Exhibit 10.16
PROMISSORY NOTE
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$488,149.03 June 30, 2005
----------- Dallas, Texas
FOR VALUE RECEIVED, the undersigned, MedSolutions, Inc., a Texas
corporation (the "the Maker"), hereby unconditionally promises to pay to the
order of Xxxx X. Xxxx, an individual and resident of the State of Ohio (the
"Payee"), at such place as designated by the Payee, or at such other place or to
such other party or parties as may be designated by the Payee from time to time,
in lawful money of the United States of America, the principal amount of four
hundred eighty eight thousand and one hundred forty nine dollars and three cents
($488,149.03) (the "Principal Amount"), with simple interest at an annual rate
of ten per cent (10%).
1. This Promissory Note (the "Note") shall be due and payable in 25
monthly payments of principal and interest on the (7th) day of each month,
commencing on July 7th, 2005, and each in the amount of twenty one thousand
seven hundred eleven dollars and forty four cents ($21,711.44) (an
"Installment"), with the final Installment due on July 7th, 2007 (the "Maturity
Date"); provided, that each such Installment shall be in the form of a check
delivered to an address as may be designated by the Payee. Each date on which a
payment is due, including the Maturity Date, shall be referred to herein as a
"Payment Date"; provided, however, that if a Payment Date should fall on a
Saturday, Sunday, or bank holiday, then the Payment Date shall be the next
business day.
2. Notation of Indebtedness and Payments. The Payee is authorized to
record the date and amount of the indebtedness evidenced by this Note, and the
date and amount of each payment and prepayment of principal hereof on any
schedule annexed hereto and made a part hereof, or on a continuation thereof
which shall be attached thereto and made a part hereof, and any such notation
shall be conclusive and binding for all purposes absent manifest error;
provided, however, that failure by the Payee to make any such notation shall not
affect the obligations of the Maker hereunder.
3. Prepayment. This Note is subject to prepayment in whole or in part at
any time or from time to time, without premium or penalty of any kind
whatsoever. All partial prepayments shall be applied first to accrued but unpaid
interest and then to the outstanding principal amount of this Note.
4. Default.
(a) Each of the following shall constitute an "Event of Default" under
this Note:
(i) The Maker shall fail to pay when due any Installment or any other
amount due hereunder in the manner provided herein, and such default shall
continue unremedied for a period of ten (10) business days; or
(ii) A substantial part of any of the operations or business of the
Maker is suspended, other than in the ordinary course of business, which
suspension has a material adverse effect on the Maker's financial
condition; or
(iii) The Maker commences any case, proceeding or other action
relating to it in bankruptcy or seeking reorganization, liquidation,
dissolution, winding-up, arrangement, composition, compromise, readjustment
of its debts or any other relief under any bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement, composition,
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compromise, readjustment of debt or similar act or law of any jurisdiction,
now or hereafter existing, or consents to, approves of or acquiesces in,
any such case, proceeding or other action, or applies for a receiver,
trustee or custodian for itself or for all or a substantial part of its
properties or assets, or makes an assignment for the benefit of creditors,
or fails generally to pay its debts as they mature or admits in writing its
inability to pay its debts as they mature, or is adjudicated insolvent or
bankrupt; or
(iv) There is commenced against the Maker any case or proceeding, or
any other action is taken against the Maker in bankruptcy or seeking
reorganization, liquidation, dissolution, winding-up, arrangement,
composition, compromise, readjustment of its debts or any other relief
under any bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement, composition, compromise, readjustment of debt or similar act
or law of any jurisdiction, now or hereafter existing; or there is
appointed a receiver, trustee or custodian for the Maker or for all or a
substantial part of its properties or assets; or there is issued a warrant
of attachment, execution or similar process against any substantial part of
the properties or assets of the Maker, and any such event continues for 90
days un-dismissed, un-bonded or un-discharged.
(b) If any Event of Default shall have occurred and be continuing, the
Payee may, by written notice to the Maker, declare this Note, all interest
hereon and all other amounts, if any, payable hereunder or in respect of this
Note to be forthwith due and payable, whereupon they shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Maker.
Notwithstanding the foregoing, upon the occurrence of any of the events or
conditions described in subsection (iii) or (iv) of Section 4(a) above, this
Note, all interest hereon and all other amounts, if any, payable hereunder or in
respect of this Note shall immediately become due and payable, without any
requirement on the part of the Payee to give notice, or make declaration, of any
kind regarding such Event of Default and without presentment, demand, protest or
any other requirement on the part of the Payee, all of which are hereby
expressly waived by the Maker.
(c) From and after the occurrence of any Event of Default, and for so long
as such Event of Default shall continue, the unpaid principal amount of this
Note shall bear interest at a rate per annum equal to the lesser of (i) ten
percent (10%), or (ii) the Highest Lawful Rate (as defined below), payable on
demand.
5. Waiver of Certain Demands and Notices. Presentment for payment,
demand, notice of dishonor, protest, notice of protest and all other demands and
notices in connection with the delivery, performance and enforcement of this
Note are hereby expressly waived by the Maker.
6. Payment of Court Costs. If this Note is placed in the hands of an
attorney for collection, or if it is collected through any legal proceedings,
the Maker agrees to pay court costs, reasonable attorneys' fees and other costs
of collection of the holder hereof.
7. Usury. It is the intention of the Maker to conform strictly to
applicable usury laws now or hereafter in force, and therefore all agreements
between the Maker and the Payee are expressly limited so that in no contingency
or event whatsoever, whether by reason of advancement of the proceeds hereof,
acceleration of maturity of the unpaid principal balance hereof or otherwise,
shall the amount paid or agreed to be paid to the Payee, for the use,
forbearance or detention of the money to be advanced hereunder exceed the
highest lawful rate permitted by applicable law. Regardless of any provision
contained herein, or in any other documents or instruments executed in
connection herewith, the Payee shall never be entitled to receive, collect or
apply, as interest hereon, any amount in excess of the Highest Lawful Rate
(hereinafter defined) and in the event the Payee ever receives, collects or
applies, as interest, any such excess, such amount which would be excessive
interest shall be deemed a partial prepayment of principal and treated hereunder
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as such; and, if the principal hereof is paid in full, any remaining excess
shall be refunded to the Maker. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the Highest Lawful Rate, the
Maker and the Payee shall, to the maximum extent permitted under applicable law,
(a) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof, and
(c) spread the total amount of interest throughout the entire contemplated term
hereof; provided that if the interest received for the actual period of
existence hereof exceeds the Highest Lawful Rate, the Payee shall either apply
or refund to the Maker the amount of such excess as herein provided, and in such
event the Payee shall not be subject to any penalties provided by any laws for
contracting for, charging or receiving interest in excess of the Highest Lawful
Rate. As used in this Note, the term "Highest Lawful Rate" means, at any given
time during which indebtedness shall be outstanding hereunder, the maximum
non-usurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the indebtedness
evidenced by this Note under the laws of the United States and applicable state
law currently in effect or, to the extent allowed by law, under such applicable
laws of the United States and applicable state law may hereafter be in effect
and which allow a higher maximum non-usurious interest rate than applicable laws
now allow, in any case after taking into account, to the extent required by
applicable law, any and all relevant payments or charges under this Note and any
documents executed in connection herewith.
8. Additional Covenants of the Maker.
(a) The Maker shall comply with the reporting requirements of Sections 13
and 15(d) of the Securities Exchange Act of 1934, as amended, for so long as and
to the extent that such requirements apply to the Maker.
(b) The Maker shall not, by amendment of its Articles of Incorporation or
Bylaws or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this Note.
(c) Until the entire Principal Amount of and all accrued but unpaid
interest on this Note is paid in full, the Maker shall not sell all or a
significant portion of the Maker's assets, or merge or enter into any
combination or consolidation with another person or entity in which it is not
the surviving entity, without the prior written consent of the Payee (which
consent shall not be unreasonably withheld).
9. Governing Law. This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Texas. Venue for any
action arising out of this Note shall lie exclusively in Dallas County, Texas.
10. Permitted Transfer or Assignment by Holder. The holder of this Note
may not transfer or assign to any person or entity all or any portion of this
Note unless, prior to any transfer or assignment, the holder of this Note gives
written notice to the Maker of such holder's proposal to effect such transfer or
assignment, together with such information and other written assurances as the
Maker may reasonably request with respect to the proposed transfer or assignment
and the proposed transferee or assignee. The Maker and the holder of this Note
acknowledge that the foregoing condition is intended only to ensure compliance
with the provisions of the Securities Act of 1933, as amended, and any
applicable state securities laws in respect of the transfer or assignment of
this Note.
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12. Successors and Assigns. This Note shall be binding upon the Maker and
its successors, and shall inure to the benefit of the Payee and its successors
and permitted assigns. The Maker shall not assign its obligations hereunder
without the prior written consent of the Payee.
13. Notices. Any notice, request, demand or other communication permitted
or required to be given pursuant to this Note shall be in writing, shall be sent
by one of the following means to the addressee at the address set forth below
(or at such other address as shall be designated hereunder by notice to the
other parties receiving copies, effective upon actual receipt) and shall be
deemed conclusively to have been given: (a) on the first business day following
the day timely deposited with Federal Express (or other equivalent national
overnight courier) or United States Express Mail, with the cost of delivery
prepaid; (b) on the fifth business day following the day duly sent by certified
or registered United States mail, postage prepaid and return receipt requested;
or (c) when otherwise actually delivered to the addressee. If a written notice
or signed item is expressly required by another provision of this Note, a
manually signed original must be delivered by the party giving it. Any other
notice, request, demand or other communication also may be sent by telegram or
facsimile, with the cost of transmission prepaid, and shall be deemed
inclusively to have been given on the day duly sent. Copies may be sent by
regular first-class mail, postage prepaid, to the parties set forth below, but
any failure or delay in sending copies shall not affect the validity of any such
notice, request, demand or other communication so given to a party. The
addresses of the parties are as follows:
(i) If to the Maker:
MedSolutions, Inc.
00000 Xxxxx Xxxxx
Xxxx Xxxxxxx XXX, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
(ii) If to the Payee:
Xxxx X Xxxx
00000 Xxx Xxxxx Xxxx
Xxxxxx Xxxx, XX 00000
000-000-0000
14. Severability. In case any provision of this Note shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
15. Amendments and Waivers. This Note may be amended only with the mutual
consent of the Payee and the Maker. No amendment or waiver or modification of
this Note shall be effective unless in writing and signed by both the Maker and
the Payee.
16. WAIVER OF JURY TRIAL. THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
NOTE AND AGREES THAT ANY SUCH DISPUTE SHALL, AT THE OPTION OF THE PAYEE, BE
TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
17. Acknowledgement of Payee. Payee hereby acknowledges that this Note
restates and supersedes in its entirety all of Maker's outstanding obligations
and liabilities pursuant to those certain promissory notes issued by Maker to
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Payee (i) dated March 7, 2004 in the original principal amount of $500,000, (ii)
dated July 7, 2004 in the original principal amount of $250,000, (iii) dated
September 27, 2004 in the original principal amount of $150,000, (iv) dated
December 6, 2004 in the original principal amount of $100,000, (v) dated
February 14, 2005 in the original principal amount of $75,000, each of which has
been duly cancelled and returned to Maker by Xxxxx as of the same date hereof.
MEDSOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
Agreed to and Accepted this Date: __________, 2005
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
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