EXHIBIT 10.35
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("THE ACT"), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR
RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY) IN THE FORM, SUBSTANCE AND SCOPE
REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION FROM REGISTRATION
UNDER THE ACT AND SUCH STATE SECURITIES LAWS.
CONVERTIBLE PROMISSORY NOTE
$110,000 JUNE 8, 2000
For value received, the undersigned, IMAGING DIAGNOSTIC
SYSTEMS, INC., a Florida corporation ("Maker"), hereby unconditionally
promises to pay to the order of Aspen International, Ltd. ("Holder"),
at such place as Holder may designate, the principal sum of ONE HUNDRED
TEN THOUSAND DOLLARS ($110,000), together with interest on the unpaid
principal amount of this Note, beginning as of the date hereof, before
or after maturity or judgment, at the rate of ten percent (10%) per
annum, which rate shall be computed monthly on the basis of a three
hundred sixty (360) day year and for actual days elapsed.
1. Proposed Financing. This Promissory Note is being made in
connection with the proposed private placement of Convertible Preferred Stock
(the "Convertible Preferred") by the Maker to the Holder and certain other
institutional investors (the "Proposed Financing").
2. Interest. Interest on the outstanding principal amount
under this Note shall accrue, in arrears, at the rate set forth herein,
commencing on the date hereof and continuing until the earlier of (i) the
conversion of this Note in accordance with Section 6 hereof and (ii) the
Maturity Date (as defined in Section 3 hereof).
If Maker shall fail to pay any amount owing to Holder under
this Note when due (whether at stated due date, upon acceleration or otherwise),
then to the extent permitted by law, Maker will pay interest to Holder, payable
on demand, on the amount in default from the date such payment became due until
payment in full at the rate of twelve percent (12%) per annum.
3. Payment. The outstanding principal amount of this Note plus
all accrued and unpaid interest shall be due and payable in cash or converted
into the Convertible Preferred, at the option of the Holder, on the Maturity
Date. For purposes of the Note, the term "Maturity Date" shall mean the earliest
of (i) the date the Holder request that the maker issue Convertible Preferred
upon the closing of the Proposed Financing (the "Closing"), (ii) July 10, 2000
and (iii) the date on which the Note becomes immediately due and payable
pursuant to Section 5 hereof, provided, however, that if the Closing does occur
on or before July 10, 2000 and no Event of Default (as defined hereinafter) has
occurred or is continuing then the outstanding principal balance of this Note
plus all unpaid accrued interest shall be converted into Convertible Preferred
in accordance with Section 6 hereof. If the Closing does not occur for any
reason whatsoever, the Maker will issue to the Holder a warrant to purchase
fifty thousand (50,000) shares of the Maker's common stock. Such Warrant shall
have an exercise price equal to 110% of the closing bid price of the Maker's
common stock on the trading date immediately preceding a date that is the
earlier of: (i) the first trading date after the maker is in default and (ii)
the date the Maker informs the Holder it intends to terminate the proposed
private placement of Convertible Preferred. The Warrants shall have a term of
two years from the Maturity Date and shall carry standard piggy-back
registration rights on any registration statement filed by the Maker.
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4. Events of Default. The occurrence at any time of any one or
more of the following events shall constitute an "Event of Default" under this
Note: (a) Maker's failure to pay principal, interest or other amount when due
under this Note, which failure remains unremedied for a period of ten (10) days
thereafter, (b) failure of Maker to perform in any material respect its
agreements and obligations, or a material breach of any of Maker's
representations and warranties, under the purchase agreement with respect to the
Convertible Preferred, which failure remains unremedied for a period of ten (10)
days thereafter; (c) the dissolution, liquidation or termination of legal
existence of Maker; (d) the appointment of a receiver, trustee or similar
judicial officer or agent to take charge of or liquidate any property of assets
of Maker, or action by any court to take jurisdiction of all or substantially
all of the property or assets of Maker; (e) the sale of all or substantially all
of Maker's property or assets; (f) the commencement of any proceeding by the
Maker or any other party under any provision of the Bankruptcy Code of the
United States as now in existence or hereafter amended, or of any other
proceeding under any applicable federal or state law, now existing or hereafter
in effect, relating to bankruptcy, reorganization, insolvency, liquidation or
otherwise, for the relief of debtors or readjustment of indebtedness, by or
against Maker; provided, that any proceeding commenced against the Maker remains
undismissed or unstayed for a period of 30 days, or any of the actions sought in
such proceedings occur.
5. Effect of Default. Maker agrees that upon the occurrence of
an Event of Default, the entire indebtedness with accrued interest thereon due
and owing under this Note shall, at the option of the Holder, be immediately due
and payable without presentment, demand, protest or notice, all of which are
hereby expressly unconditionally and irrevocably waived by the Maker. Failure to
exercise such option shall not constitute a waiver of the right to exercise the
same in the event of any subsequent Event of Default.
6. Conversion.
(a) On the Maturity Date all of the outstanding principal
amount and accrued and unpaid interest thereon due and owing under this Note
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shall automatically be converted into Convertible Preferred equal to the
outstanding principal amount of this Note, plus any accrued and unpaid interest;
provided, that the Closing occurs on or before July 10, 2000 and no Event of
Default has occurred or is continuing.
(b) In connection with the conversion of this Note in
accordance with this Section 6, the Holder shall deliver to the Maker the
original version of this Note to be converted marked "Canceled", and
acknowledged by the Holder to be paid-in-full in exchange for certificate(s)
representing the Convertible Preferred determined in accordance with Section
6(a) hereof.
(c) The Maker recognizes and acknowledges that a breach by
the Maker of the provisions of this Section 6 will cause irreparable and
material harm to the Holder, for which monetary damages will not provide an
adequate remedy, and accordingly, the Holder may bring a suit to specifically
enforce the provisions of this Section 6 by the Maker and to obtain other
equitable relief (without being required to post a bond or other security),
including, but not limited to, injunctive relief, as may be appropriate in any
court of competent jurisdiction, in addition to any and all other rights and
remedies available to the Holder at law or in equity or otherwise, and all such
rights and remedies shall be cumulative.
(d) At all times during which this Note remains outstanding,
the Maker agrees to reserve and keep available an authorized number of
Convertible Preferred sufficient to permit the conversion in full of this Note
and the Maker represents and warrants that all of the Convertible Preferred
issued upon conversion of this Note shall be duly and validly issued and fully
paid.
7. Transfer. Subject to the limitations set forth on the
legend on this Note, this Note may be transferred, sold, pledged, hypothecated
or otherwise granted as security by the Holder. The obligations of the Maker
hereunder may not be assigned. This Note shall inure to the benefit of the
transferees, successors and assigns of the Holder of this Note.
8. Replacement. Upon receipt of a duly executed, notarized
and unsecured written statement from the Holder with respect to the loss, theft
or destruction of this Note (or any replacement hereof), and without requiring
an indemnity bond or other security, or, in the case of a mutilation of this
Note, upon surrender and cancellation of such Note, the Maker shall issue a new
Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or
mutilated Note.
9. No Fractional Securities. The Maker shall not issue
fractional Convertible Preferred upon conversion of this Note, but in lieu of
such fractional Convertible Preferred, the Maker shall make cash payment
therefor upon the basis of the fair market value of the Convertible Preferred on
the Closing Date.
10. Enforcement Expenses. The Maker agrees to pay all costs
and expenses in connection with the enforcement of this Note (including, without
limitation, seeking equitable relief as contemplated by Section 6(c) hereof),
including, without limitation, all reasonable attorneys' fees and expenses.
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11. Waivers, Etc.
(a) Failure by the Holder to insist upon the strict
performance by Maker of any terms and provisions herein shall not be deemed to
be a waiver of any terms and provisions herein, and the Holder shall retain the
right thereafter to insist upon strict performance by the Maker of any and all
terms and provisions of this Note or any document securing the repayment of this
Note.
(b) Maker waives diligence, demand, presentment for payment,
notice of nonpayment, protest and notice of protest, and notice of any renewals
or extensions of this Note.
(c) This Note may not be amended or modified except by an
instrument in writing signed by the Maker and the Holder.
12. 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 law provisions). Maker hereby unconditionally and
irrevocably consents to the exclusive jurisdiction of any state or Federal court
located in New York County, New York, U.S.A., with respect to any claim, action,
suit or other proceeding arising out of or relating to, this Note.
13. Headings. Article and section headings in this Note are
included herein for purposes of convenience of reference only and shall not
constitute a part of this Note for any other purpose.
IMAGING DIAGNOSTIC SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: President
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THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS WARRANT SHALL NOT CONSTITUTE AN OFFER
TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
Act PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
COMMON STOCK PURCHASE WARRANT
To Purchase 50,000 Shares of Common Stock of
IMAGING DIAGNOSTIC SYSTEMS, INC.
THIS CERTIFIES that, for value received, ASPEN INTERNATIONAL,
LTD. (the "Investor/Lender"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time on or after July 7, 2000, and on
or prior to July 7, 2002 (the "Termination Date") but not thereafter, to
subscribe for and purchase from IMAGING DIAGNOSTIC SYSTEMS, INC., a Florida
corporation (the "Company"), fifty thousand (50,000) shares of Common Stock (the
"Warrant Shares"). The purchase price of one share of Common Stock (the
"Exercise Price") under this Warrant shall be equal to $1.452. The Exercise
Price and the number of shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein. This Warrant is being issued in
connection with a Convertible Promissory Note dated as of June 8, 2000, in the
amount of one hundred ten thousand ($110,000) Dollars (the "Note") between the
Company and Investor/Lender and is subject to its terms. In the event of any
conflict between the terms of this Warrant and the Note, the Note shall control.
1. Title of Warrant. Prior to the expiration hereof and
subject to compliance with applicable laws, this Warrant and all rights
hereunder are transferable, in whole or in part, at the office or agency of the
Company by the holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed.
2. Authorization of Shares. The Company covenants that all
shares of Common Stock which may be issued upon the exercise of rights
represented by this Warrant will, upon exercise of the rights represented by
this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).
3. Exercise of Warrant. Exercise of the purchase rights
represented by this Warrant may be made at any time or times, in whole, before
the close of business on the Termination Date, or such earlier date on which
this Warrant may terminate as provided in paragraph 11 below, by the surrender
of this Warrant and the Subscription Form annexed hereto duly executed, at the
office of the Company (or such other office or agency of the Company as it may
designate by notice in writing to the registered holder hereof at the address of
such holder appearing on the books of the Company) and upon payment of the
Exercise Price of the shares thereby purchased; whereupon the holder of this
Warrant shall be entitled to receive a certificate for the number of shares of
Common Stock so purchased. Certificates for shares purchased hereunder shall be
delivered to the holder hereof within five business days after the date on which
this Warrant shall have been exercised as aforesaid. Payment of the Exercise
Price of the shares may be by a certified check or cashier's check or by wire
transfer to an account designated by the Company in an amount equal to the
Exercise Price multiplied by the number of shares being purchased.
4. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of this
Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for
shares of Common Stock upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall be issued in
the name of the holder of this Warrant or in such name or names as may be
directed by the holder of this Warrant; provided, however, that in the event
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and provided further, that upon any transfer
involved in the issuance or delivery of any certificates for shares of Common
Stock, the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
6. Closing of Books. The Company will at no time close its
shareholder books or records in any manner which interferes with the timely
exercise of this Warrant.
7. No Rights as Shareholder until Exercise. This Warrant does
not entitle the holder hereof to any voting rights or other rights as a
shareholder of the Company prior to the exercise thereof. If, however, at the
time of the surrender of this Warrant and purchase the holder hereof shall be
entitled to exercise this Warrant, the shares so purchased shall be and be
deemed to be issued to such holder as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been exercised.
8. Assignment and Transfer of Warrant. This Warrant may be
assigned by the surrender of this Warrant and the Assignment Form annexed hereto
duly executed at the office of the Company (or such other office or agency of
the Company as it may designate by notice in writing to the registered holder
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hereof at the address of such holder appearing on the books of the Company);
provided, however, that this Warrant may not be resold or otherwise transferred
except (i) in a transaction registered under the Securities Act, or (ii) in a
transaction pursuant to an exemption, if available, from such registration.
9. Loss, Theft, Destruction or Mutilation of Warrant. The
Company represents and warrants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
any Warrant or stock certificate, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it, and upon reimbursement to
the Company of all reasonable expenses incidental thereto, and upon surrender
and cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of this Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or
appointed day for the taking of any action or the expiration of any right
required or granted herein shall be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a legal holiday.
11. Effect of Certain Events.
(a) If at any time the Company proposes (i) to sell or
otherwise convey all or substantially all of its assets or (ii) to effect a
transaction (by merger or otherwise) in which more than 50% of the voting power
of the Company is disposed of (collectively, a "Sale or Merger Transaction"), in
which the consideration to be received by the Company or its shareholders
consists solely of cash, the Company shall give the holder of this Warrant
thirty (30) days' written notice by certified mail of the proposed effective
date of the transaction specifying that the Warrant shall terminate if the
Warrant has not been exercised by the effective date of the transaction.
(b) In case the Company shall at any time effect a Sale or
Merger Transaction in which the consideration to be received by the Company or
its shareholders consists in part of consideration other than cash, the holder
of this Warrant shall have the right thereafter to purchase, by exercise of this
Warrant and payment of the aggregate Exercise Price in effect immediately prior
to such action, the kind and amount of shares and other securities and property
which it would have owned or have been entitled to receive after the happening
of such transaction had this Warrant been exercised immediately prior thereto.
(c) Registration. The Company agrees to register the shares of
Common Stock underlying this Warrant pursuant to the terms of the Convertible
Promissory Note. In addition to the foregoing, the Holder of this Warrant shall
have the right to include all of the shares of Common Stock underlying this
Warrant (the "Registrable Securities") as part of any registration of securities
filed by the Company (other than in connection with a transaction contemplated
by Rule 145(a) promulgated under the Act or pursuant to Form S-8) and must be
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notified in writing of such filing. Holder shall have five (5) business days to
notify the Company in writing as to whether the Company is to include Holder or
not include Holder as part of the registration; provided, however, that if any
registration pursuant to this Section shall be underwritten, in whole or in
part, the Company may require that the Registrable Securities requested for
inclusion pursuant to this Section be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. If in the good faith judgment of the underwriter evidenced in
writing of such offering only a limited number of Registrable Securities should
be included in such offering, or no such shares should be included, the Holder,
and all other selling stockholders, shall be limited to registering such
proportion of their respective shares as shall equal the proportion that the
number of shares of selling stockholders permitted to be registered by the
underwriter in such offering bears to the total number of all shares then held
by all selling stockholders desiring to participate in such offering. Those
Registrable Securities which are excluded from an underwritten offering pursuant
to the foregoing provisions of this Section (and all other Registrable
Securities held by the selling stockholders) shall be withheld from the market
by the Holders thereof for a period, not to exceed one hundred eighty (180)
days, which the underwriter may reasonably determine is necessary in order to
effect such underwritten offering.
12. Adjustments of Exercise Price and Number of Warrant
Shares. The number and kind of securities purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of any of the following.
In case the Company shall (i) declare or pay a dividend in
shares of Common Stock or make a distribution in shares of Common Stock to
holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (iv) effect a reclassification of
the Common Stock, the number of Warrant Shares purchasable upon exercise of this
Warrant immediately prior thereto shall be adjusted so that the holder of this
Warrant shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or have been entitled
to receive had such Warrant been exercised in advance thereof. An adjustment
made pursuant to this paragraph shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.
13. Voluntary Adjustment by the Company. The Company may at
its option, at any time during the term of this Warrant, reduce the then current
Exchange Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
14. Notice of Adjustment. Whenever the number of Warrant
shares or number or kind of securities or other property purchasable upon the
exercise of this Warrant or the Exercise Price is adjusted, as herein provided,
the Company shall promptly mail by registered or certified mail, return receipt
requested, to the holder of this Warrant notice of such adjustment or
adjustments setting forth the number of Warrant Shares (and other securities or
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property) purchasable upon the exercise of this Warrant and the Exercise Price
of such Warrant Shares after such adjustment, setting forth a brief statement of
the facts requiring such adjustment and setting forth computation by which such
adjustment was made. Such notice, in absence of manifest error, shall be
conclusive evidence of the correctness of such adjustment.
15. Authorized Shares. The Company covenants that during the
period the Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of any purchase rights under this Warrant. In
the event that the Company has insufficient authorized and unissued Common Stock
it shall seek to increase its authorized shares through either a written action
of the majority of its shareholders or a shareholder's meeting. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of the
Company's Common Stock upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be necessary to
assure that such shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the OTC
Bulletin Board or any domestic securities exchange upon which the Common Stock
may be listed.
16. Miscellaneous.
(a) Issue Date; Jurisdiction. The provisions of this Warrant
shall be construed and shall be given effect in all respects as if it had been
issued and delivered by the Company on the date hereof. This Warrant shall be
binding upon any successors or assigns of the Company. This Warrant shall
constitute a contract under the laws of Florida and for all purposes shall be
construed in accordance with and governed by the laws of said state without
regard to its conflict of law, principles or rules. The party who initiates
legal action shall choose the jurisdiction of the federal courts or the state
courts in connection with any dispute arising under this Agreement and hereby
waives, to the maximum permitted by law, any objection, including any objection
based on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. Each party waives its right to a trial by jury.
(b) Restrictions. The holder hereof acknowledges that the
Common Stock acquired upon the exercise of this Warrant, if not registered, may
have restrictions upon its resale imposed by state and federal securities laws.
(c) Modification and Waiver. This Warrant and any provisions
hereof may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the holders hereof of the Company shall be
delivered or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: August 23, 2000
IMAGING DIAGNOSTIC SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------
Xxxxx X. Xxxxxx, President
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NOTICE OF EXERCISE
To: IMAGING DIAGNOSTIC SYSTEMS, INC.
(1) The undersigned hereby elects to purchase ________ shares
of Common Stock of IMAGING DIAGNOSTIC SYSTEMS, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing
said shares of Common Stock in the name of the undersigned or in such other name
as is specified below:
_______________________________
(Name)
_______________________________
(Address)
_______________________________
Dated:________________________
______________________________
Signature
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ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to
_______________________________________________ whose address is
_________________________________________________________________.
_________________________________________________________________
Dated: ________________________
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
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