Contract
Exhibit
10.2
THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO PATIENTS & PHYSICIANS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
AMENDED
AND RESTATED SECURED CONVERTIBLE TERM NOTE
FOR
VALUE
RECEIVED, FLAGSHIP PATIENT ADVOCATES, INC. (F/K/A FLAGSHIP HEALTHCARE
MANAGEMENT, INC.), a Delaware corporation (the “Company”),
promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate Services
Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street, Xxxxxx Town, Grand
Cayman, Cayman Islands, Fax: 000-000-0000 (the “Holder”)
or its
registered assigns or successors in interest, the sum of Four Million One
Hundred Thousand Dollars ($4,100,000), together with any accrued and unpaid
interest hereon, on January 30, 2009 (the “Maturity
Date”)
if not
sooner indefeasibly paid in full.
Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in that certain Securities Purchase Agreement dated as of the date hereof
by and between the Company, the Holder and Patients & Physicians, Inc., a
Delaware corporation (“Patients”) (as amended, modified and/or supplemented from
time to time, the “Purchase
Agreement”).
The
following terms shall apply to this Secured Convertible Term Note (this
“Note”):
ARTICLE
I
CONTRACT
RATE AND AMORTIZATION
1.1 Contract
Rate.
Subject
to Sections 4.2 and 5.10, interest payable on the outstanding principal amount
of this Note (the “Principal
Amount”)
shall
accrue at a rate per annum equal to the “prime rate” published in The
Wall Street Journal
from
time to time (the “Prime
Rate”),
plus
one percent (1%) (the “Contract
Rate”).
The
Contract Rate shall be increased or decreased as the case may be for each
increase or decrease in the Prime Rate in an amount equal to such increase
or
decrease in the Prime Rate; each change to be effective as of the day of the
change in the Prime Rate. The Contract Rate shall not at any time be less than
seven percent (7%). Interest shall be (i) calculated on the basis of a 360
day
year, and (ii) payable monthly, in arrears, commencing on September 1, 2006,
on
the first business day of each consecutive calendar month thereafter through
and
including the Maturity Date, and on the Maturity Date, whether by acceleration
or otherwise.
1.2 Contract
Rate Adjustments and Payments.
The
Contract Rate shall be calculated on the last business day of each calendar
month hereafter (other than for increases or decreases in the Prime Rate which
shall be calculated and become effective in accordance with the terms of Section
1.1) until the Maturity Date.
1.3 Principal
Payments.
Amortizing payments of the aggregate principal amount outstanding under this
Note at any time (the “Principal
Amount”)
shall
be made by the Company on February 1, 2007 and on the first business day of
each
succeeding month thereafter through and including the Maturity Date (each,
an
“Amortization
Date”).
Subject to Article III below, commencing on the first Amortization Date, the
Company shall make monthly payments to the Holder on each Amortization Date,
each such payment in the amount of $170,833.33 together with any accrued and
unpaid interest on such portion of the Principal Amount plus any and all other
unpaid amounts which are then owing under this Note, the Purchase Agreement
and/or any other Related Agreement (collectively, the “Monthly
Amount”).
Any
outstanding Principal Amount together with any accrued and unpaid interest
and
any and all other unpaid amounts which are then owing by the Company to the
Holder under this Note, the Purchase Agreement and/or any other Related
Agreement shall be due and payable on the Maturity Date.
ARTICLE
II
CONVERSION
AND REDEMPTION
2.1 Payment
of Monthly Amount.
(a) Payment
in Cash or Common Stock.
If the
Monthly Amount (or a portion of such Monthly Amount if not all of the Monthly
Amount may be converted into shares of Common Stock pursuant to Section 3.2)
is
required to be paid in cash pursuant to Section 2.1(b), then the Company
shall pay the Holder an amount in cash equal to 100% of the Monthly Amount
(or
such portion of such Monthly Amount to be paid in cash) due and owing to the
Holder on the Amortization Date. If the Monthly Amount (or a portion of such
Monthly Amount if not all of the Monthly Amount may be converted into shares
of
Common Stock pursuant to Section 3.2) is required to be paid in shares of Common
Stock pursuant to Section 2.1(b), the number of such shares to be issued by
Patients to the Holder on such Amortization Date (in respect of such portion
of
the Monthly Amount converted into shares of Common Stock pursuant to Section
2.1(b)), shall be the number determined by dividing (i) the portion of the
Monthly Amount converted into shares of Common Stock, by (ii) the then
applicable Fixed Conversion Price. For purposes hereof, subject to Section
3.6
hereof, the initial “Fixed
Conversion Price”
means
$0.90.
(b) Monthly
Amount Conversion Conditions.
Subject
to Sections 2.1(a), 2.2, and 3.2 hereof, the Holder shall convert into
shares of Common Stock all (subject to the limitations of this clause (b))
of
the Monthly Amount due on each Amortization Date if the following conditions
(the “Conversion
Criteria”)
are
satisfied: (i) if at such time, the Common Stock is publicly traded, the average
closing price of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market for the five (5) trading days immediately preceding such
Amortization Date shall be greater than or equal to 120% of the Fixed Conversion
Price and (ii) the amount of such conversion does not exceed twenty five percent
(25%) of the aggregate dollar trading volume of the Common Stock for the period
of twenty-two (22) trading days immediately preceding such Amortization Date.
If
subsection (i) of the Conversion Criteria is met but subsection (ii) of the
Conversion Criteria is not met as to the entire Monthly Amount, the Holder
shall
convert only such part of the Monthly Amount that meets subsection (ii) of
the
Conversion Criteria. Any portion of the Monthly Amount due on an Amortization
Date that the Holder has not been able to convert into shares of Common Stock
due to the failure to meet the Conversion Criteria, shall be paid in cash by
the
Company at the rate of 100% of the Monthly Amount otherwise due on such
Amortization Date, within three (3) business days of such Amortization Date.
2
2.2 No
Effective Registration.
Notwithstanding anything to the contrary herein, none of the Company’s
obligations to the Holder may be converted into Common Stock unless (a) either
(i) an effective current Registration Statement (as defined in the Registration
Rights Agreement) covering the shares of Common Stock to be issued in connection
with satisfaction of such obligations exists or (ii) an exemption from
registration for resale of all of the Common Stock issued and issuable is
available pursuant to Rule 144 of the Securities Act and (b) no Event of Default
(as hereinafter defined) exists and is continuing, unless such Event of Default
is cured within any applicable cure period or otherwise waived in writing by
the
Holder.
2.3 Optional
Redemption in Cash.
The
Company may prepay this Note (“Optional
Redemption”)
by
paying to the Holder a sum of money equal to one hundred thirty percent (130%)
of the Principal Amount outstanding at such time together with accrued but
unpaid interest thereon and any and all other sums due, accrued or payable
to
the Holder arising under this Note, the Purchase Agreement or any other Related
Agreement (the “Redemption
Amount”)
outstanding on the Redemption Payment Date (as defined below). The Company
shall
deliver to the Holder a written notice of redemption (the “Notice
of Redemption”)
specifying the date for such Optional Redemption (the “Redemption
Payment Date”),
which
date shall be seven (7) business days after the date of the Notice of Redemption
(the “Redemption
Period”).
A
Notice of Redemption shall not be effective with respect to any portion of
this
Note for which the Holder has previously delivered a Notice of Conversion (as
hereinafter defined) or for conversions elected to be made by the Holder
pursuant to Article III during the Redemption Period. The Redemption Amount
shall be determined as if the Holder’s conversion elections had been completed
immediately prior to the date of the Notice of Redemption. On the Redemption
Payment Date, the Redemption Amount must be paid in good funds to the Holder.
In
the event the Company fails to pay the Redemption Amount on the Redemption
Payment Date as set forth herein, then such Redemption Notice will be null
and
void.
ARTICLE
III
HOLDER’S
CONVERSION RIGHTS
3.1 Optional
Conversion.
Subject
to the terms set forth in this Article III, the Holder shall have the right,
but
not the obligation, to convert all or any portion of the issued and outstanding
Principal Amount and/or accrued interest and fees due and payable, in accordance
with the terms and conditions of the Purchase Agreement and the Related
Agreements, into fully paid and nonassessable shares of Common Stock at the
Fixed Conversion Price. The shares of Common Stock to be issued upon such
conversion are herein referred to as, the “Conversion
Shares.”
3
3.2 Conversion
Limitation.
Notwithstanding anything contained herein to the contrary, the Holder shall
not
be entitled to convert pursuant to the terms of this Note an amount that would
be convertible into that number of Conversion Shares which would exceed the
difference between (i) 4.99% of the outstanding shares of Common Stock and
(ii)
the number of shares of Common Stock beneficially owned by the Holder. For
purposes of the immediately preceding sentence, beneficial ownership shall
be
determined in accordance with Section 13(d) of the Exchange Act and Regulation
13d-3 thereunder. The Conversion Shares limitation described in this Section
3.2
shall automatically become null and void following notice to the Company or
Patients upon the occurrence and during the continuance of an Event of Default,
upon 75 days prior notice to the Company or Patients, or upon receipt by the
Holder of a Notice of Redemption. Notwithstanding anything contained herein
to
the contrary, the provisions of this Section 3.2 are irrevocable and may not
be
waived by the Holder, Patients or any Company.
3.3 Mechanics
of Xxxxxx’s Conversion.
In the
event that the Holder elects to convert this Note into Common Stock, the Holder
shall give notice of such election by delivering an executed and completed
notice of conversion in substantially the form of Exhibit A hereto
(appropriately completed) (“Notice
of Conversion”)
to
Patients and such Notice of Conversion shall provide a breakdown in reasonable
detail of the Principal Amount, accrued interest and fees that are being
converted. On each Conversion Date (as hereinafter defined) and in accordance
with its Notice of Conversion, the Holder shall make the appropriate reduction
to the Principal Amount, accrued interest and fees, payable to Holder in
accordance with the terms and conditions of the Purchase Agreement and the
Related Agreements, as entered in its records and shall provide written notice
thereof to the Company within two (2) business days after the Conversion Date.
Each date on which a Notice of Conversion is delivered or telecopied to Patients
in accordance with the provisions hereof shall be deemed a Conversion Date
(the
“Conversion
Date”).
Pursuant to the terms of the Notice of Conversion, Patients will issue
instructions to the transfer agent accompanied by an opinion of counsel within
three (3) business days of the date of the delivery to Patients of the Notice
of
Conversion and shall cause the transfer agent to transmit the certificates
representing the Conversion Shares to the Holder by crediting the account of
the
Holder’s designated broker with the Depository Trust Corporation (“DTC”)
through its Deposit Withdrawal Agent Commission (“DWAC”)
system
within three (3) business days after receipt by Patients of the Notice of
Conversion (the “Delivery
Date”).
In
the case of the exercise of the conversion rights set forth herein the
conversion privilege shall be deemed to have been exercised and the Conversion
Shares issuable upon such conversion shall be deemed to have been issued upon
the date of receipt by Patients of the Notice of Conversion. The Holder shall
be
treated for all purposes as the record holder of the Conversion Shares, unless
the Holder provides Patients written instructions to the contrary.
3.4 Late
Payments.
The
Company understands that a delay in the delivery of the Conversion Shares in
the
form required pursuant to this Article beyond the Delivery Date could result
in
economic loss to the Holder. As compensation to the Holder for such loss, in
addition to all other rights and remedies which the Holder may have under this
Note, applicable law or otherwise, the Company shall pay late payments to the
Holder for any late issuance of Conversion Shares in the form required pursuant
to this Article III upon conversion of this Note, in the amount equal to $500
per business day after the Delivery Date. The Company shall make any payments
incurred under this Section in immediately available funds upon
demand.
4
3.5 Conversion
Mechanics.
The
number of shares of Common Stock to be issued upon each conversion of this
Note
shall be determined by dividing that portion of the principal and interest
and
fees to be converted, if any, by the then applicable Fixed Conversion Price.
In
the event of any conversions of a portion of the outstanding Principal Amount
pursuant to this Article III, such conversions shall be deemed to constitute
conversions of the outstanding Principal Amount applying to Monthly Amounts
for
the remaining Amortization Dates in chronological order.
3.6 Adjustment
Provisions.
The
Fixed Conversion Price and number and kind of shares or other securities to
be
issued upon conversion determined pursuant to this Note shall be subject to
adjustment from time to time upon the occurrence of certain events during the
period that this conversion right remains outstanding, as follows:
(a) Reclassification.
If
Patients at any time shall, by reclassification or otherwise, change the Common
Stock into the same or a different number of securities of any class or classes,
this Note, as to the unpaid Principal Amount and accrued interest thereon,
shall
thereafter be deemed to evidence the right to purchase an adjusted number of
such securities and kind of securities as would have been issuable as the result
of such change with respect to the Common Stock (i) immediately prior to or
(ii)
immediately after, such reclassification or other change at the sole election
of
the Holder.
(b) Stock
Splits, Combinations and Dividends.
If the
shares of Common Stock are subdivided or combined into a greater or smaller
number of shares of Common Stock, or if a dividend is paid on the Common Stock
or any preferred stock issued by Patients in shares of Common Stock, the Fixed
Conversion Price shall be proportionately reduced in case of subdivision of
shares or stock dividend or proportionately increased in the case of combination
of shares, in each such case by the ratio which the total number of shares
of
Common Stock outstanding immediately after such event bears to the total number
of shares of Common Stock outstanding immediately prior to such
event.
3.7 Reservation
of Shares.
During
the period the conversion right exists, Patients will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of Conversion Shares upon the full conversion of this Note
and
the Warrant. Patients represents that upon issuance, the Conversion Shares
will
be duly and validly issued, fully paid and non-assessable. Patients agrees
that
its issuance of this Note shall constitute full authority to its officers,
agents, and transfer agents who are charged with the duty of executing and
issuing stock certificates to execute and issue the necessary certificates
for
the Conversion Shares upon the conversion of this Note.
3.8 Registration
Rights.
The
Holder has been granted registration rights with respect to the Conversion
Shares as set forth in the Registration Rights Agreement.
5
ARTICLE
IV
EVENTS
OF DEFAULT
4.1 Events
of Default.
The
occurrence of any of the following events set forth in this Section 4.1 shall
constitute an event of default (“Event
of Default”)
hereunder:
(a) Failure
to Pay.
The
Company fails to pay when due any installment of principal, interest or other
fees hereon in accordance herewith, or the Company or Patients fails to pay
any
of the other Obligations (under and as defined in the Master Security Agreement)
when due, and, in any such case, such failure shall continue for a period of
three (3) days following the date upon which any such payment was
due.
(b) Breach
of Covenant.
Patients, the Company or any of their respective Subsidiaries breaches any
covenant or any other term or condition of this Note in any material respect
and
such breach, if subject to cure, continues for a period of fifteen (15) days
after the occurrence thereof.
(c) Breach
of Representations and Warranties.
Any
representation, warranty or statement made or furnished by Patients, the Company
or any of their respective Subsidiaries in this Note, the Purchase Agreement
or
any other Related Agreement shall at any time be false or misleading in any
material respect on the date as of which made or deemed made.
(d) Default
Under Other Agreements.
The
occurrence of any default (or similar term) in the observance or performance
of
any other agreement or condition relating to any indebtedness or contingent
obligation of Patients, the Company or any of their respective Subsidiaries
beyond the period of grace (if any), the effect of which default is to cause,
or
permit the holder or holders of such indebtedness or beneficiary or
beneficiaries of such contingent obligation to cause, such indebtedness to
become due prior to its stated maturity or such contingent obligation to become
payable;
(e) Material
Adverse Effect.
Any
change or the occurrence of any event which could reasonably be expected to
have
a Material Adverse Effect;
(f) Bankruptcy.
Patients, the Company or any of their respective Subsidiaries shall
(i) apply for, consent to or suffer to exist the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary case under
the federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated
a bankrupt or insolvent, (v) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vi) acquiesce to, without
challenge within ten (10) days of the filing thereof, or failure to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing;
(g) Judgments.
Attachments or levies in excess of $50,000 in the aggregate are made upon
Patients, the Company or any of their respective Subsidiary’s assets or a
judgment is rendered against the Company’s property involving a liability of
more than $50,000 which shall not have been vacated, discharged, stayed or
bonded within thirty (30) days from the entry thereof;
6
(h) Insolvency.
Patients, the Company or any of their respective Subsidiaries shall admit in
writing its inability, or be generally unable, to pay its debts as they become
due or cease operations of its present business;
(i) Change
of Control.
A
Change of Control (as defined below) shall occur with respect to Patients or
the
Company, unless Holder shall have expressly consented to such Change of Control
in writing. A “Change in Control” with respect to Patients shall mean any event
or circumstance as a result of which (i) any “Person” or “group” (as such terms
are defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on
the
date hereof), other than the Holder, is or becomes the “beneficial owner” (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of 35% or more on a fully diluted basis of the then outstanding
voting equity interest of Patients (other than a “Person” or “group” that
beneficially owns 35% or more of such outstanding voting equity interests of
Patients on the date hereof), (ii) the Board of Directors of Patients shall
cease to consist of a majority of Patients’ board of directors on the date
hereof (or directors appointed by a majority of the board of directors in effect
immediately prior to such appointment) or (iii) Patients or any of its
Subsidiaries merges or consolidates with, or sells all or substantially all
of
its assets to, any other person or entity; and a “Change of Control” with
respect to the Company shall mean any event or circumstance as a result of
which
any “Person” or “group”, other than Patients, is or becomes the “beneficial
owner”, directly or indirectly, of any of the then outstanding equity interests
of the Company.
(j) Indictment;
Proceedings.
The
indictment or threatened indictment of Patients, the Company or any of their
respective Subsidiaries or any executive officer of Patients, the Company or
any
of their respective Subsidiaries under any criminal statute, or commencement
or
threatened commencement of criminal or civil proceeding against Patients, the
Company or any of their respective Subsidiaries or any executive officer of
Patients, the Company or any of their respective Subsidiaries pursuant to which
statute or proceeding penalties or remedies sought or available include
forfeiture of any of the property of Patients, the Company or any of their
respective Subsidiaries;
(k) The
Purchase Agreement and Related Agreements.
(i) An
Event of Default shall occur under and as defined in the Purchase Agreement
or
any other Related Agreement, (ii) Patients, the Company or any of their
respective Subsidiaries shall breach any term or provision of the Purchase
Agreement or any other Related Agreement in any material respect and such
breach, if capable of cure, continues unremedied for a period of fifteen (15)
days after the occurrence thereof, (iii) Patients, the Company or any of their
respective Subsidiaries attempts to terminate, challenges the validity of,
or
its liability under, the Purchase Agreement or any Related Agreement, (iv)
any
proceeding shall be brought to challenge the validity, binding effect of the
Purchase Agreement or any Related Agreement or (v) the Purchase Agreement or
any
Related Agreement ceases to be a valid, binding and enforceable obligation
of
Patients, the Company or any of their respective Subsidiaries (to the extent
such persons or entities are a party thereto);
7
(l) Stop
Trade.
A
Securities and Exchange Commission stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for five (5) consecutive
days
or five (5) days during a period of ten (10) consecutive days, excluding in
all
cases a suspension of all trading on a Principal Market, provided that Patients
shall not have been able to cure such trading suspension within thirty (30)
days
of the notice thereof or list the Common Stock on another Principal Market
within sixty (60) days of such notice; or
(m) Failure
to Deliver Common Stock or Replacement Note.
Patients’ failure to deliver Common Stock to the Holder pursuant to and in the
form required by this Note and the Purchase Agreement and, if such failure
to
deliver Common Stock shall not be cured within two (2) business days or Patients
and the Company are required to issue a replacement Note to the Holder and
Patients and the Company shall fail to deliver such replacement Note within
seven (7) business days.
4.2 Default
Interest.
Following the occurrence and during the continuance of an Event of Default,
the
Company shall pay additional interest on this Note in an amount equal to two
percent (2%) per month, and all outstanding obligations under this Note, the
Purchase Agreement and each other Related Agreements, including unpaid interest,
shall continue to accrue interest at such additional interest rate from the
date
of such Event of Default until the date such Event of Default is cured or
waived.
4.3 Default
Payment.
Following the occurrence and during the continuance of an Event of Default,
the
Holder, at its option, may demand repayment in full of all obligations and
liabilities owing by Company or Patients to the Holder under this Note, the
Purchase Agreement and/or any other Related Agreement and/or may elect, in
addition to all rights and remedies of the Holder under the Purchase Agreement
and the other Related Agreements and all obligations and liabilities of Patients
and the Company under the Purchase Agreement and the other Related Agreements,
to require the Company to make a Default Payment (“Default
Payment”).
The
Default Payment shall be 130% of the outstanding principal amount of the Note,
plus accrued but unpaid interest, all other fees then remaining unpaid, and
all
other amounts payable hereunder. The Default Payment shall be applied first
to
any fees due and payable to the Holder pursuant to this Note, the Purchase
Agreement, and/or the other Related Agreements, then to accrued and unpaid
interest due on this Note and then to the outstanding principal balance of
this
Note. The Default Payment shall be due and payable immediately on the date
that
the Holder has exercised its rights pursuant to this Section 4.3.
ARTICLE
V
MISCELLANEOUS
5.1 Conversion
Privileges.
The
conversion privileges set forth in Article III shall remain in full force and
effect immediately from the date hereof until the date this Note is indefeasibly
paid in full and irrevocably terminated.
5.2 Cumulative
Remedies.
The
remedies under this Note shall be cumulative.
5.3 Failure
or Indulgence Not Waiver.
No
failure or delay on the part of the Holder hereof in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive
of,
any rights or remedies otherwise available.
8
5.4 Notices.
Any
notice herein required or permitted to be given shall be in writing and shall
be
deemed effectively given: (a) upon personal delivery to the party notified,
(b)
when sent by confirmed telex or facsimile if sent during normal business hours
of the recipient, if not, then on the next business day, (c) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification
of
receipt. All communications shall be sent to Patients and the Company at the
address provided in the Purchase Agreement executed in connection herewith,
and
to the Holder at the address provided in the Purchase Agreement for the Holder,
with a copy to Xxxx X. Xxxxxx, Esq., 000 Xxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000, or at such other
address as Patients, the Company or the Holder may designate by ten days advance
written notice to the other parties hereto. A Notice of Conversion shall be
deemed given when made to Patients pursuant to the Purchase
Agreement.
5.5 Amendment
Provision.
The
term “Note” and all references thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented, and any successor instrument
as such successor instrument may be amended or supplemented.
5.6 Assignability.
This
Note shall be binding upon Patients, the Company and their respective successors
and shall inure to the benefit of the Holder and its successors and assigns,
and
may be assigned by the Holder in accordance with the requirements of the
Purchase Agreement. Neither Patients nor the Company may assign any of its
obligations under this Note without the prior written consent of the Holder,
any
such purported assignment without such consent being null and void.
5.7 Cost
of Collection.
In case
of any Event of Default under this Note, Patients and the Company shall jointly
and severally pay the Holder reasonable costs of collection, including
reasonable attorneys’ fees.
5.8 Governing
Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS
NOTE
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.
9
(b) PATIENTS
AND THE COMPANY HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS
LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN PATIENTS
AND/OR THE COMPANY, ON THE ONE HAND, AND THE HOLDER, ON THE OTHER HAND,
PERTAINING TO THIS NOTE OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS NOTE OR ANY OF THE RELATED AGREEMENTS;
PROVIDED,
THAT
PATIENTS AND THE COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY
HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF
NEW
YORK; AND FURTHER PROVIDED,
THAT
NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
HOLDER. PATIENTS AND THE COMPANY EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO
SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND PATIENTS
AND
THE COMPANY HEREBY WAIVE ANY OBJECTION WHICH EACH MAY HAVE BASED UPON LACK
OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS.
PATIENTS AND THE COMPANY HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT
AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE
OF
SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO PATIENTS AND THE COMPANY AT THE ADDRESS SET FORTH IN THE
PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE
EARLIER OF PATIENTS’ OR THE COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
(c) PATIENTS
AND THE COMPANY DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, PATIENTS AND THE COMPANY HERETO WAIVE
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN
THE
HOLDER AND PATIENTS OR THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED
OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS
NOTE, ANY OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
THERETO.
5.9 Severability.
In the
event that any provision of this Note is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Note.
5.10 Maximum
Payments.
Nothing
contained herein shall be deemed to establish or require the payment of a rate
of interest or other charges in excess of the maximum permitted by applicable
law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum rate permitted by such law, any payments in excess
of such maximum rate shall be credited against amounts owed by the Company
to
the Holder and thus refunded to the Company.
10
5.11 Security
Interest and Guarantee.
The
Holder has been granted a security interest (i) in certain assets of Patients
and the Company and their respective Subsidiaries as more fully described in
the
Master Security Agreement and (ii) in the equity interests of Patients’
Subsidiaries pursuant to the Stock Pledge Agreement. The obligations of the
Company under this Note are guaranteed by Patients pursuant to a Guaranty dated
as of the date hereof.
5.12 Construction.
Each
party acknowledges that its legal counsel participated in the preparation of
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party against the
other.
5.13 Registered
Obligation.
This
Note is intended to be a registered obligation within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i) and the Company (or its agent) shall
register the Note (and thereafter shall maintain such registration) as to both
principal and any stated interest. Notwithstanding any document, instrument
or
agreement relating to this Note to the contrary, transfer of this Note (or
the
right to any payments of principal or stated interest thereunder) may only
be
effected by (i) surrender of this Note and either the reissuance by the Company
of this Note to the new holder or the issuance by the Company of a new
instrument to the new holder, or (ii) transfer through a book entry system
maintained by the Company (or its agent), within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i)(B).
5.14 Amendment
and Restatement.
This
Note amends and restates in its entirety and is given in substitution for (but
not satisfaction of) that certain Secured Convertible Term Note dated as of
January 30, 2006 made by Company in favor of Holder in the original principal
amount of $4,100,000.
[Balance
of page intentionally left blank; signature page follows]
11
IN
WITNESS WHEREOF,
Patients and the Company have caused this Secured Convertible Term Note to
be
signed in its name effective as of this 22nd
day of
August, 2006.
|
FLAGSHIP
PATIENT ADVOCATES, INC.
By:
/S/
Xxxx X.
Xxxxx
Name:
Xxxx X. Xxxxx
Title:
CEO
|
|
|
WITNESS:
/S/
Xxxxxx
Xxxxx
|
|
|
PATIENTS
& PHYSICIANS, INC.
By:
/S/
Xxxx X. Xxxxx
Name:
Xxxx X. Xxxxx
Title:
CEO
|
|
|
WITNESS:
/S/
Xxxxxx
Xxxxx
|
EXHIBIT
A
NOTICE
OF CONVERSION
(To
be
executed by the Holder in order to convert all or part of
the
Secured Convertible Term Note into Common Stock)
Patients
& Physicians, Inc.
000
Xxxx
Xxxxxx Xxxxx, 00xx
Xxxxx
The
undersigned hereby converts $_________ of the principal due on [specify
applicable Repayment Date] under the Secured Convertible Term Note dated as
of
August ___, 2006 (the “Note”)
issued
by Flagship Patient Advocates, Inc. and Patients & Physicians, Inc. (the
“Company”)
by
delivery of shares of Common Stock of the Company (“Shares”)
on and
subject to the conditions set forth in the Note.
| 1. |
Date
of
Conversion
_______________________
|
| 2. |
Shares
To Be
Delivered:
_______________________
|
|
[HOLDER]
By:
____________________________
Name:
__________________________
Title:
___________________________
|
EXHIBIT
B
PROJECTIONS
[See
Attached]
