Exhibit 10.27
SECURITY AND LOAN AGREEMENT
This Security and Loan Agreement is made on November 4, 2002 by and
between InforMedix Acquisition Corp., a Delaware Corporation ("IMAC"), its
wholly-owned subsidiary, InforMedix, Inc., a Delaware Corporation ("IMI"),
duly-authorized as a foreign corporation to transact business in the State of
Maryland and each having a business address in said State at 0000 Xxxxxxx Xxxxx,
Xxxxxxxxx, XX 00000 (IMAC and INI are collectively referred to herein as the
"Debtor") and Private Investors Equity, LLC ("Secured Party").
RECITALS:
Debtor and Xxxxxx & Xxxxx Investment Corporation, as correspondent on
behalf of Secured Party, entered into the Commitment Letter whereby Secured
Party was to fund unto Debtor the Loan. The Loan was funded by Secured Party and
is evidenced by the Convertible Promissory Note ("Note"), which instrument is
secured by this Security and Loan Agreement and public notice thereof is made by
the filing of one or more financing statements pursuant to the laws of the
Jurisdiction. In consideration of Ten Dollars ($10.00) in hand paid and in
consideration of the Loan, the parties have entered into this instrument.
WITNESSETH:
1. Grant of Security Interest. For value received and to secure payment
and performance of the Obligations of Debtor as Borrower to Secured Party as
Lender, however created and arising out, and, except with respect to the Senior
Lienors pursuant to the Senior Lien Instruments, grants and first and exclusive,
otherwise pursuant to or in connection with the Note, Debtor hereby grants to
Secured Party a continuing security interest in and lien upon the following
described property, whether now owned or hereafter acquired, and any additions,
replacements, accessions, or substitutions thereof and all cash and non-cash
proceeds and products thereof and called the "Collateral" and described on
Exhibit "A" appended hereto and made a part hereof.
2. Debtor's Representations and Warranties - Covenants and Agreements.
If a representation and warranty, Debtor hereby represents, warrants and agrees
each of the following statements are true, valid, complete and correct, if an
affirmative covenant, Debtor represents, warrants and covenants to abide thereby
and if a negative covenant, Debtor represents, warrants and covenants not to
breach the same, to wit:
A. Ownership of the Collateral. Debtor owns the Collateral,
the Collateral is free and clear of all liens, security interests, and claims
except those previously reported in writing to or approved by Secured Party and
liens and security interests granted to Senior Lienors and Debtor will keep the
Collateral free and clear from all liens, security interests and claims, other
than those granted to or approved by Secured Party. All income, dividends,
earnings and profits with respect to the Collateral shall be reported for state
and federal income tax purposes as attributable to Debtor and not Secured Party.
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B. Names and Offices; Jurisdiction of Organization; Alteration
of Articles of Incorporation and By-Laws - Reorganization - Spinoff; Shares of
Stock - Issued and Outstanding.
B. (i) The name and address of Debtor appearing at the
beginning of this Agreement is Debtor's exact legal name and the address of its
chief executive office. There has been no change in the name of Debtor, or the
name under which Debtor conducts business, within the five (5) years preceding
the date hereof except as previously reported in writing to Secured Party.
Debtor has not moved its chief executive office within the five years preceding
the date hereof except as previously reported in writing to Secured Party.
Debtor is organized under the laws of the State of Delaware and has not changed
the jurisdiction of its organization within the five (5) years preceding the
date hereof except as previously reported in writing to Secured Party. The
parties executing all Loan Documents are duly-authorized to do so and have been
specifically granted such authority under resolutions duly given and approved by
the Board of Directors of Debtor. So long as any of the Obligations remain
outstanding, Debtor shall not except as provided in subsection B. (ii) of this
Section 2, (x) amend its Articles of Incorporation, its By-Laws or any of its
agreements or documents regarding its corporate governance, or (y) "spin-off"
any of its assets to any subsidiary or affiliate or otherwise having a direct or
indirect affect as any reorganization, recapitalization, subdivision or
otherwise (the events described in (x) and (y) above are collectively referred
to herein as "Material Events"). There are, as of this date, shares of stock
authorized and outstanding, fully-paid and non-assessable of IMAC, as follows:
Common Shares, 100,000,000 shares authorized and _____________ shares
outstanding; there are, as of this date, shares of stock authorized and
outstanding, fully paid and nonassessable of IMI, as follows: Common Shares,
5,000,000 shares authorized and _______ shares outstanding.
B. (ii) Subject to the other terms hereof, Debtor shall have
the right, after securing Secured Party's prior written consent, to undertake
the actions provided in (x) and (y) of the preceding paragraph. Secured Party
agrees not to withhold its consent so long as such action, in Secured Party's
reasonable judgment, does not have any material adverse effect upon the
Collateral. Subject to the provisions of the conditions of this sentence and the
provisions of the conditions of the sentence immediately following this
sentence, Secured Party agrees to make its determination within ten (10)
business days after receiving Debtor's written request (the "Debtor Notice") and
such reasonable supporting documentation regarding the request as required by
Secured Party; the Debtor Notice shall be accompanied by any information,
documents and materials which support Debtor's contention that there is no
material adverse effect upon the Collateral ("Supporting Materials"). Should the
Supporting Materials be insufficient for Secured Party's review, Secured Party
agrees to notify Debtor (the "Secured Party Request") within three (3) business
days of receipt of the Debtor Notice and Debtor shall, thereupon, use its best
efforts to deliver all such supporting documents within three (3) days of
receipt of the Secured Party Request. As a precondition to issuing its consent
hereunder, Debtor shall pay the Secured Party's reasonable costs and fees to
review and underwrite Debtor's requests made relative thereto. Notwithstanding
any rule of law to the contrary but except for cases of bad faith on the party
of the Secured Party, in any action which seeks to adjudicate or arbitrate any
of Debtor's rights hereunder, Debtor's sole and absolute remedy shall be one
based in equity and no remedy in damages shall be assessed.
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B. (iii) Notwithstanding anything herein to the contrary, in
the event that any Material Event would result in the Debtor raising sufficient
funds to repay the Obligations and the Obligations are repaid from the proceeds
from such Material Event, the Secured Party may not withhold its consent to such
Material Event provided that repayment of the Obligations are a condition to the
closing of the transactions contemplated by the Material Event.
C. Title and Taxes - Maintenance, Protection and Impairment of
the Collateral. Debtor has good and marketable title to Collateral and will
warrant, protect and defend same against all claims. Debtor will not transfer,
sell, or lease Collateral, except in the ordinary course of business. Debtor
agrees to pay promptly all taxes and assessments upon or for the use of
Collateral and on this Security Agreement. At its option, Secured Party may
discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on Collateral. Debtor agrees to reimburse Secured Party, on
demand, for any such payment made by Secured Party. Any amounts so paid shall be
added to the Obligations. Debtor shall take all need actions necessary to insure
that the security for the Loan is not impaired. Should there result impairment
of the Collateral, Debtor shall promptly notify Secured Party and Debtor, at its
sole cost and expense, promptly restore the Collateral. Should Debtor elect to
sell or transfer any of the Collateral, no transfer or sale may be made unless
conducted in a commercially reasonable manner with a bona fide effort to obtain
a sale price of at least market value as determined by Secured Party.
D. Waivers. Debtor agrees not to assert against Secured Party
as a defense (legal or equitable), as a set-off, as a counterclaim, or
otherwise, any claims Debtor may have against Secured Party. Debtor waives all
exemptions and homestead rights with regard to the Collateral. Debtor waives any
and all rights to any bond or security which might be required by applicable law
prior to the exercise of any of Secured Party's remedies against any Collateral.
All rights of Secured Party and security interests hereunder, and all
obligations of Debtor hereunder, shall be absolute and unconditional, not
discharged or impaired irrespective of (and regardless of whether Debtor
receives any notice of) any lack of validity or enforceability of any of the
Loan Documents; any change in the time, manner or place of payment or
performance, or in any term, of all or any of the Obligations or the Loan
Documents or any other amendment or waiver of or any consent to any departure
from any of the Loan Documents; any exchange, release or non-perfection of any
collateral, or any release of or modifications of the obligations of any
guarantor or other obligor and any amendment or waiver of or consent to
departure from any Loan Document or other agreement. To the extent permitted by
law, Debtor hereby waives any rights under any valuation, stay, appraisement,
extension or redemption laws now existing or which may hereafter exist and
which, but for this provision, might be applicable to any sale or disposition of
the Collateral by Secured Party; and any other circumstance which might
otherwise constitute a defense available to, or a discharge of any party with
respect to the Obligations.
E. Change of Name and Place of Business. Debtor will notify
Secured Party in writing at least thirty (30) days prior to any change in:
Debtor's chief place of business; Debtor's name or identity; Debtor's
corporate/organizational structure or the jurisdiction in which Debtor is
organized. In addition, Debtor shall promptly notify Secured Party of any claims
or alleged claims of any other person or entity to the Collateral or the
institution of any litigation, arbitration, governmental investigation or
administrative proceedings against or affecting the Collateral. Debtor will
bear, on demand, the actual costs of preparing and filing any documents
necessary to protect Secured Party's liens, whether now or hereafter required by
Secured Party.
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F. Financing Statements - Power of Attorney. Except for any of
the Senior Lienors' financing statements of record as of July 1, 2002, relating
to the Collateral, no financing statement (other than any filed or approved by
Secured Party in writing or filed or generated in connection with the Other
Obligations) covering any Collateral is on file in any public filing office. On
request of Secured Party, Debtor authorizes Secured Party to execute one or more
financing statements in form satisfactory to Secured Party and will pay all
reasonable costs and expenses of filing the same or of filing relative to this
Security Agreement in the appropriate public filing offices in the jurisdiction
of the Debtor's organization or elsewhere and with the United States Patent and
Trademark Office or any other office required by Secured Party and Secured Party
is authorized to file financing statements relating to Collateral without
Debtor's signature. In order to protect its rights under this Agreement, subject
to the Senior Lienors' rights in and to the Collateral and subject to the terms
of the escrow agreement of even date by and between Debtor, Secured Party and HD
National Title Group, LLC, Debtor hereby constitutes and appoints Secured Party
the true and lawful attorney of Debtor with full power of substitution to take
any and all appropriate action and to execute any and all documents or
instruments that may be necessary or desirable to accomplish the purpose and
carry out the terms of this Security Agreement, including, without limitation,
to complete, execute, and deliver any further or other documentation request by
Secured Party, Debtor and third party(ies) required in connection herewith (a
"Further Agreement"), instructions to third party(ies) regarding, among other
things, control and disposition of any Collateral, and endorsements desirable
for transfer or delivery of any Collateral, registration of any Collateral under
applicable laws, retitling any Collateral, receipt, endorsement and/or
collection of all checks and other orders for payment of money payable to Debtor
with respect to Collateral. The foregoing power of attorney is coupled with an
interest and shall be irrevocable until all of the Obligations have been paid in
full. Neither Secured Party nor anyone acting on its behalf shall be liable for
acts, omissions, errors in judgment, or mistakes in fact in such capacity as
attorney-in-fact except in the event of willful misconduct. Debtor ratifies all
acts of Secured Party consistent with this paragraph as attorney-in-fact. Debtor
agrees to take such other actions, at Debtor's sole and absolute expense, as
might be requested for the perfection, continuation and assignment, in whole or
in part, of the security interests granted herein and to assure Secured Party's
intended priority position subject to the rights of the Senior Lienors. Upon
Secured Party's request, Debtor will, at its own expense do all things
reasonably determined by Secured Party to be desirable to make the sale of the
Collateral in accordance with this Agreement valid, binding and in compliance
with applicable law.
G. Representations and Warranties Heretofore Given. All
representations and warranties heretofore given, including but not limited to
the description of the Collateral, whether oral or written and whether they
might be in the form of documents, instruments, materials, pro formas, business
plans, financial statements, income statements, contracts, cash flow forecasts,
materials and otherwise, upon which credit underwriting for the credit facility
are based are true, complete, valid and correct on the date made and on the date
hereof.
H. Business Purposes. The Loan evidenced by the Note and
otherwise with respect to the Loan Documents was transacted solely for the
purpose of carrying on or acquiring a business, mercantile purposes and for
engaging in a commercial enterprise and not for any personal or consumer needs.
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I. Compliance with Laws. Debtor shall comply with all Federal,
State and local laws a breach of which would materially and adversely affect the
financial condition of Debtor, its ability to operate its business affairs and
own and use the Collateral, the value or status of the Collateral or the value
or status of Debtor's interest or ownership in the Collateral.
J. Transfer of Collateral. Except in the event of a Permitted
Reorganization, Debtor shall not permit the Collateral, or any part or portion
thereof of or any interest therein whether directly or indirectly or otherwise,
to be transferred (whether by voluntary or involuntary conveyance, merger,
operation of law, or otherwise) without the prior written consent of Secured
Party. Any transferee of the Collateral or any part or portion thereof or any
interest therein, by virtue of its acceptance of the transfer, shall (without in
any way affecting Debtor's liability under the Loan Documents) be conclusively
deemed to have agreed to assume primary personal liability for the performance
of Debtor's obligations under the Loan Documents.
K. Compliance with Agreements with Third Parties. Debtor shall
comply with all obligations it has with third parties, whether or not related to
the Collateral.
L. Maintenance of the Collateral - Inspection Rights. Debtor
shall keep and maintain the Collateral so as to insure that the security for the
Loan is not impaired, not commit or suffer any waste of the Collateral. Should
the Collateral be adversely affected or impaired by anyone, including Debtor,
Debtor shall promptly notify Secured Party. Debtor shall permit Secured Party or
its designee to inspect its documentation regarding the Collateral as provided
in this Agreement.
3. INTENTIONALLY DELETED.
4. Collateral Duties. Secured Party shall have no custodial or
ministerial duties to perform with respect to Collateral pledged except as set
forth herein; and by way of explanation and not by way of limitation, Secured
Party shall incur no liability for any of the following: the loss or
depreciation of Collateral (unless caused by its willful misconduct or gross
negligence); a failure to present any paper for payment or protest, to protest
or give notice of nonpayment, or any other notice with respect to any paper or
Collateral, a failure to ascertain, notify Debtor of, or take any action in
connection with any conversion, call, redemption, retirement or any other event
relating to any of the Collateral or the failure to notify any party hereto that
Collateral should be presented or surrendered for any such reason. Debtor
acknowledges that Secured Party is not an investment advisor or insurer with
respect to the Collateral; and Secured Party has no duty to advise Debtor of any
actual or anticipated changes in the value of the Collateral.
5. Transfer of Collateral. Secured Party may assign its rights in
Collateral or any part thereof to any assignee who shall thereupon become vested
with all the powers and rights herein given to Secured Party with respect to the
property so transferred and delivered, and Secured Party shall thereafter be
forever relieved and fully discharged from any liability with respect to such
property so transferred, but with respect to any property not so transferred,
Secured Party shall retain all rights and powers hereby given.
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6. Inspection of Books and Records. Debtor will upon demand and, at its
sole cost and expense at all times keep accurate and complete records covering
each item of Collateral, including the proceeds therefrom. Secured Party, or any
of its agents, shall have the right, at intervals to be determined by Secured
Party and without hindrance or delay, at Debtor's sole costs and expense, to
inspect, audit, and examine the Collateral and to make copies of and extracts
from the books, records, journals, orders, receipts, correspondence and other
data relating to Collateral, Debtor's business or any other transaction between
the parties hereto. Debtor will at its expense furnish Secured Party copies
thereof upon request. Further, Debtor shall, without any advance request made by
Secured Party, and at all times promptly notify Secured Party of all changes in
the ownership of the stock of Debtor to the extent that any one individual,
entity or affiliated entities acquires more than five percent (5%) or more of
any of the stock of Debtor. At any time Secured Party may request, Debtor shall
furnish a complete statement, sworn to under penalty of perjury by an officer of
Debtor, setting forth all of the stockholders, officers, directors and Debtor
and the extent of their respective stock ownership or control. In the event
Debtor is aware of any other person having a beneficial interest in such stock,
the statement shall also set forth the name of such person and the extent of
their interest.
7. Attorney's Fees and Costs of Collection. Debtor shall pay all of
Secured Party's actual Costs and Expenses relative to this Agreement, including
but not limited to all costs and expenses incurred in enforcing this Security
Agreement and in preserving and liquidating Collateral, any arbitration, the
costs of attorneys, paralegals, assistants, consultants and experts, whether
incurred with or without the commencement of a suit, trial, arbitration or
administrative proceeding, or in any appellate or bankruptcy proceeding.
8. Default. Upon the occurrence of any of the following, a "Default"
shall occur under this Security Agreement shall exist:
(a) a default under this Security Agreement or under any of the other
Loan Documents; any breach of any of the covenants, agreements, representations
or warranties under this Security Agreement or under any of the other Loan
Documents which shall continue for a period of thirty (30) days after notice
thereof has been sent by Secured Party to Debtor, or
(b) any misrepresentation of any kind thereunder which shall continue
for a period of thirty (30) days after notice thereof has been sent by Secured
Party to Debtor,
(c) any loss with respect to the Collateral or any devaluation thereof
which shall continue for a period of thirty (30) days after notice thereof has
been sent by Secured Party to Debtor,
(d) any sale, lease or transfer or encumbrance of any Collateral not
specifically permitted herein without prior written consent of Secured Party
which shall continue for a period of thirty (30) days after notice thereof has
been sent by Secured Party to Debtor, or
(e) the making of any levy, seizure, or attachment on or of Collateral
or any of the other properties of Debtor not set aside, discharged, or stayed
within thirty (30) days after the same was levied or within ten (10) days after
the expiration of any stay thereof which shall continue for a period of thirty
(30) days after notice thereof has been sent by Secured Party to Debtor, or
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(f) should Debtor consent in writing to, the appointment of a receiver,
trustee, or liquidator for it of Collateral or of all or substantially all of
its assets or files a voluntary petition in bankruptcy or makes an assignment
for the benefit of creditors, files a petition or an answer seeking a
reorganization, composition, adjustment, arrangement with creditors, or takes
advantage of any insolvency law, files an answer admitting the material
allegations of a petition filed against it in any, bankruptcy, reorganization,
composition, adjustment, arrangement, or insolvency proceeding, or is dissolved
as a result of an adversary suit or proceeding, which shall continue for a
period of thirty (30) days after notice thereof has been sent by Secured Party
to Debtor,
(g) any execution or attachment levied against the assets of Debtor not
set aside, discharged, or stayed within thirty (30) days after the same was
levied or within ten (10) days after the expiration of any stay thereof, an
order, judgment, or decree is entered by any court of competent jurisdiction on
the application of a creditor, adjudicating Debtor a bankrupt or insolvent, or
appointing a receiver, trustee, or liquidator for Debtor, or of all or
substantially all of its assets, or an order of relief is entered against Debtor
pursuant to any bankruptcy statute or law and such order, judgment, or decree
continues unstayed and in effect for a period of thirty (30) days and is not
discharged within ten (10) days after the expiration of any stay thereof; any
attempt to terminate, revoke, rescind, modify, or violate the terms of this
Security Agreement or any of the other Loan Documents without the prior written
consent of Secured Party, or
(h) any material adverse change in the finances of Debtor or a material
change in the management of Debtor which shall continue for a period of thirty
(30) days after notice thereof has been sent by Secured Party to Debtor, or
(i) any breach under any of the terms, conditions or provisions of any
of the "Other Obligations," beyond any applicable notice, grace and cure period.
9. Remedies Upon a Default. Upon any default hereunder, Liquidator
shall have the following rights and remedies:
(a) Secured Party may accelerate the Note and exercise any of the
remedies it has under any of the Loan Documents;
(b) Secured Party may instruct the Liquidator the take immediate
possession of the books and records regarding the Collateral and otherwise to
take such action as it determines under this Agreement, without notice or resort
to legal process, and for such purposes, Liquidator may enter upon any premises
on which such books and records regarding the Collateral or any part thereof may
be situated and remove the same therefrom, or, at option of the Liquidator,
render such Collateral unusable or dispose of said Collateral on Debtor's
premises with respect thereto;
(c) Appointment to act hereunder by the Liquidator may be made without
notice having been given to the immediate appointment of a receiver for the
Collateral for which is entitled to act without regard to the value of the
Collateral or the solvency of any person liable for payment of the amounts due
under the Loan Documents;
(d) Secured Party may require Debtor to assemble the books and records
regarding the Collateral and make them available to Liquidator, with respect to
such foregoing portions of the Collateral, at a place to be designated by
Liquidator and Secured Party;
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(e) INTENTIONALLY OMITTED.
(f) Secured Party may require Debtor to deliver to Secured Party and
Liquidator lists or copies of the Patent and License related Accounts promptly
after they arise and will deliver to Secured Party, promptly upon receipt, all
Proceeds received by Debtor, including all Proceeds of the Accounts, in the
exact form in which they are received;
(g) Secured Party or Liquidator may require Debtor to assign or endorse
all of the Collateral and related proceeds to Liquidator and Liquidator with
regard to such Collateral shall have full power to collect, compromise, endorse,
sell, or otherwise deal therewith as agent for Debtor;
(h) Liquidator and Secured Party, in its discretion, may apply cash
proceeds to the payment of any Obligations secured hereby or may release such
cash proceeds to Debtor for use in the operation of Debtor's business;
(i) Secured Party and Liquidator may, upon a default, notify the
Account debtors or other obligors with respect to the Collateral that it
controls that the Accounts have been assigned to such party and should be paid
to Secured Party;
(j) Secured Party may notify any of the parties to whom Debtor is owed
money, accounts receivable, tangibles or intangibles, interests, whether
corporeal or incorporeal and take such action as is may lawfully take hereunder
and under applicable law;
(k) Secured Party may require Debtor to notify all Account debtors and
indicate on all invoices to such Account debtors that the Accounts are payable
to Secured Party.
(l) Secured Party shall be authorized to notify any third party vendor
or contracting party or any party under any agreement given as a part of the
Collateral and act consistent with its rights hereunder; transfer into Secured
Party's name or the name of its nominee, all or any part of the Collateral;
(m) Secured Party may receive all interest, dividends, and other
proceeds of the Collateral;
(n) Liquidator may notify any person obligated on any such Collateral
to which it may act of the security interest of Secured Party therein and
require such person to make payment directly to Secured Party or Liquidator on
demand and also demand, xxx for, collect or receive any proceeds of the
collateral thereof, and/or make any settlement or compromise as Secured Party or
Liquidator deems desirable with respect to any such Collateral;
(o) Otherwise, Secured Party and Liquidator may act with respect to the
power of attorney granted hereunder to protect its rights.
(p) The proceeds of any Collateral obtained pursuant to the exercise of
any remedy set forth in this Security and Loan Agreement shall be applied
reasonably promptly by Secured Party and Liquidator:
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First, to the payment of all costs and expenses, fees,
commissions and taxes of such sale, collection or other realization, including,
without limitation, compensation to the Liquidator and actual attorneys' fees of
Liquidator and Secured Party, together with interest on each such amount at the
highest rate then in effect under this Security and Loan Agreement;
Second, to the indefeasible payment in full in cash of the
Obligations, ratably according to the unpaid amounts thereof, without ;reference
or priority of any kind among amounts so due and payable; and
Third, to Debtor, or its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
With regard to all of the rights, prerogatives, entitlements and remedies of
Secured Party for itself or Liquidator, as agent for Secured Party hereunder,
Debtor agrees that such parties may exercise all rights under this Security
Agreement without regard for the actual or potential tax consequences to Debtor
under federal or state law, without regard to any other limitations imposed or
proscribed and without regard to any instructions or directives given Secured
Party or Liquidator by Debtor.
10. Due Authority - Resolutions - Approval. Debtor further represents
and warrants as follows:
(a) Negotiation and Execution. Both the negotiation of the Commitment
Letter and all of the Loan Documents, as well as the execution thereof, has been
duly authorized by the Board of Directors of Debtor as evidenced by the
Certified Board Resolution attached hereto as Exhibit "B".
(b) True, Complete and Accurate Copies of Exhibits. True, complete and
accurate copies of the following exhibits, documents, certificates, instruments
and lists are attached hereto, to wit:
o Exhibit "A" - Description of Collateral
o Exhibit "B" - Resolutions
o Exhibit "C" - (Complete) Certified Copy of Articles
of Incorporation of Debtor from the Secretary of
State of the State of Delaware;
o Exhibit "D" - Good Standing Certificate from the
Secretary of State of Delaware;
o Exhibit "E" - Articles of Foreign Corporation from
the Maryland State Department of Assessments &
Taxation ("MD-SDAT");
o Exhibit "F" - Certificate of Good Standing from
MD-SDAT;
o Exhibit "G" - Debtor's By-Laws;
o Exhibit "H" - Sample Stock Certificates and
o Exhibit "I"- description of limitations and
prerogatives of all classes of stock;
o Exhibit "J" - current financial statement and
o Exhibit "K" - listing of all accounts payable and
debts, Payables, loans term, credit line and
otherwise
o Exhibit "L" - listing of all "Other Obligations" of
Debtor.
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o Exhibit "M" - "Adverse Claims"
11. Special Notices to be Given. Any notice of sale, disposition or
other action by Secured Party required by law and sent to Debtor at Debtor's
address shown below at least five (5) days prior to such action, shall
constitute reasonable notice to Debtor. Notice shall be deemed given or sent
when mailed postage prepaid to Debtor's address as provided herein and
irrespective of whether delivery is accepted by certified mail, postage prepaid
or by hand delivery or by any nationally-recognized next-day delivery service or
otherwise as permitted by applicable law. Collateral that is subject to rapid
declines in value and is customarily sold in recognized markets may be disposed
of by Secured Party in a recognized market for such collateral without providing
notice of sale. Debtor waives any and all requirements that the Secured Party
sell or dispose of all or any part of the Collateral at any particular time,
regardless of whether Debtor has requested such sale or disposition.
12. Remedies Cumulative. No failure on the part of Secured Party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise by Secured
Party or any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any right, power or remedy. The remedies
herein provided are cumulative and are not exclusive of any remedies provided by
law, in equity, or in other Loan Documents.
13. Indemnification of Secured Party by Debtor. Debtor shall indemnify
and save harmless Secured Party and said party's agents, attorneys, officers,
equity holders and affiliates (including Xxxxxx & Xxxxx Investment Corporation
and its owners and affiliates and attorneys), singularly and jointly, from all
actual costs and expenses, including actual attorneys' fees, incurred by them or
any of them by reason of this Security Agreement, including any legal action to
which Secured Party shall or may become a party. Any money so paid or expended
by Secured Party shall be due and payable upon demand together with interest at
the Penalty Rate at the rate set forth in the Note from the date incurred and
shall be secured by this Security Agreement.
14. Enforcement and Interpretation. At the option of Secured Party,
matters of enforcement and interpretation of this instrument or any of the Loan
Documents, whether by claim, counterclaim or otherwise, may be interpreted
solely by arbitration conducted within fifty (50) miles of the office of the
Secured Party under the general commercial arbitration rules then-applicable of
the American Arbitration Association. Arbitration shall be conducted by a panel
of three (3) arbitrators, one of whom shall be selected from among a panel
suggested by the AAA by each party and the third of whom shall be selected by
the two (2) designees so selected. Any party failing to designate his designee
within fifteen (15) days of the date requested by the AAA shall forfeit its
right to designate his designee and the designee timely designated shall appoint
the recalcitrant party's designee. No arbitrator shall serve unless said party
is an attorney currently practicing law in the State of Maryland and having
experience in matters relative to secured banking transactions in which
intellectual property is pledged as security over a period of not less than ten
(10) years. Enforcement shall be under the laws of the Jurisdiction or any other
venue which shall have subject matter jurisdiction over the matter.
Notwithstanding any rule of law to the contrary, before Debtor may institute any
counterclaim to any action against Secured Party or any third party claim
against any third party, it shall have posted a bond reasonably acceptable to
Secured Party with the AAA to bond off and otherwise to protect Secured Party
hereunder. All costs of the arbitration shall be borne by the party deemed to be
the "non-prevailing party" but the cost, expense and fees to litigate shall be
allocated as otherwise provided hereunder. The panel of arbitrators shall
schedule the trial within thirty (30) days of their appointment and they shall
render their decision within thirty (30) days of the last day of such trial,
provided that, in the event a party petitions for an Emergency Arbitration, the
above-proscribed time periods shall be reduced as provided for the Schedule of
Emergency Arbitration.
10
15. Designation of Agent for Service of Process Purposes. Any matter
requiring service of process shall be served upon the Designated Agent; if said
Designated Agent shall refuse to accept service of process, the posting of the
service on the door of the Designated Agent's office shall be sufficient if
accompanied by an affidavit by the process server of compliance herewith.
16. Definitions. The following shall have the following meanings:
(a) "Loan Documents" refers to all documents, including this Security Agreement,
whether now or hereafter existing, executed in connection with or related to the
Obligations, and may include, without limitation and whether executed by Debtor
or others, commitment letters that survive closing, loan agreements, convertible
notes, other security agreements, security instruments, financing statements,
chattel mortgage instruments and any renewals or modifications, whenever any of
the foregoing are executed. (b) "UCC" means the Uniform Commercial Code as
presently and hereafter enacted in the Jurisdiction. Any term used in this
Agreement and in any financing statement filed in connection herewith which is
defined in the UCC and not otherwise defined in this Agreement or any other Loan
Document has the meaning given to the term in the UCC. (c) "Loan" means the loan
to be advanced under the Commitment Letter which was advanced and closed by the
parties this date as evidenced by the Note and which was made pursuant to the
Loan Documents. (d) "Obligations" means all obligations, funds and impositions
due and owing under any of the Loan Documents, including, but not limited to
principal under the Note, interests, Costs and Expenses, impositions, fees,
advances made pursuant to any of the Loan Documents by Secured Party, resulting
from any remedy or right or prerogative or otherwise which arise under any of
the Loan Documents, any charges and impositions and otherwise due under any of
the foregoing. (e) "Note" means the Note defined on page one hereof and executed
of even date herewith. (f) "Jurisdiction" means the State of Maryland. (g)
"Designated Agent" means the party whose name and address appears on the
signature page hereof. (h) The term "Costs and Expenses" means all actual costs,
expenses, fees and actual impositions that a party may accrue or pay relative to
this Agreement and the enforcement of any term, condition or provision of this
instrument or any of the Loan Documents. (i) "Other Obligations" means any of
the obligations listed to any party designated on Exhibit "L". (j) "Adverse
Claims" means any claim, public or private, whether of public record or
otherwise, which has any adverse impact upon the underwriting and risk by
Security Party with respect to the Loan, the Obligations or otherwise with
respect to the transactions made between the parties or otherwise the risk of
any loss to Secured Party. (k) "Liquidator" means any party selected from among
the list attached hereto as Exhibit "N." In the absence of a party to agree at
such time to be the designated "Liquidator," then the parties shall agree upon
the designated Liquidator within fifteen (15) days upon demand by Secured Party
to do so, time being of the essence, neither party unreasonably withholding,
delaying or denying its consent and after lapse of such period, the matter shall
be submitted to arbitration hereunder using the Expedited Schedule of
Arbitration. (l) "Collateral" means the item of Collateral described on Exhibit
"A". (m) INTENTIONALLY OMITTED. (n) INTENTIONALLY OMITTED. (o) "Accounts" means
as such term is defined in the UCC with respect to any of the Collateral or
other secured given hereunder. (p) "Schedule of Emergency Arbitration" means
that all time periods otherwise scheduled for arbitration hereunder shall be
reduced as follows: (i) with regard to any matter to acted upon within fifteen
(15) days, the time period shall be reduced to three (3) days and (ii) with
respect to any matter to be acted upon within thirty (30) days, the time period
shall be reduced to five (5) days. (q) "Emergency Arbitration" shall mean any
matter relative to either (i) Liquidator's or Secured Party's rights hereunder
as a result of an actual default having been declared by Secured Party under
this Agreement or under any of the other Loan Documents or (ii) any other matter
to which a party has certified, supported by an opinion of its counsel, that the
time periods otherwise proscribed hereunder cannot wait for the periods
otherwise provided due to an emergency, provided however that with regard to any
matter petitioned under clause (ii) hereof. (r ) "Senior Lienors" means any
bank, savings and loan or similar lending institution, equipment lessor, or
accounts receivable-based lender, that has or may hereafter extend line of
credit or equipment financing or similar financing to Debtor, provided that, in
doing so, the value of the collateral is not impaired. (s) "Senior Lien
Instruments" means agreements entered into between the Debtor and the Senior
Lienors, and all collateral documentation of such transactions.
11
17. Waiver of Trial By Jury. THE UNDERSIGNED PARTIES COVENANT AND
AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY WITH
RESPECT TO THIS DOCUMENT AND ALL OF THE OTHER LOAN DOCUMENTS, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN,
KNOWINGLY AND VOLUNTARILY, BY EACH PARTY TO THIS INSTRUMENT, AND THIS WAIVER IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. THE PARTY TO THIS INSTRUMENT IS
HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS INSTRUMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES HERETO, SO AS TO SERVE AS
CONCLUSIVE EVIDENCE OF THE WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, EACH
PARTY TO THIS INSTRUMENT HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE
OTHER PARTY (INCLUDING ITS COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT IT WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
18. Confession of Judgment Provisions. THE MAKER HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS (WHICH APPOINTMENT SHALL BE DEEMED TO BE COUPLED WITH
AN INTEREST) XXXXX XXXX XXXXX OR HIS DESIGNEE, AN ATTORNEY ADMITTED TO PRACTICE
BEFORE THE COURTS OF THE STATE OF MARYLAND, AS THE MAKER'S TRUE AND LAWFUL
ATTORNEY IN FACT, TO APPEAR FOR THE MAKER BEFORE THE CLERK OF THE CIRCUIT COURT
OF XXXXXXXXXX COUNTY, MARYLAND OR THE TRIAL OR SUPERIOR COURT OF ANY COUNTY IN
SAID STATE OF MARYLAND OR THE STATE OF DELAWARE OR ANY FEDERAL DISTRICT COURT
(EACH, THE "CONFESSION JURISDICTION") AND AFTER ONE OR MORE DECLARATIONS FILED,
CONFESS JUDGMENT AGAINST THE MAKER AS OF ANY TIME AFTER ANY SUM IS DUE HEREUNDER
(WHETHER BY DEMAND, STATED MATURITY, ACCELERATION OR OTHERWISE) FOR THE UNPAID
BALANCE OF THIS NOTE AND INTEREST, WITH COURT COSTS, EXPENSES DUE HEREON AND
FIFTEEN PERCENT (15%) ATTORNEY'S FEES FOR COLLECTION AND RELEASE ALL ERRORS,
WITHOUT STAY OF EXECUTION, AND INQUISITION AND EXTENSION UPON ANY LEVY ON REAL
ESTATE IS HEREBY WAIVED AND CONDEMNATION AGREED TO, AND THE EXEMPTION OF
PERSONAL PROPERTY FROM LEVY AND SALE IS ALSO HEREBY EXPRESSLY WAIVED AND NO
BENEFIT OF EXEMPTION SHALL BE CLAIMED UNDER ANY EXEMPTION LAW NOW IN FORCE OR
WHICH MAY BE HEREAFTER ADOPTED. MAKER CONSENTS TO VENUE IN THE CONFESSION
JURISDICTION WITH RESPECT TO THE INSTITUTION OF AN ACTION CONFESSING JUDGMENT
HEREON, REGARDLESS OF WHERE VENUE WOULD OTHERWISE BE PROPER. ANY JUDGMENT
ENTERED AGAINST MAKER, WHETHER BY CONFESSION OR OTHERWISE, SHALL BEAR INTEREST
AT A RATE WHICH IS THE HIGHEST RATE OF INTEREST BEING PAID BY MAKER ON THE DATE
OF JUDGMENT. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST
MAKER SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISES THEREOF, OR BY ANY
IMPERFECT EXERCISE THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT
ENTERED PURSUANT THERETO; SUCH AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR
MORE OCCASIONS, FROM TIME TO TIME, IN THE SAME OR DIFFERENT JURISDICTIONS AS
OFTEN AS THE PAYEE OR ITS ASSIGNS SHALL DEEM NECESSARY OR ADVISABLE UNTIL ALL
SUMS DUE HEREUNDER HAVE BEEN PAID IN FULL.
12
19. Miscellaneous Provisions. No waiver, amendment or modification of
any provision of this Security Agreement shall be valid unless in writing and
signed by Debtor and an officer of Secured Party. No waiver by Secured Party of
any Default shall operate as a waiver of any other Default or of the same
Default on a future occasion. All rights of Secured Party hereunder are freely
assignable, in whole or in part, and shall inure to the benefit of and be
enforceable by Secured Party, its successors, assigns and affiliates. Debtor may
not assign its obligations to any person, party or entity, whether affiliated or
otherwise with Debtor hereunder without the prior written consent of Secured
Party and any attempt by Debtor to assign without Secured Party's prior written
consent is null and void; provided, however, that Debtor may assign this
Security and Lien Agreement, and all of its rights and obligations hereunder,
without secured Party's written consent in connection with a Permitted
Reorganization. No assignment, other than in connection with a Permitted
Reorganization, shall release Debtor from its obligations hereunder. Time shall
be strictly of the essence with respect to each and every term, condition and
provision of all of the Loan Documents. Debtor consents to the laws of the
Jurisdiction or wherever it shall have assets or does business. Debtor agrees
that venue may lie in the United States Federal Court for either the State of
Maryland or the State of Delaware or any local court therein, the defense under
the doctrine of forum non-conveniens being waived. All rights, powers, and
remedies of Secured Party provided for in the Loan Documents are cumulative and
concurrent and shall be in addition to and not exclusive of any appropriate
legal or equitable remedy provided by Law or contract. Exercise of any right,
power, or remedy shall not preclude the simultaneous or subsequent exercise of
any other by the Secured Party. The terms, conditions and provisions of the
Commitment Letter shall survive the closing of the Loan and not be merged
therein. This Security Agreement shall be binding upon Debtor, and the heirs,
personal representatives, successors, and assigns of Debtor. This Security
Agreement shall be governed by and construed under the laws of the Jurisdiction
without regard to that Jurisdiction's conflict of laws principles, except to the
extent that the Uniform Commercial Code requires the application of the law of a
different jurisdiction. If any terms of this Security Agreement conflict with
the terms of any commitment letter or loan proposal, the terms of this Security
Agreement shall control. Debtor irrevocably agrees to non-exclusive personal
jurisdiction in the Jurisdiction. If any provision of this Security Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement. Any notices to Debtor shall be sufficiently given, if in
writing and mailed or delivered to the address of Debtor shown above or such
other address as provided hereunder and to Secured Party, if in writing and
mailed or delivered to Secured Party's office address shown below such party's
signature or such other address as Secured Party may specify in writing from
time to time. In the event that Debtor changes Debtor's mailing address at any
time prior to the date the Obligations are paid in full, Debtor agrees to
promptly give written notice of said change of address by registered or
certified mail, return receipt requested, all charges prepaid. The parties waive
the doctrine of contra proferentem for purposes of all of the Loan Documents.
This Agreement may be signed in counterpart, which, when fully assembled, shall
constitute one complete instrument. Notwithstanding any rule of law nor any
action or representation to the contrary, whenever the discretion or prerogative
of Secured Party shall be given or granted, the same shall be as Secured Party
shall determine in its sole and absolute discretion and not under any objective
standard. The captions contained herein are inserted for convenience only and
shall not affect the meaning or interpretation of this Security Agreement or any
provision hereof. The use of the plural shall also mean the singular, and vice
versa. Debtor, by execution and Secured Party by acceptance of this Security
Agreement, agrees it is bound by all terms and provisions of this Security
Agreement.
13
In witness whereof, the undersigned have set their hand and seal
effective on the date first set forth above.
14
SECURED PARTY: Private Investors Equity, LLC
By: /s/
----------------------------------------------
Title:
-------------------------------------------
Address for Notices:
c/o Private Consulting Group, Inc.
0000 XX Xxxxxxx Xxxxxx, Xxxxx #000
Xxxxxxxx, XX 00000 Attn: Xxxxx Xxxxxxxxxxx, EVP
DEBTOR: InforMedix, Inc.
By:/s/
----------------------------------------------
Title:
-------------------------------------------
Attest by:/s/
---------------------------------------
Its Secretary SEAL
Address for Notices:
0000 Xxxxxxx Xxxxx, Xxxxxxxxx, XX 00000
Designated Party for InforMedix, Inc. Means:
-------------------------------------------------
whose address is at:
----------------------------
-------------------------------------------------
InforMedix Acquisition Corp.
By:/s/
----------------------------------------------
Title:
-------------------------------------------
Attest by:/s/
---------------------------------------
Its Secretary SEAL
Address for Notices:
0000 Xxxxxxx Xxxxx, Xxxxxxxxx, XX 00000
Designated Party for InforMedix, Inc. Means:
-------------------------------------------------
whose address is
-------------------------------
-------------------------------------------------
15
Exhibit "A" - Description of Collateral,
Including a copy of description of all intellectual property,
The Patent & License Exchange dated January 16, 2002 and otherwise
A. All patents, patent applications and patentable inventions,
including, without limitation, the Debtor's Pioneer Patent Portfolio,
each such patent being identified in Schedule 1 to this Exhibit "A"
attached hereto and made a part hereof and each patent application
identified in such Schedule 1 including, without limitation, all
inventions and improvements described and claimed therein and the
right to make, use or sell the same, the right to xxx or otherwise
recover for any misappropriations thereof, all income, royalties,
damages and other payments now and hereafter due and/or payable with
respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and
payments for past and future infringements thereof), and all rights
corresponding thereto throughout the world and all reissues,
divisions, continuations, continuations-in-part, substitutes,
renewals and extensions thereof, all improvements thereon and all
other rights of any kind whatsoever of each Grantor accruing
hereunder or pertaining thereto ("Patents").
B. All license agreements (subject to the rights of the other parties
thereto) with any other person in connection with any of the Patents,
or such other person's patents, trade names, trademarks, service
marks, copyrights or works of authorship, or other intellectual
property, whether such grantor is a licensor or licensee under any
such license agreement, including, without limitation, the license
agreements listed on Schedule 2 attached hereto and made a part
hereof, and any right to prepare for sale, sell and advertise for
sale, all goods and/or services now or hereafter owned by the Debtor
and now or hereafter covered by any such licenses ("Licenses");
provided, however, that to the extent that the consent of any other
party to any of the Licenses is required, under the terms thereof,
for the collateral assignment thereof, the Security and Loan
Agreement shall not effect any collateral assignment of (or otherwise
be applied so as to cause a default under) such Licenses.
C. All proceeds of the Accounts, Patents and Licenses, including,
without limitation, all claims by Debtor against third parties for
infringement of the Patents or Licenses ("Proceeds").
16
THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
SECURED CONVERTIBLE PROMISSORY NOTE
WITH DETACHABLE WARRANT
$350,000.00 November 4, 2002
Xxxxxxxxxx County, Maryland
For value received and pursuant to the terms of that certain "Security and Loan
Agreement" made this date, InforMedix Acquisition Corp., a Delaware Corporation
("IMAC") and its wholly-owned subsidiary, InforMedix, Inc., a Delaware
corporation ("IMI"), their assigns and successors in interest (collectively, the
"Company"), promises to pay Private Investors Equity, LLC, or order, and any
successors, transferees and assignees thereof (together, "Holder"), the
principal sum of three-hundred fifty thousand dollars ($350,000.00), plus
interest, Costs and Expenses, impositions, charges and fees or any other expense
accruing and entitled pursuant to the terms hereof. This Note evidences the loan
("Loan") made by the Holder this date unto the Company and is subject to the
following terms and conditions:
1. Term. The term of this Note shall mature ("Maturity Date") on the
earlier of (i) the date which is six (6) months from the date hereof,
or (ii) or the date on which any Financing Event(s) is closed or (iii)
any other date on which any principal amount of, or accrued unpaid
interest on, this Note becomes, due and payable pursuant to its terms
prior to its natural maturity. The term "Financing Event(s)" means any
date(s) on which debt or equity financing or other funding is secured,
cumulatively, commencing on the date hereof and subsequent to the date
hereof, in the cumulative total of $1,000,000 or more (excluding all
funds advanced under this Note).
1
2. Conversion. (a) Investment by Holder. The entire principal amount and
the accrued interest as well as any costs, fees and expenses having
accrued and all Costs and Expenses relative to this Note or any of the
Loan Documents, or any portion thereof, may be converted, if the Holder
so elects in writing to the Company, at any time prior to receipt of
full payment made, into shares of the Company's common stock ("Common
Stock"). Holder may make the foregoing election to convert on one (1)
occasion only. The number of shares of Common Stock to be issued to the
Holder upon such conversion shall be equal to the number of shares
derived by the quotient obtained by dividing the outstanding principal
balance and accrued interest, together with any expenses, accruals,
fees or impositions, Costs and Expenses and otherwise on this Note by
one dollar ($1.00) ("Price Per Share"). The Price Per Share shall be
adjusted upon the occurrence of the events described in and in the
manner provided for adjustment to the warrant exercise price in Section
2 of Exhibit A hereto. (b) Mechanics and Effect of Conversion. No
fractional shares of the Company's capital stock will be issued upon
conversion of this Note and the accrued interest balance. In lieu of
any fractional share to which the Holder would otherwise be entitled,
upon full conversion of this Note, the Company will pay to the Holder,
in cash, the amount of the unconverted principal and accrued interest
balance, together with any Costs and Expenses relative to this Note.
The Holder shall surrender this Note, duly endorsed, at the principal
offices of the Company or any transfer agent of the Company, and shall
give written notice to the Company ("Exercise Notice") of the election
to convert same or the portion to be converted and shall state therein
the name or names in which the certificate or certificates for the
securities acquired hereunder are to be issued. At its expense, the
Company will, as soon as practicable thereafter but not later than five
(5) days therefrom, issue and deliver to such Holder, at such principal
office, a certificate or certificates for the number of shares to which
such Holder is entitled upon such conversion, together with any other
securities and property to which the Holder is entitled upon such
conversion under the terms of this Note, including a check payable to
the Holder for any cash amounts payable as described herein. Upon
conversion of this Note, and accrued interest balance, the Company will
be forever released from all of its obligations and liabilities under
this Note with regard to that portion of the principal amount being
converted included, without limitation, the obligation to pay future
interest on such portion of the principal amount.
3. Interest. Interest shall accrue from the effective date of this Note
("Note Date") until repayment of the Note on the unpaid principal
amount computed on the basis of a 360-day year and the actual number of
days elapsed. Interest shall be payable at a rate equal to twelve
percent (12.0%) per annum until the Note is repaid in full.
Notwithstanding anything to the contrary herein contained, repayment
under the preceding sentence shall be paid in preference to repayment
thereof and prior to the payment of any dividends or distributions on
any equity security issued by the Company or any interest or principal
on any other debt of the Company other pursuant to the Senior Lien
Instruments.
4. Security. To secure the full and complete performance of the
obligations of the Company under this Note the Company hereby grants to
the Holder, a perfected lien on all of its right, title and interest in
and to, whether now owned or hereafter acquired (together
"Collateral")": all of its property on Exhibit A to the Security and
Loan Agreement. The Holder's interest in the Collateral shall be as a
secured lender pursuant to the terms of the Security and Loan Agreement
as publicized by one or more financing statement(s) dated of even date
with subject only to Senior Lien Instruments as such term is defined in
the Security and Loan Agreement of even date herewith.
2
5. Payment. (a) All payments shall be made in lawful currency of the
United States of America at such place as the Holder hereof may from
time to time designate in writing to the Company, all payments shall be
credited first to Costs and Expenses, fees, expenses and impositions,
if any, then to accrued interest then due and payable and the remainder
applied to principal, except that, after the occurrence and during the
continuation of any default under this Note, all amounts received shall
be applied in such order as the Holder, in its sole discretion, may
elect. In order for a payment to be timely received as of the date
sought to be made, it shall be received not later than 2:00pm Eastern
Time on a Business Day and if not made by such time or on such business
day, then it shall be deemed to be received on the next business day.
The term "Business Day" shall mean any banking day that SunTrust Bank,
NA is open for business and during which it may both accept and credit
wire transfers. Prior to any payment, the Company shall provide the
Holder at least ten (10) business days advance notice of its intention
to make such payment. Except with respect to prepayment made at the
Company's election in connection with a Permitted Reorganization (as
defined in the Security and Loan Agreement), payment hereon may only be
made in full on the Maturity Date.
6. No Waiver. The acceptance by the Holder of any payment under this Note
after the date that such payment is due shall not constitute a waiver
of the right to require prompt payment when due of future or succeeding
payments or to declare a default as herein provided for any failure to
so pay. The acceptance by the Holder of a portion of any payment at any
time that such payment is due and payable in its entirety shall neither
cure nor excuse the default caused by the failure to pay the whole of
such payment and shall not constitute a waiver of the Holder's right to
require full payment when due of all future or succeeding payments
7. Registration. If at any time the Company shall determine to register
for its own account or the account of others under the Securities Act
of 1933, as amended (including without limitation pursuant to the
registration of any shareholder of the Company), any of its equity
securities, other than on Form S-8 or Form S-4 or their then
equivalents (a "Piggyback Registration"), it shall send the Holder
written notice of such determination and, if within fifteen (15) days
after receipt of such notice, Holder shall so request in writing, the
Company shall use its diligent efforts to include in such registration
statement all or any part of the shares of Common Stock or other
securities issued or issuable upon conversion of this Note
("Registrable Shares") that Holder requests to be registered, except
that if, in connection with any offering involving an underwriting of
Common Stock to be issued by the Company the managing underwriter shall
impose a limitation on the number of shares of Common Stock which may
be included in the registration statement because, in its judgment,
such limitations necessary to effect an orderly public distribution,
then the Company shall be obligated to include in such registration
statement only such limited portion (or none, if so required by the
managing underwriter) of the Registrable Shares with respect to which
such holder has requested inclusion hereunder. Except as specifically
provided herein, all Registration Expenses incurred in connection with
any registration under this Section shall be borne by the Company. All
Selling Expenses incurred in connection with any registrations
hereunder, shall be borne by the holders of the securities so
registered pro rata on the basis of the number of shares so registered.
For purposes of this Section, "Registration Expenses" means all
expenses incurred by the Company in complying with this Section,
including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent
public accountants for the company, fees and expenses of listing the
securities with the securities exchange, fees and expenses (including
counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees and expenses of one designated
counsel for the Holder in connection with the registration of
Registrable Shares, transfer taxes, fees of transfer agents and
registrars, costs of any insurance which might be obtained, but
excluding any Selling Expenses. For purposes of this Section, "Selling
Expenses" means all underwriting discounts and selling commissions
applicable to the sale of Registrable Shares and the fees and expenses
of more than one counsel for the Holder in connection with the
registration of Registrable Shares.
3
8. Stock Purchase Warrants. (a) Contemporaneous with the making of this
Note, IMAC has issued warrants ("Warrants") in connection herewith to
purchase from IMAC , at any time on or before the fifth anniversary of
the Note date, shares of IMAC's Common Stock at an exercise price of
one dollar and fifty cents ($1.50) per share ("Warrant Exercise
Price"). The Warrants may be exercised by the holder, in whole only,
with the purchase form appended to the Warrant duly executed by the
holder at the principal office of IMAC, or at such other office or
agency as IMAC may designate, accompanied by payment in full of the
purchase price as set forth herein. (b) A certificate representing the
warrant fully executed by IMAC, shall be delivered to the holder upon
the making of the Note.
9. Transfer; Successors and Assigns. The terms and conditions of this Note
shall inure to the benefit of and be binding upon the respective heirs,
successors and assigns of the parties. Notwithstanding the foregoing,
the Company may not assign, pledge or otherwise transfer this Note
without the prior written consent of the Holder. Subject to the
preceding sentence, this Note may be transferred by the Company only
upon surrender of the original Note for registration of transfer, duly
endorsed, or accompanied by a duly executed written instrument of
transfer in terms satisfactory to the Holder. This Note may be
transferred by the Holder only upon surrender of the original Note for
registration of transfer, duly endorsed, or accompanied by a duly
executed written instrument of transfer, a form of which has been given
to the Holder. Thereupon, a new note for the same principal amount and
interest will be issued to, and registered in the name of, the
transferee. Interest and principal are payable only to the registered
Holder of this Note.
10. Attorneys' Fees and Costs and Expenses. In the event it becomes
necessary for the Holder to utilize legal counsel for the enforcement
of this Note or any of the other of the Loan Documents or any of said
terms, and, irrespective of whether or not suit is filed or otherwise,
the Company shall pay or reimburse as the case may be, on demand, the
Holder immediately for all of the Holder's accrued attorney's fees and
other Costs and Expenses; Company shall likewise pay Holder on demand
for any of the foregoing incurred in connection with the representation
of the Holder in any bankruptcy, insolvency, reorganization or other
debtor-relief or similar proceeding of or relating to the Company.
4
11. Waivers; Time. The maker of this Note hereby waives diligence, demand,
presentment, notice of non-payment or dishonor, protest and notice of
protest, and expressly agrees that the time for performance of any
obligation under this Note may be extended from time to time, and
consents to the release of any party liable hereon or herefor, consents
to the acceptance of further security for this Note, including other
types of security, all without in any way affecting liability, and
waives the right to plead any and all statutes of limitations as a
defense to any demand on this Note, or to any agreements to pay the
same, to the fullest extent permissible by law. Time is strictly of the
essence with respect to all terms, condition and provisions hereof.
12. Governing Law. This Note and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of
Maryland, without giving effect to principles of conflicts of law.
13. Severability. Every provision hereof is intended to be severable. If
any provision of this Note is determined by a court of competent
jurisdiction to be illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall not affect the other provisions
hereof, which shall remain binding and enforceable.
14. Notices. Any notice required by this Note shall be in writing and shall
be deemed sufficient when delivered personally or by a nationally
recognized delivery service (such as Federal Express or UPS) or when
delivery is attempted to be made and addressed to the party to be
notified at such party's address as set forth below or as subsequently
modified by written notice. No notice need be given if payment is due
on the Maturity Date.
15. Amendments and Waivers. Any term of this Note may be amended only with
the mutual written consent of the Company and the Holder. Any amendment
or waiver effected in accordance with this Section shall be binding
upon the Company, the Holder and each transferee of the Note.
16. Securities Act of 1933. Upon conversion of this Note, the persons
entitled to receive the securities may be required to execute and
deliver to the Company an instrument, in form satisfactory to the
Company, representing that such person is an accredited investor as
defined in Securities and Exchange Commission Rule 501(a) under the
Securities Act of 1933, as amended (the "Act") and the securities are
being acquired for investment, and not with a view to distribution,
within the meaning of the Act.
17. Shareholder Status. Nothing contained in this Note shall be construed
as conferring upon the Holder the right to vote or to receive dividends
or to consent, or any rights whatsoever as a shareholder of the Company
prior to conversion hereof.
18. Default - Penalty Rate - Acceleration. If Company fails to make any
payment under this Note when due, or otherwise breaches (beyond any
available notice and cure period) any obligation, term, conditions or
provision hereunder or under any of the Loan Documents, then the entire
principal sum, together with all accrued and unpaid interest and costs
thereon, including any Costs and Expenses, shall at Holder's option be
immediately due and payable. Further, upon the failure of the Company
to comply with any of the requirements embraced herein or in any of the
Loan Documents then, in such event and in addition to any other remedy
the Lender may exercise, the interest rate accruing on the unpaid
principal balance of this Note shall be increased by 500 basis points
(5%) (said adjusted interest rate being the "Penalty Rate"), regardless
of whether the Holder elects to accelerate the unpaid principal balance
as a result of such default.
5
19. Confession of Judgment Provisions. THE MAKER HEREBY IRREVOCABLY
CONSTITUTES AND APPOINTS (WHICH APPOINTMENT SHALL BE DEEMED TO BE
COUPLED WITH AN INTEREST) XXXXX XXXX XXXXX OR HIS DESIGNEE, AN ATTORNEY
ADMITTED TO PRACTICE BEFORE THE COURTS OF THE STATE OF MARYLAND, AS THE
MAKER'S TRUE AND LAWFUL ATTORNEY IN FACT, TO APPEAR FOR THE MAKER
BEFORE THE CLERK OF THE CIRCUIT COURT OF XXXXXXXXXX COUNTY, MARYLAND OR
THE TRIAL OR SUPERIOR COURT OF ANY COUNTY IN SAID STATE OF MARYLAND OR
THE STATE OF DELAWARE OR ANY FEDERAL DISTRICT COURT (EACH, THE
"CONFESSION JURISDICTION") AND AFTER ONE OR MORE DECLARATIONS FILED,
CONFESS JUDGMENT AGAINST THE MAKER AS OF ANY TIME AFTER ANY SUM IS DUE
HEREUNDER (WHETHER BY DEMAND, STATED MATURITY, ACCELERATION OR
OTHERWISE) FOR THE UNPAID BALANCE OF THIS NOTE AND INTEREST, WITH COURT
COSTS, EXPENSES DUE HEREON AND FIFTEEN PERCENT (15%) ATTORNEY'S FEES
FOR COLLECTION AND RELEASE ALL ERRORS, WITHOUT STAY OF EXECUTION, AND
INQUISITION AND EXTENSION UPON ANY LEVY ON REAL ESTATE IS HEREBY WAIVED
AND CONDEMNATION AGREED TO, AND THE EXEMPTION OF PERSONAL PROPERTY FROM
LEVY AND SALE IS ALSO HEREBY EXPRESSLY WAIVED AND NO BENEFIT OF
EXEMPTION SHALL BE CLAIMED UNDER ANY EXEMPTION LAW NOW IN FORCE OR
WHICH MAY BE HEREAFTER ADOPTED. MAKER CONSENTS TO VENUE IN THE
CONFESSION JURISDICTION WITH RESPECT TO THE INSTITUTION OF AN ACTION
CONFESSING JUDGMENT HEREON, REGARDLESS OF WHERE VENUE WOULD OTHERWISE
BE PROPER. ANY JUDGMENT ENTERED AGAINST MAKER, WHETHER BY CONFESSION OR
OTHERWISE, SHALL BEAR INTEREST AT A RATE WHICH IS THE HIGHEST RATE OF
INTEREST BEING PAID BY MAKER ON THE DATE OF JUDGMENT. THE AUTHORITY AND
POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST MAKER SHALL NOT BE
EXHAUSTED BY ONE OR MORE EXERCISES THEREOF, OR BY ANY IMPERFECT
EXERCISE THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT ENTERED
PURSUANT THERETO; SUCH AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR
MORE OCCASIONS, FROM TIME TO TIME, IN THE SAME OR DIFFERENT
JURISDICTIONS AS OFTEN AS THE PAYEE OR ITS ASSIGNS SHALL DEEM NECESSARY
OR ADVISABLE UNTIL ALL SUMS DUE HEREUNDER HAVE BEEN PAID IN FULL.
6
20. Definitions - Construction - Enforcement - Miscellany. The term "Loan
Documents" shall mean any instrument, agreement or writing relative to
the credit extended as evidenced by this instrument, including but not
limited to the following documents executed of even date herewith:
Security and Loan Agreement, Financing Statement(s), Warrants and any
other agreement in writing executed on or after the date hereof. Except
as may be specifically provided for in the Loan Documents, no terms,
condition or provision shall survive the closing of the Loan and the
Loan Documents, all of the same being merged therein. Any other defined
term herein shall be defined consistent with the terms of any of the
other Loan Documents. The term "Costs and Expenses" shall mean all
costs, expenses, fees and actual impositions that Holder may accrue or
pay relative to the enforcement of any term, condition or provision of
this Note or any of the Loan Documents. Construction and enforcement of
this instrument or under any of the other of the Loan Documents shall
be, at the option of the Holder, pursuant to this instrument or any of
the other of the Loan Documents or relative to enforcement or
litigation pursuant to or relative to arbitration or court action
pursuant to the Loan Documents References to the singular, plural and
gender shall be read as the context shall plainly require. Paragraphs
and juxtaposition is purely for convenience sake and no particular
meaning shall be ascribed thereto. The Company represents and warrants
that the proceeds of the loan evidenced by this instrument are for
business and mercantile purposes and not for personal or consumer
purposes and thereby exempt from all usury limitations under applicable
law. All terms, conditions and provisions of all of the other Loan
Documents, including, but not limited to the Security and Loan
Agreement, to the extent such provisions are not inconsistent herewith,
are incorporated herein by this reference and any remedies or
provisions of the Holder hereof are likewise incorporated herein such
that the Holder may exercise such other remedies. This instrument may
be signed in counterpart which, when fully assembled, shall constitute
one instrument. The doctrine of contra proferentem shall not apply to
this instrument or any of the other of the Loan Documents. This Note is
made under seal.
Made on November 4, 2002 under seal in Xxxxxxxxxx County, Maryland.
MAKER:
INFORMEDIX, INC.
By: /s/
-----------------------------------------------------
Name:
------------------------------------------------
Title:
------------------------------------------------
Address for notices: 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, XX 00000
Attest: /s/
-------------------------------------------------
SECRETARY Seal
7
INFORMEDIX ACQUISITION CORP.
By: /s/
-----------------------------------------------------
Name:
------------------------------------------------
Title:
------------------------------------------------
Address for notices: 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, XX 00000
Attest: /s/
-------------------------------------------------
SECRETARY Seal
8
HOLDER:
PRIVATE INVESTORS EQUITY, LLC
By: /s/
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
Address for Notices:
c/o Private Consulting Group, Inc.
0000 XX Xxxxxxx Xxxxxx, Xxxxx #000, Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxxx, EVP
9
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("1933
ACT") OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE SHARES
OF THE STOCK OF
informedix ACQUISITION CORP.
(Void after Expiration Date-November 4, 2007)
This certifies that Private Investors Equity, LLC or its successors or
assigns ("Holder") in consideration of one cent in hand paid for each share of
the Common Stock exercised hereunder, shall be entitled to purchase from
InforMedix Acquisition Corp., a Delaware corporation ("Company"), having its
principal place of business at 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, XX 00000, Seven
Hundred Thousand (700,000) shares of fully paid and nonassessable shares of the
Company's common stock ("Common Stock"), at an exercise price of one dollar and
fifty cents ($1.50) per share ("Exercise Price"). This Warrant shall be
exchangeable for shares at any time, or from time-to-time, up to and including
5:00 p.m. (local time) on the fifth anniversary from the date of this Warrant,
namely, November 4, 2007 ("Expiration Date"), upon the surrender to the Company
at its principal place of business (or at such other location as the Company may
advise the Holder in writing) of this Warrant properly endorsed with a form of
subscription in substantially the form attached hereto duly filled in and signed
and, if applicable, upon payment in cash or by check of the aggregate Exercise
Price for the number of shares for which this Warrant is being exercised
determined in accordance with the provisions hereof. The Exercise Price and the
number of shares of Common Stock purchasable hereunder are subject to adjustment
as provided in Section 2 of this Warrant.
1. EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
1.1. General. This Warrant is exercisable in full on one (1) occasion only,
at the option of the Holder of record at any time or from time, to
time, up to the Expiration Date for all of the shares of Common Stock
(but not for a fraction of a share) which may be purchased hereunder.
The Company agrees that the shares of Common Stock purchased under this
Warrant shall be and are deemed to be issued to the Holder hereof as
the record owner of such shares as of the close of business on the date
on which this Warrant shall have been surrendered, properly endorsed,
the completed, executed Subscription Form (attached hereto as Exhibit
A-1) delivered and payment made for such shares. Certificates for the
shares of Common Stock so purchased, together with any other securities
or property to which the Holder is entitled upon such exercise, shall
be delivered to the Holder by the Company at the Company's expense
within a reasonable time after the rights represented by this Warrant
have been so exercised, and in any event, within fifteen (15) days of
such exercise. Each Common Stock certificate so delivered shall be in
such denominations of Common Stock as may be requested by the Holder
hereof and shall be registered on the Company's books in the name
designated by such Holder.
1.2. Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common
Stock is greater than the Exercise Price (at the date of calculation as
set forth below), in lieu of exercising this Warrant for cash, the
Holder may elect to receive shares equal to the value (as determined
below) of this Warrant (or the portion thereof being canceled) by
surrender of this Warrant at the principal office of the Company
together with the properly endorsed Form of Subscription and notice of
such election in which event the Company shall issue to the Holder a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X= the number of shares of Common Stock to be issued to the
Holder
Y= the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the
Warrant being canceled (at the date of such
calculation)
A= the fair market value of one share of Common Stock
(at the date of such calculation)
B= Exercise Price (as adjusted to the date of such
calculation).
For purposes of the above calculation, the fair market value of one
share of Common Stock shall be determined by the Company's Board of
Directors in good faith; provided, however, that where there is a
public market for the Common Stock, the fair market value per share
shall be the average of the closing prices of the Common Stock quoted
on the Bulletin Board, Nasdaq National Market (or similar system), or
on any exchange on which the Common Stock is listed, whichever is
applicable, over the five (5) day period ending one (1) day before the
day the current fair market value is being determined.
1.3. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants
and agrees that all shares of Common Stock which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance,
be duly authorized, validly issued, fully paid and nonassessable and
free from all preemptive rights of any shareholder and free of all
taxes, liens and charges with respect to the issue thereof. The Company
further covenants and agrees that, during the period within which the
rights represented by this Warrant may be exercised, the Company will
at all times have authorized and reserved, for the purpose of issue or
transfer upon exercise of the subscription rights evidenced by this
Warrant, a sufficient number of shares of authorized but unissued
Common Stock, when and as required to provide for the exercise of the
rights represented by this Warrant. The Company will take all such
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 any domestic securities
exchange upon which the Common Stock or other securities may be listed;
provided, however, that the Company shall not be required to effect a
registration under federal or state securities laws with respect to
such exercise. The Company will not take any action which would result
in any adjustment of the Exercise Price (as set forth in Section 2
hereof) if the total number of shares of Common Stock issuable after
such action upon exercise of all outstanding warrants, together with
all shares of Common Stock then outstanding and all shares of Common
Stock then issuable upon exercise of all options and upon the
conversion of all convertible securities then outstanding, would exceed
the total number of shares of Common Stock or Equity Securities then
authorized by the Company's Articles/Certificate of Incorporation
("Company Charter").
2
2. DETERMINATION OR ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The
Exercise Price and the number of shares purchasable upon the exercise
of this Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events described in this Section 2. Upon each
adjustment of the Exercise Price, the Holder of this Warrant shall
thereafter be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the
number of shares purchasable pursuant hereto immediately prior to such
adjustment, and dividing the product thereof by the Exercise Price
resulting from such adjustment. The initial number of shares
purchasable upon the exercise of this Warrant is Seven Hundred Thousand
(700,000) shares.
2.1. Subdivision or Combination of Common Stock. In case the Company
shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect immediately
prior to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock of the
Company shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be
proportionately increased.
2.2 Dividends in Common Stock, Other Stock, Property, Reclassification.
If at any time or from time to time the holders of Common Stock (or any
shares of stock or other securities at the time receivable upon the
exercise of this Warrant or into which such securities are convertible)
shall have received or become entitled to receive, without payment
therefor,
2.2.1. Stock, Common Stock or any shares of stock or other securities
which are at any time directly or indirectly convertible into
or exchangeable for Common Stock, or any rights or options to
subscribe for, purchase or otherwise acquire any of the
foregoing by way of dividend or other distribution,
3
2.2.2. any cash paid or payable otherwise than as a cash dividend, or
2.2.3. Stock, Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up,
reclassification, combination of shares or similar corporate
rearrangement, (other than shares of Common Stock issued as a
stock split or adjustments in respect of which shall be
covered by the terms of Section 2.1 above), then and in each
such case, the Holder hereof shall, upon the exercise of this
Warrant, be entitled to receive, in addition to the number of
shares of Stock or Common Stock receivable thereupon, and
without payment of any additional consideration therefor, the
amount of stock and other securities and property (including
cash in the cases referred to in clause (2.2.2) above and this
clause (2.2.3)) which such Holder would hold on the date of
such exercise had he been the holder of record of such Common
Stock as of the date on which holders of Common Stock received
or became entitled to receive such shares or all other
additional stock and other securities and property.
2.3. Reorganization, Reclassification, Consolidation, Merger or Sale. If any
recapitalization, reclassification or reorganization of the capital
stock of the Company, or any consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of
its assets or other transaction shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities,
or other assets or property (an "Organic Change"), then, as a condition
of such Organic Change, lawful and adequate provisions shall be made by
the Company whereby the Holder hereof shall thereafter have the right,
upon exercise of this warrant, to purchase and receive (in lieu of the
shares of the Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented
by this Warrant) such shares of stock, securities or other assets or
property as may be issued or payable with respect to or in exchange for
a number of outstanding shares of such Common Stock equal to the number
of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented by this Warrant.
In the event of any Organic Change, appropriate provision shall be made
by the Company with respect to the rights and interests of the Holder
of this Warrant to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Exercise Price
and of the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, in relation
to any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof. The Company will not effect any such
consolidation, merger or sale unless, prior to the consummation
thereof, the successor corporation (if other than the Company)
resulting from such consolidation or the corporation purchasing such
assets shall assume by written instrument reasonably satisfactory in
form and substance to the Holder executed and mailed or delivered to
the registered Holder hereof at the last address of such Holder
appearing on the books of the Company, the obligation to deliver to
such Holder, upon Holder's exercise of this Warrant and payment of the
purchase price in accordance with the terms hereof, such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase.
4
2.4. Certain Events. If any change in the outstanding Common Stock of the
Company or any other event occurs as to which the other provisions of
this Section 2 are not strictly applicable or if strictly applicable
would not fairly protect the purchase rights of the Holder of the
Warrant in accordance with such provisions, then the Board of Directors
of the Company shall make an adjustment in the number and class of
shares available under the Warrant, the Exercise Price or the
application of such provisions, so as to protect such purchase rights
as aforesaid. The adjustment shall be such as will give the Holder of
the Warrant upon exercise for the same aggregate Exercise Price the
total number, class and kind of shares as he would have owned had the
Warrant been exercised prior to the event and had he continued to hold
such shares until after the event requiring adjustment.
2.5. Notices of Change.
2.5.1. Upon any determination or adjustment in the number or class of
shares subject to this Warrant and of the Exercise Price, the
Company shall give written notice thereof to the Holder,
setting forth in reasonable detail and certifying the
calculation of such determination or adjustment.
2.5.2. The Company shall give written notice to the Holder at least
10 business days prior to the date on which the Company closes
its books or takes a record for determining rights to receive
any dividends or distributions.
2.5.3. The Company shall also give written notice to the Holder at
least 30 business days prior to the date on which an Organic
Change shall take place.
3. ISSUE TAX. The issuance of certificates for shares of Common Stock upon the
exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in
respect thereof; provided, however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in
the issuance and delivery of any certificate in a name other than that of
the then Holder of the Warrant being exercised.
4. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of stock issued or
issuable upon the exercise of any warrant in any manner which interferes
with the timely exercise of this Warrant.
5
5. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in
this Warrant shall be construed as conferring upon the Holder hereof the
right to vote as a shareholder of the Company. No dividends or interest
shall be payable or accrued in respect of this Warrant, the interest
represented hereby, or the shares purchasable hereunder until, and only to
the extent that, this Warrant shall have been exercised. The Holder of this
Warrant shall receive all notices as if a shareholder of the Company. No
provisions hereof, in the absence of affirmative action by the Holder to
purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability
of such Holder for the Exercise Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by its creditors.
6. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the Holder of this Warrant and of the holder
of shares of Common Stock issued upon exercise of this Warrant, shall
survive the exercise of this Warrant.
7. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
7.1 Articles and Bylaws. The Company has made available to Holder true,
complete and correct copies of the Company Charter and Bylaws, as
amended, through the date hereof.
7.2 Due Authority. The execution and delivery by the Company of this
Warrant and the performance of all obligations of the Company
hereunder, including the issuance to Holder of the right to acquire the
shares of Common Stock, have been duly authorized by all necessary
corporate action on the part of the Company, and the Warrant is not
inconsistent with the Company Charter or Bylaws and constitutes a
legal, valid and binding agreement of the Company, enforceable in
accordance with its terms.
7.3. Consents and Approvals. No consent or approval of, giving of notice to,
registration with, or taking of any other action in respect of any
state, federal or other governmental authority or agency is required
with respect to the execution, delivery and performance by the Company
of its obligations under this Warrant, except for any filing required
by applicable federal and state securities laws, which filing will be
effective by the time required thereby.
7.4. Issued Securities. All issued and outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. All outstanding shares of capital stock
were issued in full compliance with all federal and state securities
laws.
6
7.5. Exempt Transaction. Subject to the accuracy of the Holders
representations in Section 8 hereof, the issuance of the Common Stock
upon exercise of this Warrant will constitute a transaction exempt from
(i) the registration requirements of Section 5 of the Securities Act of
1933, as amended ("1933 Act"), in reliance upon Section 4(2) thereof,
or upon the applicable exemption under Regulation D. and (ii) the
qualification requirements of the applicable state securities laws.
7.6. Compliance with Rule 144. At the written request of the Holder, who
proposes to sell Common Stock issuable upon the exercise of the Warrant
in compliance with Rule 144 promulgated by the Securities and Exchange
Commission, the Company shall furnish to the Holder, within thirty (30)
days after receipt of such request, a written statement confirming the
Company's compliance with the filing requirements of the Securities and
Exchange Commission as set forth in such Rule, as such Rule may be
amended from time to time.
7.7. Registration. If at any time the Company shall determine to register
for its own account or the account of others under the Securities Act
of 1933, as amended (including without limitation pursuant to the
registration of any shareholder of the Company), any of its equity
securities, other than on Form S-8 or Form S-4 or their then
equivalents (a "Piggyback Registration"), it shall send the Holder
written notice of such determination and, if within fifteen (15) days
after receipt of such notice, Holder shall so request in writing, the
Company shall use its diligent efforts to include in such registration
statement all or any part of the shares of Common Stock or other
securities issued or issuable upon conversion of this Note
("Registrable Shares") that Holder requests to be registered, except
that if, in connection with any offering involving an underwriting of
Common Stock to be issued by the Company the managing underwriter shall
impose a limitation on the number of shares of Common Stock which may
be included in the registration statement because, in its judgment,
such limitations necessary to effect an orderly public distribution,
then the Company shall be obligated to include in such registration
statement only such limited portion (or none, if so required by the
managing underwriter) of the Registrable Shares with respect to which
such holder has requested inclusion hereunder. Except as specifically
provided herein, all Registration Expenses incurred in connection with
any registration under this Section shall be borne by the Company. All
Selling Expenses incurred in connection with any registrations
hereunder, shall be borne by the holders of the securities so
registered pro rata on the basis of the number of shares so registered.
For purposes of this Section, "Registration Expenses" means all
expenses incurred by the Company in complying with this Section,
including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent
public accountants for the company, fees and expenses of listing the
securities with the securities exchange, fees and expenses (including
counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees and expenses of one designated
counsel for the Holder in connection with the registration of
Registrable Shares, transfer taxes, fees of transfer agents and
registrars, costs of any insurance which might be obtained, but
excluding any Selling Expenses. For purposes of this Section, "Selling
Expenses" means all underwriting discounts and selling commissions
applicable to the sale of Registrable Shares and the fees and expenses
of more than one counsel for the Holder in connection with the
registration of Registrable Shares.
7
8. REPRESENTATIONS AND COVENANTS OF THE HOLDER.
8.1 This Warrant has been entered into by the Company in reliance upon the
following representations and covenants of the Holder:
8.1.1. Investment Purpose. The Warrant or the Common Stock issuable
upon exercise of the Warrant will be acquired for investment
and not with a view to the sale or distribution of any part
thereof, and the Holder has no present intention of selling or
engaging in any public distribution of the same except
pursuant to a registration or exemption.
8.1.2. Private Issue. The Holder understands (i) that the Warrant and
the Common Stock issuable upon exercise of this Warrant are
not registered under the 1933 Act or qualified under
applicable state securities laws on the ground that the
issuance contemplated by this Warrant will be exempt from the
registration and qualifications requirements thereof, and (ii)
that the Company's reliance on such exemption is predicated on
the representations set forth in this Section 8.
8.1.3. Disposition of Holders Rights. In no event will the Holder
make a disposition of the Warrant or the Common Stock issuable
upon exercise of the Warrant unless and until (i) it shall
have notified the Company of the proposed disposition, and
(ii) if requested by the Company, it shall have furnished the
Company with an opinion of counsel (which counsel may either
be inside or outside counsel to the Holder) satisfactory to
the Company and its counsel to the effect that (A) appropriate
action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements
of the 1933 Act is available. Notwithstanding the foregoing,
the restrictions imposed upon the transferability of any of
its rights to acquire Common Stock issuable on the exercise of
such rights do not apply to transfers from the beneficial
owner of any of the aforementioned securities to its nominee
or from such nominee to its beneficial owner, and shall
terminate as to any particular share of stock when (1) such
security shall have been effectively registered under the 1933
Act and sold by the Holder thereof in accordance with such
registration or (2) such security shall have been sold without
registration in compliance with Rule 144 under the 1933 Act,
or (3) a letter shall have been issued to the Holder at its
request by the staff of the Securities and Exchange Commission
or a ruling shall have been issued to the Holder at its
request by such Commission stating that no action shall be
recommended by such staff or taken by such Commission, as the
case may be, if such security is transferred without
registration under the 1933 Act in accordance with the
conditions set forth in such letter or ruling and such letter
or ruling specifies that no subsequent restrictions on
transfer are required. Whenever the restrictions imposed
hereunder shall terminate, as hereinabove provided, the Holder
or holder of a share of stock then outstanding as to which
such restrictions have terminated shall be entitled to receive
from the Company, without expense to such Holder, one or more
new certificates for the Warrant or for such shares of stock
not bearing any restrictive legend.
8
8.1.4. Financial Risk. The Holder has such knowledge and experience
in financial and business matters as to be capable of
evaluating the merits and risks of its investment, and has the
ability to bear the economic risks of its investment.
8.1.5. Risk of No Registration. The Holder understands that if the
Company does not register with the Securities and Exchange
Commission pursuant to Section 12 of the 1933 Act, or file
reports pursuant to Section 15(d), of the Securities Exchange
Act of 1934 ("1934 Act"), or if a registration statement
covering the securities under the 1933 Act is not in effect
when it desires to sell (i) the Warrant, or (ii) the Common
Stock issuable upon exercise of the Warrant, it may be
required to hold such securities for an indefinite period. The
Holder also understands that any sale of the Warrant or the
Common Stock issuable upon exercise of the Warrant which might
be made by it in reliance upon Rule 144 under the 1933 Act may
be made only in accordance with the terms and conditions of
that Rule.
8.1.6. Accredited Investor. The Holder is an "accredited investor"
within the meaning of Regulation D promulgated under the 1933
Act.
9. MODIFICATION AND WAIVER. This Warrant and any provision 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.
10. NOTICES. Any notice, request or other document required or permitted to be
given or delivered to the Holder hereof or the Company shall be delivered or
shall be sent by certified 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 indicated therefor in the first paragraph of this Warrant or such
other address as either may from time to time provide to the other.
11. BINDING EFFECT ON SUCCESSORS. As provided in Section 2.3 above, this Warrant
shall be binding upon any corporation succeeding the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets. All of the obligations of the Company relating to the Common Stock
issuable upon the exercise of this Warrant shall survive the exercise and
termination of this Warrant. All of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the
Holder hereof.
9
12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties
shall be governed by the laws of the State of Maryland.
13. LOST WARRANTS. The Company represents and warrants to the Holder hereof that
upon receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction, or mutilation of this Warrant and, in the case of any
such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense,
will make and deliver a new Warrant, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant.
14. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share,
pay the Holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Exercise Price.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its officers, thereunto duly authorized this 4th day of November, 2002. .
InforMedix Acquisition Corp.,
a Delaware corporation
By: /s/
-----------------------------------------
Name:
Title:
ATTEST:
/s/
Secretary
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EXHIBIT A-1
SUBSCRIPTION FORM
Date: _________________, _______
InforMedix Acquisition Corp. - Attn: President
Ladies and Gentlemen:
The undersigned hereby elects to exercise the warrant issued to it by
InforMedix Acquisition Corp. ("Company") and dated November 4, 2002, ("Warrant")
and to purchase thereunder __________________________________ shares of the
Common Stock of the Company ("Shares") at a purchase price of ________________
($______) per Share or an aggregate purchase price of __________________
________________ Dollars ($__________) ("Exercise Price").
The undersigned hereby elects to convert _______________________
percent (____%) of the value of the Warrant pursuant to the provisions of
Section 1.2 of the Warrant.
Pursuant to the terms of the Warrant, the undersigned has delivered the
Exercise Price herewith in full in cash or by certified check or wire transfer.
Very truly yours,
