THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO SWISS MEDICA, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED NOTE
FOR VALUE RECEIVED, SWISS MEDICA, INC., a Delaware corporation
(hereinafter called "Borrower"), hereby promises to pay to DOUBLE U MASTER FUND
LP, c/o Navigator Management Ltd., Harbor House, Waterfront Drive, P.O. Box 000,
Xxxx Xxxx, Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx, Fax: (000) 000-0000, (the "Holder")
or order, without demand, the sum of Five Hundred and Sixty Thousand Dollars
($560,000.00), with simple interest accruing at the annual rate of fifteen
percent (15%), on December ___, 2005 (the "Maturity Date").
This Note has been entered into pursuant to the terms of a subscription
agreement between the Borrower and the Holder, dated of even date herewith (the
"Subscription Agreement"), and shall be governed by the terms of such
Subscription Agreement. This Note may be prepaid at any time. Unless otherwise
separately defined herein, all capitalized terms used in this Note shall have
the same meaning as is set forth in the Subscription Agreement. The following
terms shall apply to this Note:
ARTICLE I
PAYMENT AND INTEREST
1.1 Payment Grace Period. The Borrower shall have a five (5) business day
grace period to pay any monetary amounts due under this Note, after which grace
period a default interest rate of twenty-two percent (22%) per annum shall apply
to the amounts owed hereunder.
1.2 Repayment. The Note shall be payable in full on the Maturity Date;
provided, that if an Event of Default has occurred (whether or not such Event of
Default is continuing), the Borrower may not pay this Note without the consent
of the Holder until the later of the Maturity Date or until one year after the
Event of Default has been cured.
1.3 Interest Rate. Simple interest payable on this Note shall accrue at
the annual rate of fifteen percent (15%) and be payable monthly commencing July
1, 2005, and on the Maturity Date, accelerated or otherwise, when the principal
and remaining accrued but unpaid interest shall be due and payable, or sooner as
described below.
1.4 Subsequent Financing. The Maturity of this Note shall automatically be
accelerated to the date the Borrower receives the net proceeds from the sale by
Borrower of any equity or debt instruments with a gross offering amount of not
less than $2,500,000 ("Subsequent Financing"). The Company undertakes to pay all
amounts due on this Note out of the proceeds from and on the closing date of the
Subsequent Financing.
1.5 Maturity Date Extension. Provided an Event of Default has not occurred
or a Subsequent Financing has not occurred, then the Holder, upon written notice
to Borrower given between 150 and 160 days after the date of this Note may
extend the Maturity Date to not later than one year after the date of this Note.
Such extension shall be effective provided that the Borrower forwards to Holder
within five (5) days a cash payment of $10,000 payable to the Finder (as defined
in the Subscription Agreement) and a certificate in the name of the Holder
representing 100,000 common stock purchase warrants identical to and having the
same terms and conditions as the Warrants as described in the Subscription
Agreement.
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ARTICLE II
EVENT OF DEFAULT
The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums of principal
and interest then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable, upon demand, without presentment, or
grace period, all of which hereby are expressly waived, except as set forth
below:
2.1 Failure to Pay Principal or Interest. The Borrower fails to pay any
installment of principal, interest or other sum due under this Note when due and
such failure continues for a period of five (5) business days after the due
date. The five (5) business day period described in this Section 2.1 is the same
five (5) business day period described in Section 1.1 hereof.
2.2 Breach of Covenant. The Borrower breaches any material covenant or
other term or condition of the Subscription Agreement or this Note in any
material respect and such breach, if subject to cure, continues for a period of
ten (10) business days after written notice to the Borrower from the Holder, and
provided that the default shall no longer apply if the Company cures such breach
at any time after such ten business day period shall cause the Company.
2.3 Breach of Representations and Warranties. Any material representation
or warranty of the Borrower made herein, in the Subscription Agreement, or in
any agreement, statement or certificate given in writing pursuant hereto or in
connection therewith shall be false or misleading in any material respect as of
the date made and the Closing Date.
2.4 Receiver or Trustee. The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed.
2.5 Judgments. Any money judgment, writ or similar final process shall be
entered or filed against Borrower or any of its property or other assets for
more than $50,000, and shall remain unvacated, unbonded or unstayed for a period
of forty-five (45) days.
2.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law,
or the issuance of any notice in relation to such event, for the relief of
debtors shall be instituted by or against the Borrower and if instituted against
Borrower are not dismissed within 45 days of initiation.
2.7 Delisting. Delisting of the Common Stock from the OTC Bulletin Board
("Bulletin Board") or such other principal exchange on which the Common Stock is
listed for trading; failure to comply with the requirements for continued
listing on the Bulletin Board for a period of five (5) consecutive trading days;
or notification from the Bulletin Board or any Principal Market that the
Borrower is not in compliance with the conditions for such continued listing on
the Bulletin Board or other Principal Market.
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2.8 Stop Trade. An SEC or judicial stop trade order or Principal Market
trading suspension that lasts for five or more consecutive trading days.
2.9 Cross Default. A default by the Borrower of a material term, covenant,
warranty or undertaking of any other agreement to which the Borrower and Holder
are parties, or the occurrence of a material event of default under any such
other agreement which is not cured after any required notice and/or cure period.
ARTICLE III
SECURITY INTEREST
3. Security Interest/Waiver of Automatic Stay. This Note is secured by a
security interest granted to the Holder pursuant to a Security Agreement, as
delivered by Borrower to Holder. The Borrower acknowledges and agrees that
should a proceeding under any bankruptcy or insolvency law be commenced by or
against the Borrower, or if any of the Collateral (as defined in the Security
Agreement) should become the subject of any bankruptcy or insolvency proceeding,
then the Holder should be entitled to, among other relief to which the Holder
may be entitled under the Transaction Documents and any other agreement to which
the Borrower and Holder are parties (collectively, "Loan Documents") and/or
applicable law, an order from the court granting immediate relief from the
automatic stay pursuant to 11 U.S.C. Section 362 to permit the Holder to
exercise all of its rights and remedies pursuant to the Loan Documents and/or
applicable law. THE BORROWER EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, THE BORROWER EXPRESSLY
ACKNOWLEDGES AND AGREES THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION
OF THE BANKRUPTCY CODE OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION,
11 U.S.C. SECTION 105) SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN
ANY WAY THE ABILITY OF THE HOLDER TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES
UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. The Borrower hereby consents to
any motion for relief from stay that may be filed by the Holder in any
bankruptcy or insolvency proceeding initiated by or against the Borrower and,
further, agrees not to file any opposition to any motion for relief from stay
filed by the Holder. The Borrower represents, acknowledges and agrees that this
provision is a specific and material aspect of the Loan Documents, and that the
Holder would not agree to the terms of the Loan Documents if this waiver were
not a part of this Note. The Borrower further represents, acknowledges and
agrees that this waiver is knowingly, intelligently and voluntarily made, that
neither the Holder nor any person acting on behalf of the Holder has made any
representations to induce this waiver, that the Borrower has been represented
(or has had the opportunity to he represented) in the signing of this Note and
the Loan Documents and in the making of this waiver by independent legal counsel
selected by the Borrower and that the Borrower has discussed this waiver with
counsel.
ARTICLE IV
MISCELLANEOUS
4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of
Holder hereof in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.
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4.2 Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Borrower to: Swiss Medica, Inc., 00
Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0, Attn: Xxxxx Xxxxxxx,
CEO, telecopier: (000) 000-0000, with a copy by telecopier only to: Xxxxxxxxxx &
Xxxxx LLP, 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000, Attn:
Xxxx Xxxx, Esq., telecopier: (000) 000-0000, and (ii) if to the Holder, to the
name, address and telecopy number set forth on the front page of this Note, with
a copy by telecopier only to Grushko & Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, Xxx Xxxx 00000, telecopier number: (000) 000-0000.
4.3 Amendment Provision. The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented.
4.4 Assignability. This Note shall be binding upon the Borrower and its
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns.
4.5 Cost of Collection. If default is made in the payment of this Note,
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys' fees.
4.6 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York. Any action brought by either
party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. Both parties and the individual
signing this Agreement on behalf of the Borrower agree to submit to the
jurisdiction of such courts. The prevailing party shall be entitled to recover
from the other party its reasonable attorney's fees and costs.
4.7 Maximum Payments. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest required to be paid or other charges hereunder exceed the maximum
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Borrower to the Holder and thus refunded to the
Borrower.
4.8 Redemption. This Note may not be redeemed or called without the
consent of the Holder.
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IN WITNESS WHEREOF, Xxxxxxxx has caused this Note to be signed in its name
by an authorized officer as of the ____ day of June, 2005.
SWISS MEDICA, INC.
By:
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WITNESS:
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