EXHIBIT A
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A
VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT, EXCEPT UNDER SPECIFIC LIMITED CIRCUMSTANCES, AN OPINION
OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE COMPANY THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
INTEGRATED MEDICAL RESOURCES, INC.
CONVERTIBLE SUBORDINATED PROMISSORY NOTE
Lenexa, Kansas
$______________________ _____________, 1998
1. Principal and Interest.
INTEGRATED MEDICAL RESOURCES, INC. (the "Company"), a Kansas
corporation, for value received, hereby promises to pay to the order of
_____________________ or holder ("Payee") in lawful money of the United States
at the address of Payee set forth below, the principal amount of
_______________________________________ ($________________), the amount lent by
Payee to the Company pursuant to that certain Note and Warrant Agreement of even
date herewith (the "Agreement"), together with simple interest at a rate equal
to the sum of the prime rate as quoted by the Bank of America NT & SA,
calculated as of the date hereof, plus one percent (1.0%), per annum.
The principal of and accrued interest on this Note is due and
payable on [6 months], 1998. This Note may be prepaid without penalty, in whole
or in part, at any time.
Upon payment in full of all principal and interest payable
hereunder, this Note shall be surrendered to Company for cancellation.
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2. Subordination.
(a) "Senior Indebtedness" means the principal of and premium,
if any, and interest on indebtedness of the Company for money borrowed from
commercial banks, equipment lessors or other financial institutions under a
secured or unsecured line of credit, term loan or equipment lease.
(b) The Company agrees and the holder of each Note, by
acceptance thereof, agrees, expressly for the benefit of the present and future
holders of Senior Indebtedness, that, except as otherwise provided herein, upon
(i) an event of default under any Senior Indebtedness, or (ii) any dissolution,
winding up, or liquidation of the Company, whether or not in bankruptcy,
insolvency or receivership proceedings, the Company shall not pay, and the
holder of such Note shall not be entitled to receive, any amount in respect of
the principal and interest of such Note unless and until the Senior Indebtedness
shall have been paid or otherwise discharged. Upon (1) an event of default under
any Senior Indebtedness, or (2) any dissolution, winding up or liquidation of
the Company, any payment or distribution of assets of the Company, which the
holder of this Note would be entitled to receive but for the provisions hereof,
shall be paid by the liquidating trustee or agent or other person making such
payment or distribution directly to the holders of Senior Indebtedness ratably
according to the aggregate amounts remaining unpaid on Senior Indebtedness after
giving effect to any concurrent payment or distribution to the holders of Senior
Indebtedness. Subject to the payment in full of the Senior Indebtedness and
until this Note is paid in full; the holder of this Note shall be subrogated to
the rights of the holders of the Senior Indebtedness (to the extent of payments
or distributions previously made to the holders of Senior Indebtedness pursuant
to this paragraph 2(b)) to receive payments or distributions of assets of the
Company applicable to the Senior Indebtedness.
(c) This Section 2 is not intended to impair, as between the
Company, its creditors (other than the holders of Senior Indebtedness) and the
holder of this Note, the unconditional and absolute obligation of the Company to
pay the principal of and interest on the Note or affect the relative rights of
the holder of this Note and the other creditors of the Company, other than the
holders of Senior Indebtedness. Nothing in this Note shall prevent the holder of
this Note from exercising all remedies otherwise permitted by applicable law
upon default under the Note, subject to the rights, if any, of the holders of
Senior Indebtedness in respect to cash, property or securities of the Company
received upon the exercise of any such remedy.
3. Conversion.
(a) The outstanding principal balance of this Note shall be
automatically converted upon the closing of the Company's next equity financing
(the "Next Financing") involving the receipt by the Company of, in the
aggregate, more than $4,000,000 (excluding amounts received on conversion of the
Notes), into securities issues in the next equity financing (the "Securities")
at the purchase price paid for the Securities by the investors in the Next
Financing.
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(b) Upon automatic conversion of this Note, the outstanding
principal shall be converted automatically without any further action by the
holder and whether or not the Note is surrendered to the Company or its transfer
agent. The Company shall not be obligated to issue certificates evidencing the
shares of the securities issuable upon such automatic conversion unless such
Notes are either delivered to the Company or its transfer agent, or the holder
notifies the Company or its transfer agent that such Note has been lost, stolen
or destroyed and executes an agreement satisfactory to the Company to indemnify
the Company from any loss incurred by it in connection with such Note. The
Company shall, as soon as practicable after such delivery, or such agreement or
indemnification issue and deliver at such office to such holder of such Note, a
certificate or certificates for the securities to which the holder shall be
entitled and a check payable to the holder in the amount of any accrued and
unpaid interest on such Note and any cash amounts payable as the result of a
conversion into fractional shares of the Securities. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of closing of the Next Financing. The persons or persons entitled to receive
securities issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such securities on such date.
4. Attorneys' Fees. If the indebtedness represented by this Note or any
part thereof is collected in bankruptcy, receivership or other judicial
proceedings or if this Note is placed in the hands of attorneys for collection
after default, the Company agrees to pay, in addition to the principal and
interest payable hereunder, reasonable attorneys' fees and costs incurred by
Payee.
5. Notices. Any notice, other communication or payment required or
permitted hereunder shall be in writing and shall be deemed to have been given
upon delivery if personally delivered or upon deposit in the United States mail
for mailing by certified mail, postage prepaid, and addressed as follows:
If to Payee: At the address set forth on the signature page of the Agreement
If to Company: At the address of the Company's principal executive office set
forth on page 1 of the Agreement.
Each of the above addressees may change its address for purposes of this
paragraph by giving to the other addressee notice of such new address in
conformance with this paragraph.
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6. Acceleration. This Note shall become immediately due and payable if
(i) the Company commences any proceeding in bankruptcy or for dissolution,
liquidation, winding up, composition or other relief under state and federal
bankruptcy laws; or (ii) such proceedings are commenced against the Company, or
a receiver or trustee is appointed for the Company or a substantial part of its
property, and such proceeding or appointment is not dismissed or discharged
within (60) days after its commencement.
7. Waivers. The Company hereby waives presentment, demand for
performance, notice of non-performance, protest, notice of protest and notice of
dishonor. No delay on the part of Payee in exercising any right hereunder shall
operate as a waiver of such right or any other right. This Note is being
delivered in and shall be construed in accordance with the laws of the State of
Kansas, without regard to the conflicts of laws provisions hereof.
INTEGRATED MEDICAL RESOURCES, INC.
By: /s/ E. Stanley Kardatzke
Title: Chairman and CEO
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