Attached files
file | filename |
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8-K - FORM 8-K - Healthsport, Inc. | c14977e8vk.htm |
EX-10.2 - EXHIBIT 10.2 - Healthsport, Inc. | c14977exv10w2.htm |
EX-99.1 - EXHIBIT 99.1 - Healthsport, Inc. | c14977exv99w1.htm |
EX-10.3 - EXHIBIT 10.3 - Healthsport, Inc. | c14977exv10w3.htm |
Exhibit 10.1
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
SECURITIES ACT), NOR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE PLEDGED,
SOLD, ASSIGNED OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (II)
THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE REGISTRATION OR QUALIFICATION
REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS ARE AVAILABLE.
HEALTHSPORT, INC.
PROMISSORY NOTE
DATED: March 8, 2011
DATED: March 8, 2011
FOR VALUE RECEIVED, HealthSport, Inc., a Delaware corporation (Obligor), promises to pay to
the order of DONALD N. RASKIN and SHARON L. RASKIN, as Trustee of the RASKIN FAMILY TRUST, u/t/a
dated January 18, 2008, if and as amended, DONALD N. RASKIN and SHARON L. RASKIN, as Settlors, and
all successor trustees, individuals residing in the State of Arizona, or its registered assigns
(Holder), the principal sum of Six Hundred Thousand United States Dollars (US$600,000.00).
This Promissory Note (the Note) is being issued in connection with that certain Promissory
Note Purchase Agreement of even date herewith (the Purchase Agreement) by and between Obligor and
Holder, pursuant to which Holder is purchasing the Note from Obligor. Capitalized terms not
otherwise defined in the Note shall have the respective meanings ascribed to them in the Purchase
Agreement.
Section 1. Maturity. The Note shall be due and payable in full on the date that is
six (6) months after the Closing Date (as defined in and determined by the Purchase Agreement) (the
Maturity Date).
Section 2. Interest. Except in the case of a default, this Note shall bear interest
at the annual rate of twelve percent (12%) per annum calculated on the basis of a 360 day year.
All accrued interest shall be due and payable on the Maturity Date.
Section 3. Payment. Principal and interest payments shall be paid in lawful money of
the United States at the principal officer of Holder or at such other place as Holder may designate
in writing. Upon written notice of at least five (5) days, Obligor shall have the right to prepay
all or any portion of this Note at any time or from time to time prior to the Maturity Date.
Section 4. Security. Subject to the limitations of Section 5 herein, Obligors
repayment obligations under this Note shall be secured by all the assets of Obligor, including
without limitation all of Obligors accounts, chattel paper, contract rights, commissions, notes,
securities and other forms of receivables, general intangibles and pending patents, wherever
located and whether now or hereafter existing and whether now owned or hereafter acquired and, to
the extent not otherwise included, all payments under
insurance or under any indemnity, warranty, guarantee or government award which
is payable by reason of any damage to, or any loss, taking or condemnation of, the inventory or
assets of Obligor (collectively, the Collateral). Simultaneously with the execution and delivery
of this Note, Obligor shall execute and deliver to Holder a security agreement in form acceptable
to Holder, granting a security interest in the collateral and any proceeds in favor of Holder
Section 5. Rank. The Note and all security rights granted in the Collateral pursuant
to the Purchase Agreement, the Note and Section 4 herein shall be junior to and second in rank to
the rights granted by (i) the Secured Promissory Note Purchase Agreement, dated October 1, 2008 and
attached hereto as Exhibit A, (ii) the Security Agreement, dated October 1, 2008 and attached
hereto as Exhibit B, and (iii) all Senior Secured Convertible Promissory Notes, as amended, in the
total principal amount of $1,075,000 issued by Obligor pursuant to such Secured Promissory Note
Purchase Agreement, one example of which is attached hereto as Exhibit C, (collectively, all such
documents referenced in (i), (ii) and (iii) above hereinafter referred to as the Senior Notes).
Except for the Senior Notes, the Note shall be senior to all other indebtedness of Obligor.
Section 6. Default. Notwithstanding any other provision of this Note, Holder shall
have the right to demand, upon written notice to the Obligor, that the entire principal and unpaid
accrued interest hereon immediately due and payable if:
a) | Obligor fails to make payment within three (3) days of the Maturity Date and
such failure continues for a period of ten (10) days following written notice of such
failure; |
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b) | Obligor breaches any material terms of the Note or the Purchase Agreement and
such breach continues for a period of fifteen (15) days following written notice of
such breach; or |
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c) | Obligor defaults under the terms of any of the documents relating to any of the
Senior Notes; or |
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d) | Obligor institutes proceedings to be adjudicated as bankrupt or insolvent, or
consents to the institution of bankruptcy or insolvency proceedings against it or the
filing by it of a petition or answer or consent seeking reorganization or release under
the federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a receiver,
liquidator, assignee, trustee or other similar official of Obligor, as applicable, or
of any substantial part of its property, or the making by it of an assignment for the
benefit of creditors. |
If an Event of Default occurs pursuant to Section 6, the outstanding balance of the Note shall
automatically accrue interest at the Default Rate of Eighteen percent (18%) without notice,
presentment or demand.
Section 7. Conversion.
a) | Manner of Conversion and Conversion Ratio. The outstanding principal
amount of this Note, together with accrued but unpaid interest, may be converted into
shares of Obligors common stock, $0.0001 par value per share (the Common Stock),
at any time and from time to time, in whole or in part, at the option of Holder. If
this Note is called for pre-payment, Holder may convert any such outstanding
principal amount of the Note together with accrued but unpaid interest at any time
before the close of business on the third business day prior to the pre-payment date.
The conversion ratio (the Conversion Price)
shall be equal to $0.09 per share of the Common Stock. To determine the number of shares of |
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Common Stock issuable upon conversion of this Note, add the outstanding
principal amount of the Note to be converted to the accrued but unpaid interest to be
converted and then divide that amount by the Conversion Price. To convert this Note,
the Holder must (i) complete and sign the conversion notice in the form of Exhibit D
hereto, (ii) surrender this Note to the Company, (iii) furnish appropriate
endorsements and transfer documents if required by the Company, and (iv) pay any
transfer tax/fee or similar tax if required. Holder may convert a portion of this
Note if the portion is $1,000 or an integral multiple of $1,000. |
b) | Fractional Shares. No fractional shares shall be issued upon conversion of
this Note. In place of fractional shares, Obligor shall pay to Holder an amount in
cash equal to the product of such fraction multiplied by the Conversion Price. |
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c) | Adjustments for Stock Splits. In the event Obligor subdivides its
outstanding shares of Common Stock into a greater number of shares after the Closing
Date (a Split), then the Conversion Price in effect immediately prior to such
action shall be decreased in proportion to such Split. In the event Obligor combines
its outstanding shares of Common Stock into a smaller number of shares after the
Closing Date (a Reverse Split), then the Conversion Price in effect immediately
prior to such action shall be increased in proportion to such Reverse Split. Such
adjustments shall become effective at the close of business on the date such Split or
Reverse Split occurs. If after an adjustment, Holder may upon conversion receive
shares of two or more classes of capital stock of Obligor, then Obligor shall
determine the allocation of the adjusted Conversion Price between the classes of
capital stock. After such allocation, the conversion privilege and the Conversion
Price of each class of capital stock shall thereafter be subject to adjustment on
terms comparable to those applicable to the Common Stock in this subsection. |
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d) | Adjustments of Dividends and Distributions. In the event that Obligor pays
a stock dividend or makes a distribution on its outstanding shares of Common Stock in
shares of Common Stock after the Closing Date, then the Conversion Price in effect
immediately prior to such event shall be decreased as of the date of such issuance by
multiplying, as applicable, the Conversion Price then in effect by a fraction: (i)
the numerator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance, and (ii) the denominator
of which shall be the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance plus the number of shares of Common
Stock issuable in payment of such dividend or distribution. If after an adjustment,
Holder may upon conversion receive shares of two or more classes of capital stock of
Obligor, then Obligor shall determine the allocation of the adjusted Conversion Price
between the classes of capital stock. After such allocation, the conversion
privilege and the Conversion Price of each class of capital stock shall thereafter be
subject to adjustment on terms comparable to those applicable to the Common Stock in
this subsection. |
Section 8. Stock Warrants. Obligor acknowledges that Holder continues to hold
300,000 warrants to purchase the common stock of Obligor at an exercise price equal to $0.09 per
share within five (5) years from the date of the Note (the Warrants) pursuant to the terms of
that Promissory Note dated January 6, 2011.
Section 9. Setoff and Recoupment Rights. Obligor hereby agrees that all payments to
Holder will be made without condition or deduction for any counterclaim, defense, recoupment or
setoff.
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Section 10. Waiver of Demand, Presentment, Etc. Obligor hereby waives presentment,
notice of dishonor, protest and notice of protest, and any or all other notices or demands (other
than demand for payment) in connection with this Note. Any failure of Holder to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same or any other right
at any time and from time to time thereafter. Holder may accept late payments, or partial
payments, even though marked payment in full or containing words of similar import or other
conditions, without waiving any of its rights. No amendment, modification or waiver of any
provision of this Note nor consent to any departure by Obligor therefrom shall be effective,
irrespective of any course of dealing, unless the same shall be in writing and signed by Holder,
and then such waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. This Note cannot be changed or terminated orally or by estoppel
or waiver or by any alleged oral modification regardless of any claimed partial performance
referable thereto
Section 11. Assignment. This Note shall be binding upon and inure to the benefit of
Obligor and Holder and their respective successors and assigns
Section 12. Governing Law; Jurisdiction. THIS NOTE AND THE OBLIGATIONS OF THE
PARTIES HEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ARIZONA, WITHOUT REGARD TO ANY CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD OTHERWISE REQUIRE
THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION. Each party hereto knowingly and voluntarily
waives any and all rights it may have to a trial by jury with respect to any litigation based on,
or arising out of, under, or in connection with, this Note. Each party is hereby authorized to
submit, as conclusive evidence of such waiver of jury trial, this Note to a court that has
jurisdiction over the subject matter of such litigation and the parties to this Note. The venue
for any action brought to enforce this Note shall lie exclusively in Maricopa County, Arizona.
Section 13. Attorneys Fees and Costs. A prevailing party in any action relating to
the enforcement of this Note shall be entitled to recover its reasonable attorneys fees and other
costs incurred in connection with such action.
IN WITNESS WHEREOF, Obligor has caused this Note to be executed effective as of the date and
year first above written.
HEALTHSPORT, INC. |
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By: | ||||
Kevin Taheri | ||||
Chief Executive Officer |
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The terms and conditions of this Note are accepted as of the date first set above.
DONALD N. RASKIN and SHARON L. RASKIN, as Trustee of
the RASKIN FAMILY TRUST, u/t/a dated January 18,
2008, if and as amended, DONALD N. RASKIN and SHARON
L. RASKIN, as Settlors, and all successor trustees,
individuals residing in the State of Arizona, or his
registered assigns |
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By: | ||||
Donald N. Raskin | ||||
Trustee | ||||
[Signature Page to Promissory Note]
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