FORM OF NOTE PURCHASE AGREEMENT
Exhibit 10.1
FORM OF NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”) is made and entered into as of , 2021 (the “Effective Date”), by and among INSPIRE VETERINARY PARTNERS, INC., a Delaware limited liability company (the “Company”), and those parties that (i) are identified on Schedule I attached hereto and incorporated herein by this reference, and (ii) have executed a joinder agreement in substantially the same form as that attached hereto as Exhibit B and incorporated herein by this reference (each such party, an “Investor”, and collectively the “Investors”).
Section 1. AUTHORIZATION AND SALE.
1.1 Authorization. Upon the terms and subject to the conditions set forth in this Agreement, the Company has duly authorized the issuance and sale to each Investor, pursuant to the terms of this Agreement, of a Note (or Notes), in the form attached as Exhibit A, with a principal amount (or amounts) equal to the amount (or amounts) set forth opposite such Investor’s name on Schedule I, against payment of the purchase price therefor by wire transfer of immediately available funds.
1.2 Subscription and Purchase. Upon the terms and subject to the conditions set forth in this Agreement, each Investor hereby irrevocably subscribes for and agrees to purchase at each Closing (as defined below) a Note with the original principal amount indicated opposite such Investor’s name on Schedule I.
1.3 Closing. The initial purchase and sale of the Notes (the “Closing”) shall take place electronically (by the electronic exchange of documents by the Parties hereto) at 5:00 p.m. (Eastern Time) on the date hereof. At the Closing:
(a) the Company shall deliver to each Investor a Note for the principal amount set forth opposite such Investor’s name under “Principal Amount of Note” on Schedule I, and registered in the name of such Investor; and
(b) each Investor shall pay to the Company the purchase price for such Note, as set forth opposite such Investor’s name on Schedule I, by (i) a cashier’s check payable to the Company’s order, (ii) wire transfer of immediately available funds to the Company, or (iii) any combination of the foregoing.
The purchase and sale of any subsequent Notes shall be at such time as requested by the Company and in such amounts requested and mutually agreed by the Investors in order to provide for any earnout payments under the Purchase Agreement, and such closing shall be deemed a “Closing” hereunder.
1.4 Separate Sales. The Company’s agreement with each of the Investors is a separate agreement, and the sale of the Notes to each of the Investors is a separate sale.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Investor that the statements in the following subsections of this Section 2 are all true and complete as of the date hereof and as of any Closing date:
2.1 Organization, Good Standing and Qualification. The Company has been duly incorporated and organized, and is validly existing and in good standing, under the laws of the State of Delaware. The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and the Notes (this Agreement and the Notes are referred to collectively in this Agreement as the “Transaction Agreements”), and any other agreements contemplated by the Transaction Agreements, to own and operate its properties and assets and to carry on its business as currently conducted and as presently proposed to be conducted. The Company is presently qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the failure to be so qualified would have a material adverse effect on the Company’s business, properties, prospects or financial condition.
2.2 Capitalization. The capitalization of the Company immediately prior to the initial Closing consists of the following:
(a) Common Stock. A total of 120,000,000 authorized shares of common stock, par value $0.0001 per share (the “Common Stock”), consisting of 20,000,000 designated as Class A Common Stock, 4,300,000 shares of which are issued and outstanding, and 100,000,000 designated as Class B Common Stock, 700,000 of which are issued and outstanding. The Company holds no treasury stock, and no securities of the Company are held by any subsidiary of the Company.
(c) Options, Warrants, and Reserved Shares. Other than pursuant to (i) this Agreement, (ii) that certain Master Agreement dated February 17, 2021, by and among the Company, KVC Properties LLC, KVC Holding Company, LLC, Xxxxxxx Xxxxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxx Xxxxxx, and Xxx X. Xxxxxxxxxx, Xx., issued as of October 20, 2016, to TM/RTA Rollover, LLC, and (iii) those certain Note Purchase Agreements listed on Schedule II attached hereto, there are no outstanding options, warrants, rights (including conversion or preemptive rights), or agreements for the purchase or acquisition from the Company of any shares of its capital stock or any securities convertible into or ultimately exchangeable or exercisable for any shares of the Company’s capital stock, and no shares of the Company’s outstanding capital stock, or stock issuable upon exercise or exchange of any outstanding options, warrants, or rights, or other stock issuable by the Company, are subject to any preemptive rights, rights of first refusal, or other rights to purchase such stock (whether in favor of the Company or any other person) pursuant to any agreement or commitment of the Company.
2.3 Due Authorization. All corporate action on the part of the Company and its officers and directors necessary for the authorization, execution, delivery, and performance of all obligations of the Company under the Transaction Agreements has been taken, and this Agreement constitutes, and the Transaction Agreements when executed and delivered, shall constitute, valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except as may be limited by (a) applicable bankruptcy, insolvency, reorganization, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally or (b) the effect of rules of law governing the availability of equitable remedies.
2.4 Valid Issuance of Securities.
(a) The Notes, when issued and paid for as provided in this Agreement, and any shares of Common Stock issued upon conversion of the Notes (in accordance with the terms and conditions of such Notes) shall be duly authorized and validly issued, fully paid, and (in the case of such shares of Common Stock) nonassessable, and shall be free of any liens, encumbrances or restrictions on transfer (other than those created by the Transaction Agreements, the Certificate of Incorporation and applicable state and/or federal securities laws).
(b) Based in part on the representations made by the Investors in Section 3, the Notes (assuming no change in applicable law) are exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities Act”).
(c) The Company has not offered any Notes, or substantially similar securities of the Company, for sale to, or solicited any offers to buy from, or otherwise approached or negotiated in respect of any Notes or substantially similar securities of the Company with, any persons other than the Investors. The Company has not taken any action that shall cause the issuance, sale and delivery of the Notes to constitute a violation of the Securities Act or any applicable state securities laws.
2.5 Governmental Consents. No consent, approval, order or authorization of or registration, qualification, designation, declaration or filing with, any federal, state, or local governmental authority is required on the part of the Company in order to enable the Company to execute, deliver and perform its obligations under the Transaction Agreements except for (a) such qualifications or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement or (b) as could not otherwise reasonably be expected to have a material adverse effect on the Company. All such qualifications and filings shall, in the case of qualifications, be effective on the Closing and shall, in the case of filings, be made within the time prescribed by law.
Section 3. REPRESENTATIONS, WARRANTIES, AND CERTAIN AGREEMENTS OF THE INVESTORS.
Each Investor hereby represents and warrants to, and agrees with, the Company, severally and not jointly and only with respect to itself, that:
3.1 Authorization. The Investor has full power and authority to enter into the Transaction Agreements and each such Transaction Agreement constitutes the Investor’s valid and legally binding obligation, enforceable in accordance with its terms except (a) as may be limited by applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally, and (b) as may be limited by the effect of rules of law governing the availability of equitable remedies.
3.2 Purchase for Own Account. The Notes shall be acquired for investment for the Investor’s own account, not as a nominee or agent, and not with a view to the public resale or distribution of such Notes within the meaning of the Securities Act, and the Investor has no present intention of selling, granting any participation in or otherwise distributing the same. The Investor also represents that it has not been formed for the specific purpose of acquiring the Notes.
3.4 Accredited Investor Status. The Investor is an “accredited investor” within the meaning of the Securities and Exchange Commission (“SEC”) Rule 501 of Regulation D, as presently in effect.
3.5 Restricted Securities. The Investor understands that the Notes are characterized as “restricted securities” under the Securities Act inasmuch as they are being (or shall be) acquired from the Company in a transaction not involving a public offering and that under the Securities Act, applicable regulations under the Securities Act and applicable Blue Sky Laws, such Notes may be resold without registration under the Securities Act and under applicable Blue Sky Laws only in certain limited circumstances. The Investor represents that it is familiar with SEC Rule 144, as presently in effect, and applicable Blue Sky Laws and understands the resale limitations imposed by SEC Rule 144 and by the Securities Act and applicable Blue Sky Laws. The Investor understands that the Company is under no obligation to register any of the securities sold under this Agreement. The Investor understands that no market now exists for any of the Notes, and that it is uncertain whether a market, public or otherwise, shall ever exist for the Notes.
3.6 Legends. It is understood that the Notes shall bear a legend substantially similar to the legend set forth below (in addition to any legend required under applicable state securities laws):
(a) “NEITHER THIS SUBORDINATED CONVERTIBLE PROMISSORY NOTE (THIS “NOTE”) NOR ANY OF THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE BEEN REGISTERED UNDER UNITED STATES FEDERAL OR STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THIS NOTE OR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION OF SUCH NOTE OR SUCH SECURITIES UNDER ALL APPLICABLE UNITED STATES FEDERAL OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH COMPLIANCE, AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF COUNSEL TO THE HOLDER OF THIS NOTE OR SUCH SECURITIES, IN A FORM ACCEPTABLE TO THE COMPANY, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE TO ALL SENIOR INDEBTEDNESS OF THE COMPANY, WHETHER SUCH SENIOR INDEBTEDNESS IS OUTSTANDING AS OF THE DATE OF THIS NOTE OR INCURRED AFTER THE DATE OF THIS NOTE, AND ALL SUCH SENIOR INDEBTEDNESS IS SENIOR IN RIGHT OF PAYMENT TO THIS NOTE; AND EACH HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE SUBORDINATION PROVISIONS CONTAINED HEREIN.”
(b) Any other legends required by state securities laws applicable to any individual Investor.
The legend set forth in Subsection 3.6(a) above shall be removed by the Company from any applicable Notes upon delivery to the Company of an opinion by counsel, reasonably satisfactory to the Company, that a registration statement under the Securities Act is at that time in effect with respect to the legended security or that such security can be freely transferred in a public sale without such a registration statement being in effect and that such transfer shall not jeopardize the exemption or exemptions from registration pursuant to which the Company issued the Notes.
Section 4. GENERAL PROVISIONS.
4.1 Survival of Representations and Warranties. The representations, warranties and covenants of the Company and the Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and each Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investors, their respective counsel or the Company, as the case may be.
4.2 Successors and Assigns. Except as otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties to this Agreement (including transferees of any Notes).
4.3 Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties to this Agreement and 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.
4.4 Governing Law. This Agreement shall be governed by and construed exclusively in accordance with the internal laws of the Commonwealth of Virginia as applied to agreements among Virginia residents entered into and to be performed entirely within Virginia, excluding that body of law relating to conflict of laws.
4.5 Jurisdiction. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state and federal courts located in the Eastern District of Virginia for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement; (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Virginia; and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.
4.6 Counterparts. This Agreement may be executed in two or more counterparts (including, without limitation, by .PDF email attachment or facsimile counterparts), each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.
4.7 Headings. The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. All references in this Agreement to sections, subsections, exhibits, and schedules shall, unless otherwise provided, refer to sections and subsections of this Agreement and exhibits and schedules attached to this Agreement, all of which exhibits and schedules are incorporated in this Agreement by this reference.
If to the Company:
Inspire Veterinary Partners, Inc.
c/o Xxxxxxx Xxxx, CEO
0000 Xxxxx Xxx Xxx
Virginia Beach, Virginia 23456
Email:
or at such other address or addresses as may have been furnished by giving five days’ advance written notice to all other parties.
If to an Investor, at its address set forth on Schedule I, or at such other address or addresses as may have been furnished to the Company by giving five days’ advance written notice.
Notices provided in accordance with this Section 4.8 shall be deemed delivered (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a .PDF document (in each case, with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.
4.9 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of each party hereto. Any amendment or waiver effected in accordance with this Section 4.9 shall be binding upon each Investor and the Company.
4.10 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.
4.11 Entire Agreement. This Agreement, together with all exhibits and schedules to this Agreement, constitutes the entire agreement and understanding of the parties with respect to the subject matter of this Agreement and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties or obligations between the parties with respect to the subject matter of this Agreement.
4.12 Further Assurances. From and after the date of this Agreement, upon the request of the Investors or the Company, the Company and the Investors shall execute and deliver such instruments, documents, or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.
4.13 Adjustments for Stock Splits, etc. Wherever in this Agreement there is a reference to a specific number of shares of Common Stock or Preferred Stock of the Company of any class or series, or a price per share of such stock, then, upon the occurrence of any subdivision, combination or stock dividend of such class or series of stock, the specific number of shares or the price so referenced in this Agreement shall automatically be proportionally adjusted to reflect the effect on the outstanding shares of such class of stock by such subdivision, combination or stock dividend.
4.14 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Investor, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Investor; nor shall it be construed to be a waiver of any such breach or default or an acquiescence in such breach or default or of or in any similar breach or default occurring after such breach or default; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after such breach or default. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement or any waiver on the part of any party of any provisions or conditions of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement as of the date first written above.
INSPIRE VETERINARY PARTNERS, INC. | ||
By: | ||
Name: | Xxxxxxx Xxxx | |
Its: | Chief Executive Officer |
[Investor Signature Pages Follow.]
Exhibit B
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
Original Issue Date: [MONTH DATE], 2022
Principal Amount: $
FORM OF 15% ORIGINAL ISSUE DISCOUNT SECURED CONVERTIBLE NOTE
THIS 15% ORIGINAL ISSUE DISCOUNT SECURED CONVERTIBLE NOTE is made by Inspire Veterinary Partners, Inc., a Delaware corporation (the “Company”), having its principal place of business at 0000 Xxxxx Xxx Xxx, Xxxxxxxx Xxxxx, Xxxxxxxx 00000, (the “Note”).
FOR VALUE RECEIVED, the Company promises to pay to [INVESTOR NAME] or its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of ($ ) on the earlier of [MONTH DATE], 2023 or the closing date of a Qualified Financing (as defined below) unless extended as set forth below (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. This Note is subject to the following additional provisions:
Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Note Purchase Agreement and (b) the following terms shall have the following meanings:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Alternate Consideration” shall have the meaning set forth in Section 8(b).
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“Bankruptcy Event” means any of the following events: (a) the Company or any Subsidiary thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Subsidiary thereof, (b) there is commenced against the Company or any Subsidiary thereof any such case or proceeding that is not dismissed within sixty (60) days after commencement, (c) the Company or any Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within sixty (60) calendar days after such appointment, (e) the Company or any Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Subsidiary thereof admits in writing that it is generally unable to pay its debts as they become due, or (h) the Company or any Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.
“Business Day” means any day except any Saturday, any Sunday, any day which shall be a federal legal holiday in the United States.
“Commercial Lender” means Commercial Lender means a commercial bank that provides loans or other financings via asset-based lending facilities or revolving credit facilities in the ordinary course of business of such commercial bank.
“Common Stock Equivalent” means any warrant, option, subscription or purchase right with respect to shares of Common Stock, any security convertible into, exchangeable for, or otherwise entitling the holder thereof to acquire, shares of Common Stock or any warrant, option, subscription or purchase right with respect to any such convertible, exchangeable or other security.
“Conversion Date” shall have the meaning set forth in Section 7(a).
“Conversion Price” shall have the meaning set forth in Section 7(b).
“Conversion Shares” means the shares of Common Stock of the Company, as applicable, issuable upon conversion of this Note in accordance with the terms hereof.
“Event of Default” shall have the meaning set forth in Section 9(a).
“Fair Market Value” means, in the context of the Common Stock, the fair market value of such stock as determined by the Company’s Board of Directors based on such factors as the Board of Directors considers relevant.
“Fundamental Transaction” shall have the meaning set forth in Section 8(b).
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“Indebtedness” means (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (8) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (viii) all contingent obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.
“Interest Payment Date” shall have the meaning set forth in Section 2(a).
“Note Purchase Agreement” means the Note Purchase Agreement, dated as of [MONTH DATE], 2022 between the Company and the Investor, as amended, modified or supplemented from time to time in accordance with its terms.
“Note Register” means the records of the Company regarding registration and transfers of this Note.
“Original Issue Date” means the date of the first issuance of the Note as set forth on the first page hereof, regardless of any transfers of any Note and regardless of the number of instruments which may be issued to evidence such Note.
“Permitted Indebtedness” means (a) Indebtedness outstanding as of the Original Issue Date, (b) the indebtedness evidenced by the Note, (c) capital lease obligations and other Indebtedness, secured or unsecured, incurred, acquired, or assumed after the Original Issue Date in connection with acquisition by the Company or its Subsidiaries of assets, business operations, and/or business entities advanced by a Commercial Lender, (d) trade payables and other accounts payable incurred in the ordinary course of the Company’s business, and (e) indebtedness that is expressly subordinate to the Note pursuant to a written subordination agreement with the Investor that is acceptable to the Investor in its sole and absolute discretion.
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“Permitted Lien” means the individual and collective reference to the following: (a) liens for taxes, assessments and other governmental charges or levies not yet due or liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance with GAAP; (b) liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’ liens, statutory landlords’ liens, and other similar liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such lien; and (c) liens incurred in connection with Permitted Indebtedness under clauses (a) through (d) thereunder/ thereunder.
“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or government or other agency or political subdivision thereof.
“Qualified Financing” means the Company’s sale of its Common Stock in an initial public offering or the resale of the Company’s previously issued Common Stock in a direct listing, in each case pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission and the listing of the Common Stock on a “national securities exchange” as defined in Section 6 of the Securities Exchange Act of 1934, as amended.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Security Agreement” means the Security Agreement, dated January 24, 2022 by and between the Company and the Investor.
“Successor Entity” shall have the meaning set forth in Section 8(b).
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Section 3. Maturity.
a) All principal and accrued interest is due and payable in cash on the Maturity Date.
b) If the Company has filed its Form S-1 Registration Statement with the SEC on or prior to [MONTH DATE], 2023, but the Qualified Financing has not closed by [MONTH DATE], 2023, the Maturity Date of the Note shall be automatically extended (the “Automatic Extension”). until [MONTH DATE], 2024] [six months after the Maturity Date of [MONTH DATE], 2023] (the “Final Maturity Date”).
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b) Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Note Purchase Agreement and may be transferred or exchanged only in compliance with the Note Purchase Agreement and applicable federal and state securities laws and regulations.
Section 7. Conversion.
a) Mandatory Conversion. Substantially simultaneously with the closing of a Qualified Financing, the Holder of the Note shall mandatorily convert the outstanding principal amount of, and all accrued but unpaid interest (including Default Interest) on this Note into such number of shares of Common Stock equal to the quotient obtained by dividing (x) the outstanding principal amount and accrued but unpaid interest of this Note by (y) the Conversion Price. The date that the Company delivers written notice to the Holder of the conversion of this Note shall be the “Conversion Date.” Conversion Shares shall be included in and registered in the Company’s Registration Statement for the Qualified Financing and shall be freely tradeable upon the effective date of the Company’s Registration Statement. The terms of the registration rights for the Conversion Shares are set forth in the Note Purchase Agreement and incorporated herein by reference.
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i. Delivery of Certificate Upon Conversion. Not later than two (2) Business Days after the Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder: (A) a certificate or certificates representing the Conversion Shares which, when eligible for resale under the Securities Act, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Note Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Note, and (B) a bank check in the amount of accrued and unpaid interest (if the Company has elected or is required to pay accrued interest in cash).
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Section 8. Certain Adjustments.
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a) “Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):
i. any default in the payment of: (A) the principal amount of any Note or (B) interest, and other amounts owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or the Final Maturity Date or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is not cured within five (5) Business Days;
ii. the Company shall fail to observe or perform any other covenant or agreement contained in the Note which failure is not cured, if possible to cure, within the earlier to occur of: (A) seven (7) Business Days after notice of such failure sent by the Holder or by any other Holder to the Company, and (B) ten (10) Business Days after the Company has become or should have become aware of such failure;
iii. a default or Event of Default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under any of the Transaction Documents;
iv. any representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any material respect as of the date when made or deemed made;
v. the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;
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vi. any Person shall breach any agreement delivered to the initial Holders pursuant to the Note Purchase Agreement; or
vii. the Company’s failure to close its Qualified Financing by the Final Maturity Date.
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[SIGNATURE APPEARS ON THE NEXT PAGE.]
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
INSPIRE VETERINARY PARTNERS, INC. | ||
By: | ||
Name: Xxxxxxx Xxxx | ||
Title: Chief Executive Officer |