Execution Copy
EXHIBIT A
SECURED PROMISSORY NOTE
$565,000* June 28, 1999
FOR VALUE RECEIVED, OPUS DIAGNOSTICS, INC., a Delaware corporation
("Payor"), promises to pay to the order of OXIS HEALTH PRODUCTS, INC., a
Delaware corporation ("Payee"), the principal sum of Five Hundred Sixty-Five
Thousand Dollars ($565,000*), which amount will be due and payable on November
30, 1999 (the "Maturity Date"), in accordance with this Secured Promissory Note
(the "Note").
1. Purchase Agreement. This Note is delivered pursuant to that certain
Asset Purchase Agreement of even date herewith (the "Purchase Agreement")
between Payor and Payee.
2. Interest. No interest will accrue on the principal sum of this Note
unless and until a Default (as defined below) shall have occurred and be
continuing, in which case interest shall immediately begin to accrue on the
unpaid principal sum at the lesser of (i) the rate of two percent (2%) per
month, or any part of a month or (ii) the maximum rate permitted by law, until
such time as all amounts owed hereunder are paid in full.
3. Prepayment. Payor reserves the right to prepay the outstanding principal
amount of this Note in full or in part at any time during the term of this Note
without notice and without premium or penalty.
4. Payment. All payments of principal and interest, if any (and any costs
and expenses owed hereunder, if any), shall be in lawful money of the United
States of America to Payee, at Xxxxx's principal office as set forth in the
Purchase Agreement, or at such other office as may be specified from time to
time by Xxxxx as provided in the Purchase Agreement. All payments, including,
without limitation, any prepayments, shall be applied first to any costs and
expenses owed hereunder, then to accrued interest, if any, and thereafter to
principal.
5. Security Agreement.
(a) Grant and Security Interest. Payor hereby grants to Payee a first
priority security interest in all of Payor's interests whether presently
existing or hereafter created or acquired, wherever located, in the following
described property of the Payor (referred to collectively as the "Collateral"):
(i) the Assets as such term is defined in the Purchase Agreement;
* Principal amount to be increased or decreased pursuant to the terms of Section
2.1.2 of the Asset Purchase Agreement entered into by the Payor and Payee. This
Note will be amended and restated in its entirety to incorporate such increase
or decrease.
(ii) all accounts, accounts receivable, contract rights, choses in
action, money, deposit accounts, certificates of deposit and general intangibles
including tax refund claims, trademarks, trade names, trade styles, patents,
copyrights, licenses, and rights thereunder and registrations thereof;
(iii) all inventory whether raw materials, work in process, or
finished goods including materials used or usable in the manufacturing,
processing, packaging, shipping, or advertising or promotion of inventory, and
including all returns and repossessions;
(iv) all goods, including, but not limited to, machinery,
equipment, farm products, furniture, furnishings, fixtures, all motor vehicles,
and all accessories, tools, fittings, and parts therefor;
(v) all documents, instruments, chattel paper, and letters of
credit; and
(vi) all products thereof and all proceeds of the above whether
due to voluntary or involuntary disposition, including insurance proceeds.
The terms used to describe such Collateral shall have the meanings assigned by
the Uniform Commercial Code as presently enacted in Oregon (hereinafter called
the "UCC"); provided, that the use of terms which represent only a broader
category of collateral (or use of terms which are not defined in the UCC) shall
not be deemed to directly or indirectly reduce the more expansive meaning of the
terms used in the UCC to define broader categories of Collateral (referred to
collectively as the "Collateral").
(b) Obligations Secured. The security interest granted hereby secures
all indebtedness and obligations of Payor to Payee now existing or hereafter
arising under this Note (the "Obligations").
(c) Perfection of Security Interest. Payor shall execute such financing
statements and other documents necessary to perfect Xxxxx's security interests
in the Collateral including any filings required by the U.S. Patent and
Trademark Office. Payor shall promptly notify Payee if Payor moves its principal
place of business or the place where it keeps its records from the State of New
Jersey.
(d) Representations, Warranties and Covenants. Payor represents,
warrants and covenants that:
(i) Title. Apart from the security interest in the Collateral
granted to Payee hereunder, Xxxxx has good and valid title to the Collateral,
free and clear of any and all liens, charges, claims, security interests or
encumbrances of any kind whatsoever.
(ii) Transfer of Collateral. Payor shall not sell, assign,
transfer, encumber or otherwise dispose of any of the Collateral or any interest
therein without the prior written consent of Payee (provided, however, Payor may
sell Collateral comprising inventory in the ordinary course of business). If any
such encumbrance is imposed, Payor shall give Payee immediate written notice.
(iii) Insurance. Payor shall keep the Collateral insured at all
times against such risks, with such carriers, in such amount, as is customary
for businesses similar to those of Payor.
(iv) Notice of Third Party Actions. Payor shall promptly notify
Payee of any levy against the Collateral or any other event that affects the
Collateral.
(e) Power of Attorney. Payor hereby appoints Xxxxx as attorney-in-fact
to execute and file financing statements in connection with the Collateral and,
after the occurrence of an event of Default, to take any other actions that are
appropriate to collect any proceeds of the Collateral. Payee is not obligated to
take any such action.
6. Default. Upon the occurrence of any of the following events, Payor shall
be deemed to be in default hereunder (a "Default"):
(a) commencement of any bankruptcy, insolvency, arrangement,
reorganization or other debtor-relief proceedings by or against Payor, or the
dissolution or termination of the existence of Payor;
(b) any material breach by Payor of its obligations, warranties and/or
representations under the Purchase Agreement or under this Note (except for the
payment of Obligations which are addressed below in this Section 6) which
remains uncured for a period of ten (10) business days after notice of such
breach has been given;
(c) failure by Payor to pay any of the Obligations (as defined in
Section 5) or any other amounts due hereunder when such amounts become due and
payable in accordance with the terms hereof; or
(d) Payor sells any of the Collateral other than permitted by the terms
of this Note.
Upon a Default, Payee may (i) upon written notice to Xxxxx, declare the
entire principal sum and all accrued and unpaid interest hereunder immediately
due and payable, and (ii) exercise any and all rights, powers and remedies
provided under the Purchase Agreement, this Note and otherwise under applicable
law, including the UCC.
In addition to exercising any other rights and remedies Payee may have
under any agreement with Payor or applicable law, Payee may (a) enter Payor's
premises and take possession of the Collateral, render it unusable, or complete
any work in process secured by this Agreement using the employees and property
of Payor, and store any Collateral all at Payor's expense; (b) upon written
notice, require Payor to assemble the Collateral and make it available at a
mutually convenient place designated by Payee; (c) operate, consume, sell or
dispose of the Collateral as Payee deems appropriate for the purposes of paying
or performing the Obligations; (d) declare immediately due and payable all of
the Obligations owing to the Payee; (e) apply any Collateral to the Obligations
in such order as Payee may determine; (f) enter into any agreement relating to
the Collateral; (g) make any settlement that Payee deems appropriate in respect
to any of the Collateral; (h) collect all sums payable in connection with the
Collateral; and (i) make, adjust and receive payment under insurance claims,
claims for breach of warranty and the like in connection with the Collateral.
7. Invalidity. If any provision of this Note, or the application of such
provision to any person or circumstance, is held invalid or unenforceable, the
remainder of this Note, or the application of such provisions to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby.
8. No Waiver. No failure on the part of either party to exercise, and no
delay in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, remedy, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
9. Miscellaneous.
(a) Waiver. Payor waives diligence, presentment, protest and demand and
also notice of protest, demand, dishonor and nonpayment of this Note. No
extension of time for the payment of this Note shall affect the original
liability under this Note of Payor. The pleading of any statute of limitations
as a defense to any demand against Payor is expressly waived by Payor to the
full extent permitted by law.
(b) Setoff. The obligation to pay Payee shall be absolute and
unconditional and the rights of Payee shall not be subject to any defense,
setoff, counterclaim or recoupment or by reason of any indebtedness or liability
at any time owing by Payee to Payor whether pursuant to the Purchase Agreement,
this Note or otherwise; provided, however, notwithstanding the foregoing, if the
Payor has made a claim under Article 9 of the Purchase Agreement which either
(i) Payee has not objected to on a timely basis as set forth in Section 9.4 of
the Purchase Agreement or (ii) is arbitrated and the arbitrator finds in the
favor of Payor, then Payor may setoff amounts owed hereunder equal to the amount
of such claim.
(c) Amendment. This Note may be modified or amended only by a written
agreement executed by Xxxxx and Xxxxx.
(d) Governing Law; Venue. This Note shall be governed by the internal,
substantive laws of the State of Oregon without regard to conflict of laws
provisions. Any dispute arising hereunder shall be resolved pursuant to the
terms of Section 12.5 of the Purchase Agreement (except that the non-prevailing
party shall pay all costs and expenses of the arbitration consistent with the
terms of Section 9(h) hereof).
(e) Successors. This Note shall not be assignable by Xxxxx except with
the prior written consent of Xxxxx. The terms of this Note shall inure to the
benefit of Payee and its successors and assigns.
(f) Time of Essence. Time is of the essence with respect to all matters
set forth in this Note.
(g) Replacement. If this Note is destroyed, lost or stolen, Xxxxx will
deliver a new note to Payee on the same terms and conditions as this Note with a
notation of the unpaid principal and accrued and unpaid interest in substitution
of the prior Note. Payee shall furnish to Payor reasonable evidence that the
Note was destroyed, lost or stolen and any security or indemnity that may be
reasonably required by Payor in connection with the replacement of this Note.
(h) Attorney's Fees. The prevailing party shall be entitled to recover
a reasonable allowance for attorneys' fees and litigation expenses in addition
to court costs in any suit, action, counterclaim or arbitration to enforce the
Obligations or this Note. "Prevailing party" within the meaning of this
paragraph includes without limitation a party who agrees to dismiss an action or
proceeding upon the other's payment of the sums allegedly due or performance of
the covenants allegedly breached, or who obtains substantially the relief sought
by it.
(i) Additional Actions and Documents. The parties shall execute and deliver such
further documents and instruments and shall take such other further actions as
may be required or appropriate to carry out the intent and purposes of this
Note.
By:
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