Exhibit 10.00 - Note Purchase Agreement by and between the Company and Vicis
Capital Master Fund for $1,302,000
MEDICAL MEDIA TELEVISION, INC.
$1,302,000 10% SECURED CONVERTIBLE PROMISSORY NOTE DUE
AUGUST 11, 2007
NOTE PURCHASE AGREEMENT
By and Between
MEDICAL MEDIA TELEVISION, INC.
and
VICIS CAPITAL MASTER FUND
DATED AUGUST 11, 2006
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT (the "Agreement"), dated this 11th day of
August, 2006, is made by and between MEDICAL MEDIA TELEVISION, INC., a Florida
corporation (the "Company"), and VICIS CAPITAL MASTER FUND (the "Purchaser"), a
trust formed under the laws of the Cayman Islands.
RECITALS
WHEREAS, pursuant to the terms and conditions of this Agreement, the
Company wishes to issue and sell to the Purchaser, and the Purchaser wishes to
acquire from the Company, a 10% Secured Convertible Promissory Note due August
11, 2007 in the principal amount of $1,302,000 and in the form attached hereto
as Exhibit A (the "Note").
WHEREAS, as an inducement for the Purchaser's acquisition of the Note, the
Company has agreed to register with the SEC for resale by the Purchaser the
shares of Common Stock issuable upon conversion of the Note (the "Note Shares")
pursuant to a registration rights agreement, in the form attached hereto as
Exhibit B (the "Registration Rights Agreement").
NOW, THEREFORE, the Company and the Purchaser hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE NOTE
1.1 Purchase and Sale of the Note. Subject to the terms and conditions
hereof and in reliance on the representations and warranties contained herein,
or made pursuant hereto, the Company will issue and sell to the Purchaser, and
the Purchaser will purchase from the Company at the closing of the transactions
contemplated hereby (the "Closing"), the Note for the following (collectively,
the "Purchase Price"): (a) $790,000 in cash (the "Cash Payment"), subject to the
provisions of Section 12.9 hereof; (b) the surrender of two secured promissory
notes issued by the Company to the Purchaser on June 1, 2006, and June 30, 2006,
respectively, each in the principal amount of $50,000 (collectively, the "June
Notes") ; and (c) the surrender of a Series AA Convertible Debenture No. 05-0719
issued by the Company to the Purchaser on July 19, 2005, in the principal amount
of $412,000 (the "Debenture").
1.2 Closing. The Closing shall be deemed to occur at the offices of
Xxxxxxx & Xxxxx, LLP, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx at 5:00
p.m. CDT on August 10, 2006 or at such other place, date or time as mutually
agreeable to the parties (the "Closing Date).
1.3 Closing Matters. On the Closing Date, subject to the terms and
conditions hereof, the following actions shall be taken:
(a) The Company will deliver to the Purchaser the Note dated the
Closing Date, in the principal amount of $1,302,000 and will deliver to the
Escrow Agent (as hereinafter defined) the Pledged Shares (as hereinafter
defined).
1
(b) The Purchaser shall deliver to the Company the Cash Payment in
immediately available funds to the Company and shall surrender for cancellation
to the Company the June Notes and the Debenture.
ARTICLE II
SECURITY DOCUMENTS
2.1 Company Security Documents.
(a) Security Agreement. All of the obligations of the Company under
the Note shall be secured by a lien on all the personal property and assets of
the Company now existing or hereinafter acquired granted pursuant to a security
agreement dated of even date herewith between the Company and Purchaser
("Security Agreement"), which, except for Permitted Liens (as hereinafter
defined), shall be a first lien.
(b) Stock Pledge and Escrow Agreement. To secure the obligations of
the Company under this Agreement and the Note, the Company shall pledge,
hypothecate, and assign, to the Purchaser all the capital stock of its
Subsidiaries (the "Pledged Shares"), pursuant to a stock pledge and escrow
agreement ("Stock Pledge and Escrow Agreement"). The Pledged Shares shall be
transferred and delivered at Closing to Xxxxxxx & Xxxxx LLP (the "Escrow Agent")
pursuant to the terms of the Stock Pledge and Escrow Agreement.
2.2 Guaranty. All of the obligations of the Company under the Note shall
be guaranteed pursuant to a guaranty agreement by each of the Company's
Subsidiaries set forth in Section 5.4(e) hereof ("Guaranty Agreement").
2.3 Guarantor Security Documents. All of the obligations of the
Subsidiaries under the Guaranty Agreement shall be secured by a lien on all the
personal property and assets of each respective Subsidiary now existing or
hereinafter acquired granted pursuant to a guarantor security agreement dated of
even date herewith between the Company and each Subsidiary set forth in Section
5.4(f) hereof ("Guarantor Security Agreement"), which, except for Permitted
Liens, shall be a first lien.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as of the date
of this Agreement as follows:
3.1 Organization and Qualification. The Company is a corporation duly
organized and validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, and has all requisite corporate power
and authority to carry on its business as now conducted. The Company is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means any material adverse effect on the business, properties, assets,
operations, results of operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries or on the transactions
contemplated hereby or by the agreements and instruments to be entered into in
connection herewith, or on the authority or ability of the Company to perform
its obligations under the Transaction Documents (as hereinafter defined).
2
3.2 Subsidiaries. The Company has no subsidiaries other than PetCARE
Television Network, Inc., a Florida corporation ("PetCARE"), African American
Medical Network, Inc., a Florida corporation ("African American Medical"), and
KidCARE Medical Television Network, Inc., a Florida corporation ("KidCARE")
(each a "Subsidiary" and collectively, the "Subsidiaries"). The Company owns,
directly or indirectly, all of the capital stock of its Subsidiaries, free and
clear of any and all Liens, and all the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights. Each Subsidiary is a corporation duly
organized and validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, and has all requisite corporate power
and authority to carry on its business as now conducted. Each Subsidiary is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect.
3.3 No Violation. Neither the Company nor any of its Subsidiaries is in
violation of: (a) any of the provisions of its certificate or articles of
incorporation, bylaws or other organizational or charter documents; or (b) any
judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries, except for possible
violations which would not, individually or in the aggregate, have a Material
Adverse Effect.
3.4 Capitalization.
(a) As of the date hereof, the Company's authorized capital stock
consists of (i) 100,000,000 shares of Common Stock, par value $.0005 per share,
of which 21,117,136 shares are outstanding and 40,600,182 shares have been
reserved for issuance upon the exercise of all of the outstanding options,
warrants and other securities issued by the Company that are convertible into
Common Stock as outlined in the Company's registration statement on Form SB-2;
and (ii) 25,000,000 shares of Preferred Stock, no par value per share, of which
4,303,959 shares are outstanding. All of such outstanding shares have been, or
upon issuance will be, validly issued, are fully paid and nonassessable.
(b) Except as disclosed in the Company's reports, financial
statements, schedules, forms, statements and other documents required to be
filed by it with the Securities and Exchange Commission (the "SEC") pursuant to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or otherwise on Schedule 3.4(b), prior to the date hereof
(the "SEC Documents"):
(i) no holder of shares of the Company's capital stock has any
preemptive rights or any other similar rights or has been granted or holds any
liens or encumbrances suffered or permitted by the Company;
3
(ii) except for annual issuances of Common Stock that will be
issued in connection with the Company's ESOP and to an advisory board that in
the aggregate will not exceed, during any calendar year, 1.576% of the Company's
outstanding Common Stock calculated on a fully-diluted basis at a per share
price of $.17, there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries;
(iii) there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness (as defined in Section 3.14 hereof) of the Company or
any of its Subsidiaries or by which the Company or any of its Subsidiaries is or
may become bound;
(iv) there are no financing statements securing obligations in
any material amounts, either singly or in the aggregate, filed in connection
with the Company any of its Subsidiaries;
(v) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the Securities Act of 1933, as amended, (the "Securities
Act");
(vi) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries that contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries;
(vii) there are no securities or instruments containing
antidilution or similar provisions that will be triggered by the issuance of the
Note; and
(viii) the Company does not have any stock appreciation rights
or "phantom stock" plans or agreements or any similar plan or agreement.
3.5 Issuance of the Note.
(a) The Note to be issued hereunder is duly authorized and, upon
payment and issuance in accordance with the terms hereof, shall be free from all
taxes, Liens and charges with respect to the issuance thereof. As of the
Closing, the Company has authorized or reserved the necessary number of shares
of Common Stock for the issuance of the Note Shares. All actions by the Board,
the Company and its stockholders necessary for the valid issuance of the Note
and the Note Shares pursuant to the terms of the Note has been taken.
4
(b) The Note Shares, when issued and paid for upon conversion of the
Note, will be validly issued, fully paid and nonassessable and free from all
taxes, Liens and charges with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of the Common Stock.
3.6 Authorization; Enforcement; Validity. The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the Registration Rights Agreement, the Security Agreement, the
Stock Pledge and Escrow Agreement, and the Note, and each of the other
agreements or instruments entered into by the parties hereto in connection with
the transactions contemplated by this Agreement (collectively, the "Transaction
Documents") and to issue the Note in accordance with the terms hereof and
thereof. The execution and delivery of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby, including, without limitation, and the issuance of the Note, have been
duly authorized by the board of directors of the Company (the "Board"), and no
further consent or authorization is required by the Company, the Board or its
stockholders. This Agreement and the other Transaction Documents of even date
herewith have been duly executed and delivered by the Company, and constitute
the legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except (i) as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies, or (ii) as any rights to indemnity or contribution
hereunder may be limited by federal and state securities laws and public policy
consideration.
3.7 Dilutive Effect. The Company understands and acknowledges that its
obligation to issue the Note Shares upon conversion of the Note in accordance
therewith is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of the
Company.
3.8 No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
reservation for issuance of the Note Shares) will not (i) result in a violation
of any articles or certificate of incorporation, any certificate of
designations, preferences and rights of any outstanding series of preferred
stock or bylaws of the Company or any of its Subsidiaries or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected, except in the case of
clauses (ii) and (iii), for such breaches or defaults as would not be reasonably
expected to have a Material Adverse Effect.
3.9 Governmental Consents. Except for the filing of a Form D with the SEC
and the registration of the Note Shares under the Securities Act for resale by
the Purchaser, the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court, governmental
agency or any regulatory or self-regulatory agency or any other Person (as
hereinafter defined) in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents, in each case, in
accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain at or
prior to the Closing pursuant to the preceding sentence have been obtained or
effected. The Company is unaware of any facts or circumstances which might
prevent the Company from obtaining or effecting any of the foregoing.
5
3.10 No General Solicitation. Neither the Company, nor any of its
affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Note.
3.11 No Integrated Offering. None of the Company, its subsidiaries, any of
their affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
Note under the Securities Act or cause this offering of the Note to be
integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable stockholder approval provisions.
3.12 Placement Agent's Fees. No brokerage or finder's fee or commission
are or will be payable to any Person with respect to the transactions
contemplated by this Agreement based upon arrangements made by the Company or
any of its affiliates.
3.13 Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, the transactions
contemplated by the Transaction Documents, the Common Stock or any of its
Subsidiaries or any of their respective current or former officers or directors
in their capacities as such. To the knowledge of the Company, there has not been
within the past two (2) years, and there is not pending, any investigation by
the SEC involving the Company or any current or former director or officer of
the Company (in his or her capacity as such). The SEC has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by the Company under the Securities Act within the past two (2) years.
3.14 Indebtedness and Other Contracts. Except as disclosed in the SEC
Documents or otherwise set forth on Schedule 3.14, neither the Company nor any
of its Subsidiaries (a) has any outstanding Indebtedness (as defined below), (b)
is a party to any contract, agreement or instrument, the violation of which, or
default under, by any other party to such contract, agreement or instrument
would result in a Material Adverse Effect, (c) is in violation of any term of or
in default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (d) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company's officers, has or is
expected to have a Material Adverse Effect. For purposes of this Agreement: (x)
"Indebtedness" of any Person means, without duplication (i) all indebtedness for
borrowed money, (ii) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade payables
entered into in the ordinary course of business), (iii) all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other
similar instruments, (iv) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (vi) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (vii) all
indebtedness referred to in clauses (i) through (vi) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, change, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (viii) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (vii) above; (y) "Contingent Obligation" means, as to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto; and
(z) "Person" means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
6
3.15 Financial Information; SEC Documents. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Exchange Act.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to such SEC Documents, and none of
such SEC Documents, at the time they were filed with the SEC, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. As of
their respective dates, the financial statements of the Company included in such
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Purchaser that is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made, not
misleading.
7
3.16 Absence of Certain Changes. Except as disclosed in the SEC Documents,
since December 31, 2005, there has been no material adverse change and no
material adverse development in the business, properties, operations, condition
(financial or otherwise), results of operations or prospects of the Company or
its Subsidiaries. Since December 31, 2005, the Company has not (i) declared or
paid any dividends, (ii) sold any assets, individually or in the aggregate, in
excess of $50,000 outside of the ordinary course of business or (iii) had
capital expenditures, individually or in the aggregate, in excess of $100,000.
The Company has not taken any steps to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy proceedings or any
actual knowledge of any fact which would reasonably lead a creditor to do so.
After giving effect to the transactions contemplated hereby to occur at the
Closing, the Company will not be Insolvent (as hereinafter defined). For
purposes of this Agreement, "Insolvent" means (i) the present fair saleable
value of the Company's assets is less than the amount required to pay the
Company's total indebtedness, contingent or otherwise, (ii) the Company is
unable to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured, (iii) the Company
intends to incur or believes that it will incur debts that would be beyond its
ability to pay as such debts mature or (iv) the Company has unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.
3.17 Foreign Corrupt Practices.
(a) Neither the Company, nor any director, officer, agent, employee
or other Person acting on behalf of the Company has, in the course of its
actions (a) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity, (b)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds, (c) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended or (d) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
(b) None of the Subsidiaries of the Company, nor any of their
respective directors, officers, agents, employees or other Persons acting on
behalf of such subsidiaries has, in the course of their respective actions (a)
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity, (b) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds, (c) violated or is in violation of any provision
of the U.S. Foreign Corrupt Practices Act of 1977, as amended or (d) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
3.18 Transactions With Affiliates. Except as set forth in the SEC
Documents, none of the officers, directors or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for ordinary course services as employees, officers or 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 such
officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
8
3.19 Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and each of its Subsidiaries
are engaged. Neither the Company nor any of its Subsidiaries has been refused
any insurance coverage sought or applied for and neither the Company nor any of
its Subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
3.20 Employee Relations. Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining agreement or employs any member of a
union. No Executive Officer of the Company (as defined in Rule 501(f) of the
Securities Act) has notified the Company that such officer intends to leave the
Company or otherwise terminate such officer's employment with the Company. No
Executive Officer of the Company, to the knowledge of the Company, is, or is
now, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters. The Company and each of its Subsidiaries are in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
3.21 Title. The Company and each of its Subsidiaries have good and
marketable title to all personal property owned by them which is material to
their respective business, in each case free and clear of all liens,
encumbrances and defects except such as are described in the SEC Documents or
such as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company and
its Subsidiaries. Any real property and facilities held under lease by the
Company and each of its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and each of its Subsidiaries.
3.22 Intellectual Property Rights. Schedule 3.22 sets forth a list of all
of the Company's patents, trademarks, trade names, service marks copyrights, and
registrations and applications therefor, trade secrets and any other
intellectual property right (collectively, "Intellectual Property Rights"),
identifying whether owned by the Company, any of its Subsidiaries or a third
party. The Intellectual Property Rights are, to the best of the Company's
knowledge, fully valid and are in full force and effect. The Company does not
have any knowledge of any infringement by the Company or any of its Subsidiaries
of Intellectual Property Rights of others. There is no claim, action or
proceeding being made or brought, or to the knowledge of the Company, being
threatened, against the Company or any of its Subsidiaries regarding its
Intellectual Property Rights that could have a Material Adverse Effect. The
Company is unaware of any facts or circumstances which might give rise to any of
the foregoing infringements or claims, actions or proceedings. The Company and
its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of their Intellectual Property Rights.
9
3.23 Environmental Laws. The Company and each of its Subsidiaries (a) are
in compliance with any and all Environmental Laws (as hereinafter defined), (b)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (c) are
in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (a), (b) and (c), the failure
to so comply could be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect. The term "Environmental Laws" means all
federal, state, local or foreign laws 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 relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "Hazardous Materials") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.
3.24 Tax Matters. The Company and each of its Subsidiaries (a) have made
or filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (b) have paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and (c) have set aside on its books
reasonably adequate provision for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply,
except where such failure would not have a Material Adverse Effect. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.
3.25 Xxxxxxxx-Xxxxx Act. The Company is in compliance with any and all
requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are effective as of the date
hereof and applicable to it, and any and all rules and regulations promulgated
by the SEC thereunder that are effective and applicable to it as of the date
hereof, except where such noncompliance would not have a Material Adverse
Effect.
3.26 Investment Company Status. The Company is not, and immediately after
receipt of payment for the Note will not be, an "investment company," an
"affiliated person" of, "promoter" for or "principal underwriter" for, or an
entity "controlled" by an "investment company," within the meaning of the
Investment Company Act.
10
3.27 Material Contracts. Each contract of the Company that involves
expenditures or receipts in excess of $100,000 (each an "Applicable Contract")
is in full force and effect and is valid and enforceable in accordance with its
terms. The Company is and has been in full compliance with all applicable terms
and requirements of each Applicable Contract and , to the Company's knowledge,
no event has occurred or circumstance exists that (with or without notice or
lapse of time) may contravene, conflict with or result in a violation or breach
of, or give the Company or any other entity the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate or modify any Applicable Contract. The Company has not
given or received from any other entity any notice or other communication
(whether oral or written) regarding any actual, alleged, possible or potential
violation or breach of, or default under, any Applicable Contract.
3.28 Inventory. All inventory of the Company consists of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which have been or
will be written off or written down to net realizable value on the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of June 30,
2006. The quantities of each type of inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable and
warranted in the present circumstances of the Company.
3.29 Disclosure. All disclosure provided to the Purchaser regarding the
Company, its business and the transactions contemplated hereby, including the
Schedules to this Agreement, furnished by or on behalf of the Company are true
and correct and do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as of the date
of this Agreement as follows:
4.1 Organization. The Purchaser is a corporation, limited liability
company or partnership duly incorporated or organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization.
4.2 Authorization. This Agreement has been duly authorized, validly
executed and delivered by the Purchaser and is a valid and binding agreement and
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms, subject to limitations on enforcement by general principles of equity
and by bankruptcy or other laws affecting the enforcement of creditors' rights
generally, and the Purchaser has full power and authority to execute and deliver
this Agreement and the other agreements and documents contemplated hereby and to
perform its obligations hereunder and thereunder.
11
4.3 Investment Investigation. The Purchaser understands that no Federal,
state, local or foreign governmental body or regulatory authority has made any
finding or determination relating to the fairness of an investment in the Note
and that no Federal, state, local or foreign governmental body or regulatory
authority has recommended or endorsed, or will recommend or endorse, any
investment in the Note. The Purchaser, in making the decision to purchase the
Note, has relied upon independent investigation made by it and has not relied on
any information or representations made by third parties.
4.4 Accredited Investor. The Purchaser is an "accredited investor" as
defined under Rule 501 of Regulation D promulgated under the Securities Act.
4.5 No Distribution. The Purchaser is and will be acquiring the Note for
its own account, and not with a view to any resale or distribution of the Note
in whole or in part, in violation of the Securities Act or any applicable
securities laws.
4.6 Resale. The parties intend that the offer and sale of the Note be
exempt from registration under the Securities Act, by virtue of Section 4(2)
and/or Rule 506 of Regulation D promulgated under the Securities Act. The
Purchaser understands that the Note purchased hereunder has not been, and may
never be, registered under the Securities Act and that the Note cannot be sold
or transferred unless its is first registered under the Securities Act and such
state and other securities laws as may be applicable or in the opinion of
counsel for the Company an exemption from registration under the Securities Act
is available (and then the Note may be sold or transferred only in compliance
with such exemption and all applicable state and other securities laws).
4.7 Reliance. The Purchaser understands that the Note is being offered and
sold to it in reliance on specific provisions of Federal and state securities
laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Purchaser set forth herein for purposes of qualifying for exemptions from
registration under the Securities Act, and applicable state securities laws.
4.8 Marketable Title to June Notes and Debenture; Cancellation. Purchaser
has good and marketable title to the June Notes and the Debenture, free and
clear of all liens, claims and encumbrances of any kind and has not assigned,
conveyed or otherwise transferred the June Notes or Debenture to any Person.
Purchaser agrees that upon receipt of the Note in accordance with Section 1.1
hereof, all obligations of the Company under the June Notes and Debentures shall
terminate.
ARTICLE V
CONDITIONS TO CLOSING OF THE PURCHASERS
The obligation of the Purchaser to purchase the Note at the Closing is
subject to the fulfillment to the Purchaser's satisfaction on or prior to the
Closing Date of each of the following conditions, any of which may be waived by
the Purchaser:
5.1 Representations and Warranties Correct. The representations and
warranties in Article III hereof shall be true and correct when made, and shall
be true and correct on the Closing Date with the same force and effect as if
they had been made on and as of the Closing Date.
12
5.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
the Closing Date shall have been performed or complied with by the Company in
all material respects.
5.3 No Impediments. Neither the Company nor any Purchaser shall be subject
to any order, decree or injunction of a court or administrative agency of
competent jurisdiction that prohibits the transactions contemplated hereby or
would impose any material limitation on the ability of such Purchaser to
exercise full rights of ownership of the Note. At the time of the Closing, the
purchase of the Note to be purchased by the Purchaser hereunder shall be legally
permitted by all laws and regulations to which the Purchaser and the Company are
subject.
5.4 Other Agreements and Documents. Company and/or its Subsidiaries, as
applicable, shall have executed and delivered the following agreements and
documents:
(a) The Note in the form of Exhibit A attached hereto;
(b) The Registration Rights Agreement in the form of Exhibit B
hereto;
(c) The Security Agreement in the form of Exhibit C hereto;
(d) The Stock Pledge and Escrow Agreement in the form of Exhibit D
attached hereto;
(e) The Guaranty Agreement in the form of Exhibit E attached hereto,
executed by each of PetCARE, African American Medical and KidCARE;
(f) The Guarantor Security Agreement in the form of Exhibit F
attached hereto, executed by each of PetCARE, African American Medical and
KidCARE;
(g) Confirmatory Assignments of Security Interest in United States
Patents, Trademarks, and Copyrights in the form of Exhibit G attached hereto;
(h) Xxxx Xxxxx shall have executed and delivered an amendment to his
employment agreement in the form of Exhibit H, attached hereto;
(i) Financing Statements on Form UCC-1 with respect to all personal
property and assets of the Company and each of its Subsidiaries set forth in
Section 5.4(f) above;
(j) A Certificate of Good Standing from the state of incorporation
of the Company and each of its Subsidiaries;
(k) A certificate of the Company's CEO, dated the Closing Date,
certifying (i) the fulfillment of the conditions specified in Sections 5.1 and
5.2 of this Agreement, (ii) the Board resolutions approving this Agreement and
the transactions contemplated hereby, and (iii) other matters as the Purchaser
shall reasonably request;
13
(l) A written waiver, in form and substance satisfactory to the
Purchaser, from each person, other than the Purchaser and those Persons set
forth on Schedule 5.4(l), who has any of the following rights:
(i) any currently effective right of first refusal to acquire
the Note or the Note Shares; or
(ii) any right to an anti-dilution adjustment of securities
issued by the Company that are held by such person that will be triggered as a
result of the issuance of the Note or the Note Shares; and
(m) All necessary consents or waivers, if any, from all parties to
any other material agreements to which the Company is a party or by which it is
bound immediately prior to the Closing in order that the transactions
contemplated hereby may be consummated and the business of the Company may be
conducted by the Company after the Closing without adversely affecting the
Company.
5.5 Pledged Shares. The Company shall have delivered the Pledged Shares to
the Escrow Agent.
5.6 Due Diligence Investigation. No fact shall have been discovered,
whether or not reflected in the Schedules hereto, which in the Purchaser's
determination would make the consummation of the transactions contemplated by
this Agreement not in the Purchaser's best interests.
ARTICLE VI
CONDITIONS TO CLOSING OF THE COMPANY
The Company's obligation to sell the Note at the Closing is subject to the
fulfillment to its satisfaction on or prior to the Closing Date of each of the
following conditions:
6.1 Representations. The representations made by the Purchaser pursuant to
Article IV hereof shall be true and correct when made and shall be true and
correct on the Closing Date.
6.2 No Impediments. Neither the Company nor any Purchaser shall be subject
to any order, decree or injunction of a court or administrative agency of
competent jurisdiction that prohibits the transactions contemplated hereby or
would impose any material limitation on the ability of such Purchaser to
exercise full rights of ownership of the Note. At the time of the Closing, the
purchase of the Note to be purchased by the Purchaser hereunder shall be legally
permitted by all laws and regulations to which the Purchaser and the Company are
subject.
6.3 Payment of Purchase Price. The Company shall have received the
Purchase Price, consisting of the Cash Payment in immediately available funds,
subject to the provisions of Section 12.9 hereof, and the June Notes and the
Debenture for cancellation.
14
ARTICLE VII
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees, so long as the Note remains
outstanding, as follows:
7.1 Maintenance of Corporate Existence. The Company shall and shall cause
its Subsidiaries to, maintain in full force and effect its corporate existence,
rights and franchises and all material terms of licenses and other rights to use
licenses, trademarks, trade names, service marks, copyrights, patents or
processes owned or possessed by it and necessary to the conduct of its business.
7.2 Maintenance of Properties. The Company shall and shall cause its
Subsidiaries to, keep each of its properties necessary to the conduct of its
business in good repair, working order and condition, reasonable wear and tear
excepted, and from time to time make all needful and proper repairs, renewals,
replacements, additions and improvements thereto; and the Company shall and
shall cause its Subsidiaries to at all times comply with each material provision
of all leases to which it is a party or under which it occupies property.
7.3 Payment of Taxes. The Company shall and shall cause its Subsidiaries
to, promptly pay and discharge, or cause to be paid and discharged when due and
payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the income, profits, assets, property or business of the Company
and its Subsidiaries; provided, however, that any such tax, assessment, charge
or levy need not be paid if the validity thereof shall be contested timely and
in good faith by appropriate proceedings, if the Company or its Subsidiaries
shall have set aside on its books adequate reserves with respect thereto, and
the failure to pay shall not be prejudicial in any material respect to the
holder of the Note, and provided, further, that the Company or its Subsidiaries
will pay or cause to be paid any such tax, assessment, charge or levy forthwith
upon the commencement of proceedings to foreclose any lien which may have
attached as security therefor.
7.4 Payment of Indebtedness. The Company shall and shall cause its
Subsidiaries to pay or cause to be paid all Indebtedness incident to the
operations of the Company or its Subsidiaries (including, without limitation,
claims or demands of workmen, materialmen, vendors, suppliers, mechanics,
carriers, warehousemen and landlords) which, if unpaid might become a lien
(except for Permitted Liens) upon the assets or property of the Company or its
Subsidiaries.
7.5 Maintenance of Insurance. The Company shall and shall cause its
Subsidiaries to, keep its assets which are of an insurable character insured by
financially sound and reputable insurers against loss or damage by theft, fire,
explosion and other risks customarily insured against by companies in the line
of business of the Company or its Subsidiaries, in amounts sufficient to prevent
the Company and its Subsidiaries from becoming a co-insurer of the property
insured; and the Company shall and shall cause its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance against other hazards
and risks and liability to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated or as may be
required by law, including, without limitation, general liability, fire and
business interruption insurance, and product liability insurance as may be
required pursuant to any license agreement to which the Company or its
Subsidiaries is a party or by which it is bound.
15
7.6 Notice of Adverse Change. The Company shall promptly give notice to
the holder of the Note (but in any event within seven (7) days) after becoming
aware of the existence of any condition or event which constitutes, or the
occurrence of, any of the following:
(a) any Event of Default (as hereinafter defined);
(b) any other event of noncompliance by the Company or its
Subsidiaries under this Agreement;
(c) the institution or threatening of institution of an action, suit
or proceeding against the Company or any Subsidiary before any court,
administrative agency or arbitrator, including, without limitation, any action
of a foreign government or instrumentality, which, if adversely decided, could
materially adversely affect the business, prospects, properties, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole whether or not arising in the ordinary course of business; or
(d) any information relating to the Company or any Subsidiary which
could reasonably be expected to materially and adversely affect the assets,
property, business or condition (financial or otherwise) of the Company or its
ability to perform the terms of this Agreement. Any notice given under this
Section 7.6 shall specify the nature and period of existence of the condition,
event, information, development or circumstance, the anticipated effect thereof
and what actions the Company has taken and/or proposes to take with respect
thereto.
7.7 Compliance With Agreements. The Company shall and shall cause its
Subsidiaries to comply in all material respects, with the terms and conditions
of all material agreements, commitments or instruments to which the Company or
any of its Subsidiaries is a party or by which it or they may be bound.
7.8 Compliance With Laws. The Company shall and shall cause each of its
Subsidiaries to duly comply in all material respects with any material laws,
ordinances, rules and regulations of any foreign, Federal, state or local
government or any agency thereof, or any writ, order or decree, and conform to
all valid requirements of governmental authorities relating to the conduct of
their respective businesses, properties or assets.
7.9 Protection of Licenses, etc. The Company shall and shall cause its
Subsidiaries to, maintain, defend and protect to the best of their ability
licenses and sublicenses (and to the extent the Company or a Subsidiary is a
licensee or sublicensee under any license or sublicense, as permitted by the
license or sublicense agreement), trademarks, trade names, service marks,
patents and applications therefor and other proprietary information owned or
used by it or them and shall keep duplicate copies of any licenses, trademarks,
service marks or patents owned or used by it, if any, at a secure place selected
by the Company.
16
7.10 Accounts and Records; Inspections.
(a) The Company shall keep true records and books of account in
which full, true and correct entries will be made of all dealings or
transactions in relation to the business and affairs of the Company and its
Subsidiaries in accordance with generally accepted accounting principles applied
on a consistent basis.
(b) The Company shall permit each holder of the Note or any of such
holder's officers, employees or representatives during regular business hours of
the Company, upon forty-eight (48) hours notice and as often as such holder may
reasonably request, to visit and inspect the offices and properties of the
Company and its Subsidiaries and to make extracts or copies of the books,
accounts and records of the Company or its Subsidiaries at such holder's
expense.
(c) Nothing contained in this Section 7.10 shall be construed to
limit any rights which a holder of any Note may otherwise have with respect to
the books and records of the Company and its Subsidiaries, to inspect its
properties or to discuss its affairs, finances and accounts.
7.11 Maintenance of Office. The Company will maintain its principal office
at the address of the Company set forth in Section 12.6 of this Agreement where
notices, presentments and demands in respect of this Agreement and of the Note
may be made upon the Company, until such time as the Company shall notify the
holder of the Note in writing, at least thirty (30) days prior thereto, of any
change of location of such office.
7.12 Use of Proceeds. The Company shall use all the proceeds received from
the sale of the Note pursuant to this Agreement solely for the purpose of
working capital and the repayment of certain payables incurred in the ordinary
course of business not for the repayment of debt.
7.13 Payment of the Note. The Company shall pay the principal of and
interest on the Note in the time, the manner and the form provided therein,
except to the extent that such principal and/or interest shall have been
converted into Common Stock in accordance with its terms.
7.14 SEC Reporting Requirements. The Company shall comply with its
reporting and filing obligations pursuant to Section 13 or 15(d) of the Exchange
Act. The Company shall provide copies of such reports to the holder of the Note
promptly upon such holder's request.
7.15 Authorization of and Reservation of Additional Shares of Common
Stock. The Company will at all times cause there to be reserved for issuance a
sufficient number of shares of Common Stock for the issuance of the Note Shares.
7.16 Further Assurances. From time to time the Company shall execute and
deliver to the Purchaser and the Purchaser shall execute and deliver to the
Company such other instruments, certificates, agreements and documents and take
such other action and do all other things as may be reasonably requested by the
other party in order to implement or effectuate the terms and provisions of this
Agreement and the Note.
17
ARTICLE VIII
NEGATIVE COVENANTS
The Company hereby covenants and agrees, so long as the Note remains
outstanding, it will not (and not allow any of its Subsidiaries to), directly or
indirectly, without the prior written consent of the Purchaser, as follows:
8.1 Payment of Dividends; Stock Purchase. Declare or pay any cash
dividends on, or make any distribution to the holders of, any shares of capital
stock of the Company, other than dividends or distributions payable in such
capital stock, or purchase, redeem or otherwise acquire or retire for value any
shares of capital stock of the Company or warrants or rights to acquire such
capital stock, other than in connection with repurchases upon the termination of
employment of employee equityholders.
8.2 Stay, Extension and Usury Laws. At any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereinafter in
force, which may affect the covenants or the performance of the Note, the
Company hereby expressly waiving all benefit or advantage of any such law, or by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Purchaser but will suffer and permit the execution of
every such power as though no such law had been enacted.
8.3 Reclassification. Effect any reclassification, combination or reverse
stock split of the Common Stock.
8.4 Liens. Except as otherwise provided in this Agreement, create, incur,
assume or permit to exist any mortgage, lien, pledge, charge, security interest
or other encumbrance, or any interest or title of any vendor, lessor, lender or
other secured party to or of the Company or any Subsidiary under any conditional
sale or other title retention agreement or any capital lease, upon or with
respect to any property or asset of the Company or any subsidiary (each a "Lien"
and collectively, "Liens"), except that the foregoing restrictions shall not
apply to:
(a) liens for taxes, assessments and other governmental charges, if
payment thereof shall not at the time be required to be made, and provided such
reserve as shall be required by generally accepted accounting principles
consistently applied shall have been made therefor;
(b) liens of workmen, materialmen, vendors, suppliers, mechanics,
carriers, warehouseman and landlords or other like liens, incurred in the
ordinary course of business for sums not then due or being contested in good
faith, if an adverse decision in which contest would not materially affect the
business of the Company;
(c) liens securing indebtedness of the Company or any Subsidiaries
which is in an aggregate principal amount not exceeding $100,000 and which liens
are subordinate to liens on the same assets held by the Purchaser;
(d) statutory liens of landlords, statutory liens of banks and
rights of set-off, and other liens imposed by law, in each case incurred in the
ordinary course of business (i) for amounts not yet overdue or (ii) for amounts
that are overdue and that are being contested in good faith by appropriate
proceedings, so long as such reserves or other appropriate provisions, if any,
as shall be required by generally accepted accounting principles shall have been
made for any such contested amounts;
18
(e) liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(f) any attachment or judgment lien not constituting an Event of
Default;
(g) easements, rights-of-way, restrictions, encroachments, and other
minor defects or irregularities in title, in each case which do not and will not
interfere in any material respect with the ordinary conduct of the business of
the Company or any of its subsidiaries;
(h) any (i) interest or title of a lessor or sublessor under any
lease, (ii) restriction or encumbrance that the interest or title of such lessor
or sublessor may be subject to, or (iii) subordination of the interest of the
lessee or sublessee under such lease to any restriction or encumbrance referred
to in the preceding clause (ii), so long as the holder of such restriction or
encumbrance agrees to recognize the rights of such lessee or sublessee under
such lease;
(i) liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(j) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;
(k) liens securing obligations (other than obligations representing
debt for borrowed money) under operating, reciprocal easement or similar
agreements entered into in the ordinary course of business of the Company and
its Subsidiaries; and
(l) the replacement, extension or renewal of any lien permitted by
this Section 8.4 upon or in the same property theretofore subject or the
replacement, extension or renewal (without increase in the amount or change in
any direct or contingent obligor) of the indebtedness secured thereby.
All of the Foregoing Liens described in subsections (a) - (l) above shall be
referred to as "Permitted Liens".
8.5 Indebtedness. Create, incur, assume, suffer, permit to exist, or
guarantee, directly or indirectly, any Indebtedness, excluding, however, from
the operation of this covenant:
(a) any indebtedness or the incurring, creating or assumption of any
indebtedness secured by liens permitted by the provisions of Section 8.4(c)
above;
19
(b) the endorsement of instruments for the purpose of deposit or
collection in the ordinary course of business;
(c) indebtedness which may, from time to time be incurred or
guaranteed by the Company which in the aggregate principal amount does not
exceed $100,000 and is subordinate to the indebtedness under this Agreement;
(d) indebtedness under the Note and any Indebtedness otherwise
existing on the date hereof;
(e) indebtedness relating to contingent obligations of the Company
and its subsidiaries under guaranties in the ordinary course of business of the
obligations of suppliers, customers, and licensees of the Company and its
Subsidiaries;
(f) indebtedness relating to loans from the Company to its
Subsidiaries;
(g) indebtedness relating to capital leases in an amount not to
exceed $100,000;
(h) accounts or notes payable arising out of the purchase of
merchandise or services in the ordinary course of business; or
(i) indebtedness (if any) expressly permitted by, and in accordance
with, the terms and conditions of this Agreement.
8.6 Liquidation or Sale. Sell, transfer, lease or otherwise dispose of 10%
or more of its consolidated assets (as shown on the most recent financial
statements of the Company or the Subsidiaries, as the case may be) in any single
transaction or series of related transactions (other than the sale of inventory
in the ordinary course of business), or liquidate, dissolve, recapitalize or
reorganize in any form of transaction, or acquire all or substantially all of
the capital stock or assets of another business or entity.
8.7 Change in Control Transaction. Enter into a Change in Control
Transaction. For purposes of this Agreement, "Change in Control Transaction"
means, except with respect to acquisitions by the Company in the normal course
of business, the occurrence of (a) an acquisition by an individual or legal
entity or "group" (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act) of effective control (whether through legal or beneficial
ownership of capital stock of the Company, by contract or otherwise) of in
excess of fifty percent (50%) of the voting securities of the Company (except
that the acquisition of voting securities by the Purchaser shall not constitute
a Change of Control Transaction for purposes hereof), (b) a replacement at one
time or over time of more than one-half of the members of the Board of the
Company which is not approved by a majority of those individuals who are members
of the Board on the date hereof (or by those individuals who are serving as
members of the Board on any date whose nomination to the Board was approved by a
majority of the members of the Board who are members on the date hereof), (c)
the merger or consolidation of the Company or any subsidiary of the Company in
one or a series of related transactions with or into another entity (except in
connection with a reincorporation merger involving the Company or with respect
to which the Company is the survivor), or (d) the execution by the Company of an
agreement to which the Company is a party or by which it is bound, providing for
any of the events set forth above in (a), (b) or (c).
20
8.8 Amendment of Charter Documents. Make any further amendment to the
articles of incorporation or by-laws of the Company or any of its Subsidiaries.
8.9 Loans and Advances. Except for loans and advances outstanding as of
the Closing Date, directly or indirectly, make any advance or loan to, or
guarantee any obligation of, any person, firm or entity, except for intercompany
loans or advances and those provided for in this Agreement.
8.10 Transactions with Affiliates.
(a) Make any intercompany transfers of monies or other assets in any
single transaction or series of transactions, except as otherwise permitted in
this Agreement.
(b) Engage in any transaction with any of the officers, directors,
employees or affiliates of the Company or of its Subsidiaries, except on terms
no less favorable to the Company or the Subsidiary as could be obtained in an
arm's length transaction.
(c) Divert (or permit anyone to divert) any business or opportunity
of the Company or subsidiary to any other corporate or business entity.
8.11 Other Business. Enter into or engage, directly or indirectly, in any
business other than the business currently conducted or proposed to be conducted
as of the date of this Agreement by the Company or any Subsidiary.
8.12 Investments. Make any investments in, or purchase any stock, option,
warrant, or other security or evidence of indebtedness of, any person or entity
(exclusive of any Subsidiary), other than obligations of the United States
Government or certificates of deposit or other instruments maturing within one
year from the date of purchase from financial institutions with capital in
excess of $50 million.
ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default. The occurrence and continuance of any of the
following events shall constitute an event of default under this Agreement and
the Note (each an "Event of Default" and, collectively, "Events of Default"):
(a) if the Company shall default in the payment of (i) any part of
the principal of the Note, when the same shall become due and payable, whether
at maturity or at a date fixed for prepayment or by acceleration or otherwise;
or (ii) the interest on the Note; when the same shall become due and payable;
and in each case such default shall have continued without cure for ten (10)
business days after written notice (a "Default Notice") is given to the Company
of such default;
21
(b) if the Company shall default in the performance of any of the
covenants contained in Articles VIII or IX hereof and such default shall have
continued without cure for thirty (30) days after a Default Notice is given to
the Company;
(c) if the Company shall default in the performance of any other
material agreement or covenant contained in this Agreement and such default
shall not have been remedied to the satisfaction of the Purchaser within
thirty-five (35) days after a Default Notice shall have been given to the
Company;
(d) if the Company shall have failed to obtain the waivers of all
persons holding preemptive or anti-dilution adjustment rights as required by
Section 5.4(l) hereof and such default shall not have been remedied to the
satisfaction of the Purchaser, within thirty-five (35) days after a Default
Notice shall have been given to the Company
(e) if any representation or warranty made in this Agreement or in
or any certificate delivered pursuant hereto shall prove to have been incorrect
in any material respect when made;
(f) if any default shall occur under any indenture, mortgage,
agreement, instrument or commitment (other than a default under any trade
payable or the continuation of default under those agreements set forth on
Schedule 3.14) evidencing or under which there is at the time outstanding any
indebtedness of the Company or a Subsidiary, in excess of $25,000, or which
results in such indebtedness, in an aggregate amount (with other defaulted
indebtedness) in excess of $50,000 becoming due and payable prior to its due
date and if such indenture or instrument so requires, the holder or holders
thereof (or a trustee on their behalf) shall have declared such indebtedness due
and payable;
(g) if any of the Company or its Subsidiaries shall default in the
observance or performance of any term or provision of an agreement, other than
those agreements set forth on Schedule 3.14, to which it is a party or by which
it is bound, which default will have a Material Adverse Effect and such default
is not waived or cured within the applicable grace period provided for in such
agreement;
(h) if a final judgment which, either alone or together with other
outstanding final judgments against the Company and its Subsidiaries, exceeds an
aggregate of $100,000 shall be rendered against the Company or any Subsidiary
and such judgment shall have continued undischarged or unstayed for thirty-five
(35) days after entry thereof;
(i) if the Company or any Subsidiary shall make an assignment for
the benefit of creditors, or shall admit in writing its inability to pay its
debts; or if the Company or any Subsidiary shall suffer a receiver or trustee
for it or substantially all of its assets to be appointed, and, if appointed
without its consent, not to be discharged or stayed within ninety (90) days; or
if the Company or any Subsidiary shall suffer proceedings under any law relating
to bankruptcy, insolvency or the reorganization or relief of debtors to be
instituted by or against it, and, if contested by it, not to be dismissed or
stayed within ninety (90) days; or if the Company or any Subsidiary shall suffer
any writ of attachment or execution or any similar process to be issued or
levied against it or any significant part of its property which is not released,
stayed, bonded or vacated within ninety (90) days after its issue or levy; or if
the Company or any Subsidiary takes corporate action in furtherance of any of
the aforesaid purposes or conditions; or
22
9.2 Remedies.
(a) Upon the occurrence and continuance of an Event of Default, the
Purchaser may at any time (unless all defaults shall theretofore have been
remedied) at its option, by written notice or notices to the Company (i) declare
the Note to be due and payable, whereupon the same shall forthwith mature and
become due and payable, together with interest accrued thereon, without
presentment, demand, protest or notice, all of which are hereby waived; and (ii)
declare any other amounts payable to the Purchaser under this Agreement or as
contemplated hereby due and payable.
(b) Notwithstanding anything contained in Section 9.2(a), in the
event that at any time after the principal of the Note shall so become due and
payable and prior to the date of maturity stated in the Note all arrears of
principal of and interest on the Note (with interest at the rate specified in
the Note on any overdue principal and, to the extent legally enforceable, on any
interest overdue) shall be paid by or for the account of the Company, then the
Purchaser, by written notice or notices to the Company, may (but shall not be
obligated to) waive such Event of Default and its consequences and rescind or
annul such declaration, but no such waiver shall extend to or affect any
subsequent Event of Default or impair any right resulting therefrom.
9.3 Enforcement. In case any one or more Events of Default shall occur and
be continuing, the Purchaser may proceed to protect and enforce its rights by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in the Note or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law. In case of a
default in the payment of any principal of or interest on the Note, the Company
will pay to the Purchaser such further amount as shall be sufficient to cover
the cost and the expenses of collection, including, without limitation,
reasonable attorney's fees, expenses and disbursements. No course of dealing and
no delay on the part of the Purchaser in exercising any rights shall operate as
a waiver thereof or otherwise prejudice the Purchaser's rights. No right
conferred hereby or by the Note upon the Purchaser shall be exclusive of any
other right referred to herein or therein or now available at law in equity, by
statute or otherwise.
ARTICLE X
[INTENTIONALLY OMITTED]
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by the Company. The Company agrees to defend,
indemnify and hold harmless the Purchaser and shall reimburse the Purchaser for,
from and against each claim, loss, liability, cost and expense (including
without limitation, interest, penalties, costs of preparation and investigation,
and the reasonable fees, disbursements and expenses of attorneys, accountants
and other professional advisors) (collectively, "Losses") directly or indirectly
relating to, resulting from or arising out of any untrue representation,
misrepresentation, breach of warranty or non-fulfillment of any covenant,
agreement or other obligation by or of the Company contained herein or in any
certificate, document, or instrument delivered to the Purchaser pursuant hereto.
23
11.2 Indemnification by the Purchaser. The Purchaser agrees to defend,
indemnify and hold harmless the Company and shall reimburse the Company for,
from and against all Losses directly or indirectly relating to, resulting from
or arising out of any untrue representation, misrepresentation, breach of
warranty or non-fulfillment of any covenant, agreement or other obligation of
the Purchaser contained herein or in any certificate, document or instrument
delivered to the Company pursuant hereto.
11.3 Procedure. The indemnified party shall promptly notify the
indemnifying party of any claim, demand, action or proceeding for which
indemnification will be sought under Sections 11.1 or 11.2 of this Agreement,
and, if such claim, demand, action or proceeding is a third party claim, demand,
action or proceeding, the indemnifying party will have the right at its expense
to assume the defense thereof using counsel reasonably acceptable to the
indemnified party. The indemnified party shall have the right to participate, at
its own expense, with respect to any such third party claim, demand, action or
proceeding. In connection with any such third party claim, demand, action or
proceeding, the Purchaser and the Company shall cooperate with each other and
provide each other with access to relevant books and records in their
possession. No such third party claim, demand, action or proceeding shall be
settled without the prior written consent of the indemnified party, which shall
not be unreasonably withheld. If a firm written offer is made to settle any such
third party claim, demand, action or proceeding and the indemnifying party
proposes to accept such settlement and the indemnified party refuses to consent
to such settlement, then: (i) the indemnifying party shall be excused from, and
the indemnified party shall be solely responsible for, all further defense of
such third party claim, demand, action or proceeding; and (ii) the maximum
liability of the indemnifying party relating to such third party claim, demand,
action or proceeding shall be the amount of the proposed settlement if the
amount thereafter recovered from the indemnified party on such third party
claim, demand, action or proceeding is greater than the amount of the proposed
settlement.
ARTICLE XII
MISCELLANEOUS
12.1 Governing Law. This Agreement and the rights of the parties hereunder
shall be governed in all respects by the laws of the State of New York wherein
the terms of this Agreement were negotiated.
12.2 Survival. Except as specifically provided herein, the
representations, warranties, covenants and agreements made herein shall survive
the Closing.
12.3 Amendment. This Agreement may not be amended, discharged or
terminated (or any provision hereof waived) without the written consent of the
Company and the Purchaser.
12.4 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding upon
and enforceable by and against, the successors, assigns, heirs, executors and
administrators of the parties hereto. The Purchaser may assign its rights
hereunder (provided, that the Purchaser may not so assign any of such rights to
any competitor of the Company), and the Company may not assign its rights or
obligations hereunder without the consent of the Purchaser or any of its
successors, assigns, heirs, executors and administrators.
24
12.5 Entire Agreement. This Agreement, the Transaction Documents and the
other documents delivered pursuant hereto and simultaneously herewith constitute
the full and entire understanding and agreement between the parties with regard
to the subject matter hereof and thereof.
12.6 Notices, etc. All notices, demands or other communications given
hereunder shall be in writing and shall be sufficiently given if delivered
personally, via facsimile, or by a nationally recognized courier service marked
for next business day delivery or sent in a sealed envelope by first class mail,
postage prepaid and either registered or certified, addressed as follows:
(a) if to the Company:
Mr. Xxxxxx Xxxxx, President/CEO
Medical Media Television, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx X
Xxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxxx, Esq.
Xxxx Xxxx, P.A.
000 X. Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) if to a Purchaser:
Vicis Capital Master Fund
Xxxxx 00, Xxxxx 000
000 X. 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx Xxxxxxxx
25
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
12.7 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the holder of the Note upon any breach or default of
the Company under this Agreement shall impair any such right, power or remedy of
such holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence, therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any holder of any breach or default under this Agreement, or any
waiver on the part of any holder of any provisions or conditions of this
Agreement must be, made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any holder, shall be cumulative and
not alternative.
12.8 Severability. The invalidity of any provision or portion of a
provision of this Agreement shall not affect the validity of any other provision
of this Agreement or the remaining portion of the applicable provision. It is
the desire and intent of the parties hereto that the provisions of this
Agreement shall be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated
to be invalid or unenforceable, such provision shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid or unenforceable, such
deletion to apply only with respect to the operation of such provision in the
particular jurisdiction in which such adjudication is made.
12.9 Expenses. Each party shall bear its own expenses and legal fees
incurred on its behalf with respect to the negotiation, execution and
consummation of the transactions contemplated by this Agreement, and without
requiring any documentation therefor, the Company will reimburse the Purchaser
$25,000 for all fees and expenses incurred by the Purchaser with respect to the
negotiation, execution and consummation of the transactions contemplated by this
Agreement and the transactions contemplated hereby and due diligence conducted
in connection therewith, including the fees and disbursements of counsel and
auditors for the Purchaser. Such reimbursement shall be paid on the Closing Date
by the Purchaser deducting such $25,000 from the Cash Payment.
12.10 Consent to Jurisdiction; Waiver of Jury Trial. EACH OF THE PARTIES
TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED THE STATE AND
COUNTY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTION DOCUMENTS. EACH OF THE PARTIES TO
THIS AGREEMENT IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN ANY SUCH COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY SUCH LEGAL PROCEEDING. EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY CONSENTS TO SERVICE OF PROCESS BY NOTICE IN THE
MANNER SPECIFIED IN SECTION 12.6 AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION SUCH PARTY MAY NOW OR HEREAFTER HAVE TO SERVICE
OF PROCESS IN SUCH MANNER.
26
12.11 Titles and Subtitles. The titles of the articles, sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
12.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
12.13 Disclosure Schedules. The representations and warranties of the
Company set forth in this Agreement are made and given subject to disclosures
contained in (a) the schedules attached to this agreement (collectively, the
"Disclosure Schedules"), and (b) where specifically referenced by the particular
representation or warranty, the SEC Documents. The Company will not be, nor will
it be deemed to be, in any breach of any such representations or warranties in
connection with any such matter so disclosed in the Disclosure Schedules or in
the SEC Documents, provided that such representation or warranty made specific
reference to the SEC Documents. Where only brief particulars of a matter are set
out or referred to in the Disclosure Schedules, or a reference is made only to a
particular part of a disclosed document, full particulars of the matter and the
full contents of the document are deemed to be disclosed. Inclusion of
information in the Disclosure Schedules will not be construed as an admission
that such information is material to the business, operations or condition
(financial or otherwise) of the Company, taken as a whole, or as an admission of
liability or obligation of the Company to any third party. The specific
disclosures set forth in the Disclosure Schedules have been organized to
correspond to section references in this Agreement to which the disclosure may
be most likely to relate, together with appropriate cross references when
disclosure is applicable to other sections of this Agreement; provided, however,
that any disclosure in the Disclosure Schedules will apply to and will be deemed
to be disclosed for the purposes of this Agreement generally. In the event that
there is any inconsistency between this Agreement and matters disclosed in the
Disclosure Schedules, information contained in the Disclosure Schedules will
prevail and will be deemed to be the relevant disclosure.
27
IN WITNESS WHEREOF, the parties hereto have duly executed this Note Purchase
Agreement, as of the day and year first above written.
COMPANY:
MEDICAL MEDIA TELEVISION, INC.
/s/ Xxxxxx X. Xxxxx
---------------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
PURCHASER:
VICIS CAPITAL MASTER FUND
By: Vicis Capital LLC
/s/ Xxxx Xxxxxxxx
---------------------------------------
Xxxx Xxxxxxxx,
Chief Operating Officer
28
EXHIBIT A
FORM OF NOTE
29
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT C
FORM OF SECURITY AGREEMENT
EXHIBIT D
FORM OF STOCK PLEDGE AND ESCROW AGREEMENT
EXHIBIT E
FORM OF GUARANTY AGREEMENT
EXHIBIT F
FORM OF GUARANTOR SECURITY AGREEMENT
EXHIBIT G
FORM OF CONFIRMATORY ASSIGNMENTS OF SECURITY INTEREST IN UNITED STATES PATENTS,
TRADEMARKS, AND COPYRIGHTS
EXHIBIT H
FORM OF AMENDED EMPLOYMENT AGREEMENT FOR XXXX XXXXX
SCHEDULE 3.04
CAPITALIZATION
1. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXX
PORT FOR $100,000 DATED FEBRUARY 15, 2006:
THIS ONE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART NOTE
FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH MAY BE PAID AT THE END OF EACH
QUARTER IN EITHER (I) SHARES OF THE COMPANY'S SERIES C ZERO COUPON PREFERRED
STOCK VALUED A $1.00 PER SHARE, OR (II) CASH, AT THE OPTION OF PORT. ON THE
MATURITY DATE, PORT HAS THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE
COMPANY'S COMMON STOCK AT A PRICE EQUAL TO $0.40 PER SHARE OR AN AMOUNT EQUAL TO
A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE BASED ON THE
AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE CONVERSION, WITH
THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER THAN $0.166. THE NOTE
MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. PORT WAS ALSO ISSUED 250,000
FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED EXERCISE PRICE OF $.75 PER
SHARE.
2. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXXX X.
XXXX FOR $200,000 DATED FEBRUARY 16, 2006:
THIS THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART
NOTE FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT
BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, XXXX HAS
THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY'S COMMON STOCK AT A
PRICE EQUAL A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE
BASED ON THE AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE
CONVERSION, WITH THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER THAN
$0.166. THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. XXXX WAS
ALSO ISSUED 500,000 FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED
EXERCISE PRICE OF $.75 PER SHARE.
3. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO SOFTREV
PARTNERS, INC. FOR $250,000 DATED MARCH 30, 2006:
THIS THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART
NOTE FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT
BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, SOFTREV
PARTNERS HAS THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY'S COMMON
STOCK AT A PRICE EQUAL A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT
MARKET PRICE BASED ON THE AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY
PRECEDING THE CONVERSION, WITH THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT
BE LOWER THAN $0.166. THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME
TERMS. SOFTREV PARTNERS WAS ALSO ISSUED 625,000 FIVE-YEAR COMMON STOCK PURCHASE
WARRANTS WITH A FIXED EXERCISE PRICE OF $.75 PER SHARE.
4. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXXX X.
XXXXXX FOR $450,000 DATED MARCH 31, 2006:
THIS THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE CAPITALSMART
NOTE FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT
BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, XXXXXX HAS
THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY'S COMMON STOCK AT A
PRICE EQUAL A TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE
BASED ON THE AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE
CONVERSION, WITH THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER THAN
$0.166. THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. XXXXXX WAS
ALSO ISSUED 1,125,000 FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED
EXERCISE PRICE OF $.75 PER SHARE.
5. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXX X.
PORT FOR $125,000 DATED APRIL 1, 2006:
THIS ONE-YEAR NOTE BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT NOT
BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE, PORT HAS
THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY'S COMMON STOCK AT A
PRICE EQUAL TO $0.40 PER SHARE OR AN AMOUNT EQUAL TO A TWENTY PERCENT (20%)
DISCOUNT TO THE THEN CURRENT MARKET PRICE BASED ON THE AVERAGE CLOSING PRICE FOR
THE 20 DAYS IMMEDIATELY PRECEDING THE CONVERSION, WITH THE EXCEPTION THAT THE
CONVERSION PRICE SHALL NOT BE LOWER THAN $0.166. THE NOTE MAY BE EXTENDED FOR
ONE YEAR UNDER THE SAME TERMS. PORT WAS ALSO ISSUED 312,500 FIVE-YEAR COMMON
STOCK PURCHASE WARRANTS WITH A FIXED EXERCISE PRICE OF $.75 PER SHARE.
5. THE COMPANY INTENDS TO ISSUE 100,000 WARRANTS TO PURCHASE SHARES OF THE
COMPANY'S COMMON STOCK AT A STRIKE PRICE OF $.17 PER SHARE TO XXXXXXXX XXXXXXX.
6. THE COMPANY INTENDS TO ISSUE 200,000 WARRANTS TO PURCHASE SHARES OF THE
COMPANY'S COMMON STOCK AT A STRIKE PRICE OF $.17 PER SHARE TO XXXXXX XXXXXXXX.
SCHEDULE 3.14
INDEBTEDNESS AND OTHER CONTRACTS
1. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO
XXXXXXXX XXXXXXX:
PRINCIPAL AMOUNT OF NOTE OF $100,000 PLUS INTEREST WAS DUE ON APRIL 17,
2006. THE COMPANY IS IN DEFAULT UNDER THE NOTE.
2. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXX
XXXXXXXXX:
PRINCIPAL AMOUNT OF NOTE OF $200,000 PLUS INTEREST WAS DUE ON DECEMBER 14,
2005. THE NOTE HAS BEEN VERBALLY EXTENDED.
3. EMPLOYMENT AGREEMENT BETWEEN MEDICAL MEDIA TELEVISION, INC. AND XXXXXXX X.
XXXXXXXXXX:
DATED AS OF NOVEMBER 16, 2005; IN DEFAULT REGARDING PAYMENTS.
4. EMPLOYMENT AGREEMENT BETWEEN AFRICAN AMERICAN MEDICAL NETWORK, INC. AND
XXXXXX CAMBRIDGE:
DATED AS OF NOVEMBER 16, 2005; IN DEFAULT REGARDING PAYMENTS.
5. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXX
PORT FOR $100,000 DATED FEBRUARY 15, 2006:
THIS ONE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE
CAPITALSMART NOTE FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH MAY BE
PAID AT THE END OF EACH QUARTER IN EITHER (I) SHARES OF THE COMPANY'S
SERIES C ZERO COUPON PREFERRED STOCK VALUED A $1.00 PER SHARE, OR (II)
CASH, AT THE OPTION OF PORT. ON THE MATURITY DATE, PORT HAS THE OPTION TO
CONVERT THE NOTE INTO SHARES OF THE COMPANY'S COMMON STOCK AT A PRICE
EQUAL TO $0.40 PER SHARE OR AN AMOUNT EQUAL TO A TWENTY PERCENT (20%)
DISCOUNT TO THE THEN CURRENT MARKET PRICE BASED ON THE AVERAGE CLOSING
PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE CONVERSION, WITH THE
EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER THAN $0.166. THE
NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. PORT WAS ALSO
ISSUED 250,000 FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED
EXERCISE PRICE OF $.75 PER SHARE.
6. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXXX
X. XXXX FOR $200,000 DATED FEBRUARY 16, 2006:
THIS THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE
CAPITALSMART NOTE FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST
WILL ACCRUE BUT NOT BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE
MATURITY DATE, XXXX HAS THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE
COMPANY'S COMMON STOCK AT A PRICE EQUAL A TWENTY PERCENT (20%) DISCOUNT TO
THE THEN CURRENT MARKET PRICE BASED ON THE AVERAGE CLOSING PRICE FOR THE
20 DAYS IMMEDIATELY PRECEDING THE CONVERSION, WITH THE EXCEPTION THAT THE
CONVERSION PRICE SHALL NOT BE LOWER THAN $0.166. THE NOTE MAY BE EXTENDED
FOR ONE YEAR UNDER THE SAME TERMS. XXXX WAS ALSO ISSUED 500,000 FIVE-YEAR
COMMON STOCK PURCHASE WARRANTS WITH A FIXED EXERCISE PRICE OF $.75 PER
SHARE.
7. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO SOFTREV
PARTNERS, INC. FOR $250,000 DATED MARCH 30, 2006:
THIS THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE
CAPITALSMART NOTE FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST
WILL ACCRUE BUT NOT BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE
MATURITY DATE, SOFTREV PARTNERS HAS THE OPTION TO CONVERT THE NOTE INTO
SHARES OF THE COMPANY'S COMMON STOCK AT A PRICE EQUAL A TWENTY PERCENT
(20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE BASED ON THE AVERAGE
CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE CONVERSION, WITH
THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER THAN $0.166.
THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. SOFTREV
PARTNERS WAS ALSO ISSUED 625,000 FIVE-YEAR COMMON STOCK PURCHASE WARRANTS
WITH A FIXED EXERCISE PRICE OF $.75 PER SHARE.
8. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXXX
X. XXXXXX FOR $450,000 DATED MARCH 31, 2006:
THIS THREE-YEAR NOTE WAS ISSUED AS A PARTIAL REPLACEMENT FOR THE
CAPITALSMART NOTE FOR $1,000,000. IT BEARS INTEREST AT 20% WHICH INTEREST
WILL ACCRUE BUT NOT BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE
MATURITY DATE, XXXXXX HAS THE OPTION TO CONVERT THE NOTE INTO SHARES OF
THE COMPANY'S COMMON STOCK AT A PRICE EQUAL A TWENTY PERCENT (20%)
DISCOUNT TO THE THEN CURRENT MARKET PRICE BASED ON THE AVERAGE CLOSING
PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE CONVERSION, WITH THE
EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE LOWER THAN $0.166. THE
NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME TERMS. XXXXXX WAS ALSO
ISSUED 1,125,000 FIVE-YEAR COMMON STOCK PURCHASE WARRANTS WITH A FIXED
EXERCISE PRICE OF $.75 PER SHARE.
9. CONVERTIBLE PROMISSORY NOTE FROM MEDICAL MEDIA TELEVISION, INC. TO XXXXXX
X. PORT FOR $125,000 DATED APRIL 1, 2006:
THIS ONE-YEAR NOTE BEARS INTEREST AT 20% WHICH INTEREST WILL ACCRUE BUT
NOT BECOME DUE AND PAYABLE UNTIL THE MATURITY DATE. ON THE MATURITY DATE,
PORT HAS THE OPTION TO CONVERT THE NOTE INTO SHARES OF THE COMPANY'S
COMMON STOCK AT A PRICE EQUAL TO $0.40 PER SHARE OR AN AMOUNT EQUAL TO A
TWENTY PERCENT (20%) DISCOUNT TO THE THEN CURRENT MARKET PRICE BASED ON
THE AVERAGE CLOSING PRICE FOR THE 20 DAYS IMMEDIATELY PRECEDING THE
CONVERSION, WITH THE EXCEPTION THAT THE CONVERSION PRICE SHALL NOT BE
LOWER THAN $0.166. THE NOTE MAY BE EXTENDED FOR ONE YEAR UNDER THE SAME
TERMS. PORT WAS ALSO ISSUED 312,500 FIVE-YEAR COMMON STOCK PURCHASE
WARRANTS WITH A FIXED EXERCISE PRICE OF $.75 PER SHARE.
SCHEDULE 3.20
EMPLOYEE RELATIONS
EMPLOYMENT AGREEMENT BETWEEN MEDICAL MEDIA TELEVISION, INC. AND XXXXXXX X.
XXXXXXXXXX:
DATED AS OF NOVEMBER 16, 2005; IN DEFAULT REGARDING PAYMENTS.
EMPLOYMENT AGREEMENT BETWEEN AFRICAN AMERICAN MEDICAL NETWORK, INC. AND XXXXXX
CAMBRIDGE:
DATED AS OF NOVEMBER 16, 2005; IN DEFAULT REGARDING PAYMENTS.
SCHEDULE 3.22
INTELLECTUAL PROPERTY RIGHTS
1. NOTICE OF PUBLICATION WAS RECEIVED INDICATING THAT THE LOGO (SUBJECT XXXX)
OF AFRICAN AMERICAN MEDICAL NETWORK, INC. HAS BEEN APPROVED BY THE UNITED
STATES PATENT AND TRADEMARK OFFICE. SERIAL NUMBER: 78/473792; FILING DATE:
08/26/04; INTERNATIONAL CLASSES 009 AND 042.
SCHEDULE 3.27
MATERIAL CONTRACTS
PLEASE REFERENCE SCHEDULE 3.14.
SCHEDULE 5.4(l)
WAIVERS
WARRANT NUMBER OF
DATE WARRANT DESCRIPTION WARRANT HOLDER WARRANTS
------- ----------------------------------------- ----------------------- ---------
5/17/04 Common Stock Purchase Warrant-W-HCW-04-01 X.X. Xxxxxxxxxx & Co., Inc. 7,396
0/00/00 Xxxxxx Xxxxx Xxxxxxxx Xxxxxxx-X-XXX-00-00 Xxxxxx Business
Consultants, LLC 3,556
5/17/04 Common Stock Purchase Warrant-W-HCW-04-03 Xxxx X. Xxxxxx 3,067
5/17/04 Common Stock Purchase Warrant-W-HCW-04-04 Xxxxx X. Xxxx 3,067
5/17/04 Common Stock Purchase Warrant-W-HCW-04-05 Xxx X. Xxxxx 347
5/17/04 Common Stock Xxxxxxxx Xxxxxxx-X-XXX-00-00 Xxxxxxx Xxxxxx 347
------
17,780
------
7/28/04 Common Stock Purchase Warrant TotalCFO, LLC 10,000
------
3/16/05 Common Stock Purchase Warrant MidTown Partners & Co., LLC 1,667
5/6/05 Series D Common Stock Warrant-05-0605-D-MP MidTown Partners & Co., LLC 20,000
7/19/05 Series BB Common Stock Warant-05-0719AM MidTown Partners & Co., LLC 50,000
------
71,667
------
TOTAL WARRANTS 99,447
======
