Exhibit 2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
BIO-PLEXUS, INC.
7.5% SECURED NOTE
No. R-1 Dated as of October 21, 1999
$3,000,000
FOR VALUE RECEIVED, the undersigned, BIO-PLEXUS, INC. (herein called the
"Company"), a corporation organized and existing under the laws of the
State of Connecticut, hereby unconditionally promises to pay to the order
of Appaloosa Investment Limited Partnership I, L.P., or its registered
assigns (the "Holder"), the principal sum of THREE MILLION DOLLARS
($3,000,000) in immediately available lawful money of the United States of
America, together with interest on the unpaid balance hereof, in accordance
with the terms and conditions set forth below.
1. Payment.
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1.1. Principal. The entire unpaid principal balance of this Note
shall be paid in full by the Company on the Due Date.
1.2. Home Office Payment. The Company will pay to each Holder or
any transferee thereof all sums becoming due on this Note at the
account/address to be specified by such Holder or transferee for such
purpose by notice to the Company, by wire transfer of immediately available
funds, or at such other address or by such other method as such Holder or
transferee shall have designated by notice to the Company.
1.3. Prepayment. Subject to Section 8.8, (i) upon at least ten
days prior notice to the Holder, this Note may be prepaid, without premium
or penalty, in whole or in part by the Company at any time and from time to
time and (ii) concurrently with the receipt of any proceeds received by the
Company in respect of any sale of Debentures pursuant to section 1.4 of the
Subscription Agreement, the Company shall make a mandatory prepayment of
the Note in an amount equal to 100% of such proceeds; provided, that, upon
any prepayment under (i) or (ii) above, all accrued and unpaid interest
shall be paid on the principal of the Note being repaid.
1.4. Interest. The unpaid principal balance of this Note
outstanding at any time shall accrue interest, at a rate per annum equal to
7.5%. Interest shall begin to accrue from the date hereof and shall be
computed on the basis of a year of 360 days and actual days elapsed and
shall be payable in one lump sum on the Due Date.
1.5. Default Interest. If the Company shall fail to pay any
principal amount of, or interest on, or other amount payable under, this
Note when due and payable (whether at the Due Date, the Acceleration Date
or otherwise), such principal amount, interest or other amount shall
thereafter bear interest, until paid in full (after as well as before
judgment) to the extent lawful, at a rate per annum equal to 12%. The
Company shall pay such default interest in cash on demand from time to
time.
1.6. Limitation on Interest. No provision of this Note shall
require the payment or permit the collection of interest in excess of the
maximum rate which is permitted by Law. If any such excess interest is
provided for herein, or shall be adjudicated to be so provided for, then
the Company shall not be obligated to pay such interest in excess of the
maximum rate permitted by Law, and the right to demand payment of any such
excess interest is hereby waived, any other provisions in this Note to the
contrary notwithstanding.
2. Deliveries by the Company. Simultaneously with the execution of
this Note, the Company is delivering to the Holder the following:
(a) an opinion of the Company's counsel, dated as of the date
hereof, addressed to such Holder in the form of Exhibit 2(a) hereto;
(b) a good standing certificate for the Company, dated no earlier
than seven days prior to the date hereof, from the State of Connecticut;
(c) a copy of the resolutions of the Board of Directors
authorizing the execution of each of the Transaction Documents and the
performance of the transactions contemplated by the Transaction Documents
which shall be certified as true, correct and effective as of the date
hereof by an officer of the Company;
(d) a duly executed copy of the Security Agreement in the form
attached hereto as Exhibit 2(d), and copies of any other Collateral
Documentation including Financing Statements required to perfect the
Holder's security interest in the Collateral;
(e) duly executed warrants to purchase 1,000,000 shares of Common
Stock in the aggregate with an exercise price of $3 per share in the form
attached hereto as Exhibit 2(e)(i) (the "$3 Warrants") and duly executed
warrants to purchase 1,500,000 shares of Common Stock in the aggregate with
an exercise price of $5 per share in the form attached hereto as Exhibit
2(e)(ii) (the "$5 Warrants", together with the $3 Warrants, the
"Warrants"); and
(f) the Holder's costs and expenses (including the reasonable
fees and expenses of its counsel, Xxxxx, Xxxxx, Xxxxxx, Xxxxxxx & Xxxxxxxx,
in an aggregate amount not to exceed $50,000 which amounts shall be
deducted from the proceeds of this Note and shall be wired transferred by
the Holder, on behalf of the Company, to one or more accounts designated by
such party on or prior to the date hereof) incurred in connection with the
transactions contemplated hereby.
3. Representations and Warranties of the Company. The Company
represents and warrants to the Holder as follows:
3.1. Organization; Subsidiaries. (a) The Company is a corporation
duly organized and existing in good standing under the laws of the State of
Connecticut and has the corporate power to own its property and to carry on
its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary and where the failure to so
qualify could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(b) The Company does not have any Subsidiaries. Except as set
forth on Schedule 3.1(b), the Company does not own, directly or indirectly,
or have the right or obligation to acquire, any interest in any business
association or other Person.
3.2. Due Authorization. The Company has all right, power and
authority to enter into, deliver and perform the Transaction Documents to
which it is a party and to consummate the transactions contemplated
thereby. The execution and delivery of each Transaction Document by the
Company and the performance by it of the transactions contemplated thereby
(including, without limitation, the issuance and sale of this Note and the
Warrants and issuance of shares of Common Stock upon exercise of the
Warrants) and compliance by the Company with all the provisions of each
Transaction Document (as applicable) has been duly authorized by all
requisite corporate proceedings on the part of the Company. Each of the
Transaction Documents has been duly executed and delivered on behalf of the
Company, and each such Transaction Document constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its respective terms, except to the extent that such
enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally or (ii) is subject to general principles of equity. The
shares of Common Stock issuable upon exercise of the Warrants have been
validly reserved for issuance, and upon issuance, will be validly issued
and outstanding, fully paid and nonassessable.
3.3. Capitalization. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock, of which, as of the date
hereof, 13,643,308 shares were issued and outstanding, 579,650 shares were
reserved for issuance upon the exercise of outstanding stock options
pursuant to the Company's option plans, 1,395,386 shares were reserved for
issuance upon the exercise of the outstanding warrants, and 2,472,876
shares were reserved for issuance upon the conversion of certain 6%
Convertible Debentures due 2004 and (ii) 3,000,000 shares of Preferred
Stock, no par value (the "Preferred Stock"), of which, as of the date
hereof, no shares were issued and outstanding. All of the outstanding
shares of Common Stock are validly issued and are fully paid and
nonassessable. No class of Capital Stock of the Company is entitled to
preemptive rights. Except as set forth on Schedule 3.3, there are no
outstanding options, warrants, preemptive rights, subscription rights,
calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of any class of Capital Stock of the
Company, or Contracts, by which the Company is or may become bound to issue
additional shares of its Capital Stock or options, warrants or other rights
to purchase or acquire any shares of its Capital Stock. Except as set forth
on Schedule 3.3, no warrants, bonds, debentures, notes or other
Indebtedness or other security having the right to vote (or convertible
into or exercisable for securities having the right to vote) on any matters
on which stockholders may vote were issued or outstanding. Except as set
forth on Schedule 3.3 or as contemplated by the Transaction Documents, the
Company is not a party to, and, to the Company's best knowledge, there are,
and immediately after the Closing, there will be, no agreement, restriction
or encumbrance (such as a preemptive or similar right of first refusal,
right of first offer, proxy, voting agreement, voting trust, registration
rights agreement, shareholders' agreement, etc., whether or not the Company
is a party thereto) with respect to the purchase, sale or voting of any
shares of Capital Stock of the Company (whether outstanding or issuable
upon conversion, exchange or exercise of outstanding securities) or other
securities of the Company pursuant to any provision of Law, the Certificate
of Incorporation or By-Laws, any agreement or otherwise. Except as set
forth on Schedule 3.3, no person has the right to nominate or elect one or
more directors of the Company. Immediately following the transactions
contemplated hereby, the Company's capitalization will be as set forth on
Schedule 3.3. The Company has not declared or paid any dividend or made any
other distribution of cash, stock or other property to its stockholders
since January 1, 1996.
3.4. SEC Reports Correspondence. The Company has filed all proxy
statements, reports and other documents required to be filed by it under
the Exchange Act from and after January 1, 1995 (collectively, the "SEC
Reports"). Each SEC Report was in compliance in all material respects with
the requirements of its respective report form and did not on the date of
filing contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and as of the date hereof there is no fact or facts
not disclosed in the SEC Reports which relate specifically to the Company
and which could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
3.5. Financial Statements. The financial statements (including
any related schedules and/or notes) included in the SEC Reports have been
prepared in accordance with GAAP consistently followed (except as indicated
in the notes thereto) throughout the periods involved and fairly present
the consolidated financial condition, results of operations, cash flows and
changes in stockholders' equity of the Company as of the respective dates
thereof and for the respective periods then ended (in each case subject, as
to interim statements, to changes resulting from year-end adjustments, none
of which were material in amount or effect). Except as set forth on
Schedule 3.5, the Company is not subject to any Liabilities, except (i)
Liabilities in the respective amounts reflected or reserved against in the
Company's balance sheet as of December 31, 1998 included in the SEC Reports
or (ii) Liabilities incurred in the ordinary course of business since
December 31, 1998 which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.6. No Material Adverse Change. Since December 31, 1998, no
event has occurred or failed to occur which could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
3.7. Intellectual Property Rights. Schedule 3.7 sets forth a
complete and correct list of all Intellectual Property of the Company (the
"Company Intellectual Property"). Except as set forth on Schedule 3.7, the
Company owns and possesses all right, title and interest in, or possesses
adequate licenses to (without the making of any payment to others or the
obligation to grant rights to others in exchange) all the Company
Intellectual Property, free and clear of any Liens, licenses or other
restrictions. The Company has the right to require the applicant of any
Company Intellectual Property which is an application, including but not
limited to patent applications, trademark applications, service mark
applications, copyright applications, or mask work applications, to
transfer ownership to the Company of the application and of the
registration once it issues. All registered patents, trademarks, service
marks and copyrights listed on Schedule 3.7 are valid and subsisting and in
full force and effect. The Company Intellectual Property is all the
Intellectual Property that is necessary for the ownership, maintenance and
operation of the Company's properties and assets and the Company has the
right to use all of the Company Intellectual Property in all jurisdictions
in which the Company conducts or proposes to conduct its business, and the
consummation of the transactions contemplated hereby will not alter or
impair any such rights. The Company has never agreed to indemnify any
person for or against any interference, infringement, misappropriation or
other conflict with respect to any Company Intellectual Property. Except as
set forth in Schedule 3.7, no third party has interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Company
Intellectual Property. The Company has taken all reasonably necessary and
desirable action to maintain and protect each item of Company Intellectual
Property. The validity, ownership, enforceability, use or legality of the
Company Intellectual Property is not being questioned or opposed in any
Litigation or Order to which the Company or any Person who has granted a
license of Intellectual Property to the Company, is a party or subject,
nor, to the knowledge of the Company, is any such Litigation or Order
threatened. The conduct of the Company as currently conducted and as
currently proposed to be conducted does not and will not infringe,
interfere with, misappropriate or otherwise come into conflict with any
Intellectual Property of any other Person, and the Company has not received
any charge, complaint, claim, demand or notice alleging any such
infringement, interference, misappropriation or conflict (including any
claim that the Company must license or refrain from using any Intellectual
Property of any other Person). Except as set forth on Schedule 3.7, the
Company has not granted any licenses of Intellectual Property to any
Person.
3.8. Existing Indebtedness; Future Liens. (a) Schedule 3.8 sets
forth a complete and correct list of all outstanding Indebtedness of the
Company as of the date hereof. Except as set forth on Schedule 3.8, the
Company has not defaulted and no waiver of default is currently in effect,
in the payment of any principal or interest on any such Indebtedness and no
event or condition exists with respect to any such Indebtedness that would
permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Indebtedness to become due and payable
before its stated maturity or before its regularly scheduled dates of
payment. The Company has not received any notice from any Person declaring
or threatening to declare any Indebtedness owed by the Company to such
Person due and payable prior to the stated maturity of such Indebtedness or
before its regularly scheduled dates of payment.
(b) The Company has not agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any
of its property, whether now owned or hereafter acquired, to be subject to
any Lien (other than Permitted Liens).
3.9. Litigation. (a) Except as set forth on Schedule 3.9, there
is no Litigation pending or, to the knowledge of the Company, threatened
against the Company or any of its properties or assets by or before any
court, arbitrator or other Governmental Entity.
(b) The Company is not in default under or in breach of any Order
of any court, arbitrator or other Governmental Entity, and the Company is
not subject to or a party to any Order of any court, arbitrator or other
Governmental Entity arising out of any claim, demand, notice, action, suit
or proceeding under any Law.
3.10. Compliance with Laws. The Company is in compliance with all
applicable Laws including, without limitation, all rules, regulations and
other Laws of the Food and Drug Administration relating to the design,
development, manufacturing, sales and distribution of safety medical
products and accessories, except where the failure to comply could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Order has been issued nor any Law enacted which
prevents, nor does any Law prohibit the consummation of the transactions
contemplated by any of the Transaction Documents.
3.11. Offering of the Securities. In connection with offering of
this Note and the issuance of the Warrants, neither the Company nor any
Person acting on its behalf has offered the Note, the Warrants or any
similar securities of the Company for sale to, solicited any offers to buy
the Note, the Warrants or any similar securities of the Company from or
otherwise approached or negotiated with respect to the Company with any
Person other than the Purchasers and other "accredited investors" (as
defined in Rule 501(a) under the Securities Act). Neither the Company nor
any Person acting on its behalf has taken or, except as contemplated hereby
will take any action (including, without limitation, any offering of any
securities of the Company under circumstances which would require the
integration of such offering with the offering of the Note and the issuance
of the Warrants under the Securities Act) which could reasonably be
expected to subject the offering, issuance or sale of the Note and the
Warrants to the registration requirements of Section 5 of the Securities
Act or violate the provisions of any securities, "blue sky", or similar law
of any applicable jurisdiction.
3.12. Solvency. The Company is not, and after giving effect to
the issuance of this Note and the application of the proceeds therefrom
will not be, insolvent within the meaning of Title 11 of the United States
Code or any comparable state law provision.
3.13. Security Documents. Except as set forth in Schedule 3.13,
upon proper filing of the Financing Statements (or assignments thereof) in
the offices of the Secretary of State of Connecticut with respect to the
Company (or assignments thereof) and in the locations identified in the
Security Agreement, the Liens granted under the Transaction Documents shall
constitute a fully perfected first priority security interest in all right,
title and interest of the Company in and to the personal property therein
prior to any other security interests against such property or interests
therein.
3.14. Disclosure. Neither any Transaction Document nor any
Schedule hereto and thereto, nor any certificate furnished to any Holder by
or on behalf of the Company in connection with the transactions
contemplated hereby and thereby, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements contained herein and therein not misleading. The financial
forecasts furnished by the Company to the Holder has been prepared in good
faith based upon reasonable assumptions. There is no fact or information
relating to the Company that could reasonably be expected to be material to
the Company that has not been disclosed to the Holder.
4. Covenants of the Company. The Company covenants that for so long as
this Note is outstanding or any amounts are due and unpaid hereunder:
4.1. Limitation on Indebtedness. The Company shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or indirectly
liable for the payment of any Indebtedness (excluding Permitted
Indebtedness and Indebtedness which is a Guaranty of an Indebtedness of the
Company or any of its Subsidiaries that is otherwise Permitted
Indebtedness).
4.2. Limitation on Encumbrances. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or otherwise suffer to exist or cause or otherwise suffer to
become effective any Lien in or on any right, title or interest to any
property (real or personal) that constitutes all or any portion of the
Collateral (a "Restricted Encumbrance," which term excludes the Lien
created in favor of the Holder) unless such Restricted Encumbrance is a
Permitted Lien.
4.3. Limitation on Dividends; Stock Issuances. The Company shall
not offer or issue any shares of Preferred Stock or Common Stock for any
purpose whatsoever, except for (i) shares of Common Stock issuable upon the
exercise of the Warrants and (ii) pursuant to Schedule 4.3. The Company
shall not declare any dividends on any shares of its Capital Stock, or make
any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, retirement, exchange or other
acquisition of any shares of its Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash, securities, property or in
obligations of the Company or any of its Subsidiaries.
4.4. Stockholders' Meetings. As promptly as practicable hereafter
but in no event no later than December 31, 1999, the Company shall take all
action necessary, in accordance with applicable Law and its Certificate of
Incorporation and By-laws, to convene a special meeting of its stockholders
(the "Company Meeting") for the purpose of considering and voting upon the
approval of the Rollover Transactions, including, without limitation, the
issuance and sale of the Convertible Notes, the Shares and the Rollover
Warrant, and any other transactions contemplated in furtherance thereof
under applicable Law. The Company will use its best efforts to obtain such
stockholders' approval, including, without limitation, taking all lawful
actions to solicit such approval. The Board of Directors will recommend
that its stockholders vote in favor of and approve the Rollover
Transactions, including, without limitation, the issuance and sale of the
Convertible Notes, the Shares and the Warrants, and any other transactions
contemplated in furtherance thereof under applicable Law.
4.5. Proxy Statement. The Company shall promptly prepare and file
with the SEC as soon as practicable the Proxy Statement, which shall comply
as to form in all material respects with the applicable provisions of the
Exchange Act and the rules and regulations thereunder. The Company shall
use its best efforts, and the Holder will cooperate with the Company, to
have the Proxy Statement cleared by the SEC as promptly as practicable. The
Company shall, as promptly as practicable, provide copies of any written
comments received from the SEC with respect to the Proxy Statement to the
Holder and advise the Holder of any oral comments with respect to the Proxy
Statement received from the SEC. The Holder agrees that none of the
information supplied or to be supplied by it for inclusion or incorporation
by reference in the Proxy Statement and each amendment or supplement
thereto, at the time of mailing thereof and at the time of the Company
Meeting, will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Company agrees that none of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in the Proxy Statement and each amendment or supplement thereto,
at the time of mailing thereof and at the time of the Company Meeting, will
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company will provide the Holder with a reasonable
opportunity to review and comment on the Proxy Statement and any amendment
or supplement thereto prior to filing such with the SEC, and will provide
the Holder with a copy of all such filings made with the SEC. No amendment
or supplement to the information supplied by the Holder for inclusion in
the Proxy Statement shall be made without the approval of such Holder,
which approval shall not be unreasonably withheld or delayed.
4.6. Operations in Accordance with the Business Plan. The
business and operations of the Company and its Subsidiaries shall be
conducted in accordance with a business plan of the Company approved by the
Holder.
4.7. Proceeds. The proceeds of the sale of this Note shall be
used for the purposes set forth on Schedule 4.7. No part of the proceeds
from the sale of this Note hereunder shall be used, directly or indirectly,
for the purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of Regulation U of the Board of Governors of the
Federal Reserve System or for any purpose which violates or would be
inconsistent with the provisions of Regulations T, U or X of said Board.
4.8. Additional Offerings of Securities. The Company shall not
seek financing from any third party consisting of an issuance of Equity
Securities without the written consent of the Holder (which may be withheld
at the Holder's absolute discretion).
4.9. Existence. Neither the Company nor any of its Subsidiaries
shall enter into any transaction for the acquisition of, or merger or
consolidation or amalgamation with, any other Person (including any
Subsidiary or Affiliate of the Company or any of its Subsidiaries), or
enter into any transaction or series of transactions that could result in a
Change of Control, or sell, transfer or otherwise dispose of ("Transfer")
all or substantially all of its assets in one transaction or series of
transactions to any Person, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or make any material change in the
present method of conducting business or engage in any type of business
other than of same general type now conducted by it. The Company shall not,
and shall not permit any of its Subsidiaries to, Transfer any property or
assets, unless the property or asset that is the subject of such Transfer
constitutes (i) inventory held for sale, (ii) marketable securities
available for sale, or (iii) real estate, equipment, fixtures, supplies or
materials no longer required in the operation of the business of the
Company or such Subsidiary or that is obsolete, and, in the case of any
Transfer described in clause (i) or (iii), such Transfer is in the ordinary
course of business consistent with past practice.
4.10. Access. Subject to a written confidentiality agreement, the
Company shall, and shall cause the Company's officers, directors, employees
and agents to, afford to the Holder and each of its Affiliates, officers,
directors, employees, counsel, investment bankers, accountants, advisors,
agents and other representatives (collectively, "Representatives"),
reasonable access during normal business hours to its officers, employees,
accountants, agents, properties, offices and other facilities, and to the
books and records of the Company (including, without limitation, all
interim financial statements, tax returns and work papers of its
accountants), legal documents of the Company, and shall furnish the Holder
and its Representatives all financial, operating, technical and other data
and information which any of them may from time to time reasonably request.
4.11. Release of Liens. The Company shall take all actions
necessary to promptly (but in no event later than seven days from the date
hereof) file necessary documentation to remove evidence of any prior liens
and/or security interests on any Company Intellectual Property (other than
security interests on any Company Intellectual Property granted to Holder
in connection with the transactions contemplated hereby), including,
without limitation, all prior liens and/or security interests on any
Company Intellectual Property on record with the United States Patent and
Trademark Office.
4.12. 6% Convertible Debentures due 2004. The Company shall not
exercise its Put Option without the written consent of the Holder.
5. Events of Default and Remedies.
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5.1. Events of Default and Remedies. "Event of Default," wherever
used herein, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any Order of any court or
any Order, rule or regulation of any Governmental Entity) (or if the giving
of notice or lapse of time or both is required, then, prior to such notice
or lapse of time, a "Default"):
(a) default in the payment of any interest upon this Note
when it becomes due and payable; or
(b) default in the payment of any principal of this Note
when it becomes due and payable; or
(c) default in the performance of any agreement or covenant
in, or provision of, this Note or the other documents executed and
delivered in connection with this Note (including any other
Transaction Document) and to which the Company or any of its
Subsidiaries is a party (other than a covenant or a default in whose
performance is elsewhere in this Section specifically dealt with)
which is not cured within thirty (30) days, or any representation or
warranty made in any document executed and delivered in connection
with this Note (including any other Transaction Document) was false in
any material respect on the date as of which made or deemed made; or
(d) the Company Meeting shall not have been held on or prior
to December 31, 1999 or the approval of the Company's stockholders
described in Section 4.4 shall not have been obtained at the Company
Meeting on or prior to December 31, 1999; or
(e) the Company or any of its Subsidiaries shall: (A)
default in any payment of principal of or interest on any Indebtedness
(other than this Note and any intercompany debt) or in the payment of
any Guarantee, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee was
created; or (B) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Guarantee
or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness or beneficiary
or beneficiaries of such Guarantee (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to become due
prior to its stated maturity, any applicable grace period having
expired, or such Guarantee to become payable, any applicable grace
period having expired, provided that the aggregate principal amount of
all such Indebtedness and Guarantee which would then become due or
payable as described in this Section 5.1(e) would equal or exceed
$100,000; or
(f) a final judgment or judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the
Company or any of its Subsidiaries and such remains undischarged for a
period (during which execution shall not effectively be stayed) of 60
days, provided that the aggregate of all such judgments that are not
covered by insurance under which the Company or a Subsidiary is a
beneficiary exceeds $100,000, or the Holder shall determine that any
regulatory body having jurisdiction over the Company or any of its
Subsidiaries including, without limitation, the SEC, shall have taken
or proposed to take any action that the Holder believes could,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or that adversely affects the Holder's
security interest in the Collateral; or
(g) the Company or any of its Subsidiaries (i) is generally
not paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or other Governmental Entity of competent
jurisdiction enters an Order appointing, without consent by the
Company or any of its Subsidiaries, a custodian, receiver, trustee or
other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for
relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage
of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Company or any of
its Subsidiaries, or any such petition shall be filed against the
Company or any of its Subsidiaries and such petition shall not be
dismissed within 60 days; or
(i) a court or other Governmental Entity of competent
jurisdiction enters a final judgment holding this Note or any of the
documents delivered in connection with this Note (including any other
Transaction Document) to be invalid or unenforceable and such judgment
remains unstayed and in effect for a period of 20 consecutive days; or
the Company or any of its Subsidiaries shall assert, in any pleading
filed in such a court, that this Note or any of the documents
delivered in connection with this Note (including any other
Transaction Document) are invalid or unenforceable; or
(j) any material provision of any Transaction Document shall
for any reason cease to be valid, binding and enforceable in
accordance with its terms (or the Company or any of its Subsidiaries
shall challenge the enforceability of any Transaction Document or
shall assert in writing, or engage in any action or inaction based on
any such assertion, that any provision of any of the Transaction
Documents has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms), or any first priority
security interest created under any Transaction Document shall cease
to be a valid and perfected security interest, or Lien in any of the
Collateral purported to be covered thereby; or
(k) the Company or any of its Subsidiaries shall default in
the payment of any amounts due pursuant to the terms of any document
executed and delivered by the Company or such Subsidiary in connection
with this Note (other than payments elsewhere in this Section
specifically dealt with).
5.2. Acceleration of Maturity. If any Event of Default (other
than an Event of Default specified in clause (g), (h), (i) or (j) of
Section 5.1) shall have occurred and be continuing, the Holder may, by
notice to the Company, declare the entire unpaid principal amount of this
Note, plus all accrued and unpaid interest thereon (together with the
Holder's costs and expenses pursuant to Section 8.8) , to be immediately
due and payable, and upon such declaration all of such amount shall be
immediately due and payable (the "Declared Acceleration Date"), in each and
every case without presentment, demand, protest or further notice, all of
which are hereby waived, anything in this Note to the contrary
notwithstanding; provided that if an Event of Default under clause (g),
(h), (i) or (j) of Section 5.1 shall have occurred, the entire unpaid
principal amount of this Note (to the full extent permitted by applicable
Law), plus all accrued and unpaid interest thereon (together with the
Holder's costs and expenses pursuant to Section 8.8), shall immediately
become due and payable (the "Automatic Acceleration Date"), without any
declaration and without presentment, demand, protest or further notice, all
of which are hereby waived, anything in this Note to the contrary
notwithstanding.
5.3. Other Remedies. If any Event of Default shall have occurred
and be continuing, from and including the date of such Event of Default to
but not including the date such Event of Default is cured or waived, each
Holder may enforce its rights by suit in equity, by action at law, or by
any other appropriate proceedings, whether for the specific performance (to
the extent permitted by Law) of any covenant or agreement contained in this
Note or in aid of the exercise of any power granted in this Note, and each
Holder may enforce the payment of any Note held by such Holder and any of
its other legal or equitable rights.
5.4. Conduct; No Waiver; Collection Expenses. No course of
dealing on the part of the Holder, nor any delay or failure on the part of
the Holder to exercise any of its rights, shall operate as a waiver of such
right or otherwise prejudice the Holder's rights, powers and remedies. If
the Company fails to pay, when due, any payment in respect of this Note,
the Company will pay such Holder, to the extent permitted by Law, on
demand, all costs and expenses incurred by such Holder in the collection of
any amount due in respect of this Note hereunder, including reasonable
legal fees incurred by such Holder in enforcing its rights hereunder.
5.5. Annulment of Acceleration. If a declaration is made in
accordance with Section 5.2, then and in every such case, the Holder may,
by an instrument delivered to the Company, annul such declaration and the
consequences thereof.
5.6. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Holder under this Note is intended to be exclusive of any
other right or remedy, and every right and remedy shall be cumulative and
in addition to every other right and remedy given hereunder or now and
hereafter existing under applicable Law. Every right and remedy given by
this Note or by applicable Law to the Holder may be exercised from time to
time and as often as may be deemed expedient by such Xxxxxx.
6. Rollover.
--------
6.1. Rollover. Within five Business Days after the stockholders'
approval referred to in Section 4.4 has been obtained (the "Rollover
Date"), subject to Section 6.2, the Company and the Purchasers shall enter
into (i) the Convertible Note Purchase Agreement substantially in the form
attached hereto as Exhibit 6.1(i) (the "Convertible Note Purchase
Agreement"), (ii) a warrant to purchase 1,500,000 shares of Common Stock
with an exercise price of $7 substantially in the form attached hereto as
Exhibit 6.1(ii) (the "Rollover Warrant"), (iii) the Registration Rights
Agreement substantially in the form attached hereto as Exhibit 6.1(iii)
(the "Rollover Registration Rights Agreement") and (iv) the Convertible
Note Security Agreement substantially in the form attached hereto as
Exhibit 6.1(iv) (the "Convertible Note Security Agreement"); provided,
however, that if a Governmental Entity shall determine that any of the
transactions contemplated by the Rollover Transactions violate any
applicable rules or regulations of such Governmental Entity, the Holder
shall, at the Holder's sole discretion, either (i) abandon the Rollover
Transactions or (ii) modify the structure of the Rollover Transactions in a
manner to comply with such rule or regulation. Concurrently with the
foregoing, subject to Section 6.2, the Company shall issue 250,000 shares
of Common Stock (the "Shares") to the Holder or one or more of its
Affiliates at $3.00 per share.
6.2. Conditions to Rollover. (a) The obligation of each party to
consummate the Rollover Transactions shall be subject to there having been
no enactment, issuance, promulgation, enforcement or entering into of any
Law by a Governmental Entity that effects or has the effect of making any
of the Rollover Transactions illegal or otherwise restraining or
prohibiting such transactions.
(b) The obligation of the Purchasers to consummate the
Rollover Transactions shall be subject to the following conditions:
(i) no change (or any condition, event or development
involving a prospective change) shall have occurred or be
threatened that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(ii) no Default shall have occurred and be continuing;
(iii) concurrently with the consummation of the
Rollover Transactions, the principal amount of this Note, plus
all accrued and unpaid interest on this Note, shall have been
repaid in full;
(iv) the final forms of the Convertible Note Purchase
Agreement, the Rollover Warrant, the Rollover Registration Rights
Agreement and the Convertible Note Security Agreement shall be
satisfactory to the Purchasers in their sole discretion;
(v) the Company shall have delivered to the Purchasers
any document, instrument or certificate required to be delivered
by the Company pursuant to the Rollover Transaction Documents;
and
(vi) each Purchaser shall have received such other
instruments and documents reasonably requested by such Purchaser.
(c) The obligation of the Company to consummate the Rollover
Transactions shall be subject to the delivery by each Purchaser to the
Company of any document, instrument or certificate required to be delivered
by such Purchaser pursuant to the Rollover Transaction Documents.
6.3. Failure to Consummate the Rollover Transactions.
Notwithstanding anything herein to the contrary, if the Company shall fail
to consummate the Rollover Transactions described in Section 6.1 for any
reason whatsoever, then the Company's sole liability to the Holder will be
the: (i) payment of the Holder's costs and expenses pursuant to Section
8.8; (ii) payment of principal and interest under this Note (and default
interest, if applicable); and (iii) execution of the Registration Rights
Agreement by the Company pursuant to Section 6.4. In addition, for the
avoidance of doubt, the Company acknowledges and agrees that the Warrants
are fully vested as of the date hereof and that they shall remain in full
force and effect even if the Rollover Transactions are not consummated for
any reason.
6.4. Registration Rights Agreement. In the event the approval of
the Company's stockholders described in Section 4.4 shall not have been
obtained at the Company Meeting on or prior to December 31, 1999, or in the
event that the Rollover Transactions shall not have occurred on or prior to
the Rollover Date, the Company shall immediately execute the Registration
Rights Agreement attached hereto as Exhibit 6.3 (the "Registration Rights
Agreement") and deliver such executed Registration Rights Agreement by fax
to the Holder.
7. Interpretation.
--------------
7.1. Definitions.
"$3 Warrants" shall have the meaning ascribed thereto in Section
1.4(vii).
"$5 Warrants" shall have the meaning ascribed thereto in Section
1.4(vii).
"Acceleration Date" shall mean the Declared Acceleration Date or
the Automatic Acceleration Date, as the case may be.
"Action" shall have the meaning ascribed thereto in Section
8.1(b)(i).
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act. "Affiliate" shall also include partners of a
Person. Notwithstanding the foregoing, "Affiliate" shall not include the
limited partners of the Holder or any limited partners of a limited partner
of the Holder.
"Automatic Acceleration Date" shall have the meaning ascribed
thereto in Section 5.2.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are
authorized or obligated by Law or executive order to close.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Capitalized Lease" shall mean, with respect to any Person, any
lease or any other agreement for the use of property which, in accordance
with generally accepted accounting principles, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and
include, as of any date as of which the amount thereof is to be determined,
the amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such Person in respect of a Capitalized
Lease of such Person.
"Change of Control" shall mean
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 30% or more of the
combined voting power of the then outstanding Voting Securities
of the Company, but excluding, for this purpose, any such
acquisition by (i) the Company or any Subsidiary), (ii) any
Benefit Plan (or related trust) of the Company or any Subsidiary
or (iii) the Holder or any of its Affiliates or in connection
with the Rollover Transactions; or
(b) the Incumbent Board shall cease for any reason to
constitute at least 50% of the members of the Board.
"Collateral" means all real and personal property and interests
in real and personal property including, without limitation, Intellectual
Property, rights under leases and royalty rights and agreements, now owned
or hereafter acquired by the Company or its Subsidiaries in or upon which a
Lien is granted or made under the Collateral Documentation.
"Collateral Documentation" means the Security Agreement, the
Financing Statements, and all other deeds of trust, assignments,
endorsements, pledged stock, collateral assignments and other instruments,
documents, agreements or conveyances at any time creating or evidencing
Liens or assigning Liens to the Holder, to secure the obligations of the
Company or any of its Subsidiaries under this Note and the Registration
Rights Agreement.
"Common Stock" shall mean the Common Stock, no par value, of the
Company.
"Company" shall have the meaning ascribed thereto in the
Preamble.
"Company Meeting" shall have the meaning ascribed thereto in
Section 4.4.
"Contracts" shall mean all agreements, contracts, leases,
purchase orders, arrangements, commitments and licenses to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound.
"Convertible Note Purchase Agreement" shall have the meaning
ascribed thereto in Section 6.1.
"Convertible Note Security Agreement" shall have the meaning
ascribed thereto in Section 6.1.
"Debentures" shall have the meaning ascribed thereto in the
Subscription Agreement.
"Declared Acceleration Date" shall have the meaning ascribed
thereto in Section 5.2.
"Default" shall have the meaning ascribed thereto in Section 5.1.
"Due Date" shall mean the earlier of the Maturity Date and the
Acceleration Date, as applicable.
"Environmental Laws" means any and all Laws, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or
the release of any materials into the environment, including but not
limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"Equity Interests" means any capital stock, partnership interest,
joint venture interest or other equity interest or warrants, options or
other rights to acquire any capital stock, partnership interest, joint
venture interest or other equity interest.
"Equity Securities" shall mean with respect to any Person, shares
of capital stock or other equity interest of such Person, and any rights,
options or warrants to purchase stock or other securities exchangeable for
or convertible into capital stock of or other equity interest in the
Company.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" shall have the meaning ascribed thereto in
Section 5.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include reference to the comparable section, if any, of
any such successor federal statute.
"Financing Statements" means Form UCC-1 financing statements to
be filed in all jurisdictions necessary or desirable in order to perfect
the Holder's security interest in the Collateral and shall include any Form
UCC-1 financing statements assigned to the Holder and filings to be made in
the U.S. Patent and Trademark Office and the U.S. Copyright Office.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory or self-regulatory body or authority.
"Guaranty" or "Guarantee" by any Person shall mean all
obligations (other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of any Person
guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all
obligations incurred through an agreement, contingent or otherwise, by such
Person: (i) to purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply funds (x)
for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (iii) to lease property or to purchase
securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. For the purposes of any
computations made under this Note, a Guarantee in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to
the outstanding amount of the Indebtedness for borrowed money which has
been guaranteed, and a Guarantee in respect of any other Liability or any
dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such Liability or dividend.
"Holder" shall have the meaning ascribed thereto in the Preamble.
"Incumbent Board" shall mean the individuals who, immediately
after the Closing, constitute the Board of Directors; provided, however,
that any individual becoming a director subsequent to the Closing whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be deemed to be a member of the Incumbent Board
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all Guarantees of such Person, (viii) all
obligations (including but not limited to reimbursement obligations)
relating to the issuance of letters of credit for the account of such
Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Indemnified Person" shall have the meaning ascribed thereto in
Section 8.1(b).
"Intellectual Property" means (a) Patents, (b) all trademarks,
service marks, trade dress, logos, trade names, domain names and corporate
names, together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, and
all applications, registrations and renewals in connection therewith, (c)
all copyrightable works, all copyrights and all applications, registrations
and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e) all
trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, (h) all copies and tangible embodiments of the foregoing (in
whatever form or medium) and (i) all licenses, sublicenses, permissions or
agreements in connection with the foregoing.
"Law" shall include any foreign, federal, state, or local law,
statute, rule, regulation, Order or other restriction of any court or other
Governmental Entity.
"Liability" shall mean any debt, liability or obligation, whether
known or unknown, asserted or unasserted, accrued, absolute, contingent or
otherwise, whether due or to become due.
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or
title of any vendor, lessor, lender or other secured party to or of such
Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements).
"Litigation" shall mean any claim, demand, notice, action, suit,
proceeding, arbitration, investigation, civil, criminal or administrative
action, audit, inquiry or hearing by or before any Governmental Entity or
private arbitration tribunal.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the properties, business, prospects, operations, earnings, assets,
Liabilities or the condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole, whether or not in the ordinary course of
business, (b) the ability of the Company or any of its Subsidiaries to
perform its obligations under any of the Transaction Documents to which it
is a party, (c) the validity or enforceability of any of the Transaction
Documents, (d) the rights, remedies, powers and privileges of the Holder
under any of the Transaction Documents or (e) the timely payment or
performance of the Secured Obligations.
"Maturity Date" shall mean the earlier of December 31, 1999 and
the Rollover Date.
"Order" shall mean any judgment, order, injunction, ruling,
decree, stipulation or award of any Governmental Entity or private
arbitration tribunal.
"Patents" shall mean, collectively, (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice) and all
improvements thereon, (b) all patents, patent applications and patent
disclosures, (c) all reissues, divisions, continuations, revisions
reexaminations, renewals, extensions and continuations-in-part thereof) and
(d) all rights, now existing or hereafter coming into existence, (i) to all
income, royalties, damages, and other payments (including in respect of all
past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Permitted Indebtedness" means, without duplication, any of the
following Indebtedness of the Company or any of its Subsidiaries, as the
case may be: (i) Indebtedness and obligations under this Note; (ii) any
Indebtedness and obligations outstanding on the date hereof, as set forth
on Schedule 4.1; or (iii) Indebtedness incurred in the ordinary course of
business and consistent with past practice not to exceed $10,000
individually or in the aggregate.
"Permitted Liens" means: (i) Liens existing on the date hereof
and set forth on Schedule 4.2, all of which are subordinate to the Lien of
the Collateral Documentation except as set forth in Schedule 4.2; (ii)
Liens (other than any Lien imposed under ERISA or any Environmental Laws)
for taxes, assessments or charges of any Governmental Entity for claims not
yet due or which are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, and with respect
to which adequate reserves or other appropriate provisions are being
maintained in accordance with the provisions of GAAP and enforcement
thereof is stayed; (iii) Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other Liens (other than any Lien imposed under
ERISA) not voluntarily granted for amounts not yet due or which are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with the
provisions of GAAP, and enforcement thereof is stayed; (iv) Liens (other
than any Lien imposed under ERISA), incurred or deposited made in the
ordinary course of business, including without limitation, surety bonds and
appeal bonds, in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts; (v) easements (including without limitation reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other similar restrictions,
charges or encumbrances (whether or not recorded) and other Liens incurred
in the ordinary course of business, which do not secure indebtedness or the
deferred purchase price of any asset and which do not interfere materially
with the ordinary conduct of the business of the Company or any Subsidiary
of the Company and which do not materially detract from the value of the
property to which they attach or materially impair the use thereof to the
Company or any Subsidiary of the Company; and (vi) building restrictions,
zoning laws and other statutes, laws, rules, regulations, ordinances and
restrictions, and any amendments thereto, now or at any time hereafter
adopted by any Governmental Entity having jurisdiction.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Preferred Stock" shall have the meaning ascribed thereto in
Section 3.3.
"Proxy Statement" shall mean the proxy statement in a definitive
form relating to the Company Meeting.
"Put Option" shall have the meaning ascribed thereto in the
Subscription Agreement.
"Purchaser" shall mean the purchasers listed on Exhibit A to the
Convertible Note Purchase Agreement.
"Registration Rights Agreement" shall have the meaning ascribed
thereto in Section 6.3.
"Representatives" shall have the meaning ascribed thereto in
Section 4.10.
"Restricted Encumbrance" shall have the meaning ascribed thereto
in Section 4.2.
"Rollover Date" shall have the meaning ascribed thereto in
Section 6.1.
"Rollover Registration Rights Agreement" shall have the meaning
ascribed
thereto in Section 6.1.
"Rollover Transactions" shall mean the transactions contemplated
by Section 6 of this Note.
"Rollover Transaction Documents" shall mean the Convertible Note
Purchase Agreement, the Rollover Warrant, the Rollover Registration Rights
Agreement, the Convertible Note Security Agreement and any documents and
instruments required to be executed or delivered pursuant to any of the
foregoing agreements.
"Rollover Warrant" shall have the meaning ascribed thereto in
Section 6.1.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Reports" shall have the meaning ascribed thereto in Section
3.4.
"Secured Obligations" shall mean any and all obligations of the
Company or any of its Subsidiaries at any time and from time to time for
the performance of its agreements, covenants and undertakings under or in
respect of the Transaction Documents to which it is a party.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Act shall include
reference to the comparable section, if any, of such successor federal
statute.
"Security Agreement" shall mean the agreement, dated as of the
date hereof, between Appaloosa Investment Limited Partnership I, L.P. and
the Company, providing for a security interest in the Collateral.
"Shares" shall have the meaning ascribed thereto in Section 6.1.
"Subscription Agreement" shall mean the Subscription Agreement,
dated as of April 21, 1999, by and among the Company and certain
subscribers thereto.
"Subsidiary" means, with respect to any Person, (i) a corporation
a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof, (ii) any other Person (other
than a corporation), including without limitation a joint venture, in which
such Person, one or more Subsidiaries thereof or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest entitled to
vote in the election of directors, managers or trustees thereof (or other
Persons performing similar functions), (iii) the management of which is
otherwise controlled, directly or indirectly, by such Person or (iv) any
other Person required to be consolidated with such Person in accordance
with generally accepted accounting principles. For purposes of this
definition (and for the determination of whether or not a Subsidiary is a
wholly-owned Subsidiary of a Person), any directors' qualifying shares or
investment by foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Transaction Documents" shall mean this Note, the Warrants, the
Security Agreement, the Voting Agreement and the Registration Rights
Agreement.
"Transfer" shall have the meaning ascribed thereto in 4.9.
"Voting Securities" shall mean at any time shares of any class of
Capital Stock of the Company (or other corporation) which are then entitled
to vote generally in the election of directors of the Company (or such
other corporation).
"Warrants" shall have the meaning ascribed thereto in Section
2(f).
7.2. Accounting Principles. The character or amount of any asset,
liability, capital account or reserve and of any item of income or expense
required to be determined pursuant to this Note, and any consolidation or
other accounting computation required to be made pursuant to this Note, and
the construction of any definition in this Note containing a financial
term, shall be determined or made, as the case may be, in accordance with
GAAP, to the extent applicable, unless such principles are inconsistent
with the express requirements of this Note.
8. Miscellaneous.
-------------
8.1. Payment; Indemnity; Taxes. (a) If the date on which any
payment under this Note is required to be made occurs on a day other than a
Business Day, such payment shall be due and payable on the next succeeding
Business Day.
(b) (i) The Company and its Subsidiaries shall jointly and
severally indemnify and hold harmless the Holder and its Representatives
(each, an "Indemnified Person") from and against any and all suits,
actions, proceedings, claims (collectively, "Actions"), damages, losses,
Liabilities and out-of-pocket expenses (including reasonable attorneys'
fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) which may be instituted or
asserted against or incurred by any such Indemnified Person as the result
of credit having been extended, suspended or terminated under this Note and
the other Transaction Documents and the administration of such credit, and
in connection with or arising out of the transactions contemplated
hereunder and thereunder and any actions or failures to act in connection
therewith.
(ii) Upon receipt by any Indemnified Person of any Action
against such Indemnified Person with respect to which indemnity may be
sought under this Note or any other Transaction Document, such Indemnified
Person shall promptly notify the Company in writing, provided that failure
so to notify the Company shall not relieve the Company from any liability
which the Company may have on account of this indemnity or otherwise,
except to the extent the Company shall have been materially prejudiced by
such failure. The Company shall, at its option, assume the defense of any
Action including the employment of counsel reasonably satisfactory to the
Indemnified Person. Any Indemnified Person shall have the right to employ
separate counsel in any such action and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Person, unless: (i) the Company has failed promptly to assume
the defense and employ counsel or (ii) the named parties to such Action
(including any impleaded parties) include such Indemnified Person and the
Company, and such Indemnified Person and the Company shall have been
advised by counsel that there may be one or more legal defenses available
to it which are different from or in addition to those available to the
Company or there is or may be a conflict between the Company and any
Indemnified Person (in which case the Company may not assume the defense).
In the event that any Indemnified Person shall become entitled to separate
counsel under this Note or any other Transaction Document, the Company
shall not in such event be responsible hereunder for the fees and expenses
of more than one firm of separate counsel in connection with any Action in
the same jurisdiction, in addition to any local counsel. In addition, the
Company will not, without prior written consent of the Indemnified Person,
settle, compromise or consent to the entry of any judgment in or otherwise
seek to terminate any pending or threatened Action in which indemnification
may be sought hereunder (whether or not any Indemnified Person is a party
thereto) unless such settlement, compromise, consent or termination
includes an unconditional release of such Indemnified Person from all
liabilities and expenses arising out of such Action.
(c) The Company shall bear all sales, documentary, transfer,
stamp or other similar taxes and all filing fees and expenses incurred in
connection with the transactions contemplated by this Note and shall
indemnify and hold harmless each Indemnified Purchaser from and against any
such taxes.
8.2. Severability. If any term, provision, covenant or
restriction of this Note or any exhibit hereto is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Note and such
exhibits shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, void or unenforceable.
8.3. Specific Enforcement. The Holder, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Note were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Holder shall be entitled to an
injunction to prevent breaches of the provisions of this Note and to
enforce specifically the terms and provisions hereof in any court of the
United States or any state thereof having jurisdiction, this being in
addition to any other remedy to which they may be entitled at Law or
equity.
8.4. Entire Agreement. The Transaction Documents (including the
Schedules and Exhibits hereto and thereto) contain the entire understanding
of the parties with respect to the transactions contemplated hereby and
thereby.
8.5. Notices and other Communications. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be deemed given,
if in writing and delivered personally, by telecopy or sent by registered
mail, postage prepaid, if to:
The Company, to:
000 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxx
Fax: (000) 000-0000
With a copy to:
Pepe & Hazard LLP
Xxxxxxx Square
Hartford, CT 06103
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
The Holder, to:
c/o Appaloosa Management, L.P.
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxx Xxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxx, Xxxxx, Xxxxxx, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
or to such other address as any party may, from time to time, designate in
a written notice given in a like manner.
8.6. Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the Holder and its
respective successors and assigns. The Company many not assign this Note
without the written consent of the Holder.
8.7. Amendments. No amendment or waiver of any provision of this
Note, nor consent to any departure by the Company therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Holder and then such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
8.8. Expenses. The Company agrees to promptly (but in no event
later than 2 business days) pay the Holder all costs and expenses
(including the fees and expenses of its counsel) incurred by it in
connection with the transactions contemplated hereby (to the extent not
already paid by the Company on the date hereof) and the Rollover
Transactions (regardless of whether the Rollover Transactions are
consummated) upon the earlier to occur of (i) the prepayment of the entire
outstanding principal amount of the Note in accordance Section 1.3 and (ii)
the Due Date. In addition, the Company agrees to pay to the Holder all
reasonable costs and expenses incurred by such Holder relating to any
future amendment or supplement to any of the Transaction Documents (or any
proposal by the Company for such amendment or supplement) whether or not
consummated or any waiver or consent with respect thereto (or any proposal
for such waiver or consent) whether or not consummated, and all costs and
expenses of such Holder relating to the enforcement of any of the
Transaction Documents
8.9 Survival. All covenants, agreements, representations and
warranties contained herein in connection with the transactions
contemplated hereby shall survive the date hereof and the delivery of the
Transaction Documents, regardless of any investigation made by or on behalf
of any party; provided, that, all covenants, agreements, representations
and warranties contained herein shall terminate when this Note and any
amounts due hereunder have been indefeasibly repaid in full; provided,
however, that notwithstanding anything to the contrary contained herein,
Sections 6.3, 8.1(b), 8.2, 8.3, 8.4, 8.5 and 8.8 shall survive forever.
8.10. Public Announcements. Neither the Company nor the Holder
shall make any public statements, including, without limitation, any press
releases, with respect to this Note or the other Transaction Documents and
the transactions contemplated hereby or thereby without the prior written
consent of the other party (which consent shall not be unreasonably
withheld) except as may be required by Law. If a public statement is
required to be made by Law, the parties shall consult with each other in
advance as to the contents and timing thereof.
8.11. Governing Law. thIS NOTE AND THE OTHER TRANSACTION
DOCUMENTS shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of NEW
YORK EXCluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such
State.
8.12. Submission to Jurisdiction. If any Litigation shall be
brought by the Holder in order to enforce any right or remedy under this
Note or any of the other Transaction Documents, the Company hereby consents
and will submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the
date of this Note. The Company hereby irrevocably waives any objection,
including, but not limited to, any objection to the laying of venue or
based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any such Litigation in such jurisdiction.
8.13. Service of Process. Nothing herein shall affect the right
of the Holder to serve process in any other manner permitted by Law or to
commence legal proceedings or otherwise proceed against the Company in any
other jurisdiction.
8.14. Waiver of Jury Trial. The Company hereby waives any right
it may have to a trial by jury in respect of any action, proceeding or
litigation directly or indirectly arising out of, under or in connection
with, THIS NOTE OR ANY OF THE OTHER TRANSACTION DOCUMENTS
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the date first above written.
BIO-PLEXUS, INC.
By: /s/ Xxxx Xxxx
------------------------------
Name: Xxxx Xxxx
Title: President & CEO
