Exhibit 10.45
FIRST AMENDMENT
TO
SERIES 1 BRIDGE NOTE PURCHASE AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SERIES 1 BRIDGE NOTE PURCHASE AND SECURITY
AGREEMENT (the "First Amendment") is made and entered into as of this 21st day
of April, 1999, between COMPOSITECH LTD., a Delaware corporation (the "Company")
and the Purchasers hereto (each of whom is individually referred to as a
"Purchaser" and all of whom collectively are referred to as the "Purchasers"),
in connection with an Additional Closing as contemplated in the Purchase
Agreement (defined below). Capitalized terms used and not otherwise defined in
this First Amendment shall have the meanings ascribed to them in the Purchase
Agreement.
Background
The Company has previously authorized the issuance, sale, and delivery of
up to $1,500,000 in original principal amount of the Company's Series 1 Secured
Convertible Bridge Financing Notes (the "Bridge Notes") in the Series 1 Bridge
Note Purchase And Security Agreement (the "Purchase Agreement") dated March 16,
1999, by and among the Company and the Purchasers. The First Closing under the
Purchase Agreement for the sale of $500,000 in original principal amount of
Bridge Notes took place pursuant to the terms of the Purchase Agreement on that
date, and the parties now wish to conduct an Additional Closing under the
Purchase Agreement (the "Second Closing") for the issuance, sale, and delivery
of $430,000 in original principal amount of Bridge Notes (the "Second Closing
Bridge Notes") contemporaneously herewith, and to amend the Purchase Agreement
to, inter alia, provide for additional Collateral as security for the Second
Closing Bridge Notes and to appoint a Purchaser as representative for all other
Purchasers with respect to certain actions that may be taken in the future with
respect to the Collateral.
Agreement
For and in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and each Purchaser hereby agree as
follows:
Article 1. Amendments to Purchase Agreement
Section 1.1. General Amendments. The Purchase Agreement shall hereby be
amended as follows:
(a) Section 2.1 shall be amended to change the term "Bridge Notes" in
the third line thereof to read "Bridge Notes issued on the First Closing
Date."
(b) Section 2.2 shall be amended such that the first three lines of
the first sentence read "Upon the occurrence or existence of an "Event of
Default" as defined in Section 10 of the Bridge Notes issued at the First
Closing, each such Purchaser of such Bridge Notes, subject to the
provisions of this Article 2, as amended, shall have the right to pursue
all available remedies at law or in equity, including without limitation:"
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(c) Section 2.3 shall be amended by deleting in its entirety the text
of such section and replacing it with the following:
"On, before, or as soon as practicable after each Closing, the Company
shall execute and deliver or cause to be executed and delivered for filing
one or more Financing Statements with each of the Secretary of State of New
York and the Clerk of Suffolk County, New York to perfect the security
interest granted in connection with each such Closing."
(d) Section 3.2(a) shall be amended by inserting into the second line
thereof, after the phrase "perform each of this Agreement," the phrase "all
amendments thereto," so that all amendments to the Purchase Agreement are
included in the defined term "Transaction Agreements."
(e) Section 3.3 shall be amended by inserting into the eighth line
thereof, after the word "outstanding" and before the period at the end of
such sentence, the phrase ", all as adjusted for issuances or
authorizations of such stock subsequent to the First Closing Date."
(f) Section 7.6 shall be amended by deleting in its entirety the text
of such section and replacing it with the following:
"The Company will maintain or cause to be maintained a perfected first
priority security interest in favor of each group of Purchasers purchasing
Bridge Notes at a Closing, with each such first priority security interest
granted at each Closing having a value of approximately 200% of the
aggregate principal amount of Bridge Notes purchased at each such Closing
and then outstanding."
(g) Article 7 "Affirmative Covenants" shall be amended by adding at
the end of the first sentence in Section 7.17, before the period at the end
of such sentence, as follows:
", provided however, that the Company at its option may secure the
listing of all such shares required by this Section 7.17 at any time up to
but not later than fifteen (15) days prior to the Registration Deadline (as
defined in Section 2(a) of the Registration Rights Agreement)."
Article 2. Second Closing Grant of Security Interest and Provision of
Collateral.
Section 2.1. Additional Equipment as Security. In order to secure the
obligations of the Company due to the Purchasers under the Second Closing Bridge
Notes, in addition to the general credit of the Company, the Company hereby
grants to Purchasers of the Second Closing Bridge Notes, effective on the
Additional Closing Date established therefor, a continuing first priority
security interest in and a general lien upon the equipment listed and related
proceeds described on Exhibit A hereto and incorporated herein by reference (the
"Second Closing Collateral"). The Company and all Purchasers of Second Closing
Bridge Notes acknowledge and agree that the Equipment (and any proceeds related
thereto) pledged as collateral pursuant to the First Closing does not provide
security for the Second Closing Bridge Notes, and that such Bridge Notes are
secured solely by the Second Closing Collateral.
Section 2.2. Remedies Upon Default under the Second Closing Bridge Notes.
Upon the occurrence or existence of an "Event of Default" as defined in Section
10 of the Second Closing Bridge Notes, and subject to the terms of Article 2 of
the Purchase Agreement, as specifically amended by this First Amendment, each
Purchaser of the Second Closing Bridge Notes shall have the right to pursue all
available remedies at law or in equity, including without limitation:
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(a) all of the rights and remedies available to a secured party under
the Uniform Commercial Code as adopted in the State of New York and any
other applicable law, all of which shall be cumulative and none of which
shall be exclusive to the fullest extent permitted by law, and all other
legal and equitable rights under this First Amendment and the Transaction
Agreements which may be available to such Purchasers, all of which shall be
cumulative;
(b) the right to take possession of the Second Closing Collateral upon
receipt by the Company of 24 hours' written notice of Purchasers' intention
to do so, and to enter the offices of the Company during normal business
hours to take possession of the Second Closing Collateral; the right of the
Purchaser to (a) enter upon the premises of the Company or any of its
subsidiaries, or any other place or places where the Second Closing
Collateral is located and kept, through self-help and without judicial
process, without first obtaining a final judgment or giving Company or any
of its subsidiaries notice and opportunity for a hearing on the validity of
the Purchaser's claim and without any obligation to pay rent to Company or
any of its subsidiaries, and remove the Second Closing Collateral therefrom
to the premises of Purchaser or any agent of Purchaser, for such time as
Purchaser may desire, in order to effectively collect or liquidate the
Second Closing Collateral; and/or (b) require Company to assemble the
Second Closing Collateral and make it available to Purchaser at a place to
be designated by the Purchaser, in its sole discretion.
(c) the right to sell or otherwise dispose of all or any part of the
Second Closing Collateral in its then condition, at public or private sale
or sales, with such notice as may be required by law, in lots or in bulk,
for cash or on credit, all as such Purchaser may deem advisable, and
purchase all or any part of the Second Closing Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such
purchase price, may set off the amount of such price against the Company
obligations under the Second Closing Bridge Notes, and to apply the
proceeds realized from such sale, after allowing two (2) business days for
collection, first to the reasonable costs, expenses, and attorneys' fees
and expenses incurred by such Purchaser for collection and for acquisition,
storage, sale, and delivery of the Second Closing Collateral, secondly to
interest due upon the Company obligations under the Second Closing Bridge
Notes, and thirdly to the principal of the Company obligations under the
Second Closing Bridge Notes; and
(d) the right to proceed by an action or actions at law or in equity
to obtain possession of the Second Closing Collateral, to recover the
Company obligations under the Second Closing Bridge Notes and amounts
secured hereunder or thereunder or to foreclose under this Agreement or the
other Transaction Agreements and sell the Second Closing Collateral or any
portion thereof, pursuant to a judgment or decree of a court or courts of
competent jurisdiction, all without the necessity of posting any bond.
Section 2.3. Legal Opinion of Company Counsel. The opinion of legal counsel
to the Company in substantially the form of Exhibit B attached hereto is issued
in connection with the Second Closing.
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Article 3. Appointment of Representative.
Section 3.1. Further Amendment of Article 2 of Purchase Agreement. Article
2 "Security Agreement" shall be further amended by adding at the end of that
Article 2 the following sections, numbered and containing the text as follows:
"Section 2.5 Appointment of Purchaser Representative. Each Purchaser hereto
hereby irrevocably appoints SovCap Equity Advisors, Ltd., a corporation
organized under the laws of the Bahamas and a Purchaser hereunder, to act as the
sole and exclusive agent and representative (the "Representative") of such
Purchaser to act on behalf of such Purchaser and in such Purchaser's name,
place, and stead, to (i) exercise all rights of such Purchaser, and (ii) take
all action on behalf of Purchaser that may be taken by Purchaser with respect to
the collateral under this Agreement, the Bridge Notes, and the other Transaction
Agreements. Without limiting the generality of the foregoing:
(a) The Representative shall, on behalf of all Purchasers, send all
notices which shall or may be given by Purchasers, under the Transaction
Agreements, declare Events of Default under this Agreement, the Bridge
Notes, and the other Transaction Agreements, accelerate the Bridge Notes,
rescind acceleration of the Bridge Notes, and enforce the Bridge Notes,
this Agreement, and the other Transaction Agreements. The Representative
reserves the right, in its sole discretion, in each instance without prior
notice to the Purchasers, (i) to agree to the modification, waiver, or
release of any of the terms of any of the Transaction Agreements,
including, without limitation, the waiver or release of any of the
conditions precedent for the purchase and sale of the Bridge Notes; (ii) to
consent to any action or failure to act by the Company; and (iii) to
exercise or refrain from exercising any powers, rights, or remedies that
the Purchasers have or may have with respect to collateral under the
Transaction Agreements; provided however, that the Representative shall
not, without obtaining the prior written consent of each Purchaser (which
consent shall not be unreasonably withheld or delayed), exercise any of
such rights so as to knowingly release or waive any claim against the
Company or any other person who may be liable with respect to the Bridge
Notes if such action would have a materially adverse effect on the
collection of the indebtedness evidenced by the Bridge Notes or the
enforcement of the Transaction Agreements.
If any Purchaser shall refuse to consent to any amendment,
modification, waiver, release, or subordination requiring the written
consent of the Purchasers, the Purchasers who consent to such amendment,
modification, waiver, release, or subordination may, at their option, at
any time thereafter (but shall not be obligated to) purchase the Bridge
Note or Bridge Notes held by the non-consenting Purchaser or Purchasers by
paying to such non-consenting Purchaser or Purchasers an amount equal to
the unpaid principal and accrued but unpaid interest on the Bridge Note
held by such non-consenting Purchaser or Purchasers.
(b) The Representative shall collect, enforce, and bring any action on
the Transaction Agreements and any collateral granted therein in the name
of the Representative for the benefit of all Purchasers.
Section 2.6 Assurances.
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(a) Each Purchaser hereby authorizes third parties with whom
Representative deals in carrying out the responsibilities of Representative
hereunder, to rely conclusively on the instructions and decisions of the
Representative as to any action taken pursuant to and in accordance with
the terms of this Agreement and the other Transaction Agreements without
any further or additional approval or authorization from such Purchaser,
including without limitation, the execution and delivery of any documents
or instruments, or any other actions required to be taken by the
Representative under this Agreement and the other Transaction Agreements,
and no Purchaser shall have any cause of action against third parties with
whom Representative deals in carrying out the responsibilities of
Representative hereunder or under the other Transaction Agreements for any
action taken by such third parties in reliance upon the instructions or
decisions of the Representative;
(b) All actions, decisions, and instructions of the Representative
shall be conclusive and binding upon all of the Purchasers, and no
Purchaser shall have any cause of action against the Representative for any
actions taken, decision made or instruction given by the Representative
under this Agreement, except for fraud or willful misconduct by
Representative acting in such capacity hereunder.
Section 2.7 Default and Acceleration Procedures.
(a) Each Purchaser acknowledges and agrees that its respective rights
in, to, and under any collateral granted in the Transaction Agreements are
limited to the specific collateral securing the Bridge Notes purchased by
each such Purchaser as granted by the Company pursuant to the Closing at
which such Bridge Notes are purchased.
(b) The Representative shall give all Purchasers written notice of any
Event of Default under the Bridge Notes, this Agreement, or the other
Transaction Agreements which, in the judgment of the Representative,
adversely affects the respective interests of the Purchasers under any of
the Transaction Agreements. In the event of any Event of Default
thereunder, the Representative shall pursue any remedies available to
Purchasers under the Transaction Agreements which the Representative in its
sole discretion shall deem advisable, and Representative may also elect to
postpone the pursuit of remedies if in its sole discretion and judgment it
is appropriate under the circumstances to do so.
(c) In the event proceedings are instituted for a sale under power of
sale or a judicial foreclosure of the collateral provided under the
Transaction Agreements, the provisions of the New York UCC, absent written
agreement to the contrary, shall govern such proceedings and the actions
taken pursuant thereto, as among the Representative and the Purchasers.
(d) In the event the Representative acquires title to any of the
collateral provided under the Transaction Agreements pursuant to a
foreclosure or conveyance in lieu of foreclosure, title shall be taken in a
form acceptable to the Representative and shall be held by or on behalf of
the Representative for the benefit of only the Purchasers holding Bridge
Notes which were secured by such collateral, in their Proportionate Share.
The Representative shall manage such collateral in its ordinary course of
business and in accordance with its customary practices and procedures for
as long as such title is held in whole or in part in the name of or on
behalf of the Representative. The Representative shall contemporaneously
endeavor to sell such collateral on terms and conditions reasonably
acceptable to the Representative.
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(e) If the Representative receives a payment after acceleration of the
Bridge Notes, whether pursuant to a demand for payment or as a result of
legal proceedings against the Company, or from any source whatsoever, such
payment in respect of the specific Bridge Notes so paid shall be applied in
the following order (unless mandated otherwise by the Transaction
Agreements or validly by the express terms of such payment):
(1) To the expenses incurred in effecting such recovery or in
enforcing any right or remedy under the Transaction Agreements, and
any other expenses theretofore incurred by the Representative and not
previously reimbursed by the Company;
(2) To accrued interest, payable by the Company, according to
Purchaser's Proportionate Share of such accrued interest in respect of
such Bridge Notes; and
(3) To the unpaid principal of such Bridge Notes with each
Purchaser receiving such Purchaser's Proportionate Share of such
principal.
(f) The term "Proportionate Share" shall mean the amount of each
Purchaser's Bridge Note purchased at a specific Closing divided by the
total amount of Bridge Notes purchased at such Closing.
Section 2.8 Standard of Care of the Representative.
(a) The Representative shall endeavor in good faith to perform all
services and duties and exercise all powers hereunder specifically assigned
and delegated to the Representative, and the Representative shall perform
and exercise, and shall have the right and power to perform and exercise,
such other services and powers as are reasonably incidental thereto. The
Representative shall not be liable to the Purchasers, however, for any
action or failure to act or any error of judgment, negligence, mistake, or
oversight by it or any of its agents, officers, employees, or attorneys,
with respect to the Transaction Agreements, provided the Representative has
acted in good faith and has not been guilty of willful misconduct or gross
negligence. Without limiting the generality of the foregoing, the
Representative may consult with counsel or other advisors selected by it,
and the Representative shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such
counsel or other advisors. In performing its obligations hereunder and
under the Transaction Agreements, the Representative may rely in good faith
on written and telephonic communications received by the Representative
without investigating the genuineness thereof or the power and authority of
the author of such communications. Each Purchaser acknowledges and agrees
that the Representative's duties and obligations under this Agreement are
administrative and ministerial in nature, and that the Representative has
no fiduciary obligation to the Purchasers.
(b)The Representative does not assume, and shall not have, any
responsibility or liability, express or implied, for the adequacy,
sufficiency, validity, collectability, genuineness, or enforceability of
any of the Transaction Agreements, for the financial condition of the
Company, for compliance by the Company with the terms and conditions of the
Transaction Agreements, or for the accuracy of any financial or other
information furnished to the Purchaser by the Representative or by any
other party. The Representative shall not be required to ascertain or
inquire as to the performance or observance by the Company of any of the
terms, conditions, provisions, covenants, or agreements contained in any of
the Transaction Agreements or as to the
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use of the proceeds of the offering of the Bridge Notes or of the existence
or possible existence of any Event of Default thereunder.
(c) The Representative may accept deposits from, lend money to, and
generally engage in any kind of banking, trust, financial advisory, or
other business with the Company or any affiliate thereof as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Company or affiliate for services in connection with
such services, without having to account for the same to the Purchasers."
Section 3.2. Provision for Updated Disclosure Schedule. In connection with
the Second Closing and this First Amendment executed pursuant thereto, the
Company may in its discretion update its disclosure to Purchasers of certain
information required under Article 3 of the Purchase Agreement, by attaching to
this First Amendment an updated Disclosure Schedule, as indicated on Schedule 1
attached hereto and incorporated herein by reference.
Section 3.3. No Further Amendment. Except as specifically provided in this
First Amendment, the Purchase Agreement and all its original terms, covenants,
conditions, and agreements, including without limitation the Company's
representations and warranties therein, shall remain in full force and effect as
originally executed by the parties thereto, including the Purchasers executing
Purchaser signature pages to this First Amendment, such execution being deemed
to be execution of the Purchase Agreement.
Article 4. Miscellaneous.
Section 4.1. Entire Agreement. Amendments. This Agreement supersedes all
other prior oral or written agreements between the Purchasers under this Second
Closing, the Company, their affiliates and persons acting on their behalf with
respect to the matters discussed herein, and this First Amendment and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Purchaser
makes any representation, warranty, covenant, or undertaking with respect to
such matters other than those contained in the Purchase Agreement, which remain
in full force and effect as if made on the date hereof. No provision of this
First Amendment may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
Section 4.2. Governing Law. This First Amendment shall be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws. The parties agree that any appropriate
State court located in New Castle County, Delaware or the Federal courts located
in the District of Delaware, shall have jurisdiction of any case or controversy
arising under or in connection with this First Amendment and shall be the proper
forum in which to adjudicate such case or controversy, and the parties further
agree to submit to the personal jurisdiction of such court.
Section 4.3. Notices. Any notices, consents, waivers, or other
communications required or permitted to be given under the terms of this First
Amendment must be in writing and given as more fully provided for in Section 9.5
of the Purchase Agreement.
[Remainder of page intentionally left blank; signatures begin on next page]
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COMPANY SIGNATURE PAGE
TO
FIRST AMENDMENT
TO
SERIES 1 BRIDGE NOTE PURCHASE AND SECURITY AGREEMENT
COMPANY
COMPOSITECH, LTD.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------------
Xxxxxx X. Xxxxx, Executive Vice President
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PURCHASER SIGNATURE PAGE
TO
FIRST AMENDMENT TO SERIES 1 BRIDGE NOTE
PURCHASE AND SECURITY AGREEMENT
AND
SERIES 1 BRIDGE NOTE PURCHASE AND SECURITY AGREEMENT
PURCHASER
ARAB COMMERCE BANK, LTD.
By:/s/ A. De Nazareth
-------------------------
Name: A. De Nazareth
Title: Secretary
================================================================================
Arab Commerce Bank, Ltd.
Purchaser Name Address and X.X. Xxx 000, Xxxxx Xxxxxx
Xxxxxxxxx Xxxxxx Xxxxxx Xxxxxxx
Xxxxxx Fax No.: 0000-000-0000
--------------------------------------------------------------------------------
Principal Amount of Second USD$100,000.00
Closing Bridge Notes Purchased
--------------------------------------------------------------------------------
Purchaser's Legal Counsel
Address and
Facsimile Number
================================================================================
PURCHASER SIGNATURE PAGE
TO
FIRST AMENDMENT TO SERIES 1 BRIDGE NOTE
PURCHASE AND SECURITY AGREEMENT
AND
SERIES 1 BRIDGE NOTE PURCHASE AND SECURITY AGREEMENT
PURCHASER
CORRELLUS INTERNATIONAL LTD.
By: /s/ Xxx Xxxxxx
------------------------
Name: Xxx Xxxxxx
Title: Director
================================================================================
Correllus International Ltd.
Purchaser Name Address and Calle Azucera 37
Facsimile Number Xxxxxxxxxxx Xxx Xxx
000 00 Xxxxxxxxxx
Xxxxx
Fax No.: (00) 00 0000000
--------------------------------------------------------------------------------
Principal Amount of Second USD$200,000.00
Closing Bridge Notes Purchased
--------------------------------------------------------------------------------
Purchaser's Legal Counsel
Address and
Facsimile Number
================================================================================
PURCHASER SIGNATURE PAGE
TO
FIRST AMENDMENT TO SERIES 1 BRIDGE NOTE
PURCHASE AND SECURITY AGREEMENT
AND
SERIES 1 BRIDGE NOTE PURCHASE AND SECURITY AGREEMENT
PURCHASER
SOVCAP EQUITY PARTNERS LTD.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
Title: President
================================================================================
SOVCAP EQUITY PARTNERS LTD.
Purchaser Name Address and Cumberland House
Facsimile Number #00 Xxxxxxxxxx Xxxxxx
X.X. Xxx XX 00000
Nassau, New Providence, The Bahamas
--------------------------------------------------------------------------------
Principal Amount of Second USD$130,000.00
Closing Bridge Notes Purchased
--------------------------------------------------------------------------------
Xxxxxxx Law Group LLC
Purchaser's Legal Counsel 0000 Xxxxx Xxxx, XX, Xxxxx 000
Address and Xxxxxxx, Xxxxxxx 00000 XXX
Facsimile Number Fax No.: (000) 000-0000
================================================================================
