99(ii) Secured Convertible Promissory Note for $140,000 issued to the Company
by MainStreet IPO.com Inc. dated July 12, 2000.
SECURED CONVERTIBLE PROMISSORY NOTE
$140,000.00 July 12, 2000
FOR VALUE RECEIVED, the undersigned, MainStreet IPO.com Inc., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of Dialysis
Corporation of America, a Florida corporation, or its successors and assigns
(hereinafter, with any subsequent holder, the "Holder"), at its principal
offices located at 27 Miller Street, Lemoyne, Pennsylvania 17043, or at such
other place or to such other party as the Holder may from time to time desig-
nate in writing, the principal sum of One Hundred Forty Thousand Dollars
($140,000.00) together with interest from the date hereof on the principal
balance outstanding from time to time at the rate of 1/2 of 1% per annum in
excess of the prime rate as the Holder's bank describes as its "prime" or
"best" rate, the Prime Rate, unless and as the Prime Rate shall change, but
in no event less than 9.5% per annum, until this Note is paid in full. The
interest rate on the date hereof is 10% per annum. All payments hereunder
shall be made in lawful currency of the United States and in immediately
available funds. Except as otherwise defined herein, all capitalized terms
shall have the meanings ascribed to them in the Loan Agreement (as herein
defined).
1. Loan Agreement. This Secured Convertible Promissory Note (the
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"Note") is being issued under and is entitled to the benefits of the Loan
and Security Agreement dated as of the date of this Note (the "Loan Agree-
ment"), to which Loan Agreement reference is hereby made for a statement of
the rights in respect thereto of the Holder of this Note.
This Note will be secured by the collateral identified and described
in Section 1.4 of the Loan Agreement (the "Collateral"), to which Section
and Sections 3 and 10 of the Loan Agreement reference is hereby made for a
statement of the rights in respect thereto of the Holder of this Note.
This Note provides Holder with a superior claim upon the Borrower and
its assets, prior to any other Affiliate of the Borrower, whether now or
hereafter existing, and all of Borrower's Indebtedness to such Affiliates,
except as to Borrower's Obligations to Holder, as these terms are defined in
the Loan Agreement, are and shall be subordinate to this Note and the
Obligations due to the Holder. The Holder shall have a superior, prior and
first Lien on and against the Collateral as against any other Person.
2. Payments/Maturity Date. Unless sooner paid in full, accelerated,
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or converted in accordance with the terms of this Note, the Loan Agreement
and related Loan Documents, the entire unpaid principal of this Note,
together with all accrued, but unpaid, interest and all other fees, costs,
and charges, if any, shall be due and payable in full as of the earlier of
(i) failure of approval by Holder's shareholders of the Merger on or before
but not later than November 1, 2000, or (ii) on July 11, 2001 (the "Maturity
Date"). No payments of principal or interest (which shall accrue from the
date hereof) are required hereunder until the Maturity Date except as other-
wise provided herein. The Borrower shall pay a late payment premium of five
percent (5%) of any interest payment made more than five (5) days after the
monthly interest due date. If any
amounts due under this Note are due on a day which is not a business day,
then such amounts shall be due on the next following day which is a regular
business day.
After the Maturity Date (whether by acceleration or otherwise), the
interest rate shall be at a rate of 5% per annum in excess of the Prime Rate.
3. Purpose. The Borrower shall use the principal of the Loan solely for
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the purpose of working capital and for no other purpose, except upon prior
written approval of the Holder.
4. Application of Payments. All payments on account of the indebtedness
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evidenced by this Note prior to demand, acceleration or conversion shall be
applied first, to any and all costs, expenses, or charges then owed the
Holder by the Borrower, including but not limited to any costs incurred by
the Holder under any other document executed as Collateral security for this
Note; second, to the payment of late charges provided herein; third, to
accrued and unpaid interest; and the balance to the unpaid principal until
the full amount of principal and interest has been paid in full. All payments
so received after demand or acceleration shall be applied in such manner as
the Holder may determine in its sole and absolute discretion.
5. Costs of Collections. If all sums due under this Note are not paid
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in full when due, the Borrower agrees to pay, in addition to the sums due
hereunder, all costs of collection (including reasonable attorneys' fees
and expenses), whether suit be brought or not.
6. No Reborrowing. All amounts that are borrowed and repaid by the
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Borrower hereunder shall not be available for reborrowing.
7. Prepayment/Acceleration. Amounts borrowed hereunder together with
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all accrued interest thereon may be prepaid at any time prior to the Maturity
Date in accordance with Section 2.5 of the Loan Agreement.
8. Conversion.
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(a) At any time after the date hereof, the Holder shall have the
right, at its sole option, at any time and from time to time to the
Maturity Date, to convert any portion up to 100% of the original principal
amount plus accrued interest (to the extent such convertible portion has
not been prepaid pursuant to Section 7 of this Note) into shares of the
common stock of the Borrower at the price of $1.23 per share, subject to
adjustment.
(b) As promptly as practicable after the Lender has converted all
or a portion of this Note, the Borrower shall deliver or cause to be
delivered to, or upon the written order of the Holder of this Note so
surrendered, (a) certificates representing the number of fully paid and
non-assessable shares of common stock of the Borrower into which the Note
was converted, and (b) if any amount of this Note remains unpaid after
such conversion, a new Note with all the terms and provisions of this Note
in an aggregate principal amount equal to such unpaid principal amount plus
accrued interest, with conversion rights into common stock of the Borrower
as otherwise provided for in this Section 8. Such conversion shall have
been deemed to be made at the close of business on the date the Note shall
have been surrendered for conversion, so that the
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rights of the Holder of this Note as a creditor of the Borrower shall cease
as a creditor (Note Holder) with respect to the principal amount of the Note
together with the applicable accrued interest so converted, and the Holder
entitled to receive the Borrower's common stock upon such conversion of the
Note shall be treated for all purposes as having become the record holder of
such shares of Borrower's common stock at such time, and such conversion
shall be at the conversion price in effect at such time.
If the last day for the exercise of the conversion right shall be a
Sunday or a legal holiday, or a day on which banking institutions are
authorized by law to close, then such conversion right may be exercised on
the next succeeding day not a Sunday, legal holiday or a day on which banking
institutions are authorized by law to close.
(c) If the Borrower shall make a public offering of common stock
prior to the full satisfaction of the Borrower's Obligations, if the public
offering price per share of common stock is less than the conversion price,
the conversion price shall be forthwith decreased to such per share public
offering price.
(d) In case of any reclassification or change of outstanding shares
of common stock issuable upon conversion of this Note, or in case of any sale
or conveyance to another corporation of the property of the Borrower as an
entirety or substantially as an entirety, the Borrower, or such successor or
purchasing corporation, as the case may be, shall execute with each Holder a
supplemental agreement providing that the Holder shall have the right there-
after to convert this Note into the kind and amount of shares of stock and
other securities and property receivable upon such reclassification, change,
sale or conveyance by a holder of the number of shares of common stock of
the Borrower into which this Note might have been converted immediately prior
to such reclassification, change, sale or conveyance. Such supplemental
agreement shall provide for adjustments which shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Section 8.
The above provisions of this Section 8 shall similarly apply to successive
reclassifications and changes of shares of common stock and to successive
sales or conveyances.
(e) The Borrower covenants that it will at all times reserve and
keep available out of its authorized and unissued common stock, solely for
the purpose of issue upon conversion of this Note, such number of shares of
common stock as shall then be issuable upon the conversion of all of the Note.
The Borrower covenants that all shares of common stock which shall be so
issuable shall, when issued, be duly and validly issued and fully paid and
non-assessable.
(f) The Borrower will not, by amendment of its articles of
incorporation or through any reorganization, transfer of assets, consolida-
tion, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Note, but will 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 Holder
against dilution or other impairment.
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(g) Whenever the conversion price is adjusted, as herein provided,
the Borrower shall promptly deliver to the Holder a computation setting forth
the conversion price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment. Such computation shall be examined
and reported on by a firm of independent certified public accountants (who
may be the regular auditors employed by the Borrower) and shall be conclusive
evidence of the correctness of such adjustment.
9. Certain Default Remedies.
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(a) Upon the occurrence of any event constituting an Event of
Default under the terms of the Loan Agreement, the entire balance of the
principal and interest under this Note then owing and unpaid, at the option
of the Holder, shall immediately become due and payable. Delay on the part
of the Holder of this Note in execution of the right to declare this obliga-
tion due shall not be a waiver thereof. In addition, Holder shall have all
other rights and remedies available under law.
(b) Following an acceleration in accordance with this section, the
Borrower shall pay, in addition to the principal and interest due and payable
hereon, all costs and expenses of any nature, whether incurred in or out of
court, whether incurred before or after the Note becomes due at its Maturity
Date or otherwise, whether in law, equity, or in bankruptcy, receivership or
any other proceeding (including, but not limited to, reasonable attorneys'
fees and expenses) which Holder may deem necessary or proper in connection
with the collection of any of the sums due Holder under this Note and the
Loan Agreement, or any related Loan Documents and transactions.
(c) Notwithstanding anything contained herein to the contrary, upon
an Event of Default, the Holder shall be entitled to receive the greater of
(i) all sums due under this Note and the Loan Agreement, in the form of cash,
or (ii) the entire Collateral. The Collateral shall be free and clear of all
liens, encumbrances and security interests of any kind whatsoever ("Liens"),
and shall not be subject to any options, warrants or rights ("Rights") in and
to any other Person; and the Borrower shall take whatever action is necessary
to remove any Liens and Rights with respect to the Collateral at its sole
expense and cost, and to the extent necessary, the Holder may but is not
obligated to take any and all action to obtain the Collateral free of any
Liens and Rights, and any such costs and expenses to accomplish that result,
including attorney's fees and expenses, will be included in the Obligations
of Borrower due Holder under this Note.
10. Default Interest Rate. Upon the occurrence, and during the contin-
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uance of, an Event of Default, the rate of interest accruing on the unpaid
principal balance hereof and accrued interest thereon shall be increased to
a fixed rate of 5% over the Prime Rate as defined and provided for in
Section 2.2 of the Loan Agreement.
11. Maximum Rate of Interest. This Note is subject to the express
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condition that at no time shall the Borrower be obligated or required to pay
interest hereunder at a rate that could be deemed subject the Holder to
either civil or criminal liability as a result of being in excess of the
Maximum Lawful Rate which the Borrower is permitted by law to contract or
agree to pay. If, by the terms of this Note, the Borrower is at any time
required or obligated to pay interest at a
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rate in excess of such Maximum Lawful Rate, the rate of interest under this
Note shall be deemed to be immediately reduced to such Maximum Lawful Rate
and interest payable hereunder shall be computed at such Maximum Lawful Rate
and the portion of all prior interest payments in excess of such Maximum
Lawful Rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance of this Note and as more particularly
provided in Section 11.6 of the Loan Agreement.
12. Waivers. Borrower waives all exemption rights, whether under any
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state constitution, homestead exemption or otherwise, and also waives demand,
presentment for payment, notice of dishonor, protest valuation and appraisal,
notice of protest, notice of dishonor, and any other notice required to be
given by law in connection with the delivery, acceptance, performance, default
or enforcement of this Note, and consents to all forbearance or waiver of any
term hereof or release or discharge by the Holder hereof of the Borrower,
substitution or exchange of any security for the payment hereof or the
failure to act on the part of the Holder or any other indulgence shown by
the Holder from time to time, in one or more instances (without notice to or
further assent from the Borrower), and consents and agrees to the Holder
taking the Collateral upon an Event of Default as provided in Section 10.1(c)
of the Loan Agreement and Section 9(c) of this Note, and the Borrower agrees
that no such action, failure to act or failure to exercise any right or remedy
on the part of the Holder shall in any way affect or impair the Obligations
of the Borrower under the Loan Agreement and this Note or be construed as a
waiver by the Holder of or otherwise affect any of the Holder's rights under
the Loan Agreement or this Note, or under any document or instrument
evidencing any security for payment of this Note, and the Borrower expressly
agrees that the Maturity Date hereof may be extended from time to time by the
written consent of the Holder without in any way affecting the liability of
the Borrower.
13. Governing Law. This Note shall be governed by, and construed in
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accordance with, the laws of the State of Florida.
14. Severability. In the event any one or more of the provisions
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contained in this Note shall, for any reason, be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality, or unenforce-
ability shall not affect any other provision of this Note and this Note shall
be construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
15. No Oral Modifications or Waivers. This Note may not be changed
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orally, but only by an agreement in writing signed by the parties against
whom enforcement of any waiver, change, modification or discharge is sought.
16. Due Authority and Enforceability. The representative of the Borrower
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subscribing below represents that he or she has full power, authority and
legal right to execute and deliver this Note and that the debt and Indebted-
ness hereunder constitutes the valid and binding Obligations of the Borrower.
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17. CONFESSION OF JUDGMENT. IF THIS NOTE IS NOT PAID WHEN DUE AND AFTER
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THE EXPIRATION WITHOUT CURE OF ANY GRACE PERIODS, EXCEPT TO THE EXTENT HOLDER
EXERCISES ITS RIGHTS AND REMEDIES TO THE COLLATERAL UNDER SECTIONS 10.1(c) OF
THE LOAN AGREEMENT AND SECTION 9(c) OF THIS NOTE TO WHICH THIS SECTION 17
SHALL NOT BE APPLICABLE, THE BORROWER HEREBY IRREVOCABLY AUTHORIZES ANY CLERK
OF ANY COURT OF RECORD OR ANY ATTORNEY TO ENTER IN ANY COURT OF COMPETENT
JURISDICTION IN THE STATE OF FLORIDA, OR ANY OTHER STATE OR TERRITORY OF THE
UNITED STATES, JUDGMENT BY CONFESSION AGAINST THE BORROWER AND IN FAVOR OF
THE HOLDER OF THIS NOTE FOR THE ENTIRE AMOUNT OF THIS NOTE THEN REMAINING
UNPAID (INCLUDING PRINCIPAL, ACCRUED INTEREST AND LATE CHARGES), TOGETHER
WITH REASONABLE ATTORNEY'S FEES AND COURT COSTS, WITHOUT ISSUANCE OR SERVICE
OF PROCESS, STAY OF EXECUTION OR RIGHT OF APPEAL, AND EXPRESSLY WAIVING THE
BENEFIT OF ALL EXEMPTION LAWS (WHETHER BY STATE CONSTITUTION, HOMESTEAD
EXEMPTION OR OTHERWISE) AND ALL IRREGULARITY OR ERROR IN ENTERING SAID
JUDGMENT OR THE EXECUTION THEREON AND ALL RIGHTS OF APPEAL AND STAYS OF
EXECUTION, AND WILL REPRESENT A DEBT JUSTLY DUE THE HOLDER. NO SINGLE
EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT SHALL BE DEEMED TO
EXHAUST THE POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY
COURT TO BE INVALID, VOIDABLE OR VOID, BUT THE POWER SHALL CONTINUE
UNDIMINISHED, AND IT MAY BE EXERCISED FROM TIME TO TIME AS OFTEN AS THE
HOLDER OF THIS NOTE SHALL ELECT, UNTIL SUCH TIME AS THE HOLDER OF THIS NOTE
SHALL HAVE RECEIVED PAYMENT IN FULL OF ALL INDEBTEDNESS OF THE BORROWER TO
THE HOLDER OF THIS NOTE UNDER THE TERMS HEREOF. THE EXECUTION OF THIS NOTE
WILL BE DEEMED THE EXECUTION OF THE AFFIDAVIT OF CONFESSION OF JUDGMENT FOR
ENTRY OF THE JUDGMENT WHICH HOLDER MAY ENFORCE IN ANY COURT OF COMPETENT
JURISDICTION.
18. WAIVER OF JURY TRIAL. THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY
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AND INTENTIONALLY WAIVES THE RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, OR IN CONNECTION WITH THIS NOTE,
THE LOAN AGREEMENT AND RELATED DOCUMENTS. THIS PROVISION WAS SPECIFICALLY
BARGAINED FOR AND IS A MATERIAL INDUCEMENT FOR THE HOLDER TO EXTEND CREDIT
AND MAKE THE LOAN TO THE BORROWER.
19. Assignment. This Note and the Borrower's Obligations may not be
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assigned by the Borrower without the prior written consent of the Holder.
20. Binding Effect. This Note shall be binding upon the Borrower and
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its successors and assigns and shall inure to the benefit of the Holder and
its successors and assigns.
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21. Headings. The headings in this Note are for convenience of
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reference only and shall not define or limit any terms or provisions hereof.
IN WITNESS WHEREOF, the Borrower has duly executed this Note as of the
day and year first above written.
ATTEST: BORROWER:
MAINSTREET IPO.COM INC.,
a Delaware corporation
/s/ Lawrence E. Jaffe /s/ Joseph M. Salvani
- ---------------------------------- By:--------------------------(SEAL)
LAWRENCE E. JAFFE Name: JOSEPH M. SALVANI
Title: Chairman of the Board of
Directors, Chief Executive
Officer and President
STATE OF NEW JERSEY )
) SS:
COUNTY OF BERGEN )
The foregoing instrument was acknowledged before me this 12 day of July,
2000 by JOSEPH M SALVANI, the Chairman of the Board of Directors, Chief
Executive Officer and President of MainStreet IPO.com Inc., a Delaware
corporation, on behalf of the corporation.
/s/ Nancy A. Cox
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Notary Public
Nancy A. Cox
Notary Public of New Jersey
My Commission Expires March 6, 2005