EXHIBIT 10.2
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER ANY APPLICABLE STATE OR PROVINCIAL
SECURITIES LAW AND NEITHER MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR SUCH
LAWS OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
CONVERTIBLE NOTE
US$2,500,000
December 29, 2000
FOR VALUE RECEIVED, MEDIX RESOURCES, INC., a Colorado corporation with
offices at 0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx Xxxxxxx, Xxxxxxxx,
00000 (the "Company") promises to pay to the order of RoyCap Inc., an Ontario
corporation, (the "Holder"), or to such other person or at such other place
as the Holder may designate from time to time in writing, up to the sum of
Two Million Five Hundred Thousand Dollars (US$2,500,000) in lawful money of
the United States of America ("US Dollars"), as provided herein. All
advances or payments in respect of this Note shall be recorded and endorsed
on the grid attached hereto and on any continuation grid which may be
attached from time to time by the Holder. The actual quantum of all payments
on or in respect of this Note at any given time as shown on the books and
records of the Holder shall be considered correct and conclusively binding on
the Company, absent manifest error. In this Note, unless specifically defined
herein, all capitalized words and phrases shall have the meaning attributed
thereto in the Securities Purchase Agreement dated the date hereof between
the Company and the Holder ("SPA"), and certain matters related hereto shall
be governed by the SPA.
2. Maturity.
The amount outstanding under this Note will be immediately due and
payable on January 10, 2002 (the "Maturity Date").
3. Principal Drawdowns.
(a) An initial drawdown of Seven Hundred and Fifty Thousand US Dollars
(US$750,000) will be made by the Company at the Closing.
(b) Provided that the Company is in compliance with the terms and
conditions, the SPA, the Transaction Documents and the conditions
to the ability to make such draws as set out in the SPA have been
satisfied, the Company may make additional draws of:
(i) Two Hundred and Fifty Thousand US Dollars (US$250,000) within ten (10)
business days from the Effective Date; and
(ii) Five Hundred Thousand US Dollars (US$500,000) within ten (10) business
days after each of the following dates:
(A) sixty (60) days from the Effective Date (the "60 Day Drawdown");
(B) ninety (90) days from the Effective Date (the "90 Day Drawdown"); and
(C) one hundred and fifty (150) days from the Effective Date (the "150 Day
Drawdown").
The Company acknowledges that the Holder shall not be required to make
any particular advance hereunder (other than the initial drawdown of
$750,000) unless the five (5) Trading Days ending the day prior to the
request for an advance hereunder, the Closing Bid Price exceeds One Dollar
($1.00).
4. Interest.
(a) This Note shall bear interest at the rate of ten percent (10%) per
annum from the date of its issue until the Maturity Date on the
outstanding principal balance advanced from time to time
hereunder. Such interest shall be payable semi-annually in
arrears, on July 10, 2001 and on January 10, 2002, by a payment
in cash, or at the Company's option, by delivery of such number
of Common Shares as is determined pursuant to section 6 hereof
(with the payment date used in the twenty (20) Trading Days
calculation), provided that such Common Shares have been included
in the Registration Statement and that such Registration
Statement has been declared effective by the SEC and remains
effective on the date of payment.
5. Conversion.
(a) At any time after the Effective Date and from time to time thereafter,
the Holder may at its option convert:
(i) up to $750,000 of the principal amount of this Note into Common Shares
at a conversion price of Ninety US Cents ($0.90) per share
(subject to section 7 hereof; and
(ii) all or any portion of the balance of the principal amount of this Note
then outstanding into Common Shares at a conversion price
of One US Dollar ($1.00) per share (subject to section 7
hereof).
(b) The Holder shall give written notice of such election to the Company.
6. Prepayment Notice.
From the date hereof through to the Maturity Date, the Company, at its
option, may prepay this Note by giving the Holder ten (10) business days
written notice (the "Notice Period") of such election. During the Notice
Period, the Holder may elect to convert all or part of this Note in
accordance with the provisions of section 4 hereof. In circumstances where
the Holder does not elect to convert, upon the conclusion of the Notice
Period, the Company shall pay to the Holder an amount equal to the
outstanding principal balance set out in the notice referred to in this
section plus all accrued interest thereon. In circumstances where the
Company delivers the notice referred to in this section prior to the
Effective Date, the Company, in addition to the prepayment contemplated
herein shall issue to the Holder a warrant to acquire Common Shares in the
form attached as Exhibit C to the Warrant Agreement.
7. Redemption.
Notwithstanding the Maturity Date, the Holder may require repayment of
some or all of the principal outstanding under this Note and interest thereon
as follows:
(a) all amounts advanced pursuant to subparagraphs 2(a) and 2(b)(i) hereof
up to One Million US Dollars (US$1,000,000) together with
interest accrued thereon, starting April 10, 2001 upon ten (10)
Business Days notice to the Company;
(b) all amounts advanced pursuant to subparagraph 2(b)(ii)(A) hereof up to
Five Hundred Thousand US Dollars (US$500,000) (together with any
amounts drawn pursuant to section 2(b) (i) after April 10, 2001)
together with interest accrued thereon, any time following the
90th day after the Effective Date upon ten (10) Business Days
notice to the Company; and
(c) all amounts advanced pursuant to subparagraph 2(b)(ii)(B) and (C) up to
One Million US Dollars (US$1,000,000) together with accrued
interest thereon, any time following the 180th day from the
Effective Date upon ten (10) Business Days notice to the Company.
Upon the delivery of a notice by the Holder as contemplated herein (the
"Repayment Notice") the Company shall pay the amounts owing in cash on the
tenth (10th) Business Day following receipt of the Repayment Notice;
provided, however that the Company may, upon delivery of a notice to the
Holder within three (3) Business Days following its receipt of the Repayment
Notice of its intention to, in lieu of payment of cash, satisfy its
obligations pursuant to this section 6 by issuing and delivering to the
Holder within ten (10) days following receipt of the Repayment Notice such
number of Common Shares as is equal to the fraction the numerator of which is
the dollar value of the amount which the Company is required to repay
pursuant to this section 6 and the denominator of which is eighty (80%)
percent of the Volume Weighted Market Price per Common Share during the
twenty (20) Trading Days ending on the day of the notice delivered by the
Holder pursuant to this section 6. The Company may not exercise this right
to issue shares of Common Stock in lieu of the payment of cash unless a
Registration Statement to permit their sale into the public markets has been
declared effective. In the event that the Company fails to deliver cash or
shares, as the case may be, within the applicable period as provided above,
the Company shall only be entitled to satisfy its obligations pursuant to
this section 6 by issuing and delivering shares of Common Stock in the manner
set forth above with the written consent of the Holder and the Holder, in its
sole discretion and without prejudice to its other rights and remedies
hereunder, shall determine the amount then owing by the Company to the Holder
in accordance with the provisions hereof which determination shall be binding
on the Company.
For the purposes hereof, "Market Price Per Share" means on any
particular date (a) the aggregate price of Common Shares sold on such date on
the American Stock Exchange or on such Subsequent Market (as defined in the
Registration Rights Agreement) on which the Common Shares are then listed or
quoted divided by the number of Common Shares so sold, or if there is no such
price on such date, then the closing price on the American Stock Exchange or
on such Subsequent Market on the date nearest preceding such date or (b) if
the Common Shares are not then listed or quoted on the American Stock
Exchange or a Subsequent Market, the closing bid price for a Common Share in
the over-the-counter market, as reported by the National Quotation Bureau
Incorporated or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (c) if the Common
Shares are not then reported by the National Quotation Bureau Incorporated
(or similar organization or agency succeeding to its functions of reporting
prices), then the average of the "Pink Sheet" quotes for the relevant
conversion period, as determined in good faith by the Holder, or (d) if the
Common Shares are not then publicly traded, the fair market value of a Common
Share as determined by an Appraiser selected in good faith by the Holder.
"Trading Day" means (a) a day on which the Common Shares are traded on
the American Stock Exchange or on such Subsequent Market on which the Common
Shares are then listed or quoted, or (b) if the Common Shares are not listed
on the American Stock Exchange or a Subsequent Market, a day on which the
Common Shares are traded in the over-the-counter market, as reported by the
OTC Bulletin Board, or (c) if the Common Shares are not quoted on the OTC
Bulletin Board, a day on which the Common Shares are quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions
of reporting prices); provided, however, that in the event that the Common
Shares are not listed or quoted as set forth in (a), (b) and (c) hereof, then
Trading Day shall mean a Business Day.
8. Certain Adjustments.
In case of the closing of any (1) merger or consolidation of the
Company with or into another Person, or (2) sale by the Company of more than
one-half of the assets of the Company (on a book value basis) in one or a
series of related transactions, or (3) tender or other offer or exchange
(whether by the Company or another Person) pursuant to which holders of
Common Shares are permitted to tender or exchange their shares for other
securities, stock, cash or property of the Company or another Person; then
the Holder shall have the right thereafter to (A) convert the Note for the
shares of stock and other securities, cash and property receivable upon or
deemed to be held by holders of Common Shares following such merger
consolidation or sale, and the Holder shall be entitled upon conversion of
this Note to receive such amount of securities, cash and property as the
Common Shares for which this Note could have been converted immediately prior
to such merger, consolidation or sales would have been entitled, or (B) in
the event of an exchange or tender offer or other transaction contemplated by
clause (3) of this Section, convert the Note for such securities, stock, cash
and other property receivable upon or deemed to be held by holders of Common
Shares that have tendered or exchanged their shares of Common Shares
following such tender or exchange, and the Holder shall be entitled upon
conversion of this Note to receive such amount of securities, cash and
property as the Common Shares into which this Note could have been converted
immediately prior to such tender or exchange would have been entitled. The
terms of any such merger, sale, consolidation, tender or exchange shall
include such terms which shall continue to give the Holder the right to
receive the securities, cash and property set forth in this Section upon any
conversion or redemption following such event. This provision shall
similarly apply to successive such events.
9. Events of Default.
The occurrence of one or more of the following events (after the
expiration of any stated notice or cure period) shall constitute an event of
default ("Event of Default") hereunder and shall result in the holder being
deemed to have made a demand for payment:
(a) The Company shall fail to make any payment due to the Holder under this
Note after the same shall become due and payable;
(b) The Company becomes insolvent, bankrupt or generally fails to pay its
debts as such debts become due; is adjudicated insolvent or
bankrupt; admits in writing its inability to pay its debts; or
shall suffer a custodian, receiver or trustee for it or
substantially all of its property to be appointed and if
appointed without its consent, not be discharged within sixty
(60) days; makes an assignment for the benefit of creditors; or
suffers proceedings under any law related to bankruptcy,
insolvency, liquidation or the reorganization, readjustment or
the release of debtors to be instituted against it, and if
contested by it, not dismissed or stayed within sixty (60) days;
if proceedings under any law related to bankruptcy, insolvency,
liquidation, or the reorganization, readjustment or the release
of debtors is instituted or commenced by the Company; if any
order for relief is entered relating to any of the foregoing
proceedings; if the Company shall call a meeting of its creditors
with a view to arranging a composition or adjustment of its
debts; or if the Company shall by any act or failure to act
indicate its consent to, approval of or acquiescence in any of
the foregoing;
(c) The Company fails to perform in accordance with any other terms or
conditions in this Note and the Company has failed to cure the
same within fifteen (15) days following its receipt of written
notice of said Event of Default hereunder or of a default
thereunder;
(d) The Company is in default of any of its obligations under the SPA, the
Registration Rights Agreement or any of the other Transaction
Documents;
(e) The Company sells or otherwise transfers substantially all of its
assets unless this Note is assumed by the transferee,
discontinues its business, voluntarily or involuntarily dissolves.
10. Remedies.
Upon the occurrence of any Event of Default, at the option of the
Holder, the Holder may declare the indebtedness hereunder due and thereupon
the Company shall forthwith repay all of its obligations under the Note to
the Holder. The Holder shall be entitled to exercise any and all rights and
remedies which it has at law or in equity.
11. Remedies Cumulative, etc.
(a) No right or remedy conferred upon or reserved to the Holder hereunder
or now or hereafter existing at law or in equity is intended to
be exclusive of any other right or remedy, and each and every
such right or remedy shall be cumulative and concurrent, and in
addition to every other such right or remedy, and may be pursued
singly, concurrently, successively or otherwise, at the sole
discretion of the Holder, and shall not be exhausted by any one
exercise thereof but may be exercised as often as occasion
therefor shall occur.
(b) The Company agrees that any action or proceeding against it to enforce
this Note may be commenced in state or federal court in any
county in the State of Colorado.
12. Costs and Expenses.
Following the occurrence of any Event of Default, the Company shall pay
upon demand all costs and expenses (including all attorneys' fees and
expenses) incurred by the Holder in the exercise of any of its rights,
remedies or powers to enforce this Note.
13. Notices.
All notices required to be given to any of the parties hereunder shall
be in writing and shall be deemed to have been sufficiently given for all
purposes when presented personally to such party or sent by certified or
registered mail, return receipt requested, to such party at its address set
forth below:
If to the Company: Medix Resources, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx
00000
Attn: Xxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With copies to: Xxxx Xxxxxxx
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx
00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Holder: RoyCap Inc.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxxxx Xxxxx
Tel: (000)-000-0000
Fax: (000) 000-0000
With copies to: Fogler, Rubinoff, LLP
Suite 4400 Royal Trust Tower
Toronto Dominion Centre
Toronto, Ontario M5K 1G8
Attn: Xxxxxxx Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Such notice shall be deemed to be given when received if delivered
personally or three (3) business days after the date mailed to a recipient in
the same country as the sender, or seven (7) business days to any other
recipient. Any notice mailed shall be sent by certified or registered mail.
Any notice of any change in such address shall also be given in the manner
set forth above. Whenever the giving of notice is required, the giving of
such notice may be waived in writing by the party entitled to receive such
notice.
14. Severability.
In the event that any provision of this Note is held to be invalid,
illegal or unenforceable in any respect or to any extent, such provision
shall nevertheless remain valid, legal and enforceable in all such other
respects and to such extent as may be permissible. Any such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Note, but this Note shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
15. Successors and Assigns.
This Note inures to the benefit of the Holder and binds the Company,
and its respective successors and assigns, and the words "Holder" and
"Company" whenever occurring herein shall be deemed and construed to include
such respective successors and assigns.
16. Entire Agreement.
This Note embodies the entire understanding and agreement between the
parties hereto and thereto with respect to the subject matter hereof and
thereof and supersedes all prior agreements, understandings and inducements,
whether express or implied, oral and written, except for the SPA, the Warrant
Agreement and the Registration Rights Agreement.
17. Modification of Agreement.
This Note may not be modified, altered or amended, except by an
agreement in writing signed by both the Company and the Holder.
18. No Presentment, Etc.
The Company hereby waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, Event of Default or enforcement of this Note.
19. No Waiver.
The Holder shall not, by any act, delay, omission or otherwise, be
deemed to have waived any of its rights or remedies hereunder, unless such
waiver shall be in writing and signed by the Holder. A waiver on any one
occasion shall not be construed as a bar to or waiver of any such right or
remedy on any future occasion.
20. Governing Law and Jurisdiction.
This Note shall be governed by and construed in accordance with
the laws of the State of New York without regard to the conflicts of laws
principles of any jurisdiction. The Company and the Holder hereby
irrevocably submit to the jurisdiction of the Province of Ontario and the
State of New York, as determined by the party initiating any proceeding, for
the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby
irrevocably waive, and agree not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, or that such suit, action or proceeding is improper. Each of the
Company and the Holder hereby irrevocably waives personal service of process
and consents to the process being served in any such suit, action or
proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law.
IN WITNESS WHEREOF, the Company has duly executed this Note this 10th day of
January, 2001.
MEDIX RESOURCES, INC.
By: /s/Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Executive Vice-President and
Chief Financial Officer
LOAN GRID
PRINCIPAL PRINCIPAL
AMOUNT AMOUNT REPAID PRINCIPAL NOTATION
DATE ADVANCED OR CONVERTED BALANCE MADE BY
----------------- ----------- --------------- ------------- ---------------
January 10, 2001 $750,000 $750,000
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