Exhibit 10.2

 

SECURED PROMISSORY NOTE

 

Effective Date: October 29, 2020 U.S. $2,690,000.00

 

FOR VALUE RECEIVED, IMAC Holdings, Inc., a Delaware corporation (“Borrower”),
promises to pay to Iliad Research and Trading, L.P., a Utah limited partnership,
or its successors or assigns (“Lender”), $2,690,000.00 and any interest, fees,
charges, and late fees accrued hereunder on the date that is eighteen (18)
months after the Purchase Price Date (the “Maturity Date”) in accordance with
the terms set forth herein and to pay interest on the Outstanding Balance at the
rate of seven percent (7%) per annum from the Purchase Price Date until the same
is paid in full. All interest calculations hereunder shall be computed on the
basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall
compound daily and shall be payable in accordance with the terms of this Note.
This Secured Promissory Note (this “Note”) is issued and made effective as of
October 29, 2020 (the “Effective Date”). This Note is issued pursuant to that
certain Note Purchase Agreement dated October 29, 2020, as the same may be
amended from time to time, by and between Borrower and Lender (the “Purchase
Agreement”). Certain capitalized terms used herein are defined in Attachment 1
attached hereto and incorporated herein by this reference.

 

1. Payment; Prepayment.

 

1.1. Payment. All payments owing hereunder shall be in lawful money of the
United States of America and delivered to Lender at the address or bank account
furnished by Lender to Borrower for that purpose. All payments shall be applied
first to (a) Lender’s reasonable costs of collection, if any, then to (b) fees
and charges hereunder, if any, then to (c) accrued and unpaid interest
hereunder, and thereafter, to (d) principal hereunder.

 

1.2. Prepayment. Borrower may pay all or any portion of the Outstanding Balance
earlier than it is due; provided that in the event Borrower elects to prepay all
or any portion of the Outstanding Balance, it shall pay to Lender 110% of the
portion of the Outstanding Balance Borrower elects to prepay. Early payments of
less than all principal, fees and interest outstanding will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower’s remaining obligations
hereunder.

 

2. Security. This Note is secured by the Security Agreement (as defined in the
Purchase Agreement), executed by Borrower in favor of Lender encumbering the
collateral set forth therein, as more specifically set forth in the Security
Agreement, all the terms and conditions of which are hereby incorporated into
and made a part of this Note.

 

3. Redemption. Beginning on the date that is six (6) months after the Purchase
Price Date, Lender shall have the right, exercisable at any time in its sole and
absolute discretion, to redeem any amount of this Note up to $300,000.00 (such
amount, the “Redemption Amount”) per calendar month by providing written notice
to Borrower (each, a “Redemption Notice”). For the avoidance of doubt, Lender
may submit to Borrower one (1) or more Redemption Notices in any given calendar
month so long as the aggregate amount being redeemed in such month does not
exceed $300,000.00. Upon receipt of any Redemption Notice, Borrower shall pay
the applicable Redemption Amount in cash to Lender within seven (7) Trading Days
of Borrower’s receipt of such Redemption Notice. Notwithstanding the foregoing,
if Borrower does not pay the applicable Redemption Amount in cash to Lender
within three (3) Trading Days of Borrower’s receipt of a Redemption Notice, then
an amount equal to twenty-five percent (25%) of such Redemption Amount will be
added to the Outstanding Balance. Borrower shall have the right to defer up to
three (3) separate redemptions for up to thirty (30) days each by providing
written notice to Lender within three (3) Trading Days of its receipt of a
Redemption Notice. In the event Borrower elects to exercise its deferral right,
the Outstanding Balance shall automatically be increased by two percent (2%) of
the Outstanding Balance as of the date Borrower exercises such deferral right.

 

   

 

 

4. Defaults and Remedies.

 

4.1. Defaults. The following are events of default under this Note (each, an
“Event of Default”): (a) Borrower fails to pay any principal, interest, fees,
charges, or any other amount when due and payable hereunder; (b) a receiver,
trustee or other similar official shall be appointed over Borrower or a material
part of its assets and such appointment shall remain uncontested for twenty (20)
days or shall not be dismissed or discharged within sixty (60) days; (c)
Borrower becomes insolvent or generally fails to pay, or admits in writing its
inability to pay, its debts as they become due, subject to applicable grace
periods, if any; (d) Borrower makes a general assignment for the benefit of
creditors; (e) Borrower files a petition for relief under any bankruptcy,
insolvency or similar law (domestic or foreign); (f) an involuntary bankruptcy
proceeding is commenced or filed against Borrower and is not dismissed or stayed
within sixty (60) days; (g) Borrower or any pledgor, trustor, or guarantor of
this Note defaults or otherwise fails to observe or perform any covenant,
obligation, condition or agreement of Borrower or such pledgor, trustor, or
guarantor contained herein or in any other Transaction Document (as defined in
the Purchase Agreement), other than those specifically set forth in this Section
4.1 and Section 4 of the Purchase Agreement; (h) any representation, warranty or
other statement made or furnished by or on behalf of Borrower or any pledgor,
trustor, or guarantor of this Note to Lender herein, in any Transaction
Document, or otherwise in connection with the issuance of this Note is false,
incorrect, incomplete or misleading in any material respect when made or
furnished; (i) the occurrence of a Fundamental Transaction without Lender’s
prior written consent; (j) any United States money judgment, writ or similar
process is entered or filed against Borrower or any subsidiary of Borrower or
any of its property or other assets for more than $1,000,000.00, and shall
remain unvacated, unbonded or unstayed for a period of twenty (20) calendar days
unless otherwise consented to by Lender; (k) Borrower fails to observe or
perform any covenant set forth in Section 4 of the Purchase Agreement; or (l)
Borrower, any affiliate of Borrower, or any pledgor, trustor, or guarantor of
this Note breaches any covenant or other term or condition contained in any
Other Agreements.

 

4.2. Remedies. At any time and from time to time after Lender becomes aware of
the occurrence of any Event of Default, Lender may accelerate this Note by
written notice to Borrower, with the Outstanding Balance becoming immediately
due and payable in cash at the Mandatory Default Amount. Notwithstanding the
foregoing, at any time following the occurrence of any Event of Default, Lender
may, at its option, elect to increase the Outstanding Balance by applying the
Default Effect (subject to the limitation set forth below) via written notice to
Borrower without accelerating the Outstanding Balance, in which event the
Outstanding Balance shall be increased as of the date of the occurrence of the
applicable Event of Default pursuant to the Default Effect, but the Outstanding
Balance shall not be immediately due and payable unless so declared by Lender
(for the avoidance of doubt, if Lender elects to apply the Default Effect
pursuant to this sentence, it shall reserve the right to declare the Outstanding
Balance immediately due and payable at any time and no such election by Lender
shall be deemed to be a waiver of its right to declare the Outstanding Balance
immediately due and payable as set forth herein unless otherwise agreed to by
Lender in writing). Notwithstanding the foregoing, upon the occurrence of any
Event of Default described in clauses (b), (c), (d), (e) or (f) of Section 4.1,
the Outstanding Balance as of the date of acceleration shall become immediately
and automatically due and payable in cash at the Mandatory Default Amount,
without any written notice required by Lender. At any time following the
occurrence of any Event of Default, upon written notice given by Lender to
Borrower, interest shall accrue on the Outstanding Balance beginning on the date
the applicable Event of Default occurred at an interest rate equal to the lesser
of twenty-two percent (22%) per annum or the maximum rate permitted under
applicable law (“Default Interest”). In connection with acceleration described
herein, Lender need not provide, and Borrower hereby waives, any presentment,
demand, protest or other notice of any kind, and Lender may immediately and
without expiration of any grace period enforce any and all of its rights and
remedies hereunder and all other remedies available to it under applicable law.
Such acceleration may be rescinded and annulled by Lender at any time prior to
payment hereunder and Lender shall have all rights as a holder of the Note until
such time, if any, as Lender receives full payment pursuant to this Section 4.2.
No such rescission or annulment shall affect any subsequent Event of Default or
impair any right consequent thereon. Nothing herein shall limit Lender’s right
to pursue any other remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.

 

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5. Unconditional Obligation; No Offset. Borrower acknowledges that this Note is
an unconditional, valid, binding and enforceable obligation of Borrower not
subject to offset, deduction or counterclaim of any kind. Borrower hereby waives
any rights of offset it now has or may have hereafter against Lender, its
successors and assigns, and agrees to make the payments called for herein in
accordance with the terms of this Note.

 

6. Waiver. No waiver of any provision of this Note shall be effective unless it
is in the form of a writing signed by the party granting the waiver. No waiver
of any provision or consent to any prohibited action shall constitute a waiver
of any other provision or consent to any other prohibited action, whether or not
similar. No waiver or consent shall constitute a continuing waiver or consent or
commit a party to provide a waiver or consent in the future except to the extent
specifically set forth in writing.

 

7. Right of First Refusal. In the event Borrower desires to make a Restricted
Issuance it must first provide notice of such proposed Restricted Issuance to
Lender, which notice must include all of the material terms of the Restricted
Issuance. Lender shall then have a period of fifteen (15) days to provide
financing to the Company on the same terms as outlined in the notice of the
potential Restricted Issuance. If Lender elects to not provide such financing,
then Borrower may elect to make the Restricted Issuance on the same terms that
were offered to Lender. In the event Borrower makes such Restricted Issuance the
Outstanding Balance will automatically be increased by three percent (3%) for
each time Borrower makes a Restricted Issuance after Lender has refused to
provide financing on the same terms, which increase will be effective as of the
date of each Restricted Issuance. In the event Borrower fails to notify Lender
of a potential Restricted Issuance and also offer Lender a right of first
refusal with respect to such Restricted Issuance, the Outstanding Balance will
automatically be increased by ten percent (10%) for each time Borrower makes a
Restricted Issuance without first offering Lender the right of first refusal to
match the terms of the Restricted Issuance, which increase will be effective as
of the date of each Restricted Issuance. For the avoidance of doubt, in the
event Borrower offers Lender the right to match a potential Restricted Issuance,
but subsequently changes the terms of such potential Restricted Issuance after
Lender has refused to match the terms originally offered to it, Borrower must
again comply with the terms of this Section as the alteration of the terms of
such potential Restricted Issuance shall constitute a new Restricted Issuance.

 

8. Governing Law; Venue. This Note shall be construed and enforced in accordance
with, and all questions concerning the construction, validity, interpretation
and performance of this Note shall be governed by, the internal laws of the
State of Utah, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Utah or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Utah. The provisions set forth in the Purchase Agreement to determine the
proper venue for any disputes are incorporated herein by this reference.

 

9. Arbitration of Disputes. By its issuance or acceptance of this Note, each
party agrees to be bound by the Arbitration Provisions (as defined in the
Purchase Agreement) set forth as an exhibit to the Purchase Agreement.

 

10. Cancellation. After repayment of the entire Outstanding Balance, this Note
shall be deemed paid in full, shall automatically be deemed canceled, and shall
not be reissued.

 

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11. Amendments. The prior written consent of both parties hereto shall be
required for any change or amendment to this Note.

 

12. Assignments. Borrower may not assign this Note without the prior written
consent of Lender. This Note may be offered, sold, assigned or transferred by
Lender to any of its affiliates without the consent of Borrower, so long as such
transfer is in accordance with applicable federal and state securities laws.

 

13. Notices. Whenever notice is required to be given under this Note, unless
otherwise provided herein, such notice shall be given in accordance with the
subsection of the Purchase Agreement titled “Notices.”

 

14. Liquidated Damages. Lender and Borrower agree that in the event Borrower
fails to comply with any of the terms or provisions of this Note, Lender’s
damages would be uncertain and difficult (if not impossible) to accurately
estimate because of the parties’ inability to predict future interest rates,
future share prices, future trading volumes and other relevant factors.
Accordingly, Lender and Borrower agree that any fees, balance adjustments,
Default Interest or other charges assessed under this Note are not penalties but
instead are intended by the parties to be, and shall be deemed, liquidated
damages.

 

15. Severability. If any part of this Note is construed to be in violation of
any law, such part shall be modified to achieve the objective of Borrower and
Lender to the fullest extent permitted by law and the balance of this Note shall
remain in full force and effect.

 

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IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed as of the
Effective Date.

 

  BORROWER:       IMAC Holdings, Inc.         By: /s/ Jeffrey Ervin     Jeffrey
Ervin, Chief Executive Officer

 

ACKNOWLEDGED, ACCEPTED AND AGREED:   LENDER:       Iliad Research and Trading,
L.P.         By: Iliad Management, LLC, its General Partner         By: Fife
Trading, Inc., its Manager         By: /s/ John Fife     John Fife, President  

 

[Signature Page to Secured Promissory Note]

 

   

 

 

ATTACHMENT 1

DEFINITIONS

 

For purposes of this Note, the following terms shall have the following
meanings:

 

A1. “Default Effect” means multiplying the Outstanding Balance as of the date
the applicable Event of Default occurred by (a) fifteen percent (15%) for each
occurrence of any Major Default, or (b) five percent (5%) for each occurrence of
any Minor Default, and then adding the resulting product to the Outstanding
Balance as of the date the applicable Event of Default occurred, with the sum of
the foregoing then becoming the Outstanding Balance under this Note as of the
date the applicable Event of Default occurred; provided that the Default Effect
may only be applied three (3) times hereunder with respect to Major Defaults and
three (3) times hereunder with respect to Minor Defaults.

 

A2. “Fundamental Transaction” means that (a) (i) Borrower or any of its
subsidiaries shall, directly or indirectly, in one or more related transactions,
consolidate or merge with or into (whether or not Borrower or any of its
subsidiaries is the surviving corporation) any other person or entity, or (ii)
Borrower or any of its subsidiaries shall, directly or indirectly, in one or
more related transactions, sell, lease, license, assign, transfer, convey or
otherwise dispose of all or substantially all of its respective properties or
assets to any other person or entity, or (iii) Borrower or any of its
subsidiaries shall, directly or indirectly, in one or more related transactions,
allow any other person or entity to make a purchase, tender or exchange offer
that is accepted by the holders of more than 50% of the outstanding shares of
voting stock of Borrower (not including any shares of voting stock of Borrower
held by the person or persons making or party to, or associated or affiliated
with the persons or entities making or party to, such purchase, tender or
exchange offer), or (iv) Borrower or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, consummate a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with any
other person or entity whereby such other person or entity acquires more than
50% of the outstanding shares of voting stock of Borrower (not including any
shares of voting stock of Borrower held by the other persons or entities making
or party to, or associated or affiliated with the other persons or entities
making or party to, such stock or share purchase agreement or other business
combination), or (v) Borrower or any of its subsidiaries shall, directly or
indirectly, in one or more related transactions, reorganize, recapitalize or
reclassify the Common Stock, other than an increase in the number of authorized
shares of Borrower’s Common Stock, or reverse splits of its outstanding and
authorized shares of Common Stock to meet Nasdaq listing requirements or (b) any
“person” or “group” (as these terms are used for purposes of Sections 13(d) and
14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is
or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934
Act), directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding voting stock of Borrower.

 

A3. “Major Default” means any Event of Default occurring under Sections 4.1(a)
or 4.1(k).

 

A4. “Mandatory Default Amount” means the Outstanding Balance following the
application of the Default Effect.

 

A5. “Minor Default” means any Event of Default that is not a Major Default.

 

A6. “OID” means an original issue discount.

 

A7. “Other Agreements” means, collectively, (a) all existing and future
agreements and instruments between, among or by Borrower (or an affiliate), on
the one hand, and Lender (or an affiliate), on the other hand, and (b) any
financing agreement or a material agreement that affects Borrower’s ongoing
business operations.

 

A8. “Outstanding Balance” means as of any date of determination, the Purchase
Price, as reduced or increased, as the case may be, pursuant to the terms hereof
for payment, offset, or otherwise, plus the OID, the Transaction Expense Amount,
accrued but unpaid interest, collection and enforcements costs (including
attorneys’ fees) incurred by Lender, transfer, stamp, issuance and similar taxes
and fees incurred under this Note.

 

A9. “Purchase Price Date” means the date the Purchase Price is delivered by
Lender to Borrower.

 

A10. “Restricted Issuance” means the issuance of any promissory note, debenture,
or other instrument that evidences a debt obligation of Borrower.
Notwithstanding the foregoing, working capital lines of credit for accounts
receivable, equipment leases or loans, and tenant improvement loans will not be
deemed to be Restricted Issuances.

 

A11. “Trading Day” means any day on which the New York Stock Exchange (or such
other principal market for the Common Stock) is open for trading.

 

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