EXHIBIT 10.16
Published on May 15, 2007
Exhibit 10.16
NEITHER
THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE
HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
$200,000
POWER3
MEDICAL PRODUCTS, INC.
Convertible
Debenture
Due
April 17, 2009
This
Convertible Debenture (the “Debenture”) is issued by POWER3
MEDICAL PRODUCTS, INC., a New York corporation (the “Obligor”),
to NEOGENOMICS, INC., a Nevada corporation (the
“Holder”), pursuant to that certain Securities Purchase Agreement
(the
“Purchase Agreement”) of even date herewith. Capitalized terms
used and not defined herein have the meanings given to them in the Purchase
Agreement.
FOR
VALUE
RECEIVED, the Obligor hereby promises to pay to the Holder or its successors
and
assigns the principal sum of Two Hundred Thousand Dollars ($200,000) together
with accrued but unpaid interest on or before April 17, 2009 (the “Maturity
Date”) in accordance with the following terms:
This
Debenture is subject to the following additional provisions:
Section
1. Interest;
Exchange. Interest shall accrue on the outstanding principal
balance hereof at an annual rate equal to six percent (6%). Interest
shall be calculated on the basis of a 365-day year and the actual number of
days
elapsed, to the extent permitted by applicable law. Interest
hereunder will be paid on the last day of each calendar quarter to the Holder
or
its assignee (as defined in Section 5) in whose name this Debenture is
registered on the records of the Obligor regarding registration and transfers
of
Debentures (the “Debenture Register”). This Debenture is
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same.
No
service charge will be made for such registration of transfer or
exchange.
Section
2. Events
of Default.
(a) An
“Event of Default”, wherever used herein, means any one of the following
events (whatever the reason and whether it shall be voluntary or involuntary
or
effected by operation of law or pursuant to any judgment, decree or order of
any
court, or any order, rule or regulation of any administrative or governmental
body):
(i) Any
default in the payment of the principal of, interest on or other charges in
respect of this Debenture, free of any claim of subordination, as and when
the
same shall become due and payable (whether on a Conversion Date or the Maturity
Date or by acceleration or otherwise);
(ii) The
Obligor shall fail to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit any breach or default of any
provision of this Debenture (except as may be covered by Section 2(a)(i) hereof)
or any Transaction Document which is not cured with in the time
prescribed;
(iii) The
Obligor or any subsidiary of the Obligor shall commence, or there shall be
commenced against the Obligor or any subsidiary of the Obligor under any
applicable bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the Obligor or any subsidiary of the Obligor commences
any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any
jurisdiction whether now or hereafter in effect relating to the Obligor or
any
subsidiary of the Obligor or there is commenced against the Obligor or any
subsidiary of the Obligor any such bankruptcy, insolvency or other proceeding
which remains undismissed for a period of sixty-one (61) days; or the Obligor
or
any subsidiary of the Obligor is adjudicated insolvent or bankrupt; or any
order
of relief or other order approving any such case or proceeding is entered;
or
the Obligor or any subsidiary of the Obligor suffers any appointment of any
custodian, private or court appointed receiver or the like for it or any
substantial part of its property which continues undischarged or unstayed for
a
period of sixty one (61) days; or the Obligor or any subsidiary of the Obligor
makes a general assignment for the benefit of creditors; or the Obligor or
any
subsidiary of the Obligor shall fail to pay, or shall state that it is unable
to
pay, or shall be unable to pay, its debts generally as they become due; or
the
Obligor or any subsidiary of the Obligor shall call a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its
debts; or the Obligor or any subsidiary of the Obligor shall by any act or
failure to act expressly indicate its consent to, approval of or acquiescence
in
any of the foregoing; or any corporate or other action is taken by the Obligor
or any subsidiary of the Obligor for the purpose of effecting any of the
foregoing;
(iv) The
Obligor or any subsidiary of the Obligor shall default in any of its obligations
under any other debenture or any mortgage, credit agreement or other facility
(other than existing defaults with respect to outstanding convertible debentures
and notes that have previously been disclosed to the Holder), indenture
agreement, factoring agreement or other instrument under which there may be
issued, or by which there may be secured or evidenced any indebtedness for
borrowed money or money due under any long term leasing or factoring arrangement
of the Obligor or any subsidiary of the Obligor in an amount exceeding one
hundred thousand dollars ($100,000), whether such indebtedness now exists or
shall hereafter be created and such default shall result in such indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise become due and payable;
(v) The
Common Stock shall cease to be quoted for trading or listing for trading on
either the Pink Sheets Electronic Quotation Service (the “Pink Sheets”),
or if then listed on the OTC Bulletin Board, Nasdaq Capital Market, New York
Stock Exchange, American Stock Exchange or the Nasdaq National Market (each,
a
“Subsequent Market”) shall cease to be quoted for trading or listing on
such Subsequent Market and shall not again be quoted or listed for trading
thereon within five (5) Trading Days of such delisting;
(vi) The
Obligor or any subsidiary of the Obligor shall be a party to any Change of
Control Transaction (as defined in Section 5);
(vii) The
Obligor, following the exercise by the Holder of its registration rights
pursuant to Section 2 of the Registration Rights Agreement, shall fail to
file the Registration Statement with the Commission or the Registration
Statement shall not have been declared effective by the Commission, in each
case
within the time periods set forth in the Registration Rights
Agreement;
(viii) If
the effectiveness of the Registration Statement lapses for any reason or the
Holder shall not be permitted to resell the shares of Common Stock underlying
this Debenture under the Registration Statement, in either case, for more than
five (5) consecutive Trading Days or an aggregate of eight (8) Trading Days
(which need not be consecutive Trading Days);
(ix) The
Obligor shall fail for any reason to deliver Common Stock certificates to a
Holder prior to the fifth Trading Day after a Conversion Date or the Obligor
shall provide notice to the Holder, including by way of public announcement,
at
any time, of its intention not to comply with requests for conversions of this
Debenture in accordance with the terms hereof;
(x) The
Obligor shall fail for any reason to deliver the payment in cash pursuant to
a
Buy-In (as defined herein) within three (3) days after notice is claimed
delivered hereunder;
(b) During
the time that any portion of this Debenture is outstanding, if any Event of
Default has occurred, the full principal amount of this Debenture, together
with
interest and other amounts owing in respect thereof, to the date of acceleration
shall become at the Holder’s election, immediately due and payable in cash,
provided however, the Holder may request (but shall have no obligation to
request) payment of such amounts in Common Stock of the Obligor. In
addition to any other remedies, the Holder shall have the right (but not the
obligation) to convert this Debenture at any time after (x) an Event of Default
or (y) the Maturity Date at the Conversion Price then in-effect. The
Holder need not provide and the Obligor hereby waives any presentment, demand,
protest or other notice of any kind, and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such
declaration may be rescinded and annulled by Holder at any time prior to payment
hereunder. No such rescission or annulment shall affect any subsequent Event
of
Default or impair any right consequent thereon.
Section
3. Conversion.
(a) Conversion
at Option of Holder.
(i) This
Debenture shall be convertible into shares of Common Stock at the option of
the
Holder, in whole or in part at any time and from time to time, after the
Original Issue Date (as defined in Section 5). The number of shares of Common
Stock issuable upon a conversion hereunder equals the quotient obtained by
dividing (x) the outstanding amount of this Debenture to be converted by (y)
the
Conversion Price (as defined in Section 3(b)(i)). The Obligor shall
deliver Common Stock certificates to the Holder prior to the fifth (5th) Trading
Day after
a Conversion Date.
(ii) Notwithstanding
anything to the contrary contained herein, if on any Conversion
Date: (1) the number of shares of Common Stock at the time
authorized, unissued and unreserved for all purposes, or held as treasury stock,
is insufficient to pay principal and interest hereunder in shares of Common
Stock; (2) the Common Stock is not listed or quoted for trading on the Pink
Sheets or on a Subsequent Market; or (3) the Obligor has failed to timely
satisfy its conversion obligations, then, at the option of the Holder, the
Obligor, in lieu of delivering shares of Common Stock pursuant to Section
3(a)(i), shall deliver, within three (3) Trading Days of each applicable
Conversion Date, an amount in cash equal to the product of the outstanding
principal amount to be converted plus any interest due therein divided by the
Conversion Price, chosen by the Holder, and multiplied by the highest closing
price of the stock from date of the conversion notice till the date that such
cash payment is made.
Further,
if the Obligor shall not have delivered any cash due in respect of conversion
of
this Debenture or as payment of interest thereon by the fifth (5th) Trading
Day after
the Conversion Date, the Holder may, by notice to the Obligor, require the
Obligor to issue shares of Common Stock pursuant to Section 3(b), except that
for such purpose the Conversion Price applicable thereto shall be the lesser
of
the Conversion Price on the Conversion Date and the Conversion Price on the
date
of such Holder demand. Any such shares will be subject to the provisions of
this
Section.
(iii) The
Holder shall effect conversions by delivering to the Obligor a completed notice
in the form attached hereto as Exhibit A (a “Conversion
Notice”). The date on which a Conversion Notice is delivered is
the “Conversion Date.” Unless the Holder is converting the entire
principal amount outstanding under this Debenture, the Holder is not required
to
physically surrender this Debenture to the Obligor in order to effect
conversions. Conversions hereunder shall have the effect of lowering
the outstanding principal amount of this Debenture plus all accrued and unpaid
interest thereon in an amount equal to the applicable conversion. The Holder
and
the Obligor shall maintain records showing the principal amount converted and
the date of such conversions. In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence
of
manifest error.
(b) Conversion
Price and Adjustments to Conversion Price.
(i) The
conversion price in effect on any Conversion Date shall be, at the sole option
of the Holder, equal to $0.20 per share (the “Fixed Conversion Price”),
subject to adjustment as set forth herein.
(ii) If
the Obligor, at any time while this Debenture is outstanding, shall (a) pay
a stock dividend or otherwise make a distribution or distributions on shares
of
its Common Stock or any other equity or equity equivalent securities payable
in
shares of Common Stock, (b) subdivide outstanding shares of Common Stock into
a
larger number of shares, (c) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (d)
issue
by reclassification of shares of the Common Stock any shares of capital stock
of
the Obligor, then the Fixed Conversion Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after
such
event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
(iii) If
the Obligor, at any time while this Debenture is outstanding, shall issue
rights, options or warrants to all holders of Common Stock (and not to the
Holder) (a “Distribution Security”) entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the Fixed
Conversion Price, then the Fixed Conversion Price shall be determined by (i)
multiplying (x) the difference between the Fixed Conversion Price prior to
the
issuance of such Distribution Securities and the issuance price per share of
the
Distribution Security by (y) one minus the percentage amount (subject to a
maximum of 100%) determined by dividing the number of shares of Common Stock
or
any other security convertible into or exchangeable for shares of Common Stock
(“Common Stock Equivalents”) issued through such issuance of the
Distribution Security by the total number of Common Stock Equivalents held
by
the Holder; and then (ii) adding the resulting product to the issuance price
per
share of such Distribution Security. Such adjustment shall be made
whenever such Distribution Securities are issued, and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such Distribution Securities.
(iv) If
the Obligor or any subsidiary thereof, as applicable, at any time while this
Debenture is outstanding, shall issue shares of Common Stock or Common Stock
Equivalents entitling any Person to acquire shares of Common Stock, at a price
per share less than the Fixed Conversion Price (if the holder of the Common
Stock or Common Stock Equivalent so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which is issued in connection with such issuance, be entitled to
receive shares of Common Stock at a price per share which is less than the
Fixed
Conversion Price, such issuance shall be deemed to have occurred for less than
the Fixed Conversion Price), then the Fixed Conversion Price shall be determined
by (i) multiplying (x) the difference between the Fixed Conversion Price prior
to the issuance of such Common Stock or Common Stock Equivalents and the
issuance price per share of such Common Stock or Common Stock
Equivalents by; (y) one minus the percentage amount (subject to a
maximum of 100%) determined by dividing the number of shares of Common Stock
or
Common Stock Equivalents issued by the total number of shares of Common Stock
Equivalents held by the Holder; and then (ii) adding the resulting product
to
the issuance price per share of such Common Stock or Common Stock
Equivalents. Such adjustment shall be made whenever such Common Stock
or Common Stock Equivalents are issued, and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such Common Stock or Common Stock Equivalents. The Obligor shall notify the
Holder in writing, no later than one (1) business day following any issuance
of
Common Stock or Common Stock Equivalents subject to this Section, indicating
therein the applicable issuance price, or of applicable reset price, exchange
price, conversion price and other pricing terms.
(v) [Intentionally
Omitted]
(vi) In
case of any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is converted into other securities,
cash or property, the Holder shall have the right thereafter to, at its
option, (A) convert the then outstanding principal amount, together
with all accrued but unpaid interest and any other amounts then owing hereunder
in respect of this Debenture into the shares of stock and other securities,
cash
and property receivable upon or deemed to be held by holders of the Common
Stock
following such reclassification or share exchange, and the Holder of this
Debenture shall be entitled upon such event to receive such amount of
securities, cash or property as the shares of the Common Stock of the Obligor
into which the then outstanding principal amount, together with all accrued
but
unpaid interest and any other amounts then owing hereunder in respect of this
Debenture could have been converted immediately prior to such reclassification
or share exchange would have been entitled, or (B) require the Obligor to prepay
the outstanding principal amount of this Debenture, plus all interest and other
amounts due and payable thereon. The entire prepayment price shall be paid
in
cash. This provision shall similarly apply to successive
reclassifications or share exchanges.
(vii) The
Obligor shall at all times reserve and keep available out of its authorized
Common Stock the full number of shares of Common Stock issuable upon conversion
of all outstanding amounts under this Debenture; and within three (3) Business
Days following the receipt by the Obligor of a Holder’s notice that such minimum
number of Underlying Shares is not so reserved, the Obligor shall promptly
reserve a sufficient number of shares of Common Stock to comply with such
requirement.
(viii) All
calculations under this Section 3 shall be rounded up to the nearest $0.001
or
whole share.
(ix) Whenever
the Conversion Price is adjusted pursuant to Section 3 hereof, the Obligor
shall
promptly mail to the Holder a notice setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring
such
adjustment.
(x) If
(A) the Obligor shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Obligor shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock; (C) the Obligor shall authorize the
granting to all holders of the Common Stock rights or warrants to subscribe
for
or purchase any shares of capital stock of any class or of any rights; (D)
the
approval of any stockholders of the Obligor shall be required in connection
with
any reclassification of the Common Stock, any consolidation or merger to which
the Obligor is a party, any sale or transfer of all or substantially all of
the
assets of the Obligor, of any compulsory share exchange whereby the Common
Stock
is converted into other securities, cash or property; or (E) the Obligor shall
authorize the voluntary or involuntary dissolution, liquidation or winding
up of
the affairs of the Obligor; then, in each case, the Obligor shall cause to
be
filed at each office or agency maintained for the purpose of conversion of
this
Debenture, and shall cause to be mailed to the Holder at its last address as
it
shall appear upon the stock books of the Obligor, at least twenty (20) calendar
days prior to the applicable record or effective date hereinafter specified,
a
notice stating (x) the date on which a record is to be taken for the purpose
of
such dividend, distribution, redemption, rights or warrants, or if a record
is
not to be taken, the date as of which the holders of the Common Stock of record
to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of
the
Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share exchange,
provided, that the failure to mail such notice or any defect therein or in
the
mailing thereof shall not affect the validity of the corporate action required
to be specified in such notice. The Holder is entitled to convert
this Debenture during the twenty (20) day calendar period commencing the date
of
such notice to the effective date of the event triggering such
notice.
(xi) In
case of any (1) merger or consolidation of the Obligor or any subsidiary of
the
Obligor with or into another Person, or (2) sale by the Obligor or any
subsidiary of the Obligor of more than one-half of the assets of the Obligor
in
one or a series of related transactions, a Holder shall have the right to (A)
exercise any rights under Section 2(b), (B) convert the aggregate amount of
this
Debenture then outstanding into the shares of stock and other securities, cash
and property receivable upon or deemed to be held by holders of Common Stock
following such merger, consolidation or sale, and such Holder shall be entitled
upon such event or series of related events to receive such amount of
securities, cash and property as the shares of Common Stock into which such
aggregate principal amount of this Debenture could have been converted
immediately prior to such merger, consolidation or sales would have been
entitled, or (C) in the case of a merger or consolidation, require the surviving
entity to issue to the Holder a convertible Debenture with a principal amount
equal to the aggregate principal amount of this Debenture then held by such
Holder, plus all accrued and unpaid interest and other amounts owing thereon,
which such newly issued convertible Debenture shall have terms identical
(including with respect to conversion) to the terms of this Debenture, and
shall
be entitled to all of the rights and privileges of the Holder of this Debenture
set forth herein and the agreements pursuant to which this Debentures were
issued. In the case of clause (C), the conversion price applicable for the
newly
issued shares of convertible preferred stock or convertible Debentures shall
be
based upon the amount of securities, cash and property that each share of Common
Stock would receive in such transaction and the Conversion Price in effect
immediately prior to the effectiveness or closing date for such transaction.
The
terms of any such merger, sale or consolidation shall include such terms so
as
to continue to give the Holder the right to receive the securities, cash and
property set forth in this Section upon any conversion or redemption following
such event. This provision shall similarly apply to successive such
events.
(c) [Intentionally
Omitted]
(d) Other
Provisions.
(i) The
Obligor covenants that it will at all times reserve and keep available out
of
its authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of this Debenture and payment of interest on this
Debenture, each as herein provided, free from preemptive rights or any other
actual contingent purchase rights of persons other than the Holder, not less
than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Obligor as to reservation of such shares set
forth in this Debenture) be issuable (taking into account the adjustments and
restrictions of Section 3(b)) upon the conversion of the outstanding principal
amount of this Debenture and payment of interest hereunder. The Obligor
covenants that all shares of Common Stock that shall be so issuable shall,
upon
issue, be duly and validly authorized, issued and fully paid, nonassessable
and,
if the Registration Statement has been declared effective under the Securities
Act, registered for public sale in accordance with such Registration
Statement.
(ii) Upon
a conversion hereunder the Obligor shall not be required to issue stock
certificates representing fractions of shares of the Common Stock, but may
if
otherwise permitted, make a cash payment in respect of any final fraction of
a
share based on the Closing Bid Price at such time. If the Obligor elects not,
or
is unable, to make such a cash payment, the Holder shall be entitled to receive,
in lieu of the final fraction of a share, one whole share of Common
Stock.
(iii) The
issuance of certificates for shares of the Common Stock on conversion of this
Debenture shall be made without charge to the Holder thereof for any documentary
stamp or similar taxes that may be payable in respect of the issue or delivery
of such certificate, provided that the Obligor shall not be required to pay
any
tax that may be payable in respect of any transfer involved in the issuance
and
delivery of any such certificate upon conversion in a name other than that
of
the Holder of such Debenture so converted and the Obligor shall not be required
to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Obligor the amount of
such tax or shall have established to the satisfaction of the Obligor that
such
tax has been paid.
(iv) Nothing
herein shall limit a Holder’s right to pursue actual damages or declare an Event
of Default pursuant to Section 2 herein for the Obligor ‘s failure to deliver
certificates representing shares of Common Stock upon conversion within the
period specified herein and such Holder shall have the right to pursue all
remedies available to it at law or in equity including, without limitation,
a
decree of specific performance and/or injunctive relief, in each case without
the need to post a bond or provide other security. The exercise of any such
rights shall not prohibit the Holder from seeking to enforce damages pursuant
to
any other Section hereof or under applicable law.
(v) In
addition to any other rights available to the Holder, if the Obligor fails
to
deliver to the Holder such certificate or certificates pursuant to Section
3(a)(i) by the fifth (5th) Trading
Day after
the Conversion Date, and if after such fifth (5th) Trading
Day the
Holder purchases (in an open market transaction or otherwise) Common Stock
to
deliver in satisfaction of a sale by such Holder of the Underlying Shares which
the Holder anticipated receiving upon such conversion (a “Buy-In”), then
the Obligor shall (A) pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the Common
Stock so purchased exceeds (y) the product of (1) the aggregate number of shares
of Common Stock that such Holder anticipated receiving from the conversion
at
issue multiplied by (2) the market price of the Common Stock at the time of
the
sale giving rise to such purchase obligation and (B) at the option of the
Holder, either reissue a Debenture in the principal amount equal to the
principal amount of the attempted conversion or deliver to the Holder the number
of shares of Common Stock that would have been issued had the Obligor timely
complied with its delivery requirements under Section 3(a)(i). For example,
if
the Holder purchases Common Stock having a total purchase price of $11,000
to
cover a Buy-In with respect to an attempted conversion of Debentures with
respect to which the market price of the Underlying Shares on the date of
conversion was a total of $10,000 under clause (A) of the immediately preceding
sentence, the Obligor shall be required to pay the Holder $1,000. The
Holder shall provide the Obligor written notice indicating the amounts payable
to the Holder in respect of the Buy-In.
Section
4. Notices. Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms hereof must be in writing and will be deemed to have
been
delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) trading day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such
communications shall be:
|
If
to the Obligor, to:
|
Power3
Medical Products, Inc.
|
|
3400
Research Forest Drive, Suite B2-3
|
|
|
The
Woodlands, Texas 77381
|
|
|
Attention: Steven
B. Rash, President and CEO
|
|
|
Telephone: (281)
466-1600
|
|
|
Facsimile: (281)
466 1481
|
|
|
If
to the Holder:
|
Neogenomics,
Inc.
|
|
12701
Commonwealth Drive, Suite 9
|
|
|
Fort
Myers, Florida 33913
|
|
|
Attention: Robert
P. Gasparini, President and Chief Scientific Officer
|
|
|
Telephone: (239)
768-0600
|
|
|
With
a copy to:
|
Kirkpatrick
& Lockhart Preston Gates Ellis, LLP
|
|
201
South Biscayne Boulevard, Suite 2000
|
|
|
Miami,
Florida 33131
|
|
|
Attention: Clayton
E. Parker, Esq.
|
|
|
Telephone: (305)
539-3306
|
|
|
Facsimile: (305)
358-7095
|
or
at
such other address and/or facsimile number and/or to the attention of such
other
person as the recipient party has specified by written notice given to each
other party three (3) business days prior to the effectiveness of such
change. Written confirmation of receipt (i) given by the recipient of
such notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (iii) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
Section
5. Definitions. For
the purposes hereof, the following terms shall have the following
meanings:
“Business
Day” means any day except Saturday, Sunday and any day which shall be a
federal legal holiday in the United States or a day on which banking
institutions are authorized or required by law or other government action to
close.
“Change
of Control Transaction” means the occurrence of (a) an acquisition after the
date hereof by an individual or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Obligor, by
contract or otherwise) of in excess of fifty percent (50%) of the voting
securities of the Obligor (except that the acquisition of voting securities
by
the Holder shall not constitute a Change of Control Transaction for purposes
hereof), (b) a replacement at one time or over time of more than one-half of
the
members of the board of directors of the Obligor which is not approved by a
majority of those individuals who are members of the board of directors on
the
date hereof (or by those individuals who are serving as members of the board
of
directors on any date whose nomination to the board of directors was approved
by
a majority of the members of the board of directors who are members on the
date
hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more
of
the assets of the Obligor or any subsidiary of the Obligor in one or a series
of
related transactions with or into another entity, or (d) the execution by the
Obligor of an agreement to which the Obligor is a party or by which it is bound,
providing for any of the events set forth above in (a), (b) or (c).
“Closing
Bid Price” means the price per share in the last reported trade of the
Common Stock on the Pink Sheets or on the exchange on which the Common Stock
is
then listed as quoted by Bloomberg, LP.
“Common
Stock” means the common stock, par value $.001, of the Obligor and stock of
any other class into which such shares may hereafter be changed or
reclassified.
“Conversion
Date” shall mean the date upon which the Holder gives the Obligor notice of
their intention to effectuate a conversion of this Debenture into shares of
the
Obligor’s Common Stock as outlined herein.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Original
Issue Date” shall mean the date of the first issuance of this Debenture
regardless of the number of transfers and regardless of the number of
instruments, which may be issued to evidence such Debenture.
“Person”
means a corporation, an association, a partnership, organization, a business,
an
individual, a government or political subdivision thereof or a governmental
agency.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“Trading
Day” means a day on which the shares of Common Stock are quoted on the Pink
Sheets or quoted or traded on such Subsequent Market on which the shares of
Common Stock are then quoted or listed; provided, that in the event that the
shares of Common Stock are not listed or quoted, then Trading Day shall mean
a
Business Day.
“Underlying
Shares” means the shares of Common Stock issuable upon conversion of this
Debenture or as payment of interest in accordance with the terms
hereof.
Capitalized
terms that are not otherwise defined herein have the meanings given to such
terms in the Purchase Agreement.
Section
6. Ranking. Except
as expressly provided herein, no provision of this Debenture shall alter or
impair the obligations of the Obligor, which are absolute and unconditional,
to
pay the principal of, interest and other charges (if any) on, this Debenture
at
the time, place, and rate, and in the coin or currency, herein
prescribed. This Debenture is a direct obligation of the Obligor.
This Debenture ranks pari passu with all other Debentures now or hereafter
issued under the terms set forth herein. As long as this Debenture is
outstanding, the Obligor shall not and shall cause their subsidiaries not to,
without the consent of the Holder, (i) amend its certificate of incorporation,
bylaws or other charter documents so as to adversely affect any rights of the
Holder; (ii) repay, repurchase or offer to repay, repurchase or otherwise
acquire shares of its Common Stock or other equity securities other than as
to
the Underlying Shares to the extent permitted or required under the Transaction
Documents; or (iii) enter into any agreement with respect to any of the
foregoing.
Section
7. No
Rights as Stockholder. This Debenture shall not entitle the
Holder to any of the rights of a stockholder of the Obligor, including without
limitation, the right to vote, to receive dividends and other distributions,
or
to receive any notice of, or to attend, meetings of stockholders or any other
proceedings of the Obligor, unless and to the extent converted into shares
of
Common Stock in accordance with the terms hereof.
Section
8. Replacement. If
this Debenture is mutilated, lost, stolen or destroyed, the Obligor shall
execute and deliver, in exchange and substitution for and upon cancellation
of
the mutilated Debenture, or in lieu of or in substitution for a lost, stolen
or
destroyed Debenture, a new Debenture for the principal amount of this Debenture
so mutilated, lost, stolen or destroyed but only upon receipt of evidence of
such loss, theft or destruction of such Debenture, and of the ownership hereof,
and indemnity, if requested, all reasonably satisfactory to the
Obligor.
Section
9. Priority. No
indebtedness of the Obligor is senior to this Debenture in right of payment,
whether with respect to interest, damages or upon liquidation or dissolution
or
otherwise. Without the Holder’s consent, the Obligor will not and
will not permit any of their subsidiaries to, directly or indirectly, enter
into, create, incur, assume or suffer to exist any indebtedness of any kind,
on
or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits there from that is senior
in
any respect to the obligations of the Obligor under this Debenture.
Section
10. Governing
Law. This Debenture shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflicts of laws thereof. Each of the parties consents to the
exclusive jurisdiction of the United States federal courts and the state courts
located in the City of New York, Borough of Manhattan in connection with any
dispute arising under this Debenture and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on
forumnonconveniens to the bringing of any such proceeding
in such jurisdictions.
Section
11. Expenses. If
the Obligor fails to strictly comply with the terms of this Debenture, then
the
Obligor shall reimburse the Holder promptly for all fees, costs and expenses,
including, without limitation, attorneys’ fees and expenses incurred by the
Holder in any action in connection with this Debenture, including, without
limitation, those incurred: (i) during any workout, attempted workout, and/or
in
connection with the rendering of legal advice as to the Holder’s rights,
remedies and obligations, (ii) collecting any sums which become due to the
Holder, (iii) defending or prosecuting any proceeding or any counterclaim to
any
proceeding or appeal; or (iv) the protection, preservation or enforcement of
any
rights or remedies of the Holder.
Section
12. Waiver. Any
waiver by the Holder of a breach of any provision of this Debenture shall not
operate as or be construed to be a waiver of any other breach of such provision
or of any breach of any other provision of this Debenture. The failure of the
Holder to insist upon strict adherence to any term of this Debenture on one
or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other
term
of this Debenture. Any waiver must be in writing.
Section
13. Severability. If
any provision of this Debenture is invalid, illegal or unenforceable, the
balance of this Debenture shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances. If it shall be found that
any
interest or other amount deemed interest due hereunder shall violate applicable
laws governing usury, the applicable rate of interest due hereunder shall
automatically be lowered to equal the maximum permitted rate of interest. The
Obligor covenants (to the extent that it may lawfully do so) that it shall
not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Obligor from paying all or any portion of the
principal of or interest on this Debenture as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Obligor (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of
any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.
Section
14. Payment
Date. Whenever any payment or other obligation hereunder shall be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.
Section
15. Jury
Trial. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE
OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’
ACCEPTANCE OF THIS AGREEMENT.
[REMAINDER
OF PAGE INTENTIONLLY LEFT BLANK]
IN
WITNESS WHEREOF, the Obligor has caused this Convertible Debenture to be duly
executed by a duly authorized officer as of the date set forth
above.
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POWER3
MEDICAL PRODUCTS, INC.
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By:
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Name:
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Title:
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EXHIBIT
“A”
NOTICE
OF CONVERSION
(To
be executed by the Holder in order to convert the
Debenture)
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TO:
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The
undersigned hereby irrevocably elects to convert $ of the principal
amount of the above Debenture into Shares of Common Stock of, according to
the
conditions stated therein, as of the Conversion Date written below.
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Conversion
Date:
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Applicable
Conversion Price:
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Signature:
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Name:
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Address:
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Amount
to be converted:
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$
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Amount
of Debenture unconverted:
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$
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Conversion
Price per share:
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$
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Number
of shares of Common Stock to be issued:
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Please
issue the shares of Common Stock in the following name and to the
following address:
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Issue
to:
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Authorized
Signature:
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Name:
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Title:
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Phone
Number:
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Broker
DTC Participant Code:
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Account
Number:
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