UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN CONSENT STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment
No. )
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by the
Registrant ☒
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Revised
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Confidential, for Use of the Commission Only (as permitted by
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Definitive
Proxy Statement
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Definitive
Additional Materials
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☐
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Soliciting
Material Under §240.14a-12
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IMEDICOR, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No fee
required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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Title
of each class of securities to which transaction
applies:
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Aggregate
number of securities to which transaction applies:
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3)
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):
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4)
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Proposed
maximum aggregate value of transaction:
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5)
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Total
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or schedule and the date of its filing.
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iMEDICOR,
INC.
13506
Summerport Parkway #160
Windermere,
FL 34786
CONSENT
STATEMENT OF ACTION BY WRITTEN
CONSENT
OF STOCKHOLDERS
To our
Stockholders:
On
March 30, 2017, stockholders of iMedicor, Inc. (the
“Company”) holding not less than twothirds of its
outstanding shares of its Series A Preferred Stock and its
Series B Preferred Stock and more than a majority of the total
of its outstanding shares of its Common Stock and the shares of its
Common Stock into which its outstanding shares Series A Preferred
Stock and Series B Preferred Stock are convertible (the holders of
the shares of Series A Preferred Stock and Series B Preferred Stock
are entitled to vote on an as converted basis with the holders of
the shares of its Common Stock) agreed to
effect a recapitalization of the Company (the
“Recapitalization”), that will include:
1.
The amendment of
the Articles of Incorporation of the Company to increase the number
of shares of Common Stock that the Company is authorized to issue
from two billion (2,000,000,000) to twenty billion
(20,000,000,000).
2.
The amendment of
the Series A Preferred Stock Certificate of Designation to provide
that the Series A Preferred Stock may be converted by the Company
into shares of Common Stock at any time.
3.
The amendment of
the Series B Preferred Stock Certificate of Designation to provide
that the Series B Preferred Stock may be converted by the Company
into shares of Common Stock at any time.
4.
The conversion by
holders of convertible debt in an aggregate principal amount of
approximately $6,388,000 (as of May 31, 2017) into shares of Common
Stock.
5.
The conversion of
the Series B Preferred Stock into shares of Common
Stock.
6.
The conversion of
the Series A Preferred Stock into shares of Common
Stock.
7.
The combination of
the outstanding shares of Common Stock so that immediately
following such reverse split the number of shares of Common Stock
outstanding shall be 10,000,000 shares (the “Reverse
Split”), provided, however, no fractional share of Common
Stock shall remain outstanding following the Reverse Split and in
lieu thereof each holder who otherwise would receive a fractional
share shall be entitled to receive cash therefor.
8.
The amendment and
restatement of the Articles of Incorporation to provide that the
Company shall be authorized to issue 610,000,000 shares, consisting
of 600,000,000 shares of Common Stock, of which approximately
10,000,000 shares shall be outstanding, and 10,000,000 shares of
Preferred Stock, none of which shall be outstanding.
9.
The amendment and
restatement of the ByLaws of the Company.
Assuming
requisite written consents are obtained, the
Recapitalization will be effective upon the filing of certain
certificates with the Secretary of State of Nevada and is scheduled
to occur on June 30, 2017 (the "Recapitalization Date").
Immediately following the Recapitalization, the Company will
further amend and restate its Articles of Incorporation to change
the name of the Company from iMedicor, Inc.to iCoreConnect,
Inc
Also,
the stockholders of the Company have approved the 2016
LongTerm Incentive Compensation Plan of the Company and the
2016 Incentive Bonus Compensation Plan of the Company that the
Board of Directors had previously approved and adopted subject to
the approval of the stockholders of the Company.
The
Definitive Consent Statement will be mailed on
or before June 17, 2017 to all stockholders of record
as of the close of business on June 9,
2017.
By Order of the
Board of Directors:
/s/ Robert
McDermott
Robert
McDermott
President
iMEDICOR, INC.
CONSENT STATEMENT
This
Consent Statement is being furnished in connection with iMedicor,
Inc., a Nevada corporation (“iMedicor” “the
Company,” “we” or “us”),
soliciting requisite written consents of
stockholders of the Company (the "Requisite Written
Consents") to approve a recapitalization of the Company (the
“Recapitalization”).
The
reason for the Recapitalization is to simplify the capitalization
of the Company by converting substantially all of the outstanding
long term debt of the Company, the outstanding shares of Series B
Preferred Stock and the outstanding shares of Series A Preferred
Stock into shares of Common Stock, to reduce the number of
outstanding shares of Common Stock by combining the number of
outstanding shares of Common Stock into a lesser number of shares
of Common Stock and to enhance the ability of the Company to raise
funds to conduct its operations and to add value to the Company and
its Common Stock.
This
Consent Statement and the enclosed form of consent (the
“Consent”) are first being sent to the Company’s
stockholders on or before June 17, 2017.
Stockholders are urged to complete, date and
sign the accompanying form of Consent and return it promptly in the
envelope provided with these materials.
All such Consents
will expire on January 1, 2018 at 12:01 a.m. Pacific Standard
Time.
CONSENT PROCEDURE
Record Date
The
Company’s Board of Directors (the “Board”) has
fixed the close of business on June 9, 2017, as the
record date (the “Record Date”) for the determination
of the stockholders of record entitled to execute a Consent with
respect to the Recapitalization. The enclosed Consent is being sent
to, and may be executed only by, stockholders of record as of the
Record Date. As of the Record Date, we had issued and outstanding
35.75 shares of Series A Preferred Stock, 63.075 shares of Series B
Preferred Stock and 1,419,651,828 shares of Common Stock. Each
share of Common Stock outstanding on the Record Date entitles the
record holder to execute the Consent with respect to one share for
the approval of the Recapitalization. Each share of Series A
Preferred Stock and each share of Series B Preferred Stock
outstanding on the Record Date entitles the record holder thereof
to execute the consent with respect to the number of shares of
Common Stock which the holder would be entitled to receive if such
holder converted the shares of Series A Preferred Stock and/or
Series B Preferred Stock held by such holder.
Consents Required
Under
the Nevada Revised Statutes (the “NRS”), unless
otherwise provided in the articles of incorporation, any action
that may be taken at an annual or special meeting of stockholders
may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, shall be
provided by the holders of outstanding shares having not less than
the minimum number of votes that would be necessary to authorize or
take that action at a meeting at which all shares entitled to vote
thereon were present and voted. Our Amended and Restated Articles
of Incorporation (the “Articles”) do not limit,
prohibit, restrict, or otherwise qualify the use of this
procedure.
The NRS
generally requires the approval of a majority voting power of the
Company and, in this instance, to amend the Certificate of
Designation of the Series A Preferred Stock and the Certificate of
Designation of the Series B Preferred Stock which amendments are
part of the Recapitalization, the approval of two-thirds (2/3) of
the outstanding shares of the Series A Preferred Stock and
two-thirds (2/3) of the outstanding shares of the Series B
Preferred Stock, respectively.
As a
result, approval of the Recapitalization will require the receipt
of unrevoked written Consents from the holders of at least
sixty-six and two-thirds percent (66
2
⁄
3
%)
of the outstanding shares of Series A Preferred Stock and at least
sixty-six and two thirds percent (66
2
⁄
3
%)
the outstanding shares of Series B Preferred Stock and of more than
a majority of the outstanding shares of the Common Stock and the
shares of Common Stock into which its outstanding shares of Series
A Preferred Stock and Series B Preferred Stock are convertible (the
holders of the shares of Series A Preferred Stock and Series B
Preferred Stock are entitled to vote on an as converted basis with
the holders of the shares of its Common Stock). As of the date of
this Consent Statement, the holders of more than two-thirds percent
(66
2
⁄
3
%)
of the outstanding shares of Series A Preferred Stock and of more
than sixty-six and two thirds percent (66
2
⁄
3
%)
of the outstanding shares of Series B Preferred Stock and the
holders holding more than a majority of the total of its
outstanding shares of the Common Stock and the shares of its Common
Stock into which its outstanding shares Series A Preferred Stock
and Series B Preferred Stock are convertible (the holders of the
shares of Series A Preferred Stock and Series B Preferred Stock are
entitled to vote on an as converted basis with the holders of the
shares of its Common Stock) have entered into a Recapitalization
Agreement dated as of November 1, 2016 agreeing
to effect the Recapitalization. Accordingly, the
holders of shares of the capital stock of the Company whose consent
is required to consummate the Recapitalization have as of the date
of this Consent Statement have agreed to
effect the Recapitalization. If and when the
Requisite Written Consents shall have been obtained and the
Recapitalization is consummated, the Company will notify its
stockholders by filing a Current Report on Form 8-K with the
Securities and Exchange Commission
(the “SEC”).
Expiration of Consents
If the
Recapitalization shall not have occurred, Consents will expire on
January 1, 2018 at 12:01 A.M. Pacific Standard
Time.
Submission and Revocation of Consents
The
enclosed Consent permits stockholders to approve of and consent to,
disapprove of and not consent to, or abstain with respect to the
Recapitalization. All properly executed Consents will be counted in
accordance with the instructions indicated on the Consent, if any.
If a properly executed Consent has been received but no
instructions are provided or indicated as to what action is to be
taken, such Consent will be deemed to constitute a Consent
FOR
the approval of the
Recapitalization.
For
shares held in “street name” through a broker or other
nominee, the broker or nominee may not be permitted to exercise
discretion with respect to the Recapitalization. Thus, if
stockholders do not give their broker or nominee specific
instructions as to how to consent with respect to the
Recapitalization, their shares may not be and will not be counted
in determining the number of Consents that have been received
approving and consenting to the Recapitalization.
Any
stockholder submitting a Consent may revoke it at any time before
the action authorized by the executed Consents becomes effective by
duly executing and delivering a written revocation to the Company.
A revocation of a Consent may be in any written form validly
executed by the revoking stockholder so long as it clearly states
that the Consent previously given is no longer effective. Any
written revocation of a Consent shall be delivered to the Secretary
of the Company at our principal executive offices, located at the
address set forth above. As stated above, a sufficient number of
unrevoked written consents to take the proposed action have been
signed by stockholders of record and delivered to the
Company.
Appraisal Rights
Under
the NRS it is conceivable that a stockholder may be entitled to
notice of and assert stockholder’s dissenter’s rights
as set forth in NRS 92A.300 to 92A.500. See paragraph 7 of Section
III hereunder and Exhibit I attached hereto. In order for a
stockholder to assert dissenter’s rights under the NRS, the
stockholder must not approve or consent to the
Recapitalization.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS
Some of
the information included in this Consent Statement and the
documents incorporated by reference herein contains
“forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). These statements use forward-looking
words such as “may,” “will,”
“should,” “could,”
“achievable,” “anticipate,”
“believe,” “expect,”
“estimate,” “project” or other words and
phrases of similar meaning. These statements discuss goals,
intentions and expectations as to future trends, plans, events,
results of operations or financial condition or state other
“forward-looking” information. A forward-looking
statement may include a statement of the assumptions or bases
underlying the forward-looking statements. We believe we have
chosen these assumptions or bases in good faith and that they are
reasonable. However, we caution you that assumed facts or bases
almost always vary from actual results, and the differences between
assumed facts or bases and actual results can be material,
depending on the circumstances. When considering forward-looking
statements, you should keep in mind the cautionary statements in
the documents we have incorporated by reference, including in our
Annual Report on Form 10-K for the year ended June 30, 2014. These
statements reflect our current views with respect to future events
and are subject to various risks, uncertainties and assumptions,
including, but not limited to:
●
The availability of
additional capital.
●
The ability to
attract, retain and motivate highly skilled personnel.
●
The ability to
achieve significant sales for our products and
services.
●
The disclosure or
misuse of our confidential information.
●
The ability to keep
pace with rapid technological changes.
●
The ability to
utilize third- party software to deliver specified aspects of our
services.
●
Competition of
competitors with greater financial resources and established
relationships with major customers.
●
The potential
introduction by others of products competitive with our
products.
●
The ability to
protect our intellectual property rights and avoid liability for
infringing intellectual property rights of others.
●
The ability to
maintain an effective system of internal control over financial
reporting and disclosure controls and procedures.
●
Future regulatory
developments related to the internet.
●
The unpredictable
nature of online businesses and e-commerce in general.
●
The general
economic conditions in the United States and world
wide.
RECAPITLIZATION
The
Company was incorporated under the laws of the State of Nevada on
November 2, 1992 as E & M Management, Inc. ("E&M"). E&M
entered into a certain Plan and Agreement of Merger (the "Merger
Agreement") dated July 29, 1998 with Omninet International, Inc.
("Omninet"), and, subject to numerous terms and conditions, E&M
was to be merged with and into Omninet, whereby Omninet would be
the surviving corporation. In anticipation of the proposed merger,
on September18, 1998 E&M changed its name to Omninet
International, Inc. As a result of a failed business venture at
Omninet, Omninet and E&M entered into a Mutual Termination
Agreement and Release dated as of October 27, 1999 that terminated
the Merger Agreement. On December 6, 1999, the Company changed its
name to OMII Corp.
Pursuant to a Share
Exchange Agreement dated October 12, 2005, the Company issued an
aggregate of 17,600,000 shares of Common Stock, representing
approximately 80% of the Common Stock immediately outstanding after
the transaction, to the stockholders of Vemics, Inc., a Delaware
corporation ("VemicsDelaware"), in exchange for all of the
outstanding stock of VemicsDelaware. Following this
transaction, VemicsDelaware became a wholly owned subsidiary of the
Company, though for accounting purposes VemicsDelaware was
deemed to have been the acquirer in a "reverse
merger."
On
October 25, 2005, the Company amended its Articles of Incorporation
to increase the total number of its authorized shares of Common
Stock from twenty five million (25,000,000) shares to seventy five
million (75,000,000) shares and changed its name to Vemics,
Inc.
On
April 15, 2008, the Company amended and restated its Articles of
Incorporation to increase the aggregate number of shares of stock
that the Company had authority to issue to three hundred million
(300,000,000) shares, consisting of two hundred million
(200,000,000) shares of common stock (the "Common Stock") and one
hundred million (100,000,000) shares of preferred stock (the
"Preferred Stock").
On July
24, 2009, the Company amended its Articles of Incorporation to
change the name of the Company to iMedicor, Inc.
On May
3, 2010, the Company amended its Articles of Incorporation to
provide that the aggregate number of shares of stock that the
Company had authority to issue was seven hundred million
(700,000,000) shares, consisting of six hundred million
(600,000,000) shares of Common Stock and one hundred million
(100,000,000) shares of Preferred Stock (the “Preferred
Stock’).
On
October 10, 2011, the Company filed a Certificate of Designation
creating a series of Preferred Stock consisting of 28 authorized
shares of Preferred Stock designated as “Series A Preferred
Stock” and setting forth the voting powers, designation,
preferences, limitations, restrictions and related rights of the
Series A Preferred Stock (the “Series A Preferred Stock
Certificate of Designation”).
On
October 10, 2011, the Company filed a Certificate of Designation
creating a series of Preferred Stock consisting of 60 authorized
shares of Preferred Stock designated as “Series B Preferred
Stock” and setting forth the voting powers, designation,
preferences, limitations, restrictions and related rights of the
Series B Preferred Stock (the “Series B Preferred Stock
Certificate of Designation”).
On July
27, 2012, the Company amended its Articles of Incorporation to
provide that the number of shares of stock that the Company had
authority to issue was two billion (2,000,000,000)
shares.
On
December 19, 2012, the Company filed a Certificate of Correction to
correct its Articles of Incorporation to provide that the aggregate
number of shares of stock that the Company had authority to issue
was two billion one hundred million (2,100,000,000) shares,
consisting of two billion (2,000,000,000) shares of Common Stock
and one hundred million (100,000,000) shares of Preferred
Stock.
On
March 22, 2013, the Company amended the Series A Preferred Stock
Certificate of Designation to increase the number of shares
constituting such series to up to 37 and to redefine the powers,
preferences, rights and limitations of the Series A Preferred
Stock.
On
March 22, 2013, the Company amended the Series B Preferred Stock
Certificate of Designation to increase the number of shares
constituting such series to up to 63 and to redefine the powers,
preferences, rights and limitations of the Series B Preferred
Stock.
Throughout the
period commencing with the incorporation of the Company to the date
of this Consent Statement the Company has issued shares of its
Series A Preferred Stock, Series B Preferred Stock and Common
Stock, as well as securities convertible into or exercisable or
exchangeable for shares of its Common Stock in exchange for funds
used by the Company to operate the business of the Company and/or
for services rendered to or on behalf of the Company.
As of
the date of this Consent Statement (i.e. before the Reverse Split
referred to in paragraph 6 under Section III of this Consent
Statement), the Company has or will have issued and
outstanding:
(i)
convertible debt convertible into shares of Common Stock as
follows:
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Accrued
and Unpaid Interest
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$
14,765,516
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6,500,732,091
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(ii) shares of
stock as follows:
Class
of Stock
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Series A Preferred
Stock
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35.750
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Series B Preferred
Stock
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63.075
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Common
Stock
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1,419,651,828
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(iii) options and
warrants exercisable for shares of Common Stock as
follows:
Type
of Security
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Options
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494,966,666
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Warrants
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106,457,230
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II.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following tables set forth information regarding beneficial
ownership of our Series A Preferred Stock, our Series B Preferred
Stock, and our Common Stock as of May 31, 2017 based
on a review of information filed with the SEC and our records with
respect to each person known to be the beneficial of more than 5%
of the outstanding shares of our Series A Preferred Stock, Series B
Preferred Stock, and our Common Stock. Also shown is the beneficial
ownership for each class of stock for each of our directors, each
of our named executive officers, and our directors and executive
officers as a group.
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Name of Beneficial Owner
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WESCO
Energy Corporation (1)
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8.000
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22.4
%
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Sonoran
Pacific Resources, LLP (1)
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5.000
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14.0
%
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SH
114, LLP (1)
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5.000
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14.0
%
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Sonoran
Pacific Foundation, Inc. (1)
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5.000
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14.0
%
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Family
Life Educational Ministries (1)
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5.000
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14.0
%
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All
directors and executive officers as a group (3
persons)
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-
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0.0
%
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(1)
These entities, are
collectively named “The Sonoran Group”. The Sonoran
Group is not a group as contemplated by the SEC. rather Jerry Smith
is involved with said entities. Several of these entities are
notforprofit entities. Jerry Smith is the President of
the corporate General Partner of Sonoran Pacific Resources, LLP,
hereinafter “Sonoran”. He, and the JDS Trust
collectively own 25 % of Sonoran As President of Sonoran’s
general partner, Mr. Smith can generally direct its activities.
However, he disclaims beneficial ownership of the remaining 75% of
the Sonoran ownership interests in the Company and all of the
ownership interests of any nonprofit members of the Sonoran
Group
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Name of Beneficial Owner
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Robert
McDermott (1)
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19.125
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30.3
%
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Chan
Coddington (2)
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11.000
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17.4
%
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Jerry
Smith (3)
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3.500
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5.5
%
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JD
Smith (4)
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1.000
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1.6
%
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Jeff
Stellinga (5)
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0.450
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0.7
%
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All
directors and executive officers as a group (3
persons)
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20.575
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32.6
%
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(1)
Mr. McDermott is
the President, the Chief Executive Officer and a member of the
Board of Directors of the Company.
(2)
Mr. Coddington is a
former member of the Board of Directors of the
Company.
(3)
Mr. Jerry Smith is
an investor in the Company and the President of the General Partner
of Sonoran Pacific Resources, LLP.
(4)
Mr. JD Smith is the
Chairman of the Board of Directors of the Company.
(5)
Mr. Stellinga is a
member of the Board of Directors of the Company.
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Name of Beneficial Owner
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Jerry
Smith (1)
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9,475,364,307
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86.4
%
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Robert
McDermott (2)
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723,371,853
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34.6
%
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Chan
Coddington (3)
|
414,884,795
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26.3
%
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Lucinda
Smith (4)
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100,000,000
|
6.6
%
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Fred
Zolla (5)
|
100,000,000
|
6.6
%
|
Don
Douglas (6)
|
53,549,893
|
3.6
%
|
JD
Smith (7)
|
18,946,518
|
1.3
%
|
Don
Sproat (8)
|
15,080,556
|
1.1
%
|
Jeff
Stellinga (9)
|
8,603,436
|
0.6
%
|
All
directors and executive officers as a group (5
persons)
|
819,552,256
|
41.2
%
|
(1)
Consists of: (a)
179,675,000 shares of Common Stock owned by. Mr. Smith’s
Trusts (135,475,000), Sonoran Pacific Resources (24,000,000), WESCO
Energy Corporation (20,000,000) and JD Investments (200,000). (b)
255,537,329 shares of Common Stock issuable upon conversion of 18.0
shares of Series A Preferred Stock. (c) 49,687,814 shares of Common
Stock issuable upon conversion of 3.5 shares of Series B Preferred
Stock owned by JDS Trust. (d) 8,979,459,103 shares of Common Stock
issuable upon conversion of Sonoran Pacific Resources, LLP’s
convertible debt of the Company. (e) 4,044,698 shares of Common
Stock issuable upon conversion of Bridge Notes owned by JDS Trust.
(f) 1,295,000 shares of Common Stock issuable upon exercise of
warrants by JDS Trust (g) 4,138,473 shares of Common Stock issuable
upon conversion of Bridge Notes held personally by Mr. Smith. (h)
1,526,890 shares of Common Stock issuable upon exercise of Bridge
Warrants owned by Mr. Smith.
(2)
Consists of: (a)
50,000,000 shares of Common Stock owned by Mr. McDermott. (b)
271,508,412 shares of Common Stock issuable upon conversion of
19.125 shares of Series B Preferred Stock. (c) 135,707 shares of
Common Stock issuable upon conversion of Bridge Notes; (d) 61,068
shares of Common Stock issuable upon exercise of Bridge Warrants;
(e) 401,666,666 shares of Common Stock issuable upon exercise of
presently exercisable options.
(3)
Consists of:
(a) 66,723,094 shares of Common Stock owned by Mr.
Coddington, (b) 156,161,701 shares of Common Stock
issuable upon conversion of 11 shares of Series B Preferred
Stock, (c) 142,000,000 shares of Common Stock to be issued to
Mr. Coddington simultaneously with the conversion of the
Convertible Debt pursuant to the Recapitalization Agreement and (d)
50,000,000 shares of Common Stock issuable upon the exercise of
warrants to be issued to Mr. Coddington simultaneously
with the conversion of the Convertible Debt pursuant to the
Recapitalization Agreement.
(4)
Consists of
100,000,000 shares of Common Stock owned by Ms. Smith.
(5)
Consists of a
warrant to purchase up to 100,000,000 shares of Common
Stock.
(6)
Consists of: (a)
53,300,000 shares of Common Stock issuable upon exercise of Vested
Options. (b) 180,261 shares of Common Stock issuable upon
conversion of Bridge Notes. (c) 69,632 shares of Common Stock
issuable upon exercise of 69,632 warrants.
(7)
Consists of: (a)
4,500,000 shares of Common Stock owned by High Sonoran, a company
controlled by JD Smith and 250,000 shares of Common Stock owned by
JD Smith. (b) 14,196,518 shares of Common Stock issuable upon
conversion of 1 share of Series B Preferred Stock owned by High
Sonoran.
(8)
Consists of; (a)
15,000,000 shares of Common Stock issuable upon exercise of
presently exercisable options; (b) 55,556 shares of Common Stock
issuable upon conversion of Bridge Notes; (c) 25,000 shares of
Common Stock issuable upon exercise of 25,000
warrants.
(9)
Consists of: (a)
2,000,000 shares of Common Stock owned by Mr. Stellinga. (b)
6,388,433 shares of Common Stock issuable upon conversion of 0.45
shares of Series B Preferred Stock. (c) 160,003 shares of Common
Stock issuable upon conversion of Bridge Notes. (d) 55,000 shares
of Common Stock issuable upon exercise of 55,000
warrants.
(10)
Lucinda Smith is
the daughter of Jerry Smith and JD Smith is the son of Jerry
Smith.
III.
ELECTION OF DIRECTORS AND OFFICERS
The
Company had not held an annual meeting of stockholders of the
Company for the election of directors for more than eighteen
(18) months. As a result, stockholders holding not less than a
majority of the voting power of the Company signed a written
consent dated June 7, 2016 determining that the number of directors
constituting the Board of Directors is three (3) and electing JD
Smith, Robert McDermott and Jeffrey Stellinga as Directors of the
Company to serve until the next annual meeting of the stockholders
of the Company and until their successors are duly elected and
qualified.
At a
meeting of the Board of Directors of the Company held on August 17,
2016 the Board of Directors of the Company elected Robert McDermott
as President and Donald Douglas as Secretary of the Company and
designated Mr. McDermott as Chief Executive Officer, Donald Sproat
as Chief Financial Officer and Mr. Douglas as Chief Operating
Officer of the Company. At the same meeting, the Board appointed
Mr. Smith and Mr. Stellinga as members of the Audit Committee, the
Compensation Committee and the Nominating and Governance Committee
and designated Mr. Smith as Chairman of the Compensation Committee
and the Nominating and Governance Committee and Mr. Stellinga as
Chairman of the Audit Committee.
On
March 30, 2017, stockholders of the Company holding not less than
two thirds of the outstanding shares of each of the Series A
Preferred Stock of the Company (the “Series A Preferred
Stock”) and the Series B Preferred Stock of the Company and
holders of Common Stock of the Company (who, together with the
holder of the Series A Preferred Stock and the Series B Preferred
Stock are entitled to vote upon matters submitted to stockholders
for a vote in the same manner and with the same effect as the
holders of Common Stock, voting together on an as converted basis
and, therefore, represent a majority of the voting power of the
Company), as well as the holders of convertible debt of the Company
(the “Convertible Debt Holders”) who will hold as of
June 30, 2017 approximately $6,388,000 of indebtedness (principal
and accrued and unpaid interest thereon) of the Company convertible
into shares of Common Stock of the Company (the “Convertible
Debt”), entered into a Recapitalization Agreement dated as of
November 1, 2016 (the "Recapitalization Agreement") for the purpose
of recapitalizing the Company (the "Recapitalization"). A copy of
the Recapitalization Agreement is attached to this Consent
Statement as Exhibit I.
Section
78.320 of the Nevada Statutes provides that an action permitted to
be taken at a meeting of stockholders may be taken by written
consent if it is signed by stockholders holding at least a majority
of the voting power. The Certificates of Designation of both the
Series A Preferred Stock and the Series B Preferred Stock provide
that the holders of shares of Series A Preferred Stock and Series B
Preferred Stock are entitled to vote upon matters submitted to
stockholders for a vote in the same manner and with the same effect
as the holders of shares of Common Stock, voting together with the
holders of Common Stock as a single class and that the holders of
such Series A Preferred Stock and Series B Preferred Stock shall
have the number of votes equal to the number of shares of Common
Stock into which the Series A Preferred Stock or the Series B
Preferred Stock, as the case may be, is convertible on the date
upon which the consent in lieu of meeting is
executed.
The
parties to the Recapitalization Agreement agreed that,
assuming the Requisite Written Consents have been obtained,
the Recapitalization would take place on such date as the Company,
in its sole discretion, would designate in a written notice to all
of the parties to the Recapitalization Agreement (the
"Recapitalization Date”). The Board of Directors has
designated June 30, 2017 as the Recapitalization Date and written
notice thereof has been given to all of the parties to the
Recapitalization Agreement.
Pursuant to the
Recapitalization:
1.
Amendment of Articles of
Incorporation.
Section 3.1 of the Articles of Incorporation
shall be amended to increase the number of shares of Common Stock
that the Company is authorized to issue from two billion
(2,000,000,000) to twenty billion (20,000,000,000) and, in
connection therewith, the Company shall prepare, execute, and file
with the Secretary of State of the State of Nevada an Amendment of
Articles of Incorporation.
The
purpose of this amendment is to increase the number of authorized
but unissued shares of Common Stock in order that the Company shall
have available enough authorized shares of Common Stock to issue if
all outstanding debt securities, shares of Series B Preferred Stock
and shares of Series A Preferred Stock convertible into or for
which options or warrants may be exercisable or exchangeable are
converted, exercised and/or exchanged.
2.
Amendment of Series B Preferred Stock
Certificate of Designation.
Clause (b) of Section 4 of the
Series B Preferred Stock Certificate of Designation shall be
amended to read as follows: “(b) at the option of the Company
at any time” and, in connection therewith, the Company shall
prepare, execute, and file with the Secretary of State of the State
of Nevada an Amendment of Certificate of Designation amending the
Series B Preferred Stock Certificate of Designation.
The
purpose of this amendment is to permit the Company at its option to
cause the conversion of all outstanding shares of Series B
Preferred Stock.
3.
Amendment of Series A Preferred Stock
Certificate of Designation.
Clause (b) of Section 4 of the
Series A Preferred Stock Certificate of Designation shall be
amended to read as follows:“(b) at the option of the Company
at any time” and, in connection therewith, the Company shall
prepare, execute, and file with the Secretary of State of the State
of Nevada an Amendment of Certificate of Designation amending the
Series A Preferred Stock Certificate of Designation.
The
purpose of this amendment is to permit the Company at its option to
cause the conversion of all outstanding shares of Series A
Preferred Stock.
4.
Conversion
of
Convertible Debt.
The holders
of the Convertible Debt (the “Convertible Debt
Holders”) shall convert all of the Convertible Debt
(consisting of approximately $6,388,000 aggregate principal amount
of indebtedness) held by the Convertible Debt Holders at a price
per share of $0.001 into approximately 6,388,000,000 shares of
Common Stock, in the manner set forth in the instruments relating
to the Convertible Debt.
If
for any reason the Recapitalization occurs either before June
30, 2017, based on the amount of interest due and not paid,
the number of shares of Common Stock into which the Convertible
Debt shall convert will decrease and, if for any reason the
Recapitalization occurs after June 30, 2017, based on
the amount of interest due and not paid, the number of shares of
Common Stock into which the Convertible Debt shall convert will
increase.
The
conversion of the Convertible Debt into shares of Common Stock will
simplify and add equity to the capitalization of the
Company.
5.
Conversion of the Series B Preferred
Stock and, immediately thereafter conversion of the Series A
Preferred Stock.
Immediately following the conversion of the
Convertible Debt into shares of Common Stock, the Company shall
convert the Series B Preferred Stock and immediately thereafter the
Series A Preferred Stock into shares of Common Stock in the manner
set forth in section 4(b) of the Series B Preferred Stock
Certificate of Designation and section 4(b) of the Series A
Preferred Stock Certificate of Designation,
respectively.
The
purpose of causing all outstanding shares of Series B Preferred
Stock and all outstanding shares of Series A Preferred Stock to be
converted into shares of Common Stock is to simplify the
capitalization of the Company and eliminate the potential dilution
that the outstanding shares of Series B Preferred Stock and Series
A Preferred Stock represent which the Company believes may depress
the value of the Common Stock and restrict the ability of the
Company to raise funds to conduct its operations and to add value
to the Company and its Common Stock.
6.
Reverse Split of Shares of Common
Stock.
Immediately following the conversion of the
Convertible Debt, the Series B Preferred Stock and the Series A
Preferred Stock, the Company shall combine its outstanding shares
of Common Stock by a ratio to be determined by the Company’s
Board of Directors, in its sole discretion, so that immediately
following such reverse split the number of shares of Common Stock
shall be 10,000,000 shares (the “Reverse Split”).
provided however, no fractional share of Common Stock shall remain
outstanding and in lieu of any fractional share of Common Stock
that otherwise would be outstanding, the holder thereof shall be
entitled to receive and the Company shall pay to such holder of
such fraction, that amount equal to such fraction times that amount
that the Board shall determine in good faith to be the value of a
share of Common Stock on the Recapitalization Date.
In
order for a stockholder to receive a new stock certificate
evidencing the shares of Common Stock of the Company into which the
shares of Common Stock owned by such stockholder on the
Recapitalization Date shall have been converted as a result of the
Reverse Split and the Cash Payment which such stockholder shall be
entitled to receive in lieu of any fractional share of Common Stock
which such stockholder otherwise would have been entitled to
receive, such stockholder should complete the Letter of Transmittal
attached to this Consent Statement as Exhibit II and return it,
accompanied by the stock certificates evidencing such
stockholder’s shares in the Company, to Pacific Stock
Transfer Company.
7.
Dissenter’s Rights.
Nevada Revised Statutes (“NRS”) 78.2055 provides that
any proposed corporate action that would result in only money being
paid or scrip being issued to stockholders who:
(i)
before the proposed
corporate action becomes effective, hold 1 percent or more of the
outstanding shares of the affected class or series.
and
(ii)
would otherwise be
entitled to receive a fraction of a share in exchange for the
cancellation of all their outstanding shares, is subject to the
provisions of NRS 92A.300 to 92A.500, inclusive. If the proposed
corporate action is subject to those provisions, any stockholder
who is obligated to accept money or scrip rather than receive a
fraction of a share resulting from the action taken pursuant to
Section 78.2055 may dissent in accordance with those provisions and
obtain payment of the fair value of the fraction of a share to
which the stockholder would otherwise be entitled. Copies of NRS
78.2055 and NRS 92A.300 to 92A.500 are attached hereto as Exhibit
III.
Accordingly,
because the Reverse Split could conceivably result in the payment
of cash to a stockholder in lieu of the issuance of a fractional
share as provided in NRS 78.2055 and was approved by a written
consent of stockholders without a meeting, it is possible that a
stockholder may be entitled to the notice prescribed by NRS 92A.430
of such stockholder’s dissenter’s rights
(“Dissenter’s Rights”) as set forth in NRS
92A.300 to 92A.500. If such a stockholder of record exists,
iMedicor, Inc. will give to such stockholder the notice prescribed
by NRS 92A.430. iMedicor, Inc. considers the cash payment that any
such stockholder would receive to satisfy the requirements of
Nevada law to pay “fair value” in lieu of fractional
shares. If, however, a stockholder does not agree that such payment
represents “fair value,” such stockholder may assert
Dissenter’s Rights.
8.
Amendment and Restatement of Articles
of Incorporation.
The Articles of Incorporation shall be
amended and restated in its entirety to read as set forth in
Exhibit 2.8 of the Recapitalization Agreement (the "Reverse Split
Amendment") to reflect the Reverse Split and to provide that,
following the filing of the Reverse Split Amendment, the Company
shall be authorized to issue six hundred ten million (610,000,000)
shares, consisting of six hundred million (600,000,000) shares of
Common Stock, of which approximately ten million (10,000,000)
shares shall be outstanding, and ten million (10,000,000) shares of
Preferred Stock, none of which shall be outstanding. Following the
filing of the Reverse Split Amendment and the conversion of the
Series A Bridge Notes and the Series B Bridge Notes (see the Bridge
Financings below), which is anticipated to occur immediately
following the Recapitalization, the Company anticipates that the
Company shall continue to have outstanding convertible debt in the
aggregate principal amount of approximately $63,654 convertible
into approximately 197,395 shares of Common Stock and
nonconvertible debt (exclusive of trade debt and other
payables incurred in the operation of the business of the Company
in the ordinary course) of approximately $1,525,000.
9.
Amendment of ByLaws.
The
ByLaws of the Company shall be amended and restated in their
entirety to read as set forth in Exhibit 2.9 of the
Recapitalization Agreement.
The
Recapitalization will be effective upon the filing of the Reverse
Split Amendment with the Secretary of the State of the State of
Nevada (the "Effective Date") which, assuming the Requisite
Written Consensts have been obtained, the Company intends to
occur shortly following the date 10 days following the date on
which this Consent Statement is sent or given to each holder of
shares of Class A Preferred Stock, Class B Common Stock and Common
Stock and to each holder of a security issued by the Company
convertible into or excisable or exchangeable for shares of Common
Stock.
V.
CHANGE OF COMPANY NAME
Immediately
following the Recapitalization, the Company will further amend and
restate its Articles of Incorporation to change the name of the
Company from iMedicor, Inc. to iCoreConnect Inc. In connection
therewith, the Company will file with the Secretary of State of the
State of Nevada amended and restated Articles of Incorporation in
the form attached hereto as Exhibit IV.
The
purpose of this amendment to change the name of the Company is to
reflect the fact that the business of the Company has expanded and
is no longer limited to the medical field.
VI.
BRIDGE FINANCINGS
Series
A Bridge Financing
The
Company has been raising funds on a best efforts basis up to a
maximum amount of $10,000,000 for working capital by issuing Series
A 18% Convertible Promissory Notes (the “Series A Bridge
Notes”) with warrants (the “Series A Bridge
Warrants”). The Series A Bridge Notes bear interest at the
rate of 18% per annum and were payable at the earlier of
December 31, 2016 (the “Maturity Date”) or
conversion. The Series A Bridge Notes (principal and accrued and
unpaid interest) are convertible into shares of Common Stock at a
price (following the Reverse Split) equal to $0.45 per share of
Common Stock. As of the date of this Consent Statement, the Series
A Bridge Notes have not been paid. Investors purchasing the Series
A Bridge Notes receive one Series A Bridge Warrant for every $1.00
in principal amount of the Series A Bridge Notes purchased in the
Series A Bridge Offering. Each Series A Bridge Warrant is
exercisable until December 31, 2019 to purchase one share of Common
Stock at an exercise price (following the Reverse Split) of $1.35
per share, subject to adjustment in certain
circumstances.
As of
the date of this Consent Statement, the Company has issued Series A
Bridge Notes in the aggregate principal amount of $6,226,544 and
Series A Bridge Warrants to purchase 6,226,544 shares of Common
Stock of the Company.
The
Series A Bridge Notes are convertible into shares of Common Stock
at any time at the option of the Series A Bridge Note holder. The
Series A Bridge Notes (principal and accrued and unpaid interest)
are convertible at a price (following the Reverse Split) equal to
$0.45 per share of Common Stock, subject to adjustment as provided
below. If the Company’s fully diluted shares of Common Stock
outstanding on the date of conversion is greater or less than 10
million, the Conversion Price shall be adjusted proportionately to
equate to a Conversion Price based upon a $4.5 million pre-money
valuation of the Company on a fully diluted basis on the date of
conversion (i.e., a 10% discount to a $5.0 million premoney
valuation on a fully diluted basis on the date of conversion). The
Conversion Price (following the Reverse Split) will be $0.45 per
share of Common Stock assuming the Company has 10 million shares of
Common Stock issued and outstanding on a fully diluted basis on the
date of conversion.
As of
the date of this Consent Statement, the Company has entered into
separate Conversion Agreements (a “Conversion
Agreement”) with the holders of Series A Bridge Notes holding
Series A Bridge Notes in the aggregate principal amount of
$5,987,890 pursuant to which on the Recapitalization Date
immediately following the Recapitalization the Series A Bridge
Notes held by such holders will be converted into shares of Common
Stock at a conversion price of $0.45 per share of Common
Stock.
The
Series A Bridge Notes by their terms are also exchangeable for
convertible notes (“PIPE Notes”) if offered by the
Company in a PIPE Financing, or exchangeable for PIPE Notes as
provided herein. In addition, if (i) the Company is current (as of
the date of this Information Statement, the Company is not current)
in filing its reports (other than reports required to be filed on
Form 8K) under Section 13(a) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and (ii) the
gross combined proceeds of the Series A Bridge Financing and the
PIPE Financing are at least the Minimum PIPE, as defined below,
then the Series A Bridge Notes will automatically be exchanged for
PIPE Notes in a principal amount equal to (A) the sum of (1) the
total outstanding principal balance of the Series A Bridge Notes
plus (2) all accrued and unpaid interest thereon, multiplied by (B)
111% (the “Exchange Ratio”). For this purpose a PIPE
Financing means a private offering of securities consisting of
convertible notes and warrants in a minimum amount equal to the
greater of (i) $4.0 million or (ii) $1.0 million more than the
aggregate principal amount of Series A Bridge Notes sold in the
Series A Bridge Financing (including the principal of and accrued
interest on the Series A Bridge Notes exchanged for PIPE Notes)
(the “Minimum PIPE”) and a maximum amount of $2.0
million more than the Minimum PIPE (the “Maximum PIPE”)
undertaken prior to the Maturity Date of the Series A Bridge
Notes.
However, as of the
date of this Consent Statement the Company has no plans to
undertake a PIPE Financing. The Company had entered into a Letter
Agreement with GVC Capital LLC (“GVC”) dated November
12, 2015 (the “GVC Letter Agreement”) pursuant to which
GVC would have been willing to act as the placement agent of the
Company’s securities in a PIPE Financing. However, as of
October 31, 2016, the Company and GVC mutually agreed to terminate
the GVC Letter Agreement.
Investors
purchasing Series A Bridge Notes also receive one Series A Bridge
Warrant for every $1.00 in principal amount of Series A Bridge
Notes purchased in the Series A Bridge Offering. Each Series A
Bridge Warrant is exercisable until December 31, 2019 to purchase
one share of Common Stock at an exercise price (following the
Reverse Split) equal to $1.35 per share (the “Series A Bridge
Warrant Exercise Price”), assuming the Company has 10 million
shares of common stock issued and outstanding on a fully diluted
basis. If the Company’s fully diluted shares of Common Stock
outstanding on the date of issuance of the Series A Bridge Warrants
is greater or less than 10 million, the Series A Bridge Warrant
Exercise Price shall be adjusted proportionately to equate to a
Series A Bridge Warrant Exercise Price based upon a $4.5 million
premoney valuation of the Company on a fully diluted basis
(i.e., a 10% discount to a $5.0 million premoney valuation on
a fully diluted basis). The Series A Bridge Warrants are callable
by the Company if (i) there exists a public trading market for the
shares of Common Stock, (ii) there is an effective registration
statement registering for resale under the Securities Act of 1933,
as amended (the “Securities Act”), the shares of Common
Stock issuable upon exercise of the Series A Bridge Warrants ( the
“Series A Bridge Warrant Shares”) and (iii) the closing
price of the Common Stock on an exchange registered with the SEC
has equaled at least 150% of the then current Series A Bridge
Warrant Exercise Price for 20 of the preceding 30 trading days and
the volume for such 30 trading days has averaged 50,000 shares per
day (for example, if the Series A Bridge Warrant Exercise Price
(following the Reverse Split) is $1.35 the Series A Bridge Warrants
are callable if the Common Stock closes above $2.02 per share for
20 of the preceding 30 trading days with the average volume in
excess of 50,000 shares per day for such 30 trading
days.
A term
sheet (titled “Fifth Amended and Restated Term Sheet”)
dated November 28, 2016 setting forth the terms of the Series A
Bridge Financing is attached hereto as Exhibit V (the “Series
A Bridge Financing Term Sheet”). The information provided in
this Paragraph V. with respect to the Series A Bridge Financing is
qualified in its entirety by reference to the terms of the Series A
Bridge Financing Term Sheet and incorporated herein by
reference.
As of
the date of this Consent Statement, the Company has issued and sold
to investors Series A Bridge Notes in the aggregate principal
amount of $6,226,544 and Series A Bridge Warrants exercisable to
purchase 6,226,544 shares of Common Stock. The form of the Series A
Bridge Note issued by the Company to the holders of Series A Bridge
Notes is attached hereto as Exhibit VI. The Company has reported
such sales on Form D and amendments thereto filed with the
SEC.
As of
the date of this Consent Statement, the Company has entered into
separate Conversion Agreements with the holders of Series A Bridge
Notes in an aggregate principal amount of $6,162,890. A form of the
Conversion Agreement is attached hereto as Exhibit VII. It is
anticipated that the Series A Bridge Notes will be converted into
Common Stock immediately following the
Recapitalization.
Series B Bridge Financing
The
Company has been raising funds on a best efforts basis up to a
maximum amount of $4,000,000 for working capital by issuing Series
B Convertible Promissory Notes (the “Series B Bridge
Notes” and, together with the Series A Bridge Notes, the
“Bridge Notes”) with warrants (the “Series B
Bridge Warrants” and, together with the Series A Bridge
Warrants, the “Bridge Warrants”). The Series B Bridge
Notes do not bear interest and are payable on December 31, 2017
(the “Maturity Date”). The Series B Bridge Notes
(principal) are convertible (see below) into shares of Common Stock
at a price (following the Reverse Split) equal to $0.45 per share
of Common Stock. As of the date of this Consent Statement, the
Series B Bridge Notes have not been paid. Investors purchasing the
Series B Bridge Notes receive one Series B Bridge Warrant for every
$1.00 in principal amount of the Series B Bridge Notes purchased in
the Series B Bridge Offering. Each Series B Bridge Warrant is
exercisable until December 31, 2019 to purchase one share of Common
Stock at an exercise price (following the Reverse Split) of $1.35
per share, subject to adjustment in certain
circumstances.
As of
the date of this Consent Statement, the Company has issued Series B
Bridge Notes in the aggregate principal amount of $230,686 and
Series B Bridge Warrants to purchase 230,686 shares of Common Stock
of the Company.
The
Series B Bridge Notes are convertible into shares of Common Stock
either at any time at the option of the Series B Bridge Note holder
or, following the Recapitalization, at any time at the option of
the Company. It is the intention of the Company to exercise its
option to convert the Series B Bridge Notes immediately following
the consummation of the Recapitalization. The Series B Bridge Notes
(principal) are convertible at a price (following the Reverse
Split) equal to $0.45 per share of Common Stock, subject to
adjustment as provided below. If the Company’s fully diluted
shares of Common Stock outstanding on the date of conversion is
greater or less than 10 million, the Conversion Price shall be
adjusted proportionately to equate to a Conversion Price based upon
a $4.5 million pre-money valuation of the Company on a fully
diluted basis on the date of conversion (i.e., a 10% discount to a
$5.0 million premoney valuation on a fully diluted basis on
the date of conversion). The Conversion Price (following the
Reverse Split) will be $0.45 per share of Common Stock assuming the
Company has 10 million shares of Common Stock issued and
outstanding on a fully diluted basis on the date of
conversion.
Investors
purchasing Series B Bridge Notes also receive one Series B Bridge
Warrant for every $1.00 in principal amount of Series B Bridge
Notes purchased in the Series B Bridge Offering. Each Series B
Bridge Warrant is exercisable until December 31, 2019 to purchase
one share of Common Stock at an exercise price (following the
Reverse Split) equal to $1.35 per share (the “Series B Bridge
Warrant Exercise Price”), assuming the Company has 10 million
shares of common stock issued and outstanding on a fully diluted
basis. If the Company’s fully diluted shares of Common Stock
outstanding on the date of issuance of the Series B Bridge Warrants
is greater or less than 10 million, the Series B Bridge Warrant
Exercise Price shall be adjusted proportionately to equate to a
Series B Bridge Warrant Exercise Price based upon a $4.5 million
premoney valuation of the Company on a fully diluted basis
(i.e., a 10% discount to a $5.0 million premoney valuation on
a fully diluted basis). The Series B Bridge Warrants are callable
by the Company if (i) there exists a public trading market for the
shares of Common Stock, (ii) there is an effective registration
statement registering for resale under the Securities Act of 1933,
as amended (the “Securities Act”), the shares of Common
Stock issuable upon exercise of the Series B Bridge Warrants ( the
“Series B Bridge Warrant Shares”) and (iii) the closing
price of the Common Stock on an exchange registered with the SEC
has equaled at least 150% of the then current Series B Bridge
Warrant Exercise Price for 20 of the preceding 30 trading days and
the volume for such 30 trading days has averaged 50,000 shares per
day (for example, if the Series B Bridge Warrant Exercise Price
(following the Reverse Split) is $1.35 the Series B Bridge Warrants
are callable if the Common Stock closes above $2.02 per share for
20 of the preceding 30 trading days with the average volume in
excess of 50,000 shares per day for such 30 trading
days.
A term
sheet dated May 1, 2017 setting forth the terms of the Series B
Bridge Financing is attached hereto as Exhibit VIII (the
“Series B Bridge Financing Term Sheet”). The
information provided in this Paragraph VII. with respect to the
Series B Bridge Financing is qualified in its entirety by reference
to the terms of the Series B Bridge Financing Term Sheet and
incorporated herein by reference.
As of
the date of this Consent Statement, the Company has issued and sold
to investors Series B Bridge Notes in the aggregate principal
amount of $230,686 and Series B Bridge Warrants exercisable to
purchase 230,686 shares of Common Stock. The form of the Series B
Bridge Note issued by the Company to the holders of Series B Bridge
Notes is attached hereto as Exhibit IX. The Company has reported
such sales on Form D and amendments thereto filed with the
SEC.
It is
anticipated that the Series B Bridge Notes will be converted into
Common Stock immediately following the
Recapitalization.
No Registration of Bridge Notes or Bridge Warrants
Neither
any Bridge Notes or the Bridge Warrants nor any of the securities
of the Company issuable upon the conversion of the Bridge Notes or
the exercise of the Bridge Warrants has been or will be registered
under the Securities Act of 1933, as amended, and may not be
offered or sold in the United States absent registration thereunder
or an applicable exemption from registration
requirements.
CAPITAL STRUCTURE
BEFORE AND AFTER RECAPITALIZATION
AND
BEFORE AND AFTER CONVERSION OF BRIDGE NOTES
The
following tables set forth the number of shares of common stock,
Series A Preferred Stock and Series B Preferred Stock that is
authorized, issued and outstanding, reserved for issuance and
authorized but unissued, both before and after giving effect to the
Recapitalization and, after the Recapitalization, the conversion of
the Bridge Notes.
|
BEFORE RECAPITALIZATION
|
AFTER RECAPITALIZATION
|
AFTER CONVERSION OF BRIDGE NOTES
|
|
Preferred
|
Preferred
|
|
|
|
|
|
|
Series A
|
Series B
|
Common
|
Preferred
|
Common
|
Preferred
|
Common
|
|
Stock
|
Stock
|
Stock
|
Stock
|
Stock
|
Stock
|
Stock
|
Authorized
|
37.0000
|
63.0000
|
2,000,000,000
|
10,000,000
|
600,000,000
|
10,000,000
|
600,000,000
|
Issued
|
35.7500
|
63.0750
|
1,419,651,828
|
-
|
10,000,000
|
-
|
27,850,477
|
Outstanding
|
35.7500
|
63.0750
|
1,419,651,828
|
-
|
10,000,000
|
-
|
27,850,477
|
Reserved for issuance
|
-
|
5.0000
|
11,001,901,790
|
-
|
18,391,678
|
-
|
541,201
|
Authorized but unissued
|
1.2500
|
-
|
580,348,172
|
10,000,000
|
590,000,000
|
10,000,000
|
572,149,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCK RESERVED FOR ISSUANCE BEFORE
RECAPITALIZATION
|
STOCK RESERVED FOR ISSUANCE AFTER
RECAPITALIZATION
|
STOCK RESERVED FOR ISSUANCE AFTER CONVERSION OF BRIDGE
NOTES
|
Warrants
|
|
5.0000
|
106,457,230
|
|
60,857
|
|
60,857
|
Vested options
|
|
|
494,966,666
|
|
282,949
|
|
282,949
|
Series A Preferred Stock
|
|
|
507,525,529
|
|
-
|
|
-
|
Series B Preferred Stock
|
|
|
895,445,391
|
|
-
|
|
-
|
Convertible Debt
|
|
|
8,979,459,103
|
|
-
|
|
-
|
Bridge notes
|
|
|
18,047,872
|
|
18,047,872
|
|
197,395
|
Total
|
|
|
11,001,901,790
|
|
18,391,678
|
|
541,201
|
VIII
.
2016 LONGTERM INCENTIVE COMPENSATION PLAN
On
August 17, 2016 (i.e. before the Reverse Split) the Board of
Directors approved and adopted, subject to the approval of the
stockholders of the Company, the 2016 LongTerm Incentive
Compensation Plan of the Company which provides for the granting to
directors, officers, employees and consultants of and service
providers to, the Company and its affiliates of awards under the
plan including options, SARs (including limited SARs), restricted
stock, deferred stock, stock granted as a bonus or in lieu of other
awards, dividend equivalents and other stock based awards to enable
such persons to acquire or increase a proprietary interest in the
Company, thereby promoting a closer identity of interests between
such persons and the Company’s stockholders, all upon the
terms and provisions set forth in the plan, a copy of which is
attached hereto as Exhibit X.
Subject
to adjustment in the event of an extraordinary or unusual event
effecting the Common Stock of the Company such as a
recapitalization, forward or reverse split or a stock dividend,
following the Reverse Split referred to in the Recapitalization
Agreement, the aggregate number of shares of Common Stock for which
Awards may be granted under the Plan shall not exceed 2,500,000
shares.
The
stockholders of the Company holding not less than a majority of the
voting power of the Company approved the 2016 LongTerm
Incentive Compensation Plan by signing a written consent dated as
of November 1, 2016.
The
Company has no current plans to grant any awards under the 2016
LongTerm Incentive Plan. Neither the Board of Directors nor
the Compensation Committee of the Company has considered the
granting of any such awards. However, it is anticipated that at
some time in the near future, the granting of such awards will be
considered and awards will be granted.
The
information provided in this Paragraph VIII with
respect to the 2016 LongTerm Incentive Compensation Plan is
qualified in its entirety by reference to the terms of the 2016
LongTerm Incentive Compensation Plan, a copy of which is
attached to this Consent Statement as Exhibit X and incorporated
herein by reference.
IX.
2016 INCENTIVE BONUS COMPENSATION PLAN
On
August 17, 2016 the Board of Directors approved and adopted,
subject to the approval of the stockholders of the Company, the
2016 Incentive Bonus Compensation Plan of the Company which
provides for the granting to key senior executives of the Company
of bonus awards based on the extent to which specified performance
goals for specified periods shall have been achieved or exceeded,
all upon the terms and provisions set forth in the plan, a copy of
which is attached hereto as Exhibit XI.
The
stockholders of the Company holding not less than a majority of the
voting power of the Company approved the 2016 Incentive Bonus
Compensation Plan by signing a written consent dated as of November
1, 2016.
The
Company has no current plans to grant any awards under the 2016
Incentive Bonus Compensation Plan. Neither the Board of Directors
nor the Compensation Committee of the Company has considered the
granting of any such awards. However, it is anticipated that at
some time in the near future the granting of such awards will be
considered and awards will be granted.
The
information provided in this Paragraph IX with respect
to the 2016 Incentive Bonus Compensation Plan is qualified in its
entirety by reference to the terms of the 2016 Incentive Bonus
Compensation Plan, a copy of which is attached to this Consent
Statement as Exhibit XI and incorporated herein by
reference.
The
table below presents the range of closing bid quotations prior to
the Reverse Split for the Company's Common Stock during the fiscal
quarters ended September 30, December 31, 2016 and March 31, 2017
and three most recent fiscal years ended June 30, 2016, 2015,
2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
quarter.
|
0.0012
|
0.0002
|
0.0010
|
0.0004
|
0.0090
|
0.0035
|
0.0240
|
0.0086
|
Second
quarter.
|
0.0018
|
0.0002
|
0.0006
|
0.0001
|
0.0065
|
0.0013
|
0.0200
|
0.0050
|
Third
quarter.
|
0.0009
|
0.0002
|
0.0010
|
0.0002
|
0.0048
|
0.0013
|
0.0295
|
0.0047
|
Fourth
quarter.
|
|
|
0.0010
|
0.0004
|
0.0020
|
0.0006
|
0.0085
|
0.0040
|
The
prices presented are bid prices, which reflect interdealer
transactions and do not include retail markups and markdowns or any
commission to the parties involved. As such, the prices may not
reflect prices in actual transactions. There is no established
market for the Common Stock except for limited and sporadic
quotations. For example, reported trading indicates that between
January 1, 2017 and March 31, 2017 (i.e. prior to the Reverse
Split) a total of only 13,959,000 shares were traded at prices
ranging from $0.0009 per share to $0.0002 per share.
The
Company has never declared a Common Stock dividend. At present,
management anticipates that no dividend will be declared or paid
with respect to the Common Stock at any time during the foreseeable
future.
Copies
of the Company’s Annual Report on Form 10K for the
fiscal year ended June 30, 2014 and Quarterly Reports on Form
10Q for the fiscal quarters ended September 30, 2014,
December 31, 2014 and March 31, 2015 are available on the Company
website (www.imedicor.com) and on the Securities and Exchange
Commission (“SEC”) website (www.sec.gov). The Company
is in the process of preparing and anticipates filing with the SEC
within the next 120 days its Annual Report on Form 10K for
the fiscal year ended June 30, 2015, its Quarterly Reports on Form
10Q for the fiscal quarters ended September 30, 2015,
December 31, 2015 and March 31, 2016, its Annual Report on Form
10K for the fiscal year ended June 30, 2016 and its Quarterly
Reports on Form 10Q for the fiscal quarters ended September
30, 2016, December 31, 2016 and March 31, 2017.
On
March 31, 2017 the Company filed with the SEC a current report on
Form 8K describing the contemplated Recapitalization as well
as the Series A Bridge Financing referred to therein. A copy of the
Form 8K is attached as Exhibit XII.
The
Company anticipates that for the foreseeable future the Company
will continue to be a company whose Common Stock will be registered
with the SEC and that the Company will file the periodic reports
provided for under the Securities and Exchange Act of 1934, as
amended.
1. HOW
THE REVERSE SPLIT WILL BE IMPLEMENTED
The
Reverse Split of the Company's outstanding Common Stock will
automatically occur on the Recapitalization Date.
Following the
Recapitalization Date, each holder of 1,749.3119 shares of Common
Stock will automatically become the holder of one share of Common
Stock. Fractional shares will not be issued in connection with the
Reverse Split, and all fractional shares that may result will be
redeemed in an amount equal to such fraction times the value of a
share of Common Stock on the Recapitalization Date as determined by
the Board of Directors of the Company in good faith.
Shares
held by stockholders affiliated with one another will be aggregated
for this purpose to the extent commercially
practicable.
The
certificates representing the Common Stock prior to the Reverse
Split will not be required to be exchanged for new certificates
representing shares of Common Stock following the Reverse Split.
Rather, the certificates representing Common Stock prior to the
Reverse Split will be deemed automatically to constitute and
represent the correct number of shares of Common Stock following
the Reverse Split without further action by the Company's
stockholders, and certificates representing Common Stock will be
issued only as certificates of Common Stock are delivered to the
Company's transfer agent when transfers of shares occur after the
Recapitalization Date or as otherwise requested by the
stockholders.
The
Company anticipates that it will pay out less than $100 to holders
of Common Stock that would otherwise be holders of fractional
shares of Common Stock following the Reverse Split based on the
value of a share of Common Stock on the Recapitalization Date as
determined by the Board of Directors of the Company in good
faith.
2.
WHAT WILL YOU
RECEIVE WHEN THE REVERSE SPLIT IS EFFECTIVE?
When
the Reverse Split is implemented:
(i)
Each holder of
1,749.3119 shares of Common Stock will automatically be entitled to
one postReverse Split share of Common Stock.
(ii)
No new certificates
representing fractional shares will be issued. Instead, the holder
of a fractional share will receive cash in an amount equal to such
fraction times the amount that the Board of Directors of the
Company shall determine in good faith to be the value of a share of
Common Stock on the Recapitalization Date. This transaction will
not involve commissions or other transaction fees that would be
charged if you sold shares on the open market. We estimate that an
aggregate amount of less than $100
will
be paid for resulting fractional shares.
3.
HOW WILL THE
OWNERSHIP INTERESTS OF HOLDERS OF FEWER THAN 1,749.3119 SHARES
PRIOR TO THE REVERSE SPLIT BE AFFECTED BY THE REVERSE
SPLIT?
Holders
of fewer than 1,749.3119 shares of Common Stock prior to the
Reverse Split will no longer have voting or ownership rights in the
Company after the Reverse Split is effected and will instead be
entitled to receive a cash payment in lieu of their interest. As a
result, such holders will no longer be able to participate in the
potential future growth, if any, of the Company.
4.
FEDERAL INCOME TAX
CONSEQUENCES OF THE REVERSE SPLIT FOR STOCKHOLDERS?
The
receipt of cash in the Reverse Split will be taxable for federal
income tax purposes. Each stockholder is advised to consult with
his or her own tax specialist for the specific tax consequences.
Stockholders who receive only shares of Common Stock should not be
subject to taxation as a result of the Reverse Split.
Stockholders who
receive cash in lieu of fractional shares of Common Stock will
recognize capital gain or loss in an amount equal to the difference
between the amount of cash received and the adjusted basis of the
fractional shares surrendered for cash.
5.
DO HOLDERS OF
COMMON STOCK HAVE APPRAISAL OR DISSENTER’S
RIGHTS?
Under
Nevada law, there is a provision for appraisal or dissenter's
rights in the event of a Reverse Split. However, it is unlikely
that very many stockholders, if any, will qualify to assert
dissenter’s rights inasmuch as NRS 78.2055 provides that any
stockholder who may dissent in accordance with the provisions of
NRS 92A.300 to 92A.500, before the proposed corporate action
becomes effective must hold 1% or more of the outstanding Common
Stock and would otherwise be entitled to receive a fraction of a
share in exchange for the cancellation of all of such
stockholder’s outstanding shares.
6.
HOW DOES A HOLDER
RECEIVE CASH FOR A FRACTIONAL SHARE?
You
should complete the enclosed Letter of Transmittal and return it
together with your stock certificates to Pacific Stock Transfer
Company, the Company's Transfer Agent, at the address shown on the
enclosed envelope.
COSTS OF OBTAINING CONSENTS
The
Company will bear the cost of preparing, assembling, and mailing
the Consent Statements and the Consent cards in connection with the
Recapitalization. In addition to the use of the mail, employees of
the Company may obtain Consents, personally or by telephone, but
will not receive additional compensation therefor. Arrangements may
be made with banks, brokerage houses, and other institutions,
nominees, and fiduciaries to forward the solicitation materials to
beneficial holders and to obtain authorization for execution of
Consents. The Company, upon request, will reimburse those persons
and entities for expenses incurred in forwarding Consent materials
to beneficial owners.
OTHER MATTERS
No
business other than the approval of the Recapitalization will be
transacted by any written Consent executed in
connection with this Consent Statement.
Very
truly yours,
iMEDICOR,
INC.
By: /s/
Robert McDermott
_____________________________
Robert
McDermott
President and Chief
Executive Officer
LIST OF EXHIBITS ATTACHED
I.
Recapitalization
Agreement
II.
Letter of
Transmittal
III.
Nevada Revised
Statutes – Dissenter’s Rights Provisions
IV.
Amended and
Restated Articles of Incorporation
V.
Series A Bridge
Financing Term Sheet (the Fifth Amended and Restated Term
Sheet)
VI.
Form of Series A
18% Bridge Note
VII.
Form of Conversion
Agreement between the Company and Holders of Series A 18% Bridge
Notes
VIII.
Series B Bridge
Financing Term Sheet
IX.
Form of Series B
Bridge Note
X.
2016 Long-Term
Incentive Compensation Plan
XI.
2016 Incentive
Bonus Compensation Plan
XII.
Form 8-K dated
March 31, 2017
FORM OF WRITTEN CONSENT SOLICITED ON BEHALF OF BOARD OF
DIRECTORS
iMEDICOR, INC.
The
undersigned stockholder of iMedicor, Inc., a Nevada corporation
(the “Company”), hereby:
☐
Approves of and Consents to
Recapitalization
|
☐
Disapproves of and
Does Not Consent to
Recapitalization
|
☐
Abstains
|
The undersigned stockholder should check the appropriate
box.
If no
direction is given, this Consent will be deemed to be a Consent
approving and consenting to the Recapitalization.
The
Recapitalization of the Company is described in the accompanying
Consent Statement mailed on or before June 17, 2017 to
all stockholders of record as of close of business on June
9, 2017. This Consent will expire on January 1, 2018 at
12:01 a.m. Pacific Standard Time.
If an
Entity
_________________________
[Print
Name of Entity]
By:
_________________________
Date:
___________
[Name]
[Title}
If an
individual
___________________________
[Print
Name]
Securities
Held:
Series
A Preferred Stock ______________ shares
Series
B Preferred Stock ______________ shares
Common
Stock _____________________ shares
Please
sign your name above. Joint owners should each sign. When signing
as an attorney, executor, administrator, trustee, guardian,
corporate officer or other similar capacity, so indicate. If the
owner is a corporation, an authorized officer should sign for the
corporation and state his or her title. If shares are held in more
than one capacity, this Consent shall be deemed valid for all
shares held in all capacities.
WARNING:
IN ORDER FOR A STOCKHOLDER TO ASSERT DISSENTER’S RIGHTS UNDER
THE NEVADA REVISED STATUTES, THE STOCKHOLDER MUST NOT APPROVE OR
CONSENT TO THE RECAPITALIZATION.
EXHIBIT I
EXECUTION COPY
RECAPITALIZATION AGREEMENT
RECAPITIALIZATION
AGREEMENT (this "Agreement"), dated as of November 1, 2016, among
iMEDICOR, Inc., a Nevada corporation formerly known as Vemics, Inc.
(the "Company"), and those persons who are signatories of this
Agreement and who are owners of record of shares of the capital
stock of the Company (the "Stockholders") and/or the holders (the
"Convertible Debt Holders") of indebtedness convertible into shares
of capital stock of the Company (the "Convertible
Debt").
A
number of the persons who are signatories of this Agreement (but
not all of those necessary to consent to and approve the
Recapitalization) entered into a Recapitalization Agreement, dated
as of December 1, 2015 (the “Originally Proposed
Recapitalization Agreement”), and thereafter entered into a
proposed Amendment No. 1 to Recapitalization Agreement, dated as of
December 24, 2015 (“Amendment No. 1 to Originally Proposed
Recapitalization Agreement”). Because not all of the
stockholders necessary to consent to and approve the
Recapitalization were signatories to either the Originally Proposed
Recapitalization Agreement or Amendment No. 1 to Originally
Proposed Recapitalization Agreement, neither of these agreements
ever took effect nor were binding upon the Company or any of such
persons signatories thereto.
This
Agreement is being entered into by all of those persons necessary
to consent to and approve the Recapitalization, and revises the
terms and provisions of the Originally Proposed Recapitalization
Agreement as amended by the Amendment No. 1 to Originally Proposed
Recapitalization Agreement and when executed by the Company and
such persons shall be binding upon the Company and each of such
persons.
BACKGROUND
WHEREAS,
the Articles of Incorporation, as amended, of the Company (the
"Articles of Incorporation") provide that the Company is authorized
to issue two billion one hundred million (2,100,000,000) shares,
consisting of two billion (2,000,000,000) shares of Common Stock,
$0.001 par value per share (the "Common Stock"), and one hundred
million (100,000,000) shares of Preferred Stock, $0.001 par value
per share (the "Preferred Stock").
WHEREAS,
the Company created a series of the Preferred Stock designated as
the Series A Preferred Stock (the "Series A Preferred Stock"), the
number of authorized shares "of which is up to thirty seven (37)",
and a series of the Preferred Stock designated as the Series B
Preferred Stock (the "Series B Preferred Stock"), the number of
authorized shares "of which is up to sixty three
(63)".
WHEREAS,
the number of issued and outstanding shares of the Series A
Preferred Stock is thirty-five and three quarters (35.75) shares,
the number of issued and outstanding shares of the Series B
Preferred Stock is sixty-three (63.00) shares and the number of
issued and outstanding shares of Common Stock is one billion four
hundred sixteen million eighty thousand four hundred nine
(1,416,080,409) shares.
WHEREAS,
Article VIII of the Articles of Incorporation provides that "the
Corporation reserves the right to amend, alter, change, or repeal
any provision contained in the Articles of Incorporation, in the
manner now or hereafter prescribed by statute, or by the Articles
of Incorporation, and all rights conferred upon stockholders herein
are granted subject to this reservation."
WHEREAS,
the certificate of designation establishing the Series A Preferred
Stock, as amended (the "Series A Certificate of Designation"),
among other things, provides in section 4 thereof
that:
"Each
share of Series A is convertible into an amount of shares of Common
Stock that is equal to one (1%) percent of the outstanding "Common
Share Equivalents" (see definition of "Common Share Equivalents"
below) of the Company at the time of conversion, subject to
readjustment as provided herein below, without the payment of any
additional consideration by the Holder thereof, as
follows:
(b)
at the option of the Company on or after the date that is ten (10)
days subsequent to the date the Company gives written notice to the
Holders that the Company has raised at least $10,000,000 in a
single or coordinated series of transactions, which notice
specifies the particulars of such capital raise
transaction(s)."
and
also provides in section 7 that:
"So
long as any shares of the Series A are outstanding, the Company
shall not, without the affirmative vote or written consent of the
holders of at least two thirds of the aggregate number of shares at
the time outstanding of the Series A (ii) alter or change any
of the powers, preferences or special rights given to the Series A
so as to affect the same adversely."
WHEREAS,
the certificate of designation establishing the Series B Preferred
Stock, as amended (the "Series B Certificate of Designation"),
among other things, provides in section 4 thereof
that:
"Each
share Series B Preferred Stock is convertible into an amount of
shares of Common Stock that is equal to one (1%) percent of the
outstanding "Common Share Equivalents" (see definition of "Common
Share Equivalents" below) of the Company at the time of conversion,
subject to readjustment as provided herein, without the payment of
any additional consideration by Holder thereof, as
follows
(b)
at the option of the Company on or after the date that is ten (10)
days subsequent to the date the Company gives written notice to the
Holders that the Company has raised at least $10,000,000 in a
single or coordinated series of transactions, which notice
specifies the particulars of such capital raise
transaction(s)."
and
also provides in section 7 that:
"So
long as any shares of the Series B are outstanding, the Company
shall not, without the affirmative vote or written consent of the
holders of at least two thirds
of the aggregate number of shares at the time
outstanding of Series B
(ii) alter
or
change any of the powers, preferences or special rights given to
the Series B so as to affect the same adversely."
WHEREAS,
the Company is in the process of offering securities in the form of
convertible notes and warrants pursuant to the Bridge Financing
Term Sheet dated November 5, 2015 (as amended from time to time,
the "Bridge Financing").
WHEREAS,
the number of shares of Common Stock that shall be issuable as of
the Recapitalization Date (assuming for purposes of the numbers
below that the Recapitalization Date is December 31, 2016) upon (i)
the conversion of the Convertible Debt, (ii) the conversion of all
outstanding shares of the Series A Preferred Stock, and (iii) the
conversion of all outstanding shares of the Series B Preferred
Stock (assuming that on the Recapitalization Date (which shall be
presumed to be December 31, 2016 for purposes of the numbers set
forth below) the conversion of the Convertible Debt occurs before
the conversion of the Series B Preferred Stock and the conversion
of the Series A Preferred Stock, that the conversion of the Series
B Preferred Stock occurs immediately after the conversion of the
Convertible Debt and that the conversion of the Series A Preferred
Stock occurs immediately after the conversion of the Series B
Preferred Stock) is as follows:
|
Number
of Shares
of Common Stock
|
Convertible
Debt
|
5,934,136,390
|
Series
A Preferred Stock
|
4,280,635,526
|
Series
B Preferred Stock
|
4,620,017,448
|
WHEREAS,
the Company and GVC Capital LLC (“GVC”) have entered
into a Letter Agreement dated as of October 31, 2016 pursuant to
which the Letter Agreement between the Company and GVC dated
November 12, 2015, and all their respective obligations thereunder,
including but not limited to their respective obligations with
respect to a proposed private offering by the Company of the
Company’s securities (a “PIPE Financing”) have
been terminated effective as of October 31, 2016.
NOW,
THEREFORE, in consideration of the premises and the mutual promises
made herein, and in consideration of the representations,
warranties, covenants and agreements herein contained, intending to
be legally bound, the Parties hereby agree as follows:
1.
Definitions.
As used herein, the following words
shall have the meanings indicated
below:
"Board
of Directors" means the board of directors of the
Company.
"Government
Entity" means any court, tribunal, arbitrator or any government or
political subdivision thereof, whether federal, state, county,
local or foreign, or any agency, authority, contractor, official or
instrumentality of such governmental political subdivision, or any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of government.
"Knowledge"
means the actual knowledge of the relevant party after due
investigation and independent inquiry.
"Law"
means any applicable law, statute, rule, regulation, ordinance or
other pronouncement having the effect of law of the applicable
country, state, county, city or other political subdivision or
Government Entity.
"Parties"
means the parties to this Agreement.
2.
Recapitalization of
the Company.
Upon the terms and
provisions of this Agreement, and subject to and conditioned upon
the Requisite Consent of Security Holders, the Company, on such
date as the Company in its sole discretion shall designate in a
written notice to all the parties to this
Agreement (the "Recapitalization Date"), effective
as of the Recapitalization Date, shall be recapitalized (the
"Recapitalization") as follows:
2.1
Amendment of Articles
of Incorporation.
The Articles
of Incorporation shall be
amended
to increase the number of shares of Common Stock that the Company
is authorized to issue from two billion (2,000,000,000) to twenty
billion (20,000,000,000) and, in connection therewith, the Company
shall prepare, execute, and file with the Secretary of State of the
State of Nevada an Amendment of the Articles of Incorporation for
such purpose.
2.2
Amendment of Series A
Certificate of Designation.
Clause (b) of section 4 of the
Series
A Certificate of Designation shall be amended to read as
follows:
"(b)
at the option of the Company at any time"
and,
in connection therewith, the Company shall prepare, execute and
file with the Secretary of State of the State of Nevada an
Amendment of Certificate of Designation amending the Series A
Preferred Stock Certificate of Designation, as amended, for such
purpose.
2.3
Amendment
of Series B Certificate of Designation.
Clause (b) of section 4 of the
Series
B Preferred Stock Certificate of Designation shall be amended to
read as follows:
"(b)
at the option of the Company at any time"
and,
in connection therewith, the Company shall prepare, execute and
file with the Secretary of State of the State of Nevada an
Amendment of the Series B Preferred Stock Certificate of
Designation amending the Series B Preferred Stock Certificate of
Designation, as amended, for such purpose.
2.4
Conversion
of the Convertible Debt.
The
Convertible Debt Holders shall convert all of the Convertible Debt
held by the Convertible Debt Holders at a price per share of $0.001
into 5,934,136,390 (for example, which amount may decrease if the
Recapitalization Date occurs prior to December 31, 2016 based on
the amount of interest due and accordingly increase if the
Recapitalization Date occurs after December 31, 2016) shares of
Common Stock in the manner set forth in the instruments relating to
the Convertible Debt.
2.5
Conversion
of the Series B Preferred Stock.
Immediately following the conversion of the
Convertible Debt into shares of Common Stock, the Company shall
convert the Series B Preferred Stock into shares of Common Stock in
the manner set forth in section 4(b) of the Series B Certificate of
Designation, as amended.
2.6
Conversion of the
Series A Preferred Stock.
Immediately following the
conversion
of the Series B
Preferred Stock into shares of Common Stock, the
Company shall convert the Series A Preferred Stock into shares of
Common Stock in the manner set forth in section 4(b) of the Series
A Certificate of Designation, as amended.
2.7
Reverse
Split of Shares of Common Stock.
Immediately following the conversion of the
Convertible Debt, the Series B Preferred Stock and the Series A
Preferred Stock into shares of Common Stock, the Company shall
combine its outstanding shares of Common Stock by a ratio to be
determined by the Company's Board of Directors, in its sole
discretion, so that immediately following such reverse split the
number of shares of Common Stock outstanding, shall be 10,000,000
shares; provided, however, no fractional share of Common Stock
shall remain outstanding and in lieu of any fractional share of
Common Stock that otherwise would be outstanding the holder thereof
shall be entitled to receive and the Company shall pay to such
holder of such fraction an amount equal to such fraction times the
amount that the Board of Directors shall determine in good faith to
be the value of a share of Common Stock on the Recapitalization
Date.
2.8
Amendment
and Restatement of Articles of Incorporation.
The Articles of Incorporation shall be amended and
restated in their entirety to read as set forth in Exhibit
2.8.
2.9
Amendment
of By-Laws.
The By-Laws of the
Company shall be amended and restated in their entirety to read as
set forth in Exhibit 2.9.
2.10
Capitalization
Following Recapitalization.
Assuming that none of the presently outstanding
securities of the Company (other than the Convertible Debt, the
Series B Preferred Stock and the Series A Preferred Stock) are
converted into or are exercised or exchanged for shares of Common
Stock, it is the intention of the Parties that, immediately
following the Recapitalization, the Company shall be authorized to
issue six hundred ten million (610,000,000) shares, consisting of
six hundred million (600,000,000) shares of Common Stock, of which
10,000,000 shares shall be outstanding, and ten million
(10,000,000), shares of Preferred Stock, none of which shall be
outstanding.
2.11
Certain
Adjustments.
Notwithstanding
anything to the contrary in this Agreement, if the Recapitalization
Date as designated by the Company is a date other than December 31,
2016, the amount of the Convertible Debt and the numbers of shares
of stock of the Company that are outstanding immediately preceding
and shall be outstanding as a result of the Recapitalization shall
be adjusted consistent with the assumptions and calculations
contained in this Agreement to be consistent with the facts on the
Recapitalization Date.
3.
Consent
of Convertible Debt Holders and Stockholders.
Each of the Convertible Debt Holders and each of
the Stockholders hereby consents to and approves the
Recapitalization and the Company taking each and every action set
forth in Section 2 and each and every other action as shall be
necessary or desirable for the Company to carry out the
Recapitalization and to take each and every other action set forth
in Section 2 or contemplated in this Agreement. Without limiting
the generality of the foregoing, each Convertible Debt Holder and
each Stockholder agrees that:
3.1
By
executing this Agreement, each Convertible Debt Holder and each
Stockholder shall be deemed to have exercised all voting rights
held or acquired by such holder as a result of the Recapitalization
in favor of each action included in the Recapitalization which
requires the approval of the Company's stockholders under
applicable law or agreement.
3.2
The
Company is hereby granted the consent of each Convertible Debt
Holder and Stockholder that executes this Agreement to identify
such holder, by name, in any report or filing made by the Company
with the SEC as having consented to the Recapitalization and
exercised all voting rights held or acquired by such holder in
favor of each action included in the recapitalization which
requires the approval of the Company's stockholders under
applicable law or agreement.
3.3
To
execute such documents, undertakings and agreements as may be
necessary or advisable to confirm the undersigned's ratification of
the corporate actions set forth in Sections 2.1, 2.2, 2.3, 2.4,
2.5, 2.6, 2.7, 2.8 and 2.9 and each other action provided for or
contemplated by this Agreement.
3.4
The
consent of the undersigned set forth in this Section 5, and the
other covenants and agreements of the undersigned set forth in this
Agreement, shall be deemed effective, unconditional and irrevocable
upon the consummation of the Recapitalization on the
Recapitalization Date.
4.
Representations and
Warranties of the Company.
The
Company represents and warrants to each Convertible Debt Holder and
each Stockholder as follows:
4.1
Power
and Authorization.
The Company
is a corporation duly organized, validly existing and in good
standing under the Laws of the state of Nevada and has the
requisite power and authority necessary to enter into this
Agreement and to carry out its obligation hereunder. The execution,
delivery and performance of this Agreement and the transactions
contemplated hereby have been duly authorized by the Board of
Directors and the stockholders of the Company and no other
corporate proceeding on the part of the Company is necessary to
authorize the execution and delivery of this Agreement or the
Recapitalization or any of the other transactions contemplated
hereby. This Agreement has been duly executed and delivered on
behalf of the Company and is a legal valid and binding obligation
of the Company and enforceable against the Company in accordance
with its terms.
4.2
No
Violation.
Neither the
execution, delivery nor performance of this Agreement nor the
consummation of the Recapitalization or any of the transactions
contemplated hereby (i) will violate or conflict with the Articles
of Incorporation or By-Laws of the Company, (ii) will result in any
breach of or default under any provision of any contract or
agreement of any kind to which the Company is a party or by which
the Company is bound or to which any property or asset of the
Company is subject or (iii) is prohibited by or requires the
Company to obtain or make any consent, authorization, approval,
registration or filing under any statute, law, ordinance,
regulation, rule, judgment, decree or order of any court or
Government Entity or of any other person.
4.3
No
Litigation.
There are no
actions, suits, proceedings or, to the best of the Company's
knowledge, investigations, either at law or in equity, or before
any commission or other administrative authority in any United
States or foreign jurisdiction, of any kind now pending or
threatened or proposed in any manner, or any circumstances which
should or could reasonably form the basis of any such action, suit,
proceeding or investigation, involving the Company or any of its
properties or assets that (i) questions the validity of this
Agreement or the Recapitalization or any of the transactions
provided for or contemplated hereby or (ii) seeks to delay,
prohibit or restrict in any manner any action taken or contemplated
to be taken by the Company under this
Agreement.
5.
Covenants,
Representations and Warranties of each Convertible Debt Holder
and
Stockholder.
Each Convertible Debt Holder and
Stockholder (solely with respect to itself), severally and not
jointly, hereby covenants, represents and warrants to the Company
as follows:
5.1
Power
and Authorization.
Such
Convertible Debt Holder or Stockholder, if such Convertible Debt
Holder or Stockholder is an entity, is duly organized, validly
existing and in good standing under the Laws of the jurisdiction
under which it is organized or formed and has the requisite power
and authority necessary to enter into this Agreement and to carry
out its obligation hereunder. The execution, delivery and
performance of this Agreement and the transactions contemplated
hereby have been duly authorized by its board of directors or other
governing body, as applicable, and no other proceeding on the part
of such Convertible Debt Holder or Stockholder is necessary to
authorize the execution and delivery of this Agreement or any of
the other transactions contemplated hereby. This Agreement has been
duly executed and delivered on behalf of such Convertible Debt
Holder or Stockholder, and is a legal valid and binding obligation
of such Convertible Debt Holder or Stockholder, and is enforceable
against such Convertible Debt Holder or Stockholder, in accordance
with its terms.
Such
Convertible Debt Holder or Stockholder, if such Convertible Debt
Holder or Stockholder is not an entity, has the requisite power
authority and capacity to enter into this Agreement and to carry
out its obligations hereunder. This Agreement has been duly
executed and delivered on behalf of such Convertible Debt Holder or
Stockholder, and is a legal valid and binding obligation of such
Convertible Debt Holder or Stockholder, and enforceable against
such Convertible Debt Holder or Stockholder, in accordance with its
terms.
5.2
No
Violation.
Neither the
execution, delivery nor performance of this Agreement nor the
consummation of any of the transactions contemplated hereby (i)
will violate or conflict with the Certificate of Incorporation or
By-Laws of such Convertible Debt Holder or Stockholder that is an
entity, (ii) will result in any breach of or default under any
provision of any contract or agreement of any kind to which such
Convertible Debt Holder or Stockholder is a party or by which such
Convertible Debt Holder or Stockholder is bound or to which any
property or asset of such Convertible Debt Holder or Stockholder is
subject or (iii) is prohibited by or requires such Convertible Debt
Holder or Stockholder to obtain or make any consent, authorization,
approval, registration or filing under any statute, law, ordinance,
regulation, rule, judgment, decree or order of any court or
Government Entity or of any other person.
5.3
No
Litigation.
There is no action,
suit, proceeding or, to the knowledge of such Convertible Debt
Holder or Stockholder, investigation, either at law or in equity,
or before any commission or other administrative authority in any
United States or foreign jurisdiction, of any kind now pending or
threatened or proposed in any manner, or any circumstances which
should or could reasonably form the basis of any such action, suit,
proceeding or investigation, involving any Convertible Debt Holder
or Stockholder or any of their respective properties or assets that
(i) questions the validity of this Agreement, the Recapitalization
or any of the transactions contemplated hereby or (ii) seeks to
delay, prohibit or restrict in any manner any action taken or
contemplated to be taken by the Company or any Convertible Debt
Holder or Stockholder under this Agreement.
5.4
Surrender
of Certificates.
On and after
the Recapitalization Date, each such Convertible Debt Holder and
Stockholder acknowledges and agrees that any certificates and/or
other documentation representing the Convertible Debt and/or the
Series A Preferred Stock and/or Series B Preferred Stock shall
represent thereafter only the right of the registered holder
thereof to receive the number of shares of Common Stock issuable
upon the conversion of such Convertible Debt and/or Series A
Preferred Stock and/or Series B Preferred
Stock.
5.5
Waiver.
By signing this Agreement, each holder
of Convertible Debt and each Stockholder shall be deemed to have
waived any and all rights, entitlements, claims, demands or
interests which such holder may have had by virtue of having been
the beneficial owner of the Convertible Debt and/or Series A
Preferred Stock and/or Series B Preferred Stock held by such
holder, save and except for the right to receive a certificate
representing the shares of Common Stock issuable upon the
conversion of such securities.
5.6
Release.
By signing this Agreement, but
effective as of the consummation of the Recapitalization in
accordance with the terms hereof and assuming all convertible
debtholders are signatory hereto and all stockholders holding in
excess of 2/3rds of the outstanding shares of Series A Preferred
Stock, 2/3rds of the outstanding shares of Series B Preferred Stock
and 51% of the shares of Common Stock of the Company are signatory
hereto, each holder of Convertible Debt and each Stockholder shall
be deemed to have unconditionally and irrevocably released,
acquitted and forever discharged the Company together with its
officers, directors, stockholders, agents, bankers,
representatives, note holders, attorneys and investment bankers,
together with their respective affiliates and agents, both past and
present, from any claim, demand, obligation or liability, direct or
indirect, known or unknown, arising from any act or omission from
the beginning of time up to the Recapitalization Date (a "Claim")
except as hereinafter provided in this Section 5.6. Without
limiting the generality of the foregoing, it is understood that
this release shall include any Claim arising from any statement or
representation, verbal or written, and any act or omission made in
connection with any offer or sale of any security. However,
notwithstanding anything in this Agreement to the contrary, none of
Jerry D. Smith, JD Investments, Inc. or Sonoran Pacific Resources,
Inc. or any of their affiliates shall be deemed to have released,
acquitted or discharged the Company with respect to any claim that
it may now or at any time hereafter have, including only any claim
or right under any applicable security agreement or security
interest that, as of the date of this Agreement, relates
to:
(i)
the
credit card or cards issued to or for the benefit of the Company
the performance of the obligations of the Company with respect to
which have been guaranteed by Jerry D. Smith,
(ii)
the
line of credit in the amount of $500,000 extended to the Company by
Western State Bank that has been guaranteed by Jerry D. Smith and
the security agreements and other documentation executed with
respect thereto, and
(iii)
The
financing in an amount of $155,000 provided to the Company by
Genesis Finance Corporation that has been guaranteed by Jerry D.
Smith and the security agreements and other documentation executed
with respect thereto.
5.7
Information.
Each Convertible Debt Holder and each
Stockholder has been provided with information and materials
concerning the subject matter of this Agreement and the
transactions provided for herein or contemplated hereby. In
addition, each such person has had access to the Company's reports
and information filed with the SEC (the "SEC Documents"). The
information and materials provided by the Company and the SEC
Documents are referred to herein as the "Disclosure Materials."
Each such person has carefully reviewed and is familiar with all of
the information contained in the Disclosure Materials. Each such
person has been given access to full and complete information
regarding the Company and has utilized such access to such person's
satisfaction for the purpose of obtaining such information
regarding the Company as such person has reasonably requested; and,
particularly, each such person has been given a reasonable
opportunity to ask questions of, and receive answers from,
representatives of the Company concerning the terms and conditions
of this Agreement, including the conversion of the Convertible Debt
and the shares of the Series A Preferred Stock and the Series B
Preferred Stock and the shares of Common Stock issuable upon the
conversion thereof and to obtain any and all additional information
related thereto, to the extent reasonably available. Each such
person has relied on nothing other than the Disclosure Materials
(including any exhibits thereto) in deciding whether to execute
this Agreement. Except as set forth in the Disclosure Materials, no
representations or warranties have been made to any such person by
the Company, any selling agent of the Company, or any agent,
employee, or affiliate of the Company or such selling
agent.
Each
such person, in reaching a decision to execute this Agreement, has
such knowledge and experience in financial and business matters
that such person is capable of reading and interpreting financial
statements and evaluating the merits and risks of the covenants,
representations and warranties contained herein and has the net
worth to undertake such risks.
5.8
Risk
Factors Applicable to Convertible Debt Holders and
Stockholders.
Each of the
Convertible Debt Holders and/or Stockholders acknowledge that they
will be subject to substantial risks as a result thereof, including
the following:
5.8.1
Each
Holder of Convertible Debt acknowledges that such Person has
certain senior rights as the holder of senior secured debt ("Senior
Debt") of the Company ("Senior Lender Rights"), including, without
limitation:
(i)
the
right to accrue and collect interest on the principal balance of
the Senior Debt;
(ii)
upon
a default by the Company in its obligation to repay the Senior
Debt, the right to foreclose upon the assets of the Company, compel
a liquidation of those assets and collect the proceeds from such
liquidation senior to the holders of all subordinated secured debt,
unsecured debt and preferred and common equity; and
(iii)
the
right to convert the outstanding principal balance, together with
all accrued and unpaid interest due thereon, into shares of Common
Stock which, upon such conversion, would grant to the holders of
the Senior Debt voting control of the Company.
and,
agreeing to convert the Convertible Debt into shares of Common
Stock in accordance with the terms of this Agreement, the holders
of the Convertible Debt will lose their Senior Rights and will
possess only those rights of all other holders of Common Stock,
including, without limitation:
(i)
Voting Rights.
The holders of Common Stock are
entitled to one vote per share on all matters. The Common Stock
does not have cumulative voting rights.
(ii)
Dividends.
Each share of Common Stock has an equal and
ratable right to receive dividends to be paid from the assets
legally available therefor when, as and if declared by the Board.
The Company does not anticipate paying cash dividends on the Common
Stock in the foreseeable future.
(iii)
Liquidation.
In the event the Company is dissolved,
liquidated or wound up, the holders of Common Stock are entitled to
share equally and ratably in the assets available for distribution
after payments are made to the Company's creditors and to the
holders of any outstanding stock ranking senior to the Common
Stock, including any that the Company may designate and issue in
the future with liquidation preferences greater than those of the
Common Stock.
(iv)
Other.
The holders of shares of Common Stock have no
preemptive, subscription or redemption rights and are not liable
for further calls or assessments. All of the outstanding shares of
Common Stock are, and the shares of Common Stock issued upon the
conversion of the Convertible Debt and the Series A Preferred Stock
and the Series B Preferred Stock will be fully paid and
non-assessable.
5.8.2
Holders
of Series A Preferred Stock and Series B Preferred Stock have
certain rights, designations and preferences applicable to such
shares of Series A Preferred Stock and/or Series B Preferred Stock
set forth in the Certificate of Designation applicable to such
Series A Preferred Stock and/or Series B Preferred Stock, as the
case may be, including, without limitation, the right to convert
each share of Series A Preferred Stock and/or Series B Preferred
Stock into that amount of shares of Common Stock equal to one
percent (1%) of the outstanding Common Stock Equivalent (as defined
in the applicable Certificate of Designation).
The
Conversion Rights granted to the holders of the Series A Preferred
Stock and/or the Series B Preferred Stock provide protection
against all dilutive issuances of Common Stock which may occur
prior to the conversion of the Series A Preferred Stock and/or the
Series B Preferred Stock, as the case may be. By executing this
Agreement and converting the Series A Preferred Stock and/or the
Series B Preferred Stock into shares of Common Stock, the holders
of the Series A Preferred Stock and/or the Series B Preferred Stock
will lose their conversion rights and will possess only the rights
of a holder of Common Stock.
5.8.3
Implementation
of this Agreement will result in the conversion of the Convertible
Debt and the Series A Preferred Stock and the Series B Preferred
Stock into a substantial number of shares of Common Stock. The
public trading market for the Common Stock is sporadic and highly
illiquid. Future sales of substantial amounts of the Common Stock
in the public market, or the perception that such sales might
occur, could cause the market price of the Common Stock to decline
and could impair the value of an investment in the Common Stock and
its ability to raise equity capital in the
future.
This
Agreement will result in an immediate and substantial increase in
the number of shares of Common Stock issued and outstanding. The
sale of some portion of this additional Common Stock by the holders
thereof, or even the appearance that such holders may make such
sales, may limit the market for the Common Stock or depress any
trading market volume and price before other investors are able to
sell any of their Common Stock. There is a substantial risk that
the persons who participate in the Recapitalization will not be
able to sell any of their Common Stock in a timeframe and/or at
prices that would permit the recovery of their initial
investment.
6.1
Assurance
of Further Action.
From time to
time after the Recapitalization, at the Company's expense, each
Convertible Debt Holder and Stockholder shall execute and deliver,
or cause to be executed and delivered, to the Company such further
instruments or other documents or take such other actions as the
Company may reasonably request in order to consummate the
Recapitalization and the other transactions contemplated
hereby.
6.2
Expenses.
Whether or not the Recapitalization is
consummated, except as otherwise provided in the documents relating
to the Convertible Debt, each of the Parties shall pay all of its
own legal and accounting fees and other expenses, taxes, debts,
liabilities and obligations incurred in the preparation of this
Agreement and the performance of the terms and provisions of this
Agreement.
6.3
Waiver.
The Parties may by written agreement,
(i) extend the time for or waive or modify the performance of any
of the obligations or other acts of the Parties or (ii) waive any
inaccuracies in the representations and warranties contained in
this Agreement or in any document delivered pursuant to this
Agreement.
6.4
Notices.
All notices, requests or other
communications hereunder shall be in writing and shall be deemed to
have been duly given if delivered or mailed first class certified
mail postage prepaid addressed as follows: if to the Company, to
iMedicor, Inc., 13506 Summerport Village Parkway, Suite 160,
Windermere FL, 34786, Attention: Robert McDermott, President and
Chief Executive Officer (with a copy to Samuel B. Fortenbaugh III,
Esq., 45 Rockefeller Plaza, Suite 2000, New York, New York 10111);
if to a Convertible Debt Holder or a Stockholder, to the address
set forth below the signature of such Convertible Debt Holder or
Stockholder on the Signature Page of this Agreement; or to such
other address as may have been furnished in writing to the party
giving the notice by the Party to whom notice is to be
given.
6.5
Entire
Agreement.
This Agreement
embodies the entire agreement among the Parties and there have been
and are no agreements, representations or warranties, oral or
written among the Parties other than those set forth or provided
for in this Agreement. This Agreement may not be modified or
changed, in whole or in part, except by a supplemental agreement
signed by each of the Parties.
6.6
Rights
Under this Agreement; No assignability.
This Agreement shall bind and inure to the benefit
of the Parties hereto and their respective successors and assigns,
but shall not be assignable by any Party without the prior written
consent of the other Parties. Nothing contained in this Agreement
is intended to confer upon any person, other than the Parties and
their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
6.7
Governing
Law.
This Agreement and the
rights and duties of the Parties hereto shall be governed by and
construed in accordance with the laws of the State of Nevada. The
Parties hereby irrevocably submit to the jurisdictions of the
courts of the States of Arizona and Florida and the federal courts
of the United States of America located in the States of Arizona
and Florida in respect of all matters that arise out of or are
related to this Agreement or the documents referred to in or
contemplated by this Agreement and the transactions contemplated
hereby and thereby and hereby waive, and agree not to assert, as a
defense in any action for the interpretation or enforcement hereof
or of any such document, that it is not subject thereto or that
such action may not be brought or is not maintainable in said
courts or that the venue thereof may not be appropriate or that
this Agreement or any such document may not be enforced in or by
such courts, and the Parties irrevocably agree that all claimswith
respect to such action shall be heard and determined in such
Arizona or Florida state or federal court. The Parties hereby
consent to and grant any such court jurisdiction over the person of
such Parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such
action in the manner provided in this Section 6.7 or in such other
matter as may be permitted by law shall be valid and sufficient
service thereof.
6.8
Waiver
of Jury Trial.
EACH PARTY
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMUTED BY LAW,
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
6.9
Specific
Performance.
The Parties agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with
their specific terms or
were otherwise breached. It is accordingly agreed that the Parties
shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement in any court of competent
jurisdiction specified in Section 6.7, this being in addition to
any other remedy to which they are entitled at law or in
equity.
6.10
Headings:
References to Sections, Exhibits and Schedules.
The headings of the Sections, paragraphs and
subparagraphs of this Agreement are solely for convenience and
reference and shall not limit or otherwise affect the meaning of
any of the terms or provisions of this Agreement. The references
herein to Sections, Exhibits and Schedules, unless otherwise
indicated, are references to sections of and exhibits and schedules
to this Agreement.
6.11
Counterparts.
This Agreement may be executed in any
number of counterparts, each of which shall be an original, but
which together constitute one and the same
instrument.
6.12
Certain
Rights.
In the event the
Recapitalization does not occur as set forth here therein, the
signatories hereto shall not be deemed to have waived or released
any rights.
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK ó
SIGNATURE
PAGES FOLLOW
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
iMEDICOR,
INC.
Robert
McDermott President
HOLDERS OF CONVERTIBLE
DEBT
SONORAN PACIFIC RESOURCES,
LLP
By:
JD Investments, Inc.,
Jerry
D. Smith,
President
4385 N. 75
th
Street, Suite 100 Scottsdale, AZ
85251
Securities Held
Series A Preferred
Stock
shares
Series B Preferred
Stock
shares
(the
principal amount of which will aggregate $_____________ as of
December 31, 2016)
HOLDERS OF SERIES A PREFERRED STOCK, SERIES B PREFERRED STOCK
AND/OR COMMON STOCK
x
(Signature)
Or Individual
x
(Signature)
Securities
Held:
Series A Preferred
Stock
shares
Series B Preferred
Stock
shares
EXHIBIT III
NRS 78.2055 Decrease in number of issued and
outstanding shares of class or series: Resolution by board of
directors; approval by stockholders; rights of
stockholders.
1. Unless otherwise provided in the articles of
incorporation, a corporation that desires to decrease the number of
issued and outstanding shares of a class or series held by each
stockholder of record at the effective date and time of the change
without correspondingly decreasing the number of authorized shares
of the same class or series may do so if:
(a) The board of directors adopts a resolution setting forth
the proposal to decrease the number of issued and outstanding
shares of a class or series; and
(b) The proposal is approved by the vote of stockholders
holding a majority of the voting power of the affected class or
series, or such greater proportion as may be provided in the
articles of incorporation, regardless of limitations or
restrictions on the voting power of the affected class or
series.0
2. If the proposal required by subsection 1 is
approved by the stockholders entitled to vote, the corporation may
reissue its stock in accordance with the proposal after the
effective date and time of the change.
3. Except as otherwise provided in this subsection, if
a proposed decrease in the number of issued and outstanding shares
of any class or series would adversely alter or change any
preference, or any relative or other right given to any other class
or series of outstanding shares, then the decrease must be approved
by the vote, in addition to any vote otherwise required, of the
holders of shares representing a majority of the voting power of
each class or series whose preference or rights are adversely
affected by the decrease, or such greater proportion as may be
provided in the articles of incorporation, regardless of
limitations or restrictions on the voting power of the adversely
affected class or series. The decrease does not have to be approved
by the vote of the holders of shares representing a majority of the
voting power of each class or series whose preference or rights are
adversely affected by the decrease if the articles of incorporation
specifically deny the right to vote on such a
decrease.
4. Any proposal to decrease the number of issued and
outstanding shares of any class or series, if any, that includes
provisions pursuant to which only money will be paid or scrip will
be issued to stockholders who:
(a) Before the decrease in the number of shares becomes
effective, hold 1 percent or more of the outstanding shares of the
affected class or series; and
(b) Would otherwise be entitled to receive a fraction of a
share in exchange for the cancellation of all their outstanding
shares,
is subject to the
provisions of
NRS 92A.300
to
92A.500
,
inclusive. If the proposal is subject to those provisions, any
stockholder who is obligated to accept money or scrip rather than
receive a fraction of a share resulting from the action taken
pursuant to this section may dissent in accordance with those
provisions and obtain payment of the fair value of the fraction of
a share to which the stockholder would otherwise be
entitled.
(Added to NRS by
2001, 1357
; A
2001,
3199
;
2003,
3089
;
2009,
1676
)
NRS 92A.300 Definitions.
As
used in
NRS
92A.300
to
92A.500
,
inclusive, unless the context otherwise requires, the words and
terms defined in
NRS
92A.305
to
92A.335
,
inclusive, have the meanings ascribed to them in those
sections.
(Added to NRS
by
1995,
2086
)
NRS 92A.305 “Beneficial
stockholder” defined.
“Beneficial stockholder” means a
person who is a beneficial owner of shares held in a voting trust
or by a nominee as the stockholder of record.
(Added to NRS
by
1995,
2087
)
NRS 92A.310 “Corporate
action” defined.
“Corporate action” means the action of
a domestic corporation.
(Added to NRS
by
1995,
2087
)
NRS 92A.315 “Dissenter”
defined.
“Dissenter” means a stockholder who is
entitled to dissent from a domestic corporation’s action
under
NRS
92A.380
and who exercises
that right when and in the manner required
by
NRS
92A.400
to
92A.480
,
inclusive.
(Added to NRS
by
1995,
2087
;
A
1999,
1631
)
NRS 92A.320 “Fair
value” defined.
“Fair value,” with respect to a
dissenter’s shares, means the value of the shares
determined:
1. Immediately before the effectuation of the
corporate action to which the dissenter objects, excluding any
appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable;
2. Using customary and current valuation concepts and
techniques generally employed for similar businesses in the context
of the transaction requiring appraisal; and
3. Without discounting for lack of marketability or
minority status.
(Added to NRS
by
1995,
2087
;
A
2009,
1720
)
NRS 92A.325 “Stockholder”
defined.
“Stockholder” means a stockholder of
record or a beneficial stockholder of a domestic
corporation.
(Added to NRS
by
1995,
2087
)
NRS 92A.330 “Stockholder
of record” defined.
“Stockholder of record” means the
person in whose name shares are registered in the records of a
domestic corporation or the beneficial owner of shares to the
extent of the rights granted by a nominee’s certificate on
file with the domestic corporation.
(Added to NRS
by
1995,
2087
)
NRS 92A.335 “Subject
corporation” defined.
“Subject corporation” means the
domestic corporation which is the issuer of the shares held by a
dissenter before the corporate action creating the
dissenter’s rights becomes effective or the surviving or
acquiring entity of that issuer after the corporate action becomes
effective.
(Added to NRS
by
1995,
2087
)
NRS 92A.340 Computation
of interest.
Interest payable pursuant
to
NRS
92A.300
to
92A.500
,
inclusive, must be computed from the effective date of the action
until the date of payment, at the rate of interest most recently
established pursuant to
NRS
99.040
.
(Added to NRS
by
1995,
2087
;
A
2009,
1721
)
NRS 92A.350 Rights
of dissenting partner of domestic limited
partnership.
A
partnership agreement of a domestic limited partnership or, unless
otherwise provided in the partnership agreement, an agreement of
merger or exchange, may provide that contractual rights with
respect to the partnership interest of a dissenting general or
limited partner of a domestic limited partnership are available for
any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a
constituent entity.
(Added to NRS
by
1995,
2088
)
NRS 92A.360 Rights
of dissenting member of domestic limited-liability
company.
The
articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the
articles of organization or operating agreement, an agreement of
merger or exchange, may provide that contractual rights with
respect to the interest of a dissenting member are available in
connection with any merger or exchange in which the domestic
limited-liability company is a constituent
entity.
(Added to NRS
by
1995,
2088
)
NRS 92A.370 Rights of
dissenting member of domestic nonprofit
corporation.
1. Except as otherwise provided in subsection 2, and
unless otherwise provided in the articles or bylaws, any member of
any constituent domestic nonprofit corporation who voted against
the merger may, without prior notice, but within 30 days after the
effective date of the merger, resign from membership and is thereby
excused from all contractual obligations to the constituent or
surviving corporations which did not occur before the
member’s resignation and is thereby entitled to those rights,
if any, which would have existed if there had been no merger and
the membership had been terminated or the member had been
expelled.
2. Unless otherwise provided in its articles of
incorporation or bylaws, no member of a domestic nonprofit
corporation, including, but not limited to, a cooperative
corporation, which supplies services described
in
chapter
704
of NRS to its members only,
and no person who is a member of a domestic nonprofit corporation
as a condition of or by reason of the ownership of an interest
in real property, may resign and dissent pursuant to
subsection 1.
(Added to NRS
by
1995,
2088
)
NRS 92A.380 Right of
stockholder to dissent from certain corporate actions and to obtain
payment for shares.
1. Except as otherwise provided
in
NRS
92A.370
and
92A.390
and
subject to the limitation in paragraph (f), any stockholder is
entitled to dissent from, and obtain payment of the fair value of
the stockholder’s shares in the event of any of the following
corporate actions:
(a) Consummation of a plan of merger to which the domestic
corporation is a constituent entity:
(1) If approval by the stockholders is required for the
merger by
NRS
92A.120
to
92A.160
,
inclusive, or the articles of incorporation, regardless of whether
the stockholder is entitled to vote on the plan of merger;
or
(2) If the domestic corporation is a subsidiary and is merged
with its parent pursuant to
NRS
92A.180
.
(b) Consummation of a plan of conversion to which the
domestic corporation is a constituent entity as the corporation
whose subject owner’s interests will be
converted.
(c) Consummation of a plan of exchange to which the domestic
corporation is a constituent entity as the corporation whose
subject owner’s interests will be acquired, if the
stockholder’s shares are to be acquired in the plan of
exchange.
(d) Any corporate action taken pursuant to a vote of the
stockholders to the extent that the articles of incorporation,
bylaws or a resolution of the board of directors provides that
voting or nonvoting stockholders are entitled to dissent and obtain
payment for their shares.
(e) Accordance of full voting rights to control shares, as
defined in
NRS
78.3784
, only to the extent
provided for pursuant to
NRS
78.3793
.
(f) Any
corporate action not described in this subsection that will result
in the stockholder receiving money or scrip instead of a fraction
of a share except where the stockholder would not be entitled to
receive such payment pursuant to
NRS
78.205
,
78.2055
or
78.207
.
A dissent pursuant to this paragraph applies only to the fraction
of a share, and the stockholder is entitled only to obtain payment
of the fair value of the fraction of a share.
2. A
stockholder who is entitled to dissent and obtain payment pursuant
to
NRS
92A.300
to
92A.500
,
inclusive, may not challenge the corporate action creating the
entitlement unless the action is unlawful or fraudulent with
respect to the stockholder or the domestic
corporation.
3. Subject to the limitations in this subsection, from
and after the effective date of any corporate action described in
subsection 1, no stockholder who has exercised the right to dissent
pursuant to
NRS
92A.300
to
92A.500
,
inclusive, is entitled to vote his or her shares for any purpose or
to receive payment of dividends or any other distributions on
shares. This subsection does not apply to dividends or other
distributions payable to stockholders on a date before the
effective date of any corporate action from which the stockholder
has dissented. If a stockholder exercises the right to dissent with
respect to a corporate action described in paragraph (f) of
subsection 1, the restrictions of this subsection apply only to the
shares to be converted into a fraction of a share and the dividends
and distributions to those shares.
(Added to NRS
by
1995,
2087
;
A
2001,
1414
,
3199
;
2003,
3189
;
2005,
2204
;
2007,
2438
;
2009,
1721
;
2011,
2814
)
NRS 92A.390 Limitations on
right of dissent: Stockholders of certain classes or series; action
of stockholders not required for plan of
merger.
1. There is no right of dissent with respect to a plan
of merger, conversion or exchange in favor of stockholders of any
class or series which is:
(a) A covered security under section 18(b)(1)(A) or (B) of
the Securities Act of 1933, 15 U.S.C. § 77r(b)(1)(A) or (B),
as amended;
(b) Traded in an organized market and has at least 2,000
stockholders and a market value of at least $20,000,000, exclusive
of the value of such shares held by the corporation’s
subsidiaries, senior executives, directors and beneficial
stockholders owning more than 10 percent of such shares;
or
(c) Issued by an open end management investment company
registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, 15 U.S.C. §§ 80a-1 et
seq., as amended, and which may be redeemed at the option of the
holder at net asset value,
unless the articles of incorporation of the
corporation issuing the class or series or the resolution of the
board of directors approving the plan of merger, conversion or
exchange expressly provide otherwise.
2. The applicability of subsection 1 must be
determined as of:
(a) The record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the corporate action requiring
dissenter’s rights; or
(b) The day before the effective date of such corporate
action if there is no meeting of stockholders.
3. Subsection 1 is not applicable and
dissenter’s rights are available pursuant
to
NRS
92A.380
for the holders of
any class or series of shares who are required by the terms of the
corporate action requiring dissenter’s rights to accept for
such shares anything other than cash or shares of any class or any
series of shares of any corporation, or any other proprietary
interest of any other entity, that satisfies the standards set
forth in subsection 1 at the time the corporate action becomes
effective.
4. There is no right of dissent for any holders of
stock of the surviving domestic corporation if the plan of merger
does not require action of the stockholders of the surviving
domestic corporation under
NRS
92A.130
.
5. There is no right of dissent for any holders of
stock of the parent domestic corporation if the plan of merger does
not require action of the stockholders of the parent domestic
corporation under
NRS
92A.180
.
(Added to NRS
by
1995,
2088
;
A
2009,
1722
;
2013,
1285
)
NRS 92A.400 Limitations on
right of dissent: Assertion as to portions only to shares
registered to stockholder; assertion by beneficial
stockholder.
1. A stockholder of record may assert
dissenter’s rights as to fewer than all of the shares
registered in his or her name only if the stockholder of record
dissents with respect to all shares of the class or series
beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on
whose behalf the stockholder of record asserts dissenter’s
rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which the partial dissenter
dissents and his or her other shares were registered in the names
of different stockholders.
2. A beneficial stockholder may assert
dissenter’s rights as to shares held on his or her behalf
only if the beneficial stockholder:
(a) Submits to the subject corporation the written consent of
the stockholder of record to the dissent not later than the time
the beneficial stockholder asserts dissenter’s rights;
and
(b) Does so with respect to all shares of which he or she is
the beneficial stockholder or over which he or she has power to
direct the vote.
(Added to NRS
by
1995,
2089
;
A
2009,
1723
)
NRS 92A.410 Notification of
stockholders regarding right of dissent.
1. If
a proposed corporate action creating dissenter’s rights is
submitted to a vote at a stockholders’ meeting, the notice of
the meeting must state that stockholders are, are not or may be
entitled to assert dissenter’s rights
under
NRS
92A.300
to
92A.500
,
inclusive. If the domestic corporation concludes that
dissenter’s rights are or may be available, a copy
of
NRS
92A.300
to
92A.500
,
inclusive, must accompany the meeting notice sent to those record
stockholders entitled to exercise dissenter’s
rights.
2. If
the corporate action creating dissenter’s rights is taken by
written consent of the stockholders or without a vote of the
stockholders, the domestic corporation shall notify in writing all
stockholders entitled to assert dissenter’s rights that the
action was taken and send them the dissenter’s notice
described in
NRS
92A.430
.
(Added to NRS
by
1995,
2089
;
A
1997,
730
;
2009,
1723
;
2013,
1286
)
NRS 92A.420 Prerequisites to
demand for payment for shares.
1. If a proposed corporate action creating
dissenter’s rights is submitted to a vote at a
stockholders’ meeting, a stockholder who wishes to assert
dissenter’s rights with respect to any class or series of
shares:
(a) Must deliver to the subject corporation, before the vote
is taken, written notice of the stockholder’s intent to
demand payment for his or her shares if the proposed action is
effectuated; and
(b) Must not vote, or cause or permit to be voted, any of his
or her shares of such class or series in favor of the proposed
action.
2. If a proposed corporate action creating
dissenter’s rights is taken by written consent of the
stockholders, a stockholder who wishes to assert dissenter’s
rights with respect to any class or series of shares must not
consent to or approve the proposed corporate action with respect to
such class or series.
3. A
stockholder who does not satisfy the requirements of subsection 1
or 2 and
NRS
92A.400
is not entitled to
payment for his or her shares under this
chapter.
(Added to NRS
by
1995,
2089
;
A
1999,
1631
;
2005,
2204
;
2009,
1723
;
2013,
1286
)
NRS 92A.430 Dissenter’s
notice: Delivery to stockholders entitled to assert rights;
contents.
1. The
subject corporation shall deliver a written dissenter’s
notice to all stockholders of record entitled to assert
dissenter’s rights in whole or in part, and any beneficial
stockholder who has previously asserted dissenter’s rights
pursuant to
NRS
92A.400
.
2. The
dissenter’s notice must be sent no later than 10 days after
the effective date of the corporate action specified
in
NRS
92A.380
, and
must:
(a) State where the demand for payment must be sent and where
and when certificates, if any, for shares must be
deposited;
(b) Inform the holders of shares not represented by
certificates to what extent the transfer of the shares will be
restricted after the demand for payment is received;
(c) Supply a form for demanding payment that includes the
date of the first announcement to the news media or to the
stockholders of the terms of the proposed action and requires that
the person asserting dissenter’s rights certify whether or
not the person acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the subject corporation must receive
the demand for payment, which may not be less than 30 nor more than
60 days after the date the notice is delivered and state that the
stockholder shall be deemed to have waived the right to demand
payment with respect to the shares unless the form is received by
the subject corporation by such specified date; and
(e) Be
accompanied by a copy of
NRS
92A.300
to
92A.500
,
inclusive.
(Added to NRS
by
1995,
2089
;
A
2005,
2205
;
2009,
1724
;
2013,
1286
)
NRS 92A.440 Demand for payment
and deposit of certificates; loss of rights of stockholder;
withdrawal from appraisal process.
1. A
stockholder who receives a dissenter’s notice pursuant
to
NRS
92A.430
and who wishes to
exercise dissenter’s rights must:
(a) Demand payment;
(b) Certify whether the stockholder or the beneficial owner
on whose behalf he or she is dissenting, as the case may be,
acquired beneficial ownership of the shares before the date
required to be set forth in the dissenter’s notice for this
certification; and
(c) Deposit the stockholder’s certificates, if any, in
accordance with the terms of the notice.
2. If
a stockholder fails to make the certification required by paragraph
(b) of subsection 1, the subject corporation may elect to treat the
stockholder’s shares as after-acquired shares
under
NRS
92A.470
.
3. Once a stockholder deposits that
stockholder’s certificates or, in the case of uncertified
shares makes demand for payment, that stockholder loses all rights
as a stockholder, unless the stockholder withdraws pursuant to
subsection 4.
4. A
stockholder who has complied with subsection 1 may nevertheless
decline to exercise dissenter’s rights and withdraw from the
appraisal process by so notifying the subject corporation in
writing by the date set forth in the dissenter’s notice
pursuant to
NRS
92A.430
. A stockholder who
fails to so withdraw from the appraisal process may not thereafter
withdraw without the subject corporation’s written
consent.
5. The stockholder who does not demand payment or
deposit his or her certificates where required, each by the date
set forth in the dissenter’s notice, is not entitled to
payment for his or her shares under this chapter.
(Added to NRS
by
1995,
2090
;
A
1997,
730
;
2003,
3189
;
2009,
1724
)
NRS 92A.450 Uncertificated
shares: Authority to restrict transfer after demand for
payment.
The
subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their
payment is received.
(Added to NRS
by
1995,
2090
;
A
2009,
1725
)
NRS 92A.460 Payment for shares:
General requirements.
1. Except as otherwise provided
in
NRS
92A.470
, within 30 days after
receipt of a demand for payment pursuant
to
NRS
92A.440
, the subject
corporation shall pay in cash to each dissenter who complied
with
NRS
92A.440
the amount the subject
corporation estimates to be the fair value of the dissenter’s
shares, plus accrued interest. The obligation of the subject
corporation under this subsection may be enforced by the
district court:
(a) Of the county where the subject corporation’s
principal office is located;
(b) If the subject corporation’s principal office is
not located in this State, in the county in which the
corporation’s registered office is located; or
(c) At the election of any dissenter residing or having its
principal or registered office in this State, of the county where
the dissenter resides or has its principal or registered
office.
The court shall dispose of the complaint
promptly.
2. The payment must be accompanied by:
(a) The subject corporation’s balance sheet as of the
end of a fiscal year ending not more than 16 months before the date
of payment, a statement of income for that year, a statement of
changes in the stockholders’ equity for that year or, where
such financial statements are not reasonably available, then such
reasonably equivalent financial information and the latest
available quarterly financial statements, if any;
(b) A statement of the subject corporation’s estimate
of the fair value of the shares; and
(c) A
statement of the dissenter’s rights to demand payment
under
NRS
92A.480
and that if any
such stockholder does not do so within the period specified, such
stockholder shall be deemed to have accepted such payment in full
satisfaction of the corporation’s obligations under this
chapter.
(Added to NRS
by
1995,
2090
;
A
2007,
2704
;
2009,
1725
;
2013,
1287
)
NRS 92A.470 Withholding payment
for shares acquired on or after date of dissenter’s notice:
General requirements.
1. A subject corporation may elect to withhold payment
from a dissenter unless the dissenter was the beneficial owner of
the shares before the date set forth in the dissenter’s
notice as the first date of any announcement to the news media or
to the stockholders of the terms of the proposed
action.
2. To
the extent the subject corporation elects to withhold payment,
within 30 days after receipt of a demand for payment pursuant
to
NRS
92A.440
, the subject
corporation shall notify the dissenters described in subsection
1:
(a) Of the
information required by paragraph (a) of subsection 2
of
NRS
92A.460
;
(b) Of the
subject corporation’s estimate of fair value pursuant to
paragraph (b) of subsection 2 of
NRS
92A.460
;
(c) That they
may accept the subject corporation’s estimate of fair value,
plus interest, in full satisfaction of their demands or demand
appraisal under
NRS
92A.480
;
(d) That those stockholders who wish to accept such an offer
must so notify the subject corporation of their acceptance of the
offer within 30 days after receipt of such offer; and
(e) That
those stockholders who do not satisfy the requirements for
demanding appraisal under
NRS
92A.480
shall be deemed to
have accepted the subject corporation’s
offer.
3. Within 10 days after receiving the
stockholder’s acceptance pursuant to subsection 2, the
subject corporation shall pay in cash the amount offered under
paragraph (b) of subsection 2 to each stockholder who agreed to
accept the subject corporation’s offer in full satisfaction
of the stockholder’s demand.
4. Within 40 days after sending the notice described
in subsection 2, the subject corporation shall pay in cash the
amount offered under paragraph (b) of subsection 2 to each
stockholder described in paragraph (e) of subsection
2.
(Added to NRS
by
1995,
2091
;
A
2009,
1725
;
2013,
1287
)
NRS 92A.480 Dissenter’s
estimate of fair value: Notification of subject corporation; demand
for payment of estimate.
1. A
dissenter paid pursuant to
NRS
92A.460
who is
dissatisfied with the amount of the payment may notify the subject
corporation in writing of the dissenter’s own estimate of the
fair value of his or her shares and the amount of interest due, and
demand payment of such estimate, less any payment pursuant
to
NRS
92A.460
. A dissenter offered
payment pursuant to
NRS
92A.470
who is
dissatisfied with the offer may reject the offer pursuant
to
NRS
92A.470
and demand payment
of the fair value of his or her shares and interest
due.
2. A
dissenter waives the right to demand payment pursuant to this
section unless the dissenter notifies the subject corporation of
his or her demand to be paid the dissenter’s stated estimate
of fair value plus interest under subsection 1 in writing within 30
days after receiving the subject corporation’s payment or
offer of payment under
NRS
92A.460
or
92A.470
and
is entitled only to the payment made or
offered.
(Added to NRS
by
1995,
2091
;
A
2009,
1726
)
NRS 92A.490 Legal proceeding to
determine fair value: Duties of subject corporation; powers of
court; rights of dissenter.
1. If
a demand for payment pursuant to
NRS
92A.480
remains unsettled,
the subject corporation shall commence a proceeding within 60 days
after receiving the demand and petition the court to determine the
fair value of the shares and accrued interest. If the subject
corporation does not commence the proceeding within the 60-day
period, it shall pay each dissenter whose demand remains unsettled
the amount demanded by each dissenter pursuant
to
NRS
92A.480
plus
interest.
2. A subject corporation shall commence the proceeding
in the district court of the county where its principal office is
located in this State. If the principal office of the subject
corporation is not located in this State, the right to dissent
arose from a merger, conversion or exchange and the principal
office of the surviving entity, resulting entity or the entity
whose shares were acquired, whichever is applicable, is located in
this State, it shall commence the proceeding in the county where
the principal office of the surviving entity, resulting entity or
the entity whose shares were acquired is located. In all other
cases, if the principal office of the subject corporation is not
located in this State, the subject corporation shall commence the
proceeding in the district court in the county in which the
corporation’s registered office is located.
3. The subject corporation shall make all dissenters,
whether or not residents of Nevada, whose demands remain unsettled,
parties to the proceeding as in an action against their shares. All
parties must be served with a copy of the petition. Nonresidents
may be served by registered or certified mail or by publication as
provided by law.
4. The jurisdiction of the court in which the
proceeding is commenced under subsection 2 is plenary and
exclusive. The court may appoint one or more persons as appraisers
to receive evidence and recommend a decision on the question of
fair value. The appraisers have the powers described in the order
appointing them, or any amendment thereto. The dissenters are
entitled to the same discovery rights as parties in other civil
proceedings.
5. Each dissenter who is made a party to the
proceeding is entitled to a judgment:
(a) For the amount, if any, by which the court finds the fair
value of the dissenter’s shares, plus interest, exceeds the
amount paid by the subject corporation; or
(b) For the
fair value, plus accrued interest, of the dissenter’s
after-acquired shares for which the subject corporation elected to
withhold payment pursuant to
NRS
92A.470
.
(Added to NRS
by
1995,
2091
;
A
2007,
2705
;
2009,
1727
;
2011,
2815
;
2013,
1288
)
NRS 92A.500 Assessment of costs
and fees in certain legal proceedings.
1. The court in a proceeding to determine fair value
shall determine all of the costs of the proceeding, including the
reasonable compensation and expenses of any appraisers appointed by
the court. The court shall assess the costs against the subject
corporation, except that the court may assess costs against all or
some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment.
2. The court may also assess the fees and expenses of
the counsel and experts for the respective parties, in amounts the
court finds equitable:
(a) Against
the subject corporation and in favor of all dissenters if the court
finds the subject corporation did not substantially comply with the
requirements of
NRS
92A.300
to
92A.500
,
inclusive; or
(b) Against
either the subject corporation or a dissenter in favor of any other
party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good
faith with respect to the rights provided
by
NRS
92A.300
to
92A.500
,
inclusive.
3. If the court finds that the services of counsel for
any dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services should not
be assessed against the subject corporation, the court may award to
those counsel reasonable fees to be paid out of the amounts awarded
to the dissenters who were benefited.
4. In
a proceeding commenced pursuant to
NRS
92A.460
, the court may assess
the costs against the subject corporation, except that the court
may assess costs against all or some of the dissenters who are
parties to the proceeding, in amounts the court finds equitable, to
the extent the court finds that such parties did not act in good
faith in instituting the proceeding.
5. To
the extent the subject corporation fails to make a required payment
pursuant to
NRS
92A.460
,
92A.470
or
92A.480
,
the dissenter may bring a cause of action directly for the amount
owed and, to the extent the dissenter prevails, is entitled to
recover all expenses of the suit.
6. This section does not preclude any party in a
proceeding commenced pursuant to
NRS
92A.460
or
92A.490
from
applying the provisions of
N.R.C.P.
68
.
(Added to NRS
by
1995,
2092
;
A
2009,
1727
;
2015,
2566
)
EXHIBIT IV
CERTIFICATE OF
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
iMEDICOR, INC.
The
undersigned hereby certifies as follows:
1.
He
is the duly elected President of iMedicor, Inc., a Nevada
Corporation (the "Corporation").
2.
The
Articles of Incorporation of the Corporation were filed with the
Nevada Secretary of State on November 2, 1992. The Articles of
Incorporation provided that the name of the corporation was E &
M Management, Inc.
3.
On
July 24, 2009 the Corporation filed a Certificate of Amendment of
the Corporation's Articles of Incorporation changing the name of
the Corporation to iMedicor, Inc.
4.
On
March 1, 2017 upon the recommendation of the Board of Directors of
the Corporation, these Amended and Restated Articles of
Incorporation were adopted and approved by the stockholders of the
Corporation pursuant to Section 78.320 of the Nevada General
Corporation Law. Stockholders holding shares of the Company's
Common Stock were entitled to vote on these Amended and Restated
Articles of Incorporation, with adoption and approval of these
Amended and Restated Articles of Incorporation requiring the
affirmative vote of at least a majority of said outstanding shares
of Common Stock. The holders of shares of Common Stock,
constituting a majority of the votes entitled to be cast, voted in
favor of the adoption and approval of these Amended and Restated
Articles of Incorporation. These Amended and Restated Articles of
Incorporation change the name of the Corporation from iMedicor,
Inc. to iCoreConnect Inc.
5.
The
Articles of Incorporation, as amended to the date of this
certificate, are hereby amended and restated as
follows:
ARTICLE
I
The
name of the Corporation is iCoreConnect Inc.
ARTICLE
II
The
nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the laws of the State of
Nevada, as amended from time to time. In addition to the powers and
privileges conferred upon the Corporation by law and those
incidental thereto, the Corporation shall possess and may exercise
all the powers and privileges, which are necessary or convenient to
the conduct, promotion or attainment of the business or purposes of
the Corporation.
ARTICLE
III
3.1
Authorized
Capital Stock.
The aggregate
number of shares of stock that the Corporation shall have authority
to issue is six hundred ten million (610,000,000) shares,
consisting of six hundred million (600,000,000) shares of common
stock, $0.001 par value per share (the "Common Stock"), and ten
million (10,000,000) shares of preferred stock, $0.001 par value
per share (the "Preferred Stock").
3.2
Preferred
Stock.
The Corporation may have
more than one class or series of Preferred Stock. The Board of
Directors is vested with the authority to prescribe the classes,
series and the number of each class or series of stock and the
voting powers, designations, preferences, limitations, restrictions
and relative rights of each class or series of stock. If more than
one class or series of Preferred Stock is authorized, the
resolution of the Board of Directors passed pursuant to this
provision of the Articles of Incorporation must prescribe a
distinguishing designation for each class and series. The voting
powers, designations, preferences, limitations, restrictions1
relative rights and distinguishing designation of each class or
series of Preferred Stock must be described in the resolution of
the Board of Directors before the issuance of that class or
series.
3.3
Common
Stock.
Except as provided in
the resolution or resolutions of the Board of Directors creating
any class or series of Preferred Stock, each share of Common Stock
issued and outstanding shall be identical in all respects, one with
the other, and no dividends shall be paid on any shares of Common
Stock unless the same dividend is paid on all shares of Common
Stock outstanding at the time such dividend is declared. Except as
may be provided by law, the holder and equally all the assets and
funds of the Corporation which they are entitled to receive upon
such liquidation, dissolution or winding up of the Corporation as
herein provided.
3.4
Assessment
of Shares.
The capital stock of
the Corporation, after the amount of the consideration for the
issuance of shares, as determined by the Board of Directors, has
been paid, is not subject to assessment to pay the debts of the
Corporation and no stock issued as fully paid up may ever be
assessed, and the Articles of Incorporation cannot be amended in
this respect.
3.5
Registered
Stockholders.
Except as may be
otherwise provided by statute, the Corporation shall be entitled to
treat the registered holder of any shares of the Corporation as the
owner of such shares and of all rights derived from such shares for
all purposes, and the Corporation shall not be obligated to
recognize any equitable or other claim to or interest in such
shares or rights on the part of any other person, including, but
without limiting the generality of the term "person" to, a
purchaser, pledgee, assignee or transferee of such shares or
rights, unless and until such person becomes the registered holder
of such shares_ The foregoing shall apply whether or not the
Corporation shall have either actual or constructive notice of the
claim by or the interest of such person.
ARTICLE
IV
4.1
Directors.
The governing board of the Corporation
shall be known as the Board of Directors, and its members shall be
known as directors. The exact number of directors shall be fixed
from time to time as provided in the bylaws of the
Corporation.
4.2
Increase
or Decrease of Directors.
The
minimum and maximum number of directors of the Corporation may be
increased or decreased from time to time as provided in the bylaws
of the Corporation.
4.3
Removal
of Directors.
The stockholders
may remove one or more Directors, with or without cause, but only
at a special meeting called for the purpose of removing the
Director or Directors, and the meeting notice must state that the
purpose or one of the purposes, of the meeting is removal of the
Director or Directors. The stockholders may fill the vacancy
created thereby.
4.4
Vacancies
on Board of Directors.
If a
vacancy occurs on the Board of Directors, including a vacancy
resulting from an increase in the number of Directors, the Board of
Directors may fill the vacancy, or, if the Directors in office
constitute fewer than a quorum of the Board of Directors, they may
fill the vacancy by the affirmative vote of a majority of all the
Directors in office. Except as provided in Section 4.3, t h e
stockholders may fill a vacancy only if there are no Directors in
office.
ARTICLE
V
The
Corporation is to have perpetual existence.
ARTICLE
VI
In
furtherance, and not in limitation of the powers confined by
statute, the Board of Directors is expressly authorized as
follows:
(i)
Subject
to the bylaws, if any, adopted by the stockholders, to make, alter
or amend the bylaws of the Corporation.
(ii)
To
fix the amount to be reserved as working capital over and above its
capital stock paid in, to authorize and cause to be executed
mortgages and liens upon the real and personal property of the
Corporation.
(iii)
By
resolution passed by a majority of the whole Board of Directors, to
designate one or more committees, each committee to consist of one
or more of the directors of the Corporation, which, to the extent
provided in the resolution or in the bylaws of the Corporation,
shall have and may exercise the powers of the Board of Directors in
the management of
the
business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers
which may require it. Such committee or committees shall have such
name and names as may be stated in the bylaws of the Corporation or
as may be determined from time to time by resolution adopted by the
Board of Directors.
(iv)
When
and as authorized by the affirmative vote of stockholders holding
stock entitling them to exercise at least a majority of the voting
power given at a stockholders' meeting called for that purpose, or
when authorized by the written consent of the holders of at least a
majority of the voting stock issued and outstanding, the Board of
Directors shall have power and authority at any meeting to sell,
lease or exchange all of the property and assets of the
Corporation, including its good will and its corporate franchises,
upon such terms and conditions as its Board of Directors deem
expedient and for the best interest of the
Corporation.
ARTICLE
VII
7.1
Stockholder
Actions.
Subject to any
limitations imposed by applicable securities laws, any action
required or permitted to be taken at a stockholders meeting may be
taken without a meeting, without prior notice and without a vote,
if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Whenever
applicable corporate Jaw permits a corporation's articles of
incorporation to specify that a lesser number of shares than would
otherwise be required shall suffice to approve an action by
stockholders, these Articles of Incorporation hereby specify that
the number of shares required to approve such an action shall be
such lesser number.
7.2
Special
Meetings of Stockholders.
So
long as this Corporation is a public company, special meetings of
the stockholders of the Corporation for any purpose may be called
at any time by the Board of Directors or, if the Directors in
office constitute fewer than a quorum of the Board of Directors, by
the affirmative vote of a majority of all the Directors in office,
but such special meetings may not be called by any other person or
persons other than by a person or persons who shall constitute a
group for purposes of section 13(d) of the Securities Exchange Act,
as amended, and who shall hold in the aggregate not less than a
majority of the issued and outstanding voting power entitled to
vote at a meeting called for that purpose.
7.3
Quorum
for Meetings of Stockholders.
Except with respect to any greater requirement
contained in these Articles of Incorporation or the applicable
corporate law, majority of the votes entitled to be cast on a
matter by the holders of shares that, pursuant to the Articles of
Incorporation or the applicable corporate law, are entitled to vote
and be counted collectively upon such matter, represented in person
or by proxy, shall constitute a quorum of such shares at a meeting
of stockholders.
7.4
Location
of Meetings.
Meetings of the
stockholders may be held outside the State of Nevada, if the bylaws
so provide.
ARTICLE
VIII
The
Corporation reserves the right to amend, alter, change or repeal
any provision contained in the Articles of Incorporation, in the
manner now or hereafter prescribed by statute, or by the Articles
of Incorporation, and all rights conferred upon, stockholders
herein are granted subject to this reservation.
ARTICLE
IX
9.1
Limits
on Liability.
No Director or,
to the extent specified from time to time by the Board of
Directors, officer of the Corporation will be liable to the
Corporation or its stockholders for damages for breach of fiduciary
duty as a director or officer, excepting only (a) acts or omissions
which involve intentional misconduct, fraud or a knowing violation
of law, or (b) the payment of dividends in violation of Section
78.300 General Corporation Law. No amendment or repeal of this
Article applies to or has any effect on the liability or alleged
liability of any Director or officer of this Corporation for or
with respect to any acts or omissions of the Director or officer
occurring prior to the amendment or repeal, except as otherwise
required by law. In the event that Nevada law is amended to
authorize the further elimination or limitation of liability of
directors or officers, then this Article shall also be deemed to be
so amended to provide for the elimination or limitation of
liability to the fullest extent permitted by Nevada
law.
9.2
Limits
on Indemnification.
The
Corporation shall indemnify its officers and directors to the full
extent permitted by the laws of the State of Nevada. However, such
indemnity shall not apply if the director (a) did not act in good
faith and in a manner the director reasonably believed to be in or
not opposed to the best interests of the Corporation, and (b) with
respect to any criminal action or proceeding, had reasonable cause
to believe the director's conduct was unlawful. The Corporation
shall advance expenses for such person s pursuant to the terms set
forth in the bylaws, or in a separate Board of Directors resolution
or contract The Corporation may, in the sole discretion of the
Board of Directors, indemnify any other person who may be
indemnified pursuant to the laws of the State of Nevada to the
extent the Board of Directors deems advisable.
9.3
Authorization.
The Board of Directors may take such
action as is necessary to carry out these indemnification and
expense advancement provisions. The Board of Directors is expressly
empowered to adopt, approve and amend from time to time such
bylaws, resolutions, contracts, or further indemnification and
expense advancement arrangements as may be permitted by law,
implementing these provisions. Such bylaws, resolutions, contracts
or further arrangements shall include but not be limited to
implementing the manner in which determinations as to any indemnity
or advancement of expenses shall be made.
9.4
Effect
of Amendment.
No amendment or
repeal of this Article shall apply to or have any effect on any
right to indemnification provided hereunder with respect to acts or
omissions occurring prior to such amendment or
repeal.
ARTICLE
X
The
books of the Corporation may be kept (subject to any provisions
contained in applicable corporate law) outside the State of Nevada
at such place or places as may be designated from time to time by
the Board of Directors or in the bylaws of the
Corporation.
ARTICLE
XI
These
Amended and Restated Articles of Incorporation shall become
effective upon filing.
IN
WITNESS WHEREOF, the undersigned, President of the Corporation, for
the purpose of amending and restating the Articles of Incorporation
of the Corporation, hereby makes, files and records these Amended
and Restated Articles of Incorporation and certifies that it is the
act and deed of the Corporation and that the facts stated herein
are true this _________ day of _____________, 2017.
iMEDICOR,
INC.
x
_____________________________
Robert
McDermott, CEO/ President
EXHIBIT V
iMedicor,
Inc.
(VMCI.ob)
FIFTH AMENDED AND
RESTATED TERM SHEET
Convertible Bridge
Note Offering (the “Bridge Offering”)
February 22,
2017
ISSUER:
iMedicor, Inc. (the “Company”)
SECURITIES:
Series A 18% Convertible Promissory Notes (the “Bridge
Notes”) with warrants (“Bridge
Warrants”).
SIZE OF
OFFERING:
Maximum: Up to $10,000,000 best efforts
COUPON:
18% payable at the earlier of Maturity or Conversion.
TERM:
Due and payable June 30, 2017 (“Maturity Date”) unless
earlier converted.
CONVERSION
RIGHTS:
The Notes are exchangeable for convertible notes (“PIPE
Notes”) offered by the Company in the PIPE Financing defined
below or (ii) convertible into shares of common stock at any time
at the option of the Bridge Note holder. The Bridge Notes
(principal and accrued and unpaid interest) will be convertible at
a price equal to $0.45 per share of common stock, subject to
adjustment as provided below, or exchangeable for PIPE Notes as
provided herein. In addition, if (i) the Company is current in
filing its reports (other than reports required to be filed on Form
8-K) under Section 13(a) of the Securities Exchange Act of 1934, as
amended (the “ExchangeAct”) and (ii) the gross combined
proceeds of the Bridge Offering and PIPE Financing are at least the
Minimum PIPE, as defined herein, then the BridgeNotes will
automatically be exchanged for PIPE Notes in the principal amount
equal to (A) the sum of (1) the total outstanding principal balance
of the Bridge Notes plus (2) all accrued and unpaid interest,
multiplied by (B) 111% (“Exchange Ratio”). For the
purposes hereof, the PIPE Financing shall mean a private offering
of securities consisting of convertible notes and warrants in the
minimum amount equal to the greater of (i) $4.0 million or (ii)
$1.0 million more than the aggregate principal amount of Bridge
Notes sold in the Bridge Note Offering (including the principal of
and accrued interest on Bridge Notes exchanged for PIPE Notes) (the
“Minimum PIPE”) and a maximum of $2.0 million more than
the Minimum PIPE (“Maximum PIPE”) undertaken prior to
the Maturity Date of these Notes, (the “PIPE
Financing”); If the Company fails to undertake and consummate
the PIPE Financing prior to the Maturity Date, the Conversion Price
shall be $0.45 per share of common stock (assuming the Company has
10 million shares of common stock issued and outstanding on a fully
diluted basis on the date of conversion. If the Company’s
fully diluted shares outstanding on the date of conversion is
greater or less than 10 million, the Conversion Price shall be
adjusted proportionately to equate to a Conversion Price based upon
a $4.5 million pre-money valuation on a fully diluted basis on the
date of conversion (i.e.,a 10% discount to a $5.0 million pre-money
valuation on a fully diluted basis on the date of
conversion).
COLLATERAL:
Under an Intercreditor Agreement, the Bridge Notes will be secured
by a UCC Security Agreement entered into by the Company with
Sonoran Pacific Resources LLP, (“Sonoran”),
pari passu.
with amounts
owing to Sonoran.
WARRANTS:
Investors purchasing the Bridge Notes will receive one Bridge
Warrant for every $1.00 in principal amount of Bridge Note
purchased in the Bridge Offering. Each Bridge Warrant will be
exercisable until December 31, 2019 to purchase one share of common
stock at an exercise price equal to $1.35 per share (the
“Exercise Price”), (assuming the Company has 10 million
shares of common stock issued and outstanding on a fully diluted
basis. If the Company’s fully diluted shares outstanding on
the date of issuance of the Bridge Warrant is greater or less than
10 million, the Exercise Price shall be adjusted proportionately to
equate to a Exercise Price based upon a $4.5 million pre-money
valuation on a fully diluted basis (i.e., a 10% discount to a $5.0
million pre-money valuation on a fully diluted basis). The Warrants
will be callable by the Company if (i) there exists a public
trading market for the shares of common stock (ii) there is an
effective registration statement registering for resale under the
Securities Act of 1933, as amended (“Securities Act”)
the shares of common stock issuable upon exercise of the Warrants (
the “Warrant Shares”) and (iii) the closing price of
the common stock on a registered exchange with the Securities and
Exchange Commission (“SEC”) has equaled at least 150%
of the then current Exercise Price of volume for 20 of the
preceding 30 trading days and has averaged 50,000 shares per day
(for example, if the Exercise Price is $1.35 the warrants are
callable if the stock closes above $2.02 for 20 of 30 trading days
with average volume in excess of 50,000 shares per
day.
USE OF
PROCEEDS:
For working capital.
PRICE
PROTECTION:
If at any time prior to the PIPE Financing the Company raises in
excess of $250,000 at a lower valuation than the existing
conversion price, the conversion price will be reduced to match the
price of the lower valuation.
RISK
FACTORS:
An investment in the Notes involves a high degree of risk, and
investors should have the financial ability to sustain the loss of
their entire investment. Such Risk Factors include those included
in the Company’s Annual Report on Form 10-K for the fiscal
year ended June 30, 2014, which are incorporated herein by this
reference. In addition, investors should consider the following
Risk Factors:
1.
As of the date of
this Term Sheet, the Company has not filed, and is delinquent in
its filing, of its Annual Report on Form 10-K for the fiscal year
ended June 30, 2015, its Quarterly Report on Form 10-Q for the
quarter ended September 30, 2015, and its Quarterly Report on Form
10-Q for the quarter ended December 31, 2015. Accordingly, these
delinquencies have resulted in there being no available current
information regarding the Company, its business, results of
operations or its financial condition; and investors will be
required to make an investment decision without this material
information.
2.
The proceeds of
this Offering will be insufficient to meet the Company’s
working capital requirements, and there can be no assurance that
the PIPE Financing will be completed as currently contemplated. If
the Company fails to obtain additional financing it is likely that
it will have to curtail operations and perhaps cease as a going
concern.
3.
Should the Company
default on the Notes, the collateral securing the Notes will likely
be insufficient to enable investors to recover the full amount of
their investments through a foreclosure of the Company’s
assets. In such an event, the amount actually recoverable upon such
foreclosure is likely to be
de
minimus.
4.
Under the
Intercreditor Agreement, all investors are agreeing to act in
concert in accordance with the determination of creditors holding a
majority of the outstanding principal amount secured by the UCC
Security Agreement. Even assuming the sale of the Maximum $10.0
million in Notes, Sonoran Pacific Resources, LLC and its affiliates
hold approximately of $5.0 in unpaid secured debt and could control
the exercise of creditor rights regardless of the wishes of the
investors in this Offering. Furthermore, Jerry D. Smith, the
principal of Sonoran Pacific Resources, LLC, has been appointed
Agent for the noteholders and may not be removed without his
consent.
Information
Incorporated by Reference
The Company files
annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). You may read and copy any document we file at the
Commission's Public Reference Rooms in Washington, D.C. Please call
the Commission at 1-800-SEC-0330 for further information on the
Public Reference Rooms. You can also obtain copies of our
Commission filings by going to the Commission's website at
http://www.sec.gov
.
The Commission
allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information
to you by referring you to those documents. The information
incorporated by reference is considered to be part of this
Memorandum, and later information that we file with the Commission
will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future
filings we make with the Commission under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934:
|
(a)
|
The Company's
Annual Report on Form 10-K for the year ended June 30, 2014, as
filed with the Commission on December 9, 2015;
|
|
|
|
|
|
|
|
(b)
|
All reports and
other documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, shall be
deemed to be incorporated by reference herein and to be a part of
this Memorandum from the date of the filing of such reports and
documents.
|
You may request a
copy of these filings at no charge by a written or oral request to
Robert McDermott, President, iMedicor, Inc., 13506 Summerport
Parkway, Suite 160, Windermere, FL 34786; tel: 407-505-8934. In
addition, you can obtain these filings electronically at the
Commission's worldwide website at
http://www.sec.gov/edgarhp/htm
.
EXHIBIT VI
THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS.
No.
[2017-___]
U.S.
$____________
Original Issue
Date: ___________
SERIES
A 18% CONVERTIBLE PROMISSORY NOTE
DUE
DECEMBER 31, 2016
THIS PROMISSORY
NOTE is one of a series of duly authorized issue of Convertible
Promissory Notes of
iMEDICOR,
INC.,
a Nevada corporation, (the “
Company
”), designated as
its Series A 18% Convertible Promissory Notes (collectively the
“Promissory Notes” or “Bridge Notes”) due
on December 31, 2016 (the “Maturity Date”), in an
aggregate principal amount of up to $10.0 million for all
Promissory Notes.
FOR VALUE RECEIVED,
the Company promises to pay to
________________________
, the registered
holder hereof (the "Holder"), the principal sum
of _____________ 00/100 Dollars (US $_______). The principal
balance of this Promissory Note shall accrue interest at the rate
of 18% per annum commencing on the initial date of issuance and
continuing until all principal and accrued and unpaid interest are
paid in full.
The Company shall
pay principal and accrued interest on or before the earlier of the
Maturity Date or the date of Conversion or Exchange, as defined
below.
This Promissory
Note is subject to the following additional
provisions.
Section 1.
Collateral and
Pari
Passu
.
(a)
This Promissory
Note is one of a series of Promissory Notes known as the Series A
18% Convertible Promissory Notes in an aggregate principal amount
of up to $10.0 million. No payments will be made to the holder of
this Promissory Note unless a proportional payment (based on
outstanding principal amount) is made with respect to all other
Promissory Notes of the Series. Upon liquidation, this Promissory
Note will be treated
in pari
passu
with all other Promissory Notes of the
Series.
(b)
The obligation of
the Company to pay the Promissory Note is secured by an
Intercreditor Agreement, as amended by Amendment No. 1 thereto
dated December 24, 2015, between Holder and Sonoran Pacific
Resources, LLP (“SPR”) pursuant to which SPR has
granted to Holder a participating interest,
pari passu,
in a Security Agreement
covering all of the tangible and intangible assets of the Company
(the “Security Interest”) held by SPR and evidenced by
the following UCC instruments recorded in the office of the Nevada
Secretary of State:
Initial Financing
Statement: April 23, 2009 Doc.#2009010332-5
Amendment: October
28, 2010 Doc.#2010027335-3
Continuation: March
6, 2014 Doc.#2014005757-9
The foregoing
Security Interest is subject to that certain Subordination
Agreement between SPR and Forest Capital, LLC dated February 29,
2012 pursuant to which SPR agreed that the Security Interest would
be junior to the security interest of Forest Capital, LLC in the
Company’s Accounts and Inventory, and proceeds
thereof.
Section 2
.
No Sale or Transfer.
This
Promissory Note may not be sold, transferred, assigned,
hypothecated or divided into two or more Promissory Notes of
smaller denominations except to the extent such sale, transfer,
assignment, hypothecation or division is in compliance with federal
and applicable state securities laws, the compliance with which
must be established to the reasonable satisfaction of the
Company.
Section
3
.
Limitations
on Debt
. Until all Promissory Notes issued in this Series
are repaid in full or converted into shares of Common Stock in
accordance with their terms, the Company may not create, incur,
assume, or suffer to exist any other indebtedness, except for
Indebtedness that is subordinated to the Promissory Notes or
indebtedness incurred in the ordinary course of
business.
Section
4.
(a)
“
Event of Default
”
wherever used herein, means any one of the following events
(whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental
body):
(i)
Any default in the
payment of the principal of this Promissory Note as and when the
same shall become due and payable, (whether on the Maturity Date or
by acceleration or otherwise);
(ii)
The Company shall
fail to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit any breach of, this
Promissory Note, the Security Agreement or any other agreement
between the Company and the holder hereof, and such failure or
breach shall not have been remedied within 30 days after the date
on which notice of such failure or breach shall have been given, in
writing to the Company;
(iii)
The Company shall
commence a voluntary case under the United States Bankruptcy Code
or insolvency laws as now or hereafter in effect or any successor
thereto (the “
Bankruptcy Code
”); or an
involuntary case is commenced against the Company under the
Bankruptcy Code and the petition is not controverted within 30
days, or is not dismissed within 60 days, after commencement of
such involuntary case; or a “custodian” (as defined in
the Bankruptcy Code) is appointed for, or takes charge of, all or
any substantial part of the property of the Company or the Company
commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Company or there
is commenced against the Company any such proceeding which remains
undismissed for a period of 60 days; or the Company is adjudicated
insolvent or bankrupt;or any order of relief or other order
approving any such case or proceeding is entered; or the Company
suffers any appointment of any custodian or the like for it or any
substantial part of its property which continues undischarged or
unstayed for a period of 60 days; or the Company makes a general
assignment for the benefit of creditors; or the Company shall fail
to pay, or shall state that it is unable to pay its debts generally
as they become due; or the Company shall call a meeting of all of
its creditors with a view to arranging a composition or adjustment
of its debts; or the Company shall by any act or failure to act
indicate its consent to, approval of or acquiescence in any of the
foregoing; or any corporate or other action is taken by the Company
for the purpose of effecting any of the foregoing.
(b)
Remedies
.
The Holder, together with all other holders of Promissory Notes
based on a majority vote by principal amount of the Holders of all
Promissory Notes (a “Majority of the Holders”), may
declare a default under Section 4(a)(i) upon not less than twenty
(20) days’ prior written notice to the Company. If the
Company fails to cure an Event of Default within such period (or if
the cure cannot be reasonably completed within such period,
commence the cure of the Event of Default and diligently pursue
such cure), then the principal amount hereof shall accrue interest
at the rate of 25% per annum and a Majority of the Holders
may:
(i)
Declare all amounts
due under the Promissory Notes immediately due and owing and
exercise all rights with respect thereto under the Security
Interest or permitted by law;
(ii)
Apply to a court in
Arizona that has competent jurisdiction over the Company for the
appointment of a receiver to manage the assets and operations of
the Company;
(iii)
Assert any other
remedy available at law or in equity.
Section
5.
Prepayment
. The Company may
prepay this Promissory Note in whole or in part at any time prior
to the Maturity Date upon not less than fifteen (15) days’
prior written notice to the Holder. If less than all of the
Promissory Notes are paid in whole then all Promissory Notes shall
be paid to Holders
pro rata
based upon the outstanding principal amounts of the Promissory
Notes.
Section
6.
Definitions
. For the purposes
hereof, the following terms shall have the following
meanings:
“
Business Day
” means any
day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of
Florida are authorized or required by law or other government
action to close.
“
Company
” means iMedicor,
Inc., a Nevada corporation.
“
Conversion Amount
” shall
mean the total of unpaid principal and accrued but unpaid interest
at the date such amount is determined.
“
Conversion Price
” shall
mean the Exchange Ratio by which the Notes, (including outstanding
principal and accrued and unpaid interest), will be exchanged for
PIPE Notes sold by the Company in the next round of financing
consisting of a private offering of securities consisting of
convertible notes and warrants in the minimum amount of the greater
of (i) $4.0 million or (ii) $1.0 million more than the aggregate
principal amount of Bridge Notes sold in the Bridge Note Offering
(including the principal of and unpaid interest on Bridge Notes
exchanged for PIPE Notes) (the “Minimum PIPE”) and a
maximum of $2.0 million more than the Minimum PIPE (“Maximum
PIPE”) undertaken prior to the Maturity Date of these Notes,
(the “PIPE Financing”); provided, however, if the
Company fails to undertake and consummate a PIPE Financing within
such period of time, the Conversion Price shall be $0.45 per share
(assuming the Company on the date of conversion has 10 million
shares issued and outstanding on a fully diluted basis. If the
Company’s fully diluted shares outstanding on the date of
conversion is greater or less than 10 million, the Conversion Price
shall be adjusted proportionately to equate to a Conversion Price
based upon a $4.5 million pre-money valuation on a fully diluted
basis on the date of conversion (i.e., a 10% discount to a $5.0
million pre-money valuation on a fully diluted basis on the date of
conversion). Further, if at any time prior to completing the PIPE
Financing the Company raises more than $250,000 at an effective
valuation per share that is less than the Conversion Price, the
Conversion Price will be reduced to an amount equal to the lower
price.
“
Conversion Rights
” shall
mean the Notes are exchangeable for convertible notes (“PIPE
Notes”) offered by the Company in the PIPE Financing defined
below or (ii) convertible into shares of common stock at any time
at the option of the Bridge Note holder. The Bridge Notes
(principal and accrued and unpaid interest) will be convertible at
a price equal to $0.45 per share of common stock, subject to
adjustment as provided below, or exchangeable for PIPE Notes as
provided herein. In addition, if (i) the Company is current in
filing its reports (other than reports required to be filed on Form
8-K) under Section 13(a) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and (ii) the gross
combined proceeds of the Bridge Offering and PIPE Financing are at
least the Minimum PIPE, as defined herein, then the Bridge Notes
will automatically be exchanged for PIPE Notes in the principal
amount equal to (A) the sum of (1) the total outstanding principal
balance of the Bridge Notes plus (2) all accrued and unpaid
interest, multiplied by (B) 111% (“Exchange Ratio”).
For the purposes hereof, the PIPE Financing shall mean a private
offering of securities consisting of convertible notes and warrants
in the minimum amount equal to the greater of (i) $4.0 million or
(ii) $1.0 million more than the aggregate principal amount of
Bridge Notes sold in the Bridge Note Offering (including the
principal of and accrued interest on Bridge Notes exchanged for
PIPE Notes) (the “Minimum PIPE”) and a maximum of $2.0
million more than the Minimum PIPE (“Maximum PIPE”)
undertaken prior to the Maturity Date of these Notes, (the
“PIPE Financing”); If the Company fails to undertake
and consummate the PIPE Financing prior to the Maturity Date, the
Conversion Price shall be $0.45 per share of common stock (assuming
the Company has 10 million shares of common stock issued and
outstanding on a fully diluted basis on the date of conversion. If
the Company’s fully diluted shares outstanding on the date of
conversion is greater or less than 10 million, the Conversion Price
shall be adjusted proportionately to equate to a Conversion Price
based upon a $4.5 million pre-money valuation on a fully diluted
basis on the date of conversion (i.e., a 10% discount to a $5.0
million pre-money valuation on a fully diluted basis on the date of
conversion).
“
Conversion
Shares
” shall mean the PIPE Notes sold by the Company
in the PIPE Financing; and in the absence of a PIPE Financing, the
shares of common stock issued or issuable upon conversion of the
Promissory Notes.
“
Exchange
Ratio” means the
ratio at which the Bridge Notes that will be exchanged for PIPE
Notes in the principal amount equal to (A) the sum of (1) the total
outstanding principal balance of the Bridge Notes plus (2) all
accrued and unpaid interest as of the date of the exchange,
multiplied by (B) 111%.
“
Holder
” means any Person
who is a registered holder of this Promissory Note as listed in the
books of the Company.
“
Majority of the Holders
”
is as defined in Section 4(b).
“
Market Price
” at any date
shall be deemed to be (i) if the principal trading market for such
securities is any registered exchange, the last reported sale
price, on such Trading Day for which determination is made as
officially reported on any consolidated tape, (ii) if the principal
market for such securities is the over-the-counter market, the
closing prices (or, if no closing price, the closing bid price) on
such Trading Day as set forth by Nasdaq or any other registered
exchange or the OTC Bulletin Board (whichever is the principal
market for the Company’s common stock) as reported at
http://finance.yahoo.com
or, (iii) if the security is not quoted on Nasdaq or other
registered exchange or the OTC Bulletin Board, the average bid and
asked price as set forth on
www.pinksheets.com
or (if not available) in the National Quotation Bureau sheet
listing such securities for such day. Notwithstanding the
foregoing, if there is no reported closing price or bid price, as
the case may be, on any of the ten trading days preceding the event
requiring a determination of Market Price hereunder, then the
Market Price shall be determined in good faith by resolution of the
Board of Directors of the Company, based on the best information
available to it.
“
Material Adverse Effect
”
means a material adverse effect upon the business, operations,
properties, assets or condition (financial or otherwise) of the
Company taken as a whole.
“
Maturity Date
” means the
date defined in the first paragraph or (if earlier) the date of any
prepayment or acceleration.
“
Original Issue Date
”
shall mean the date this Promissory Note is purchased by the
initial holder.
“
Person
” means a
corporation, an association, a partnership, an organization, a
business, an individual, a government or political subdivision
thereof or a governmental agency.
“PIPE Financing”
means the sale by the Company of equity securities without
registration under the Securities Act of 1933, as amended,
consisting of a private offering of securities consisting of
convertible notes and warrants in the minimum amount equal to the
greater of (i) $4.0 million or (ii) $1.0 million more than the
aggregate principal amount of Bridge Notes sold in the Bridge Note
Offering (including the principal of and accrued interest on Bridge
Notes exchanged for PIPE Notes) (the “Minimum PIPE”)
and a maximum of $2.0 million more than the Minimum PIPE
(“Maximum PIPE”) undertaken prior to the Maturity Date
of these Notes.
“
Trading Day
” means a day
in which the market on which shares of the Company’s common
stock are principally traded is open for trading, whether or not
any shares of the Company’s common stock are actually traded
on that day.
Section
7.
Conversion and
Exchange
.
a.
Voluntary
Conversion.
At any time before this Promissory Note has been
paid, upon written notice to the Company, the Holder may convert
the Conversion Amount into Conversion Shares determined by dividing
the Conversion Amount by the Conversion Price.
b.
Mandatory
Automatic Exchange.
Provided that the Company has filed all
reports (other than reports required to be filed on Form 8-K)
required to be filed under Section 13(a) of the Securities Exchange
Act of 1934, as amended, the Conversion Amount shall automatically
be exchanged for PIPE Notes at the Exchange Ratio in the event the
Company consummates the PIPE Financing within the time
required.
c.
Limitation
on Conversion.
Notwithstanding any other provision hereof,
in no event (except (i) as specifically provided herein as an
exception to this provision, or (ii) while there is outstanding a
tender offer for any or all of the shares of the Company’s
Common Stock or (iii) for a Holder who is immediately prior to the
conversion of this Promissory Note the beneficial owner of five
percent or more of the issued and outstanding shares of the
Company’s Common Stock) shall the Holder be entitled to
convert any portion of this Promissory Note, or shall the Company
have the obligation to convert such Promissory Note (and the
Company shall not have the right to pay interest hereon in shares
of Common Stock) to the extent that, after such conversion or
issuance of stock in payment of interest, the sum of (1) the number
of shares of Common Stock beneficially owned by theHolder and its
affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted portion
of the Promissory Notes or other convertible securities or of the
unexercised portion of warrants or otherrights to purchase Common
Stock), and (2) the number of shares of Common Stock issuable upon
the conversion of the Promissory Notes with respect to which the
determination of this proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Common Stock (after taking into
account the shares to be issued to the Holder upon such
conversion). For purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, except as otherwise provided in clause (1) of
such sentence. The Holder, by its acceptance of this Promissory
Note, further agrees that if the Holder transfers or assigns any of
the Promissory Notes to a party who or which would not be
considered such an affiliate, such assignment shall be made subject
to the transferee’s or assignee’s specific agreement to
be bound by the provisions of this Section 7(c) as if such
transferee or assignee were the original Holder hereof. Nothing
herein shall preclude the Holder from disposing of a sufficient
number of other shares of Common Stock beneficially owned by the
Holder so as to thereafter permit the continued conversion of this
Promissory Note. . The provisions of this paragraph 7(c)(i) shall
not apply to any Holder who, without regard to this Note and the
underlying Conversion Shares is at the time the beneficial owner,
within the meaning of Rule 13d-3) of 5% or more of the
Company’s issued and outstanding shares of common stock, (ii)
can be waived by agreement of the Company and the Holder, and (iii)
shall terminate in the event the provisions of paragraph 7(b)
regarding mandatory automatic conversion are triggered and become
operative.
d.
Manner of
Conversion.
Voluntary
conversion provided for in paragraph 7(a) above shall be
effectuated by faxing a Notice of Conversion (as defined below) to
the Company as provided in this paragraph. The Notice of Conversion
shall be executed by the Holder of this Promissory Note and shall
evidence such Holder's intention to convert this Promissory Note or
a specified portion hereof in the form annexed hereto as Exhibit A.
No fractional shares of Common Stock or scrip representing
fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded to the nearest whole share. The
date on which this Promissory Note shall be deemed to be converted
(the "Conversion Date") shall be the date on which the Holder faxes
or otherwise delivers the conversion notice ("Notice of
Conversion") to the Company and that it is received by the Company,
provided that, if such conversion would convert the entire
remaining principal of this Promissory Note, the Holder shall
deliver to the Company the original Promissory Notes being
converted no later than five (5) business days thereafter. Email
delivery of the Notice of Conversion shall be accepted by the
Company at rmcdermott@imedicor.com. Certificates representing
Common Stock upon conversion (“Conversion
Certificates”) will be delivered to the Holder at the address
specified in the Notice of Conversion (which may be the
Holder’s address for notices as contemplated by the
Subscription Agreement or a different address), via express
courier, by electronic transfer or otherwise, as provided in
Section 8(e)(iii) below, and, if interest is paid by the Company
issuing to the Holder Common Stock, the Interest Payment Date shall
be the date of Conversion. The Holder shall be deemed to be the
holder of the shares issuable to it in accordance with the
provisions of this Section 8(d) on the Conversion
Date.
e.
Nature of Common Stock Issued.
(i)
When issued upon
conversion of the Promissory Notes pursuant to Section 7(a) or (b)
hereof, the Conversion Shares will be legally and validly issued,
fully-paid and non-assessable.
(ii)
Upon any
conversion, this Promissory Note will be deemed cancelled and of no
further force and effect, representing only the right to receive
the Conversion Shares, regardless whether the Holder delivers this
Promissory Note to the Company for cancellation.
(iii) As
soon as possible after a conversion has been effected (and subject
to the Holder having returned the Promissory Note to the Company
for cancellation), the Company will deliver to the converting
holder a certificate or certificates representing the Conversion
Shares issuable by reason of such conversion in such name or names
and such denomination or denominations as the converting holder has
specified.
(iv) The
issuance of certificates for shares of Conversion Shares will be
made without charge.
(v) The
Company will not close its books against the transfer of the
Conversion Shares issued or issuable in any manner which interferes
with the conversion of this Promissory Note.
f.
Conversion Price
Dilution Adjustment
. In order to prevent dilution of the
conversion rights granted under this Section, the Conversion Price
will be subject to adjustment from time to time pursuant to this
Section 7f.
(i) If
the Company at any time subdivides (by any stock split, stock
dividend or otherwise) its outstanding shares of Common Stock into
a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately
reduced, and if the Company at any time combines (by reverse stock
split or otherwise) its outstanding shares of common stock into a
smaller number of shares, the Conversion Price in effect
immediately prior to such combination will be proportionately
increased.
(ii) In
the event of a judicial or non-judicial dissolution of the Company,
the conversion rights and privileges of the Holder shall terminate
on a date, as fixed by the Board of Directors of the Company, not
more than 45 days and not less than 30 days before the date of such
dissolution. The reference to shares of Common Stock herein shall
be deemed to include shares of any class into which said shares of
common stock may be changed.
(iii)
Adjustment
for Dividends
. In the event the Company shall make or issue,
or shall have issued, or shall fix a record date for the
determination of holders of Common Stock entitled to receive a
dividend or the distribution (other than a distribution otherwise
provided for herein) payable in (a) securities of the Company
other than shares of common stock or (b) assets (including
cash paid or payable out of capital or capital surplus or surplus
created as a result of a revaluation of property, but excluding the
cumulative dividends payable with respect to an authorized series
of Preferred Stock), then and in each such event provision shall be
made so that the holders of Promissory Notes shall receive upon
conversion thereof in addition to the number of shares of Common
Stock receivable thereupon, the number of securities or such other
assets of the Company which they would have received had their
Promissory Notes been converted into Common Stock on the record
date of such event and had they thereafter, during the period from
the date of such event to and including the conversion date,
retained such securities or such other assets receivable by them as
aforesaid during such period, giving application to all adjustments
called for during such period under this paragraph with respect to
Holders.
(iv)
Adjustment
for Capital Reorganization or Reclassification
. If the
Common Stock issuable upon the conversion of the Promissory Notes
shall be changed into the same or different number of shares of any
class or classes of stock, whether by capital reorganization,
reclassification or otherwise then and in each such event the
holder of the Promissory Notes shall have the right thereafter to
convert such Promissory Notes and receive the kind and amount of
shares of stock and other securities and property receivable upon
such reorganization, reclassification or other change by holders of
the number of shares of Common Stock into which such Promissory
Note might have been converted immediately prior to such
reorganization, reclassification or change, all subject to further
adjustment as provided herein.
(v)
Adjustment
of Number of Shares
. Anything in this Certificate to the
contrary notwithstanding, in case the Company shall at any time
issue Common Stock or convertible securities by way of dividend or
other distribution on any stock of the Company or subdivide or
combine the outstanding shares of Common Stock, the Conversion
Price shall be proportionately decreased in the case of such
issuance (on the day following the date fixed for determining
shareholders entitled to receive such dividend or other
distribution) or decreased in the case of such subdivision or
increased in the case of such combination (on the date that such
subdivision or combination shall become effective).
(vi)
No
Adjustment for Small Amounts
. Anything in this paragraph to
the contrary notwithstanding, the Company shall not be required to
give effect to any adjustment in the Conversion Price unless and
until the net effect of one or more adjustments, determined as
above provided, shall have required a change of the Conversion
Price by at least one cent, but when the cumulative net effect of
more than one adjustment so determined shall be to change the
actual Conversion Price by at least one cent, such change in the
Conversion Price shall thereupon be given effect.
Section
8.
No Impairment.
Except as
expressly provided herein, no provision of this Promissory Note
shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and interest
on, this Promissory Note at the time, place, and rate, and in the
coin or currency, herein prescribed. This Promissory Note is a
direct obligation of the Company.
Section
9.
No Rights as a Shareholder.
This Promissory Note shall not entitle the Holder to any of the
rights of a stockholder of the Company, including without
limitation, the right to vote, to receive dividends and other
distributions, or to receive any notice of, or to attend, meetings
of stockholders or any other proceedings.
Section
10.
No recourse shall
be had for the payment of the principal of, or the interest on,
this Promissory Note, or for any claim based hereon, or otherwise
in respect hereof, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or
any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof,
expressly waived and released.
Section
11.
All payments
contemplated hereby to be made “in cash” shall be made
in immediately available good funds of United States of America
currency by wire transfer to an account designated in writing by
the Holder to the Company (which account may be changed by notice
similarly given). All payments of cash and each delivery of shares
of Common Stock issuable to the Holder as contemplated hereby shall
be made to the Holder at the address last appearing on the
Promissory Note Register of the Company as designated in writing by
the Holder from time to time; except that the Holder can designate,
by notice to the Company, a different delivery address for any one
or more specific payments or deliveries.
Section
12.
The Holder of this
Promissory Note, by acceptance hereof, agrees that this Promissory
Note is being acquired for investment and that such Holder will not
offer, sell or otherwise dispose of this Promissory Note or the
shares of Common Stock issuable upon conversion hereof except under
circumstances which will not result in a violation of the Act or
any applicable state Blue Sky or foreign laws or similar laws
relating to the sale of securities.
Section
13.
The Promissory
Notes will initially be issued in denominations determined by the
Company, but are exchangeable for an equal aggregate principal
amount of Promissory Notes of different denominations, as requested
by the Holder surrendering the same. No service charge will be made
for such registration or transfer or exchange.
Section
14.
The Company shall
be entitled to withhold from all payments of principal of, and
interest on, this Promissory Note any amounts required to be
withheld under the applicable provisions of the United States
income tax laws or other applicable laws at the time of such
payments, and the Holder shall execute and deliver all required
documentation in connection therewith.
Section
15.
This Promissory
Note has been issued subject to investment representations of the
original purchaser hereof and may be transferred or exchanged only
in compliance with the Securities Act of 1933, as amended (the
"Act"), and other applicable state and foreign securities laws and
the terms of the Subscription Agreement. In the event of any
proposed transfer of this Promissory Note, the Company may require,
prior to issuance of a new Promissory Note in the name of such
other person, that it receive reasonable transfer documentation
that is sufficient to evidence that such proposed transfer complies
with the Act and other applicable state and foreign securities laws
and the terms of the Subscription Agreement. Prior to due
presentment for transfer of this Promissory Note, the Company and
any agent of the Company may treat the person in whose name this
Promissory Note is duly registered on the Company's Promissory Note
Register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this
Promissory Note be overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary.
Section
16.
Mutilated, Lost or Stolen Promissory
Notes.
If this Promissory Note shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated
Promissory Note, or in lieu of or in substitution for a lost,
stolen or destroyed Promissory Note, a new Promissory Note for the
principal amount of this Promissory Note so mutilated, lost, stolen
or destroyed but only upon receipt of evidence of such loss, theft
or destruction of such Promissory Note, and of the ownership
hereof, and adequate indemnity, if requested, all reasonably
satisfactory to the Company.
Section
17.
Governing Law.
This Promissory
Note shall be governed by and construed in accordance with the laws
of the State of Arizona. Each of the parties consents to the
exclusive jurisdiction of the federal courts whose districts
encompass any part of Scottsdale, Arizona, or the state courts of
the State of Arizona sitting in Scottsdale, Arizona in connection
with any dispute arising out of or in connection with this
Promissory Note and hereby waives, to the maximum extent permitted
by law, any objection, including any objection based on
forum non conveniens
, to
the bringing of any such proceeding in such jurisdictions. To the
extent determined by such court, the Company shall reimburse the
Holder for any reasonable legal fees and disbursements incurred by
the Holder in enforcement of or protection of any of its rights
under this Promissory Note.
Section
18.
Waiver of Jury Trial; No Other
Waivers.
The Company and the Holder hereby waive the right
to a trial by jury in any action, proceeding or counterclaim in
respect of any matter arising out or in connection with this
Promissory Note. Any waiver by the Company or the Holder of a
breach of anyprovision of this Promissory Note shall not operate as
or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this
Promissory Note. The failure of the Company or the Holder to insist
upon strict adherence to any term of this Promissory Note on one or
more occasions shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to
that term or any other term of this Promissory Note. Any waiver
must be in writing.
Section
19.
Severability.
If any provision
of this Promissory Note is invalid, illegal or unenforceable, the
balance of this Promissory Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall
nevertheless remain applicable to all other Persons and
circumstances.
Section
20.
Obligations Due on a Business
Day.
Whenever any payment or other obligation hereunder
shall be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next calendar month, the
preceding Business Day in the appropriate calendar
month).
IN WITNESS WHEREOF
, the Company has
caused this instrument to be duly executed by an officer duly
authorized for such purpose, as of the date first above
indicated.
iMEDICOR,
INC., a Nevada corporation
By:________________________________
Robert
McDermott, President
NOTICE
OF CONVERSION
(To be Executed by
the Registered Holder
in order to Convert
the Note)
The undersigned
hereby irrevocably elects to convert $__________ principal amount
of the Note (defined below) into securities of iMedicor, Inc., a
Nevada corporation (the “
Company
”) according to the terms
of the Series A 18% Convertible Note of the Company registered in
the name of the undersigned (the “
Note
”), as of the date written
below. If securities are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such
certificates. No fee will be charged to the Holder for any
conversion, except for transfer taxes, if any. The original
certificate evidencing the Note is delivered herewith (or evidence
of loss, theft or destruction thereof).
The undersigned
hereby requests that the Company issue a certificate or
certificates for the number of shares of Common Stock set forth
below (which numbers are based on the Holder’s calculation
attached hereto) in the name(s) specified immediately below or, if
additional space is necessary, on an attachment
hereto:
Address:
The Company shall
issue and deliver shares of Common Stock to an overnight courier
not later than three business days following receipt of the
original Note(s) to be converted, and shall make payments pursuant
to the Notes for the number of business days such issuance and
delivery is late.
The undersigned
represents and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon
conversion of the Note shall be made pursuant to registration of
the securities under the Securities Act of 1933, as amended (the
“
Act
”), or
pursuant to an exemption from registration under the
Act.
Date of
Conversion:___________________________
Applicable
Conversion Price:____________________
Number and Kind of
Securities to be Issued Pursuant to
Conversion of the
Notes:___________________
Signature:___________________________________
Name:______________________________________
Address:____________________________________
___________________________________________
SS or Tax I.D.
No.____________________________
EXHIBIT VII
EXECUTION COPY
CONVERSION AGREEMENT
CONVERSION AGREEMENT
(this
“Agreement”), dated November 7, 2016 among iMEDICOR,
Inc., a Nevada corporation formerly known as Vemics, Inc. (the
“Company”), and the undersigned holder (the
“Holder”) of a Series A 18% Convertible Promissory Note
in the principal amount set forth below the Holder’s
signature to this Agreement, as amended by the Amendment dated
December 24, 2015 (the “Bridge Note”).
BACKGROUND
WHEREAS, the
Company issued the Bridge Note to the Holder on the Original Issue
Date.
WHEREAS, the Bridge
Note was due and payable in full on or before June 30, 2016, but
neither any of the principal nor any of the interest payable with
respect to the Bridge Note has been paid and interest on the
principal of the Bridge Note continues to accrue at the rate of 18%
per annum.
WHEREAS, the
Company has entered into a Recapitalization Agreement dated as of
November 1, 2016 (the “Recapitalization Agreement”, a
copy of which is attached to this Agreement) with persons who are
the owners of record of shares of the capital stock of the Company
and/or the holders of indebtedness convertible into shares of
capital stock of the Company, pursuant to which the Company shall
be recapitalized upon the terms and provisions of the
Recapitalization Agreement (the “Recapitalization”) on
such date as the Company in its sole discretions shall designate in
a written notice to all of the parties to the Recapitalization
Agreement (the “Recapitalization Date”).
WHEREAS, the
Company entered into a Letter Agreement dated as of October 31,
2016 with GVC Capital LLC (“GVC”) pursuant to which the
Letter Agreement between the Company and GVC dated November 12,
2015 and all of their respective obligations thereunder, including
but not limited to their respective obligations with respect to a
proposed private offering by the Company of the Company’s
securities (a “PIPE Financing”) were terminated
effective as of October 31, 2016.
WHEREAS, the Holder
desires to convert the Bridge Note into shares of Common Stock of
the Company, and the Company desires that the Holder convert the
Bridge Note into shares of Common Stock of the Company, at a price
equal to $0.45 per share of Common Stock immediately following the
Recapitalization of the Company on the Recapitalization Date and
otherwise on the terms and conditions set forth in the Bridge
Note.
NOW, THEREFORE, in
consideration of the premises and the promises made herein, and in
consideration of the representations, warranties, covenants and
agreements herein contained, intending to be legally bound, the
parties to this Agreement hereby agree as follows:
1.
Definitions.
Except as
otherwise provided in this Agreement, the terms used herein shall
have the meanings thereof as defined in the Bridge Note or the
Recapitalization Agreement, as the case may be.
2.
Conversion of Bridge Note.
On
the Recapitalization Date immediately following the
Recapitalization, the Bridge Note shall be converted into shares of
Common Stock of the Company at a price equal to $0.45 per share of
Common Stock, subject to adjustment as provided in the Bridge Note
(the “Conversion”). The shares of Common Stock to be
issued by the Company upon the Conversion shall be issued to the
Holder in the name of the Holder.
3.
Representations and
Warranties of the Company.
The
Company represents and warrants to the Holder as
follows:
3.1
Power
and Authorization.
The Company
is a corporation duly organized, validly existing and in good
standing under the Laws of the state of Nevada and has the
requisite power and authority necessary to enter into this
Agreement and to carry out its obligation hereunder. The execution,
delivery and performance of this Agreement and the transactions
contemplated hereby have been duly authorized by the Board of
Directors of the Company and no other corporate proceeding on the
part of the Company is necessary to authorize the execution and
delivery of this Agreement or the Conversion or any of the other
transactions contemplated hereby. This Agreement has been duly
executed and delivered on behalf of the Company and is a legal
valid and binding obligation of the Company and enforceable against
the Company in accordance with its terms.
3.2
No
Violation.
Neither the
execution, delivery nor performance of this Agreement nor the
consummation of the Recapitalization or any of the transactions
contemplated hereby (i) will violate or conflict with the Articles
of Incorporation or By-Laws of the Company, (ii) will result in any
breach of or default under any provision of any contract or
agreement of any kind to which the Company is a party or by which
the Company is bound or to which any property or asset of the
Company is subject or (iii) is prohibited by or requires the
Company to obtain or make any consent, authorization, approval,
registration or filing under any statute, law, ordinance,
regulation, rule, judgment, decree or order of any court or
Government Entity or of any other person.
3.3
No
Litigation.
There are no
actions, suits, proceedings or, to the best of the Company's
knowledge, investigations, either at law or in equity, or before
any commission or other administrative authority in any United
States or foreign jurisdiction, of any kind now pending or
threatened or proposed in any manner, or any circumstances which
should or could reasonably form the basis of any such action, suit,
proceeding or investigation, involving the Company or any of its
properties or assets that (i) questions the validity of this
Agreement or the Recapitalization or any of the transactions
provided for or contemplated hereby or (ii) seeks to delay,
prohibit or restrict in any manner any action taken or contemplated
to be taken by the Company under this
Agreement.
4.
Covenants,
Representations and Warranties of the Holder.
The Holder hereby covenants, represents and
warrants to the Company as follows:
4.1
Power
and Authorization.
The Holder,
if the Holder is an entity, is duly organized, validly existing and
in good standing under the Laws of the jurisdiction under which it
is organized or formed and has the requisite power and authority
necessary to enter into this Agreement and to carry out its
obligation hereunder. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been
duly authorized by its board of directors or other governing body,
as applicable, and no other proceeding on the part of the Holder is
necessary to authorize the execution and delivery of this Agreement
or any of the other transactions contemplated hereby. This
Agreement has been duly executed and delivered on behalf of the
Holder, and is a legal valid and binding obligation of the Holder,
and is enforceable against the Holder in accordance with its
terms.
The
Holder is not an entity, has the requisite power authority and
capacity to enter into this Agreement and to carry out its
obligations hereunder. This Agreement has been duly executed and
delivered on behalf of the Holder, and is a legal valid and binding
obligation of the Holder, and enforceable against the Holder in
accordance with its terms.
4.2
No
Violation.
Neither the
execution, delivery nor performance of this Agreement nor the
consummation of any of the transactions contemplated hereby (i)
will violate or conflict with the Certificate of Incorporation or
By-Laws if the Holder is an entity, (ii) will result in any breach
of or default under any provision of any contract or agreement of
any kind to the Holder is a party or by which the Holder is bound
or to which any property or asset of the Holder is subject or (iii)
is prohibited by or requires the Holder to obtain or make any
consent, authorization, approval, registration or filing under any
statute, law, ordinance, regulation, rule, judgment, decree or
order of any court or Government Entity or of any other
person.
4.3
No
Litigation.
There is no action,
suit, proceeding or, to the knowledge of the Holder, investigation,
either at law or in equity, or before any commission or other
administrative authority in any United States or foreign
jurisdiction, of any kind now pending or threatened or proposed in
any manner, or any circumstances which should or could reasonably
form the basis of any such action, suit, proceeding or
investigation, involving the Holder or any of their respective
properties or assets that (i) questions the validity of this
Agreement, the Recapitalization or any of the transactions
contemplated hereby or (ii) seeks to delay, prohibit or restrict in
any manner any action taken or contemplated to be taken by the
Company or the Holder under this Agreement.
4.4
Surrender
of Certificates.
On and after
the Conversion, the Holder acknowledges and agrees that any
documentation representing the Bridge Note shall represent
thereafter only the right of the Holder to receive the number of
shares of Common Stock issuable upon the
Conversion.
4.5
Waiver.
By signing this Agreement, the Holder
shall be deemed to have waived any and all rights, entitlements,
claims, demands or interests which the Holder may have had by
virtue of having been the beneficial owner of the Bridge Note, save
and except for the right to receive a certificate representing the
shares of Common Stock issuable upon the
Conversion.
4.6
Release.
By signing this Agreement, but
effective as of the consummation of the Conversion in accordance
with the terms hereof, the Holder shall be deemed to have
unconditionally and irrevocably released, acquitted and forever
discharged the Company together with its officers, directors,
stockholders, agents, bankers, representatives, note holders,
attorneys and investment bankers, together with their respective
affiliates and agents, both past and present, from any claim,
demand, obligation or liability, direct or indirect, known or
unknown, arising from any act or omission from the beginning of
time up to the Conversion (a "Claim") except as hereinafter
provided in this Section 4.6. Without limiting the generality of
the foregoing, it is understood that this release shall include any
Claim arising from any statement or representation, verbal or
written, and any act or omission made in connection with any offer
or sale of any security. However, notwithstanding anything in this
Agreement to the contrary, none of Jerry D. Smith, JD Investments,
Inc. or Sonoran Pacific Resources, Inc. or any of their affiliates
shall be deemed to have released, acquitted or discharged the
Company with respect to any claim that it may now or at any time
hereafter have, including only any claim or right under any
applicable security agreement or security interest that, as of the
date of this Agreement, relates to:
(i)
the
line of credit in the amount of $500,000 extended to the Company by
Western State Bank that has been guaranteed by Jerry D. Smith and
the security agreements and other documentation executed with
respect thereto, and
(ii)
The
financing in an amount of $155,000 provided to the Company by
Genesis Finance Corporation that has been guaranteed by Jerry D.
Smith and the security agreements and other documentation executed
with respect thereto.
4.7
Information.
The Holder has been provided with
information and materials concerning the subject matter of this
Agreement and the transactions provided for herein or contemplated
hereby. In addition, each such person has had access to the
Company's reports and information filed with the SEC (the "SEC
Documents"). The information and materials provided by the Company
and the SEC Documents are referred to herein as the "Disclosure
Materials." Each such person has carefully reviewed and is familiar
with all of the information contained in the Disclosure Materials.
Each such person has been given access to full and complete
information regarding the Company and has utilized such access to
such person's satisfaction for the purpose of obtaining such
information regarding the Company as such person has reasonably
requested; and, particularly, each such person has been given a
reasonable opportunity to ask questions of, and receive answers
from, representatives of the Company concerning the terms and
conditions of this Agreement, including the Conversion and the
shares of Common Stock issuable upon the Conversion and to obtain
any and all additional information related thereto, to the extent
reasonably available. Each such person has relied on nothing other
than the Disclosure Materials (including any exhibits thereto) in
deciding whether to execute this Agreement. Except as set forth in
the Disclosure Materials, no representations or warranties have
been made to any such person by the Company, any selling agent of
the Company, or any agent, employee, or affiliate of the Company or
such selling agent.
Each
such person, in reaching a decision to execute this Agreement, has
such knowledge and experience in financial and business matters
that such person is capable of reading and interpreting financial
statements and evaluating the merits and risks of the covenants,
representations and warranties contained herein and has the net
worth to undertake such risks.
4.8
Risk
Factors Applicable to the Holder.
The Holder acknowledges that the Holder will be
subject to substantial risks as a result of the Conversion,
including the following:
4.8.1
The
Holder acknowledges that the Holder has certain rights as a holder
of the Bridge Note (“Bridge Note Rights"), including, without
limitation:
(i)
the
right to accrue and collect interest on the principal balance of
the Bridge Note; and
(ii)
upon
a default by the Company in its obligation to repay certain
indebtedness of the Company, the right to foreclose upon the assets
of the Company, compel a liquidation of those assets and collect
the proceeds from such liquidation senior to the holders of all
indebtedness of the Company subordinated to the Bridge Note and
preferred and common equity.
and,
by agreeing to convert the Bridge Note into shares of Common Stock
in accordance with the terms of this Agreement, the Holder will
lose the Holder’s Bridge Note Rights and will possess only
those rights of all other holders of Common Stock, including,
without limitation:
(i)
Voting Rights.
The holders of Common Stock are
entitled to one vote per share on all matters. The Common Stock
does not have cumulative voting rights.
(ii)
Dividends.
Each share of Common Stock has an equal and
ratable right to receive dividends to be paid from the assets
legally available therefor when, as and if declared by the Board.
The Company does not anticipate paying cash dividends on the Common
Stock in the foreseeable future.
(iii)
Liquidation.
In the event the Company is dissolved,
liquidated or wound up, the holders of Common Stock are entitled to
share equally and ratably in the assets available for distribution
after payments are made to the Company's creditors and to the
holders of any outstanding stock ranking senior to the Common
Stock, including any that the Company may designate and issue in
the future with liquidation preferences greater than those of the
Common Stock.
(iv)
Other.
The holders of shares of Common Stock have no
preemptive, subscription or redemption rights and are not liable
for further calls or assessments. All of the outstanding shares of
Common Stock issued upon the Conversion will be fully paid and
non-assessable.
4.8.2
The
Holder has certain rights and preferences applicable to the Bridge
Note, including, without limitation, the right to convert the
Bridge Note into shares of Common Stock. By executing this
Agreement and converting the Bridge Note into shares of Common
Stock, the Holder will possess only the rights of a holder of
Common Stock.
4.8.3
Implementation
of this Agreement will result in the conversion of the Bridge Note
into a substantial number of shares of Common Stock. The public
trading market for the Common Stock is sporadic and highly
illiquid. Future sales of substantial amounts of the Common Stock
in the public market, or the perception that such sales might
occur, could cause the market price of the Common Stock to decline
and could impair the value of an investment in the Common Stock and
the Company’s ability to raise equity capital in the
future.
This
Agreement will result in an immediate and substantial increase in
the number of shares of Common Stock issued and outstanding. The
sale of some portion of this additional Common Stock by the holders
thereof, or even the appearance that such holders may make such
sales, may limit the market for the Common Stock or depress any
trading market volume and price before other investors are able to
sell any of their Common Stock. There is a substantial risk that
the Holder will not be able to sell any of the Holder’s
Common Stock in a timeframe and/or at prices that would permit the
recovery of the Holder’s investment.
5.1
Assurance
of Further Action.
From time to
time after the Conversion, at the Company's expense, the Holder
shall execute and deliver, or cause to be executed and delivered,
to the Company such further instruments or other documents or take
such other actions as the Company may reasonably request in order
to consummate the Conversion and the other transactions
contemplated hereby.
5.2
Expenses.
Whether or not the Conversion is
consummated, except as otherwise provided in the documents relating
to the Conversion, each of the Parties shall pay all of its own
legal and accounting fees and other expenses, taxes, debts,
liabilities and obligations incurred in the preparation of this
Agreement and the performance of the terms and provisions of this
Agreement.
5.3
Waiver.
The Parties may by written agreement,
(i) extend the time for or waive or modify the performance of any
of the obligations or other acts of the Parties or (ii) waive any
inaccuracies in the representations and warranties contained in
this Agreement or in any document delivered pursuant to this
Agreement.
5.4
Notices.
All notices, requests or other
communications hereunder shall be in writing and shall be deemed to
have been duly given if delivered or mailed first class certified
mail postage prepaid addressed as follows: if to the Company, to
iMedicor, Inc., 13506 Summerport Village Parkway, Suite 160,
Windermere FL, 34786, Attention: Robert McDermott, President and
Chief Executive Officer (with a copy to Samuel B. Fortenbaugh III,
Esq., 45 Rockefeller Plaza, Suite 2000, New York, New York 10111);
if to the Holder, to the address set forth below the signature of
the Holder on the signature page of this Agreement; or to such
other address as may have been furnished in writing to the party
giving the notice by the Party to whom notice is to be
given.
5.5
Entire
Agreement.
This Agreement
embodies the entire agreement among the Parties and there have been
and are no agreements, representations or warranties, oral or
written among the Parties other than those set forth or provided
for in this Agreement. This Agreement may not be modified or
changed, in whole or in part, except by a supplemental agreement
signed by each of the Parties.
5.6
Rights
Under this Agreement; No assignability.
This Agreement shall bind and inure to the benefit
of the Parties hereto and their respective successors and assigns,
but shall not be assignable by any Party without the prior written
consent of the other Party. Nothing contained in this Agreement is
intended to confer upon any person, other than the Parties and
their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
5.7
Governing
Law.
This Agreement and the
rights and duties of the Parties hereto shall be governed by and
construed in accordance with the laws of the State of Florida. The
Parties hereby irrevocably submit to the jurisdictions of the
courts of the States of Arizona and Florida and the federal courts
of the United States of America located in the States of Arizona
and Florida in respect of all matters that arise out of or are
related to this Agreement or the documents referred to in or
contemplated by this Agreement and the transactions contemplated
hereby and thereby and hereby waive, and agree not to assert, as a
defense in any action for the interpretation or enforcement hereof
or of anysuch document, that it is not subject thereto or that such
action may not be brought or is not maintainable in said courts or
that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such
courts, and the Parties irrevocably agree that all claims with
respect to such action shall be heard and determined in such
Arizona or Florida state or federal court. The Parties hereby
consent to and grant any such court jurisdiction over the person of
such Parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such
action in the manner provided in this Section 5.7 or in such other
matter as may be permitted by law shall be valid and sufficient
service thereof.
5.8
Waiver
of Jury Trial.
EACH PARTY
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMUTED BY LAW,
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
5.9
Specific
Performance.
The Parties agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with
their specific terms or
were otherwise breached. It is accordingly agreed that the Parties
shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement in any court of competent
jurisdiction specified in Section 5.7, this being in addition to
any other remedy to which they are entitled at law or in
equity.
5.10
Headings:
References to Sections, Exhibits and Schedules.
The headings of the Sections, paragraphs and
subparagraphs of this Agreement are solely for convenience and
reference and shall not limit or otherwise affect the meaning of
any of the terms or provisions of this Agreement. The references
herein to Sections, Exhibits and Schedules, unless otherwise
indicated, are references to sections of and exhibits and schedules
to this Agreement.
5.11
Counterparts.
This Agreement may be executed in any
number of counterparts, each of which shall be an original, but
which together constitute one and the same
instrument.
5.12
Certain
Rights.
In the event the
Conversion does not occur as set forth here therein, the Holder
shall not be deemed to have waived or released any
rights.
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK —
SIGNATURE
PAGES FOLLOW
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
iMEDICOR,
INC.
Robert
McDermott President
HOLDER OF BRIDGE NOTE
Entity
__
____________________________
By:
_________________________________
Name:
Title:
Or Individual
___________________________________
___________________________
Bridge
Note Held:
Principal
Amount:
$____________________
Original Issue
Date:
_____________________
EXHIBIT VIII
iMedicor, Inc.
(VMCI.ob)
TERM
SHEET
Series
B Convertible Bridge Note Offering
(the
“Bridge Offering”)
MAY 1,
2017
ISSUER:
|
iMedicor, Inc.
(the “Company”)
|
|
|
|
|
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SECURITIES:
|
Series
B Convertible Bridge Notes (the “Series B Bridge
Notes”) with warrants (the “Series B Bridge
Warrants”).
|
|
|
|
|
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SIZE
OF OFFERING:
|
Maximum: Up to
$4,000,000 Series B Bridge Notes best efforts
|
|
|
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COUPON:
|
None.
|
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TERM:
|
Due
and payable December 31, 2017 (“Maturity Date”) unless
earlier converted.
|
|
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CONVERSION
RIGHTS:
|
The
Series B Bridge Notes are (i) convertible into shares of common
stock at any time at the option of the Series B Bridge Note holder
or (ii) convertible into shares of common stock at any time after
the Recapitilization of the Company at the option of the Company.
The Series B Bridge Notes will be convertible at a price
(the “Conversion
Price”)
equal
to $0.45 per share of common stock, assuming the Company has
10 million shares of common stock issued and outstanding on a
fully diluted basis immediately following the Recapitilization of
the Company pursuant to the Recapitalization Agreement. If the
Company’s fully diluted shares outstanding immediately
following the Recapitilization of the Company pursuant to the
Recapitalization Agreement is greater or less than 10 million, the
Conversion Price shall be adjusted proportionately to equate to a
Conversion Price based upon a $4.5 million pre-money valuation on a
fully diluted basis immediately following the Recapitilization of
the Company pursuant to the Recapitalization Agreement (i.e., a 10%
discount to a $5.0 million pre-money valuation on a fully diluted
basis immediately following the Recapitilization of the Company
pursuant to the Recapitalization Agreement).
|
COLLATERAL:
|
Under
an Intercreditor Agreement, the Series B Bridge Notes will be
secured by a UCC Security Agreement entered into by the Company
with Sonoran Pacific Resources, LLP (“Sonoran”),
pari passu.
with amounts
owing to Sonoran.
|
|
|
|
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|
WARRANTS:
|
Investors purchasing the Series B
Bridge Notes will receive one Series B Bridge Warrant for every
$1.00 in principal amount of Series B Bridge Note purchased in the
Bridge Offering. Each Series B Bridge Warrant will be exercisable
until December 31, 2019 to purchase one share of common stock at an
exercise price equal to $1.35 per share (the “Exercise
Price”),
assuming the Company has 10 million shares of
common stock issued and outstanding on a fully diluted basis
immediately following
the Recapitilization of the Company pursuant to the
Recapitalization Agreement
. If the Company’s fully
diluted shares outstanding
immediately following the
Recapitilization of the Company pursuant to the Recapitalization
Agreement
is greater or less than 10 million, the Exercise
Price shall be adjusted proportionately to equate to an Exercise
Price based upon a $4.5 million pre-money valuation on a fully
diluted basis (i.e., a 10% discount to a $5.0 million pre-money
valuation on a fully diluted basis). The Warrants will be callable
by the Company if (i) there exists a public trading market for the
shares of common stock, (ii) there is an effective registration
statement registering for resale under the Securities Act of 1933,
as amended (“Securities Act”), the shares of common
stock issuable upon exercise of the Warrants (the “Warrant
Shares”) and (iii) the closing price of the common stock on a
registered exchange with the Securities and Exchange Commission
(“SEC”) has equaled at least 150% of the then current
Exercise Price for 20 of the preceding 30 trading days and its
volume has averaged 50,000 shares per day (for example, if the
Exercise Price is $1.35 the warrants are callable if the stock
closes above $2.02 for 20 of 30 trading days with average volume in
excess of 50,000 shares per day.
|
|
|
|
|
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USE OF
PROCEEDS:
|
For
working capital.
|
|
|
|
|
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PRICE
PROTECTION:
|
If at
any time prior to the Recapitilization of the Company the Company
raises in excess of $250,000 at a lower valuation than the existing
conversion price, the conversion price will be reduced to match the
price of the lower valuation.
|
|
|
|
|
|
RISK
FACTORS:
|
An
investment in the Series B Bridge Notes involves a high degree of
risk, and investors should have the financial ability to sustain
the loss of their entire investment. Such Risk Factors include
those included in the Company’s Annual Report on Form 10-K
for the fiscal year ended June 30, 2014, which are incorporated
herein by this reference. In addition, investors should consider
the following Risk Factors:
|
1.
As
of the
date of this Term Sheet, the Company has not filed, and is
delinquent in its filing, of its Annual Reports on Form 10-K for
the fiscal years ended June 30, 2015 and June 30, 2016 and its
Quarterly Reports on Form 10-Q for the quarters ended September 30,
2015, December 31, 2015, March 31, 2016, September 30, 2016,
December 31, 2016 and March 31, 2017. Accordingly, these
delinquencies have resulted in there being no available current
information regarding the Company, its business, results of
operations or its financial condition; and investors will be
required to make an investment decision without this material
information.
2.
The proceeds
of this Offering may be insufficient to meet the Company’s
working capital requirements, and there can be no assurance that
the Company can obtain additional financing. If the Company fails
to obtain additional financing it is likely that it will have to
curtail operations and perhaps cease as a going
concern.
3.
Should
the
Company default on the Series B Bridge Notes, the collateral
securing the Series B Bridge Notes will likely be insufficient to
enable investors to recover the full amount of their investments
through a foreclosure of the Company’s assets. In such an
event, the amount actually recoverable upon such foreclosure is
likely to be
de
minimus.
4.
Under
the
Intercreditor Agreement, all investors are agreeing to act in
concert in accordance with the determination of creditors holding a
majority of the outstanding principal amount of the Series B Bridge
Notes and the Serie A 18% Promissory Notes secured by the UCC
Security Agreement. Even assuming the sale of the maximum $4.0
million in Series B Bridge Notes, Sonoran Pacific Resources, LLC
and its affiliates hold approximately of $5.0 in unpaid secured
debt and could control the exercise of creditor rights regardless
of the wishes of the investors in this Offering. Furthermore, Jerry
D. Smith, the principal of Sonoran Pacific Resources, LLC, has been
appointed Agent for the noteholders and may not be removed without
his consent.
Information Incorporated by Reference
The
Company files annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). You may read and copy any document
we file at the Commission's Public Reference Rooms in Washington,
D.C. Please call the Commission at 1-800-SEC-0330 for further
information on the Public Reference Rooms. You can also obtain
copies of our Commission filings by going to the Commission's
website at
http://www.sec.gov
.
The
Commission allows us to "incorporate by reference" the information
we file with them, which means that we can disclose important
information to you by referring you to those documents. The
information incorporated by reference is considered to be part of
this Memorandum, and later informationthat we file with the
Commission will automatically update and supersede this
information. We incorporate by reference the documents listed below
and any future filings we make with the Commission under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934:
|
(a)
|
The
Company's Annual Report on Form 10-K for the year ended June 30,
2014, as filed with the Commission on December 9,
2015;
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(b)
|
All
reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act, shall be deemed to be incorporated by reference herein and to
be a part of this Memorandum from the date of the filing of such
reports and documents.
|
You may
request a copy of these filings at no charge by a written or oral
request to Robert McDermott, President, iMedicor, Inc., 13506
Summerport Parkway, Suite 160, Windermere, FL 34786; tel:
407-505-8934. In addition, you can obtain these filings
electronically at the Commission's worldwide website at
http://www.sec.gov/edgarhp/htm
.
EXHIBIT IX
THIS CONVERTIBLE BRIDGE NOTE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS.
No.
[2017-___]
|
U.S. $____________
|
|
|
|
Original
Issue Date: ___________
|
SERIES B CONVERTIBLE BRIDGE NOTE
DUE DECEMBER 31, 2017
THIS
BRIDGE NOTE is one of a series of duly authorized issue of
Convertible Bridge Notes of
iMEDICOR, INC.,
a Nevada corporation,
(the “
Company
”), designated as
its Series B Convertible Bridge Notes (collectively the
“Bridge Notes”) due on December 31, 2017 (the
“Maturity Date”), in an aggregate principal amount of
up to $4.0 million for all Bridge Notes.
FOR
VALUE RECEIVED, if the Bridge Note shall not have been earlier
converted into Conversion Shares as provided in Section 7 of this
Bridge Note, the Company promises to pay to
________________________
, the registered
holder hereof (the "Holder"), on the Maturity Date, the principal
sum of
_____________
00/100 Dollars (US $_______). The principal balance of this Bridge
Note shall not accrue any interest.
This
Bridge Note is subject to the following additional
provisions.
Section 1.
Collateral and
Pari
Passu
.
(a) This
Bridge Note is one of a series of Bridge Notes known as the Series
B Convertible Bridge Notes in an aggregate principal amount of up
to $4.0 million. No payments will be made to the holder of this
Bridge Note unless a proportional payment (based on outstanding
principal amount) is made with respect to all other Bridge Notes of
the Series. Upon liquidation, this Bridge Note will be treated
in pari passu
with all
other Bridge Notes of the Series.
(b)
The obligation of the Company to pay the Bridge Note is secured by
an Intercreditor Agreement, as amended by Amendment No. 1 thereto
dated December 24, 2015, between Holder and Sonoran Pacific
Resources, LLP (“SPR”) pursuant to which SPR has
granted to Holder a participating interest,
pari passu,
in a Security Agreement
covering all of the tangible and intangible assets of the Company
(the “Security Interest”) held by SPR and evidenced by
the following UCC instruments recorded in the office of the Nevada
Secretary of State:
Initial
Financing Statement:
|
April
23, 2009
|
Doc.#2009010332-5
|
Amendment:
|
October
28, 2010
|
Doc.#2010027335-3
|
Continuation:
|
March
6, 2014
|
Doc.#2014005757-9
|
The
Security Interest is subject to that certain Subordination
Agreement between SPR and Forest Capital, LLC dated February 29,
2012 pursuant to which SPR agreed that the Security Interest would
be junior to the security interest of Forest Capital, LLC in the
Company’s Accounts and Inventory, and proceeds
thereof.
Section 2
.
No Sale or
Transfer.
This Bridge Note may not be sold, transferred,
assigned, hypothecated or divided into two or more Bridge Notes of
smaller denominations except to the extent such sale, transfer,
assignment, hypothecation or division is in compliance with federal
and applicable state securities laws, the compliance with which
must be established to the reasonable satisfaction of the
Company.
Section 3
.
Limitations on
Debt
. Until all Bridge Notes issued in this Series are
repaid in full or converted into shares of Common Stock in
accordance with their terms, the Company may not create, incur,
assume, or suffer to exist any other indebtedness, except for
Indebtedness that is subordinated to the Bridge Notes or
indebtedness incurred in the ordinary course of
business.
Section 4.
(a)
“
Event of Default
”
wherever used herein, means any one of the following events
(whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental
body):
(i)
Any default in the
payment of the principal of this Bridge Note as and when the same
shall become due and payable, (whether on the Maturity Date or by
acceleration or otherwise);
(ii)
The Company shall
fail to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit any breach of, this
Bridge Note, the Security Agreement or any other agreement between
the Company and the holder hereof, and such failure or breach shall
not have been remedied within 30 days after the date on which
notice of such failure or breach shall have been given, in writing
to the Company;
(iii)
The Company shall
commence a voluntary case under the United States Bankruptcy Code
or insolvency laws as now or hereafter in effect or any successor
thereto (the “
Bankruptcy Code
”); or an
involuntary case is commenced against the Company under the
Bankruptcy Code and the petition is not controverted within 30
days, or is not dismissed within 60 days, after commencement of
such involuntary case; or a “custodian” (as defined in
the Bankruptcy Code) is appointed for, or takes charge of, all or
any substantial part of the property of the Company or the Company
commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Company or there
is commenced against the Company any such proceeding which remains
undismissed for a period of 60 days; or the Company is adjudicated
insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the Company
suffers any appointment of any custodian or the like for it or any
substantial part of its property which continues undischarged or
unstayed for a period of 60 days; or the Company makes a general
assignment for the benefit of creditors; or the Company shall fail
to pay, or shall state that it is unable to pay its debts generally
as they become due; or the Company shall call a meeting of all of
its creditors with a view to arranging a composition or adjustment
of its debts; or the Company shall by any act or failure to act
indicate its consent to, approval of or acquiescence in any of the
foregoing; or any corporate or other action is taken by the Company
for the purpose of effecting any of the foregoing.
(b)
Remedies
.
The Holder, together with all other holders of Bridge Notes based
on a majority vote by principal amount of the Holders of all Bridge
Notes (a “Majority of the Holders”), may declare a
default under Section 4(a)(i) upon not less than twenty (20)
days’ prior written notice to the Company. If the Company
fails to cure an Event of Default within such period (or if the
cure cannot be reasonably completed within such period, commence
the cure of the Event of Default and diligently pursue such cure),
then the principal amount hereof shall accrue interest at the rate
of 25% per annum and a Majority of the Holders may:
(i)
Declare all amounts
due under the Bridge Notes immediately due and owing and exercise
all rights with respect thereto under the Security Interest or
permitted by law;
(ii)
Apply to a court in
Arizona that has competent jurisdiction over the Company for the
appointment of a receiver to manage the assets and operations of
the Company;
(iii)
Assert any other
remedy available at law or in equity.
Section
5.
Prepayment
. The Company may
prepay this Bridge Note in whole or in part at any time prior to
the Maturity Date upon not less than fifteen (15) days’ prior
written notice to the Holder. If less than all of the Bridge Notes
are paid in whole then all Bridge Notes shall be paid to Holders
pro rata
based upon the
outstanding principal amounts of the Bridge Notes.
Section 6.
Definitions
. For the purposes
hereof, the following terms shall have the following
meanings:
“
Business Day
” means any
day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of
Florida are authorized or required by law or other government
action to close.
“
Company
” means iMedicor,
Inc., a Nevada corporation.
“
Conversion Amount
” shall
mean the total of unpaid principal of this Bridge Note at the date
such amount is determined.
“
Conversion Price
” shall
be $0.45 per share (assuming the Company on the date of conversion
has 10 million shares issued and outstanding on a fully diluted
basis. If the Company’s fully diluted shares outstanding on
the date of conversion is greater or less than 10 million, the
Conversion Price shall be adjusted proportionately to equate to a
Conversion Price based upon a $4.5 million pre-money valuation on a
fully diluted basis on the date of conversion (i.e., a 10% discount
to a $5.0 million pre-money valuation on a fully diluted basis on
the date of conversion). Further, if at any time prior to
conversion of this Bridge Note, the Company raises more than
$250,000 at an effective valuation per share that is less than the
Conversion Price, the Conversion Price will be reduced to an amount
equal to the lower price.
“
Conversion Rights
” shall
mean the Bridge Notes are (i) convertible into shares of Common
Stock atany time at the option of the holders of the Bridge Notes
or (ii) convertible into shares of Common Stock at any time after
the Recapitalization of the Company at the option of the Company.
The Bridge Notes will be convertible at a price (the
“Conversion Price”) equal to $0.45 per share of common
stock (assuming the Company has 10 million shares of common stock
issued and outstanding on a fully diluted basis on the date of
conversion. If the Company’s fully diluted shares outstanding
on the date of conversion is greater or less than 10 million, the
Conversion Price shall be adjusted proportionately to equate to a
Conversion Price based upon a $4.5 million pre-money valuation on a
fully diluted basis on the date of conversion (i.e., a 10% discount
to a $5.0 million pre-money valuation on a fully diluted basis on
the date of conversion).
“
Conversion Shares
” shall
mean the shares of Common Stock issued or issuable upon conversion
of the Bridge Notes.
“
Holder
” means any Person
who is a registered holder of this Bridge Note as listed in the
books of the Company.
“
Majority of the Holders
”
is as defined in Section 4(b).
“
Market Price
” at any date
shall be deemed to be (i) if the principal trading market for such
securities is any registered exchange, the last reported sale
price, on such Trading Day for which determination is made as
officially reported on any consolidated tape, (ii) if the principal
market for such securities is the over-the-counter market, the
closing prices (or, if no closing price, the closing bid price) on
such Trading Day as set forth by Nasdaq or any other registered
exchange or the OTC Bulletin Board (whichever is the principal
market for the Company’s Common Stock) as reported at
http://finance.yahoo.com
or, (iii) if the security is not quoted on Nasdaq or other
registered exchange or the OTC Bulletin Board, the average bid and
asked price as set forth on
www.pinksheets.com
or (if not available) in the National Quotation Bureau sheet
listing such securities for such day. Notwithstanding the
foregoing, if there is no reported closing price or bid price, as
the case may be, on any of the ten trading days preceding the event
requiring a determination of Market Price hereunder, then the
Market Price shall be determined in good faith by resolution of the
Board of Directors of the Company, based on the best information
available to it.
“
Material Adverse Effect
”
means a material adverse effect upon the business, operations,
properties, assets or condition (financial or otherwise) of the
Company taken as a whole.
“
Maturity Date
” means the
date defined in the first paragraph of this Bridge Note or (if
earlier) the date of any prepayment or acceleration.
“
Original Issue Date
”
shall mean the date this Bridge Note is purchased by the initial
holder.
“
Person
” means a
corporation, an association, a partnership, an organization, a
business, an individual, a government or political subdivision
thereof or a governmental agency.
“
Recapitalization
” is as
defined in the Recapitalization Agreement.
“
Recapitalization
Agreement
” means the Recapitalization Agreement dated
as of November 1, 2016 among the Company and the holders of Series
A Preferred Stock, Series B Preferred Stock and Common Stock of the
Company and the holders of Convertible Debt of the Company, who are
parties thereto and have consented to the
Recapitalization
“
Trading Day
” means a day
in which the market on which shares of the Company’s Common
Stock are principally traded is open for trading, whether or not
any shares of the Company’s Common Stock are actually traded
on that day.
a.
Voluntary
Conversion by Holder.
At any time before this Bridge Note
has been paid, upon written notice to the Company, the Holder may
convert the Conversion Amount into Conversion Shares determined by
dividing the Conversion Amount by the Conversion
Price.
b.
Mandatory
Conversion by Company.
At any time before this Bridge Note
has been paid and after the Recapitalization of the Company
pursuant to the Recapitalization Agreement, upon written notice to
the Holder, the Company may convert the Conversion Amount into
Conversion Shares determined by dividing the Conversion Amount by
the Conversion Price.
c.
Limitation
on Conversion.
Notwithstanding
any other
provision hereof, in
no event (except (i) as specifically provided herein as an
exception to this provision, or (ii) while there is outstanding a
tender offer for any or all of the shares of the Company’s
Common Stock or (iii) for a Holder who is immediately prior to the
conversion of this Bridge Note the beneficial owner of five percent
or more of the issued and outstanding shares of the Company’s
Common Stock) shall the Holder be entitled to convert any portion
of this Bridge Note, or shall the Company have the obligation to
convert such Bridge Note to the extent that, after such conversion
or issuance of stock the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other
than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unconverted portion of the Bridge
Notes or other convertible securities or of the unexercised portion
of warrants or other rights to purchase Common Stock), and (2) the
number of shares of Common Stock issuable upon the conversion of
the Bridge Notes with respect to which the determination of this
proviso is being made, would result in beneficial ownership by the
Holder and its affiliates of more than 4.99% of the outstanding
shares of Common Stock (after taking into account the shares to be
issued to the Holder upon such conversion). For purposes of the
proviso to the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, except as otherwise
provided in clause (1) of such sentence. The Holder, by its
acceptance of this Bridge Note, further agrees that if the Holder
transfers or assigns any of the Bridge Notes to a party who or
which would not be considered such an affiliate, such assignment
shall be made subject to the transferee’s or assignee’s
specific agreement to be bound by the provisions of this Section
7(b) as if such transferee or assignee were the original Holder
hereof. Nothing herein shall preclude the Holder from disposing of
a sufficient number of other shares of Common Stock beneficially
owned by the Holder so as to thereafter permit the continued
conversion of this Bridge Note.
The provisions of this
Section 7(c) (i) shall not apply to any Holder who, without regard
to this Bridge Note and the underlying Conversion Shares is at the
time the beneficial owner, within the meaning of Rule 13d-3) of 5%
or more of the Company’s issued and outstanding shares of
Common Stock, (ii) can be waived by agreement of the Company and
the Holder, and (iii) shall terminate in the event the provisions
of Section 7(b) regarding mandatory automatic conversion are
triggered and become operative.
d.
Manner
of Conversion.
Voluntary
conversion provided for in Section 7(a) be effectuated by faxing a
Notice of Conversion (as defined below) to the Company as provided
in this paragraph. The Notice of Conversion shall be executed by
the Holder of this Bridge Note and shall evidence such Holder's
intention to convert this Bridge Note or a specified portion hereof
in the form annexed hereto as Exhibit A. No fractional shares of
Common Stock or scrip representing fractions of shares will be
issued on conversion, but the number of shares issuable shall be
rounded to the nearest whole share. The date on which this Bridge
Note shall be deemed to be converted (the "Conversion Date") shall
be the date on which the Holder faxes or otherwise delivers the
conversion notice ("Notice of Conversion") to the Company and that
it is received by the Company, provided that, if such conversion
would convert the entire remaining principal of this Bridge Note,
the Holder shall deliver to the Company the original Bridge Notes
being converted no later than five (5) business days thereafter.
Email delivery of the Notice of Conversion shall be accepted by the
Company at rmcdermott@imedicor.com. Certificates representing
Common Stock upon conversion (“Conversion
Certificates”) will be delivered to the Holder at the address
specified in the Notice of Conversion (which may be the
Holder’s address for notices as contemplated by the
Subscription Agreement or a different address), via express
courier, by electronic transfer or otherwise, as provided in
Section 7(e)(iii). The Holder shall be deemed to be the holder of
the shares issuable to it in accordance with the provisions of this
Section 7(d) on the Conversion Date.
(e)
Nature of Common Stock Issued.
(i)
When issued upon conversion of this Bridge Note pursuant to Section
7(a) or (b) hereof, the Conversion Shares will be legally and
validly issued, fully-paid and non-assessable.
(ii)
Upon any conversion, this Bridge Note will be deemed cancelled and
of no further force and effect, representing only the right to
receive the Conversion Shares, regardless whether the Holder
delivers this Bridge Note to the Company for
cancellation.
(iii) As
soon as possible after a conversion has been effected (and subject
to the Holder having returned the Bridge Note to the Company for
cancellation), the Company will deliver to the converting holder a
certificate or certificates representing the Conversion Shares
issuable by reason of such conversion in such name or names and
such denomination or denominations as the converting holder has
specified.
(iv) The
issuance of certificates for shares of Conversion Shares will be
made without charge.
(v) The
Company will not close its books against the transfer of the
Conversion Shares issued or issuable in any manner which interferes
with the conversion of this Bridge Note.
(f)
Conversion Price
Dilution Adjustment
. In order to prevent dilution of the
conversion rights granted under this Section, the Conversion Price
will be subject to adjustment from time to time pursuant to this
Section 7(f).
(i) If
the Company at any time subdivides (by any stock split, stock
dividend or otherwise) its outstanding shares of Common Stock into
a greater number of shares, the Conversion Price in effect
immediately prior to such subdivision will be proportionately
reduced, and if the Company at any time combines (by reverse stock
split or otherwise) its outstanding shares of common stock into a
smaller number of shares, the Conversion Price in effect
immediately prior to such combination will be proportionately
increased.
(ii) In
the event of a judicial or non-judicial dissolution of the Company,
the conversion rights and privileges of the Holder shall terminate
on a date, as fixed by the Board of Directors of the Company, not
more than 45 days and not less than 30 days before the date of such
dissolution. The reference to shares of Common Stock herein shall
be deemed to include shares of any class into which said shares of
Common Stock may be changed.
(iii)
Adjustment for
Dividends
. In the event the Company shall make or issue, or
shall have issued, or shall fix a record date for the determination
of holders of Common Stock entitled to receive a dividend or the
distribution (other than a distribution otherwise provided for
herein) payable in (a) securities of the Company other than
shares of Common Stock or (b) assets (including cash paid or
payable out of capital or capital surplus or surplus created as a
result of a revaluation of property, but excluding the cumulative
dividends payable with respect to an authorized series of Preferred
Stock), then and in each such event provision shall be made so that
the holders of Bridge Notes shall receive upon conversion thereof
in addition to the number of shares of Common Stock receivable
thereupon, the number of securities or such other assets of the
Company which they would have received had their Bridge Notes been
converted into Common Stock on the record date of such event and
had they thereafter, during the period from the date of such event
to and including the conversion date, retained such securities or
such other assets receivable by them as aforesaid during such
period, giving application to all adjustments called for during
such period under this Section 7(f) with respect to
Holders.
(iv)
Adjustment for Capital
Reorganization or Reclassification
. If the Common Stock
issuable upon the conversion of the Bridge Notes shall be changed
into the same or different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification or
otherwise then and in each such event the holders of the Bridge
Notes shall have the right thereafter to convert such Bridge Notes
and receive the kind and amount of shares of stock and other
securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares
of Common Stock into which such Bridge Notes might have been
converted immediately prior to such reorganization,
reclassification or change, all subject to further adjustment as
provided herein.
(v)
Adjustment of Number of
Shares
. Anything in this Section 7(f) to the contrary
notwithstanding, in case the Company shall at any time issue Common
Stock or convertible securities by way of dividend or other
distribution on any stock of the Company or subdivide or combine
the outstanding shares of Common Stock, the Conversion Price shall
be proportionately decreased in the case of such issuance (on the
day following the date fixed for determining stockholders entitled
to receive such dividend or other distribution) or decreased in the
case of such subdivision or increased in the case of such
combination (on the date that such subdivision or combination shall
become effective).
(vi)
No
Adjustment for Small Amounts
. Anything in this Section 7(f)
to the contrary notwithstanding, the Company shall not be required
to give effect to any adjustment in the Conversion Price unless and
until the net effect of one or more adjustments, determined as
above provided, shall have required a change of the Conversion
Price by at least one cent, but when the cumulative net effect of
more than one adjustment so determined shall be to change the
actual Conversion Price by at least one cent, such change in the
Conversion Price shall thereupon be given effect.
Section
8.
No Impairment.
Except as
expressly provided herein, no provision of this Bridge Note shall
alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, and interest on, this
Bridge Note at the time, place, and rate, and in the coin or
currency, herein prescribed. This Bridge Note is a direct
obligation of the Company.
Section
9.
No Rights as a Stockholder.
This Bridge Note shall not entitle the Holder to any of the rights
of a stockholder of the Company, including without limitation, the
right to vote, to receive dividends and other distributions, or to
receive any notice of, or to attend, meetings of stockholders or
any other proceedings.
Section
10.
No recourse shall
be had for the payment of the principal of this Bridge Note, or for
any claim based hereon, or otherwise in respect hereof, against any
incorporator, shareholder, officer or director, as such, past,
present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and
released.
Section
11.
All payments
contemplated hereby to be made “in cash” shall be made
in immediately available good funds of United States of America
currency by wire transfer to an account designated in writing by
the Holder to the Company (which account may be changed by notice
similarly given). All payments of cash and each delivery of shares
of Common Stock issuable to the Holder as contemplated hereby shall
be made to the Holder at the address last appearing on the Bridge
Note Register of the Company as designated in writing by the Holder
from time to time; except that the Holder can designate, by notice
to the Company, a different delivery address for any one or more
specific payments or deliveries.
Section
12.
The Holder of this
Bridge Note, by acceptance hereof, agrees that this Bridge Note is
being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Bridge Note or the shares of
Common Stock issuable upon conversion hereof except under
circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the “Act”) or any
applicable state Blue Sky or foreign laws or similar laws relating
to the sale of securities.
Section13.
The Bridge Notes
will initially be issued in denominations determined by the
Company, but are exchangeable for an equal aggregate principal
amount of Bridge Notes of different denominations, as requested by
the Holder surrendering the same. No service charge will be made
for such registration or transfer or exchange.
Section14.
The Company shall
be entitled to withhold from all payments of principal of this
Bridge Note any amounts required to be withheld under the
applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments, and the Holder shall
execute and deliver all required documentation in connection
therewith.
Section
15.
This Bridge Note
has been issued subject to investment representations of the
original purchaser hereof and may be transferred or exchanged only
in compliance with the Act and other applicable state and foreign
securities laws and the terms of the Subscription Agreement. In the
event of any proposed transfer of this Bridge Note, the Company may
require, prior to issuance of a new Bridge Note in the name of such
other person, that it receive reasonable transfer documentation
that is sufficient to evidence that such proposed transfer complies
with the Act and other applicable state and foreign securities laws
and the terms of the Subscription Agreement. Prior to due
presentment for transfer of this Bridge Note, the Company and any
agent of the Company may treat the person in whose name this Bridge
Note is duly registered on the Company's Bridge Note Register as
the owner hereof for the purpose of receiving payment as herein
provided and for all other purposes, whether or not this Bridge
Note be overdue, and neither the Company nor any such agent shall
be affected by notice to the contrary.
Section
16.
Mutilated, Lost or Stolen Bridge
Notes.
If this Bridge Note shall be mutilated, lost, stolen
or destroyed, the Company shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Bridge
Note, or in lieu of or in substitution for a lost, stolen or
destroyed Bridge Note, a new Bridge Note for the principal amount
of this Bridge Note so mutilated, lost, stolen or destroyed but
only upon receipt of evidence of such loss, theft or destruction of
such Bridge Note, and of the ownership hereof, and adequate
indemnity, if requested, all reasonably satisfactory to the
Company.
Section
17.
Governing Law.
This Bridge Note
shall be governed by and construed in accordance with the internal
laws (and not the law of conflicts) of the State of Florida. Each
of the parties consents to the non-exclusive jurisdiction of the
courts of the State of Florida and any federal or state court whose
district encompass any part of Orlando, Florida in connection with
any dispute arising out of or in connection with this Bridge Note
and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on
forum non conveniens
, to the bringing
of any such proceeding in such jurisdictions. To the extent
determined by such court, the Company shall reimburse the Holder
for any reasonable legal fees and disbursements incurred by the
Holder in enforcement of or protection of any of its rights under
this Bridge Note.
Section
18.
Waiver of Jury Trial; No Other
Waivers.
The Company and the Holder hereby waive the right
to a trial by jury in any action, proceeding or counterclaim in
respect of any matter arising out or in connection with this Bridge
Note. Any waiver by the Company or the Holder of a breach of any
provision of this Bridge Note shall not operate as or be construed
to be a waiver of any other breach of such provision or of any
breach of any other provision of this Bridge Note. The failure of
the Company or the Holder to insist upon strict adherence to any
term of this Bridge Note on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of
this Bridge Note. Any waiver must be in writing.
Section
19.
Severability.
If any provision
of this Bridge Note is invalid, illegal or unenforceable, the
balance of this Bridge Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall
nevertheless remain applicable to all other Persons and
circumstances.
Section
20.
Obligations Due on a Business
Day.
Whenever any payment or other obligation hereunder
shall be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next calendar month, the
preceding Business Day in the appropriate calendar
month).
IN WITNESS WHEREOF
, the Company has
caused this instrument to be duly executed by an officer duly
authorized for such purpose, as of the date first above
indicated.
iMEDICOR,
INC., a Nevada corporation
By:________________________________
Robert
McDermott, President
NOTICE OF CONVERSION
(To be
Executed by the Registered Holder
in
order to Convert the Bridge Note)
The
undersigned hereby irrevocably elects to convert $__________
principal amount of the Bridge Note (defined below) into securities
of iMedicor, Inc., a Nevada corporation (the “
Company
”) according to the terms
of the Series B Convertible Bridge Note of the Company registered
in the name of the undersigned (the “
Bridge Note
”), as of the date
written below. If securities are to be issued in the name of a
person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering
herewith such certificates. No fee will be charged to the Holder
for any conversion, except for transfer taxes, if any. The original
certificate evidencing the Bridge Note is delivered herewith (or
evidence of loss, theft or destruction thereof).
The
undersigned hereby requests that the Company issue a certificate or
certificates for the number of shares of Common Stock set forth
below (which numbers are based on the Holder’s calculation
attached hereto) in the name(s) specified immediately below or, if
additional space is necessary, on an attachment
hereto:
Address
:
The
Company shall issue and deliver shares of Common Stock to an
overnight courier not later than three business days following
receipt of the original Bridge Note(s) to be converted, and shall
make payments pursuant to the Bridge Notes for the number of
business days such issuance and delivery is late.
The
undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable to the undersigned upon
conversion of the Bridge Note shall be made pursuant to
registration of the securities under the Securities Act of 1933, as
amended (the “
Act
”), or pursuant to an exemption
from registration under the Act.
Date of
Conversion:___________________________
Applicable
Conversion Price:____________________
Number
and Kind of Securities to be Issued Pursuant to
Conversion of the
Bridge Notes:___________________
Signature:___________________________________
Name:______________________________________
Address:____________________________________
___________________________________________
SS or
Tax I.D. No.____________________________
EXHIBIT X
IMEDICOR, INC.
2016 LONG-TERM INCENTIVE COMPENSATION PLAN
1.
Purpose
. The
purpose of this 2016 Long-Term Incentive Compensation Plan (the
“Plan”) of iMedicor, Inc., a Nevada corporation (the
“Company”), is to advance the interests of the Company
and its stockholders by providing a means to attract, retain,
motivate and reward directors, officers, employees and consultants
of and service providers to the Company and its affiliates and to
enable such persons to acquire or increase a proprietary interest
in the Company, thereby promoting a closer identity of interests
between such persons and the Company’s stockholders. The Plan
will be effective as of the day immediately following the
Recapitalization Date as defined in the Recapitalization Agreement
dated as of December 1, 2015, among the Company and those persons
signatories thereto who are owners of record of shares of the
capital stock of the Company and/or the holders of indebtedness
convertible into shares of capital stock of the Company, as
amended, subject to approval by the Company’s stockholders
(the “Effective Date”). The Plan shall apply to Awards
(as defined below) granted on or after the Effective
Date.
2.
Definitions
. The
definitions of awards under the Plan, including Options, SARs
(including Limited SARs), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of other awards, Dividend Equivalents
and Other Stock-Based Awards are as set forth in Section 6 of the
Plan. Such awards, together with any other right or
interest granted to a Participant under the Plan, are termed
“Awards.” For purposes of the Plan, the
following additional terms shall be defined as set forth
below:
(a)
“
Appreciation Award” means an Option or an
SAR (which SAR provides for payment to a Participant equal to the
excess of the Fair Market Value on the date of exercise over the
Fair Market Value on the date of grant).
(b)
“Award Agreement” means any written agreement,
contract, notice or other instrument or document evidencing an
Award.
(c)
“Beneficiary” shall mean the person,
persons, trust or trusts which have been designated by a
Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant’s death or, if
there is no designated Beneficiary or surviving designated
Beneficiary, then the person, persons, trust or trusts entitled by
will or the laws of descent and distribution to receive such
benefits.
(d)
“Board” means the Board of Directors
of the Company.
(e)
“Cause” shall have the meaning set forth in the
applicable Award Agreement; provided that, if such Award Agreement
does not include a definition of Cause, then (i) if there is an
employment agreement or severance plan or agreement applicable to
the Participant, Cause shall have the same definition as set forth
in such plan or agreement; or (ii) if Cause is not defined in such
plan or agreement or there is no such plan or agreement applicable
to the Participant, then Cause shall mean: (i) Participant is
convicted of a felony; (ii) Participant commits an act of fraud,
willful misconduct or dishonesty in connection with
Participant’s employment or which results in material harm to
the Company; or (iii) Participant commits a material violation of
any law, rule, or regulation of any governmental
authority.
(f)
“Code” means the Internal Revenue Code
of 1986, as amended from time to time. References to any
provision of the Code shall be deemed to include regulations
thereunder and successor provisions and regulations
thereto.
(g)
“Committee” means the committee
appointed by the Board to administer the Plan, or if no committee
is appointed, the Board. Unless otherwise determined by the Board,
the Compensation Committee of the Board shall be the Committee.
Unless the Board determines otherwise, the Committee shall be
comprised of solely not less than two members who each qualify as
(i) a “Non-Employee Director” within the meaning of
Rule 16b-3(b)(3), (ii) an “outside director” within the
meaning of Section 162(m) of the Code, and (iii) an
“independent director,” as determined in accordance
with the independence standards established by the stock exchange
on which the Stock is at the time primarily
traded.
(h)
“Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to
time. References to any provision of the Exchange Act
shall be deemed to include rules thereunder and successor
provisions and rules thereto.
(i)
“Good Reason” shall have the meaning set forth in the
applicable Award Agreement; provided that, if such Award Agreement
does not include a definition of Good Reason, then (i) if there is
an employment agreement applicable to the Participant, Good Reason
shall have the meaning set forth in such agreement; or (ii) if Good
Reason is not defined in such agreement or there is no such
agreement applicable to the Participant, then Good Reason shall not
apply to the Participant.
(j)
“Fair Market Value” means, with respect to Stock,
Awards, or other property, the fair market value of such Stock,
Awards, or other property determined by such methods or procedures
as shall be established from time to time by the Committee,
provided, however, that if the Stock is listed on a national
securities exchange or quoted in an interdealer quotation system,
the Fair Market Value of such Stock on a given date shall be based
upon the last sales price at the end of regular trading or, if
unavailable, the average of the closing bid and asked prices per
share of the Stock at the end of regular trading on such date (or,
if there was no trading or quotation in the Stock on such date, on
the next preceding date on which there was trading or quotation) as
provided by one of such organizations.
(k)
“ISO” means any Option that is
designated as an incentive stock option within the meaning of
Section 422 of the Code, and qualifies as such.
(l)
“Parent” means any
“person” (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) that controls the Company, either
directly or indirectly through one or more
intermediaries.
(m)
“Participant” means a person
who, at a time when eligible under Section 5 hereof, has been
granted an Award under the Plan.
(n)
“Rule 16b-3” means Rule 16b-3, as from
time to time in effect and applicable to the Plan and Participants,
promulgated by the Securities and Exchange Commission under Section
16 of the Exchange Act.
(o)
“Stock” means the Company’s
common stock, and such other securities as may be substituted for
Stock pursuant to Section 4.
(p)
“Subsidiary” means each entity that is
controlled by the Company or a Parent, either directly or
indirectly through one or more intermediaries.
3.
Administration
.
(a)
Authority of the
Committee
. Except as
otherwise provided below, the Plan shall be administered by the
Committee. The Committee shall have full and final
authority to take the following actions, in each case subject to
and consistent with the provisions of the Plan:
(i)
to select persons to whom Awards may be
granted;
(ii)
to determine the type or types of Awards to be
granted to each such person;
(iii)
to determine the number of Awards to be granted,
the number of shares of Stock to which an Award will relate, the
terms and conditions of any Award granted under the Plan
(including, but not limited to, any exercise price, grant price or
purchase price, any restriction or condition (including, but not
limited to, restrictive covenant obligations (such as
confidentiality, non-competition and non-solicitation covenants),
and clawback or recoupment provisions), any schedule for lapse of
restrictions or conditions relating to transferability or
forfeiture, vesting, exercisability or settlement of an Award, and
waivers or accelerations thereof (including in connection with a
Participant’s death or disability or a Change in Control),
performance conditions relating to an Award (including
performance conditions relating to Awards not intended to be
governed by Section 7(e) and waivers and modifications thereof),
based in each case on such considerations as the Committee shall
determine), and all other matters to be determined in connection
with an Award;
(iv)
to determine whether, to what extent and under
what circumstances an Award may be settled, or the exercise price
of an Award may be paid, in cash, Stock, other Awards, or other
property, or an Award may be canceled, forfeited, or
surrendered;
(v)
to determine whether, to what extent and under
what circumstances cash, Stock, other Awards or other property
payable with respect to an Award will be deferred either
automatically, at the election of the Committee or at the election
of the Participant, consistent with Section 409A of the
Code;
(vi)
to determine the restrictions, if any, to which
Stock received upon exercise or settlement of an Award shall be
subject (including lock-ups and other transfer restrictions) and
condition the delivery of such Stock upon the execution by the
Participant of any agreement providing for such
restrictions;
(vii)
to prescribe the form of each Award Agreement,
which need not be identical for each
Participant;
(viii)
to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem
necessary or advisable to administer the Plan;
(ix)
to correct any defect or supply any omission or
reconcile any inconsistency in the Plan and to construe and
interpret the Plan and any Award, rules and regulations, Award
Agreement or other instrument hereunder; and
(x)
to make all other decisions and determinations as
may be required under the terms of the Plan or as the Committee may
deem necessary or advisable for the administration of the
Plan.
Other
provisions of the Plan notwithstanding, (i) the Board shall perform
the functions of the Committee for purposes of granting awards to
directors who serve on the Committee and (ii) the Board may perform
any function of the Committee under the Plan for any other purpose,
including without limitation for the purpose of ensuring that
transactions under the Plan by Participants who are then subject to
Section 16 of the Exchange Act in respect of the Company are exempt
under Rule 16b-3. In any case in which the Board is
performing a function of the Committee under the Plan, each
reference to the Committee herein shall be deemed to refer to the
Board, except where the context otherwise requires.
(b)
Manner of Exercise of
Committee Authority
. Any action of the Committee with
respect to the Plan shall be final, conclusive and binding on all
persons, including the Company, its Parent and Subsidiaries,
Participants, any person claiming any rights under the Plan from or
through any Participant and stockholders, except to the extent the
Committee may subsequently modify, or take further action not
consistent with, its prior action. If not specified in
the Plan, the time at which the Committee must or may make any
determination shall be determined by the Committee, and any such
determination may thereafter be modified by the Committee (subject
to Section 9(f)). The express grant of any specific
power to the Committee, and the taking of any action by the
Committee, shall not be construed as limiting any power or
authority of the Committee. Except as provided under
Section 7(e), the Committee may delegate to officers or managers of
the Company, its Parent or Subsidiaries the authority, subject to
such terms as the Committee shall determine, to perform such
functions as the Committee may determine, to the extent permitted
under applicable law.
(c)
Limitation of
Liability; Indemnification
. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other
information furnished to him by any officer or other employee of
the Company, its Parent or Subsidiaries, the Company’s
independent certified public accountants or any executive
compensation consultant, legal counsel or other professional
retained by the Company to assist in the administration of the
Plan. No member of the Committee, or any officer or
employee of the Company acting on behalf of the Committee, shall be
personally liable for any action, determination or interpretation
taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company
acting on its behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company with respect to any
such action, determination or interpretation.
4.
Stock Subject to
Plan
.
(a)
Amount of Stock
Reserved
. Subject to
Section 4(b), the aggregate number of shares of Stock for which
Awards may be granted under the Plan shall not exceed 2,500,000
shares. Awards made under the Plan which are forfeited
(including a repurchase or cancellation of shares of Stock subject
thereto by the Company in exchange for the price, if any, paid to
the Company for such shares, or for their par value or other
nominal value), terminated, surrendered, cancelled or have expired,
shall be disregarded for purposes of the preceding sentence and
shall not be considered as having been theretofore made subject to
an Award.
Shares of Stock shall not again be
available for award if such shares are surrendered or withheld as
payment either of the exercise price of an Option or Stock
Appreciation Right or of withholding taxes in respect of the
exercise, settlement or payment of, or the lapse of restrictions
with respect to, any Award. Shares purchased in the open market
with proceeds from option exercises shall not be added to the pool
of available shares. The exercise or settlement of a Stock
Appreciation Right shall reduce the shares of Stock available under
the Plan by the total number of shares to which the exercise or
settlement of the Stock Appreciation Right relates, not just the
net amount of shares actually issued upon exercise or settlement.
Awards settled solely in cash shall not reduce the number of shares
of Stock available for issuance under the Plan. Any shares of Stock
subject to an Option (or part thereof) that is cancelled upon
exercise of a tandem Stock Appreciation Right when settled wholly
or partially in shares shall to the extent of such settlement in
shares be treated as if the Option itself had been exercised and
such shares received in settlement of the Stock Appreciation Right
shall no longer be available for award.
Any shares of Stock delivered pursuant to an Award
may consist, in whole or in part, of authorized and unissued
shares, treasury shares or shares acquired in the market on a
Participant’s behalf.
(b)
Adjustments
. In
the event of any recapitalization, reclassification, forward or
reverse split, reorganization, merger, consolidation, spinoff,
combination, repurchase or exchange of Stock or other securities,
Stock dividend or other special, large and non-recurring dividend
or distribution (whether in the form of cash, securities or other
property), liquidation, dissolution, or any other extraordinary or
unusual event affecting the outstanding Stock as a class, then the
Committee shall equitably adjust any or all of (i) the number and
kind of shares of Stock reserved and available for Awards under
Section 4(a), including shares reserved for ISOs and the number of
shares which may be issued without regard to the vesting
requirements set forth in Section 7(f), (ii) the number and kind of
shares of outstanding Restricted Stock or other outstanding Awards
in connection with which the shares have been issued, (iii) the
number and kind of shares that may be issued in respect of other
outstanding Awards, (iv) the maximum number and kind of shares of
Stock for which any individual may receive Awards in any year, and
(v) the exercise price, grant price or purchase price relating to
any Award (or, if deemed appropriate, the Committee may make
provision for a cash payment with respect to any outstanding
Award), to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under the Plan and such outstanding
Awards; provided, however, that any fractional shares resulting
from such adjustment shall be eliminated. In addition,
the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including,
without limitation, cancellation of unexercised or outstanding
Awards (to the extent permitted by Section 9(f)(ii)), or
substitution of Awards using stockof a successor or other entity)
in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence)
affecting the Company, its Parent or any Subsidiary or the
financial statements of the Company, its Parent or any Subsidiary,
or in response to changes in applicable laws, regulations, or
accounting principles.
Any
adjustments to outstanding Awards shall be consistent with Section
409A, 162(m) or 424 of the Code, to the extent
applicable. Any adjustments determined by the Committee
shall be final, binding and conclusive.
5.
Eligibility
. Directors,
officers and employees of the Company or its Parent or any
Subsidiary, and persons who provide consulting or other services to
the Company, its Parent or any Subsidiary deemed by the Committee
to be of substantial value to the Company or its Parent and
Subsidiaries, are eligible to be granted Awards under the
Plan. In addition, persons who have been offered
employment by, or agreed to become a director of, the Company, its
Parent or any Subsidiary, and persons employed by an entity that
the Committee reasonably expects to become a Subsidiary of the
Company, are eligible to be granted an Award under the
Plan.
6.
Specific Terms of
Awards
.
(a)
General
. Awards
may be granted on the terms and conditions set forth in this
Section 6. In addition, the Committee may impose on any
Award or the exercise thereof such additional terms and conditions,
not inconsistent with the provisions of the Plan, as the Committee
shall determine, including terms requiring forfeiture of Awards in
the event of termination of employment or service of the
Participant. Except as expressly provided by the
Committee (including for purposes of complying with the
requirements of the Nevada Revised Statutes relating to lawful
consideration for the issuance of shares), no consideration other
than services will be required as consideration for the grant (but
not the exercise) of any Award.
(b)
Options
. The
Committee is authorized to grant options to purchase Stock on the
following terms and conditions
(“Options”):
(i)
Exercise
Price
. The exercise
price per share of Stock purchasable under an Option shall be
determined by the Committee; provided, however, such exercise price
may not be less than one hundred percent (100%) of the Fair Market
Value of such Stock on the date of grant of such
Option.
(ii)
Time and Method of
Exercise
. The
Committee shall determine the time or times at which an Option may
be exercised in whole or in part, the methods by which such
exercise price may be paid or deemed to be paid, the form of such
payment, including, without limitation, cash, Stock, other Awards
or awards granted under other Company plans or other property
(including notes or other contractual obligations of Participants
to make payment on a deferred basis, such as through
“cashless exercise” arrangements, to the extent
permitted by applicable law), and the methods by which Stock will
be delivered or deemed to be delivered to
Participants.
(iii)
Termination of
Employment or Service
. The Committee shall determine the
period, if any, during which Options shall be exercisable following
a Participant’s termination of his employment or service
relationship with the Company, its Parent or any
Subsidiary. For this purpose, unless otherwise
determined by the Committee, any sale of a Subsidiary of the
Company pursuant to which it ceases to be a Subsidiary of the
Company shall be deemed to be a termination of employment or
service by any Participant employed or retained by such
Subsidiary. Unless otherwise determined by the
Committee, (x) during any period that an Option is exercisable
following termination of employment or service, it shall be
exercisable only to the extent it was exercisable upon such
termination of employment or service, and (y) if such termination
of employment or service is for Cause, as determined in the
discretion of the Committee, all Options held by the Participant
shall immediately terminate.
(iv)
Options Providing
Favorable Tax Treatment
. The Committee may grant Options that
may afford a Participant with favorable treatment under the tax
laws applicable to such Participant, including, but not limited to
ISOs. If Stock acquired by exercise of an ISO is sold or otherwise
disposed of within two years after the date of grant of the ISO or
within one year after the transfer of such Stock to the
Participant, the holder of the Stock immediately prior to the
disposition shall promptly notify the Company in writing of the
date and terms of the disposition and shall provide such other
information regarding the disposition as the Company may reasonably
require in order to secure any deduction then available against the
Company’s or any other corporation’s taxable
income. The Company may impose such procedures as it
determines may be necessary to ensure that such notification is
made. Each Option granted as an ISO shall be designated
as such in the Award Agreement relating to such Option. ISOs may
only be granted to individuals who are employees of the Company or
any parent or subsidiary corporation of the Company (as defined by
Section 422 of the Code).
(v)
Awards Assumed by the Company
.
In the event that the Company assumes options or other awards
pursuant to a merger, acquisition or similar transaction, such
awards and any replacement awards granted pursuant thereto shall
not be subject to the provisions of Section 7(f).
(c)
Stock Appreciation
Rights
. The
Committee is authorized to grant stock appreciation rights
(“SARs”) on the following terms and
conditions:
(i)
Right to
Payment
. An SAR
shall confer on the Participant to whom it is granted a right to
receive, upon exercise thereof, the excess of (A) the Fair Market
Value of one share of Stock on the date of exercise (or, if the
Committee shall so determine in the case of any such right other
than one related to an ISO, the Fair Market Value of one share at
any time during a specified period before or after the date of
exercise), over (B) the exercise price of the SAR as determined by
the Committee as of the date of grant of the SAR, which, except as
provided in Section 7(a), shall be not less than the Fair Market
Value of one share of Stock on the date of
grant.
(ii)
Other
Terms
. The Committee
shall determine the time or times at which a SAR may be exercised
in whole or in part, the method of exercise, method of settlement,
form of consideration payable in settlement, method by which Stock
will be delivered or deemed to be delivered to Participants,
whether or not a SAR shall be in tandem with any other Award, and
any other terms and conditions of any SAR. Limited SARs
that may only be exercised upon the occurrence of a Change in
Control of the Company may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee may
determine. Limited SARs may be either freestanding or in
tandem with other Awards.
(d)
Restricted
Stock
. The Committee
is authorized to grant Stock that is subject to restrictions based
on continued employment on the following terms and conditions
(“Restricted Stock”):
(i)
Grant and
Restrictions
. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if
any, as the Committee may impose, which restrictions may lapse
separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the Committee
may determine. Except to the extent restricted under the
terms of the Plan and any Award Agreement relating to the
Restricted Stock, a Participant granted Restricted Stock shall have
all of the rights of a stockholder including, without limitation,
the right to vote Restricted Stock or the right to receive
dividends thereon.
(ii)
Forfeiture
. Except
as otherwise determined by the Committee, upon termination of
employment or service (as determined under criteria established by
the Committee) during the applicable restriction period, Restricted
Stock that is at that time subject to restrictions shall be
forfeitedand reacquired by the Company; provided, however, that the
Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock
will be waived in whole or in part in the event of termination
resulting from specified causes.
(iii)
Certificates for
Stock
. Restricted
Stock granted under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing
Restricted Stock are registered in the name of the Participant,
such certificates may bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted
Stock and the Company may retain physical possession of the
certificate, in which case the Participant shall be required to
have delivered a stock power to the Company, endorsed in blank,
relating to the Restricted Stock.
(iv)
Dividends
. Dividends
paid on Restricted Stock shall be either paid at the dividend
payment date in cash or in shares of unrestricted Stock having a
Fair Market Value equal to the amount of such dividends, or the
payment of such dividends shall be deferred and/or the amount or
value thereof automatically reinvested in additional Restricted
Stock, other Awards, or other investment vehicles, as the Committee
shall determine or permit the Participant to elect consistent with
Section 409A of the Code. Stock distributed in
connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a
risk of forfeiture to the same extent as the Restricted Stock with
respect to which such Stock or other property has been distributed,
unless otherwise determined by the Committee.
(e)
Deferred
Stock
. The Committee
is authorized to grant units representing the right to receive
Stock at a future date subject to the following terms and
conditions (“Deferred Stock”):
(i)
Award and
Restrictions
. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of
Deferred Stock by the Committee (or, if permitted by the Committee,
as elected by the Participant, consistent with Section 409A of the
Code). In addition, Deferred Stock shall be subject to
such restrictions as the Committee may impose, if any, which
restrictions may lapse at the expiration of the deferral period or
at earlier specified times, separately or in combination, in
installments or otherwise, as the Committee may
determine.
(ii)
Forfeiture
. Except
as otherwise determined by the Committee, upon termination of
employment or service (as determined under criteria established by
the Committee) during the applicable deferral period or portion
thereof to which forfeiture conditions apply (as provided in the
Award Agreement evidencing the Deferred Stock), all Deferred Stock
that is at that time subject to such forfeiture conditions shall be
forfeited; provided, however, that the Committee may provide, by
rule or regulation or in any Award Agreement, or may determine in
any individual case, that restrictions or forfeiture conditions
relating to Deferred Stock will be waived in whole or in part in
the event of termination resulting from specified
causes.
(f)
Bonus Stock and Awards
in Lieu of Cash Obligations
. The Committee is authorized to grant
Stock as a bonus, or to grant Stock or other Awards in lieu of
Company obligations to pay cash under other plans or compensatory
arrangements.
(g)
Dividend
Equivalents
. The
Committee is authorized to grant awards entitling the Participant
to receive cash, Stock, other Awards or other property equal in
value to dividends paid with respect to a specified number of
shares of Stock (“Dividend
Equivalents”). Dividend Equivalents may be awarded
on a free-standing basis or in connection with another
Award. The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be
deemed to have been reinvested in additional Stock, Awards or other
investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee may
specify.
(h)
Other Stock-Based
Awards
. The
Committee is authorized, subject to limitations under applicable
law, to grant such other Awards that may be denominated or payable
in, valued in whole or in part by reference to, or otherwise based
on, or related to, Stock and factors that may influence the value
of Stock, as deemed by the Committee to be consistent with the
purposes of the Plan, including, without limitation, convertible or
exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with
value and payment contingent upon performance of the Company or any
other factors designated by the Committee and Awards valued by
reference to the book value of Stock or the value of securities of
or the performance of specified Subsidiaries (“Other
Stock-Based Awards”). The Committee shall
determine the terms and conditions of such Awards. Stock
issued pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such
consideration, paid for at such times, by such methods, and in such
forms, including, without limitation, cash, Stock, other Awards, or
other property, as the Committee shall determine. Cash
awards, as an element of or supplement to any other Award under the
Plan, may be granted pursuant to this Section
6(h).
7.
Certain Provisions
Applicable to Awards
.
(a)
Stand-Alone,
Additional, Tandem, and Substitute Awards
. Subject to Section 9(f)(ii), Awards
granted under the Plan may, in the discretion of the Committee, be
granted either alone or in addition to, in tandem with or in
substitution for any other Award granted under the Plan or any
award granted under any other plan of the Company, its Parent or
Subsidiaries or any business entity to be acquired by the Company
or a Subsidiary, or any other right of a Participant to receive
payment from the Company its Parent or
Subsidiaries. Awards granted in addition to or in tandem
with other Awards or awards may be granted either as of the same
time as or a different time from the grant of such other Awards or
awards.
(b)
Term of
Awards
. The term of
each Award shall be for such period as may be determined by the
Committee; provided, however, that in no event shall the term of
any ISO or an SAR granted in tandem therewith exceed a period of
ten years from the date of its grant (or such shorter period as may
be applicable under Section 422 of the Code).
(c)
Form of Payment Under
Awards
. Subject to
the terms of the Plan and any applicable Award Agreement, payments
to be made by the Company, its Parent or Subsidiaries upon the
grant, exercise or settlement of an Award may be made in such forms
as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a
single payment or transfer, in installments or on a deferred
basis. Such payments may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments
denominated in Stock.
(d)
Loan
Provisions
. With the
consent of the Committee, and subject at all times to, and only to
the extent, if any, permitted under and in accordance with, laws
and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee or
arrange for a loan or loans to a Participant with respect to the
exercise of any Option or other payment in connection with any
Award, including the payment by a Participant of any or all
federal, state or local income or other taxes due in connection
with any Award. Subject to such limitations, the
Committee shall have full authority to decide whether to make a
loan or loans hereunder and to determine the amount, terms and
provisions of any such loan or loans, including the interest rate
to be charged in respect of any such loan or loans, whether the
loan or loans are to be with or without recourse against the
borrower, the terms on which the loan is to be repaid and
conditions, if any, under which the loan or loans may be
forgiven.
(e)
Performance-Based
Awards
. The
Committee may, in its discretion, determine that an Award granted
to an employee shall be considered “qualified
performance-based compensation” under Section 162(m) of the
Code (“Performance Award”). Performance Awards shall be
contingent upon achievement of pre-established performance
objectives and other terms set forth in this Section 7(e); however,
this Section 7(e) shall not apply to Awards that otherwise qualify
as “performance-based compensation” by reason of
Treasury Regulation §1.162-27(e)(2)(vi) (relating to certain
stock options and stock appreciation rights).
(i)
Performance
Objectives
. The performance
objectives for an Award subject to this Section 7(e) shall consist
of one or more business criteria and a targeted level or levels of
performance with respect to such criteria, as specified by the
Committee consistent with this Section 7(e). Performance
objectives shall be objective and shall otherwise meet the
requirements of Section 162(m) of the Code, including the
requirement that the level or levels of performance targeted by the
Committee result in the achievement of performance goals being
“substantially uncertain.” The Committee may determine
that such Performance Awards shall be granted, exercised, and/or
settled upon achievement of any one performance objective or that
two or more of the performance objectives must be achieved as a
condition to grant, exercise, and/or settlement of such Performance
Awards. Business criteria used by the Committee in establishing
performance objectives for Awards subject to this Section 7(e)
shall be selected from among the following, which may be applied to
the Company, on a consolidated basis, and/or for specified
Subsidiaries, divisions, or other business units of the Company
(where the criteria are applicable):
|
Annual
return on capital;
|
(2)
|
Annual
earnings or earnings per share (which earnings may include equity
in earnings of investees, and may be determined without regard to
interest, taxes, depreciation, and/or amortization);
|
(3)
|
Annual
cash flow provided by operations;
|
(4)
|
Increase
in stock price;
|
(5)
|
Changes
in annual revenues;
|
(7)
|
Strategic
business criteria, consisting of one or more objectives based on
meeting specified revenue, market penetration, geographic business
expansion goals, cost targets, and goals relating to acquisitions
or divestitures.
|
The
levels of performance required with respect to such business
criteria may be expressed in absolute or relative
levels. Performance objectives may differ for such
Awards to different Participants. The Committee shall
specify the weighting to be given to each performance objective for
purposes of determining the final amount payable with respect to
any such Award.
(ii)
Performance Period;
Timing for Establishing Performance Award Terms
. Achievement of performance objectives in respect
of such Performance Awards shall be measured over a performance
period as specified by the Committee. Performance objectives,
amounts payable upon achievement of such objectives, and other
material terms of Performance Awards shall be established by the
Committee (A) while the performance outcome for that performance
period is substantially uncertain and (B) no more than 90 days
after the period of service to which the performance goal relates
or, if less, the number of days which is equal to 25 percent of the
relevant period of service.
(iii)
Negative Discretion;
Other Terms
. The Committee may,
in its discretion, reduce the amount of a payout otherwise to be
made in connection with an Award subject to this Section 7(e), but
may not exercise discretion to increase such amount, and the
Committee may consider other performance criteria in exercising
such discretion. The Committee shall specify the
circumstances in which such Performance Awards shall be paid or
forfeited in the event of termination of employment by the
Participant prior to the end of a performance period or settlement
of Performance Awards.
(iv)
Impact of
Extraordinary Items or Changes In Accounting
. To the extent applicable, the determination of
achievement of performance objectives for Performance Awards shall
be made in accordance with U.S. generally accepted accounting
principles (“GAAP”) and a manner consistent with the
methods used in the Company’s audited financial statements,
and, unless the Committee decides otherwise within the period
described in Section 7(e)(ii), without regard to (A) extraordinary
items as determined by the Company’s independent public
accountants in accordance with GAAP, (B) changes in accounting
methods, (C) non-recurring acquisition expenses and restructuring
charges; or (D) other costs or charges associated with
refinancings, write-downs, impairments, closures, consolidations,
divestitures, strategic initiatives, and items associated with
acquisitions, including but not limited to, earn-outs and bargain
purchase gains. Notwithstanding the foregoing, in calculating
earnings or earnings per share, the Committee may, within the
period described in Section 7(e)(ii), provide that such calculation
shall be made on the same basis as reflected in a release of the
Company’s earnings for a previously completed period as
specified by the Committee.
(v)
Written
Determinations
. Determinations
by the Committee as to the establishment of performance objectives,
the amount potentially payable in respect of Performance Awards,
the achievement of performance objectives relating to Performance
Awards, and the amount of any final Performance Award shall be
recorded in writing. Specifically, the Committee shall certify in
writing, in a manner conforming to applicable regulations under
Section 162(m) of the Code, prior to settlement of each Performance
Award, that the performance objectives and other material terms of
the Performance Award upon which settlement of the Performance
Award was conditioned have been satisfied.
(vi)
Status of Section 7(e)
Performance Awards under Code Section 162(m)
. It is the intent of the Company that Performance
Awards under Section 7(e) constitute “performance-based
compensation” within the meaning of Section 162(m) of the
Code. Accordingly, the terms of Section 7(e) shall be interpreted
in a manner consistent with Section 162(m) of the Code. If any
provision of the Plan as in effect on the date of adoption of any
agreements relating to Performance Awards does not comply or is
inconsistent with the requirements of Section 162(m) of the Code,
such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.
(vii)
No
Delegation
. The Committee may
not delegate any responsibility with respect to an Award subject to
this Section 7(e).
(f)
One Year Minimum
Vesting of Appreciation Awards
.
Appreciation Awards shall become exercisable over a period of not
less than one year following the date the Appreciation Award is
granted,
except for Appreciation Awards, in the aggregate,
for such number of shares of Stock not exceeding 5% of the
available shares for Awards under the Plan on the Effective
Date.
8.
Change in
Control.
Notwithstanding anything contained in the Plan
to the contrary, the provisions of this Section 8 shall apply in
the event of a Change in Control.
(a)
Replacement Awards; No Immediate
Vesting.
(i)
An
Award shall not vest upon the occurrence of a Change in Control and
shall continue to the extent qualifying as a Replacement
Award.
(ii) A
“Replacement Award” includes an outstanding Award that
continues upon and after the occurrence of a Change in Control and
an Award provided to a Participant in replacement of an outstanding
Award (such replaced Award, a “Replaced Award”) in
connection with a Change in Control that satisfies the following
conditions:
(A)
I
t has a value at least equal to the value
of the Replaced Award;
(B)
It relates to
publicly traded equity securities of the Company or its successor
in the Change in Control or another entity that is affiliated with
the Company or its successor following the Change in
Control;
(C)
Its other terms and
conditions are not less favorable to the Participant than the terms
and conditions of the Replaced Award (including the provisions that
would apply in the event of a subsequent Change in Control);
and
(D)
Upon an involuntary
termination of employment or separation from service of a
Participant by the Company other than for Cause (and not due to
disability), or a voluntary termination of employment or separation
from service by the Participant for Good Reason (if applicable),
occurring on or during the period of twenty-four (24) months after
the Change in Control, the Replacement Award, to the extent not
vested and unrestricted as of such termination of employment or
separation from service, shall become fully vested and (if
applicable) exercisable and free of restrictions.
The Committee, as
constituted immediately before the Change in Control, shall have
the discretion to determine whether the conditions of this Section
8(a)(ii) are satisfied.
(b)
Vesting if No Replacement
Award
. To the extent that a Replacement Award is not
provided to the Participant, upon the occurrence of a Change in
Control:
(i) Any
and all Options and SARs granted hereunder shall become immediately
exercisable;
(ii) Any
restrictions imposed on Restricted Stock shall lapse and become
freely transferable, and all other Awards shall become fully
vested; and
(iii) Except
as otherwise provided in an Award Agreement, the payout
opportunities attainable at target or, if greater, in the amount
determined by the Committee to have been earned thereunder based on
performance through the date of the Change in Control, under all
outstanding Awards of performance-based Stock, cash Awards and
o
ther Awards
and shall be
deemed to have been earned for the entire performance period(s) as
of the effective date of the Change in Control. The vesting of all
such earned Awards shall be accelerated as of the effective date of
the Change in Control, and in full settlement of such Awards, there
shall be paid out in cash, or in the discretion of the Committee,
shares of Stock with a Fair Market Value equal to the amount of
such cash.
Except as otherwise
determined by the Committee, the foregoing provisions of this
Section 8(b) shall apply, and a Participant’s outstanding
Awards shall not become Replacement Awards, upon the occurrence of
a Change in Control following an involuntary termination of
employment or separation from service of the Participant by the
Company other than for Cause (and not due to disability), or a
voluntary termination of employment or separation from service for
Good Reason by the Participant (if applicable), occurring (x) at
the request of a third party who was taking steps reasonably
calculated to effect such Change in Control or (y) otherwise in
contemplation of and within 180 days before such Change in
Control.
(c)
Change in
Control
. For purposes of the
Plan, “Change in Control” shall
mean:
(i)
Any
person becoming the beneficial owner of securities of the Company
representing twenty percent (20%) or more of the combined voting
power of the Company’s then outstanding securities entitled
to vote generally in the election of directors; or
(ii) Individuals
who serve on the Board immediately prior to the event, or whose
election to the Board or nomination for election to the Board was
approved by a vote of at least two-thirds of the directors who
either serve on the Board immediately prior to the event, or whose
election or nomination for election was previously so approved,
ceasing for any reason to constitute a majority of the Board;
or
(iii)
Consummation
of a merger or consolidation of
the Company or any
Subsidiary into any other corporation, other than a merger or
consolidation that results in the holders of the voting securities
of the Company outstanding immediately prior thereto holding
immediately thereafter securities representing more than sixty
percent (60%) of the combined voting power of the voting securities
of the Company; or
(iv) (A)
The stockholders of the Company approving a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company’s assets and such liquidation, sale or disposition is
consummated, or (B) such a plan being commenced.
In
addition, the Committee may provide for a different definition of
“Change in Control” in an Award Agreement if it
determines that such different definition is necessary or
appropriate, including without limitation, to comply with the
requirements of Section 409A of the Code.
9.
General
Provisions
.
(a)
Compliance with Laws
and Obligations
. The
Company shall not be obligated to issue or deliver Stock in
connection with any Award or take any other action under the Plan
in a transaction subject to the requirements of any applicable
securities law, any requirement under any listing agreement between
the Company and any national securities exchange or automated
quotation system or any other law, regulation or contractual
obligation of the Company until the Company is satisfied that such
laws, regulations, and other obligations of the Company have been
complied with in full. Certificates representing shares
of Stock issued under the Plan will be subject to such
stop-transfer orders and other restrictions as may be applicable
under such laws, regulations and other obligations of the Company,
including any requirement that a legend or legends be placed
thereon. In addition, the Company may adopt policies
that impose restrictions on the timing of exercise of Options, SARs
or other Awards (e.g., to enforce compliance with Company-imposed
black-out periods).
(b)
Limitations on
Transferability
. Awards and other rights under the
Plan will not be transferable by a Participant except by will or
the laws of descent and distribution or to a Beneficiary in the
event of the Participant’s death, shall not be pledged,
mortgaged, hypothecated or otherwise encumbered, or otherwise
subject to the claims of creditors, and, in the case of ISOs and
SARs in tandem therewith, shall be exercisable during the lifetime
of a Participant only by such Participant or his guardian or legal
representative; provided, however, that such Awards and other
rights (other than ISOs and SARs in tandem therewith) may be
transferred to one or more transferees during the lifetime of the
Participant to the extent and on such terms as then may be
permitted by the Committee.
(c)
No Right to Continued
Employment or Service
. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee, director or
other person the right to be retained in the employ or service of
the Company, its Parent or any Subsidiary, nor shall it interfere
in any way with the right of the Company, its Parent or any
Subsidiary to terminate any employee’s employment or other
person’s service at any time or with the right of the Board
or stockholders to remove any director.
(d)
Taxes
. The
Company, its Parent and Subsidiaries are authorized to withhold
from any Award granted or to be settled, any delivery of Stock in
connection with an Award, any other payment relating to an Award or
any payroll or other payment to a Participant amounts of
withholding and other taxes due or potentially payable in
connection with any transaction involving an Award, and to take
such other action as the Committee may deem advisable to enable the
Company, its Parent and Subsidiaries and Participants to satisfy
obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall
include authority to withhold or receive Stock or other property
and to make cash payments in respect thereof in satisfaction of a
Participant’s tax obligations.
(e)
Section
409A
. Notwithstanding the other
provisions hereof, the Plan and the Awards are intended to comply
with the requirements of Section 409A of the Code, to the extent
applicable. Accordingly, all provisions herein and with respect to
any Awards shall be construed and interpreted such that the Award
either (i) qualifies for an exemption from the requirements of
Section 409A of the Code or (ii) satisfies the requirements of
Section 409A of the Code to the maximum extent possible; provided,
however, that in no event shall the Company be obligated to
reimburse a Participant or Beneficiary for any additional tax (or
related penalties and interest) incurred by reason of application
of Section 409A, and the Company makes no representations that
Awards are exempt from or comply with Section 409A and makes no
undertakings to ensureor preclude that Section 409A will apply to
any Awards. If an Award is subject to Section 409A, (A)
distributions shall only be made in a manner and upon an event
permitted under Section 409A, (B) payments to be made upon a
termination of employment shall only be made upon a
“separation from service” under Code Section 409A, (C)
unless the Award Agreement specifies otherwise, each installment
payment shall be treated as a separate payment for purposes of
Section 409A, and (D) in no event shall a Participant, directly or
indirectly, designate the calendar year in which a distribution is
made except in accordance with Section 409A. Notwithstanding
anything herein to the contrary, in the event that any Awards
constitute nonqualified deferred compensation under Section 409A of
the Code, if (x) the Participant is a “specified
employee” of the Company as of the specified employee
identification date for purposes of Section 409A (as determined in
accordance with the policies and procedures adopted by the Company)
and (y) the delivery of any cash or Stock payable pursuant to an
Award is required to be delayed for a period of six months after
separation from service pursuant to Section 409A, such cash or
Stock shall be paid within 15 days after the end of the six-month
period. If the Participant dies during such six-month period, the
amounts withheld on account of Section 409A shall be paid to the
Participant’s Beneficiary within 30 days of the
Participant’s death.
(f)
Changes to the Plan
and Awards
.
(i)
The Board may amend, alter, suspend, discontinue
or terminate the Plan or the Committee’s authority to grant
Awards under the Plan without the consent of stockholders or
Participants, except that any such action shall be subject to the
approval of the Company’s stockholders at or before the next
annual meeting of stockholders for which the record date is after
such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Stock may then
be listed or quoted, and the Board may otherwise, in its
discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided, however, that, without the
consent of an affected Participant, no such action may materially
impair the rights of such Participant under any Award theretofore
granted to him (as such rights are set forth in the Plan and the
Award Agreement). The Committee may waive any conditions
or rights under, or amend, alter, suspend, discontinue, or
terminate, any Award theretofore granted and any Award Agreement
relating thereto; provided, however, that, (subject to Section
4(c)) without the consent of an affected Participant, no such
action may materially impair the rights of such Participant under
such Award (as such rights are set forth in the Plan and the Award
Agreement). The Board or the Committee shall also have
the authority to establish separate sub-plans under the Plan with
respect to Participants resident in a particular jurisdiction (the
terms of which shall not be inconsistent with those of the Plan) if
necessary or desirable to comply with the applicable laws of such
jurisdiction.
(ii)
Except in connection with a corporate transaction
involving the Company (including, without limitation, any stock
dividend, distribution (whether in the form of cash, Stock, other
securities or other property), stock split, extraordinary cash
dividend, recapitalization, change in control, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase
or exchange of Stock or other securities, or similar transactions),
the Company may not, without obtaining stockholder approval, (A)
amend the terms of outstanding Options or SARs to reduce the
exercise price of such outstanding Options or SARs, (B) cancel
outstanding Options or SARs in exchange for Options or SARs with an
exercise price that is less than the exercise price of the original
Options or SARs or (C) cancel outstanding Options or SARs with an
exercise price above the current Stock price in exchange for cash
or other securities.
(g)
No Rights to Awards;
No Stockholder Rights
. No person shall have any claim to be
granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants and
employees. No Award shall confer on any Participant any
of the rights of a stockholder of the Company unless and until
Stock is duly issued or transferred and delivered to the
Participant in accordance with the terms of the Award or, in the
case of an Option, the Option is duly
exercised.
(h)
Company
Policies
. All Awards made under
the Plan shall be subject to any applicable clawback or recoupment
policies, share trading policies and other policies that may be
implemented by the Board from time to time.
(i)
Unfunded Status of
Awards; Creation of Trusts
. The Plan is intended to constitute an
“unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made
to a Participant pursuant to an Award, nothing contained in the
Plan or any Award shall give any such Participant any rights that
are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of
trusts or make other arrangements to meet the Company’s
obligations under the Plan to deliver cash, Stock, other Awards, or
other property pursuant to any Award, which trusts or other
arrangements shall be consistent with the “unfunded”
status of the Plan unless the Committee otherwise determines with
the consent of each affected Participant.
(j)
Non-Exclusivity of the
Plan
. Neither the
adoption of the Plan by the Board nor any submission of the Plan or
amendments thereto to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the
Board to adopt such other compensatory arrangements as it may deem
desirable, including, without limitation, the granting of stock
options otherwise than under the Plan, and such arrangements may be
either applicable generally or only in specific
cases.
(k)
No Fractional
Shares
. No
fractional shares of Stock shall be issued or delivered pursuant to
the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise
eliminated.
(l)
Governing
Law
. The validity,
construction and effect of the Plan, any rules and regulations
relating to the Plan and any Award Agreement shall be determined in
accordance with the laws of the State of Florida, without giving
effect to principles of conflicts of laws, and applicable federal
law.
(m)
Severability
.
If any provision of the Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and the Plan shall be construed and
enforced as if such provisions had not been
included.
(n)
Successors and
Assigns
. The Plan and Award
Agreements may be assigned by the Company to any successor to the
Company’s business. The Plan and any applicable Award
Agreement shall be binding on all successors and assigns of the
Company and a Participant, including any permitted transferee of a
Participant, the Beneficiary or estate of such Participant and the
executor, administrator or trustee of such estate, or any receiver
or trustee in bankruptcy or representative of the
Participant’s creditors.
(o)
Effective
Date
. The amended and
restated Plan shall be effective as of the Effective
Date.
EXHIBIT XI
iMEDICOR, INC
.
2016 INCENTIVE BONUS COMPENSATION PLAN
1.
Purpose.
The
purpose of this 2016 Incentive Bonus Compensation Plan (the "Plan")
of iMedicor, Inc. (the "Company") is (i) to retain and motivate key
senior executives of the Company who have been designated as
Participants in the Plan for a given Performance Period, by
providing them with the opportunity to earn bonus awards that are
based on the extent to which specified performance goals for such
Performance Period have been achieved or exceeded; and (ii) to
structure such bonus opportunities in a way that will qualify the
awards made as "performance-based" for purposes of Section 162(m)
of the Internal Revenue Code of 1986, as amended (or any successor
section) so that the Company will be entitled to a tax deduction on
the payment of such incentive awards to such
employees.
2.
Definitions.
As used in the Plan, the following terms shall the meanings set
forth below:
(a)
"Annual Base
Salary" shall mean the amount of base salary paid to a Participant
for a given year, adjusted to include the amount of any base salary
deferrals for such year, unless the Plan Committee otherwise
specifies at the time that the Participant's award opportunity for
a given Performance Period is established.
(b)
"Applicable Period"
shall mean, with respect to any Performance Period, a period
commencing on or before the first day of such Performance Period
and ending no later than the earlier of (i) the 90th day of such
Performance Period, or (ii) the date on which 25% of such
Performance Period has been completed. Any action required under
the Plan to be taken with the period specified in the preceding
sentence may be taken at a later date if, but only if, the
regulations under Section 162(m) of the Code are hereafter amended,
or interpreted by the Internal Revenue Service, to permit such
later date, in which case the term "Applicable Period" shall be
deemed amended accordingly.
(c)
"Board" shall mean
the Board of Directors of the Company as constituted from time to
time.
(d)
"Cause" shall mean
"cause" as defined in any employment agreement then in effect
between the Participant and the Company or if not defined therein
or, if there shall be no such agreement, where the Participant: (i)
commits any act of fraud, willful misconduct or dishonesty in
connection with his employment or which injures the Company or its
direct or indirect subsidiaries;(ii) breaches any other material
provision of any agreement between the Participant and the Company
or a subsidiary of the Company relating to the Participant's
employment or breaches any fiduciary duty to the Company or its
direct or indirect subsidiaries; (iii) fails, refuses or neglects
to timely perform any material duty or obligation relating to his
position; (iv) commits a material violation of any law, rule,
regulation or by-law of any governmental authority (state, federal
or foreign), any securities exchange or association or other
regulatory or self-regulatory body or agency applicable to the
Company or its direct or indirect subsidiaries or any general
policy or directive of the Company or its direct or indirect
subsidiaries communicated in writing to the Participant; or (v) is
charged with a crime involving moral turpitude, dishonesty, fraud
or unethical business conduct, or a felony.
(e)
"Change of Control"
shall mean:
(i) the date of the
acquisition by any "person" (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act), excluding (x) Jerry Smith and his
affiliates and (y) the Company or any of its subsidiaries or
affiliates or any employee benefit plan sponsored by any of the
foregoing, of beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of 20% or more of the combined voting
power of the Company’s then outstanding securities entitled
to vote generally in the election of directors;or
(ii)
the date the
individuals who constitute the Board as of the effective date of
the Plan (the "Incumbent Board") cease for any reason to constitute
at least a majority of the members of the Board, provided that any
individual becoming a director subsequent to the effective date of
this Agreement whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than any individual whose nomination for election to Board
membership was not endorsed by the Company's management prior to,
or at the time of, such individual's initial nomination for
election) shall be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent Board;
or
(iii)
the consummation of
a merger, consolidation, recapitalization, reorganization, sale or
disposition of all or a substantial portion of the Company's
assets, a reverse stock split of outstanding voting securities, the
issuance of shares of stock of the Company in connection with the
acquisition of the stock or assets of another entity, provided,
however, that a Change of Control shall not occur under this clause
(iii) if consummation of the transaction would result in at least
80% of the total voting power represented by the voting securities
of the Company (or, if not the Company, the entity that succeeds to
all or substantially all of the Company's business) outstanding
immediately after such transaction being beneficially owned (within
the meaning of Rule 13d-3 promulgated pursuant to the Exchange Act)
by at least 75% of the holders of outstanding voting securities of
the Company immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such
continuing holders not substantially altered in the
transaction.
(f)
"Code" shall mean
the Internal Revenue Code of 1986, as amended from time to
time.
(g)
"Committee" or
"Plan Committee" shall mean the committee for the board consisting
solely of two or more non-employee directors (each of whom is
intended to qualify as an "outside director" within the meaning of
Section 162(m) of the Code) designated by the Board as the
committee responsible for administering and interpreting the
Plan.
(h)
"Company" shall
mean iMedicor, Inc., a corporation organized under the laws of the
State of Florida, and any successor thereto.
(i)
"Disability" shall
mean "disability" as defined in any employment agreement then in
effect between the Participant and the Company or if not defined
therein or if there shall be no such agreement, as defined in the
Company's long-term disability plan as in effect from time to time,
or if there shall be no plan or if not defined therein, the
Participant's becoming physically or mentally incapacitated and
consequent inability for a period of 120 days in any twelve
consecutive month period to perform his duties to the
Company.
(j)
"Exchange Act"
means the Securities Exchange Act of 1934, as amended.
(k)
"Executive Officer"
shall have the meaning set forth in Rule 3b-7 promulgated under the
Securities Exchange Act of 1934, in each case as amended from time
to time.
(l)
"Individual Award
Opportunity" shall mean the performance-based award
opportunity
for a given
Participant for a given Performance Period as specified by the Plan
Committee within the Applicable Period, which may be expressed in
dollars or on a formula basis that is consistent with the
provisions of the Plan.
(m)
"Negative
Discretion" shall mean the discretion authorized by the Plan to be
applied
by the Committee to
eliminate, or reduce the size of, a bonus award otherwise payable
to a Participant for a given Performance Period, provided that the
exercise of such discretion would not cause the award to fail to
qualify as "performance-based compensation" under Section 162(m) of
the Code. By way of example and not by way of limitation, in no
event shall any discretionary authority granted to the Committee by
the Plan including, but not limited to, Negative Discretion, be
used (i) to provide for an award under the Plan in excess of the
amount payable based on actual performance versus the applicable
performance goals for the Performance Period in question, or in
excess of the maximum individual award limit specified in Section
6(b) below, or (ii) to increase the amount otherwise payable to any
other Participant.
(n)
"Participant" shall
mean, for any given Performance Period with respect to which
the
Plan is in effect,
each key employee of the Company (including any subsidiary,
operating unit or division) who is an Executive Officer of the
Company and who is designated as a Participant in the Plan for such
Performance Period by the Committee pursuant to Section 4
below.
(o)
"Performance
Period" shall mean any period commencing on or after January
1,
2000 for which
performance goals are set under Section 5 and during which
performance shall be measured to determine whether such goals have
been met for purposes of determining whether a Participant is
entitled to payment of a bonus under the Plan. A Performance Period
may be coincident with one or more fiscal years of the Company, or
a portion thereof.
(p)
"Plan" or "Section
162(m) Plan" shall mean the iMedicor, Inc. Section 162(m) Bonus
Plan as set forth in this document, and as amended from time to
time.
(q)
"Retirement" shall
mean any termination of employment with the Company and its
subsidiaries (other than a termination by the Company (or any of
its subsidiaries) for Cause) that (i) qualifies as a "retirement"
event under the terms of any tax-qualified retirement plan
maintained by the Company in which the Participant participates,
and (ii) is approved in writing as a "Retirement" event for
purposes of this Plan by (or pursuant to procedures established by)
the Plan Committee.
(a)
General.
The Plan shall be
administered by the Committee. Subject to the terms of the Plan and
applicable law (including, but not limited to, Section 162(m) of
the Code), and in addition to any other express powers and
authorizations conferred on the Committee by the Plan, the
Committee shall have the full power and authority, after taking
into account, in its sole and absolute discretion, the
recommendations of the Company's senior management:
(i)
to designate
(within the Applicable Period) the Participants in the Plan and the
individual award opportunities and/or, if applicable, bonus pool
award opportunities for such Performance Period;
(ii)
to designate
(within the Applicable Period) and thereafter administer the
performance goals and other award terms and conditions that are to
apply under the Plan for such Performance Period;
(iii)
to determine and
certify the bonus amounts earned for any given Performance Period,
based on actual performance versus the performance goals for such
Performance Period, after making any permitted Negative Discretion
adjustments;
(iv)
to decide (within
the Applicable Period) any issues that are not resolved under the
express terms of the Plan relating to the impact on the bonus
awards for such Performance Period of (A) a termination of
employment (due to death, Disability, Retirement, voluntary
termination (other than Retirement), termination by the Company
other than for Cause, or termination by the Company for Cause),
provided, in each case, that no payment shall be made for any given
Performance Period prior to the time that the Plan Committee
certifies, pursuant to Section 6(c)(i) below, that the applicable
performance goals for such Performance Period have been met or (B)
a Change of Control;
(v)
to decide whether,
under what circumstances and subject to what terms bonus payouts
are to be paid on a deferred basis, including automatic deferrals
at the Committee's election as well as elective deferrals at the
election of Participants;
(vi)
to adopt, revise,
suspend, waive or repeal, when and as appropriate, in its sole and
absolute discretion, such administrative rules, guidelines and
procedures for the Plan as it deems necessary or advisable to
implement the terms and conditions of the Plan;
(vii)
to interpret and
administer the terms and provisions of the Plan and any award
issued under the Plan (including reconciling any inconsistencies,
correcting any defaults and addressing any omissions in the Plan or
any related instrument or agreement); and
(viii)
to otherwise
supervise the administration of the Plan.
It is intended that
all amounts payable to Participants under the Plan who are "covered
employees" within the meaning of Treas. Reg. Sec. 1.162-27(c)(2)
(as amended from time to time) shall constitute "qualified
performance-based compensation" within the meaning of Section
162(m) of the Code and Treas. Reg. Sec. 1.162-27(e) (as amended
from time to time), and, to the maximum extent possible, the Plan
and the terms of any awards under the Plan shall be so interpreted
and construed.
(b)
Binding Nature of Committee
Decisions.
Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations and other
decisions made under or with respect to the Plan or any award under
the Plan shall be within the sole and absolute discretion of the
Committee, and shall be final, conclusive and binding on all
persons, including the Company, any Participant, and any award
beneficiary or other person having, or claiming, any rights under
the Plan.
(c)
Other.
No member of the
Committee shall be liable for any action or
determination
(including, but
limited to, any decision not to act) made in good faith with
respect to the Plan or any award under the Plan. If a Committee
member intended to qualify as an "outside director" under Section
162(m) of the Code does not in fact so qualify, the mere fact of
such non-qualification shall not invalidate any award or other
action made by the Committee under the Plan which otherwise was
validly made under the Plan.
(a)
Participant Designations By Plan
Committee.
For any given Performance Period, the Plan
Committee, in its sole and absolute discretion, shall, within the
Applicable Period, designate those key employees of the Company
(including its subsidiaries, operating units and divisions) who
shall be Participants in the Plan for such Performance Period. Such
Participant designations shall be made by the Plan Committee, in
its sole and absolute discretion, based primarily on its
determination as to which key employees:
(i)
are likely to be
Executive Officers of the Company as of the last day of the fiscal
year for which the Company would be entitled to a Federal tax
deduction for payment of the award in respect of such Performance
Period;
(ii)
are reasonably
expected by the Plan Committee to have individual compensation for
such fiscal year that may be in excess of $1 million, excluding any
compensation that is grandfathered for Section 162(m) purposes or
is otherwise excluded for Section 162(m) purposes based on an
existing or other "performance-based" plan other than this Plan;
and
(iii)
are reasonably
expected by the Plan Committee to be "covered employees" for such
fiscal year for Section 162(m) purposes, and such other
consideration as the Committee deems appropriate, in its sole and
absolute discretion.
(b)
Impact Of Plan
Participation.
An individual who is a designated Participant
in the Section 162(m) Plan for any given Performance Period shall
not also participate in the Company's general bonus plans for such
Performance Period, if such participation would cause any award
hereunder to fail to qualify as "performance-based" under Section
162(m).
5.
Performance Goals.
(a)
Setting Of
Performance Goals.
For a given Performance Period, the Plan
Committee shall, within the Applicable Period, set one or more
objective performance goals for each Participant and/or each group
of Participants and/or each bonus pool (if any). Such goals shall
be based exclusively on one or more of the following corporate-wide
or subsidiary, division or operating unit financial
measures:
(1)
pre-tax or
after-tax net income,
(2)
operating
income,
(3)
gross
revenue,
(4)
profit
margin,
(5)
stock
price,
(6)
cash
flow(s),
(7)
strategic business
criteria, consisting of one or more objectives based on meeting
specified revenue, market penetration, geographic business
expansion goals, cost targets, and goals relating to acquisitions
or divestitures,
or any combination
thereof (in each case before or after such objective income and
expense allocations or adjustments as the Committee may specify
within the Applicable Period). Each such goal may be expressed on
an absolute and/or relative basis, may be based on or otherwise
employ comparisons based on current internal targets, the past
performance of the Company (including the performance of one or
more subsidiaries, divisions and/or operating units) and/or the
past or current performance of other companies, and in the case of
earnings-based measures, may use or employ comparisons relating to
capital (including, but limited to, the cost of capital),
shareholders' equity and/or shares outstanding, or to assets or net
assets. In all cases, the performance goals shall be such that they
satisfy any applicable requirements under Treas. Reg. Sec.
1.162-27(e)(2) (as amended from time to time) that the achievement
of such goals be "substantially uncertain" at the time that they
are established, and that the award opportunity be defined in such
a way that a third party with knowledge of the relevant facts could
determine whether and to what extent the performance goal has been
met, and, subject to the Plan Committee's right to apply Negative
Discretion, the amount of the award payable as a result of such
performance.
(b)
Impact Of Extraordinary Items Or
Changes In Accounting.
The measures used in setting
performance goals set under the Plan for any given Performance
Period shall be determined in accordance with GAAP and a manner
consistent with the methods used in the Company's audited financial
statements, without regard to (i) extraordinary items as determined
by the Company's independent public accountants in accordance with
GAAP, (ii) changes in accounting, unless, in each case, the Plan
Committee decides otherwise within the Applicable Period or (iii)
non-recurring acquisition expenses and restructuring
charges.
6.
Bonus Pools, Award Opportunities And
Awards
.
(a)
Setting Of Individual Award
Opportunities.
At the time that annual performance goals are
set for Participants for a given Performance Period (within the
Applicable Period), the Plan Committee shall also establish each
Individual Award Opportunity for such Performance Period, which
shall be based on the achievement of stated target performance
goals, and may be stated in dollars or on a formula basis
(including, but not limited to, a designated share of a bonus pool
or a multiple of Annual Base Salary), provided:
(i)
that the designated
shares of any bonus pool shall not exceed 100% of such pool;
and
(ii)
that the Plan
Committee, in all cases, shall have the sole and absolute
discretion, based on such factors as it deems appropriate, to apply
Negative Discretion to reduce (but not increase) the actual bonus
awards that would otherwise actually be payable to any Participant
on the basis of the achievement of the applicable performance
goals.
(b)
Maximum Individual Bonus Award.
Notwithstanding any other provision of this Plan, the maximum bonus
payable under the Plan to any one individual in any one calendar
year shall be $5 million.
(c)
Bonus
Payments.
Subject to the
following, bonus awards determined under the Plan for given
Performance Period shall be paid to Participants in cash, as soon
as practicable following the end of the Performance Period to which
they apply, provided:
(i)
that no such payment shall be made unless and
until the Plan Committee, based on the Company's audited financial
results for such Performance Period (as prepared and reviewed by
the Company's independent public accountants), has certified (in
the manner prescribed under applicable
regulations) the extent to which
the applicable
performance
goals for such Performance Period have been satisfied, and has made
its decisions regarding the extent of any Negative Discretion
adjustment of awards (to the extent permitted under the
Plan);
(ii)
that
the Plan Committee may specify that a portion of the actual bonus
award for any given Performance Period shall be paid on a deferred
basis, based on such award payment rules as the Plan Committee may
establish and announce for such Performance Period;
(iii)
that
the Plan Committee may require (if established and announced within
the Applicable Period), as a condition of bonus eligibility (and
subject to such exceptions as the Committee may specify within the
Applicable Period) that Participants for such Performance Period
must still be employed as of end of such Performance Period and/or
as of the later date that the actual bonus awards for such
Performance Period are announced, in order to be eligible for an
award for such Performance Period; and
(iv)
that,
within the Applicable Period and subject to Section 6(c)(i) above,
the Committee may adopt such forfeiture, pro-ration or other rules
as it deems appropriate, in its sole and absolute discretion,
regarding the impact on bonus award rights of a Participant's
death, Disability, Retirement, voluntary termination (other than
Retirement), termination by the Company other than for Cause, or
termination by the Company for Cause.
7.
General
Provisions.
(a)
Plan
Amendment Or Termination.
The
Board may at any time amend or terminate the
Plan,
provided that (i) without the Participant's written consent, no
such amendment or termination shall adversely affect the bonus
rights (if any) of any already designated Participant for a given
Performance Period once the Participant designations and
performance goals for such Performance Period have been announced,
(ii) the Board shall be authorized to make any amendments necessary
to comply with applicable regulatory requirements (including,
without limitation, Section 162(m) of the Code), and (iii) the
Board shall submit any Plan amendment to the Company's stockholders
for their approval if and to the extent such approval is required
under Section 162(m) of the Code.
(b)
Applicable
Law.
All issues arising under
the Plan shall be governed by, and
construed
in accordance with, the laws of the State of Florida, applied
without regard to conflict of law principles.
(c)
Tax
Withholding.
The Company (and
its subsidiaries) shall have right to make such
provisions
and take such action as it may deem necessary or appropriate for
the withholding of any and all Federal, state and local taxes that
the Company (or any of its subsidiaries) may be required to
withhold.
(d)
No Employment Right Conferred.
Participation in the Plan shall not confer on any Participant the
right to remain employed by the Company or any of its subsidiaries,
and the Company and its subsidiaries specifically reserve the right
to terminate any Participant's employment at any time with or
without cause or notice.
(e)
Impact
of Plan Awards on Other
Plans.
Plan awards shall not be treated as compensation for
purposes of any other compensation or benefit plan, program or
arrangement of the Company or any subsidiary, unless and except to
the extent that the Board or its Compensation Committee so
determines in writing. Neither the adoption of the Plan nor the
submission of the Plan to the Company's stockholders for their
approval shall be construed as limiting the power of the Board or
the Plan Committee to adopt such other incentive arrangements as it
may otherwise deem appropriate.
(f)
Beneficiary Designations.
Each
Participant shall designate in a written form filed with the
Committee the beneficiary (or beneficiaries) to receive the amounts
(if any) payable under the Plan in the event of the Participant's
death prior to the bonus payment date for a given Performance
Period. Any such beneficiary designation may be changed by the
Participant at any time without the consent of the beneficiary
(unless otherwise required by law) by filing a new written
beneficiary designation with the Committee. A beneficiary
designation shall be effective only if the Company is in receipt of
the designation prior to the Participant's death. If no effective
beneficiary designation is made, the beneficiary of any amounts die
shall be the Participant's estate.
(g)
Costs & Expenses.
All award
and administrative costs and expenses of the Plan shall be borne by
the Company.
(h)
Non-Transferability of Rights.
Except as and to the extent required by law, a Participant's rights
under the Plan may not be assigned or transferred in whole or in
part either directly or by operation of law or otherwise (except,
pursuant to Section 7(f) above, in the event of the Participant's
death), including, but not limited to, by way of execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner,
and no such right of the Participant shall be subject to any
obligation or liability of the Participant other than any
obligation or liability owed by the Participant to the Company (or
any of its subsidiaries).
8.
Effective Date; Prior
Plan.
The Plan shall be
effective for Performance Periods commencing on and after July 1,
2016 and shall remain effective until terminated by the
Board;
provided,
however,
that the continued effectiveness of the Plan shall
be subject to the approval of the Company's stockholders at such
times and in such manner as may be required pursuant to Section
162(m) of the Code.
EXHIBIT XII
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO
SECTION
13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported) March 31, 2017 (March 30,
2017)
iMedicor,
Inc.
|
(Exact Name of
Registrant as Specified in Its Charter)
|
Nevada
|
(State or Other
Jurisdiction of Incorporation)
|
000-52765
|
|
95-4696799
|
(Commission File
Number)
|
|
(IRS Employer
Identification No.)
|
13506 Summerport
Village Parkway #160, Windermere, FL
|
|
34786
|
(Address of
Principal Executive Offices)
|
|
(Zip
Code)
|
407-505-8934
|
(Registrant’s
Telephone Number, Including Area Code)
|
N/A
|
(Former Name or
Former Address, if Changed Since Last Report)
|
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (
see
General Instruction A.2.
below):
☐
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☐
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 1.01
Entry into a Material Definitive Agreement
On
March 30, 2017 iMedicor, Inc., a Nevada corporation formerly known
as Vemics, Inc. (the "Company"), and the holders of approximately
$6,200,000 aggregate principal amount of indebtedness of the
Company convertible into shares of Common Stock of the Company (the
"Convertible Debt"), the holders of not less than two thirds of the
outstanding shares of the Series A Preferred Stock of the Company
(the “Series A Preferred Stock”) and the holders of not
less than two thirds of the outstanding shares of the Series B
Preferred Stock of the Company (the "Series B Preferred Stock" and,
together with the Series A Preferred Stock, the "Preferred Stock")
entered into a Recapitalization Agreement dated as of November 1,
2016 (the "Recapitalization Agreement") for the purpose of
recapitalizing the Company (the "Recapitalization").
A.
Recapitalization of the Company.
Pursuant
to, and upon the terms and provisions of, the Recapitalization
Agreement, the Company shall be recapitalized on such date as the
Company in its sole discretion shall designate in a written notice
to all the parties to the Recapitalization Agreement (the
“Recapitalization Date”) as follows:
1.
Amendment of Articles
of Incorporation.
The Articles
of Incorporation shall be amended to increase the number of shares
of Common Stock that the Company is authorized to issue from two
billion (2,000,000,000) to twenty billion (20,000,000,000) and, in
connection therewith, the Company shall prepare, execute, and file
with the Secretary of State of the State of Nevada an Amendment of
the Articles of Incorporation for such purpose.
2.
Amendment of Series A
Certificate of Designation.
Clause (b) of section 4 of the Series A
Certificate of Designation shall be amended to read as
follows:
"(b)
at the option of the Company at any time".
and,
in connection therewith, the Company shall prepare, execute and
file with the Secretary of State of the State of Nevada an
Amendment to Certificate of Designation amending the Series A
Preferred Stock Certificate of Designation, as amended, for such
purpose
3.
Amendment of Series B
Certificate of Designation.
Clause (b) of section 4 of the Series B Preferred
Stock Certificate of Designation shall be amended to read as
follows:
"(b) at the option of the Company at any
time”
.
and,
in connection therewith, the Company shall prepare, execute and
file with the Secretary of State of the State of Nevada an
Amendment to Certificate of Designation amending the Series B
Preferred Stock Certificate of Designation, as amended, for such
purpose.
4.
Conversion of the
Convertible Debt.
Assuming the
Recapitalization occurs on April 30, 2017, the holders of the
Convertible Debt (the “Convertible Debt Holders”) shall
convert all of the Convertible Debt (consisting of approximately
$6,300,000 aggregate principal amount of indebtedness) held by the
Convertible Debt Holders at a price per share of $0.001 into
approximately 6,300,000,000 shares of Common Stock, in the manner
set forth in the instruments relating to the Convertible
Debt.
If
for any reason the Recapitalization occurs either before April 30,
2017, based on the amount of interest due and not paid, the number
of shares of Common Stock into which the Convertible Debt shall
convert will decrease and, if for any reason the Recapitalization
occurs after April 30, 2017, based on the amount of interest due
and not paid, the number of shares of Common Stock into which the
Convertible Debt shall convert will increase.
5.
Conversion of the
Series B Preferred Stock.
Immediately following the conversion of the
Convertible Debt into shares of Common Stock, the Company shall
convert the Series B Preferred Stock into shares of Common Stock in
the manner set forth in section 4(b) of the Series B Preferred
Stock Certificate of Designation, as amended.
6.
Conversion of the
Series A Preferred Stock.
Immediately following the conversion of the Series
B Preferred Stock into shares of Common Stock, the Company shall
convert the Series A Preferred Stock into shares of Common Stock in
the manner set forth in section 4(b) of the Series A Preferred
Stock Certificate of Designation, as amended.
7.
Reverse Split of
Shares of Common Stock.
Immediately following the conversion of the
Convertible Debt, the Series B Preferred Stock and the Series A
Preferred Stock into shares of Common Stock, the Company shall
combine its outstanding shares of Common Stock by a ratio to be
determined by the Company's Board of Directors, in its sole
discretion, so that immediately following such reverse split the
number of shares of Common Stock outstanding, shall be 10,000,000
shares (the “Reverse Split”); provided, however, no
fractional share of Common Stock shall remain outstanding and in
lieu of any fractional share of Common Stock that otherwise would
be outstanding, the holder thereof shall be entitled to receive and
the Company shall pay to such holder of such fraction an amount
equal to such fraction times the amount that the Board of Directors
shall determine in good faith to be the fair value of a share of
Common Stock on the Recapitalization Date.
8.
Amendment and
Restatement of Articles of Incorporation.
The Articles of Incorporation shall be amended and
restated in their entirety to read as set forth in Exhibit 2.8 to
the Recapitalization Agreement.
9.
Amendment of
By-Laws.
The By-Laws of the
Company shall be amended and restated in their entirety to read as
set forth in Exhibit 2.9 to the Recapitalization
Agreement.
10.
Capitalization
Following Recapitalization.
Assuming that none of the presently outstanding
securities of the Company (other than the Convertible Debt, the
Series B Preferred Stock and the Series A Preferred Stock) are
converted into or are exercised or exchanged for shares of Common
Stock, it is the intention of the parties to the Recapitalization
Agreement that, immediately following the Recapitalization, the
Company shall be authorized to issue six hundred ten million
(610,000,000) shares, consisting of six hundred million
(600,000,000) shares of Common Stock, of which approximately
10,000,000 shares shall be outstanding, and ten million
(10,000,000) shares of Preferred Stock, none of which shall be
outstanding.
11.
Certain
Adjustments.
Notwithstanding
anything to the contrary in the Recapitalization Agreement, the
amount of the Convertible Debt and the numbers of shares of stock
of the Company that are outstanding immediately preceding and shall
be outstanding as a result of the Recapitalization shall be
adjusted consistent with the assumptions and calculations contained
in the Recapitalization Agreement to be consistent with the facts
on the Recapitalization Date.
The
information provided in this Item 1.01 with respect to the
Recapitalization is qualified in its entirety by reference to the
terms of the Recapitalization Agreement attached hereto as Exhibit
I, and incorporated herein by reference.
B.
Conditions of the Recapitalization.
The
Recapitalization of the Company is subject to and conditioned upon
the Requisite Consent of Security Holders (as defined in the
Recapitalization Agreement).
The
information provided in this Item 1.01 with respect to the
Conditions of the Recapitalization is qualified in its entirety by
reference to the terms of the Recapitalization Agreement attached
hereto as Exhibit I, and incorporated herein by
reference.
C.
The Bridge
Financing
.
The
Company has been raising, and continues to raise, funds on a best
efforts basis up to a maximum amount of $10,000,000 for working
capital by issuing convertible promissory notes (the “Bridge
Notes”) with warrants (the “Bridge Warrants”).
The Bridge Notes bear interest at the rate of 18% per annum and
were payable at the earlier of December 31, 2016 (the
“Maturity Date”) or conversion. The Bridge Notes
(principal and accrued and unpaid interest) are convertible into
shares of Common Stock at a price (following the Reverse Split)
equal to $0.45 per share of Common Stock. Investors purchasing the
Bridge Notes receive one Bridge Warrant for every $1.00 in
principal amount of the Bridge Notes purchased in the Bridge
Offering. Each Bridge Warrant is exercisable until December 31,
2019 to purchase one share of Common Stock at an exercise price
(following the Reverse Split) of $1.35 per share, subject to
adjustment in certain circumstances.
The Bridge Notes are
convertible
into shares of Common Stock at any time at the
option of the Bridge Note holder. The Bridge Notes (principal and
accrued and unpaid interest) are convertible at a price (following
the Reverse Split) equal to $0.45 per share of Common Stock,
subject to adjustment as provided below. If the Company’s
fully diluted shares of Common Stock outstanding on the date of
conversion is greater or less than 10 million, the Conversion Price
shall be adjusted proportionately to equate to a Conversion Price
based upon a $4.5 million pre-money valuation of the Company on a
fully diluted basis on the date of conversion (i.e., a 10% discount
to a $5.0 million pre-money valuation on a fully diluted basis on
the date of conversion). The Conversion Price (following the
Reverse Split) shall be $0.45 per share of Common Stock assuming
the Company has 10 million shares of Common Stock issued and
outstanding on a fully diluted basis on the date of
conversion.
As of the date of
this report on Form 8-K, the Company has entered into separate
Conversion Agreements (a “Conversion Agreement”) with
the holders of Bridge Notes holding Bridge Notes in the aggregate
principal amount of $4,684,654 pursuant to which on the
Recapitalization Date immediately following the Recapitalization
the Bridge Notes held by such holders will be converted into shares
of Common Stock at a conversion price of $0.45 per share of Common
Stock.
The Bridge Notes by
their terms are also exchangeable for convertible notes
(“PIPE Notes”) if offered by the Company in a PIPE
Financing, or exchangeable for PIPE Notes as provided herein. In
addition, if (i) the Company is current (as of the date of this
Form 8-K the Company is not current) in filing its reports (other
than reports required to be filed on Form 8-K) under Section 13(a)
of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and (ii) the gross combined proceeds
of the Bridge Financing and the PIPE Financing are at least the
Minimum PIPE, as defined below, then the Bridge Notes will
automatically be exchanged for PIPE Notes in a principal amount
equal to (A) the sum of (1) the total outstanding principal balance
of the Bridge Notes plus (2) all accrued and unpaid interest
thereon, multiplied by (B) 111% (the “Exchange Ratio”).
For this purpose a PIPE Financing means a private offering of
securities consisting of convertible notes and warrants in a
minimum amount equal to the greater of (i) $4.0 million or (ii)
$1.0 million more than the aggregate principal amount of Bridge
Notes sold in the Bridge Financing (including the principal of and
accrued interest on the Bridge Notes exchanged for PIPE Notes) (the
“Minimum PIPE”) and a maximum amount of $2.0 million
more than the Minimum PIPE (the “Maximum PIPE”)
undertaken prior to the Maturity Date of the Bridge
Notes.
However, the
Company has neither undertaken nor consummated a PIPE Financing
and, as of the date of this Report on Form 8-K, has no plans to
undertake a PIPE Financing. The Company had entered into a Letter
Agreement with GVC Capital LLC (“GVC”) dated November
12, 2015 (the “GVC Letter Agreement”) pursuant to which
GVC would have been willing to act as the placement agent of the
Company’s securities in a PIPE Financing. However, as of
October 31, 2016, the Company and GVC mutually agreed to terminate
the GVC Letter Agreement.
Investors
purchasing Bridge Notes also receive one Bridge Warrant for every
$1.00 in principal amount of Bridge Notes purchased in the Bridge
Offering. Each Bridge Warrant is exercisable until December 31,
2019 to purchase one share of Common Stock at an exercise price
(following the Reverse Split) equal to $1.35 per share (the
“Bridge Warrant Exercise Price”), assuming the Company
has 10 million shares of common stock issued and outstanding on a
fully diluted basis. If the Company’s fully diluted shares of
Common Stock outstanding on the date of issuance of the Bridge
Warrants is greater or less than 10 million, the Bridge Warrant
Exercise Price shall be adjusted proportionately to equate to a
Bridge Warrant Exercise Price based upon a $4.5 million pre-money
valuation of the Company on a fully diluted basis (i.e., a 10%
discount to a $5.0 million pre-money valuation on a fully diluted
basis). The Bridge Warrants are callable by the Company if (i)
there exists a public trading market for the shares of Common
Stock, (ii) there is an effective registration statement
registering for resale under the Securities Act of 1933, as amended
(the “Securities Act”), the shares of Common Stock
issuable upon exercise of the Bridge Warrants ( the “Bridge
Warrant Shares”) and (iii) the closing price of the Common
Stock on an exchange registered with the SEC has equaled at least
150% of the then current Bridge Warrant Exercise Price for 20 of
the preceding 30 trading days and the volume for such 30 trading
days has averaged 50,000 shares per day (for example, if the Bridge
Warrant Exercise Price (following the Reverse Split) is $1.35 the
Bridge Warrants are callable if the Common Stock closes above $2.02
per share for 20 of the preceding 30 trading days with the average
volume in excess of 50,000 shares per day for such 30 trading
days.
A
term sheet (titled “Fifth Amended and Restated Term
Sheet”) dated November 28, 2016 setting forth the terms of
the Bridge Financing is attached hereto as Exhibit II (the
“Bridge Financing Term Sheet”). The information
provided in this Item 1.01 with respect to the Bridge Financing is
qualified in its entirety by reference to the terms of the Bridge
Financing Term Sheet and incorporated herein by
reference.
As
of the date of this Form 8-K, the Company has issued and sold to
investors Bridge Notes in the aggregate principal amount of
$4,684,654 and Bridge Warrants exercisable to purchase 4,684,654
shares of Common Stock. The form of the Bridge Note issued by the
Company to the holders of Bridge Notes is attached hereto as
Exhibit III. The Company has reported such sales on Form D and
amendments thereto filed with the SEC.
As of the date of this Form 8-K, the Company has
entered into separate Conversion Agreements with the holders of
Bridge Notes in an aggregate principal amount of
$4,391,000
. A form of the
Conversion Agreement is attached hereto as Exhibit
IV.
Neither the Bridge
Notes or Bridge Warrants nor any of the securities of the Company
issuable upon the conversion of the Bridge Notes or the exercise of
the Bridge Warrants has been or will be registered under the
Securities Act of 1933, as amended, and may not be offered or sold
in the United States absent registration thereunder or an
applicable exemption from registration requirements.
D.
2016 Long-Term Incentive Compensation Plan
On
August 17, 2016, the Board of Directors approved and adopted,
subject to the approval of the stockholders of the Company, the
2016 Long-Term Incentive Compensation Plan of the Company which
provides for the granting to directors, officers, employees and
consultants of and service providers to, the Company and its
affiliates of awards under the plan including options, SARs
(including limited SARs), restricted stock, deferred stock, stock
granted as a bonus or in lieu of other awards, dividend equivalents
and other stock based awards to enable such persons to acquire or
increase a proprietary interest in the Company, thereby promoting a
closer identity of interests between such persons and the
Company’s stockholders, all upon the terms and provisions set
forth in the plan, a copy of which is attached hereto as Exhibit
V.
Subject to
adjustment in the event of an extraordinary or unusual event
effecting the Common Stock of the Company such as a
recapitalization, forward or reverse split or a stock dividend,
following the Reverse Split referred to in the Recapitalization
Agreement, the aggregate number of shares of Common Stock for which
Awards may be granted under the Plan shall not exceed 2,500,000
shares.
Stockholders
of the Company holding not less than a majority of the voting power
of the Company approved the 2016 Long-Term Incentive Compensation
Plan by signing a written consent dated as of November 1,
2016.
The
information provided in this Item 1.01 with respect to the 2016
Long-Term Incentive Compensation Plan is qualified in its entirety
by reference to the terms of the 2016 Long-Term Incentive
Compensation Plan attached hereto as Exhibit V and incorporated
herein by reference.
E.
2016 Incentive Bonus Compensation Plan
On
August 17, 2016 the Board of Directors approved and adopted,
subject to the approval of the stockholders of the Company, the
2016 Incentive Bonus Compensation Plan of the Company which
provides for the granting to key senior executives of the Company
of bonus awards based on the extent to which specified performance
goals for specified periods shall have been achieved or exceeded,
all upon the terms and provisions set forth in the plan, a copy of
which is attached hereto as Exhibit VI.
Stockholders
of the Company holding not less than a majority of the voting power
of the Company approved the 2016 Incentive Bonus Compensation Plan
by signing a written consent dated as of November 1,
2016.
The
information provided in this Item 1.01 with respect to the 2016
Incentive Bonus Compensation Plan is qualified in its entirety by
reference to the terms of the 2016 Incentive Bonus Compensation
Plan attached hereto as Exhibit VI and incorporated herein by
reference.
Item 3.02
Unregistered Sales of Equity Securities
Reference is made
to Item 1.01 and the information provided therein with respect to
the Recapitalization and Bridge Financing and all such information
is incorporated herein by reference.
Item 5.02
Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers
At a special
meeting held on August 17, 2016, the Board of Directors of the
Company elected Robert McDermott as President and Donald Douglas as
Secretary of the Company and designated Mr. McDermott as Chief
Executive Officer, Donald Sproat as Chief Financial Officer and Mr.
Douglas as Chief Operating Officer of the Company. At the same
meeting, the Board appointed Mr. JD Smith and Mr. Jeffrey Stellinga
as members of the Audit Committee, the Compensation Committee and
the Nominating and Governance Committee, designating Mr. Smith as
Chairman of the Compensation Committee and the Nominating and
Governance Committee and Mr. Stellinga as Chairman of the Audit
Committee.
Item
5.03
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
As part of the
Recapitalization, the Company will amend its Articles of
Incorporation and Bylaws. Reference is made to Item 1.01 and the
information provided therein as well as Exhibits 3.8 (Articles of
Incorporation) and 3.9 (Bylaws) to the Recapitalization Agreement
with respect to the Recapitalization and all such information is
incorporated herein by reference.
Immediately
following the Recapitalization, the Company intends to further
amend and restate its Articles of Incorporation to change the name
of the Company from iMedicor, Inc. to iCoreConnect Inc. A form of
the Amended and Restated Articles of Incorporation is attached
hereto as Exhibit VII.
Item
5.07
Submission of Matters to a Vote of Security Holders
The holders of
approximately $6,000,000 aggregate principal amount of convertible
debt of the Company and each stockholder of the Company who is a
party to the Recapitalization Agreement, being the holders of not
less than a majority of the voting power of the Company and the
holders of not less than two thirds of the outstanding shares of
the Series A Preferred Stock and not less than two thirds of the
outstanding shares of the Series B Preferred Stock of the Company,
in the Recapitalization Agreement consented to and approved the
Recapitalization and the Company taking each and every action set
forth in Section 2 of the Recapitalization Agreement and each and
every other action as shall be necessary or desirable for the
Company to carry out the Recapitalization and to take each and
every other action as set forth in Section 2 of the
Recapitalization Agreement or contemplated by the Recapitalization
Agreement. Reference is made to Section 5 of the Recapitalization
Agreement.
Stockholders
holding not less than a majority of the voting power of the Company
signed a written consent dated as of November 1, 2016 approving the
2016 Long-Term Incentive Compensation Plan of the Company and the
2016 Incentive Bonus Compensation Plan of the Company.
Stockholders
holding not less than a majority of the voting power of the Company
signed a written consent dated as of January 3, 2017 approving,
immediately following the Recapitalization, the amendment and
restatement of the Company’s Articles of Incorporation to
change the name of the Company from iMedicor, Inc. to iCoreConnect
Inc.
Item
9.01
Financial Statements and Exhibits
(a)
Exhibits. The
following exhibits are filed with this report:
Exhibit
No.
Description of Exhibit
I
Recapitalization
Agreement dated as of November 1, 2016 among the Company and those
persons’ signatories thereto who are the holders of
convertible debt of the Company and/or the owners of record of
shares of the capital stock of the Company.
II
Current Bridge
Financing Term Sheet (the Fourth Amended and Restated Term
Sheet)
III
Form of Bridge Note
issued to the holders of the Bridge Notes
IV
Form of Conversion
Agreement between the Company and holders of Bridge
Notes
V
2016 Long-Term
Incentive Compensation Plan
VI
2016 Incentive
Bonus Compensation Plan
VII
Form of Amended and
Restated Articles of Incorporation
SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.
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iMEDICOR,
INC.
(Registrant)
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Dated: March 31,
2017
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By:
|
/s/
Robert
McDermott
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Robert
McDermott
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Chief Executive
Officer
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