EXHIBIT
10.4
NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER),
IN A FORM REASONABLY ACCEPTABLE TO THE BORROWER, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE
144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.
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Principal
Amount: $657,200.00
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Issue Date: September 16,
2009
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Purchase
Price: $620,000.00
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SECURED CONVERTIBLE PROMISSORY
NOTE
FOR VALUE RECEIVED, MEDIS TECHNOLOGIES LTD., a
Delaware corporation (hereinafter called “ Borrower
”), hereby promises to pay to the order of IROQUOIS MASTER
FUND LTD., 641 Lexington Ave., 26th Floor, New York NY 10022, (212)
207-3452 (the “ Holder ”), without demand, the
sum of Six Hundred and Fifty-Seven Thousand Two Hundred Dollars
($657,200.00) (“ Principal Amount ”), with
interest accruing thereon, if any, on January 16, 2010 (the “
Maturity Date ”), if not sooner paid.
This Note has been entered into pursuant to the
terms of a subscription agreement between the Borrower and the
Holder dated at or about the date hereof (the “
Subscription Agreement ”), and shall be governed by
the terms of such Subscription Agreement. Unless
otherwise separately defined herein, all capitalized terms used in
this Note shall have the same meaning as is set forth in the
Subscription Agreement. The following terms shall apply
to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1
Payment Grace Period . The Borrower shall not
have any grace period to pay any monetary amounts due under this
Note. During the pendency of an Event of Default (as
described in Article III), a default interest rate of eighteen
percent (18%) per annum shall be in effect.
1.2
Conversion Privileges . The Conversion Rights set
forth in Article IV shall remain in full force and effect
immediately from the date hereof and until the Note is paid in full
regardless of the occurrence of an Event of
Default. This Note shall be payable in full on the
Maturity Date, unless previously converted into Common Stock in
accordance with Article IV hereof.
ARTICLE II
CONVERSION RIGHTS
The Holder shall have the right to convert the
principal and any interest due under this Note into Shares of the
Borrower's Common Stock, $.01 par value per share (“
Common Stock ”) as set forth below.
2.1.
Conversion into the Borrower's Common Stock .
(a) The
Holder shall have the right from and after the date of the issuance
of this Note and then at any time until this Note is fully paid, to
convert any outstanding and unpaid principal portion of this Note,
and accrued interest, at the election of the Holder (the date of
giving of such notice of conversion being a “ Conversion
Date ”) into fully paid and non-assessable shares of
Common Stock as such stock exists on the date of issuance of this
Note, or any shares of capital stock of Borrower into which such
Common Stock shall hereafter be changed or reclassified, at the
conversion price as defined in Section 2.1(b) hereof,
determined as provided herein. Upon delivery to the
Borrower of a completed Notice of Conversion, a form of which is
annexed hereto as Exhibit A , Borrower shall issue and
deliver to the Holder within five (5) business days after the
Conversion Date (such third day being the “ Delivery
Date ”) that number of shares of Common Stock for the
portion of the Note converted in accordance with the
foregoing. At the election of the Holder, the Borrower
will deliver accrued but unpaid interest on the Note, if any,
through the Conversion Date directly to the Holder on or before the
Delivery Date. The number of shares of Common Stock to
be issued upon each conversion of this Note shall be determined by
dividing that portion of the principal of the Note and interest, if
any, to be converted, by the Conversion Price.
(b)
Subject to adjustment as provided in Section 2.1(c) hereof,
the conversion price (“Conversion Price”) per share
shall be $0.20.
(c)
The Conversion Price and number and kind of shares or other
securities to be issued upon conversion determined pursuant to
Section 2.1(a) , shall be subject to adjustment from time to
time upon the happening of certain events while this conversion
right remains outstanding, as follows:
A.
Merger, Sale of Assets, etc . If (A) the Borrower
effects any merger or consolidation of the Borrower with
or into another entity, (B) the Borrower effects any sale of all or
substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer
(whether by the Borrower or another entity) is completed pursuant
to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, (D)
the Borrower consummates a stock purchase agreement or other
business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more persons or entities whereby such
other persons or entities acquire more than the 50% of the
outstanding shares of Common Stock (not including any shares of
Common Stock held by such other persons or entities making or party
to, or associated or affiliated with the other persons or entities
making or party to, such stock purchase agreement or other business
combination), (E) any “person” or “group”
(as these terms are used for purposes of Sections 13(d) and 14(d)
of the 1934 Act) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of 50% of the aggregate Common Stock of the
Borrower, or (F) the Borrower effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a “
Fundamental Transaction ”), this Note,
as to the unpaid principal portion thereof and accrued interest
thereon, if any, shall thereafter be deemed to evidence
the
right to
convert into such number and kind of shares or other securities and
property as would have been issuable or distributable on account of
such Fundamental Transaction, upon or with respect to the
securities subject to the conversion right immediately prior to
such Fundamental Transaction. The foregoing provision
shall similarly apply to successive Fundamental Transactions of a
similar nature by any such successor or
purchaser. Without limiting the generality of the
foregoing, the anti-dilution provisions of this Section shall apply
to such securities of such successor or purchaser after any such
Fundamental Transaction.
B.
Reclassification, etc. If the Borrower at any
time shall, by reclassification or otherwise, change the Common
Stock into the same or a different number of securities of any
class or classes that may be issued or outstanding, this Note, as
to the unpaid principal portion thereof and accrued interest
thereon, shall thereafter be deemed to evidence the right to
purchase an adjusted number of such securities and kind of
securities as would have been issuable as the result of such change
with respect to the Common Stock immediately prior to such
reclassification or other change.
C.
Stock Splits, Combinations and Dividends . If the
shares of Common Stock are subdivided or combined into a greater or
smaller number of shares of Common Stock, or if a dividend is paid
on the Common Stock in shares of Common Stock, the Conversion Price
shall be proportionately reduced in case of subdivision of shares
or stock dividend or proportionately increased in the case of
combination of shares, in each such case by the ratio which the
total number of shares of Common Stock outstanding immediately
after such event bears to the total number of shares of Common
Stock outstanding immediately prior to such event.
D.
Share Issuance . So long as this Note is
outstanding,