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THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.  THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED
FOR VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION THEREOF UNDER THE
SECURITIES ACT OF 1933 AND/OR THE SECURITIES ACT OF ANY STATE HAVING
JURISDICTION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS.
 

 

 No. __________ $______________    Tustin, California 

[FORM OF REG D NOTE]
AMDL, INC.
12% SENIOR PROMISSORY NOTE
DUE: _________, 2010
 
FOR VALUE RECEIVED, AMDL, Inc., a Delaware corporation (the “Company”) with an
address at 2492 Walnut Avenue, Tustin, California  92780, USA, hereby promises
to pay to the order of _____________________________________ (the “Holder”), or
his or its registered assigns, the sum of ______________________________________
Dollars ($_________) or such lesser amount as shall then be outstanding
hereunder.
 
The entire outstanding principal amount of this Senior Promissory Note (“Note”)
shall be due and payable, together with all interest accrued hereon, on a date
(the “Maturity Date”) which shall be the earlier to occur of (i) _________ __,
2010, or (ii) the completion of the closing of a credit facility or loans by the
Company or its subsidiaries with a financial institution or bank of not less
than Eight Million Dollars ($8,000,000) or more in a transaction or series of
transactions (“Bank Financing”).
 
Payment for all amounts of cash or securities due hereunder shall be made by
mail to the registered address of the Holder.  The Holder has received and has
executed, in connection with the purchase hereof, a Securities (Note) Purchase
Agreement dated as of November 19, 2008 (the “Purchase Agreement”) and a
subscription and purchaser representation letter (the “Representation Letter”),
Exhibit A to the Purchase Agreement.  Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Purchase Agreement.
 
The following is a statement of the rights of the Holder of this Note and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
 
1.           Definitions.  As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
 
1.1.           “Business Day” shall mean any day of the week, other than
Saturday, Sunday or any other day in which national banks in the United States
is not open for business.
 
 
 
EXHIBIT "B"
 

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1.2.           “Company” includes any corporation that may succeed to or assume
the obligations of the Company under this Note.
 
1.3.           “Holder,” when the context refers to a Holder of this Note, shall
mean any person who shall at the time be the registered Holder of this Note.
 
2.           Interest.  This Note shall bear interest at the annual rate of
twelve percent (12%) which shall accrue and all accrued interest shall be
payable semi-annually June 1st and December 1st of each year after the issuance
of this Note.  Any unpaid interest shall be payable on the Maturity Date, or
earlier in the event of a prepayment of all or a portion of this
Note.  Notwithstanding the foregoing, if this Note shall not be paid or
satisfied in full on the Maturity Date, this Note shall bear interest,
commencing on the Maturity Date, at the rate of eighteen percent (18%) per
annum, payable on the last day of each month following the Maturity Date, until
such time as the entire unpaid principal amount of this Note, together with all
interest accrued hereon shall have been paid in full.
 
3.           Prepayment.  The Company shall have the right, at any time upon not
less than ten (10) Business Days prior written notice (the “Prepayment Notice”)
given to the Holder of this Note to prepay in cash all or any portion of the
outstanding principal amount of this Note together with all accrued interest
hereon and thereon without prepayment penalty or premium of any kind.
 
4.           Events of Default.
 
(i)           If any of the events specified in this Section 4 shall occur
(herein individually referred to as an “Event of Default”) and shall not have
been cured within ten (10) Business Days after written notice of such default
has been given by the Holder to the Company, the Holder of the Note may, so long
as such condition exists, declare the entire principal and unpaid accrued
interest thereon immediately due and payable:
 
(ii)           Default in the payment of the principal amount of this Note when
due on the Maturity Date; or
 
(iii)           A breach by the Company of any material representation or
warranty contained in the Purchase Agreement; or
 
(iv)           The issuance of notes or evidence of indebtedness by the Company
having rights senior to this Note; provided, however, the Company shall be
specifically permitted to issue additional notes or evidences of indebtedness in
the aggregate principal amount of $2,500,000 which are of equal priority and
pari passu with this Note and all other Notes issued pursuant the Purchase
Agreement (which $2,500,000 of additional notes or obligations specifically do
not include the $2,510,000 of the 10% convertible notes issued in September 2008
or the exchange of those notes into any other securities of the Company); or
 
(v)           Any (A) merger, consolidation of the Company with or into any
other entity, or the sale or all or substantially all of the assets of the
Company to any other entity, in each case where the ability to elect the members
of the board of directors of the Company or its successor in interest shall be
vested in persons who are not presently stockholders of the Company (a “Sale of
Control”), or (B) dissolution or termination of existence of the Company; or
 
 
 
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(vi)           A final judgment or judgments for the payment of money in excess
of an aggregate of (US) $500,000 are rendered against one or more of the Company
and its subsidiaries, which judgments are not, within sixty (60) days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within sixty (60) days after the expiration of such stay; or
 
(vii)           The institution by the Company of proceedings to be adjudicated
as bankrupt or insolvent, or the consent by it to institution of bankruptcy or
insolvency proceedings against it or the filing by it of a petition or answer or
consent seeking reorganization or release under the federal Bankruptcy Act, or
any other applicable federal or state law, or the consent by it to the filing of
any such petition or the appointment of a receiver, liquidator, assignee,
trustee or other similar official of the Company, as applicable, or of any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the taking of corporate action by the Company in
furtherance of any such action; or
 
(viii)           If, within sixty (60) days after the commencement of an action
against the Company (and service of process in connection therewith on the
Company) seeking any bankruptcy, insolvency, reorganization, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, such action shall not have been resolved in favor of the Company, as
applicable, or all orders or proceedings thereunder affecting the operations or
the business of the Company, as applicable, stayed, or if the stay of any such
order or proceeding shall thereafter be set aside, or if, within sixty (60) days
after the appointment without the consent or acquiescence of the Company, as
applicable, of any trustee, receiver or liquidator of the Company, as
applicable, or of all or any substantial part of the properties of the Company,
such appointment shall not have been vacated; or
 
(ix)           The cessation of the Company’s business for more than thirty (30)
days.
 
4.2.           If an Event of Default with respect to the Company described in
paragraphs (i) through (ix) of Section 4.1 has occurred and has not been cured,
this Note shall automatically become immediately due and payable.  Upon this
Note becoming due and payable under this Section 4, whether automatically or by
declaration (a “Default”), such Note will forthwith mature and the entire unpaid
principal amount of such Note, plus all accrued and unpaid interest thereon
shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby
waived.  If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Additional Notes have become or have been declared
immediately due and payable, the Holder of this Note may proceed to protect and
enforce the rights of such Holder by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of the Purchase
Agreement, the Registration Rights Agreement or this Note, or for an injunction
against a violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or otherwise.
 
 
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5.           Treatment of Note.  To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
 
6.           No Stockholder Rights.  Nothing contained in this Note shall be
construed as conferring upon the Holder or any other person the right to vote or
to consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company.  This limitation does
not apply to or in any way restrict a Holder’s rights as a stockholder in
connection with any shares of common stock of the Company otherwise held by the
Holder.
 
7.           Assignment.  Subject to the restrictions on transfer described in
Section 13 below, the rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
 
8.           Waiver and Amendment.  Any provision of this Note may be amended,
waived or modified upon the written consent of the Company and the Holders of at
least a majority of the face amount of all then outstanding Notes issued
pursuant to the Purchase Agreement.
 
9.           Transfer of This Note.  With respect to any offer, sale or other
disposition of this Note, the Holder will give written notice to the Company
prior thereto, describing briefly the manner thereof, together with a written
opinion of such Holder’s counsel reasonably acceptable to the Company, to the
effect that such offer, sale or other distribution may be effected without
registration or qualification (under any federal or state law then in
effect).  Promptly upon receiving such written notice and reasonably
satisfactory opinion, if so requested, the Company shall notify such Holder that
such Holder may sell or otherwise dispose of this Note, all in accordance with
the terms of the notice delivered to the Company.  If a determination has been
made pursuant to this Section 13 that the opinion of counsel for the Holder is
not reasonably satisfactory to the Company, the Company shall so notify the
Holder promptly after such determination has been made.  Each Note thus
transferred and each certificate representing the securities thus transferred
shall bear a legend as to the applicable restrictions on transferability in
order to ensure compliance with the Securities Act, unless in the opinion of
counsel for the Company such legend is not required.  The Company may issue stop
transfer instructions to its transfer agent in connection with such
restrictions.
 
10.           Notices.  Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given on the date of service if personally served on the party to whom such
notice is to be given, on the date of transmittal of service via telecopy to the
party to whom notice is to be given (with a confirming copy delivered within 24
hours thereafter), or on the third day after mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified mail,
postage prepaid, or via a recognized overnight courier providing a receipt for
delivery and properly addressed at the respective addresses of the parties as
set forth herein.  Any party hereto may by notice so given change its address
for future notice hereunder.
 
 
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11.           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, excluding that body of law
relating to conflict of laws.
 
12.           Heading; References.  All headings used herein are used for
convenience only and shall not be used to construe or interpret this
Note.  Except where otherwise indicated, all references herein to Sections refer
to Sections hereof.
 
IN WITNESS WHEREOF, the Company has caused this Note to be executed this ______
day of ____________ 2008.
 

 

   AMDL, INC.                  By:____________________________________      
 Akio Ariura, Chief Financial Officer        

 
 
 
 
 
 
 
 
 
 
 
 

 
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