Those terms don't make it toxic, especially, when other provisions are put in place to limit the dilution. What makes these convertible notes NON-TOXIC is clearly defined below, restrictions have clearly been placed on the lenders activity and option is open for repayment in full*****
Secondly, the current balance is only $3,515,000. There is no certain guarantee that states any of the remaining balances will be withdrawn. Is it likely some will? Yes, but not guaranteed. The first note some 2 1/2 years ago was for $2,000,000 and they only borrowed $830,000. Let’s not forget, using this approach leaves the door open to complete more pharmacy location acquisitions this year even****
Provisions/Restrictions applied to these Security Agreements
1.2. Prepayment. Notwithstanding the foregoing, Borrower shall have the right to prepay all or any portion of the Outstanding Balance (less such portion of the Outstanding Balance for which Borrower has received a Redemption Notice (as defined below) from Lender where the applicable Conversion Shares have not yet been delivered. If Borrower exercises its right to prepay this Note, Borrower shall make payment to Lender of an amount in cash equal to 110% of the portion of the Outstanding Balance Borrower elects to repay.
5. Restrictions on the Sale of Conversion Shares. 5.1. Volume Limitation. Lender agrees that, with respect to the sale of any Conversion Shares, in any given calendar week its Net Sales (as defined below) of such Conversion Shares shall not exceed the greater of (i) ten percent (10%) of Borrower’s Common Stock dollar trading volume (the “Trading Volume”)
5.2. Breach of Volume Limitation. Borrower and Lender agree that in the event Lender breaches the Volume Limitation where its Net Sales of Conversion Shares during any calendar week exceed the dollar volume it is permitted to sell during such week pursuant to the Volume Limitation (such excess, the “Excess Sales”), then in such event, as Borrower’s sole and exclusive remedy for such breach (and which breach may not be used as a defense to Borrower’s performance of its obligations hereunder), Borrower shall be entitled to reduce the Outstanding Balance of this Note by an amount equal to such Excess Sales upon delivery of written notice to Lender setting forth its basis for such reduction (the “Outstanding Balance Reduction”).
5.3. Restrictions on Open Market Purchases. Lender agrees that while this Note is outstanding it will not purchase or sell any Common Stock other than the Conversion Shares except in the case of purchases and sales related to trading errors by Lender’s broker or as otherwise required by Lender’s broker. The exclusive remedy for a violation of this Section 5.3 will be disgorgement of trading profits by Lender to Borrower.
9. No Shorting. During the period beginning on the Closing Date and ending on the date the Note has been repaid in full or sold by Investor to a third party that is not an affiliate of Investor, Investor will not directly or through an affiliate engage in any open market Short Sales (as defined below) of the Common Stock;
12. Ownership Limitation. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, if at any time Lender shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding on such date (including for such purpose the shares of Common Stock issuable upon such issuance) (the “Maximum Percentage”), then Borrower must not issue to Lender shares of Common Stock which would exceed the Maximum Percentage.
IMPROVED FUNDING AGREEMENTS FOR ACQUISITIONS and NEW HEADQUARTERS
Security Agreements in case you need to locate the source of information above****
SECURED CONVERTIBLE PROMISSORY NOTE Effective Date: January 2, 2019 U.S. $2,710,000.00 FOR VALUE RECEIVED, PROGRESSIVE CARE INC., a Delaware corporation (“Borrower”), promises to pay to CHICAGO VENTURE PARTNERS, L.P., a Utah limited partnership, or its successors or assigns (“Lender”), $2,710,000.00 and any interest, fees, charges, and late fees on the date that is thirty-six (36) months after the Purchase Price Date (the “Maturity Date”) in accordance with the terms set forth herein and to pay interest on the Outstanding Balance (including all Tranches (as defined below), both Conversion Eligible Tranches (as defined below) and Subsequent Tranches (as defined below) that have not yet become Conversion Eligible Tranches) at the rate of nine percent (9%) per annum from the Purchase Price Date until the same is paid in full. This Secured Convertible Promissory Note (this “Note”) is issued and made effective as of January 2, 2019 (the “Effective Date”). This Note is issued pursuant to that certain Securities Purchase Agreement dated January 2, 2019, as the same may be amended from time to time, by and between Borrower and Lender (the “Purchase Agreement”). Certain capitalized terms used herein are defined in Attachment 1 attached hereto and incorporated herein by this reference.
This Note carries an OID of $200,000.00. In addition, Borrower agrees to pay $10,000.00 to Lender to cover Lender’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of this Note (the “Transaction Expense Amount”), all of which amount is included in the initial principal balance of this Note. The purchase price for this Note shall be $2,500,000.00 (the “Purchase Price”), computed as follows: $2,710,000.00 original principal balance, less the OID, less the Transaction Expense Amount. The Purchase Price shall be payable by delivery to Borrower at Closing of the Investor Notes (as defined in the Purchase Agreement) and a wire transfer of immediately available funds in the amount of the Initial Cash Purchase Price (as defined in the Purchase Agreement). This Note shall be comprised of seven (7) tranches (each, a “Tranche”), consisting of (i) an initial Tranche in an amount equal to $1,090,000.00 and any interest, costs, fees or charges accrued thereon or added thereto under the terms of this Note and the other Transaction Documents (as defined in the Purchase Agreement) (the “Initial Tranche”), and (ii) six (6) additional Tranches, each in the amount of $270,000.00, plus any interest, costs, fees or charges accrued thereon or added thereto under the terms of this Note and the other Transaction Documents (each, a “Subsequent Tranche”). The Initial Tranche shall correspond to the Initial Cash Purchase Price, $80,000.00 of the OID and the Transaction Expense Amount, and may be converted into shares of Common Stock (as defined below) any time subsequent to the Purchase Price Date. The first Subsequent Tranche shall correspond to Investor Note #1 and $20,000.00 of the OID, the second Subsequent Tranche shall correspond to Investor Note #2 and $20,000.00 of the OID, the third Subsequent Tranche shall correspond to Investor Note #3 and $20,000.00 of the OID, the fourth Subsequent Tranche shall correspond to Investor Note #4 and $20,000.00 of the OID, the fifth Subsequent Tranche shall correspond to Investor Note #5 and $20,000.00 of the OID, and the sixth Subsequent Tranche shall correspond to Investor Note #6 and $20,000.00 of the OID.
1. Payment; Prepayment.
1.1. Payment. Provided there is an Outstanding Balance, on each Redemption Date (as defined below), Borrower shall pay to Lender an amount equal to the Redemption Amount (as defined below) due on such Redemption Date in accordance with Section 3.3. All payments owing hereunder shall be in lawful money of the United States of America or Conversion Shares (as defined below), as provided for herein, and delivered to Lender at the address or bank account furnished to Borrower for that purpose. All payments shall be applied first to (a) costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid interest, and thereafter, to (d) principal.
1.2. Prepayment. Notwithstanding the foregoing, Borrower shall have the right to prepay all or any portion of the Outstanding Balance (less such portion of the Outstanding Balance for which Borrower has received a Redemption Notice (as defined below) from Lender where the applicable Conversion Shares have not yet been delivered. If Borrower exercises its right to prepay this Note, Borrower shall make payment to Lender of an amount in cash equal to 110% of the portion of the Outstanding Balance Borrower elects to repay.
3. Redemption.
3.1. Conversion Price. Subject to the adjustments set forth herein, the conversion price for each Conversion (as defined below) shall be calculated pursuant to the following formula: the Conversion Factor multiplied by the average of the five (5) lowest Closing Trade Prices during the twenty (20) Trading Days immediately preceding the applicable Conversion (the “Conversion Price”).
3.2. Conversions. Beginning on the date that is twelve (12) months after the Purchase Price Date, Lender shall have the right, exercisable at any time in its sole and absolute discretion, to redeem all or any portion of the Note (such amount, the “Redemption Amount”) up to the Maximum Monthly Redemption Amount by providing Borrower with a notice substantially in the form attached hereto as Exhibit B (each, a “Redemption Notice”, and each date on which Lender delivers a Redemption Notice, a “Redemption Date”).
5. Restrictions on the Sale of Conversion Shares.
5.1. Volume Limitation. Lender agrees that, with respect to the sale of any Conversion Shares, in any given calendar week its Net Sales (as defined below) of such Conversion Shares shall not exceed the greater of (i) ten percent (10%) of Borrower’s Common Stock dollar trading volume (the “Trading Volume”) in such week (which, for purposes hereof, means the number of shares traded during such calendar week multiplied by the volume weighted average price per share for such week), and (ii) $50,000.00 plus accrued interest (the “Volume Limitation”); provided; however, that if Lender’s Net Sales are less than the Volume Limitation for any given week, then in the following week (or two (2) weeks in the case of any week where the Closing Trade Price on any given day during that week is 25% greater than the previous week’s VWAP) Lender shall be allowed to sell an additional amount of Conversion Shares equal to the difference between the amount Lender was allowed to sell and the amount Lender actually sold. For illustration purposes only, if the Trading Volume was $400,000.00 each week for three (3) consecutive weeks, Lender would be entitled to Net Sales of up to $50,000.00 per week or up to $150,000.00 during such three-week period. If Lender’s Net Sales were $80,000.00 during the first two (2) such weeks, then Lender would be entitled to Net Sales of up to $70,000.00 during the third week. For purposes of this Agreement, the term “Net Sales” means the gross proceeds from sales of the Conversion Shares sold in a calendar week minus any trading commissions or costs associated with clearing and selling such Conversion Shares, minus legal fees Lender incurs to obtain any legal opinions required to sell such Shares, minus the purchase price paid for any shares of Common Stock purchased on the open market during such week.
5.2. Breach of Volume Limitation. Borrower and Lender agree that in the event Lender breaches the Volume Limitation where its Net Sales of Conversion Shares during any calendar week exceed the dollar volume it is permitted to sell during such week pursuant to the Volume Limitation (such excess, the “Excess Sales”), then in such event, as Borrower’s sole and exclusive remedy for such breach (and which breach may not be used as a defense to Borrower’s performance of its obligations hereunder), Borrower shall be entitled to reduce the Outstanding Balance of this Note by an amount equal to such Excess Sales upon delivery of written notice to Lender setting forth its basis for such reduction (the “Outstanding Balance Reduction”). For illustration purposes only, if the Trading Volume was $450,000.00 for a calendar week, Lender would be entitled to Net Sales of up to $50,000.00 during that week. If Lender’s Net Sales for such week were equal to $55,000.00, and Lender had sold the maximum number of Conversion Shares it could within the Volume Limitation during each prior week, then in such event Borrower would be entitled to reduce the Outstanding Balance of the Note by $5,000.00 ($55,000.00 - $50,000.00). For the avoidance of doubt, in such event Lender shall be entitled to retain the Excess Sales and shall have no obligation to return the Excess Sales to Borrower.
5.3. Restrictions on Open Market Purchases. Lender agrees that while this Note is outstanding it will not purchase or sell any Common Stock other than the Conversion Shares except in the case of purchases and sales related to trading errors by Lender’s broker or as otherwise required by Lender’s broker. The exclusive remedy for a violation of this Section 5.3 will be disgorgement of trading profits by Lender to Borrower.
9. No Shorting. During the period beginning on the Closing Date and ending on the date the Note has been repaid in full or sold by Investor to a third party that is not an affiliate of Investor, Investor will not directly or through an affiliate engage in any open market Short Sales (as defined below) of the Common Stock; provided; however, that unless and until Company has affirmatively demonstrated by the use of specific evidence that Investor is engaging in open market Short Sales, Investor shall be assumed to be in compliance with the provisions of this Section 9 and Company shall remain fully obligated to fulfill all of its obligations under the Transaction Documents; and provided, further, that (i) Company shall under no circumstances be entitled to request or demand that Investor either (A) provide trading or other records of Investor or of any party or (B) affirmatively demonstrate that Investor or any other party has not engaged in any such Short Sales in breach of these provisions as a condition to Company’s fulfillment of its obligations under any of the Transaction Documents, (ii) Company shall not assert Investor’s or any other party’s failure to demonstrate such absence of such Short Sales or provide any trading or other records of Investor or any other party as all or part of a defense to any breach of Company’s obligations under any of the Transaction Documents, and (iii) Company shall have no setoff right with respect to any such Short Sales. As used herein, “Short Sale” has the meaning provided in Rule 3b-3 under the 1934 Act.
12. Ownership Limitation. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, if at any time Lender shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding on such date (including for such purpose the shares of Common Stock issuable upon such issuance) (the “Maximum Percentage”), then Borrower must not issue to Lender shares of Common Stock which would exceed the Maximum Percentage. For purposes of this section, beneficial ownership of Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. Notwithstanding the forgoing, the term “4.99%” above shall be replaced with “9.99%” at such time as the Market Capitalization is less than $10,000,000.00. Notwithstanding any other provision contained herein, if the term “4.99%” is replaced with “9.99%” pursuant to the preceding sentence, such increase to “9.99%” shall remain at 9.99% until increased, decreased or waived by Lender as set forth below. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Lender.
DEFINITIONS For purposes of this Note, the following terms shall have the following meanings: A3. “Closing Bid Price” and “Closing Trade Price” means the last closing bid price and last closing trade price, respectively, for the Common Stock on its principal market, as reported by Bloomberg, or, if its principal market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of the Common Stock prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if its principal market is not the principal securities exchange or trading market for the Common Stock, the last closing bid price or last trade price, respectively, of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of the Common Stock in the over-the-counter market on the electronic bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for the Common Stock by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for the Common Stock as reported by OTC Markets Group, Inc., and any successor thereto. If the Closing Bid Price or the Closing Trade Price cannot be calculated for the Common Stock on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Trade Price (as the case may be) of the Common Stock on such date shall be the fair market value as mutually determined by Lender and Borrower. If Lender and Borrower are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved in accordance with the procedures in Section 16.2. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period. A5. “Conversion Factor” means 80%, subject to the following adjustments. If at any time the average of the five (5) lowest Closing Trade Prices during the twenty (20) Trading Days immediately preceding any date of measurement is below $0.01, then in such event the then-current Conversion Factor shall be reduced by 10% for all future Conversions (subject to other reductions set forth in this section).
SECURED CONVERTIBLE PROMISSORY NOTE Effective Date: March 6, 2019 U.S. $3,310,000.00 FOR VALUE RECEIVED, PROGRESSIVE CARE INC., a Delaware corporation (“Borrower”), promises to pay to ILIAD RESEARCH AND TRADING, L.P., a Utah limited partnership, or its successors or assigns (“Lender”), $3,310,000.00 and any interest, fees, charges, and late fees on the date that is thirty-six (36) months after the Purchase Price Date (the “Maturity Date”) in accordance with the terms set forth herein and to pay interest on the Outstanding Balance (including all Tranches (as defined below), both the Initial Tranche (as defined below) and the Subsequent Tranche (as defined below)) at the rate of ten percent (10%) per annum from the Purchase Price Date until the same is paid in full. This Secured Convertible Promissory Note (this “Note”) is issued and made effective as of March 6, 2019 (the “Effective Date”). This Note is issued pursuant to that certain Securities Purchase Agreement dated March 6, 2019, as the same may be amended from time to time, by and between Borrower and Lender (the “Purchase Agreement”). Certain capitalized terms used herein are defined in Attachment 1 attached hereto and incorporated herein by this reference. This Note carries an OID of $300,000.00. In addition, Borrower agrees to pay $10,000.00 to Lender to cover Lender’s legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred in connection with the purchase and sale of this Note (the “Transaction Expense Amount”). The Transaction Expense Amount and $115,000.00 of the OID are deemed to be fully earned and non-refundable as of the Effective Date. The remaining $185,000.00 of the OID shall be deemed fully earned and non-refundable upon closing of Borrower’s purchase of Family Physicians Rx, Inc. The purchase price for this Note shall be $3,000,000.00 (the “Purchase Price”), computed as follows: $3,310,000.00 original principal balance, less the OID, less the Transaction Expense Amount. The Purchase Price shall be payable by delivery to Borrower at Closing of the Investor Note (as defined in the Purchase Agreement) and a wire transfer of immediately available funds in the amount of the Initial Cash Purchase Price (as defined in the Purchase Agreement). This Note shall be comprised of two (2) tranches (each, a “Tranche”), consisting of (i) an initial Tranche in an amount equal to $2,425,000.00 and any interest, costs, fees or charges accrued thereon or added thereto under the terms of this Note and the other Transaction Documents (as defined in the Purchase Agreement) (the “Initial Tranche”), and (ii) one (1) subsequent Tranche in the amount of $885,000.00,
1. Payment; Prepayment. 1.1. Payment. Provided there is an Outstanding Balance, on each Redemption Date (as defined below), Borrower shall pay to Lender an amount equal to the Redemption Amount (as defined below) due on such Redemption Date in accordance with Section 3.3. All payments owing hereunder shall be in lawful money of the United States of America or Conversion Shares (as defined below), as provided for herein, and delivered to Lender at the address or bank account furnished to Borrower for that purpose. All payments shall be applied first to (a) costs of collection, if any, then to (b) fees and charges, if any, then to (c) accrued and unpaid interest, and thereafter, to (d) principal. 1.2. Prepayment. Notwithstanding the foregoing, Borrower shall have the right to prepay all or any portion of the Outstanding Balance (less such portion of the Outstanding Balance for which Borrower has received a Redemption Notice (as defined below) from Lender where the applicable Conversion Shares have not yet been delivered. If Borrower exercises its right to prepay this Note, Borrower shall make payment to Lender of an amount in cash equal to 110% of the portion of the Outstanding Balance Borrower elects to repay.
3. Redemption. 3.1. Conversion Price. Subject to the adjustments set forth herein, the conversion price for each Conversion (as defined below) shall be calculated pursuant to the following formula: the Conversion Factor multiplied by the average of the two (2) lowest Closing Trade Prices during the twenty (20) Trading Days immediately preceding the applicable Conversion (the “Conversion Price”). 3.2. Conversions. Beginning on the date that is twelve (12) months after the Purchase Price Date, Lender shall have the right, exercisable at any time in its sole and absolute discretion, to redeem all or any portion of the Note (such amount, the “Redemption Amount”) by providing Borrower with a notice substantially in the form attached hereto as Exhibit A (each, a “Redemption Notice”, and each date on which Lender delivers a Redemption Notice, a “Redemption Date”).
5. Restrictions on the Sale of Conversion Shares. 5.1. Volume Limitation. Lender agrees that, with respect to the sale of any Conversion Shares, in any given calendar week its Net Sales (as defined below) of Conversion Shares shall not exceed the greater of (i) ten percent (10%) of Borrower’s Common Stock dollar trading volume (the “Trading Volume”) in such week (which, for purposes hereof, means the number of shares traded during such calendar week multiplied by the volume weighted average price per share for such week), and (ii) $100,000.00 (the “Volume Limitation”); provided; however, that if Lender’s Net Sales are less than the Volume Limitation for any given week, then in the following week (or two (2) weeks in the case of any week where the Closing Trade Price on any given day during that week is 25% greater than the previous week’s VWAP) Lender shall be allowed to sell an additional amount of Conversion Shares equal to the difference between the amount Lender was allowed to sell and the amount Lender actually sold. For illustration purposes only, if the Trading Volume was $900,000.00 each week for three (3) consecutive weeks, Lender would be entitled to Net Sales of up to $100,000.00 per week or up to $300,000.00 during such three-week period. If Lender’s Net Sales were $180,000.00 during the first two (2) such weeks, then Lender would be entitled to Net Sales of up to $120,000.00 during the third week. For purposes of this Agreement, the term “Net Sales” means the gross proceeds from sales of the Conversion Shares sold in a calendar week minus any trading commissions or costs associated with clearing and selling such Conversion Shares, minus legal fees Lender incurs to obtain any legal opinions required to sell such Shares, minus the purchase price paid for any shares of Common Stock purchased on the open market during such week.
5.2. Breach of Volume Limitation. Borrower and Lender agree that in the event Lender breaches the Volume Limitation where its Net Sales of Conversion Shares during any calendar week exceed the dollar volume it is permitted to sell during such week pursuant to the Volume Limitation (such excess, the “Excess Sales”), then in such event, as Borrower’s sole and exclusive remedy for such breach (and which breach may not be used as a defense to Borrower’s performance of its obligations hereunder), Borrower shall be entitled to reduce the Outstanding Balance of this Note by an amount equal to such Excess Sales upon delivery of written notice to Lender setting forth its basis for such reduction (the “Outstanding Balance Reduction”). For illustration purposes only, if the Trading Volume was $950,000.00 for a calendar week, Lender would be entitled to Net Sales of up to $100,000.00 during that week. If Lender’s Net Sales for such week were equal to $105,000.00, and Lender had sold the maximum number of Conversion Shares it could within the Volume Limitation during each prior week, then in such event Borrower would be entitled to reduce the Outstanding Balance of the Note by $5,000.00 ($105,000.00 - $100,000.00). For the avoidance of doubt, in such event Lender shall be entitled to retain the Excess Sales and shall have no obligation to return the Excess Sales to Borrower. 5.3. Restrictions on Open Market Purchases. Lender agrees that while this Note is outstanding it will not purchase or sell any Common Stock other than the Conversion Shares except in the case of purchases and sales related to trading errors by Lender’s broker or as otherwise required by Lender’s broker. The exclusive remedy for a violation of this Section 5.3 will be disgorgement of trading profits by Lender to Borrower.
9. No Shorting. During the period beginning on the Closing Date and ending on the date the Note has been repaid in full or sold by Investor to a third party that is not an affiliate of Investor, Investor will not directly or through an affiliate engage in any open market Short Sales (as defined below) of the Common Stock; provided; however, that unless and until Company has affirmatively demonstrated by the use of specific evidence that Investor is engaging in open market Short Sales, Investor shall be assumed to be in compliance with the provisions of this Section 9 and Company shall remain fully obligated to fulfill all of its obligations under the Transaction Documents; and provided, further, that (i) Company shall under no circumstances be entitled to request or demand that Investor either (A) provide trading or other records of Investor or of any party or (B) affirmatively demonstrate that Investor or any other party has not engaged in any such Short Sales in breach of these provisions as a condition to Company’s fulfillment of its obligations under any of the Transaction Documents, (ii) Company shall not assert Investor’s or any other party’s failure to demonstrate such absence of such Short Sales or provide any trading or other records of Investor or any other party as all or part of a defense to any breach of Company’s obligations under any of the Transaction Documents, and (iii) Company shall have no setoff right with respect to any such Short Sales. As used herein, “Short Sale” has the meaning provided in Rule 3b-3 under the 1934 Act.
13. Ownership Limitation. Notwithstanding anything to the contrary contained in this Note or the other Transaction Documents, if at any time Lender shall or would be issued shares of Common Stock under any of the Transaction Documents, but such issuance would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding on such date (including for such purpose the shares of Common Stock issuable upon such issuance) (the “Maximum Percentage”), then Borrower must not issue to Lender shares of Common Stock which would exceed the Maximum Percentage. For purposes of this section, beneficial ownership of Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. Notwithstanding the forgoing, the term “4.99%” above shall be replaced with “9.99%” at such time as the Market Capitalization is less than $10,000,000.00. Notwithstanding any other provision contained herein, if the term “4.99%” is replaced with “9.99%” pursuant to the preceding sentence, such increase to “9.99%” shall remain at 9.99% until increased, decreased or waived by Lender as set forth below. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Lender.
ATTACHMENT 1 DEFINITIONS For purposes of this Note, the following terms shall have the following meanings:
A3. “Closing Bid Price” and “Closing Trade Price” means the last closing bid price and last closing trade price, respectively, for the Common Stock on its principal market, as reported by Bloomberg, or, if its principal market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case may be) then the last bid price or last trade price, respectively, of the Common Stock prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if its principal market is not the principal securities exchange or trading market for the Common Stock, the last closing bid price or last trade price, respectively, of the Common Stock on the principal securities exchange or trading market where the Common Stock is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of the Common Stock in the over-the-counter market on the electronic bulletin board for the Common Stock as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for the Common Stock by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for the Common Stock as reported by OTC Markets Group, Inc., and any successor thereto. If the Closing Bid Price or the Closing Trade Price cannot be calculated for the Common Stock on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Trade Price (as the case may be) of the Common Stock on such date shall be the fair market value as mutually determined by Lender and Borrower. If Lender and Borrower are unable to agree upon the fair market value of the Common Stock, then such dispute shall be resolved in accordance with the procedures in Section 17.2. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.
A5. “Conversion Factor” means 80%, subject to the following adjustments. If at any time the average of the two (2) lowest Closing Trade Prices during the twenty (20) Trading Days immediately preceding any date of measurement is below $0.01, then in such event 80% shall be replaced with 70% for all future Conversions.
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