EXHIBIT 10.16
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE
PLEDGED, SOLD ASSIGNED OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW
HAS BECOME EFFECTIVE WITH RESPECT THERETO, OR (2) RECEIPT BY THE MAKER OF
AN OPINION OF COUNSEL TO THE MAKER TO THE EFFECT THAT REGISTRATION UNDER
THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN
CONNECTION WITH THE PROPOSED TRANSFER.
$537,500.00 JULY 23, 1996.
PROMISSORY NOTE AND SECURITY AGREEMENT
FOR VALUE RECEIVED, the undersigned PHARMASYSTEMS COST CONTAINMENT CORP.,
a Florida corporation (the "Maker") promises to pay to the order of XXXXXX X.
XXXXX, XX., an Individual, as Successor in Interest to Expired, S.A. de C.V., a
Mexican corporation (collectively, the "Payee"), the principal sum of Five
Hundred Thirty Seven Thousand Five Hundred Dollars ($537,500.00) in lawful money
of the United States, together with interest in like lawful money at the rate of
ten percent (10%) per annum.
1. PAYMENT OF PRINCIPAL AND INTEREST. This Note shall be payable in
monthly payments of Ten Thousand Dollars ($10,000.00), representing principal
and interest, commencing with the execution of this Note and subsequently, on
the 15th day of each month thereafter until fully discharged. Ninety days
following the successful completion and funding of an initial public offering of
Maker's securities under the Securities Act of 1933, as amended, or the merger
and or other consolidation of the Maker into a publicly registered trading
company, Maker shall pay the outstanding principal balance on the Note together
with accrued interest thereon. If Maker does not successfully complete and fund
an initial public offering of its' Securities under the Securities Act of 1933,
as amended, within ninety (90) days of the date hereof, then the monthly
payments of principal and interest on the Note shall be increased to Twenty
Thousand Dollars ($20,000.00) until such time as the Note is paid in full.
2. INTEREST RATE. The unpaid principal balance of this Note shall
bear interest at the rate of ten percent (10%) per annum. Interest shall be
calculated on the basis of a calendar year and the actual days elapsed and
shall be paid as set forth in Section 1 above.
3. SECURITY. To secure its obligations hereunder, and the obligations of
Healthcare Workshop, Ltd., a British Virgin Island corporation ("HWL") under
that certain promissory Note and Security Agreement in the amount of $1,000,000
from Healthcare Workshop, Ltd. to Xxxxxx Xxxxx (the "HWL Note") the Maker hereby
pledges, assigns and grants to the Payee, with full recourse therein to the
Maker and subject to the provisions of this Note, a continuing security interest
in the following property (the "Collateral"): 100% of the Maker's ownership
interest in Xxx'x Acquisition Corporation, a Florida corporation ("LAC"), such
stock being more fully described in Schedule "1" attached hereto which is
incorporated herein and made a part hereof by this reference. The Collateral
also includes all proceeds, products and profits of any Collateral, all
increases and additions and accessions to any Collateral and all replacements
and substitutions for any Collateral, including without limitation, any proceeds
of any insurance, indemnity, warranty or guaranty payable with respect to any
Collateral, any awards or payments due or payable in connection with any
condemnation, requisition, confiscation, seizure or forfeiture of any Collateral
by any person acting under governmental authority or color thereof, and any
damages or other amounts payable to the Maker in connection with any lawsuit
regarding any of the Collateral. The Collateral secures and will secure the
prompt and unconditional payment of the indebtedness, obligations and
liabilities of the Maker evidence by or arising under this Note and the
obligations of HWL under the HWL Note. Unless an Event of Default (as defined
below) is then continuing, the Maker shall retain any and all rights relating to
the Stock constituting the Collateral, including without limitation, the voting
rights relating thereto PROVIDED, HOWEVER that the voting rights will not be
exercised in a manner that violates the covenants set forth in the Agreement, of
even date herewith, between PharmaSystems Cost Containment Corp., LAC and Xxxxxx
Xxxxx (the "Covenant Agreement").
3.1. In order to facilitate Payee's rights with respect to
the Collateral, Maker shall execute Stock Powers granting
upon Xxxxx, Xxxxxxx & Xxxxx, P.A. the power to transfer
the Collateral in the Event of Default hereunder. Said
Stock Powers and the Share Certificates representing the
Collateral shall be held in escrow by Xxxxx, Xxxxxxx &
Xxxxx, P.A. and will be released to Payee upon the
occurrence of an Event of Default hereunder.
3.2. Upon the occurrence of an Event of Default as defined
hereunder, Payee shall have the right to take ownership,
possession and control of the Collateral. Payee shall,
within a reasonable time period, attempt to sell and/or
otherwise dispose of the Collateral upon terms deemed
reasonable by Payee in its sole and unfettered discretion.
3.3. Upon a sale or disposition of the Collateral, the
proceeds from such sale or disposition shall be applied
to the repayment of the full principal balance and
interest outstanding under this Note and the HWL Note, as
of the date of such disposition (collectively the
"Outstanding Balance"). The express proceeds, if any,
received by Payee upon sale or disposition of the
Collateral, after full payment of the Outstanding
Balance, shall be paid to Maker of its designee.
3.4. Between the date hereof and the time when the Notes are
fully discharged, the Maker shall have the absolute
right, without the consent of Payee, to pledge and
encumber the Six Hundred (600) shares of Xxx'x
Acquisition Corporation issued to PharmaSystems Cost
Containment Corp., represented by Certificate No. 1, for
the specific purpose of paying Payee the outstanding
balance on this Note and/or the outstanding balance on
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the Promissory Note and Security Agreement executed
between Payee and Healthcare Workshop, Ltd., a British
Virgin Islands corporation.
4. EVENTS OF DEFAULT. The entire unpaid principal balance of this Note,
together with all unpaid interest accrued thereon and all other sums owing under
this Note, shall at the option of the Payee become immediately due and payable
without notice or demand upon the occurrence of any one or more of the following
events ("Events of Default"), regardless of the cause thereof and whether within
or beyond the control of the Maker:
(a) The failure of the Maker to pay any sum when due under this
Note;
(b) The failure of the Maker to observe or perform any covenant
or agreement by Maker in this Note after the Payee's written
notice to Maker of such failure and the Maker's further
failure to cure such breach within five days of such notice;
or
(c) The occurrence of an Event of Default under the HWL Note;
(d) The occurrence of an Event of Default under the Covenant
Agreement; or
(e) If the Maker shall make an assignment for the benefit of
creditors, file a petition in bankruptcy, apply to or
petition any tribunal for the appointment of a custodian,
receiver, intervenor or trustee for the Maker or a
substantial part of the Maker's assets; or if the Maker shall
commence any proceeding under any bankruptcy, arrangement,
readjustment of debts owed, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in
effect; or if any such petition or application shall have
been filed or proceeding commenced against the Maker or if
any such custodian, receiver, intervenor or trustee shall
have been appointed.
5. RIGHTS AND REMEDIES OF THE PAYEE. The Payee's delays in exercising or
failure to exercise any rights or remedies to which the Payee may be entitled if
any Event of Default occurs shall not constitute a waiver of any of the Payee's
rights or remedies with respect to that or any subsequent Event of Default,
whether of the same or a different nature, nor shall any single or partial
exercise of any right or remedy by the Payee preclude any other or further
exercise of that or any other right or remedy.
6. WAIVER AND CONSENT. To the fullest permitted extent by law, the Maker
waives demand, presentment, protest, notice of dishonor, suit against or joinder
of any other person, and all other requirements necessary to charge or hold the
Maker liable with respect to this Note.
7. COSTS, INDEMNITIES AND EXPENSES. All filing fees and similar charges
and all costs incurred by the Payee in collecting or securing or attempting to
collect or secure this Note, including attorney's fees, whether or not involving
litigation and/or appellate, administrative or bankruptcy proceedings shall be
paid by Maker and are deemed included in the liquidated damages described in
Section 3 hereof. The Maker agrees to pay any documentary stamp taxes,
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intangible taxes or other taxes (except for federal or state income or franchise
taxes based on the Payee's income) which may now or hereafter apply to this Note
or any payment made in respect of this Note or any security for this Note.
8. MAXIMUM INTEREST RATE. In no event shall any agreed to or actual
exaction charged, reserved or taken as an advance or forbearance by the Payee as
consideration for this Note exceed the limits (if any) imposed or provided by
the law applicable from time to time to this Note for the use or detention of
money or for forbearance in seeking its collection, the Payee hereby waives any
right to demand such excess. In the event that the interest provisions of this
Note shall result at any time or for any reason in an effective rate of interest
that exceeds the maximum interest rate permitted by applicable law (if any),
then without further agreement or notice the obligation to be fulfilled shall
automatically reduced to such limit and all sums received by the Payee in excess
of those lawfully collectible as interest shall be applied against the principal
of this Note immediately upon the Payee's receipt thereof, with the same force
and effect as though the Maker had specifically designated such extra sums to be
so applied to principal and the Payee had agreed to accept such extra payment(s)
as a premium-free prepayment or prepayments.
9. CORPORATE OBLIGATION OF MAKER. It is expressly understood that
this Note is solely a corporate obligation of the Maker.
10. ASSIGNABILITY BY PAYEE. This Note shall be assignable by Payee,
with the prior written consent of Maker, which consent shall not be
unreasonably withheld.
11. GOVERNING LAW. This Note shall be governed by, and construed
and enforced in accordance with, the laws of the State of Florida.
12. SEVERABILITY. Any provision of this Note which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction only, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
13. INTERPRETATION. Whenever used in this Note, words in the singular
include the plural, words in the plural include the singular, and pronouns of
any gender include the other genders, all as may be appropriate. Captions and
paragraph headings in this Note are for convenience of reference only and shall
not affect its interpretation. As used in this Note, the term "the Payee" shall
be deemed to include any subsequent holder(s) of this Note.
14. SURRENDER OF NOTE TO BE PAID IN FULL. At such time as the Note is
paid by the Maker in full as to principal, and accrued interest, the holder
thereof shall surrender the original Note to the Maker for cancellation after
payment.
15. MISCELLANEOUS. Time shall be of the essence with respect to the terms
of this Note. This Note cannot be changed or modified orally. Except as
otherwise required by the provisions of this Note, any notice required to be
given to other Maker shall be deemed sufficient if made personally or if mailed,
postage prepaid, to the Maker's address as it appears on the signature page of
this Note.
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MAKER:
PHARMASYSTEMS COST CONTAINMENT CORP., a
Florida corporation
0000 X.X. 0xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxxx, solely in his
capacity as President, and not
individually
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SCHEDULE 1
COLLATERAL:
Stock Certificate No. 1 issued to PharmaSystems Cost Containment Corp.
for six hundred (600) shares of Xxx'x Acquisition Corporation, a Florida
corporation.
