EXHIBIT NO. 10.1
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THE SECURITIES WHICH ARE THE SUBJECT OF THIS
AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE, AND WILL BE OFFERED AND SOLD BY REMOTEMDX IN
RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION
REQUIREMENTS OF
FEDERAL AND STATE
LAW BY VIRTUE OF REMOTEMDX'S INTENDED COMPLIANCE WITH THE
PROVISIONS OF SECTION
4(2) AND/OR REGULATION S PROMULGATED UNDER
THE ACT. THE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY ANY REGULATORY
AUTHORITY.
ANY REPRESENTATION TO
THE
CONTRARY IS A CRIMINAL OFFENSE.
CONVERTIBLE NOTE PURCHASE AGREEMENT
This
Convertible
Note Purchase
Agreement ("Agreement") is made and
entered into as of the 16th day of
September,
2005 by and between
RemoteMDx,
Inc., a Utah corporation ("RemoteMDx") and
_____________ ("Purchaser").
A. RemoteMDx desires to borrow ____________ ($_____ ) from Purchaser,
and Purchaser desires to lend ___________
($_________ ) to RemoteMDx; and
B. In consideration
of the loan amount,
RemoteMDx has
authorized the
issuance to Purchaser of a Promissory Note
in the original
principal amount
of
__________________ ($_________ ) (the
"Note").
NOW THEREFORE, in
consideration
of the mutual promises
and covenants
contained in this Agreement, and other valuable consideration,
the receipt and
sufficiency of which is hereby acknowledged, the parties covenant and agree
as
follows:
1. Loan and Note
Purchase. RemoteMDx
agrees to borrow
_____________
($_______ ) from Purchaser, and Purchaser agrees to lend to RemoteMDx
____________ ($________ ) (the "Loan")
pursuant to the terms
and conditions of
this Agreement, the Note, a copy of which is attached to this Agreement as
Exhibit "A" and by this reference
incorporated
herein. (This
Agreement and the
Note constitute the "Transaction
Documents").
The Purchaser shall
pay the loan
amount of ____________ ($______ ) for the Note in full at Closing, as
hereinafter defined, via certified funds or wire transfer to an account of
RemoteMDx identified by RemoteMDx on or before the Closing Date. Wire
instructions shall be provided by RemoteMDx
to Purchaser prior to the Closing.
2. Closing. Payment of the purchase price by the Purchaser and
delivery
of the Note by RemoteMDx shall be deemed to
be the completion of the transaction
contemplated by this Agreement ("Closing"). Closing shall occur concurrently
with the execution of this Agreement, or on such later date as the
parties may
hereafter agree (the "Closing Date").
3. Conversion and Registration Rights. The Note may be converted into
common stock of the Company (Conversion Shares) at any time from the date
of
purchase through September 15, 2008. The
conversion
price will be 50% of
the
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fair market value (FMV) or $0.40 per share,
whichever is lower. FMV will be
determined by taking the 20 day average
ask quotation on a national trading
exchange. Both the Interest Shares (that are described in the Note) and the
Conversion Shares described above are subject
to limited
registration
rights.
The holders of the Convertible Note will be granted limited piggy-back
registration rights for the shares of the
common stock underlying the conversion
of the Note and the common stock
underlying
the Interest
Shares. At any time
commencing three months from the closing
date of the Offering
and terminating
when the registrable securities are eligible for sale without any volume
limitation under Rule 144(k) under the Securities Act, the holders of
registrable securities will be entitled to
piggyback registration
rights with
respect to registrations of public offerings of common
stock by us (other than
registrations relating solely to the sale of common stock
to participants in a
company-sponsored employee benefit plan). For underwritten offerings, these
piggyback registration rights are subject to
a pro rata reduction among selling
shareholders at the underwriter's discretion. We will bare all registration
expenses of all Company registrations, excluding underwriting discounts and
commissions.
4. Use and Disposition
of Proceeds. The Loan
proceeds will be used in
the manner directed by RemoteMDx's Board of
Directors, or as shall be determined
or directed pursuant to authority delegated
by the Board.
5. Representations and
Warranties of Purchaser. To induce RemoteMDx's
acceptance of this Agreement, Purchaser hereby represents and warrants to
RemoteMDx and its agents and attorneys as
follows:
5.1 Investor Status.
Purchaser is an "accredited investor" within
the meaning of Section
501(a) of Regulation D under the Act, or is not
a "U.S. Person"
as that term is defined under Rule 902(o)(1) of
Regulation S under the Act.
5.2 Liquidity. Purchaser presently has sufficient liquid assets
to
pay the purchase price
for the Note.
Purchaser has adequate
means of
providing for its current needs and contingencies and has no need for
liquidity in its loan to RemoteMDx. Purchaser is capable of bearing
the
economic risk
and the burden of the loan contemplated by this
Agreement, including,
but not limited to, the possibility of the
complete loss of the value of the Note, and the limited
transferability
of the Note, which may
make the liquidation
of the Note impossible in
the near future.
5.3 Absence of Conflicts. Purchaser represents and warrants that
the execution and delivery of this Agreement and any other document
or
instrument executed
in connection with this Agreement, and the
consummation of the transaction contemplated thereby, and compliance
with the requirements thereof, will not violate any law, rule,
regulation, order, writ, judgment, injunction, decree, or award
binding
on Purchaser,
or the provision of any indenture, instrument, or
agreement to which
Purchaser is a party or is subject, or by which
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Purchaser or any of
its properties
is bound, or conflict with or
constitute a material default thereunder, or result in the creation or
imposition of any lien
pursuant to the terms of any such
indenture,
instrument or agreement, or constitute a breach of any
fiduciary duty
owed by such Purchaser
to any third party, or
require the approval of
any third-party
pursuant
to any material contract, agreement,
instrument,
relationship or legal
obligation
to which Purchaser is
subject or to which any of its properties, operations or management
may
be subject.
5.4 Sole Party in Interest. Purchaser represents that it is the
sole and true party in
interest, and no other
person or entity has or
will have upon the issuance of the Note beneficial ownership interest
in the Note or any portion thereof, whether direct or indirect
(excluding any contractual right to payments based on the
value of the
Note).
5.5 Investment Purpose. Purchaser represents that it is
acquiring
the Note for its own account and for investment purposes and not for
the account or benefit of any U.S. person or other person or entity
or
for or with a view to resale or distribution.
5.6 Knowledge
and Experience. Purchaser is experienced in
evaluating and making speculative investments, and has the capacity to
protect Purchaser's interests in connection with the acquisition of
the
Note. Purchaser
has such knowledge and experience in financial and
business matters
in general, and investments in RemoteMDx in
particular, that
Purchaser is capable of evaluating the merits and
risks of Purchaser's loan to RemoteMDx.
5.7 Disclosure, Access to Information. Purchaser confirms that it
has received,
read, and understands this Agreement, and that all
documents,
records, books
and other information pertaining to
Purchaser's loan to
RemoteMDx requested
by Purchaser
have been made
available for
inspection and copying
and that there are no additional
materials or documents
that have been requested by Purchaser that have
not been made available by RemoteMDx.
5.8 Exclusive Reliance
on this Agreement. In
making the decision
to purchase the Note, Purchaser has relied exclusively upon
information
included in this Agreement or incorporated herein by reference, and
not
on any other representations, promises or information, whether
written
or verbal, by any person.
5.9 Advice
of Counsel. Purchaser understands the terms and
conditions of
this Agreement, has investigated all issues to
Purchaser's
satisfaction, has
consulted with such of Purchaser's own
legal counsel or other advisors as Purchaser deems necessary, and is
not relying, and has not relied on RemoteMDx, for an explanation of
the
terms or conditions
of this Agreement or any document or
instrument
related to the
transaction
contemplated thereby.
Purchaser further
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acknowledges,
understands and
agrees that, in arranging for the
preparation of this
Agreement and all other documents and materials
related thereto,
RemoteMDx has not
attempted to procure,
and has not
procured, legal representation for Purchaser.
5.10 Accuracy
of Representations and Information. All
representations made by Purchaser in this Agreement, all documents and
instruments related to this Agreement, and all information provided
by
Purchaser to RemoteMDx
concerning Purchaser and its financial position
is correct and complete in all material respects as of the date
hereof.
If there is any material change in such information before the actual
issuance of
the Note, Purchaser immediately shall provide such
information to RemoteMDx.
5.11 Federal Tax Matters. Purchaser has reviewed and
understands
the federal
income tax aspects of
its purchase of the
Note, and has
received such advice in this regard as Purchaser deems necessary from
qualified sources such as attorneys, tax advisors or accountants,
and
is not relying on any
representative or employee of RemoteMDx for such
advice.
5.12 No Brokers or
Finders. Purchaser
represents
that no third
person has in any way brought the parties together or been
instrumental
in the negotiation, execution, or consummation of this Agreement or
any
instrument, document,
or agreement
related to this
Agreement, other
than any financial
advisor to the Purchaser whose fee or compensation
in connection with the
matters covered by this Agreement is solely the
obligation of the Purchaser. Purchaser agrees to indemnify RemoteMDx
against any claim by
any third person for
any commission,
brokerage
fee, finders fee, or
other payment with
respect to this
Agreement or
the transaction contemplated hereby based upon any alleged
agreement or
understanding between
such party and such third person, whether
expressed or implied,
arising from the actions of such party. The
covenants set forth in
this Section shall survive the Closing Date and
the consummation of the transaction contemplated by this
Agreement.
5.13 Certain Risk Factors. Purchaser has been informed
about and
fully understands
that there are
