PURCHASE NOTE
PURCHASE
NOTE
$_____________
|
Executed
and Delivered in Chicago, Illinois
|
February
13, 2006
|
FOR
VALUE
RECEIVED, Health
Partnership Inc.,
a
Colorado corporation (“Maker”) hereby promises to pay to _____________ (“Payee”)
at such place as may be designated in writing by Xxxxx, on the Maturity Date
(as
defined herein) in immediately available lawful money of the United States
of
America, the principal sum of __________________________ Dollars
($____________), together with simple interest on the outstanding principal
amount of this Note (as modified and supplemented and in effect from time to
time, the “Note”) at the rate of five percent (5%) per annum for the period
beginning on the date hereof and ending on April 14, 2006, and at the rate
of ten percent (10%) per annum for the period beginning on April 15, 2006
and ending on the Maturity Date hereof (as herein defined).
This
Note
is being executed and delivered to Payee as part of the Cash Consideration
under
that certain Agreement and Plan of Merger dated of even date herewith by and
among Maker, Xxxxx, Xxxxxx Xxxxx, Capital Partners For Health & Fitness,
Inc., a North Carolina corporation (“Capital Partners”), Capital Partners Merger
Sub, Inc., a North Carolina corporation (“Capital Partners Mergeco”) and Capital
Partners Acquisition Sub, Inc., a North Carolina corporation (“Capital Partners
Acquistionco”).
EACH
OF
THE PAYEE AND ANY SUBSEQUENT HOLDER OF THIS NOTE, ACKNOWLEDGES THAT ITS RIGHT
TO
ENFORCE MAKER’S OBLIGATION TO PAY THE AMOUNTS DUE UNDER THIS NOTE IS (IN
ADDITION TO ANY DEFENSES AVAILABLE TO MAKER UNDER LAW) SUBJECT TO ANY DEFENSES
THAT MAY BE AVAILABLE TO MAKER AS A RESULT OF THE PERFORMANCE, OR
NON-PERFORMANCE, BY THE PAYEE OF ITS INDEMNIFICATION OBLIGATIONS UNDER THE
AGREEMENT.
This
Note
shall mature on the earlier of June 30, 2006 or such time as the Maker
shall have raised capital sufficient to fund the entire amount of the Cash
Consideration (the “Maturity Date”). Interest on the Note shall be payable in
arrears at the Maturity Date. Principal on this Note may be prepaid in whole
or
in part at any time without premium or penalty, together with accrued interest
on the principal amount being prepaid. If not sooner paid, the principal of
this
Note shall be due and payable in full on the Maturity Date.
In
the
event at any time prior to the Maturity Date, Xxxxxx “Xxx” Xxxxxxx (“Xxxxxxx”)
purchases up to $1,000,000 of the Maker’s Common Stock as part of the HPI
Offering, the Payee shall be entitled to put to Maker, at a price of $2.00
per
share of HPI Common Stock, up to that number of shares of HPI Common Stock
issued to Payee as part of the Transactions as would cumulatively total the
product of the Payee’s percentage ownership in Capital Partners immediately
prior to the consummation of the Transactions, multiplied by the subscription
amount (up to $1,000,000) received by HPI from Xxxxxxx under the HPI Offering.
Upon exercise of this put right, the put price payable by Maker shall be added
to the principal amount of this Note and shall accrue interest from the date
of
closing of the put transaction. The put right shall expire on the earlier
of:
(a) ten
(10)
business days after Maker provides Payee with written notice that Xxxxxxx has
subscribed to shares of HPI Common Stock; and
(b) in
the
event no such subscriptions are made, on the Maturity Date.
Xxxxx
xxxx Xxxxxxx $3,100,000 as described in the Merger Agreement. The Maker is
authorized to pay $3,100,000 of the principal balance hereunder directly to
Xxxxxxx and such payments shall satisfy Maker’s obligations to Xxxxx, hereunder,
on a dollar-for-dollar basis.
Capitalized
terms used but not defined herein shall have the respective meanings given
such
terms in the Merger Agreement.
Maker
and
every endorser now or hereafter appearing on this Note waives presentment,
demand for payment, protest, notice of protest and notice of nonpayment of
this
Note.
This
Note
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of Payee and Maker.
This
Note
may be changed or amended only by an instrument in writing agreed upon by both
parties, signed by the party against whom enforcement of the change or amendment
is sought.
THIS
NOTE
HAS BEEN EXECUTED AND DELIVERED IN, AND SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF ILLINOIS EXCEPT TO THE EXTENT PRE-EMPTED
BY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
All
notices and other communications in respect of this Note (including, without
limitation, any modifications of, or requests, waivers or consents under, this
Note) shall be given or made in writing (including, without limitation, by
telecopy) to the Maker or Payee, as the case may be, in accordance with the
Notice provisions contained in Section 15.1 of the Merger
Agreement.
This
Note
is subject to the unwind provisions under Section 2.11 of the Merger
Agreement.
IN
WITNESS WHEREOF, the undersigned has executed this Note on the day and year
first written above.
MAKER:
|
|||
Health
Partnership Inc.,
a Colorado
|
|||
corporation
|
|||
By:
|
|||
Its:
|
2