex, telecopy or other
facsimile transmission such notice or communication shall be deemed to have been
made at the time of dispatch.
(q) Severability. If any portion of this agreement is held invalid,
illegal or unenforceable, such determination shall not impair the enforceability
of the remaining terms and provisions herein, which may remain effective, and to
this end this agreement is declared to be severable.
(r) Time for Performance. Time is of the essence in this agreement.
(s) Waiver. No waiver of a default, breach or other violation of any
provision of this agreement shall operate or be construed as a waiver of any
subsequent default, breach or other violation or limit or restrict any right or
remedy otherwise available. No delay or omission on the part of the Holder to
exercise any right or power arising by reason of a default shall impair any such
right or power or prevent its exercise at any time during the continuance
thereof.
(t) Gender and Pronouns. Throughout this agreement, the masculine shall
include the feminine and neuter and the singular shall include the plural and
vice versa as the context requires.
(u) Entire Agreement. This Note and the Loan Documents constitute the
entire agreement of the parties and supersede any and all other prior
agreements, oral or written, with respect to the subject matter contained
herein.
(v) Allocations of Maximum Share Amount and Reserved Amount. The
Maximum Share Amount and Reserved Amount shall be allocated pro rata among the
holders of Notes based on the principal amount of such Notes issued to each
holder. Each increase to the Maximum Share Amount and Reserved Amount shall be
allocated pro rata among the holders of Notes based on the principal amount of
such Notes held by each holder at the time of the increase in the Maximum Share
Amount or Reserved Amount. In the event a holder shall sell or otherwise
transfer any of such holder's Notes, each transferee shall be allocated a pro
rata portion of such transferor's Maximum Share Amount and Reserved Amount. Any
portion of the Maximum Share Amount or Reserved Amount which remains allocated
to any person or entity which does not hold any Notes shall be allocated to the
remaining holders of Notes, pro rata based on the principal amount of such Notes
then held by such holders.
(w) Damages Shares. The shares of Common Stock that may be issuable to
the Holder pursuant to Sections 1(b) and 1(e) hereof ("Damages Shares") shall be
treated as Common Stock issuable upon conversion of this Note for all purposes
hereof and shall be subject to all of the limitations and afforded all of the
rights of the other shares of Common Stock issuable hereunder, including without
limitation, the right to be included in the Registration Statement filed
pursuant to the Registration Rights Agreement. For purposes of calculating
interest payable on the outstanding principal amount hereof, except as otherwise
provided herein, amounts convertible into Damages Shares ("Damages Amounts")
shall not bear interest but must be converted into Damages Shares
20
prior to the conversion of any outstanding principal amount hereof, until the
outstanding Damages Amounts is zero.
(x) Remedies. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Note will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Note, that the Holder
shall be entitled, in addition to all other available remedies at law or in
equity, and in addition to the penalties assessable herein, to an injunction or
injunctions restraining, preventing or curing any breach of this Note and to
enforce specifically the terms and provisions thereof, without the necessity of
showing economic loss and without any bond or other security being required.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, the Company has signed and sealed this Note on this
26th day of December, 2000.
CYTOMEDIX, INC.
By: /s/ Robin Lee Geller
-------------------------------------
Name: Robin Lee Geller
Title: Vice President
22
EXHIBIT A
NOTICE OF CONVERSION
OF CONVERTIBLE NOTE
TO: CYTOMEDIX, INC.
(1) Pursuant to the terms of the attached Convertible Note (the
"NOTE"), the undersigned hereby elects to convert $ __________ principal amount
of the Note into shares of Common Stock of Cytomedix, Inc., a Delaware
corporation (the "COMPANY"). Capitalized terms used herein and not otherwise
defined herein have the respective meanings provided in the Note.
(2) The Company shall electronically transmit the Common Stock issuable
pursuant to this Notice of Conversion to the account of the undersigned or its
nominee with DTC through its Deposit Withdrawal Agent Commission system ("DWAC
Transfer").
Name of DTC Prime Broker:
Account Number:
------------------------------
[ ] In lieu of receiving shares of Common Stock issuable pursuant to this
Notice of Conversion by way of a DWAC Transfer, the undersigned hereby
requests that the Company issue a certificate or certificates for the
number of shares of Common Stock set forth above (which numbers are
based on the Holder's calculation attached hereto) in the name(s)
specified immediately below or, if additional space is necessary, on an
attachment hereto:
Name:
---------------------------------------
Address:
------------------------------------
------------------------------------
(3) Holder acknowledges and affirms that the Common Stock issued
pursuant to this Notice of Conversion has been or will be sold in accordance
with the requirements of the 1933 Act, if applicable, and applicable state
securities laws, or pursuant to an exemption under the 1933 Act and applicable
state securities laws.
Date:
----------------------- -------------------------------------------
Signature of Registered Holder (must be
signed exactly as name appears in the Note,
if applicable).
23