Exhibit 4.1





Ex. 4.1




FORM OF CONVERTIBLE NOTE





THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR APPLICABLE STATE SECURITIES
LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
THAT THERE IS AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.



			
	 
	 	 
	Amount: $XX,XXX.XX
	 	Irvine, California
	 
	 	Date:
 _____, 2009






FOR VALUE RECEIVED, BIOLARGO, INC., a
corporation organized under the laws of the state of
Delaware (“Issuer”), promises to pay to the order of xxxxxx (hereafter, together with
any subsequent holder hereof, called “Holder”), at its office, at “Holder’s Address” (as that term
is defined below), or at such other place as Holder may direct, the “Amount” noted above (the “Loan
Amount”), payable on June 1, 2012, or at an earlier date as provided herein (the “Maturity Date”).
This convertible note is duly authorized issue of the Issuer, issued on the “Date” noted (the
“Issuance Date”), and designated as its Convertible Note due June 1, 2012 (the “Note”).



The Issuer agrees to pay interest on the unpaid principal amount of the Loan Amount from time
to time outstanding hereunder at the following rates per year, compounded annually: (i) before
maturity of the Loan Amount, whether by acceleration or otherwise, at the rate per annum equal to
ten percent (10%); (ii) after the maturity of the Loan Amount, whether by acceleration or
otherwise, until paid, at a rate per annum equal to fifteen percent (15%).



Payments of both principal and interest are to be made in immediately available funds in
lawful money of the United States of America, or in Common Stock of the Issuer as set forth below.



Accrual of interest shall commence as of the Issuance Date. Interest will accrue monthly and
be paid annually on the Note on June 1st (pro-rated based on the actual number of days elapsed in a
365-day year), such interest to be paid, at the Company’s option, in cash or in that number of
shares of Common Stock of the Issuer (the “Common Stock”) at a price per share equal to the average
closing price of the Company’s common stock for the 20 trading days preceding a given interest due
date. Unless otherwise agreed in writing by both parties hereto, the interest so payable will be
paid to the person in whose name this Note (or one or more predecessor Notes) is registered on the
records of the Issuer regarding registration and transfers of the Note (the “Note Register”),
provided, however, that the Issuer’s obligation to a transferee of this Note arises only if such
transfer, sale or other disposition is made in accordance with the terms and conditions contained
in this Note and the Subscription Agreement (the “Agreement”) that the Holder executed at the time
of making an investment in the Issuer.


 


 









 






The Note is subject to the following additional provisions:



1. The Issuer shall be entitled to withhold from all payments of principal and/or interest of
this Note any amounts required to be withheld under the applicable provisions of the Internal
Revenue Code of 1986, as amended, or other applicable laws at the time of such payments.



2. This Note has been issued subject to investment representations of the original Holder
hereof and may be transferred or exchanged only in compliance with the Securities Act and
applicable state securities laws and in compliance with the restrictions on transfer provided in
the Agreement. Prior to the due presentment for such transfer of this Note, the Issuer and any
agent of the Issuer may treat the person in whose name this Note is duly registered in the Note
Register as the owner hereof for the purpose of receiving payment as herein provided and all other
purposes, whether or not this Note is overdue, and neither the Issuer nor any such agent shall be
affected by notice to the contrary. The transferee shall be bound, as the original Holder by the
same representations and terms described herein and under the Agreement.



3. The Holder may, at its option, at any time convert the principal amount of this Note or any
portion thereof, and any accrued and unpaid interest thereon, into such number of shares of fully
paid and non-assessable Common Stock of the Issuer (“Conversion Shares”) as is obtained by dividing
the Loan Amount by $0.55 (“Conversion Price”). The right to convert the Note may be exercised by
the Issuer by telecopying, mailing (via first class mail, postage prepaid) or personally delivering
an executed and completed notice of conversion (the “Notice of Voluntary Conversion”) to the
Issuer. The business day (a “Business Day”) on which a Notice of Voluntary Conversion is delivered
in accordance with the provisions hereof shall be deemed the “Voluntary Conversion Date”. The
Issuer will transmit the certificates representing Conversion Shares issuable upon such conversion
of the Note (together with the certificates representing the Note not so converted) to the Holder
via express courier, by electronic transfer (if applicable) or otherwise, within ten Business Days
after the later to occur of (i) the Voluntary Conversion Date or (ii) the Business Day on which the
Issuer has received from the Holder the original Note being so converted.



4. The Issuer may, at its option, (i) on or after December 15, 2009, if the Company has
received one or more written firm commitments, or has closed on one or more transactions, or a
combination of the foregoing, of at least $3 million gross proceeds of equity or debt; or (ii) on
the Maturity Date, require the Holder to convert the Note or any portion thereof, and any accrued
and unpaid interest thereon, into such number of Conversion Shares as is obtained by dividing the
Loan Amount by the Conversion Price. The obligation of the Holder to convert the Note may be
exercised by the Company by telecopying, mailing (via first class mail, postage prepaid) or
personally delivering an executed and completed notice of conversion (the “Notice of Mandatory
Conversion”) to the Holder’s Address maintained in the Note Register. The Holder covenants and
agrees to acknowledge a Notice of Mandatory Conversion in writing by completing, dating and signing
such Notice of Mandatory Conversion and returning it to the Company by telecopier, first class mail
(postage prepaid) or personal delivery (the “Holder Acknowledgment Date”). The business day on
which a Notice of Mandatory Conversion is delivered in accordance with the provisions hereof shall
be deemed the “Mandatory Conversion Date”. The Issuer will transmit the certificates representing
Conversion Shares issuable upon such conversion of the Note (together with the certificates
representing any portion of the Note not so converted) to the Holder via express courier, by
electronic transfer (if applicable) or otherwise within ten Business Days after the later to occur
of (i) the Holder Acknowledgment Date or (ii) the date that the Issuer has
received from the Holder the original Note being so converted.



5. The principal amount of this Note, and any accrued interest thereon, shall be reduced as
per that principal amount indicated on the Notice of Voluntary Conversion or Notice of Mandatory
Conversion, as the case may be, upon the proper receipt by the Holder of such
Conversion Shares due upon such Notice of Voluntary Conversion or Notice of Mandatory Conversion.


 


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6. The number of Conversion Shares shall be adjusted as follows. If the Issuer shall at any
time subdivide its outstanding shares of Common Stock into a greater number of shares of Common
Stock, the number of Conversion Shares in effect immediately prior to such subdivision shall be
proportionately increased, and conversely, in case the outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the number of Conversion Shares in effect
immediately prior to such subdivision shall be proportionately decreased.



7. No provision of this Note shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, upon an Event of Default (as defined below), to pay the principal of,
and interest on this Note at the place, time, and rate, and in the coin or currency herein
prescribed.



8. Events of Default. Each of the following occurrences is hereby defined as an “Event of
Default”:




a. Nonpayment. The Issuer shall fail to make any payment of principal, interest, or
other amounts payable hereunder when and as due; or




b. Dissolutions, etc. The Issuer or any subsidiary shall fail to comply with any
provision concerning its existence or any prohibition against dissolution, liquidation,
merger, consolidation or sale of assets; or




c. Noncompliance with this Agreement. The Issuer shall fail to comply in any material
respect with any provision hereof, which failure does not otherwise constitute an Event of
Default, and such failure shall continue for ten (10) days after the occurrence of such
failure; or




d. Bankruptcy. Any bankruptcy, insolvency, reorganization, arrangement, readjustment,
liquidation, dissolution, or similar proceeding, domestic or foreign, is instituted by or
against the Issuer or any of its subsidiaries, or the Issuer or any of its subsidiaries
shall take any step toward, or to authorize, such a proceeding; or




e. Insolvency. The Issuer shall make a general assignment for the benefit of its
creditors, shall enter into any composition or similar agreement, or shall suspend the
transaction of all or a substantial portion of its usual business.



9. If one or more “Events of Default” shall occur, then, or at any time thereafter, and in
each and every such case, unless such Event of Default shall have been waived in writing by the
Holder (which waiver shall not be deemed to be a waiver of any subsequent default) or cured as
provided herein, at the option of the Holder, and in the Holder’s sole discretion, the Holder may
elect to consider this Note (and all interest through such date) immediately due and
payable. In order to so elect, the Holder must deliver written notice of the election and the
amount due to the Issuer via certified mail, return receipt requested, at the Issuer’s address as
set forth herein (or any other address provided to the Holder), and thereafter the Issuer shall
have ten business days upon receipt to cure the Event of Default, pay the Note, or convert the
amount due on the Note pursuant to the conversion formula set forth above. It is agreed that in the
event of such action, such Holder shall be entitled to receive all reasonable fees, costs and
expenses incurred, including without limitation such reasonable fees and expenses of attorneys. The
parties acknowledge that a change in control of the Issuer shall not be deemed to be an Event of
Default as set forth herein.


 


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10. In case any provision of this Note is held by a court of competent jurisdiction to be
excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather
than voided, if possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Note will not in any way be
affected or impaired thereby.



11. This Note does not entitle the Holder hereof to any voting rights or other rights as a
stockholder of the Issuer prior to the conversion into Common Stock thereof, except as provided by
applicable law. If, however, at the time of the surrender of this Note and conversion the Holder
hereof shall be entitled to convert this Note, the Conversion Shares so issued shall be and be
deemed to be issued to such holder as the record owner of such shares as of the close of business
on the Conversion Date.



12. This Note and all other notes in this series may be subordinated to up to $10 million of
additional debt financing that the Issuer may incur prior to the Maturity Date.



IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed by an officer
thereunto duly authorized.



	 	 	 	 	 	 	 
	 	 	BIOLARGO, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	XXXXXX
 

	 	 
	 

	 	Name:
	Dennis P. Calvert, President	 	 
	 
	 	 	 	 	 	 
	 	 	ACCEPTED:	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 

	 	 
	 

	 	Print Name: 	 	 	 	 
	 

	 	 	 

	 	 
	 

	 	Holder’s Address:	 	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 






 


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NOTICE OF VOLUNTARY CONVERSION




(To be Executed by the Registered Holder in order to convert the Note)



The undersigned hereby irrevocably elects to convert $_____ 
of the principal amount of
the above Note, and $_____ of accrued and unpaid interest, into
_____ Shares of Common Stock of BioLargo, Inc. (the “Company”) according to the conditions hereof, as of the date written
below.



The undersigned represents and warrants to the Company that, as of the date hereof, the
undersigned is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D
under the Securities Exchange Act of 1934, as amended.



	 	 	 	 	 	 	 
	Date of Voluntary Conversion:                                    

	 	Signature:	 	 	 	 
	 

	 	 	 

	 	 
	 

	 	Print Name:	 	 	 	 
	 

	 	 	 

	 	 
	 

	 	Holder’s Address: 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Social Security No.: 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ACCEPTED:	 	 
	 
	 	 	 	 	 	 
	 	 	BIOLARGO, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By (Signature):
	 

	 	 
	 

	 	
Print Name: 	 	 	 	 
	 

	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 

	 	 






 


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NOTICE OF MANDATORY CONVERSION





(To be Executed by the Company in order to required the Holder to convert the Note)



The undersigned hereby notifies you of its irrevocably election to require you to convert
$_____ 
of the principal amount of the above Note, and $_____ 
of accrued and unpaid
interest, into
 _____ 
Shares of Common Stock of BioLargo, Inc. according to the conditions
hereof, as of the date written below.



	 	 	 	 	 	 	 
	Date of Mandatory Conversion:                                    	 	BIOLARGO, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By (Signature):	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Print Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 






 


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