NOTE PURCHASE AGREEMENT
THIS
NOTE
PURCHASE AGREEMENT (“Agreement”) is made as of March 31, 2006, by and among
Health
Partnership Inc.,
a
Colorado corporation, (the “Company”), and Xxxxxxx X. Xxxxxx (“Lender”).
Capitalized terms not otherwise defined in this Agreement shall have the
meanings ascribed to them in Section 1
below.
WHEREAS,
Company is in need of additional financing to provide for certain obligations
of
Company, and Lender is willing to advance $300,000 to Company on the terms
set
forth below, contingent upon Company agreeing to pay back all monies advanced
by
Lender hereby on a priority basis prior to the repayment of any present or
future indebtedness of Company, including but not limited to purchase money
financing for the purchase of Capital Partners for Health & Fitness,
Inc. and the prior $400,000 of bridge financing issued by Company to several
lenders during the period of January through February of 2006 (all such other
indebtedness being the “Other Indebtedness;” and
WHEREAS,
the Company has obtained the written consent of Xxxxxx X. Xxxxxx in
connection with the sale and issuance of the Note pursuant to that certain
Note
Purchase Agreement, dated October 31, 2005 by the Company and each lender named
therein, a copy of which consent is attached hereto as Exhibit A.
NOW,
THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Definitions.
(a) “Common
Stock” shall mean the common stock, par value $.0001, of the
Company.
(b) “Consideration”
shall mean the amount of money paid by Lender pursuant to this Agreement, namely
the sum of $300,000
(c) “Equity
Securities” shall mean the Company’s Common Stock or Preferred Stock or any
securities conferring the right to purchase the Company’s Preferred Stock or
securities convertible into, or exchangeable for (with or without additional
consideration), the Company’s Common Stock or Preferred Stock, except any
security granted, issued and/or sold by the Company to any director, officer,
employee or consultant of the Company in such capacity for the primary purpose
of soliciting or retaining their services.
(d) “Knowledge”
shall mean the actual knowledge of any officer of the Company.
(e) “Maturity
Date” shall mean the earlier of July 31, 2006 or the day in which the Company
breaks escrow (“Escrow Break Date”) with respect to the issuance of Common Stock
pursuant to its February 13, 2006 Amended and Restated Confidential Private
Placement Memorandum, or any substitute equity financing in lieu
thereof.
(f) “Note”
shall mean the unsecured promissory note issued to Lender pursuant to
Section 2.1
below,
the form of which is attached hereto as Exhibit B.
(g) “Preferred
Stock” shall mean the preferred stock, par value $0.10, of the
Company.
(h) “Securities”
shall have the meaning set forth in Section 5.2
below.
2. Terms
of the Note.
2.1 Issuance
of Note.
In
return for the Consideration paid by Lender, the Company shall sell and issue
to
Lender one unsecured Note in the principal amount of $300,000.
3. Closing.
The
closing (the “Closing”) of the purchase of the Note shall take place at the
offices of the Company take place by facsimile on the date of this Agreement
by
circulation of counterpart copies of the relevant documents, to be followed
by
the delivery of originals thereafter.
4. Representations
and Warranties of the Company.
In
connection with the transactions provided for herein, the Company hereby
represents and warrants to the Lenders that:
4.1 Organization,
Good Standing and Qualification.
The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Colorado and has all requisite corporate power
and authority to carry on its business as now conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction
in
which the failure to so qualify would have a material adverse effect on its
business or properties.
4.2 Authorization.
All
corporate action has been taken on the part of the Company, its officers,
directors and stockholders necessary for the authorization, execution, delivery
and performance, of this Agreement and the Note. Except as may be limited by
applicable bankruptcy, insolvency, reorganization, or similar laws relating
to
or affecting the enforcement of creditors’ rights, the Company has taken all
corporate action required to make all of the obligations of the Company
reflected in the provisions of this Agreement and the Note the valid and
enforceable obligations they purport to be.
4.3 Compliance
with Other Instruments.
Neither
the authorization, execution and delivery of this Agreement or the Note, nor
the
issuance and delivery of the Note, will constitute or result in a default or
violation of any law or regulation applicable to the Company or any term or
provision of the Company’s current Articles or Bylaws or any material agreement
or instrument by which it is bound or to which its properties or assets are
subject.
4.4 Valid
Issuance.
The
Note when issued, will be duly and validly issued, fully paid and nonassessable
and, based in part upon the representations and warranties of the Lender in
this
Agreement, and will be issued in compliance with all applicable federal and
state securities laws.
4.5 No
Violation.
The
Company is not in violation of any order of any court, arbitrator or
governmental body, material laws, ordinances or governmental rules or
regulations (domestic or foreign) to which it is subject, or with respect to
any
material loan agreement, debt instrument or contract with a supplier or customer
of the Company or other agreement to which it is a party and has not failed
to
obtain or apply for any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its property or to the conduct
of
its business.
2
4.6 No
Litigation.
There
are no suits or proceedings pending or, to the Knowledge of the Company,
threatened in any court or before any regulatory commission, board or other
governmental administrative agency against or affecting the Company which if
determined adversely to the Company could result in a material adverse effect
on
the Company’s business as presently conducted or its ability to perform its
obligations hereunder or under the Note.
4.7 Arms’
Length Transactions.
The
transactions evidenced by this Agreement and the Note and the other documents
and instruments delivered in connection herewith or therewith (a) are the result
of arms’ length negotiations among the parties hereto, (b) are made on
commercially reasonable terms, and (c) are undertaken by the Company without
any
intent to hinder, delay or defraud any entity to which the Company is or may
become indebted.
5. Representations
and Warranties of the Lender.
In
connection with the transactions provided for herein, Lender hereby represents
and warrants to the Company that:
5.1 Authorization.
This
Agreement constitutes Lender’s valid and legally binding obligation, enforceable
in accordance with its terms, except as may be limited by (a) applicable
bankruptcy, insolvency, reorganization, or similar laws relating to or affecting
the enforcement of creditors’ rights, and (c) laws relating to the availability
of specific performance, injunctive relief or other equitable remedies. Lender
represents that the execution, delivery and performance of this Agreement has
been duly authorized and approved by Lender.
5.2 Purchase
Entirely for Own Account.
Lender
acknowledges that this Agreement is made with Lender in reliance upon Lender’s
representation to the Company that the Note (collectively, the “Securities”)
will be acquired for investment for Lender’s own account, as principal and not
as a nominee or agent, and not with a view to the resale or distribution of
any
part thereof, and that Lender has no present intention of selling, granting
any
participation in, or otherwise distributing the same. By executing this
Agreement, Lender further represents that Lender does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant
participations to such person or to any third person, with respect to the
Securities.
5.3 Disclosure
of Information.
Lender
acknowledges that it has received all the information, documents and materials
it considers necessary or appropriate for deciding whether to acquire the
Securities. Lender confirms that he has made such further investigation of
the
Company as was deemed appropriate to evaluate the merits and risks of this
investment. Lender further represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Securities.
5.4 Investment
Experience.
Lender
is an investor in securities of companies in the development stage and
acknowledges that he is able to fend for himself, can bear the economic risk
of
its investment and has such knowledge and experience in financial or business
matters that he is capable of evaluating the merits and risks of the investment
in the Securities.
3
5.5 Accredited
Investor.
Lender
is an “accredited investor” within the meaning of Rule 501 of Regulation D of
the Securities Act of 1933, as presently in effect (the “Securities
Act”).
5.6 Restricted
Securities.
Lender
understands that the Securities are characterized as “restricted securities”
under the federal securities laws inasmuch as they are being acquired from
the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may not be resold except through
a valid registration statement or pursuant to a valid exemption from the
registration requirements under the Securities Act and applicable state
securities laws. Lender represents that he is familiar with Rule 144 of the
Securities Act, and understands the resale limitations imposed thereby and
by
the Securities Act and applicable state securities laws.
5.7 Further
Limitations on Disposition.
Without
in any way limiting the representations and warranties set forth above, Lender
further agrees not to make any disposition of all or any portion of the
Securities unless and until the transferee has agreed in writing for the benefit
of the Company to be bound by this Section 5
and:
(a) There
is
then in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with such
registration statement or the disposition is otherwise made in a manner which
in
the reasonable opinion of the Company or its counsel would not violate
applicable securities laws;
(b) (i)Lender
has notified the Company of the proposed disposition and has furnished the
Company with a detailed statement of the circumstances surrounding the proposed
disposition; and (ii) if reasonably requested by the Company, Lender shall
have
furnished the Company with an opinion of counsel, reasonably satisfactory to
the
Company, that such disposition will not require registration of such shares
under the Securities Act; or
(c) All
transferees agree in writing to be subject to the terms hereof, and any other
agreements to which such Securities may be subject, to the same extent as if
they were the Lender hereunder.
5.8 Legends.
It is
understood that the certificates evidencing the Securities, or any other
securities issued in respect of the Securities upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall bear
the legends required by applicable law as well as such agreements to which
such
Securities may be subject, including, without limitation, legends relating
to
restrictions on transfer under federal and state securities laws and legends
required under applicable state securities laws, as well as the following
legend:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR REGISTERED UNDER ANY STATE SECURITIES LAWS. THEY MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, (B) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT, OR (C) AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF
AVAILABLE), IN EACH OF CASES (A) THROUGH (C) IN ACCORDANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.”
4
6. Defaults
and Remedies.
6.1 Events
of Default.
The
following events shall be considered Events of Default with respect to the
Note:
(a) The
Company shall default in the payment of any part of the principal or unpaid
accrued interest on the Note when due;
(b) The
Company shall make an assignment for the benefit of creditors, or shall admit
in
writing its inability to pay its debts as they become due, or shall file a
voluntary petition for bankruptcy, or shall file any petition or answer seeking
for itself any reorganization, arrangement, composition, readjustment,
dissolution or similar relief under any present or future statute, law or
regulation, or shall file any answer admitting the material allegations of
a
petition filed against the Company in any such proceeding, or shall seek or
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator of the Company, or of all or any substantial part of the properties
of the Company, or the Company or its respective directors or majority
stockholders shall take any action looking to the dissolution or liquidation
of
the Company;
(c) Within
sixty (60) days after the commencement of any proceeding against the Company
seeking any bankruptcy reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such proceeding shall not have been dismissed, or within
sixty (60) days after the appointment without the consent or acquiescence of
the
Company of any trustee, receiver or liquidator of the Company or of all or
any
substantial part of the properties of the Company, such appointment shall not
have been vacated; or
(d) The
Company shall fail to observe or perform any other obligation to be observed
or
performed by it under this Agreement or the Note within ten (10) days after
written notice from the Lender to perform or observe the obligation, or any
representation or warranty made by the Company hereunder or thereunder shall
be
false in any material respect as of the date made and such representation or
warranty is not cured, if susceptible to cure, within ten (10) days after the
Company’s Knowledge of such failure.
(e) The
Company shall make any payment with respect to the Other Indebtedness without
Lender’s prior consent; the parties acknowledge and agree that as a material
inducement to fund the loan evidenced by this Agreement, Lender is requiring
the
Company to pay all sums due with respect to the Note and thereafter, with
respect to the $100,000 of funding from Lender (or an affiliate) and the $50,000
of funding from Xxxxx Xxxxxxx (subsequently purchased by Lender or an affiliate)
pursuant to the most recent aggregate round of $400,000 of bridge financing
($400,000 Bridge Round), prior to the payment of any of the remaining Other
Indebtedness of Company. The parties further agree that on the Escrow Break
Date, the Company shall pay in full the remainder of the $400,000 Bridge Round
debt off in full after satisfaction of the above obligations to
Lender.
5
6.2 Remedies.
Upon
the occurrence of an Event of Default under Section 6.1
hereof,
at the option and upon the declaration of the holder of the Note, the entire
unpaid principal and accrued and unpaid interest on the Note, and all other
amounts owing under this Agreement shall, without presentment, demand, protest,
or notice of any kind, all of which are hereby expressly waived, be forthwith
due and payable, and such holder may, immediately and without expiration of
any
period of grace, enforce payment of all amounts due and owing under the Note
and
exercise any and all other remedies granted to Lender at law, in equity or
otherwise; provided, however, that if any Event of Default occurs under
Sections 6.1(b)
or 6.1(c),
all
unpaid principal and accrued and unpaid interest on such Note, and all other
amounts owing under this Agreement, shall automatically become immediately
due
and payable.
6.3 Additional
Consideration.
In the
event the Note is not paid in full for any reason by the Maturity Date, Company
agrees to issue to the holder of the Note 250,000 shares of its Common Stock
as
a nonpayment fee to the holder, which shares shall be held and subject to the
restrictions on transfer set forth above.
7. Miscellaneous.
7.1 Successors
and Assigns.
Except
as otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties, provided, however, that the Company may not assign
its
obligations under this Agreement without the written consent of the Lender
(which shall not be unreasonably withheld), and Lender may not, without the
written consent of the Company (which shall not be unreasonably withheld and
which will be permitted to the extent of the assignment to the individual who
provided the funds to Lender to enable him to make the loan called for
hereunder), assign all or any portion of the Note to any person or entity.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
7.2 Governing
Law.
This
Agreement and the Note shall be governed by and construed under the laws of
the
State of Illinois as applied to agreements among Illinois residents, made and
to
be performed entirely within the State of Illinois.
7.3 Counterparts.
This
Agreement, and any of the other agreements, documents and instruments
contemplated hereby, may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and
the same instrument. Delivery of an executed signature page to this Agreement,
and any of the other Agreements, documents and instruments contemplated hereby,
by facsimile transmission shall be effective as delivery of a manually signed
counterpart hereof or thereof.
7.4 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
6
7.5 Notices.
All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to
the
party to be notified, (ii) when sent by confirmed electronic mail or facsimile
if sent during normal business hours of the recipient, if not so confirmed,
then
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid or
(iv)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the respective parties at the following
addresses (or at such other addresses as shall be specified by notice given
in
accordance with this Section 7.5):
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If
to the Company:
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0000
X. Xxxxxxxx, Xxxxx 0X
Xxxxxxx,
XX 00000
Attention: Xxx
Xxxxxxxxx; and
00
X. Xxxxxxx Xxxx
Xxxx
Xxxxxx, Xx. 00000
Attention:
Xxxxxx Xxxxxx
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|
|
|
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If
to Lender:
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Xxxxxxx
X. Xxxxxx
00000
Xxxxx Xxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
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7.6 Finder’s
Fee.
Each
party represents that it neither is nor will be obligated for any finder’s fee
or commission in connection with this transaction. Lender agrees to indemnify
and to hold harmless the Company from any liability for any commission or
compensation in the nature of a finder’s fee (and the costs and expenses of
defending against such liability or asserted liability) for which Lender is
responsible. The Company agrees to indemnify and hold harmless Lender from
any
liability for any commission or compensation in the nature of a finder’s fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.7 Expenses.
If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other relief to
which
such party may be entitled. The Company shall pay all costs and expenses that
it
incurs with respect to the negotiation, execution, delivery and performance
of
this Agreement.
7.8 Entire
Agreement; Amendments and Waivers.
This
Agreement and the Note and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof. Nonetheless, any term of this
Agreement or the Note may be amended and the observance of any term of this
Agreement or the Note may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent
of
the Company and the Lender. Any waiver or amendment effected in accordance
with
this Section 7.8
shall be
binding upon each party to this Agreement and any holder of the Note purchased
under this Agreement at the time outstanding and each future holder of the
Note.
7
7.9 Effect
of Amendment or Waiver.
Lender
acknowledges that by the operation of Section 7.8
hereof,
the Lender will have the right and power to diminish or eliminate all of his
rights under this Agreement and the Note issued to Lender.
7.10 Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
7.11 Exculpation
by Lender.
Lender
acknowledges that he is not relying upon any person, firm, corporation or
stockholder, other than the Company and its officers and directors in their
capacities as such, in making its investment or decision to invest in the
Company.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
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By:
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Name:
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|||||
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Title:
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|||||
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LENDER:
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|||||
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Xxxxxxx
X. Xxxxxx
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|||||
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Amount:
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$
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300,000.00
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Address:
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00000
Xxxxx Xxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
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8
EXHIBIT
A
CONSENT
The
undersigned acknowledges and agrees as follows:
1. Health
Partnership Inc. (the “Company”) proposes to sell and issue one unsecured
promissory note in the aggregate amount of $300,000 to Xxxxxxx Xxxxxx (or an
affiliate of his) to provide consideration to the Company on terms and
conditions which have been fully disclosed to the undersigned (the “Contemplated
Transaction”).
2. Pursuant
to Section 7.13 of that certain Note Purchase Agreement dated October 31,
2005 by the Company and the lenders named on the Schedule of Lenders attached
thereto (the “Note Purchase Agreement”), until the later of the Maturity Date or
repayment of the Note (each as defined in the Note Purchase Agreement), the
Company shall not take any action regarding, among others, the issuance of
debt
of more than $100,000 or Equity Securities (as defined in the Note Purchase
Agreement) in any amount, without the express written consent of Xxxxxx X.
Xxxxxx, or, in the event of his death or incapacity, the trustee of the Xxxxxxx
Xxxxxx Family Trust u/a/d 11-11-99.
3. The
undersigned hereby consents to the Contemplated Transaction upon the terms
stated herein and all such further agreements, instruments, certificates,
documents and other amendments related thereto or deemed necessary by the
Company in order to carry out the Contemplated Transaction.
4. This
Consent is binding upon the successors and assigns of the
undersigned.
5. This
Consent is governed by and construed in accordance with the laws of the State
of
Illinois, without regard to choice or conflict of laws principles.
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Date:
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Xxxxxx
X. Xxxxxx
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A-1
EXHIBIT
B
FORM
OF PROMISSORY NOTE
THIS
PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE ”SECURITIES ACT”), OR REGISTERED UNDER ANY STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, (B) AN OPINION OF COUNSEL SATISFACTORY
TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT, OR
(C)
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), IN EACH OF CASES (A) THROUGH (C) IN ACCORDANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.
PROMISSORY
NOTE
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No.
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March-1
|
Date
of Issuance:
|
March
31, 2006, 2006
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$
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300,000.00
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||||
FOR
VALUE
RECEIVED, Health Partnership Inc., a Colorado corporation (the “Company”),
hereby promises to pay to the order of Xxxxxxx X. Xxxxxx (the “Lender”), the
principal sum of Three Hundred Thousand Dollars ($300,000.00), together with
interest thereon from the date of this Promissory Note (the “Promissory Note”).
Interest shall accrue at a rate of ten percent (10%) per annum. The principal
amount and all accrued and unpaid interest shall be due and payable by the
Company on the earlier of July 31, 2006 or the day upon which the Company breaks
escrow with respect to the sale of its Common Stock pursuant to its February
13,
2006 Confidential Private Placement Memorandum or any substitute financing
therefore (the “Maturity Date”).
This
Promissory Note is issued pursuant to that certain Note Purchase Agreement
dated
as of March 31, 2006, by and among the Company, the Lender, as amended, modified
or supplemented from time to time (the “Purchase Agreement”), and capitalized
terms not defined herein shall have the meaning set forth in the Purchase
Agreement.
1. Payment.
All
payments shall be made in lawful money of the United States of America at the
principal office of the Company, or at such other place as the Lender may from
time to time designate in writing to the Company. Payment shall be credited
first to Costs (as defined below), if any, then to accrued interest due and
payable and any remainder applied to principal. Prepayment of principal may
be
made at any time. In connection with the delivery, acceptance, performance
or
enforcement of this Promissory Note, the Company hereby waives demand, notice,
presentment, protest, notice of dishonor and other notice of any kind, and
asserts to extensions of the time of payment, release, surrender or substitution
of security, or forbearance or other indulgence, without notice. The Company
agrees to pay all amounts under this Promissory Note without offset, deduction,
claim, counterclaim, defense or recoupment, all of which are hereby waived.
All
payments made under this Promissory Note shall be made in priority to any
payments with respect to any of the Other Indebtedness.
B-1
2. Event
of Default Interest.
Upon
the occurrence of an Event of Default pursuant to the Purchase Agreement, and
continuing until such time as such Event of Default is cured, interest shall
be
due and payable on the whole of the unpaid principal balance at an annual rate
of twenty percent (20%) per annum, compounded annually, or the maximum legally
permitted rate, whichever is less. In addition, the Lender shall be entitled
to
a fee as set forth in Section 6.3 of the Purchase Agreement should the Note
not be paid in full by the Maturity Date.
3. Amendments
and Waivers; Resolutions of Dispute; Notice.
The
amendment or waiver of any term of this Promissory Note, the resolution of
any
controversy or claim arising out of or relating to this Promissory Note and
the
provision of notice shall be conducted pursuant to the terms of the Purchase
Agreement.
4. Successors
and Assigns.
This
Promissory Note applies to, inures to the benefit of, and binds the successors
and assigns of the parties hereto; provided, however, that the Company may
not
assign its obligations under this Promissory Note without the written consent
of
the Lender may not, and Lender may not without the written consent of the
Company (which shall not be unreasonably withheld, and which shall be consented
to in the event of assignment of this Note to the individual who provided Lender
the funds to enable Lender to fund the Note), assign all or any portion of
this
Promissory Note. Any transfer of this Promissory Note may be effected only
pursuant to the Purchase Agreement and by surrender of this Promissory Note
to
the Company and reissuance of a new note to the transferee. The Lender and
any
subsequent holder of this Promissory Note receives this Promissory Note subject
to the foregoing terms and conditions, and agrees to comply with the foregoing
terms and conditions for the benefit of the Company.
5. Officers
and Directors not Liable.
In no
event shall any officer or director of the Company be liable for any amounts
due
and payable pursuant to this Promissory Note.
6. Expenses.
The
Company hereby agrees, subject only to any limitation imposed by applicable
law,
to pay all expenses, including reasonable attorneys’ fees and legal expenses,
incurred by the Lender (“Costs”) in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by declaration or otherwise.
The
Company agrees that any delay on the part of the Lender in exercising any rights
hereunder will not operate as a waiver of such rights. The Lender of this
Promissory Note shall not by any act, delay, omission or otherwise be deemed
to
have waived any of its rights or remedies, and no waiver of any kind shall
be
valid unless in writing and signed by the party or parties waiving such rights
or remedies.
7. Governing
Law.
This
Promissory Note shall be governed by and construed under the laws of the State
of Illinois
8. Approval.
The
Company hereby represents that its board of directors, in the exercise of its
fiduciary duty, has approved the Company’s execution of this Promissory Note
based upon a reasonable belief that the principal provided hereunder is
appropriate for the Company after reasonable inquiry concerning the Company’s
financing objectives and financial situation.
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By:
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Name:
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Title:
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B-2
