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Exhibit 10.30
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT OR SUCH LAWS.
BIO-PLEXUS, INC.
7.5% SECURED NOTE
No. R-1 Dated as of October 21, 1999
$3,000,000
FOR VALUE RECEIVED, the undersigned, BIO-PLEXUS, INC. (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Connecticut, hereby unconditionally promises to pay to the order of Appaloosa
Investment Limited Partnership I, L.P., or its registered assigns (the
"Holder"), the principal sum of THREE MILLION DOLLARS ($3,000,000) in
immediately available lawful money of the United States of America, together
with interest on the unpaid balance hereof, in accordance with the terms and
conditions set forth below.
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1. Payment.
1.1. Principal. The entire unpaid principal balance of this Note
shall be paid in full by the Company on the Due Date.
1.2. Home Office Payment. The Company will pay to each Holder or any
transferee thereof all sums becoming due on this Note at the account/address to
be specified by such Holder or transferee for such purpose by notice to the
Company, by wire transfer of immediately available funds, or at such other
address or by such other method as such Holder or transferee shall have
designated by notice to the Company.
1.3. Prepayment. Subject to Section 8.8, (i) upon at least ten days
prior notice to the Holder, this Note may be prepaid, without premium or
penalty, in whole or in part by the Company at any time and from time to time
and (ii) concurrently with the receipt of any proceeds received by the Company
in respect of any sale of Debentures pursuant to section 1.4 of the Subscription
Agreement, the Company shall make a mandatory prepayment of the Note in an
amount equal to 100% of such proceeds; provided, that, upon any prepayment under
(i) or (ii) above, all accrued and unpaid interest shall be paid on the
principal of the Note being repaid.
1.4. Interest. The unpaid principal balance of this Note outstanding
at any time shall accrue interest, at a rate per annum equal to 7.5%. Interest
shall begin to accrue from the date hereof and shall be computed on the basis of
a year of 360 days and actual days elapsed and shall be payable in one lump sum
on the Due Date.
1.5. Default Interest. If the Company shall fail to pay any principal
amount of, or interest on, or other amount payable under, this Note when due and
payable (whether at the Due Date, the Acceleration Date or otherwise), such
principal amount, interest or other amount shall thereafter bear interest, until
paid in full (after as well as before judgment) to the extent lawful, at a rate
per annum equal to 12%. The Company shall pay such default interest in cash on
demand from time to time.
1.6. Limitation on Interest. No provision of this Note shall require
the payment or permit the collection of interest in excess of the maximum rate
which is permitted by Law. If any such excess interest is provided for herein,
or shall be adjudicated to be so provided for, then the Company shall not be
obligated to pay such interest in excess of the maximum rate permitted by Law,
and the right to demand payment of any such excess interest is hereby waived,
any other provisions in this Note to the contrary notwithstanding.
2. Deliveries by the Company. Simultaneously with the execution of this
Note, the Company is delivering to the Holder the following:
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(a) an opinion of the Company's counsel, dated as of the date hereof,
addressed to such Holder in the form of Exhibit 2(a) hereto;
(b) a good standing certificate for the Company, dated no earlier than
seven days prior to the date hereof, from the State of Connecticut;
(c) a copy of the resolutions of the Board of Directors authorizing
the execution of each of the Transaction Documents and the performance of the
transactions contemplated by the Transaction Documents which shall be certified
as true, correct and effective as of the date hereof by an officer of the
Company;
(d) a duly executed copy of the Security Agreement in the form
attached hereto as Exhibit 2(d), and copies of any other Collateral
Documentation including Financing Statements required to perfect the Holder's
security interest in the Collateral;
(e) duly executed warrants to purchase 1,000,000 shares of Common
Stock in the aggregate with an exercise price of $3 per share in the form
attached hereto as Exhibit 2(e)(i) (the "$3 Warrants") and duly executed
warrants to purchase 1,500,000 shares of Common Stock in the aggregate with an
exercise price of $5 per share in the form attached hereto as Exhibit 2(e)(ii)
(the "$5 Warrants", together with the $3 Warrants, the "Warrants"); and
(f) the Holder's costs and expenses (including the reasonable fees and
expenses of its counsel, Fried, Frank, Harris, Shriver & Jacobson, in an
aggregate amount not to exceed $50,000 which amounts shall be deducted from the
proceeds of this Note and shall be wired transferred by the Holder, on behalf of
the Company, to one or more accounts designated by such party on or prior to the
date hereof) incurred in connection with the transactions contemplated hereby.
3. Representations and Warranties of the Company. The Company represents
and warrants to the Holder as follows:
3.1. Organization; Subsidiaries. (a) The Company is a corporation duly
organized and existing in good standing under the laws of the State of
Connecticut and has the corporate power to own its property and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary and where the failure to so qualify could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Company does not have any Subsidiaries. Except as set forth on
Schedule 3.1(b), the Company does not own, directly or indirectly, or have the
right or obligation to acquire, any interest in any business
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association or other Person.
3.2. Due Authorization. The Company has all right, power and authority
to enter into, deliver and perform the Transaction Documents to which it is a
party and to consummate the transactions contemplated thereby. The execution and
delivery of each Transaction Document by the Company and the performance by it
of the transactions contemplated thereby (including, without limitation, the
issuance and sale of this Note and the Warrants and issuance of shares of Common
Stock upon exercise of the Warrants) and compliance by the Company with all the
provisions of each Transaction Document (as applicable) has been duly authorized
by all requisite corporate proceedings on the part of the Company. Each of the
Transaction Documents has been duly executed and delivered on behalf of the
Company, and each such Transaction Document constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its respective terms, except to the extent that such enforceability (i) may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally or (ii) is subject to
general principles of equity. The shares of Common Stock issuable upon exercise
of the Warrants have been validly reserved for issuance, and upon issuance, will
be validly issued and outstanding, fully paid and nonassessable.
3.3. Capitalization. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock, of which, as of the date
hereof, 13,643,308 shares were issued and outstanding, 579,650 shares were
reserved for issuance upon the exercise of outstanding stock options pursuant to
the Company's option plans, 1,395,386 shares were reserved for issuance upon the
exercise of the outstanding warrants, and 2,472,876 shares were reserved for
issuance upon the conversion of certain 6% Convertible Debentures due 2004 and
(ii) 3,000,000 shares of Preferred Stock, no par value (the "Preferred Stock"),
of which, as of the date hereof, no shares were issued and outstanding. All of
the outstanding shares of Common Stock are validly issued and are fully paid and
nonassessable. No class of Capital Stock of the Company is entitled to
preemptive rights. Except as set forth on Schedule 3.3, there are no outstanding
options, warrants, preemptive rights, subscription rights, calls or commitments
of any character whatsoever relating to, or securities or rights convertible
into, shares of any class of Capital Stock of the Company, or Contracts, by
which the Company is or may become bound to issue additional shares of its
Capital Stock or options, warrants or other rights to purchase or acquire any
shares of its Capital Stock. Except as set forth on Schedule 3.3, no warrants,
bonds, debentures, notes or other Indebtedness or other security having the
right to vote (or convertible into or exercisable for securities having the
right to vote) on any matters on which stockholders may vote were issued or
outstanding. Except as set forth on Schedule 3.3 or as contemplated by the
Transaction Documents, the Company is not a party to, and, to the Company's best
knowledge, there are, and immediately after the Closing, there will be, no
agreement,
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restriction or encumbrance (such as a preemptive or similar right of first
refusal, right of first offer, proxy, voting agreement, voting trust,
registration rights agreement, shareholders' agreement, etc., whether or not the
Company is a party thereto) with respect to the purchase, sale or voting of any
shares of Capital Stock of the Company (whether outstanding or issuable upon
conversion, exchange or exercise of outstanding securities) or other securities
of the Company pursuant to any provision of Law, the Certificate of
Incorporation or By-Laws, any agreement or otherwise. Except as set forth on
Schedule 3.3, no person has the right to nominate or elect one or more directors
of the Company. Immediately following the transactions contemplated hereby, the
Company's capitalization will be as set forth on Schedule 3.3. The Company has
not declared or paid any dividend or made any other distribution of cash, stock
or other property to its stockholders since January 1, 1996.
3.4. SEC Reports Correspondence. The Company has filed all proxy
statements, reports and other documents required to be filed by it under the
Exchange Act from and after January 1, 1995 (collectively, the "SEC Reports").
Each SEC Report was in compliance in all material respects with the requirements
of its respective report form and did not on the date of filing contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and as of the date
hereof there is no fact or facts not disclosed in the SEC Reports which relate
specifically to the Company and which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.5. Financial Statements. The financial statements (including any
related schedules and/or notes) included in the SEC Reports have been prepared
in accordance with GAAP consistently followed (except as indicated in the notes
thereto) throughout the periods involved and fairly present the consolidated
financial condition, results of operations, cash flows and changes in
stockholders' equity of the Company as of the respective dates thereof and for
the respective periods then ended (in each case subject, as to interim
statements, to changes resulting from year-end adjustments, none of which were
material in amount or effect). Except as set forth on Schedule 3.5, the Company
is not subject to any Liabilities, except (i) Liabilities in the respective
amounts reflected or reserved against in the Company's balance sheet as of
December 31, 1998 included in the SEC Reports or (ii) Liabilities incurred in
the ordinary course of business since
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December 31, 1998 which could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
3.6. No Material Adverse Change. Since December 31, 1998, no event has
occurred or failed to occur which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.7. Intellectual Property Rights. Schedule 3.7 sets forth a complete
and correct list of all Intellectual Property of the Company (the "Company
Intellectual Property"). Except as set forth on Schedule 3.7, the Company owns
and possesses all right, title and interest in, or possesses adequate licenses
to (without the making of any payment to others or the obligation to grant
rights to others in exchange) all the Company Intellectual Property, free and
clear of any Liens, licenses or other restrictions. The Company has the right to
require the applicant of any Company Intellectual Property which is an
application, including but not limited to patent applications, trademark
applications, service mark applications, copyright applications, or mask work
applications, to transfer ownership to the Company of the application and of the
registration once it issues. All registered patents, trademarks, service marks
and copyrights listed on Schedule 3.7 are valid and subsisting and in full force
and effect. The Company Intellectual Property is all the Intellectual Property
that is necessary for the ownership, maintenance and operation of the Company's
properties and assets and the Company has the right to use all of the Company
Intellectual Property in all jurisdictions in which the Company conducts or
proposes to conduct its business, and the consummation of the transactions
contemplated hereby will not alter or impair any such rights. The Company has
never agreed to indemnify any person for or against any interference,
infringement, misappropriation or other conflict with respect to any Company
Intellectual Property. Except as set forth in Schedule 3.7, no third party has
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Company Intellectual Property. The Company has taken all reasonably
necessary and desirable action to maintain and protect each item of Company
Intellectual Property. The validity, ownership, enforceability, use or legality
of the Company Intellectual Property is not being questioned or opposed in any
Litigation or Order to which the Company or any Person who has granted a license
of Intellectual Property to the Company, is a party or subject, nor, to the
knowledge of the Company, is any such Litigation or Order threatened. The
conduct of the Company as currently conducted and as currently proposed to be
conducted does not and will not infringe, interfere with, misappropriate or
otherwise come into conflict with any Intellectual Property of any other Person,
and the Company has not received any charge, complaint, claim, demand or notice
alleging any such infringement, interference, misappropriation or conflict
(including any claim that the Company must license or refrain from using any
Intellectual Property of any other Person). Except as set forth on Schedule 3.7,
the Company has not granted any licenses of Intellectual Property to any Person.
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3.8. Existing Indebtedness; Future Liens. (a) Schedule 3.8 sets forth
a complete and correct list of all outstanding Indebtedness of the Company as of
the date hereof. Except as set forth on Schedule 3.8, the Company has not
defaulted and no waiver of default is currently in effect, in the payment of any
principal or interest on any such Indebtedness and no event or condition exists
with respect to any such Indebtedness that would permit (or that with notice or
the lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment. The Company has not received any notice
from any Person declaring or threatening to declare any Indebtedness owed by the
Company to such Person due and payable prior to the stated maturity of such
Indebtedness or before its regularly scheduled dates of payment.
(b) The Company has not agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to any Lien
(other than Permitted Liens).
3.9. Litigation. (a) Except as set forth on Schedule 3.9, there is no
Litigation pending or, to the knowledge of the Company, threatened against the
Company or any of its properties or assets by or before any court, arbitrator or
other Governmental Entity.
(b) The Company is not in default under or in breach of any Order of
any court, arbitrator or other Governmental Entity, and the Company is not
subject to or a party to any Order of any court, arbitrator or other
Governmental Entity arising out of any claim, demand, notice, action, suit or
proceeding under any Law.
3.10. Compliance with Laws. The Company is in compliance with all
applicable Laws including, without limitation, all rules, regulations and other
Laws of the Food and Drug Administration relating to the design, development,
manufacturing, sales and distribution of safety medical products and
accessories, except where the failure to comply could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. No
Order has been issued nor any Law enacted which prevents, nor does any Law
prohibit the consummation of the transactions contemplated by any of the
Transaction Documents.
3.11. Offering of the Securities. In connection with offering of this
Note and the issuance of the Warrants, neither the Company nor any Person acting
on its behalf has offered the Note, the Warrants or any similar securities of
the Company for sale to, solicited any offers to buy the Note, the Warrants or
any similar securities of the Company from or otherwise approached or negotiated
with respect to the Company with any Person other than the Purchasers and other
"accredited investors" (as defined in Rule 501(a) under the Securities Act).
Neither the Company
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nor any Person acting on its behalf has taken or, except as contemplated hereby
will take any action (including, without limitation, any offering of any
securities of the Company under circumstances which would require the
integration of such offering with the offering of the Note and the issuance of
the Warrants under the Securities Act) which could reasonably be expected to
subject the offering, issuance or sale of the Note and the Warrants to the
registration requirements of Section 5 of the Securities Act or violate the
provisions of any securities, "blue sky", or similar law of any applicable
jurisdiction.
3.12. Solvency. The Company is not, and after giving effect to the
issuance of this Note and the application of the proceeds therefrom will not be,
insolvent within the meaning of Title 11 of the United States Code or any
comparable state law provision.
3.13. Security Documents. Except as set forth in Schedule 3.13, upon
proper filing of the Financing Statements (or assignments thereof) in the
offices of the Secretary of State of Connecticut with respect to the Company (or
assignments thereof) and in the locations identified in the Security Agreement,
the Liens granted under the Transaction Documents shall constitute a fully
perfected first priority security interest in all right, title and interest of
the Company in and to the personal property therein prior to any other security
interests against such property or interests therein.
3.14. Disclosure. Neither any Transaction Document nor any Schedule
hereto and thereto, nor any certificate furnished to any Holder by or on behalf
of the Company in connection with the transactions contemplated hereby and
thereby, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not misleading. The financial forecasts furnished by the Company to the
Holder has been prepared in good faith based upon reasonable assumptions. There
is no fact or information relating to the Company that could reasonably be
expected to be material to the Company that has not been disclosed to the
Holder.
4. Covenants of the Company. The Company covenants that for so long as this
Note is outstanding or any amounts are due and unpaid hereunder:
4.1. Limitation on Indebtedness. The Company shall not, and shall not
permit any of its Subsidiaries to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or indirectly liable
for the payment of any Indebtedness (excluding Permitted Indebtedness and
Indebtedness which is a Guaranty of an Indebtedness of the Company or any of its
Subsidiaries that is otherwise Permitted
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Indebtedness).
4.2. Limitation on Encumbrances. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or otherwise suffer to exist or cause or otherwise suffer to become effective
any Lien in or on any right, title or interest to any property (real or
personal) that constitutes all or any portion of the Collateral (a "Restricted
Encumbrance," which term excludes the Lien created in favor of the Holder)
unless such Restricted Encumbrance is a Permitted Lien.
4.3. Limitation on Dividends; Stock Issuances. The Company shall not
offer or issue any shares of Preferred Stock or Common Stock for any purpose
whatsoever, except for (i) shares of Common Stock issuable upon the exercise of
the Warrants and (ii) pursuant to Schedule 4.3. The Company shall not declare
any dividends on any shares of its Capital Stock, or make any payment on account
of, or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, retirement, exchange or other acquisition of any shares of its
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash,
securities, property or in obligations of the Company or any of its
Subsidiaries.
4.4. Stockholders' Meetings. As promptly as practicable hereafter but
in no event no later than December 31, 1999, the Company shall take all action
necessary, in accordance with applicable Law and its Certificate of
Incorporation and By-laws, to convene a special meeting of its stockholders (the
"Company Meeting") for the purpose of considering and voting upon the approval
of the Rollover Transactions, including, without limitation, the issuance and
sale of the Convertible Notes, the Shares and the Rollover Warrant, and any
other transactions contemplated in furtherance thereof under applicable Law. The
Company will use its best efforts to obtain such stockholders' approval,
including, without limitation, taking all lawful actions to solicit such
approval. The Board of Directors will recommend that its stockholders vote in
favor of and approve the Rollover Transactions, including, without limitation,
the issuance and sale of the Convertible Notes, the Shares and the Warrants, and
any other transactions contemplated in furtherance thereof under applicable Law.
4.5. Proxy Statement. The Company shall promptly prepare and file with
the SEC as soon as practicable the Proxy Statement, which shall comply as to
form in all material respects with the applicable provisions of the Exchange Act
and the rules and regulations thereunder. The Company shall use its best
efforts, and the Holder will cooperate with the Company, to have the Proxy
Statement cleared by the SEC as promptly as practicable. The Company shall, as
promptly as practicable, provide copies of any written
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comments received from the SEC with respect to the Proxy Statement to the Holder
and advise the Holder of any oral comments with respect to the Proxy Statement
received from the SEC. The Holder agrees that none of the information supplied
or to be supplied by it for inclusion or incorporation by reference in the Proxy
Statement and each amendment or supplement thereto, at the time of mailing
thereof and at the time of the Company Meeting, will contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company agrees
that none of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Proxy Statement and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the Company Meeting, will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Company will provide the Holder with a reasonable
opportunity to review and comment on the Proxy Statement and any amendment or
supplement thereto prior to filing such with the SEC, and will provide the
Holder with a copy of all such filings made with the SEC. No amendment or
supplement to the information supplied by the Holder for inclusion in the Proxy
Statement shall be made without the approval of such Holder, which approval
shall not be unreasonably withheld or delayed.
4.6. Operations in Accordance with the Business Plan. The business and
operations of the Company and its Subsidiaries shall be conducted in accordance
with a business plan of the Company approved by the Holder.
4.7. Proceeds. The proceeds of the sale of this Note shall be used for
the purposes set forth on Schedule 4.7. No part of the proceeds from the sale of
this Note hereunder shall be used, directly or indirectly, for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective meanings of
Regulation U of the Board of Governors of the Federal Reserve System or for any
purpose which violates or would be inconsistent with the provisions of
Regulations T, U or X of said Board.
4.8. Additional Offerings of Securities. The Company shall not seek
financing from any third party consisting of an issuance of Equity Securities
without the written consent of the Holder (which may be withheld at the Holder's
absolute discretion).
4.9. Existence. Neither the Company nor any of its Subsidiaries shall
enter into any transaction for the acquisition of, or merger or consolidation or
amalgamation with, any other Person (including any Subsidiary or Affiliate of
the Company or any of its Subsidiaries), or enter into any transaction or series
of transactions that could result in a Change of Control, or sell, transfer or
otherwise dispose of
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("Transfer") all or substantially all of its assets in one transaction or series
of transactions to any Person, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or make any material change in the
present method of conducting business or engage in any type of business other
than of same general type now conducted by it. The Company shall not, and shall
not permit any of its Subsidiaries to, Transfer any property or assets, unless
the property or asset that is the subject of such Transfer constitutes (i)
inventory held for sale, (ii) marketable securities available for sale, or (iii)
real estate, equipment, fixtures, supplies or materials no longer required in
the operation of the business of the Company or such Subsidiary or that is
obsolete, and, in the case of any Transfer described in clause (i) or (iii),
such Transfer is in the ordinary course of business consistent with past
practice.
4.10. Access. Subject to a written confidentiality agreement, the
Company shall, and shall cause the Company's officers, directors, employees and
agents to, afford to the Holder and each of its Affiliates, officers, directors,
employees, counsel, investment bankers, accountants, advisors, agents and other
representatives (collectively, "Representatives"), reasonable access during
normal business hours to its officers, employees, accountants, agents,
properties, offices and other facilities, and to the books and records of the
Company (including, without limitation, all interim financial statements, tax
returns and work papers of its accountants), legal documents of the Company, and
shall furnish the Holder and its Representatives all financial, operating,
technical and other data and information which any of them may from time to time
reasonably request.
4.11. Release of Liens. The Company shall take all actions necessary
to promptly (but in no event later than seven days from the date hereof) file
necessary documentation to remove evidence of any prior liens and/or security
interests on any Company Intellectual Property (other than security interests on
any Company Intellectual Property granted to Holder in connection with the
transactions contemplated hereby), including, without limitation, all prior
liens and/or security interests on any Company Intellectual Property on record
with the United States Patent and Trademark Office.
4.12. 6% Convertible Debentures due 2004. The Company shall not
exercise its Put Option without the written consent of the Holder.
5. Events of Default and Remedies.
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5.1. Events of Default and Remedies. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any Order of any court or any Order, rule or
regulation of any Governmental Entity) (or if the giving of notice or lapse of
time or both is required, then, prior to such notice or lapse of time, a
"Default"):
(a) default in the payment of any interest upon this Note
when it becomes due and payable; or
(b) default in the payment of any principal of this Note when it
becomes due and payable; or
(c) default in the performance of any agreement or covenant in,
or provision of, this Note or the other documents executed and delivered in
connection with this Note (including any other Transaction Document) and to
which the Company or any of its Subsidiaries is a party (other than a
covenant or a default in whose performance is elsewhere in this Section
specifically dealt with) which is not cured within thirty (30) days, or any
representation or warranty made in any document executed and delivered in
connection with this Note (including any other Transaction Document) was
false in any material respect on the date as of which made or deemed made;
or
(d) the Company Meeting shall not have been held on or prior to
December 31, 1999 or the approval of the Company's stockholders described
in Section 4.4 shall not have been obtained at the Company Meeting on or
prior to December 31, 1999; or
(e) the Company or any of its Subsidiaries shall: (A) default in
any payment of principal of or interest on any Indebtedness (other than
this Note and any intercompany debt) or in the payment of any Guarantee,
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness or Guarantee was created; or (B) default in
the observance or performance of any other agreement or condition relating
to any such Indebtedness or Guarantee or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with
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the giving of notice if required, such Indebtedness to become due prior to
its stated maturity, any applicable grace period having expired, or such
Guarantee to become payable, any applicable grace period having expired,
provided that the aggregate principal amount of all such Indebtedness and
Guarantee which would then become due or payable as described in this
Section 5.1(e) would equal or exceed $100,000; or
(f) a final judgment or judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company
or any of its Subsidiaries and such remains undischarged for a period
(during which execution shall not effectively be stayed) of 60 days,
provided that the aggregate of all such judgments that are not covered by
insurance under which the Company or a Subsidiary is a beneficiary exceeds
$100,000, or the Holder shall determine that any regulatory body having
jurisdiction over the Company or any of its Subsidiaries including, without
limitation, the SEC, shall have taken or proposed to take any action that
the Holder believes could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or that adversely affects the
Holder's security interest in the Collateral; or
(g) the Company or any of its Subsidiaries (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing against
it of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of
any jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
(h) a court or other Governmental Entity of competent
jurisdiction enters an Order appointing, without consent by the Company or
any of its Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or insolvency law
of any jurisdiction, or ordering the dissolution, winding-up or liquidation
of the Company or any of its Subsidiaries, or any such petition shall be
filed against the Company or any of its Subsidiaries and such petition
shall not be
14
dismissed within 60 days; or
(i) a court or other Governmental Entity of competent
jurisdiction enters a final judgment holding this Note or any of the
documents delivered in connection with this Note (including any other
Transaction Document) to be invalid or unenforceable and such judgment
remains unstayed and in effect for a period of 20 consecutive days; or the
Company or any of its Subsidiaries shall assert, in any pleading filed in
such a court, that this Note or any of the documents delivered in
connection with this Note (including any other Transaction Document) are
invalid or unenforceable; or
(j) any material provision of any Transaction Document shall for
any reason cease to be valid, binding and enforceable in accordance with
its terms (or the Company or any of its Subsidiaries shall challenge the
enforceability of any Transaction Document or shall assert in writing, or
engage in any action or inaction based on any such assertion, that any
provision of any of the Transaction Documents has ceased to be or otherwise
is not valid, binding and enforceable in accordance with its terms), or any
first priority security interest created under any Transaction Document
shall cease to be a valid and perfected security interest, or Lien in any
of the Collateral purported to be covered thereby; or
(k) the Company or any of its Subsidiaries shall default in the
payment of any amounts due pursuant to the terms of any document executed
and delivered by the Company or such Subsidiary in connection with this
Note (other than payments elsewhere in this Section specifically dealt
with).
5.2. Acceleration of Maturity. If any Event of Default (other than an
Event of Default specified in clause (g), (h), (i) or (j) of Section 5.1) shall
have occurred and be continuing, the Holder may, by notice to the Company,
declare the entire unpaid principal amount of this Note, plus all accrued and
unpaid interest thereon (together with the Holder's costs and expenses pursuant
to Section 8.8) , to be immediately due and payable, and upon such declaration
all of such amount shall be immediately due and payable (the "Declared
Acceleration Date"), in each and every case without presentment, demand, protest
or further notice, all of which are hereby waived, anything in this Note to the
contrary notwithstanding; provided that if an Event of Default under clause (g),
(h), (i) or (j) of Section 5.1 shall have occurred, the entire unpaid principal
amount of this Note (to the full extent permitted by applicable Law), plus all
accrued and unpaid interest thereon (together with the Holder's costs and
expenses pursuant to Section 8.8), shall immediately become due and payable (the
"Automatic Acceleration Date"), without any declaration and without presentment,
demand, protest or further notice, all
15
of which are hereby waived, anything in this Note to the contrary
notwithstanding.
5.3. Other Remedies. If any Event of Default shall have occurred and
be continuing, from and including the date of such Event of Default to but not
including the date such Event of Default is cured or waived, each Holder may
enforce its rights by suit in equity, by action at law, or by any other
appropriate proceedings, whether for the specific performance (to the extent
permitted by Law) of any covenant or agreement contained in this Note or in aid
of the exercise of any power granted in this Note, and each Holder may enforce
the payment of any Note held by such Holder and any of its other legal or
equitable rights.
5.4. Conduct; No Waiver; Collection Expenses. No course of dealing on
the part of the Holder, nor any delay or failure on the part of the Holder to
exercise any of its rights, shall operate as a waiver of such right or otherwise
prejudice the Holder's rights, powers and remedies. If the Company fails to pay,
when due, any payment in respect of this Note, the Company will pay such Holder,
to the extent permitted by Law, on demand, all costs and expenses incurred by
such Holder in the collection of any amount due in respect of this Note
hereunder, including reasonable legal fees incurred by such Holder in enforcing
its rights hereunder.
5.5. Annulment of Acceleration. If a declaration is made in accordance
with Section 5.2, then and in every such case, the Holder may, by an instrument
delivered to the Company, annul such declaration and the consequences thereof.
5.6. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Holder under this Note is intended to be exclusive of any other
right or remedy, and every right and remedy shall be cumulative and in addition
to every other right and remedy given hereunder or now and hereafter existing
under applicable Law. Every right and remedy given by this Note or by applicable
Law to the Holder may be exercised from time to time and as often as may be
deemed expedient by such Holder.
6. Rollover.
6.1. Rollover. Within five Business Days after the stockholders'
approval referred to in Section 4.4 has been obtained (the "Rollover Date"),
subject to Section 6.2, the Company and the Purchasers shall enter into (i) the
Convertible Note Purchase Agreement substantially in the form attached hereto as
Exhibit 6.1(i) (the "Convertible Note Purchase Agreement"), (ii) a warrant to
purchase 1,500,000 shares of Common Stock with an exercise price of $7
substantially in the form attached hereto as Exhibit 6.1(ii) (the "Rollover
Warrant"), (iii) the Registration Rights Agreement substantially in the form
attached hereto
16
as Exhibit 6.1(iii) (the "Rollover Registration Rights Agreement") and (iv) the
Convertible Note Security Agreement substantially in the form attached hereto as
Exhibit 6.1(iv) (the "Convertible Note Security Agreement"); provided, however,
that if a Governmental Entity shall determine that any of the transactions
contemplated by the Rollover Transactions violate any applicable rules or
regulations of such Governmental Entity, the Holder shall, at the Holder's sole
discretion, either (i) abandon the Rollover Transactions or (ii) modify the
structure of the Rollover Transactions in a manner to comply with such rule or
regulation. Concurrently with the foregoing, subject to Section 6.2, the Company
shall issue 250,000 shares of Common Stock (the "Shares") to the Holder or one
or more of its Affiliates at $3.00 per share.
6.2. Conditions to Rollover. (a) The obligation of each party to
consummate the Rollover Transactions shall be subject to there having been no
enactment, issuance, promulgation, enforcement or entering into of any Law by a
Governmental Entity that effects or has the effect of making any of the Rollover
Transactions illegal or otherwise restraining or prohibiting such transactions.
(b) The obligation of the Purchasers to consummate the Rollover
Transactions shall be subject to the following conditions:
(i) no change (or any condition, event or development
involving a prospective change) shall have occurred or be threatened
that could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect;
(ii) no Default shall have occurred and be continuing;
(iii) concurrently with the consummation of the Rollover
Transactions, the principal amount of this Note, plus all accrued and
unpaid interest on this Note, shall have been repaid in full;
(iv) the final forms of the Convertible Note Purchase
Agreement, the Rollover Warrant, the Rollover Registration Rights
Agreement and the Convertible Note Security Agreement shall be
satisfactory to the Purchasers in their sole discretion;
(v) the Company shall have delivered to the Purchasers any
document, instrument or certificate required to be delivered by the
Company pursuant to the Rollover Transaction Documents; and
(vi) each Purchaser shall have received such other
instruments and documents reasonably requested by such Purchaser.
(c) The obligation of the Company to consummate the
17
Rollover Transactions shall be subject to the delivery by each Purchaser to the
Company of any document, instrument or certificate required to be delivered by
such Purchaser pursuant to the Rollover Transaction Documents.
6.3. Failure to Consummate the Rollover Transactions. Notwithstanding
anything herein to the contrary, if the Company shall fail to consummate the
Rollover Transactions described in Section 6.1 for any reason whatsoever, then
the Company's sole liability to the Holder will be the: (i) payment of the
Holder's costs and expenses pursuant to Section 8.8; (ii) payment of principal
and interest under this Note (and default interest, if applicable); and (iii)
execution of the Registration Rights Agreement by the Company pursuant to
Section 6.4. In addition, for the avoidance of doubt, the Company acknowledges
and agrees that the Warrants are fully vested as of the date hereof and that
they shall remain in full force and effect even if the Rollover Transactions are
not consummated for any reason.
6.4. Registration Rights Agreement. In the event the approval of the
Company's stockholders described in Section 4.4 shall not have been obtained at
the Company Meeting on or prior to December 31, 1999, or in the event that the
Rollover Transactions shall not have occurred on or prior to the Rollover Date,
the Company shall immediately execute the Registration Rights Agreement attached
hereto as Exhibit 6.3 (the "Registration Rights Agreement") and deliver such
executed Registration Rights Agreement by fax to the Holder.
7. Interpretation.
7.1. Definitions.
"$3 Warrants" shall have the meaning ascribed thereto in Section
1.4(vii).
"$5 Warrants" shall have the meaning ascribed thereto in Section
1.4(vii).
"Acceleration Date" shall mean the Declared Acceleration Date or the
Automatic Acceleration Date, as the case may be.
"Action" shall have the meaning ascribed thereto in Section
8.1(b)(i).
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act. "Affiliate" shall also include partners of a Person.
Notwithstanding the foregoing, "Affiliate" shall not include the limited
partners of the Holder or any limited partners of a limited
18
partner of the Holder.
"Automatic Acceleration Date" shall have the meaning ascribed thereto
in Section 5.2.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by Law or executive order to close.
"Capital Stock" means, in the case of the Company, any and all shares
(however designated) of the capital stock of the Company now or hereafter
outstanding.
"Capitalized Lease" shall mean, with respect to any Person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the lessee's
or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and include,
as of any date as of which the amount thereof is to be determined, the amount of
the liability capitalized or disclosed (or which should be disclosed) in a
balance sheet of such Person in respect of a Capitalized Lease of such Person.
"Change of Control" shall mean
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30% or more of the combined
voting power of the then outstanding Voting Securities of the Company,
but excluding, for this purpose, any such acquisition by (i) the
Company or any Subsidiary), (ii) any Benefit Plan (or related trust)
of the Company or any Subsidiary or (iii) the Holder or any of its
Affiliates or in connection with the Rollover Transactions; or
(b) the Incumbent Board shall cease for any reason to
constitute at least 50% of the members of the Board.
"Collateral" means all real and personal property and interests in
real and personal property including, without limitation, Intellectual Property,
rights under leases and royalty rights and agreements, now owned or hereafter
acquired by the Company or its Subsidiaries in or upon which a Lien is granted
or made under the Collateral Documentation.
19
"Collateral Documentation" means the Security Agreement, the Financing
Statements, and all other deeds of trust, assignments, endorsements, pledged
stock, collateral assignments and other instruments, documents, agreements or
conveyances at any time creating or evidencing Liens or assigning Liens to the
Holder, to secure the obligations of the Company or any of its Subsidiaries
under this Note and the Registration Rights Agreement.
"Common Stock" shall mean the Common Stock, no par value, of the
Company.
"Company" shall have the meaning ascribed thereto in the
Preamble.
"Company Meeting" shall have the meaning ascribed thereto in
Section 4.4.
"Contracts" shall mean all agreements, contracts, leases, purchase
orders, arrangements, commitments and licenses to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound.
"Convertible Note Purchase Agreement" shall have the meaning ascribed
thereto in Section 6.1.
"Convertible Note Security Agreement" shall have the meaning ascribed
thereto in Section 6.1.
"Debentures" shall have the meaning ascribed thereto in the
Subscription Agreement.
"Declared Acceleration Date" shall have the meaning ascribed thereto
in Section 5.2.
"Default" shall have the meaning ascribed thereto in Section 5.1.
"Due Date" shall mean the earlier of the Maturity Date and the
Acceleration Date, as applicable.
"Environmental Laws" means any and all Laws, permits, concessions,
grants, franchises, licenses, agreements or governmental restrictions relating
to pollution and the protection of the environment or the release of any
materials into the environment, including but not limited to those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
"Equity Interests" means any capital stock, partnership interest,
joint venture interest or other equity interest or warrants, options or other
rights to acquire any capital stock, partnership interest, joint venture
interest or other equity interest.
"Equity Securities" shall mean with respect to any Person, shares of
capital stock or other equity interest of such Person, and any rights, options
or warrants to purchase stock or other securities exchangeable for or
convertible into capital stock of or other equity interest in the Company.
20
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" shall have the meaning ascribed thereto in
Section 5.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include reference to the comparable section, if any, of any such successor
federal statute.
"Financing Statements" means Form UCC-1 financing statements to be
filed in all jurisdictions necessary or desirable in order to perfect the
Holder's security interest in the Collateral and shall include any Form UCC-1
financing statements assigned to the Holder and filings to be made in the U.S.
Patent and Trademark Office and the U.S. Copyright Office.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Governmental Entity" shall mean any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory or self-regulatory body or authority.
"Guaranty" or "Guarantee" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of any Person guaranteeing, or in effect
guaranteeing, any Indebtedness, dividend or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through an agreement,
contingent or otherwise, by such Person: (i) to purchase such Indebtedness or
obligation or any property or assets constituting security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (iii) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of such Indebtedness or obligation, or (iv) otherwise to assure the
owner of the Indebtedness or obligation of the primary obligor against loss in
respect thereof. For the purposes of any computations made under this Note, a
Guarantee in respect of any Indebtedness for borrowed money shall be deemed to
be Indebtedness equal to the outstanding amount of the Indebtedness for borrowed
money which has
21
been guaranteed, and a Guarantee in respect of any other Liability or any
dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such Liability or dividend.
"Holder" shall have the meaning ascribed thereto in the Preamble.
"Incumbent Board" shall mean the individuals who, immediately after
the Closing, constitute the Board of Directors; provided, however, that any
individual becoming a director subsequent to the Closing 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 shall
be deemed to be a member of the Incumbent Board.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (other than accounts
payable to suppliers and similar accrued liabilities incurred in the ordinary
course of business and paid in a manner consistent with industry practice), (v)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by such Person
whether or not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such Person, (vii) all Guarantees of such
Person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account of
such Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.
"Indemnified Person" shall have the meaning ascribed thereto in
Section 8.1(b).
"Intellectual Property" means (a) Patents, (b) all trademarks, service
marks, trade dress, logos, trade names, domain names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrightable works,
all copyrights and all applications, registrations and renewals in connection
therewith, (d) all mask works and all applications, registrations
22
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, (h) all copies and tangible embodiments of the
foregoing (in whatever form or medium) and (i) all licenses, sublicenses,
permissions or agreements in connection with the foregoing.
"Law" shall include any foreign, federal, state, or local law,
statute, rule, regulation, Order or other restriction of any court or other
Governmental Entity.
"Liability" shall mean any debt, liability or obligation, whether
known or unknown, asserted or unasserted, accrued, absolute, contingent or
otherwise, whether due or to become due.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Litigation" shall mean any claim, demand, notice, action, suit,
proceeding, arbitration, investigation, civil, criminal or administrative
action, audit, inquiry or hearing by or before any Governmental Entity or
private arbitration tribunal.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the properties, business, prospects, operations, earnings, assets, Liabilities
or the condition (financial or otherwise) of the Company and its Subsidiaries
taken as a whole, whether or not in the ordinary course of business, (b) the
ability of the Company or any of its Subsidiaries to perform its obligations
under any of the Transaction Documents to which it is a party, (c) the validity
or enforceability of any of the Transaction Documents, (d) the rights, remedies,
powers and privileges of the Holder under any of the Transaction Documents or
(e) the timely payment or performance of the Secured Obligations.
"Maturity Date" shall mean the earlier of December 31, 1999 and the
Rollover Date.
23
"Order" shall mean any judgment, order, injunction, ruling, decree,
stipulation or award of any Governmental Entity or private arbitration tribunal.
"Patents" shall mean, collectively, (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice) and all
improvements thereon, (b) all patents, patent applications and patent
disclosures, (c) all reissues, divisions, continuations, revisions
reexaminations, renewals, extensions and continuations-in-part thereof) and (d)
all rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.
"Permitted Indebtedness" means, without duplication, any of the
following Indebtedness of the Company or any of its Subsidiaries, as the case
may be: (i) Indebtedness and obligations under this Note; (ii) any Indebtedness
and obligations outstanding on the date hereof, as set forth on Schedule 4.1; or
(iii) Indebtedness incurred in the ordinary course of business and consistent
with past practice not to exceed $10,000 individually or in the aggregate.
"Permitted Liens" means: (i) Liens existing on the date hereof and set
forth on Schedule 4.2, all of which are subordinate to the Lien of the
Collateral Documentation except as set forth in Schedule 4.2; (ii) Liens (other
than any Lien imposed under ERISA or any Environmental Laws) for taxes,
assessments or charges of any Governmental Entity for claims not yet due or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with the
provisions of GAAP and enforcement thereof is stayed; (iii) Liens of landlords,
carriers, warehousemen, mechanics, materialmen and other Liens (other than any
Lien imposed under ERISA) not voluntarily granted for amounts not yet due or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with the
provisions of GAAP, and enforcement thereof is stayed; (iv) Liens (other than
any Lien imposed under ERISA), incurred or deposited made in the ordinary course
of business, including without limitation, surety bonds and appeal bonds, in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the
24
performance of tenders, bids, leases, contracts (other than for the repayment of
indebtedness), statutory obligations and other similar obligations or arising as
a result of progress payments under government contracts; (v) easements
(including without limitation reciprocal easement agreements and utility
agreements), rights-of-way, covenants, consents, reservations, encroachments,
variations and other similar restrictions, charges or encumbrances (whether or
not recorded) and other Liens incurred in the ordinary course of business, which
do not secure indebtedness or the deferred purchase price of any asset and which
do not interfere materially with the ordinary conduct of the business of the
Company or any Subsidiary of the Company and which do not materially detract
from the value of the property to which they attach or materially impair the use
thereof to the Company or any Subsidiary of the Company; and (vi) building
restrictions, zoning laws and other statutes, laws, rules, regulations,
ordinances and restrictions, and any amendments thereto, now or at any time
hereafter adopted by any Governmental Entity having jurisdiction.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Preferred Stock" shall have the meaning ascribed thereto in
Section 3.3.
"Proxy Statement" shall mean the proxy statement in a definitive form
relating to the Company Meeting.
"Put Option" shall have the meaning ascribed thereto in the
Subscription Agreement.
"Purchaser" shall mean the purchasers listed on Exhibit A to the
Convertible Note Purchase Agreement.
"Registration Rights Agreement" shall have the meaning ascribed
thereto in Section 6.3.
"Representatives" shall have the meaning ascribed thereto in
Section 4.10.
"Restricted Encumbrance" shall have the meaning ascribed thereto
in Section 4.2.
"Rollover Date" shall have the meaning ascribed thereto in
Section 6.1.
"Rollover Registration Rights Agreement" shall have the meaning
ascribed
thereto in Section 6.1.
"Rollover Transactions" shall mean the transactions contemplated by
Section 6 of this Note.
25
"Rollover Transaction Documents" shall mean the Convertible Note
Purchase Agreement, the Rollover Warrant, the Rollover Registration Rights
Agreement, the Convertible Note Security Agreement and any documents and
instruments required to be executed or delivered pursuant to any of the
foregoing agreements.
"Rollover Warrant" shall have the meaning ascribed thereto in
Section 6.1.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Reports" shall have the meaning ascribed thereto in Section
3.4.
"Secured Obligations" shall mean any and all obligations of the
Company or any of its Subsidiaries at any time and from time to time for the
performance of its agreements, covenants and undertakings under or in respect of
the Transaction Documents to which it is a party.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.
"Security Agreement" shall mean the agreement, dated as of the date
hereof, between Appaloosa Investment Limited Partnership I, L.P. and the
Company, providing for a security interest in the Collateral.
"Shares" shall have the meaning ascribed thereto in Section 6.1.
"Subscription Agreement" shall mean the Subscription Agreement, dated
as of April 21, 1999, by and among the Company and certain subscribers thereto.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof, (ii) any other Person (other than a corporation),
including without limitation a joint venture, in which such Person, one or more
Subsidiaries thereof or such Person and one or more Subsidiaries thereof,
directly or indirectly, at the date of determination thereof, has at least
majority ownership interest entitled to vote in the election of directors,
managers or trustees thereof (or other Persons performing similar functions),
(iii) the management of which is
26
otherwise controlled, directly or indirectly, by such Person or (iv) any other
Person required to be consolidated with such Person in accordance with generally
accepted accounting principles. For purposes of this definition (and for the
determination of whether or not a Subsidiary is a wholly-owned Subsidiary of a
Person), any directors' qualifying shares or investment by foreign nationals
mandated by applicable law shall be disregarded in determining the ownership of
a Subsidiary.
"Transaction Documents" shall mean this Note, the Warrants, the
Security Agreement, the Voting Agreement and the Registration Rights
Agreement.
"Transfer" shall have the meaning ascribed thereto in 4.9.
"Voting Securities" shall mean at any time shares of any class of
Capital Stock of the Company (or other corporation) which are then entitled to
vote generally in the election of directors of the Company (or such other
corporation).
"Warrants" shall have the meaning ascribed thereto in Section
2(f).
7.2. Accounting Principles. The character or amount of any asset,
liability, capital account or reserve and of any item of income or expense
required to be determined pursuant to this Note, and any consolidation or other
accounting computation required to be made pursuant to this Note, and the
construction of any definition in this Note containing a financial term, shall
be determined or made, as the case may be, in accordance with GAAP, to the
extent applicable, unless such principles are inconsistent with the express
requirements of this Note.
8. Miscellaneous.
8.1. Payment; Indemnity; Taxes. (a) If the date on which any payment
under this Note is required to be made occurs on a day other than a Business
Day, such payment shall be due and payable on the next succeeding Business Day.
(b) (i) The Company and its Subsidiaries shall jointly and severally
indemnify and hold harmless the Holder and its Representatives (each, an
"Indemnified Person") from and against any and all suits, actions, proceedings,
claims (collectively, "Actions"), damages, losses, Liabilities and out-of-pocket
expenses (including reasonable attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Note and the other Transaction Documents and the administration of such credit,
and in connection with or arising out of the transactions contemplated
27
hereunder and thereunder and any actions or failures to act in connection
therewith.
(ii) Upon receipt by any Indemnified Person of any Action against
such Indemnified Person with respect to which indemnity may be sought under this
Note or any other Transaction Document, such Indemnified Person shall promptly
notify the Company in writing, provided that failure so to notify the Company
shall not relieve the Company from any liability which the Company may have on
account of this indemnity or otherwise, except to the extent the Company shall
have been materially prejudiced by such failure. The Company shall, at its
option, assume the defense of any Action including the employment of counsel
reasonably satisfactory to the Indemnified Person. Any Indemnified Person shall
have the right to employ separate counsel in any such action and participate in
the defense thereof but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person, unless: (i) the Company has failed promptly
to assume the defense and employ counsel or (ii) the named parties to such
Action (including any impleaded parties) include such Indemnified Person and the
Company, and such Indemnified Person and the Company shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to the Company or there is or
may be a conflict between the Company and any Indemnified Person (in which case
the Company may not assume the defense). In the event that any Indemnified
Person shall become entitled to separate counsel under this Note or any other
Transaction Document, the Company shall not in such event be responsible
hereunder for the fees and expenses of more than one firm of separate counsel in
connection with any Action in the same jurisdiction, in addition to any local
counsel. In addition, the Company will not, without prior written consent of the
Indemnified Person, settle, compromise or consent to the entry of any judgment
in or otherwise seek to terminate any pending or threatened Action in which
indemnification may be sought hereunder (whether or not any Indemnified Person
is a party thereto) unless such settlement, compromise, consent or termination
includes an unconditional release of such Indemnified Person from all
liabilities and expenses arising out of such Action.
(c) The Company shall bear all sales, documentary, transfer, stamp or
other similar taxes and all filing fees and expenses incurred in connection with
the transactions contemplated by this Note and shall indemnify and hold harmless
each Indemnified Purchaser from and against any such taxes.
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8.2. Severability. If any term, provision, covenant or restriction of
this Note or any exhibit hereto is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Note and such exhibits shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such which may be hereafter declared invalid, void or
unenforceable.
8.3. Specific Enforcement. The Holder, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Note were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Holder shall be entitled to an injunction to prevent
breaches of the provisions of this Note and to enforce specifically the terms
and provisions hereof in any court of the United States or any state thereof
having jurisdiction, this being in addition to any other remedy to which they
may be entitled at Law or equity.
8.4. Entire Agreement. The Transaction Documents (including the
Schedules and Exhibits hereto and thereto) contain the entire understanding of
the parties with respect to the transactions contemplated hereby and thereby.
8.5. Notices and other Communications. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be deemed given, if
in writing and delivered personally, by telecopy or sent by registered mail,
postage prepaid, if to:
The Company, to:
129 Reservoir Road
Vernon, CT 06066
Attention: Carl Sahi
Fax: (860) 870-6118
With a copy to:
Pepe & Hazard LLP
Goodwin Square
Hartford, CT 06103
Attention: Walter W. Simmers, Esq.
Fax: (860) 522-2796
The Holder, to:
c/o Appaloosa Management, L.P.
26 Main Street, 1st Floor
29
Chatham, New Jersey 07928
Attention: Mr. James Bolin
Fax: (973) 701-7055
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
Fax: (212) 859-4000
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner.
8.6. Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of the Holder and its respective
successors and assigns. The Company many not assign this Note without the
written consent of the Holder.
8.7. Amendments. No amendment or waiver of any provision of this Note,
nor consent to any departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Holder and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
8.8. Expenses. The Company agrees to promptly (but in no event later
than 2 business days) pay the Holder all costs and expenses (including the fees
and expenses of its counsel) incurred by it in connection with the transactions
contemplated hereby (to the extent not already paid by the Company on the date
hereof) and the Rollover Transactions (regardless of whether the Rollover
Transactions are consummated) upon the earlier to occur of (i) the prepayment of
the entire outstanding principal amount of the Note in accordance Section 1.3
and (ii) the Due Date. In addition, the Company agrees to pay to the Holder all
reasonable costs and expenses incurred by such Holder relating to any future
amendment or supplement to any of the Transaction Documents (or any proposal by
the Company for such amendment or supplement) whether or not consummated or any
waiver or consent with respect thereto (or any proposal for such waiver or
consent) whether or not consummated, and all costs and expenses of such Holder
relating to the enforcement of any of the Transaction Documents
8.9 Survival. All covenants, agreements, representations and
warranties contained herein in connection with the transactions contemplated
hereby shall survive the date hereof and the delivery of the Transaction
Documents, regardless of any investigation made by or on behalf of any party;
provided, that, all covenants, agreements, representations and warranties
contained herein shall terminate when this Note and any amounts due hereunder
have been indefeasibly repaid in full; provided, however, that notwithstanding
anything to the contrary contained herein, Sections 6.3, 8.1(b), 8.2, 8.3, 8.4,
8.5 and 8.8 shall survive forever.
30
8.10. Public Announcements. Neither the Company nor the Holder shall
make any public statements, including, without limitation, any press releases,
with respect to this Note or the other Transaction Documents and the
transactions contemplated hereby or thereby without the prior written consent of
the other party (which consent shall not be unreasonably withheld) except as may
be required by Law. If a public statement is required to be made by Law, the
parties shall consult with each other in advance as to the contents and timing
thereof.
8.11. Governing Law. thIS NOTE AND THE OTHER TRANSACTION DOCUMENTS
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of NEW YORK EXCluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.
8.12. Submission to Jurisdiction. If any Litigation shall be brought
by the Holder in order to enforce any right or remedy under this Note or any of
the other Transaction Documents, the Company hereby consents and will submit,
and will cause each of its Subsidiaries to submit, to the jurisdiction of any
state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Note. The
Company hereby irrevocably waives any objection, including, but not limited to,
any objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
Litigation in such jurisdiction.
8.13. Service of Process. Nothing herein shall affect the right of the
Holder to serve process in any other manner permitted by Law or to commence
legal proceedings or otherwise proceed against the Company in any other
jurisdiction.
8.14. Waiver of Jury Trial. The Company hereby waives any right it may
have to a trial by jury in respect of any action, proceeding or litigation
directly or indirectly arising out of, under or in connection with, THIS NOTE OR
ANY OF THE OTHER TRANSACTION DOCUMENTS
31
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the date first above written.
BIO-PLEXUS, INC.
By: /s/ Carl Sahi
------------------------------
Name: Carl Sahi
Title: President & CEO