f8k020310ex4i_bioneutral.htm


     

    
       

       

      
        Exhibit
4.1

         

        EXECUTION COPY

         

      

       

      
        THE
PROMISSORY NOTE REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
APPLICABLE STATE SECURITIES LAWS.  THIS PROMISSORY NOTE MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR AN
OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT.

         

        8% EXCHANGEABLE PROMISSORY
NOTE

        
           

           

          
            	US$250,000.00 	 Roseland,
      NJ
	No.:  1 	 Original
      Issuance Date:  November 13,
2009


          

           

        

        FOR VALUE RECEIVED, the
undersigned, BioNeutral
Group, Inc., a Nevada corporation (“Issuer”), hereby promises to
pay to Michael D.
Francis,
an individual with a business address at 150 Smith Road, Parsippany, NJ 07054
(“Holder”), at Holder’s
business address or at such other address as Holder may designate from time to
time in accordance with the terms hereof to Issuer, the principal amount of TWO
HUNDRED FIFTY THOUSAND and 00/100 DOLLARS ($250,000.00) (subject to reduction as
set forth in Section 3), plus all “PIK Amounts” (as hereinafter
defined) added to the principal amount hereof pursuant to Section 1(c)
hereof, on the five (5) year anniversary of the Original Issuance Date (the
“Original Issuance
Date”) set forth on the face of this unsecured 8% Exchangeable Promissory
Note (this “Promissory
Note”), or such earlier date as provided in Section 5 hereof (the
“Maturity Date”), with
interest on the unpaid principal amount of this Promissory Note from time to
time as provided herein in lawful money of the United States of America at the
rate per annum equal to
eight percent (8%), to the extent and in the manner set forth
herein.

        


        Section
1.   Principal and
Interest.

         

        (a) All
outstanding principal under this Promissory Note and any accrued and unpaid
interest thereon shall be due and payable on the Maturity Date.

         

        (b) If the
date on which any cash payment is due and payable under this Promissory Note is
a day other than a Business Day, such payment shall be due and payable on the
next succeeding Business Day.  Interest on this Promissory Note shall
be computed on the basis of a 360-day year and twelve 30-day months, or in the
case of any interest paid in connection with a prepayment for a period less than
a full year, then on the basis of the pro rata portion of such year
period calculated by dividing the number of days interest accrued during such
period by the number of days in such period.  “Business Day” means any day
other than a Saturday, Sunday or other day on which commercial banks in New York
City are required or authorized by law to be closed.

         

        (c) Interest
shall accrue on the then-outstanding principal under this Promissory from the
later of the Original Issuance Date or the most recent date on which PIK Amounts
were added to the principal amount of this Promissory Note through but not
including the earliest of (i) each succeeding three (3) month anniversary
of the Original Issuance Date, (ii) the date on which principal is prepaid
pursuant to Section 3 hereof with respect to the amount of principal so
prepaid, and (iii) the Maturity Date.  On each succeeding three
(3) month anniversary of the Original Issuance Date, all accrued and unpaid
interest on the unpaid principal amount of this Promissory Note (each a “PIK Amount”, and collectively,
the “PIK Amounts”),
shall be added to the unpaid principal amount of this Promissory
Note.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        Section
2.   Payments.  All
cash payments hereunder shall be made in lawful money of the United States of
America in immediately available funds to Holder at Holder’s place of business
as set forth in the preamble to this Promissory Note or at such other address as
Holder may designate from time to time in accordance with Section 8 hereof,
and , at the sole option of Issuer, by certified or bank cashier’s check or wire
transfer of immediately available funds at such address or to such account
as Holder specifies in writing to Issuer.

         

        Section
3.   Prepayment.  This
Promissory Note may be prepaid in whole or in part at any time without premium
or penalty; provided,
however, that upon any
such prepayment Issuer shall pay to Holder all accrued and unpaid interest on
the principal amount being so prepaid from the later of the Original Issuance
Date and the last date upon which PIK Amounts were paid hereunder, through, but
not including, such prepayment date.

         

        Section
4.   Exchange.  Upon
the consummation of a Qualified Financing (as defined below), this
Promissory Note shall automatically be exchanged for, at  the sole
election of Issuer:

         

        (a) securities
on the same terms and conditions as those received by investors in such
Qualified Financing based on an assumed exchange rate reflecting the pricing
used in such Qualified Financing as determined in good faith by a the Issuer’s
Board of Directors; or

         

        (b) a number
of shares of the Issuer's common stock,  par value $0.00001 per share
("Common Stock"), equal
the quotient obtained by dividing (x) the then outstanding principal amount of
this Promissory Note by (y) the lower of (i) $0.69 and (ii) the Fair Market
Value (as defined below) of one share of Common Stock as of the date of such
exchange.

         

        Any
securities of the Issuer issued pursuant to this Section 4 will, unless
determined otherwise by  the Issuer in its sole discretion, not have been registered
under the Securities Act of 1933, as amended (the "Act"), or applicable state
securities laws.  Such securities may not be offered for sale, sold,
transferred or assigned in the absence of an effective registration statement
for the securities under the Act, or an opinion of counsel, in a generally
acceptable form, that registration is not required under the Act.

         

        For the
purposes hereof,

         

        (x) “Qualified Financing” means an
investment in securities of Issuer (including any financing that includes
convertible indebtedness and/or warrants) occurring after the Original Issuance
Date by an investor that is not an affiliate of the Issuer in which Issuer
receives net proceeds greater than $500,000 (including any additional investment
by Holder or by the holder of any other 8% Exchangeable Promissory Note of
Issuer in the Qualified Financing);

         

         

        
          
            
            

          

          
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        (y) “Fair Market Value” means, for
any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading
Market, the closing price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted as reported by Bloomberg L.P., (b) if the OTC Bulletin Board is
not a Trading Market, the closing bid price of the Common Stock for such date
(or the nearest preceding date) on the OTC Bulletin Board, (c) if the
Common Stock is not then listed or quoted for trading on the OTC Bulletin Board
and if prices for the Common Stock are then reported in the “Pink Sheets”
published by Pink OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock as determined in good faith by the
Issuer's Board of Directors; and

         

        (z)  “Trading Market” means
whichever of the New York Stock Exchange, the NYSE Amex, the NASDAQ Global
Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC
Bulletin Board on which the Common Stock is listed or quoted for trading on the
date in question.

         

        Section
5.   Events of Default;
Remedies.  Upon the occurrence of any of the following
specified events of default (each an “Event of
Default”):  (i)  Issuer shall make a general assignment
for the benefit of its creditors; (ii) Issuer makes an assignment for the
benefit of creditors, or a trustee or receiver is appointed for Issuer or for
the greater part of the properties of Issuer with the consent of Issuer, or if
appointed without the consent of Issuer, such trustee or receiver is not
discharged within ninety (90) days, or the bankruptcy, reorganization,
liquidation or similar proceedings are instituted by or against Issuer under the
laws of any jurisdiction, and if instituted against Issuer are consented to by
Issuer or remain undismissed for ninety (90) days, or a writ or warrant of
attachment or similar process shall be issued against a substantial part of the
property of Issuer and shall not be released or bonded within sixty (60) days
after levy; (iii) a sale or assignment in one or more series of related
transactions of more than fifty percent (50%) of the voting equity interests of
Issuer, (iv) a sale or other disposition, in one or more series of related
transactions, of all, or substantially all, of the assets of Issuer and its
subsidiaries, taken as a whole, (v) a merger or consolidation involving Issuer
following which the holders of Issuer’s voting equity interests immediately
prior to such transaction do not collectively own 50% or more of the outstanding
voting equity interests in the surviving entity, or (vi) an event of
default has occurred and is continuing under any  debt obligations of
Issuer that have been subordinated by the terms thereof to this Promissory Note;
provided, that, in the
case of (iii), (iv) and (v), the purchaser or surviving entity, as the case may
be, in such transaction is exclusively a third party that is not an affiliate
of  Issuer;  THEN, in any such event, and at any time
thereafter, unless and to the extent that Holder shall otherwise elect, if any
Event of Default shall then be continuing, the principal and the accrued and
unpaid interest under this Promissory Note shall become immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are expressly waived by Issuer.  Upon an Event of Default
hereunder, Holder shall have the rights and remedies provided by
law.

         

         

        
          
            
            

          

          
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        Section
6.   Investment
Representations.  Holder represents and warrants to the Issuer
as follows:  (a) It is acquiring this Promissory Note, and (if and
when this Promissory Note is exchanged pursuant to the terms hereof) it will
acquire securities of the Issuer, for its own account for investment and not
with a view to, or for sale in connection with, any distribution thereof, nor
with the present intention of distributing or selling the same; and Holder has
no present or contemplated agreement, obligation, indebtedness or commitment
providing for the disposition thereof; (b) Holder is an "accredited investor" as
defined in Rule 501(a) under the Act; and (c) Holder has made such inquiry
concerning the Issuer and its business and personnel as it has deemed
appropriate; and Holder has sufficient knowledge and experience in finance and
business that it is capable of evaluating the risks and merits of its investment
in the Issuer.

         

        Section 7. Governing Law; Jurisdiction;
Jury.  THIS
PROMISSORY NOTE AND THE RIGHTS AND OBLIGATIONS
OF ISSUER AND HOLDER HEREUNDER AND IN RESPECT HEREOF, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New Jersey or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New
Jersey.  Each of Issuer and, by its acceptance hereof, Holder, hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in Essex County, New Jersey, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law.  EACH OF ISSUER,
AND BY ITS ACCEPTANCE HEREOF, HOLDER, HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS PROMISSORY NOTE
OR ANY TRANSACTION CONTEMPLATED HEREBY.

         

        Section
8.   Notices.  All
notices, requests, claims, demands and other communications hereunder shall be
in writing and shall be deemed properly served and delivered if:  (i)
sent through the United States mail, three (3) Business Days after deposit in
United States first class mail, certified with return receipt requested and
postage prepaid, (ii) sent by prepaid overnight delivery for next morning
delivery by a nationally recognized overnight courier service, on the next
Business Day after delivery to such nationally recognized overnight courier
service, (iii) delivered by hand (including by overnight courier), when
delivered, or (iv) sent by facsimile transmission with confirmation of
receipt, upon receipt of a legible copy, in each case, addressed to
(x) Issuer at its address for notices set forth on its signature page
hereto or (y) Holder at the address of Holder’s residence set forth in the
preamble hereto, as applicable, or at such other address, or to the attention of
such other officer or Person, as Issuer or Holder, as applicable, shall have
specified in writing to the other pursuant to notice given in the manner
provided in this Section 8.

         

        Section
9.   Amendment;
Waiver.  No amendment, modification or waiver of any provision
of this Promissory Note and no consent by Holder to any departure therefrom by
Issuer shall be effective unless such modification or waiver shall be in writing
and signed by both Issuer and Holder.

         

         

        
          
            
            

          

          
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        Section
10.   Assignment.  Holder
may not assign or transfer all or any part of this Promissory Note or its
interest therein and any attempt to effect such assignment or transfer will be
void ab initio without
the prior written consent of Issuer.  Notwithstanding the foregoing,
this Promissory Note may be assigned to the heirs, executors, administrators,
estate of Holder or any trust or trustee for any of the foregoing or Holder,
upon the death or permanent disability of Holder.  Issuer may not
assign this Promissory Note to any Person without the prior written consent of
Holder other than to a direct or indirect wholly owned subsidiary of, or other
affiliate of, Issuer.  This Promissory Note and the provisions hereof
are to be binding on the successors and assigns of Issuer.

         

        Section
11.   Effect of Headings;
Construction.  The headings contained in this Promissory Note
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Promissory Note.  In the event of an ambiguity
or question of intent or interpretation arises, this Promissory Note shall be
construed as if drafted jointly by Issuer and Holder and no presumptions or
burdens of proof shall arise favoring any party by virtue of the authorship of
any of the provisions of this Promissory Note.

         

        Section
12.   Severability.  To
the extent any provision of this Promissory Note is prohibited by or invalid
under the applicable law of any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity and only in
such jurisdiction, without prohibiting or invalidating such provision in any
other jurisdiction or the remaining provisions of this Promissory Note in any
jurisdiction.

         

        [Signature Page
Follows]

         

         

        
          
            
            

          

          
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        IN WITNESS WHEREOF, Issuer has
caused its duly authorized officer to execute and deliver this Promissory Note
as of the Original Issuance Date of this Promissory Note.

         

        BIONEUTRAL GROUP,
INC.

         

        By:                                               
    

        Name:

        Title:

         

         

        Address
for Notices:

         

        211
Warren Street

        Newark,
New Jersey 07103

        Telephone:  (973) 286-2899

        Attention:  Chief
Executive Officer

         

        


         

         

        Acknowledged
and Agreed as of the date first written above:

         

         

        
          
            

          

        

         

        Michael
D. Francis

         

         

         

         


          Signature
Page to 8% Exchangeable Promissory Note