Exhibit 10.12
FORM OF NOTE AGREEMENT
----------------------
15% Exchangeable Convertible Subordinated Notes
Due November 30, 2005
To each of the Purchasers
of the above Notes:
Gentlemen:
PharmaFrontiers Corp., a Texas corporation (the "Company"), is offering
for sale up to $10,000,000 of 15% Exchangeable Convertible Subordinated Notes
due November 30, 2005 (the "Notes"). The terms and conditions governing the
Notes are contained in this Agreement. As purchasers of the Notes, you are
acquiring one or more of the Notes to be issued pursuant to this Agreement.
Accordingly, the Company hereby agrees with you (each herein called a
"Purchaser" and together, the "Purchasers") as follows:
1. AUTHORIZATION OF NOTES. The Company will authorize the issue and
sale of up to $10,000,000 in aggregate principal amount of its Notes. Each Note
issued hereunder will be dated the date of its issuance, will mature on November
30, 2005, will bear interest on its unpaid principal balance from the date of
issuance at the rate of 15% per annum, computed on the basis of a 360-day year
of twelve 30 day months, payable at maturity, November 30, 2005, and will have
the other terms and provisions provided herein and in the form of Note attached
hereto as Exhibit A. Interest is payable in cash or at the option of the Company
in shares of its Common Stock valued at $3.00 per share. Upon maturity, the
principal amount of the Note will automatically convert into Common Stock. The
term "Note" or "Notes" as used herein shall include each Note delivered pursuant
to any provision of this Agreement and each Note delivered in substitution or
exchange for any such Note pursuant to any such provision. Certain capitalized
terms used in this Agreement are defined in Section 15.
2. PURCHASE AND SALE OF NOTES. The Company will issue and sell to you
and, subject to the terms and conditions of this Agreement, you will purchase
from the Company at the purchase price of 100% of the principal amount or value
thereof.
3. REGISTRATION RIGHTS. The Company agrees to register the resale of
the shares of Common Stock issued upon maturity, as set forth in Exhibit B.
4. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to you that:
4.1 Organization, Qualification, Standing, Capital Stock, etc. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of its jurisdiction of incorporation, has the corporate power to
own its properties and to carry on its businesses as the same are now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned by it or the nature
of its businesses makes such qualification necessary. The authorized capital
stock of the Company consists of 50,000,000 shares of Common Stock, of which
7,366,838 shares are issued and outstanding as of the date of this Agreement,
and 10,000,000 shares of preferred stock, of which no shares are issued and
outstanding as of the date of this Agreement. All of the outstanding shares of
Common Stock have been validly issued and are fully paid and nonassessable.
Except for those described in the Memorandum and in SEC Filings, there are not
outstanding, nor is the Company subject to any agreement, arrangement, or
understanding under which there may become outstanding, any option, warrant, or
other right to purchase or subscribe to, or security convertible into or
exchangeable for, any shares of capital stock of any class of the Company.
4.2 Financial Statements, Subsequent Changes, etc. The financial
statements and other financial data and information contained in or referred to
in SEC Filings and the Memorandum, are complete and correct in all material
respects and fairly present in all material respects the financial condition of
the Company at the respective dates of said statements or information for the
respective periods covered thereby. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise noted
therein).
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4.3 Other Information as to the Company. The SEC Filings and the
Memorandum do not contain any misstatement of a material fact or omit to state
any material fact necessary to be stated therein or necessary in order to make
the statements therein not misleading. In the event the Company has furnished to
you written information which corrects information previously furnished, the
information last furnished is deemed to govern for purposes of this Section 4.3.
4.4 Litigation. Except as set forth in the SEC Filings and the
Memorandum, there is no action, suit, or proceeding at law or in equity or by or
before any governmental instrumentality or agency or any arbitrator now pending
or, to the Company's knowledge, threatened, against, or affecting the Company,
or any of its properties or rights, which, if adversely determined, might,
either in any case or in the aggregate result in a Material Adverse Change, or
result in any substantial liability not adequately covered by insurance, or for
which adequate reserves are not maintained on the Company's balance sheet.
4.5 Licenses. Except as disclosed in the SEC Filings and the Memorandum
and which would not have a Material Adverse Change, the Company has all permits,
licenses, and other authority as are necessary to enable it to conduct its
business as now conducted and as proposed to be conducted, and to the best of
the Company's knowledge, the Company is not in default under any such permits,
licenses or other authority.
4.6 Due Authorization and Compliance with Other Instruments. This
Agreement and the Notes have been duly and validly authorized by all requisite
corporate proceeding and this Agreement constitutes, and the Notes when executed
and delivered will be, valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms except as
enforceability is limited by bankruptcy, insolvency, reorganization, moratorium,
or other laws relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of equitable remedies are
subject to the discretion of courts before which any proceeding therefor may be
brought and the Notes will be entitled to the benefits of this Agreement and are
not subject to any preemptive or similar rights on the part of any holder or
holders of shares of capital stock of the Company.
4.7 Burdensome and Conflicting Agreements and Violations of Charter
Provisions. The Company is not bound by any agreement or instrument or subject
to any charter or other corporate restriction which materially and adversely
affects its business, properties, operations, prospects or condition, financial
or otherwise. The Company is not in violation of its charter or bylaws or of any
agreement or instrument by which it is bound, or of any statute, law, rule or
regulation, or of any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority applicable to it, in a manner that
could result in the imposition of substantial penalties or result in a Material
Adverse Change. Neither the authorization, execution, and delivery of this
Agreement or the Notes, the consummation of the transactions herein and therein
contemplated, nor the fulfillment of or compliance with the terms hereof and
thereof, will conflict with or result in a breach of any of the terms of the
charter or by-laws, or of any material statute, law, rule, or regulation, or of
any judgment, decree, writ, injunction, order, or award of any arbitrator, court
or governmental authority, or of any instrument, which is applicable to the
Company or by which the Company is bound, or result in the imposition of any
lien upon any of the properties or assets of the Company, other than consents to
obtained prior to Closing.
4.8 Consents and Approvals. Except as disclosed in the SEC Filings or
the Memorandum or as would not have a Material Adverse Change, the Company has
obtained or made provisions to obtain all material (a) governmental consents,
approvals and authorizations, and registrations and filings with governmental
authorities, and (b) consents, approvals, waivers, and notifications of
stockholders, creditors, lessors, and other non-governmental persons, in each
case, in connection with the execution and delivery of this Agreement and the
Notes, and the consummation of the transactions herein and therein contemplated.
4.9 Tax Returns and Payments. The Company has filed all required
information and tax returns and reports and has paid, or adequately provided for
the payment of, all taxes, assessments, and other governmental charges that are
material in amount imposed upon it or upon any of its assets, income or
franchises, other than any such charges which are currently payable without
penalty or interest. The charges, accruals, and reserves on the books of the
Company with respect to taxes for all fiscal periods are adequate, in the
opinion of the Company, and the Company knows of no actual or proposed tax
assessment that is material in amount for any fiscal period or of any basis
therefor against which adequate reserves have not been set up.
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4.10 Offering of the Securities. Neither the Company nor anyone
authorized to act on its behalf (other than the Agent) has or will directly or
indirectly sell or offer the Notes or any part thereof or any similar
instruments to, or solicit any offer to buy any thereof from, any Person so as
to bring the issue and sale of any thereof within the provisions of Section 5 of
the Securities Act.
4.11 Transactions With Affiliates and Employees. Except as set forth in
the SEC Filings or the Memorandum, none of the officers, directors, affiliates
or greater than 5% shareholders of the Company and, to the knowledge of the
Company, none of the employees of the Company is presently a party to any
transaction with the Company or any subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
5. PREPAYMENT OF NOTES. The Company does not have any right to prepay
all or a portion of the Notes.
6. RESERVED.
7. COVENANTS OF THE COMPANY. The Company covenants and agrees that, so
long as any of the Notes are outstanding, it will comply with the following
provisions, subject to the provisions of Section 17 hereof:
7.1 Use of Proceeds. The Company will apply all proceeds (net of costs
directly related to the preparation and negotiation of this Agreement and the
offering and sale of the Notes) derived from the sale of the Notes as set forth
in the Memorandum.
7.2 Payment of Principal and Interest. The Company will make all
payments of principal of and interest on the Notes at the time the same shall
become due thereunder or hereunder.
7.3 Taxes. The Company will promptly pay and discharge all lawful
taxes, assessments, and governmental charges or levies (other than taxes,
assessments, and other governmental charges imposed by foreign jurisdictions or
otherwise which in the aggregate are not material to the business or assets of
the Company) imposed on it or upon its income or profits, or upon any of its
properties, real or personal, before the same shall become in default, as well
as all lawful claims for labor, materials, and supplies or otherwise which, if
unpaid, might become a lien or charge upon its properties or any part thereof;
provided, however, that the Company shall not be required to pay or cause to be
paid any such tax, assessment, charge, levy or claim prior to institution of
foreclosure proceedings if the validity thereof shall be contested in good faith
by appropriate proceedings and if the Company shall have established reserves
deemed by the Company adequate with respect to such tax, assessment, charge,
levy, or claim or as may be required by generally accepted accounting principles
consistently applied.
7.4 Insurance. The Company will maintain all current, and will use its
best efforts to obtain all additional, liability, property damage and other
insurance on its insurable property against fire and other hazards with
financially sound and responsible insurance carriers with which the Company is
doing or will do business, or (in the absence of any such requirements) in the
relative proportionate amounts usually carried by reasonable and prudent
companies conducting businesses similar to that of the Company.
7.5. Maintenance of Existence and Properties. The Company will keep its
corporate existence in full force and effect. The Company will keep its
properties in good repair, working order, and condition, and from time to time
will make all needful and proper repairs, renewals, replacements, extensions,
additions, betterments, and improvements thereto, so that the business carried
on may be properly conducted at all times in accordance with prudent business
management. The Company will comply with all applicable laws and regulations
(including Environmental Laws), decrees, orders, judgments, licenses and
permits, including without limitation all environmental permits ("Applicable
Laws"), except where noncompliance with such Applicable Laws would not cause a
Material Adverse Change.
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7.6 Financial Statements. The Company will keep books of record and
accounts in which full, true and correct entries in all material respects in
accordance with generally accepted accounting principles will be made of all
dealings or transactions in relation to its business and activities.
7.7 Filings Under the Exchange Act. So long as the Noteholders
beneficially own the Notes, the Company shall file all reports required to be
filed with the Commission pursuant to Section 13 and 15(d) of the Exchange Act
and shall not terminate its status as an issuer required to file reports under
the Exchange Act where the rules and regulations thereunder would permit such
termination. The Company will take all reasonable action under its control to
maintain the continued listing and quotation and trading of the its Common Stock
on the OTC Bulletin Board and will comply with the Company's reporting, filing
and other obligations under the by-laws or rules of the National Association of
Securities Dealers, Inc. applicable to it at least so long as the Noteholder
beneficially owns the Notes.
7.8 Listing on Securities Exchanges and Nasdaq. In the event the
Company applies for listing on any national securities exchange or on the Nasdaq
Stock Market, the Company will include the shares of Common Stock underlying the
Notes in any such application.
7.9 Shares Reserved for Issuance. The Company shall reserve, free from
preemptive rights, out of its authorized but unissued shares, sufficient shares
to provide for the conversion of the Notes from time to time as such Notes are
presented for conversion; provided that nothing contained herein shall be
construed to preclude the Company from satisfying its obligations in respect of
the conversion of Notes by delivery of repurchased shares of Common Stock which
are held in the treasury of the Company.
7.10 Shares Issued Upon Conversion. The Company covenants that all
shares of Common Stock which may be issued upon conversion of Notes will upon
issuance be fully paid and nonassessable by the Company and free of preemptive
rights. If any shares of Common Stock to be reserved for the purpose of
conversion of Notes hereunder require registration with or approval of any
governmental authority under any federal or state law before such shares may be
validly issued or delivered upon conversion, then the Company covenants that it
will in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be; provided, however, that nothing in
this Section shall be deemed to affect in any way the obligations of the Company
to convert Notes into Common Stock.
7.11 Dealings with Affiliates. Without Board of Directors approval, the
Company covenants that it will not enter into any transaction including, without
limitation, any loans or extensions of credit or royalty agreements with any
officer, director, affiliate or greater than 5% shareholder of the Company, or
any member of their respective immediate families or any corporation or other
entity directly or indirectly controlled by one or more of such officers,
directors, affiliates or greater than 5% shareholder or members of their
immediate families, except for (i) ordinary course business expense advances for
business purposes that are subject to reimbursement from the Company upon
presentation of appropriate documentation and other advances in reasonable
amounts made to employees of the Company for valid business purposes, and (ii)
service rendered to the Company by an officer, director, employee or greater
than 5% shareholder.
7.12 Other Negative Covenants. Unless such transaction is approved in
writing by the holders of 51% of the aggregate principal amount of the Notes,
the Company hereby further covenants and agrees that it will not:
(a) Alter, change or amend the preferences or rights of the Company's
common stock;
(b) Amend its articles of incorporation;
(c) Sell, lease, or otherwise dispose of all or substantially all of its
assets;
(d) Dissolve, liquidate, or wind up its business;
(e) Conduct its business other than in its ordinary and usual course;
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(f) Reclassify any of its outstanding securities or declare, set aside, or
pay any dividend or other distribution on or make or agree or commit
to make any exchange for or redemption of any such securities payable
in cash, stock, or property; or
(g) Create, incur, or assume any long-term or short-term indebtedness for
money borrowed by the Company other than the Notes, Permitted Debt or
in the ordinary course of business.
7.13 Notice of Default. The Company will within ten Business Days
notify you upon becoming aware of the occurrence of any Event of Default
hereunder.
8. PAYMENT, REGISTRATION, AND TRANSFER OF NOTES. The Company will
promptly and punctually pay the interest on the Notes held by you without any
presentment thereof; and the Company will pay all amounts payable to you in
respect of principal of and interest on the Notes to you or your nominees at the
address or at such other place as you may from time to time designate in
writing. The Company agrees to maintain an office (or to appoint an agent having
an office) in Houston, Texas, or such other city as the Company may designate by
notice in writing to the Noteholders, at which Notes may be surrendered for
transfer and reissuance, for exchange, replacement, conversion, or cancellation.
The Company shall keep or cause to be kept, at the office or agency so
maintained, a register or registers in which the Company or its agents shall
register the names and addresses of the holders of the Notes and shall transfer
registered Notes in accordance with this Agreement. Upon surrender for transfer
of any registered Note duly assigned by the registered holder (or its duly
authorized attorney) to the transferee(s) thereof and subject to satisfaction of
the requirements set forth in Section 12.4, the Company shall execute and
deliver a new registered Note (or Notes in appropriately subdivided
denominations of principal), dated the most recent date to which interest shall
have been paid on the surrendered Note, in an equal principal amount with
notation of payments of principal made thereon, or in a principal amount equal
to the original principal amount as reduced by payments of principal theretofore
made on the Note surrendered, in the name of, and payable to the order of, the
transferee(s) thereof. No service charge shall be assessed for any transfer,
registration, reissuance, or notation of payment hereunder.
9. SUBORDINATION OF NOTES. The Company covenants and agrees and each
Noteholder, by his acceptance thereof, whether upon original issue or upon
transfer or assignment, likewise covenants and agrees that the payment of the
principal of and interest on each and all of the Notes is hereby expressly made
subordinate in accordance with the provisions of this Section 9, and each Person
holding any Notes, accepts and agrees to be bound hereby.
9.1 Subordination to Senior Indebtedness. The indebtedness evidenced
by, and payment of the principal of and interest on, the Notes shall be
subordinate and subject in right of payment to the extent and in the manner set
forth in this Section 9 to the prior payment in full of all Senior Indebtedness.
9.2 No Payment of Notes in Certain Events. To the extent and in the
manner set forth in this Section 9.2, no part of the Notes shall have any claim
to the assets of the Company on parity with or prior to the claim of the Senior
Indebtedness. In the event and during the continuation of a Senior Indebtedness
Default, no payment of principal or interest shall be made on the Notes unless
and until such Senior Indebtedness Default shall have been waived or remedied,
nor shall any such payment be made if after giving effect, as if paid, to such
payment, any Senior Indebtedness Default would exist; provided, that with
respect to a Senior Indebtedness Default other than a default in the payment of
principal (including mandatory prepayments) of or interest on Senior
Indebtedness, nothing in this Section 9.2 shall prevent any regularly scheduled
payment of principal or interest of the Notes for a period longer than the
longer of (i) 120 days or (ii) any period during which the Senior Indebtedness
in respect of which a Senior Indebtedness Default so exists is or has been
declared due and payable in its entirety and (x) such acceleration has not been
rescinded or annulled or (y) such Senior Indebtedness has not been paid in full.
9.3 Priority of Payment of Senior Indebtedness in Certain Events. Upon
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property, or securities, to creditors upon any dissolution or
winding up or total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, assignment for the benefit of creditors, or in
bankruptcy, insolvency, receivership, reorganization or other proceedings, all
Senior Indebtedness shall first be paid in full or payment thereof provided for
in money or money's worth before the holders of the Notes shall be entitled to
retain any assets so paid or distributed in respect thereof (for principal or
interest); and upon any such dissolution or winding up or liquidation or
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reorganization any payment or distribution of assets of the Company of any kind
or character, whether in cash, property, or securities, to which the holders of
the Notes would be entitled, except for these provisions, shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent,
or other Person making such payment or distribution, or by the Noteholders if
received by them, directly to the holders of Senior Indebtedness (pro rata to
each holder on the basis of the respective amounts of Senior Indebtedness held
by such holder) or their representatives, to the extent necessary to pay all
Senior Indebtedness in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Noteholders.
9.4 Payments Due Holders of Senior Indebtedness. In the event that any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property, or securities, which, by virtue of the provisions of
Sections 9.2 or 9.3 should not be paid to the Noteholders, shall nevertheless be
received by the Noteholders before all Senior Indebtedness is paid in full, or
provision made for such payment, in accordance with its terms, such payments or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of such Senior Indebtedness or their representative
or representatives, or to the trustee or trustees under any agreement pursuant
to which any instruments evidencing any of such Senior Indebtedness may have
been issued, as their respective interests may appear, or to a bank or trust
company having a combined capital and surplus of not less than $10,000,000 which
is in good standing and has its principal office in the State of Texas, to be
held in escrow, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all such Senior Indebtedness in
full in accordance with its terms, after giving effect to any concurrent payment
or distribution to or for the holders of such Indebtedness.
9.5 Notice of Acceleration. The Noteholders agree to give the holders
of Senior Indebtedness notice in writing 30 days prior to declaring the unpaid
principal amount of the Notes immediately due and payable pursuant to the
provisions of Section 11.
9.6 Enforcement, Subrogation, etc. The foregoing subordination
provisions shall be for the benefit of the present and future holders of the
Senior Indebtedness and may be enforced directly by such holders against the
Noteholders. Upon any payment or distribution of assets of the Company referred
to in Section 9.3, the Noteholder shall be entitled to rely upon a certificate
of the receiver, trustee in bankruptcy, liquidating trustee, Company, agent, or
other Person making such payment or distribution, delivered to the Noteholder
for the purpose of ascertaining the Persons entitled to participate in such
distribution, to the holders of the Senior Indebtedness and other indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertaining thereto or to the
provisions of this Section 9. Subject to the payment in full of all Senior
Indebtedness, the Noteholders (together and pro rata with the holders of any
other indebtedness of the Company which is subordinate in right of payment to
the payment of other indebtedness of the Company, but is not subordinate in
right of payment to the Notes and by its terms grants the right of subrogation
to the holders thereof) shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of assets of the
Company made on the Senior Indebtedness until the principal of and interest on
the Notes shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of any cash,
property, or securities to which the Noteholders would be entitled except for
these provisions shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the Noteholders, be deemed to be a payment
by the Company to or on account of Senior Indebtedness, it being understood that
these provisions are and are intended solely for the purpose of defining the
relative rights of the Noteholders, on the one hand, and the holders of Senior
Indebtedness, on the other hand.
9.7 Obligations Unimpaired. Nothing contained in this Section 9 is
intended to or shall impair as between the Company, its creditors other than the
holders of Senior Indebtedness and the Noteholders, the obligation of the
Company, which shall be absolute and unconditional, to pay to the Noteholders
the principal of and interest on the Notes as and when the same shall become due
and payable in accordance with the terms thereof, or is intended to or shall
affect the relative rights against the Company of the Noteholders and creditors
of the Company other than the holders of Senior Indebtedness, nor shall anything
herein or therein prevent the Noteholder from exercising all remedies otherwise
permitted by applicable law upon default, subject to the rights, if any, under
this Section 9 of the holders of Senior Indebtedness in respect of any required
notice of the exercise of any such remedy or cash, property, or securities of
the Company otherwise payable or deliverable to such holder. Each Noteholder by
his acceptance thereof shall be deemed to acknowledge and agree that the
subordination provisions of this Section 9 are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness, was created or acquired before or after the
issuance of the Notes, to acquire and continue to hold, or to continue to hold,
such Senior Indebtedness and each holder of Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.
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10. SUBSTITUTION OF NOTES. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction, or mutilation of any Note,
and of indemnity satisfactory to it (which, in the case of any original
purchaser of the Notes, shall be a contractual obligation of such purchaser) and
upon surrender, at the office or agency maintained in accordance with Section 8
hereof, and cancellation of any Note, if mutilated, the Company will execute and
deliver a new Note of like tenor, in lieu of such Note, dated the most recent
date to which interest on such Note shall have been paid.
11. EVENTS OF DEFAULT.
11.1 Definition; Remedies. If any one or more of the following
events (herein called "Events of Default") shall occur and be continuing:
(a) default shall be made in the payment of principal of any
of the Notes when and as the same shall become due and payable at
maturity which principal amount shall not have been paid through the
issuance of Common Stock at the Conversion Price within 20 days from
maturity;
(b) default shall be made in the payment of interest on the
Notes when the same becomes due and payable and such default shall have
continued for a period of 10 days;
(c) default shall be made in any of the representations or
warranties set forth in Section 4 or the covenants set forth in Section
7 and such default shall have continued for a period of 20 days after
written notice thereof to the Company from any holder or holders of
Notes aggregating not less than 51% of the aggregate principal amount
of the Notes then outstanding;
(d) the Company shall (i) apply for or consent to the
appointment of a receiver, trustee, or liquidator of the Company or any
of its assets, (ii) make a general assignment for the benefit of
creditors, (iii) be adjudicated a bankrupt or insolvent or (iv) file a
voluntary petition in bankruptcy, or a petition or answer seeking
reorganization or an arrangement with creditors to take advantage of
any bankruptcy, reorganization, insolvency, readjustment of debt,
moratorium, dissolution, liquidation, or debtor relief law, or any
chapter of any such law, or an answer admitting the material
allegations of a petition filed against it in any proceeding under any
such law or chapter, or corporate action shall be taken by the Company
for the purpose of effecting any of the foregoing; (v) or an order,
judgment, or decree shall be entered, without the application,
approval, or consent of the Company, by any court of competent
jurisdiction, approving a petition seeking liquidation or
reorganization of the Company of all or a substantial part of the
assets of the Company, and provided that such order, judgment, or
decree remains in effect for more than 90 consecutive days;
(e) default shall occur with respect to any other indebtedness
for borrowed money of the Company or under any agreement under which
such indebtedness may be issued by the Company and such default shall
continue for more than the period of grace, if any, therein specified,
if the aggregate amount of such indebtedness for which such default
shall have occurred exceeds $500,000; or
(f) final judgment for the payment of money in excess of
$500,000 shall be rendered against the Company and the same shall
remain undischarged for a period of 60 days during which the execution
shall not be effectively stayed;
then and in each and every such case upon the written authorization of a holder
of a Note by notice in writing to the Company, declare the unpaid principal of
all the Notes together with accrued interest thereon to be forthwith due and
payable and thereupon such principal and interest shall be due and payable
without presentment, protest, or further demand or notice of any kind, all of
which are hereby expressly waived.
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This Section 11, however, is subject to the condition that, if at any
time after the occurrence of an Event of Default hereunder, and before the entry
of any judgment or decree against the Company for the payment of all or any
portion of the Notes then outstanding, the Noteholders aggregating not less than
51% of the aggregate principal amount of the Notes then outstanding may, by
written notice to the Company, either temporarily suspend or permanently rescind
and annul such declaration of an Event of Default and its consequences
(including, without limitation, the acceleration of the Notes as a result of
such Event of Default); but no such suspension or rescission and annulment shall
extend to or affect any prior, concurrent, or subsequent default or Event of
Default (other than the ones identified by the Noteholders declaring them due as
the ones upon which such declaration was based) or impair any right consequent
thereon.
If any Noteholder shall demand payment thereof or take any other action
(of which the Company has actual knowledge) in respect of a default occurring in
the payment of any principal of, or interest on, any Note when and as the same
shall become due and payable, the Company will forthwith give written notice
thereof to each holder of record of the Notes then outstanding.
11.2. Costs of Collection. The Company covenants that in the Event of
Default, it will pay to the holder thereof such further amount as shall be
reasonably sufficient to cover the cost and expense of collection, including,
without limitation, court costs and reasonable compensation to the attorneys and
counsel of the holder for all services rendered in that connection.
11.3. No Course of Dealing. No course of dealing between the Company
and any Noteholder or any delay on the part of the Noteholder in exercising any
rights thereunder or hereunder shall operate as a waiver of any rights of any
such holder.
12. REPRESENTATIONS OF PURCHASER. Each Purchaser represents and
warrants to the Company as of the date hereof, as follows:
12.1. Investment Representations. The Purchaser is acquiring the Notes
for investment purposes and not with a view to the resale or distribution of all
or any part thereof. The Purchaser acknowledges that the Notes have not been
registered under the Securities Act, or the securities or "blue sky" laws of any
state or other domestic or foreign jurisdiction, and that none of such
securities may be sold, transferred or otherwise disposed of except pursuant to
an effective registration statement thereunder or an applicable exemption
therefrom.
12.2. Authority. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby by the Purchaser has been
duly and validly authorized by all requisite action on the part of the
Purchaser. This Agreement has been duly executed and delivered by the Purchaser
and constitutes the valid and binding obligations of Purchaser, enforceable
against the Purchaser in accordance with its terms except as the same may be
limited by equitable principles and by bankruptcy, insolvency, moratorium and
other laws of general application affecting the enforcement of creditors'
rights.
12.3 Accredited Investor. Each Purchaser (i) has such knowledge and
experience in financial and business matters that such Purchaser is capable of
evaluating the merits and risks of his or her investment in the Notes and has
the financial ability to assume the monetary risk associated therewith; (ii) is
able to bear the complete loss of his or her investment in the Notes; has
received such documents and information from the Company as such Purchaser has
requested and has had the opportunity to ask questions of and receive answers
from the Company and the terms and conditions of the offering of the notes and
to obtain additional information ; (iv) is an "accredited investor" as defined
in Rule 501(a) of Regulation D promulgated under the Securities Act; and (v) is
not relying upon any statements or instruments made or issued by any person
other than the Company in making a decision to invest in the Notes.
12.4. Restrictive Legends. Each Note shall (unless otherwise permitted
by the provisions of Section 12.5 hereof) and certificate for Common Stock
issued upon conversion of a Note and each certificate for Common Stock issued to
a subsequent transferee shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Securities
Act") or any state securities act. The securities have been acquired
for investment and may not be sold, transferred, pledged or
hypothecated unless (i) they shall have been registered under the
Securities Act and any applicable state securities act, or (ii) the
corporation shall have been furnished with an opinion of counsel,
satisfactory to counsel for the corporation, that registration is not
required under any such act."
Page 8 of 24
12.5. Notice of Proposed Transfers. (a) Except as otherwise provided in
paragraph (b) of this Section 12.5, prior to any transfer or attempted transfer
of any Note or shares of Common Stock, the holder thereof shall give written
notice to the Company of such holder's intention to effect such transfer. Each
such notice shall describe the manner and circumstances of the proposed transfer
and shall be accompanied by an opinion of counsel for such holder satisfactory
to the Company, to the effect that such transfer may be effected without
registration of such Note under the Securities Act. If such notice is
accompanied by such an opinion, such holder shall be entitled to transfer such
Note in conformity with the terms of such notice, and, if the opinion of counsel
so specifies, the Note issued upon any such transfer shall not bear the
restrictive legend set forth in Section 12.4. Such holder shall indemnify the
Company for any transfer effected pursuant to this Section 12.5(a).
(b) The procedure set forth in paragraph (a) of this Section 12.5 shall
not apply to any transfer by you (or a transferee pursuant to this paragraph
(b)) of any Note to any of your Subsidiaries or Affiliates; provided, however,
that at the time of such transfer the transferee shall execute and deliver to
the Company an "investment letter" containing substantially the representations
provided in Sections 12.1, 12.2 and 12.3 hereof with respect to the Notes that
are the subject of such transfer and its agreement to be bound by the provisions
of this Section 12 and such transfer is otherwise exempt from registration under
the securities Act and applicable state securities laws. Notes issued upon such
transfer shall bear the appropriate restrictive legend set forth in Section 12.4
hereof.
12.6 Transfer of Your Rights. Your rights under this Section 12 shall
inure to the benefit of all Persons who shall at any time be the holders of
Notes originally purchased by you hereunder, pro rata in accordance with their
respective interests, and each such holder, by such holder's acceptance of such
Note, as the case may be, agrees to be and shall be deemed to be bound by all of
your covenants set forth in this Section 12, to the extent that such covenants
are applicable to such holder's Notes.
13. EXCHANGE FOR SECURITIES ISSUED IN EQUITY FINANCING.
13.1 Closing of Equity Financing. Upon the closing of an Equity
Financing, the holders of the Notes agree and acknowledge that the principal
amount of the Notes will automatically be exchanged for the securities issued in
the Equity Financing. The amount of principal of each Note will constitute the
consideration of the securities issued in the Equity Financing. The purchase
price in the mandatory exchange shall be equal to the weighted average gross
offering price of the common stock or common stock equivalents issued in the
Equity Financing resulting in gross proceeds raised of at least $10 million in
one or more series of transactions by the Company. Accrued interest on the Notes
will be paid at closing in cash or in shares of Common Stock valued at the
Common Stock equivalent offering price of the Equity Financing.
13.2 No further action needed to Cancel Notes. Upon the closing of the
Equity Financing, the holders will deliver to the Company the Notes issued upon
the closing as set forth in this Agreement. Failure to deliver the Notes to the
Company in a timely manner will authorize the Company to effect such transfer on
its books and records in lieu of said delivery by the Noteholders.
14. MANDATORY CONVERSION OF NOTES.
14.1. Mandatory Conversion and Conversion Price. Upon maturity, the
principal amount of the Note will automatically convert into Common Stock and
the Company will have the right to pay the accrued interest on the Note through
the issuance of Common Stock or in cash. The number of shares of Common Stock
which shall be issued upon conversion of a Note shall be determined by dividing
the outstanding principal amount of, and accrued interest on (if applicable),
such Note by the Conversion Price (as defined herein) in effect at the time of
conversion. The "Conversion Price" per share at which shares of Common Stock
shall initially be $3.00; provided however, that the Conversion Price shall be
subject to adjustment pursuant to Section 14.4.
Page 9 of 24
Conversion. Conversion shall be deemed to have been effected on the
maturity date, and such date is referred to herein as the "Conversion Date." As
promptly as practicable on or after the Conversion Date, the Company shall issue
and shall deliver at such office or agency a certificate or certificates for the
number of full shares of Common Stock issuable upon conversion, together with
payment in lieu of any fraction of a share, as provided in Section 14.3.
No payment or adjustment shall be made upon any conversion on account
of any interest accrued on the Notes surrendered for conversion after such
surrender or on account of any dividends on the Common Stock issued upon
conversion.
Notes shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Notes for conversion in
accordance with the foregoing provisions, and at such time the rights of the
holders of such Notes as holders shall cease, and the Person or Persons entitled
to receive the shares of Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such shares of Common Stock
at such time.
14.3. Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of Notes. Instead of any fractional share of Common Stock
that would otherwise be delivered upon conversion of any Note or Notes (or
specified Portions thereof), the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction of the Market Price per
share of Common Stock (as deemed by the Board of Directors or in any manner
prescribed by the Board of Directors) at the close of business on the day of
conversion.
14.4 Adjustment of Conversion Price. (a) The Conversion Price shall be
subject to adjustment as follows:
(i) If the Company, at any time while any Notes are
outstanding, (a) shall pay a cash dividend or otherwise make a
distribution or distributions on shares of its Common Stock payable in
shares of Common Stock, (b) subdivide outstanding shares of Common
Stock into a larger number of shares, (c) combine outstanding shares of
Common Stock into a smaller number of shares, or (d) issue by
reclassification of shares of Common Stock any shares of capital stock
of the Company, the Conversion Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event and
of which the denominator shall be the number of shares of Common Stock
outstanding after such event. Any adjustment made pursuant to this
Section 14.4 shall become effective immediately after the record date
for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
(ii) If the Company, at any time while any Notes are
outstanding, shall distribute to all holders of Common Stock evidences
of its indebtedness or assets or rights or warrants to subscribe for or
purchase any security (excluding those referred to in Section
14.4(a)(i) above), then in each such case the Conversion Price shall be
determined by multiplying the Conversion Price in effect immediately
prior to the record date fixed for determination of stockholders
entitled to receive such distribution by a fraction of which the
denominator shall be the Market Price of Common Stock determined as of
the record date mentioned above, and of which the numerator shall be
such Market Price of the Common Stock on such record date less the then
fair market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding
share of Common Stock as determined by the Company's board of directors
in good faith; provided, however, that if the Noteholder disputes such
amount, the Noteholder may select a nationally recognized or major
regional investment banking firm or firm of independent certified
public accountants of recognized standing (an "Appraiser") paid for by
the Noteholder and the Company equally, in which case the fair market
value shall be equal to the average of the determinations by the
Company's board of directors and such Appraiser. In either case the
adjustments shall be described in a statement provided to the
Noteholder of the Notes of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to
one share of Common Stock. Such adjustment shall be made whenever any
such distribution is made and shall become effective immediately after
the record date mentioned above
Page 10 of 24
(iii) In case the Company (i) consolidates with or merges into
any other entity and is not the continuing or surviving entity of such
consolidation or merger, or (ii) permits any other entity to
consolidate with or merge into the Company and the Company is the
continuing or surviving Company but, in connection with such
consolidation or merger, the Common Stock is changed into or exchanged
for common stock or other securities of any other entity or cash or any
other assets, or (iii) transfers all or substantially all of its
properties and assets to any other entity, or (iv) effects a
reorganization or reclassification of the equity of the Company in such
a way that holders of Common Stock shall be entitled to receive stock,
securities, cash or assets with respect to or in exchange for Common
Stock, then, and in each such case, proper provision shall be made so
that, upon the exercise of the Notes at any time after the consummation
of such consolidation, merger, transfer, reorganization or
reclassification, the Noteholder shall be entitled to receive (at the
Conversion Price in effect for Common Stock issuable upon such
conversion of the Notes immediately prior to such consummation), in
lieu of Common Stock issuable upon such exercise of the Note prior to
such consummation, the stock and other securities, cash and assets to
which the Noteholder would have been entitled upon such consummation if
such Holder had so exercised the Note immediately prior thereto.
(iv) If and whenever the Company issues or sells any Common
Stock (or Common Stock Equivalents) for an effective consideration per
common stock of less than the then Conversion Price or for no
consideration (such issuances individually and collectively, a
"Dilutive Issuance"), then, the Conversion Price shall be reduced by
multiplying the Conversion Price by a fraction, the numerator of which
is the number of shares of Common Stock issued and outstanding
immediately prior to the Dilutive Issuance plus the number of shares of
Common Stock which the offering price for such Dilutive Issuance would
purchase at the then Conversion Price, and the denominator of which
shall be the sum of the number of shares of Common Stock issued and
outstanding immediately prior to the Dilutive Issuance plus the number
of shares of Common Stock so issued or issuable in connection with the
Dilutive Issuance. Such adjustment shall be made whenever Common Stock
or Common Stock Equivalents are issued.
(v) Exceptions to Adjustment of Conversion Price.
Notwithstanding the foregoing, no adjustment will be made under this
Section 14.4 in respect of an Exempt Issuance
(b) Notwithstanding the foregoing provisions, no adjustment in the
Conversion Price shall be required unless such adjustment would require an
increase or decrease in such Conversion Price of more than $.01; provided,
however, that any adjustments which by reason of this paragraph (b) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment.
(c) All calculations under this Section 14.4 shall be made to the
nearest cent.
(d) Whenever the Conversion Price is adjusted as herein provided, the
Company shall determine the adjusted Conversion Price in accordance with this
Section 14.4 and shall prepare an Officers' Certificate setting forth such
adjusted Conversion Price and showing in detail the facts upon which such
adjustment is based; such Officers' Certificate shall forthwith be mailed by or
on behalf of the Company to the holders at their last addresses as they shall on
the appropriate Schedule.
14.5 Notice of Certain Events. In case at any time:
(a) the Company shall declare a dividend (or any other distribution)
payable to the holders of Common Stock otherwise than in cash; or
(b) there shall occur any reclassification of Common Stock (other than
a subdivision or combination of outstanding shares of Common stock) or any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or the sale or transfer of all
or substantially all the assets of the Company; or
(c) there shall occur the voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then the Company shall cause to be filed at the office or agency maintained for
the purpose of exchange of Notes, and shall cause to be mailed to the holders of
Notes at their last addresses, at least 20 days prior to the record date or
other applicable date hereinafter specified, or two days after such date as it
receives actual notice of such event, whichever is later, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend, or,
if a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, or (y) the date, if known by the
Company, on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective.
Page 11 of 24
14.6 Transfer Taxes. The Company will pay any and all documentary,
stamp, transfer or similar taxes that may be payable in respect of the transfer
and delivery of shares of Common Stock pursuant hereto (but not income, capital
gains or similar taxes imposed on Noteholders in respect of such transactions);
provided, however, that the Company shall not be required to pay any such tax
which may be payable in respect of any transfer involved in the delivery of
shares of Common Stock in a name other than that in which the Notes converted
were registered, and no such transfer or delivery shall be made unless and until
the Person requesting such transfer has paid to the Company the amount of any
such tax, or has established, to the satisfaction of the Company, that such tax
has been paid.
15. DEFINITIONS.
"Affiliates" of any Person shall mean any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such
Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise.
"Agreement" shall mean this Note Agreement governing the 15%
Exchangeable Convertible Subordinated Notes due November 30, 2005, as amended
and modified pursuant to Section 16 hereof.
"Applicable Law" shall have the meaning given such term in Section 7.5
hereof.
"Business Day" shall mean any day on which national banks located in
Texas are open for the conduct of banking business.
"Closing" shall have the meaning given such term in Section 3 hereof.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's presently authorized Common
Stock.
"Common Stock Equivalents" means any securities of the Company which
would entitle the holder thereof to acquire at any time Common Stock, including
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock.
"Conversion Price" shall have the meaning given such term in Section
14.1 hereof.
"Dilutive Issuance" shall have the meaning given such term in Section
14.4 hereof.
"Environmental Law" shall mean all federal, state, local and foreign
laws and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling to materials of environmental concern.
"Equity Financing" shall mean the sale in one or a series of closings
of the Common Stock or Common Stock equivalent securities of the Company (either
in the form of common or preferred stock) resulting in the raising of gross
sales proceeds by the Company of at least $10 million prior to November 30,
2005. The weighted average of the Common Stock or Common Stock equivalent
offering price in the Equity Financing (giving effect to the gross offering
amount resulting in the satisfaction of the $10,000,000 minimum threshold) will
be the purchase price in the mandatory exchange.
"Event of Default" shall have the meaning given such term in Section 11
hereof.
Page 12 of 24
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Exempt Issuance" shall mean the issuance of (a) shares of Common Stock
or Common Stock Equivalents to employees, officers, or directors of the Company
pursuant to any existing or future employment arrangements or compensatory plans
existing or duly adopted by a majority of the members of the board of directors
of the Company or a majority of the members of a committee of directors
established for such purpose, (b) Common Stock issued upon conversion or
exchange of the Notes and Common Stock issued upon exercise of the Warrants, (c)
securities underlying Common Stock Equivalents outstanding on the date of this
Agreement, provided that such securities have not been amended since the date of
this Agreement to increase the number of such securities (unless such amendment
results from the application of any anti-dilution provisions applicable to such
securities), (d) securities issued pursuant to acquisitions or strategic
transactions, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities provided that such
arrangements are approved by a majority of the members of the board of directors
of the Company; (e) shares of Common Stock issued to persons or entities with
whom the Company has business relationships, including under equipment leasing
arrangements, bank or other institutional loans, acquisitions of companies or
product lines, joint ventures, manufacturing, marketing, or distribution
arrangements, technology transfers or development arrangements, or other
arrangements or transactions wherein the principal purpose of the issuance of
such Common Stock is for non-equity financing purposes; (f) shares of Common
Stock issued to Xxxxxxx Xxxxxx Xxxxxx Inc. or issuable to Xxxxxxx Xxxxxx Xxxxxx
Inc. upon exercise of warrants or options issued to Xxxxxxx Xxxxxx Xxxxxx Inc.
pursuant to the terms of the Financing & Strategic Advisory Agreement dated June
12, 2004; and (g) shares of Common Stock issued pursuant to a public offering.
"Market Price" shall mean the price of one share of Common Stock
determined as follows: (i) if the Common Stock is listed on the New York Stock
Exchange, the American Stock Exchange, or the BBX, the closing bid price on such
exchange on the date of valuation; (ii) if clause (i) does not apply and the
Common Stock is listed on the Nasdaq National Market System, the Nasdaq
Small-Cap Market, or the OTC Bulletin Board, the mean between the last reported
bid price thereof on the date of valuation; (iii) if neither clause (i) nor (ii)
apply but the Common Stock is quoted in the over-the-counter market, another
recognized exchange or on the pink sheets, the mean between the last reported
"bid" and "asked" prices thereof on the date of valuation; and (iv) if neither
clause (i), (ii), or (iii) above applies, the fair market value thereof as
determined by the Company's board of directors in good faith.
"Material Adverse Change" shall mean any single circumstance or event
(or series of circumstances or events) having a material adverse effect on the
assets, properties, financial condition, business operations, or prospects of
the Company.
"Materials of Environmental Concern" shall mean chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum, and
petroleum products.
"Maximum Rate" shall mean the maximum non-usurious rate of interest
which, under all applicable statutes, rules and regulations, the Purchasers are
permitted to contract for, charge, take, reserve, or receive on the Notes. If
the statutes, rules, and regulations of the State of Texas are applicable for
purposes of determining the maximum rate, then such term means the "weekly
ceiling" from time to time in effect under Texas Finance Code ss.303.001 as
limited by Texas Finance Code ss.303.009. The Company agrees that Chapter 346 of
the Texas Finance Code, as amended (which regulates certain revolving credit
loan accounts and revolving tri-party accounts), does not apply to the Note
Agreement or Notes.
"Memorandum" shall mean the Private Placement Memorandum dated
September 22, 2004, as may be hereafter amended, modified, or supplemented,
relating to the offering and sale of the Notes.
"Noteholder" or "Noteholders" shall mean any Person in whose name at
the time a particular Note shall be registered on the registry books of the
Company maintained for that purpose in accordance with the terms of this
Agreement.
"Notes" shall have the meaning given such term in Section 1 hereof.
Page 13 of 24
"Officers' Certificate" means a certificate signed by the chairman of
the board of directors or the president or a vice president, and by the
treasurer, or the secretary of the Company, and delivered to the Agent.
"Permitted Debt" means (a) all indebtedness of the Company for money
borrowed from and owed to any bank, savings, and loan association, or other
financial institution that makes loans or investments as a part of its regular
business and renewals, extensions, modifications, and refundings of any such
indebtedness, (b) all indebtedness of the Company for money borrowed pursuant to
a bridge financing on terms substantially similar to the terms of the Notes.,
and (c) all indebtedness assumed in any Qualified Merger or Acquisition.
"Person" shall mean and include an individual, a partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a
government or any department or agency thereof, and any other entity.
"Qualified Merger or Acquisition" shall mean any merger, acquisition or
consolidation transaction undertaken between the Company and any other entity so
long as such transaction is a bona-fide arms length transaction approved by a
disinterested board.
"SEC Filings" shall mean the Company's Form 10-K for the fiscal year
ended September 30, 2003; the Company's Form 10-Q SBfor the quarter ended June
30, 2004; the Company's Current Report on Form 8-K filed on June 4, 2004; and
the Company's information statement filed on June 29, 2004.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Senior Indebtedness" shall mean all indebtedness of the Company,
whether outstanding at the time of execution of this Agreement or thereafter
created, which is not by its express terms subordinated in right of payment to
or on par with the Notes. Indebtedness means (i) all indebtedness for money
borrowed, which is created, assumed, incurred, or guaranteed in any manner by
the Company or for which the Company is otherwise responsible or liable or (ii)
leases that are capitalized under generally accepted accounting principles.
"Subsidiary" shall mean any Person of which at the time of
determination the party in question and/or one or more of its subsidiaries owns
or controls directly or indirectly more than 50% of the shares of voting stock
of such Person.
"Warrant" shall have the same meaning as described in the Memorandum
which shall be issued upon conversion or exchange of the Notes.
16. WAIVERS; MODIFICATIONS OF AGREEMENT. Any provision in this
Agreement to the contrary notwithstanding, changes in or additions to this
Agreement may be made, and compliance with any covenant or condition herein set
forth may be omitted, if the Company (a) shall obtain from the holders of record
of Notes aggregating not less than 51% of the aggregate principal amount of the
Notes at the time outstanding their consent thereto in writing and (b) shall
deliver copies of such consent in writing to any such holders of record who did
not execute the same; provided, however, that without the consent in writing of
the holder of each Note affected thereby, no such consent shall be effective to
reduce the principal of or rate of interest payable on, or to postpone any date
fixed for the payment of principal of or any installment of interest on, any
Note, to increase the percentage specified in Section 11 hereof of the principal
amount of the Notes the holders of which may, in accordance with the provisions
of such Section 11, accelerate the maturity of the Notes upon an Event of
Default or to reduce the percentage of the principal amount of the Notes the
consent of the holders of which shall be required under this Section 16.
17. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations, and warranties made herein and in the Notes and in any
certificate delivered pursuant hereto shall survive any investigation made by
you and the execution and delivery to you of the Notes to be purchased by you
and your payment therefor.
18. BROKERS; ISSUANCE TAXES. The Company will hold you free and
harmless from any (a) claim, demand, liability for, or expense in connection
with, any broker's or finders' fees or commissions claimed by any Person
asserted to be acting on behalf of the Company in connection with this Agreement
or the transactions contemplated herein and (b) taxes, if any, payable upon, or
on account of, issuance of the Notes.
Page 14 of 24
19. GOVERNING LAW; VENUE. THIS AGREEMENT AND THE NOTES ARE BEING
DELIVERED IN TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS
OF THE STATE OF TEXAS WITHOUT CONSIDERATION OF ITS CONFLICT OF LAW PROVISIONS.
The Company hereby expressly and irrevocably agrees and consents that any suit,
action or proceeding arising out of or relating to this Agreement, the Notes, or
the transactions contemplated herein or therein may be instituted by any
Noteholder in any State or Federal court sitting in Xxxxxx County, Texas, United
States of America, and, by the execution and delivery of this Agreement, the
Company expressly waives any objection that it may have now or hereafter to the
laying of the venue or to the jurisdiction of any such suit, action or
proceeding, and irrevocably submits generally and unconditionally to the
jurisdiction of any such court in any such suit, action or proceeding.
20. NOTICES. Any notice, consent, request, or other communication
required or permitted hereunder shall be in writing and shall be deemed given
when either (a) personally delivered to the intended recipient or (b) sent, by
certified or registered mail, return-receipt requested, addressed to the
intended recipient as follows:
if to the Company to: 0000 Xxxxxxxxxx Xxxxx, Xxxxx X-0
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. XxXxxxxxxx, CEO
if to any of you, to the address given for such of you; if to any other
Noteholder to the address of such holder given to the Company in accordance with
Section 8. Any Person (other than the Company) may change the address to which
notice is to be sent pursuant to the preceding sentence by giving notice of such
new address to the Company in accordance with this Section 20. The Company may
change the address to which notice is to be sent hereunder by giving notice of
such change, in accordance with this Section 20, to each Person against whom
such change shall be effective. Any notice mailed as aforesaid shall, unless
otherwise provided herein, be deemed given on the fifth day after deposited in
the United States mail in accordance with the first sentence of this Section 20.
21. PARTIES IN INTEREST. All of the terms and provisions of this
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
22. BUSINESS DAYS. Should any installment of the principal of or
interest on any Note become due and payable upon a day other than a day on which
national banks located in Texas are open for the conduct of banking business,
the maturity thereof shall be extended to the next succeeding day upon which
such banks are open for the conduct of banking business and, in the case of an
installment of principal, interest shall be payable thereon at the rate per
annum specified in such Note during such extension.
23. HEADINGS. The headings of the various sections and subsections
hereof have been inserted for convenience of reference only and shall not be
deemed to in any way modify any of the terms or provisions hereof.
24. COUNTERPARTS. This Agreement may be signed by each party hereto
upon a separate copy, in which event all of said copies shall constitute a
single counterpart of this Agreement. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
25. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
26. FINAL AGREEMENT. This Agreement, together with those documents
expressly referred to herein, constitutes the final agreement of the parties
concerning the matters referred to herein, and supersedes all prior agreements
and understandings.
Page 15 of 24
27. SAVINGS CLAUSE. Regardless of any provision contained in the Notes
or Note Agreement, Purchaser shall never be entitled to receive, collect or
apply as interest (whether the termed interest herein or deemed to be interest
by operation of law or judicial determination) on the Note any amount in excess
of interest calculated at the Maximum Rate, and, in the event that any Purchaser
ever receives, collects or applies as interest any such excess then the amount
which would be excessive interest shall be deemed to be a partial prepayment of
principal and treated hereunder as such; and, if the principal amount of the
Note is paid in full, then any remaining excess shall forthwith be paid to the
Company. In determining whether or not the interest paid or payable under any
specific contingency exceeds interest calculated at the Maximum Rate, the
Company and Purchasers shall, to the maximum extent permitted under applicable
law: (a) characterize any non-principal payment as an expense, fee or premium
rather than as interest; (B) exclude voluntary principal prepayments and the
effects thereof; and (C) amortize, prorate, allocate, and spread, in equal
parts, the total amount of interest throughout the entire contemplated term of
the Note; provided that, if the Note is paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds interest calculated at the Maximum
Rate, then Purchaser shall refund to the Company the amount of such excess or
credit the amount of such excess against the principal amount of the Note and,
in such event, Purchasers shall not be subject to any penalties provided by any
laws for contracting for, charging, taking, reserving, or receiving interest in
excess of interest calculated at the Maximum Rate.
28. TERMINATION. This Agreement will terminated upon the repayment or
conversion of all obligations outstanding under the Notes.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.]
Page 16 of 24
If the foregoing is in accordance with your understanding, please sign
the form of confirmation and acceptance on the enclosed counterpart of this
Agreement and return the same to the Company, whereupon this Agreement shall be
a binding agreement between you and the Company.
Very truly yours,
PharmaFrontiers Corp.
By:
-----------------------------
Xxxxx XxXxxxxxxx,
Chief Executive Officer
Dated as of ____________, 2004
I HEREBY ACCEPT AND AGREE TO THE
TERMS AND CONDITIONS CONTAINED IN
THIS NOTE AGREEMENT:
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Page 17 of 24
EXHIBIT "A"
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND IS TRANSFERABLE ONLY UPON THE CONDITIONS SPECIFIED IN THE NOTE AGREEMENT
REFERRED TO HEREIN.
15% Exchangeable Convertible Subordinated Note Due November 30, 2005
No. $
------------------------ ------------------
PHARMAFRONTIERS CORP. a corporation duly organized and existing under the laws
of the State of Texas (herein called the "Company") for value received, hereby
promises to pay to ____________________________________ or registered assigns,
the principal sum of ____________________________ Dollars ($___________) on
November 30, 2005, through the issuance of Common Stock valued at the Conversion
Price, and all accrued interest on November 30, 2005, at 15% per annum, from the
date of issuance of this Note until maturity, computed on the basis of a 360-day
year of twelve 30-day months, and paid as set forth in the Note Agreement.
The principal amount of this Note is mandatorily (i) exchangeable for securities
issued by the Company pursuant to the Equity Financing (as defined in the Note
Agreement) provided that Equity Financing closes prior to maturity and (ii)
convertible into Common Stock at maturity.
This Note is one of a duly authorized issue of Notes of the Company (which term
includes any successor corporation under the Note Agreement hereinafter referred
to) designated as its 15% Subordinated Notes due November 30, 2005 (the
"Notes"), issued pursuant to a Note Agreement, dated as of ___________, 2004
(the "Note Agreement"), between the Company and the purchasers of the Notes. The
terms of this Note include those stated in the Note Agreement. Reference is
hereby made to the Note Agreement and all supplements thereto for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, and the holders of the Notes and of the terms upon which the
Notes are, and are to be, and delivered.
If an Event of Default shall occur and be continuing, the principal of all the
Notes may be declared due and payable in the manner and with the effect provided
in the Note Agreement.
The indebtedness evidenced by the Notes is, to the extent provided in the Note
Agreement, subordinate and junior in right of payment to the prior payment in
full of all Senior Indebtedness, as defined in the Note Agreement. Each holder
of this Note, by accepting the same, agrees to and shall be bound by such
provisions of the Note Agreement.
No reference herein to the Note Agreement and no provision of this Note or of
the Note Agreement shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, places, and rate, and in the coin or currency, herein prescribed.
As provided in the Note Agreement and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Note register, upon
surrender of this Note or registration of transfer at the offices or agencies of
the Company in Houston, Texas duly endorsed by, or accompanied by a written
instrument of transfer in substantially the form accompanying this Note duly
executed by, the holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
Prior to due presentment of this Note for registration of transfer, the Company,
and any agent of the Company may treat the person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Company nor any such agent shall be affected by notice
to the contrary.
Page 18 of 24
All terms used in this Note which are defined in the Note Agreement shall have
the meanings assigned to them in the Note Agreement. The Company will furnish to
any Note holder of record upon written request without charge a copy of the Note
Agreement. Requests may be made to the Company at 0000 Xxxxxxxxxx Xxxxx, Xxxxx
X-0, Xxx Xxxxxxxxx, XX 00000 (which address shall be subject to the change of
address provisions of the Note Agreement).
IN WITNESS WHEREOF, PharmaFrontiers Corp. has caused this instrument to be
executed in its corporate name.
Dated: _____________________, 2005
PharmaFrontiers Corp.
By: ___________________________
Xxxxx X. XxXxxxxxxx, CEO
Page 19 of 24
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is by and between
PharmaFrontiers Corp. (the "Company") and ______________ (the "Holder"), dated
as of ___________, 2004.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company offered for sale of 15% Convertible Subordinated
Notes due November 30, 2005 ("Notes");
WHEREAS, the Notes automatically convert into Common Stock upon the
maturity of the Notes at November 30, 2005;
WHEREAS, interest on the Notes is payable on November 30, 2005, at the
rate 15% per annum, in cash or at the option of the Company in shares
of Common Stock valued at $3.00 per share;
WHEREAS, in connection with the issuance of Common Stock upon
conversion of the principal and for accrued interest of the Notes, the
Company has agreed to grant one demand registration right to the Holder
to register the resale of such Common Stock issued; and
WHEREAS, the parties desire to set forth the Holder's rights and the
Company's obligations to cause the registration of the resale of shares pursuant
to the Securities Act of 1933, as amended (the "Securities Act").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE ONE
Registration Rights Agreement
-----------------------------
SECTION 1.1 Registration Rights Available. The Company agrees to
provide the Holder with respect to the shares underlying the principal amount of
the Note and issued for accrued interest due on the Note ("Shares") and any
other securities issued or issuable at any time or from time to time in respect
of the Shares upon a stock split, stock dividend, recapitalization or other
similar event involving the Company (collectively, the "Securities"): one demand
secondary offering by means of registration pursuant to the Securities Act of
1933, as amended ("Securities Act"), subject to the provisions of this Agreement
(the demand registration right is referred to herein as the "Registration
Right").
SECTION 1.2 Demand Registration. With respect to Holder's right to one
demand registration pursuant to Section 1.1, the parties agree as follows:
(a) Holder shall provide written notice to the Company indicating his
intention to exercise the demand registration right on or after November 30,
2005, and on or before December 31, 2005. The Company shall promptly, and in any
event within 90 days of receiving notice from the Holders, use its best efforts
to file with the Securities and Exchange Commission (the "Commission") and cause
to become effective, a registration statement on appropriate form relating to
the offer and sale of the Common Stock by Holder. The Company shall use its best
efforts to obtain effectiveness of such registration statement for the demand
secondary offering requested under Section 1.1. The Company agrees to provide
Holder with notice of the filing of such registration and of the filing of any
amendments or supplements thereto.
Page 20 of 24
(b) The Company agrees to maintain such registration statement in
effect for the maximum period allowable under the regulations promulgated by the
Commission then in effect.
(c) In any offering pursuant to this Section that becomes effective in
which the Holder participates, the Company shall use its best efforts to keep
available to the Holder a prospectus meeting the requirements of Section
10(a)(3) of the Securities Act and shall file all amendments and supplements
under the Securities Act required for that purpose. In any offering pursuant to
this Section the Company will, as soon as practicable, use its best efforts to
effect such registration and use its best efforts to effect such qualification
and compliance as may be so requested and as would permit or facilitate the
distribution of such Securities, including, without limitation, registration
under the Securities Act, appropriate qualifications under applicable blue-sky
or other state securities laws, appropriate compliance with any other
governmental requirements and listing on a national securities exchange on which
the Common Stock is then listed or inter-dealer quotation system.
SECTION 1.3 Registration Procedure. With respect to each Registration
Right, the following provisions shall apply:
(a) The Holder shall be obligated to furnish to the Company and the
underwriters (if any) such information regarding the Securities and the proposed
manner of distribution of the Securities as the Company and the underwriters (if
any) may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to herein and shall otherwise
cooperate with the Company and the underwriters (if any) in connection with such
registration, qualification or compliance.
(b) With a view to making available the benefits of certain rules and
regulations of the Securities and Exchange Commission (the "Commission), which
may at any time permit the sale of the Restricted Securities (used herein as
defined in Rule 144 under the Securities Act) to the public without
registration, the Company agrees to use its best lawful efforts to:
(i) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all
times during which the Company is subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended ("Exchange Act");
and
(ii) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act
and the Exchange Act (at all times during which the Company is subject
to such reporting requirements).
(c) All expenses (except for costs of any interim audit required by
underwriters, any underwriting and selling discounts and commissions and legal
fees for Holder's attorneys) of any registrations permitted pursuant to this
Agreement and of all other offerings by the Company (including, but not limited
to, the expenses of any qualifications under the blue-sky or other state
securities laws and compliance with governmental requirements of preparing and
filing any post-effective amendments required for the lawful distribution of the
Securities to the public in connection with such registration, of supplying
prospectuses, offering circulars or other documents) will be paid by the
Company.
(d) In connection with the preparation and filing of a registration
statement under the Securities Act pursuant to this Agreement, the Company will
give the Holder, its counsel and accountants, the opportunity to participate in
the preparation of such registration statement, each prospectus included therein
or filed with the Commission, and each amendment thereof or supplement thereto,
and will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary to conduct a reasonable investigation within the meaning of
the Securities Act.
ARTICLE TWO
Indemnification
---------------
SECTION 2.1 Indemnification by the Company. In the event of any
registration of the Securities of the Company under the Securities Act, the
Company agrees to indemnify and hold harmless Holder and each other person who
participates as an underwriter in the offering or sale of such securities
against any and all claims, demands, losses, costs, expenses, obligations,
liabilities, joint or several, damages, recoveries and deficiencies, including
interest, penalties and attorneys' fees (collectively, "Claims"), to which
Holder may become subject under the Securities Act or otherwise, insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based on any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which Holder's Securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse Holder and each such underwriter for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim (or action or proceeding in respect thereof); provided that the
Company shall not be liable in any such case to the extent that any such Claim
(or action or proceeding in respect thereof) or expense arises out of or is
based on an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance on and
in conformity with written information furnished to the Company through an
instrument duly executed by Holder specifically stating that it is for use in
the preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Holder or any such
underwriter and shall survive the transfer of the Securities by Holder.
SECTION 2.2 Indemnification by Holder. The Company may require, as a
condition to including the Securities in any registration statement filed
pursuant to this Agreement, that the Company shall have received an undertaking
satisfactory to it from Holder, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Section 2.1) the Company, each
director of the Company, each officer of the Company and each other person, if
any, who controls the Company, within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus contained therein,
or any amendment or supplement thereto, if such statement or alleged statement
or omission or alleged omission was made in reliance on and in conformity with
written information furnished to the Company through an instrument duly executed
by Holder specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Notwithstanding the foregoing, the maximum
liability hereunder which any holder shall be required to suffer shall be
limited to the net proceeds to such Holder from the Securities sold by such
Holder in the offering. Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company or any such
director, officer or controlling person and shall survive the transfer of the
Securities by Holder.
Page 22 of 24
SECTION 2.3 Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a Claim referred to in this Article Two, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, provided that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Article Two, except
to the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnifying
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such Claim, the indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such Claim.
SECTION 2.4 Indemnification Payments. The indemnification required by
this Article shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
ARTICLE THREE
Miscellaneous
-------------
SECTION 3.1 Consent to Amendments. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended or waived only
by the written agreement of the Company and the Holder of 51% or more of the
shares of Common Stock sold pursuant to the Subscription Agreements and shall be
effective only to the extent specifically set forth in such writing.
SECTION 3.2 Term of the Agreement. This Agreement shall terminate with
respect to Holder on the earlier to occur of (i) the Securities having been
registered as provided in Article One or (ii) November 30, 2007.
SECTION 3.3 Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto are transferable and will bind and inure
to the benefit of the respective successors and assigns of the parties hereto,
but only if so expressed in writing.
SECTION 3.4 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
SECTION 3.5 Delays or Omissions. No failure to exercise or delay in the
exercise of any right, power or remedy accruing to Holder on any breach or
default of the Company under this Agreement shall impair any such right, power
or remedy nor shall it be construed to be a waiver of any such breach or
default.
SECTION 3.6 Remedies Cumulative. All remedies under this Agreement, or
by law or otherwise afforded to any party hereto shall be cumulative and not
alterative.
SECTION 3.7 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. Unless clearly denoted otherwise, any reference to Articles or
Sections contained herein shall be to the Articles or Sections of this
Agreement.
Page 23 of 24
SECTION 3.8 Notices. Any notices required or permitted to be sent
hereunder shall be delivered personally or mailed, certified mail, return
receipt requested, to the following addresses, and shall be deemed to have been
received on the day of personal delivery or within three business days after
deposit in the mail, postage prepaid:
If to the Company, to:
Xxxxx X. XxXxxxxxxx, CEO
PharmaFrontiers Corp.
0000 Xxxxxxxxxx Xxxxx, Xxxxx X-0
Xxx Xxxxxxxxx, XX 00000
If to Holder, to:
the address set forth below.
SECTION 3.9 Governing Law. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of the State of Texas
applicable to contracts made and to be performed in that state.
SECTION 3.10 Final Agreement. This Agreement, together with those
documents expressly referred to herein, constitutes the final agreement of the
parties concerning the matters referred to herein, and supersedes all prior
agreements and understandings.
SECTION 3.11 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute one
instrument.
The parties hereto have executed this Agreement as of the date first
set forth above.
COMPANY:
--------
PHARMAFRONTIERS CORP.
By:
-------------------------------------------------
Xxxxx X. XxXxxxxxxx, Chief Executive Officer
HOLDER:
-------
By:
------------------------------------------------
Name:
----------------------------------------------
Address:
-------------------------------------------
Page 24 of 24
