EXHIBIT 10.5
CONVERTIBLE NOTE
$[[Amount]] June 7, 1999
FOR VALUE RECEIVED, SFBC International, Inc. (the "Company"), a
Delaware corporation, hereby promises to pay to the order of [[Name]] (the
"Holder"), at [[Address]], or at such other place as Holder designates in
writing to the Company, the principal sum of $[[Amount]] together with interest
thereon accruing as of January 1, 1999 computed at the annual rate of 10%.
Principal and interest shall be due and payable on June 7, 2002 unless
previously converted. While in default, this Note shall bear interest at the
rate of 18% per annum or such lower maximum rate of interest allowable under the
laws of the State of Delaware. Payments shall be made in lawful money of the
United States.
1. CONVERSION TO COMMON STOCK. At the time the Company completes an
initial public offering of its common stock ("IPO"), this Note shall convert
into shares of common stock of the Company at 80% of the IPO price (the
"Conversion Price") which is a 20% discount from the IPO Price. The number of
shares of common stock issuable upon conversion shall be determined by dividing
the Conversion Price into the face amount of this Note. No fractional shares
shall be issued. The Company shall pay the Holder the interest accrued from
January 1, 1999 and the difference between the face amount of this Note and the
product of (i) the number of shares issued times (ii) the Conversion Price. No
effect shall be given to the inclusion of any warrants contained in any units
consisting of common stock and warrants.
2. ISSUANCE OF WARRANT. At the time this Note is converted into shares
of common stock, the Company shall issue to the Holders a Warrant to purchase an
equal number of shares of common stock, exercisable at 120% of the IPO price.
3. OWNERSHIP OF SOUTH FLORIDA KINETICS, INC. The Company represents and
warrants to the Holder that it owns 100% of the outstanding stock of South
Florida Kinetics, Inc., a Florida corporation.
4. REPLACEMENT OF SOUTH FLORIDA KINETICS, INC. This Note replaces a
note of South Florida Kinetics, Inc. payable to the Holder (the "Kinetics Note")
and is in an amount equal to the outstanding principal and accrued interest of
the Kinetics Note as of December 31, 1998.
5. DIVIDENDS. In the event that the Company shall pay a dividend
consisting of the securities of any other entity or in cash or other property,
upon conversion of this Note, the Holder shall receive the securities, cash, or
property which the Holder would have been entitled to if the Holder had
converted this Note immediately prior to the record date of such dividend.
6. EVENT OF DEFAULT. In the event the Company shall commence any case,
proceeding or other action under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it as bankrupt or insolvent, or seeking
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reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to its debts, or seeking appointment of
a receiver, custodian, trustee or other similar official for it or for all or
any substantial part of its assets; or there shall be commenced against the
Company, any case, proceeding or other action which results in the entry of an
order for relief or any such adjudication or appointment remains undismissed,
undischarged or unbounded for a period of 30 days; or there shall be commenced
against the Company, any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, restraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 10 days from the entry thereof; or the Company
shall make an assignment for the benefit of creditors; or the Company shall be
unable to, or shall admit in writing the inability to, pay its debts as they
become due; or the Company shall take any action indicating its consent to,
approval of, or acquiescence in, or in furtherance of, any of the foregoing;
then, or any time thereafter during the continuance of any of such events, the
entire unpaid balance of this Note then outstanding, together with accrued
interest thereon, if any, shall be and become immediately due and payable
without notice of demand by Holder.
7. INVESTMENT INTENT. The Holder, by acceptance of this Note, warrants
and represents that he is acquiring this Note, the Warrant and the shares of
common stock issuable upon conversion and exercise for his own account, for
investment and not with a view to, or for resale in connection with, the
distribution thereof. The Holder has no present intention of reselling or
distributing them after any period of time. The acquisition of the securities
for investment is consistent with the Holder's financial needs.
8. MISCELLANEOUS.
(a) All makers and endorsers now or hereafter becoming parties
hereto jointly and severally waive demand, presentment, notice of
non-payment and protest and, if this Note becomes in default and an
action is filed to collect the Note, the prevailing party shall be
entitled to an award of reasonable attorney's fees and all other costs
incurred in connection with such collection.
(b) This Note may not be changed or terminated orally, but
only with an agreement in writing, signed by the parties against whom
enforcement of any waiver, change, modification, or discharge is sought
with such agreement being effective and binding only upon attachment
hereto.
(c) This Note and the rights and obligations of the Holder and
of the undersigned shall be governed and construed in accordance with
the laws of the State of Delaware.
9. AGREEMENT TO BE BOUND BY UNDERWRITER'S LOCK-UP. The Holder by his
acceptance of delivery of this Note, agrees to execute any lock-up agreement
requested by the underwriter or the managing underwriter of the Company's IPO as
long as such lock-up agreement is applied to all other officers and directors of
the Company.
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IN WITNESS WHEREOF, the Company has caused this Note to be executed as
of the date aforesaid.
SFBC INTERNATIONAL, INC.
By:
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Xxxxxx Xxxxxxx, Chief Executive Officer
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RESTRICTIVE LEGEND
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE FEDERAL OR ANY STATE SECURITIES
LAWS AND MAY NOT BE SOLD, TRANSFERRED OR HYPOTHECATED IN ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH LAWS AS MAY BE APPLICABLE OR, AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM SUCH APPLICABLE
LAWS EXIST.
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