EXHIBIT NO. 10.1
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THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE, AND WILL BE OFFERED AND SOLD BY REMOTEMDX IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF FEDERAL AND STATE
LAW BY VIRTUE OF REMOTEMDX'S INTENDED COMPLIANCE WITH THE PROVISIONS OF SECTION
4(2) AND/OR REGULATION S PROMULGATED UNDER THE ACT. THE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY ANY REGULATORY AUTHORITY. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
CONVERTIBLE NOTE PURCHASE AGREEMENT
This Convertible Note Purchase Agreement ("Agreement") is made and
entered into as of the 16th day of September, 2005 by and between RemoteMDx,
Inc., a Utah corporation ("RemoteMDx") and _____________ ("Purchaser").
A. RemoteMDx desires to borrow ____________ ($_____ ) from Purchaser,
and Purchaser desires to lend ___________ ($_________ ) to RemoteMDx; and
B. In consideration of the loan amount, RemoteMDx has authorized the
issuance to Purchaser of a Promissory Note in the original principal amount of
__________________ ($_________ ) (the "Note").
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties covenant and agree as
follows:
1. Loan and Note Purchase. RemoteMDx agrees to borrow _____________
($_______ ) from Purchaser, and Purchaser agrees to lend to RemoteMDx
____________ ($________ ) (the "Loan") pursuant to the terms and conditions of
this Agreement, the Note, a copy of which is attached to this Agreement as
Exhibit "A" and by this reference incorporated herein. (This Agreement and the
Note constitute the "Transaction Documents"). The Purchaser shall pay the loan
amount of ____________ ($______ ) for the Note in full at Closing, as
hereinafter defined, via certified funds or wire transfer to an account of
RemoteMDx identified by RemoteMDx on or before the Closing Date. Wire
instructions shall be provided by RemoteMDx to Purchaser prior to the Closing.
2. Closing. Payment of the purchase price by the Purchaser and delivery
of the Note by RemoteMDx shall be deemed to be the completion of the transaction
contemplated by this Agreement ("Closing"). Closing shall occur concurrently
with the execution of this Agreement, or on such later date as the parties may
hereafter agree (the "Closing Date").
3. Conversion and Registration Rights. The Note may be converted into
common stock of the Company (Conversion Shares) at any time from the date of
purchase through September 15, 2008. The conversion price will be 50% of the
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fair market value (FMV) or $0.40 per share, whichever is lower. FMV will be
determined by taking the 20 day average ask quotation on a national trading
exchange. Both the Interest Shares (that are described in the Note) and the
Conversion Shares described above are subject to limited registration rights.
The holders of the Convertible Note will be granted limited piggy-back
registration rights for the shares of the common stock underlying the conversion
of the Note and the common stock underlying the Interest Shares. At any time
commencing three months from the closing date of the Offering and terminating
when the registrable securities are eligible for sale without any volume
limitation under Rule 144(k) under the Securities Act, the holders of
registrable securities will be entitled to piggyback registration rights with
respect to registrations of public offerings of common stock by us (other than
registrations relating solely to the sale of common stock to participants in a
company-sponsored employee benefit plan). For underwritten offerings, these
piggyback registration rights are subject to a pro rata reduction among selling
shareholders at the underwriter's discretion. We will bare all registration
expenses of all Company registrations, excluding underwriting discounts and
commissions.
4. Use and Disposition of Proceeds. The Loan proceeds will be used in
the manner directed by RemoteMDx's Board of Directors, or as shall be determined
or directed pursuant to authority delegated by the Board.
5. Representations and Warranties of Purchaser. To induce RemoteMDx's
acceptance of this Agreement, Purchaser hereby represents and warrants to
RemoteMDx and its agents and attorneys as follows:
5.1 Investor Status. Purchaser is an "accredited investor" within
the meaning of Section 501(a) of Regulation D under the Act, or is not
a "U.S. Person" as that term is defined under Rule 902(o)(1) of
Regulation S under the Act.
5.2 Liquidity. Purchaser presently has sufficient liquid assets to
pay the purchase price for the Note. Purchaser has adequate means of
providing for its current needs and contingencies and has no need for
liquidity in its loan to RemoteMDx. Purchaser is capable of bearing the
economic risk and the burden of the loan contemplated by this
Agreement, including, but not limited to, the possibility of the
complete loss of the value of the Note, and the limited transferability
of the Note, which may make the liquidation of the Note impossible in
the near future.
5.3 Absence of Conflicts. Purchaser represents and warrants that
the execution and delivery of this Agreement and any other document or
instrument executed in connection with this Agreement, and the
consummation of the transaction contemplated thereby, and compliance
with the requirements thereof, will not violate any law, rule,
regulation, order, writ, judgment, injunction, decree, or award binding
on Purchaser, or the provision of any indenture, instrument, or
agreement to which Purchaser is a party or is subject, or by which
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Purchaser or any of its properties is bound, or conflict with or
constitute a material default thereunder, or result in the creation or
imposition of any lien pursuant to the terms of any such indenture,
instrument or agreement, or constitute a breach of any fiduciary duty
owed by such Purchaser to any third party, or require the approval of
any third-party pursuant to any material contract, agreement,
instrument, relationship or legal obligation to which Purchaser is
subject or to which any of its properties, operations or management may
be subject.
5.4 Sole Party in Interest. Purchaser represents that it is the
sole and true party in interest, and no other person or entity has or
will have upon the issuance of the Note beneficial ownership interest
in the Note or any portion thereof, whether direct or indirect
(excluding any contractual right to payments based on the value of the
Note).
5.5 Investment Purpose. Purchaser represents that it is acquiring
the Note for its own account and for investment purposes and not for
the account or benefit of any U.S. person or other person or entity or
for or with a view to resale or distribution.
5.6 Knowledge and Experience. Purchaser is experienced in
evaluating and making speculative investments, and has the capacity to
protect Purchaser's interests in connection with the acquisition of the
Note. Purchaser has such knowledge and experience in financial and
business matters in general, and investments in RemoteMDx in
particular, that Purchaser is capable of evaluating the merits and
risks of Purchaser's loan to RemoteMDx.
5.7 Disclosure, Access to Information. Purchaser confirms that it
has received, read, and understands this Agreement, and that all
documents, records, books and other information pertaining to
Purchaser's loan to RemoteMDx requested by Purchaser have been made
available for inspection and copying and that there are no additional
materials or documents that have been requested by Purchaser that have
not been made available by RemoteMDx.
5.8 Exclusive Reliance on this Agreement. In making the decision
to purchase the Note, Purchaser has relied exclusively upon information
included in this Agreement or incorporated herein by reference, and not
on any other representations, promises or information, whether written
or verbal, by any person.
5.9 Advice of Counsel. Purchaser understands the terms and
conditions of this Agreement, has investigated all issues to
Purchaser's satisfaction, has consulted with such of Purchaser's own
legal counsel or other advisors as Purchaser deems necessary, and is
not relying, and has not relied on RemoteMDx, for an explanation of the
terms or conditions of this Agreement or any document or instrument
related to the transaction contemplated thereby. Purchaser further
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acknowledges, understands and agrees that, in arranging for the
preparation of this Agreement and all other documents and materials
related thereto, RemoteMDx has not attempted to procure, and has not
procured, legal representation for Purchaser.
5.10 Accuracy of Representations and Information. All
representations made by Purchaser in this Agreement, all documents and
instruments related to this Agreement, and all information provided by
Purchaser to RemoteMDx concerning Purchaser and its financial position
is correct and complete in all material respects as of the date hereof.
If there is any material change in such information before the actual
issuance of the Note, Purchaser immediately shall provide such
information to RemoteMDx.
5.11 Federal Tax Matters. Purchaser has reviewed and understands
the federal income tax aspects of its purchase of the Note, and has
received such advice in this regard as Purchaser deems necessary from
qualified sources such as attorneys, tax advisors or accountants, and
is not relying on any representative or employee of RemoteMDx for such
advice.
5.12 No Brokers or Finders. Purchaser represents that no third
person has in any way brought the parties together or been instrumental
in the negotiation, execution, or consummation of this Agreement or any
instrument, document, or agreement related to this Agreement, other
than any financial advisor to the Purchaser whose fee or compensation
in connection with the matters covered by this Agreement is solely the
obligation of the Purchaser. Purchaser agrees to indemnify RemoteMDx
against any claim by any third person for any commission, brokerage
fee, finders fee, or other payment with respect to this Agreement or
the transaction contemplated hereby based upon any alleged agreement or
understanding between such party and such third person, whether
expressed or implied, arising from the actions of such party. The
covenants set forth in this Section shall survive the Closing Date and
the consummation of the transaction contemplated by this Agreement.
5.13 Certain Risk Factors. Purchaser has been informed about and
fully understands that there are risks associated with a loan to
RemoteMDx, including those disclosed in documents incorporated herein
by reference.
5.14 Manner of Sale. At no time was Purchaser presented with or
solicited by or through any leaflet, public promotional meeting,
television advertisement or any other form of general solicitation or
advertising.
5.15 Restricted Securities. Purchaser understands and acknowledges
that the Note has not been registered under the Act, or any state
securities laws, and that it will be issued in reliance upon certain
exemptions from the registration requirements of those laws, and thus
cannot be resold unless it is registered under the Act or unless
RemoteMDx has first received an opinion of competent securities counsel
that registration is not required for such resale. Purchaser agrees
that it will not resell the Note unless such resale transaction is in
accordance with Regulation S and/or Rule 144 under the Act, pursuant to
registration under the Act, or pursuant to an available exemption from
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registration. With regard to the restrictions on resale of the Note,
Purchaser is aware (i) of the limitations and applicability of
Securities and Exchange Commission Rule 144; and (ii) the Note is
subject to the following restrictions:
THE SECURITIES ACQUIRED OR TO BE ACQUIRED PURSUANT TO HIS
AGREEMENT HAVE BEEN ISSUED PURSUANT TO A CLAIM OF EXEMPTION
FROM THE REGISTRATION OR QUALIFICATION PROVISIONS OF THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND STATE
SECURITIES LAWS, AND THEREFORE HAVE NOT BEEN REGISTERED
UNDER THE ACT OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED WITHOUT COMPLIANCE WITH THE
PROVISIONS OF RULE 144 OR, IF APPLICABLE, REGULATION S
UNDER THE ACT, COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF THE ACT OR APPLICABLE STATE
LAWS, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS. REMOTEMDX WILL INSTRUCT ITS
OFFICERS NOT TO RECOGNIZE ANY SALE OF THESE SECURITIES
UNLESS SUCH SALE IS MADE PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR REMOTEMDX HAS FIRST
RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO REMOTEMDX
AND ITS SECURITIES COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
6. Indemnification. RemoteMDx agrees to indemnify the Purchaser, its
officers, employees, and agents, and any persons controlling the Purchaser and
hold them harmless from and against any and all liability, damage, cost, or
expense, including attorneys fees, incurred on account or arising out of any
inaccuracy or omission in or breach of the declarations, covenants, agreements,
representations, and warranties by RemoteMDx set forth or incorporated by
reference herein.
7. Representations and Warranties of RemoteMDx. RemoteMDx hereby
represents and warrants to Purchaser as follows:
7.1 Organization, Standing, Etc. RemoteMDx is duly organized,
validly existing, and in good standing under the laws of the State of
Utah, and has the requisite power and authority to enter into and
perform this Agreement and to execute and perform under the documents,
instruments and agreements related to this Agreement.
7.2 Authorization. The execution and delivery of this Agreement
and the consummation of the transaction contemplated herein have been
duly authorized by all required action of RemoteMDx, and each of the
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Transaction Documents and all instruments and agreements to be
delivered in connection therewith constitute its legal, valid and
binding obligation, enforceable against RemoteMDx in accordance with
their respective terms, subject to laws of general application relating
to the rights of creditors generally. The qualified directors of
RemoteMDx have authorized this Agreement and the consummation of the
transaction contemplated hereby in accordance with the provisions of
Section 16-10a-852 of the Utah Business Corporation Act.
7.3 Absence of Conflicts. Neither the execution and delivery of
the Transaction Documents or any other agreement or instrument to be
delivered to the Purchaser in connection therewith, nor the
consummation of the transaction contemplated thereby, by RemoteMDx,
shall (i) conflict with or result in a breach of or constitute a
violation or default under (A) any provision of the Articles of
Incorporation or By-laws, each as amended to date, of RemoteMDx, or (B)
the provision of any indenture, instrument or agreement to which
RemoteMDx is a party or by which it or any of its properties is bound,
or (C) any order, writ, judgment, award, injunction, decree, law,
statute, rule or regulation, license or permit applicable to RemoteMDx;
(ii) result in the creation or imposition of any lien pursuant to the
terms of any such indenture, instrument or agreement, or constitute a
breach of any fiduciary duty owned by RemoteMDx to any third party, or
(iii) require the approval of any third party pursuant to any material
contract, agreement, instrument, relationship or legal obligation to
which RemoteMDx is subject or to which it or any of its properties,
operations or management may be subject.
8. Nondisclosure. Except as required by applicable securities laws,
rules and regulations, prior to the Closing Date, no press release or other
announcement concerning the transaction contemplated by this Agreement will be
issued except by mutual consent of the parties. This Agreement and all
negotiations and discussions between the parties in connection with this
Agreement shall be strictly confidential and will not be disclosed in any manner
prior to the Closing Date, except to employees and agents of the parties on a
need-to-know basis, as required by applicable law or regulations or as otherwise
agreed by the parties. After Closing, disclosure shall be at the sole discretion
of RemoteMDx, provided that Purchaser shall have the opportunity to review such
disclosure prior to publication.
9. Conditions to Closing. Closing of the transaction contemplated by
this Agreement shall be contingent upon the satisfaction of the following
conditions precedent:
9.1 Approvals, Waivers, Etc. RemoteMDx shall have delivered to
Purchaser evidence of all approvals, including waivers and consents, of
its board of directors, government or third-parties which may be
required for the sale of the Note, in full force and effect as of the
Closing Date.
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9.2 Absence of Litigation. No litigation shall have been
threatened or shall be pending challenging the purchase of the Note
contemplated by this Agreement or which could have a material adverse
effect on RemoteMDx.
9.3 No Bankruptcy. RemoteMDx shall not have filed for bankruptcy
protection, the appointment of a trustee or receiver, assignment for
the benefit of creditors, nor have taken any other action designed to
protect RemoteMDx, its property or assets from the rights of creditors;
and no other person shall have made any such filing or taken any such
action in respect of RemoteMDx.
9.4 No Breach of Agreements. Neither the execution and delivery of
the Transaction Documents or any other agreement or instrument to be
delivered to the Purchaser in connection therewith, nor the
consummation of the transaction contemplated thereby, by RemoteMDx,
shall have conflicted with or resulted in a breach of or constituted a
violation or default under (A) any provision of the Articles of
Incorporation or By-laws, each as amended to date, of RemoteMDx, or (B)
the provision of any indenture, instrument or agreement to which
RemoteMDx is a party or by which it or any of its properties is bound,
or (C) any order, writ, judgment, award, injunction, decree, law,
statute, rule or regulation, license or permit applicable to RemoteMDx.
9.5 Representations and Warranties. The representations and
warranties of RemoteMDx and Purchaser set forth in this Agreement shall
be true and correct in all material respects (disregarding, for
purposes of such determination of materiality, all qualifications in
such representations and warranties regarding "material") as of the
date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date (except that representations and warranties that
by their terms speak as of the date of this Agreement or some other
date shall be true and correct only as of such date).
10. General Provisions.
10.1 Attorneys' Fees. In the event of a default in the performance
of this Agreement or any document or instrument executed in connection
with this Agreement, the defaulting party, in addition to all other
obligations of performance hereunder, shall pay reasonable attorneys'
fees and costs incurred by the non-defaulting party to enforce
performance of this Agreement.
10.2 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah, including
choice of law rules.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when so signed shall be deemed to be an
original, and such counterparts together shall constitute one and the
same instrument.
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10.4 Entire Agreement. The Transaction Documents collectively set
forth the entire agreement between the parties as to the subject matter
hereof, supersede any and all prior or contemporaneous agreements or
understandings of the parties relating to the subject matter of this
Agreement, and may not be amended except by an instrument in writing
signed by all of the parties to this Agreement.
10.5 Expenses. The parties shall be responsible for and shall pay
their own costs and expenses, including without limitation attorneys'
fees and accountants' fees and expenses, in connection with the conduct
of the due diligence inquiry, negotiation, execution and delivery of
this Agreement and the instruments, documents and agreements executed
in connection with this Agreement.
10.6 Headings. The headings of the sections and paragraphs of this
Agreement have been inserted for convenience of reference only and do
not constitute a part of this Agreement.
10.7 Notices. All notices or other communications provided for
under this Agreement shall be in writing, and mailed, telecopied or
delivered by hand delivery or by overnight courier service, to the
parties at their respective addresses as indicated below or at such
other address as the parties may designate in writing:
(1) If to Purchaser:
_____________________
_____________________
_____________________
_____________________
(2) If to RemoteMDx:
RemoteMDx, Inc.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx, 00000
Fax: (000) 000-0000
With a copy to:
Xxxxx X. Xxxx, Esq.
S. Xxxxxx Xxxxxxx, Esq.
DURHAM, XXXXX & XXXXXXX, P.C.
000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Fax: (000) 000-0000
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All notices and communications shall be effective as follows: When
mailed, upon three (3) business days after deposit in the mail (postage
prepaid); when telecopied, upon confirmed transmission of the
telecopied notice; when hand delivered, upon delivery; and when sent by
overnight courier, the next business day after deposit of the notice
with the overnight courier.
10.8 Severability. Should any one or more of the provisions of
this Agreement be determined to be illegal or unenforceable, all other
provisions of this Agreement shall be given effect separately from the
provision or provisions determined to be illegal or unenforceable and
shall not be affected thereby.
10.9 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors, but shall
not be assignable by Purchaser without the prior written consent of
RemoteMDx
10.10 Survival of Representations, Warranties and Covenants
Closing. All warranties, representations, indemnities and agreements
made in this Agreement by a party hereto shall survive the date of this
Agreement, the Closing Date, the consummation of the transaction
contemplated by this Agreement, and the issuance by RemoteMDx of the
Note.
[Balance of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date set forth below.
By: _______________________________
Its: _______________________________
RemoteMDx, Inc., a Utah corporation
By: _______________________________
Its: _______________________________
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Exhibit A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, OR AN AVAILABLE
EXEMPTION THEREUNDER
CONVERTIBLE PROMISSORY NOTE
$ September 16, 2005
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FOR VALUE RECEIVED, REMOTEMDX, INC., a Utah corporation (the
"Company"), hereby promises to pay to the order of ______________________
("Payee") the principal sum of __________________ and ____/100 Dollars
($__________ ), on (Maturity Date).
Interest on the amount evidenced by this Promissory Note (the "Note")
shall be charged on the unpaid principal of the Note at a rate equal to eighteen
percent (18%) per annum. Interest or the entire three year note shall be prepaid
by the Company by issuing____________ (___________ ) shares (Interest Shares) of
restricted common stock of the Company.
The Company may prepay all or any portion of the principal balance of
the Note at any time, and from time to time. If the Company does prepay part or
all of this Note, Payee shall retain all of the common shares issued as
interest.
The Note may be converted into common stock of the Company (Conversion
Shares) at any time from the date of purchase through September 15, 2008. The
conversion price will be 50% of the fair market value (FMV) or $0.40 per share
whichever is lower. FMV will be determined by taking the 20 day average ask
quotation on a national trading exchange.
The Company shall be in default under this Note if the Company shall
(i) file a petition seeking to be adjudged bankrupt, (ii) make a general
assignment for the benefit of creditors, (iii) suffer the appointment of a
receiver, (iv) fail to satisfy or perform, at the time and in the manner
required, any obligation provided to be satisfied or performed under this Note
or (v) become insolvent.
Upon default hereunder, the unpaid principal balance, at the option of
the Payee, shall become immediately due and payable, without presentment,
demand, protest or any further notice of any kind, all of which are hereby
expressly waived, anything contained herein to the contrary notwithstanding.
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This Note (or any payment due and payable hereunder) may be extended
from time to time with the written consent of the Payee, without in any manner
affecting the liability of the Company. Any consent of the Payee hereunder
(written or otherwise), acceptance of any payment due and payable under this
Note other than in accordance with the terms and conditions hereof, or any
failure of the Payee to exercise any rights under this Note or to specifically
enforce the terms and conditions hereof shall not be deemed or constitute a
waiver of any rights or remedies to which the Payee is entitled to under this
Note or otherwise.
If any covenant or other term or condition of this Note is invalid,
illegal or incapable of being enforced, by reason of any rule of law or public
policy, all other covenants and provisions of the Note shall nevertheless remain
in full force and effect, and no covenant or provision shall be deemed dependent
upon any other covenant or provision.
This Note may not be assigned by Payee without the express written
permission of the Company. This Note shall be binding upon the successors and
assigns of the Company.
This Note has been executed in conformity with, and shall be construed
under and governed by, the laws of the State of Utah.
DATED this _____ day of _________, 2005, effective as of the day and
year first above written.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
RemoteMDx, Inc., a Utah corporation
By:_______________________________________
Its: _____________________________________
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