FORM OF NOTE PURCHASE AGREEMENT
FORM OF NOTE
PURCHASE AGREEMENT
THIS
NOTE
PURCHASE AGREEMENT (“Agreement”) is made as of January __, 2006, by and among
Health
Partnership Inc.,
a
Colorado corporation, (the “Company”), and the lenders (each individually a
“Lender,” and collectively the “Lenders”) named on the Schedule of Lenders
attached hereto (the “Schedule of Lenders”). Capitalized terms not otherwise
defined in this Agreement shall have the meanings ascribed to them in Section
1
below.
WHEREAS,
each of the Lenders intends to provide certain Consideration to the Company
as
described for each Lender on the Schedule of Lenders;
WHEREAS,
the parties wish to provide for the sale and issuance of the Notes in return
for
the provision by the Lenders of the Consideration to the Company on the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS,
the Company has obtained the written consent of Xxxxxx Xxxxxx in connection
with
the sale and issuance of the Notes 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 each Lender pursuant to this Agreement
as
shown on the Schedule of Lenders.
(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) “Majority
Note Holders” shall mean the holders of a majority in interest of the aggregate
principal amount of Notes.
(f) “Maturity
Date” shall mean the earlier of October 31, 2006 or the initial closing on
Company issuance of equity.
(g) “Notes”
shall mean the one or more unsecured promissory notes issued to each Lender
pursuant to Section 2.1 below, the form of which is attached hereto as Exhibit
B.
(h) “Preferred
Stock” shall mean the preferred stock, par value $0.10, of the
Company.
(i) “Securities”
shall have the meaning set forth in Section 5.2 below.
2. Terms
of the Notes.
2.1 Issuance
of Notes.
In
return for the Consideration paid by each Lender, the Company shall sell and
issue to such Lender one or more unsecured Notes in the aggregate amount up
to
$1,000,000 (or such increased amount as determined by the Company’s board of
directors). Each Note shall have a principal balance equal to that portion
of
the Consideration paid by such Lender for the Note, as set forth in the Schedule
of Lenders. Notwithstanding anything to the contrary herein, there shall be
no
minimum aggregate principal amount of the Notes which must be sold by the
Company to any one or more Lenders before the Company can consummate the First
Closing (as defined herein) or utilize the proceeds of the respective
Consideration received by the Company at the First Closing or any Subsequent
Closing (as defined herein).
3. Closing.
The
initial closing (the “First Closing”) of the purchase of the Notes in the
amounts set forth opposite each Lender’s name on the Schedule of Lenders shall
take place at the offices of the Company at 12:00 p.m., on ____________, 2006,
or at such other time and place as the Company and Lenders purchasing the
aggregate principal amount of the Notes to be sold at the First Closing agree
upon orally or in writing. Any subsequent closing of the purchase of the Notes
(a “Subsequent Closing”) in the amounts set forth opposite each Lender’s name on
the Schedule of Lenders shall take place at such locations and at such times
as
shall be mutually agreed upon orally or in writing by the Company and Lenders
purchasing the aggregate principal amount of the Notes to be sold at such
Subsequent Closing. At each Closing, each Lender shall deliver the Consideration
to the Company and the Company shall deliver to each Lender one or more executed
Notes in return for the respective Consideration provided to the Company.
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 Notes. 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 Notes 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 Notes, nor
the issuance and delivery of the Notes, 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
Notes when issued, will be duly and validly issued, fully paid and nonassessable
and, based in part upon the representations and warranties of the Lenders 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.
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 Notes.
4.7 Arms’
Length Transactions.
The
transactions evidenced by this Agreement and the Notes 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 Lenders.
In
connection with the transactions provided for herein, each Lender hereby
represents and warrants to the Company that:
5.1 Authorization.
This
Agreement constitutes such 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. Each Lender represents that the execution, delivery and performance
of
this Agreement has been duly authorized and approved by such
Lender.
5.2 Purchase
Entirely for Own Account.
Each
Lender acknowledges that this Agreement is made with Lender in reliance upon
such Lender’s representation to the Company that the Notes (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 such Lender has no present intention
of selling, granting any participation in, or otherwise distributing the same.
By executing this Agreement, each Lender further represents that such 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.
Each
Lender acknowledges that it has received all the information, documents and
materials it considers necessary or appropriate for deciding whether to acquire
the Securities. Each Lender confirms that it has made such further investigation
of the Company as was deemed appropriate to evaluate the merits and risks of
this investment. Each 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.
Each
Lender is an investor in securities of companies in the development stage and
acknowledges that it is able to fend for itself, can bear the economic risk
of
its investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Securities. If other than an individual, each Lender also represents
it
has not been organized solely for the purpose of acquiring the
Securities.
5.5 Accredited
Investor.
Each
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.
Each
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. Each Lender represents that it 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, each
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;
(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 Lenders 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.”
6. Defaults
and Remedies.
6.1 Events
of Default.
The
following events shall be considered Events of Default with respect to each
Note:
(a) The
Company shall default in the payment of any part of the principal or unpaid
accrued interest on any Note for more than thirty (30) days after the Maturity
Date or at a date fixed by acceleration or otherwise;
(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 Notes within 30 (thirty) days after
written notice from the Majority Note Holders 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 30
(thirty) days after the Company’s Knowledge of such failure.
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 a Note, the entire unpaid principal
and accrued and unpaid interest on such 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 such Note and exercise any
and all other remedies granted to it 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. Notwithstanding anything herein to the contrary, any payments
under
the Notes shall be made to all Holder on a pari
passu.
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 Majority
Note Holders (which shall not be unreasonably withheld), and no Lender may,
without the written consent of the Company (which shall not be unreasonably
withheld), assign all or any portion of a 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 Notes 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.
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
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If
to Lenders:
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At
the respective addresses shown on the Schedule of
Lenders.
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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 or
any
of its officers, partners, employees or representatives 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 Notes 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. The Company’s agreements with
each of the Lenders are separate agreements, and the sales of the Notes to
each
of the Lenders are separate sales. Nonetheless, any term of this Agreement
or
the Notes may be amended and the observance of any term of this Agreement or
the
Notes may be waived (either generally or in a particular instance and either
retroactively or prospectively), with the written consent of the Company and
the
Majority Note Holders. Any waiver or amendment effected in accordance with
this
Section shall be binding upon each party to this Agreement and any holder of
any
Note purchased under this Agreement at the time outstanding and each future
holder of all such Notes.
7.9 Effect
of Amendment or Waiver.
Each
Lender acknowledges that by the operation of Section 7.8 hereof, the Majority
Note Holders will have the right and power to diminish or eliminate all rights
of such Lender under this Agreement and each Note issued to such
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
Among Lenders.
Each
Lender acknowledges that it 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. Each Lender agrees that no other Lender nor the respective controlling
persons, officers, directors, partners, agents, stockholders or employees of
any
other Lender shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the purchase and sale
of
the Securities.
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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Title:
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LENDERS:
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[Print
Name]
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Amount:
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$
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Address:
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SCHEDULE
OF LENDERS
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Lender
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Total
Consideration
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Principal
Balance of Promissory Note
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Lenders’
Addresses:
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EXHIBIT
A
CONSENT
The
undersigned acknowledges and agrees as follows:
1. Health
Partnership Inc. (the “Company”) proposes to sale and issue one or more
unsecured promissory notes in the aggregate amount of $1,000,000 (or such
increased amount as determined by the Company’s board of directors) to certain
lenders to provide consideration to the Company (collectively, the “Contemplated
Transactions”).
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 $100,000 or Equity Securities (as defined in the Note Purchase
Agreement) in any amount, without the express written consent of Xxxxxx Xxxxxx,
or, in the event of his death or incapacity, the trustee of the Xxxxxxx Xxxxxx
Family Trust u/a/d 11-11-99.
3. The
undersigned hereby consents to the Contemplated Transactions upon the terms
stated herein and all such further agreements, instruments, certificates,
documents and other amendments related thereto or deemed necessary by the
Company in order to carry out the Contemplated Transactions.
4. This
Consent is binding upon the successors and assigns of the
undersigned.
5. This
Consent is governed by and construed in accordance with the laws of the State
of
Illinois, without regard to choice or conflict of laws principles.
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Date:
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Xxxxxx
Xxxxxx
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A-1
EXHIBIT
B
FORM
OF PROMISSORY NOTE
THIS
PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE ”SECURITIES ACT”), OR REGISTERED UNDER ANY STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED, (B) AN OPINION OF COUNSEL SATISFACTORY
TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT, OR
(C)
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), IN EACH OF CASES (A) THROUGH (C) IN ACCORDANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.
PROMISSORY
NOTE
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No.
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Date
of Issuance:
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January
__, 2006
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$
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FOR
VALUE
RECEIVED, Health Partnership Inc., a Colorado corporation (the “Company”),
hereby promises to pay to __________________ (the “Lender”), the principal sum
of _________________ Dollars ($______), together with interest thereon from
the
date of this Promissory Note (the “Promissory Note”). Interest shall accrue at a
rate of twelve percent (12%) per annum. The principal amount and all accrued
and
unpaid interest shall be due and payable by the Company on the Maturity
Date.
This
Promissory Note is one of the Notes issued pursuant to that certain Note
Purchase Agreement dated as of January __, 2006, by and among the Company,
the
Lender and certain other parties, 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 and the Notes issued pursuant to the
Purchase Agreement shall be made pro rata, based on the principal amount owing
under the Notes.
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 fourteen percent (14%) per annum, compounded annually.
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 Majority Note Holders and the Lender may not, without the written consent
of
the Company (which shall not be unreasonably withheld), 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
and any other Lenders.
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
