THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. 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 AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO NATIONAL INVESTMENT MANAGERS INC.
THAT SUCH REGISTRATION IS NOT REQUIRED.
SECURED TERM NOTE
FOR VALUE RECEIVED, NATIONAL INVESTMENT MANAGERS INC., a Florida
corporation (the "Borrower"), hereby promises to pay to LAURUS MASTER FUND,
LTD., c/o M&C Corporate Services Limited, P.O. Box 309 GT, Xxxxxx House, South
Church Street, Xxxxxx Town, Grand Cayman, Cayman Islands, Fax: 000-000-0000 (the
"Holder") or its registered assigns or successors in interest, on order, the sum
of Nine Million Two Hundred Thousand Dollars ($9,200,000), together with any
accrued and unpaid interest thereon, on November 30, 2009 (the "Maturity Date")
if not sooner paid. The original principal amount of this Note is hereinafter
referred to as the "Original Principal Amount", and, the principal amount from
time to time outstanding as adjusted pursuant to Section 1.1.(b) hereof, shall
be referred to as the "Principal Amount". .
Capitalized terms used herein without definition shall have the meanings
ascribed to such terms in that certain Securities Purchase Agreement dated as of
the date hereof between the Borrower and the Holder (the "Purchase Agreement").
The following terms shall apply to this Secured Term Note (this "Note"):
ARTICLE I
INTEREST & AMORTIZATION
1.1 Interest Rate. Subject to Section 5.6 hereof, interest payable on the
outstanding Principal Amount of this Note from time to time outstanding shall be
calculated on the basis of a 360 day year and shall accrue at a rate per annum
(the "Interest Rate") equal to seventeen and one-half percent (17.5%) per annum,
as follows:
(a) Interest in the amount of ten percent (10%) per annum (the "10%
Interest Tranche") shall accrue but not be payable during the period commencing
on the date hereof and ending on November 30, 2005. The 10% Interest Tranche
shall be payable monthly, in arrears, commencing on December 1, 2005 and on the
first day of each consecutive calendar month thereafter (each, a "Repayment
Date") and on the Maturity Date, whether by acceleration or otherwise or, in the
event of the redemption of all or any portion of the Principal Amount, accrued
interest on the amount so redeemed shall be paid on the date of redemption.
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(b) Interest in the amount of seven and one-half percent (7.5%) per annum
(the "7.5% Interest Tranche") shall accrue but not be payable during the period
commencing on the date hereof and ending on November 30, 2005. The 7.5% Interest
Tranche shall be payable monthly, in arrears, commencing on December 1, 2005 and
on each Repayment Date and on the Maturity Date, whether by acceleration or
otherwise or, in the event of the redemption of all or any portion of the
Principal Amount, accrued interest on the amount so redeemed shall be paid on
the date of redemption. Notwithstanding the foregoing, the Borrower may elect,
in lieu of paying the 7.5% Interest Tranche on a given Repayment Date, to add
the amount of the 7.5% Interest Tranche that is due on such Repayment Date to
the Principal Amount (such added amount, the "7.5% Interest Amount"). If the
Borrower elects to add the 7.5% Interest Amount to the Principal Amount
outstanding on a given Repayment Date, then the Borrower shall give written
notice to the Holder of such election, which notice shall be received by the
Holder no later than three (3) business days prior to such Repayment Date.
1.2 Minimum Monthly Principal Payments. Amortizing payments of the
outstanding Principal Amount of this Note shall begin on June 1, 2006 and shall
recur on each succeeding Repayment Date thereafter until the Principal Amount
has been repaid in full On each Repayment Date, the Borrower shall make payments
to the Holder in the amount of $219,047.62 (the "Monthly Principal Amount"),
together with any accrued and unpaid interest then due on such portion of the
Amortizing Principal Amount plus any and all other amounts which are then owing
under this Note that have not been paid (the Monthly Principal Amount, together
with such accrued and unpaid interest and such other amounts, collectively, the
"Monthly Amount");
Any Principal Amount, together with any accrued and unpaid interest and
any and all other unpaid amounts that are then owing by the Borrower or its
subsidiaries under this Note, the Purchase Agreement and/or any other Related
Agreement that remains outstanding on the Maturity Date shall be due and payable
on the Maturity Date.
ARTICLE II
OPTIONAL PREPAYMENT
2.1 Optional Redemption of Principal Amount. The Borrower will have the
option of prepaying the outstanding Principal Amount ("Optional Redemption"), in
whole or in part, by paying to the Holder a sum of money equal to (i) one
hundred percent (100%) of the Principal Amount to be redeemed, together with
accrued but unpaid interest thereon and (ii) any and all other sums due, accrued
or payable to the Holder arising under this Note, the Purchase Agreement or any
Related Agreement (the preceding clauses (i) and (ii), collectively, the
"Redemption Amount") on the Amortizing Redemption Payment Date (as defined
below). The Borrower shall deliver to the Holder a notice of redemption (the
"Notice of Redemption") specifying the date for such Optional Redemption (the
"Redemption Payment Date"), which date shall be not less than seven (7) business
days after the date of the Notice of Redemption (the "Redemption Period"). On
the Redemption Payment Date, the Redemption Amount shall be paid in good funds
to the Holder.
2.2 Mandatory Redemption. The total outstanding Principal Amount, together
with any accrued and unpaid interest and any and all other unpaid amounts that
are then owing by Borrower and its subsidiaries to Holder under this Note, the
Purchase Agreement and/or any Related Agreement shall be due and payable on the
Maturity Date.
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ARTICLE III
[INTENTIONALLY OMITTED]
ARTICLE IV
EVENTS OF DEFAULT
Upon the occurrence and continuance of an Event of Default beyond any
applicable grace period, the Holder may make all sums of principal, interest and
other fees then remaining unpaid hereon and all other amounts payable hereunder
immediately due and payable. In the event of such an acceleration, the amount
due and owing to the Holder shall be one hundred twenty percent (120%) of the
outstanding principal amount of the Note (plus accrued and unpaid interest and
fees, if any) (the "Default Payment"). The Default Payment shall be applied
first to any fees due and payable to Holder pursuant to this Note, the Purchase
Agreement or the Related Agreements, then to accrued and unpaid interest due on
the Note and then to outstanding principal balance of the Note.
The occurrence of any of the following events set forth in Sections 4.1
through 4.10, inclusive, is an "Event of Default":
4.1 Failure to Pay Principal, Interest or other Fees. The Borrower fails
to pay when due any installment of principal, interest or other fees hereon in
accordance herewith, or the Borrower fails to pay when due any amount due under
any of the Obligations, as such term is defined in the Master Security Agreement
dated as of March 10, 2005, as amended, modified and reaffirmed by that certain
Reaffirmation and Ratification Agreement and Amendment, dated as of the date
hereof (the "Reaffirmation Agreement", and such security agreement, as amended,
the "Master Security Agreement") or under the Indebtedness, as such term is
defined in the Stock Pledge Agreement dated as of March 7, 2005, as amended,
modified and reaffirmed by the Reaffirmation Agreement (the "Stock Pledge
Agreement") or under any other promissory note issued by Borrower to the Holder,
and in any such case, such failure shall continue for a period of three (3) days
following the date upon which any such payment was due.
4.2 Breach of Covenant. The Borrower breaches any covenant or any other
term or condition of this Note or the Purchase Agreement in any material
respect, or the Borrower or any of its Subsidiaries breaches any covenant or any
other term or condition of any Related Agreement in any material respect and,
any such case, such breach, if subject to cure, continues for a period of thirty
(30) days after the occurrence thereof.
4.3 Breach of Representations and Warranties. Any representation or
warranty made by the Borrower in this Note or the Purchase Agreement, or by the
Borrower or any of its Subsidiaries in any Related Agreement, shall, in any such
case, be false or misleading in any material respect on the date that such
representation or warranty was made or deemed made.
4.4 Receiver or Trustee. The Borrower or any of its Subsidiaries 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.
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4.5 Judgments. Any money judgment, writ or similar final process shall be
entered or filed against the Borrower or any of its Subsidiaries or any of their
respective property or other assets for more than $100,000, and shall remain
unvacated, unbonded or unstayed for a period of thirty (30) days.
4.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower or any
of its Subsidiaries and, in the case of any such proceeding instituted against
the Borrower or any of its Subsidiaries, shall not be vacated or dismissed
within sixty (60) days.
4.7 Stop Trade. An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for five (5) consecutive days
or five (5) days during a period of ten (10) consecutive days, excluding in all
cases a suspension of all trading on a Principal Market, provided that the
Borrower shall not have been able to cure such trading suspension within thirty
(30) days of the notice thereof or list the Common Stock on another Principal
Market within sixty (60) days of such notice. The "Principal Market" for the
Common Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap Market,
NASDAQ National Market System, American Stock Exchange, or New York Stock
Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock).
4.8 Default Under Related Agreements or Other Agreements. The occurrence
and continuance of any Event of Default (as defined in the Purchase Agreement or
any Related Agreement) or any event of default (or similar term) under any other
indebtedness of the Company and/or any of its Subsidiaries that equals or
exceeds $25,000 in outstanding principal amount in the aggregate for all such
indebtedness.
4.9 Change in Control. (i) Any "Person" or "group" (as such terms are
defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on the
date hereof) is or becomes the "beneficial owner" (as defined in Rules 13(d)-3
and 13(d)-5 under the Exchange Act), directly or indirectly, of 35% or more on a
fully diluted basis of the then outstanding voting equity interest of the
Borrower (other than a "Person" or "group" that beneficially owns 35% or more of
such outstanding voting equity interests of the Company on the date hereof) or
(ii) the Board of Directors of the Borrower shall cease to consist of a majority
of the Board of Directors of the Borrower on the date hereof (or directors
appointed by a majority of the Board of Directors in effect immediately prior to
such appointment).
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DEFAULT RELATED PROVISIONS
4.10 Default Interest Rate. Following the occurrence and during the
continuance of an Event of Default, the Borrower shall pay additional interest
on this Note in an amount equal to two percent (2%) per month, and all
outstanding obligations under this Note, including unpaid interest, shall
continue to accrue such additional interest from the date of such Event of
Default until the date such Event of Default is cured or waived.
4.1 Cumulative Remedies. The remedies under this Note shall be cumulative.
ARTICLE V
MISCELLANEOUS
5.1 Failure or Indulgence Not Waiver. No failure or delay on the part of
the 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.
5.2 Notices. Any notice herein required or permitted to be given shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party notified, (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day,
(c) five business days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one business day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Borrower at the address provided in the Purchase Agreement executed in
connection herewith, and to the Holder at the address provided in the Purchase
Agreement for such Holder, with a copy to Xxxx X. Xxxxxx, Esq., 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000,
or at such other address as the Borrower or the Holder may designate by ten days
advance written notice to the other parties hereto. A Notice of Conversion shall
be deemed given when made to the Borrower pursuant to the Purchase Agreement.
5.3 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, and any successor instrument issued pursuant to Section 3.5
hereof, as it may be amended or supplemented.
5.4 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, and may be assigned by the Holder in accordance with the
requirements of the Purchase Agreement. This Note shall not be assigned by the
Borrower without the consent of the Holder.
5.5 Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. 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 in New York County. Both parties and the individual signing this Note
on behalf of the Borrower agree to submit to the jurisdiction of such courts.
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The prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Note is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Note. Nothing contained herein shall be deemed or operate to preclude
the Holder from bringing suit or taking other legal action against the Borrower
in any other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court in favor of the Holder.
5.6 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.
5.7 Security Interest and Guarantee. Pursuant to the terms of the Master
Security Agreement dated and the Stock Pledge Agreement, the Holder has been
granted a security interest (i) in certain assets of the Borrower and its
Subsidiaries The obligations of the Borrower under this Note are guaranteed by
certain Subsidiaries of the Borrower pursuant to the Subsidiary Guaranty dated
as of March 10, 2005, as amended, modified and reaffirmed by the Reaffirmation
Agreement.
5.8 Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.
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5.9 Cost of Collection. If default is made in the payment of this Note,
the Borrower shall pay to Holder reasonable costs of collection, including
reasonable attorney's fees.
[Balance of page intentionally left blank; signature page follows.]
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IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its
name effective as of this 30th day of November, 2005.
NATIONAL INVESTMENT MANAGERS INC.
By:________________________________
Name:
Title:
WITNESS:
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