Exhibit 10.1
$2,000,000 Chicago, Illinois
September 30, 1999
ECONOMETRICS, INC.
CONVERTIBLE DEBENTURE
1. PRINCIPAL AND INTEREST.
(a) PAYMENT OF PRINCIPAL AND INTEREST. Econometrics, Inc., a
Colorado corporation ("Parent") and Econometrics, Inc., an Illinois corporation
("Sub"; Sub and Parent hereinafter collectively referred to as the "Borrowers"
and individually referred to as a "Borrower"), for value received, hereby
jointly and severally, promise to pay to the last registered holder of this
Debenture as set forth on EXHIBIT A attached hereto and made a part hereof (the
"Registered Holder") (unless this Debenture shall have been converted), the
principal sum of $2,000,000 on September 1, 2004 (the "Maturity Date"). The
Borrowers further agree, jointly and severally, to pay interest on the unpaid
principal amount of this Debenture at a rate of eight percent (8%) per annum,
from the date of issue to the earlier of the Maturity Date or the date on which
this Debenture is paid in full, which interest shall accrue until September 1,
2000, at which time all accrued interest from the date hereof until such date
shall be paid. Thereafter, commencing on December 1, 2000, interest shall be
paid quarterly (with quarterly payment dates of March 1, June 1, September 1 and
December 1) until the principal amount has been paid in full or this Debenture
has been converted in full into Common Stock (hereinafter defined) as provided
herein. Interest shall be computed on the basis of actual days elapsed based on
a 365-day year.
(b) PREPAYMENT. The Borrowers shall have the right to prepay,
in whole or in part, the outstanding principal balance of this Debenture, as
follows: (i) at any time after September 1, 2001 but before September 1, 2002,
by payment of accrued interest plus 104% of the unpaid principal amount; (ii) at
any time on or after September 1, 2002 and before September 1, 2003, by payment
of accrued interest plus 102.5% of the unpaid principal amount; or (iii) at any
time on or after September 1, 2003, but before September 1, 2004, by payment of
accrued interest plus 101% of the unpaid principal amount. If the Borrowers
elect to prepay any portion of the outstanding principal balance of this
Debenture, the Borrowers shall provide the Registered Holder hereof with thirty
(30) days prior written notice of their intent to prepay this Debenture and, if
the Registered Holder exercises its Conversion Option (hereinafter defined)
within the thirty (30) day period after receiving notice of prepayment, the
Registered Holder hereof shall receive such number of shares of Parent's common
stock, no par value (the "Common Stock"), as calculated in Section 2 hereunder.
(c) REDEMPTION BY REGISTERED HOLDER. Until the date on which
this Debenture is paid in full, the Registered Holder hereof shall have the
right to demand payment of the entire outstanding principal balance of this
Debenture, plus interest thereon accrued to date, in the event of (i) any
voluntary or involuntary liquidation, dissolution of winding-up of either
Borrower, (ii) the consolidation of either Borrower with, or merger of either
Borrower into, any
other corporation, or (iii) the acquisition of forty percent (40%) or more of
the then outstanding voting stock of either Borrower by any person or entity
other than the applicable Borrower or an affiliate, subsidiary or parent of such
Borrower.
(d) PLACE OF PAYMENT. The principal of and interest on this
Debenture shall be payable at the Registered Xxxxxx's address as it appears in
EXHIBIT A to this Debenture.
2. CONVERSION.
(a) Conversion Option.
(1) Until the date on which this Debenture is paid in
full, the Registered Holder hereof shall have the right to convert up
to the entire outstanding principal balance of this Debenture, plus
interest thereon accrued to date, into shares of Common Stock at the
Conversion Price (as hereinafter defined) (the "Conversion Option").
The Common Stock issuable upon conversion of this Debenture is referred
to hereinafter as the "Conversion Securities." In order to exercise its
Conversion Option, which exercise shall be irrevocable, the Registered
Holder shall surrender this Debenture to Parent, accompanied by a
written statement indicating that the Registered Holder is exercising
its Conversion Option (and specifying whether the Registered Holder is
converting this Debenture as to all or a portion of the outstanding
principal balance hereof, plus interest thereon, and as to any portion,
stating the amount to be so converted). If the Registered Holder
exercises its Conversion Option, the Registered Holder shall receive
such number of shares of Common Stock as is equal to the number derived
by dividing (i) the portion of the outstanding principal balance
hereof, plus interest thereon, to be converted on the date of
conversion (which in the event the Borrowers have elected to prepay the
outstanding principal balance of this Debenture in accordance with the
requirements set forth in Section 1(b) above, such amount may, at the
option of the Registered Holder, include up to the entire amount
required for prepayment under said Section 1(b)) by (ii) the Conversion
Price. In the event the Registered Holder exercises the Conversion
Option as to less than the entire outstanding principal amount hereof,
then subsequent to such exercise by the Registered Holder and the
Registered Holder's surrender of this Debenture to Parent, the
Borrowers shall issue and deliver to the Registered Holder a debenture
in substitution for and replacement of this Debenture, which debenture
shall indicate the remaining outstanding principal balance subsequent
to such exercise, and shall in all other respects be identical to this
Debenture. Notwithstanding the foregoing, prior to that date which is
one day following the date which is one (1) year from the date of
issuance of this Debenture, the Registered Holder's right to exercise
the Conversion Option may only be exercised in full for the entire
outstanding principal balance, and may not be exercised for any portion
thereof.
(2) Any conversion hereunder shall be deemed to have
been made at the close of business on the date that this Debenture
shall have been surrendered for conversion, so that the rights of the
Registered Holder as a Debenture holder (but only as such rights relate
to the portion of the Debenture so converted) shall cease at such time
and the person or persons entitled to receive Conversion Securities
upon such conversion,
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shall for all purposes be treated as having become the record holder or
holders of such Conversion Securities at such time; PROVIDED, HOWEVER,
that no such surrender on any date when the stock transfer books of
Parent shall be closed shall be effective to constitute the person or
persons entitled to receive such Conversion Securities as the record
holder or holders of such Conversion Securities on such date, but such
surrender shall be effective to constitute the person or persons
entitled to receive such Conversion Securities as the record holder or
holders thereof for all purposes at the close of business on the next
succeeding day on which such stock transfer books are open. Promptly
after this Debenture shall have been surrendered for conversion, Parent
shall issue and shall deliver to the Registered Holder, a certificate
for the number of full shares issuable upon conversion of this
Debenture (or portion thereof) in accordance with the provisions of
this Section 2 and cash as provided in Section 2(d).
(b) CONVERSION PRICE. Subject to adjustment as provided in
Section 2(c) below, the "Conversion Price" shall be $.4315 per share of Common
Stock.
(c) ADJUSTMENTS OF CONVERSION PRICE. The Conversion Price
shall be subject to adjustment from time to time only as follows:
(3) In the event shares of Common Stock are issued
by Parent as a dividend or other distribution on any class of stock of
Parent, the Conversion Price which would otherwise be in effect at the
opening of business on the date fixed for determination of stockholders
entitled to receive such dividend or other distribution shall be
reduced to an amount equal to the product of (A) the Conversion Price
immediately prior to such event multiplied by (B) a fraction, the
numerator of which is the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and
the denominator of which is the sum of the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the total number of shares constituting such
dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the date
fixed for such determination.
(4) In the event the number of shares of outstanding
Common Stock shall be subdivided into a greater or combined into a
lesser number of shares of Common Stock, the Conversion Price in effect
immediately prior thereto, or immediately prior to the record date for
such subdivision or combination if a record date is fixed, shall be
proportionately adjusted so that it will bear the same relationship to
the Conversion Price in effect immediately prior to such subdivision or
combination, or such record date, as the total number of shares of
Common Stock outstanding immediately prior to such subdivision or
combination, or such record date, shall bear to the total number of
shares of common Stock outstanding immediately after such subdivision
or combination or such record date.
(5) In the event of any capital reorganization of
Parent, or any reclassification of the Common Stock, or the
consolidation of Parent with, or the merger of the Parent into, any
other corporation or of the sale of all or substantially all of the
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Common Stock or assets of Parent to any other entity (each, a
"Significant Event"), this Debenture shall, after such Significant
Event, entitle the Registered Holder to receive upon conversion that
number of shares of stock or other securities or property of Parent, or
of the corporation resulting from such consolidation or surviving such
merger or to which such sale shall be made, as the case may be, to
which the Registered Holder would have been entitled had the Registered
Holder converted this Debenture immediately prior to such Significant
Event; and in any such event, the provisions of this subsection with
respect to the rights and interests thereafter of the Registered Holder
shall be appropriately adjusted so as to be applicable, as nearly as
may reasonably be, to any shares of stock or other securities or any
property thereafter deliverable on the conversion of this Debenture.
The subdivision or combination of shares of Common Stock deliverable
upon conversion of this Debenture into a greater or lesser number of
shares of Common Stock shall not be deemed to be a reclassification of
the Common Stock for the purposes of this paragraph.
(d) FRACTIONAL SHARES. Parent shall not be required to issue
any fraction of a share in connection with the conversion of this Debenture, but
in any case where the Registered Holder of this Debenture would, except for the
provisions of this paragraph, be entitled under the terms of this Debenture to
receive a fraction of a share upon the conversion of this Debenture, Parent
shall pay a sum in cash in respect of any fraction of a share which would
otherwise be issuable upon the surrender of this Debenture.
(e) DIVIDENDS. No payment to the Registered Holder or
adjustment of the Conversion Price shall be made upon any conversion on account
of any cash dividends on the Common Stock declared and paid prior to the date
the Registered Holder exercises its Conversion Option.
(f) SHARES ISSUABLE UPON CONVERSION. Parent covenants and
agrees that all shares of Common Stock which may be issued upon the conversion
of this Debenture will, upon issuance, be duly and validly issued and fully paid
and nonassessable and free from all taxes, liens, and charges with respect to
the issue thereof. Parent further covenants and agrees that, if necessary, it
will cause the amendment of its Articles of Incorporation to assure that it will
have authorized a sufficient number of shares of its Common Stock as shall then
be issuable upon the conversion of this Debenture.
3. AFFIRMATIVE COVENANTS OF BORROWERS. The Borrowers covenant and
agree that, so long as this Debenture shall be outstanding:
(a) PROVIDE FINANCIAL AND OTHER MATERIAL INFORMATION
CONCERNING OPERATIONS OF BORROWERS. Parent shall furnish to the Registered
Holder at the same time as sent to stockholders of Parent, one copy of each
annual and interim financial and other reports or communications provided by
Parent to said stockholders. Additionally, the Borrowers shall afford to the
Registered Holder and its authorized employees, counsel, accountants and other
representatives, upon reasonable notice and during ordinary business hours, (i)
free and full access, at all reasonable times and for any reasonable purpose, to
all books, records and properties of the Borrowers, and (ii) the opportunity to
interview any directors, officers, and
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employees of the Borrowers regarding the affairs of the Borrowers.
(b) BOOKS AND RECORDS. Each Borrower will at all times keep,
in accordance with generally accepted accounting principles, true and complete
books and records in connection with its assets and operations.
(c) CONSENTS. All necessary consents to the issuance of this
Debenture have been obtained.
(d) Right of First Refusal.
(i) For so long as the principal balance hereunder
remains outstanding, Parent hereby grants to the Registered Holder the
right of first refusal to purchase the Parent's Common Stock which
Parent may from time to time propose to sell. In the event Parent
proposes to undertake a sale of Common Stock, it shall give to the
Registered Holder written notice (the "Parent Notice") of its
intentions, which notice shall describe the price and the principal
terms upon which Parent proposes to sell such Common Stock. The
Registered Holder shall have ten (10) days from the delivery of the
Parent Notice to exercise its right of first refusal to purchase all or
a portion of such Common Stock by giving written notice to Parent
stating the quantity of such Common Stock to be purchased accompanied
by payment of the purchase price therefor. Any shares of Common Stock
not accepted for purchase by the Registered Holder may be issued by
Parent, provided such issuance is in accordance with the terms of the
proposed offering as set forth in the Parent Notice;
(ii) For so long as the principal balance hereunder
remains outstanding, Sub hereby grants to the Registered Holder the
right of first refusal to purchase Sub's capital stock ("Sub Stock")
which Sub may from time to time propose to sell. In the event Sub
proposes to undertake a sale of Sub Stock, it shall give to the
Registered Holder written notice (the "Sub Notice") of its intentions,
which notice shall describe the price and the principal terms upon
which Sub proposes to sell such Sub Stock. The Registered Holder shall
have ten (10) days from the delivery of the Sub Notice to exercise its
right of first refusal to purchase all or a portion of such Sub Stock
by giving written notice to Sub stating the quantity of such Sub Stock
to be purchased accompanied by payment of the purchase price therefor.
Any shares of Sub Stock not accepted for purchase by the Registered
Holder may be issued by Sub, provided such issuance is in accordance
with the terms of the proposed offering as set forth in the Sub Notice.
4. EVENTS OF DEFAULT AND REMEDIES.
(a) EVENTS OF DEFAULT. If one or more of the events described
in subsections (a) through (d) of this Section 4 shall happen and be continuing,
each of such events shall be an "Event of Default":
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(i) Default shall be made by the Borrowers (A) in the
payment of principal of this Debenture when and as the same shall
become due and payable, whether at maturity thereof or otherwise, or
(B) in the payment of interest on this Debenture when and as the same
shall become due and payable in accordance with the provisions hereof
and such Default shall continue for a period of thirty (30) days; or
(ii) Default shall be made by either Borrower in the
performance or observance of any other of the covenants, conditions or
agreements on the part of the Borrowers, their successors or assigns,
set forth in this Debenture, and such default shall continue for a
period of sixty (60) days after either Borrower receives written notice
of such default from the Registered Holder; or
(iii) A decree or order by a court having
jurisdiction in the premises shall have been entered adjudging either
Borrower bankrupt or insolvent, or approving a petition seeking
reorganization, readjustment, arrangement, composition or similar
relief for either Borrower under the federal bankruptcy laws, or any
other similar applicable federal or state law, and such decree or order
shall have continued undischarged and unstayed for a period of sixty
(60) days; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of either Borrower or a
substantial part of the property of either Borrower, or for the winding
up or liquidation of either of their affairs, shall have been entered,
and such decree or order shall have remained in force, undischarged and
unstayed for a period of sixty (60) days; or any property of either
Borrower shall be sequestered or attached and shall not be returned to
the possession of such Borrower or released from such attachment within
sixty (60) days thereafter; or
(iv) Either Borrower, shall institute proceedings to
be adjudicated a voluntary bankrupt, or shall consent to the filing of
a bankruptcy proceeding against it, or shall file a petition or answer
or consent seeking reorganization, readjustment, arrangement,
composition or similar relief under the federal bankruptcy laws, or any
other similar applicable federal or state law, or shall consent to the
filing of any such petition, or shall consent to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of a substantial part of its property, or shall be
unable to pay its debts generally as they become due, or shall make an
assignment for the benefit of creditors, or corporate action shall be
taken by either Borrower in furtherance of any of the aforesaid
purposes.
(b) ACCELERATION. If an Event of Default occurs, the
Registered Holder may declare the entire unpaid principal balance of this
Debenture and all accrued but unpaid interest thereon to be due and payable
immediately, and upon any such declaration the unpaid principal balance of this
Debenture and said accrued unpaid interest thereon shall be immediately due and
payable, anything in this Debenture to the contrary notwithstanding, and the
Registered Holder may thereupon proceed to protect and enforce its rights either
by suit in equity, or by action at law, or by other appropriate proceedings
whether for the specific performance (to the extent permitted by law) of any
covenant or agreement contained in this Debenture or in aid of the
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exercise of any power granted in this Debenture, and proceed to enforce the
payment of any of this Debenture and to enforce any other legal or equitable
right of the Registered Holder.
(c) REMEDIES CUMULATIVE. No remedy herein conferred upon the
Registered Holder is intended to be exclusive of any other remedy and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
(d) REMEDIES NOT WAIVED. No course of dealing between the
Borrowers and the Registered Holder or any delay in exercising any rights
hereunder shall operate as a novation of this Note or as a waiver by the
Registered Holder. Each Borrower hereby waives the benefit of any statute or
rule of law or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the foregoing.
5. TRANSFERABILITY OF DEBENTURE.
(a) RESTRICTIONS ON TRANSFER. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE (THE "SECURITIES") HAVE BEEN ISSUED AND SOLD IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPROPRIATE EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES LAWS OF ALL
APPLICABLE JURISDICTIONS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION OR AN EXEMPTION
FROM REGISTRATION. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH THE SECURITIES ACT
OF 1933, AS AMENDED.
(b) TRANSFERABILITY. This Debenture may not be transferred
unless the Debenture is subsequently registered under the Securities Act of
1933, as amended (the "Securities Act"), or an exemption from such registration
is available.
(c) The Borrowers represent, warrant and agree that for
purposes of Rule 144 promulgated under the Securities Act, that the initial
Registered Holder's holding period of Common Stock received, if any, pursuant to
a conversion described under Section 2 herein, shall have commenced on the date
of issuance of this Debenture, and that all Common Stock received by the initial
Registered Holder pursuant to any such conversion shall have been received
pursuant to a conversion described in paragraph (d)(3)(ii) of Rule 144.
6. JUNIOR UNSECURED LOAN. Anything in this Debenture to the
contrary notwithstanding, the indebtedness evidenced by this Debenture, both
principal and interest, and the right to seek enforcement of any of the rights
granted to the Registered Holder, shall be unsecured and subordinate and junior
in all respects to the existing debt of Sub to American National Bank and Trust
Company of Chicago, but only as to the amount of such indebtedness which is owed
and outstanding on the date of this Debenture. The indebtedness evidenced by
this Debenture shall be senior to all other indebtedness of Parent or Sub
currently outstanding or hereafter incurred.
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7. MISCELLANEOUS.
(a) ENTIRE AGREEMENT: NO ORAL CHANGE. This Debenture embodies
the entire agreement and understanding between the Borrowers and the Registered
Holder relating to the subject matter hereof, and supersedes all prior
agreements and understandings relating to such subject matter. This Debenture
may not be changed orally, but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification or discharge
is sought.
(b) NOTICES, ETC. All notices, demands or other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, mailed by certified mail, return receipt requested, sent by
overnight courier service or telecopied (transmission confirmed), or otherwise
actually delivered (i) if to the Registered Holder, to his address as it appears
on EXHIBIT A to this Debenture, or to such other address as may have been
furnished to the Borrowers by the Registered Holder in writing and (ii) if to
the Borrowers, to their respective addresses set forth below or to such other
address as may have been furnished to the Registered Holder by the Borrowers in
writing.
(c) GOVERNING LAW. This Debenture shall be construed in
accordance with and governed by the internal laws of the State of Illinois,
without regard to its conflicts of laws principles.
(d) BENEFIT. The provisions of this Debenture shall be binding
upon and inure to the benefit of the Borrowers and all subsequent Registered
Holders and their respective successors and assigns.
(e) PRESENTMENT. Presentment for payment, demand, protest and
notice of demand, protest and nonpayment and all other notices, except as
specifically required herein, are hereby waived by the Borrowers.
(f) MAXIMUM INTEREST. In no event shall the amount of interest
due or payable hereunder exceed the maximum rate of interest allowed by
applicable law, and in the event any such payment is inadvertently paid by the
Borrowers or inadvertently received by the Registered Holder, then such excess
sum shall be credited as a payment of principal, unless the Borrowers shall
notify the Registered Holder, in writing, that the Borrowers elect to have such
excess sum returned to them forthwith. It is the express intent hereof that the
Borrowers not pay and the Registered Holder not receive, directly or indirectly,
in any manner whatsoever, interest in excess of that which may be lawfully paid
by the Borrowers under applicable law.
(g) SEVERABILITY. If any one or more of the provisions of this
Debenture shall be determined to be invalid, illegal or unenforceable in any
respect for my reason, the validity, legality and enforceability of any such
provision in every other respect and the remaining provisions hereof shall not
in any way be impaired.
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(h) HEADINGS. The headings of the Sections of this Debenture
are inserted for convenience only and do not constitute a part of this
Debenture.
(i) LOSS, THEFT, DESTRUCTION OR MUTILATION OF DEBENTURE. Upon
receipt of evidence reasonably satisfactory to the Borrowers of the loss, theft,
destruction or mutilation of the Debenture and in the case of any such loss,
theft or destruction, upon receipt of any indemnity bond in such reasonable
amount as the Borrowers may determine or, in the case of any such mutilation,
upon surrender and cancellation of such Debenture, the Borrowers shall make and
deliver, in lieu of such lost, stolen, destroyed or mutilated Debenture, a new
debenture of like tenor and unpaid principal amount and dated as of the date to
which interest has been paid on the Debenture so lost, stolen, destroyed or
mutilated.
(j) SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Borrowers contained in this Debenture
shall survive the execution and delivery of this Debenture and shall continue in
full force and effect thereafter until the earlier of the date on which all
principal and interest hereunder has been paid in full or until the date that is
two years after the date of exercise in full of the Conversion Option. All
covenants and agreements of the Borrowers contained in this Debenture shall
survive the execution and delivery of this Debenture and shall continue in full
force and effect thereafter in accordance with the terms hereof.
(Signatures on next page)
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IN WITNESS WHEREOF, the Borrowers have signed and sealed this Debenture
as of September 30, 1999.
ECONOMETRICS, INC.,
an Illinois corporation
Address of Sub:
One Illinois Center By: /s/ Xxxxxx X. XxXxxxx
000 Xxxx Xxxxxx Xxxxx, Xxxxx 1250 -----------------------------
Chicago, Illinois 60601 Name: Xxxxxx X. XxXxxxx
Fax No. (000) 000-0000 Title: Chairman/CEO
ATTEST:
/s/ X. Xxxx XxXxxxx
-----------------------------
Name: X. Xxxx XxXxxxx
Title: President/CFO
ECONOMETRICS, INC.,
a Colorado corporation
Address of Parent:
One Illinois Center By: /s/ Xxxxxx X. XxXxxxx
000 Xxxx Xxxxxx Xxxxx, Xxxxx 1250 ---------------------------
Chicago, Illinois 60601 Name: Xxxxxx X. XxXxxxx
Fax No. (000) 000-0000 Title: Chairman/CEO
ATTEST:
/s/ X. Xxxx XxXxxxx
-----------------------------
Name: X. Xxxx XxXxxxx
Title: President/CFO
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EXHIBIT A
REGISTRATION
(No Writing on this Debenture Except by an officer
or Agent of the Borrowers)
Date of Registration In Whose Name Registered Address (Including Fax No.) Registry Officer
-------------------- ------------------------ --------------------------- ----------------
September 30, 1999 Xxxxxxx Healthcare, Inc. 000 Xxxxxxxxxx Xxxxxxx, X.X.
Suite 305, Atlanta, GA 30339
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ASSIGNMENT
For value received, I, __________________ hereby assign to
__________________ the attached Debenture dated September 1, 1999, and hereby
irrevocably appoint ___________________, attorney, to transfer the Debenture on
the books of Econometrics, Inc. with full power of substitution in the premises.
DATED this ______ day of _______________, _____
________________________________
In presence of:
____________________________
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