CONVERTIBLE
PROMISSORY NOTE
July 9, 1999
$100,000.00 000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx
FOR VALUE RECEIVED, and in connection with the Subscription Agreement (the
"Subscription Agreement") entered into on even date herewith, the undersigned
Perennial Health Systems, Inc., and Perennial Health Beloit, Inc., jointly and
severally(hereinafter referred to, whether one or more than one person,
corporation, firm, or other entity, as "maker"), located at 000 Xxxx Xxxx
Xxxxxx, Xxxxx 0000X, Xxxxxxxxxx, Xxxxxxxx, 00000, hereby promises and agrees
to pay to the order of Xxxx X. Xxxxxxx ("lender"), the aggregate principal sum
of One Hundred Thousand Dollars {$100,000), together with interest thereon as
hereinafter provided, in lawful money of the United States of America, as
hereinafter provided.
The principal of this note (the "note") shall bear interest on the unpaid
balance thereof at a rate per annum of 12%. All interest on this note shall be
computed daily on the basis of the actual number of days elapsed over an
assumed year consisting of 360 days.
This note is payable in installments of interest only with the first payment
to be made August 1, 1999. Thereafter payments of accrued interest only shall
be made on the first day of each successive month. Unless the Lender has
forgiven all or any portion due under this Note pursuant to the Subscription
Agreement, a final payment of all principal and accrued interest shall be made
on December 31, 1999.
Principal of this note may be repaid in whole or in part without penalty or
premium at any time prior to maturity. All payments of principal and interest
and any other sums due under this note shall be made in immediately available
funds to lender at an address provided by the lender or to such other person
or at such other address as may be designated in writing by the holder of this
note.
It is understood and agreed that the occurrence of any one or more of the
following events shall constitute a default under this note: (A) the failure
to pay or perform any obligations, liabilities, or indebtedness of the maker
to lender, whether under this note or any other agreement, note, or instrument
now or hereafter existing as and when due (whether at maturity or by
acceleration, and with no prior demand therefor by lender being necessary; (B)
a proceeding being filed by or commenced against the maker of this note for
dissolution or liquidation, or if maker voluntarily or involuntarily
terminates or dissolves or is terminated or dissolved, or the sale of all or
substantially all of the assets of the maker (C) the failure of maker to pay
when due any installment of principal or interest or the failure to perform
any of the covenants, agreements, or conditions of any other note or
indebtedness (or contained in any security agreement, or other document
securing such note or indebtedness), the security for which constitutes an
encumbrance on any property which is security for this note; (D) insolvency
of, business failure of, the appointment of a custodian, trustee, liquidator,
or receiver for or for any of the property of, or an assignment for the
benefit of creditors by or the filing of a petition under bankruptcy,
insolvency, or debtor's relief law, or for any readjustment of indebtedness,
composition, or extension by or against the maker.
Whenever there is a default under this note the entire principal balance of
and all accrued interest on this note and all other existing or hereafter
created or arising liabilities, indebtedness, and obligations of maker to
lender (however acquired or evidenced) shall, at the option of lender, become
forthwith due and payable, without presentment, notice, protest, or demand of
any kind (all of which are hereby expressly waived by maker).
Failure of the holder of this note to exercise any of its rights and
remedies shall not constitute a waiver of the right to exercise the same at
that or any other time. All rights and remedies of the holder for default
under this note shall be cumulative to the greatest extent permitted by law.
Time shall be of the essence in the payment of all installments of interest
and principal on this note and the performance of makers' other obligations
under this note.
If there is any default under this note, and this note is placed in the
hands of an attorney for collection, or is collected through any court,
including any bankruptcy court, makers promise to pay to the holder hereof its
reasonable attorney fees and court costs incurred in collecting or attempting
to collect or securing or attempting to secure this note or enforcing the
holder's rights in any collateral securing this note, provided the same is
legally allowed by the laws of the Commonwealth of Kentucky or any state where
the collateral or part thereof is situated.
If any one or more of the provisions of this note, or the applicability of
any such provision to a specific situation, shall be held invalid or
unenforceable, such provision shall be modified to the minimum extent
necessary to make it or its application valid and enforceable, and the
validity and enforceability of all other provisions of this note and all other
applications of any such provision shall not be affected thereby. In the event
such provision(s) cannot be modified to make it or them enforceable, the
invalidity or unenforceability of any such provision(s) of this note shall not
impair the validity or enforceability of any other provision of this note.
This note has been delivered in, and shall be governed by and construed in
accordance with the laws of, the Commonwealth of Kentucky.
Maker hereby waives presentment, demand, notice of dishonor, protest,
notice of protest, and nonpayment, and further waives all exemptions to which
it may now or hereafter be entitled under the laws of this or any other state
or of the United States, and further agrees that the holder of this note shall
have the right, without notice, to deal in any way, at any time, with any of
this note or with any other party who may become primarily or secondarily
liable for any of the obligations of maker under this note without waiving any
rights the holder of this note may have hereunder or by virtue of the laws of
this state or any other state of the United States.
CO-MAKER CO-MAKER
Perennial Health Systems, Inc. Perennial Health Beloit, Inc.
______________________ ____________________________
Xxxxx X. Xxxx, President Xxxxx X. Xxxx President
LEASEHOLD MORTGAGE AND SECURITY AGREEMENT
THIS LEASEHOLD MORTGAGE AND SECURITY AGREEMENT (hereinafter called
"mortgage") executed by the hereafter-named mortgagor on the date shown by the
notarial certificate hereon, but delivered, effective, and dated July 8, 1999,
by and between Perennial Health Beloit, Inc., a Kentucky corporation, having
its principal office at 000 Xxxx Xxxx Xxxxxx, Xxxxx 0000X, Xxxxxxxxxx,
Xxxxxxxx 00000 (hereinafter called "mortgagor") Xxxx X. Xxxxxxx as agent for
himself and Xxxxx X. Xxxxxxxx, X. Xxxxxx Xxxxxxxxx, Xxxxxx X. Xxxxxxx, and X.
Xxxxx Xxxxx, individuals and residents of the Commonwealth of Kentucky, each
consenting to have any notice sent to the attention of Xxxx X. Xxxxxxx c/x
Xxxxx Companies, KADEN TOWER, 14th Floor, 0000 Xxxxxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxx 00000 (hereinafter collectively referred to as "mortgagee").
WITNESSETH:
WHEREAS, mortgagor is justly indebted as a Guarantor and Co-Maker to
mortgagee for money loaned to it by Xxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxx, X.
Xxxxxx Xxxxxxxxx, Xxxxxx X. Xxxxxxx, and X. Xxxxx Xxxxx as evidenced by their
promissory notes (collectively the "note") of even date with the delivery
hereof each in the principal sum of $100,000, for an aggregate obligation to
mortgagee of $500,000, payable to the order of mortgagee on or before December
31, 1999 which is the final maturity date of the indebtedness secured hereby.
NOW, THEREFORE, in consideration of the premises and to secure the payment
of the principal of and interest on the note according to the terms thereof
and the faithful performance of all of the covenants, stipulations, and
agreements set out herein, and in the note, xxxxxxxxx does xxxxxx xxxxx,
convey, and mortgage to mortgagee all of mortgagee's right, title, and
interest in and to the following items:
(A) All right title and interest to the leasehold estate of mortgagee in and
to that certain real property described in exhibit A attached hereto (the
"land") and incorporated herein which arises under that certain ground lease
July 1, 1999, between mortgagor as tenant and Xxx Xxxxxxxxx as landlord
(collectively, the "lease"), a form of which lease is recorded in deed book
{_____}, page {_____}, office of the Rock County Court Clerk, Rock County,
Wisconsin.
TOGETHER WITH all of mortgagor's estate, right, title, and interest in, to,
and under all buildings, structures, improvements, and fixtures now existing
or hereafter erected on the land, all easements, rights, and appurtenances
thereto or used in connection with the land, all revenues, income, and other
benefits thereof or arising from the use or enjoyment of any portion thereof,
and all development or other rights relating to the land or the operation
thereof.
TOGETHER WITH all rights and benefits of whatsoever nature derived or to be
derived by the mortgagor under or by virtue of the lease or in the extension,
renewal, or modification thereof.
TOGETHER WITH all right, title, and interest of the mortgagor, if any, in
and to the tenements, hereditaments, and appurtenances thereunto belonging or
in anywise appertaining, and the reversion or reversions, remainder, and
remainders, rents, issues, and profits thereof; and, also, all the estate,
right, title, interest, property claim, and demand whatsoever of the mortgagor
of, in, and to the same and of, in, and to every part and parcel thereof.
TOGETHER WITH all right, title, and interest of the mortgagor, if any, in
and to the land lying in the bed of any street, road, avenue, or right of way,
opened or proposed, in front of or adjoining the above-described real estate
to the center line thereof and to any strips, gaps, or gores adjoining the
said mortgaged property on all sides thereof.
TOGETHER WITH all machinery, apparatus, equipment, fittings, building
materials, fixtures, and articles of personal property of every kind and
nature whatsoever, other than consumable goods, now or hereafter located in or
upon said mortgaged property or any part thereof and used or useable in
connection with any present or future operation of said real estate
(hereinafter called "equipment") and now owned or hereafter acquired by the
mortgagor, and all of the right, title, and interest of the mortgagor in and
to any equipment which may be subject to any lease, title retention, or
security agreement superior to the lien of this mortgage. The mortgagor agrees
to execute and deliver, from time to time, such further instruments as may be
requested by mortgagee to confirm the lien of this mortgage on any equipment,
including, without limitation, UCC-1 financing statements. Mortgagor grants
and conveys unto mortgagee a security interest in all of said equipment and
proceeds thereof, and this mortgage shall constitute a financing statement
with respect to the equipment described herein and located on the mortgaged
property and proceeds thereof.
The parties hereto covenant and agree to the following terms:
(A) Insurance
The improvements on the mortgaged property shall be insured by mortgagor,
naming mortgagee as an additional insured, until the note is fully paid,
against all risks or hazards, in such amounts and for such periods as
mortgagee may require, in some insurance company or companies authorized to do
business in the State of Wisconsin and acceptable to mortgagee. Such insurance
shall include, but not be limited to, the following types:
(1) Fire and extended coverage property damage insurance, including, but
not limited to, all risk and earthquake insurance, in an amount equal to the
full replacement value of the improvements, without deducting for
depreciation, and containing a waiver of subrogation clause;
(2) Public liability insurance, in such form and amount satisfactory to
mortgagee;
(3) Flood insurance required by and obtainable through the National Flood
Insurance Program sufficient to cover any damage which may be anticipated in
the event of flood, unless mortgagor has provided evidence satisfactory to
mortgagee that no portion of the mortgaged property is located within the
boundaries of the 100-year flood plain; and
Mortgagor shall also carry and maintain liability and indemnity insurance
as may be required, from time to time, by mortgagee and by the terms of the
lease, in forms, amounts, and with companies satisfactory to mortgagee.
Evidence of such insurance, premiums prepaid, shall be deposited by mortgagor
with mortgagee and shall contain provision for not less than 10 days' notice
to mortgagee prior to any cancellation or modification thereof.
(B) Taxes
All taxes and legal assessments, water rates, and other charges, fines, or
impositions against the mortgaged property and all rentals and other expenses
owing under the lease (the "ground lease payments") shall be promptly paid by
the mortgagor, and upon request the receipts therefor exhibited to mortgagee.
(C) Covenants of mortgagor regarding lease
(1) Mortgagor shall pay all rents and all additional sums payable under the
lease as and when the same shall become due and payable. Mortgagor shall, at
all times, keep, observe, and perform all terms, covenants, and conditions of
the lease and do all things necessary to keep unimpaired the mortgagor's
rights unto the lease and the leased premises thereunder and shall not permit
or suffer any surrender, merger, cancellation, or other termination of the
lease nor commit, or permit to be committed or to occur, any event of default
or default by mortgagor under the lease. Mortgagor shall not modify, amend,
abandon, surrender, supplement, or voluntarily terminate the lease, or any
provision thereof, or waive any default or nonperformance by landlord, without
having first obtained the written consent of mortgagee. Mortgagor shall
exercise all renewal rights which it might have under the lease within the
times and in the manner required thereby and in any event upon written request
from mortgagee.
(2) Upon receiving any notice of default from any other party thereto under
the lease, or when any state of facts exist which, with the giving of notice
or lapse of time, or both, would constitute a default under the lease,
mortgagor shall immediately notify mortgagee and shall immediately forward a
copy of any written notice of the same to the mortgagee. Mortgagee may, but
shall not be obligated to, take any action as mortgagee deems necessary or
desirable to prevent or cure any default by the mortgagor. Xxxxxxxxx expressly
grants to mortgagee the absolute and immediate right to enter in and upon the
land to such extent and as often as mortgagee, at its sole discretion, deems
necessary or desirable to prevent or cure any such claimed or suspected
default by mortgagor. The curing by mortgagee of any default under the lease
shall not constitute a waiver of the mortgagor's default under this mortgage
as a result of the occurrence of a default under the lease.
(3) Xxxxxxxxx makes the following representations, warranties, and
covenants:
(a) The lease is in full force and effect, and has not been modified in any
respect. Further, the lease creates a valid leasehold estate in mortgagor in
and to the leased premises described therein;
(b) The mortgagor's leasehold estate created by the lease is subject to no
lien, security interest, or other charge or encumbrance except the lien
created hereby and the lien of ad valorem taxes not yet due and payable;
(c) No event of default or default, and to the knowledge and belief of
mortgagor, no event or condition which with a giving of notice or passage of
time or both would constitute a default or event of default, exists under the
lease;
(d) Mortgagor has good and marketable title to the lease and the leased
premises described therein; and
(e) This mortgage creates a valid first-priority mortgage in the tenant's
leasehold interest created by the lease.
(D) Payments by xxxxxxxxx
In the event the mortgagor shall fail to keep the insurance required
hereunder in force or fail to pay said taxes, legal assessments, water rates,
or other charges, fines, or impositions or lease payments, mortgagee may
effect said insurance or pay said taxes, legal assessments, water rates, or
other charges, fines, or impositions or lease payments, but shall be under no
obligation to do so. Any sums so expended by mortgagee will be repaid by
mortgagor upon demand, with interest thereon at the rate set forth in the
note, and said sums and the interest thereon shall be deemed a part of the
debt secured hereby and included herein.
(E) Certificates
Mortgagor, within five business days upon request, shall furnish a written
statement, duly acknowledged and notarized, of all amounts due on any
indebtedness secured hereby or secured by any other lien on the mortgaged
property, whether for principal or interest on the note or otherwise and
covering such other matters with respect to any such indebtedness as mortgagee
may reasonably require, including, but not limited to, any defaults or events
of default.
(F) Events of default
Any of the following circumstances constitute an "event of default":
(1) Mortgagor shall fail to pay the note or any installment thereon when
the same shall become due and payable or within any grace period permitted
herein or in the note;
(2) Mortgagor shall sell or permit the mortgaged property or any legal or
equitable interest therein to be sold, assigned, or conveyed in any manner
without the prior consent of mortgagee;
(3) Mortgagor shall mortgage or encumber the mortgaged property or the
improvements, or any interest therein, without the prior written consent of
mortgagee;
(4) Mortgagor shall file a voluntary petition in bankruptcy or be adjudged
bankrupt or insolvent, make an assignment for the benefit of creditors or be
placed in receivership, or mortgagor shall file any petition or answer
seeking, consenting to, or acquiescing in, any reorganization, arrangement,
adjustment, composition, liquidation, dissolution, or similar relief under any
present or future statute, law, or regulation or shall file an answer
admitting or shall fail to deny the material allegations of a petition against
it for any such relief, or if any such proceeding against mortgagor seeking
any such relief shall not have been dismissed within 60 days after the
commencement thereof;
(5) Mortgagor shall alter, remove, or demolish (other than by casualty
covered by the insurance referred to in paragraph (A) hereof) the improvements
on the mortgaged property, or sever, remove, or sell any fixtures or equipment
on, in, or about said improvements or on the mortgaged property (unless
mortgagor replaces same with similar items of fixtures or equipment).
Mortgagor may not mortgage any of the aforesaid (except as permitted above)
without the prior written consent of mortgagee and any such mortgaging will be
considered an event of default;
(6) Mortgagor shall permit, commit, or suffer any waste, impairment, or
deterioration of the improvements or any part thereof, or of the equipment on
the mortgaged property, or fail to keep and maintain the same and every part
thereof in good condition and repair and, from time to time, make all needful
and proper replacements so that said improvements, fixtures, and equipment
will, at all times, be in good condition, fit and proper for the purposes for
which they were originally erected or installed and such deficiency is not
cured within 30 days after notice from mortgagee;
(7) The occupancy or use of the mortgaged property shall be restricted,
impaired, or enjoined by action of any third party, including, without
limitation, any federal, state, or local authority, and such restriction,
impairment, or injunction is not removed within 30 days after notice from
mortgagee;
(8) The landlord under the lease shall declare a default thereunder, and
such default is not cured within any applicable grace period thereunder;
(9) Mortgagor shall suffer the loss of any privilege, franchise, license,
permit, or other authorization necessary for the operation of the mortgaged
property and such privilege, franchise, license, permit, or other
authorization is not restored within 30 days after notice from mortgagee;
(10) Mortgagor shall suffer the filing of any lien or encumbrance,
including, without limitation, any mechanic's or materialman's lien, other
statutory lien, or any other lien arising by operation of law and the same is
not removed within 30 days after such filing;
(11) The lease shall be cancelled, surrendered, or terminated; or
(12) Mortgagor, in any manner, shall fail to keep and perform any of the
covenants, stipulations, and agreements set out in the note or herein
contained on its part to be performed.
Then, and in any of such events, mortgagee may immediately declare the
entire unpaid principal balance of the note, with accrued unpaid interest
thereon, and all other indebtedness and obligations secured hereby,
immediately due and payable and proceed to enforce the collection of the same
and all charges and costs, including, without limitation, reasonable attorney
fees incurred by mortgagee, permitted by law and the lien of this mortgage,
and may institute proceedings to enforce the lien of this mortgage.
(G) Remedies upon default
In addition to the rights under paragraph (F) hereof, upon the happening of
any event of default as provided herein, mortgagee may, at any time
thereafter, at its option, without notice and without waiving any right or
remedy available to it by law or under the note or otherwise, take the
following actions:
(1) Institute proceedings to enforce the lien of this mortgage;
(2) Enforce its rights whether by action, suit, or proceeding in equity or
at law for the specific performance of any covenant, condition, or agreement
in the note or in this mortgage, or in aid of the execution of any power
herein granted, or for the enforcement of any other appropriate legal or
equitable remedy or otherwise, as mortgagee shall elect, including appointment
of a receiver to manage the mortgaged property (subject to the provisions
contained in the consent to leasehold mortgage by way of letter from the
lessor, a copy of which is attached hereto, of even date herewith (the
"consent to mortgage"); and
(3) Enter upon the mortgaged property, and subject to the consent to
mortgage, perform any and all work and take all steps necessary to manage and
operate the mortgaged property by itself or through a receiver.
All sums thus expended by it upon default shall be deemed paid to
mortgagor, and added to any principal amounts owing on the note. For this
purpose, the mortgagor hereby constitutes and appoints mortgagee its true and
lawful attorney in fact, with full power of substitution, to operate and
manage the mortgaged property thereon in the name of the mortgagor and hereby
empowers mortgagee as its said attorney in fact as follows:
(a) To enter upon, take possession of, conduct tests of, manage, and
operate the mortgaged property or any part thereof, and do all things
necessary or appropriate, in mortgagee's sole discretion, in connection
therewith;
(b) To make all necessary or proper repairs, renewals, replacements,
or required alterations, additions, betterments, and improvements to and upon
the mortgaged property as the mortgagee may deem judicious and pay all costs
and expenses of so taking, holding, and managing the same;
(c) To enforce any bond or policy of insurance or otherwise, and,
without limitation, to deal with any bonding or insurance company under any
policy required hereunder as mortgagor might do in its own behalf;
(d) To pay, settle, or compromise all existing bills and claims which
are or may be liens against the mortgaged property or improvements thereon, or
which may be necessary or desirable for the removal of liens and encumbrances,
including but not limited to the payment of any debts related to the pledging
of accounts receivable to Daiwa Healthco-3 LLC, or any other party;
(e) To prosecute and defend all actions or proceedings in connection
with the mortgaged property and to take such action and require such
performance as mortgagee deems necessary; and
(f) To make, enforce, modify, or accept surrender of leases, obtain or
evict tenants, fix or modify rents, or sue for or otherwise collect and
receive all earnings, revenues, rents, issues, profits, and income of the
mortgaged property, the improvements, the leases, or every part thereof.
However, it is acknowledged by mortgagee that any accounts receivable owing to
mortgagor arising out of the operation of the mortgaged property may be
pledged as security for additional financing, and, to the extent that any such
accounts receivable are collected by mortgagee, the same shall be remitted to
the provider (the "receivable lender") of such financing until the lesser of
(x) the obligations of mortgagor to the receivable lender have been satisfied,
or (y) an amount equal to the accounts receivable of the mortgagor as of the
date that mortgagee enforces the rights set forth in this paragraph. The
mortgagor shall provide notice to the mortgagee, in writing, by certified
mail, of the name and address of any receivable lender, and a copy of any
documents evidencing the agreement between the mortgagor and such receivable
lender.
The foregoing power of attorney shall be deemed coupled with an interest
and cannot be revoked.
(H) Rents and profits
All rents, issues, profits, and proceeds from the mortgaged property are
hereby assigned to mortgagee. Upon the occurrence of any event of default
under paragraph (F) hereof, and subject to the obligations to make payments in
accordance with any accounts receivable financing as set forth in paragraph
(G)(f) hereof, all such rents, issues, profits, and proceeds shall be paid
directly to mortgagee by the person(s) obligated therefor.
(I) Receiver
In any action to foreclose this mortgage, mortgagee may, at its option as a
matter of contract right (subject to the provisions contained in the consent
to mortgage), have a receiver appointed to take charge of the mortgaged
property and to collect such rents, issues, profits, and proceeds, all without
consideration of the value of the mortgaged property as security for the
amount of indebtedness secured hereby. All such rents, issues, profits, and
proceeds paid to mortgagee or collected by such receiver shall be first
applied to the cost of collection thereof (including the cost of such
receivership, if any) and then to the payment of the interest on and principal
of the note. Xxxxxxxxx, for itself and any subsequent owner of the mortgaged
property, hereby waives any and all defenses to the application for such
receiver and hereby specifically consents to such appointment without notice.
The rights and remedies herein provided for shall be deemed to be cumulative
and in addition to, not in limitation of, any other such rights or remedies
provided by law.
(J) Assumption of indebtedness
Xxxxxxxxx shall not permit the indebtedness secured by this mortgage to be
assumed in any manner without the prior written consent of mortgagee (which
may be withheld at mortgagee's discretion).
(K) No waiver
Failure of mortgagee to exercise any of its remedies or other options
provided for herein in the event of any violation of the warranties,
covenants, and agreements herein contained or referred to, or upon the
occurrence of any event of default, shall not constitute a waiver of its right
to exercise such option because of any subsequent violation.
(L) Additional indebtedness
This mortgage shall secure the payment of all renewals, amendments,
replacements, and extensions of the note or substitutions therefor.
(M) No merger of lease and fee
In the event mortgagor shall acquire the fee interest in the mortgaged
property, notwithstanding any other provision contained in this mortgage or in
the note, the lien of the mortgage shall continue in, and extend to, the
entire interest of mortgagor in the mortgaged property including such fee
interest. Unless mortgagee shall expressly consent in writing, neither the fee
title nor any other estate shall, under any circumstances, be deemed to merge
with the lease, notwithstanding the union of the lease and the fee title or
other estate either in the tenant or landlord under the lease or any third
party by purchase or otherwise and the lease shall be amended as such.
(N) Successors and assigns
This mortgage shall be binding upon, and inure to the benefit of, the
respective heirs, executors, administrators, successors, and assigns of the
parties hereto.
(O) Security interest
To the extent that this mortgage and security agreement constitutes a
security agreement with respect to personal property, the rights, remedies,
privileges, and duties of the mortgagee hereunder shall be governed in all
respects by the Uniform Commercial Code of the Commonwealth of Kentucky.
Mortgagee shall be deemed to be a secured party as defined therein and shall
have all of the rights, remedies, privileges, and duties of a secured party as
set forth therein. The remedies upon default available to the mortgagee
hereunder shall be in addition to, and not in substitution for, the rights and
remedies of a secured party under the Uniform Commercial Code of Kentucky; all
of the same shall be cumulative to the greatest extent permitted by law.
Subject to the provisions contained in the consent to mortgage, whenever there
exists an event of default hereunder, the mortgagee may exercise, from time to
time, any rights and remedies available to it under applicable law upon
default in payment of indebtedness. The mortgagor shall, promptly upon request
by the mortgagee, assemble the collateral and make it available to the
mortgagee at such place or places, reasonably convenient for both the
mortgagee and the mortgagor, as the mortgagee shall designate. Any
notification required by law of intended disposition by the mortgagor of any
of the collateral shall be deemed reasonably and properly given if given at
least 10 days before such disposition. Without limiting the foregoing, and
subject to the consent to mortgage, whenever there exists a default hereunder,
the mortgagee may, with respect to so much of the collateral as is personal
property under applicable law, to the fullest extent permitted by applicable
law of any kind, take the following actions:
(1) Notify any person obligated on the collateral to perform directly for
the mortgagee its obligations hereunder;
(2) Enforce collection of any of the collateral, by suit or otherwise, and
surrender, release, or exchange all or any part thereof or compromise or
extend or renew for any period (whether or not longer than the original
period) any obligations of any nature of any party with respect thereto;
(3) Endorse any checks, drafts, or other writings in the name of the
mortgagor to allow collection of the collateral;
(4) Take control of any proceeds of the collateral;
(5) Enter upon any premises where any of the collateral may be located and
take possession of and remove such collateral;
(6) Sell any or all of the collateral, free of all rights and claims of the
mortgagor therein and thereto, at any public or private sale; and
(7) Bid for and purchase any or all of the collateral at any such sale.
Any proceeds of any disposition by the mortgagee of any of the collateral may
be applied by the mortgagee to the payment of any expenses or fees incurred in
connection with the collateral, including reasonable attorney fees and legal
expenses, and any balance of such proceeds shall be applied by the mortgagee
toward the payment of such of the indebtedness and in such order of
application as the mortgagee may determine in its sole discretion. The
mortgagee may exercise, from time to time, any rights and remedies available
to it under the Uniform Commercial Code or other applicable law as in effect
from time to time. The mortgagor hereby expressly waives presentment, demand,
notice of dishonor, protest, and notice of protest in connection with the note
and, to the fullest extent permitted by applicable law, any and all other
notices (except such notice as is expressly required to be given under the
terms hereof), demands, advertisements, hearings, or process of law in
connection with the exercise by the mortgagee of any of its rights and
remedies hereunder. The mortgagor hereby constitutes the mortgagee its
attorney in fact with full power of substitution to take possession of the
collateral upon any event of default and, as the mortgagee in its sole
discretion deems necessary or proper, to execute and deliver all instruments
required by the mortgagor to accomplish the disposition of the collateral.
This power of attorney is a power coupled with an interest and is irrevocable
while any of the indebtedness is outstanding. This mortgage is intended to be
a financing statement within the purview of section 9-402 of the Uniform
Commercial Code with respect to those items of equipment, goods, or inventory
which are fixtures on the premises. The addresses of the mortgagor (debtor)
and mortgagee (secured party) are set forth above. This mortgage is to be
filed for record in the real estate records of the county where the premises
are located.
(P) Execution of documents
Xxxxxxxxx xxxxxx agrees that, upon the written request of mortgagee,
xxxxxxxxx will execute, deliver, record, and/or file any and all additional
mortgages, security agreements, pledge agreements, and financing statements,
in form and substance satisfactory to mortgagee, in connection with the liens
in and to the mortgaged property granted hereby.
(Q) Notice to landlord and receivable lender of default; landlord's rights
Mortgagee agrees that in the event it elects to declare an event of default
as provided in paragraph (F) hereof, mortgagee shall provide written notice to
the landlord under the lease, and the receivable lender, by hand delivery or
by registered or certified mail, and specifically to the landlord: Xxx
Xxxxxxxxx , Pioneer Court, 0000 Xxxxxxx Xxxxx, Xxxxxx, XX 00000, with a copy
to Xxxxxx X. Xxxxxxxx, Xx., Xxxxxxxx Law Offices, S.C., P.O. Box 930005,
Verona, WI 53593, and the receivable lender: at the address and to the
attention of the party set forth in the notice to the mortgagee given pursuant
to paragraph (G)(f) hereof, (which may be a copy of any default notice sent to
mortgagor) of its intention to declare a default under the terms of this
mortgage and to pursue its remedies hereunder. The landlord may (but shall not
be required to) directly cure any default of mortgagor under the mortgage by
paying any amount due and owing to mortgagee or by performing or causing to be
performed any other act or omission of mortgagor constituting a default under
the mortgage. The landlord shall have the same period of time as mortgagor to
remedy the particular default, which cure period in favor of the landlord
shall commence at the end of the tenant's cure period, and mortgagee shall
accept performance by the landlord as if it had been done or performed by the
mortgagor. If landlord pays the outstanding principal balance due under the
note, together with all interest, penalties, and other amounts due thereunder,
mortgagor shall release the lien of this mortgage of record.
PROVIDED, HOWEVER, that if mortgagor shall pay the note according to the
terms thereof, then this mortgage shall be void, and mortgagee shall, at
mortgagor's cost and request, release the same.
IN TESTIMONY WHEREOF, witness the signature of xxxxxxxxx.
Perennial Health Beloit, Inc.
___________________________
By: Xxxxx X. Xxxx, President
Commonwealth of Kentucky
County of Jefferson
The foregoing instrument was acknowledged before me July 8, 1999 by Xxxxx
X. Xxxx, President of Perennial Health Beloit, Inc., a Kentucky corporation,
on behalf of the corporation.
_________________________________
Signature
My commission expires _______________
EXHIBIT A
Legal Description of Property
The land referred to is situated in the State of Wisconsin, County of Rock,
and is described as follows: Lots Twelve (12), Thirteen (13), Fourteen (14),
Fifteen (15), Sixteen (16), Seventeen (17), Eighteen (18), Nineteen (19) and
Twenty (2) of Fairview Gardens, a subdivision, in the City of Beloit, County
of Rock and State of Wisconsin.
Return to:Xxxxxx X. Xxxx, Xxxxxxx
Xxxxx, Xxxx & Xxxxxxx PLLC
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
LEASEHOLD MORTGAGE AND SECURITY AGREEMENT
Prepared by:
XXXXXXX XXXXXXX, ESQUIRE
Perennial Health Systems, Inc.
Waterfront Plaza
000 Xxxx Xxxx Xxxxxx, Xxxxx 0000X
Xxxxxxxxxx, Xxxxxxxx 00000
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "agreement") is made and entered into as
of July 9, 1999 by and between XXXXX X. XXXX, 0000 Xxxx Xxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx (hereinafter referred to, whether one or more than one
person or entity, as the "stockholder"); and XXXX X XXXXXXX ("lender"), an
individual having an address c/o Kaden Companies, Kaden Tower, 14th Floor,
0000 Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
WHEREAS, stockholder owns 3,438,235 shares (the "shares") of the Common
Stock of Perennial Health Systems, Inc., a Colorado corporation; and
WHEREAS, Perennial Health Systems, Inc. (hereinafter referred to, whether
one or more than one person, corporation, firm, or entity, as "borrower"), 000
Xxxx Xxxx Xxxxxx, Xxxxx0000X, Xxxxxxxxxx, Xxxxxxxx 00000, desires to transact
business with and to obtain credit from, but lender is unwilling to extend or
continue credit to borrower unless the stockholder shall pledge to lender
certain of the shares, as hereinafter described, as security for all of the
obligations of borrower to lender as hereinafter defined;
NOW THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the stockholder, and to induce lender to extend credit to
borrower, and acknowledging that lender in extending such credit shall rely on
this agreement, stockholder and lender do hereby agree as follows:
(A) Deposit and pledge of shares
Stockholder has deposited with, and hereby pledges and assigns to lender
and grants lender a continuing security interest in 100,000 shares (the
"pledged shares") of the common stock of company now registered and standing
in the stockholder's name, which pledged shares are evidenced by the
certificate of company in the stockholder's name on deposit with lender,
together with stock powers duly endorsed in blank attached thereto. The
stockholder and lender acknowledge that, in conjunction with additional pledge
agreements to additional lenders (the "Lenders") executed simultaneously
herewith the stockholder has delivered to Lenders stock certificate #1287,
executed in blank, and representing 3,438,225 shares, for the express purpose
of having said stock delivered to the transfer agent, and having six
certificates re-issued in the name of the stockholder, five certificates in
the amount of 100,000 shares each, and one certificate for 2,938,225 shares,
with all of said shares to be delivered to the Lenders. Upon the delivery of
such certificates, each lender shall retain one stock certificate for 100,000
shares, and an appropriate stock power, and the balance of said certificates
shall be returned to the Lender.
(B) Obligations secured
This agreement is made as collateral security for, and the security
interest granted in the pledged shares secures the following obligations
(hereinafter sometimes referred to collectively as the "obligations"):
(1) All principal advanced pursuant to and interest (including any
interest due after default and late charges) due under the promissory note
(the "note") of even date herewith in the face principal amount of $100,000
made by borrower to the order of lender, and any renewals and extensions and
amendments of the note or substitutions and replacements for the note;
(2) All expenses, costs, and charges, of any nature whatsoever,
including, without limitation, reasonable attorney fees of lender, required to
be paid by lender in enforcing any of its rights and remedies under the loan
agreement pursuant to which the note was issued, or under any of the other
"loan documents" described in the loan agreement;
(3) The payment of all fees now or hereafter due lender in connection
with or arising out of the note, the loan agreement, and the other loan
documents, and the due and punctual performance and observance of all other
agreements, obligations, warranties, and representations of borrower to lender
under any loan document; and
(4) Any and all other debts, liabilities, and obligations of borrower
to lender, whether created directly by borrower or acquired by assignment or
otherwise, whether joint or several, matured or unmatured, absolute or
contingent, and whether now existing or hereafter arising, whether of the same
or different class or type as the note, and whether or not the creation of
same was reasonably foreseeable or would be naturally contemplated by borrower
or lender on the date of this agreement, it being the intent of lender and
borrower that all of the same be secured hereby for all purposes of this
agreement.
(C) Representations and warranties
Stockholder represents and warrants to lender that:
(1) Stockholder is the registered and absolute beneficial owner of the
pledged shares free from all liens and security interests, charges, equities,
and encumbrances as of the date hereof except for the liens and security
interests created by this agreement.
(2) Stockholder has the right to enter into this agreement, the
execution and performance of which will not, either immediately, or with
notice and/or passage of time, conflict with or constitute a breach under any
agreement to which stockholder is a party, or result in the creation or
imposition of any encumbrance upon the pledged shares except as granted
hereby.
(3) The pledged shares are validly issued and outstanding, fully paid,
and nonassessable. The pledged shares are freely transferable by lender under
this stock pledge agreement without the necessity of complying with any
shareholders agreement or similar arrangement.
(D) Maintenance of pledged shares and of interest in company
Stockholder agrees that until such time as borrower has paid in full
or discharged all of its obligations to lender hereunder, stockholder shall
not sell, assign, pledge, or option all or any portion of the pledged shares
or any interest therein without the prior written consent of lender, and that
any and all new shares of capital stock, securities, rights, warrants,
options, and the like created in respect of the pledged shares, whether by
stock split, stock dividend, merger, reorganization, consolidation,
recapitalization, or otherwise, shall be delivered promptly on receipt (with
appropriate stock powers endorsed in blank) by the stockholder to, and shall
be held by, lender subject to the terms, provisions, and conditions of this
agreement, and the term "pledged shares" as used herein shall be deemed to
include all such new shares, securities, rights, warrants, options, and the
like and the same are hereby pledged and assigned, and a security interest
therein is hereby granted to lender as security for the obligations.
(E) Cash dividends
So long as no event of default has occurred under this agreement, all
cash dividends declared in respect of any of the pledged shares shall be paid
in full to the stockholder, except for partial or complete liquidation
dividends and other distributions, all of which shall be paid to the lender
for application to the note and the other obligations. From and after the
occurrence of an event of default under this agreement, all such cash
dividends shall be paid directly to the lender for application to the note and
other obligations in such order as lender may select in its sole and absolute
discretion, and if the stockholder receives any such dividends, stockholder
shall be a fiduciary for the lender and stockholder shall receive the same in
trust for lender and immediately shall remit the same to lender for
application to the obligations in the manner aforesaid. Stockholder hereby
constitutes and appoints lender as the irrevocable attorney in fact for
stockholder to endorse stockholder's name to all checks in payment of such
dividends and to execute such documents and instruments and to perform such
other acts as the lender may deem necessary, appropriate, or desirable to
effect the payment of such cash dividends directly to the lender.
(F) Voting of stock prior to event of default
So long as there is no default in the performance of any of the terms,
provisions, and conditions of this agreement, stockholder shall be entitled to
vote the pledged shares for purposes not inconsistent with the covenants,
obligations, or agreements of stockholder contained in this agreement. It is
acknowledged and agreed by stockholder that it would be inconsistent with this
agreement to, and stockholder therefore shall not without prior written
consent of lender, vote the pledged shares prior to default in favor of any
proposals to allow company to (1) issue any additional capital stock of any
kind (common or preferred) or options, subscription rights, warrants, or other
instruments with respect thereto or debt securities convertible into capital
stock, or sell or issue or reissue any treasury stock, or (2) merge into or
with or consolidate with any other corporation or business, or participate in
any reorganization or recapitalization, or (3) sell or lease to others all or
substantially all of its assets, or (4) take any corporate action intended to
accomplish, in whole or in part, any of the foregoing.
(G) Maintenance of priority of pledge
Stockholder shall be liable for and shall timely pay and discharge all
taxes, assessments, and governmental charges imposed upon the pledged shares
by any federal, state, or local authority, the liens of which would or might
be held prior to the rights of lender hereunder in and to the pledged shares,
or which are imposed on the holder and/or registered owner of the pledged
shares. Stockholder shall not, at any time while this agreement is in effect,
enter into any stock restriction or buy-sell agreement applicable to the
pledged shares, or do or suffer any other act or thing whereby the rights of
lender in the pledged shares would or might be materially impaired.
Stockholder shall execute and deliver such further documents and take such
further actions as may be reasonably required to confirm the rights of lender
in and to the pledged shares or otherwise to effect the intended purposes of
this agreement.
(H) Conversion
Stockholder and lender agree that in the event that the lender
exercises the option granted in the note to the full extent possible ($50,000
for 100,000 shares), then, to the extent that any unpaid balance remains on
the note, the Lender may assign all, or part of his interest in such note to
stockholder, and take in return for such assignment a number of the shares of
the pledged stock equal to the balance due on the note, divided by $.50.
(I) Events of default
Each of the following shall be deemed an "event of default" hereunder:
(1) If any default occurs in the payment or performance of the note or
any of the other obligations described in the section of this agreement
entitled "Obligations secured," strictly in accordance with their respective
terms (including after any applicable requirement for notice and opportunity
to cure which may be expressly provided for in the document, instrument, or
agreement evidencing or governing such obligation); or
(2) If stockholder shall fail to comply fully with any provision of
this agreement and the same is not cured within fifteen (15) days after lender
shall have given stockholder written notice thereof; or
(3) If any warranty or representation made by stockholder to lender
herein or in any certificate, instrument, agreement, or other writing now or
hereafter delivered by stockholder to lender, shall prove to have been untrue
or materially misleading as of the time made.
(J) Remedies upon event of default
Upon the occurrence of any event of default as described in this
agreement, lender shall have the following rights and remedies, in addition to
all other rights and remedies provided by law or in equity, all of which shall
be cumulative and may be exercised from time to time, either successively or
concurrently:
(1) To declare the note and all of the other obligations of
stockholder to be immediately due and payable in full, with all accrued
interest thereon, and to sell the pledged shares in one or more lots, and from
time to time, upon not less then 10 days' prior written notice to stockholder
of the time and place of sale with respect to any public sale, and upon not
less than 10 days' prior written notice to stockholder of the date after which
the pledged shares may be sold with respect to any private sale (which notice
in each case the stockholder hereby agrees is commercially reasonable), for
cash or upon credit or for future delivery, the stockholder hereby waiving all
rights, if any, to require marshalling of the pledged shares and any other
security for the payment of the obligations and, at the option of and in the
discretion of lender, to sell the pledged shares either:
(a) At a public sale or sales, including a sale at or on any broker's
board or stock exchange; or
(b) At a private sale or sales.
Lender may bid for and acquire the pledged shares or any portion thereof
at any public sale, free from any redemption rights of stockholder to the
fullest extent permitted by applicable law, and, in lieu of paying cash
therefor, may make settlement for the selling price of the pledged shares or
part thereof by crediting, against the balance due under the obligations, the
net selling price of the pledged shares, after deducting all of lender's
reasonable costs and expenses of every kind and nature therefrom, including
reasonable attorney fees of lender incurred in connection with realizing upon
the pledged shares and collecting the obligations, to the full extent that
recovery of such fees by lender is not prohibited by the laws of the
Commonwealth of Kentucky.
Lender may elect at its sole option and in lender's complete
discretion to sell the pledged shares or any portion thereof on credit or for
future delivery, and the pledged shares so sold may, at the option of lender,
either be delivered to the purchaser thereof or retained by lender until the
selling price is paid by the purchaser, but in either event lender shall incur
no liability in case of failure by the purchaser to pay for the pledged shares
sold. If such purchaser shall fail to make payment for the pledged shares, the
pledged shares may be sold again by lender in the manner provided for in this
section, and until such pledged shares are taken up and paid for at a sale as
provided for in this section, the pledged shares shall remain subject to this
agreement and the security interest and rights granted to lender herein.
After deducting all of its reasonable costs and expenses of every
kind, including, without limitation, legal fees and (SEC and other)
registration fees and expenses, if any, in connection with the sale of the
pledged shares, lender shall apply the residue of the proceeds of any sale or
sales of the pledged shares to the note and the other obligations in such
order as lender may select. Lender shall not incur any liability solely
because of the fact that the price or prices for which the pledged shares or
any portion thereof which is sold at a private sale or sales is less than the
price which might have been obtained at a public sale or sales, or vice versa,
or in the event that the price received for the pledged shares is less than
the amount of the obligations. Stockholder agrees that lender may, without
incurring liability therefor, accept the first offer received without offering
the pledged shares to more than one offeree. Stockholder agrees that lender
shall not be liable for any delay in selling the pledged shares or portion
thereof after an event of default, solely because the price of the pledged
shares declines during such interval. Stockholder further agrees that lender
may sell the pledged shares or portion thereof immediately upon the occurrence
of an event of default and shall not be liable therefor even though the price
of the pledged shares should increase after such sale.
(2) To exercise, at the sole and exclusive option of lender, and only
upon the affirmative exercise by lender of such option, all voting rights and
privileges whatsoever with respect to the pledged shares, and to transfer or
have the pledged shares transferred into the name of lender. Without
limitation of the preceding sentence, lender may vote the pledged shares to
remove the directors and officers of the borrower, to elect new directors and
officers of the borrower who thereafter shall manage the affairs of the
borrower, to operate the properties and carry on the business and otherwise
take any action with respect to the affairs of borrower as lender shall deem
necessary or appropriate to the fullest extent permitted by law, to vote to
liquidate borrower or any or all of its businesses, to authorize the borrowing
of money in the name of xxxxxxxx, to pledge the assets of borrower to secure
any borrowings of borrower, to cause borrower to observe and perform, or to
amend or terminate, any and all agreements of borrower, and to enter into new
agreements. Stockholder hereby constitutes lender in such event as its proxy
and attorney in fact for all purposes regarding voting the pledged shares, and
this appointment shall be deemed coupled with an interest and is and shall be
irrevocable until all of the obligations of borrower to lender secured hereby
have been fully paid and terminated; and all persons whatsoever shall be
conclusively entitled to rely upon lender's verbal or written certification
that it is entitled to vote the pledged shares hereunder. Anything contained
in this subsection or this agreement to the contrary notwithstanding, lender
pursuant to the execution and delivery of this agreement does not intend nor
shall lender be deemed to be exercising any control over the business or
affairs of borrower, and any exercise of the rights of lender with respect to
the pledged shares and the exercise of any such control over borrower shall
occur only upon the affirmative election of lender to engage in such
activities.
(3) To exercise all rights of a secured party under the Uniform
Commercial Code of Kentucky and all other applicable laws.
(K) Compliance with securities laws
If lender decides to sell all or any of the pledged shares as provided
herein and if, in the opinion of counsel for lender, stockholder, or Perennial
Health Systems, Inc., it is necessary or advisable to comply with the
provisions of any securities laws for exemption from any applicable
registration requirements in connection with such sale, or to have such
pledged shares registered under the provisions of any securities laws,
stockholder agrees without cost or expense to lender to prepare, execute, and
deliver all such documents and to do or cause to be done all other such acts
and things as may be necessary or, in the opinion of lender, advisable,
(including, but not limited to, the payment of fees, costs, expenses, and
charges to or for the actions as shall be necessary to cause the borrower):
(1) to comply with the provisions of any securities laws concerning exemption
from the registration requirements thereof, including but not limited to
furnishing to lender all information which lender in its sole discretion and
judgment deems pertinent to determine the number of pledged shares which may
be sold by lender as exempt transactions under section 4(4) of the Securities
Act of 1933 and Rule 144 of the Securities and Exchange Commission (or any
laws in effect in lieu thereof), as the same are from time to time in effect,
if lender decides to use such provisions in order to effect any transaction in
the pledged shares; and (2) to qualify any pledged shares under any applicable
"Blue Sky Laws" and to obtain the approval of any required government
authority to any such disposition or dispositions, to register all or any part
of the pledged shares under any securities laws, to cause any registration
statement relating to such registration to become effective and to remain
effective for so long as necessary to lawfully effect the sale of any pledged
shares as registered securities, to make all amendments thereto and/or to
related prospectuses which in the opinion of lender are necessary or desirable
under appropriate securities laws, and to do any and all other acts and things
necessary or appropriate in lender's sole discretion and judgment to qualify
or register any of the pledged shares for disposition under any securities
laws.
(L) Indemnity
Stockholder agrees jointly and severally to indemnify and hold lender,
and any affiliate of lender, and any officer, director, employee, agent, or
independent contractor of lender or any affiliate of lender (in this section
all such persons are referred to collectively as "related parties" of lender)
from and against any and all causes of action, suits, actions, losses,
liabilities, costs, demands, claims, expenses (including reasonable legal fees
incurred in connection therewith), and damages (hereinafter in this section
each and all of the foregoing are referred to as the "indemnified claims")
arising out of, based upon, or in connection with: (1) any action taken or
information furnished by stockholder and/or borrower under or pursuant to this
agreement, including any failure to furnish information necessary to make any
information so furnished complete, accurate, and not misleading, regardless of
any independent investigation made by or on behalf of lender and/or lender's
related parties; (2) any failure by stockholder and/or borrower to take, or
any unreasonable delay by stockholder and/or borrower in taking, any action
stockholder and/or borrower are required to take under or pursuant to this
agreement; or (3) the sale or other disposition of any pledged shares by
lender or the related parties, including any violation or alleged violation or
failure to comply with any securities laws in connection with any aspect of
any such disposition, including, but not limited to, any untrue statement or
alleged untrue statement of a material fact in any document filed with any
government authority with respect to any pledged shares or arising out of or
based on any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make any statement therein not
misleading, such indemnification to be and remain operative regardless of any
investigation independently made by or on behalf of lender and/or any related
parties thereof, provided that stockholder shall not be liable in any case to
the extent that any indemnifiable event is based solely on an untrue statement
or alleged omission generated solely by lender and not in reliance in whole or
part on information furnished by or on behalf of stockholder or borrower,
whether or not such reliance of lender thereon is reasonable.
(M) Acknowledgments and disclaimers
Stockholder agrees that the whole or any part of any security now or
hereafter held for the obligations may be exchanged, compromised, or
surrendered by lender from time to time, so long as not inconsistent with any
other provisions hereof, that any instrument securing the obligations may be
modified and rights of lender or others thereunder waived, and that the
pledged shares shall remain as security for the obligations notwithstanding
any such exchange, compromise, surrender, extension, renewal, acceleration,
indulgence, or release, all of which may be effective without notice to or
further consent by stockholder and none of which shall affect the right of
lender to pursue the remedies available to lender under this agreement. The
ability of lender to pursue its remedies hereunder with respect to the pledged
shares after the occurrence of an event of default shall be direct and
immediate and not conditional or contingent upon the pursuit of any remedies
against any person or against any or all of other security, guaranties, or
liens available to lender for the payment and performance of the obligations.
Stockholder agrees that any claim or right it may have against borrower to
recover the value of the pledged shares or any portion thereof, or any claim
against any other sums paid upon the obligations secured hereby, whether
arising from subrogation to the rights of lender or otherwise, shall be
subordinate to the prior payment to lender of all of the obligations of
borrower to lender, and that no such right or claim shall be asserted by
stockholder against borrower until all of such obligations are paid or
discharged. Stockholder hereby waives any claim to marshalling of assets, any
right to require that any action be brought against any other person prior to
the exercise by lender of its remedies with respect to the pledged shares, and
any right to require that resort be had to any security for the obligations or
to any balance of any deposit account or credit on the books of lender in
favor of any person prior to action by lender hereunder to realize upon the
pledged shares after an event of default.
(N) Return of pledged shares
Stockholder shall be entitled to return of the pledged shares only
upon written request from stockholder to lender made at a time when all of the
obligations of borrower to lender hereunder shall have been extinguished, and
borrower shall not be indebted to lender in any manner whatsoever, whether
direct, indirect, absolute, or contingent, nor entitled to receive credit from
or become indebted to lender.
(O) Notices
All notices, elections, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been given at the
time delivered or deposited in the United States mails, certified or
registered and postage prepaid, addressed to the parties at the address for
each first set forth in this agreement, or at such other address as to which
any party hereto shall have given notice to the other in accordance with this
section.
(P) Governing law
The laws of the Commonwealth of Kentucky shall govern the construction
of this agreement and the rights, remedies, and duties of the parties
hereunder.
(Q) Successors and assigns
This agreement shall bind stockholder and the successors, assigns, and
legal representatives of stockholder, and shall inure to the benefit of lender
and its successors and assigns.
(R) Complete agreement; modification
This agreement contains the final, complete, and exclusive agreement
of the parties with respect to its subject matter, and may not be modified
except by a writing signed by or on behalf of each of the parties hereto.
(S) Time of essence
Time shall be of the essence in the performance of all of
stockholder's obligations hereunder.
(T) Captions
The captions and headings of the sections shall be ignored in
interpreting the provisions of this agreement.
IN WITNESS WHEREOF, the parties hereto have each duly executed this
agreement as of the day first above set forth, but actually on the date or
dates set forth below.
Stockholder:
______________________
XXXXX X. XXXX
Date:__________________
Lender:
______________________
XXXX X XXXXXXX
Date:__________________
WARRANT TO PURCHASE COMMON STOCK
OF
PERENNIAL HEALTH SYSTEMS, INC.
THE TRANSFER OF THIS WARRANT IS RESTRICTED BY THE TERMS OF THIS WARRANT.
EXCEPT AS PROVIDED HEREIN, THIS WARRANT MAY NOT BE GIVEN, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED.
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAWS AND THIS WARRANT MAY NOT BE OFFERED FOR
SALE OR SOLD UNLESS IT IS REGISTERED UNDER THE APPROPRIATE SECURITIES LAWS OR
IT OR SUCH OFFER OR SALE IS EXEMPT FROM SUCH REGISTRATION AND THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL TO THAT EFFECT, REASONABLY SATISFACTORY TO THE
COMPANY IN FORM AND SUBSTANCE.
No. W-1 Warrant to Purchase 200,000 Shares of Common Stock
(subject to adjustment)
Void after July 8, 2001
For valued received, Perennial Health Systems, Inc., a Colorado
corporation (the "Company") hereby certifies that, ________________ or
registered assigns (the "Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company, TWO HUNDRED THOUSAND (200,000) shares of
the Common Stock, without par value, of the Company ("Common Stock"), as
constituted on July 8, 1999 (the "Warrant Issue Date"), upon surrender hereof,
at the principal office of the Company referred to below, with the Notice of
Exercise attached hereto duly executed, and simultaneous payment therefor in
lawful money of the United States as hereinafter provided, at the per share
price of THIRTY-FIVE CENTS ($.35) (the "Exercise Price"). The number,
character and Exercise Price of such shares of Common Stock are subject to
adjustment as provided below. The term "Warrant" as used herein shall include
this Warrant and any warrants delivered in substitution or exchange therefor
as provided herein. This Warrant is registered and its transfer may be
registered upon the books maintained for that purpose by the Company by
delivery of this Warrant duly endorsed.
1. Term of Warrant. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in part, during the
term commencing on the Warrant Issue Date and ending at 5:00 p.m., Eastern
time, on July 8, 2001, and shall be void thereafter.
2. Exercise of Warrant.
2.1. Method. The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, at any time, or from time to
time, during the term hereof as described in Section 1 above, by the surrender
of this Warrant and the Notice of Exercise annexed hereto duly completed and
executed by the Holder, at the office of the Company (or such other office or
agency of the Company as it may designate by notice in writing to the Holder),
upon payment (a) in cash or by wire transfer to a bank account designated by
the Company or by a certified or cashier's check, (b) by cancellation by the
Holder of indebtedness of the Company to the Holder, or (c) by a combination
of (a) and (b), of the Exercise price of the shares to be purchased; provided,
however, that if less than all of the purchase rights represented by this
Warrant are exercised, such exercise shall involve the purchase of at least
ONE HUNDRED THOUSAND (100,000) shares of Common Stock, adjusted as provided in
Section 6 below.
2.2. Effect. This Warrant shall be deemed to have been exercised at
the time of its surrender for exercise as provided above, and the person
entitled to receive the shares of Common Stock issuable upon such exercise
shall be treated for all purposes as the holder of record of such shares at
and after such time. As promptly as practicable on or after such date and in
any event within ten (10) days thereafter, the Company at its expense shall
issue to the person entitled to receive the same a certificate for the number
of shares of Common Stock issuable upon such exercise. If this Warrant is
exercised in part, the Company at its expense will execute and deliver a new
Warrant exercisable for the number of shares for which this Warrant may then
be exercised.
2.3. Holder Not A Shareholder. The Holder shall neither be entitled
to vote nor receive dividends nor be deemed the holder of Common Stock or any
other securities of the Company that may at any time be issuable on the
exercise hereof for any purpose until the Warrant has been exercised as
provided in this Section 2.
2.4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise
be entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
3. Ownership Restrictions
3.1. Record Ownership. The Company shall maintain a register of the
Holders of the Warrants (the "Register") showing their names and addresses and
the serial numbers and number of Common Shares purchasable issued to or
transferred of record by them from time to time. The Register may be
maintained in electronic, magnetic or other computerized form . The Company
may treat the person named as the Holder of this Warrant in the Register as
the sole owner of this Warrant. The Holder of this Warrant is the person
exclusively entitled to receive notifications with respect to this Warrant,
exercise it to purchase shares of Common Stock and otherwise exercise all of
the rights and powers as the absolute owner hereof.
3.2. Registration of Transfer. Transfers of this Warrant may be
registered on the books of the Company maintained for such purpose pursuant to
Section 3.2 above (i.e., the Register). Transfers shall be registered when
this Warrant is presented to the Company duly endorsed with a request to
register the transfer hereof. When this Warrant is presented for transfer and
duly transferred hereunder, it shall be canceled and a new Warrant showing the
name of the transferee as the Holder thereof shall be issued in lieu hereof.
When this Warrant is presented to the Company with a reasonable request to
exchange it for Warrants of other denominations, the Company shall make such
exchange and shall cancel this Warrant and issue in lieu thereof Warrants
exercisable for an equal number of shares of Common Stock in the denominations
requested by the Holder.
3.3. Worn and Lost Warrants. If this Warrant becomes worn, defaced
or mutilated but is still substantially intact and recognizable, the Company
or its agent may issue a new Warrant in lieu hereof upon its surrender. If
this Warrant is lost, destroyed or wrongfully taken, the Company shall issue a
new Warrant in place of the original Warrant if the Holder so requests by
written notice to the Company and the Holder has delivered to the Company an
indemnity agreement reasonably satisfactory to the Company with an affidavit
of the Holder that this Warrant has been lost, destroyed or wrongfully taken.
3.4. Restrictions on Transfer. This Warrant and the Common Stock
issuable upon the exercise hereof have not been registered under the Act or
any applicable state securities laws and this Warrant and the Common Stock
issuable upon the exercise of this Warrant may not be offered for sale or sold
unless such offer or sale is registered under the appropriate securities laws
or such transfer is exempt from such registration and the Company has received
an opinion of counsel, reasonably satisfactory to the Company in form and
substance, stating that such offer or sale is exempt from registration under
applicable state and federal securities laws. In addition, the Holder may
only transfer this Warrant and the Common Stock issuable upon the exercise
hereof with the prior written consent of the Company.
3.5. Legend. Upon any exercise of a Warrant, the certificates
representing the securities purchased thereby shall bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAWS AND THESE SECURITIES MAY NOT BE OFFERED
FOR SALE OR SOLD UNLESS THEY ARE REGISTERED UNDER THE APPROPRIATE SECURITIES
LAWS OR THEY OR SUCH OFFER OR SALE ARE EXEMPT FROM SUCH REGISTRATION AND THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THAT EFFECT, REASONABLY
SATISFACTORY TO THE COMPANY IN FORM AND SUBSTANCE.
3.6. Warrant Agent. The Company may, by written notice to the Holder
appoint an agent for the purpose of maintaining the Register issuing Common
Stock or other securities then issuable upon the exercise of this Warrant,
exchanging or transferring this warrant, or any or all of the foregoing.
Thereafter, any such registration issuance, exchange, or transfer, as the case
may be, shall be made at the office of such agent.
4. Reservation of Stock. The Company covenants that, during the term
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of Shares to provide for the
issuance of Common Stock upon the exercise of this Warrant and, if at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the
Preferred Stock, the Corporation will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose, including without limitation, engaging in best
efforts to obtain the requisite shareholder approval of any necessary
amendment to its Articles of Incorporation (the "Articles"). The Company
further covenants that all shares that may be issued upon the exercise of
rights represented by this Warrant, upon exercise of the rights represented by
this Warrant and payment of the Exercise Price, all as set forth herein, will
be duly authorized, validly issued, fully paid, non-assessable and free from
all taxes, liens and charges in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously or otherwise specified
herein). The Company agrees that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares
of Common Stock upon the exercise of this Warrant.
5. Distributions. If: (a) the Company sets a record date for the
holders of its Common Stock (or other stock or securities at the time
receivable upon the exercise of this Warrant) for the purpose of entitling
them to receive any dividend or other distribution, or any right to subscribe
for or purchase any shares of stock of any class or any other securities, or
to receive any other right, or (b) there is any capital reorganization of the
Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another entity, or any
conveyance of all or substantially all of the assets of the Company or (c)
there is any voluntary dissolution, liquidation or winding-up of the Company,
the Company will mail to the Holder a notice specifying, as the case may be,
(A) the record date for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right, or (B)
the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of
Common Stock (or such stock or securities at the time receivable upon the
exercise of this Warrant) shall be entitled to exchange their shares of Common
Stock (or such other Stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up. Such notice shall be
mailed at least fourteen (14) days prior to the date therein specified.
6. Adjustments. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as follows:
6.1. Merger, Sale of Assets, etc. If, at any time while this Warrant
or any portion thereof is outstanding and unexpired, there shall be (a) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (b) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash, or
otherwise, or (c) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the holder of this Warrant shall thereafter be entitled
to receive upon exercise of this Warrant, during the period specified herein
and upon payment of the Exercise Price then in effect, the number of shares of
stock or other securities or property of the successor corporation resulting
from such reorganization, merger, consolidation, sale or transfer that a
holder of the shares deliverable upon exercise of this Warrant would have been
entitled to receive in such reorganization, consolidation, merger, sale or
transfer if this Warrant had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 6. The foregoing provisions of
this Section 6.1 shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation that are at the time receivable upon the exercise of
this Warrant. If the per-share consideration payable to the Holder hereof for
shares in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be
determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction,
to the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other
property deliverable after that event upon exercise of this Warrant.
6.2. Reclassification, etc. If the Company, at any time while this
Warrant or any portion thereof remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the
securities as to which purchase rights under this warrant exist into the same
or a different number of securities of any other class or classes, this
Warrant shall thereafter represent the right to acquire such number and kind
of securities as would have been issuable as the result of such change with
respect to the securities that were subject to the purchase rights under this
Warrant immediately prior to such reclassification or other change and the
Base Price and Exercise Price therefor shall be appropriately adjusted, all
subject to further adjustment as provided in this Section 6.
6.3. Split, Subdivision or Combination of Shares. If the Company, at
any time while this Warrant or any portion thereof remains outstanding and
unexpired, shall split, subdivide or combine the securities as to which
purchase rights under this Warrant exist, into a different number of
securities of the same class, the Base Price for such securities shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination, and the number of
shares of Common Stock for which this Warrant is exercisable shall be
proportionately increased in the case of a split or subdivision or
proportionately decreased in the case of a combination.
6.4. Adjustment for Dividends in Stock or Other Securities or
Property. If, while this Warrant or any portion hereof remains outstanding and
unexpired, the holders of the securities as to which purchase rights under
this Warrant exist at the time shall have received, or, on or after the record
date fixed for the determination of eligible shareholders, shall have become
entitled to receive, without payment therefor, other or additional stock or
other securities or property (other than cash) of the Company by way of
dividend, then, and in each case, this Warrant shall represent the right to
acquire, in addition to the number of shares of the security receivable upon
exercise of this Warrant, and without payment of any additional consideration
therefor, the amount of such other or additional stock or other security or
property (other than cash) of the Company that such holder would hold on the
date of such exercise had it been the holder of record of the security
receivable upon exercise of this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving effect to all
adjustments called for during such period by the provisions of this Section 6.
6.5. Certificate as to Adjustments. Upon the occurrence of each
adjustment pursuant to this Section 6, the Company at its expense shall
promptly compute such adjustment in accordance with the terms hereof and
furnish to the Holder a certificate setting forth such adjustment and showing
in detail the facts upon which such adjustment is based, and the Exercise
Price before and after the adjustment. The Company shall, at any time upon the
written request of any Holder, furnish to such Holder a certificate setting
forth: (a) such adjustments; (b) the Exercise Price then in effect; and (c)
the number of shares and the amount, if any, of other property that at the
time would be received upon the exercise of the warrant.
6.6. No Impairment. The Company will not, by any voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 6 and
in the taking of all such actions as may be necessary or appropriate in order
to protect the rights of the Holder of this Warrant against impairment.
7. Amendments. This Warrant may not be amended without the prior
written consent of the Holder.
8. Notices. Any notice, certificate or other communication which is
required or convenient under the terms of this Warrant shall be duly given if
it is in writing and delivered in person or mailed by first class mail,
postage prepaid, and directed to the Holder of the Warrant at its address as
it appears on the Register, or, if to the Company, to its principal executive
offices. The time when such notice is sent shall be the time of the giving of
the notice.
9. Time. Where this Warrant provides for a payment or performance on
a Saturday or Sunday or a public holiday in the State of Kentucky, such
payment or performance may be made on the next succeeding business day.
10. Rules of Construction. In this Warrant, unless the context
otherwise requires, words in the singular number include the plural, and in
the plural include the singular, and words of the masculine gender include the
feminine and the neuter, and when the sense so indicates, words of the neuter
gender may refer to any gender. The numbers and titles of sections contained
in this Warrant are inserted for convenience of reference only, and they
neither form a part of this Warrant nor are they to be used in the
construction or interpretation hereof.
11. Governing Law. The validity, terms, performance and enforcement
of this Warrant shall be governed by those laws of the Commonwealth of
Kentucky that are applicable to agreements that are negotiated, executed,
delivered and performed solely in the Commonwealth of Kentucky
IN WITNESS WHEREOF, Perennial Health Systems, Inc. has caused this
Warrant to be executed by its officer xxxxxxx xxxx authorized.
PERENNIAL HEALTH SYSTEMS, INC.
BY:_______________________________
TITLE:_____________________________
Notice of Exercise
(To be completed and signed only upon exercise of Warrant]
The undersigned, the Holder of this Warrant, hereby irrevocably elects to
exercise the right to purchase Common Stock without par value, of Perennial
Health Systems, Inc. as follows:
___________________________________________________
(whole number of Warrants exercised)
___________________________________________________
(Dollars $)
___________________________________________________
(number of warrants exercised times Exercise Price)
___________________________________________________
(name of holder of shares if different than
Holder of Warrant)
___________________________________________________
(address of holder of shares if different than
address of Holder of Warrant)
__________________________________________________
(Social Security or TIN of holder of shares if
different than Holder of Warrant)
Date:___________ Sign: _____________________________________________
(Signature must conform in all respects to
name of Holder shown on face of this Warrant)
Signature Guaranteed: (Signature must be guaranteed if name of holder of
shares differs from registered Holder of Warrant)
Assignment of Warrant
The undersigned hereby sell(s) and assign(s) and transfer(s) unto
________________________________________________________________
(name, address and SON or TIN of assignee)
_____________________________________ of this Warrant.
(portion of Warrant)
Date:
Sign:
(Signature must conform in all respects to name of Xxxxxx shown on face of
Warrant)
Signature Guaranteed:
WARRANT TO PURCHASE COMMON STOCK
OF
PERENNIAL HEALTH SYSTEMS, INC.
THE TRANSFER OF THIS WARRANT IS RESTRICTED BY THE TERMS OF THIS WARRANT.
EXCEPT AS PROVIDED HEREIN, THIS WARRANT MAY NOT BE GIVEN, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED.
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAWS AND THIS WARRANT MAY NOT BE OFFERED FOR
SALE OR SOLD UNLESS IT IS REGISTERED UNDER THE APPROPRIATE SECURITIES LAWS OR
IT OR SUCH OFFER OR SALE IS EXEMPT FROM SUCH REGISTRATION AND THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL TO THAT EFFECT, REASONABLY SATISFACTORY TO THE
COMPANY IN FORM AND SUBSTANCE.
No. W-1 Warrant to Purchase 120,000 Shares of Common Stock
(subject to adjustment)
Void after July 8, 2000
For valued received, Perennial Health Systems, Inc., a Colorado
corporation (the "Company") hereby certifies that, ________________ or
registered assigns (the "Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company, ONE HUNDRED TWENTY THOUSAND (120,000)
shares of the Common Stock, without par value, of the Company ("Common
Stock"), as constituted on July 8, 1999 (the "Warrant Issue Date"), upon
surrender hereof, at the principal office of the Company referred to below,
with the Notice of Exercise attached hereto duly executed, and simultaneous
payment therefor in lawful money of the United States as hereinafter provided,
at the per share price of ONE CENT ($.01) (the "Exercise Price"). The number,
character and Exercise Price of such shares of Common Stock are subject to
adjustment as provided below. The term "Warrant" as used herein shall include
this Warrant and any warrants delivered in substitution or exchange therefor
as provided herein. This Warrant is registered and its transfer may be
registered upon the books maintained for that purpose by the Company by
delivery of this Warrant duly endorsed.
1. Term of Warrant. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in part, during the
term commencing on the Warrant Issue Date and ending at 5:00 p.m., Eastern
time, on July 8, 2000, and shall be void thereafter.
2. Exercise of Warrant.
2.1. Method. The purchase rights represented by this Warrant are
exercisable by the Holder in whole or in part, at any time, or from time to
time, during the term hereof as described in Section 1 above, by the surrender
of this Warrant and the Notice of Exercise annexed hereto duly completed and
executed by the Holder, at the office of the Company (or such other office or
agency of the Company as it may designate by notice in writing to the Holder),
upon payment (a) in cash or by wire transfer to a bank account designated by
the Company or by a certified or cashier's check, (b) by cancellation by the
Holder of indebtedness of the Company to the Holder, or (c) by a combination
of (a) and (b), of the Exercise price of the shares to be purchased; provided,
however, that if less than all of the purchase rights represented by this
Warrant are exercised, such exercise shall involve the purchase of at least
ONE HUNDRED THOUSAND (100,000) shares of Common Stock, adjusted as provided in
Section 6 below.
2.2. Effect. This Warrant shall be deemed to have been exercised at
the time of its surrender for exercise as provided above, and the person
entitled to receive the shares of Common Stock issuable upon such exercise
shall be treated for all purposes as the holder of record of such shares at
and after such time. As promptly as practicable on or after such date and in
any event within ten (10) days thereafter, the Company at its expense shall
issue to the person entitled to receive the same a certificate for the number
of shares of Common Stock issuable upon such exercise. If this Warrant is
exercised in part, the Company at its expense will execute and deliver a new
Warrant exercisable for the number of shares for which this Warrant may then
be exercised.
2.3. Holder Not A Shareholder. The Holder shall neither be entitled
to vote nor receive dividends nor be deemed the holder of Common Stock or any
other securities of the Company that may at any time be issuable on the
exercise hereof for any purpose until the Warrant has been exercised as
provided in this Section 2.
2.4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise
be entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
3. Ownership Restrictions
3.1. Record Ownership. The Company shall maintain a register of the
Holders of the Warrants (the "Register") showing their names and addresses and
the serial numbers and number of Common Shares purchasable issued to or
transferred of record by them from time to time. The Register may be
maintained in electronic, magnetic or other computerized form . The Company
may treat the person named as the Holder of this Warrant in the Register as
the sole owner of this Warrant. The Holder of this Warrant is the person
exclusively entitled to receive notifications with respect to this Warrant,
exercise it to purchase shares of Common Stock and otherwise exercise all of
the rights and powers as the absolute owner hereof.
3.2. Registration of Transfer. Transfers of this Warrant may be
registered on the books of the Company maintained for such purpose pursuant to
Section 3.2 above (i.e., the Register). Transfers shall be registered when
this Warrant is presented to the Company duly endorsed with a request to
register the transfer hereof. When this Warrant is presented for transfer and
duly transferred hereunder, it shall be canceled and a new Warrant showing the
name of the transferee as the Holder thereof shall be issued in lieu hereof.
When this Warrant is presented to the Company with a reasonable request to
exchange it for Warrants of other denominations, the Company shall make such
exchange and shall cancel this Warrant and issue in lieu thereof Warrants
exercisable for an equal number of shares of Common Stock in the denominations
requested by the Holder.
3.3. Worn and Lost Warrants. If this Warrant becomes worn, defaced
or mutilated but is still substantially intact and recognizable, the Company
or its agent may issue a new Warrant in lieu hereof upon its surrender. If
this Warrant is lost, destroyed or wrongfully taken, the Company shall issue a
new Warrant in place of the original Warrant if the Holder so requests by
written notice to the Company and the Holder has delivered to the Company an
indemnity agreement reasonably satisfactory to the Company with an affidavit
of the Holder that this Warrant has been lost, destroyed or wrongfully taken.
3.4. Restrictions on Transfer. This Warrant and the Common Stock
issuable upon the exercise hereof have not been registered under the Act or
any applicable state securities laws and this Warrant and the Common Stock
issuable upon the exercise of this Warrant may not be offered for sale or sold
unless such offer or sale is registered under the appropriate securities laws
or such transfer is exempt from such registration and the Company has received
an opinion of counsel, reasonably satisfactory to the Company in form and
substance, stating that such offer or sale is exempt from registration under
applicable state and federal securities laws. In addition, the Holder may
only transfer this Warrant and the Common Stock issuable upon the exercise
hereof with the prior written consent of the Company.
3.5. Legend. Upon any exercise of a Warrant, the certificates
representing the securities purchased thereby shall bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAWS AND THESE SECURITIES MAY NOT BE OFFERED
FOR SALE OR SOLD UNLESS THEY ARE REGISTERED UNDER THE APPROPRIATE SECURITIES
LAWS OR THEY OR SUCH OFFER OR SALE ARE EXEMPT FROM SUCH REGISTRATION AND THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THAT EFFECT, REASONABLY
SATISFACTORY TO THE COMPANY IN FORM AND SUBSTANCE.
3.6. Warrant Agent. The Company may, by written notice to the Holder
appoint an agent for the purpose of maintaining the Register issuing Common
Stock or other securities then issuable upon the exercise of this Warrant,
exchanging or transferring this warrant, or any or all of the foregoing.
Thereafter, any such registration issuance, exchange, or transfer, as the case
may be, shall be made at the office of such agent.
4. Reservation of Stock. The Company covenants that, during the term
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of Shares to provide for the
issuance of Common Stock upon the exercise of this Warrant and, if at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the
Preferred Stock, the Corporation will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose, including without limitation, engaging in best
efforts to obtain the requisite shareholder approval of any necessary
amendment to its Articles of Incorporation (the "Articles"). The Company
further covenants that all shares that may be issued upon the exercise of
rights represented by this Warrant, upon exercise of the rights represented by
this Warrant and payment of the Exercise Price, all as set forth herein, will
be duly authorized, validly issued, fully paid, non-assessable and free from
all taxes, liens and charges in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously or otherwise specified
herein). The Company agrees that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares
of Common Stock upon the exercise of this Warrant.
5. Distributions. If: (a) the Company sets a record date for the
holders of its Common Stock (or other stock or securities at the time
receivable upon the exercise of this Warrant) for the purpose of entitling
them to receive any dividend or other distribution, or any right to subscribe
for or purchase any shares of stock of any class or any other securities, or
to receive any other right, or (b) there is any capital reorganization of the
Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another entity, or any
conveyance of all or substantially all of the assets of the Company or (c)
there is any voluntary dissolution, liquidation or winding-up of the Company,
the Company will mail to the Holder a notice specifying, as the case may be,
(A) the record date for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right, or (B)
the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of
Common Stock (or such stock or securities at the time receivable upon the
exercise of this Warrant) shall be entitled to exchange their shares of Common
Stock (or such other Stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up. Such notice shall be
mailed at least fourteen (14) days prior to the date therein specified.
6. Adjustments. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as follows:
6.1. Merger, Sale of Assets, etc. If, at any time while this Warrant
or any portion thereof is outstanding and unexpired, there shall be (a) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (b) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash, or
otherwise, or (c) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the holder of this Warrant shall thereafter be entitled
to receive upon exercise of this Warrant, during the period specified herein
and upon payment of the Exercise Price then in effect, the number of shares of
stock or other securities or property of the successor corporation resulting
from such reorganization, merger, consolidation, sale or transfer that a
holder of the shares deliverable upon exercise of this Warrant would have been
entitled to receive in such reorganization, consolidation, merger, sale or
transfer if this Warrant had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer, all subject to
further adjustment as provided in this Section 6. The foregoing provisions of
this Section 6.1 shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation that are at the time receivable upon the exercise of
this Warrant. If the per-share consideration payable to the Holder hereof for
shares in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be
determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction,
to the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other
property deliverable after that event upon exercise of this Warrant.
6.2. Reclassification, etc. If the Company, at any time while this
Warrant or any portion thereof remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the
securities as to which purchase rights under this warrant exist into the same
or a different number of securities of any other class or classes, this
Warrant shall thereafter represent the right to acquire such number and kind
of securities as would have been issuable as the result of such change with
respect to the securities that were subject to the purchase rights under this
Warrant immediately prior to such reclassification or other change and the
Base Price and Exercise Price therefor shall be appropriately adjusted, all
subject to further adjustment as provided in this Section 6.
6.3. Split, Subdivision or Combination of Shares. If the Company, at
any time while this Warrant or any portion thereof remains outstanding and
unexpired, shall split, subdivide or combine the securities as to which
purchase rights under this Warrant exist, into a different number of
securities of the same class, the Base Price for such securities shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination, and the number of
shares of Common Stock for which this Warrant is exercisable shall be
proportionately increased in the case of a split or subdivision or
proportionately decreased in the case of a combination.
6.4. Adjustment for Dividends in Stock or Other Securities or
Property. If, while this Warrant or any portion hereof remains outstanding and
unexpired, the holders of the securities as to which purchase rights under
this Warrant exist at the time shall have received, or, on or after the record
date fixed for the determination of eligible shareholders, shall have become
entitled to receive, without payment therefor, other or additional stock or
other securities or property (other than cash) of the Company by way of
dividend, then, and in each case, this Warrant shall represent the right to
acquire, in addition to the number of shares of the security receivable upon
exercise of this Warrant, and without payment of any additional consideration
therefor, the amount of such other or additional stock or other security or
property (other than cash) of the Company that such holder would hold on the
date of such exercise had it been the holder of record of the security
receivable upon exercise of this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving effect to all
adjustments called for during such period by the provisions of this Section 6.
6.5. Certificate as to Adjustments. Upon the occurrence of each
adjustment pursuant to this Section 6, the Company at its expense shall
promptly compute such adjustment in accordance with the terms hereof and
furnish to the Holder a certificate setting forth such adjustment and showing
in detail the facts upon which such adjustment is based, and the Exercise
Price before and after the adjustment. The Company shall, at any time upon the
written request of any Holder, furnish to such Holder a certificate setting
forth: (a) such adjustments; (b) the Exercise Price then in effect; and (c)
the number of shares and the amount, if any, of other property that at the
time would be received upon the exercise of the warrant.
6.6. No Impairment. The Company will not, by any voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 6 and
in the taking of all such actions as may be necessary or appropriate in order
to protect the rights of the Holder of this Warrant against impairment.
7. Amendments. This Warrant may not be amended without the prior
written consent of the Holder.
8. Notices. Any notice, certificate or other communication which is
required or convenient under the terms of this Warrant shall be duly given if
it is in writing and delivered in person or mailed by first class mail,
postage prepaid, and directed to the Holder of the Warrant at its address as
it appears on the Register, or, if to the Company, to its principal executive
offices. The time when such notice is sent shall be the time of the giving of
the notice.
9. Time. Where this Warrant provides for a payment or performance on
a Saturday or Sunday or a public holiday in the State of Kentucky, such
payment or performance may be made on the next succeeding business day.
10. Rules of Construction. In this Warrant, unless the context
otherwise requires, words in the singular number include the plural, and in
the plural include the singular, and words of the masculine gender include the
feminine and the neuter, and when the sense so indicates, words of the neuter
gender may refer to any gender. The numbers and titles of sections contained
in this Warrant are inserted for convenience of reference only, and they
neither form a part of this Warrant nor are they to be used in the
construction or interpretation hereof.
11. Governing Law. The validity, terms, performance and enforcement
of this Warrant shall be governed by those laws of the Commonwealth of
Kentucky that are applicable to agreements that are negotiated, executed,
delivered and performed solely in the Commonwealth of Kentucky
IN WITNESS WHEREOF, Perennial Health Systems, Inc. has caused this
Warrant to be executed by its officer xxxxxxx xxxx authorized.
PERENNIAL HEALTH SYSTEMS, INC.
BY:_______________________________
TITLE:_____________________________
Notice of Exercise
(To be completed and signed only upon exercise of Warrant]
The undersigned, the Holder of this Warrant, hereby irrevocably elects to
exercise the right to purchase Common Stock without par value, of Perennial
Health Systems, Inc. as follows:
___________________________________________________
(whole number of Warrants exercised)
___________________________________________________
(Dollars $)
___________________________________________________
(number of warrants exercised times Exercise Price)
___________________________________________________
(name of holder of shares if different than
Holder of Warrant)
___________________________________________________
(address of holder of shares if different than
address of Holder of Warrant)
__________________________________________________
(Social Security or TIN of holder of shares if
different than Holder of Warrant)
Date:___________ Sign: _____________________________________________
(Signature must conform in all respects to
name of Holder shown on face of this Warrant)
Signature Guaranteed: (Signature must be guaranteed if name of holder of
shares differs from registered Holder of Warrant)
Assignment of Warrant
The undersigned hereby sell(s) and assign(s) and transfer(s) unto
________________________________________________________________
(name, address and SSN or TIN of assignee)
_____________________________________ of this Warrant.
(portion of Warrant)
Date:
Sign:
(Signature must conform in all respects to name of Xxxxxx shown on face of
Warrant)
Signature Guaranteed:
