Contract
NEITHER
THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE 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 COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE
SKY LAWS. THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
SECURED
CONVERTIBLE PROMISSORY NOTE
$4,000,000
December
8, 2006
Chicago,
Illinois
1. Agreement
to Pay. FOR VALUE RECEIVED, MEDIRECT LATINO INC. a Florida
corporation ("Borrower") hereby promises to pay to the order of GRANITE CREEK
FLEXCAP I, L.P., a Delaware limited partnership, its successors and assigns
("Lender"), the principal sum of Four Million Dollars ($4,000,000) (the "Loan"),
or so much thereof that may be advanced pursuant to that certain Loan and
Security Agreement dated as of December 8, 2006 ("Loan Agreement") by and among
Borrower, Agent and Xxxxxxx (as each is defined in the Loan Agreement), at
the
place and in the manner hereinafter provided, together with interest thereon
at
the rate or rates described below, and any and all other amounts which may
be
due and payable hereunder from time to time.
2. Interest
Rate.
2.1 Interest
Prior to Default. Unless an event of default shall have occurred,
interest shall accrue on the outstanding principal balance of this Note from
the
date hereof through June 8, 2010 ("Maturity Date"), at an annual rate equal
to
the twelve percent (12.00%) (the "Interest Rate").
2.2 Interest
After Default. From and after the Maturity Date or upon the
occurrence and during the continuance of an Event of Default, interest shall
accrue on the balance of principal remaining unpaid during any such period
at an
annual rate ("Default Rate") equal to eighteen percent (18%); provided, however,
in no event shall the Default Rate exceed the maximum rate permitted by
law. The interest accruing under this paragraph shall be immediately
due and payable by Borrower to the holder of this Note upon demand and shall
be
additional indebtedness evidenced by this Note.
2.3 Interest
Calculation. Interest on this Note shall be calculated on the
basis of a 360-day year and the actual number of days elapsed in any portion
of
a month in which interest is due.
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2.4 Regulatory
Limitations on Payment of Interest. In no event shall Lender be
entitled to interest exceeding the maximum rate permitted by law or under the
applicable regulations promulgated by the United States Small Business
Administration (the "SBA"). If any excess interest is provided for or
shall be adjudicated to be so provided for in this Note, or if any payment
or
other consideration under this Note, the Loan Agreement or any other transaction
document contemplated in connection with the Loan is determined by the SBA
to
exceed the amount permitted under applicable regulations promulgated by the
SBA,
then in such event: (i) the provisions of this paragraph shall govern
and control; (ii) Borrower shall not be obligated to pay the amount of such
interest or other payment or consideration to the extent that it is in excess
of
the maximum amount permitted by law, and the same shall be construed as a mutual
mistake of the parties; and (iii) any such excess which may have been collected
or attributed shall, at the option of Lender, be subtracted from the then unpaid
principal amount hereof or refunded to Borrower.
3. Payment
Terms.
3.1 Principal
and Interest. Payments of principal and interest due under this
Note, if not sooner declared to be due in accordance with the provisions hereof
or converted into the Borrower's shares pursuant to Section 6 hereof, shall
be
made as follows:
(a) Interest
accruing on the principal balance of this Note from time to time shall be due
and payable monthly, in advance, commencing on December 15, 2006 and on the
fifteenth day of each calendar month thereafter and on the Maturity
Date.
(b) The
unpaid principal balance of this Note, if not sooner paid or declared to be
due
in accordance with the terms hereof, together with all accrued and unpaid
interest thereon and any other amounts due and payable hereunder or under any
other Transaction Documents, shall be due and payable in full on the Maturity
Date.
3.2 Application
of Payments. All payments and prepayments on account of the
indebtedness evidenced by this Note shall be applied in accordance with the
terms and provisions of the Loan Agreement.
3.3 Method
of Payments. All payments of principal and interest hereunder
shall be paid by automatic debit, wire transfer, check or in coin or currency
which, at the time or times of payment, is the legal tender for public and
private debts in the United States of America and shall be made to the Lender's
Payment Account or such other place as the Lender shall from time to time
identify in writing, and in the absence of such appointment, then at the offices
of Lender at 000 Xxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000. Payment made by check shall be deemed paid on the date such
check is delivered to the Lender's Payment Account or the Lender receives such
check; provided, however, that if such check is subsequently returned unpaid
due
to insufficient funds or otherwise, the payment shall not be deemed to have
been
made and shall continue to bear interest until collected.
3.4 Prepayment. Except
for conversions pursuant to Section 6 hereof, this Note may be prepaid, in
whole
only, without penalty or premium, at any time and from time to time; provided,
however that any prepayment of all of the principal balance of the Loan shall
include accrued interest on the Loan to the date of prepayment and payment
in
full of all other Obligations then due and payable.
4. Security. This
Note is secured by the Collateral. Reference is hereby made to the Loan
Agreement (which is incorporated herein by reference as fully and with the
same
effect as if set forth herein at length) for a statement of the covenants and
agreements contained therein, a statement of the rights, remedies, and security
afforded thereby, and all matters therein contained.
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5. Events
of Default. The occurrence of an Event of Default under the Loan Agreement
shall constitute an "Event of Default" under this Note.
6. Conversion. The
Lender shall have the right to convert, subject to the terms, conditions and
provisions of this Note, the outstanding principal and interest due under this
Note as of the date of the Conversion Notice (defined below), into shares of
Common Stock of the Borrower upon five (5) days written notice (hereinafter
referred to as "Conversion Notice"). In the event the principal and
interest due under this Note from time to time, or any portion thereof, is
to be
converted, the Lender shall surrender this Note to the Borrower during usual
business hours together with the Conversion Notice specifying that the Lender
elects to convert this Note into shares of Common Stock in accordance with
the
provisions of this Note, the dollar amount to be converted into shares (the
"Conversion Amount") and specifying the name or names in which the shares to
be
issued upon such conversion shall be held, together with the addresses and
social security numbers, in the case of natural persons, or federal employer
identification numbers, in the case of entities, of the persons so
named. The number of shares of Common Stock to be issued upon the
conversion of the amounts due under this Note shall be calculated as
follows: the Conversion Amount shall be multiplied by (i) subject to
the following paragraph, .4286 and that amount shall be converted into shares
at
$1.50 per share, (ii) .2857 and that amount shall be converted into shares
at
$2.00 per share and (iii) .2857 and that amount shall be converted into shares
at $2.50 per share.; provided, however, that if a Conversion Price Adjustment
Event has occurred, then the Conversion Price of the .4286 traunch shall
thereafter be $1.00 per share.
A
"Conversion Price Adjustment Event" shall mean the failure on the part of the
Borrower, (i) within six (6) months of the date hereof, to identify and hire
either a Chief Executive Officer or a Chief Financial Officer on terms
acceptable to both the Borrower and at least the Required Lenders or (ii) the
failure of the Borrower, within six (6) months of the first date of employment
of the first to be hired of a Chief Executive Officer or a Chief Financial
Officer, to identify and hire on terms acceptable to the Borrower and at least
the Required Lenders a person to fill the position of Chief Executive Officer
or
Chief Financial Officer, whichever was not previously filled.
The
Lender shall make such representations and warranties as are required in
connection with any Conversion as are set forth in the Investor Rights
Agreement.
7. Remedies. At
the election of the holder hereof, and without notice, the principal balance
remaining unpaid under this Note, and all unpaid interest accrued thereon and
any other amounts due hereunder, shall be and become immediately due and payable
in full upon the occurrence of any Event of Default. Failure to
exercise this option shall not constitute a waiver of the right to exercise
such
rights in the event of any subsequent Event of Default. No holder
hereof shall, by any act of omission or commission, be deemed to waive any
of
its rights, remedies or powers hereunder or otherwise unless such waiver is
in
writing and signed by the holder hereof, and then only to the extent
specifically set forth therein. The rights, remedies and powers of
the holder hereof, as provided in this Note and in all of the other Transaction
Documents are cumulative and concurrent, and may be pursued singly, successively
or together against Borrower and any security given at any time to secure the
repayment hereof, all at the sole discretion of the holder hereof. If
any suit or action is instituted or attorneys are employed to collect this
Note
or any part hereof, Xxxxxxxx promises and agrees to pay all costs of collection,
including reasonable attorneys' fees and court costs.
8. Covenants
and Waivers. In connection with any Event of Default, Borrower
expressly agrees: (i) to waive and renounce any and all homestead,
redemption and exemption rights and the benefit of all valuation and
appraisement privileges against the indebtedness evidenced by this Note or
by
any extension or renewal hereof; (ii) to waive presentment and demand for
payment, notices of nonpayment and of dishonor, protest of dishonor, and notice
of protest; (iii) except as expressly provided in the Transaction Documents,
to
waive any and all notices in connection with the delivery and acceptance hereof
and all other notices in connection with the performance, default, or
enforcement of the payment hereof or hereunder; (iv) to waive any and all lack
of diligence and delays in the enforcement of the payment hereof; (v) the
liability of Borrower, guarantor, endorser or obligor shall be unconditional
and
without regard to the liability of any other person or entity for the payment
hereof, and shall not in any manner be affected by any indulgence or forbearance
granted or consented to by Lender to any of them with respect
hereto. Furthermore, the Borrower consents to any and all extensions
of time, renewals, waivers, or modifications that may be granted by Lender
with
respect to the payment or other provisions hereof, and to the release of any
security at any time given for the payment hereof, or any part thereof, with
or
without substitution, and to the release of any person or entity liable for
the
payment hereof; and to the addition of any and all other makers, endorsers,
guarantors, and other obligors for the payment hereof, and to the acceptance
of
any and all other security for the payment hereof. Xxxxxxxx agrees
that the addition of any such makers, endorsers, guarantors or other obligors,
or security shall not affect the liability of Borrower and all others now liable
for all or any part of the obligations evidenced hereby. This
provision is a material inducement for Lender making the Loan to
Borrower.
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9. Other
General Agreements.
9.1 The
Loan is a business loan which comes within the purview of Section 205/4,
paragraph (1)(c) of Chapter 815 of the Illinois Compiled Statutes, as
amended. Xxxxxxxx agrees that the Loan evidenced by this Note is an
exempted transaction under the Truth In Lending Act, 15 U.S.C.,
Section 1601, etseq.
9.2 Time
is of the essence hereof.
9.3 This
Note is governed and controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the statutes, laws and
decisions of the State of Illinois (without giving effect to Illinois conflict
or choice of laws principles). This Note may not be changed or
amended orally but only by an instrument in writing signed by the party against
whom enforcement of the change or amendment is sought.
9.4 Lender
shall not be construed for any purpose to be a partner, joint venturer, agent
or
associate of Borrower or of any lessee, operator, concessionaire or licensee
of
Borrower in the conduct of its business, and by the execution of this Note,
Xxxxxxxx agrees to indemnify, defend, and hold Lender harmless from and against
any and all damages, costs, expenses and liability that may be incurred by
Xxxxxx as a result of a claim that Lender is such partner, joint venturer,
agent
or associate.
9.5 This
Note has been made and delivered at Chicago, Illinois and all funds disbursed
to
or for the benefit of Borrower will be disbursed in Chicago,
Illinois.
9.6 If
any provision of this Note is deemed to be invalid by reason of the operation
of
law, or by reason of the interpretation placed thereon by any administrative
agency or any court, Borrower and Lender shall negotiate an equitable adjustment
in the provisions of the same in order to effect, to the maximum extent
permitted by law, the purpose of this and the validity and enforceability of
the
remaining provisions, or portions or applications thereof, shall not be affected
thereby and shall remain in full force and effect.
9.7 If
the interest provisions herein or in any of the Transaction Documents shall
result, at any time during the Loan, in an effective rate of interest which,
for
any month, exceeds the limit of usury or other laws applicable to the Loan,
all
sums in excess of those lawfully collectible as interest of the period in
question shall, without further agreement or notice between or by any party
hereto, be applied upon principal immediately upon receipt of such monies by
Lender, with the same force and effect as though the payer has specifically
designated such extra sums to be so applied to principal and Lender had agreed
to accept such extra payment(s) as a premium-free
prepayment. Notwithstanding the foregoing, however, Lender may at any
time and from time to time elect by notice in writing to Borrower to reduce
or
limit the collection to such sums which, when added to the said first-stated
interest, shall not result in any payments toward principal in accordance with
the requirements of the preceding sentence. In no event shall any
agreed to or actual exaction as consideration for this Loan transcend the limits
imposed or provided by the law applicable to this transaction or the makers
hereof in the jurisdiction in which the premises are located for the use or
detention of money or for forbearance in seeking its collection.
9.8 Lender
may at any time assign its rights in this Note and the Transaction Documents,
subject to the terms of the Loan Agreement, or any part thereof and transfer
its
rights in any or all of the collateral, and Lender thereafter shall be relieved
from all liability with respect to such collateral. In addition,
Lender may at any time sell one or more participations in the Note subject
to
the terms of the Loan Agreement. Borrower may not assign its interest
in this Note, or any other agreement with Lender or any portion thereof, either
voluntarily or by operation of law, without the prior written consent of
Lender.
9.9 Capitalized
terms not otherwise defined herein shall have the meaning given to them in
the
Loan Agreement.
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10. Notices. All
notices required under this Note will be in writing and will be transmitted
in
the manner and to the addresses or facsimile numbers required by the Loan
Agreement, or to such other addresses or facsimile numbers as Lender and
Borrower may specify from time to time in writing.
11. Consent
to Jurisdiction. TO INDUCE XXXXXX TO ACCEPT THIS
NOTE, XXXXXXXX IRREVOCABLY AGREES THAT, SUBJECT TO XXXXXX'S SOLE AND ABSOLUTE
ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO
THIS NOTE WILL BE LITIGATED IN COURTS HAVING SITUS IN CHICAGO,
ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY COURT LOCATED WITHIN CHICAGO, ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS
UPON BORROWER, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL DIRECTED TO BORROWER AT THE ADDRESS STATED IN THE MORTGAGE
AND
SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL
RECEIPT.
12. Waiver
of Jury Trial. XXXXXXXX AND XXXXXX (BY
ACCEPTANCE OF THIS NOTE), HAVING BEEN REPRESENTED BY COUNSEL, EACH KNOWINGLY
AND
VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR ANY RELATED AGREEMENT OR UNDER
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE
FUTURE BE DELIVERED IN CONNECTION WITH THIS NOTE, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY. XXXXXXXX AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST
XXXXXX ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, Xxxxxxxx has executed and delivered this Note as of
the day and year first written above.
BORROWER:
By:
Its:
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