Exhibit 10.3
THIS
INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT
DATED SEPTEMBER 30, 2007 IN FAVOR OF SOVEREIGN BANK, WHICH
SUBORDINATION AGREEMENT IS INCORPORATED HEREIN BY REFERENCE.
NOTWITHSTANDING ANY CONTRARY STATEMENT CONTAINED IN THE WITHIN
INSTRUMENT, NO PAYMENT ON ACCOUNT OF THE PRINCIPAL OR INTEREST
HEREOF SHALL BECOME DUE OR BE PAID AND NO ACTIONS SHALL BE TAKEN
HEREUNDER EXCEPT IN ACCORDANCE WITH THE TERMS OF SUCH SUBORDINATION
AGREEMENT.
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED, OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS, OR THE DELIVERY TO MAKER OF AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO MAKER THAT SUCH OFFER, SALE,
OR TRANSFER, PLEDGE, OR HYPOTHECATION IS IN COMPLIANCE WITH THE
ACT.
CONVERTIBLE SUBORDINATED
PROMISSORY NOTE
|
$3,500,000
|
September 30,
2007
|
FOR VALUE RECEIVED,
InfoLogix Systems Corporation, a Delaware corporation (“
Maker ”), hereby promises to pay to the order of
Healthcare Informatics Associates, Inc. (“ Holder
”), the principal sum of THREE MILLION FIVE HUNDRED THOUSAND
and 00/100 Dollars ($3,500,000), together with interest on the
outstanding principal balance of this Note from time to time
outstanding from the date hereof until this Note is paid in
full. Such principal and interest shall be payable on the
terms and conditions set forth in this Note. This Note is
being issued pursuant to an Asset Purchase Agreement dated as of
September 30, 2007 among Maker, Holder, and certain other parties
(the “ Asset Purchase Agreement ”).
1.
Interest Rate
.
(a)
The principal sum
outstanding from time to time under this Note shall bear interest
at the rate of 9% per annum, compounding annually, from the date
hereof until the principal balance of this Note is paid in
full. All interest under this Note shall be paid as provided
in Section 2 below.
(b)
Both before and after any
Event of Default, interest shall be calculated on the basis of a
360-day year (consisting of 12 months, each month consisting of 30
days) and the actual number of days elapsed in any calendar year or
part thereof.
2.
Principal and Interest
Payments; Maturity Date .
(a)
Subject to Sections
7 , 8 and 9 below, interest shall accrue in
arrears and shall be paid in full in cash on the Maturity Date (as
defined below).
(b)
The entire outstanding
balance of this Note shall be paid in full on September 30,
2010 (the “ Maturity Date ”).
(c)
If any payment of
principal or interest becomes due on a day which is not a Business
Day, such payment shall be due on the next succeeding Business
Day. For purposes of this Note, the term “ Business
Day ” shall mean any day other than a Saturday, Sunday,
or holiday on which banks in the City of New York are or may elect
to be closed.
(d)
Amounts repaid or prepaid
under this Note may not be reborrowed.
(e)
Payments of principal and
interest (including, without limitation, any payment made
pursuant to Section 10 below) shall be made in lawful
currency of the United States of America by wire transfer of
immediately available funds to the bank account of Holder set forth
on Exhibit A to this Note, or to such other bank account as
Holder may from time to time designate in writing to
Maker.
3.
Prepayments
. Maker may prepay
the principal of this Note in whole or in part without penalty or
premium; provided , however , that any such
prepayment shall be accompanied by the payment of all accrued and
unpaid interest under this Note and all other sums that are due and
payable under this Note or otherwise in connection with this Note
on the date of prepayment.
4.
Subordination
. Maker, Holder and
Sovereign Bank have entered into a Subordination Agreement dated as
of September 30, 2007 (as amended, supplemented, or otherwise
modified from time to time, the “ Subordination
Agreement ”). This Note is subordinated to the
prior payment in full of the Senior Debt (as defined in the
Subordination Agreement) pursuant to, and to the extent provided
in, the Subordination Agreement.
5.
Events of
Default . The occurrence of any of the following
events shall be an “ Event of Default ” under
this Note:
(a)
the nonpayment of any
principal, interest, or other amount due under this Note on the
date such payment is due, including, without limitation, any
Redemption Amount (as defined below) pursuant to Section 10
;
(b)
the filing by or against
Maker of any proceeding in bankruptcy, receivership, insolvency,
reorganization, liquidation, conservatorship, or similar proceeding
(and, in the case of any such proceeding instituted against Maker,
such proceeding is not dismissed or stayed within 90 days of the
commencement thereof);
(c)
the appointment of (or
taking possession by) a receiver, liquidator, assignee, trustee,
custodian, or other similar official for Maker or any assignment by
Maker for the benefit of creditors, or any levy, garnishment,
attachment, or similar proceeding is instituted against any
material property of Maker;
2
(d)
the insolvency of Maker or
Maker admits in writing its inability to pay its debts as they become
due;
(e)
Maker defaults in the due
performance of any debt senior to this Note (“ Senior
Debt ”) and such default shall have caused the
acceleration of payment of all amounts due under such Senior Debt;
or
(f)
Maker defaults in the due
performance or observance of any material covenant to be performed
pursuant to this Note and such default is not cured by Maker within
10 days after receiving notice of such default from
Holder.
6.
Default Rate
. Upon the
occurrence and during the continuation of any Event of Default, at
Holder’s option, this Note shall bear interest at a rate per
annum which shall be two and one-half percentage points (2.5%) in
excess of the interest rate otherwise in effect from time to time
under this Note but not more than the maximum rate allowed by law
(the “ Default Rate ”). The Default Rate
shall continue to apply until the Event of Default has been cured,
or in the event the principal of this Note has been accelerated,
until this Note is paid in full, including the period following
entry of any judgment on or relating to this Note. Interest
on any such judgment shall accrue and be payable at the Default
Rate after judgment, any execution thereon, and until actual
receipt by Holder of payment in full of such judgment.
Interest at the Default Rate shall be collectible as part of any
judgment under this Note. The Default Rate shall change with
each change in the interest rate otherwise payable under this
Note.
7.
Remedies
.
(a)
Subject to the
Subordination Agreement, upon the occurrence of any Event of
Default, the entire unpaid principal balance of this Note, together
with all accrued and unpaid interest thereon and all other sums
owing under this Note, shall, at Holder’s option, become
immediately due and payable, without presentation, demand, or
further action of any kind, and Holder may exercise any and all
rights and remedies available to Holder under this Note or
otherwise available to Holder at law or in equity. The
failure of Holder to accelerate the outstanding principal balance
of this Note upon the occurrence of an Event of Default shall not
constitute a waiver of such default or of the right to accelerate
this Note at any time thereafter so long as the Event of Default
remains uncured.
(b)
Maker shall be responsible
for all reasonable fees and expenses incurred by Holder and its
counsel in the collection or attempted collection, by foreclosure
or otherwise, of the principal amount of this Note, the interest
thereon or any other payment due hereunder (“ Collection
Costs ”).
(c)
All payments made under
this Note shall be applied first to repayment of any outstanding
unpaid Collection Costs, then to repayment of any accrued but
unpaid interest, and then to repayment of the outstanding principal
amount.
8.
Voluntary
Conversion .
(a)
Subject to Section
9 hereof, at any time and from time to time after the initial
issuance of this Note, Holder shall be entitled to convert all or a
portion of the outstanding and unpaid principal of this Note into
fully paid and nonassessable shares of Infologix, Inc.
3
(“Parent”)
common stock, par value $0.00001 per share (the “ Common
Stock ”) in accordance with this Section 8 (a
“ Voluntary Conversion ”); provided that,
notwithstanding the foregoing, Holder shall not be entitled to
effect a Voluntary Conversion unless the total principal to be
converted equals or exceeds $1,000,000.
(b)
The number of shares of
Common Stock issuable upon any Voluntary Conversion shall be
determined by dividing (i) the principal amount to be converted by
(ii) the Voluntary Conversion Price. For the purposes of this
Note, “ Voluntary Conversion Price ” means $5.50
(as adjusted for stock splits, stock dividends, combinations and
other similar events in accordance with Section 13
).
(c)
To effect a Voluntary
Conversion on any date (a “ Voluntary Conversion Date
”), Holder shall (i) transmit by facsimile (or otherwise
deliver), for receipt on or prior to 5:00 p.m., New York City time,
on such date, a copy of an executed notice of conversion (the
“ Voluntary Conversion Notice ”) to the Company
setting forth the principal amount of this Note to be converted and
(ii) surrender this Note to a common carrier for delivery to the
Company as soon as practicable on or following such date (or an
indemnification undertaking with respect to this Note in the case
of its loss, theft or destruction). On or before the first
Business Day following the date of receipt of a Conversion Notice,
the Company shall transmit by facsimile a confirmation of receipt
of such Conversion Notice to Holder and Parent’s transfer
agent (the “ Transfer Agent ”). On or
before the third Business Day following the date of receipt of a
Voluntary Conversion Notice, Parent shall (1) (X) provided that the
Transfer Agent is participating in the Depository Trust Company
(“ DTC ”) Fast Automated Securities Transfer
Program and so long as the certificates therefor are not required
to bear a restrictive legend evidencing the lack of registration
under the Act of the Common Stock represented thereby, credit such
aggregate number of shares of Common Stock to which Holder shall be
entitled to Holder’s or its designee’s balance account
with DTC through its Deposit Withdrawal Agent Commission system or
(Y) if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, issue and deliver to the
address as specified in the Voluntary Conversion Notice,
certificates, registered in the name of Holder or its designee, for
the number of shares of Common Stock to which Holder shall be
entitled, which certificates shall not bear any restrictive legend
unless such certificates are required to bear such a l
