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Exhibit A
Form of Convertible Note Purchase Agreement
CONVERTIBLE NOTE PURCHASE AGREEMENT
AMONG
BIO-PLEXUS, INC.,
THE PURCHASERS
LISTED ON EXHIBIT A HERETO
AND
APPALOOSA MANAGEMENT L.P.,
as Collateral Agent
Dated as of _________, 1999
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TABLE OF CONTENTS
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1. Issuance and Sale of Notes, Common Stock and $7 Warrants.................................................6
1.1. Definitions..............................................................................6
1.2. Issuance, Purchase and Sale..............................................................6
1.3. Closing..................................................................................6
1.4. Deliveries by the Company................................................................7
1.5. Deliveries by the Purchasers.............................................................8
2. Representations and Warranties of the Company............................................................8
2.1. Organization; Subsidiaries...............................................................8
2.2. Due Authorization........................................................................8
2.3. Capitalization...........................................................................9
2.4. SEC Reports Correspondence..............................................................10
2.5. Financial Statements....................................................................10
2.6. Litigation..............................................................................10
2.7. Title to Properties; Insurance..........................................................10
2.8. Consents, etc...........................................................................11
2.9. No Material Adverse Change..............................................................11
2.10. Taxes...................................................................................11
2.11. Compliance with ERISA...................................................................12
2.12. Labor Relations.........................................................................12
2.13. Intellectual Property Rights............................................................13
2.14. Possession of Franchises, Licenses, Etc.................................................13
2.15. Compliance with Laws....................................................................13
2.16. Conflicting Agreements and Certificate of Incorporation Provisions......................14
2.17. Suppliers...............................................................................14
2.18. Products................................................................................14
2.19. Offering of the Securities..............................................................14
2.20. Existing Indebtedness; Future Liens.....................................................15
2.21. Environmental Matters...................................................................15
2.22. Solvency................................................................................15
2.23. Security Documents......................................................................15
2.24. Brokers or Finders......................................................................16
2.25. Holding Company Act and Investment Company Act..........................................16
2.26. Related Party Transactions..............................................................16
2.27. Year 2000...............................................................................16
2.28. Disclosure..............................................................................16
3. Representations and Warranties of the Purchasers........................................................17
3.1. Organization and Qualification..........................................................17
3.2. Due Authorization.......................................................................17
3.3. Acquisition for Investment..............................................................17
3.4. Offering of Securities..................................................................17
3.5. Accredited Investor.....................................................................18
4. Registration, Exchange and Transfer of Notes............................................................18
4.1. The Note Register; Persons Deemed Owners................................................18
4.2. Issuance of New Notes Upon Exchange or Transfer.........................................18
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5. Payment of Notes........................................................................................18
5.1. Home Office Payment.....................................................................18
5.2. Limitation on Interest..................................................................18
5.3. Accreted Value..........................................................................19
5.4. Interest................................................................................20
5.5. Principal...............................................................................20
6. Covenants of the Company................................................................................20
6.1. Maintenance of Office or Agency.........................................................20
6.2. Money for Security Payments to be Held in Trust.........................................20
6.3. Existence...............................................................................20
6.4. Maintenance of Properties...............................................................21
6.5. Payment of Taxes and Other Claims.......................................................21
6.6. Limitation on Indebtedness..............................................................21
6.7. Limitation on Encumbrances..............................................................21
6.8. Limitation on Related Party Transactions................................................21
6.9. Limitation on Dividends; Stock Issuances................................................22
6.10. Subsidiary Guarantees...................................................................22
6.11. Additional Offerings of Securities......................................................22
6.12. Pledges of Intercompany Notes...........................................................23
6.13. No Speculative Transactions.............................................................23
6.14. Restricted Investments..................................................................23
6.15. Financial Covenants.....................................................................23
6.16. Sale-and-Leaseback Transactions.........................................................23
6.17. Line of Business........................................................................23
6.18. Sale of Assets..........................................................................24
6.19. Indenture Relating to the Notes.........................................................24
6.20. Financial Statements and Information....................................................24
6.21. Inspection..............................................................................25
6.22. Compliance with Laws....................................................................26
6.23. Supplemental Disclosure.................................................................26
6.24. Proceeds................................................................................26
6.25. Insurance; Damage to or Destruction of Collateral.......................................27
6.26. Rights of Required Holders to Designate Directors; Board Composition....................27
6.27. Executive Officers......................................................................28
6.28. Board and Committee Notice Requirement..................................................28
6.29. Reimbursement of Certain Expenses.......................................................28
6.30. Limitation of Agreements................................................................29
6.31. Redemption of Convertible Debentures....................................................29
6.32. Preparation of Quarterly Budgets........................................................29
6.33. Operations in Accordance with the Business Plan.........................................29
7. Events of Default and Remedies..........................................................................29
7.1. Events of Default and Remedies..........................................................29
7.2. Acceleration of Maturity................................................................31
7.3. Other Remedies..........................................................................32
7.4. Conduct No Waiver; Collection Expenses..................................................32
7.5. Annulment of Acceleration...............................................................32
7.6. Remedies Cumulative.....................................................................32
8. Redemption .............................................................................................32
8.1. Optional Redemption.....................................................................32
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8.2. Partial Redemption......................................................................33
8.3. Change of Control.......................................................................33
8.4. Redemption Procedures...................................................................33
9. Conversion .............................................................................................34
9.1. Holder's Option to Convert into Common Stock............................................34
9.2. Exercise of Conversion Privilege........................................................34
9.3. Fractions of Shares; Interest...........................................................35
9.4. Reservation of Stock; Listing...........................................................35
9.5. Rights..................................................................................35
9.6. Adjustment of Conversion Ratio..........................................................35
9.7. Merger or Consolidation.................................................................38
9.8. Notice of Certain Corporate Actions.....................................................38
9.9. Reports as to Adjustments...............................................................39
10. The Collateral Agent....................................................................................39
10.1. Appointment.............................................................................39
10.2. Delegation of Duties....................................................................39
10.3. Exculpatory Provisions..................................................................39
10.4. Reliance by the Collateral Agent........................................................40
10.5. Notice of Default.......................................................................40
10.6. Non-Reliance on Collateral Agent and Other Purchasers...................................40
10.7. Indemnification.........................................................................41
10.8. Collateral Agent in its Individual Capacity.............................................41
10.9. Successor Collateral Agent..............................................................41
11. Interpretation..........................................................................................42
11.1. Definitions.............................................................................42
11.2. Accounting Principles...................................................................53
12. Miscellaneous...........................................................................................53
12.1. Payments; Indemnity.....................................................................53
12.2. Severability............................................................................54
12.3. Specific Enforcement....................................................................54
12.4. Entire Agreement........................................................................55
12.5. Counterparts............................................................................55
12.6. Notices and other Communications........................................................55
12.7. Amendments..............................................................................56
12.8. Successors and Assigns..................................................................56
12.9. Expenses................................................................................56
12.10. Survival................................................................................56
12.11. Transfer of Notes and Common Stock......................................................56
12.12. GOVERNING LAW...........................................................................57
12.13. Submission to Jurisdiction..............................................................57
12.14. Service of Process......................................................................57
12.15. WAIVER OF JURY TRIAL....................................................................58
12.16. Public Announcements....................................................................58
12.17. Further Assurances......................................................................58
12.18. Substitution of Purchaser...............................................................58
12.19. Signatures..............................................................................58
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THIS CONVERTIBLE NOTE PURCHASE AGREEMENT, dated as of
_________, 1999 (this "Agreement"), is made among BIO-PLEXUS, INC., a
Connecticut corporation (the "Company"), the purchasers listed on Exhibit A
(each such party, a "Purchaser" and, collectively, the "Purchasers"), and
APPALOOSA MANAGEMENT L.P., as Collateral Agent (the "Collateral Agent").
WHEREAS, the parties hereto have previously entered into a
Note Purchase Agreement (the "Note Purchase Agreement");
WHEREAS, the Note Purchase Agreement provides that, subject to
the terms and conditions specified therein, the parties thereto will enter into
this Agreement;
WHEREAS, upon the terms and subject to the conditions set
forth in this Agreement, the Purchasers wish to purchase from the Company, and
the Company wishes to issue and sell to the Purchasers, (i) Zero Coupon Secured
Convertible Notes due ______, 2004 (the "Notes") in the aggregate principal Face
Amount of $[ ], (ii) an aggregate of 250,000 shares (the "Shares") of Common
Stock, no par value, of the Company (the "Common Stock") and (iii) warrants to
purchase 1,500,000 shares of Common Stock with an exercise price of $7 per share
in the form attached as Exhibit B (the "$7 Warrants");
WHEREAS, the Notes shall be convertible (under the
circumstances described herein) into shares of Common Stock; and
WHEREAS, the Purchasers and the Company desire to provide for
such purchase and sale and to establish various rights and obligations in
connection therewith.
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties and agreements herein set forth, the parties
hereto agree as follows:
1. Issuance and Sale of Notes, Common Stock and $7 Warrants.
1.1. Definitions. Certain capitalized terms used in the
Agreement are defined in Section 11.1 hereof; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement.
1.2. Issuance, Purchase and Sale. (a) Upon the terms and
subject to the conditions set forth herein, the Company is issuing and selling
to the Purchasers, and the Purchasers are purchasing from the Company, the
Notes, the Shares and the $7 Warrants for an aggregate cash purchase price of
[$________] (the "Purchase Price"). The Notes shall be in the form of Exhibit
1.2.
(b) The parties agree that the fair market value of the Notes
is $_____, the fair market value of the Shares is $[750,000] and the fair market
value of the $7 Warrants is $ . Each party agrees to file all Tax Returns
consistent with such allocation and to take no position inconsistent with such
allocation, unless required by Law.
1.3. Closing. The closing of the transactions contemplated
hereby (the "Closing") will take place simultaneously with the execution hereof
at the offices of Fried, Frank, Harris, Shriver & Jacobson, New York, New York.
1.4. Deliveries by the Company. At the Closing, the Company is
delivering to each Purchaser (and to such other parties as otherwise set forth
below) the following:
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(i) duly executed Notes in the principal amount set
forth opposite such Purchaser's name on Exhibit 1.4i;
(ii) duly executed $7 Warrants in the number set
forth opposite such Purchaser's name on Exhibit 1.4ii;
(iii) an opinion of the Company's counsel, dated as
of the date hereof, addressed to such Purchaser in the form of
Exhibit 1.4iii;
(iv) an Officers' Certificate, dated as of the date
hereof, certifying that (A) the representations and warranties
contained in Section 2 hereof are true and correct and (B) the
Rollover Transactions have been approved and adopted by the
requisite vote of the stockholders of the Company in
accordance with applicable Law, the applicable rules of NASDAQ
and the Company's Certificate of Incorporation and By-Laws at
a properly called special meeting of the stockholders of the
Company;
(v) a good standing certificate for the Company,
dated no earlier than seven days prior to the date hereof,
from the Secretary of State of the State of Connecticut;
(vi) a copy of the resolutions of the Board of
Directors adopting the execution of each of the Transaction
Documents and the performance of the transactions contemplated
by the Transaction Documents, which resolutions shall be
certified as true, correct and effective as of the date hereof
by an officer of the Company;
(vii) duly executed copies of the Security Agreement
[and the Intercreditor Agreement] in the forms attached hereto
as Exhibits 1.4A and B, and copies of any other Collateral
Documentation including Financing Statements required to
perfect the Holders' security interest in the Collateral;
(viii) a duly executed copy of the Registration
Rights Agreement attached as Exhibit 1.4viii;
(ix) an opinion from an independent valuation
consultant or appraiser reasonably satisfactory to the
Purchasers in form and substance reasonably satisfactory to
the Purchasers supporting the conclusions that, after giving
effect to the Rollover Transactions, the Company will not be
insolvent by the incurrence of Indebtedness incurred in
connection therewith, or be left with unreasonably small
capital with which to engage in its business, or have incurred
debts beyond its ability to pay such debts as they mature;
(x) a copy of the Company's employment agreement with
Carl Sahi, which employment agreement shall be in form and
substance reasonably satisfactory to the Purchasers and which
shall be certified as true, correct and effective as of the
date hereof by an officer of the Company;
(xi) reimbursement of the Purchasers' costs and
expenses (including the reasonable fees and expenses of their
counsel, Fried, Frank, Harris, Shriver & Jacobson) incurred in
connection with the transactions contemplated by the
Transaction Documents to be paid as set forth in Section 1.5;
and
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(xii) such other instruments and documents as
reasonably requested by each Purchaser.
1.5. Deliveries by the Purchasers. At the Closing, each
Purchaser is delivering to the Restricted Account or to such other parties as
otherwise set forth below the amount set forth opposite such Purchaser's name in
Exhibit 1.5, such amount being equal to the pro-rata portion of the Purchase
Price allocable to such Purchaser for the Notes, the Shares and the $7 Warrants
being purchased by such Purchaser as set forth opposite such Purchaser's name in
Exhibit 1.5, less its costs and expenses (including the fees and expenses of its
counsel, Fried, Frank, Harris, Shriver & Jacobson, and its accountants, which
amounts shall be wire transferred by the Collateral Agent in immediately
available funds to one or more accounts designated by such parties on or prior
to the date hereof).
2. Representations and Warranties of the Company.
The Company represents and warrants to each Holder as follows:
2.1. 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 2.1(b), the Company does not own, directly or indirectly, or
have the right or obligation to acquire, any interest in any business
association or other Person.
2.2. Due Authorization. (a) The Company has all right, power
and authority to enter into, deliver and perform the Transaction Documents 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 the Notes, the Shares, the $7 Warrants and issuance of shares of
Common Stock upon conversion of the Notes and the exercise of the $7 Warrants)
and compliance by the Company with all the provisions of each Transaction
Document (as applicable) have been duly authorized by all requisite corporate
proceedings on the part of the Company (including, without limitation, approval
by the requisite vote of holders of the outstanding Common Stock). 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 and shares of Common Stock issuable
upon conversion of the Notes and exercise of the $7 Warrants have been validly
reserved for issuance and, upon issuance, will be validly issued and
outstanding, fully paid and nonassessable.
(b) The Board of Directors has taken all necessary action so
that no "fair price," "moratorium," "control share acquisition," "interested
holder" or other similar anti-takeover statute or regulation (including, without
limitation, Sections 33-840 through 33-845 of the Connecticut Business
Corporation Act) or any applicable anti-takeover provision in the Company's
Certificate of Incorporation
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or By-Laws is applicable to the transactions contemplated by this Agreement. To
the knowledge of the Company, no other state takeover statute is applicable to
the transactions contemplated by this Agreement.
2.3. 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, ______________ shares were issued and outstanding, _______________
shares were reserved for issuance upon the exercise of outstanding stock options
pursuant to the Company's option plans, _______________ shares were reserved for
issuance upon the exercise of the outstanding warrants, and ______________
shares were reserved for issuance upon the conversion of the Company's 6%
Convertible Debentures due 2004 (the "Convertible Debentures") 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 2.3, there are no outstanding
options, warrants, 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 2.3, 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 of the Company may vote were issued or outstanding. Except as
set forth on Schedule 2.3 or as contemplated by the Transaction Documents, the
Company is not a party to, and, to the Company's best knowledge, there is, and
immediately after the Closing, there will be, no agreement, 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 2.3 or as
contemplated by the Transaction Documents, 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 in Schedule 2.3. 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.
2.4. 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, and the Company has furnished
each Purchaser true and complete copies of all annual reports, quarterly
reports, proxy statements and other reports under the Exchange Act filed by the
Company from and after such date, each as filed with the SEC (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
that relate specifically to the Company and that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has made available for inspection by each Purchaser copies of all correspondence
between the Company and the SEC from and after January 1, 1995.
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2.5. 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 was
material in amount or effect). Except as set forth on Schedule 2.5, 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 December 31, 1998 which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.6. Litigation. (a) Except as set forth on Schedule 2.6,
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.
2.7. Title to Properties; Insurance. (a) Except as set forth
on Schedule 2.7(a), the Company has good and valid title to, or, in the case of
property leased by it as lessee, a valid and subsisting leasehold interest in,
its properties and assets, free of all Liens.
(b) Schedule 2.7(b) sets forth a complete and correct list of
all insurance coverage carried by the Company, the carrier and the terms and
amount of coverage. All of the material assets of the Company and all aspects of
the Company's business that are of insurable character are covered by insurance
with insurers against risks of liability, casualty and fire and other losses and
liabilities customarily obtained to cover comparable businesses and assets in
amounts, scope and coverage that are consistent with prudent industry practice.
The Company is not in default with respect to its obligations under any such
insurance policy maintained by it. All such policies and other instruments are
in full force and effect and no premiums with respect thereto are past due and
owed. The Company has not failed to give any notice or present any material
claim under any such insurance policy in due and timely fashion or as required
by any of such insurance policies. The Company has not otherwise, through any
act, omission or non-disclosure, jeopardized or impaired full recovery of any
claim under such policies, and there are no claims by the Company under any of
such policies to which any insurance company is denying liability or defending
under a reservation of rights or similar clause. The Company has not received
notice of any pending or threatened termination of any of such policies or any
premium increases for the current policy period with respect to any of such
policies and the consummation of the transactions contemplated by the
Transaction Documents will not result in any such termination or premium
increase.
2.8. Consents, etc. The Company is not required to obtain any
consent, approval or authorization of, or to make any registration declaration
or filing with, any Governmental Entity or third party as a condition to or in
connection with the valid execution and delivery of any of the Transaction
Documents (including, without limitation, the issuance and sale of the Notes,
the Shares and the $7 Warrants), or the performance by the Company of its
obligations in respect of any thereof, except for (i) filings required pursuant
to state and federal securities laws to effect any registration of Securities
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pursuant to this Agreement and the Registration Rights Agreement, (ii) the
filing of the Financing Statements [and Mortgages], (iii) filings to be made
with the U.S. Patent and Trademark Office or the U.S. Copyright Office to
perfect the Holders' first priority security interest in the Intellectual
Property constituting Collateral under the Collateral Documentation, (iv) the
filing on Form 8-K under the Exchange Act to report the consummation of the
transactions contemplated hereby and (v) the approval of the stockholders of the
Company, which approval has been previously obtained.
2.9. No Material Adverse Change. Since December 31, 1998, no
event has occurred or failed to occur that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
2.10. Taxes. Except as set for on Schedule 2.10:
(a) The Company (i) has timely filed all Tax Returns
(including, but not limited to, those filed on a consolidated, combined or
unitary basis) required to have been filed by the Company, all of which Tax
Returns are true, correct and complete in all material respects, (ii) has within
the time and manner prescribed by Law paid all Taxes required to be paid in
respect of the periods covered by such Tax Returns or otherwise due to any
Governmental Entity, (iii) has established and maintained on its books and
records, accruals and reserves that are adequate for the payment of all Taxes
not yet due and payable and attributable to any period preceding the date
hereof, and (iv) has not received notice of any deficiencies for any Tax from
any Governmental Entity against the Company, which deficiency has not been
satisfied. The Company is not the subject of any currently ongoing audit or
judicial or administrative proceeding relating to Taxes, nor is any such audit
pending or, to the Company's knowledge, threatened. With respect to any taxable
period ended prior to December 31, 1994, all Tax Returns of the Company have
been audited by the Internal Revenue Service or are closed by the applicable
statute of limitations. The accruals and reserves for Taxes on the Company's
balance sheet as of December 31, 1998 included in the SEC Reports are complete
and adequate in all respects to cover any and all Liabilities of the Company for
Taxes through such date. There are no Liens with respect to Taxes upon any of
the properties or assets, real or personal, tangible or intangible, of the
Company (other than Liens for Taxes not yet due). No claim has been made or
threatened by any Governmental Entity in a jurisdiction where the Company does
not file Tax Returns that the Company is or may be subject to taxation by such
jurisdiction. The Company has not filed an election under Section 341(f) of the
Code to be treated as a consenting corporation. The Company is not or has not
been a party to any Tax sharing agreement.
(b) The Company has duly withheld or collected all
Taxes required by Law to have been withheld or collected (including Taxes
required by Law to be withheld or collected in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party) and any such amounts required to be remitted to a Governmental
Entity have been timely remitted.
2.11. Compliance with ERISA. Schedule 2.11 sets forth a
complete and correct list of all (i) Benefit Plans, (ii) Employee Agreements,
including (in the case of each of (i) and (ii)) all amendments thereto, and
trust or funding agreements with respect thereto (excluding any grantor trusts
established to hold assets subject to the claims of the Company's creditors) and
(iii) summary plan descriptions and communications of any material modifications
to any employee or employees relating to any Benefit Plan or Employee Agreement.
Each Benefit Plan has been established and operated in accordance with terms
thereof and all other applicable Laws, including but not limited to the Code and
ERISA, and the Company and each ERISA Affiliate are in compliance with the terms
of each Employee
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Agreement. Neither the Company nor any ERISA Affiliate presently sponsors,
maintains, contributes to, or is required to contribute to, nor has the Company
nor any ERISA Affiliate ever sponsored, maintained, contributed to, or been
required to contribute to, an "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA) which is subject to Title IV of ERISA or
Section 412 of the Code or a "multiemployer plan" (within the meaning of Section
4001(a)(3) of ERISA). Neither the Company nor any ERISA Affiliate has ever
maintained or contributed to or been required to maintain or contribute to any
employee welfare benefit plan (within the meaning of Section 3(1) of ERISA)
which provides for post-retirement medical, life insurance or other welfare-type
benefits, and neither the Company nor any ERISA Affiliate has any Liability for
any such post-retirement benefits to any present or former employee.
2.12. Labor Relations. No unfair labor practice complaint or
any complaint alleging sexual harassment or sex, age, race or other employment
discrimination has been brought during the last three years against the Company
before the National Labor Relations Board, the Equal Employment Opportunity
Commission or any other Governmental Entity, nor is there any charge,
investigation (formal or informal) or complaint pending, or to the knowledge of
the Company, threatened, against the Company regarding any labor or employment
matter. There have been no governmental audits of the equal employment
opportunity practices of the Company and, to the knowledge of the Company, no
reasonable basis for any such audit exists. The Company (i) is in compliance
with all applicable Laws respecting employment, employment practices, labor,
terms and conditions of employment, collective bargaining and wages and hours,
and (ii) has withheld all amounts required by Law or by agreement to be withheld
from the wages, salaries and other payments to its employees.
2.13. Intellectual Property Rights. Schedule 2.13(a) sets
forth a complete and correct list of all Intellectual Property of the Company
(the "Company Intellectual Property"). Except as set forth on Schedule 2.13(b),
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, and 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 2.13(a) 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, 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 2.13(b), no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Company Intellectual
Property. The Company has taken all 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
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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 in Schedule 2.13(b), the Company has not
granted any licenses of Intellectual Property to any Person.
2.14. Possession of Franchises, Licenses, Etc. The Company
possesses all franchises, certificates, licenses, permits and other
authorizations from Governmental Entities and other rights, free from burdensome
restrictions, that are necessary for the ownership, maintenance and operation of
its properties and assets, except for those the absence of which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and the Company is not in violation of any such franchise,
certificates, licenses, permits, authorizations and rights.
2.15. 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 (the "FDA") 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.
2.16. Conflicting Agreements and Certificate of Incorporation
Provisions. The Company has not entered into any Contract and the Company is not
subject to any Certificate of Incorporation or By-Law provision or any Order
that in any case could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. None of the execution and delivery of any of
the Transaction Documents, the issuance, sale and delivery of the Notes, the
Shares or the $7 Warrants, and the fulfillment of or compliance with the terms
and provisions hereof or thereof will conflict with or result in a breach of the
terms, conditions, or provisions of, or give rise to a right of termination
under, or constitute a default under, or result in the creation of any Lien, or
result in any violation of, the Certificate of Incorporation or By-Laws or other
organizational documents of the Company or any Contract of the Company. The
Company has not defaulted under any outstanding indenture or other debt
instrument or with respect to the payment of the principal of or interest on any
outstanding obligations for borrowed money, and the Company is not in default
under any of its Contracts except where such default could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
2.17. Suppliers. Except as set forth on Schedule 2.17, no
Major Supplier has during the last twelve months materially increased or, to the
knowledge of the Company, threatened to materially increase its prices or
materially decreased or limited or, to the knowledge of the Company, threatened
to materially decrease or limit its provision of services or supplies to the
Company. During the last twelve months, there has been no termination,
cancellation or limitation of, or any material change in, the business
relationships of the Company with any Major Supplier. To the knowledge of the
Company, there will not be any such change in relations with any Major Supplier
or the triggering of any right of termination, cancellation or penalty or other
payment by or to any Major Supplier in connection with or as a result of the
transactions contemplated by the Transaction Documents that could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
2.18. Products. Except as set forth on Schedule 2.18, there
are no statements, citations or decisions by the FDA or any other Governmental
Entity stating that any product manufactured, sold, rented, leased, designed,
distributed or marketed at any time by the Company ("Products") is defective or
unsafe or fails to meet any standards promulgated by the FDA or such
Governmental Entity. Except as
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set forth on Schedule 2.18, there is no (i) fact relating to any Product that,
to the knowledge of the Company, may impose upon the Company a duty to recall or
retrofit such Product or a duty to warn customers of a defect in such Product,
(ii) latent or overt design, manufacturing or other defect in any Product that
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or (iii) Liability for warranty claims or returns with
respect to any Product that could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
2.19. Offering of the Securities. Neither the Company nor any
Person acting on its behalf has offered the Securities or any similar securities
of the Company for sale to, solicited any offers to buy the Securities 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 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 that would require
the integration of such offering with the offering of the Securities under the
Securities Act) that could reasonably be expected to subject the offering,
issuance or sale of the Securities 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.
2.20. Existing Indebtedness; Future Liens. (a) Schedule 2.20
sets forth a complete and correct list of all outstanding Indebtedness of the
Company as of the date hereof. 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).
2.21. Environmental Matters. The Company has no knowledge of
any claim and has not received any notice of any claim, and no proceeding has
been instituted raising any claim against the Company or any of its real
properties now or formerly owned, leased or operated by it or other assets,
alleging any damage to the environment or violation of any Environmental Laws.
Except as set forth on Schedule 2.21, (i) the Company has no knowledge of any
facts that would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
affecting real properties now or formerly owned, leased or operated by the
Company or to other assets or their use, (ii) the Company has not stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by it and has not disposed of any Hazardous Materials in a manner contrary to
any Environmental Laws, and (iii) all buildings on all real properties now
owned, leased or operated by the Company are in compliance with applicable
Environmental Laws.
2.22. Solvency. The Company is not, and, after giving effect
to the issuance of the Notes and the sale of the Shares and the $7 Warrants 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.
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2.23. Security Documents. Upon proper filing of the Financing
Statements (or assignments thereof) in the offices of the Secretary of State of
the 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 security
interest in all right, title and interest of the Company in and to the personal
property or interests therein secured thereby prior to any other security
interests against such property or interests therein.
2.24. Brokers or Finders. No agent, broker, investment banker
or other Person is or will be entitled to any broker's fee or any other
commission or similar fee from the Company in connection with any of the
transactions contemplated by this Agreement.
2.25. Holding Company Act and Investment Company Act. The
Company is not: (i) a "public utility company" or a "holding company", or an
"affiliate" or a "subsidiary company" of a "holding company", or an "affiliate"
of such a "subsidiary company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (ii) a "public utility", as defined
in the Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person", as such terms are defined in the Investment Company Act of 1940, as
amended.
2.26. Related Party Transactions. (a) Except as set forth on
Schedule 2.26, the Company has not entered into or been a party to any
transaction with any Related Party thereof except in the ordinary course of, and
pursuant to the reasonable requirements of, such Related Party's business and
upon fair and reasonable terms that are at least equivalent to an arm's-length
transaction with a Person not a Related Party.
(b) Except as set forth on Schedule 2.26, the Company has not
entered into any lending or borrowing transaction with any director, officer or
employee of the Company.
2.27. Year 2000. The software, computers and other hardware
and systems used by the Company will (i) accurately process date information
before, during and after January 1, 2000, including, but not limited to,
accepting date input, providing date output and performing calculations on dates
or portions of dates, (ii) function accurately and without interruption before,
during and after January 1, 2000 without any change in operations associated
with the advent of the new century, (iii) respond to two digit year date input
in a way that resolves the ambiguity as to century in a disclosed, defined and
predetermined manner, and (iv) store and provide output of date information in
ways that are unambiguous as to century. The Company has contacted its principal
vendors and Major Suppliers and other Persons with whom the Company has material
business relationships, and each of such vendors, Major Suppliers and other
Persons has notified the Company that its software, computers and other hardware
and systems are Year 2000 compliant in all material respects to the extent
affecting the Company. The ability of such vendors, Major Suppliers and other
Persons to identify and resolve their own Year 2000 issues could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.28. Disclosure. None of the Transaction Documents and
schedules thereto and certificates furnished to any Purchaser by or on behalf of
the Company in connection with the transactions contemplated thereby contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not misleading.
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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
Purchasers.
3. Representations and Warranties of the Purchasers. Each Purchaser,
severally and not jointly, represents and warrants to the Company with respect
to such Purchaser as follows:
3.1. Organization and Qualification. Such Purchaser is duly
organized and existing in good standing under the laws of the state of its
formation and has the power to own its respective property and to carry on its
respective business as now being conducted. Such Purchaser is duly qualified to
do business and in good standing in every jurisdiction in which the nature of
the respective business conducted or property owned by it makes such
qualification necessary, except where the failure to so qualify would not
prevent consummation of the transactions contemplated hereby or reasonably be
expected to have a material adverse effect on such Purchaser's ability to
perform its obligations hereunder.
3.2. Due Authorization. Such Purchaser 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.
Such Purchaser's execution and delivery of each Transaction Document to which it
is a party and the performance by such Purchaser of the transactions
contemplated thereby and compliance by such Purchaser with all the provisions of
each Transaction Document to which it is a party (as applicable) have been duly
authorized by all requisite proceedings on the part of such Purchaser. Each of
the Transaction Documents to which it is a party has been duly executed and
delivered on behalf of such Purchaser, and each such Transaction Document
constitutes the legal, valid and binding obligation of such Purchaser,
enforceable against such Purchaser 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.
3.3. Acquisition for Investment. Such Purchaser is acquiring
the Notes, the Shares and the $7 Warrants being purchased by it for its own
account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof except in compliance with all
applicable securities Laws.
3.4. Offering of Securities. Such Purchaser has not offered
the Securities for sale by any means of general solicitation or general
advertising including, but not limited to, any advertisements, articles, notices
or other communications published in any newspaper, magazine or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
were invited by any general solicitation or general advertising.
3.5. Accredited Investor. Such Purchaser is an "accredited
investor" within the meaning of Rule 501 promulgated under the Securities Act.
4. Registration, Exchange and Transfer of Notes.
4.1. The Note Register; Persons Deemed Owners. The Company
shall maintain, at its office designated for notices in accordance with Section
12.6, a register for the Notes (the "Note Register"), in which the Company shall
record the name and address of the Person in whose name each Note has been
issued and the name and address of each transferee and prior owner of each Note.
The Company shall deem and treat the Person in whose name a Note is so
registered as the Holder and owner
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thereof for all purposes and shall not be affected by any notice to the
contrary, until due presentment of such Note for registration of transfer as
provided in this Section 4.
4.2. Issuance of New Notes Upon Exchange or Transfer. Upon
surrender for exchange or registration of transfer of any Note at the office of
the Company designated for notices in accordance with Section 12.6, the Company
shall execute and deliver, at its expense, one or more new Notes as requested by
the Holder of the surrendered Note, each dated the date so surrendered, but in
the same aggregate Face Amount as such surrendered Note, and registered in the
name of such Person or Persons as shall be designated in writing by such Holder.
Every Note surrendered for registration of transfer shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed, by the Holder
of such Note or by his attorney duly authorized in writing. The Company may also
condition the issuance of any new Note or Notes to a Person other than the
Holder thereof on the payment of a sum sufficient to cover any stamp Tax or
other governmental charge imposed in respect of such transfer.
5. Payment of Notes.
5.1. Home Office Payment. The Company will pay to each Holder
or any transferee thereof all sums becoming due on the Notes (including all sums
that become due on the Notes at the maturity thereof) (a) prior to the date of
execution of an indenture, if any (the "Indenture Date"), 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 and (b) at any time after the Indenture
Date, by wire transfer to the Trustee, as specified in the Indenture. Before
selling or otherwise transferring any Note, such Holder or transferee will make
a notation thereon of the aggregate amount of all payments, if any, of the Face
Amount thereof, theretofore made.
5.2. Limitation on Interest. No provision of this Agreement or
of the Notes 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 in the Notes, 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
Agreement or in the Notes to the contrary notwithstanding.
5.3. Accreted Value. The Notes have been issued at the
original issue discount ("Original Issue Discount") in the amount stated on the
face of each Note and each Note will accrete in value to its Face Amount at the
Stated Maturity. Prior to the Stated Maturity, the Accreted Value for any
specified date means, the applicable amount provided below for each $1,000 Face
Amount of the Notes:
(a) if the specified date occurs on one of the
following dates (each a "Semi-Annual Accrual Date"), the Accreted Value
of such Face Amount will equal the amount set forth opposite such
Semi-Annual Accrual Date:
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Semi-Annual Accrual Date Accreted Value
------------------------ --------------
June 31, 2000 ....................................... $
December 31, 2000 ....................................... $
June 30 , 2001 ....................................... $
December 31, 2001 ....................................... $
June 30, 2002 ....................................... $
December 31, 2002 ....................................... $
June 31, 2003 ....................................... $
December 31, 2003 ....................................... $
June 30, 2004 ....................................... $
December 30, 2004 ....................................... $
(b) if the specified date occurs before the first
Semi-Annual Accrual Date, the Accreted Value of such Face Amount will
equal the sum of (i) the Original Issue Price and (ii) an amount equal
to the product of (A) the Accreted Value of such Face Amount for the
first Semi-Annual Accrual Date less the Original Issue Price and (B) a
fraction, the numerator of which is the number of days from the date
hereof to the specified date, using a 360-day year of twelve 30-day
months, and the denominator of which is the number of days elapsed from
the original issue date to the first Semi-Annual Accrual Date, using a
360-day year of twelve 30-day months;
(c) if the specified date occurs between two
Semi-Annual Accrual Dates, the Accreted Value of such Face Amount will
equal the sum of (i) the Accreted Value of such Face Amount for the
Semi-Annual Accrual Date immediately preceding such specified date and
(ii) an amount equal to the product of (A) the Accreted Value of such
Face Amount for the immediately following Semi-Annual Accrual Date less
the Accreted Value of such Face Amount for the immediately preceding
Semi-Annual Accrual Date and (B) a fraction, the numerator of which is
the number of days from the immediately preceding Semi-Annual Accrual
Date to the specified date, using a 360-day year of twelve 30-day
months, and the denominator of which is 180; or
(d) if the specified date occurs after the last
Semi-Annual Accrual Date, the Accreted Value will equal $1,000.
5.4. Interest. The Notes shall not bear interest (other than
accrued Original Issue Discount which shall be payable at Stated Maturity),
except that if any amount payable hereunder is not paid when due (including,
without limitation, payment of the Accreted Value or the entire Face Amount of
all Notes, as applicable, under Section 7.2), then in each such case the overdue
amount shall bear interest at a rate of 12% per annum compounded semi-annually
(to the extent that the payment of such interest shall be legally enforceable),
which interest shall accrue from the date such overdue amount was due to the
date payment of such amount, including interest thereon, has been made or duly
provided for. All such interest shall be payable on demand. The accrual of such
interest on overdue amounts shall, in the case of any late payment of the Face
Amount or Change of Control Redemption Price, be in lieu of, and not in addition
to, the continued accrual of Original Issue Discount. Original Issue Discount in
the period during which the Notes remain outstanding shall accrue at 7.5% per
annum, compounded semi-annually, computed on the basis of a 360-day year
consisting of twelve 30-day months, beginning on __________, 1999.
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5.5. Principal. Unless otherwise provided herein, payment of
the Face Amount of each Note shall be due and payable as provided in the Notes.
6. Covenants of the Company. The Company covenants that at all times
from and after the date hereof:
6.1. Maintenance of Office or Agency. The Company shall
maintain in Vernon, Connecticut an office or agency where Notes may be presented
or surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes may be served. The Company shall give prompt written notice
to the Holders of the location, and any change in the location, of such office
or agency. The Company may also from time to time designate one or more other
offices or agencies (in or outside Connecticut) where the Notes may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in Vernon, Connecticut for such purposes. The Company shall give
prompt written notice to the Holders of any such designation or rescission and
of any change in the location of any such other office or agency.
6.2. Money for Security Payments to be Held in Trust. On or
before each date on which payments are due on the Notes, the Company shall
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to make such payments when such payments are due, until such sums
shall be paid to such Persons or otherwise disposed of as herein provided.
6.3. Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
Material rights (charter and statutory) and franchises and the existence,
Material rights and franchises of all of its Subsidiaries. Neither the Company
nor any of its Subsidiaries shall enter into any transaction of 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 sell,
transfer or otherwise dispose of ("Transfer") all or substantially all of its
assets 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, amend or otherwise modify (i) the Company's
Certificate of Incorporation, (ii) the By-Laws or (iii) the charter, by-laws or
other organizational documents of any of the Company's Subsidiaries.
6.4. Maintenance of Properties. The Company shall cause all
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and shall cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section 6.4 shall prevent
the Company from discontinuing the operation or maintenance of any of such
property if such discontinuance is, in the reasonable, good faith judgment of
the Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any Material respect to the Holders.
6.5. Payment of Taxes and Other Claims. The Company shall pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all Taxes levied or imposed
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upon the Company or any of its Subsidiaries or upon the income, profits or
property of the Company or any of its Subsidiaries, and (ii) all lawful claims
for labor, materials and supplies that, if unpaid, might by Law become a Lien
upon the property of the Company or any of its Subsidiaries; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such Tax amount, applicability or validity of which is being
contested in good faith by appropriate proceedings.
6.6. Limitation on Indebtedness. Except as forth on Schedule
6.6, 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 that is a Guaranty of an
Indebtedness of the Company or any of its Subsidiaries that is otherwise
Permitted Indebtedness).
6.7. 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
Holders) unless such Restricted Encumbrance is a Permitted Lien.
6.8. Limitation on Related Party Transactions. (a) The Company
shall not, and shall not permit any of its Subsidiaries to, enter into or be a
party to any transaction with any Related Parties (other than any of the Holders
or their Affiliates) except in the ordinary course of, and pursuant to the
reasonable requirements of, such Related Party's business and upon fair and
reasonable terms that are at least equivalent to an arm's-length transaction
with a Person that is not a Related Party. In addition, if any such transaction
or series of related transactions involves payments in excess of $25,000 in the
aggregate, the terms of such transactions must be disclosed in advance to each
Holder. All such transactions existing as of the date hereof are set forth on
Schedule 6.8.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any lending or borrowing transaction with any
director, officer or employee of the Company or any of its Subsidiaries.
(c) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) enter into or adopt or amend any existing agreement or
arrangement relating to severance, (ii) enter into or adopt or amend any
existing severance plan, (iii) enter into or adopt or amend any Benefit Plan or
Employee Agreement or (iv) grant any bonus, salary increase, severance or
termination pay to, any employee, officer, director or consultant other than in
the ordinary course of business consistent with past practice.
6.9. 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 shares of Common Stock issuable upon (i) exercise
of the Warrants, (ii) the conversion of the Notes and (iii) pursuant to Schedule
6.9. 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.
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6.10. Subsidiary Guarantees. The Company shall cause its
future direct and indirect Subsidiaries organized under the laws of any state of
the United States (or the District of Columbia) to jointly and severally
guarantee form of obligations of the Company under the Notes and this Agreement
pursuant to the form of Guarantee and Security Agreement attached as Exhibit
6.10. The Company shall cause its Subsidiaries organized under the laws of any
jurisdiction other than any state of the United States or the District of
Columbia to jointly and severally guarantee the obligations of the Company under
the Notes and this Agreement pursuant to a guarantee agreement.
6.11. Additional Offerings of Securities. Prior to seeking
financing from any third party consisting of an issuance of Equity Securities
(the "Proposed Securities") by the Company on or after the date hereof, the
Company shall notify the Holders of a description in reasonable detail of the
Proposed Securities, the amount proposed to be issued and the consideration the
Company desires to receive therefor (the "Notice"), which Notice shall
constitute an offer to the Holders with respect to the Proposed Securities on
the terms set forth therein. The Holders and the Company shall, for not less
than 20 days after receipt of the Notice (unless the Holders earlier indicate
that they have no interest in purchasing the Proposed Securities), discuss the
possibility of any of the Holders acquiring the Proposed Securities, after which
(if any of the Holders has not agreed to purchase the Proposed Securities on the
terms set forth in the Notice or such other terms as are mutually acceptable to
the Company and such Holder) the Company shall be permitted to seek and obtain
third-party investors to acquire the Proposed Securities, provided that the
closing of such acquisition by such third-party investor occurs within 90 days
from the date of the Notice and provided, further, that the acquisition of the
Proposed Securities by such third-party investor is on terms no more favorable
to such third-party investor than those terms set forth in the Notice. No Equity
Securities shall be issued by the Company to any Person unless the Company has
first offered such Equity Securities to the Holders in accordance with this
Section 6.11. This Section 6.11 shall not apply to the following issuances of
securities: (i) pursuant to an approved employee stock option plan, stock
purchase plan, or similar employee benefit program or agreement, where the
primary purpose is not to raise equity capital for the Company and (ii) the
issuance of Equity Securities as consideration in a business combination
approved by each member of the Board of Directors.
6.12. Pledges of Intercompany Notes. The Company shall, and
shall cause each of its Subsidiaries to, promptly pledge all Intercompany Notes
(and all security agreements and documents relating thereto) created after the
date hereof to the Collateral Agent as Collateral under the Collateral
Documentation. To the extent that, on or after the date hereof, the Company
makes any cash investment in any of its Subsidiaries (in accordance with Section
6.14) that are organized under the Laws of and doing business in the United
States, such investment shall be required to be made in the form of a loan,
which shall be evidenced by an Intercompany Note and all such Intercompany Notes
shall be pledged by the Company to the Collateral Agent as Collateral under the
Collateral Documentation.
6.13. No Speculative Transactions. The Company shall not, and
shall not permit any of its Subsidiaries to, engage in any transaction involving
commodity options, futures contracts or similar transactions.
6.14. Restricted Investments. The Company shall not, or permit
any of its Subsidiaries to, directly or indirectly, make or cause or permit, (i)
any direct or indirect advance to, (ii) any loan or other extension of credit
to, (iii) any Guarantee of any Indebtedness of, (iv) any capital contribution
to, (v) any purchase or other acquisition of any Equity Interests in, (vi) any
purchase or other acquisition of assets (other than in the ordinary course of
business) from or (vii) any merger with, any Person,
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including, without limitation, any of the Company's Subsidiaries in each case
other than Permitted Investments.
6.15. Financial Covenants. The Company shall maintain the
financial covenants specified in Schedule 6.15.
6.16. Sale-and-Leaseback Transactions. The Company shall not,
and shall not permit any of its Subsidiaries to, enter into any
Sale-and-Leaseback Transaction.
6.17. Line of Business. The Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business if, as a result, the
general nature of the business in which the Company and its Subsidiaries, taken
as a whole, would then be engaged would be substantially changed from the
general nature of the business in which the Company is engaged on the date of
this Agreement.
6.18. Sale of Assets. 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.
6.19. Indenture Relating to the Notes. Upon the written
request of the Required Holders, the Company, at its expense, shall cause to be
prepared, executed and delivered within 30 days after such request an indenture
(including a new form of note, any necessary related documentation and, from
time to time thereafter, any necessary supplements thereto) (the "Indenture")
with respect to the Notes, which Indenture shall contain terms and provisions
substantially the same as those set forth in Sections 6, 8, 9 and 13 hereof and
such other terms and provisions as are required under the Trust Indenture Act of
1939 and such other items and provisions as are customary in indentures relating
to publicly traded senior secured debt securities having a rating comparable to
the rating that the Notes would receive if rated by a nationally recognized
rating agency. In such event, the Company shall also appoint as trustee under
the Indenture a national banking association reasonably acceptable to the
Required Holders having its principal offices in New York, New York, and having
capital, surplus, and undivided profits of at least $50,000,000. In connection
with the execution of the Indenture, the Holders shall exchange all outstanding
Notes for new notes in the form contemplated by the Indenture, and upon such
exchange such new notes shall be deemed to be "Notes" for purposes hereof.
6.20. Financial Statements and Information. The Company shall
furnish to each Holder: (a) as soon as practicable and in any event within 45
days after the end of each of the four quarters of each fiscal year and within
90 days of the end of each fiscal year, (i) copies of the quarterly and annual
reports and of the other information, documents, and other reports that the
Company files or is required to file with the SEC pursuant to the Exchange Act
and of any other reports or information that the Company delivers or makes
available to any of its security holders, at the time of filing such reports
with the SEC or of delivery to the Company's security holders, as the case may
be (but in no event later than the time such filing or delivery is required
pursuant to the Exchange Act) or (ii) as soon as practicable and in any event
within 45 days after the end of each of the four quarters of each fiscal year
and within 90 days of the end of each fiscal year, quarterly reports for the
four quarters of each fiscal year of the Company and annual reports which the
Company would have been required to file under any provision of the Exchange Act
if it had a class of securities listed on a national securities exchange or was
otherwise required to file such reports under the Exchange Act, within 15
Business Days of when
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such report would have been filed under Section 13 of the Exchange Act, together
with copies of a consolidating balance sheet of the Company and its Subsidiaries
as of the end of each such accounting period and of the related consolidating
statements of income and cash flow for the portion of the fiscal year then
ended, all in reasonable detail and all certified by the principal financial
officer of the Company to present fairly the information contained therein in
accordance with GAAP (and in the case of annual reports, including financial
statements, audited and certified by the Company's independent public
accountants as required under the Exchange Act); (b) within 90 days after the
end of each fiscal year, a written statement by the Company's independent
certified public accountants stating as to the Company and its Subsidiaries
whether in connection with their audit examination, any Default or Event of
Default has come to their attention; (c)(i) within 45 days after the end of the
four quarters of the Company's fiscal year and within 90 days after the end of
the Company's fiscal year, an Officers' Certificate setting forth computations
in reasonable detail showing, as at the end of such quarter or fiscal year, as
the case may be, the Company's compliance with Sections 6.6, 6.7, 6.13, 6.14 and
6.15, and (ii) within 30 days after the end of each fiscal quarter, an Officers'
Certificate stating that as of the date of such certificate, based upon such
examination or investigation and review of this Agreement, as in the opinion of
such signer is necessary to enable the signer to express an informed opinion
with respect thereto, to the best knowledge of such signer, the Company has
kept, observed, performed and fulfilled each and every covenant contained in
this Agreement, and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof, and, to the best of such signer's
knowledge, no Default or Event of Default exists or has existed during such
period or, if a Default or Event of Default shall exist or have existed,
specifying all such defaults, and the nature and period of existence thereof,
and what action the Company has taken, is taking or proposes to take with
respect thereto; (d) promptly after becoming aware of (i) the existence of a
Default or Event of Default or any default under any of the Collateral
Documentation, (ii) any default or event of default under any Indebtedness of
the Company or any of its Subsidiaries, (iii) any Litigation or proceeding
affecting the Company or any of its Subsidiaries in which the amount claimed is
in excess of $[50,000] or in which injunctive relief is sought which if obtained
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or (iv) any change that has or could reasonably be
expected to have a Material Adverse Effect, an Officers' Certificate specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto; and (e) such other information,
including financial statements and computations, relating to the performance of
the provisions of this Agreement and the affairs of the Company and any of its
Subsidiaries as each Holder may from time to time reasonably request. The
Company shall keep at its principal executive office a true copy of this
Agreement (as at the time in effect), and cause the same to be available for
inspection at said office, during normal business hours and after reasonable
notice to the Company by any Holder.
6.21. Inspection. (a) Any Holder shall have the right to visit
and inspect any of the properties of the Company or any of its Subsidiaries, to
examine the books of account and records of the Company or any of its
Subsidiaries, to be provided with copies and extracts therefrom, to discuss the
affairs, finances and accounts of the Company or any of its Subsidiaries with,
and to be advised as to the same by, its and their officers and employees, and
its and their independent public accountants (and the Company authorizes such
independent public accountants to discuss the Company's or any of its
Subsidiaries' financial matters with such Holder and its representatives,
regardless of whether any representative of the Company is present, but provided
that an officer of the Company will be afforded a reasonable opportunity to be
present at any such discussion), all at such reasonable times and intervals
during normal business hours, and upon reasonable prior notice to the Company as
such Holder and the Company shall agree and at the expense of the Company
(including the costs incurred by such Holder in hiring accountants to conduct an
audit). The Company will likewise afford each Holder the opportunity to obtain
any information necessary to verify the accuracy of any of the representations
and warranties
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made by the Company hereunder or in any other Transaction Document or compliance
by the Company and its Subsidiaries with a covenant made herein or in any other
Transaction Document.
(b) By receipt of information under this Section 6.21, such
Holder agrees that all information (other than such information that is publicly
available or any other information that is in such Holder's possession prior to
any disclosure under this Section 6.21) provided to it pursuant to this Section
6.21 shall be used by such Holder solely in connection with its investment in
the Company and for no other purpose, and such Holder shall treat such
information as confidential in accordance with such reasonable internal
procedures as it applies generally to information of this kind and shall not
disclose such information to any Person, except (i) to any Governmental Entity
having jurisdiction over such Holder in the law or ordinary course of business,
(ii) to any other Person pursuant to subpoena or other process, whether legal,
administrative or other (and such Holder hereby agrees to provide the Company
with prompt notice of any such subpoena or other process), (iii) to such
Holder's officers, directors, trustees, employees, partners, legal counsel,
financial advisors or auditors or accountants who need access to such
information in connection with their duties, (iv) to any transferee or
prospective purchaser of a Note or interest therein who agrees to be bound by
this paragraph, or (v) to the extent necessary in the enforcement of each
Holder's rights hereunder and under the Notes during the continuance of a
Default or Event of Default.
6.22. Compliance with Laws. The Company shall, and shall cause
each of its Subsidiaries to, comply with all Laws, ordinances or governmental
rules or regulations to which each of them is subject, and shall obtain and
maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses. The Company shall
timely file all proxy statements, reports and other documents required to be
filed by it under the Exchange Act and such statements, reports and other
documents shall be in compliance in all Material respects with the requirements
of its respective report form and shall 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.
6.23. Supplemental Disclosure. From time to time as may be
requested by the Required Holders, the Company shall supplement each Schedule
hereto, or any representation herein or in any other Transaction Document, with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
such Schedule or as an exception to such representation or which is necessary to
correct any information in such Schedule or representation which has been
rendered inaccurate thereby (and, in the case of any supplements to any
Schedule, such Schedule shall be appropriately marked to show changes made
therein); provided that no such supplement to any such Schedule or
representation shall be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein; provided, further, that if such
supplement discloses any Default or Event of Default, the Company shall have 15
days to cure such Default or Event of Default so long as such Default or Event
of Default (i) is not caused by the failure to pay amounts due under this
Agreement and (ii) the Collateral Manager believes that such Default or Event of
Default can be cured within such 15-day period.
6.24. Proceeds. The proceeds of the sale of the Notes, the
Shares and the $7 Warrants shall be placed in a restricted account (the
"Restricted Account"), and the disbursements of proceeds from the Restricted
Account shall be made in accordance with the procedures set forth on Schedule
6.24. No part of the proceeds from the sale of the Notes, the Shares and the $7
Warrants
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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 Regulation T, U or X of
such Board.
6.25. Insurance; Damage to or Destruction of Collateral. (a)
The Company shall, and shall cause each of its Subsidiaries to, at its sole cost
and expense, maintain the policies of insurance described on Schedule 2.7(b) in
form and with insurers reasonably acceptable to the Required Holders. If the
Company or any of its Subsidiaries at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay all
premiums relating thereto, the Collateral Agent may (at the direction of the
Required Holders) at any time or times after ten days' written notice to the
Company obtain and maintain such policies of insurance and pay such premiums and
take any other action with respect thereto that the Required Holders deem
advisable. By doing so, the Collateral Agent and the Holders shall not be deemed
to have waived any Default or Event of Default arising from the Company's or any
of its Subsidiaries' failure to maintain such insurance or pay any premiums
therefor. Neither the Collateral Agent nor the Required Holders shall have any
obligation to obtain insurance for the Company or any of its Subsidiaries or to
pay any premiums therefor. All sums so disbursed, including reasonable
attorneys' fees, court costs and other charges related thereto, shall be payable
on demand by the Company to the Collateral Agent and shall be secured by the
Collateral.
(b) The Company shall at all times maintain, with financially
sound and reputable insurers, "key man" term life insurance on the life of Mr.
Carl Sahi in the amount of $______ in form reasonably satisfactory to the
Holders. Such "key man" term life insurance policy shall be owned by the Company
and the Company shall be named as the payee of all benefits thereunder.
6.26. Rights of Required Holders to Designate Directors; Board
Composition. (a) Prior to or simultaneously with the Closing, the Company shall
expand the size of its Board of Directors from five to seven members and shall
at all times cause two individuals designated by the Holders (any such
individual so designated pursuant to this Section 6.26 from time to time, a
"Purchaser Designee" and, together, the "Purchaser Designees") to be appointed
to the Board of Directors to fill the vacancies created by such expansion, and
the Company will take all necessary action to cause a Purchaser Designee to be
appointed to (i) each present and future committee of the Board of Directors
(ii) the board of directors or governing body of any future Subsidiary of the
Company (a "Subsidiary Board") and (iii) each Committee of such Subsidiary
Board. Thereafter, in connection with any annual meeting of stockholders at
which the term of a Purchaser Designee is to expire, the Company will take all
necessary action to cause such Purchaser Designee to be elected to the Board of
Directors. In the event of any vacancy arising by reason of the resignation,
death, removal or inability to serve of any Purchaser Designee, the Holders
shall be entitled to designate a successor to fill such vacancy for the
unexpired term (and, thereafter, such successor shall be deemed a Purchaser
Designee for all purposes of this Section 6.26). The Company further agrees that
the Holders shall be entitled to designate a non-voting observer to attend and
participate in (but not to vote at) all meetings of the Board of Directors,
committee of the Board of Directors, each Subsidiary Board and each committee of
such Subsidiary Board (the "Non-Voting Observer"). The Non-Voting Observer, if
appointed, shall have the same access to information concerning the business and
operations of the Company and its Subsidiaries and at the same time as directors
of the Company and its Subsidiaries and shall be entitled to participate in
discussions and to consult with the Board of Directors and each Subsidiary Board
without voting, and the Board of Directors and each Subsidiary Board shall give
due consideration to the advice and recommendations of such Non-Voting Observer.
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(b) Without the prior written consent of the Holders, (i) the
Board of Directors shall not consist of more than seven members and (ii) the
Executive Committee of the Board of Directors shall not consist of more than
four members.
(c) Notwithstanding anything to the contrary contained herein,
so long as (i) (Y) the Holders in the aggregate (i) own at least 5% of the
Common Stock (on a fully diluted basis) or (Z) hold at least $10 million
aggregate Face Amount of the Notes, (ii) there has not been any change, event or
development or series of changes, events or developments that could or could
reasonably be expected to have a Material Adverse Effect, (iii) at least [three]
individuals who are members of the Board of Directors as of the date hereof
remain members of the Board of Directors, (iv) there is no material Litigation
pending or threatened against the Company and/or any Subsidiary and (v) the
Board of Directors or any Subsidiary Board has not failed to address in a timely
fashion any concerns raised by the Purchaser Designee(s) regarding the conduct
of, or breach of duty by, any officer or director of the Company or any
Subsidiary, the Holders agree that they shall appoint and cause one Purchaser
Designee to serve on the Board of Directors.
6.27. Executive Officers. (a) The Company shall promptly, but
in no event later than ____ days from the date hereof, hire an additional key
officer to fill one of the senior executive positions, whose appointment shall
be approved by the Board of Directors (which approval shall include the
affirmative vote of each of the Purchaser Designees).
(b) Without the approval of the Board of Directors, which
approval shall include the affirmative vote of each of the Purchaser Designees,
the Company shall not make any change in, or appointment of, key executive
officers of the Company, including, without limitation, the Chief Executive
Officer, the Chief Financial Officer, Executive Vice President, Chief Operating
Officer, General Counsel or similar positions.
6.28. Board and Committee Notice Requirement. In addition to
any requirements specified in the By-Laws of the Company, the Company shall
notify each Purchaser Designee and the Non-Voting Observer, by telecopy, of (a)
every meeting (or action by written consent) of the Board of Directors and (b)
every meeting (or action by written consent) of any Subsidiary Board and of any
committee of the Board of Directors or Subsidiary Board, at least three days in
advance of such meeting (or distribution of written consents), or, if such
notice under the circumstances is not practicable, as soon before the meeting
(or distribution) as is practicable.
6.29. Reimbursement of Certain Expenses. The Company shall,
upon request therefor, promptly reimburse each Purchaser Designee and the
Non-Voting Observer for all reasonable expenses incurred by them in connection
with their attendance at meetings of the Board of Directors, any Subsidiary
Board or of committees of any of the foregoing and any other activities
undertaken by them in their capacity as directors of the Company or any
Subsidiary or observer, as applicable. The foregoing shall be in addition to,
and not in lieu of (or in duplication of), any indemnification or reimbursement
obligations of the Company under the Certificate of Incorporation of the Company
or the By-Laws or by Law. The Non-Voting Observer shall be entitled to
indemnification from the Company and its Subsidiaries to the maximum extent
permitted by Law as though he or she were a director of the Company or the
Subsidiary.
6.30. Limitation of Agreements. The Company shall not, and
shall not permit any Subsidiaries to, enter into any Contract, or any amendment,
modification, extension or supplement to any
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of its existing Contract or the By-Laws or Certificate of Incorporation of the
Company, that prohibits the Company from honoring and observing its obligations
under the Transaction Documents.
6.31. Redemption of Convertible Debentures. As soon as
practicable after the date hereof, but in no event later than [ ] days from the
date hereof, the Company shall cause all of its outstanding Convertible
Debentures to be redeemed in accordance with the terms and conditions thereof.
6.32. Preparation of Quarterly Budgets. The Company shall
furnish to the Collateral Agent as soon as practicable, but in any event no
later than 10 days before the end of each of the quarterly periods of each
fiscal year of the Company, an operating budget (each, a "Quarterly Budget")
approved and adopted by a majority of the Board of Directors (which majority
shall include the Purchaser Designees) for the Company and its Subsidiaries,
taken as a whole, for the next quarterly period (provided that the Company need
not furnish the Collateral Agent with a Quarterly Budget for the quarterly
period commencing on January 1, 2000). Each Quarterly Budget shall specify,
among other things, the amount of funds needed by the Company and its
Subsidiaries in the next quarter to operate the business of the Company and its
Subsidiaries (the amount of such funds, the "Quarterly Amount").
6.33. 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 Collateral
Agent and the Quarterly Budgets.
7. Events of Default and Remedies.
7.1. 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 the Accreted Value of
or premium, if any, and interest in respect of any Note when it becomes
due and payable; or
(b) default in the performance of any agreement or
covenant in, or provision of, this Agreement, the Notes, or the other
documents executed and delivered in connection with this Agreement
(including any 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), or any representation or warranty made in any document executed
and delivered in connection with this Agreement (including any
Transaction Document) was false in any material respect on the date as
of which made or deemed made; or
(c) the Company or any of its Subsidiaries shall: (A)
default in any payment of principal of or interest on any Indebtedness
(other than the Notes 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
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holders or beneficiary or beneficiaries) to cause, with 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 7.1(c) would equal or exceed $500,000; or
(d) a final judgment or judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against any Company or any of its Subsidiaries and such judgment or
judgments remain 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 $500,000, or
the Required Holders shall determine that any Governmental Entity
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 Required Holders believe could, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect or that adversely affects the Holders' security interest in the
Collateral; or
(e) 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
(f) 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 dismissed
within 60 days; or
(g) a court or other Governmental Entity of competent
jurisdiction enters a final judgment holding any of the documents
delivered in connection with this Agreement (including any 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 any of the documents delivered in connection with
this Agreement are invalid or unenforceable; or
(h) any 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 [(or the
trustee in the case of the Intercreditor Agreement)] shall challenge
the enforceability of any Transaction Document or shall assert in
writing, or engage in any action or
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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 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
(i) 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 Agreement (other than payments elsewhere in this
Section specifically dealt with); or
(j) there shall exist with respect to any Benefit
Plan any "prohibited transaction" (as defined in Section 406 of ERISA
or Section 4975 of the Code); (ii) there shall exist with respect to
any Benefit Plan that is a "defined benefit plan" (within the meaning
of Section 3(35) of ERISA) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA or Section 412 of the Code, whether or
not waived); (iii) a "reportable event" (within the meaning of Section
4043 of ERISA, but excluding any reportable event with respect to which
the 30-day notice requirement of Section 4043 has been waived) shall
occur, or judicial or administrative proceedings shall have commenced,
with respect to any Benefit Plan that is a "defined benefit plan"
(within the meaning of Section 3(35) of ERISA), which reportable event
or proceedings is, in the reasonable opinion of the Holders, likely to
result in the termination of such Benefit Plan; (iv) there shall exist
with respect to any Benefit Plan that is a "multiemployer plan" (within
the meaning of Section 4001(a)(3) of ERISA) any "withdrawal liability"
(within the meaning of Section 4201 of ERISA); or (v) any Benefit Plan
that is a "defined benefit plan" (within the meaning of Section 3(35)
of ERISA) shall terminate; and in the case of each of clauses (i)
through (v) above, such event or condition could individually or in the
aggregate with all other such events or conditions have a Material
Adverse Effect.
7.2. Acceleration of Maturity. If any Event of Default (other
than an Event of Default specified in clause (e), (f), (g) or (h) of Section
7.1) shall have occurred and be continuing, the Required Holders may, by notice
to the Company, declare the entire unpaid Accreted Value of, and interest, if
any, in respect of the Notes (to the full extent permitted by applicable law) to
be immediately due and payable (and such Accreted Value shall be based on the
Accreted Value of the Notes to the day prior to such payment date), and upon
such declaration all of such amount shall be immediately due and payable, in
each and every case without presentment, demand, protest or further notice, all
of which are hereby waived, anything in the Notes or in this Agreement to the
contrary notwithstanding; provided that if an Event of Default under clause (e),
(f), (g) or (h) of Section 7.1 shall have occurred, the entire unpaid Face
Amount of each Note (to the full extent permitted by applicable law), shall
immediately become due and payable, without any declaration and without
presentment, demand, protest or further notice, all of which are hereby waived,
anything in the Notes or this Agreement to the contrary notwithstanding.
7.3. 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
Agreement or the Notes or in aid of the exercise of any power granted in this
Agreement or the Notes, and each Holder may enforce the payment of any Note held
by such Holder and any of its other legal or equitable rights.
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7.4. Conduct No Waiver; Collection Expenses. No course of
dealing on the part of any Holder, nor any delay or failure on the part of any
Holder to exercise any of its rights, shall operate as a waiver of such right or
otherwise prejudice any Holder's rights, powers and remedies. If the Company
fails to pay, when due, any payment in respect of any Note, the Company will pay
the Holder of such Note, 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 any Note hereunder, including reasonable legal fees incurred by such
Holder in enforcing its rights hereunder.
7.5. Annulment of Acceleration. If a declaration is made in
accordance with Section 7.2, then and in every such case, the Required Holders
may, by an instrument delivered to the Company, annul such declaration and the
consequences thereof.
7.6. Remedies Cumulative. No right or remedy conferred upon or
reserved to each Purchaser or the Collateral Agent or the Holders under this
Agreement 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 Agreement or by applicable Law to each Holder or
the Collateral Agent or the Holders may be exercised from time to time and as
often as may be deemed expedient by such Holder or the Collateral Agent or the
Holders.
8. Redemption
8.1. Optional Redemption. Subject to each Holder's right of
conversion set forth in Section 9, the Company shall have the right, at its sole
option and election made in accordance with Section 8.4 and subject to Section
8.4, to redeem the Notes after __________, 2001, in whole or in part, at a
redemption price of 145% of the Accreted Value of the Notes to the day prior to
the redemption date (the "Optional Redemption Price"); provided, however, that
if such redemption date occurs after ___________, 2002, the Optional Redemption
Price shall decrease to 110% of the Accreted Value of the Notes on the day prior
to the redemption date.
8.2. Partial Redemption. If less than all of the Notes at the
time outstanding are to be redeemed, the aggregate Accreted Value of the Notes
to be redeemed shall be prorated among the outstanding Notes; provided, however,
that in the event that the aggregate Accreted Value of the Notes then
outstanding is $1,000,000 or less, the Company shall be required to redeem all
of such outstanding Notes if it elects to redeem any such Notes.
8.3. Change of Control. The Company shall make an offer, in
accordance with the procedures set forth in Section 8.4(b), to acquire the Notes
for cash at a redemption price of 110% of the Accreted Value of the Notes on the
day prior to the redemption date (the "Change of Control Redemption Price"), in
the event of (i) a Change of Control, a merger, consolidation or other
combination involving the Company, or (ii) a Change of Control of a Subsidiary
of the Company or a group of Subsidiaries of the Company occurs and such
Subsidiary or group of Subsidiaries, individually or in the aggregate, together
with their consolidated Subsidiaries and all other Subsidiaries previously
subject to a Change of Control, if any, represent more than 50% of the revenues
or net assets of the Company and its Subsidiaries on a consolidated basis as of
the last date of the immediately preceding fiscal quarter of the Company or for
the twelve month period then ended.
8.4. Redemption Procedures. (a) Notice of any redemption of
Notes pursuant to Section 8.1 shall be mailed at least 30 but not more than 60
days prior to the date fixed for redemption to
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each Holder of a Note to be redeemed, at such Holder's address as it appears in
the Note Register. In order to facilitate the redemption of Notes, the Board of
Directors may fix a record date for the determination of Notes to be redeemed
which shall be a date at least 20 days following the date of the notice.
(b) Promptly following a Change of Control (but in no event
more than five Business Days thereafter), the Company shall mail to each Holder,
at such Holder's address as it appears in the Note Register, notice of such
Change of Control, which notice shall set forth such Holder's right to require
the Company to redeem any or all Notes held by it. The Company shall thereafter,
during a period of 90 days from the date of such notice, redeem any Note, in
whole or in part, at the option of the Holder thereof, upon at least five days'
written notice to the Company by such Holder specifying (i) the Accreted Value
of Notes to be redeemed and (ii) the redemption date.
(c) On the date of any redemption being made pursuant to
Section 8.1, 8.2 or 8.3 that is specified in a notice given pursuant to this
Section 8.4, the Company shall wire transfer to such Holder the Optional
Redemption Price or the Change of Control Redemption Price, as the case may be,
for the Accreted Value of such Holder's Notes and premium, if any, so redeemed.
9. Conversion
9.1. Holder's Option to Convert into Common Stock. Subject to
the provisions for adjustment hereinafter set forth, any Note or any portion of
the outstanding Accreted Value of such Note shall be convertible at the option
of the Holder thereof at any time after the Closing into fully paid and
nonassessable shares of Common Stock at a conversion price, determined as
hereinafter provided, in effect at the time of conversion.
The number of shares of Common Stock issuable upon conversion
of a Note shall be determined by dividing the Accreted Value of such Note or
portion thereof surrendered for conversion on the day prior to the conversion
date by the Conversion Price. The "Conversion Price" shall initially be $3.00
per share, subject to adjustment as provided in this Section 9.
9.2. Exercise of Conversion Privilege. (a) Conversion of the
Notes may be effected by any Holder thereof upon the surrender to the Company at
the office of the Company designated for notices in accordance with Section 14.6
or at the office of any agent or agents of the Company, as may be designated by
the Board of Directors (the "Transfer Agent"), of the Notes to be converted,
accompanied by a written notice stating that such Holder elects to convert all
or a specified portion of the Accreted Value of such Notes in accordance with
the provisions of this Section 9 and specifying the name or names in which such
Holder wishes the certificate or certificates for shares of Common Stock to be
issued. In case any Holder's notice shall specify a name or names other than
that of such Holder, such notice shall be accompanied by payment of all transfer
Taxes payable upon the issuance of shares of Common Stock in such name or names.
Other than such Taxes, the Company will pay any and all issue and other Taxes
(other than Taxes based on income) that may be payable in respect of any issue
or delivery of shares of Common Stock on conversion of Notes pursuant hereto. As
promptly as practicable, and in any event within five Business Days after the
surrender of such Notes and the receipt of such notice relating thereto and, if
applicable, payment of all transfer Taxes (or the demonstration to the
satisfaction of the Company that such Taxes have been paid), the Company shall
deliver or cause to be delivered (i) a certificate or certificates representing
the number of validly issued, fully paid and nonassessable full shares of Common
Stock to which the Holder of the Notes being converted shall be entitled and
(ii) if less than the entire Accreted Value of any Note surrendered is being
converted, a new
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Note in the Accreted Value that remains outstanding upon such partial
conversion. Such conversion shall be deemed to have been made at the close of
business on the date of giving such notice so that the rights of any Holder
thereof as to the Note or Notes (or portion thereof) being converted shall cease
except for the right to receive shares of Common Stock in accordance herewith,
and the Person entitled to receive the shares of Common Stock shall be treated
for all purposes as having become the record holder of such shares of Common
Stock at such time, so long as such Holder's Notes are delivered to the Company
within two Business Days after the date of the giving of notice.
(b) In case any Notes are to be redeemed pursuant to Section
8.1, such right of conversion shall cease and terminate as to the Notes to be
redeemed at the close of business on the Business Day preceding the date fixed
for redemption unless (i) the Company shall default in the payment of the
Optional Redemption Price or (ii) a Holder of a Note to be redeemed has given
notice to the Company of such Holder's election to convert all or any portion of
a Note prior to the date fixed for redemption. For the avoidance of doubt, both
the Holders and the Company acknowledge that the Holders' right to convert the
Notes into Common Stock remains in effect until any redemption and will not be
suspended by any notice of redemption.
9.3. Fractions of Shares; Interest. In connection with the
conversion of any Note into Common Stock, no fractional shares shall be issued,
but in lieu thereof the Company shall pay a cash adjustment in respect of each
fractional interest in an amount equal to such fractional interest multiplied by
the Current Market Price per share of Common Stock on the Trading Day on which
any Note is deemed to have been converted. If more than one Note shall be
surrendered for conversion by the same Holder at the same time, the number of
full shares of Common Stock issuable on conversion thereof shall be computed on
the basis of the aggregate Accreted Value of Notes so surrendered, together with
cash in lieu of any fractional share of Common Stock.
9.4. Reservation of Stock; Listing. (a) The Company shall at
all times reserve and keep available for issuance upon the conversion of the
Notes, free from any preemptive rights, such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of the aggregate Face Amount of the Notes into Common
Stock, and shall take all action required to increase the authorized number of
shares of Common Stock, if necessary, to permit the conversion of the aggregate
Face Amount of the Notes.
(b) If at the time of conversion, the Common Stock is listed
on a national securities exchange, or is designated as a "national market system
security" on the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), the Company shall take all action necessary to
cause the shares of Common Stock issuable upon conversion of the Notes to be
listed on such exchange, subject to official notice of issuance.
9.5. Rights. If the Company shall issue shares of Common Stock
upon conversion of any Notes as contemplated by this Section 9, the Company
shall issue together with each such share of Common Stock any rights issued to
holders of Common Stock, irrespective of whether such rights shall be
exercisable at such time, but only if such rights are issued and outstanding and
held by other holders of Common Stock at such time and have not expired.
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9.6. Adjustment of Conversion Ratio. The Conversion Price will
be subject to adjustment from time to time as follows:
(a) In case the Company shall at any time or from
time to time after the date hereof (A) pay a dividend, or make a distribution,
on the outstanding shares of Common Stock in shares of Common Stock, (B)
subdivide the outstanding shares of Common Stock; (C) combine the outstanding
shares of Common Stock into a smaller number of shares; or (D) issue by
reclassification of the shares of Common Stock any shares of capital stock of
the Company, then, and in each such case, the Conversion Price in effect
immediately prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the Holder of any Note thereafter surrendered
for conversion into Common Stock shall be entitled to receive the number of
shares of Common Stock of the Company that such Holder would have owned or would
have been entitled to receive after the happening of any of the events described
above, had such Notes been surrendered for conversion immediately prior to the
happening of such event or the record date therefor, whichever is earlier. An
adjustment made pursuant to this clause (a) shall become effective (x) in the
case of any such dividend or distribution, immediately after the close of
business on the record date for the determination of holders of shares of Common
Stock entitled to receive such dividend or distribution, or (y) in the case of
such subdivision, reclassification or combination, at the close of business on
the day upon which such corporate action becomes effective. No adjustment shall
be made pursuant to this clause (a) in connection with any transaction to which
Section 9.7 applies.
(b) If at any time the Company shall issue shares of
Common Stock (or rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock (collectively "Convertible Securities"))
at a price per share (or having a conversion price per share) less than the
Conversion Price per share of Common Stock as of the date of issuance of such
shares (or, in the case of Convertible Securities, less than the Conversion
Price as of the date of issuance of the Convertible Securities in respect of
which shares of Common Stock were issued), then the Conversion Price shall be
adjusted by multiplying (A) the Conversion Price in effect on the day
immediately prior to such date by (B) a fraction, the numerator of which shall
be the sum of (1) the number of shares of Common Stock outstanding on such date
and (2) the number of shares of Common Stock purchasable with the aggregate
consideration receivable by the Company for the total number of shares of Common
Stock so issued (or into which the rights, warrants or other convertible
securities may convert), and the denominator of which shall be the sum of (x)
the number of shares of Common Stock outstanding on such date and (y) the number
of additional shares of Common Stock issued (or into which the Convertible
Securities may convert).
An adjustment made pursuant to this Section 9.6(b)
shall be made on the next Business Day following the date on which any such
issuance is made and shall be effective retroactively to the close of business
on the date of such issuance. For purposes of this Section 9.6(b), the aggregate
consideration receivable by the Company in connection with the issuance of
shares of Common Stock or of Convertible Securities shall be deemed to be equal
to the sum of the aggregate offering price (before deduction of underwriting
discounts or commissions and expenses payable to third parties) of all such
Common Stock and Convertible Securities plus the minimum aggregate amount, if
any, payable upon exercise or conversion of any such Convertible Securities. The
issuance or reissuance of any shares of Common Stock (whether treasury shares or
newly issued shares) pursuant to (i) a dividend or distribution on, or
subdivision, combination or reclassification of, the outstanding shares of
Common Stock requiring an adjustment in the Conversion Price pursuant to Section
9.6(a) or (ii) any stock option plan or program of the Company currently in
effect involving the grant of options to employees of the Company at the Current
Market Price shall not be deemed to constitute an issuance of Common Stock or
Convertible
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Securities by the Company to which this Section 9.6(b) applies. No adjustment
shall be made pursuant to this Section 9.6(b) in connection with any transaction
to which Section 9.7 applies.
(c) In case the Company shall at any time or from
time to time after the date hereof declare, order, pay or make a dividend or
other distribution (including, without limitation, any distribution of stock or
other securities or property or Convertible Securities of the Company or any of
its Subsidiaries by way of dividend or spinoff), on its Common Stock, then, and
in each such case, the Conversion Price shall be adjusted by multiplying (1) the
applicable Conversion Price on the day immediately prior to the record date
fixed for the determination of stockholders entitled to receive such dividend or
distribution by (2) a fraction, the numerator of which shall be the average
Current Market Price of the Common Stock for the period of 20 Trading Days
preceding such record date, and the denominator of which shall be such average
Current Market Price of the Common Stock less the Fair Market Value per share of
Common Stock (as determined in good faith by the board of directors of the
Company, a certified resolution with respect to which shall be mailed to each
Holder) of such dividend or distribution. No adjustment shall be made pursuant
to this Section 9.6(c) in connection with any transaction to which Section 9.7
applies.
(d) In case a tender or exchange offer made by the
Company or any Affiliate of the Company for all or any portion of the Common
Stock shall expire and such tender or exchange offer shall involve the payment
by the Company or such Affiliate of consideration per share of Common Stock
having a Fair Market Value at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds the Current Market Price per share of Common
Stock on the Trading Day next succeeding the Expiration Time, the Conversion
Price shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this subsection
(d) by a fraction (which shall not be greater than one) of which the numerator
shall be the number of shares of Capital Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time multiplied by the Current
Market Price per share of Common Stock on the Trading Day next succeeding the
Expiration Time and of which the denominator shall be the sum of (i) the Fair
Market Value of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (ii) the product of the number of
shares of Capital Stock outstanding (less any Purchased Shares) at the
Expiration Time and the Current Market Price per share of Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to become
retroactively effective immediately prior to the opening of business on the day
following the Expiration Time.
(e) For purposes of this Section 9.6, the number of
shares of Common Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the account of the Company.
(f) The term "dividend," as used in this Section 9.6,
shall mean a dividend or other distribution upon Capital Stock of the Company.
(g) Anything in this Section 9.6 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 (each of which shall be carried forward), determined as above
provided, shall have resulted in a change of the Conversion Price by at least
one one-hundredth of one
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share of Common Stock, and when the cumulative net effect of more than one
adjustment so determined shall be to change the Conversion Price by at least one
one-hundredth of one share of Common Stock, such change in Conversion Price
shall thereupon be given effect.
(h) The certificate of any firm of independent public
accountants of recognized national standing selected by the Board of Directors
(which may be the firm of independent public accountants regularly employed by
the Company) shall be presumptively correct for any computation made under this
Section 9.6.
(i) If the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive a dividend or
other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion granted by this Section
9.6 or in the Conversion Price then in effect shall be required by reason of the
taking of such record.
9.7. Merger or Consolidation. In the case of any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or a substantial portion of the Company's assets to another Person or
other transaction which is effected in such a manner that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock
(each of the foregoing being referred to as a "Transaction"), each Note then
outstanding shall thereafter be convertible into, in lieu of the Common Stock
issuable upon such conversion prior to consummation of such Transaction, the
kind and amount of shares of stock and other securities and property receivable
(including cash) upon the consummation of such Transaction by a holder of that
number of shares of Common Stock into which the Accreted Value of such Note was
convertible immediately prior to such Transaction. In each such case, the
Company shall also make appropriate provisions (in form and substance
satisfactory to the Required Holders) to insure that the provisions of this
Section 9.6 shall thereafter be applicable to the Notes (including, in the case
of any such consolidation, merger or sale in which the successor entity or
purchasing entity is other than the Company, an immediate adjustment of the
Conversion Price to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and a corresponding immediate adjustment in
the number of shares of Common Stock acquirable and receivable upon conversion
of the Notes, in each case if the value so reflected is less than the Conversion
Price in effect immediately prior to such consolidation, merger or sale). The
Company shall not effect any such consolidation, merger or sale, unless prior to
the consummation thereof, the successor corporation (if other than the Company)
resulting from consolidation or merger or the corporation purchasing such assets
assumes by written instrument (in form reasonably satisfactory to the Required
Holders), the obligation to deliver to each such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to acquire. In case securities or property other than
Common Stock shall be issuable or deliverable upon conversion as aforesaid, then
all references in this Section 9 shall be deemed to apply, so far as appropriate
and nearly as may be, to such other securities or property.
9.8. Notice of Certain Corporate Actions. In case at any time
or from time to time the Company shall pay any stock dividend or make any other
non-cash distribution to the holders of its Common Stock, or shall offer for
subscription pro rata to the holders of its Common Stock any additional shares
of stock of any class or any other right, or there shall be any capital
reorganization or reclassification of the Common Stock or consolidation or
merger of the Company with or into another corporation, or any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, or there shall be a voluntary or involuntary
dissolution, liquidation
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or winding up of the Company, then, in any one or more of such cases, the
Company shall give at least 20 days' prior written notice (the time of mailing
of such notice shall be deemed to be the time of giving thereof) to the Holders
of the Notes at their addresses as shown in the Note Register as of the date on
which (i) a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which Section 9.7 applies the Company shall give at least 30
days' prior written notice as aforesaid. Such notice shall also specify the date
as of which the holders of the Common Stock of record shall participate in such
dividend, distribution or subscription rights or shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
9.9. Reports as to Adjustments. Upon any adjustment of the
Conversion Price then in effect and any increase or decrease in the number of
shares of Common Stock issuable upon the operation of the conversion provisions
set forth in this Section 9, then, and in each such case, the Company shall
promptly deliver to each Holder and the Transfer Agent of the Notes and Common
Stock, a certificate signed by the President or a Vice President and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the Company setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated and specifying
the Conversion Price then in effect following such adjustment, and shall set
forth in reasonable detail the method of calculation of each and a brief
statement of the facts requiring such adjustment. Where appropriate, such notice
to any Holder may be given in advance and included as part of the notice
required under the provisions of Section 9.8.
10. The Collateral Agent.
10.1. Appointment. Each Purchaser for itself and for future
Holders hereby irrevocably designates and appoints Appaloosa Management L.P. as
the Collateral Agent under this Agreement, and irrevocably authorizes the
Collateral Agent to take such action on such Purchaser's behalf and any future
Holder's behalf and to exercise such powers and perform such duties as are
expressly delegated to the Collateral Agent by the terms of the Transaction
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Collateral Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Purchaser or
future Holder, and no implied covenants, functions, responsibilities, duties,
obligations or Liabilities shall be read into this Agreement or any of the
Transaction Documents or otherwise exist against the Collateral Agent.
10.2. Delegation of Duties. The Collateral Agent may execute
any of its duties under the Transaction Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys-in-fact selected by
it with reasonable care, except as otherwise provided in Section 10.3.
10.3. Exculpatory Provisions. Neither the Collateral Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact, Affiliates
or Subsidiaries shall be (i) liable for any action taken or omitted to be taken
by any of them under or in connection with the Transaction Documents, or (ii)
responsible in any manner to any of the Purchasers or future Holders for any
recitals, statements, representations or warranties made by the Company or any
of its Subsidiaries or any officer thereof
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contained in the Transaction Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by the Collateral
Agent under or in connection with, the Transaction Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of the
Transaction Documents or for any failure of the Company or any of its
Subsidiaries to perform its obligation thereunder. The Collateral Agent shall
not be under any obligation to any Purchaser or future Holder to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, any Transaction Document, or to inspect the properties,
books or records of the Company or any of its Subsidiaries.
10.4. Reliance by the Collateral Agent. The Collateral Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Company), independent accountants and other experts selected by the Collateral
Agent. The Collateral Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Collateral Agent.
The Collateral Agent shall be fully justified in failing or refusing to take any
action under any Transaction Document unless it shall first receive such advice
or concurrence of the Required Holders (or, where unanimous consent of the
Holders is expressly required hereunder or thereunder, such Holders) as it deems
appropriate or it shall first be indemnified to its satisfaction by the Holders
against any and all Liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Collateral Agent shall in
all cases be fully protected in acting, or in refraining from acting, under any
Transaction Document in accordance with a request of the Required Holders, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all Purchasers and all future Holders of the Notes.
10.5. Notice of Default. The Collateral Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Collateral Agent has received written notice from a
Holder or the Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Collateral Agent receives such a notice, the Collateral Agent
shall promptly give notice thereof to all Holders. The Collateral Agent shall
take such action with respect to such Default or Event of Default as shall be
directed by the Required Holders, provided that (i) the Collateral Agent shall
not be required to take any action that exposes the Collateral Agent to any
Liability or that is contrary to this Agreement or applicable Law and (ii)
unless and until the Collateral Agent shall have received such directions, the
Collateral Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such default or Event or
Default as it shall deem advisable in the best interests of the Holders.
10.6. Non-Reliance on Collateral Agent and Other Purchasers.
Each Purchaser for itself and all future Holders of the Notes acquired by such
Purchaser expressly acknowledges that neither the Collateral Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or
Affiliates has made any representation or warranties to it and that no act by
the Collateral Agent hereafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by the Collateral Agent to any such Purchaser or Holder. Each
Purchaser for itself and all future Holders of the Notes acquired by such
Purchaser represents to the Collateral Agent that it has, independently and
without reliance upon the Collateral Agent or any other Holder, and based on
such documents and information as it has deemed appropriate, made its own
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appraisal of and investigation into the business, operation, property, financial
and other condition and creditworthiness of the Company and its Subsidiaries,
and made its own decision to make its investment hereunder and to enter into
this Agreement. Each Purchaser also represents for itself and all future Holders
of the Notes acquired by such Purchaser that it will, independently and without
reliance upon the Collateral Agent or any other Holder, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under the Transaction Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Company and its
Subsidiaries. Except for notices, reports and other documents expressly required
to be furnished to the Holders by the Collateral Agent hereunder, the Collateral
Agent shall not have any duty or responsibility to provide any Holder with any
credit or other information concerning the business, financial condition,
assets, liabilities, net assets, properties, results of operations, value,
prospects and other condition or creditworthiness of the Company and its
Subsidiaries which may come into the possession of the Collateral Agent or any
of its officers, directors, employees, agents, attorneys-in-fact, Affiliates or
any of its Subsidiaries.
10.7. Indemnification. The Purchasers and the future Holders
jointly and severally agree to indemnify the Collateral Agent in its capacity as
such (to the extent not reimbursed by the Company and its Subsidiaries and
without limiting the obligation of the Company and its Subsidiaries to do so),
from and against any and all Liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever that may at any time be imposed on, incurred by or asserted
against the Collateral Agent in any way relating to or arising out of the
Transaction Documents or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted by the
Collateral Agent under or in connection with any of the foregoing, provided that
no Purchaser or future Holder shall be liable for the payment of any portion of
such Liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the Collateral
Agent's gross negligence or willful misconduct. The agreements contained in this
Section 10.7 shall survive the payment of the Notes and all other amounts
payable hereunder.
10.8. Collateral Agent in its Individual Capacity. The
Collateral Agent and its Affiliates and Subsidiaries may make loans to, accept
deposits from and generally engage in any kind of business with the Company and
its Subsidiaries as though the Collateral Agent were not the Collateral Agent
hereunder. With respect to its loans made or renewed by it or any Note issued to
it, the Collateral Agent shall have the same rights and powers, duties and
Liabilities under the Transaction Documents as any Holder and may exercise the
same as though it were not the Collateral Agent and the terms "Purchaser",
"Purchasers", "Holder" and "Holders" shall include the Collateral Agent in its
individual capacity.
10.9. Successor Collateral Agent. The Collateral Agent may
resign as Collateral Agent upon 30 days' notice to the Company (and the Company
shall promptly notify the Holders thereof). If the Collateral Agent shall resign
as Collateral Agent under the Transaction Documents, then the Required Holders
shall appoint a successor agent for the Holders whereupon such successor agent
shall succeed to the rights, powers and duties of the Collateral Agent and the
term "Collateral Agent" shall mean such successor agent effective upon its
appointment, and the former Collateral Agent's rights, powers and duties as
Collateral Agent shall be terminated, without any other or further act or deed
on the part of such former Collateral Agent or any of the parties to this
Agreement or any Holders of the Notes. After any retiring Collateral Agent's
resignation hereunder as Collateral Agent, the provisions of this
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Section 10 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Collateral Agent under the Transaction Documents.
11. Interpretation.
11.1. Definitions.
"$7 Warrants" shall have the meaning ascribed thereto in the
Recitals.
"Accreted Value" shall have the meaning ascribed thereto in
Section 5.3.
"Action" shall mean see Section 12.1(b)(i).
"Agreement" shall have the meaning ascribed thereto in the
Preamble.
"Affiliate" shall have the respective meanings ascribed to
such term 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 any Purchaser
or Holder or any limited partners of a limited partner of any Purchaser or
Holder.
"Beneficially Own" with respect to any securities shall mean
having "beneficial ownership" of such securities (as determined pursuant to Rule
13d-3 under the Exchange Act), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. "Beneficial Owners" and
Beneficially Owned shall have correlative meanings.
"Benefit Plan" shall mean each plan, program, policy, payroll
practice, commitment or other arrangement providing for compensation, severance,
termination pay, bonuses, performance awards, stock or stock-related awards,
fringe benefits or other employee benefits of any kind, whether formal or
informal, funded or unfunded, written or oral and whether or not legally
binding, including, without limitation, each "employee benefit plan" (within the
meaning of Section 3(3) of ERISA), in the case of each of the foregoing,
maintained, sponsored or contributed to by the Company or any ERISA Affiliate or
pursuant to which the Company or any ERISA Affiliate has or may have any
Liability, but excluding individual Employee Agreements.
"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.
"By-Laws" shall mean the By-Laws of the Company as currently
in effect.
"Capital Expenditures" shall mean expenditures made or
liabilities incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful life of
more than one year, including the total principal portion of Capitalized Lease
Obligations.
"Capital Stock" shall mean, in the case of the Company, any
and all shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
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"Capitalized Lease" shall mean, with respect to any Person,
any lease or any other agreement for the use of property which, in accordance
with GAAP, 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.
"Certificate of Incorporation" shall mean the Certificate of
Incorporation of the Company as currently in effect.
"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 35% 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 of its Subsidiaries, (ii) any Benefit Plan (or related
trust) of the Company or any of its Subsidiaries, or (iii) any
corporation with respect to which, following such acquisition,
50% or more of the combined voting power of the then
outstanding Voting Securities of such corporation is then
Beneficially Owned, directly or indirectly, by individuals and
entities who were the Beneficial Owners of Voting Securities
of the Company immediately prior to such acquisition in
substantially the same proportion as their ownership,
immediately prior to such acquisition, of the combined voting
power of the then outstanding Voting Securities of the
Company; or
(b) a reorganization, merger or
consolidation, in each case, with respect to which all or
substantially all the Persons who were the Beneficial Owners
of the Voting Securities of the Company immediately prior to
such reorganization, merger or consolidation do not, following
such reorganization, merger or consolidation Beneficially Own,
directly or indirectly, more than 35% of the combined voting
power of the then outstanding Voting Securities of the
corporation resulting from such reorganization, merger or
consolidation; or
(c) the Incumbent Board shall cease for any
reason to constitute at least 50% of the members of the Board
of Directors; or
(d) the sale, lease or other disposition of
all or a substantial part of the Company's assets in one
transaction or a series of related transactions.
"Change of Control Redemption Price" shall have the meaning
ascribed thereto in Section 8.3.
"Closing" shall have the meaning ascribed thereto in Section
1.3.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
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"Collateral" shall mean 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.
"Collateral Agent" shall have the meaning ascribed thereto in
the Preamble.
"Collateral Documentation" shall mean the Guarantee and
Security Agreement, the Security Agreement, the Financing Statements, the
Intercompany Notes and the endorsements thereof to the Collateral Agent (for the
benefit of the Holders) or to the Holders, 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 Collateral Agent (for the benefit of
the Holders) or to the Holders, to secure the obligations of the Company or any
of its Subsidiaries under the Notes, [the Intercreditor Agreement] and the
Registration Rights Agreement.
"Common Stock" shall have the meaning ascribed thereto in the
Recitals.
"Company" shall have the meaning ascribed thereto in the
Preamble.
"Company Intellectual Property" shall have the meaning
ascribed thereto in Section 2.13.
"Consolidated" or "consolidated", when used with reference to
any financial term in this Agreement (but not when used with respect to any Tax
Return or Tax Liability), shall mean the aggregate for two or more Persons of
the amounts signified by such term for all such Persons, with inter-company
items eliminated and, with respect to earnings, after eliminating the portion of
earnings properly attributable to minority interests, if any, in the capital
stock of any such Person or attributable to shares of preferred stock of any
such Person not owned by any other such Person.
"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.
"Conversion Price" shall have the meaning ascribed thereto in
Section 9.1.
"Convertible Debentures" shall have the meaning ascribed
thereto in Section 2.3.
"Convertible Securities" shall have the meaning ascribed
thereto in Section 9.6(b).
"Current Market Price", when used with reference to shares of
Common Stock or other securities on any date, shall mean the closing price per
share of Common Stock or such other securities on such date and, when used with
reference to shares of Common Stock or other securities for any period shall
mean the average of the daily closing prices per share of Common Stock or such
other securities for such period. If the Common Stock or such other securities
are listed or admitted to trading on a national securities exchange, the closing
price shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Common Stock or such other securities are not listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Stock
or such other securities are listed or admitted to trading
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or, if the Common Stock or such other securities are not so listed on any
national securities exchange, as reported in the transaction reporting system
applicable to securities designated as a "national market system security" or
NASDAQ. If the Common Stock or such other securities are not publicly held or so
listed or designated, "Current Market Price" shall mean the Fair Market Value
per share of Common Stock or of such other securities as determined in good
faith by the Board of Directors based on an opinion of an independent investment
banking firm with an established national reputation with respect to the
valuation of securities.
"Default" shall have the meaning ascribed thereto in Section
7.1.
"Employee Agreement" shall mean each management, employment,
severance, consulting, non-compete, confidentiality, or similar agreement or
Contract between the Company or any ERISA Affiliate and any employee pursuant to
which the Company or any ERISA Affiliate has or may have any Liability.
"Environmental Laws" shall mean 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" shall mean 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 such Person.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean each business or entity which is
a member of a "controlled group of corporations," under "common control" or an
"affiliated service group" with the Company within the meaning of Sections
414(b), (c) or (m) of the Code, or required to be aggregated with the Company
under Section 414(o) of the Code, or is under "common control" with the Company,
within the meaning of Section 4001(a)(14) of ERISA.
"Event of Default" shall have the meaning ascribed thereto in
Section 7.1.
"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.
"Expiration Time" shall have the meaning ascribed thereto in
Section 9.6(d).
"Face Amount" for each Note shall mean the principal amount at
Stated Maturity of such Note as indicated on the face of such Note.
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"Fair Market Value" shall mean, as to shares of Common Stock
or any other securities of the Company or any other issuer that are publicly
traded, the average of the Current Market Prices of such shares or securities
during the period of five consecutive Trading Days preceding the date as of that
the Fair Market Value of such shares or securities is to be determined. The
"Fair Market Value" of any security which is not publicly traded or of any other
property shall mean the fair value thereof as determined by an independent
investment banking or appraisal firm experienced in the valuation of such
securities or property selected in good faith by the Board of Directors or a
committee thereof.
"FDA" shall have the meaning ascribed thereto in Section 2.15.
"Financing Statements" means Form UCC-1 financing statements
to be filed in all jurisdictions necessary or desirable in order to perfect the
Holders' security interest in the Collateral and shall include any Form UCC-1
financing statements assigned to the Holders 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, consistently applied.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.
"Guarantee and Security Agreement" shall mean the agreement,
in the form of Exhibit 6.10, to be entered into between the Collateral Agent and
the Company's future domestic Subsidiaries, providing for a security interest in
such domestic Subsidiaries' Collateral and Guarantees from such Subsidiaries.
"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 Agreement, 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 that has 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.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
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"Holder" shall mean, at any time of reference, a Person in
whose name a Note is registered in the Note Register at such time.
"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 12.1(b).
"Indenture" shall have the meaning ascribed thereto in Section
6.19.
"Indenture Date" shall have the meaning ascribed thereto in
Section 5.1.
"Intellectual Property" shall mean (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 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.
"Intercompany Notes" shall mean any notes from the
Subsidiaries or Affiliates of the Company in favor of the Company, as the same
may be amended, modified or supplemented from time to time in accordance with
their terms, and all other promissory notes or other instruments evidencing
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Indebtedness of Affiliates or Subsidiaries of the Company to the Company between
the Company and its Affiliates.
["Intercreditor Agreement" shall mean the agreement, dated as
of the date hereof, between the Collateral Agent and [ ]].
"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" shall mean, 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.
"Major Supplier" shall mean a supplier of $20,000 or more in
materials or services to the Company during the last twelve months.
"Material" shall mean material in relation to the properties,
business, prospects, operations, earnings, assets, Liabilities, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries taken
as a whole, whether or not in the ordinary course of business.
"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 Holders under any of the
Transaction Documents or (e) the timely payment or performance of the Secured
Obligations.
"NASDAQ" shall have the meaning ascribed thereto in Section
9.4(b).
"Net Income" shall mean, with respect to any period, the net
income or net loss of the Company and its Subsidiaries in accordance with GAAP
on a consolidated basis as reflected in the financial statements furnished to
the Holders in accordance with Section 6.20.
"Non-Voting Observer" shall have the meaning ascribed thereto
in Section 6.26.
"Note Purchase Agreement" shall have the meaning ascribed
thereto in the Recitals.
"Note Register" shall have the meaning ascribed thereto in
Section 4.1.
"Notes" shall have the meaning ascribed thereto in the
Recitals.
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"Notice" shall have the meaning ascribed thereto in Section
6.11.
"Officers' Certificate" shall mean a certificate signed by any
two officers of the Company, one of whom must be the Chairman of the Board of
Directors, the President, the Chief Executive Officer, the Treasurer or a Vice
President of the Company.
"Optional Redemption Price" shall have the meaning ascribed
thereto in Section 8.1.
"Order" shall mean any judgment, order, injunction, ruling,
decree, stipulation or award of any Governmental Entity or private arbitration
tribunal.
"Original Issue Discount" shall have the meaning ascribed
thereto in Section 5.3.
"Original Issue Price" of a Note shall mean $ ____________ per
$1,000 face value thereof.
"Outstanding" or "outstanding" shall mean, when used with
reference to the Notes at a particular time, all Notes theretofore issued as
provided in this Agreement, except (i) Notes theretofore reported as lost,
stolen, damaged or destroyed, or surrendered for transfer, exchange or
replacement, in respect to which replacement Notes have been issued, (ii) Notes
theretofore paid in full, and (iii) Notes therefore canceled by the Company,
except that, for the purpose of determining whether Holders of the requisite
aggregate Accreted Value of Notes have made or concurred in any waiver, consent,
approval, notice or other communication under this Agreement, Notes registered
in the name of, or Beneficially Owned by, the Company or any Subsidiary of any
thereof, shall not be deemed to be outstanding.
"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 the Notes; (ii) any
Indebtedness and obligations outstanding on the date hereof, as set forth on
Schedule 6.6; or (iii) Indebtedness of a domestic Subsidiary of the Company to
the Company as long as such Subsidiary has executed the Guarantee and Security
Agreement and such Indebtedness is evidenced by Intercompany Notes and the
Intercompany Notes are pledged to the Collateral Agent as Collateral.
"Permitted Investments" shall mean (a) direct obligations of
the United States of America, or of any of its agencies, or obligations
guaranteed as to principal and interest by the United States of America, or of
any of its agencies, in either case maturing not more than 90 days from the date
of acquisition of such obligation; (b) deposit accounts in, and certificates of
deposit, repurchase agreements or bankers acceptances of any bank or trust
company organized under the laws of the United States of America or any state or
licensed to conduct a banking or trust business in the United States of America
or any state and having capital, surplus and undivided profits of at least
$35,000,000, maturing not more than 90 days from the date of acquisition; (c)
commercial paper rated A-1 or better or P-1 by Standard & Poor's Ratings
Service, a division of The McGraw-Hill Companies or Moody's Investors
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Services, Inc., respectively, maturing not more than 90 days from the date of
acquisition; (d) money market funds sponsored by commercial or investment banks
unaffiliated with the Company or any of its Subsidiaries; and (e) loans or
advances of money by the Company to its wholly owned domestic Subsidiaries that
have executed the Guarantee and Security Agreement as long as such loans or
advances are evidenced by Intercompany Notes and the Intercompany Notes are
pledged to the Collateral Agent as Collateral.
"Permitted Liens" means (i) Liens existing on the date hereof
and set forth on Schedule , all of which are subordinate to the Lien of the
Collateral Documentation; (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 that 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 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, that do not secure Indebtedness or the deferred purchase
price of any asset and that do not interfere materially with the ordinary
conduct of the business of the Company or any Subsidiary of the Company and that
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 authority 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 2.3.
"Product Sales Revenues" shall mean sale of medical products
manufactured by the Company calculated in accordance with GAAP.
"Products" shall have the meaning ascribed thereto in Section
2.18.
"Proposed Securities" shall have the meaning ascribed thereto
in Section 6.11.
"Purchase Price" shall have the meaning ascribed thereto in
Section 1.2(a).
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"Purchased Shares" shall have the meaning ascribed thereto in
Section 9.6(d).
"Purchaser" and "Purchasers" shall have the meaning ascribed
thereto in the Preamble.
"Purchaser Designee" and "Purchaser Designees" shall have the
meanings ascribed thereto in Section 6.26.
"Quarterly Amount" shall have the meaning ascribed thereto in
Section 6.32.
"Quarterly Budget" shall have the meaning ascribed thereto in
Section 6.32.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement dated the date hereof between the Purchasers and the Company
with respect to the Notes.
"Related Parties" shall mean Affiliates of the Company or any
of its Subsidiaries and directors or officers of the Company or any of its
Subsidiaries (including any family members of such directors and officers).
"Required Holders" shall mean, at any time, the Holders of at
least 51% of the aggregate Accreted Value of the Notes at the time outstanding
(exclusive of Notes then owned by the Company or any of its Affiliates).
"Restricted Account" shall have the meaning ascribed thereto
in Section 6.24.
"Restricted Encumbrance" shall have the meaning ascribed
thereto in Section 6.7.
"Rollover Transactions" shall have the meaning ascribed
thereto in the Note Purchase Agreement.
"Sale-and-Leaseback Transaction" shall mean a transaction or
series of transactions pursuant to which the Company or any Subsidiary shall
Transfer to any Person (other than the Company or a Subsidiary) any property,
whether now owned or hereafter acquired, and, as part of the same transaction or
series of transactions, the Company or any Subsidiary shall rent or lease as
lessee (other than pursuant to a Capitalized Lease), or similarly acquire the
right to possession or use of, such property or one or more properties which it
intends to use for the same purpose or purposes as such property.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Reports" shall have the meaning ascribed thereto in
Section 2.4.
"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 the Company or such Subsidiary is a party.
"Securities" shall mean the Notes, the Shares, the Warrants
and the shares of Common Stock issuable upon the conversion of the Notes and
exercise of the Warrants.
"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
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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 the Collateral Agent and the Company, providing for a
security interest in the Collateral.
"Semi-Annual Accrual Date" shall have the meaning ascribed
thereto in Section 5.3(a).
"Shares" shall have the meaning ascribed thereto in the
Recitals.
"Stated Maturity", when used with respect to any Security or
any installment of interest thereon, shall mean the date specified in such
Security as the fixed date on which the principal of such Security or such
installment of interest is due and payable.
"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 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.
"Subsidiary Board" shall have the meaning ascribed thereto in
Section 6.26(a).
"Tax" and "Taxes" shall mean any federal, state, local or
foreign income, gross receipts, property, sales, use, value added, license,
excise, franchise, capital, net worth, estimated, withholding, employment,
payroll, premium, withholding, alternative or added minimum, ad valorem,
inventory, asset, gains, transfer or excise tax, or any other tax, levy, custom,
duty, impost, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or additions to tax, imposed by
any Governmental Entity and, including, without limitation, any Taxes of another
Person owing under a contract, as transferee or successor, under Treas. Reg.
Section 1.1502-6 or analogous state, local or foreign law, or otherwise.
"Tax Return" shall mean any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
"Total Revenue" shall mean, with respect to any period, the
total revenues of the Company and its Subsidiaries in accordance with GAAP on a
consolidated basis as reflected in the financial statements furnished to the
Holders in accordance with Section 6.20.
"Trading Day" shall mean a Business Day or, if the Common
Stock is listed or admitted to trading on any national securities exchange, a
day on which such exchange is open for the transaction of business.
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"Transaction" shall have the meaning ascribed thereto in
Section 9.7.
"Transaction Documents" shall mean this Agreement, the Notes,
the $7 Warrants, the Registration Rights Agreement, the Security Agreement, the
Guarantee and Security Agreement and [the Intercreditor Agreement].
"Transfer" shall have the meaning ascribed thereto in Section
6.3.
"Transfer Agent" shall have the meaning ascribed thereto in
Section 9.2.
"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).
11.2. 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 Agreement, and any
consolidation or other accounting computation required to be made pursuant to
this Agreement, and the construction of any definition in this Agreement
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 Agreement.
12. Miscellaneous.
12.1. Payments; Indemnity. (a) The Company agrees that, so
long as any Holder shall hold any Notes, it will make all payments hereunder and
under the Notes in immediately available funds by wire transfer on the date due
in such manner as each Holder may reasonably request in writing. Anything in
this Agreement or the Notes to the contrary notwithstanding, any payment of any
Note that is due on a date other than a Business Day shall be made on the next
succeeding Business Day. If the date for payment is extended to the next
succeeding Business Day by reason of the preceding sentence, the period of such
extension will be included in the computation of the interest payable on such
next succeeding Business Day.
(b) (i) The Company and its Subsidiaries shall jointly and
severally indemnify and hold harmless each Purchaser, each Holder and each of
their respective Affiliates, and each such Person's respective officers,
directors, partners, members, employees, attorneys, agents and 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 Agreement and the other Transaction Documents and the
administration of such credit, and in connection with or arising out of the
transactions contemplated 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 Agreement 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 that 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
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Action including the employment of counsel reasonably satisfactory to such
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 such Indemnified Person that 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 Agreement 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
such 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 Agreement and shall
indemnify and hold harmless each Indemnified Purchaser from and against any such
Taxes.
12.2. Severability. If any term, provision, covenant or
restriction of this Agreement or any Exhibit or Schedule 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 Agreement
and such Exhibits and Schedules 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.
12.3. Specific Enforcement. The Holders, 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 Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Holders shall be entitled to an injunction to
prevent breaches of the provisions of this Agreement 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.
12.4. 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.
12.5. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been signed
by each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
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12.6. 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: Mr. Carl Sahi
With a copy to:
Pepe & Hazard LLP
Goodwinn Square
Hartford, CT 06103
Attention: Walter W. Simmers, Esq.
The Purchasers, to each Purchaser's address
as set forth in the Note Register
The Collateral Agent, to:
Appaloosa Management, L.P.
26 Main Street, 1st Floor
Chatham, New Jersey 07928
Attention: Mr. James E. Bolin
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner.
12.7. Amendments. This Agreement may be amended as to the
Purchasers, any Holder and their respective successors and assigns, and the
Company may take any action herein prohibited, or omit to perform any act
required to be performed by it, if the Company shall obtain the written consent
of the Required Holders. This Agreement may not be waived, changed, modified, or
discharged orally, but only by an agreement in writing signed by the party or
parties against whom enforcement of any waiver, change, modification or
discharge is sought or by parties with the right to consent to such waiver,
change, modification or discharge on behalf of such party.
12.8. Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns (including, without limitation, any
subsequent Holder of a Note).
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12.9. Expenses. The Company agrees to pay to each 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 of the Notes
(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.
12.10. Survival. All covenants, agreements, representations
and warranties contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby shall survive the
Closing 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
all the Notes and amounts due hereunder have been paid in full; provided,
however, that notwithstanding anything to the contrary contained herein,
Sections 12.1(b), 12.6, 12.12, 12.13, 12.14 and 12.15 shall survive forever.
12.11. Transfer of Notes and Common Stock. Each Holder
understands and agrees that the Notes and the Shares have not been registered
under the Securities Act or the securities laws of any state and that they may
be sold or otherwise disposed of only in one or more transactions registered
under the Securities Act and, where applicable, such laws or transactions as to
which an exemption from the registration requirements of the Securities Act and,
where applicable, such laws are available. Each Holder acknowledges that, except
as provided in the Registration Rights Agreement, such Holder has no right to
require the Company to register the Notes. Each Holder understands and agrees
that each Note or certificate representing the Notes shall bear the following
legends:
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR
INFORMATION REGARDING THE AMOUNT OF ORIGINAL ISSUE DISCOUNT,
THE PURCHASE PRICE, DATE OF ISSUANCE OF YIELD TO MATURITY OF
THE NOTE, CONTACT [name or title of contact] AT [address].
THE TRANSFER OF [THE SECURITIES REPRESENTED BY THIS
CERTIFICATE] [THIS NOTE] IS RESTRICTED BY AND PURSUANT TO A
NOTE PURCHASE AGREEMENT DATED AS OF AUGUST _, 1999, A COPY OF
WHICH IS ON FILE AT THE OFFICES OF THE COMPANY.
[THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE] [THIS
NOTE HAS] NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
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.
12.12. GOVERNING LAW. THIS AGREEMENT AND THE NOTES 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.
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12.13. Submission to Jurisdiction. If any Litigation shall be
brought by any Holder in order to enforce any right or remedy under this
Agreement or any of the Notes, 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 Agreement. 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.
12.14. Service of Process. Nothing herein shall affect the
right of any 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.
12.15. 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 AGREEMENT AND THE NOTES.
12.16. Public Announcements. Neither the Company nor any
Purchaser shall make any public statements, including, without limitation, any
press releases, with respect to this Agreement and the transactions contemplated
hereby 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.
12.17. Further Assurances. Each of the Company and its
Subsidiaries agrees that it shall and shall cause each other to, at the
Company's expense and upon the reasonable request of the Collateral Agent, duly
execute and deliver, or cause to be duly executed and delivered, to the
Collateral Agent such further instruments, agreements and documents (including,
without limitation, financing statements under the Code, security agreements in
respect of Intellectual Property, stock powers executed in blank and other items
necessary or desirable in connection with the perfection of Liens in the
Collateral) and do and cause to be done such further acts as may be necessary or
proper in the reasonable opinion of the Collateral Agent to carry out more
effectually the provisions and purposes of the Transaction Documents.
12.18. Substitution of Purchaser. Each Purchaser shall have
the right to substitute one of its Affiliates as the purchaser of the Notes, by
written notice to the Company, which notice shall be signed by both such
Purchaser and such Affiliate, shall contain such Affiliate's agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 3.
Upon receipt of such notice, wherever the word "Purchaser" is used in this
Agreement (other than in this Section 14.17), such word shall be deemed to refer
to such Affiliate in lieu of the Purchaser. In the event that such Affiliate is
so substituted as a purchaser hereunder and such Affiliate thereafter transfers
to any Purchaser all of the Notes then held by such Affiliate, upon receipt by
the Company of notice of such transfer, wherever the word "Purchaser" is used in
this Agreement (other than in this Section 14.17), such word shall no longer be
deemed to refer to such Affiliate, but shall refer to such Purchaser, and such
Purchaser shall have all the rights of an original Holder of the Notes under
this Agreement.
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12.19. Signatures. This Agreement shall be effective upon
delivery of original signature pages or facsimile copies thereof executed by
each of the parties hereto.
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IN WITNESS WHEREOF, the Company, the Purchasers and the
Collateral Agent have caused this Agreement to be executed and delivered by
their respective officers or partners thereunto duly authorized.
BIO-PLEXUS, INC.
By:__________________________________________
Name:
Title:
APPALOOSA MANAGEMENT L.P.,
as Collateral Agent
By: Appaloosa Partners Inc., its
General Partner
By:__________________________________________
Name:
Title:
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management L.P., its
General Partner
By: Appaloosa Partners Inc., its General
Partner
By:__________________________________________
Name:
Title:
PALOMINO FUND LTD.
By: Appaloosa Management L.P., its
Investment Adviser
By: Appaloosa Partners Inc., its General
Partner
By:__________________________________________
Name:
Title:
TERSK LLC
By: Appaloosa Management L.P., its
Investment Adviser
By: Appaloosa Partners Inc., its General
Partner
By:__________________________________________
Name:
Title:
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Exhibit B
Form of Warrant
WARRANT
To Purchase Shares of Common Stock of
BIO-PLEXUS, INC.
At a Purchase Price of
$7.00 per Share
(Subject to Adjustment as Provided herein)
No. of Shares of Common Stock: _________
57
TABLE OF CONTENTS
SECTION PAGE
1. DEFINITIONS 1
2. EXERCISE OF WARRANT 4
2.1. MANNER OF EXERCISE. 4
2.2. PAYMENT OF TAXES. 5
2.3. FRACTIONAL SHARES. 5
3. TRANSFER, DIVISION AND COMBINATION 5
3.1. TRANSFER. 5
3.2. DIVISION AND COMBINATION. 6
3.3. EXPENSES. 6
3.4. MAINTENANCE OF BOOKS. 6
4. ADJUSTMENTS 6
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. 6
4.2. CERTAIN OTHER DISTRIBUTIONS. 7
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. 7
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. 8
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. 9
4.6. SUPERSEDING ADJUSTMENT. 9
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. 10
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. 11
4.9. OTHER ACTION AFFECTING COMMON STOCK. 12
4.10. CERTAIN LIMITATIONS. 12
5. NOTICES TO WARRANT HOLDERS 12
5.1. NOTICE OF ADJUSTMENTS. 12
5.2. NOTICE OF CORPORATE ACTION. 13
6. RIGHTS OF HOLDERS 14
6.1 NO IMPAIRMENT. 14
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH
OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY 14
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8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS 14
9. RESTRICTIONS ON TRANSFERABILITY 15
9.1. RESTRICTIVE LEGEND. 15
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. 15
9.3. TERMINATION OF RESTRICTIONS. 15
10. PREEMPTIVE RIGHTS 16
11. SUPPLYING INFORMATION 17
12. LOSS OR MUTILATION 17
13. LIMITATION OF LIABILITY 17
14. MISCELLANEOUS 17
14.1. NONWAIVER AND EXPENSES. 17
14.2. NOTICE GENERALLY. 17
14.3. REMEDIES. 18
14.4. SUCCESSORS AND ASSIGNS. 18
14.5. AMENDMENT. 18
14.6. SEVERABILITY. 19
14.7. HEADINGS. 19
14.8. GOVERNING 19
59
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, 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
No. of Shares of Common Stock: _________
WARRANT
To Purchase Shares of Common Stock of
BIO-PLEXUS, INC.
THIS IS TO CERTIFY THAT _______________., or its registered
assigns (the "Holder"), is entitled, at any time prior to the Expiration Date
(as hereinafter defined), to purchase from BIO-PLEXUS, INC., a Connecticut
corporation (the "Company"), _________ (subject to adjustment as provided
herein) shares of Common Stock (as hereinafter defined), in whole or in part, at
a purchase price of $7.00 per share (subject to adjustment as provided herein),
all on the terms and conditions and pursuant to the provisions hereinafter set
forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than Warrant
Stock and shares of Common Stock issuable upon the conversion of the Convertible
Notes issued under the Convertible Note Purchase Agreement.
"Average Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the daily volume weighted average
sale price per share of Common Stock for such date. The closing price for each
day shall be the last quoted sale price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc., Automated Quotation System or
such other system then in use, or, if on any such date the Common Stock or such
other securities are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Board of Directors of the Company.
If the Common Stock is listed or admitted to trading on a
60
national securities exchange, the closing price shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Common
Stock is not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"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.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, no par value, of the Company as constituted on the
Closing Date, and any capital stock into which such Common Stock may thereafter
be changed, and shall also include (i) capital stock of the Company of any other
class (regardless of how denominated) issued to the holders of shares of Common
Stock upon any reclassification thereof and (ii) shares of common stock of any
successor or acquiring corporation (as defined in Section 4.8) received by or
distributed to the holders of Common Stock of the Company in the circumstances
contemplated by Section 4.8.
"Convertible Note Purchase Agreement" shall mean the
convertible note purchase agreement, dated as of , among the Company,
the purchasers listed on Exhibit A thereto and Appaloosa Management L.P., as
collateral agent.
"Convertible Notes" shall mean the notes to be issued pursuant
to the Convertible Note Purchase Agreement.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
or exercisable, with or without payment of additional consideration in cash or
property, for Additional Shares of Common Stock, either immediately or upon the
occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the average of the Average Market
Price for the twenty Business Days ending five days prior to such date.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date. The Current
Warrant Price as of the date of the issuance of this Warrant is $7.
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"Expiration Date" shall mean a date which is nine years from
the issuance of this Warrant.
"Holder" shall mean the Person in whose name this Warrant is
registered on the books of the Company maintained for such purpose. "Holders"
shall mean, collectively, each Holder of a Warrant, in the event of any division
of this Warrant.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of shares of Warrant
Stock then purchasable upon exercise of all Warrants.
"Other Property" shall have the meaning set forth in
Section 4.8.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any subsidiary thereof, and shall include all
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock. For the purposes of Sections
4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock Outstanding shall include all shares of
Common Stock issuable in respect of options or warrants to purchase, or
securities convertible into, shares of Common Stock, the exercise or conversion
price of which is less than the Current Market Price as of any date on which the
number of shares of Common Stock Outstanding is to be determined.
"Permitted Issuances" shall mean issuances of shares of Common
Stock and upon exercise of the warrants and options and other convertible
securities, in each case listed on Schedule 1.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by merger or
otherwise of such entity.
"Restricted Common Stock" shall mean shares of Common Stock
which are, or which upon their issuance on the exercise of this Warrant would
be, evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Security" or "Securities" shall mean any equity or debt
security of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the Company
may be bound of any character relating to, or obligating the Company to issue,
grant, award, transfer or sell any issued or unissued shares of the Company's
Capital Stock or other securities of the Company).
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"Trading Day" means a Business Day or, if the Common Stock is
listed or admitted to trading in any national securities exchange, a day on
which such exchange is open for the transaction of business.
"Transfer" shall mean any disposition of any Warrant or
Warrant Stock or of any interest in either thereof, which would constitute a
sale thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued
upon transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may be
exercised.
"Warrant Stock" shall mean the shares of Common Stock
purchased by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. At any time or from time to time from and
after the Closing Date and until 5:00 P.M., New York time, on the Expiration
Date, Holder may exercise this Warrant, on any Business Day, for all or any part
of the number of shares of Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 129 Reservoir Road,
Vernon, CT 06066 (i) a written notice of Holder's election to exercise this
Warrant, which notice shall specify the number of shares of Common Stock to be
purchased, (ii) payment of the aggregate Current Warrant Price for such shares
and (iii) this Warrant. Such notice shall be substantially in the form appearing
at the end of this Warrant as Exhibit A, duly executed by Holder. Thirty days
after receipt of the items specified in the second preceding sentence, the
Company shall execute or cause to be executed and deliver or cause to be
delivered to Holder a certificate or certificates representing the aggregate
number of full shares of Common Stock issuable upon such exercise, together with
cash in lieu of any fraction of a share, as hereinafter provided. The stock
certificate or certificates so delivered shall be in such denomination or
denominations as Holder shall request in the notice and shall be registered in
the name of Holder or, subject to Section 9, such other name as shall be
designated in the notice. This Warrant shall be deemed to have been exercised
and such certificate or certificates shall be deemed to have been issued, and
Holder or any other Person so designated shall be deemed to have become a holder
of record of such shares for all purposes, as of the date which is thirty days
after the date of the notice, together with the Current Warrant Price and this
Warrant, are received by the Company as described above. If this Warrant shall
have been exercised in part, the Company shall, at the time of delivery of the
certificate or certificates representing Warrant Stock, deliver to Holder a new
Warrant evidencing the right of Holder to purchase the unpurchased shares of
Common Stock called for by this Warrant, which
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new Warrant shall in all other respects be identical with this Warrant, or, at
the request of Holder, appropriate notation may be made on this Warrant and the
same returned to Holder.
Payment of the Current Warrant Price shall be made at the
option of Holder by (i) certified or official bank check, (ii) wire transfer of
immediately available funds, (iii) tendering Convertible Notes having an
Accreted Value (as defined in the Convertible Note Purchase Agreement) equal to
the Current Warrant Price (the Company hereby agreeing to reissue any
Convertible Notes, of a Holder into one or more Convertible Notes in
denominations requested by such Holder) or (iv) the surrender of this Warrant to
the Company, with a duly executed exercise notice marked to reflect "Net Issue
Exercise," and, in either case, specifying the number of shares of Common Stock
to be purchased, during normal business hours on any Business Day. Upon a Net
Issue Exercise, Holder shall be entitled to receive shares of Common Stock equal
to the value of this Warrant (or the portion thereof being exercised by Net
Issue Exercise) by surrender of this Warrant to the Company together with notice
of such election, in which event the Company shall issue to Holder a number of
shares of the Company's Common Stock computed as of the date of surrender of
this Warrant to the Company using the following formula:
X = Y x (A-B)
---------
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Warrant Stock being exercised under
this Warrant;
A = the Current Market Price of one share of the Company's Common Stock
(at the date of such calculation);
B = the Current Warrant Price (as adjusted to the date of
such calculation).
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant shall be validly issued, fully paid and nonassessable.
The Company shall pay all expenses in connection with, and all taxes (other than
income taxes or capital gain tax of the Holder) and other governmental charges
that may be imposed with respect to, the issue or delivery thereof.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the Current Market Price per
share of Common Stock on the date of exercise.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered on
the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of the Company referred to in Section 2.1,
together with a written assignment of this Warrant
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substantially in the form of Exhibit B hereto duly executed by Holder and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall, subject
to Section 9, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be canceled. A
Warrant, if properly assigned in compliance with Section 9, may be exercised by
a new Holder for the purchase of shares of Common Stock without having a new
Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant may
be divided into multiple Warrants or combined with other Warrants upon
presentation hereof at the aforesaid office or agency of the Company, together
with a written notice specifying the names and denominations in which new
Warrants are to be issued, signed by Holder. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office, books for the registration and the registration of transfer of
the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable and/or the price at which such shares may be purchased upon exercise
of this Warrant, shall be subject to adjustment from time to time as set forth
in this Section 4. The Company shall give each Holder notice of any event
described below which requires an adjustment pursuant to this Section 4 at the
time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
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then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
per share shall be adjusted to equal (A) the Current Warrant Price multiplied by
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall take
a record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of stock or
any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment and a fraction (A) the numerator of which shall be the Current Market
Price per share of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Current Market Price per share of Common
Stock minus the amount allocable to one share of Common Stock of any such cash
so distributable and of the fair value (as determined in good faith by the Board
of Directors of the Company) of any and all such evidences of indebtedness,
shares of stock, other securities or property or warrants or other subscription
or purchase rights so distributable, and (ii) the Current Warrant Price shall be
adjusted to equal (A) the Current Warrant Price multiplied by the number of
shares of Common Stock for which this Warrant is exercisable immediately prior
to the adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the Common
Stock (other than a change in par value, or from par value to no par value or
from no par value to par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by the Company to the
holders of its Common Stock of such shares of such other class of stock within
the meaning of this Section 4.2 and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4.1.
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4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If at any time
the Company shall (except as hereinafter provided) issue or sell any Additional
Shares of Common Stock, other than Permitted Issuances, in exchange for
consideration in an amount per Additional Share of Common Stock less than the
Current Warrant Price at the time the Additional Shares of Common Stock are
issued, then (i) the Current Warrant Price as to the number of shares for which
this Warrant is exercisable prior to such adjustment shall be reduced to a price
determined by multiplying (A) the Current Warrant Price by (B) a fraction, the
numerator of which shall be the sum of (x) the number of shares of Common Stock
Outstanding immediately prior to such issue or sale multiplied by the then
applicable Current Warrant Price (the "Adjustment Price") and (y) the aggregate
consideration receivable by the Company for the total number of shares of Common
Stock so issued, and the denominator of which shall be the sum of (a) the total
number of shares of Common Stock Outstanding on such date and (b) the number of
Additional Shares issued, multiplied by the Adjustment Price; and (ii) the
number of shares of Common Stock for which this Warrant is exercisable shall be
adjusted to equal the product obtained by multiplying the Current Warrant Price
in effect immediately prior to such issue or sale by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
issue or sale and dividing the product thereof by the Current Warrant Price
resulting from the adjustment made pursuant to clause (i) above. For purposes of
this Section 4.3 and for the purposes of making adjustments of the number of
shares of Common Stock for which this Warrant is exercisable and the Current
Warrant Price as provided in this Section 4, the aggregate consideration
receivable by the Company in connection with the issuance of shares of Common
Stock or of rights, warrants or other securities convertible into shares of
Common Stock shall be deemed to be equal to the sum of the aggregate offering
price (before deduction of underwriting discounts or commissions and expenses
payable to third parties) of all such Common Stock, rights, warrants and
convertible securities plus the aggregate amount (as determined on the date of
issuance), if any, payable upon exercise or conversion of any such rights,
warrants and convertible securities into shares of Common Stock. If, subsequent
to the date of issuance of such rights, warrants or Convertible Securities, the
exercise or conversion price thereof is reduced, such aggregate amount shall be
recalculated and the Current Warrant Price and number of shares of Common Stock
for which the Warrant is exercisable adjusted retroactively to give effect to
such reduction. If Common Stock is sold as a unit with other securities, the
aggregate consideration received for such Common Stock shall be deemed to be net
of the Fair Market Value of such other securities.
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe
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for or purchase any Additional Shares of Common Stock or any Convertible
Securities (other than Permitted Issuances), whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such warrants or
other rights or upon conversion or exchange of such Convertible Securities shall
be less than the Current Warrant Price in effect immediately prior to the time
of such issue or sale, then the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as provided in
Section 4.3 on the basis that the maximum number of Additional Shares of Common
Stock issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall have received
all of the consideration payable therefor, if any, as of the date of the actual
issuance of the number such warrants or other rights. No further adjustments of
the Current Warrant Price shall be made upon the actual issue of such Common
Stock or of such Convertible Securities upon exercise of such warrants or other
rights or upon the actual issue of such Common Stock upon such conversion or
exchange of such Convertible Securities. Notwithstanding the foregoing, no
adjustment shall be required under this Section 4.4 solely by reason of the
issuance or distribution of stock purchase rights pursuant to a shareholder
rights plan or any other rights plan of the Company, provided that the
adjustments required by this Section 4.4 shall be made if any "flip-in" or
"flip-over" event shall occur under such stockholder rights plan.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any Convertible Securities (other than Permitted
Issuances), whether or not the rights to exchange or convert thereunder are
immediately exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange shall be less than the Current Warrant
Price in effect immediately prior to the time of such issue or sale, then the
number of shares for which this Warrant is exercisable and the Current Warrant
Price shall be adjusted as provided in Section 4.3 on the basis that the maximum
number of Additional shares of Common Stock necessary to effect the conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued and outstanding and the Company shall have received all of the
consideration payable therefor, if any, as of the date of actual issuance of
such Convertible Securities. No adjustment of the number of shares for which
this Warrant is exercisable and the Current Warrant Price shall be made under
this Section 4.5 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 4.4. No
further adjustments of the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be made upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible Securities
and, if any issue or
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sale of such Convertible Securities is made upon exercise of any warrant or
other right to subscribe for or to purchase any such Convertible Securities for
which adjustments of the number of shares for which this Warrant is exercisable
and the Current Warrant Price have been or are to be made pursuant to other
provisions of this Section 4, no further adjustments of the number of shares for
which this Warrant is exercisable and the Current Warrant Price shall be made by
reason of such issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall have been made pursuant to Section 4.4 or Section 4.5 as the
result of any issuance of warrants, rights or Convertible Securities, such
warrants or rights, or the right of conversion or exchange in such other
Convertible Securities, shall expire, and all of such warrants or rights, or the
right of conversion or exchange with respect to all or a portion of such other
Convertible Securities, as the case may be, shall not have been exercised and no
outstanding Warrant shall have been exercised (in whole or in part), then for
each outstanding Warrant such previous adjustment shall be rescinded and
annulled and the Additional Shares of Common Stock which were deemed to have
been issued by virtue of the computation made in connection with the adjustment
so rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any warrants
or other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for cash consideration, the
consideration received by the Company therefor shall be the amount of the cash
received by the Company therefor, or, if such Additional Shares of Common Stock
or Convertible Securities are offered by the Company for subscription, the
subscription price, or, if such Additional Shares of Common Stock or Convertible
Securities are sold to underwriters or dealers for public offering without a
subscription offering, the public offering price (in any such case subtracting
any amounts paid or receivable for accrued interest or accrued dividends). To
the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at the
time of such issuance as determined in good faith by the Board of Directors of
the Company. In case any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or purchase such
Additional Shares of Common Stock or Convertible Securities shall be issued in
connection with any merger in which the Company issues any securities, the
amount of consideration therefor shall be deemed to be the fair value, as
determined in good faith by the Board of Directors of the Company, of such
portion of the assets and business of the nonsurviving corporation as such Board
in good faith shall determine to be attributable to such Additional Shares of
Common Stock, Convertible Securities, warrants or other rights, as the case may
be. The consideration for
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any Additional Shares of Common Stock issuable pursuant to any warrants or other
rights to subscribe for or purchase the same shall be the consideration received
by the Company for issuing such warrants or other rights plus the additional
consideration payable to the Company upon exercise of such warrants or other
rights. The consideration for any Additional Shares of Common Stock issuable
pursuant to the terms of any Convertible Securities shall be the consideration
received by the Company for issuing warrants or other rights to subscribe for or
purchase such Convertible Securities, plus the consideration paid or payable to
the Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the Company
upon the exercise of the right of conversion or exchange in such Convertible
Securities. In case of the issuance at any time of any Additional Shares of
Common Stock or Convertible Securities in payment or satisfaction of any
dividends upon any class of stock other than Common Stock, the Company shall be
deemed to have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of such dividend so
paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of shares of the Common Stock, as provided for in Section 4.1) up
to, but not beyond the date of exercise if such adjustment either by itself or
with other adjustments not previously made results in an increase or decrease of
less than 1% of the shares of Common Stock for which this Warrant is exercisable
immediately prior to the making of such adjustment. Any adjustment representing
a change of less than such minimum amount (except as aforesaid) which is
postponed shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the purpose of
any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
(e) Escrow of Warrant Stock. If Holder exercises this Warrant
after any property becomes distributable pursuant to this Section 4 by reason of
the taking of any record of the holders of Common Stock, but prior to the
occurrence of the event for which such record is taken, any additional shares of
Common Stock issuable upon exercise by reason of such
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adjustment shall be deemed the last shares of Common Stock for which this
Warrant is exercised (notwithstanding any other provision to the contrary
herein) and such shares or other property shall be held in escrow for Holder by
the Company to be issued to Holder when and to the extent that the event
actually takes place, upon payment of the then Current Warrant Price.
Notwithstanding any other provision to the contrary herein, if the event for
which such record was taken fails to occur or is rescinded, then such escrowed
shares shall be canceled by the Company and escrowed property returned.
(f) Challenge to Good Faith Determination. Whenever the Board
of Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such determination may
be challenged in good faith by the Majority Holders, and any dispute shall be
resolved by an investment banking firm of recognized national standing selected
by the Majority Holders and acceptable to the Company.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant and payment of the Current Warrant Price, the number of
shares of common stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and Other Property receivable upon
or as a result of such reorganization, reclassification, merger, consolidation
or disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. In case of
any such reorganization, reclassification, merger, consolidation or disposition
of assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of each
and every covenant and condition of this Warrant to be performed and observed by
the Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of shares
of the Common Stock for which this Warrant is exercisable which shall be as
nearly equivalent as practicable to the adjustments provided for in this Section
4. For purposes of this Section 4.8, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe
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for or purchase any such stock. The foregoing provisions of this Section 4.8
shall similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.9. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock,
other than any action described in this Section 4, then, unless such action will
not have a materially adverse effect upon the rights of the Holders, the number
of shares of Common Stock or other stock for which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.
4.10. CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants, shall
be adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated (including a description of the basis on
which the Board of Directors of the Company determined the fair value of any
evidences of indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights referred to in Section 4.2 or
4.7(a)), specifying the number of shares of Common Stock for which this Warrant
is exercisable and (if such adjustment was made pursuant to Section 4.8 or 4.9)
describing the number and kind of any other shares of stock or Other Property
for which this Warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. The Company
shall promptly cause a signed copy of such certificate to be delivered to each
Holder in accordance with Section 14.2. The Company shall keep at its principal
office copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by any Holder or any
prospective purchaser of a Warrant designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend
(other than a cash dividend payable out of earnings or earned surplus
legally available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution, or
any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the
Company or any
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consolidation or merger of the Company with, or any sale, transfer or
other disposition of all or substantially all the property, assets or
business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 20 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 13.2.
6. RIGHTS OF HOLDERS
6.1 NO IMPAIRMENT. The Company shall not by any action, including,
without limitation, amending its Certificate of Incorporation, by-laws or
comparable governing instruments or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate to protect the rights of Holder against impairment.
Without limiting the generality of the foregoing, the Company will (a) not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise of
this Warrant, and (c) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.
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Upon the request of Holder, the Company will at any time
during the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to Holder, the continuing validity of this Warrant and
the obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at all
times reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon exercise of
any Warrant and payment therefor in accordance with the terms of such Warrant,
shall be duly and validly issued and fully paid and nonassessable.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any provision
of Section 4 refers to the taking of a record of such holders, the Company will
in each such case take such a record and will take such record as of the close
of business on a Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. Except as otherwise provided in this Section
9, each Warrant and each certificate for Warrant Stock initially issued upon the
exercise of a Warrant, and each certificate for Warrant Stock issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"[THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY]
[THE SECURITIES REPRESENTED BY THIS CERTIFICATE] HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, 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
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APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO
THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of Restricted
Common Stock, the holder of such Warrants or Restricted Common Stock shall give
ten days' prior written notice (a "Transfer Notice") to the Company of such
holder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and obtain from counsel to such holder
who shall be reasonably satisfactory to the Company, an opinion that the
proposed Transfer of such Warrants or such Restricted Common Stock may be
effected without registration under the Securities Act. After receipt of the
Transfer Notice and opinion, the Company shall, within five days thereof, notify
the holder of such Warrants or such Restricted Common Stock as to whether such
opinion is reasonably satisfactory and, if so, such holder shall thereupon be
entitled to Transfer such Warrants or such Restricted Common Stock, in
accordance with the terms of the Transfer Notice. Each certificate, if any,
evidencing such shares of Restricted Common Stock issued upon such Transfer and
each Warrant issued upon such Transfer shall bear the restrictive legend set
forth in Section 9.1, unless in the opinion of such counsel such legend is not
required in order to ensure compliance with the Securities Act. The holder of
the Warrants or the Restricted Common Stock, as the case may be, giving the
Transfer Notice shall not be entitled to Transfer such Warrants or such
Restricted Common Stock until receipt of notice from the Company under this
Section 9.2 that such opinion is reasonably satisfactory.
9.3 Termination of Restrictions. Notwithstanding the foregoing
provisions of this Section 9, the restrictions imposed by this Section upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock and the legend requirements of Section 9.1 shall terminate as to any
particular Warrant or share of Warrant Stock or Restricted Common Stock (i)
when and so long as such security shall have been effectively registered under
the Securities Act and disposed of pursuant thereto or (ii) when the Company
shall have received an opinion of counsel reasonably satisfactory to it that
such shares may be transferred without registration thereof under the
Securities Act.
10. PREEMPTIVE RIGHTS
(a) The Company shall not issue, sell or exchange, or agree to issue,
sell or exchange (collectively, "Issue," and any issuance, sale or exchange
resulting therefrom, an "Issuance") any Securities unless the Company shall
have first given written notice (the "Section 10 Notice") to each holder of
Warrants or Warrant Stock (for purposes of this Section, each a "Section 10
Offeree") that shall (i) state the Company's intention to Issue Securities, the
amount to be issued, sold or exchanged, the terms of such Securities, the
purchase price therefor and a summary of the other material terms of the
proposed issuance, sale or exchange and (ii) offer (a "Section 10 Offer") to
Issue to each Section 10 Offeree and their affiliates such Section 10 Offeree's
Proportionate Percentage (as defined below) of such Securities (with respect to
each Section 10 Offeree, the "Offered Securities") upon the terms and subject
to the conditions set forth in the Section 10 Notice, which Section 10 Offer by
its terms shall remain open and irrevocable for a period of 15-days from the
date it is delivered by the Company to such holder, as the case may be (and, to
the extent the Section 10 Offer is accepted during such 15-day period, until
the closing of the Issuance contemplated by the Section 10 Offer),
"Proportionate Percentage" for the purposes of this Section shall mean the
quotient obtained by dividing: (A) the Warrant Stock held by such Section 10
Offeree (assuming for purposes of this Section 10 that all issued and
outstanding Warrants have been exercised) on the date of the Section 10 Offer,
by (B) the Warrant Stock issued and outstanding on the date of the Section 10
Offer.
(b) Notice of a Section 10 Offeree's intention to accept a Section 10
Offer, in whole or in part, shall be evidenced by a writing signed by such
party and delivered to the Company prior to the end of the 15-day period of
such Section 10 Offer (each, a "Notice of Acceptance"), setting forth the
portion of the Offered Securities that the Section 10 Offeree elects to
purchase, which election shall be binding.
(c) In the event that a Notice of Acceptance is not given by a Section
10 Offeree in respect of all the Offered Securities, the Company shall have 60
days following the 15-day period referred to in clause (b) above to Issue all
or any part of such remaining Offered Securities not covered by the Notice of
Acceptance to any other Person(s), but only at a price not less than the price,
and on terms no more favorable to the person that the terms, stated in the
Section 10 Offer Notice. If the Company does not consummate the Issuance of all
or part of the remaining Offered Securities to such other Person(s) within such
period, the right provided hereunder shall be deemed to be revived and such
securities shall not be offered unless first re-offered to each Section 10
Offeree in accordance with Section 10. Upon the closing of the Issuance to such
other Person(s) (the "Other Buyers") of all or part of the remaining Offered
Securities, each Section 10 Offeree shall purchase from the Company, and the
Company shall Issue to each such Section 10 Offeree, the Offered Securities
covered by the Notice of Acceptance delivered to the Company by the Section 10
Offeree, on the terms specified in the Section 10 Offer. The purchase by a
Section 10 Offeree of any Offered Securities is subject in all cases to the
execution and delivery by the Company and the Section 10 Offeree of a purchase
agreement relating to such Offered Securities in form and substance similar in
all material respects to the extent applicable to that executed and delivered
between the Company and the Other Buyers.
11. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and
each holder of Restricted Common Stock in supplying such information as may be
reasonably necessary for such holder to complete and file any reports or forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any Warrant
or Restricted Common Stock.
12. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably satisfactory
to it (it being understood that, in the case of the initial holder, the written
agreement of Appaloosa Management, L.P. shall be sufficient indemnity), and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
provided, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to the Company for cancellation.
13. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of Holder hereof,
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shall give rise to any liability of such Holder for the purchase price of any
Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
14. MISCELLANEOUS
14.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
14.2. NOTICE GENERALLY. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or sent by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its
last known address appearing on the books of the Company maintained for
such purpose.
(b) If to the Company at
Bio-Plexus, Inc.
129 Reservoir Road
Vernon, CT 06066
Attention: Carl Sahi
Fax: (860) 870-6118
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three Business Days after the same shall have been deposited in
the United States mail. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other communication to the
person designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.
14.3. REMEDIES. Each holder of Warrant and Warrant Stock, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under of this
Warrant. The Company agrees that monetary
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damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
14.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant and, with respect to
Section 9 hereof, holders of Warrant Stock, and shall be enforceable by any such
Holder or holder of Warrant Stock.
14.5. AMENDMENT. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Majority Holders, provided that no such Warrant may be modified or
amended to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof, provided
however, that the foregoing shall not limit the operation of Section 4.6.
14.6. SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable 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 Warrant.
14.7. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
14.8. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA, IN EACH
CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY ACTION, PROCEEDING OR
INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL AUTHORITY ("LITIGATION")
ARISING OUT OF OR RELATING TO THIS WARRANT AND THE TRANSACTIONS CONTEMPLATED
HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING THERETO EXCEPT IN
SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR
DOCUMENT BY U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN THIS
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WARRANT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST
IT IN ANY SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION
ARISING OUT OF THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE
COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE
LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL
BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by an officer thereunto duly authorized.
Dated:
------------------------
BIO-PLEXUS, INC.
By:
----------------------------------
Name:
Title:
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
Net Issue Exercise _____No ______Yes
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of _____ shares of Common Stock of
Bio-Plexus, Inc. and herewith makes payment therefor, all at the price and on
the terms and conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and any securities
or other property issuable upon such exercise) be issued in the name of and
delivered to _____________ whose address is ________________ and, if such shares
of Common Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable hereunder be delivered to the
undersigned.
_______________________________________
(Name of Registered Owner)
_______________________________________
(Signature of Registered Owner)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ________________
attorney-in-fact to register such transfer on the books of BIO-PLEXUS, INC.
maintained for the purpose, with full power of substitution in the premises.
Dated:_______________ Print Name:_____________________
Signature:______________________
Witness: _______________________
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
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Exhibit C
Form of Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of _________________,
(this "Registration Rights Agreement"), by and among BIO-PLEXUS, INC., a
Connecticut corporation (the "Company"), [APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I, L.P., PALOMINO FUND LTD. and TERSK, LLC] (collectively, the
"Purchasers").
1. Background. The Company and the Purchasers have entered into a
Convertible Note Purchase Agreement, dated as of __________________, (as
amended, supplemented, amended and restated, restructured or otherwise modified
from time to time, the "Convertible Note Purchase Agreement") whereby the
Purchasers purchased from the Company (i) Zero Coupon Secured Convertible Notes
due _____________ issued by the Company in the aggregate principal amount of
$16,750,000 (the "Notes") and (ii) an aggregate of 250,000 shares (the "Shares")
of Common Stock, no par value, of the Company (the "Common Stock"). The
execution and delivery of this Registration Rights Agreement is required by
Section [1.4vii] of the Convertible Note Purchase Agreement.
2. Definitions. Capitalized terms used but not defined herein shall
have the respective meanings given to them in the Convertible Note Purchase
Agreement. As used herein, unless the context otherwise requires, the following
terms have the following respective meanings:
"Commission" means the Securities and Exchange Commission.
"Incidental Registration" is defined in Section 3.2.
"NASDAQ" is defined in Section 3.3(j).
"Participating Holders" means the holders of Registrable
Securities participating in the particular registration.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 3, including, without
limitation, all registration, filing and applicable fees of the Commission,
stock exchange or NASD registration and filing fees and all listing fees and
fees with respect to the inclusion of securities in NASDAQ (as defined in
Section 3.3(j)), all fees and expenses of complying with state securities or
blue sky laws (including fees and disbursements of counsel to the underwriters
or the Participating Holders in connection with "blue sky" qualification of the
Registrable Securities and determination of their eligibility for investment
under the laws of the various jurisdictions), all word processing, duplicating
and printing expenses, all messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants including the expenses of "cold comfort" letters required by or
incident to such registration, all fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, all transfer
82
taxes, and the reasonable fees and expenses of one counsel to the Participating
Holders (selected by the Requisite Percentage of Participating Holders);
provided, however, that Registration Expenses shall exclude and the
Participating Holders shall pay underwriters' fees and underwriting discounts
and commissions in respect of the Registrable Securities being registered.
"Registrable Securities" mean (i) the Notes, (ii) the Shares,
(iii) the shares of Common Stock issuable upon exercise of the Warrants and (iv)
any other additional shares of Common Stock the Purchasers may otherwise
ACQUIRE. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities (a) when a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (b) when such securities shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer under the Securities Act shall have been delivered
by the Company and subsequent public distribution of them shall not require
registration of them under the Securities Act, (c) when such securities are sold
pursuant to Rule 144 (or similar rule adopted by the Commission) under the
Securities Act, or (d) when such securities cease to be outstanding.
"Requested Registration" is defined in Section 3.1(a).
"Requisite Percentage of Participating Holders" means
Participating Holders of Registrable Securities who hold a majority of the
Registrable Securities that are then being held by all Participating Holders.
"Warrants" means the $3 Warrants, the $5 Warrants and the $7
Warrants.
3. Registration Under Securities Act, etc.
3.1 Requested Registrations.
(a) Request for Registration. Subject to the
limitations imposed by Sections 3.1(c), at any time and from time to time, one
or more holders of Registrable Securities shall have the right to require the
Company to file a registration statement under the Securities Act covering all
or any part of their respective Registrable Securities, by delivering a written
request therefor to the Company specifying the number and amount of Registrable
Securities and the intended method of distribution thereof. Any such request
pursuant to this Section 3.1(a) is referred to herein as a "Requested
Registration." The Company shall give prompt written notice of each Requested
Registration to all other holders of record of Registrable Securities, and
thereupon the Company shall use its best efforts to effect the registration
under the Securities Act so as to permit promptly the sale, in accordance with
the intended method of distribution, of the Registrable Securities which the
Company has been so requested to register in the Requested Registration and all
other Registrable Securities which the Company has been requested to register by
the holders thereof by written request given to the Company within 30 days after
the giving of such written notice by the Company.
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(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 3.1 in connection
with an underwritten offering by one or more Participating Holders of
Registrable Securities, no securities other than Registrable Securities shall be
included among the securities covered by such registration unless (i) such
inclusion is pursuant to and subject to the terms of the applicable underwriting
agreement or arrangements and (ii) in the opinion of the underwriter, the
inclusion of such securities will not have a material adverse effect on the
offering (including, without limitation, on the pricing of the offering). If the
offering is not an underwritten offering, there is no limitation on the
inclusion of other securities therein.
(c) Limitations on Requested Registrations; Expenses.
The rights of holders of Registrable Securities to request Requested
Registrations pursuant to Section 3.1(a) are subject to the following
limitations: (i) the Company shall not be obligated to effect a Requested
Registration having an aggregate anticipated offering price of less than U.S.
$1,000,000 unless such offering shall cover all remaining Registrable
Securities; (ii) the Company shall not be obligated to effect a Requested
Registration within six months after the effective date of any other
registration of securities (other than pursuant to a registration on Form S-8 or
any successor or similar form which is then in effect); and (iii) the Company
will pay all Registration Expenses only in connection with the first three
Requested Registrations of Registrable Securities pursuant to this Section 3.1
that have become effective under the Securities Act.
(d) Registration Statement Form. Registrations under
this Section 3.1 shall be on Form S-1, Form S-3 or any successor forms, if
permitted, or such appropriate registration form of the Commission as shall be
selected by the Company and as shall be reasonably acceptable to the Requisite
Percentage of Participating Holders. The Company agrees to include in any such
registration statement all information which, in the opinion of counsel to the
Participating Holders and counsel to the Company, is required to be included.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 3.1 shall not be deemed to have been effected
(including for purposes of paragraph (c) of this Section 3.1) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least 180 days (or such shorter
period which shall terminate when all the Registrable Securities covered by such
registration statement have been sold pursuant thereto), (ii) if, after it has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other Governmental
Entity or court for any reason not attributable to the Participating Holders and
has not thereafter become effective, or (iii) if the conditions to closing
specified in the underwriting agreement, if any, entered into in connection with
such registration are not satisfied or waived, other than by reason of a failure
on the part of the Participating Holders.
(f) Selection of Underwriters. The managing
underwriter or underwriters of each underwritten offering of the Registrable
Securities registered under this
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Section 3.1 shall be selected by the Requisite Percentage of Participating
Holders (and shall be reasonably acceptable to the Company).
(g) Cutbacks in Requested Registration. If the
managing underwriter of any underwritten offering shall advise the Company in
writing (with a copy to each Participating Holder) that, in its opinion, the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering within a price range acceptable to the
Requisite Percentage of Participating Holders, the Company will include in such
registration, to the extent of the number which the Company is so advised can be
sold in such offering, Registrable Securities requested to be included in such
registration, pro rata among the Participating Holders requesting such
registration in accordance with the Registrable Securities held by each such
Participating Holder so requested to be registered, and any securities of the
Company and other investors included in such registration pursuant to Section
3.1(b) shall be reduced proportionately.
(h) Postponement. The Company shall be entitled once
in any six-month period to postpone for a reasonable period of time (but not
exceeding 90 days) the filing of any registration statement required to be
prepared and filed by it pursuant to this Section 3.1 if the Board of Directors
of the Company determines, in its reasonable judgment, that such registration
and offering would interfere with any financing, corporate reorganization or
other material transaction or development involving the Company or any
subsidiary or would require premature disclosure thereof, and promptly gives the
holders of Registrable Securities requesting registration thereof pursuant to
this Section 3.1 written notice of such determination, containing a statement of
the reasons for such postponement and an approximation of the anticipated delay.
If the Company shall so postpone the filing of a registration statement, the
Participating Holders representing the Requisite Percentage of Participating
Holders shall have the right to withdraw the request for registration by giving
written notice to the Company within 20 days after receipt of the notice of
postponement and, in the event of such withdrawal, such request shall not be
counted toward the number of Requested Registrations (including for purposes of
paragraph (c) of this Section 3.1).
(i) Holder's Right to Withdraw. The Requisite
Percentage of Participating Holders shall have the right to withdraw the request
for registration pursuant to Section 3.1 at any time by giving written notice to
the Company of its request to withdraw and such request shall not be counted
toward the number of Requested Registrations (including for purposes of
paragraph (c) of this Section 3.1).
3.2 Incidental Registration.
(a) Incidental Registration. If, at any time, the
Company proposes or is required to register any of its securities under the
Securities Act (other than pursuant to registrations on such form or similar
form(s) solely for registration of securities in connection with an employee
benefit plan or dividend reinvestment plan) (an "Incidental Registration"), the
Company will give prompt written notice to all holders of record of Registrable
Securities of its intention to so register its securities and of such holders'
rights under this Section 3.2. Upon the
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written request of any holder of Registrable Securities made within 20 days
following the receipt of any such written notice (which request shall specify
the maximum number of Registrable Securities intended to be disposed of by such
holder and the intended method of distribution thereof), the Company will use
its best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the holders thereof together with any other securities the Company is obligated
to register pursuant to incidental registration rights of other security holders
of the Company. No registration effected under this Section 3.2 shall relieve
the Company of its obligation to effect any Requested Registration under Section
3.1.
(b) Abandonment or Delay. If, at any time after the
Company has giving written notice of its intention to register any securities
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine not to register
or to delay registration of such securities, the Company may, at its election,
give written notice of such determination and its reasons therefor to all
holders of record of Registrable Securities and (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not from
any obligation of the Company to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any holder or holders
of Registrable Securities entitled to do so to request that such registration be
effected as a registration under Section 3.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities for the same period as the delay in registering such
other securities.
(c) Holder's Right to Withdraw. Each holder of
Registrable Securities shall have the right to withdraw its request for
inclusion of its Registrable Securities in any registration statement pursuant
to this Section 3.2 at any time by giving written notice to the Company of its
request to withdraw.
(d) Unlimited Number of Registrations; Expenses.
There is no limitation on the number of Incidental Registrations which the
Company is obligated to effect pursuant to this Section 3.2. The Company will
pay all Registration Expenses in connection with any registration of Registrable
Securities requested pursuant to this Section 3.2.
(e) Underwriters' Cutback in Incidental
Registrations. If the managing underwriter of any underwritten offering shall
inform the Company by letter of its belief that the number of Registrable
Securities requested to be included in such registration would materially
adversely affect such offering, then the Company will include in such
registration, first, the securities proposed by the Company to be sold for its
own account, and, second, the Registrable Securities and all other securities of
the Company to be included in such registration to the extent of the number and
type which the Company is so advised can be sold in (or during the time of) such
offering, pro rata among the Participating Holders and such other holders
requesting such registration in accordance with the Registrable Securities held
by each Participating Holder and each such other holder so requested to be
registered.
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3.3 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 3.1 or 3.2 hereof,
the Company will as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect
such registration (and shall include all financial statements
required by the Commission to be filed therewith) and
thereafter use its best efforts to cause such registration
statement to become effective; provided, however, that before
filing such registration statement (including all exhibits) or
any amendment or supplement thereto or comparable statements
under securities or blue sky laws of any jurisdiction, the
Company shall furnish such documents to the Participating
Holders, their counsel, and each underwriter, if any,
participating in the offering of the Registrable Securities
and its counsel; and provided, further, however, that the
Company may discontinue any registration of its securities
which are not Registrable Securities at any time prior to the
effective date of the registration statement relating thereto;
(b) notify each Participating Holder of the
Commission's requests for amending or supplementing the
registration statement and the prospectus, and prepare and
file with the Commission such amendments and supplements to
such registration statement and the prospectus used in
connection therewith as may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such
registration statement for such period as shall be required
for the disposition of all of such Registrable Securities,
provided, that such period need not exceed 180 days;
(c) furnish, without charge, to each Participating
Holder such number of conformed copies of such registration
statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements
of the Securities Act, and such other documents, as such
Participating Holder may reasonably request;
(d) use its best efforts (i) to register or qualify
all Registrable Securities and other securities covered by
such registration statement under such securities or blue sky
laws of such States of the United States of America where an
exemption is not available and as the Participating Holders
shall reasonably request, (ii) to keep such registration or
qualification in effect for so long as such registration
statement remains in effect, and (iii) to take any other
action which may be reasonably necessary or advisable to
enable such Participating Holders to consummate the
disposition in such jurisdictions of the securities to be sold
by such Participating Holders, except that the Company shall
not for any such
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purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not
but for the requirements of this subsection (d) be obligated
to be so qualified or to consent to general service of process
in any such jurisdiction;
(e) use its best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other federal or state or
foreign governmental agencies or authorities as may be
necessary in the opinion of counsel to the Company and counsel
to the Participating Holders to consummate the disposition of
such Registrable Securities;
(f) furnish to each Participating Holder and each
underwriter, if any, participating in the offering of the
securities covered by such registration statement, a signed
counterpart of
(i) an opinion of outside counsel (or inside
counsel if satisfactory to each underwriter) for the
Company, and
(ii) a "comfort" letter signed by the
independent public accountants who have certified the
Company's financial statements included or
incorporated by reference in such registration
statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein)
and, in the case of the accountants' comfort letter, with
respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's
counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities
(and dated the dates such opinions and comfort letters are
customarily dated) and, in the case of the legal opinion, such
other legal matters, and, in the case of the accountants'
comfort letter, such other financial matters, as the Requisite
Percentage of Participating Holders, or the underwriters, may
reasonably request;
(g) promptly notify each Participating Holder and
each managing underwriter, if any, participating in the
offering of the securities covered by such registration
statement (i) when such registration statement, any
pre-effective amendment, the prospectus or any prospectus
supplement related thereto or post-effective amendment to such
registration statement has been filed, and, with respect to
such registration statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the
Commission for amendments or supplements to such registration
statement or the prospectus related thereto or for additional
information; (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of such registration
statement or the initiation of any proceedings for that
purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the
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qualification of any of the Registrable Securities for sale
under the securities or blue sky laws of any jurisdiction or
the initiation of any proceeding for such purpose; (v) at any
time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, in
the light of the circumstances under which they were made, and
in the case of this clause (v), at the request of any
Participating Holder, promptly prepare and furnish to it and
each managing underwriter, if any, participating in the
offering of the Registrable Securities a reasonable number of
copies of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not
include 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 not misleading in the
light of the circumstances under which they were made; and
(vi) at any time when the representations and warranties of
the Company contemplated by Section 3.4(a) hereof cease to be
true and correct;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve
months beginning with the first full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder, and
promptly furnish to each such Participating Holder a copy of
any amendment or supplement to such registration statement or
prospectus;
(i) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company)
for all Registrable Securities covered by such registration
statement from and after a date not later than the effective
date of such registration;
(j) use its best efforts to cause all Registrable
Securities covered by such registration statement to be listed
on a national securities exchange or to secure designation of
all such Registrable Securities on the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
"Small Cap Market";
(k) deliver promptly to counsel to the Participating
Holders and each underwriter, if any, participating in the
offering of the Registrable Securities, copies of all
correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to such
registration statement;
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(l) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
registration statement;
(m) if required, provide a CUSIP number for all
Registrable Securities, no later than the effective date of
the registration statement; and
(n) make available its employees and personnel and
otherwise provide reasonable assistance to the underwriters
(taking into account the needs of the Company's businesses) in
their marketing of Registrable Securities.
The Company may require each Participating Holder as to the Registrable
Securities of whom any registration is being effected to furnish the Company
such information regarding such holder and the distribution of such securities
as the Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees that upon receipt
of any notice from the Company of the happening of any event of the kind
described in subsection (g) (iii) or (v) of this Section 3.3, the Participating
Holder will forthwith discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement relating to such Registrable
Securities until, in the case of subsection (g)(iii) of this Section 3.3, such
stop order is removed or proceedings therefor terminated, and, in the case of
subsection (g)(v) of this Section 3.3, such holder's receipt of the copies of
the supplemented or amended prospectus contemplated by subsection (g)(v) of this
Section 3.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
3.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offering by Participating Holders pursuant
to a registration requested under Section 3.1, the Company will use its best
efforts to enter into an underwriting agreement with such underwriters for such
offering, such agreement to be reasonably satisfactory in substance and form to
the Company, each such holder and the underwriters and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of that type, including, without limitation,
indemnities to the effect and to the extent provided in Section 3.6 hereof. The
Participating Holders will cooperate with the Company in the negotiation of the
underwriting agreement and will give consideration to the reasonable suggestions
of the Company regarding the form thereof. The Participating Holders shall be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of the Participating Holders and that any or all
of the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Participating Holders. No Participating Holder shall be required to make any
representations or
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warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder, such holder's
ownership of and title to the Registrable Securities, such holder's intended
method of distribution and any other representations required by law, and any
liability of the Participating Holder to any underwriter or other person under
such underwriting agreement shall be limited to liability arising from
misstatements in or omissions from its representations and warranties and shall
be limited to an amount equal to the net proceeds that the Participating Holder
derives from such registration.
(b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 3.2 hereof and such securities are to be distributed by
or through one or more underwriters, the Company will, if requested by any
Participating Holder, use its best efforts to arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such
Participating Holder among the securities of the Company to be distributed by
such underwriters. The Participating Holders shall be parties to the
underwriting agreement between the Company and such underwriters and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such
Participating Holders and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Participating Holders. No Participating
Holder shall be required to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such holder, such holder's ownership of and
title to the Registrable Securities, such holder's intended method of
distribution and any other representations required by law, and any liability of
the Participating Holder to any underwriter or other person under such
underwriting agreement shall be limited to liability arising from misstatements
in or omissions from its representations and warranties and shall be limited to
an amount equal to the net proceeds that the Participating Holder derives from
such registration.
3.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the Participating Holders,
their underwriters, if any, and their respective counsel and accountants the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and, to the
extent practicable, each amendment thereof or supplement thereto, and give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and employees and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of such holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
3.6 Indemnification.
(a) Indemnification by the Company. In the event of
any registration of any securities of the Company under the Securities Act, the
Company will, and hereby does,
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indemnify and hold harmless, to the fullest extent permitting by law, each
Participating Holder, its directors, officers, partners, attorneys, agents and
affiliates or general and limited partners (and the directors, officers,
employees, stockholders and affiliates thereof), and each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such Participating Holder or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages, or liabilities, joint or several (or actions or proceedings,
whether commenced or threatened) to which such Participating Holder or any such
director, officer, partner, agent or affiliate or underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities, joint or several (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, together with the documents incorporated by reference
therein, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading, and the
Company will reimburse such Participating Holder and each such director,
officer, partner, agent or affiliate, or general or limited partner, underwriter
and controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of such Participating Holder or
underwriter, as the case may be, specifically stating that it is for use in the
preparation thereof; and provided, further, that the Company shall not be liable
to any Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
regardless of any investigation made by or on behalf of such Participating
Holder or any such director, officer, partner, attorney, agent or affiliate or
controlling Person and shall survive the transfer of such securities by such
Participating Holder.
(b) Indemnification by the Participating Holders. As
a condition to including any Registrable Securities in any registration
statement, the Company shall have received an undertaking reasonably
satisfactory to it from the Participating Holders to indemnify and hold harmless
(in the same manner and to the same extent as set forth in subsection (a) of
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this Section 3.6) the Company, each director and officer of the Company, and
each other Person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, but only if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such Participating Holder specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; provided, however, that
the liability of such indemnifying party under this Section 3.6(b) shall be
limited to the amount of net proceeds received by such indemnifying party in the
offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by the Participating Holder.
(c) Notices of Claims, etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subsections of this Section 3.6,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action or proceeding; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subsections of this
Section 3.6, except to the extent that the indemnifying party is materially
prejudiced by such failure to give notice, and shall not relieve the
indemnifying party from any liability which it may have to the indemnified party
otherwise than under this Section 3.6. In case any such action or proceeding is
brought against an indemnified party, the indemnifying party shall be entitled
to participate therein and, unless in the opinion of outside counsel to the
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
or proceeding include both the indemnified party and the indemnifying party and
if in the opinion of outside counsel to the indemnified party there may be legal
defenses available to such indemnified party and/or other indemnified parties
which are different from or in addition to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to defend such action or proceeding on behalf of such indemnified party
or parties, provided, further, that the indemnifying party shall be obligated to
pay for only one counsel for all indemnified parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for any legal
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation (unless the first proviso
in the preceding sentence shall be applicable). No indemnifying party shall be
liable for any settlement of any action or proceeding effected without its
written consent. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by
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the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for
in this Section 3.6 shall for any reason be held by a court to be unavailable to
an indemnified party under subsection (a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under subsection (a) or (b) hereof, the indemnified
party and the indemnifying party under subsection (a) or (b) hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative fault of
the Company and the Participating Holders which resulted in such loss, claim,
damage or liability, or action in respect thereof, with respect to the
statements or omissions which resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect not only the relative fault but also the relative benefits received by
the Company and the Participating Holders from the offering of the securities
covered by such registration statement as well as any other relevant equitable
considerations. The parties hereto agree that it would not be just and equitable
if contributions pursuant to this Section 3.6(d) were to be determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The Participating Holders'
obligations to contribute as provided in this subsection (d) are several and not
joint in proportion to the relative value of their respective Registrable
Securities covered by such registration statement. In addition, no Person shall
be obligated to contribute hereunder any amounts in payment for any settlement
of any action or claim effected without such Person's consent, which consent
shall not be unreasonably withheld. Notwithstanding anything in this subsection
(d) to the contrary, no indemnifying party (other than the Company) shall be
required to contribute any amount in excess of the net proceeds received by such
party from the sale of the Registrable Securities in the offering to which the
losses, claims, damages or liabilities of the indemnified parties relate.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subsections of this
Section 3.6 (with appropriate modifications) shall be given by the Company and
each Participating Holder with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act. The indemnification
agreements contained in this Section 3.6 shall be in addition to any other
rights to indemnification or contribution which any indemnified party may have
pursuant to law or contract and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the transfer of any of the Registrable Securities by any
of the Participating Holders.
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(f) Indemnification Payments. The indemnification and
contribution required by this Section 3.6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
3.7 Certain Rights of the Holder If Named in a Registration
Statement. If any statement contained in a registration statement under the
Securities Act or in any filing under the state securities laws of any
jurisdiction refers to any Participating Holder by name or otherwise as the
holder of any securities of the Company, then such Participating Holder shall
have the right to require (i) the insertion therein of language, in form and
substance satisfactory to such Participating Holder, to the effect that the
holding by such Participating Holder of such securities does not necessarily
make such Participating Holder a "controlling person" of the Company within the
meaning of the Securities Act and is not to be construed as a recommendation by
such Participating Holder of the investment quality of the Company's debt or
equity securities covered thereby and that such holding does not imply that such
Participating Holder will assist in meeting any future financial requirements of
the Company or (ii) in the event that such reference to such Participating
Holder by name or otherwise is not, in the reasonable judgment of such
Participating Holder as advised by its counsel, required by the Securities Act
or any of the rules and regulations promulgated thereunder, or any state
securities laws of any jurisdiction, the deletion of the reference to such
Participating Holder.
3.8 Unlegended Warrant Shares. In connection with the offering
of any Registrable Securities registered pursuant to this Article 3, the Company
shall (i) facilitate the timely preparation and delivery to Participating
Holders and the underwriters, if any, participating in such offering, of
unlegended Warrant Shares representing ownership of such Registrable Securities
being sold in such denominations and registered in such names as requested by
such Participating Holders or such underwriters and (ii) instruct any transfer
agent and registrar of such Registrable Securities to release any stop transfer
orders with respect to any such Registrable Securities.
3.9 Limitation on Sale or Distribution of Other Securities.
The Company hereby agrees that, if it shall previously have received a request
for registration pursuant to Section 3.1 or 3.2 hereof, and if such previous
registration shall not have been withdrawn or abandoned, (i) the Company shall
not effect any public or private offer, sale or other distribution of its
securities or effect any registration of any of its equity securities under the
Securities Act (subject to the provisions of Section 3.2 hereof) (other than a
registration on Form S-8 or any successor or similar form which is then in
effect), whether or not for sale for its own account, until a period of 180 days
(or such shorter period as the Requisite Majority of Participating Holders shall
agree) shall have elapsed after the effective date of such previous registration
(and the Company shall so provide in any registration rights agreements
hereafter entered into with respect to any of its securities); and (ii) the
Company shall use its best efforts to cause each holder of its equity securities
purchased from the Company at any time after the date of this Agreement other
than in a public offering to agree not to effect any public sale or distribution
of any such securities during such period, including a sale pursuant to Rule 144
under the Securities Act.
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3.10 No Required Sale. Nothing in this Agreement shall be
deemed to create an independent obligation on the part of any Participating
Holder to sell any Registrable Securities pursuant to any effective registration
statement.
4. Rule 144. The Company shall take all actions reasonably necessary to
enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144, or (b) any similar rule or regulation hereafter
adopted by the Commission including, without limiting the generality of the
foregoing, filing on a timely basis all reports required to be filed by the
Exchange Act. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the
consent of (i) the Company and (ii) the holders of at least 51% in aggregate
principal amount of the Registrable Securities. The Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, in each case only if the Company shall have obtained the written consent to
such action or omission to act, of holders of at least 51% in aggregate
principal amount of the outstanding Registrable Securities. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company (accompanied by a written acknowledgment of, and consent to, such
election by such nominee), be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or holders
of Registrable Securities pursuant to this Agreement or any determination of any
number or percentage of shares of Registrable Securities held by any holder or
holders of Registrable Securities contemplated by this Agreement. If the
beneficial owner of any Registrable Securities so elects to be treated as the
holder of such Registrable Securities, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities.
7. Notices. All communications provided for hereunder shall be
personally delivered or sent by telecopier (and confirmed by telephone) or by a
reputable overnight courier, and shall be addressed as follows:
(a) if to any of the Purchasers, addressed to it at such
address as it shall have furnished to the Company in writing;
(b) if to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing, or,
until any such other holder so furnishes to the Company an address, then to and
at the address of the last holder of such Registrable Securities who has
furnished an address to the Company; or
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(c) if to the Company, addressed to it in the manner set forth
in the Convertible Note Purchase Agreement, or at such other address as the
Company shall have furnished to each holder of Registrable Securities at the
time outstanding.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by the
Company. This Agreement and/or the registration and other rights contained
herein (including these assignment rights) may be assigned by the Purchasers to
any one or more transferees or distributees of all or part of such Purchaser's
Registrable Securities. A holder of Registrable Securities shall be permitted,
in connection with a transfer or disposition of Registrable Securities, to
impose conditions or constraints on the ability of the transferee, as a holder
of Registrable Securities, to request a registration pursuant to Section 3.1 and
shall provide the Company with copies of such conditions or constraints and the
identity of such transferees.
9. Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate. In any
action or proceeding brought to enforce any provision of this Agreement
(including the indemnification provisions thereof), the successful party shall
be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
10. No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
Except as set forth on Schedule 10(a) hereto, the Company has not previously
entered into any agreement with respect to its securities granting any
registration rights to any Person other than the registration rights granted
pursuant to this Agreement. Except as set forth on Schedule 10(b) hereto, the
rights granted to the holders of Registrable Securities hereunder do not in any
way conflict with and are not inconsistent with any other agreements to which
the Company is a party or by which it is bound. The Company further agrees that
if any other registration rights agreement entered into after the date of this
Agreement with respect to any of its securities contains terms which are more
favorable to, or less restrictive on, the other party thereto than the terms and
conditions contained in this Agreement are (insofar as they are applicable) to
the Purchasers, then the terms and conditions of this Agreement shall
immediately be deemed to have been amended without further action by the Company
or any of the holders of Registrable Securities so that such holders shall be
entitled to the benefit of any such more favorable or less restrictive terms or
conditions.
11. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
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12. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of New York,
without regard to the conflicts of laws principles thereof. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and the United
States of America located in New York, New York for any action or proceeding
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any action or proceeding relating thereto
except in such courts). Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action or
proceeding arising out of this Agreement or the transactions contemplated hereby
in the courts of the State of New York or the United States of America located
in New York, New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
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 Agreement.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
BIO-PLEXUS, INC.
By:
Name:
Title:
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I, L.P.
By: Appaloosa Management, L.P., its
General Partner
By: Appaloosa Partners Inc., its General
Partner
By:
Name:
Title:
TERSK LLC
By:
Name:
Title:
PALOMINO FUND LTD.
By: Appaloosa Management, L.P.,
its Investment Advisor
By: Appaloosa Partners Inc.,
its General Partner
By:
Name:
Title:
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99
EXHIBIT D
Form of Security Agreement
SECURITY AGREEMENT
AMONG
BIO-PLEXUS, INC.,
as Obligor
and
--------------------.,
as Collateral Agent
Dated as of [ ], 1999
100
TABLE OF CONTENTS
Article I. Definitions and Interpretation................................1
1.01 Certain Defined Terms...........................................1
1.02 Interpretation..................................................4
Article II. Collateral...................................................4
2.01 Grant of First Priority Security Interest.......................4
2.02 Grant of Second Priority Security Interest......................6
2.03 Intellectual Property...........................................7
2.04 Perfection......................................................7
2.05 Preservation and Protection of Security Interests...............8
2.06 Attorney-in-Fact................................................9
2.07 Special Provisions Relating to Securities Collateral...........10
2.08 Use of Intellectual Property...................................11
2.09 Instruments....................................................11
2.10 Use of Collateral..............................................12
2.11 Rights and Obligations.........................................12
2.12 Release of Motor Vehicles......................................13
2.13 Termination....................................................13
Article III. Cash Proceeds of Collateral................................13
3.01 Collateral Account.............................................13
3.02 Certain Proceeds...............................................14
3.03 Investment of Balance in Collateral Account...................14
Article IV. Representations and Warranties..............................14
4.01 Title...........................................................14
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4.02 Intellectual Property..........................................15
4.03 Goods..........................................................15
Article V. Covenants....................................................15
5.01 Books and Records...............................................15
5.02 Removals, Etc...................................................16
5.03 Stock Collateral................................................16
5.04 Intellectual Property..........................................16
Article VI. Remedies....................................................18
6.01 Events of Default, Etc.........................................18
6.02 Deficiency.....................................................19
6.03 Private Sale...................................................19
6.04 Application of Proceeds........................................20
Article VII. Miscellaneous..............................................21
7.01 Waiver.........................................................21
7.02 Notices........................................................21
7.03 Expenses, Etc..................................................21
7.04 Amendments.....................................................22
7.05 Successors and Assigns.........................................22
7.06 Survival.......................................................22
7.07 Agreements Superseded..........................................22
7.08 Severability...................................................22
7.09 Captions.......................................................23
7.10 Counterparts...................................................23
7.11 GOVERNING LAW..................................................23
7.12 Submission to Jurisdiction......................................23
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7.13. Service of Process.............................................23
7.14. WAIVER OF JURY TRIAL...........................................24
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Exhibit A - List of Purchasers
Annex I - Schedule of Pledged Debt
Annex II - Jurisdictions for Filing of Financing Statements
Annex III - Business Locations
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SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") dated as of ______1999, is
made by and among BIO-PLEXUS, INC., a Connecticut corporation (the "Obligor"),
and ____________________, as collateral agent (the "Collateral Agent") for the
benefit of the holders of the Obligor's Notes.
WHEREAS, pursuant to the Convertible Note Purchase Agreement, dated as
of the date hereof (as amended, supplemented, restated or otherwise modified
from time to time, the "Note Purchase Agreement"), among the purchasers listed
on Exhibit A thereto (the "Purchasers"), the Collateral Agent and the Obligor,
the Purchasers are purchasing Notes from the Obligor in the aggregate principal
amount of $__________;
WHEREAS, as a condition, and material inducement, to the Purchasers'
agreement to purchase the Notes, the Purchasers required that the Obligor
deliver this Agreement to the Collateral Agent;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Obligor agrees with the
Collateral Agent as follows:
Article I. Definitions and Interpretation.
1.01 Certain Defined Terms. Unless otherwise defined, all capitalized
terms used in this Agreement that are defined in the Note Purchase Agreement
(including those terms incorporated therein by reference) shall have the
respective meanings assigned to them in the Note Purchase Agreement. In
addition, the following terms shall have the following meanings under this
Agreement:
"Accounts" shall have the meaning assigned to that term in Section
2.01(b).
"Additional Debt" shall have the meaning assigned to that term in
Section 2.01(a).
"Additional Shares" shall have the meaning assigned to that term in
Section 5.03.
"Casualty Event" shall mean, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.
"Collateral" shall have the meaning assigned to that term in Section
2.02.
105
"Collateral Account" shall have the meaning assigned to that term in
Section 3.01.
"Copyright Collateral" shall mean all Copyrights, whether now owned or
hereafter acquired by the Obligor.
"Copyrights" shall mean, collectively, (a) all copyrightable works, all
copyrights, and all registrations, applications and renewals and extensions in
connection therewith and (b) 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 or 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.
"Documents" shall have the meaning assigned to that term in Section
2.01(f).
"Equipment" shall have the meaning assigned to that term in Section
2.01(e).
"Equity Rights" shall mean, with respect to any Person, any outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any stockholders' or voting trust agreements) for the
issuance, sale, registration or voting of, or outstanding securities convertible
into, any additional shares of capital stock of any class, or partnership or
other ownership interests of any type in, such Person.
"First Priority Collateral" shall have the meaning assigned to that
term in Section 2.01.
"Holder" shall mean, at any time of reference, a Person in whose name a
Note is registered in the Note Register at such time.
"Instruments" shall have the meaning assigned to that term in Section
2.01(c).
"Inventory" shall have the meaning assigned to that term in Section
2.01(d).
"Issuers" shall mean, collectively, each Subsidiary, directly or
indirectly, of the Obligor that is the issuer (as defined in the Uniform
Commercial Code) of any shares of capital stock now owned or hereafter acquired
by the Obligor.
"Loan Documents" shall mean the Note Purchase Agreement, the Notes,
this Agreement, the Guarantee and Security Agreement and the Intercreditor
Agreement.
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"Motor Vehicles" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title to any such property is governed
by a certificate of title or ownership.
"Patent Collateral" shall mean all Patents, whether now owned or
hereafter acquired by the Obligor.
"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.
"Pledged Debt" shall have the meaning assigned to that term in Section
2.01(a).
"Pledged Stock" shall have the meaning assigned to that term in Section
2.01(a).
"Second Priority Collateral" shall have the meaning assigned to that
term in Section 2.02.
"Securities Collateral" means the Stock Collateral and the Pledged
Debt.
"Signing Date" shall mean the date on which the Obligor shall sign and
deliver this Agreement.
"Stock Collateral" shall have the meaning assigned to that term in
Section 2.01(a).
"Trademark Collateral" shall mean all Trademarks, whether now owned or
hereafter acquired by the Obligor. Notwithstanding the foregoing, the Trademark
Collateral shall not include any Trademark which would be rendered invalid,
abandoned, void or unenforceable by reason of its being included as part of the
Trademark Collateral.
"Trademarks" shall mean, collectively, (a) all trade names, trademarks,
service marks, logos, trade dress, domain names, and corporate names, together
with all translations, adaptations, decorations, and combinations thereof and
including all goodwill associated therewith and all registrations and
applications in connection with any of the foregoing, (b) all renewals and
extensions of any of the foregoing and (c) 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, together, in each case, with the product lines
and goodwill of the business connected with the use of, or otherwise symbolized
by, each of the foregoing.
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"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State of New York from time to time or, by reason of mandatory
application, any other applicable jurisdiction.
1.02 Interpretation. In this Agreement, unless otherwise indicated, the
singular includes the plural and plural the singular; words importing either
gender include the other gender; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
extensions and other modifications to such instruments (without, however,
limiting any prohibition on any such amendments, extensions and other
modifications by the terms of any Loan Document); and references to Persons
include their respective permitted successors and assigns and, in the case of
governmental Persons, Persons succeeding to their respective functions and
capacities.
Article II. Collateral.
2.01 Grant of First Priority Security Interest. As collateral security
for the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) and performance of the Secured Obligations and
obligations of every kind and nature of the Obligor now or hereafter incurred,
existing or created, to the Purchasers (including, without limitation, under the
Convertible Note Purchase Agreement), the Obligor hereby pledges and grants to
the Collateral Agent, for the ratable benefit of the Holders, a first priority
security interest in all of the Obligor's right, title and interest in and to
the following property, whether now owned or hereafter acquired by the Obligor
and whether now existing or hereafter coming into existence including, without
limitation, all real and personal property and interests in real and personal
property (collectively, the "First Priority Collateral"):
(a)(i) all of the shares of capital stock of the Issuers now
owned or hereafter acquired by the Obligor together with in each case the
certificates representing the same (collectively, the "Pledged Stock"); (ii) all
shares, securities, moneys or property representing a dividend on, or a
distribution or return of capital in respect of, any of the Pledged Stock,
resulting from a split-up, revision, reclassification or other like change of
any of the Pledged Stock or otherwise received in exchange for any of the
Pledged Stock and all Equity Rights issued to the holders of, or otherwise in
respect of, any of the Pledged Stock; and (iii) without affecting the
obligations of the Obligor under any provision prohibiting such action under any
Loan Document, in the event of any
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consolidation or merger in which any Issuer is not the surviving corporation,
all shares of each class of the capital stock of the successor corporation
(unless such successor corporation is the Obligor itself) formed by or resulting
from such consolidation or merger (collectively, and together with the property
described in clauses (i) and (ii) above, the "Stock Collateral"); [(iv) the
Indebtedness described in Annex I and issued by the obligors named therein (the
"Pledged Debt")]; (v) all additional Indebtedness for money borrowed or for the
deferred purchase price of property from time to time owed to the Obligor by any
Person, "Additional Debt"); (vi) all notes or other instruments evidencing the
Indebtedness referred to in clauses (iv) and (v) above;
(b) all accounts and general intangibles (each as defined in
the Uniform Commercial Code) of the Obligor constituting a right to the payment
of money, whether or not earned by performance, including, without limitation,
(i) in payments due and to become due to the Obligor under the Development and
License Agreement, dated as of January 28, 1997, between Johnson & Johnson
Medical, Inc. and the Company, as such agreement may be amended from time to
time (the "Development and License Agreement"), (ii) in payments due and to
become due to the Obligor under any existing or future licensing, supply,
development, or similar agreements, (iii) in repayment of any loans or advances
(including loans and advances to Subsidiaries of the Obligor), (iv) in payment
for goods (including Inventory and Equipment) sold or leased or for services
rendered and (v) in payment of tax refunds and in payment of any guarantee of
any of the foregoing (collectively, the "Accounts");;
(c) all instruments, chattel paper or letters of credit (each
as defined in the Uniform Commercial Code) of the Obligor evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts (collectively, the
"Instruments");
(d) all inventory (as defined in the Uniform Commercial Code)
and all other goods (including Motor Vehicles) of the Obligor that are held by
the Obligor for sale, lease or furnishing under a contract of service (including
to its Subsidiaries or Affiliates), that are so leased or furnished or that
constitute raw materials, work in process or material used or consumed in its
business, including all spare parts and related supplies, all goods obtained by
the Obligor in exchange for any such goods, all products made or processed from
any such goods and all substances, if any, commingled with or added to any such
goods (collectively, the "Inventory");
(e) all equipment (as defined in the Uniform Commercial Code)
and all other goods (including Motor Vehicles) of the Obligor that are used or
bought for use primarily in its business, including all spare parts and related
supplies, all goods obtained by the Obligor in exchange for any such goods, all
substances, if any, commingled with or added to such goods and all upgrades and
other improvements to such goods, in each case to the extent not constituting
Inventory (collectively, the "Equipment");
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(f) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of the Obligor covering, evidencing or
representing Inventory or Equipment (collectively, the "Documents");
(g) all contracts and other agreements of the Obligor relating
to the sale or other disposition of all or any part of the Inventory, Equipment
or Documents and all rights, warranties, claims and benefits of the Obligor
against any Person arising out of, relating to or in connection with all or any
part of the Inventory, Equipment or Documents of the Obligor, including any such
rights, warranties, claims or benefits against any Person storing or
transporting any such Inventory or Equipment or issuing any such Documents;
(h) all other accounts or general intangibles of the Obligor
not constituting Accounts, including, to the extent related to all or any part
of the other Collateral, all books, correspondence, credit files, records,
invoices, tapes, cards, computer runs and other papers and documents in the
possession or under the control of the Obligor or any computer bureau or service
company from time to time acting for the Obligor;
(i) the balance from time to time in the Collateral Account;
(j) all other tangible and intangible property of the Obligor,
including all Intellectual Property; and
(k) all proceeds and products in whatever form of all or any
part of the other Collateral, including all proceeds of insurance and all
condemnation awards and all other compensation for any Casualty Event with
respect to all or any part of the other Collateral (together with all rights to
recover and proceed with respect to the same), and all accessories to,
substitutions for and replacements of all or any part of the other Collateral.
2.02 Grant of Second Priority Security Interest. As collateral security
for the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) and performance of the Secured Obligations, the
Obligor hereby pledges and grants to the Collateral Agent, for the ratable
benefit of the Holders a second priority security interest in all of the
Obligor's right, title and interest in and to the property in which [ ] has a
perfected first priority security interest pursuant to the [First Mortgage Notes
and Equipment Lease Facility, dated [ ] between the Obligor and [ ]], whether
now owned or hereafter acquired by the Obligor and whether now existing or
hereafter coming into existence (collectively, the "Second Priority Collateral"
and together with the First Priority Collateral, the "Collateral")).
2.03 Intellectual Property. For the purpose of enabling the Collateral
Agent to exercise its rights, remedies, powers and privileges under Article VI
at such time or times
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as the Collateral Agent shall be lawfully entitled to exercise such rights,
remedies, powers and privileges, and for no other purpose, the Obligor hereby
grants to the Collateral Agent, the right to immediately, without demand of
performance and without additional notice, or demand whatsoever to the Obligor,
sell at public or private sale or otherwise realize upon, all right, title, and
interest in all or any of the Intellectual Property and any associated good
will, as the case may be, or any interest that the Obligor may have therein, and
after deducting all expenses (including all reasonable expenses for brokers'
fees and legal services) from the proceeds of such sale or other disposition of
the Intellectual Property and any associated good will, as the case may be, the
Collateral Agent shall apply the residue of such proceeds toward the payment of
all liabilities.
2.04 Perfection. Concurrently with the execution and delivery of this
Agreement, the Obligor shall (i) file such financing statements and other
documents in such offices as shall be necessary or as the Collateral Agent may
request to perfect and establish, with regard to First Priority Collateral, the
first priority (subject only to Liens permitted under Section 6.7 of the Note
Purchase Agreement) of, and with regard to Second Priority Collateral, the
second priority of, the Liens granted by this Agreement (including promptly
filing the Assignment for Security--Trademarks and Patents, in the forms
executed on the date hereof by the Obligor, in the United States Patent and
Trademark Office), (ii) deliver and pledge to the Collateral Agent any and all
Instruments, endorsed or accompanied by such instruments of assignment and
transfer in such form and substance as the Collateral Agent may request, (iii)
cause the Collateral Agent to be listed as the lienholder on all certificates of
title or ownership relating to Motor Vehicles owned by the Obligor and deliver
to the Collateral Agent originals of all such certificates of title or ownership
for the Motor Vehicles together with the odometer statements for each respective
Motor Vehicle, (iv) deliver and pledge to the Collateral Agent all certificates
for the Pledged Stock and notes, instruments or other documents evidencing the
Pledged Debt, accompanied by undated stock or bond powers, as the case may be,
duly executed in blank and (v) take all such other actions as shall be necessary
or as the Collateral Agent may request to perfect and establish (A) with regard
to the First Priority Collateral, the first priority (subject only to such
Permitted Liens), and (B) with regard to the Second Priority Collateral, the
second priority of, Liens granted by this Agreement. The Collateral Agent shall
have the right, at any time in its discretion and with notice to the Obligor, to
transfer to or to register in its name or in the name of any of its nominees any
or all of the Pledged Stock or Pledged Debt.
2.05 Preservation and Protection of Security Interests. The Obligor
shall:
(a) upon the acquisition after the Signing Date by the Obligor
of any Securities Collateral, promptly either (x) transfer and deliver to the
Collateral Agent all such Securities Collateral (together with the certificates
or instruments representing such Securities Collateral securities duly endorsed
in blank or accompanied by undated powers
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duly executed in blank) or (y) take such other action as the Collateral Agent
shall deem necessary or appropriate to perfect, and establish the priority of,
the Liens granted by this Agreement in such Securities Collateral;
(b) upon the acquisition after the Signing Date by the Obligor
of any Instrument, promptly deliver and pledge to the Collateral Agent all such
Instruments, endorsed or accompanied by such instruments of assignment and
transfer in such form and substance as the Collateral Agent may request;
(c) upon the acquisition after the Signing Date by the Obligor
of any Equipment or Motor Vehicle covered by a certificate of title or
ownership, promptly cause the Collateral Agent to be listed as the lienholder on
such certificate of title and within 45 days of the acquisition of such property
deliver evidence of the same to the Collateral Agent;
(d) upon the Obligor's acquiring, or otherwise becoming
entitled to the benefits of, any Copyright (or copyrightable material), Patent
(or patentable invention), Trademark (or associated goodwill) or other
Intellectual Property or upon or prior to the Obligor's filing, either directly
or through any agent, licensee or other designee, of any application with any
governmental Person for any Copyright, Patent, Trademark, or other Intellectual
Property, in each case after the Signing Date, execute and deliver such
contracts, agreements and other instruments as the Collateral Agent may request
to evidence, validate, perfect and establish the first priority (subject only to
Liens permitted under Section 6.7 of the Note Purchase Agreement) of the Liens
granted by this Agreement in such and any related Intellectual Property; and
(e) give, execute, deliver, file or record any and all
financing statements, notices, contracts, agreements or other instruments,
obtain any and all governmental approvals and take any and all steps that may be
necessary or as the Collateral Agent may request to create, perfect, establish
with regard to the First Priority Collateral, the first priority (subject only
to Liens permitted under Section 6.7 of the Note Purchase Agreement) of, or with
regard to the Second Priority Collateral, the second priority of, or to preserve
the validity, perfection with regard to the First Priority Collateral, first
priority (subject only to such Permitted Liens) of, or with regard to the Second
Priority Collateral, second priority of, the Liens granted by this Agreement or
to enable the Collateral Agent to exercise and enforce its rights, remedies,
powers and privileges under this Agreement with respect to such Liens, including
causing any or all of the Securities Collateral to be transferred of record into
the name of the Collateral Agent or its nominee (and the Collateral Agent agrees
that if any Securities Collateral is transferred into its name or the name of
its nominee, the Collateral Agent will thereafter promptly give to the Obligor
copies of any notices and communications received by it with respect to the
Stock Collateral pledged by the Obligor), provided that notices to account
debtors in respect of any Accounts or Instruments shall be subject to the
provisions of Section 3.02(b).
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2.06 Attorney-in-Fact. (a) Subject to the rights of the Obligor under
Sections 2.07, 2.08, 2.09 and 2.10, the Collateral Agent is hereby appointed the
attorney-in-fact of the Obligor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instruments which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement, to preserve the validity, perfection, with regard to First
Priority Collateral, first priority (subject only to Liens permitted under
Section 6.7 of the Note Purchase Agreement), and with regard to Second Priority
Collateral, second priority, of the Liens granted by this Agreement and,
following any Default, to exercise its rights, remedies, powers and privileges
under this Agreement. This appointment as attorney-in-fact is irrevocable and
coupled with an interest. Without limiting the generality of the foregoing, the
Collateral Agent shall be entitled under this Agreement upon the occurrence and
continuation of any Event of Default (or, in respect of Section 3.02(b), any
Default) (i) to ask, demand, collect, sue for, recover, receive and give receipt
and discharge for amounts due and to become due under and in respect of all or
any part of the Collateral; (ii) to receive, endorse and collect any Instruments
or other drafts, instruments, documents and chattel paper in connection with
clause (i) above (including any draft or check representing the proceeds of
insurance or the return of unearned premiums); (iii) to file any claims or take
any action or proceeding that the Collateral Agent may deem necessary or
advisable for the collection of all or any part of the Collateral, including the
collection of any compensation due and to become due under any contract or
agreement with respect to all or any part of the Collateral; and (iv) to
execute, in connection with any sale or disposition of the Collateral under
Article VI, any endorsements, assignments, bills of sale or other instruments of
conveyance or transfer with respect to all or any part of the Collateral. In any
suit, proceeding or action brought by the Collateral Agent relating to any
Account, contract or Instrument for any sum owing thereunder, or to enforce any
provision of any Account, contract or Instrument, the Obligor will save,
indemnify and keep the Collateral Agent harmless from and against all expense,
loss or damage suffered by reason of any defense, set-off, counterclaim,
recoupment or reduction or liability whatsoever of the obligor thereunder,
arising out of a breach by the Obligor of any obligation thereunder or arising
out of any other agreement, Indebtedness or liability at any time owing to, or
in favor of, such obligor or its successors from the Obligor, and all such
obligations of the Obligor shall be and remain enforceable against and only
against the Obligor and shall not be enforceable against the Collateral Agent.
(b) Without limiting the rights and powers of the Collateral
Agent under Section 2.06(a), the Obligor hereby appoints the Collateral Agent as
its attorney-in-fact, effective the Signing Date and terminating upon the
termination of this Agreement, for the purpose of (i) executing on behalf of the
Obligor title or ownership applications for filing with appropriate state
agencies to enable Motor Vehicles now owned or hereafter acquired by the Obligor
to be retitled and the Collateral Agent to be listed as lienholder as to such
Motor Vehicles, (ii) filing such applications with such state agencies and (iii)
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executing such other documents and instruments on behalf of, and taking such
other action in the name of, the Obligor as the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement (including
the purpose of creating in favor of the Collateral Agent a first priority
perfected lien on the Motor Vehicles and exercising the rights and remedies of
the Collateral Agent under Article VI). This appointment as attorney-in-fact is
irrevocable and coupled with an interest.
(c) Without limiting the rights and powers of the Collateral
Agent under Section 2.06(a), the Obligor hereby appoints the Collateral Agent as
its attorney-in-fact, effective the Signing Date and terminating upon the
termination of this Agreement, for the purpose of executing and filing all such
contracts, agreements and other documents as are contemplated by Section
2.05(d). This appointment as attorney-in-fact is irrevocable and coupled with an
interest.
2.07 Special Provisions Relating to Securities Collateral. (a) So long
as no Event of Default shall have occurred and be continuing, the Obligor shall
have the right to exercise all voting, consensual and other powers of ownership
pertaining to the Securities Collateral for all purposes not inconsistent with
the terms of any Loan Document, provided that the Obligor agrees that it will
not vote the Securities Collateral in any manner that is inconsistent with the
terms of any Loan Document; and the Collateral Agent shall, at the Obligor's
expense, execute and deliver to the Obligor or cause to be executed and
delivered to the Obligor all such proxies, powers of attorney, dividends and
other orders and other instruments, without recourse, as the Obligor may
reasonably request for the purpose of enabling the Obligor to exercise the
rights and powers which it is entitled to exercise pursuant to this Section
2.07(a).
(b) So long as no Event of Default shall have occurred and be
continuing, the Obligor shall be entitled to receive and retain any dividends or
distributions on the Securities Collateral paid in cash.
(c) If any Event of Default shall have occurred and be
continuing, and whether or not the Holders or the Collateral Agent exercise any
available right to declare any Secured Obligation due and payable or seek or
pursue any other right, remedy, power or privilege available to them under
applicable law, this Agreement or any other Loan Document, all dividends and
other distributions on the Securities Collateral shall be paid directly to the
Collateral Agent and retained by it in the Collateral Account as part of the
Securities Collateral, subject to the terms of this Agreement, and, if the
Collateral Agent shall so request, the Obligor agrees to execute and deliver to
the Collateral Agent appropriate additional dividend, distribution and other
orders and instruments to that end, provided that if such Event of Default is
cured, any such dividend or distribution paid to the Collateral Agent prior to
such cure shall, upon request of the Obligor (except to the extent applied to
the Secured Obligations), be returned by the Collateral Agent to the Obligor.
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2.08 Use of Intellectual Property. Subject to such action not otherwise
constituting a Default and so long as no Event of Default shall have occurred
and be continuing, the Obligor will be permitted to exploit, use, enjoy,
protect, license, sublicense, assign, sell, dispose of or take other actions
with respect to the Intellectual Property in the ordinary course of the business
of the Obligor subject to the rights of the Collateral Agent, whose rights shall
not be subordinated, impaired or diminished. In furtherance of the foregoing, so
long as no Event of Default shall have occurred and be continuing, the
Collateral Agent shall from time to time, upon the request of the Obligor,
execute and deliver any instruments, certificates or other documents, in the
form so requested, which the Obligor shall have certified are appropriate (in
its reasonable judgment) to allow it to take any action permitted above. The
exercise of rights, remedies, powers and privileges under Article VI by the
Collateral Agent shall not terminate the rights of the holders of any licenses
or sublicenses theretofore granted by the Obligor in accordance with the first
sentence of this Section 2.08.
2.09 Instruments. So long as no Default or Event of Default shall have
occurred and be continuing, the Obligor may retain for collection in the
ordinary course of business any Instruments obtained by it in the ordinary
course of business, and the Collateral Agent shall, promptly upon the request,
and at the expense of the Obligor, make appropriate arrangements for making any
Instruments pledged by the Obligor available to the Obligor for purposes of
presentation, collection or renewal. Any such arrangement shall be effected, to
the extent deemed appropriate by the Collateral Agent, against trust receipt or
like document.
2.10 Use of Collateral. So long as no Event of Default shall have
occurred and be continuing, the Obligor shall, in addition to its rights under
Sections 2.07, 2.08 and 2.09 hereof and Section 6.18 of the Note Purchase
Agreement, in respect of the Collateral contemplated in those sections, be
entitled to use and possess the other Collateral and to exercise its rights,
title and interest in all contracts, agreements, licenses and governmental
approvals, subject to the rights, remedies, powers and privileges of the
Collateral Agent under Articles III and VI and to such use, possession or
exercise not otherwise constituting a Default.
2.11 Rights and Obligations. (a) The Obligor shall remain liable to
perform its duties and obligations under the contracts and agreements included
in the Collateral in accordance with their respective terms to the same extent
as if this Agreement had not been executed and delivered. The exercise by the
Collateral Agent of any right, remedy, power or privilege in respect of this
Agreement shall not release the Obligor from any of its duties and obligations
under such contracts and agreements and the Obligor shall save, indemnify and
keep the Collateral Agent harmless from and against all expense, loss or damage
suffered by reason of such exercise. The Collateral Agent shall have no duty,
obligation or liability under such contracts and agreements or with respect to
any
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governmental approval included in the Collateral by reason of this Agreement
or any other Loan Document, nor shall the Collateral Agent be obligated to
perform any of the duties or obligations of the Obligor under any such contract
or agreement or any such governmental approval or to take any action to collect
or enforce any claim (for payment) under any such contract or agreement or
governmental approval.
(b) No Lien granted by this Agreement in the Obligor's right,
title and interest in any contract, agreement or governmental approval shall be
deemed to be a consent by the Collateral Agent to any such contract, agreement
or governmental approval.
(c) No reference in this Agreement to proceeds or to the sale
or other disposition of Collateral shall authorize the Obligor to sell or
otherwise dispose of any Collateral except to the extent otherwise expressly
permitted by the terms of any Loan Document.
(d) The Collateral Agent shall not be required to take steps
necessary to preserve any rights against prior parties to any part of the
Collateral.
2.12 Release of Motor Vehicles. So long as no Default shall have
occurred and be continuing, upon the request of, and at the expense of, the
Obligor, the Collateral Agent shall execute and deliver to the Obligor such
instruments as the Obligor shall reasonably request to remove the notation of
the Collateral Agent as lienholder on any certificate of title for any Motor
Vehicle; provided that any such instruments shall be delivered, and the release
shall be effective, only upon receipt by the Collateral Agent of a certificate
from the Obligor stating that the Motor Vehicle the Lien on which is to be
released is to be sold or has suffered a casualty loss (with title passing to
the appropriate casualty insurance company in settlement of the claim for such
loss).
2.13 Termination. When all Secured Obligations shall have been
indefeasibly paid in full, this Agreement shall terminate, and the Collateral
Agent shall, at the expense of the Obligor, forthwith cause to be assigned,
transferred and delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Collateral and money received in
respect of the Collateral, to or on the order of the Obligor and to be released,
canceled and granted back all licenses and rights referred to in Section 2.03.
The Collateral Agent shall also, at the expense of the Obligor, execute and
deliver to the Obligor upon such termination such Uniform Commercial Code
termination statements, certificates for terminating the Liens on the Motor
Vehicles and such other documentation as shall be reasonably requested by the
Obligor to effect the termination and release of the Liens granted by this
Agreement on the Collateral.
Article III. Cash Proceeds of Collateral.
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3.01 Collateral Account. There is hereby established with the
Collateral Agent a cash collateral account (the "Collateral Account") in the
name and under the exclusive domain and control of the Collateral Agent into
which there shall be deposited from time to time the cash proceeds of any of the
Collateral (including proceeds resulting from insurance or condemnation)
required to be delivered to the Collateral Agent pursuant to this Agreement and
into which the Obligor may from time to time deposit any additional amounts
which it wishes to pledge to the Collateral Agent as additional collateral
security under this Agreement. The balance from time to time in the Collateral
Account shall constitute part of the Collateral and shall not constitute payment
of the Secured Obligations until applied as provided in this Agreement. If any
Event of Default shall have occurred and be continuing, the Collateral Agent may
in its discretion apply (subject to collection) the balance from time to time
outstanding to the credit of the Collateral Account to the payment of the
Secured Obligations in the manner specified in Article VI. The balance from time
to time in the Collateral Account shall be subject to withdrawal only as
provided in this Agreement.
3.02 Certain Proceeds. (a) If any Default or Event of Default shall
have occurred and be continuing, the Obligor shall, upon request of the
Collateral Agent, promptly notify (and the Obligor hereby authorizes the
Collateral Agent so to notify) each account debtor in respect of any Accounts or
Instruments that such Collateral has been assigned to the Collateral Agent under
this Agreement and that any payments due or to become due in respect of such
Collateral are to be made directly to the Collateral Agent. All such payments
made to the Collateral Agent shall be immediately deposited in the Collateral
Account.
(b) The Obligor agrees that if the proceeds of any Collateral
(including payments made in respect of Accounts and Instruments) shall be
received by it following the occurrence and during the continuation of a
Default, the Obligor shall as promptly as possible deposit such proceeds into
the Collateral Account. Until so deposited, all such proceeds shall be held in
trust by the Obligor for and as the property of the Collateral Agent and shall
not be commingled with any other funds or property of the Obligor.
3.03 Investment of Balance in Collateral Account. Amounts on deposit in
the Collateral Account shall be invested from time to time in such Permitted
Investments as the Obligor (or, if any Default or Event of Default shall have
occurred and be continuing, the Collateral Agent) shall determine. All such
investments shall be held in the name and be under the control of the Collateral
Agent. At any time after the occurrence and during the continuance of an Event
of Default, the Collateral Agent may in its discretion at any time and from time
to time elect to liquidate any such investments and to apply or cause to be
applied the proceeds of such action to the payment of the Secured Obligations in
the manner specified in Article VI.
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Article IV. Representations and Warranties.
The Obligor hereby represents and warrants to the Collateral Agent for
the benefit of the Holders as follows:
4.01 Title. The Obligor is the sole beneficial owner of the Collateral
in which it purports to grant a Lien pursuant to this Agreement, and, except as
set forth in Schedule 4.01, such Collateral is free and clear of all Liens. The
first priority Liens with regard to First Priority Collateral and the second
priority Liens with regard to Second Priority Collateral granted by this
Agreement in favor of the Collateral Agent for the benefit of the Collateral
Agent and the Holders have attached and, upon filing of the respective financing
statements in the jurisdictions listed on Annex II, this Agreement is effective
to create a perfected first priority security interest in all of such First
Priority Collateral and to create a perfected second priority security interest
in all such Second Priority Collateral, prior to all other Liens. With respect
to the Pledged Stock, the Pledged Debt and the cash in the Collateral Account,
the pledge of such Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in such Collateral in favor of the
Collateral Agent for the benefit of the Holders.
4.02 Intellectual Property. (a) Except pursuant to licenses and other
user agreements entered into by the Obligor in the ordinary course of business,
the Obligor owns and possesses the right to use, and has done nothing to
authorize or enable any other Person to use, any Copyright, Patent or Trademark
constituting Intellectual Property or any other Intellectual Property.
(b) The Obligor owns any Trademarks registered in the United
States of America to which the last sentence of the definition of Trademark
Collateral applies.
4.03 Goods. Any goods now or hereafter manufactured or otherwise
produced by the Obligor or any of its Subsidiaries included in the Collateral
have been and will be produced in compliance with the requirements of the Fair
Labor Standards Act.
Article V. Covenants.
5.01 Books and Records. The Obligor shall: (a) keep full and accurate
books and records relating to the Collateral and stamp or otherwise mark such
books and records in such manner as the Collateral Agent may reasonably require
in order to reflect the Liens granted by this Agreement; (b) furnish to the
Collateral Agent from time to time (but, unless a Default shall have occurred
and be continuing, no more frequently than quarterly) statements and schedules
further identifying and describing the Copyright Collateral, the Patent
Collateral and the Trademark Collateral and such other reports in connection
with the Copyright Collateral, the Patent Collateral and the Trademark
Collateral, as the Collateral Agent may reasonably request, all in reasonable
detail; (c)
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prior to filing, either directly or through an agent, licensee or other
designee, any application for any Copyright, Patent or Trademark, furnish to the
Collateral Agent prompt notice of such proposed filing; and (d) permit
representatives of the Collateral Agent, upon reasonable notice, at any time
during normal business hours to inspect and make abstracts from its books and
records pertaining to the Collateral, permit representatives of the Collateral
Agent to be present at the Obligor's place of business to receive copies of all
communications and remittances relating to the Collateral and forward copies of
any notices or communications received by the Obligor with respect to the
Collateral, all in such manner as the Collateral Agent may reasonably request.
5.02 Removals, Etc. Without at least 30 days' prior written notice to
the Collateral Agent, the Obligor shall (i) not maintain any of its books and
records with respect to the Collateral at any office or maintain its principal
place of business at any place, or permit any Inventory or Equipment to be
located anywhere, other than (a) at the address initially indicated for notices
to it under Article VII, (b) at one of the other business locations presently
owned or operated by the Obligor or any of its Affiliates and identified in
Annex II or III or (c) in transit from one of such locations to another, or (ii)
change its corporate name, or the name under which it does business, from the
name shown on the signature pages to this Agreement.
5.03 Stock Collateral. The Obligor will cause the Stock Collateral to
constitute at all times 100% of the total number of shares of each class of
capital stock of each Issuer then outstanding. The Obligor shall cause all such
shares to be duly authorized, validly issued, fully paid and nonassessable and
to be free of any contractual restriction or any restriction under the charter
or bylaws of the respective Issuer of such Stock Collateral, upon the transfer
of such Stock Collateral (except for any such restriction contained in any Loan
Document). The Obligor agrees that it will (i) cause each issuer of the Pledged
Stock not to issue any shares of stock or other securities in addition to or in
substitution for the Pledged Stock, (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional shares of
capital stock issued to the Obligor (the "Additional Shares") and any and all
Additional Debt, and (iii) promptly (and in any event within three business
days) deliver to the Collateral Agent an amendment to this Agreement, duly
executed by the Obligor, in respect of the Additional Shares or Additional Debt,
together with all certificates, notes or other instruments representing or
evidencing the same. The Obligor agrees that all Additional Shares and
Additional Debt listed on any such amendment delivered to the Collateral Agent
shall for all purposes hereunder constitute Pledged Stock and Pledged Debt,
respectively, and (iii) is deemed to have made, upon such delivery, the
representations and warranties contained in Article IV hereof with respect to
such Collateral.
5.04 Intellectual Property. (a) The Obligor (either itself or through
licensees) will, for each Trademark, (i) to the extent consistent with past
practice and good business
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judgment, continue to use such Trademark on each and every trademark class of
goods applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in full force and
effect free from any claim of abandonment for nonuse, (ii) maintain as in the
past the quality of products and services offered under such Trademark, (iii)
employ such Trademark with the appropriate notice of registration and (iv) not
(and not permit any licensee or sublicensee to) do any act or knowingly omit to
do any act whereby any Trademark material to the conduct of its business may
become invalidated.
(b) The Obligor (either itself or through licensees) will not
do any act or knowingly omit to do any act whereby any Patent or Copyright
material to the conduct of its business may become abandoned or dedicated.
(c) The Obligor shall notify the Collateral Agent immediately
if it knows or has reason to know that any Intellectual Property material to the
conduct of its business may become abandoned or dedicated, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding before any governmental Person)
regarding the Obligor's ownership of any Intellectual Property material to its
business, its right to apply for registration or register the same (as the case
may be), or its right to keep, use and maintain the same.
(d) The Obligor will take all necessary steps that are
consistent with good business practices in any proceeding before any appropriate
governmental Person to maintain and pursue each application relating to any
Intellectual Property (and to obtain the relevant registrations) and to maintain
each registration material to the conduct of its business, including but not
limited to payment of maintenance fees, filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition, interference
and cancellation proceedings.
(e) In the event that any Intellectual Property material to
the conduct of its business is infringed, misappropriated or diluted by, or
comes in conflict with, a third party, the Obligor shall notify the Collateral
Agent within ten days after it learns of such event and shall, if consistent
with good business practice, promptly sue for infringement, misappropriation or
dilution, seek temporary restraints and preliminary injunctive relief to the
extent practicable, seek to recover any and all damages for such infringement,
misappropriation or dilution and take such other actions as are appropriate
under the circumstances to protect such Collateral.
(f) The Obligor shall prosecute diligently any application for
any Intellectual Property pending as of the date of this Agreement or thereafter
made until the termination of this Agreement, make application on uncopyrighted
but copyrightable material, unpatented but patentable inventions and
unregistered but registerable Trademarks and preserve and maintain all rights in
applications for any Intellectual
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Property; provided, however, that the Obligor shall have no obligation to make
any such application if making such application would be unnecessary or
imprudent in the good faith business judgment of the Obligor. Any expenses
incurred in connection with such an application shall be borne by the Obligor.
(g) The Collateral Agent shall have the right but shall in no
way be obligated to bring suit in its own name to enforce the Copyrights,
Patents and Trademarks or any other Intellectual Property and any license under
such Intellectual Property, in which event the Obligor shall, at the request of
the Collateral Agent, do any and all lawful acts and execute and deliver any and
all proper documents required by the Collateral Agent in aid of such enforcement
action.
Article VI. Remedies.
6.01 Events of Default, Etc. If any Event of Default shall have
occurred and be continuing:
(a) the Collateral Agent in its discretion may require the
Obligor to, and the Obligor shall, assemble the Collateral owned by it at such
place or places, reasonably convenient to both the Collateral Agent and the
Obligor, designated in the Collateral Agent's request;
(b) the Collateral Agent in its discretion may make any
reasonable compromise or settlement it deems desirable with respect to any of
the Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, all or any part of the
Collateral;
(c) the Collateral Agent in its discretion may, in its name or
in the name of the Obligor or otherwise, demand, sue for, collect or receive any
money or property at any time payable or receivable on account of or in exchange
for all or any part of the Collateral, but shall be under no obligation to do
so;
(d) the Collateral Agent in its discretion may, upon five
business days' prior written notice to the Obligor of the time and place, with
respect to all or any part of the Collateral which shall then be or shall
thereafter come into the possession, custody or control of the Collateral Agent,
or its agents, sell, lease or otherwise dispose of all or any part of such
Collateral, at such place or places as the Collateral Agent deems best, for
cash, for credit or for future delivery (without thereby assuming any credit
risk) and at public or private sale, without demand of performance or notice of
intention to effect any such disposition or of time or place of any such sale
(except such notice as is required above or by applicable statute and cannot be
waived), and the Collateral Agent or any other Person may be the purchaser,
lessee or recipient of any or all of the Collateral so disposed of at any public
sale (or, to the extent permitted by law, at any private sale) and
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thereafter hold the same absolutely, free from any claim or right of whatsoever
kind, including any right or equity of redemption (statutory or otherwise), of
the Obligor, any such demand, notice and right or equity being hereby expressly
waived and released. In the event of any sale, assignment, license or other
disposition of any of the Trademark Collateral, the goodwill connected with and
symbolized by the Trademark Collateral subject to such disposition shall be
included, and the Obligor shall supply to the Collateral Agent or its designee,
for inclusion in such sale, assignment, license or other disposition, all
Intellectual Property relating to such Trademark Collateral. The Collateral
Agent may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the sale may be so adjourned; and
(e) the Collateral Agent shall have, and in its discretion may
exercise, all of the rights, remedies, powers and privileges with respect to the
Collateral of a secured party under the Uniform Commercial Code (whether or not
the Uniform Commercial Code is in effect in the jurisdiction where such rights,
remedies, powers and privileges are asserted) and such additional rights,
remedies, powers and privileges to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights, remedies, powers and
privileges in respect of this Agreement or the Collateral may be asserted,
including the right, to the maximum extent permitted by law, to exercise all
voting, consensual and other powers of ownership pertaining to the Collateral as
if the Collateral Agent were the sole and absolute owner of the Collateral (and
the Obligor agrees to take all such action as may be appropriate to give effect
to such right).
The proceeds of, and other realization upon, the Collateral by
virtue of the exercise of remedies under this Section 6.01 and of the exercise
of the license granted to the Collateral Agent in Section 2.03 shall be applied
in accordance with Section 6.04.
6.02 Deficiency. If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section 6.01 and of the
exercise of the license granted to the Collateral Agent in Section 2.03 are
insufficient to cover the costs and expenses (including attorneys fees) of such
exercise and the payment in full of the other Secured Obligations, the Obligor
shall remain liable for any deficiency.
6.03 Private Sale. (a) The Collateral Agent shall incur no liability as
a result of the sale, lease or other disposition of all or any part of the
Collateral at any private sale pursuant to Section 6.01 conducted in a
commercially reasonable manner. The Obligor hereby waives any claims against the
Collateral Agent arising by reason of the fact that the price at which the
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale or was less than the aggregate
amount of the Secured Obligations, even if the Collateral Agent accepts the
first offer received and does not offer the Collateral to more than one offeree.
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(b) The Obligor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws, the Collateral Agent may be compelled, with respect to any sale of all or
any part of the Collateral, to limit purchasers to those who will agree, among
other things, to acquire the Collateral for their own account, for investment
and not with a view to distribution or resale. The Obligor acknowledges that any
such private sales may be at prices and on terms less favorable to the
Collateral Agent than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Collateral Agent shall have no obligation to engage in
public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the respective Issuer of such Collateral to
register it for public sale.
6.04 Application of Proceeds. Except as otherwise expressly provided in
this Agreement and except as provided below in this Section 6.04, the proceeds
of, or other realization upon, all or any part of the Collateral by virtue of
the exercise of remedies under Section 6.01 or of the exercise of the license
granted in Section 2.03, and any other cash at the time held by the Collateral
Agent under Article III or this Article VI, shall be applied by the Collateral
Agent:
First, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of the
Collateral Agent, the fees and expenses of its agents and counsel and all other
expenses incurred and advances made by the Collateral Agent in that connection;
Second, to the Collateral Agent for amounts due and unpaid on the Notes
for principal and interest and all other amounts due and unpaid under the Loan
Documents; and
Third, to the Obligor or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
As used in this Article VI, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Obligor or any issuer of,
or account debtor or other obligor on, any of the Collateral.
Article VII. Miscellaneous.
7.01 Waiver. No failure on the part of the Collateral Agent or any
Holder to exercise and no delay in exercising, and no course of dealing with
respect to, any right, remedy, power or privilege under this Agreement shall
operate as a waiver of such right, remedy, power or privilege, nor shall any
single or partial exercise of any right, remedy,
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power or privilege under this Agreement preclude any other or further exercise
of any such right, remedy, power or privilege or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
provided in this Agreement are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
7.02 Notices. All notices and, consents, requests, instructions,
approvals, financial statements, reports and other communications to be given
under this Agreement shall be deemed given, if in writing and delivered
personally, by telecopy or sent by registered mail, postage prepaid to:
if to the Obligor: Bio-Plexus, Inc.
129 Reservoir Road
Vernon, CT 06066
Attention: [ ]
if to the Collateral Agent: Appaloosa Management, L.P.
26 Main St., 1st Floor
Chatham, NJ 07928
Attention: Mr. James Bolin
with a copy to: Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
7.03 Expenses, Etc. The Obligor agrees to pay or to reimburse the
Collateral Agent for all costs and expenses (including reasonable attorney's
fees and expenses) that may be incurred by the Collateral Agent in any effort to
enforce any of the provisions of Article VI, or any of the obligations of the
Obligor in respect of the Collateral or in connection with (a) the preservation
of the Lien of, or the rights of the Collateral Agent under this Agreement or
(b) any actual or attempted sale, lease, disposition, exchange, collection,
compromise, settlement or other realization in respect of, or care of, the
Collateral, including all such costs and expenses (and reasonable attorney's
fees and expenses) incurred in any bankruptcy, reorganization, workout or other
similar proceeding.
7.04 Amendments. This Agreement may be amended as to the Collateral
Agent and its respective successors and assigns, and the Obligor may take any
action herein prohibited, or omit to perform any act required to be performed by
it, if the Obligor shall obtain the written consent of the Collateral Agent.
This Agreement may not be waived,
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changed, modified, or discharged orally, but only by an agreement in writing
signed by the party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent to
such waiver, change, modification or discharge on behalf of such party.
7.05 Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
7.06 Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant hereto in
connection with the transactions contemplated hereby shall survive the Closing
and the delivery of the Loan Documents, regardless of any investigation made by
or on behalf of any party.
7.07 Agreements Superseded. Except with respect to express references
to other Loan Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect to the subject
matter of this Agreement.
7.08 Severability. If any term, provision, covenant or restriction of
this Agreement 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 Agreement 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.
7.09 Captions. The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
7.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
7.11 GOVERNING LAW. THIS AGREEMENT 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.
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7.12 Submission to Jurisdiction. If any action, proceeding or
litigation shall be brought by the Collateral Agent in order to enforce any
right or remedy under this Agreement, the Obligor 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 Agreement. The
Obligor 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
action, proceeding or litigation in such jurisdiction.
7.13. Service of Process. Nothing herein shall affect the right of the
Collateral Agent to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Obligor in any other
jurisdiction.
7.14. WAIVER OF JURY TRIAL. THE OBLIGOR 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
AGREEMENT.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
BIO-PLEXUS, INC.
By:________________________
Name:
Title:
APPALOOSA MANAGEMENT, L.P.
By:________________________
Name:
Title:
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