EXHIBIT A STOCK PURCHASE AND LOAN OPTION AGREEMENT
EXHIBIT
10.2
EXHIBIT
A
THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH
A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE
SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION AND QUALIFICATION WITHOUT, EXCEPT UNDER CERTAIN SPECIFIC LIMITED
CIRCUMSTANCES, AN OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL
FOR
THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED.
CONVERTIBLE
PROMISSORY
NOTE
| $4,500,000.00 |
Dated:
SEPTEMBER, 1,
2005
|
FOR
VALUE
RECEIVED, the undersigned, MR3 SYSTEMS, INC. (the “Borrower”), HEREBY
UNCONDITIONALLY PROMISES TO PAY to the order of MRD HOLDINGS INC., or nominee
(the “Lender”), the principal sum of 4.5 MILLION DOLLARS (US$4,500,000), on
September 1, 2008. This Note is secured by a Security Agreement of even date
herewith.
The
Borrower further promises to pay interest on the outstanding principal amount
of
this Promissory Note from the date hereof until maturity, at a rate per annum
equal at all times to five percent (5%), said interest to accrue and be payable
at maturity. All computations of interest shall be made on the basis of a year
of 365 or 366 days, as the case may be, for the actual number of days (including
the first day but excluding the last day) occurring in the period for which
such
interest is payable. Any unpaid principal and unpaid accrued interest on this
Note is due and payable at maturity, or upon conversion, whichever shall first
occur.
All
payments hereunder shall be made in lawful money of the United States of America
and in same day or immediately available funds, to the Lender at such place
or
to such account as the Lender from time to time shall designate in a written
notice to the Borrower.
Whenever
any payment hereunder shall be stated to be due, or whenever any interest
payment date or any other date specified hereunder would otherwise occur, on
a
day other than a Business Day (as defined below), then such payment shall be
made, and such interest payment date or other date shall occur, on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest hereunder. As used herein,
“Business Day” means a day (i) other than Saturday or Sunday, and (ii) on which
commercial banks are open for business in San Francisco,
California.
Anything
herein to the contrary notwithstanding, if during any period for which interest
is computed hereunder, the amount of interest computed on the basis provided
for
in this Note, together with all fees, charges and other payments which are
treated as interest under applicable law, as provided for herein or in any
other
document executed in connection herewith, would exceed the amount of such
interest computed on the basis of the Highest Lawful Rate, the Borrower shall
not be obligated to pay, and the Lender shall not be entitled to charge,
collect, receive, reserve or take, interest in excess of the Highest Lawful
Rate, and during any such period the interest payable hereunder shall be
computed on the basis of the Highest Lawful Rate. As used herein, “Highest
Lawful Rate” means the maximum non-usurious rate of interest, as in effect from
time to time, which may be charged, contracted for, reserved, received or
collected by the Lender in connection with this Note under applicable
law.
EXHIBIT
A
So
long
as any amount payable by the Borrower hereunder shall remain unpaid, the
Borrower will furnish to the Lender from time to time such information
respecting the Borrower’s financial condition as the Lender may from time to
time reasonably request.
The
Borrower represents and warrants to the Lender that this Note does not
contravene any contractual or judicial restriction binding on or affecting
the
Borrower and that this Note is the legal, valid and binding obligation of the
Borrower enforceable against him in accordance with its terms.
The
occurrence of any of the following shall constitute an “Event of Default” under
this Note:
i. the
failure to make any payment of principal, interest or any other amount payable
hereunder when due under this Note or the breach of any other condition or
obligation under this Note; or
ii. a
breach
of or failure to perform any representation, condition or obligation under
the
Agreement or Security Agreement; or
iii. the
filing of a petition by or against the Borrower under any provision of the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time, or under any similar law relating to bankruptcy,
insolvency or other relief for debtors; or appointment of a receiver, trustee,
custodian or liquidator of or for all or any part of the assets or property
of
the Borrower; or the insolvency of the Borrower; or the making of a general
assignment for the benefit of creditors by the Borrower.
Upon
the
occurrence of any Event of Default, the Lender, at its option, may (i) by notice
to the Borrower, declare the unpaid principal amount of this Note, all interest
accrued and unpaid hereon and all other amounts payable hereunder to be
immediately due and payable, whereupon the unpaid principal amount of this
Note,
all such interest and all such other amounts shall become immediately due and
payable, without presentment, demand, protest or further notice of any kind;
provided that if an event described in paragraph (iii) above shall occur, the
result which would otherwise occur only upon giving of notice by the Lender
to
the Borrower as specified above shall occur automatically, without the giving
of
any such notice; and (ii) whether or not the actions referred to in clause
(i)
have been taken, exercise any or all of the Lender’s rights and remedies
available to the Lender under the Agreement or Security Agreement, each dated
as
of May 30, 2005 between the Borrower and the Lender, or otherwise available
to
the Lender under applicable law.
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The
outstanding principal balance of this Note may be converted prior to payment
in
full of the principal balance of this Note, at the option of Lender, into Series
B Convertible Preferred Stock of the Company, at the rate of one Preferred
Share
for each $2.50 of principal balance to be converted. Upon receipt by Borrower
of
the Notice of Conversion, the outstanding principal balance of this Note shall
be converted automatically without any further action by Lender and whether
or
not the Note is surrendered to Borrower or its transfer agent. Borrower shall
not be obligated to issue certificates evidencing the shares of the securities
issuable upon conversion unless such Note is either delivered to Borrower or
its
transfer agent, or the Lender notifies Borrower or its transfer agent that
such
Note has been lost, stolen or destroyed and executes an agreement satisfactory
to Borrower to indemnify Borrower from any loss incurred by it in connection
with such Note. Borrower shall, as soon as practicable after such delivery,
or
such agreement and indemnification, issue and deliver at such office to such
holder of such Note, a certificate or certificates for the securities to which
the Lender shall be entitled and a check payable to the Lender in the amount
of
any accrued and unpaid interest on such Note, and any cash amounts payable
as
the result of a conversion into fractional shares of the securities. Upon
conversion of the Note, Borrower shall be released from all of its obligations
and liabilities under this Note.
The
Borrower agrees to pay on demand all the losses, costs, and expenses (including,
without limitation, attorneys’ fees and disbursements) which the Lender incurs
in connection with enforcement or attempted enforcement of this Note, or the
protection or preservation of the Lender’s rights under this Note, whether by
judicial proceedings or otherwise. Such costs and expenses include, without
limitation, those incurred in connection with any workout or refinancing, or
any
bankruptcy, insolvency, liquidation or similar proceedings.
The
Borrower hereby waives diligence, demand, presentment, protest or further notice
of any kind. The Borrower agrees to make all payments under this Note without
setoff or deduction and regardless of any counterclaim or defense.
No
single
or partial exercise of any power under this Note shall preclude any other or
further exercise of such power or exercise of any other power. No delay or
omission on the part of the Lender in exercising any right under this Note
shall
operate as a waiver of such right or any other right hereunder.
This
Note
shall be binding on the Borrower and its successors and
assigns,
and shall be binding upon and inure to the benefit of the Lender, any future
holder of this Note and their respective successors and assigns. The Borrower
may not assign or transfer this Note or any of its obligations hereunder without
the Lender’s prior written consent.
[Signatures
on following page.]
THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH CALIFORNIA
LAW.
MR3
SYSTEMS, INC.
By:
/s/
Xxxxxxx X. Xxx
Name: Xxxxxxx
X. Xxx, Ph.D.
Title: CEO
&
Director
Address: 000
Xxxxxxx Xxxxxx
Xxxxx
000
Xxx
Xxxxxxxxx, XX 00000
-4-
NOTICE
OF CONVERSION
(To
Be
Signed Only Upon Conversion of Note)
TO:
MR3
SYSTEMS, INC.
The
undersigned, Lender of the foregoing Note, hereby surrenders such Note for
conversion into Series B Convertible Preferred Stock of MR3 SYSTEMS, INC.,
a
California corporation (the "Company") to the extent of $ _________
unpaid
principal amount of such Note, and requests that the certificates for such
shares be issued in the name of, and delivered to, _________________________,
whose address is _________________________________. The undersigned hereby
confirms to Borrower that the representations and warranties set forth in
Section
4
of the
Purchase Agreement to which Borrower and the undersigned are parties are true,
correct and accurate on and as of the date hereof and hereby makes such
representations and warranties to Borrower on and as of the date hereof.
Dated:____________________________
(Signature
must conform in all respects to name
of
holder
as specified on the face of the Note)
(Address)
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