Exhibit 4.2
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FORM OF PROMISSORY NOTE
$ 500,000 AUGUST __, 2005
FOR VALUE RECEIVED, SYNOVA HEALTHCARE GROUP, INC., a Nevada corporation
(the "BORROWER"), with an address at 0000 X. Xxxxxxxxxx Xxxx, Xxxxxxxx XX, Xxxxx
0000, Xxxxx, Xxxxxxxxxxxx 00000, promises to pay to the order of [LENDER], a
__________________ organized under the laws of ______________ (the "LENDER"), in
lawful money of the United States of America in immediately available funds at
its offices located at ______________________________, or at such other location
as the Lender may designate from time to time, the principal sum of Five Hundred
Thousand Dollars AND 00/100 DOLLARS ($ 500,000) (the "LOAN"), together with
interest accruing on the outstanding principal balance from the date hereof
("NOTE"), as provided below:
1. RATE OF INTEREST. The outstanding Loan will bear interest at a fixed
rate per annum equal to nine percent (9%). Interest hereunder shall be prepaid
through the Maturity Date on the date of issuance of this Note. In no event will
the rate of interest hereunder exceed the maximum rate allowed by law.
2. PAYMENT TERMS. All outstanding principal shall be due and payable in
full on the date which is six months from the date of this Note (the "Maturity
Date"). If any payment under this Note shall become due on a Saturday, Sunday or
public holiday, such payment shall be made on the next succeeding business day
and such extension of time shall be included in computing interest in connection
with such payment. Payments received will be applied to charges, fees and
expenses (including attorneys' fees), accrued interest and principal in any
order the Lender may choose, in its sole discretion.
3. DEFAULT INTEREST. Upon the occurrence of an Event of Default, the
outstanding balance of the Loan will bear interest at a fixed rate per annum
equal to eleven percent (11%).
4. PREPAYMENTS.
4.1 OPTIONAL PREPAYMENTS. Borrower may prepay this Note in whole or in
part, at any time or from time to time, without penalty or premium.
4.2 MANDATORY PREPAYMENTS. Upon Xxxxxxxx's receipt of not less than One
Million Five Hundred Thousand Dollars ($1,500,000) from the proceeds received in
connection with the exercise of any warrants issued by the Borrower and
outstanding as of the date hereof, Borrower shall repay the Loan in full.
5. OPTION TO CONVERT TO COMMON STOCK.
5.1 CONVERSION. In the event that Xxxxxxxx has not repaid the Loan in
full on or before the Maturity Date, Xxxxxxxx agrees that Lender shall have the
option to convert ("Conversion") up to one hundred percent (100%) of the
outstanding principal balance of the Loan into shares of common stock of
Borrower. Upon receipt of a Conversion Notice (as
defined below), Borrower shall cause shares of common stock of Borrower in a
number equal to (i) the Conversion Amount (as defined below), divided by (ii) a
per share price equal to fifty percent (50%) of the average closing sale price
per share for the twenty (20) trading days preceding the Maturity Date, to be
issued to Lender. No fractional shares shall be issued hereunder.
5.2 CONVERSION NOTICE. A Conversion hereunder may only be exercised by
Xxxxxx pursuant to a written notice sent to Borrower within fifteen (15) days
following the Maturity Date ("Conversion Notice"). The Conversion Notice shall
set forth the amount of the outstanding principal balance of the Loan that
Xxxxxx has elected to convert into shares of common stock (the "Conversion
Amount").
5.3 LENDER'S REPRESENTATION. In connection with a Conversion, Xxxxxx
agrees to execute and deliver to Xxxxxxxx, Xxxxxxxx's standard from of
subscription agreement, which will contain representations and warranties from
Lender, including, without limitation, representations to confirm Lender's
status as an "accredited investor" (as defined in the Securities Act of 1933, as
amended).
5.4 REDUCTION IN LOAN. Upon completion of a Conversion, the outstanding
principal balance due under this Note shall automatically be reduced by the
Conversion Amount without further action of Lender or Borrower.
6. OTHER DOCUMENTS. This Note is issued in connection with a Securities
Purchase Agreement between the Borrower and the Lender dated the date hereof,
and the other agreements and documents executed in connection therewith or
referred to therein, the terms of which are incorporated herein by reference (as
amended, modified or renewed from time to time, collectively the "Securities
Purchase Documents"). Capitalized terms used but not defined herein, shall have
the meaning ascribed to them in the Securities Purchase Documents.
7. EVENTS OF DEFAULT. The occurrence of any of the following events
will be deemed to be an "EVENT OF DEFAULT" under this Note: (i) the nonpayment
of any principal, interest or other indebtedness under this Note within five (5)
days of the date that Borrower receives Notice such payment is due; (ii) the
occurrence of any event of default or default and the lapse of any Notice or
cure period under the Securities Purchase Agreement; provided however, that if
such default or event of default is capable of being cured, such default or
event of default shall not be deemed an Event of Default hereunder if Borrower
has taken steps necessary to cure such default or event of default and such
default or event of default is cured within thirty (30) days of the date
Borrower receives a Notice from Lender that such default or event of default
exists, provided further, that Borrower shall not have the right to cure any
default or event of default more than one (1) time during the term of this Note;
(iii) the filing by or against Borrower of any proceeding in bankruptcy,
receivership, insolvency, reorganization, liquidation, conservatorship or
similar proceeding (and, in the case of any such proceeding instituted against
Borrower, such proceeding is not dismissed or stayed within 30 days of the
commencement thereof); (iv) any assignment by Borrower for the benefit of
creditors, or any levy, garnishment, attachment or similar proceeding is
instituted against any property of Borrower held by or deposited with the
Lender; or (v) Borrower ceases doing business as a going concern.
Upon the occurrence of an Event of Default specified in clause (iii) or
(iv) above, the outstanding principal balance and accrued interest hereunder
together with any additional amounts payable hereunder shall be immediately due
and payable without demand or notice of any kind; upon the occurrence of any
other Event of Default, the outstanding principal balance and accrued interest
hereunder together with any additional amounts payable hereunder may, at the
Lender's option and without demand or notice of any kind, be accelerated and
become immediately due and payable. In any case, upon the occurrence of an Event
of Default, the Lender may exercise from time to time any of the rights and
remedies available under the Securities Purchase Documents or under applicable
law.
8. MISCELLANEOUS. All notices, demands, requests, consents, approvals
and other communications required or permitted hereunder must be delivered in
accordance with Section 5.3 of the Securities Purchase Agreement. No delay or
omission on the Lender's part to exercise any right or power arising hereunder
will impair any such right or power or be considered a waiver of any such right
or power, nor will the Lender's action or inaction impair any such right or
power. No modification, amendment or waiver of any provision of this Note nor
consent to any departure by the Borrower therefrom will be effective unless made
in a writing signed by the Lender. The Borrower agrees to pay on demand, to the
extent permitted by law, all costs and expenses incurred by the Lender in the
enforcement of its rights in this Note and in any security therefor, including
without limitation reasonable fees and expenses of the Lender's counsel. If any
provision of this Note is found to be invalid by a court, all the other
provisions of this Note will remain in full force and effect. The Borrower and
all other makers and indorsers of this Note hereby forever waive presentment,
protest, notice of dishonor and notice of non-payment. The Borrower also waives
all defenses based on suretyship or impairment of collateral. This Note shall
bind the Borrower and its heirs, executors, administrators, successors and
assigns, and the benefits hereof shall inure to the benefit of the Lender and
its successors and assigns; provided, however, that the Borrower may not assign
this Note in whole or in part without the Lender's written consent and the
Lender at any time may assign this Note in whole or in part.
This Note has been delivered to and accepted by the Lender and will be
deemed to be made in the Commonwealth of Pennsylvania. This Note will be
interpreted and the rights and liabilities of the Lender and the Borrower
determined in accordance with the laws of the Commonwealth of Pennsylvania,
excluding its conflict of laws rules. The Borrower hereby irrevocably consents
to the exclusive jurisdiction of any state or federal court in the county or
judicial district in the Commonwealth of Pennsylvania; provided that nothing
contained in this Note will prevent the Lender from bringing any action,
enforcing any award or judgment or exercising any rights against the Borrower
individually, against any security or against any property of the Borrower
within any other county, state or other foreign or domestic jurisdiction. The
Borrower acknowledges and agrees that the venue provided above is the most
convenient forum for both the Lender and the Borrower. The Borrower waives any
objection to venue and any objection based on a more convenient forum in any
action instituted under this Note.
WITNESS the due execution hereof as a document under seal, as of the
date first written above, with the intent to be legally bound hereby.
SYNOVA HEALTHCARE GROUP, INC.
By:
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Xxxxxxx X. Xxxx
Chief Executive Officer
Agreed to and accepted intending
to be legally bound hereby:
[______________]
as Lender
By: _______________________________
Name:______________________________
Title: ____________________________
