Document:

f8k043012ex4i_progressive.htm

 

 

Exhibit 4.3

 

 

NEITHER THIS NOTE NOR THE SECURITIES THAT ARE ISSUABLE TO THE HOLDER UPON CONVERSION HEREOF (COLLECTIVELY, THE “SECURITIES”) HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED: (I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT OR APPLICABLE STATE SECURITIES LAWS; OR (II) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR; (III) UNLESS SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.

CONVERTIBLE PROMISSORY NOTE

North Miami Beach, Florida

 

	Issuance Date as of March 30, 2012	  $500,000.00

                                                                                                                 

Effective Date: April 30, 2012

 

FOR VALUE RECEIVED, Progressive Care, Inc., a corporation incorporated under the laws of the State of Delaware and with an office located at 901 North Miami Beach Blvd., Suite 1, North Miami Beach, Florida 33162 (the “Company”), hereby promises to pay to the order of TCA Global Credit Master Fund, LP, a Cayman Islands limited partnership located at 1404 Rodman Street, Hollywood, FL 33020, and its successors or assigns (the “Holder”), the principal amount of Five Hundred Thousand and 00/100 United States Dollars (US$500,000.00) on or prior to April 30, 2013 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of twelve percent (12%) per annum (the “Applicable Rate”) commencing as of the date the proceeds hereunder are funded to the Company (the “Funding Date”), in accordance with the terms hereof.  This Convertible Promissory Note (this note, and all modifications, extensions, future advances, supplements, and renewals thereof, and any substitutions therefor, hereinafter referred to as the “Note”) shall be payable in accordance with the terms set forth below.

1. Payments of Principal and Interest.

(a) Payment of Principal. The principal amount of this Note, together with all accrued and unpaid interest and all other sums due and payable hereunder and/or under the “Security Agreement” or any other “Transaction Documents” (as both terms are hereinafter defined), shall be due and payable in full to the Holder on or prior to the Maturity Date.

(b) Payment of Interest. Interest on the unpaid principal balance of this Note shall accrue at the Applicable Rate commencing on the Funding Date.  In addition, commencing on May 30, 2012, and on the thirtieth (30th) day of each and every consecutive calendar month thereafter during the term hereof, the Company shall pay to Holder payments of partial interest in the amount of Two Thousand Five Hundred and No/100 Dollars ($2,500.00) per month.  Interest shall be computed on the basis of a 360-day year and paid for the actual number of days elapsed.  Accrued and unpaid interest under this Note shall be paid in full on the Maturity Date.  Any accrued but unpaid interest shall, at the option of the Holder, be included, from time to time, in the Conversion Amount (as defined herein).

 

 

  

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(c) Payment of Default Interest.  Any amount of principal or interest on this Note which is not paid when due shall bear interest from the date due until such past due amount is paid at a rate of interest equal to the lesser of: (i) eighteen percent (18%) per annum; or (ii)  the highest non-usurious rate permitted by applicable law (the “Default Rate”).  Any accrued but unpaid interest at the Default Rate shall, at the option of the Holder, be included, from time to time, in the Conversion Amount.

(d) General Payment Provisions. All payments of principal and interest on this Note shall be made in lawful money of the United States of America by certified bank check or wire transfer to such account as the Holder may designate by written notice to the Company in accordance with the provisions of this Note.  Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding Business Day. For purposes of this Note, “Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the State of Florida are authorized or required by law or executive order to remain closed.  All payments hereunder shall be applied first towards costs and expenses due under this Note and any other Transaction Documents, second towards the payment of accrued and unpaid interest under this Note, and third towards the principal outstanding hereunder.

(e) Optional Prepayment.  At any time prior to the Maturity Date and/or the Conversion Date, the Company may pre-pay this Note in full or in part (provided that partial prepayments may only be made and will only be accepted by the Holder if such partial prepayments are of an amount of at least $50,000), without penalty.  Upon prepayment of this Note in full, the Holder shall have no further rights under this Note (except for such rights that may specifically survive the payment of the Note), including no rights of conversion.

2.           Conversion of Note.  At any time and from time to time while this Note is outstanding on or after the Funding Date, this Note may be, at the sole option of the Holder, convertible into shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), in accordance with the terms and conditions set forth in this Section 2.

(a)           Voluntary Conversion.  At any time while this Note is outstanding on or after the Funding Date, the Holder may convert all or any portion of the outstanding principal, accrued and unpaid interest, and any other sums due and payable hereunder or under any of the other Transaction Documents (such total amount, the “Conversion Amount”) into shares of Common Stock of the Company (the “Conversion Shares”) at a price equal to: (i) the Conversion Amount (the numerator); divided by (ii) ninety-five percent (95%) of the average daily volume weighted average price of the Company’s Common Stock during the five (5) trading days immediately prior to the Conversion Date (as defined below) as indicated in the conversion notice (in the form attached hereto as Exhibit “A”, the “Conversion Notice”) (the denominator) (the “Conversion Price”).  The Holder shall submit a Conversion Notice indicating the amount of the Note being converted, the number of Conversion Shares issuable upon such conversion, and where the Conversion Shares should be delivered.

 

  

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(b)           The Holder’s Conversion Limitations.  The Company shall not affect any conversion of this Note, and the Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the Conversion Notice submitted by the Holder, the Holder (together with the Holder’s affiliates (as defined herein) and any Persons acting as a group together with the Holder or any of the Holder’s affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined herein).  To ensure compliance with this restriction, prior to delivery of any Conversion Notice, the Holder shall have the right to request that the Company provide to the Holder a written statement of the percentage ownership of the Company’s Common Stock that would by beneficially owned by the Holder and its affiliates in the Company if the Holder converted such portion of this Note then intended to be converted by Holder.  The Company shall, within two (2) business days of such request, provide Holder with the requested information in a written statement, and the Holder shall be entitled to rely on such written statement from the Company in issuing its Conversion Notice and ensuring that its ownership of the Company’s Common Stock is not in excess of the Beneficial Ownership Limitation.  The restriction described in this Section may be waived by Holder, in whole or in part, upon sixty-one (61) days’ prior notice from the Holder to the Company to increase such percentage.

For purposes of this Note, the “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note.  The limitations contained in this Section shall apply to a successor holder of this Note.  For purposes of this Note, “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization or a government or any department or agency thereof.

(c)           Mechanics of Conversion.  The conversion of this Note shall be conducted in the following manner:

(1)           Holder's Delivery Requirements.  To convert this Note into shares of Common Stock on any date set forth in the Conversion Notice by the Holder (the “Conversion Date”), the Holder shall: (A) transmit by facsimile or electronic mail (or otherwise deliver) a copy of the fully executed Conversion Notice to the Company (or, under certain circumstances as set forth below, by delivery of the Conversion Notice to the Company’s transfer agent); and (B) upon receipt by the Holder of the Conversion Shares, surrender the original Note to a nationally recognized overnight courier for delivery to the Company.

 

(2)           Company’s Response.  Upon receipt by the Company of a copy of a Conversion Notice, the Company shall as soon as practicable, but in no event later than two (2) Business Days after receipt of such Conversion Notice, send, via facsimile or electronic mail (or otherwise deliver) a confirmation of receipt of such Conversion Notice (the “Conversion Confirmation”) to the Holder indicating that the Company will process such Conversion Notice in accordance with the terms herein. Within five (5) Business Days after the date of the Conversion Confirmation (or the date of the Conversion Notice, if the Company fails to issue the Conversion Confirmation), provided that the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, the Company shall cause the transfer agent to electronically transmit the applicable Conversion Shares to which the Holder shall be entitled by crediting the account of the Holder’s prime broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system, and provide proof satisfactory to the Holder of such delivery.  In the event that the Company’s transfer agent is not participating in the DTC FAST program and is not otherwise DWAC eligible, within five (5) Business Days after the date of the Conversion Confirmation (or the date of the Conversion Notice, if the Company fails to issue the Conversion Confirmation), the Company shall instruct and cause its transfer agent to issue and surrender to a nationally recognized overnight courier for delivery to the address specified in the Conversion Notice, a certificate, registered in the name of the Holder, for the number of Conversion Shares to which the Holder shall be entitled.  If less than the full principal and accrued but unpaid interest amount of this Note is submitted for conversion, then the Company shall within five (5) Business Days after receipt of the original Note, at its own expense, issue and deliver to the Holder a new Note for the outstanding principal and interest amount not so converted; provided that such new Note shall be substantially in the same form as this Note.

  

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(3)           Record Holder.  The Person(s) entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the record holder(s) of such shares of Common Stock as of the Conversion Date.

(4)           Failure to Deliver Certificates. If in the case of any Conversion Notice, the certificate or certificates are not delivered to or as directed by the Holder by the date required hereby, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion Notice, in which event the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the Common Stock certificates representing the principal amount of this Note unsuccessfully tendered for conversion to the Company.

(5)           Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or entity or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other person or entity of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person or entity, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof and accrued but unpaid interest thereon in accordance with the terms of this Note, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such certificate or certificates representing Conversion Shares pursuant to timing and delivery requirements of this Note, the Company shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $1.00 per day for each day after the date by which such certificates should have been delivered until such certificates are delivered.  Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant this Note or any agreement securing the indebtedness under this Note for the Company’s failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.  Nothing herein shall prevent the Holder from having the Conversion Shares issued directly by the Company’s transfer agent in accordance with the ITAI, in the event for any reason the Company fails to issue or deliver, or cause its transfer agent to issue and deliver, the Conversion Shares to the Holder upon exercise of Holder’s conversion rights hereunder.  Notwithstanding anything contained in this Section 2(c)(5) to the contrary, the foregoing penalty shall not apply in the event the failure to deliver the certificates representing the Conversion Shares is the direct result of any strike, lock-out, civil commotion, warlike operation, invasion, rebellion, hostilities, military or usurped power, sabotage, or through an act of God (each an “Event of Force Majeure”), provided, however, if an Event of Force Majeure occurs, the certificates representing the Conversion Shares shall nonetheless be delivered within ten (10) Business Days after the date of the Conversion Confirmation (or the date of the Conversion Notice, if the Company fails to issue the Conversion Confirmation), regardless of the occurrence of an Event of Force Majeure, failure of which shall result in the imposition of the penalties and other remedies provided in this Section 2(c)(5).

 

  

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(6)           Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes, or any other issuance or transfer fees of any nature or kind that may be payable in respect of the issue or delivery of such certificates, any such taxes or fees, if payable, to be paid by the Company.

(d)           Adjustments to Conversion Price.

(1)           Stock Dividends and Stock Splits.  If the Company, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on outstanding shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination, or re-classification.

(2)           Fundamental Transaction. If, at any time while this Note is outstanding: (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one (1) share of Common Stock (the “Alternate Consideration”).  For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new note consistent with the foregoing provisions and evidencing the Holder’s right to convert such note into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section and insuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

 

  

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(3)           Adjustment to Conversion Price.  Whenever the Conversion Price is adjusted pursuant to any provision of this Note, the Company shall promptly deliver to Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(4)           Notice to Allow Conversion by Holder.  If: (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Company’s records, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating: (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to convert this Note during the 10-day period commencing on the date of such notice through the effective date of the event triggering such notice.

(e)           Reservation of Common Stock.  The Company shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of this Note, such number of shares of Common Stock as shall from time to time be sufficient to effect such conversion, based upon the Conversion Price.  If at any time the Company does not have a sufficient number of Conversion Shares authorized and available, the Company shall immediately take such action as is required to increase the number of Conversion Shares authorized and available to allow for the Holder to effectuate a full conversion of this Note at the Conversion Price.

(f)           Matters With Respect to Securities.

(i) Issuance of Conversion Shares.  In the event, for any reason, the Company fails to issue, or cause its transfer agent (the “Transfer Agent”) to issue, any portion of the Conversion Shares to the Holder in connection with the exercise by Holder of any of its conversion rights hereunder, then the parties hereto acknowledge that Holder shall irrevocably be entitled to deliver to the Transfer Agent, on behalf of itself and the Company, a Conversion Notice requesting the issuance of the Conversion Shares then issuable in accordance with the terms hereof, and the Transfer Agent, provided they are the acting transfer agent for the Company at the time, shall, and the Company hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Company, issue the Conversion Shares applicable to the Conversion Notice then being exercised, and surrender to a nationally recognized overnight courier for delivery to Holder at the address specified in the Conversion Notice, a certificate of the Common Stock of the Company, registered in the name of Holder, for the number of Conversion Shares to which Holder shall be then entitled hereunder, as set forth in the Conversion Notice.

 

  

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(ii) Removal of Restrictive Legends.  In the event that Holder has any shares of the Company’s Common Stock bearing any restrictive legends, and Holder, through its counsel or other representatives, submits to the Transfer Agent any such shares for the removal of the restrictive legends thereon, whether in connection with a sale of such shares pursuant to any exemption to the registration requirements under the Securities Act, or otherwise, and the Company and or its counsel refuses or fails for any reason to render an opinion of counsel or any other documents or certificates required for the removal of the restrictive legends, then the Company hereby agrees and acknowledges that Holder is hereby irrevocably and expressly authorized to have counsel to Holder render any and all opinions and other certificates or instruments which may be required for purposes of removing such restrictive legends, and the Company hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Company, issue any such shares without restrictive legends as instructed by Holder, and surrender to a common carrier for overnight delivery to the address as specified by Holder, certificates, registered in the name of Holder or its designees, representing the shares of Common Stock to which Holder is entitled, without any restrictive legends and otherwise freely transferable on the books and records of the Company.

(iii) Authorized Agent of the Company.  The Company hereby irrevocably appoints the Holder and its counsel and its representatives, each as the Company’s duly authorized agent and attorney-in-fact for the Company for the purposes of authorizing and instructing the Transfer Agent to process issuances, transfers and legend removals upon instructions from Holder, or any counsel or representatives of Holder, as specifically contemplated herein.  The authorization and power of attorney granted hereby is coupled with an interest and is irrevocable so long as any obligations of the Company under Debentures remain outstanding, and so long as the Holder owns or has the right to receive, any shares of the Company’s Common Stock hereunder.  In this regard, the Company hereby confirms to the Transfer Agent and the Holder that it can NOT and will NOT give instructions, including stop orders or otherwise, inconsistent with the terms of this Agreement with regard to the matters contemplated herein, and that the Holder shall have the absolute right to provide a copy of this Note to the Transfer Agent as evidence of the Company’s irrevocable authority for Holder and Transfer Agent to process issuances, transfers and legend removals upon instructions from Holder, or any counsel or representatives of Holder, as specifically contemplated herein, without any further instructions, orders or confirmations from the Company.

 

  

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(iv) Injunction and Specific Performance.  The Company specifically acknowledges and agrees that in the event of a breach or threatened breach by the Company of any provision of this Section 2(f), the Holder will be irreparably damaged and that damages at law would be an inadequate remedy if the provisions in this Section 2(f) were not specifically enforced.  Therefore, in the event of a breach or threatened breach of any provision of this Section 2(f) by the Company, the Holder shall be entitled to obtain, in addition to all other rights or remedies Holder may have, at law or in equity, an injunction restraining such breach, without being required to show any actual damage or to post any bond or other security, and/or to a decree for specific performance of the provisions of this Section 2(f).

3.           Voting Rights.  The Holder shall have no voting rights under this Note, except as required by applicable law, including, but not limited to, the Delaware Corporations Law, and as expressly provided in this Note.

4.           Short Sales.  Holder represents and agrees, as applicable: (i) Holder has not prior to the Effective Date, entered into or effected any Short Sales; and (ii) so long as the Note remains outstanding, Holder will not enter into or effect any Short Sales.  The Company acknowledges and agrees that upon submission of a Conversion Notice as set forth herein, Holder immediately owns the Common Stock described in the Conversion Notice and any sale of that Common Stock issuable under such Conversion Notice would not be considered Short Sales.  For purposes herein, “Short Sales” shall mean entering into any short sale or other hedging transaction which establishes a net short position with respect to the Company’s Common Stock.

5.           Secured Nature of Note.  The indebtedness evidenced by this Note is secured by all of the assets and property of the Company pursuant to that certain Security Agreement by and between the Company and Holder made as of the Issuance Date (the “Security Agreement”). This Note, the Security Agreement, and all other documents and instruments heretofore or hereafter executed in connection with the indebtedness evidenced by this Note (whether by the Company or any other guarantor, or obligor of the indebtedness evidenced hereby), and all modifications, extensions, future advances, and renewals thereof, and any substitutions therefor, being herein collectively referred as the “Transaction Documents.” All of the agreements, conditions, covenants, provisions, representations, warranties and stipulations contained in any of the Transaction Documents which are to be kept and performed by the Company are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein, and the Company covenants and agrees to keep and perform them, or cause them to be kept or performed, strictly in accordance with their terms.

6.           Defaults and Remedies.

(a) Events of Default.  The occurrence of any of the following events shall constitute an “Event of Default” hereunder: (i) the Company shall fail to pay any installment of interest, principal or other sums due under this Note or any other Transaction Document within one (1) business day of when any such payment shall be due and payable; (ii) the Company makes an assignment for the benefit of creditors; (iii) any order or decree is rendered by a court which appoints or requires the appointment of a receiver, liquidator or trustee for the Company, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (iv) any order or decree is rendered by a court adjudicating the Company insolvent, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (v) the Company files a petition in bankruptcy under the provisions of any bankruptcy law or any insolvency act; (vi) the Company admits, in writing, its inability to pay its debts as they become due (provided, however, that receipt by the Company of an audit letter from its accountants questioning the viability of the Company as a going concern shall not, in and of itself, be construed as an admission by the Company of its inability to pay its debts as they become due; further provided, however, that receipt of any such letter shall not preclude the Holder from declaring any other default that may be applicable as a result of such a letter or the financial state of the Company giving rise to such a latter, either under this Note or any other Transaction Documents); (vii) a proceeding or petition in bankruptcy is filed against the Company and such proceeding or  petition is not dismissed within forty-five (45) days from the date it is filed; (viii) the Company files a petition or answer seeking reorganization or arrangement under the bankruptcy laws or any law or statute of the United States or any other foreign country or state; or (ix) the Company shall fail to perform, comply with or abide by any of the material stipulations, agreements, conditions and/or covenants contained in this Note or any other Transaction Documents on the part of the Company to be performed complied with or abided by, and such failure is not cured within ten (10) days after written notice of such failure is delivered by Holder to the Company.

 

  

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(b) Remedies.  Upon the occurrence of one or more Events of Default, the Holder, at its option and without further notice, demand or presentment for payment to the Company or others, may declare the then outstanding principal balance of this Note, together with all other sums due under the Note and the other Transaction Documents, immediately due and payable, together with all accrued and unpaid interest thereon and thereafter all such sums shall bear interest at the Default Rate, together with all reasonable attorneys’ fees, paralegals’ fees and costs and expenses incurred by the Holder in collecting or enforcing payment thereof (whether such fees, costs or expenses are incurred in negotiations, all trial and appellate levels, administrative proceedings, bankruptcy proceedings or otherwise), and all other sums due by the Company hereunder and under the Transaction Documents, all without any relief whatsoever from any valuation or appraisement laws and payment thereof may be enforced and recovered in whole or in part at any time by one or more of the remedies provided to the Holder at law, in equity, or under this Note or the other Transaction Documents.  Any accrued but unpaid interest and other sums due by the Company hereunder and under the Transaction Documents shall, at the option of the Holder, be included, from time to time, in the Conversion Amount.

7.           Lost or Stolen Note.  Upon notice to the Company of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Company in a form reasonably acceptable to the Company and customary for similar circumstances in commercial lender/borrower circumstances, and, in the case of mutilation, upon surrender and cancellation of the Note, the Company shall execute and deliver a new Note of like tenor and date and in substantially the same form as this Note; provided, however, the Company shall not be obligated to re-issue a Note if the Holder contemporaneously requests the Company to convert such remaining principal amount and interest into Common Stock.

 

 

  

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8.           Cancellation.  After all principal, accrued interest and all other sums at any time owed on this Note or any other Transaction Documents have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be re-issued.

9.           Waivers.  The Company hereby waives and releases all benefit that might accrue to the Company by virtue of any present or future laws exempting any property that may serve as security for this Note, or any other property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy, or sale under execution, exemption from civil process, or extension of time for payment, including, without limitation, any and all homestead exemption rights of the Company; and the Company agrees that any property that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued thereon, may be sold upon any such writ in whole or in part in any order or manner desired by Holder.  In addition, the Company and all others who are, or may become liable for the payment hereof: (i) severally waive presentment for payment, demand, notice of nonpayment or dishonor, protest and notice of protest of this Note or the other Transaction Documents, and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note or the other Transaction Documents; (ii) expressly consent to all extensions of time, renewals or postponements of time of payment of this Note or the other Transaction Documents from time to time prior to or after the maturity of this Note without notice, consent or further consideration to any of the foregoing; (iii) expressly agree that the Holder shall not be required first to institute any suit, or to exhaust its remedies against the Company or any other person or party to become liable hereunder or against any collateral that may secure this Note in order to enforce the payment of this Note; and (iv) expressly agree that, notwithstanding the occurrence of any of the foregoing (except the express written release by the Holder of any such person), the undersigned shall be and remain, directly and primarily liable for all sums due under this Note.

10.           Governing Law.  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 laws of the State of Florida, without giving effect to provisions thereof regarding conflict of laws.  Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in Broward County, Florida for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper, provided, however, nothing contained herein shall limit the Holder’s ability to bring suit or enforce this Note in any other jurisdiction.  Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by sending by certified mail or overnight courier a copy thereof to such party at the address indicated in the preamble hereto and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

  

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11.           Indemnity and Expenses.  The Company agrees:

(a)           To indemnify and hold harmless the Holder and each of its partners, employees, agents and affiliates from and against any and all claims, damages, demands, losses, obligations, judgments, suits, actions, threats and liabilities (including, without limitation, attorneys’ fees and expenses) in any way arising out of or in connection with this Note; and

(b)           To pay and reimburse the Holder upon demand for all costs and expenses (including, without limitation, attorneys’ fees and expenses) that the Holder may incur in connection with (i) the exercise or enforcement of any rights or remedies (including, but not limited to, collection) granted hereunder or otherwise available to it (whether at law, in equity or otherwise), or (ii) the failure by the Company to perform or observe any of the provisions hereof.  The provisions of this Section 11 shall survive the execution and delivery of this Note, the repayment of any or all of the principal or interest owed pursuant hereto, and the termination of this Note.

12.           Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief.  The remedies of the Holder as provided herein, or the other Transaction Documents, shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Holder, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

13.           Specific Shall Not Limit General; Construction.  No specific provision contained in this Note shall limit or modify any more general provision contained herein.  This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof.

14.           Failure or Indulgence Not Waiver.  Holder shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder or under any Transaction Documents, unless such waiver is in writing and signed by Holder, and then only to the extent specifically set forth in the writing.  A waiver on one event shall not be construed as continuing or as a bar to or waiver of any right or remedy to a subsequent event.

15.           Notice.  Notice shall be given to each party at the address indicated in the preamble hereto or at such other address as provided to the other party in writing, and such notice shall be deemed properly given in accordance with the notice provisions set forth in the Security Agreement securing this Note.

 

  

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16.           Usury Savings Clause.  Notwithstanding any provision in this Note or the other Transaction Documents, the total liability for payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing this Note or any other applicable law.  In the event the total liability of payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest, shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period exceeds the limit imposed by the usury laws of the jurisdiction governing this Note, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice by, between, or to any party hereto, be applied to the reduction of the outstanding principal balance of this Note immediately upon receipt of such sums by the Holder hereof, with the same force and effect as though the Company had specifically designated such excess sums to be so applied to the reduction of such outstanding principal balance and the Holder hereof had agreed to accept such sums as a penalty-free payment of principal; provided, however, that the Holder of this Note may, at any time and from time to time, elect, by notice in writing to the Company, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest rather than accept such sums as a prepayment of the outstanding principal balance.  It is the intention of the parties that the Company does not intend or expect to pay nor does the Holder intend or expect to charge or collect any interest under this Note greater than the highest non-usurious rate of interest which may be charged under applicable law.

17.           Binding Effect.  This Note shall be binding upon the Company and the successors and assigns of the Company and shall inure to the benefit of Holder and the successors and assigns of Holder.

18.           Severability.  In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal, or unenforceable, in whole or in part, in any respect, or in the event that any one or more of the provisions of this Note operates or would prospectively operate to invalidate this Note, then and in any of those events, only such provision or provisions shall be deemed null and void and shall not affect any other provision of this Note.  The remaining provisions of this Note shall remain operative and in full force and effect and shall in no way be affected, prejudiced, or disturbed thereby.

19.           Participations.  Holder may from time to time sell or assign, in whole or in part, or grant participations in this Note and/or the obligations evidenced hereby, subject, however, to first obtaining the Company’s written consent, which consent shall not be unreasonably withheld, conditioned or delayed.  The holder of any such sale, assignment or participation, if the applicable agreement between Holder and such holder so provides, shall be: (a) entitled to all of the rights, obligations and benefits of Holder (to the extent of such holder’s interest or participation); and (b) deemed to hold and may exercise the rights of setoff or banker’s lien with respect to any and all obligations of such holder to the Company (to the extent of such holder’s interest or participation), in each case as fully as though the Company was directly indebted to such holder.  Holder may in its discretion give notice to the Company of such sale, assignment or participation; however, the failure to give such notice shall not affect any of Holder’s or such holder’s rights hereunder.

 

  

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20.           Fees.  The Company agrees to pay to Holder a funding fee equal to five percent (5.0%) of the original face amount of this Note, due and payable upon the execution of this Note.  Such fee may be withheld and deducted by Holder from the proceeds of this Note otherwise payable to the Company.  In addition, the Company agrees to pay to its counsel, Lucosky Brookman LLP, a fee of $30,000 in connection with such firm’s work in connection with such firm’s preparation and filing of an S-1 registration statement for the Company, which fees the Company agrees may be withheld and deducted by Holder from the proceeds of this Note otherwise payable to the Company, and paid directly to such law firm.

21.           Amendments.  The provisions of this Note may be changed only by a written agreement executed by the Company and Holder.

[Signature page follows]

 

 

  

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IN WITNESS WHEREOF, the Company has caused this Note to be executed on the Effective Date, but made effective as of the Issuance Date set forth above.

 

	 	

PROGRESSIVE CARE, INC.

	 	 	 
	
 

	
By: 

	/s/ Avraham A. Friedman
	 	 	

Name: Avraham A. Friedman

Title:    Chief Executive Officer

	 	 	 
	 	 	 

 

[ signature page to Promissory Note ]

 

 

  

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EXHIBIT A

NOTICE OF CONVERSION

The undersigned hereby elects to convert principal and/or interest under the Convertible Promissory Note (the “Note”) of Progressive Care, Inc., a corporation incorporated under the laws of the State of Delaware (the “Company”), into shares of common stock, par value $0.0001 per share (the “Common Shares”), of the Company in accordance with the conditions of the Note, as of the date written below.  

Based solely on information provided by the Company to Holder, the undersigned represents and warrants to the Company that its ownership of the Common Shares does not exceed the amounts determined in accordance with Section 13(d) of the Exchange Act of 1934, as amended, specified under Section 2(b) of the Note.

 

 

Conversion calculations

 

Effective Date of Conversion:                                                                                     _______________________

 

Principal Amount and/or Interest to be Converted:                                                _______________________

 

Number of Common Shares to be Issued:                                                                 _______________________

 

 

[HOLDER]

 

 

By:  _____________________________

Name:  __________________________

Title:  ____________________________

Address:  _________________________

__________________________

__________________________f8k043012ex10i_progressive.htm

 

Exhibit 10.1

 

 

GUARANTY AGREEMENT

THIS GUARANTY AGREEMENT is dated as of March 30, 2012 (together with any amendments or modifications hereto in effect from time to time, the “Guaranty”), and is made by PHARMCO, L.L.C., a Florida limited liability company (the “Guarantor”), in favor of TCA GLOBAL CREDIT MASTER FUND, LP (“TCA”).

WHEREAS, TCA made a loan (the “Loan”) in favor of Progressive Care, Inc., a Delaware corporation (“RXMD”) in the amount of Five Hundred Thousand and No/100 Dollars ($500,000.00), which loan is evidenced by a promissory note from RXMD in favor of TCA dated as of March 30, 2012 in the original principal amount of Five Hundred Thousand and No/100 Dollars ($500,000.00) (the “Note”); and

 

WHEREAS, in order to induce TCA to make the Loan, and with full knowledge that TCA would not make the Loan without this Guaranty, Guarantor has agreed to execute and deliver this Guaranty to TCA, for the benefit of TCA, as security for the “Liabilities” (as hereinafter defined); and

 

WHEREAS, Guarantor is a wholly owned subsidiary of RXMD and will substantially benefit from TCA’s Loan to RXMD;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties each intending to be legally bound, hereby do agree as follows:

1.             LIABILITIES GUARANTEED.

Guarantor, jointly and severally (if more than one), hereby guarantees and becomes surety to TCA for the full, prompt and unconditional payment of the Liabilities, when and as the same shall become due, whether at the stated maturity date, by acceleration or otherwise, and the full, prompt and unconditional performance of each term and condition to be performed by RXMD under the Note and the other Transaction Documents.  This Guaranty is a primary obligation of Guarantor and shall be a continuing inexhaustible Guaranty.  This is a guaranty of payment and not of collection.  TCA may require Guarantor to pay and perform its liabilities and obligations under this Guaranty and may proceed immediately against Guarantor without being required to bring any proceeding or take any action against RXMD or any other Person prior thereto; the liability of Guarantor hereunder being independent of and separate from the liability of RXMD, any other Person, and the availability of other collateral security for the Note and the other Transaction Documents.

2.             DEFINITIONS.

All capitalized terms used in this Guaranty that are defined in the Note shall have the meanings assigned to them in the Note, unless the context of this Guaranty requires otherwise.  In addition to the capitalized terms defined in the Note, unless the context otherwise requires, when used herein, the following capitalized terms shall have the following meanings (provided that if a capitalized term used herein is defined in the Note and separately defined in this Guaranty, the meaning of such term as defined in this Guaranty shall control for purposes of this Guaranty):

 

  

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2.1.          “Liabilities” means, collectively: (i) the repayment of all sums due under the Note (and all extensions, renewals, replacements, future advances and amendments thereof) and the other Transaction Documents; and (ii) the performance and observance of all terms, conditions, covenants representations and warranties set forth in the Transaction Documents.

2.2.          “Person” shall mean an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

2.3.           “Transaction Documents” shall mean the Note, the security agreement executed by RXMD in favor of TCA, all other documents executed and entered into between TCA and RXMD, this Guaranty, the security agreement to be entered into between Guarantor and TCA to secure Guarantor’s obligations hereunder, all other documents and instruments relating to any of the foregoing, and all extensions, renewals, replacements, future advances and amendments hereof and thereof.

3.             REPRESENTATION AND WARRANTIES.  Guarantor represents and warrants to TCA as follows:

3.1.          Organization, Powers.  Guarantor: (i) is a limited liability company, duly organized, validly existing and in good standing under the Laws of the State of Florida; (ii) has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated; and (iii) has the power and authority to execute, deliver and perform (and the officer or manager executing this Guaranty on behalf of Guarantor has been duly authorized to so act and execute this Guaranty on behalf of the Guarantor), and by all necessary action has authorized the execution, delivery and performance of, all of its obligations under this Guaranty and any other Transaction Documents to which it is a party.

3.2.           Execution of Guaranty.  This Guaranty, and each other Transaction Document to which Guarantor is a party, have been duly executed and delivered by Guarantor.  Execution, delivery and performance of this Guaranty and each other Transaction Document to which Guarantor is a party will not: (i) violate any provision of any law, rule or regulation, any judgment, order, writ, decree or other instrument of any governmental authority, or any provision of any contract or other instrument to which Guarantor is a party or by which Guarantor or any of its properties or assets are bound; (ii) result in the creation or imposition of any lien, claim or encumbrance of any nature, other than the liens created by the Transaction Documents; and (iii) require any consent from, exemption of, or filing or registration with, any governmental authority or any other Person.

 

  

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3.3.          Obligations of Guarantor.  This Guaranty and each other Transaction Document to which Guarantor is a party are the legal, valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with their terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws or equitable principles relating to or affecting the enforcement of creditors’ rights generally. The making of the Loan by TCA to RXMD and the assumption by Guarantor of its obligations hereunder and under any other Transaction Document to which Guarantor is a party will result in material benefits to Guarantor.  This Guaranty was entered into by Guarantor for commercial purposes.

3.4.           Litigation.  There is no demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative hearing, or any other proceeding of any nature whatsoever at law or in equity or by or before any governmental authority now pending or, to the knowledge of Guarantor, threatened, against or affecting Guarantor or any of its properties, assets or rights which, if adversely determined, would materially impair or affect: (i) the value of any collateral securing the Liabilities; (ii) Guarantor’s right to carry on its business substantially as now conducted (and as now contemplated); (iii) Guarantor’s financial condition; or (iv) Guarantor’s capacity to consummate and perform its obligations under this Guaranty or any other Transaction Document to which Guarantor is a party.

3.5.           No Defaults.  Guarantor is not in default beyond the expiration of any applicable grace or cure periods, in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained herein or in any contract or other instrument to which Guarantor is a party or by which Guarantor or any of its properties or assets are bound.

3.6.           No Untrue Statements.  To the knowledge of Guarantor, no Transaction Document or other document, certificate or statement furnished to TCA by or on behalf of RXMD or Guarantor contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading.  Guarantor acknowledges that all such statements, representations and warranties shall be deemed to have been relied upon by TCA as an inducement to make the Loan.

4.             NO LIMITATION OF LIABILITY.

4.1.           Guarantor acknowledges that the obligations undertaken herein involve the guaranty of obligations of a Person other than Guarantor and, in full recognition of that fact, Guarantor consents and agrees that TCA may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness of this Guaranty: (i) change the manner, place or terms of payment of (including, without limitation, any increase or decrease in the principal amount of the Liabilities or the interest rate), and/or change or extend the time for payment of, or renew, supplement or modify, any of the Liabilities, any security therefor, or any of the Transaction Documents evidencing same, and the Guaranty herein made shall apply to the Liabilities and the Transaction Documents as so changed, extended, renewed, supplemented or modified; (ii) sell, exchange, release, surrender, realize upon or otherwise deal with in any manner and in any order, any property securing the Liabilities; (iii) supplement, modify, amend or waive, or enter into or give any agreement, approval, waiver or consent with respect to, any of the Liabilities, or any part thereof, or any of the Transaction Documents, or any additional security or guaranties, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder; (iv) exercise or refrain from exercising any rights against RXMD or other Persons (including Guarantor) or against any security for the Liabilities; (v) accept new or additional instruments, documents or agreements in exchange for or relative to any of the Transaction Documents or the Liabilities, or any part thereof; (vi) accept partial payments on the Liabilities; (vii) receive and hold additional security or guaranties for the Liabilities, or any part thereof; (viii) release, reconvey, terminate, waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer and/or enforce any security or guaranties, and apply any security and direct the order or manner of sale thereof as TCA, in its sole and absolute discretion, may determine; (ix) add, release, settle, modify or discharge the obligation of any maker, endorser, guarantor, surety, obligor or any other Person who is in any way obligated for any of the Liabilities, or any part thereof; (x) settle or compromise any Liabilities, whether in a Proceeding or not, and whether voluntarily or involuntarily, dispose of any security therefor (with or without consideration and in whatever manner TCA deems appropriate), and subordinate the payment of any of the Liabilities, whether or not due, to the payment of liabilities owing to creditors of RXMD other than TCA and Guarantor; (xi) consent to the merger, change or any other restructuring or termination of the corporate existence of RXMD or any other Person, and correspondingly restructure the Liabilities, and any such merger, change, restructuring or termination shall not affect the liability of Guarantor or the continuing effectiveness hereof, or the enforceability hereof with respect to all or any part of the Liabilities; (xii) apply any sums it receives, by whomever paid or however realized, to any of the Liabilities and/or (xiii) take any other action which might constitute a defense available to, or a discharge of, RXMD or any other Person (including Guarantor) in respect of the Liabilities.

 

  

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4.2.          The invalidity, irregularity or unenforceability of all or any part of the Liabilities or any Transaction Document, or the impairment or loss of any security therefor, whether caused by any action or inaction of TCA, or otherwise, shall not affect, impair or be a defense to Guarantor’s obligations under this Guaranty.

4.3.          Upon the occurrence and during the continuance of any Event of Default, TCA may enforce this Guaranty independently of any other remedy, guaranty or security TCA at any time may have or hold in connection with the Liabilities, and it shall not be necessary for TCA to marshal assets in favor of RXMD, any other guarantor of the Liabilities or any other Person or to proceed upon or against and/or exhaust any security or remedy before proceeding to enforce this Guaranty.  Guarantor expressly waives any right to require TCA to marshal assets in favor of RXMD or any other Person, or to proceed against RXMD or any other guarantor of the Liabilities or any collateral provided by any Person, and agrees that TCA may proceed against any obligor (including Guarantor) and/or the collateral in such order as TCA shall determine in its sole and absolute discretion.  TCA may file a separate action or actions against Guarantor, whether action is brought or prosecuted with respect to any security or against any other Person, or whether any other Person is joined in any such action or actions.  Guarantor agrees that TCA and RXMD may deal with each other in connection with the Liabilities or otherwise, or alter any contracts or agreements now or hereafter existing between them, in any manner whatsoever, all without in any way altering or affecting the security of this Guaranty.

 

  

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4.4.          Guarantor expressly waives, to the fullest extent permitted by applicable law, any and all defenses which Guarantor shall or may have as of the date hereof arising or asserted by reason of: (i) any disability or other defense of RXMD, or any other guarantor for the Liabilities, with respect to the Liabilities; (ii) the unenforceability or invalidity of any security for or guaranty of the Liabilities or the lack of perfection or continuing perfection or failure of priority of any security for the Liabilities; (iii) the cessation for any cause whatsoever of the liability of RXMD, or any other guarantor of the Liabilities (other than by reason of the full payment and performance of all Liabilities (other than contingent indemnification obligations)); (iv) any failure of TCA to marshal assets in favor of RXMD or any other Person; (v) any failure of TCA to give notice of sale or other disposition of collateral to RXMD or any other Person or any defect in any notice that may be given in connection with any sale or disposition of collateral; (vi) any failure of TCA to comply with applicable laws in connection with the sale or other disposition of any collateral or other security for any Liabilities, including, without limitation, any failure of TCA to conduct a commercially reasonable sale or other disposition of any collateral or other security for any Liabilities; (vii) any act or omission of TCA or others that directly or indirectly results in or aids the discharge or release of RXMD or any other guarantor of the Liabilities, or of any security or guaranty therefor by operation of law or otherwise; (viii) any law which provides that the obligation of a surety or guarantor must neither be larger in amount or in other respects more burdensome than that of the principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation; (ix) any failure of TCA to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person; (x) the election by TCA, in any bankruptcy proceeding of any Person, of the application or non-application of Section 1111(b)(2) of the United States Bankruptcy Code; (xi) any extension of credit or the grant of any lien under Section 364 of the United States Bankruptcy Code; (xii) any use of collateral under Section 363 of the United States Bankruptcy Code; (xiii) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any Person; (xiv) the avoidance of any lien or security interest in favor of TCA for any reason; (xv) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against any Person, including without limitation any discharge of, or bar or stay against collecting, all or any of the Liabilities (or any interest thereon) in or as a result of any such proceeding; or (xvi) any action taken by TCA that is authorized by this Section or any other provision of any Transaction Document.  Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Liabilities, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Liabilities.

4.5.          This is a continuing guaranty and shall remain in full force and effect as to all of the Liabilities until such date as all amounts owing by RXMD to TCA shall have been paid in full in cash and all obligations of RXMD with respect to any of the Liabilities shall have terminated or expired (such date is referred to herein as the “Termination Date”).

5.            LIMITATION ON SUBROGATION. Until the Termination Date, Guarantor waives any present or future right to which Guarantor is or may become entitled to be subrogated to TCA’s rights against RXMD or to seek contribution, reimbursement, indemnification, payment or the like, or participation in any claim, right or remedy of TCA against RXMD or any security which TCA now has or hereafter acquires, whether or not such claim, right or remedy arises under contract, in equity, by statute, under common law or otherwise.  If, notwithstanding such waiver, any funds or property shall be paid or transferred to Guarantor on account of such subrogation, contribution, reimbursement, or indemnification at any time when all of the Liabilities have not been paid in full, Guarantor shall hold such funds or property in trust for TCA and shall forthwith pay over to TCA such funds and/or property to be applied by TCA to the Liabilities.

 

  

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6.             COVENANTS.

6.1.          Financial Statements; Compliance Certificate.  To the extent at any time the Guarantor’s financial information is not included in the consolidated financial statements of RXMD filed with the SEC and in RXMD’s consolidated tax returns, then no later than ten (10) days after written request therefore from TCA, Guarantor shall deliver to TCA: (a) financial statements disclosing all of Guarantor’s assets, liabilities, net worth, income and contingent liabilities, all in reasonable detail and in form acceptable to TCA, signed by Guarantor, and certified by Guarantor to TCA to be true, correct and complete; (b) complete copies of federal tax returns, including all schedules, each of which shall be signed and certified by Guarantor to be true and complete copies of such returns; and (c) such other information respecting the Guarantor as TCA may from time to time reasonably request.

6.2.          Subordination of Other Debts.  Guarantor hereby: (a) subordinates the obligations now or hereafter owed by RXMD to Guarantor (“Subordinated Debt”) to any and all obligations of RXMD to TCA now or hereafter existing while this Guaranty is in effect, and hereby agrees that Guarantor will not request or accept payment of or any security for any part of the Subordinated Debt, and any proceeds of the Subordinated Debt paid to Guarantor, through error or otherwise, shall immediately be forwarded to TCA by Guarantor, properly endorsed to the order of TCA, to apply to the Liabilities.

6.3.          Security for Guaranty.  All of Guarantor’s obligations and liability evidenced by this Guaranty is also secured by all of the assets and property of the Guarantor pursuant to that certain Security Agreement by and between the Guarantor and TCA made of even date herewith (the “Security Agreement”). All of the agreements, conditions, covenants, provisions, representations, warranties and stipulations contained in the Security Agreement or any other Transaction Documents to which Guarantor is a party which are to be kept and performed by the Guarantor are hereby made a part of this Guaranty to the same extent and with the same force and effect as if they were fully set forth herein, and the Guarantor covenants and agrees to keep and perform them, or cause them to be kept or performed, strictly in accordance with their terms.

7.             EVENTS OF DEFAULT.

Each of the following shall constitute a default (each, an “Event of Default”) hereunder:

7.1.           Non-payment when due, and after all applicable grace periods, of any sum required to be paid to TCA under any of the Transaction Documents or of any of the other Liabilities;

7.2.           A breach by Guarantor of any other term, covenant, condition, obligation or agreement under this Guaranty;

 

  

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7.3.           Any representation or warranty made by Guarantor in this Guaranty shall prove to be false, incorrect or misleading in any material respect as of the date when made;

7.4.           A default by RXMD or Guarantor, after all applicable grace or notice periods, under any of the Transaction Documents; or

7.5.          The occurrence of any of the following events: (i) Guarantor makes an assignment for the benefit of creditors; (ii) any order or decree is rendered by a court which appoints or requires the appointment of a receiver, liquidator or trustee for Guarantor, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (iii) any order or decree is rendered by a court adjudicating Guarantor insolvent, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (iv) Guarantor files a petition in bankruptcy under the provisions of any bankruptcy law or any insolvency act; (v) Guarantor admits, in writing, its inability to pay its debts as they become due; (vi) a proceeding or petition in bankruptcy is filed against Guarantor and such proceeding or  petition is not dismissed within thirty (30) days from the date it is filed; or (vii) Guarantor files a petition or answer seeking reorganization or arrangement under the bankruptcy laws or any law or statute of the United States or any state.

8.            REMEDIES.

8.1.          Upon an Event of Default, all liabilities and obligations of Guarantor hereunder shall become immediately due and payable without demand or notice and, in addition to any other remedies provided by law or in equity, TCA may:

8.1.1.          Enforce the obligations of Guarantor under this Guaranty.

8.1.2.          To the extent not prohibited by and in addition to any other remedy provided by law or equity, setoff against any of the Liabilities any sum owed by TCA in any capacity to Guarantor whether due or not.

8.1.3.          Perform any covenant or agreement of Guarantor in default hereunder (but without obligation to do so) and in that regard pay such money as may be required or as TCA may reasonably deem expedient.  Any costs, expenses or fees, including reasonable attorneys’ fees and costs, incurred by TCA in connection with the foregoing shall be included in the Liabilities guaranteed hereby, and shall be due and payable on demand, together with interest at the highest non-usurious rate permitted by applicable law, such interest to be calculated from the date of such advance to the date of repayment thereof.  Any such action by TCA shall not be deemed to be a waiver or release of Guarantor hereunder and shall be without prejudice to any other right or remedy of TCA.

8.2.           Settlement of any claim by TCA against RXMD, whether in any Proceeding or not, and whether voluntary or involuntary, shall not reduce the amount due under the terms of this Guaranty, except to the extent of the amount actually paid by RXMD or any other obligated Person and legally retained by TCA in connection with the settlement (unless otherwise provided for herein).

 

  

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9.             MISCELLANEOUS.

9.1.          Disclosure of Financial Information.  TCA is hereby authorized to disclose any financial or other information about Guarantor to any governmental authority having jurisdiction over TCA or to any present, future or prospective participant or successor in interest in the Note.  The information provided may include, without limitation, amounts, terms, balances, payment history, return item history and any financial or other information about Guarantor.

9.2.          Remedies Cumulative.  The rights and remedies of TCA, as provided herein and in any other Transaction Document, shall be cumulative and concurrent, may be pursued separately, successively or together, may be exercised as often as occasion therefor shall arise, and shall be in addition to any other rights or remedies conferred upon TCA at law or in equity.  The failure, at any one or more times, of TCA to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.  TCA shall have the right to take any action it deems appropriate without the necessity of resorting to any collateral securing this Guaranty.

9.3.          Integration.  This Guaranty and the other Transaction Documents constitute the sole agreement of the parties with respect to the transaction contemplated hereby and thereby and supersede all oral negotiations and prior writings with respect thereto.

9.4.          Attorneys’ Fees and Expenses.  If TCA retains the services of counsel by reason of a claim of an Event of Default hereunder or under any of the other Transaction Documents, or on account of any matter involving this Guaranty, or for examination of matters subject to TCA’s approval under the Transaction Documents, all costs of suit and all reasonable attorneys’ fees and such other reasonable expenses so incurred by TCA shall forthwith, on demand, become due and payable and shall be secured hereby.

9.5.          No Implied Waiver.  TCA shall not be deemed to have modified or waived any of its rights or remedies hereunder unless such modification or waiver is in writing and signed by TCA, and then only to the extent specifically set forth therein.  A waiver in one event shall not be construed as continuing or as a waiver of or bar to such right or remedy on a subsequent event.

9.6.         Waiver.  Except as otherwise provided herein or in any of the Transaction Documents, Guarantor waives notice of acceptance of this Guaranty and notice of the Liabilities and waives notice of default, non-payment, partial payment, presentment, demand, protest, notice of protest or dishonor, and all other notices to which Guarantor might otherwise be entitled or which might be required by law to be given by TCA.  Guarantor waives the right to any stay of execution and the benefit of all exemption laws, to the extent permitted by law, and any other protection granted by law to guarantors, now or hereafter in effect with respect to any action or proceeding brought by TCA against it. Guarantor irrevocably waives all claims of waiver, release, surrender, alteration or compromise and the right to assert against TCA any defenses, set-offs, counterclaims, or claims that Guarantor may have at any time against RXMD or any other party liable to TCA.

 

 

  

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9.7.          No Third Party Beneficiary.  Except as otherwise provided herein, Guarantor and TCA do not intend the benefits of this Guaranty to inure to any third party and no third party (including RXMD) shall have any status, right or entitlement under this Guaranty.

9.8.         Partial Invalidity.  The invalidity or unenforceability of any one or more provisions of this Guaranty shall not render any other provision invalid or unenforceable.  In lieu of any invalid or unenforceable provision, there shall be added automatically a valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible.

9.9.          Binding Effect.  The covenants, conditions, waivers, releases and agreements contained in this Guaranty shall bind, and the benefits thereof shall inure to, the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns; provided, however, that this Guaranty cannot be assigned by Guarantor without the prior written consent of TCA, and any such assignment or attempted assignment by Guarantor shall be void and of no effect with respect to the TCA.

9.10.        Modifications.  This Guaranty may not be supplemented, extended, modified or terminated except by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.

9.11.       Sales or Participations.  TCA may from time to time sell or assign the Note, in whole or in part, or grant participations in the Note and/or the obligations evidenced thereby without the consent of RXMD or Guarantor, provided, however, TCA shall provide written notice to RXMD and Guarantor of any such assignment or grant of participations.  The holder of any such sale, assignment or participation, if the applicable agreement between TCA and such holder so provides, shall be: (a) entitled to all of the rights, obligations and benefits of TCA (to the extent of such holder’s interest or participation); and (b) deemed to hold and may exercise the rights of setoff or banker’s lien with respect to any and all obligations of such holder to Guarantor (to the extent of such holder’s interest or participation), in each case as fully as though Guarantor was directly indebted to such holder.  TCA may in its discretion give notice to Guarantor of such sale, assignment or participation; however, the failure to give such notice shall not affect any of TCA’s or such holder’s rights hereunder.

9.12.       Jurisdiction.  Guarantor hereby consents that any action or proceeding against him be commenced and maintained in Broward County, State of Florida by service of process on them; and Guarantor agrees that the courts of such County shall have jurisdiction with respect to the subject matter hereof and the person of Guarantor and all collateral securing the obligations of Guarantor.  Guarantor agree not to assert any defense to any action or proceeding initiated by TCA based upon improper venue or inconvenient forum.

9.13.       Notices.  All notices of request, demand and other communications hereunder shall be addressed to the parties as follows:

 

  

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If to the Guarantor:                                               Progressive Care, Inc.

1111 Park Center Blvd., Suite 202

Miami Gardens, Florida 33169

Attn: Mr. Avraham A. Friedman, CEO

Telephone:_____________________

Facsimile:______________________

E-Mail:________________________

With a copy to:                                                   Joseph Lucosky, Esq.

(which shall not constitute notice)                    Lucosky Brookman, LLP

33 Wood Avenue South, 6th Floor

Iselin, New Jersey 08830

Phone: (732) 395-4400

Fax: (732) 395-4401

Email: jlucosky@lucbro.com

If to TCA:                                                             TCA Global Credit Master Fund, LP

1404 Rodman Street

Hollywood, FL 33020

Attn: Mr. Robert Press

Telephone: (786) 323-1650

Facsimile: (786) 323-1651

E-Mail: bpress@trafcap.com

With a copy to:                                                   David Kahan, P.A.

(which shall not constitute notice)                   6420 Congress Ave., Suite 1800

Boca Raton, FL 33487

Attn: David Kahan, Esq.

Telephone: (561) 672-8330

Facsimile: (561) 672-8301

E-Mail: david@dkpalaw.com

unless the address is changed by the party by like notice given to the other parties.  Notice shall be in writing and shall be deemed delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address below, then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a business day.  Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following business day.  Notwithstanding the foregoing, notice, consents, waivers or other communications referred to in this Guaranty may be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation from the receiving party) that the notice has been received by the other party.

 

  

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9.14.         Governing Law.  This Guaranty shall be governed by and construed in accordance with the substantive laws of the State of Florida without reference to conflict of laws principles.

9.15. Joint and Several Liability.  The word “Guarantor” or “Guarantors” shall mean all of the undersigned persons, if more than one, and their liability shall be joint and several.  The liability of Guarantor shall also be joint and several with the liability of any other guarantor under any other guaranty.

9.16. Continuing Enforcement.  If, after receipt of any payment of all or any part of the Liabilities, TCA is compelled or reasonably agrees, for settlement purposes, to surrender such payment to any person or entity for any reason (including, without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance, an impermissible setoff, or a diversion of trust funds), then this Guaranty shall continue in full force and effect or be reinstated, as the case may be, and Guarantor shall be liable for, and shall indemnify, defend and hold harmless TCA with respect to the full amount so surrendered.  The provisions of this Section shall survive the termination of this Guaranty and shall remain effective notwithstanding the payment of the Liabilities, the cancellation, conversion or redemption of the Note, this Guaranty or any other Transaction Document, the release of any security interest, lien or encumbrance securing the Liabilities or any other action which TCA may have taken in reliance upon its receipt of such payment.  Any cancellation, release or other such action shall be deemed to have been conditioned upon any payment of the Liabilities having become final and irrevocable.

9.17. WAIVER OF JURY TRIAL.  GUARANTOR AGREES THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY TCA OR GUARANTOR ON OR WITH RESPECT TO THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY.  TCA AND GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF THEIR RESPECTIVE COUNSEL, WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING.  FURTHER, GUARANTOR WAIVES ANY RIGHT THEY MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  GUARANTOR ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS GUARANTY AND THAT TCA WOULD NOT PURCHASE THE DEBENTURES IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS GUARANTY.

 

[Signatures on the following page]

 

  

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IN WITNESS WHEREOF, Guarantor, intending to be legally bound, has duly executed and delivered this Guaranty Agreement as of the day and year first above written.

 

	 	 
 
 
PHARMCO, L.L.C.

	 	 	 
	
 

	
By: 

	/s/ Avraham A. Friedman
	 	Name:	Avraham A. Friedman
	 	Title:	Chief Executive Officer
	 	 	 

 

 

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