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Exhibit No. 10.129
$3,037,333.33
ECOGEN INC.
ECOGEN INVESTMENTS INC.
ECOGEN-BIO INC.
8% Convertible Note due October 31, 2002
October 31, 1997
Number SSNB-1
SECTION 1. General. ECOGEN INC., a Delaware corporation (the "Company),
ECOGEN INVESTMENTS INC., a Delaware corporation, and ECOGEN-BIO INC., a Delaware
corporation (hereinafter individually called a "Borrower" and collectively,
"Borrowers") ), for value received, hereby jointly and severally promise to pay
to the order of UNITED EQUITIES (COMMODITIES) COMPANY, a New York general
partnership ("Payee"), on October 31, 2002 (the "Maturity Date") the principal
amount of THREE MILLION THIRTY SEVEN THOUSAND THREE HUNDRED THIRTY THREE DOLLARS
AND THIRTY-THREE CENTS ($3,037,333.33), together with interest thereon from the
date hereof at the rate of eight percent (8%) per annum, and to pay interest at
the rate of twelve percent (12%) per annum (the "Default Rate") on any overdue
principal, and on any overdue interest, from the due date thereof until the
obligation of the Borrowers with respect to the payment thereof shall be
discharged in full. Interest at the Default Rate shall accrue both before and
after judgment. Interest on the unpaid principal amount shall be payable in
arrears on a semi-annual basis commencing April 30, 1998. Interest hereon for
any period other than a full quarterly period shall be computed on the basis of
a 360-day year of twelve 30-day months and the actual number of days elapsed.
This Note has been issued pursuant to a Convertible Note Purchase
Agreement dated October 31, 1997 by and among the Borrowers and the Purchaser
(the "Purchase Agreement"). This Note and any other similar notes (including
without limitation any PIK Notes (as hereinafter defined)) that are issued
pursuant to the Purchase Agreement are hereinafter sometimes referred to as the
"Offering Notes."
SECTION 2. Payment of Principal and Interest.
2.1 Payment of Principal. Payment of all or any portion of the
principal amount due hereunder shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of public and private debts.
2.2 Payment of Interest. The Borrowers may, at their sole
option, pay the interest due hereunder either (i) in such coin or currency of
the United States of America as at the time of payment shall be legal tender
therein for the payment of public and private debts, or (ii) by the issuance to
the Holder of an additional note of like tenor with this Note (a "PIK Note") and
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the principal amount equal to the amount of interest then due and payable for
which the additional PIK Note is being issued, and which PIK Note shall be dated
the date on which such interest payment is due and shall mature on the Maturity
Date.
2.3 Payments in Coin, etc. All payments of principal, and all
payments of interest on this Note which are made in coin or currency as
aforesaid, shall be paid by wire transfer in immediately available funds no
later than 2:00 P.M. on the due date of such payment to a deposit account with a
New York City bank designated by the Holder from time to time.
2.4 Payments in Notes. All payments of interest on this Note
which are made by the issuance to the Holder shall be paid by delivery to the
Holder of a PIK Note of like tenor with this Note, registered in the name of the
Holder, in the face amount determined in accordance with Section 2.2(ii) hereof
with interest thereon commencing to accrue on and as of the interest payment
date for which such Note is being issued.
2.5 Limitation on Interest. In no event shall the Holder be
entitled to receive interest, however characterized, at an effective rate in
excess of the maximum rate permitted by law. In the event that a court of
competent jurisdiction shall finally determine that such amounts paid or agreed
to be paid by the Borrowers in connection with this Note causes the effective
interest rate on this Note to exceed the maximum rate permitted by law, such
interest or other consideration shall automatically be reduced to a rate which
results in an effective interest rate under this Note equal to the maximum rate
permitted by law over the term hereof, and, in such event, the Borrowers shall
apply to the reduction of the unpaid principal balance of this Note any amounts
received by it deemed to constitute excessive interest.
SECTION 3. The Note. As used herein, the term "Note" refers to this 8%
Convertible Note and to any PIK Note or PIK Notes executed and delivered by the
Borrowers in payment of interest pursuant to Section 2.2(ii) above or in
exchange or replacement hereof or thereof pursuant to Section 9 hereof. Unless
the context otherwise requires, the term "Holder" is used herein to mean Payee
or any other person who shall at the time be the Holder or assignee of this
Note. This Note, the Security Agreement (as defined in Section 4 hereof), the
Purchase Agreement and all other documents executed and delivered by Borrowers
pursuant to the Purchase Agreement are hereinafter collectively referred to as
the "Purchase Documents."
SECTION 4. Security Interest. The obligations of the Issuers hereunder
shall be secured by a first lien and security interest in and to certain assets
of the Issuers pursuant to the terms of that certain Security Agreement in the
form attached as Exhibit B to the Purchase Agreement.
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SECTION 5. Conversion of Note.
5.1 Right to Convert. Subject to and upon compliance with the
provisions hereof, the Holder shall have the right, at such Holder's option, at
any time and from time to time, to convert all or any portion of the unpaid
principal amount hereof and the accrued but unpaid interest thereon into the
Company's Common Stock, par value $0.01 per share ("Common Stock") at the price
of $3.00 per share, or, in case an adjustment of such price has taken place
pursuant to the further provisions of this Section 5, then at the price as last
adjusted and in effect on the date this Note or portion hereof is presented for
conversion (such price or such price as last adjusted, as the case may be, being
referred to herein as the "Conversion Price"). Upon any conversion of this Note,
or any portion hereof, the conversion shall also be deemed to include the
accrued and unpaid interest on the principal portion of the Note tendered for
conversion, whether or not then due; provided, however, that the Company shall
have the option, at its election and in lieu of converting such interest, to
make an appropriate cash adjustment for or on account of any such accrued and
unpaid interest accrued. Upon any conversion of all or a portion of the unpaid
principal amount hereof, the principal obligation due hereunder shall be deemed
reduced to the extent of the value of the aggregate Conversion Price of the
Common Stock acquired thereby. Upon any conversion of a portion (but less than
all) of the unpaid principal amount hereof, the reduction of the principal
obligation hereunder shall be applied to the principal payment due hereunder.
5.2 Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the Holder shall present the Note to the Company, on
behalf of the Borrowers, at the office of the Company, accompanied by written
notice to the Company that the Holder elects to convert this Note, or, if less
than the entire unpaid principal amount hereof is to be converted, the portion
hereof to be converted. Such notice shall also state the name or names (with
address and taxpayer identification number) in which the certificate or
certificates for shares which shall be issuable on such conversion shall be
issued. As soon as practicable after the receipt of such notice and the
presentation of this Note, the Company shall issue and deliver, or shall cause
its registrar and transfer agent to issue, countersign and deliver, to the
Holder a certificate or certificates for the number of full shares issuable upon
the conversion of this Note (or portion hereof). Such conversion shall be deemed
to have been effected immediately prior to the close of business on the date on
which such notice shall have been received by the Company and this Note shall
have been presented as aforesaid, and conversion shall be at the Conversion
Price in effect at such time, and at such time the rights of the Holder as a
Holder shall cease (to the extent this Note is so converted) and the person or
persons in whose name or names any certificate or certificates for shares shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby. Upon conversion of only a
part of the unpaid principal amount of this Note, appropriate notation shall be
made on this Note of the principal amount so converted, and this Note shall be
retained by the Holder following such notation. Upon conversion of the balance
of the principal amount of this Note, the Holder shall surrender this Note to
the Company on behalf of all the Borrowers. No fractional share or scrip shall
be issued upon conversions of the Note. The number of full shares issuable upon
conversion shall be computed on the basis of the aggregate unpaid principal
amount of the Note (or portion thereof) so surrendered and the amount of
interest thereon being converted.
5.3 Adjustment of Conversion Price. The Conversion Price shall
be subject to adjustment from time to time as hereinafter provided. Upon each
adjustment of the Conversion
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Price, the Holder shall thereafter be entitled to receive, at the Conversion
Price resulting from such adjustment, the number of shares of Common Stock
obtained by multiplying the Conversion Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable upon conversion of
that portion of the principal amount of this Note surrendered for conversion
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Conversion Price resulting from such adjustment.
(a) Conversion Price Adjustment Formulas. If and whenever
after the date of this Note, the Company shall issue or sell any shares of
Common Stock (except as provided in subsection 5.3.(d)) for a consideration per
share less than the lower of (x) 90% of the Market Price or (y) the Conversion
Price, determined on the date of such issue or sale, then forthwith the
Conversion Price shall be reduced to the price (calculated to the nearest tenth
of a cent) determined by multiplying the Conversion Price in effect immediately
prior to the time of such issue or sale by a fraction, the numerator of which
shall be (i) the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issue or sale (assuming the conversion of all
securities convertible into shares of Common Stock) multiplied by 90% of the
Market Price or by the Conversion Price, as the case may be, immediately prior
to such issue or sale, and (B) the consideration, if any, received and deemed
received by the Company upon such issue or sale, divided by (ii) the total
number of shares of Common Stock outstanding and deemed outstanding immediately
after such issue or sale, and the denominator of which shall be (aa) 90% of the
Market Price or (bb) the Conversion Price, as the case may be, immediately prior
to such issue or sale.
No adjustment of the Conversion Price, however, shall be made in an amount less
than 5% of the Conversion Price immediately prior to the adjustment, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to 5% or more of the Conversion
Price.
(b) Constructive Issuances of Stock; Convertible Securities;
Rights and Options; Stock Dividends. For the purposes of subsection 5.3(a), the
following provisions (i) to (viii), inclusive, shall also be applicable, and the
adjustment provided in subsection 5.3(a), if required, shall be made:
(i) In case at any time subsequent to the date hereof,
the Company shall in any manner grant any rights to subscribe
for or to purchase, or any options for the purchase of, shares
of Common Stock or any stock or securities convertible into or
exchangeable for shares of Common Stock (such convertible or
exchangeable stock or securities being hereinafter called
"Convertible Securities"), whether or not such rights or
options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the
consideration per share for which shares of Common Stock are
issued or sold upon the exercise of such rights, options or
Convertible Securities (determined by dividing (A) the total
amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exercise of such rights
or options, plus, in the case of any such rights or
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options which relate to such Convertible Securities, the
minimum aggregate amount of additional consideration, if any,
payable upon the issue or sale of such Convertible Securities
(and, if such Convertible Securities constitute obligations of
the Company, the principal amount of such obligations so
convertible) and upon the conversion or exchange thereof, by
(B) the total maximum number of shares of Common Stock
issuable upon the exercise of such rights or options or upon
the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such rights or options) shall be
less than the lower of (x) 90% of the Market Price or (y) the
Conversion Price, determined as of the date of granting such
rights or options, as the case may be, then the total maximum
number of shares of Common Stock issuable upon the exercise of
such rights or options (or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable
upon the exercise of such rights or options) shall be deemed
to be outstanding and to have been issued for such price per
share. Except as provided in subsection 5.3(b)(iii) below, no
further adjustments of the Conversion Price shall be made upon
the actual issuance of such shares of Common Stock or of such
Convertible Securities upon exercise of such rights or options
or upon the actual issue of such shares of Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) In case at any time the Company shall in any
manner issue or sell any Convertible Securities, whether or
not the rights to exchange or convert thereunder are
immediately exercisable, and the price per share for which
shares of Common Stock are issuable upon such conversion or
exchange (determined by dividing (A) the total amount received
or receivable by the Company as consideration for the issue or
sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof, by (B)
the total maximum number of shares which would be issuable
upon the conversion or exchange of all such Convertible
Securities) shall be less than the lower of (x) 90% of the
Market Price or (y) the Conversion Price, determined as of the
date of such issue or sale, then the total maximum number of
shares of Common Stock issuable upon conversion or exchange of
all such Convertible Securities shall (as of the date of the
issue or sale of such Convertible Securities) be deemed to be
outstanding and to have been issued for such price per share.
Except as otherwise specified in subsection 5.3(b)(iii) below,
no further adjustments of the Conversion Price shall be made
upon the actual issuance of such shares of Common Stock upon
conversion or exchange of such Convertible Securities.
(iii) If the purchase price provided for in any right or
option referred to in subsection 5.3(b)(i), or the additional
consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in subsection
5.3(b)(ii), or the rate at which any Convertible Securities
referred to in subsections 5.3(b)(i) or (ii) are convertible
into or exchangeable for
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shares of Common Stock, shall change or a different purchase
price or rate shall become effective at any time or from time
to time (other than under or by reason of provisions designed
to protect against dilution) then, upon such change becoming
effective, the Conversion Price in effect at the time of such
event shall forthwith be increased or decreased to such
Conversion Price as would have obtained had the rights,
options or Convertible Securities still outstanding provided
for such changed purchase price, additional compensation or
rate of conversion or exchange, as the case may be, at the
time initially granted, issued or sold. On the expiration of
any such option or right or the termination of any such right
to convert or exchange such Convertible Securities, the
Conversion Price then in effect hereunder shall forthwith be
increased to such Conversion Price as would have obtained at
the time of such expiration or termination had such option,
right or convertible securities never been issued. If the
purchase price provided for in any right or option referred to
in subsection 5.3(b)(i), or the additional consideration
payable upon the exchange or conversion of any Convertible
Securities referred to in subsections 5.3(b)(i) or (ii), or
the rate at which any Convertible Securities referred to in
subsections 5.3(b)(i) or (ii) are convertible into or
exchangeable for shares of Common Stock, shall decrease at any
time under or by reason of provisions with respect thereto
designed to protect against dilution, then in the case of the
delivery of shares of Common Stock upon the exercise of any
such right or option or upon conversion or exchange of any
such right or option or upon conversion or exchange of any
such Convertible Securities, the Conversion Price then in
effect hereunder shall forthwith be decreased to such
Conversion Price as would have obtained had the adjustments
made upon issuance of such right or option or Convertible
Securities been made upon the basis of the issuance of (and
the total consideration computed in accordance with
subsections 5.3(b)(i) or (ii), as the case may be, received
for) the shares of Common Stock delivered as aforesaid.
(iv) In case of the issuance of shares of Common
Stock or Convertible Securities of the Company as a dividend
or distribution upon any shares of Common Stock of the
Company, such shares of Common Stock or Convertible
Securities, as the case may be, issuable in payment of such
dividend or distribution shall be deemed to have been issued
or sold without consideration.
(v) In case at any time any shares of Common
Stock or Convertible Securities or any rights or options to
purchase any such shares of Common Stock or Convertible
Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount payable to
the Company therefor, without deduction therefrom of any
expenses incurred or any underwriting or selling commissions
or concessions paid by the Company in connection therewith. In
case any shares of Common Stock or Convertible Securities or
any rights or options to purchase any such shares of Common
Stock or Convertible Securities shall be issued or sold for
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a consideration other than cash, the amount of the
consideration other than cash payable to the Company shall be
deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the
Company, without deduction therefrom of any expenses incurred
or any underwriting or selling commissions or concessions paid
by the Company in connection therewith. In case any shares of
Common Stock or Convertible Securities shall be issued in
connection with any merger of another corporation into the
Company, the amount of consideration therefor shall be deemed
to be the fair value, as determined in good faith by the Board
of Directors of the Company, of such portion of the assets of
such merged corporation as such Board shall determine to be
attributable to such shares of Common Stock, Convertible
Securities, rights or options, as the case may be.
(vi) In case at any time the Company shall take a
record of the holders of its Common Stock for the purpose of
entitling them (A) to receive a dividend or other distribution
payable in shares of Common Stock or in Convertible
Securities, or (B) to subscribe for or purchase shares of
Common Stock or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other
distribution or the date of the granting of such right or
subscription or purchase, as the case may be.
(vii) "Market Price" means, as of any day, the
closing sales price of the Common Stock on such day on the New
York Stock Exchange or the American Stock Exchange (or if the
Common Stock shall not then be listed on either such exchange,
such closing sales price on the principal (determined by
highest volume averaged for a period of twenty consecutive
business days prior to the day as to which "Market Price" is
being determined) national securities exchange (as defined in
the Securities Exchange Act of 1934, as amended) on which the
Common Stock may then be listed) or, if the Common Stock shall
not be listed on such exchange or exchanges, the closing bid
price at the end of such day as quoted by each of three
independent market makers as reported by the Nasdaq Stock
Market or, if the Common Stock shall not be listed or included
for quotation on the Nasdaq Stock Market, the closing bid
price at the end of the day as quoted by each of three
independent market makers in the over-the-counter market as
reported by the National Quotation Bureau, Inc. or by any
successor organization.
(viii) The number of shares of Common Stock
outstanding at any given time shall not include shares owned
or held by or for the account of the Company which are not
entitled to be voted on matters for which stockholders may
otherwise vote, and the cancellation of any such shares shall
not be considered an issue or sale of shares of Common Stock
for the purposes of subsection 5.3(a).
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(c) Effect of Certain Dividends. In case at any time the
Company shall declare a dividend upon the shares of Common Stock payable
otherwise than out of earnings or earned surplus (other than in a total
liquidation or dissolution of the Company) and otherwise than in shares of
Common Stock or Convertible Securities, the Conversion Price in effect
immediately prior to the declaration of such dividend shall be reduced by an
amount equal, in the case of a dividend in cash, to the amount thereof payable
per share of Common Stock or, in the case of any other dividend, to the fair
value thereof per share of Common Stock as determined in good faith by the Board
of Directors of the Company. For the purposes of the foregoing, a dividend other
than in cash shall be considered payable out of earnings or earned surplus only
to the extent that such earnings or earned surplus are charged an amount equal
to the fair value of such dividend as determined in good faith by the Board of
Directors of the Company. Such reductions shall take effect as of the date on
which a record is taken for the purpose of such dividend, or if a record is not
taken, the date as of which the holders of record of shares of Common Stock
entitled to such dividends are to be determined. As used in this subsection
5.3(c), the term "dividend" shall mean any distribution to the holders of shares
of Common Stock. Except as provided in this subsection 5.3(c), no adjustment in
the Conversion Price and no change in the number of shares of Common Stock so
issuable shall be made pursuant to this Section 5.3 as a result of or by reason
of any such dividend.
(d) No Adjustments Required. Notwithstanding anything herein
to the contrary, there shall be no adjustment in the Conversion Price in
connection with (i) the grant of any option, or the exercise of any option
granted under an employee benefit plan or stock option plan or (ii) upon the
exercise of any option, warrant or Convertible Security outstanding on the date
of this Note.
5.4 Stock Dividends; Splits; Subdivisions, etc. If the Company
shall issue Common Stock as a dividend upon Common Stock or in payment of a
dividend thereon, shall subdivide the number of outstanding shares of its Common
Stock into a greater number of shares or shall contract the number of
outstanding shares of its Common Stock into a lesser number of shares, the
Conversion Price then in effect shall be adjusted, effective at the close of
business on the record date for the determination of stockholders entitled to
receive such dividend or be subject to such subdivision or contraction, to the
price (computed to the nearest cent) determined by dividing (A) the product
obtained by multiplying the Conversion Price in effect immediately prior to the
close of business on such record date by the number of shares of Common Stock
outstanding prior to such dividend, subdivision or contraction, by (B) the sum
of the number of shares of Common Stock outstanding immediately after such
dividend, subdivision, or contraction.
5.5 Consolidation or Merger. If any consolidation or merger of
the Company with another corporation shall be effected, then, as a condition of
such consolidation or merger, lawful and adequate provision shall be made
whereby the Holder shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore receivable upon the conversion of this
Note, such shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for a number of outstanding shares equal to the
number of shares of Common Stock immediately theretofore so receivable by such
Holder had such consolidation or merger not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
such
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Holder to the end that the provisions hereof (including without limitation,
provisions for adjustments of the Conversion Price) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise of such conversion rights.
The Company shall not consummate any such consolidation or merger unless prior
to or simultaneously with the consummation thereof, the successor corporation
(if other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument the
obligation to deliver to such Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such Holder may be entitled to
receive. Except as expressly set forth in this Section 5.4, however, nothing
contained herein will be deemed to restrict the Company from entering into a
consolidation or merger.
5.6 Notice of Adjustment of Conversion Price. Upon any
adjustment of the Conversion Price, then and in each such case the Company shall
give written notice thereof in the manner provided in Section 11 to the Holder,
which notice shall state the Conversion Price resulting from such adjustment,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.
5.7 Notice of Certain Actions. In case at any time:
(1) the Company shall declare any dividend upon
shares of its capital stock payable in securities or make any
special dividend or other distribution;
(2) the Company shall offer for subscription pro
rata to the holders of any class of its capital stock any
additional securities of any class or other rights;
(3) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or
substantially all its assets to, another corporation; or
(4) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give written notice in
the manner provided in Section 11 to the Holder hereof, of the date on which (a)
the books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights, or (b) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of shares of record shall participate in such
dividend, distribution or subscription rights, or shall be entitled to exchange
their shares for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such written notice shall be
given at least 30 days prior to the action in question and not less than 30 days
prior to the record date or the date on which the Company's transfer books are
closed in respect thereto.
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5.8 Reservation of Shares. The Company will at all times
reserve and keep available out of its authorized capital, solely for the purpose
of issuance upon the conversion of this Note as herein provided, such number of
shares of Common Stock as shall then be issuable upon the conversion of the
outstanding principal balance due under the Note. The Company covenants that all
shares which shall be so issuable shall, upon the conversion of the Note as
herein provided, be duly and validly issued and fully paid and nonassessable by
the Company.
5.9 Registration and Listing. If any shares required to be
reserved for purposes of conversions of this Note hereunder require, as a
condition to issuance to the Holder upon conversion of all or any portion of the
principal amount represented hereby, registration with or approval of any
governmental authority under any federal (other than the Securities Act of 1933
or similar federal statute then in force) or state law, or listing on any
national securities exchange, before such shares may be issued upon conversion,
the Company will, at its expense, as expeditiously as possible cause such shares
to be duly registered or approved or listed on the relevant national securities
exchange, as the case may be.
5.10 Taxes. The issuance of certificates for shares upon
conversion of this Note shall be made without charge to the Holder for any
issuance tax in respect thereto, provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the
Holder.
SECTION 6. Redemption of Note.
6.1 Redemption by the Borrowers; Redemption Amount. Provided
that on the date fixed for redemption the shares of Common Stock issuable upon
conversion of this Note or, if applicable under the terms of the Purchase
Agreement, the Warrant Shares (as defined in the Purchase Agreement) are covered
by an effective registration statement under the Securities Act of 1933 with
respect to the resale thereof, this Note shall be redeemable at the option of
the Borrowers in whole at any time or in part from time to time from and after
the date of its issuance, at a redemption price equal to that portion of the
principal amount for which the redemption is being made together with accrued
interest to the date fixed for redemption (such amount being the "Redemption
Amount").
6.2 Notice of Redemption. Not less than 30 days nor more than
60 days prior to the date fixed by the Borrowers for redemption of this Note or
any portion hereof, the Borrowers shall deliver to the Holder, in the manner
provided in Section 10 hereof at the Holder's last address appearing on the
books of the Company, a notice of redemption. Such notice of redemption shall
advise the Holder of the principal amount of this Note to be so redeemed, and
shall state: (i) the date fixed for redemption; (ii) the Redemption Amount;
(iii) that interest accrued to the date fixed for redemption will be paid as
specified in said notice; (iv) that on the date fixed for redemption (unless the
Borrowers shall default in the payment of the Redemption Amount) the Redemption
Amount will become due and payable, and after said date interest thereon shall
cease to accrue; (v) that the Borrowers so elect to redeem such Note or portion
thereof at the office of the Company or at such other location designated upon
presentation and surrender of such Debentures; and (vi) the Conversion Price
then in effect and that the right of conversion will terminate at the close of
business on the date fixed for redemption.
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6.3 Issuance of Replacement Note on Partial Redemptions. In
case less than the entire principal amount of this Note shall be redeemed, then,
upon surrender of this Note by the Holder for redemption in the manner specified
in the notice of redemption provided pursuant to Section 6.2, a new Note in the
principal amount equal to the unredeemed portion of the principal amount of this
Note will be issued and delivered to and registered in the name of the Holder at
the Holder's last address appearing on the books of the Company.
6.4 Status of Note Following Redemption. From and after the
date fixed for redemption (unless the Company shall default in the payment of
the Redemption Amount), the principal amount called for redemption shall no
longer be deemed to be outstanding for any purpose, including, but not limited
to, the calculation of interest on the principal amount not called for
redemption, and the Holder shall cease to have any rights in respect thereof,
including the right to convert the principal amount called for redemption
pursuant to Section 6 hereof, from and after the date fixed for redemption,
other than the right to receive the Redemption Amount upon surrender of the Note
in the manner designated in the notice of redemption delivered in accordance
with Section 6.2.
SECTION 7. Affirmative Covenants. Borrowers, jointly and severally,
covenant that, until the principal of, and interest on, this Note and all other
monetary obligations to the Holder under the other Purchase Documents have been
indefeasibly paid in full, each will, and the Company will cause each other
Borrower, to:
7.1 Maintenance of Existence. Do all things material to its business
necessary to preserve and keep in full force and effect its existence (corporate
or other) and existing name, rights and franchises, and qualify and remain
qualified to do business in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business, operating results, assets
or condition (financial or otherwise).
7.2 Payment and Performance of Obligations. Duly and punctually pay or
cause to be paid all of its material liabilities and obligations, including,
without limitation, taxes, liabilities and all other charges imposed upon or
levied or leviable against it, its assets or income prior to the date on which
such taxes or other charges become delinquent, or on which penalties attach or
interest accrues, as well as all material claims for labor, materials or
supplies which, if unpaid when due might, by law or agreement, become a Lien.
7.3 Furnish to the Holder:
(a) Promptly after the sending or filing thereof, copies of
all proxy statements, financial statements and reports which the Company send to
its stockholders, and copies of all regular and periodic reports, all
registration statements (other than a Form S-8) the Company files with the
Securities and Exchange Commission (the "Commission"). All such reports
containing unaudited financial information of the Company and its subsidiaries
shall be certified by the Company's Chief Financial Officer as (i) having been
prepared in conformity with generally acceptable accounting principles
consistently applied during the periods presented ("GAAP"), subject to normal
year-end audit adjustments, (ii) being complete and correct, and (iii)
presenting fairly in all material respects the financial condition, results of
operations, changes in stockholders'
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equity and cash flows which they purport to present.
(b) Together with (i) each report on Form 10-K or Form 10-Q
which the Company furnishes to the Holder, there shall be delivered to the
Holder a certificate signed by the Chief Executive Officer and Chief Financial
Officer of the Company stating that they have caused a review of the affairs of
the Borrowers to be made and that based thereon nothing has come to their
attention which would lead them to believe that any Event of Default or any
event which, with the lapse of time or the giving of notice or both, could
become an Event of Default has occurred or exists hereunder or, if such is not
the case, specifying the nature thereof an what action has been taken or is
being taken or is proposed to be taken with respect thereto.
(c) Promptly after any Xxxxxxxx discovers the occurrence of
any Event of Default or event which, with the lapse of time or the giving of
notice or both, could become an Event of Default, a statement setting forth
details of such Event of Default or other event and the action taken, or
proposed to be taken, with respect thereto by such Xxxxxxxx.
(d) Promptly after any Borrower has knowledge thereof, notice
of any action, suit or proceeding against any Borrower known to such Borrower to
be pending before any court or governmental authority, domestic or foreign,
which might reasonably be expected to have a material adverse effect on the
business, earnings, assets or condition (financial or other) of such Borrower;
(e) Promptly after any Borrower has knowledge thereof, notice
of any judgment against any Borrower which might reasonably be expected to have
a material adverse effect on the business, operating results, assets or
condition (financial or other) of any Borrower, entered by any court or other
governmental authority, domestic or foreign, against such Borrower, such notice
to include the amount of any such judgment.
(f) Such other information respecting the business, operating
results, assets, condition (financial or other) of any Borrower as the Holder
may reasonably request from time to time.
7.4 Insurance. Maintain (i) insurance coverage on its assets against
risks in an amount consistent with commercially reasonable practice; provided
that such insurance coverage shall include business interruption insurance, fire
and extended coverage on inventory, equipment and on any building or other
facility owned or leased by it, (ii) comprehensive general liability coverage
against liability for injuries to persons or property and product liability
insurance, in such amounts as are at all times reasonably prudent in the
judgment of the Borrowers, and (iii) workers' compensation insurance coverage
required by law. Each policy of insurance insuring the inventory, equipment and
real property improvements of any Borrower shall, until this Note is paid in
full, have a standard mortgagee's or secured party's noncontributory loss
payable clause in favor of the Holder as its interest may appear and shall
provide for not less than 30 days' prior written notice to the Holder of
cancellation of or intended change in coverage. The Company will file with the
Holder promptly following its request therefor, a detailed list of all insurance
then in effect for Borrowers, stating the name of each insurer, the name of the
insured, the amounts of insurance issued by each such insurer, the expiration
dates of each policy and the property and risks covered thereby.
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7.5 Keeping of Records and Books of Account. Keep records and books of
account which are true and correct in all material respects.
7.6 Visitation Right. Upon reasonable notice, at any reasonable time,
and from time to time, permit the representative or representatives of the Payee
to examine and make copies of and abstracts from its records and books of
account and visit its properties and to discuss its affairs, finances and
accounts with its Chief Executive Officer and Chief Financial Officer.
7.7 Filing of Reports.
(a) Comply with the applicable requirements of all laws
(including the Employee Retirement Income Security Act of 1978, as amended) and
all rules, regulations and orders of any governmental authority, other than
Environmental Laws (as defined in Section 7.7(b)), as to which the compliance
requirements are set forth in Section 7.7(b), the violation of which might be
reasonably expected to have a material adverse effect on its business, operating
results, assets, condition (financial or other), or prospects.
(b) Each Borrower shall furnish to the Holder immediately
following receipt, copies of any correspondence, notice, pleading, citation,
indictment, complaint, order, decree, or other document from any source
asserting or alleging a circumstance or condition which requires or may require
a financial contribution by such Borrower or a cleanup, removal, remedial
action, or other response by or on the part of such Borrower under Environmental
Laws, or which seeks damages or civil, criminal or punitive penalties from such
Borrower for an alleged violation of Environmental Laws, and inform the Holder
in writing as soon as such Borrower becomes aware of any condition or
circumstance which makes the environmental representations or warranties
contained in this Agreement incomplete or inaccurate. "Environmental Laws" means
federal, state and local laws or regulations, codes, plans, orders, decrees,
judgments, injunctions, notices or demand letters issued, promulgated or entered
thereunder relating to pollution or protection of the environment, including
laws relating to reclamation of land and waterways and laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemical, or industrial,
toxic or hazardous substances or wastes, or otherwise relating to worker health
and safety or public health and safety.
7.8 Further Assurances. Promptly, upon the request of the Holder, (i)
correct any material defect or error that may be discovered in this Note, any
PIK Note any other Purchase Document to which it is a party or in the execution,
acknowledgement or recordation thereof; and/or (ii) execute, acknowledge,
deliver, file, re-file, register and re-register any and all such further
agreements, instruments, documents, certificates, financing statements, as the
Holder may reasonably require from time to time in order (i) to carry out more
effectively the purposes of this Note or any other Purchase Document, (ii) to
subject to the Lien created by the Security Agreement, any of such Person's
assets, rights or interests (now owned or hereafter acquired) covered or now or
hereafter intended to be covered by any of the Purchase Documents, (iii) to
perfect and maintain the validity, effectiveness and priority of any of the
Security Agreement and
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the Lien intended to be created thereby, and (iv) to better assure, assign,
transfer, preserve, protect and confirm to Holder the rights granted or now or
hereafter to be granted to Holder under this Note and any other Purchase
Document to which it is a party or under any other instrument executed in
connection with any Document to which such Borrower is or may become a party.
8. Negative Covenants. Borrowers, jointly and severally, covenant that
until the principal of, and interest on, this Note, and all other monetary
obligations to the Holder under the other Purchase Documents to which each
Borrower is party have been paid in full, each will not, and will cause each
other Borrower not to:
8.1 Indebtedness. Directly or indirectly, incur, create, assume,
suffer, allow to exist or guarantee, or become or remain obligated or liable in
any manner with respect to any Indebtedness, except:
(a) Indebtedness under this Note, any PIK Note and each other
Purchase Document, together with any refinancings and replacements thereof;
(b) Indebtedness incurred on account of the acquisition of
capital assets, by purchase or under a Capital Lease. "Capital Lease" shall mean
a lease under which the obligation of the lessee would, in accordance with GAAP,
be included in determining total liabilities as shown on the liability side of a
balance sheet of lessee;
(c) Indebtedness subordinated to the Indebtedness described in
clause (a) above (as to the principal of, and interest on, such Indebtedness) on
terms and conditions satisfactory to the Holder (in its sole discretion),
provided that subordinated Indebtedness permitted hereby shall not exceed an
aggregate principal amount of $5,000,000 at any one time outstanding;
(d) Indebtedness of the Company or any Borrower as of July 31,
1997;
(e) Indebtedness between or among the Borrowers; and
(f) Indebtedness not to exceed an aggregate of $5,000,000 at
any one time outstanding.
8.2 Negative Pledge. Incur, create or assume, or suffer to allow to be
incurred, created, assumed or to exist, any Liens upon any of the Collateral,
except:
(a) Liens in favor of the Holder.
(b) Deposits or pledges in connection with, or to secure the
payment of, contracts or leases entered into in the ordinary course of business,
utilities or similar services, workers' compensation laws, social security and
unemployment insurance laws or other similar statutory obligations; deposits on
account of insurance premiums; Liens imposed by law such as carriers'
warehousemen's and artisan's liens, provided the Indebtedness secured thereby is
not overdue for more than 90 days; and easements, restrictions and minor
irregularities of title which do not materially impair the use of its assets in
the normal operation of its business;
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(c) Liens securing the payment of any tax or other similar
charge which is not delinquent or which (or the basis of which) is being
diligently contested by appropriate proceedings in good faith and for which
appropriate reserves have been established in accordance with GAAP consistently
applied, provided enforcement of any such Lien is duly stayed pending the final
determination of such proceedings;
(d) Liens securing Indebtedness permitted by Section 8.1
incurred to finance the acquisition of capital assets, provided that (A) such
Liens shall be created concurrently with the acquisition of such assets, (B)
such Liens do not at any time encumber property other than the asset financed by
such Indebtedness and (C) the amount of Indebtedness secured thereby is not
increased;
(e) Any and all other Liens securing collateral having a value
not exceeding $100,000 in the aggregate.
8.3 Impair Value of Security. Take any action which results in a
material impairment of the value of the Collateral taken as a whole
8.4 Dividends. Directly or indirectly, declare or pay dividends in
respect of any of its capital stock or capital shares or otherwise make any
distribution in respect of its capital stock or capital shares, or redeem or
repurchase any shares of its capital stock or capital shares, provided that any
Borrower other than the Company may make dividend payments or other
distributions to the Company and may redeem or repurchase any shares of their
capital stock held by the Company provided the purchase or redemption price
thereof is paid solely to the Company.
8.5 Maintenance of Reporting Status. Not terminate the Company's status
as an issuer required to file reports under the Exchange Act, even if the
Exchange Act thereunder would permit such termination.
8.6 Transactions with Affiliates and/or Associates. Enter into any
transactions (including, without limitation, the sale, purchase, or exchange of
property, the rendition of services or the payment of management fees) in any
transactions with Affiliates and/or Associates of any of the Borrowers, except
for a valid business purpose and in good faith.
Definitions:
"Indebtedness" means: (a) all indebtedness of such Borrower for
borrowed money or for the deferred purchase price of property or services (other
than accounts payable or trade payables and other accrued liabilities incurred
in the ordinary court of business and payable in accordance with customary
practices); (b) any other indebtedness of such Borrower which is evidenced by a
note, bond, debenture or similar instrument; (c) all obligations of such
Borrower in respect of acceptances issued or created for the account of such
Borrower; and (d) all liabilities secured by any Lien on any property owned by
such Borrower in circumstances where such Xxxxxxxx has not assumed or otherwise
become liable for the payment thereof.
"Lien" means any mortgage, pledge, hypothecation, assignment,
security interest, encumbrance, lien, attachment or other charge of any kind
(including any agreement to give any of the foregoing, any lease in the nature
thereof and any conditional sale or other title retention
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agreement and any sale of accounts receivable), or any other arrangement
pursuant to which any Person is entitled to any preference or priority with
respect to the property or assets of another or the income or profits of such
other Person, whether consensual or non-consensual and whether arising by way of
agreement, operation of law, legal process or otherwise.
SECTION 9. Events of Default; Remedies.
9.1 Events of Default. The following shall constitute events
of default under this Note ("Events of Default"):
(1) The Borrowers, jointly or severally, shall fail
to pay when due (any principal amount of this Note, whether at
the Maturity Date, or with respect to the Redemption Amount on
the redemption date, or upon acceleration as permitted
hereunder or otherwise, or (b) any interest or other sums
(other than principal of this Note) due under this Note or any
Purchase Document and such default in the payment of interest
or other sums shall not have been remedied within ten (10)
days after the date such sum is due; or
(2) The Borrowers, jointly or severally, shall
default in any material respect in the observance or
performance of any covenant contained in Section 8 hereof or
in Section 3 of the Security Agreement and shall not have been
remedied such default within ten (10) days (or such longer
period as may be agreed to in writing by Borrowers and Payee)
after written notice of such default has been given by the
Holder to the Borrowers; or
(3) The Borrowers, jointly or severally, shall
default in any material respect in the observance or
performance of any covenant contained in any Purchase Document
(other than those referred to in clauses (1) and (2) above)
and shall not have remedied the default within thirty (30)
days after written notice of such default has been given by
the Holder to the Borrowers; or
(4) Any warranty or representation of the Borrowers
contained in any Purchase Document shall have been false in
any material respect; or
(5) Any Borrower shall (a) make an assignment for the
benefit of creditors, or file a voluntary petition under the
Federal Bankruptcy Code, as amended (the "Code"), or any other
Federal or state insolvency law, or (b) apply for or consent
to institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any
petition described in clause (5) below, (c) consent to the
appointment of a receiver, trustee, custodian or similar
official of all or part of its property, (d) be or become
insolvent, however, evidenced, or (e) file an answer admitting
the material allegations of a petition filed against it in any
such proceeding; or
(6) An involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of competent
jurisdiction seeking
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(a) relief in respect of any Borrower, or of a substantial
part of its assets, under the Code, as now constituted or
hereafter amended or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (b) the appointment
of a receiver, trustee, custodian or similar official for any
Borrower or for a substantial part of its assets, or (c) the
winding-up or any liquidation of any Borrower; and such
proceeding or petition shall continue undismissed for 60 days
or an order or decree approving or ordering any of the
foregoing shall be entered; or
(7) Any Borrower shall (a) fail to pay any principal
or interest due in respect of any indebtedness of such
Borrower in a principal amount in excess of $1,000,000, when
and as the same shall become due and payable, and such failure
shall continue beyond any applicable grace period, or (b) fail
to observe or perform any other term, covenant, condition or
agreement contained in any agreement or instrument evidencing
or governing any such indebtedness if the effect of any
failure referred to in this clause (b) is to cause, or to
permit the holder or holders of such indebtedness or a trustee
on its or their behalf (with or without the giving of notice,
the lapse of time or both) to cause, such indebtedness to
become due in its entirety prior to its stated maturity;
(8) One or more judgments for the payment of money in
an aggregate amount in excess of $1,000,000 shall be rendered
against any one or more of the Borrowers, and the same shall
remain undischarged for a period of 30 consecutive days during
which execution shall not be effectively stayed; or
(9) Other than as contemplated by the Security
Agreement, the lien created by the Security Agreement shall
cease to be a valid and enforceable lien on the Collateral (as
defined in the Security Agreement) with such priority as
provided in the Security Agreement or any material provision
of any Purchase Document shall, after execution and delivery
thereof, cease to be valid and binding on any party thereto
(other than the Holder), or any such other party shall so
state in writing or shall contest the validity and
enforceability thereof, and, in any such case, the Holder
shall be materially adversely affected as a result thereof.
9.2 Remedies. If an Event of Default shall occur and be
continuing then, in the sole discretion of the Holder and without further notice
to the Borrowers, the unpaid principal amount and the accrued interest hereunder
at the applicable rate specified above until full payment of all amounts due
hereunder, and all other sums due by the Borrowers under this Note shall become
immediately due and payable without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Borrowers. In addition, in each case, the Holder may recover all costs of suit
and other expenses incurred by the Holder (including reasonable attorneys' fees)
in connection with the collection of any sums due hereunder. The remedies set
forth herein shall be in addition to, and not in lieu of, any other additional
rights or remedies the Holder may have at law or in equity.
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SECTION 10. Exchange or Replacement of Note.
10.1 Exchange. The Holder, at its option, may in person or by
duly authorized attorney surrender the Note for exchange at the office of the
Company, and at the expense of the Company receive in exchange therefor a new
Note in the same aggregate principal amount as the aggregate unpaid principal
amount of the Note so surrendered and bearing interest at the same annual rate
as the Note so surrendered, each such new Note to be dated as of the date to
which interest has been paid on the Note so surrendered and to be in such
principal amount and payable to such person or persons, or order, as such Holder
may designate in writing; provided, however, that the Borrowers shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any new Note in a name other than that of the
Holder of the Note surrendered in exchange therefor. Five days prior written
notice of the Holder's intention to make such exchange shall be given to the
Company.
10.2 Replacement. Upon receipt by the Borrowers of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Note
and (in case of loss, theft or destruction) of indemnity satisfactory to it, and
upon reimbursement to the Borrowers of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Note if mutilated, the
Borrowers will make and deliver a new Note of like tenor in lieu of this Note.
Any Note made and delivered in accordance with the provisions of this Section
9.2 shall be dated as of the date to which interest has been paid on this Note.
SECTION 11. Communications. All notices, requests, consents, reports
and demands shall be deemed properly given when received, and shall be in
writing and shall be hand delivered, sent by facsimile or other electronic
medium with answer back receipt, mailed by certified or registered mail, postage
prepaid, or sent by overnight courier, to the Borrower or to the Holder at the
address set forth below or to such other address as may be furnished in writing
to the other parties hereto:
Any Borrower :
c/o Ecogen Inc.
0000 Xxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: President
The Payee:
United Equities (Commodities) Company
000 Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopy (000) 000-0000
SECTION 12. Severability. Should any part but not the whole of this
Note for any reason be declared invalid, such decision shall not affect the
validity of any remaining portion,
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which remaining portion shall remain in force and effect as if this Note had
been executed with the invalid portion thereof eliminated, and it is hereby
declared the intention of the parties hereto that they would have executed the
remaining portion of this Note without including therein any such part which
may, for any reason, be hereafter declared invalid.
SECTION 13. Transfers.
13.1 Restriction on Transfer. By its acceptance of this Note,
the Holder acknowledges that neither this Note, any PIK Note issued with respect
hereto nor the Common Stock issuable upon conversion hereof have registered
under the securities laws of the United States of America or any state thereof
and represents that this Note has been acquired for investment and, neither this
Note, any PIK Note issued with respect thereto, nor any portion hereof or
thereof, nor any interest in this Note (including the Common Stock issuable upon
conversion hereof) may be offered for sale, sold, delivered after sale,
transferred, pledged, or hypothecated in the absence of registration of this
Note, as the case may be, under applicable federal and state securities laws or
the receipt by the Company of an opinion of counsel of the Holder, as the case
may be, reasonably satisfactory to the Company that such registration is not
required by reason of an available exemption from registration under such
securities laws.
13.2 Manner of Transfer. Subject to Section 13.1 above, the
transfer of this Note is registrable by the Borrowers, and the registered Holder
hereof, in person or by his attorney duly authorized in writing, on the books of
the Company to be kept for that purpose at the office of the Company, upon
surrender and cancellation of this Note and upon presentation of a duly executed
written instrument of transfer in form satisfactory to the Borrowers, and
thereupon a new Note or Notes in aggregate principal amounts of not less than
$500,000 will be issued to the transferee or transferees in exchange herefor
with payment by the Holder of any stamp or other tax or governmental charge in
connection therewith; provided, however, this Note or any PIK Note issues with
respect hereto may not be transferred other than to an affiliate of United
Equities (Commodities) Company. Prior to due presentment of this Note for
registration of transfer, the Borrowers may deem and treat the person in whose
name this Note is registered as the absolute owner hereof for the purpose of
receiving payment hereof or on account hereof or of interest hereon (subject to
the provisions of the first paragraph on the face hereof) and for all other
purposes.
SECTION 14. Captions. The descriptive headings of the various Sections
or parts of this Note are for convenience only and shall not affect the meaning
or construction of any of the provisions hereof.
SECTION 15. Successors and Assigns. This Note shall be binding upon the
parties and their respective successors and assigns.
SECTION 16. Governing Law. This Note shall be governed by the laws of
the Commonwealth of Pennsylvania.
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SECTION 17. Consent to Jurisdiction; Waiver of Jury Trial.
(a) BORROWERS, JOINTLY AND SEVERALLY, AGREE THAT ANY LEGAL
ACTION OR PROCEEDING AGAINST ANY BORROWER WITH RESPECT TO THIS NOTE MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK (NEW YORK COUNTY), OR THE FEDERAL
COURTS FOR THE SOUTHERN DISTRICT OF NEW YORK, AS HOLDER MAY ELECT IN ITS SOLE
DISCRETION, AND, BY EXECUTION AND DELIVERY OF THIS NOTE, EACH BORROWER HEREBY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. BORROWERS, JOINTLY
AND SEVERALLY, WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND
IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OUT OF ANY OF SUCH COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY EXPRESS,
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO EACH BORROWER AT ITS ADDRESS
FOR NOTICES AS SPECIFIED HEREIN, SUCH SERVICE TO BECOME EFFECTIVE FIVE BUSINESS
DAYS AFTER SUCH MAILING. EACH BORROWER WAIVES, AT THE OPTION OF HOLDER, ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION OR PROCEEDING INSTITUTED UNDER THIS NOTE AND CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE REMEDY AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF HOLDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR THE RIGHT OF HOLDER TO BRING LEGAL ACTION OR PROCEEDING IN
ANY OTHER COMPETENT JURISDICTION. BORROWERS, JOINTLY AND SEVERALLY, AGREE THAT
ANY ACTION COMMENCED BY BORROWERS (OR ANY OF THEM) ASSERTING ANY CLAIM OR
COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER PURCHASE
DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK (NEW YORK
COUNTY), OR IN THE FEDERAL COURTS FOR THE SOUTHERN DISTRICT OF NEW YORK AND THAT
SUCH COURTS SHALL HAVE EXCLUSIVE JURISDICTION WITH RESPECT TO ANY SUCH ACTION.
(b) BORROWERS AND HOLDER, BY ITS ACCEPTANCE HEREOF, HEREBY
WAIVE TRIAL BY JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING OF ANY NATURE
WHATSOEVER ARISING UNDER, OUT OF OR IN CONNECTION WITH THIS NOTE AND IN
CONNECTION WITH ANY CLAIM, COUNTERCLAIM, OFFSET OR DEFENSE ARISING IN CONNECTION
WITH SUCH ACTION OR PROCEEDING, WHETHER ARISING UNDER STATUTE (INCLUDING ANY
FEDERAL OR STATE CONSTITUTION) OR UNDER THE LAW OF CONTRACT, TORT OR OTHERWISE
AND INCLUDING, WITHOUT LIMITATION, ANY CHALLENGE TO THE LEGALITY, VALIDITY,
BINDING EFFECT OR ENFORCEABILITY OF THIS PROVISION OR THIS NOTE.
(c) BORROWERS HEREBY, JOINTLY AND SEVERALLY, CONSENT AND AGREE
THAT ANY JUDGMENT ENTERED AGAINST ANY OF THEM IN ANY SUCH ACTION OR PROCEEDING
COMMENCED AGAINST IT (A "NY JUDGMENT") IN ANY SUCH COURT OF THE STATE OF NEW
YORK OR OF THE UNITED STATES OF AMERICA (A "NY COURT") MAY BE ENTERED, FILED,
RECORDED OR DOCKETED IN ANY COURT WITH RESPECT TO BORROWER OF THE STATE WHERE
THE PRINCIPAL OFFICES OF SUCH XXXXXXXX IS LOCATED (A "STATE COURT") WITH THE
SAME FORCE AND EFFECT AS IF THE NY JUDGMENT WAS A FINAL JUDGMENT AGAINST
BORROWERS OF THE STATE COURT (A
21
"RECORDED FOREIGN JUDGMENT") AND, FOR SUCH PURPOSE, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH BORROWER ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE STATE COURT.
EACH BORROWER HEREBY IRREVOCABLY (A) WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT (INCLUDING THE SERVICE OF POST-JUDGMENT SUBPOENAS,
INTERROGATORIES, NOTICES OF DEPOSITION OR ANY OTHER POST-JUDGMENT ORDER OR
NOTICE) IN CONNECTION WITH ANY ACTION OR PROCEEDING TO ENFORCE OR COLLECT THE NY
JUDGMENT AND/OR THE RECORDED FOREIGN JUDGMENT, AND (B) CONSENTS TO THE SERVICE
OF PROCESS, INCLUDING, WITHOUT LIMITATION, ANY SUCH POST-JUDGMENT SUBPOENAS,
INTERROGATORIES, NOTICES AND ORDERS, OUT OF THE NY COURT OR THE STATE COURT IN
ANY ACTION OR PROCEEDING TO ENFORCE OR COLLECT A NY JUDGMENT OR A RECORDED
FOREIGN JUDGMENT, BY THE MAILING OF COPIES THEREOF BY EXPRESS, REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWERS AT THEIR ADDRESS FOR NOTICES AS
SPECIFIED IN THIS NOTE, SUCH SERVICE TO BECOME EFFECTIVE FIVE BUSINESS DAYS
AFTER SUCH MAILING. EACH BORROWER HEREBY WAIVES, AT THE OPTION OF HOLDER, ANY
OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION
OR PROCEEDING INSTITUTED TO ENFORCE OR COLLECT A NY JUDGMENT OR ANY RECORDED
FOREIGN JUDGMENT, AND CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE REMEDY
AS IS DEEMED APPROPRIATE BY THE STATE COURT. EACH BORROWER HEREBY IRREVOCABLY
WAIVES THE RIGHT TO CONTEST THE SUFFICIENCY OF ANY SUCH SERVICE AND FURTHER
AGREES THAT ANY SUCH SUPPLEMENTARY PROCEEDINGS OR POST-JUDGMENT DEPOSITIONS MAY
BE CONDUCTED AT THE OFFICES OF THE HOLDER'S ATTORNEYS IN NEW YORK CITY OR
ELSEWHERE, AS HOLDER MAY ELECT IN ITS SOLE DISCRETION. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR THE RIGHT OF HOLDER TO BRING JUDGMENT, ENFORCEMENT OR COLLECTION ACTIONS OR
PROCEEDINGS IN ANY OTHER COMPETENT JURISDICTION. BORROWERS HEREBY, JOINTLY AND
SEVERALLY, IRREVOCABLY WAIVE ANY RIGHT (X) TO INTERPOSE ANY DEFENSE,
COUNTERCLAIM, SETOFF OR RECOUPMENT CLAIM AGAINST HOLDER IN ANY ACTION OR
PROCEEDING TO ENTER, FILE, RECORD OR DOCKET THE NY JUDGMENT IN THE STATE COURT
OR TO ENFORCE OR COLLECT THE RECORDED FOREIGN JUDGMENT AND/OR (Y) TO CHALLENGE,
APPEAL, MOVE TO VACATE OR MOVE TO REOPEN ANY NY JUDGMENT OR ANY RECORDED FOREIGN
JUDGMENT.
SECTION 18. Amendments. This Note may only be amended by a written
instrument executed by the Borrowers and either: (i) the Holder; or (ii) the
holders of 51% of the Offering Notes outstanding at such time.
ECOGEN INC.
By: /s/ Xxxxx X. Xxxxxx, Xx.
---------------------------------
ECOGEN INVESTMENTS INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
ECOGEN-BIO INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
22
ECOGEN INC.
ECOGEN INVESTMENTS INC.
ECOGEN-BIO INC.
8% CONVERTIBLE NOTE DUE OCTOBER 31, 2002
CONVERSION NOTICE
Ecogen Inc.
Ecogen Investments Inc.
Ecogen-Bio Inc.
The undersigned Holder of this Note hereby irrevocably exercises the
option to convert this Note, or such portion hereof as is specified below into
shares of Common Stock of Ecogen, Inc. in accordance with the terms of this
Note, and directs that the shares issuable and deliverable upon the conversion
be issued in the name of an delivered to the undersigned unless a different name
has been indicated below. If shares are to be issued in the name of a person
other than the undersigned, the undersigned will pay transfer taxes payable with
respect thereto. If this conversion involves fractional shares, please issue
this related check to the same person entitled to receive the shares.
Dated:____________________ Principal Amount to be converted, and any interest:
$____________________________
If shares are to be issued other wise than to owner:
Tax Identification
Number of Transferee_________ _____________________________________
Signature of Owner
________________________________
________________________________
________________________________
Please print name and address of Transferee (including zip code)
