EXHIBIT 4.2
AMENDED CONVERTIBLE PROMISSORY NOTE
FACE AMOUNT $1,937,000
PRICE $1,550,000
INTEREST RATE 0% per month
NOTE NUMBER December - 2006-101
ISSUANCE DATE December 6, 2006
MATURITY DATE July 11, 2008
This Note replaces the Note issued on December 6, 2006. FOR VALUE RECEIVED, On
The Go Healthcare, Inc, a Delaware corporation (the "Company"), (OTC BB: OGOH)
hereby promises to pay DUTCHESS PRIVATE EQUITIES FUND, LTD. as
successor-in-interest to Dutchess Private Equities Fund, L.P. (the "Holder")
within the Maturity Date, or earlier, the Amount of One Million Nine Hundred
and Thirty-Seven Thousand Dollars ($1,937,000) U.S., in such amounts, at such
times and on such terms and conditions as are specified herein, and as may be
amended from time to time (this "Note"). Dutchess and the Company hereby
agree that, as of March 5, 2008, the principal balance on the Note is $632,500
and there is no accrued interest.
Article 1 Payment
Payments made by the Company in satisfaction of this Note (each a "Payment,"
and collectively, the "Payments") to the Holder shall be made monthly on the
tenth (10th) business day of each month, in an amount totaling one hundred
and twenty six thousand five hundred dollars ($126,500) per month ("Payment
Amount"). The Payment Amount will be paid in the Company's common stock
pursuant to a conversion as outlined in Section 1.1, herein, par value
$0.0001 per share (the "Common Stock"), or cash as set forth herein. Failure
to make Payments will constitute an Event of Default under this Note, subject
to opportunity to cure, and the Holder may seek to take actions as described
under Article 4 of this Note.
Notwithstanding any provision to the contrary in this Note, the Company may
pay in full to the Holder the Face Amount, or any balance remaining thereof,
in shares of Common Stock or cash at any time and from time to time without
penalty ("Prepayment"). Prepayments will be applied to the next payment due
on the payment schedule and subsequent payments afterwards.
After the effective date of this Note, if the Company receives in excess of
one million dollars ($1,000,000) in financing, debt or equity, be it from
the Holder or another source, including any sale, disposition or transfer of
assets except in the ordinary course of business, the Company must make a
Prepayment to the Holder when the aggregate amount of financing received by
the Company is in excess of one million dollars ($1,000,000) ("Threshold
Amount"). The calculation of the Threshold Amount will exclude all broker's
fees, commissions, inducement shares of stock or warrants and other expenses
of the financing or sale. The Company agrees to pay one hundred percent
(100%) of any proceeds raised by the Company over the Threshold Amount
toward the Prepayment of the Note until the Face Amount is paid in full.
The payments shall be made to the Holder upon the Company's receipt of the
financing. Failure to do so will result in an Event of Default.
Section 1.1 Method of Payment
(a) Cash.
a. The Company will pay the Holder, at its sole option, in
Common Stock pursuant to a conversion as set forth in
Section 1.1 (b), below. Commencing on the eleventh (11th)
of the month until the tenth (10th) of the next month
("Payment Period"), if the amount converted by the Holder
has a value less than the Payment Amount, the Company shall
immediately pay to the Holder in cash (each, a "Cash
Payment") the difference between the amount converted and
the Payment Amount on the tenth (10th) day of the month
wherein the Payment is due, and subtracting those amounts
converted into Common Stock by the Holder for the prior
Payment Period.
(b) Conversion.
(i) Payment in satisfaction of the Note will be in shares of
Common Stock. The number of shares of Common Stock
issuable upon the conversion of the Note shall be
determined pursuant to Section 1.1(e).
(ii) In the event all or any portion of the Note remains
outstanding on the Maturity Date, the Holder shall retain
the sole right to request the Residual Amount, as defined
in Article 3, to be automatically converted into shares of
Common Stock, or due in cash, on such date.
(c) Conversion Procedure. The Holder will convert into Common Stock the
unpaid Face Amount of this Note. Such conversion shall be
effectuated by surrendering to the Company, or its attorney, the
Note to be converted together with a facsimile or original of the
signed notice of conversion (the "Notice of Conversion"). The date
on which the Notice of Conversion is effective ("Conversion Date")
shall be deemed to be the date on which the Holder has delivered
to the Company a facsimile or original of the signed Notice of
Conversion, as long as the original Note to be converted is
received by the Company within five (5) business days thereafter.
At such time that the original Note has been received by the
Company, the Holder can elect whether a reissuance of the Note is
warranted, or whether the Company can retain the Note as to a
continual conversion by the Holder. Notwithstanding the foregoing,
if no Notice of Conversion is provided to the Company, the
Conversion Date shall be deemed to be the date Payment would
otherwise be due to Holder.
(d) Common Stock to be Issued. Upon the conversion of any Payment made
in satisfaction of the Note, the Company shall instruct its
transfer agent to issue stock certificates in such denominations
to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion, as applicable. In the
event that the Common Stock underlying the Note is deemed sellable
under Rule 144, the Company shall cause its counsel to issue a
legal opinion to the Company's transfer agent promptly upon any
such request, so long as the Holder provides the Company's counsel
with all such information counsel reasonably and customarily
requests to provide such opinion. The Company is responsible to
provide all costs associated with the issuance of the shares,
including but not limited to the opinion letter, FedEx of the
certificates and any other costs that arise. The Company shall act
as registrar and shall maintain an appropriate ledger containing
the necessary information with respect to the Note. The Company
warrants that no instructions, other than these instructions, have
been given or will be given to the transfer agent and that the
Common Stock shall otherwise be freely resold, except as may be set
forth herein or subject to applicable law.
(e) Conversion Rate. The Company will convert the Note at 80% (eighty
percent) of the lowest closing best bid price of the Common Stock
for the ten (10) Trading Days prior to the Conversion Date
("Conversion Price"). No fractional shares or scrip representing
fractions of shares will be issued on conversion, but the number
of shares issuable shall be rounded up or down, as the case may be,
to the nearest whole share. Notwithstanding the foregoing, no
single issuance of Common Stock shall exceed 4.99% of the total
outstanding common stock of the Company at the time of each
issuance.
(f) Nothing contained in the Note shall be deemed to establish or
require the payment of interest to the Holder at a rate in excess
of the maximum rate permitted by governing law. In the event
that the rate of interest required to be paid exceeds the maximum
rate permitted by governing law, the rate of interest required to
be paid there under shall be automatically reduced to the maximum
rate permitted under the governing law and such excess shall be
returned with reasonable promptness by the Holder to the Company.
(g) It shall be the Company's responsibility to take all necessary
actions and to bear all such costs to issue the Common Stock
as provided herein, including the responsibility and cost for
delivery of an opinion letter to the transfer agent, if so
required. Holder shall be treated as a shareholder of record
on the date Common Stock is issued to the Holder. If the Holder
shall designate another person as the entity in the name of
which the stock certificates issuable upon conversion of the
Note are to be issued prior to the issuance of such certificates,
the Holder shall provide to the Company evidence that either no
tax shall be due and payable as a result of such transfer or that
the applicable tax has been paid by the Holder or such person.
Upon surrender of any Note that is to be converted in part, the
Company shall issue to the Holder a new Note equal to the
unconverted amount, if so requested in writing by the Holder.
(h) Within three (3) business days after receipt of the documentation
referred to above in Section 1.1(c), the Company shall deliver a
certificate, for the number of shares of Common Stock issuable
upon the conversion. In the event the Company does not make
delivery of the Common Stock as instructed by Holder within
three (3) business days after the Conversion Date, then in such
event the Company shall pay to the Holder one percent(1%) in
cash of the dollar value of the Face Amount of the Note remaining
after said conversion, compounded daily, per each day after the
third (3rd) business day following the Conversion Date that the
Common Stock is not delivered to the Holder. The Company
acknowledges that its failure to deliver the Common Stock within
five (5) business days after the Conversion Date will cause the
Holder to suffer damages in an amount that will be difficult to
ascertain. Accordingly, the parties agree that it is appropriate
to include in this Note a provision for liquidated damages. The
parties acknowledge and agree that the liquidated damages
provision set forth in this section represents the parties'
good faith effort to quantify such damages and, as such, agree
that the form and amount of such liquidated damages are reasonable
and will not constitute a penalty. The payment of liquidated
damages shall not relieve the Company from its obligations to
deliver the Common Stock pursuant to the terms of this Note.
(i) The Company shall at all times reserve (or make alternative written
arrangements for reservation or contribution of shares) and have
available all Common Stock necessary to meet conversion of the
Note by the Holder of the entire amount of the Note then
outstanding. If, at any time the Holder submits a Notice of
Conversion or a Conversion Date arises and the Company does not
have sufficient authorized but unissued shares of Common Stock
(or alternative shares of Common Stock as may be contributed by
stockholders of the Company) available to effect, in full, a
conversion of the Note (a "Conversion Default," the date of such
default being referred to herein as the "Conversion Default Date"),
the Company shall issue to the Holder all of the shares of Common
Stock which are available, and the Notice of Conversion as to any
portions of the Note requested to be converted but not converted
(the "Unconverted Note"), may be deemed null and void upon written
notice sent by the Holder to the Company. The Company shall
provide notice of such Conversion Default ("Notice of Conversion
Default") to the Holder, by facsimile within three (3) business
days of such default (with the original delivered by overnight
mail or two day courier), and the Holder shall give notice to the
Company by facsimile within five (5) business days of receipt of
the original Notice of Conversion Default (with the original
delivered by overnight mail or two day courier) of its election
to either nullify or confirm the Notice of Conversion.
The Company agrees to pay the Holder payments for a Conversion
Default ("Conversion Default Payments") in the amount of (N/365)
multiplied by 0.24 multiplied by the initial issuance price of
the outstanding or tendered but Unconverted Note held by the Holder
where N = the number of days from the Conversion Default Date to
the date (the "Authorization Date") that the Company authorizes
a sufficient number of shares of Common Stock to effect conversion
of all remaining amounts under the Note. The Company shall send
notice ("Authorization Notice") to the Holder that additional
shares of Common Stock have been authorized, the Authorization
Date, and the amount of Holder's accrued Conversion Default
Payments. The accrued Conversion Default shall be paid in cash
or shall be convertible into Common Stock at the conversion rate
set forth in the first sentence of this paragraph, upon written
notice sent by the Holder to the Company, which Conversion Default
shall be payable as follows: (i) in the event the Holder elects
to take such payment in cash, cash payments shall be made to the
Holder by the fifth (5th) day of the following calendar month, or
(ii) in the event Holder elects to take such payment in stock, the
Holder may convert such payment amount into Common Stock at the
conversion rate set forth in the first sentence of this paragraph
at any time after the fifth (5th) day of the calendar month
following the month in which the Authorization Notice was received,
until the expiration of the mandatory three (3) year conversion
period.
The Company acknowledges that its failure to maintain a sufficient
number of authorized but unissued shares of Common Stock to effect
in full a conversion of the Note will cause the Holder to suffer
damages in an amount that will be difficult to ascertain.
Accordingly, the parties agree that it is appropriate to include
in this Note a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set
forth in this section represents the parties' good faith effort to
quantify such damages and, as such, agree that the form and amount
of such liquidated damages are reasonable and will not constitute
a penalty. The payment of liquidated damages shall not relieve
the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Note.
(j) If, by the third (3rd) business day after the Conversion Date of
any portion of the Note to be converted (the "Delivery Date"), the
transfer agent fails for any reason to deliver the Common Stock
upon conversion by the Holder and after such Delivery Date, the
Holder purchases, in an open market transaction or otherwise,
shares of Common Stock (the "Covering Shares") solely in order to
make delivery in satisfaction of a sale of Common Stock by the
Holder (the "Sold Shares"), which delivery such Holder anticipated
to make using the Common Stock issuable upon conversion
(a "Buy-In"), the Company shall pay to the Holder, in addition to
any other amounts due to Holder pursuant to this Note, and not in
lieu thereof, the Buy-In Adjustment Amount (as defined below).
The "Buy In Adjustment Amount" is the amount equal to the excess,
if any, of (x) the Holder's total purchase price (including
brokerage commissions, if any) for the Covering Shares over (y)
the net proceeds (after brokerage commissions, if any) received
by the Holder from the sale of the Sold Shares. The Company shall
pay the Buy-In Adjustment Amount to the Holder in immediately
available funds within five (5) business days of written demand
by the Holder. By way of illustration and not in limitation of
the foregoing, if the Holder purchases shares of Common Stock
having a total purchase price (including brokerage commissions)
of $11,000 to cover a Buy-In with respect to shares of Common
Stock it sold for net proceeds of $10,000 the Buy-In Adjustment
Amount which the Company will be required to pay to the Holder
will be $1,000.
(k) The Company shall defend, protect, indemnify and hold harmless
the Holder and all of its shareholders, officers, directors,
employees, counsel, and direct or indirect investors and any of
the foregoing person's agents or other representatives
(including, without limitation, those retained in connection
with the transactions contemplated by this Note) (collectively,
the "Section 1.1(k)Indemnitees") from and against any and all
actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such
Section 1.1(k) Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Section 1.1(k)
Indemnified Liabilities"), incurred by any Section 1.1(k)
Indemnitee as a result of, or arising out of, or relating to
(i) any misrepresentation or breach of any representation or
warranty made by the Company in this Note or any other certificate,
instrument or document contemplated hereby or thereby, (ii) any
breach of any covenant, agreement, or obligation of the Company
contained in this Note or any other certificate, instrument, or
document contemplated hereby or thereby, (iii) any cause of action,
suit, or claim brought or made against such Section 1.1(k)
Indemnitee by a third party and arising out of or resulting from
the execution, delivery, performance, or enforcement of this Note
or any other certificate, instrument, or document contemplated
hereby or thereby, (iv) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Common Stock underlying the Note
("Securities"), or (v) the status of the Holder or holder of the
Securities as an investor in the Company, except insofar as any
such misrepresentation, breach or any untrue statement, alleged
untrue statement, omission, or alleged omission is made in
reliance upon and in conformity with written information furnished
to the Company by the Holder or the investor which is
specifically intended by the Holder or the investor to be
relied upon by the Company, including for use in the preparation
of any such registration statement, preliminary prospectus, or
prospectus, or is based on illegal trading of the Common Stock
by the Holder or the investor. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities that is
permissible under applicable law. The indemnity provisions
contained herein shall be in addition to any cause of action
or similar rights the Holder may have, and any liabilities the
Holder may be subject to.
Article 2 RESERVED
Article 3 Unpaid Amounts
In the event that on the Maturity Date the Company has any remaining amounts
unpaid on this Note (the "Residual Amount"), the Holder can exercise its right
to increase the Face Amount by ten percent (10%) as an initial penalty and two
and one-half percent (2.5%) of the Face Amount per month paid as liquidated
damages ("Liquidated Damages"). The Liquidated Damages will be compounded
daily. If the aforementioned occurs, the Company will be in Default and the
remedies as described in Article 4 may be taken at the Holder's discretion.
It is the intention and acknowledgement of both parties that the Liquidated
Damages not be deemed as interest.
Article 4 Defaults and Remedies
Section 4.1 Events of Default.
An "Event of Default" or "Default" occurs if any of the following occur:
(a) the Company does not make the Payment of the Face Amount of this
Note within three (3) business days of the later of (i) receipt
of a Notice of Conversion or (ii) a Payment Date; or, a balance
on the Note exists on the Maturity Date, as applicable, upon
redemption or otherwise;
(b) the Company, pursuant to or within the meaning of any Bankruptcy
Law (as hereinafter defined): (i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in
an involuntary case; (iii) consents to the appointment of a
Custodian (as hereinafter defined) of it or for all or
substantially all of its property; (iv) makes a general
assignment for the benefit of its creditors; or (v) a court
of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case;
(B) appoints a Custodian of the Company or for all or
substantially all of its property; or
(C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for ninety (90)
calendar days;
(c) the Company's Common Stock is suspended or is no longer listed on
any recognized exchange, including an electronic over-the-counter
bulletin board, for in excess of fifteen (15) consecutive trading
days;
(d) the Company fails to comply with any of the Articles of this
Note as outlined. As used in this Section 4.1, the term
"Bankruptcy Law" means Title 11 of the United States Code or any
similar federal or state law for the relief of debtors. The
term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
After two consecutive Events of Default, as outlined in this Note, the
Holder can exercise its right to increase the Face Amount of the Note by
ten percent (10%) as an initial penalty and for each Event of Default under
this Note. In addition, the Holder may elect to increase the Face Amount
by two and one-half percent (2.5%) per month paid as a penalty for liquated
damages ("Liquidated Damages"). The Liquated Damages will be compounded daily.
It is the intention and acknowledgement of both parties that the Liquidated
Damages not be deemed as interest.
In the event of a Default hereunder, the Holder may elect to secure a portion
of the Company's assets not to exceed 200% of the Face Amount of the Note,
including, but not limited to: accounts receivable through February 28, 2008,
cash, marketable securities, equipment, building, land or inventory. The
Holder may also elect to garnish revenue from the Company in an amount that
will repay the Holder for unpaid amounts due under this Note.
For each Event of Default, as outlined in this Note, the Holder can
exercise its right to increase the Face Amount of the Note by ten percent
(10%) as an initial penalty. In addition, the Holder may elect to increase
the Residual Amount by two and one-half percent (2.5%) per month paid as a
penalty for Liquidated Damages. The Liquidated Damages will be compounded
daily. It is the intention and acknowledgement of both parties that the
Liquidated Damages not be deemed as interest.
Article 5 Additional Financing
The Company shall not, neither directly nor indirectly, without the prior
written consent of Holder, offer Common Stock or file any registration
statement, (except those on Form S-8 or, in the case of an acquisition, on
Form S-4) for any securities (a "Subsequent Financing"), ending on the earlier
to occur of (i) Maturity Date or (ii) the date on which the full Face Amount
on the Note has been paid (each the "Lock Up Period") except with respect to
securities issued pursuant to Company's employee stock option plan or Common
Stock issued for acquisitions. Failure to do so will result in an Event of
Default and the Holder may elect to take the action outlined in Article 4.
The sole exceptions shall be any registration statements required to be filed
by the Company for previous financings completed by Laurus Funds.
Article 6 Mergers
The Company shall not consolidate or merge into, or transfer all or
substantially all of its assets to, any person, unless such person assumes in
writing the obligations of the Company under this Note and immediately after
such transaction no Event of Default exists. Any reference herein to the
Company shall refer to such surviving or transferee corporation and the
obligations of the Company shall terminate upon such written assumption.
Failure to do so will constitute an Event of Default under this Note
and the Holder may immediately seek to take actions as described under
Article 4 of this Note.
Article 7 Notice
Any notices, consents, waivers or other communications required or permitted
to be given under the terms of this Note must be in writing and will be deemed
to have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided a confirmation of transmission is
mechanically or electronically generated and kept on file by the sending
party); or (iii) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
Stuart Turk
85 Corstate Avenue, Unit #1
Concord, Ontario, Canada L4K 4Y2
Facsimile 905-760-2987
Copy to:
Amy Trombly, Esq.
Trombly Business Law
1320 Centre Street, Suite 202
Newton, MA 02459
Facsimile 617-243-0066
If to the Holder:
Dutchess
Douglas Leighton
50 Commonwealth Avenue, Suite 2
Boston, MA 02116
Phone 617-301-4700
Facsimile 617-249-0947
Each party shall provide five (5) business days prior notice to the other
party of any change in address, phone number of facsimile number.
Article 8 Time
Where this Note authorizes or requires the payment of money or the performance
of a condition or obligation on a Saturday or Sunday or a holiday in which
the United States Stock Markets ("US Markets") are closed ("Holiday"), or
authorizes or requires the payment of money or the performance of a condition
or obligation within, before or after a period of time computed from a certain
date, and such period of time ends on a Saturday or a Sunday or a Holiday,
such payment may be made or condition or obligation performed on the next
succeeding business day, and if the period ends at a specified hour, such
payment may be made or condition performed, at or before the same hour of
such next succeeding business day, with the same force and effect as if made
or performed in accordance with the terms of this Note. A "business day"
shall mean a day on which the US Markets are open for a full day or half day
of trading.
Article 9 No Assignment
This Note shall not be assigned.
Article 10 Rules of Construction.
In this Note, unless the context otherwise requires, words in the singular
number include the plural, and in the plural include the singular, and
words of the masculine gender include the feminine and the neuter, and
when the tense so indicates, words of the neuter gender may refer to any
gender. The numbers and titles of sections contained in the Note are
inserted for convenience of reference only, and they neither form a part
of this Note nor are they to be used in the construction or interpretation
hereof. Wherever, in this Note, a determination of the Company is required
or allowed, such determination shall be made by a majority of the Board of
Directors of the Company and, if it is made in good faith, it shall be
conclusive and binding upon the Company and the Holder.
Article 11 Governing Law
The validity, terms, performance and enforcement of this Note shall be
governed and construed by the provisions hereof and in accordance with the
laws of the Commonwealth of Massachusetts applicable to agreements that are
negotiated, executed, delivered and performed solely in the Commonwealth of
Massachusetts.
Article 12 Litigation
The parties to this Note will submit all disputes arising under this
Note to arbitration in Boston, Massachusetts before a single arbitrator
of the American Arbitration Association ("AAA"). The arbitrator shall be
selected by application of the rules of the AAA, or by mutual agreement of
the parties, except that such arbitrator shall be an attorney admitted to
practice law in the Commonwealth of Massachusetts. No party to this Note
will challenge the jurisdiction or venue provisions as provided in this
section. Nothing in this section shall limit the Holder's right to obtain
an injunction for a breach of this Note from a court of law.
Article 13 RESERVED
Article 14 Closing Costs
The Company paid fees associated with the transaction in the amount of
Ninety Thousand Dollars ($90,000) U.S. directly from the Closing of this Note.
No further fee is required for the amendment of this Note.
Article 15 Indemnification
In consideration of the Holder's execution and delivery of this Note and
the acquisition and funding by the Holder of the Note hereunder and in
addition to all of the Company's other obligations under the documents
contemplated hereby, the Company shall defend, protect, indemnify and hold
harmless the Holder and all of its shareholders, officers, directors,
employees, counsel, and direct or indirect investors and any of the
foregoing person's agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated
by this Note) (collectively, the "Indemnities") from and against any
and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities" ), incurred
by any Indemnitee as a result of, or arising out of, or relating to (i) any
misrepresentation or breach of any representation or warranty made by the
Company in the Note, or any other certificate, instrument or document
contemplated hereby or thereby (ii) any breach of any covenant, agreement or
obligation of the Company contained in the Note or any other certificate,
instrument or document contemplated hereby or thereby, except insofar as any
such misrepresentation, breach or any untrue statement, alleged untrue
statement, omission or alleged omission is made in reliance upon and in
conformity with written information furnished to the Company by, or on behalf
of, the Holder or is based on illegal trading of the Common Stock by the
Holder. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities that
is permissible under applicable law. The indemnity provisions contained herein
shall be in addition to any cause of action or similar rights the Holder may
have, and any liabilities the Holder may be subject to.
Article 16 Waiver
The Holder's delay or failure at any time or times hereafter to require strict
performance by Company of any undertakings, agreements or covenants shall not
waiver, affect, or diminish any right of the Holder under this Note to
demand strict compliance and performance herewith. Any waiver by the Holder of
any Event of Default shall not waive or affect any other Event of Default,
whether such Event of Default is prior or subsequent thereto and whether of
the same or a different type. None of the undertakings, agreements and
covenants of the Company contained in this Note, and no Event of Default,
shall be deemed to have been waived by the Holder, nor may this Note be
amended, changed or modified, unless such waiver, amendment, change or
modification is evidenced by an instrument in writing specifying such waiver,
amendment, change or modification and signed by the Holder.
Article 17 RESERVED
Article 18 RESERVED
Article 19 RESERVED
Article 20 Transactions With Affiliates.
The Company shall not, and shall cause each of its Subsidiaries not to,
enter into, amend, modify or supplement, or permit any Subsidiary to enter
into, amend, modify or supplement, any agreement, transaction, commitment or
arrangement with any of its or any Subsidiary's officers, directors, persons
who were officers or directors at any time during the previous two years,
shareholders who beneficially own five percent(5%) or more of the Common Stock,
or affiliates or with any individual related by blood, marriage or adoption to
any such individual or with any entity in which any such entity or individual
owns a five percent (5%) or more beneficial interest (each a "Related Party")
during the Lock Up Period. This Article 20 shall not apply to compensation
arrangements with officers and directors.
Article 21 Investor Shares
The Company issued four hundred thousand (400,000) shares of unregistered,
restricted Common Stock to the Holder as an incentive for the investment
("Shares"). Provided however, the Incentive Shares issued were not to exceed
4.99% of the total outstanding of the Company's Common Stock at any time
("Maximum Deliverable Shares"). The Maximum Deliverable Shares shall be
delivered immediately to the Holder and shall carry piggyback registration
rights. Any shares due to the Holder in excess of the Maximum Deliverable
Shares shall be issued to the Holder at such time when the Holder's total
aggregate shares are equal to or less than 2.5% of the total outstanding
shares of the Company ("Additional Incentive Shares"). Upon such time, the
Company will issue to the Holder, in whole or in part, the Additional
Incentive Shares. In no instance shall the issuance of the Additional
Incentive shares, when combined with the total number of shares then held
by the Holder (including Incentive Shares held pursuant to the Prior Note(s)),
does not exceed 4.99% of the total outstanding Common Stock. The Investor's
Shares shall be deemed fully earned as of the date hereof valued at sixty
six cents ($0.66) per share. In the event the Shares are not registered in
the next registration statement, the Company shall pay to the Holder, as a
penalty, four hundred thousand (400,000) additional shares of common stock
for each time a registration statement is filed and the Shares are not
included. The Holder retains the right to waive such penalty, in the event
Holder chooses to do so. Failure to do so will result in an Event of Default
and the Holder may elect to take the action outlined in Article 4. This
Event of Default will survive this Note until such time as the Shares
are no longer under the control of the Holder.
Article 22 Use of Proceeds
The Company will use proceeds for general corporate working capital purposes
or acquisitions. This shall not to be used to pay down long-term debt to any
financial institution.
Article 23 Miscellaneous
a. All pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, impersonal, singular or plural, as the
identity of the person or persons may require.
b. Neither this Note nor any provision hereof shall be waived, modified,
changed, discharged, terminated, revoked or canceled, except by an
instrument in writing signed by the party effecting the same against
whom any change, discharge or termination is sought.
c. Notices required or permitted to be given hereunder shall be in writing
and shall be deemed to be sufficiently given when personally delivered
or sent by facsimile transmission:
(i) if to the Company or to the Holder, at the address for correspondence
set forth in the Article 7 herein, or at such other specified by written
notice given in accordance with this paragraph.
d. This Note may be executed in two or more counterparts, all of which taken
together shall constitute one instrument. Execution and delivery of this
Note by exchange of facsimile copies bearing the facsimile signature of a
party shall constitute a valid and binding execution and delivery of this
Note by such party. Such facsimile copies shall constitute enforceable
original documents.
e. The execution and delivery of this Note shall not alter the prior written
agreements between the Company and the Holder, consisting of the prior
Notes currently due to the Holder. This Note is the FINAL AGREEMENT
between the Company and the Holder with respect to the terms and conditions
set forth herein, and, the terms of this Note may not be contradicted by
evidence of prior, contemporaneous, or subsequent oral agreements of the
parties.
f. The execution, delivery and performance of this Note by the Company and
the consummation by the Company of the transactions contemplated hereby and
thereby will not
(i) result in a violation of the Articles of Incorporation, any Certificate
of Designations, Preferences and Rights of any outstanding series of
preferred stock of the Company or the By-laws or (ii) conflict with,
or constitute a material default (or an event which with notice or
lapse of time or both would become a material default) under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, contract, indenture mortgage,
indebtedness or instrument to which the Company or any of its
Subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree, including United States
federal and state securities laws and regulations and the rules and
regulations of the principal securities exchange or trading market
on which the Common Stock is traded or listed (the "Principal Market"),
applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound
or affected. Neither the Company nor its Subsidiaries is in violation
of any term of, or in default under, the Articles of Incorporation,
any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or the By-laws
or their organizational charter or by-laws, respectively, or any
contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation
applicable to the Company or its Subsidiaries, except for possible
conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations that would not individually or in the
aggregate have a Material Adverse Effect. The business of the Company
and its Subsidiaries is not being conducted, and shall not be conducted,
in violation of any law, statute, ordinance, rule, order or regulation
of any governmental authority or agency, regulatory or self-regulatory
agency, or court, except for possible violations the sanctions for
which either individually or in the aggregate would not have a
Material Adverse Effect. The Company is not required to obtain
any consent, authorization, permit or order of, or make any filing
or registration (except the filing of a registration statement) with,
any court, governmental authority or agency, regulatory or
self-regulatory agency or other third party in order for it to
execute, deliver or perform any of its obligations under, or
contemplated by, this Note in accordance with the terms hereof or
thereof. All consents, authorizations, permits, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the
date hereof and are in full force and effect as of the date hereof.
The Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing. The
Company is not, and will not be, in violation of the listing
requirements of the Principal Market as in effect on the date hereof
and on each of the Closing Dates and is not aware of any facts which
would reasonably lead to delisting of the Common Stock by the
Principal Market in the foreseeable future.
g. The Company and its "Subsidiaries" (which for purposes of this Note means
any entity in which the Company, directly or indirectly, owns capital stock
or holds an equity or similar interest) are corporations duly organized and
validly existing in good standing under the laws of the respective
jurisdictions of their incorporation, and have the requisite corporate
power and authorization to own their properties and to carry on their
business as now being conducted. Both the Company and its Subsidiaries are
duly qualified to do business and are in good standing in every jurisdiction
in which their ownership of property or the nature of the business
conducted by them makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not
have a Material Adverse Effect. As used in this Note, "Material Adverse
Effect" means any material adverse effect on the business, properties,
assets, operations, results of operations, financial condition or prospects
of the Company and its Subsidiaries, if any, taken as a whole, or on the
transactions contemplated hereby or by the agreements and instruments to
be entered into in connection herewith, or on the authority or ability of
the Company to perform its obligations under the Note.
h. Authorization; Enforcement; Compliance with Other Instruments. (i) The
Company has the requisite corporate power and authority to enter into and
perform this Note, and to issue the Note and Common Stock upon conversion
of this Note in accordance with the terms hereof and thereof, (ii) the
execution and delivery of the Note by the Company and the consummation by
it of the transactions contemplated hereby and thereby, including without
limitation the reservation for issuance and the issuance of the Common
Stock underlying this Note, have been duly and validly authorized by the
Company's Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors, or its shareholders,
(iii) the Note has been duly and validly executed and delivered by the
Company, and (iv) the Note constitutes the valid and binding obligations
of the Company enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
i. There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the
accountants, auditors and attorneys formerly or presently used by the
Company, including but not limited to disputes or conflicts over payment
owed to such accountants, auditors or attorneys.
j. All representations made by or relating to the Company of a historical
nature and all undertakings described herein shall relate and refer to
the Company, its predecessors, and the Subsidiaries.
k. The Company acknowledges that its failure to timely meet any of its
obligations hereunder, including, but without limitation, its obligations
to make Payments, deliver shares and, as necessary, to register and maintain
sufficient number of Shares, will cause the Holder to suffer irreparable
harm and that the actual damage to the Holder will be difficult to
ascertain. Accordingly, the parties agree that it is appropriate to
include in this Note a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth
in this section represents the parties' good faith effort to quantify
such damages and, as such, agree that the form and amount of such
liquidated damages are reasonable and do not constitute a penalty. The
payment of liquidated damages shall not relieve the Company from its
obligations to deliver the Common Stock pursuant to the terms of this
Note.
l. In the event that any rules, regulations, interpretations or comments
from the SEC or other governing body, hinder any operation of this
Note, the parties hereby agree that those specific terms and conditions
shall be negotiated on similar terms within five (5) business days, and
shall not alter, diminish or affect any other rights, duties or covenants
in this Note and that all terms and conditions will remain in full force
and effect except as is necessary to make those specific terms and
conditions comply with applicable rule, regulation, interpretation or
comment. Failure for the Company to agree to such new terms, shall
constitute and Event of Default herein, as outlined in Article 4, and
the Holder may elect to take actions as outlined in this Note.
Any misrepresentations shall be considered a breach of contract and Default
under this Note and the Holder may seek to take actions as described
under Article 4 of this Note.
*****
IN WITNESS WHEREOF, the Company has duly executed this Note as of the date
first written above.
ON THE GO HEALTHCARE, INC.
By: /s/ Stuart Turk
-----------------------------
Name: Stuart Turk
Title: Chief Executive Officer
DUTCHESS PRIVATE EQUITIES FUND, LTD
as successor-in-interest to Dutchess
Private Equities Fund, L.P.
BY ITS GENERAL PARTNER DUTCHESS
CAPITAL MANAGEMENT, LLC
By: /s/ Douglas H. Leighton
-----------------------------
Name: Douglas H. Leighton
Title: A Managing Member