THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS NOTE AND/OR THE COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO INTERNATIONAL
NURSING SERVICES, INC., THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
$1,000,000
January 28, 1997
CONVERTIBLE NOTE
(the "Note")
INTTERNATIONAL NURSING SERVICES, INC.
INTERNATIONAL NURSING SERVICES, INC., a Colorado corporation (hereinafter called
the ("Company"), for value received, hereby promises to pay to the order of
Millenco LP (hereinafter the "Holder") the principal sum of $1,000,000 on
January 28, 1998. However, if the Registration Statement (as defined below) is
effective on or before October 1, 1997, such principal sum shall be payable on
the first anniversary of the effectiveness of the Registration Statement.
Interest shall accrue on this Note at the rate of 12.5% per annum and shall be
payable at maturity (including accelerated maturity) and upon conversion.
Principal and interest shall be payable at the address of the Holder. This Note
is prepayable by the Company (but only in full, together with all accrued
interest) on or before the 120th day after the date hereof and not thereafter.
1. The Note. This Note is being issued under a Private Placement Agreement
between the Company and the Holder (the "Subscription Agreement").
2. Conversion Rights and Optional Redemption.
(a) If principal and all accrued interest on this Note is not prepaid by
the Company in full by the close of business on the 120th day after the date
hereof, then this NOte and accrued interest thereon will thereafter be
convertible by Subscriber until maturity from time to time in whole or in part
into shares of common stock of the Company at the lesser of $1.50 per share
(the "Cap") or 65% (the "Percentage") of the average closing sales price of the
common stock on NASDAQ (or such other securities exchange where the common stock
may then be listed) during the last five trading days prior to conversion. The
Percentage shall be reduced by two percentage points for each full 30-day period
after the 120th day after the date hereof in which the Registration Statement
(as defined in the Subscription Agreement) has not been declared effective,
provided that the Percentage shall never be less than 45%. By way of example,
if the Registration Statement has not been declared effective by the 120th day
after the date hereof, the Percentage (subject to further later reduction) shall
be 59%. Neither the Cap nor the Percentage shall in any event be greater than
the equivalent cap or percentage applicable to any other convertible security
of the Company which is issued (or whose terms are adjusted) after the date
hereof, which is outstanding at the time this Note is converted and which is
convertible at a discount from market price at or immediately prior to
conversion. By way of example, if at the time this Note is converted there has
been no reduction in the Cap or the Percentage under the provisions hereof and
there is outstanding a convertible security of the Company which is convertible
at the lesser of $1 or 55% of the market price during IO trading days prior to
conversion, then the Cap shall be $1 and the Percentage shall be 55%. The
issuance of Common Stock at a price less than the Cap shall not effect a
reduction in the Cap.
(b) The Note shall be convertible at any time only to the extent that Holder
would not as a result of such exercise benefically own more than 9.99% of the
then outstanding common stock of the Company. Beneficial ownership shall be
defined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934.
The opinion of counsel to ▇▇▇▇▇▇ shall prevail in the event of any dispute on
the calculation of ▇▇▇▇▇▇'s beneficial ownership.
(c) In the event that the Holder elects to exercise its conversion rights
hereunder, such conversion shall be effective when Holder shall give to the
Company written notice of such election (which may be effected by facsimile).
Holder shall thereafter promptly surrender this Note to the Company for
cancellation against payment of interest accrued through the date of conversion.
The Company shall within five business days after conversion deliver to Holder
a certificate for the Common Stock acquired by Holder upon such conversion.
(d) On the 121st day after the date hereof but only if this Note has not
theretofore been prepaid in full, the Company shall reserve for issuance on
conversion and exercise of this Note and the Warrant (as defined in the
Subscription Agreement) 5,000,000 shares of Common Stock, less any shares
theretofore issued on any such conversion or exercise. The Company shall use
its best efforts promptly to list on NASDAQ all shares of Common Stock which
are issued upon conversion of this Note.
(e) Adjustment to Conversion Rights.
(i) In case the Company shall issue common stock as a dividend upon common
stock or in payment of a dividend thereon, shall subdivide the number of
outstanding shares of its common stock into a greater number of shares or shall
contract the number of outstanding shares of common stock into a lesser number
of shares, the number of Conversion Shares to which the Holder is entitled to
receive pursuant to Section 2 shall be adjusted, effective at the close of
business on the date such common shares are to be issued, so that the Conversion
Shares in effect immediately prior to the close of business on such date by a
fraction, the denominator of which shall be the number of shares of common stock
outstanding immediately prior to such dividend, the subdivision, or contraction,
and the numerator of which shall be the number of shares of common stock
outstanding immediately after such dividend, subdivision or contraction.
Similarly, there shall be appropriate changes in the Cap in the event of stock
splits or combinations.
(ii) If any capital reorganization or reclassification of the common
stock, or consolidation, or merger of the Company with or into another
corporation, or the sale or conveyance of all or substantially all of its assets
to another corporation shall be effected, then, as a condition precedent of such
reorganization or sale, the following provision shall be made: The Holder of
the Note shall from and after the date of such reorganization or sale have the
right to receive (in lieu of the shares of common stock of the Company
immediately theretofore receivable with respect to such Note, upon the exercise
of conversion rights), such shares of stock, securities or assets as would have
been issued or payable with respect to or in exchange for the number of
outstanding shares of such common stock immediately theretofore receivable with
respect to such Note (assuming the Note were then convertible). In any such
case, appropriate provision shall be made with respect to the rights and
interests of the Holders to to the end that such conversion rights (including,
without limitation, provisions for appropriate adjustments) shall thereafter be
applicable, as nearly as may be practicable in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise thereof.
(f) The Subscription Agreement provides for the filing by the Company
of a registration statement for the sale of the shares issuable on conversion
of this Note.
(g) The Company covenants and agrees that all shares of Common Stock
which may be issued upon conversion of this Note will, upon issuance, be duly
and validly issued, fully paid and non-assessable and no personal liability
will attach to the holder thereof.
3. Purchase of Investment. The Holder, by acceptance hereof, acknowledges
that the Note (and the Common Stock into which the Note is convertible) has
not been registered under the Act, covenants and agress with the Company that
such Holder is taking and holding this Note (and the Common Stock into which
the Note is convertible) for investment purposes and not with a view to, or
for sale in connection with, a distribution thereof and that his Note (and
the Common Stock into which the Note is convertible) may not be assigned,
hypothecated or otherwise disposed of in the absence of an effective
registration statement under the Act or an opinion of counsel for the Holder,
which counsel shall be reasonably satisfactory to the Company, to the effect
that such disposition is in compliance with the Act, and represents and warrants
that such Holder is an "accredited investor" that such Holder has, or with its
representative has, such knowledge and experience in financial and business
matters to be capable of evluating the merits and risks in respect of this
Note (and the Common Stock into which the Note is convertible) and is able
to bear the economic risk of such invstment.
4. Events of Default and Acceleration of the Note.
(a) An "event of default"
(i) The Company shall breach or fail to comply with any provision
of this Note and such breach or failure shall continue for 15 days after
written notice by any Holder of any Note to the Company.
(ii) A receiver, liquidator or trustee of the Company or of a
substantial part of its properties ahll be appointed by court order and such
order shall remain in effect for more than 15 days; or the Company shall be
adjudicated bankrupt or insolvent; or a substantial part of the property of
the Company shall be sequestered by court order and such order shall remain
in effect for more than 15 days; or a petition to reorganize the Company
under any bankruptcy, reorganization or insolvency law shall be file against
the Company and shall not be dismissed within 45 days after such filing.
(iii) The Company shall file a petition in voluntary bankruptcy or request
reorganization under any provision of any bankruptcy, reorganization or
insolvency law, or shall consent to the filing of any petition against it under
any such law.
(iv) The Company shall make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as
they become due, or consent to the appointment of a receiver, trustee or
liquidator of the Company, or of all or any substantial part of its properties.
(b) If an event of default referred to in clause (i) shall occur, the Holder
may, in addition to such ▇▇▇▇▇▇'s other remedies, by written notice to the
Company, declare the principal amount of this Note, together with all interest
accrued thereon, to be due and payable immediately. Upon any such declaration,
such amount shall become immediately due and payable and the Holder shall have
all such rights and remedies provided for under the terms of this Note and the
Subscription Agreement. If an event of default referred to in clauses (i),
(iii), or (iv) shall occur, the principal amount of this Note, together with
all interest accrued thereon, shall become immediately due and payable and the
Holder shall have all such rights and remedies provided for under the terms of
this Note and the Subscription Agreement.
5. Miscellaneous.
(a) All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telegram, recognized
overnight mail carrier, telex or standard form of telecommunications, or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follow if to the Holder, to such address as such Holder shall
furnish to the Company in accordance with this Section, or (b) if to the
Company it at its headquarters office, or to such other address as the
Company shall furnish to the Holder in accordance with this Section.
(b) This note shall be governed and construed in accordance with the laws
of the State of New York applicable to agreements and to be performed entirely
within such state.
(c) The Company waives protest, notice of protest, presentment, dishonor
and demand.
(d) If any provision of this Note shall for any reason be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision hereof, but this Note shall be construed as if such invalid or
unenforceable provision had never been contained herein.
(e) The waiver of any event of default or the failure of the Holder to
exercise any right or remedy to which it may be entitled should not be deemed
a waiver of any subsequent event of default or of the Holder's right to exercise
that or any other right or remedy to which the Holder is entitled.
(f) The Holder of this Note shall be entitled to recover its legal and other
costs of collecting on this Note, and such costs shall be deemed added to the
principal amount of this note.
(g) In addition to all other remedies to which the Holder may be entitled
hereunder, ▇▇▇▇▇▇ shall also be entitled to decrees of specific performance
without posting bond or other security.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed on the
date first written above.
ATTEST: INTERNATIONAL NURSING SERVICES, INC.
By:
Name: Name:
Title: Title:
PRIVATE PLACEMENT PURCHASE AGREEMENT
January 28, 1997
International Nursing Services, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
re: Purchase of Note and Warrant
Gentlemen:
▇. ▇▇▇▇▇▇▇▇ LP ("Subscriber") has reviewed the filings which
International Nursing Services, Inc. (the "Company") has made
with the Securities Exchange Commission during the past 12
months. The Company represents and warrants to the Subscriber
that all such filings are correct and accurate in all material
respects and in all material respects state all facts necessary
to make such filings not misleading. Subscriber has had the
opportunity to discuss the Company's affairs with the Company's
officers.
2. Sale of Securities.
(a) The Company hereby sells to Subscriber, and Subscriber
hereby purchases from the Company, a convertible note (a
"Note") in the form of Exhibit A annexed hereto and in the
principal amount of $ 1,000,000, and a warrant (the
"Warrant") in the form of Exhibit B to purchase 200,000
shares of Common Stock at an exercise price of $1.1875 per
share, less $.05 (but not below $.90) for each full 30-day
period after the 120th day after the date hereof in which
the Registration Statement (as defined below) has not been
declared effective. The exercise price of the Warrant shall
in no event be greater than the exercise price of any other
warrant or option of the Company which is issued (or whose
exercise price is reduced) after the date hereof and which
is outstanding at the time the Warrant is exercised. The
Note and the Warrant are hereinafter collectively referred
to as the "securities."
(b) The purchase price for the securities is $1,000,000
and is payable in cash concurrently with the
execution and delivery hereof.
(c) The Note is payable on January 27, 1998. However, if
the Registration Statement is effective on or
before October 1, 1997, the Note shall be payable on the
first anniversary of the effectiveness of the Registration
Statement. The Note is prepayable by the Company (but only
in full, together with all accrued interest) on or before
the 120th day after the date hereof and not thereafter. If
not prepaid by the Company by the close of business on the
120th day after the date hereof, the Note and accrued
interest thereon will thereafter be convertible by
Subscriber until maturity from time to time in whole or in
part into shares of common stock of the Company at the
lesser of S 1.50 per share (the "Cap") or 65% (the
"Percentage") of the average closing- sales price of the
common stock on NASDAQ (or such other securities exchange
where the common stock may then be listed) during the last
five trading days prior to conversion.
(d) The Percentage shall be reduced by two percentage
points for each full 30-day period after the 120th day after
the date hereof in which the Registration Statement has not
been declared effective, provided that the Percentage shall
never be less than 45%. By way of example, if the
Registration Statement has not been declared effective by
the 210th day after the date hereof, the Percentage (subject
to further later reduction) shall be 59%. The preceding
sentence shall not limit any other rights or remedies of
Holder as a result of the breach by the Company of any
provisions herein relating to the Registration Statement or
otherwise.
(e) Neither the Cap nor the Percentage shall in any event
be greater than the equivalent cap or percentage applicable
to any other convertible security of the Company which is
issued (or whose terms are adjusted) after
the date hereof, which is outstanding at the time the Note
is converted and which is convertible at a discount from
market price at or immediately prior to conversion. By way
of example, if at the time the Note is converted there has
been no reduction in the Cap or the Percentage under the
provisions of Section (d) and there is outstanding a
convertible security of the Company which is convertible at
the lesser of $1 or 55% of the market price during the 10
trading days prior to conversion, then the Cap shall be $1
and the Percentage shall be 55%. The issuance of Common
Stock at a price less than the Cap shall not effect a
reduction in the Cap.
(f) The Note shall be convertible and the Warrant shall be
exercisable or convertible at any time only to the extent
that Subscriber would not as a result of such conversion or
exercise beneficially own more that 9.99% of the then
outstanding common stock of the Company. Beneficial
ownership shall be defined in accordance with Rule 13d-3
under the Securities Exchange Act of 1934. The opinion of
counsel to Subscriber shall prevail in the event of any
dispute on the calculation of Subscriber's beneficial
ownership.
3. On the 121st day after the date hereof but only if the Note
has not theretofore been prepaid in full, the Company shall
reserve for issuance on conversion and exercise of the Note and
the Warrant 5,000,000 shares of Common Stock, less any shares
theretofore issued on any such conversion or exercise. The
Company shall use its best efforts promptly to list on NASDAQ all
shares of Common Stock which are issued upon conversion of the
Note or on exercise of the Warrant.
4. Registration.
(a) The Company will on or before the 60th day after the
date of this Agreement, file a registration
statement on Form S-3 or Form S- I (the "Registration
Statement") for the public sale by Subscriber of the
shares
which are issuable on conversion of the Note and Warrant.
The shares to be covered by the Registration
Statement are collectively referred to as the "registered
shares."
(b) The Company shall use its diligent efforts to cause the
Registration Statement to become effective not later than 90 days
after the date of filing, and to remain effective for two and one-
half years. The registration shall be accompanied by blue sky
clearances in such states as Subscriber may reasonably request.
(c) The Company shall pay all expenses of the registration
hereunder, other than Subscriber's underwriting discounts.
(d) The Company shall supply to Subscriber a reasonable
number of copies of all registration materials and
prospectuses. The Company and Subscriber shall execute and
deliver to each other indemnity agreements which are
conventional in registered offerings of this type. The
Subscriber shall reasonably cooperate with the Company in
the preparation and filing of the Registration Statement and
appropriate amendments thereto. Subscriber may transfer a
proportionate part of its registration rights to transferees
of the Note and Warrant or portions thereof
5. Certain Representations.
(a) Subscriber represents and warrants that it is
purchasing the Note and Warrant solely for investment solely
for its own account and not with a view to or for the resale
or distribution thereof except as permitted under the
Registration Statement.
(b) Subscriber understands that it may sell or otherwise
transfer the Note and Warrant or the shares issuable on
conversion of the Note and Warrant only if such transaction
is duly registered under the Securities Act of 1933, as
amended, under the Registration Statement or otherwise, or
if Subscriber shall have received the favorable opinion of
counsel to the holder, which opinion shall be reasonably
satisfactory to counsel to the Company, to the effect that
such sale or other transfer may be made in the absence of
registration under the Securities Act of 1933, as amended,
and registration or qualification in every applicable state.
The certificates representing the aforesaid securities will
be legended to reflect these restrictions, and stop transfer
instructions will apply. Subscriber realizes that the Note
and the Warrant are not a liquid investment. Subscriber has
not
relied upon the advice of a "Purchaser Representative" (as
defined in Regulation D of the Securities Act) in evaluating
the risks and merits of this investment. Subscriber has the
knowledge and experience to evaluate the Company and the
risks and merits relating thereto.
(c) Subscriber represents and warrants that Subscriber is
an "accredited investor" as such term is defined in rule 501
of regulation D promulgated pursuant to the Securities Act
of 1933, as amended and shall be such on the date any shares
are issued to the holder; Subscriber acknowledges that
Subscriber is able to bear the economic risk of losing
Subscriber's entire investment in the shares and understands
that an investment in the Company involves substantial
risks; Subscriber has the power and authority to enter into
this agreement, and the execution and delivery of, and
performance under this agreement shall not conflict with any
rule, regulation, judgment or agreement applicable to the
Subscriber; and Subscriber has invested in previous
transactions involving restricted securities.
6. Miscellaneous
(a) This Agreement may not be changed or terminated except
by written agreement. It sets forth all agreements of the
parties. It shall be enforceable by decrees of specific
performance (without posting bond or other security) as well
as by other available remedies. This Agreement shall be
governed by, and construed in accordance with, the laws of
the State of New York. The federal and state courts sitting
in the State of New York shall have exclusive jurisdiction
over all matters relating to this Agreement. Trial by jury
is expressly waived. The prevailing party in any dispute
hereunder shall be entitled to recover its reasonable legal
fees and costs.
( b) All notices, requests, services of process, consents,
and other communications under this Agreement shall be in
writing and shall be deemed to have been delivered (i) on
the date personally delivered or (ii) one day after properly
sent Federal Express, addressed to the respective parties at
their address set forth in this Agreement to (iii) upon
transmission by facsimile so long as a confirmation copy is
simultaneously forwarded by Federal express, in each case
addressed to the respective parties at their address set
forth in this Agreement. Either party hereto may designate
a different address by providing written notice of such new
address to the other party hereto as provided above.
(c) Each party hereto shall be responsible for its own
expense with regards to the negotiation and execution of
this Agreement.
SUBSCRIBER:
MILLENCO LP
By
Address: ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
AGREED:
INTERNATIONAL NURSING SERVICES, INC.
BY_