Document:

ex10x3.htm

Exhibit 10.3

 

FORM OF WARRANT

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, WHICH OPINION SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

	
No. SPW-

	
___________, 2010

	  	  

CAMBRIDGE HOLDINGS, LTD.

Common Stock Purchase Warrant

_________________

 

THIS CERTIFIES THAT, for value received, __________, or his/her/its registered assigns (the “Purchaser”), is entitled to subscribe for and purchase from Cambridge Holdings, Ltd., a Delaware corporation (the “Company”), at any time prior to the fifth anniversary of the date hereof  (the “Warrant Exercise Term”), the Shares at the Exercise Price (each as defined in Section 1 below); provided, however, in accordance with Section 1 hereof, simultaneously with the closing of the PPO and the Merger (each, as defined below), this Warrant shall be exchanged for a PPO Warrant (as defined below).

 

This Warrant is one of a series of warrants of like tenor that have been issued in connection with the Company’s private offering solely to accredited investors of units in accordance with, and subject to, the terms and conditions described in the Securities Purchase Agreement, attached to the Letter of Transmittal of the Company dated August __, 2010 (the “Securities Purchase Agreement”).

 

This Warrant is subject to the following terms and conditions:

 

1.           Exchange.  This Warrant shall be exchanged for warrants (the “PPO Warrants”) in an amount equal to 40% of the principal amount of the Convertible Note held by the Purchaser and issued to the Purchaser pursuant to the Securities Purchase Agreement.  This Warrant shall be exchanged for a PPO Warrant exercisable for a number of shares of securities based upon a 33.3% discount to the per share offering price of the securities sold in a private placement offering in an anticipated minimum amount of $6 million and a maximum amount of $12 million (the “PPO”), which will be scheduled to close simultaneously with the closing of the proposed merger (the “Merger”) among the Company, Prescient Medical, Inc. (“Prescient”) and a wholly-owned subsidiary of the Company.  For illustrative purposes only, if a purchaser purchases a Convertible Note in the principal amount of $100,000, and the securities offered in the PPO have a purchase price of $6.00 per share of Common Stock, applying the 33.3% discount to the $6.00 per share offering price, such purchaser would be entitled to a PPO Warrant to purchase 10,000 shares of Common Stock at the same exercise price as the PPO Warrants exercise price ($100,000 x 40% = $40,000 divided by $4.00 = 10,000 shares).

 

 

 

  

  

  

2.           Exercise of Warrant.

 

(a)           Shares.  In the event that there are no PPO Warrants issued in the PPO, the Purchaser shall be entitled to purchase, at any time during the Warrant Exercise Term and subject to the terms set forth herein, a number of shares (collectively, the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”) equal to the principal amount of such Purchaser’s Convertible Promissory Note issued pursuant to the Securities Purchase Agreement divided by two dollars and fifty cents ($2.50) at an exercise price per Share equal to One Hundred and Fifty (150%) percent of the per share price of Common Stock sold in the PPO (the “Exercise Price”).  In the event that the PPO as defined herein, is not completed and such Merger is terminated, the Exercise Price shall be based upon 150% of the average five day closing price at the time of the Merger termination, of the Common Stock of Cambridge.

 

(b)           Exercise.  Subject to Section 2(d) hereof, this Warrant may be exercised by the Purchaser at any time during the Warrant Exercise Term, in whole or in part, by delivering the notice of exercise attached as Exhibit A hereto (the “Notice of Exercise”), duly executed by the Purchaser to the Company at its principal office, or at such other office as the Company may designate, accompanied by payment, in cash or by wire transfer of immediately available funds or by check payable to the order of the Company, of the amount obtained by multiplying the number of Shares designated in the Notice of Exercise by the Exercise Price (the “Purchase Price”).  For purposes hereof, “Exercise Date” shall mean the date on which all deliveries required to be made to the Company upon exercise of this Warrant pursuant to this Section 2(b) shall have been made.

 

(c)           Issuance of Certificates.  As soon as practicable after the exercise of this Warrant, in whole or in part, in accordance with Section 2(b) hereof, the Company, at its expense, shall cause to be issued in the name of and delivered to the Purchaser (i) a certificate or certificates for the number of fully paid and non-assessable Shares to which the Purchaser shall be entitled upon such exercise and, if applicable, (ii) a new warrant of like tenor to purchase all of the Shares that may be purchased pursuant to the portion, if any, of this Warrant not exercised by the Purchaser.  The Purchaser shall for all purposes hereof be deemed to have become the Purchaser of record of such Shares on the date on which the Notice of Exercise and payment of the Purchase Price in accordance with Section 2(b) hereof were delivered and made, respectively, irrespective of the date of delivery of such certificate or certificates, except that if the date of such delivery, notice and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of record of such Shares at the close of business on the next succeeding date on which the stock transfer books are open.

 

 

2

  

  

  

(d)           Call.  If on any date commencing thirty (30) days after the closing of the PPO (the “Initial Date”), the bid price of the Common Stock exceeds 200% or more of the per share price of the Common Stock sold in the PPO (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like), for each of the immediately preceding ten (10) consecutive trading days (the “Measurement Period”) then the Company may, within two (2) trading days of the end of such Measurement Period, call for cancellation of all or any portion of this Warrant for which a Notice of Exercise has not yet been delivered (such right, a “Call”) for consideration equal to $.01 per Share.  To exercise this right, the Company must deliver to the Purchaser an irrevocable written notice (a “Call Notice”), indicating therein the portion of unexercised portion of this Warrant to which such notice applies.  If the conditions set forth below for such Call are satisfied from the period from the date of the Call Notice through and including the Call Date (as defined below), then any portion of this Warrant subject to such Call Notice for which a Notice of Exercise shall not have been received by the Call Date will be cancelled at 6:30 p.m. (New York City time) on the thirtieth (30th) trading day after the date the Call Notice is received by the Purchaser (such date and time, the “Call Date”).  Any unexercised portion of this Warrant to which the Call Notice does not pertain will be unaffected by such Call Notice.  In furtherance thereof, the Company covenants and agrees that it will honor all Notices of Exercise with respect to Shares subject to a Call Notice that are tendered through 6:30 p.m. (New York City time) on the Call Date.  The parties agree that any Notice of Exercise delivered following a Call Notice which calls less than all the Shares shall first reduce to zero the number of Shares subject to such Call Notice prior to reducing the remaining Shares available for purchase under this Warrant.  For example, if (A) this Warrant then permits the Purchaser to acquire 100 Shares, (B) a Call Notice pertains to 75 Shares, and (C) prior to 6:30 p.m. (New York City time) on the Call Date the Purchaser tenders a Notice of Exercise in respect of 50 Shares, then (x) on the Call Date the right under this Warrant to acquire 25 Warrant Shares will be automatically cancelled, (y) the Company, in the time and manner required under this Warrant, will have issued and delivered to the Purchaser 50 Shares in respect of the exercises following receipt of the Call Notice, and (z) the Purchaser may, until the Termination Date, exercise this Warrant for 25 Shares (subject to adjustment as herein provided and subject to subsequent Call Notices).  Subject again to the provisions of this Section 2(d), the Company may deliver subsequent Call Notices for any portion of this Warrant for which the Purchaser shall not have delivered a Notice of Exercise.  Notwithstanding anything to the contrary set forth in this Warrant, the Company may not deliver a Call Notice or require the cancellation of this Warrant (and any such Call Notice shall be void), unless, from the beginning of the Measurement Period through the Call Date, (1) the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered by  6:30 p.m. (New York City time) on the Call Date, and (2) a registration statement shall be effective as to all Shares and the Prospectus thereunder available for use by the Purchaser for the resale of all such Shares, and (3) the Common Stock shall be listed or quoted for trading on a trading market.  The Company’s right to call the Warrants under this Section 2(d) shall be exercised ratably among all of the holders of Warrants, including the Purchaser, based on the number of Shares initially exercisable pursuant to each of the Warrants.

 

(e)           Taxes.  The Purchaser shall be responsible for any tax or other charge of whatever nature in respect of the exercise of this Warrant, and the delivery of certificates or other instruments representing such Shares.

 

 

3

  

  

  

3.           Adjustment of Exercise Price and Number of Shares.

 

(a)           Adjustment for Reclassification, Consolidation or Merger.  If while this Warrant, or any portion hereof, remains outstanding and unexpired there shall be (i) a reorganization or recapitalization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation or other entity in which the Company shall not be the surviving entity, or a reverse merger in which the Company shall be the surviving entity but the shares of the Company’s capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (iii) a sale or transfer of the Company’s properties and assets as, or substantially as, an entirety to any other corporation or other entity in one transaction or a series of related transactions, then, as a part of such reorganization, recapitalization, merger, consolidation, sale or transfer, unless otherwise directed by the Purchaser, all necessary or appropriate lawful provisions shall be made so that the Purchaser shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the greatest number of shares of capital stock or other securities or property that a holder of the Shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, recapitalization, merger, consolidation, sale or transfer if this Warrant had been exercised immediately prior to such reorganization, recapitalization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 3.  If the per share consideration payable to the Purchaser for Shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company’s Board of Directors (the “Board of Directors”).  The foregoing provisions of this paragraph shall similarly apply to successive reorganizations, recapitalizations, mergers, consolidations, sales and transfers and to the capital stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant.  In all events, appropriate adjustment shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Purchaser after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable or issuable after such reorganization, recapitalization, merger, consolidation, sale or transfer upon exercise of this Warrant.

 

(b)           Adjustments for Split, Subdivision or Combination of Shares.  If the Company shall at any time subdivide (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Series A Convertible Preferred Stock subject to acquisition hereunder, then, after the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Series A Convertible Preferred Stock  subject to acquisition upon exercise of the Warrant will be proportionately increased.  If the Company at any time combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Series A Convertible Preferred Stock subject to acquisition hereunder, then, after the record date for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares of Series A Convertible Preferred Stock subject to acquisition upon exercise of the Warrant will be proportionately decreased.

 

 

4

  

  

  

(c)           Adjustments for Dividends in Stock or Other Securities or Property.  If while this Warrant, or any portion hereof, remains outstanding and unexpired, the holders of any class of securities as to which purchase rights under this Warrant exist at the time shall have received or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of such class of security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that such holder would hold on the date of such exercise had it been the holder of record of the class of security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available to it as aforesaid during said period, giving effect to all adjustments called for during such period by the provisions of this Section 3.

 

(d)           Notice of Adjustments.  Upon any increase or decrease in the number of Shares purchasable upon the exercise of this Warrant, then, and in each such case, the Company, within 30 days thereafter, shall give written notice thereof to the Purchaser at the address of such Purchaser as shown on the books of the Company, which notice shall state the increased or decreased number of Shares purchasable upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation of each.

 

4.           Notices.  All notices, requests, consents and other communications required or permitted under this Warrant shall be in writing and shall be deemed delivered (i) three business days after being sent by registered or certified mail, return receipt requested, postage prepaid or (ii) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, in each case to the intended recipient as set forth below:

 

If to the Company to:

 

Cambridge Holdings, Ltd.

106 S. University Blvd., #14

Denver, CO  80209

Attention:  Jeffrey McGonegal, Chief Financial Officer 
Facsimile: 303-722-4011

 

If to the Purchaser at its address as furnished in the Securities Purchase Agreement.

 

Either party may give any notice, request, consent or other communication under this Warrant using any other means (including personal delivery, messenger service, telecopy, first class mail or electronic mail), but no such notice, request, consent or other communication shall be deemed to have been duly given unless and until it is actually received by the party for whom it is intended.  Either party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the other party notice in the manner set forth in this Section 4.

 

5

 

  

  

  

5.           Legends.  Each certificate evidencing the Shares issued upon exercise of this Warrant shall be stamped or imprinted with a legend substantially in the following form:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, WHICH OPINION SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

6.           Removal of Legend.  Upon request of a holder of a certificate with the legends required by Section 5 hereof, the Company shall issue to such holder a new certificate therefor free of any transfer legend, if, with such request, the Company shall have received an opinion of counsel satisfactory to the Company in form and substance to the effect that any transfer by such holder of the Shares evidenced by such certificate will not violate the Act or any applicable state securities laws.

 

7.           Fractional Shares.  No fractional Shares will be issued in connection with any exercise hereunder.  Instead, the Company shall round up, as nearly as practicable to the nearest whole Share, the number of Shares to be issued.

 

8.           Rights of Stockholders.  Except as expressly provided in Section 3(c) hereof, the Purchaser, as such, shall not be entitled to vote or receive dividends or be deemed the holder of the Shares or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Purchaser, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or otherwise until this Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have been issued, as provided herein.

 

 

6

  

  

  

9.           Miscellaneous.

 

(a)           This Warrant and disputes arising hereunder shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to agreements made and to be performed wholly within such State, without regard to its conflict of law rules.

 

(b)           The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

 

(c)           The covenants of the respective parties contained herein shall survive the execution and delivery of this Warrant.

 

(d)           The terms of this Warrant shall be binding upon and shall inure to the benefit of any successors or permitted assigns of the Company and of the Purchaser and of the Shares issued or issuable upon the exercise hereof.

 

(e)           This Warrant and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subject hereof.

 

(f)           The Company shall not, by amendment of the Certificate of Incorporation or Bylaws, or through any other means, directly or indirectly, avoid or seek to avoid the observance or performance of any of the terms of this Warrant and shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Purchaser contained herein against impairment.

 

(g)           Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company, at its expense, will execute and deliver to the Purchaser, in lieu thereof, a new Warrant of like date and tenor.

 

(h)           This Warrant and any provision hereof may be amended, waived or terminated only by an instrument in writing signed by the Company and the Purchaser.

 

[Signature Page Follows]

 

 

7

 

  

  

  

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer.

 

 

 

CAMBRIDGE HOLDINGS, LTD.

 

By                                                                       

Name: Jeffrey McGonegal

Title: Chief Financial Officer

 

 

 

 

 

 

 

 

8

 

  

  

  

Exhibit A

NOTICE OF EXERCISE

 

TO:           Cambridge Holdings, Ltd.

 Attention:  Chief Financial Officer

 

The undersigned hereby elects to purchase _______________ shares (the “Shares”) of Common Stock of Cambridge Holdings, Ltd. (the “Company”) pursuant to the terms of this Warrant, and tenders herewith payment of the purchase price of such Shares in full.

 

Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:

 

(Name)

 

 

(Address)

The undersigned hereby represents and warrants the following:

 

(a)           He/she/it (i) has such knowledge and experience in financial and business affairs that he/she/it is capable of evaluating the merits and risks involved in purchasing the Shares, (ii) is able to bear the economic risks involved in purchasing the Shares, and (iii) is an “accredited investor,” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended;

 

(b)           In making the decision to purchase the Shares, he/she/it has relied solely on independent investigations made by him/her/it and has had the opportunity to ask questions of, and receive answers from, the Company concerning the Shares, the financial condition, prospective business and operations of the Company and has otherwise had an opportunity to obtain any additional information, to the extent that the Company possess such information or could acquire it without unreasonable effort or expense;

 

(c)           His/her/its overall commitment to investments that are not readily marketable is not disproportionate to his/her/its net worth and income, and the purchase of the Shares will not cause such overall commitment to become disproportionate; he/she/it can afford to bear the loss of the purchase price of the Shares;

 

(d)           He/she/it has no present need for liquidity in his/her/its investment in the Shares; and

 

(e)           He/she/it acknowledges that the transaction contemplated in connection with the purchase of the Shares has not been reviewed or approved by the Securities and Exchange Commission or by any administrative agency charged with the administration of the securities laws of any state, and that no such agency has passed on or made any recommendation or endorsement of any of the securities contemplated hereby.

 

 

 

	 	 	 
	 	 (Signature and Date)ex10x2.htm

Exhibit 10.4

 

THIS SENIOR SECURED CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE ON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SENIOR CONVERTIBLE PROMISSORY NOTE OR SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO BORROWER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE ACT OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT.

 

 

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

	
$1,025,000

	
September 15, 2010

Subject to the terms and conditions of this Senior Secured Convertible Promissory Note (this “Note”), for value received, Prescient Medical, Inc. (“Prescient” or the “Borrower”) a Delaware corporation promises to pay to CAMBRIDGE HOLDINGS, LTD., a Colorado corporation (“Holder”), the principal amount of ONE MILLION TWENTY FIVE THOUSAND DOLLARS AND NO CENTS ($1,025,000.00) (such principal amount, the “Loan”), together with interest at the rate of six (6%) percent per annum, on or before the Maturity Date, as defined below, subject to the terms set forth in Section 2.  This Note is one of a series of senior secured convertible promissory notes of like tenor and ranking made by the Borrower in favor of the Holder and issued, from time to time, on and after the date hereof.

 

1.  Maturity Date.  Borrower shall pay to Holder an amount in cash in immediately available funds representing the outstanding principal amount of this Note and accrued and unpaid interest thereon on June 30, 2011 (the “Maturity Date”), which date may be extended by the Borrower and the Holder in writing; provided, however, that upon the consummation of a merger between the Borrower and the Holder, or an affiliate of the Holder (the “Merger”), all indebtedness evidenced hereby shall be deemed cancelled and paid in full.

 

2.  Security.  This Note is secured by and is also entitled to the benefits of that certain Security Agreement dated as of the date between Borrower and Holder (as amended, supplemented or otherwise modified from time to time, the “Security Agreement” and, together with this Note and any other agreement, instrument or other document relating thereto or executed in connection therewith, the “Loan Documents”) and any other agreement or instrument providing collateral for the Obligations (as defined below), whether now or hereafter in existence, and any filings, instruments, agreements and documents relating thereto and providing collateral for the Obligations.  As used herein and in the Security Agreement, “Obligations” means all payment and performance obligations as existing from time to time of Borrower to Holder under this Note and any other notes issued to the Borrower, the other Loan Documents (including any interest, fees and expenses that, but for the provisions of the Bankruptcy Code (as defined in the Security Agreement), would have accrued), or as a result of making the Loan and the obligation to pay an amount equal to the amount of any and all damages which Holder may suffer by reason of a breach by Borrower of any obligation, covenant, or undertaking with respect to this Note or any other Loan Document.

 

 

 

  

  

  

3.  General Payment Terms.

 

3.1  Except to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by Borrower under this Note and the Security Agreement shall be made in lawful money of the United States of America, in immediately available funds, without deduction for any and all current or future taxes, levies, imposts, deductions, charges or withholdings with respect to any payments owed by Borrower and all interest, penalties or similar liabilities with respect thereto (all such taxes, levies, imposts, deductions, charges or withholdings and liabilities, collectively or individually, “Taxes”), to Holder as directed in writing by Holder, not later than 1:00 p.m., New York, NY time, on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day).  If Borrower shall be required by law to deduct any Taxes from any payment to Holder under this Note, then the amount payable to Holder shall be increased so that, after making all required deductions, Holder received an amount equal to that which it would have received had no such deductions been made.

 

3.2  Except to the extent otherwise expressly provided herein, if the due date of any payment under this Note would otherwise fall on a day that is not a Business Day, such date shall be extended to the next succeeding Business Day, and interest shall be payable for any principal so extended for the period of such extension.

 

3.3  Interest on the Loan shall be computed on the basis of a 360-day year for the actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable

 

3.4  Payment shall be credited first to the accrued but unpaid interest then due and payable, second to the outstanding principal balance of this Note and third to the other outstanding Obligations.

 

4.  Representations and Warranties.  Borrower represents and warrants to Holder that until the obligations under this Note and the Security Agreement are paid in full:

 

4.1  Borrower (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation, (b) has the corporate power and authority to own and operate its property, to lease the property it operates as lessee and to carry on its business as now being or as proposed to be conducted, (c) is duly qualified to do business and is in good standing under the laws of each jurisdiction in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify could reasonably be expected (either individually or in the aggregate) to have a material adverse effect on Borrower, and (d) is in compliance in all material respects with all requirements of law.

 

4.2  Borrower has the corporate power and authority to make, deliver and perform this Note and the other Loan Documents, and has taken all necessary corporate action to authorize (a) the incurrence of obligations pursuant to this Note and the terms and conditions of this Note and the other Loan Documents and (b) the execution, delivery and performance of this Note and the other Loan Documents.

 

 

2

  

  

  

4.3  No consent or authorization of, approval by, notice to, filing with or other act by or in respect of, any governmental authority or any other person or entity is required in connection with the incurrence of obligations pursuant to this Note hereunder or with the execution, delivery, performance, validity or enforceability of this Note or the other Loan Documents which has not otherwise been taken or received.

 

4.4  The Loan Documents have been duly and validly executed and delivered by Borrower and constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

 

4.5  The execution, delivery and performance of the Loan Documents, the incurrence of the obligations under this Note and the use of the proceeds thereof will not violate any requirements of law or contractual obligation of Borrower.

 

4.6  There are no actions, suits, arbitrations, investigations or proceedings of or before any arbitrator or governmental authority pending or, to the knowledge of Borrower, threatened against Borrower or against any of its properties or assets with respect to the Loan Documents or any of the transactions contemplated hereby.

 

4.7  Borrower has filed all Federal income tax returns and all other tax returns that are required to be filed by it and has paid all taxes due pursuant to such returns or pursuant to any assessment received by it, except for any such taxes or assessments that are being appropriately contested in good faith by appropriate proceedings and with respect to which adequate reserves in conformity with generally accepted accounting principles have been provided.  No lien, security interest or other encumbrance or interest (a “Lien”) with respect to any tax or assessment has been filed, and to the knowledge of Borrower, no claim is being asserted, with respect to any such tax or assessment.

 

5.  Affirmative Covenants.  Until such time as all Obligations have been paid in full in cash (unless converted pursuant to Section 2) and this Note has been terminated, Borrower hereby covenants and agrees with Holder that Borrower shall:

 

5.1  Use the proceeds of the indebtedness incurred hereunder to fund working capital and other lawful purposes of Borrower.  None of the proceeds of the indebtedness incurred hereunder will be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry margin stock or for any other purpose which might constitute this transaction a “purpose credit” within the meaning of Regulations T, U and X of the Board of Governors of the Federal Reserve System.

 

 

3

  

  

  

5.2  Preserve and maintain its separate corporate existence and all rights, franchises, licenses and privileges necessary to the conduct of its business; and qualify and remain qualified as a foreign corporation and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization, except in each case to the extent that the failure to be or remain so qualified could not reasonably be expected to have a material adverse effect on Borrower.

 

5.3  Protect and preserve all properties necessary to its business, including copyrights, patents, trade names and trademarks necessary and economically desirable in the operation of its business as determined by Borrower in its reasonable business judgment; maintain in good working order and condition (ordinary wear and tear excepted) all buildings, equipment and other tangible real and personal property necessary and material to its business; and from time to time make or cause to be made all renewals, replacements and additions to such property necessary for the conduct of its business so that the business carried on in connection therewith may be properly conducted at all times.

 

5.4  Pay or perform all taxes, assessments and other governmental charges that may be levied or assessed upon it or any of its property (including withholding, social security, payroll and similar employment related taxes on the dates such taxes are due); provided that Borrower may contest such taxes, assessments and other governmental charges in good faith so long as adequate reserves are maintained with respect thereto in accordance with generally accepted accounting principles.

 

5.5  Maintain a system of accounting, and keep such books, records and accounts (which shall be true and complete in all material respects) as may be required or as may be necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles consistently applied and in compliance with the regulations of any governmental authority having jurisdiction over it or any of its properties.

 

5.6  Observe and remain in compliance with all requirements of law and maintain in full force and effect all approvals of governmental authorities, in each case applicable or necessary to the conduct of its business except where the failure to do so could not reasonably be expected to result in a material adverse effect on Borrower and except that Borrower may contest the applicability any requirement of law in good faith so long as adequate reserves are maintained with respect thereto in accordance with generally accepted accounting principles.

 

5.7  Permit representatives of Holder, from time to time, as often as may be reasonably requested, but only during normal business hours unless an Event of Default exists, upon reasonable prior notice unless an Event of Default exists, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files, including management letters prepared by independent accountants; and discuss with its principal officers and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects.

 

5.8  Engage only in businesses consisting primarily of business conducted on the date hereof and other businesses reasonably related thereto.

 

 

4

  

  

  

6.  Negative Covenants.  Until such time as all Obligations have been paid in full in cash (unless converted pursuant to Section 2) and this Note and the Security Agreement have been terminated, Borrower hereby covenants and agrees with Holder that Borrower shall not:

 

6.1  Create, incur, assume or suffer to exist any indebtedness, other than in the ordinary course of business and in an amount not to exceed $50,000 in the aggregate.

 

6.2  (a) Create, incur, or allow any Lien on any of its property, or assign or convey any right to receive income, except for the Lien of Holder under the Security Agreement, or (b) enter into any agreement, document, instrument or other arrangement with any person which directly or indirectly prohibits or has the effect of prohibiting Borrower from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s assets.

 

6.3  Sell, lease, abandon, transfer or otherwise dispose of, in a single transaction or a series of related transactions, any assets, property or business, except for the sale of inventory in the ordinary course of business at the fair market value thereof and for cash.

 

6.4  Redeem, purchase or otherwise acquire for value any equity interest of Borrower.

 

6.5  Directly or indirectly declare or pay any dividend or distribution, or set aside any funds for any such purpose.

 

6.6  Conduct any business or enter into any transaction or series of similar transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any affiliate of Borrower unless the terms of such business, transaction or series of transactions are (a) as favorable to Borrower as terms that would be obtainable at the time for a comparable transaction or series of similar transactions in arm's-length dealings with an unrelated third person or, if such transaction is not one which by its nature could be obtained from such person, is on fair and reasonable terms and (b) are in the ordinary course of business.

 

6.7  Other than this Note, enter into any contractual obligations (including any amendment to any existing contractual obligations) that would expressly restrict or prohibit the purchase or redemption of this Note in accordance with the provisions of its organizational documents or the terms of this Note.

 

6.8  Prepay, redeem, defease or purchase in any manner, or deposit or set aside funds for the purpose of any of the foregoing, make any payment in respect of principal of, or make any payment in respect of interest on, any indebtedness (other than the Subordinated Debt), except Borrower may (a) make regularly scheduled payments of principal or interest required in accordance with the terms of the instruments governing any indebtedness permitted hereunder and (b) make payments, including prepayments permitted or required hereunder, with respect to the Obligations.

 

 

5

  

  

  

7.  Events of Default.  Each of the following events shall constitute an event of default (an “Event of Default”) hereunder:

 

7.1  Borrower shall default in the payment of (a) any principal due under this Note or (b) any interest on such principal, any fee or other amount payable by it hereunder with respect to this Notes or other Loan Documents when due, and, in the case of this clause (b), such default shall have continued unremedied for three (3) Business Days; or

 

7.2  Any representation, warranty or certification made or deemed made herein or in any other Loan Document by Borrower, or any certificate furnished to Holder pursuant to the provisions hereof or thereof, shall prove to have been false or misleading as of the time made or furnished; or

 

7.3  Borrower shall default in the performance or observance of any other agreement or covenant contained in this Note or any other Loan Document not specifically referred to elsewhere in this Section 7, and such default, if curable, shall not be cured to Holder’s satisfaction within a period of five (5) days after the earlier of (a) the date notice of such default is given to Holder or (b) the date that Borrower knew or should have known of the occurrence of such default; or

 

7.4  There shall occur any default (after the expiration of any applicable cure period) under any indenture, agreement, or instrument evidencing indebtedness of Borrower in an aggregate principal amount exceeding $50,000 (determined singly or in the aggregate with other indebtedness); or

 

7.5  Borrower shall (a) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator of itself or of all or a substantial part of its property, (b) make a general assignment for the benefit of its creditors, (c) commence a voluntary case under the Bankruptcy Code, (d) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts, or (e) fail to controvert in a timely and appropriate manner or acquiesce in writing to any petition filed against it in an involuntary case under the Bankruptcy Code; or

 

7.6  A proceeding or case shall be commenced, without the application or consent of Borrower in any court of competent jurisdiction, seeking (a) Borrower’s reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of any of their respective debts, (b) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of Borrower, or of all or any substantial part of its properties, or (c) similar relief in respect of Borrower under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or readjustment of debts and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of thirty (30) or more days; or an order for relief against Borrower shall be entered in an involuntary case under the Bankruptcy Code; or

 

7.7  All or any portion of any Loan Document shall at any time and for any reason be declared to be null and void, or a proceeding shall be commenced by Borrower, by any governmental authority having jurisdiction over Borrower, or by any other person or entity, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or Borrower thereof shall deny that it has any liability or obligation for the payment of any Obligation purported to be created under any Loan Document; or

 

 

6

  

  

  

7.8  The Security Agreement shall for any reason cease to create a valid and perfected first priority Lien on, or security interest in, any of the collateral purported to be covered thereby.

 

8.  Remedies Upon Default.

 

8.1  If an Event of Default shall have occurred and shall be continuing, in addition to the rights and remedies set forth elsewhere in this Note and the other Loan Documents:

 

(a)  With the exception of an Event of Default specified in Section 7.5 or 7.6, Holder may in its discretion declare the principal of and interest on the Loan and all other Obligations to be forthwith due and payable without presentment, demand, protest, or notice of any kind, all of which are hereby expressly waived, anything in this Note or in any other Loan Document to the contrary notwithstanding, or both.

 

(b)  Upon the occurrence and continuance of an Event of Default specified in Section 7.5 or 7.6, such principal, interest, and other Obligations shall thereupon and concurrently therewith become immediately due and payable, all without any action by Holder and without presentment, demand, protest, or other notice of any kind, all of which are expressly waived, anything in this Note or in any other Loan Document to the contrary notwithstanding.

 

(c)  Holder may in its discretion exercise all of the post-default rights granted to Holder under the Loan Documents or under applicable law.  Holder shall have the right to the appointment of a receiver for the Collateral (as defined in the Security Agreement), and Borrower hereby consents to such rights and such appointment and hereby waives any objection Borrower may have thereto or the right to have a bond or other security posted by Holder in connection therewith.

 

8.2  Except as expressly provided hereinabove, presentment, demand, protest and all other notices of any kind are hereby expressly waived by Borrower.

 

8.3  The rights and remedies of Holder hereunder and under the other Loan Documents shall be cumulative, and not exclusive.

 

8.4  No failure on the part of Holder to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Note or any of the other Loan Documents shall operate as a waiver hereof or thereof, nor shall any single or partial exercise of any right, power or privilege under this Note or any of the other Loan Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  Any waiver requested by Borrower shall require the written consent of Holder.  The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

 

 

7

  

  

  

9.  Indemnification.  Borrower agrees to indemnify and hold harmless Holder and each of its employees, representatives, officers, directors and advisors (each, an “Indemnified Person”) from and against any and all claims, liabilities, investigations, losses, damages, actions, demands, penalties, judgments, suits, investigations, costs, expenses (including fees and expenses of experts, agents, consultants and counsel) and disbursements, in each case, of any kind or nature (whether or not an Indemnified Person is a party to any such action, suit or investigation) whatsoever which may be imposed on or asserted against an Indemnified Person resulting from any breach or alleged breach by Borrower of any representation or warranty made hereunder or under any other Loan Document, or otherwise in any way relating to or arising out of the Obligations, this Note, the other Loan Documents or any other document contemplated by this Note or any action taken or omitted by Holder under this Note, any other Loan Document, or any other document contemplated by this Note, the making, administration or enforcement of the Loan Documents and the Loan hereunder or any transaction contemplated hereby or any related matters unless, with respect to any of the above, such Indemnified Person is determined by a final non-appealable judgment of a court of competent jurisdiction to have acted or failed to act with gross negligence or willful misconduct.  This Section 9 is for the benefit of each Indemnified Person.  The provisions of this Section 9 shall survive the termination of this Note and the other Loan Documents.

 

10.  Assignment.  The rights and obligations of Borrower and Holder of this Note will be binding upon and inure to the benefit of the successors, assigns, heirs, administrators and transferees of the parties.  Borrower may not assign any of its rights or obligations hereunder or under any of the other Loan Documents.  Holder may assign or transfer all or any of their respective rights or obligations under this Note and the other Loan Documents without the prior written consent of Borrower so long as such assignment or transfer does not violate any applicable securities laws.

 

11.  Amendments.  Except as otherwise expressly provided in this Note, any provision of this Note may be modified or supplemented only by an instrument in writing signed by Borrower and Holder.

 

12.  Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by facsimile, by registered or certified mail (postage prepaid, return receipt requested), or by any courier or other service providing evidence of delivery to the respective parties as set forth below:

 

if to a Borrower, to:

 

Prescient Medical, Inc.

2005 South Easton Road

Doylestown, PA 18901-7101

Attention:  Patricia Scheller

Facsimile: (215) 933-1149

 

with a copy to counsel (which shall not constitute notice):

 

Duane Morris LLP

1540 Broadway

New York, New York 10036

Attention:  Nanette C. Heide, Esq.

Facsimile:  (212) 202-5334

 

 

8

  

  

  

if to Holder, to:

 

Cambridge Holdings, Ltd.

106 S. University Blvd., #14

Denver, CO  80209

Attention:  Jeffrey McGonegal, Chief Financial Officer 

Facsimile: 303-722-4011

 

Borrower and Holder may change the information provided above or to such other address (or facsimile number, if applicable) by providing such change to the others in writing in the manner set forth above (provided that notice of any change of address or facsimile number shall be effective only upon receipt thereof).  Notice will conclusively be deemed to have been given when personally delivered or when deposited in the mail in the manner set forth above and will be deemed to have been received when delivered.

 

13.  Governing Law; Venue; Trial by Jury.  This Note shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof, and if any action is brought to enforce or interpret this Note, exclusive venue for such action shall be in Wilmington, Delaware.  BORROWER, TO THE EXTENT PERMITTED BY APPLICABLE LAW, WAIVES, AND OTHERWISE AGREES NOT TO REQUEST, A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION, PROCEEDING OR COUNTERCLAIM OF ANY TYPE IN WHICH BORROWER OR ANY OF ITS SUCCESSORS OR ASSIGNS IS A PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS NOTE OR THE OTHER LOAN DOCUMENTS.

 

14.  Waivers.  All parties now or hereafter liable with respect to this Note, whether Holder, any guarantor, endorser or any other Person, hereby waive presentment for payment, demand, notice of non payment or dishonor, protest, notice of protest and notice of any other kind whatsoever.

 

15.  No Fraudulent Conveyance.  Borrower and Holder hereby confirm that it is the intention of all such Persons that this Note and the Obligations of Borrower hereunder not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act (the “UFCA”), the Uniform Fraudulent Transfer Act (the “UFTA”) or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law to the extent applicable to this Note and the Obligations of Borrower hereunder. To effectuate the foregoing intention, Holder and Borrower hereby irrevocably agree that the Obligations of Borrower under this Note and the other Loan Documents at any time shall be limited to the maximum amount as will result in the Obligations of Borrower under this Note and the other Loan Documents not constituting a fraudulent transfer or conveyance.

 

 

 

9

  

  

  

16.  Certain Matters of Construction.  Any pronoun used shall be deemed to cover all genders.  References in this Note to “Sections” shall be to Sections of or to this Note unless otherwise specifically provided.  Paragraph titles are for descriptive purposes only and shall not control or alter the meaning of this Note as set forth in the text.  All references in this Note to (a) statutes shall include all amendments of same and implementing regulations and any successor statutes and regulations, (b) any instrument or agreement shall include any and all modifications and supplements thereto and any and all restatements, extensions or renewals thereof to the extent such modifications, supplements, restatements, extensions or renewals of any such documents are permitted by the terms thereof, (c) “including” shall be understood to mean “including, without limitation” or (d) the time of day shall mean the time of day on the day in question in New York, New York, unless otherwise expressly provided in this Note.  Unless the context of this Note clearly requires otherwise, references to the plural include the singular, references to the singular include the plural and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”  The words “hereof”, “herein”, “hereby”, “hereunder”, and similar terms in this Note refer to this Note as a whole and not to any particular provision of this Note.  Whenever in any provision of this Note Holder is authorized to take or decline to take any action (including making any determination) in the exercise of its “discretion”, such provision shall be understood to mean that Holder may take or refrain to take such action in its sole discretion.

 

 

[Remainder of page intentionally left blank.]

 

 

 

 

 

 

 

10

  

  

  

IN WITNESS WHEREOF, Borrower has caused this Note to be issued under seal as of the date first above written.

 

	  	
PRESCIENT MEDICAL, INC.

 

 

By:  /s/ Patricia Scheller                                                                

Patricia Scheller, Chief Executive Officer

	  	
[SEAL]

 

	  	  

 

 

 

 

 

 

 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}]]