CONSENT, WAIVER, PAYOFF AND EXCHANGE AGREEMENT
This Consent, Waiver, Payoff and Exchange Agreement, dated as
of April 20, 2001 (this "Agreement") is entered into by Cytomedix, Inc.
("Borrower") and Bel-Cap Delaware, LLC ("Bel-Cap"), Bristol Investment Fund,
Ltd. ("Bristol"), TSENVI, LLC ("TSENVI") and Curative Health Services, Inc.
("Curative"), (Bel-Cap, Bristol, TSENVI and Curative are collectively referred
to herein as the "Lenders").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lenders are parties to a series of
agreements, each dated as of December 26, 2000, including the Securities
Purchase Agreement; Registration Rights Agreement; 10% Secured Convertible
Promissory Notes (each, a "Note" and, collectively, the "Notes"); Warrant
Certificates; Irrevocable Transfer Agent Instructions; Security Agreement;
Subordination Agreement; Stock Pledge Agreement; Guarantee; Grant of Security
Interest; and Intercreditor Agreement (all of said agreements collectively
referred to as the "Transaction Documents");
WHEREAS, Borrower has requested, in connection with the initial closing
(the "Closing") of a financing transaction involving the issuance of certain 12%
convertible promissory notes in the aggregate principal amount of up to $6.5
million (the "Bond Transaction"), as more particularly set forth in the
Borrower's Offering Memorandum dated March 2, 2001, that the Lenders consent to
certain transactions as provided herein;
WHEREAS, Borrower has further requested, in connection with the
issuance of subordinated debt in the aggregate principal amount of $1,249,000
(the "Subordinated Debt Transaction") concurrently with the Closing, that the
Lenders consent to certain transactions as provided herein;
WHEREAS, after giving effect to the transactions contemplated by this
agreement and by separate agreements with third parties: (i) TSENVI and Bel-Cap
shall have received $700,000; (ii) Bristol shall have received $500,000 and
shall have extended the remaining $200,000 principal balance of its Note for a
period of 75 days from the original Maturity Date (as defined in the Note) and
shall also have subordinated its security interest rights under its Note to the
holders of the 12% convertible promissory notes issued in the Bond Transaction;
and (iii) Curative shall have received $633,000, shall have extended the
remaining $1,049,000 principal balance of its Note for a period of 12 months
from the original Maturity Date (as defined in the Note), shall also have
subordinated its security interest rights under its Note to the holders of the
12% convertible promissory notes issued in the Bond Transaction and shall have
entered into an amendment to the royalty agreement dated as of December 26, 2000
between the Borrower and Curative (the "Royalty Agreement"); and
WHEREAS, the Lenders have agreed to provide such consents and waivers
and to effect such extensions and changes of their respective Notes on the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. PARTIAL REPAYMENT OF NOTES.
A. At the Closing, under the Bond Transaction Borrower shall issue 12%
convertible promissory notes in the aggregate principal amount of $1,833,000
yielding net proceeds of $1,424,000. At the Closing, from the net proceeds of
the Bond Transaction, Borrower shall partially repay the Notes to the respective
Lenders in such amounts as are set forth on SCHEDULE A hereto by wire transfer
of immediately available funds as directed by each of the Lenders.
B. At the Closing, from the net proceeds of the Subordinated Debt
Transaction, third parties shall have taken an assignment of the Notes of TSENVI
and Bel-Cap and further to such assignment, Borrower and/or third parties shall
repay the balance of the Notes payable to TSENVI and Bel-Cap and partially repay
the Note to Bristol and the Note to Curative in such amounts as are set forth in
SCHEDULE B hereto by wire transfer of immediately available funds as directed by
each such Lender.
2. EXTENSION AND/OR ASSIGNMENT AND SUBORDINATION OF NOTES. At the Closing,
Bristol and Curative shall extend the term of their respective Notes for periods
of 75 days and 12 months, respectively, from the original Maturity Date with the
aggregate principal amounts remaining as set forth as SCHEDULE C. In addition,
Bristol and Curative will agree to undertake whatever actions are necessary to
subordinate their security interest rights under their respective Notes to the
holders of the 12% convertible promissory notes issued in the Bond Transaction.
At the Closing, the Notes of TSENVI and Bel-Cap shall have been assigned to
third parties, who will extend the term of the said Notes for a period of 12
months and will agree to undertake whatever actions are necessary to subordinate
their security interest rights under said Notes to the holders of the 12%
convertible promissory notes issued in the Bond Transaction.
3. GRANT OF SECURITY INTEREST RIGHTS; RELEASE OF EXISTING SECURITY. At the
Closing, Bristol and Curative shall have subordinated the security interest
rights in their respective Notes to all other holders of the 12% convertible
promissory notes issued in the Bond Transaction, provided that the security
interest rights in Borrower's Patents (as defined in the Royalty Agreement)
shall be subordinate to Curative's security interest rights in the royalty
payments under the royalty agreement and the security interest rights held by
Curative securing such patents and such royalty payment stream.
4. CONSENT. Pursuant to (i) Section 4(e) of the Securities Purchase
Agreement and (ii) Sections 5(f) and 12 of the Notes, the Lenders hereby give
their consent to the Borrower to enter into the Bond Transaction and the
Subordinated Debt Transaction on the terms and conditions set forth in the
transaction documents attached to this Agreement.
5. WAIVER. The Lenders hereby waive the requirements of Section 4(e) of the
Securities Purchase Agreement regarding prior consent to and notice of and
rights to participate in the Bond Transaction, the Subordinated Debt Transaction
and a proposed transaction with Fusion Capital Fund II, LLC ("Fusion"), PROVIDED
that Bristol is not waiving such rights with
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respect to the proposed transaction with Fusion. Furthermore, the Lenders hereby
waive the requirements of Section 4(e) of the Securities Purchase Agreement
regarding prior consent to any Future Offerings (as defined in the Securities
Purchase Agreement) but not the right to notice of and any rights to participate
therein in accordance with the terms of said Section 4(e).
6. ACCELERATION OF EFFECTIVE DATE. As a material inducement to the Lenders
entering into this Agreement, Borrower agrees to submit an acceleration request
to the Securities Exchange Commission regarding its Form SB-2 registration
statement (File No. 333-55818) (the "Registration Statement") no later than
April 30, 2001, which request shall request acceleration of the effective date
of the Registration Statement to not later than May 2, 2001. In the event of the
failure of the Registration Statement to become effective prior to May 2, 2001,
each Lender shall be entitled to the payments described in Section 2(c) of the
Registration Rights Agreement; provided, however, in lieu of using the
Outstanding Principal Amount owed to each Lender to calculate the amount due
thereunder, the amount used shall be equal to number of Warrants held by such
Lender multiplied by the difference between (i) the average of the three (3)
lowest Closing Bid Prices (as defined in the Notes) for one share of the
Company's Common Stock during the twenty (20) trading days prior to the payment
date; less (ii) the Fixed Exercise Price of the Warrant with respect to purchase
one share of said Common Stock (the Outstanding Warrant Value"). The Outstanding
Warrant Value shall then be multiplied times the Applicable Percentage to
determine the amount payable to such Lender under said Section 2(c).
7. LIMITATIONS. The consents and waivers set forth herein shall be limited
precisely as written and shall not be deemed or otherwise construed to: (i)
constitute a waiver of any default by the Borrower of any and all of its other
obligations under the Transaction Documents or any other agreements to which the
Borrower and any such Lender may be a party, except as expressly set forth
herein; or (ii) prejudice any right, power or remedy which the Lenders may now
have or may have in the future under or in connection with the Borrower's breach
of or default under the Transaction Documents (after giving effect to this
Agreement) or any other agreements to which the Borrower and any such Lender may
be a party.
8. CONDITIONS PRECEDENT. The effectiveness of the consent and the waivers
set forth in this Agreement are subject to the satisfaction of the following
conditions precedent:
A. EXECUTION OF THIS AGREEMENT. The Lenders shall have executed and
delivered this Agreement.
B. PAYMENTS AND ISSUANCES BY BORROWER. Borrower shall have made the
payments set forth in Section 1 hereof in the amounts set forth on Schedule A
and the Bond Transaction and the Subordinated Debt Transaction shall have been
duly consummated.
In the event that any of the conditions set forth in this Section 8 are not
satisfied on or prior to April 25, 2001, then this Agreement shall be void and
of no force or effect.
9. CURATIVE CONSENT. Notwithstanding any provision in the Intercreditor
Agreement or Section 12 of the Note issued to Curative to the contrary, Curative
hereby consents to and agrees to the payments to be made by Borrower to the
Lenders pursuant to Section 1(B) hereof in
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consideration for the execution and delivery at the Closing of the First
Amendment to Royalty Agreement in substantially the form of EXHIBIT C hereto.
10. MISCELLANEOUS.
A. CAPTIONS. Section captions used in this Agreement are for
convenience only, and shall not affect the construction of this Agreement.
B. GOVERNING LAW. This Agreement shall be a contract made under and
governed by the laws of the State of Illinois, without regard to conflict of
laws principles. Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
C. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Agreement.
D. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon all of
the parties hereto and their respective successors and assigns, and shall inure
to the sole benefit of the parties and their successors and assigns.
E. CONTINUED EFFECTIVENESS. Notwithstanding anything contained herein,
the terms of this Agreement are not intended to and do not serve to effect a
novation as to any of the Transaction Documents other than those specifically
earmarked in Section 3, and each of the Transaction Documents other than those
specifically earmarked shall otherwise remain in full force and effect.
[Signature page follows]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the date first above written.
Cytomedix, Inc., as the Borrower Bel-Cap Delaware, LLC, as a Lender
By: By:
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Its: Its:
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Bristol Investment Fund, Ltd, as a Lender
By:
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Its:
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TSENVI, LLC, as a Lender
By:
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Its:
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Curative Health Services, Inc.,
as a Lender
By:
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Its:
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SCHEDULE A
[PRO RATA INTEREST IN NET PROCEEDS OF BOND TRANSACTION]
Bristol Investment Fund, Ltd. $264,000
Bel-Cap Delaware, LLC $264,000
TSENVI, LLC $264,000
Curative Health Services, Inc. $633,000
SCHEDULE B
[PAYMENTS IN SUBORDINATED DEBT TRANSACTION]
Bristol Investment Fund, Ltd. $236,000
Bel-Cap Delaware, LLC $436,000
TSENVI, LLC $436,000
SCHEDULE C
[BALANCE OF BRISTOL AND CURATIVE NOTES CARRIED FORWARD]
Bristol Investment Fund, Ltd. $200,000
Curative Health Services, Inc. $1,049,000