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EXHIBIT 10.33
Form of Convertible Note Purchase Agreement
CONVERTIBLE NOTE PURCHASE AGREEMENT
AMONG
BIO-PLEXUS, INC.,
THE PURCHASERS
LISTED ON EXHIBIT A HERETO
AND
APPALOOSA MANAGEMENT L.P.,
as Collateral Agent
Dated as of __________1999
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TABLE OF CONTENTS
Page
1. Issuance and Sale of Notes and Common Stock...........................1
1.1. Definitions..............................................1
1.2. Issuance, Purchase and Sale..............................1
1.3. Closing..................................................2
1.4. Deliveries by the Company................................2
1.5. Deliveries by the Purchasers.............................3
2. Representations and Warranties of the Company.........................4
2.1. Organization; Subsidiaries...............................4
2.2. Due Authorization........................................4
2.3. Capitalization...........................................5
2.4. SEC Reports Correspondence...............................5
2.5. Financial Statements.....................................6
2.6. Litigation...............................................6
2.7. Title to Properties; Insurance...........................6
2.8. Consents, etc............................................7
2.9. No Material Adverse Change...............................7
2.10. Taxes....................................................7
2.11. Compliance with ERISA....................................8
2.12. Labor Relations..........................................9
2.13. Intellectual Property Rights.............................9
2.14. Possession of Franchises, Licenses, Etc.................10
2.15. Compliance with Laws....................................10
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2.16. Conflicting Agreements and Charter Provisions...........10
2.17. Suppliers...............................................11
2.18. Products................................................11
2.19. Offering of the Securities..............................11
2.20. Existing Indebtedness; Future Liens.....................12
2.21. Environmental Matters...................................12
2.22. Solvency................................................12
2.23. Security Documents......................................13
2.24. Brokers or Finders......................................13
2.25. Holding Company Act and Investment Company Act..........13
2.26. Related Party Transactions..............................13
2.27. Year 2000...............................................13
2.28. Disclosure..............................................14
3. Representations and Warranties of the Purchasers.....................14
3.1. Organization and Qualification..........................14
3.2. Due Authorization.......................................14
3.3. Acquisition for Investment..............................15
3.4. Offering of Securities..................................15
3.5. Accredited Investor.....................................15
4. Registration, Exchange and Transfer of Notes.........................15
4.1. The Note Register; Persons Deemed Owners................15
4.2. Issuance of New Notes Upon Exchange or Transfer.........15
5. Payment of Notes.....................................................16
5.1. Home Office Payment.....................................16
5.2. Limitation on Interest..................................16
5.3. Accreted Value..........................................16
5.4. Interest................................................17
5.5. Principal...............................................18
6. Covenants of the Company.............................................18
6.1. Maintenance of Office or Agency.........................18
6.2. Money for Security Payments to be Held in Trust.........18
6.3. Existence...............................................18
6.4. Maintenance of Properties...............................19
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6.5. Payment of Taxes and Other Claims.......................19
6.6. Limitation on Indebtedness..............................19
6.7. Limitation on Encumbrances..............................19
6.8. Limitation on Related Party Transactions................20
6.9. Limitation on Dividends; Stock Issuances................20
6.10. Subsidiary Guarantees...................................20
6.11. Additional Offerings of Securities......................21
6.12. Pledges of Intercompany Notes...........................21
6.13. No Speculative Transactions.............................22
6.14. Restricted Investments..................................22
6.15. Financial Covenants.....................................22
6.16. Sale and Leaseback Transactions.........................24
6.17. Line of Business........................................24
6.18. Sale of Assets..........................................24
6.19. Indenture Relating to the Notes.........................25
6.20. Financial Statements and Information....................25
6.21. Inspection..............................................26
6.22. Compliance with Laws....................................27
6.23. Supplemental Disclosure.................................28
6.24. Proceeds................................................28
6.25. Insurance; Damage to or Destruction of Collateral.......28
6.26. Rights of Required Holders to Designate Directors;
Board Composition.....................................29
6.27. Executive Officers......................................30
6.28. Board and Committee Notice Requirement..................30
6.29. Reimbursement of Certain Expenses.......................31
6.30. Limitation of Agreements................................31
6.31. Redemption of Convertible Debentures....................31
6.32. Operations in Accordance with the Business Plan.........31
7. Events of Default and Remedies.......................................31
7.1. Events of Default and Remedies..........................31
7.2. Acceleration of Maturity................................34
7.3. Other Remedies..........................................34
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7.4. Conduct No Waiver; Collection Expenses..................35
7.5. Annulment of Acceleration...............................35
7.6. Remedies Cumulative.....................................35
8. Redemption...........................................................35
8.1. Optional Redemption.....................................35
8.2. Partial Redemption......................................36
8.3. Change of Control.......................................36
8.4. Redemption Procedures...................................36
9. Conversion...........................................................37
9.1. Holder's Option to Convert into Common Stock............37
9.2. Exercise of Conversion Privilege........................37
9.3. Fractions of Shares; Interest...........................38
9.4. Reservation of Stock; Listing...........................38
9.5. Rights..................................................38
9.6. Adjustment of Conversion Ratio..........................39
9.7. Merger or Consolidation.................................42
9.8. Notice of Certain Corporate Actions.....................43
9.9. Reports as to Adjustments...............................43
10. The Collateral Agent.................................................43
10.1. Appointment.............................................43
10.2. Delegation of Duties....................................44
10.3. Exculpatory Provisions..................................44
10.4. Reliance by the Collateral Agent........................44
10.5. Notice of Default.......................................45
10.6. Non-Reliance on Collateral Agent and Other Purchasers...45
10.7. Indemnification.........................................46
10.8. Collateral Agent in its Individual Capacity.............46
10.9. Successor Collateral Agent..............................47
11. Interpretation.......................................................47
11.1. Definitions.............................................47
11.2. Accounting Principles...................................62
12. Miscellaneous........................................................62
12.1. Payments; Indemnity.....................................62
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12.2. Severability............................................64
12.3. Specific Enforcement....................................64
12.4. Entire Agreement........................................64
12.5. Counterparts............................................64
12.6. Notices and other Communications........................64
12.7. Amendments..............................................65
12.8. Successors and Assigns..................................66
12.9. Expenses................................................66
12.10. Survival................................................66
12.11. Transfer of Notes and Common Stock......................66
12.12. GOVERNING LAW...........................................67
12.13. Submission to Jurisdiction..............................67
12.14. Service of Process......................................67
12.15. WAIVER OF JURY TRIAL....................................67
12.16. Public Announcements....................................67
12.17. Further Assurances......................................68
12.18. Substitution of Purchaser...............................68
12.19. Signatures..............................................68
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THIS CONVERTIBLE NOTE PURCHASE AGREEMENT, dated as of _________, 1999
(this "Agreement"), is made among BIO-PLEXUS, INC., a Connecticut corporation
(the "Company"), the purchasers listed on Exhibit A hereto (each such party, a
"Purchaser" and collectively, the "Purchasers"), and APPALOOSA MANAGEMENT L.P.,
as Collateral Agent (the "Collateral Agent").
WHEREAS, the parties hereto have previously entered into a Note
Purchase Agreement (the "Note Purchase Agreement");
WHEREAS, the Note Purchase Agreement provides that, subject to the
terms and conditions specified therein, the parties thereto will enter into this
Agreement;
WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, the Purchasers wish to purchase from the Company, and the
Company wishes to issue and sell to the Purchasers, (i) Zero Coupon Secured
Convertible Notes due [______, 2004] (the "Notes") issued by the Company in the
aggregate principal amount of $____________ (the "Face Amount") and (ii) an
aggregate of 250,000 shares (the "Shares") of Common Stock, no par value, of the
Company (the "Common Stock");
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WHEREAS, the Notes shall be convertible (under the circumstances
described herein) into shares of Common Stock, no par value, of the Company (the
"Common Stock"); and
WHEREAS, the Purchasers and the Company desire to provide for such
purchase and sale and to establish various rights and obligations in connection
therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein set forth, the parties hereto
agree as follows:
1. Issuance and Sale of Notes and Common Stock.
1.1. Definitions. Certain capitalized terms used in the Agreement are
defined in Section 13 hereof; references to a "Schedule" or an "Exhibit" are,
unless otherwise specified, to a Schedule or an Exhibit attached to this
Agreement.
1.2. Issuance, Purchase and Sale. (a) Upon the terms and subject to
the conditions set forth herein, the Company is issuing and selling to the
Purchasers and the Purchasers are purchasing from the Company, the Notes and the
Shares for an aggregate cash purchase price of [$________] (the "Purchase
Price"). The Notes shall be in the form of Exhibit 1.2 hereto.
(b) The parties agree that the fair market value of the Notes is
$_____ and the fair market value of the Common Stock purchased hereby is
$[750,000]. Each party agrees to file all tax returns consistent with such
allocation and to take no position in consistent with such allocation, unless
required by law.
1.3. Closing. (a) The closing of the transactions contemplated hereby
(the "Closing") will take place simultaneously herewith at the offices of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, New York, New York.
1.4. Deliveries by the Company. At the Closing, the Company is
delivering to each Purchaser (and to such other parties as otherwise set forth
below) the following:
(i) duly executed Notes in the principal amount set forth
opposite such Purchaser's name on Exhibit 1.4i hereto;
(ii) a duly executed warrant to purchase 1,500,000 shares of
Common Sock with an exercise price of $7 per share in the form
attached hereto as Exhibit 1.4 hereto (the "$7 Warrants");
(iii) an opinion of the Company's counsel, dated as of the date
hereof, addressed to such Purchaser in the form of Exhibit 1.4ii
hereto;
(iv) an Officers' Certificate, dated as of the date
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hereof, certifying that: the (A) representations and warranties
contained in Section 2 hereof are true and correct; and (B) holders of
more than 50% of the Company's outstanding Common Stock have approved
the Rollover Transactions at a properly called special meeting of the
stockholders of the Company;
(v) a good standing certificate for the Company, dated no earlier
than seven days prior to the date hereof, from the State of
Connecticut;
(vi) a copy of the resolutions of the Board of Directors
authorizing the execution of each of the Transaction Documents and the
performance of the transactions contemplated by the Transaction
Documents which shall be certified as true, correct and effective as
of the date hereof by an officer of the Company;
(vii) duly executed copies of the Security Agreement [and the
Intercreditor Agreement] in the forms attached hereto as Exhibits 1.4A
and B, and copies of any other Collateral Documentation including
Financing Statements required to perfect the Holders' security
interest in the Collateral;
(viii) a duly executed copy of the Registration Rights Agreement
attached hereto as Exhibit 1.4vii;
(ix) a duly executed copy of the Escrow Agreement attached hereto
as Exhibit 1.4viii;
(x) an opinion from an independent valuation consultant or
appraiser reasonably satisfactory to the Purchasers in form and
substance reasonably satisfactory to the Purchasers supporting the
conclusions that, after giving effect to the Rollover Transactions,
the Company will not be insolvent by the incurrence of Indebtedness
incurred in connection therewith, or be left with unreasonably small
capital with which to engage in its business, or have incurred debts
beyond its ability to pay such debts as they mature];
(xi) a copy of the Amended and Restated By-laws of the Company in
form and substance reasonably satisfactory to the Purchasers (the
"By-Laws") and which shall be certified as true, correct and effective
as of the date hereof by an officer of the Company;
(xii) the Purchasers' costs and expenses (including the
reasonable fees and expenses of its counsel, Fried, Frank, Harris,
Xxxxxxx & Xxxxxxxx) incurred in connection with the transactions
contemplated by the Transaction Documents to be
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paid as set forth in Section 1.5(i)(Y); and
(xiii) such other instruments and documents as reasonably
requested by each Purchaser.
1.5. Deliveries by the Purchasers. At the Closing, each Purchaser
is delivering to the Company (or such other parties as otherwise set forth
below) the following:
(i) the amount set forth opposite such Purchaser's name in
Exhibit 1.5i, such amount being equal to the pro-rata portion of the
Purchase Price allocable to such Purchaser for the principal amount of
Notes being purchased by such Purchaser as set forth opposite such
Purchaser's name in Exhibit 1.5i hereto, less (Y) its costs and
expenses (including the fees and expenses of its counsel, Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx and accountants, which amounts shall
be wire transferred by Appaloosa in immediately available funds to one
or more accounts designated by such parties on or prior to the date
hereof) [and (Y) $________ to be wire transferred in immediately
available funds to _______ (the "Escrow Agent") pursuant to the Escrow
Agreement, dated as of the date hereof, by and between the Company,
the Escrow Agent and the [Collateral Agent]]; and
[(ii) a duly executed copy of the Escrow Agreement].
2. Representations and Warranties of the Company.
The Company represents and warrants to each Holder as follows:
2.1. Organization; Subsidiaries. (a) The Company is a corporation duly
organized and existing in good standing under the laws of the State of
Connecticut and has the corporate power to own its property and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary and where the failure to so qualify could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Company does not have any Subsidiaries. Except as set
forth on Schedule 2.1(b), the Company does not own, directly or indirectly, or
have the right or obligation to acquire, any interest in any business
association or other Person.
2.2. Due Authorization. The Company has all right, power and authority
to enter into, deliver and perform the Transaction Documents
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to which it is a party and to consummate the transactions contemplated thereby.
The execution and delivery of each Transaction Document by the Company and the
performance by it of the transactions contemplated thereby (including, without
limitation, the issuance and sale of the Notes, the Shares and issuance of
shares of Common Stock upon conversion of the Notes) and compliance by the
Company with all the provisions of each Transaction Document (as applicable) has
been duly authorized by all requisite corporate proceedings on the part of the
Company, (including, without limitation, approval by holders of more than 50% of
the outstanding Common Stock). Each of the Transaction Documents has been duly
executed and delivered on behalf of the Company, and each such Transaction
Document constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its respective terms, except
to the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally or (ii) is subject to general principles of equity.
The Shares and the shares of Common Stock issuable upon conversion of the Notes
have been validly reserved for issuance, and upon issuance, will be validly
issued and outstanding, fully paid and nonassessable.
2.3. Capitalization. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock, of which, as of the date
hereof, 13,643,308 shares were issued and outstanding, 809,750 shares were
reserved for issuance upon the exercise of outstanding stock options pursuant to
the Company's option plans, 1,380,386 shares were reserved for issuance upon the
exercise of the outstanding warrants, and 2,500,000 shares were reserved for
issuance upon the conversion of certain 6% Convertible Debentures due 2004 and
(ii) 3,000,000 shares of Preferred Stock, no par value (the "Preferred Stock"),
of which, as of the date hereof, no shares were issued and outstanding. All of
the outstanding shares of Common Stock are validly issued and are fully paid and
nonassessable. No class of Capital Stock of the Company is entitled to
preemptive rights. Except as set forth on Schedule 2.3, there are no outstanding
options, warrants, subscription rights, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, shares of any
class of Capital Stock of the Company, or Contracts, by which the Company is or
may become bound to issue additional shares of its Capital Stock or options,
warrants or other rights to purchase or acquire any shares of its Capital Stock.
Except as set forth on Schedule 2.3, no warrants, bonds, debentures, notes or
other Indebtedness or other security having the right to vote (or convertible
into or exercisable for securities having the right to vote) on any matters on
which stockholders may vote were issued or outstanding. Except as set forth on
Schedule 2.3 or as contemplated by the Transaction Documents, the Company is not
a party to, and, to the Company's best knowledge, there are, and immediately
after the
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Closing, there will be, no agreement, restriction or encumbrance (such as a
preemptive or similar right of first refusal, right of first offer, proxy,
voting agreement, voting trust, registration rights agreement, shareholders'
agreement, etc., whether or not the Company is a party thereto) with respect to
the purchase, sale or voting of any shares of Capital Stock of the Company
(whether outstanding or issuable upon conversion, exchange or exercise of
outstanding securities) or other securities of the Company pursuant to any
provision of law, the Certificate of Incorporation or By-Laws, any agreement or
otherwise. Except as set forth on Schedule 2.3 or as contemplated by the
Transaction Documents, no person has the right to nominate or elect one or more
directors of the Company. Immediately following the transactions contemplated
hereby, the Company's capitalization will be as set forth in Schedule 2.3. The
Company has not declared or paid any dividend or made any other distribution of
cash, stock or other property to its stockholders since January 1, 1996.
2.4. SEC Reports Correspondence. The Company has filed all proxy
statements, reports and other documents required to be filed by it under the
Exchange Act from and after January 1, 1995; and the Company has furnished each
Purchaser true and complete copies of all annual reports, quarterly reports,
proxy statements and other reports under the Exchange Act filed by the Company
from and after such date, each as filed with the SEC (collectively, the "SEC
Reports"). Each SEC Report was in compliance in all material respects with the
requirements of its respective report form and did not on the date of filing
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
as of the date hereof there is no fact or facts not disclosed in the SEC Reports
which relate specifically to the Company and which could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has made available for inspection by each Purchaser copies of all correspondence
between the Company and the SEC from and after January 1, 1995.
2.5. Financial Statements. The financial statements (including any
related schedules and/or notes) included in the SEC Reports have been prepared
in accordance with GAAP consistently followed (except as indicated in the notes
thereto) throughout the periods involved and fairly present the consolidated
financial condition, results of operations, cash flows and changes in
stockholders' equity of the Company as of the respective dates thereof and for
the respective periods then ended (in each case subject, as to interim
statements, to changes resulting from year-end adjustments, none of which were
material in amount or effect). Except as set forth on Schedule 2.5, the Company
is not subject to any Liabilities, except (i) Liabilities in the respective
amounts reflected or reserved against in
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the Company's balance sheet as of December 31, 1998 included in the SEC Reports
or (ii) Liabilities incurred in the ordinary course of business since December
31, 1998 which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
2.6. Litigation. (a) Except as set forth on Schedule 2.6, there is no
Litigation pending or, to the knowledge of the Company, threatened against the
Company or any of its properties or assets by or before any court, arbitrator or
other Governmental Entity.
(b) The Company is not in default under or in breach of any Order
of any court, arbitrator or other Governmental Entity, and the Company is not
subject to or a party to any Order of any court, arbitrator or other
Governmental Entity arising out of any claim, demand, notice, action, suit or
proceeding under any Law.
2.7. Title to Properties; Insurance. (a) Except as set forth on
Schedule 2.7(a), the Company has good and valid title to, or, in the case of
property leased by it as lessee, a valid and subsisting leasehold interest in,
the Company's properties and assets, free of all Liens.
(b) Schedule 2.7(b) sets forth a complete and correct list of all
insurance coverage carried by the Company, the carrier and the terms and amount
of coverage. All of the material assets of the Company and all aspects of the
Company's business that are of insurable character are covered by insurance with
insurers against risks of liability, casualty and fire and other losses and
liabilities customarily obtained to cover comparable businesses and assets in
amounts, scope and coverage which are consistent with prudent industry practice.
The Company is not in default with respect to its obligations under any such
insurance policy maintained by it. All such policies and other instruments are
in full force and effect and no premiums with respect thereto are past due and
owed. The Company has not failed to give any notice or present any material
claim under any such insurance policy in due and timely fashion or as required
by any of such insurance policies. The Company has not otherwise through any
act, omission or non-disclosure, jeopardized or impaired full recovery of any
claim under such policies, and there are no claims by the Company under any of
such policies to which any insurance company is denying liability or defending
under a reservation of rights or similar clause. The Company has not received
notice of any pending or threatened termination of any of such policies or any
premium increases for the current policy period with respect to any of such
policies and the consummation of the transactions contemplated by the
Transaction Documents will not result in any such termination or premium
increase.
2.8. Consents, etc. The Company is not required to obtain any
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consent, approval or authorization of, or to make any registration declaration
or filing with, any Governmental Entity or third party as a condition to or in
connection with the valid execution and delivery of any of the Transaction
Documents (including, without limitation, the issuance and sale of the Notes and
the Shares), or the performance by the Company of its obligations in respect of
any thereof, except for (i) filings required pursuant to state and federal
securities laws to effect any registration of Securities pursuant to this
Agreement and the Registration Rights Agreement, (ii) filing of the Financing
Statements [and Mortgages], (iii) filings to be made with the U.S. Patent and
Trademark Office or the U.S. Copyright Office to perfect the Holders' first
priority security interest in the Intellectual Property constituting Collateral
under the Collateral Documentation, (iv) filing on Form 8-K under the Exchange
Act to report the consummation of the transactions contemplated hereby and (v)
the approval of the stockholders of the Company referred to in Section 6.33.
2.9. No Material Adverse Change. Since December 31, 1998, no event has
occurred or failed to occur which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
2.10. Taxes. Except as set for on Schedule 2.10:
(a) The Company (i) has timely filed all Tax Returns (including,
but not limited to, those filed on a consolidated, combined or unitary basis)
required to have been filed by the Company, all of which Tax Returns are true,
correct and complete in all material respects; (ii) has within the time and
manner prescribed by Law paid all Taxes, required to be paid in respect of the
periods covered by such Tax Returns or otherwise due to any Governmental Entity;
(iii) has established and maintained on its books and records, accruals and
reserves that are adequate for the payment of all Taxes not yet due and payable
and attributable to any period preceding the date hereof; and (iv) has not
received notice of any deficiencies for any Tax from any Governmental Entity
against the Company, which deficiency has not been satisfied. The Company is not
the subject of any currently ongoing audit or judicial or administrative
proceeding relating to Taxes, nor is any such audit pending or, to the Company's
knowledge, threatened. With respect to any taxable period ended prior to
[December 31, 1994], all Tax Returns including the Company has been audited by
the Internal Revenue Service or are closed by the applicable statute of
limitations. The accruals and reserves for Taxes on the Company's balance sheet
as of December 31, 1998 included in the SEC Reports are complete and adequate in
all respects to cover any and all Liabilities of the Company
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for Taxes through such date. There are no Liens with respect to Taxes upon any
of the properties or assets, real or personal, tangible or intangible, of the
Company (other than Liens for Taxes not yet due). No claim has been made or
threatened by any Governmental Entity in a jurisdiction where the Company does
not file Tax Returns that the Company is or may be subject to taxation by that
jurisdiction. The Company has not filed an election under Section 341(f) of the
Code to be treated as a consenting corporation. The Company is not or has not
been a party to any tax sharing agreement.
(b) The Company has duly withheld or collected all Taxes
required by Law to have been withheld or collected (including Taxes required by
Law to be withheld or collected in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party)
and any such amounts required to be remitted to a Governmental Entity have been
timely remitted.
2.11. Compliance with ERISA. Schedule 2.11 sets forth a complete and
correct list of all (i) Benefit Plans, (ii) Employee Agreements, including (in
the case of each of (i) and (ii)) all amendments thereto, and trust or funding
agreements with respect thereto (excluding any grantor trusts established to
hold assets subject to the claims of the Company's creditors) and (iii) summary
plan descriptions and communications of any material modifications to any
employee or employees relating to any Benefit Plan or Employee Agreement. Each
Benefit Plan has been established and operated in accordance with terms thereof
and all other applicable Laws, including but not limited to the Code and ERISA,
and the Company and each ERISA Affiliate is in compliance with the terms of each
Employee Agreement. Neither the Company nor any ERISA Affiliate presently
sponsors, maintains, contributes to, or is required to contribute to, nor has
the Company nor any ERISA Affiliate ever sponsored, maintained, contributed to,
or been required to contribute to, an "employee pension benefit plan" (within
the meaning of Section 3(2) of ERISA) which is subject to Title IV of ERISA or
Section 412 of the Code or a "multiemployer plan" (within the meaning of Section
4001(a)(3) of ERISA). Neither the Company nor any ERISA Affiliate has ever
maintained or contributed to or been required to maintain or contribute to any
employee welfare benefit plan (within the meaning of Section 3(1) of ERISA)
which provides for post-retirement medical, life insurance or other welfare-type
benefits, and neither the Company nor any ERISA Affiliate has any Liability for
any such post-retirement benefits to any present or former employee.
2.12. Labor Relations. No unfair labor practice complaint or any
complaint alleging sexual harassment or sex, age, race or other employment
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discrimination has been brought during the last three years against the Company
before the National Labor Relations Board, the Equal Employment Opportunity
Commission or any other Governmental Entity, nor is there any charge,
investigation (formal or informal) or complaint pending, or to the knowledge of
the Company, threatened, against the Company regarding any labor or employment
matter. There have been no governmental audits of the equal employment
opportunity practices of the Company and, to the knowledge of the Company, no
reasonable basis for any such audit exists. The Company (i) is in compliance
with all applicable Laws respecting employment, employment practices, labor,
terms and conditions of employment, collective bargaining and wages and hours,
and (ii) has withheld all amounts required by Law or by agreement to be withheld
from the wages, salaries and other payments to its employees.
2.13. Intellectual Property Rights. Schedule 2.13(a) sets forth a
complete and correct list of all Intellectual Property of the Company (the
"Company Intellectual Property"). Except as set forth on Schedule 2.13(b), the
Company owns and possesses all right, title and interest in, or possesses
adequate licenses to (without the making of any payment to others or the
obligation to grant rights to others in exchange) all the Company Intellectual
Property, free and clear of any Liens, licenses or other restrictions. The
Company has the right to require the applicant of any Company Intellectual
Property which is an application, including but not limited to patent
applications, trademark applications, service xxxx applications, copyright
applications, or mask work applications, to transfer ownership to the Company of
the application and of the registration once it issues. All registered patents,
trademarks, service marks and copyrights listed on Schedule 2.13(a) are valid
and subsisting and in full force and effect. The Company Intellectual Property
is all the Intellectual Property that is necessary for the ownership,
maintenance and operation of the Company's properties and assets and the Company
has the right to use all of the Company Intellectual Property in all
jurisdictions in which the Company conducts or proposes to conduct its business,
and the consummation of the transactions contemplated hereby will not alter or
impair any such rights. The Company has never agreed to indemnify any person for
or against any interference, infringement, misappropriation or other conflict
with respect to any Company Intellectual Property. No third party has interfered
with, infringed upon, misappropriated or otherwise come into conflict with any
Company Intellectual Property. The Company has taken all necessary and desirable
action to maintain and protect each item of Company Intellectual Property. The
validity, ownership, enforceability, use or legality of the Company Intellectual
Property is not being questioned or opposed in any Litigation or Order to which
the Company or any Person who has granted a license of Intellectual Property to
the Company, is a party or subject, nor, to the knowledge of the Company, is
17
any such Litigation or Order threatened. The conduct of the Company as currently
conducted and as currently proposed to be conducted does not and will not
infringe, interfere with, misappropriate or otherwise come into conflict with
any Intellectual Property of any other Person, and the Company has not received
any charge, complaint, claim, demand or notice alleging any such infringement,
interference, misappropriation or conflict (including any claim that the Company
must license or refrain from using any Intellectual Property of any other
Person). Except as set forth in Schedule 2.13(b), the Company has not granted
any licenses of Intellectual Property to any Person.
2.14. Possession of Franchises, Licenses, Etc. The Company possesses
all franchises, certificates, licenses, permits and other authorizations from
Governmental Entities and other rights, free from burdensome restrictions, that
are necessary for the ownership, maintenance and operation of its properties and
assets, except for those the absence of which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, and the
Company is not in violation of any thereof.
2.15. Compliance with Laws. The Company is in compliance with all
applicable Laws including, without limitation, all rules, regulations and other
Laws of the Food and Drug Administration (the "FDA") relating to the design,
development, manufacturing, sales and distribution of safety medical products
and accessories, except where the failure to comply could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. No
Order has been issued nor any Law enacted which prevents, nor does any Law
prohibit the consummation of the transactions contemplated by any of the
Transaction Documents.
2.16. Conflicting Agreements and Charter Provisions. The Company has
not entered into any Contract and the Company is not subject to any charter or
by-law provision or any Order which in any case could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Neither the
execution and delivery of any of the Transaction Documents, nor the issuance,
sale and delivery of the Notes or the Shares, nor the fulfillment of or
compliance with the terms and provisions hereof or thereof, will conflict with
or result in a breach of the terms, conditions, or provisions of, or give rise
to a right of termination under, or constitute a default under, or result in the
creation of any Lien, or result in any violation of, the Certificate of
Incorporation or By-Laws or other organizational documents of the Company or any
Contract of the Company. The Company has not defaulted under any outstanding
indenture or other debt instrument or with respect to the payment of the
principal of or interest on any outstanding obligations for borrowed money, and
the Company is not in default under any of its
18
Contracts except, in the case of Contracts, where such default could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.17. Suppliers. Except as set forth on Schedule 2.17, no Major
Supplier has during the last twelve months materially increased or, to the
knowledge of the Company, threatened to materially increase its prices or
materially decreased or limited or, to the knowledge of the Company, threatened
to materially decrease or limit its provision of services or supplies to the
Company. During the last twelve months, there has been no termination,
cancellation or limitation of, or any material change in, the business
relationships of the Company with any Major Supplier. To the knowledge of the
Company, there will not be any such change in relations with any Major Supplier
or triggering of any right of termination, cancellation or penalty or other
payment in connection with or as a result of the transactions contemplated by
the Transaction Documents that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
2.18. Products. Except as set forth on Schedule 2.18, there are no
statements, citations or decisions by the FDA or any other Governmental Entity
stating that any product manufactured, sold, rented, leased, designed,
distributed or marketed at any time by the Company ("Products") is defective or
unsafe or fails to meet any standards promulgated by the FDA or such
Governmental Entity. Except as set forth on Schedule 2.18, there is no (i) fact
relating to any Product that, to the knowledge of the Company, may impose upon
the Company a duty to recall or retrofit any Product or a duty to warn customers
of a defect in any Product, (ii) latent or overt design, manufacturing or other
defect in any Product that could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect or (iii) Liability for warranty
claims or returns with respect to any Product that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
2.19. Offering of the Securities. Neither the Company nor any Person
acting on its behalf has offered the Securities or any similar securities of the
Company for sale to, solicited any offers to buy the Securities or any similar
securities of the Company from or otherwise approached or negotiated with
respect to the Company with any Person other than the Purchasers and other
"accredited investors" (as defined in Rule 501(a) under the Securities Act).
Neither the Company nor any Person acting on its behalf has taken or, except as
contemplated hereby will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Securities
under the Securities Act)
19
which could reasonably be expected to subject the offering, issuance or sale of
the Securities to the registration requirements of Section 5 of the Securities
Act or violate the provisions of any securities, "blue sky", or similar law of
any applicable jurisdiction.
2.20. Existing Indebtedness; Future Liens. (a) Schedule 2.20 sets
forth a complete and correct list of all outstanding Indebtedness of the Company
as of the date hereof. The Company has not defaulted and no waiver of default is
currently in effect, in the payment of any principal or interest on any such
Indebtedness and no event or condition exists with respect to any such
Indebtedness that would permit (or that with notice or the lapse of time, or
both, would permit) one or more Persons to cause such Indebtedness to become due
and payable before its stated maturity or before its regularly scheduled dates
of payment.
(b) The Company has not agreed or consented to cause or permit
in the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to any Lien
(other than Permitted Liens).
2.21. Environmental Matters. The Company has no knowledge of any claim
or has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its real properties now or
formerly owned, leased or operated by it or other assets, alleging any damage to
the environment or violation of any Environmental Laws. Except as set forth on
Schedule 2.21, (i) the Company has no knowledge of any facts which would give
rise to any claim, public or private, of violation of Environmental Laws or
damage to the environment emanating from, occurring on or affecting real
properties now or formerly owned, leased or operated by the Company or to other
assets or their use; (ii) the Company has not stored any Hazardous Materials on
real properties now or formerly owned, leased or operated by it and has not
disposed of any Hazardous Materials in a manner contrary to any Environmental
Laws; and (iii) all buildings on all real properties now owned, leased or
operated by the Company are in compliance with applicable Environmental Laws.
2.22. Solvency. The Company is not, and after giving effect to the
issuance of the Notes and the sale of the Shares and the application of the
proceeds therefrom will not be, insolvent within the meaning of Title 11 of the
United States Code or any comparable state law provision.
2.23. Security Documents. Upon proper filing of the Financing
Statements (or assignments thereof) in the offices of the Secretary of State of
Connecticut with respect to the Company (or assignments thereof) and in the
locations identified in the Security Agreement, the Liens
20
granted under the Transaction Documents shall constitute a fully perfected
security interest in all right, title and interest of the Company in and to the
personal property therein prior to any other security interests against such
property or interests therein.
2.24. Brokers or Finders. No agent, broker, investment banker or other
Person is or will be entitled to any broker's fee or any other commission or
similar fee from the Company in connection with any of the transactions
contemplated by this Agreement.
2.25. Holding Company Act and Investment Company Act. The Company is
not: (i) a "public utility company" or a "holding company," or an "affiliate" or
a "subsidiary company" of a "holding company," or an "affiliate" of such a
"subsidiary company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or (ii) a "public utility," as defined in the
Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person," as such terms are defined in the Investment Company Act of 1940, as
amended.
2.26. Related Party Transactions. (a) Except as set forth on Schedule
2.26, the Company has not entered into or been a party to any transaction with
any Related Party thereof except in the ordinary course of, and pursuant to the
reasonable requirements of, such party's business and upon fair and reasonable
terms that are at least equivalent to an arms length transaction with a Person
not a Related Party of such party.
(b) Except as set forth on Schedule 2.26, the Company has not
entered into any lending or borrowing transaction with any director, officer or
employee of the Company.
2.27. Year 2000. The software, computers and other hardware and
systems used by the Company will (i) accurately process date information before,
during and after January 1, 2000, including, but not limited to, accepting date
input, providing date output and performing calculations on dates or portions of
dates; (ii) function accurately and without interruption before, during and
after January 1, 2000 without any change in operations associated with the
advent of the new century; (iii) respond to two digit year date input in a way
that resolves the ambiguity as to century in a disclosed, defined and
predetermined manner; and (iv) store and provide output of date information in
ways that are unambiguous as to century. The Company has contacted its principal
vendors and Major Suppliers and other Persons with whom the Company has material
business relationships, and each of such vendors, Major Suppliers and other
Persons have notified the Company that its software, computers and other
hardware and systems are Year 2000 compliant in all material respects to the
extent affecting the Company. The ability of such vendors, Major Suppliers and
21
other Persons to identify and resolve their own Year 2000 issues could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.28. Disclosure. Neither any Transaction Document nor any Schedule
thereto, nor any certificate furnished to any Purchaser by or on behalf of the
Company in connection with the transactions contemplated thereby, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein not misleading.
3. Representations and Warranties of the Purchasers. Each Purchaser,
severally and not jointly, represents and warrants to the Company with respect
to such Purchaser as follows:
3.1. Organization and Qualification. Such Purchaser is duly organized
and existing in good standing under the laws of the state of its formation and
has the power to own its respective property and to carry on its respective
business as now being conducted. Such Purchaser is duly qualified to do business
and in good standing in every jurisdiction in which the nature of the respective
business conducted or property owned by it makes such qualification necessary,
except where the failure to so qualify would not prevent consummation of the
transactions contemplated hereby or reasonably be expected to have a material
adverse effect on such Purchaser's ability to perform its obligations hereunder.
3.2. Due Authorization. Such Purchaser has all right, power and
authority to enter into, deliver and perform the Transaction Documents to which
it is a party and to consummate the transactions contemplated thereby. Such
Purchaser's execution and delivery of each Transaction Document to which it is a
party and the performance by such Purchaser of the transactions contemplated
thereby and compliance by such Purchaser with all the provisions of each
Transaction Document to which it is a party (as applicable) have been duly
authorized by all requisite proceedings on the part of such Purchaser. Each of
the Transaction Documents to which it is a party has been duly executed and
delivered on behalf of such Purchaser, and each such Transaction Document
constitutes the legal, valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its respective terms,
except to the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally or (ii) is subject to general principles of equity.
3.3. Acquisition for Investment. Such Purchaser is acquiring the Notes
and the Shares being purchased by it for its own account for the purpose of
investment and not with a view to or for sale in connection with
22
any distribution thereof except in compliance with all applicable securities
Laws.
3.4. Offering of Securities. Such Purchaser has not offered the
Securities for sale by any means of general solicitation or general advertising
including, but not limited to, any advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
were invited by any general solicitation or general advertising.
3.5. Accredited Investor. Such Purchaser is an "accredited investor"
within the meaning of Rule 501 promulgated under the Securities Act.
4. Registration, Exchange and Transfer of Notes.
4.1. The Note Register; Persons Deemed Owners. The Company shall
maintain, at its office designated for notices in accordance with Section 12.6,
a register for the Notes (the "Note Register"), in which the Company shall
record the name and address of the person in whose name each Note has been
issued and the name and address of each transferee and prior owner of each Note.
The Company shall deem and treat the person in whose name a Note is so
registered as the Holder and owner thereof for all purposes and shall not be
affected by any notice to the contrary, until due presentment of such Note for
registration of transfer as provided in this Section 4.
4.2. Issuance of New Notes Upon Exchange or Transfer. Upon surrender
for exchange or registration of transfer of any Note at the office of the
Company designated for notices in accordance with Section 12.6, the Company
shall execute and deliver, at its expense, one or more new Notes as requested by
the Holder of the surrendered Note, each dated the date so surrendered, but in
the same aggregate Face Amount as such surrendered Note, and registered in the
name of such person or persons as shall be designated in writing by such Holder.
Every Note surrendered for registration of transfer shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed, by the Holder
of such Note or by his attorney duly authorized in writing. The Company may also
condition the issuance of any new Note or Notes to a Person other than the
Holder thereof on the payment of a sum sufficient to cover any stamp tax or
other governmental charge imposed in respect of such transfer.
5. Payment of Notes.
5.1. Home Office Payment. The Company will pay to each Purchaser or
any transferee thereof all sums becoming due on the Notes (including all
23
sums which become due on the Notes at the maturity thereof) (a) prior to the
date of execution of an indenture (the "Indenture Date") at the account/address
to be specified by such Purchaser or transferee for such purpose by notice to
the Company, by wire transfer of immediately available funds, or at such other
address or by such other method as such Purchaser or transferee shall have
designated by notice to the Company and (b) at any time after the Indenture
Date, by wire transfer to the Trustee, as specified in the indenture. Before
selling or otherwise transferring any Note, such Purchaser or transferee will
make a notation thereon of the aggregate amount of all payments of the Face
Amount, if any, theretofore made.
5.2. Limitation on Interest. No provision of this Agreement or of the
Notes shall require the payment or permit the collection of interest in excess
of the maximum rate which is permitted by Law. If any such excess interest is
provided for herein or in the Notes, or shall be adjudicated to be so provided
for, then the Company shall not be obligated to pay such interest in excess of
the maximum rate permitted by Law, and the right to demand payment of any such
excess interest is hereby waived, any other provisions in this Agreement or in
the Notes to the contrary notwithstanding.
5.3. Accreted Value. The Notes have been issued at the original issue
discount ("Original Issue Discount") in the amount stated on the face of each
Note and the Notes will accrete in value to the Face Amount at the Stated
Maturity. Prior to the Stated Maturity, the Accreted Value for any specified
date means, the applicable amount provided below for each $1,000 Face Amount of
the Notes:
(i) if the specified date occurs on one of the following dates
(each a "Semi-Annual Accrual Date"), the Accreted Value of such Face Amount
will equal the amount set forth opposite such Semi-Annual Accrual Date:
Semi-Annual Accrual Date Accreted Value
------------------------ --------------
December 31, 1999...................... $
June 31, 2000 ......................... $
December 31, 2000...................... $
June 30 , 2001......................... $
December 31, 2001...................... $
June 30, 2002 ......................... $
December 31, 2002...................... $
June 31, 2003 ......................... $
December 31, 2003...................... $
June 30, 2004 ......................... $
(ii) if the specified date occurs before the first
24
Semi-Annual Accrual Date, the Accreted Value of such Face Amount will equal
the sum of (a) the Original Issue Price and (b) an amount equal to the
product of (1) the Accreted Value of such Face Amount for the first
Semi-Annual Accrual Date less the original issue price multiplied by (2) a
fraction, the numerator of which is the number of days from the Closing
Date to the specified date, using a 360-day year of twelve 30-day months,
and the denominator of which is the number of days elapsed from the
original issue date to the first Semi-Annual Accrual Date, using a 360-day
year of twelve 30-day months;
(iii) if the specified date occurs between two Semi-Annual
Accrual Dates, the Accreted Value of such Face Amount will equal the sum of
(a) the Accreted Value of such Face Amount for the Semi-Annual Accrual Date
immediately preceding such specified date and (b) an amount equal to the
product of (1) the Accreted Value of such Face Amount for the immediately
following Semi-Annual Accrual Date less the Accreted Value of such Face
Amount for the immediately preceding Semi-Annual Accrual Date multiplied by
(2) a fraction, the numerator of which is the number of days from the
immediately preceding Semi-Annual Accrual Date to the specified date, using
a 360-day year of twelve 30-day months, and the denominator of which is
180; or
(iv) if the specified date occurs after the last Semi-Annual
Accrual Date, the Accreted Value will equal $1,000.
5.4. Interest. The Notes shall not bear interest (other than accrued
Original Issue Discount which shall be payable at Stated Maturity), except that
if any amount payable hereunder is not paid when due (including, without
limitation, payment of the Accreted Value or the entire Face Amount of the
Notes, as applicable, under Section 7.2), then in each such case the overdue
amount shall bear interest at a rate of [12%] per annum compounded semi-annually
(to the extent that the payment of such interest shall be legally enforceable),
which interest shall accrue from the date such overdue amount was due to the
date payment of such amount, including interest thereon, has been made or duly
provided for. All such interest shall be payable on demand. The accrual of such
interest on overdue amounts shall, in the case of any late payment of the Face
Amount or Change of Control Redemption Price, be in lieu of, and not in addition
to, the continued accrual of Original Issue Discount. Original Issue Discount in
the period during which the Notes remain outstanding shall accrue at 7.5% per
annum, compounded semi-annually, computed on the basis of a 360-day year
consisting of twelve 30-day months, beginning on __________, 1999.
5.5. Principal. Unless otherwise provided herein, payment of the
25
Face Amount of the Notes shall be due and payable as provided in the Notes.
6. Covenants of the Company. The Company covenants that at all times
from and after the date hereof:
6.1. Maintenance of Office or Agency. The Company shall maintain in
[Vernon, Connecticut] an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes may be served. The Company shall give prompt written notice
to the Holders of the location, and any change in the location, of such office
or agency. The Company may also from time to time designate one or more other
offices or agencies (in or outside [Connecticut]) where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations, provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in [Vernon, Connecticut] for such purposes. The Company
shall give prompt written notice to the Holders of any such designation or
rescission and of any change in the location of any such other office or agency.
6.2. Money for Security Payments to be Held in Trust. On or before
each date in which payments are due on the Notes, the Company shall segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to make such payments when such payments are due, until such sums
shall be paid to such Persons or otherwise disposed of as herein provided.
6.3. Existence. The Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, Material
rights (charter and statutory) and franchises and the existence, Material rights
and franchises of all of its Subsidiaries. Neither the Company nor any of its
Subsidiaries shall enter into any transaction of acquisition of, or merger or
consolidation or amalgamation with, any other Person (including any Subsidiary
or Affiliate of the Company or any of its Subsidiaries), or sell, transfer or
otherwise dispose of ("Transfer") all or substantially all of its assets to any
Person, or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or make any Material change in the present method of conducting
business or engage in any type of business other than of same general type now
conducted by it. The Company shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise modify (i) the Company's Certificate of
Incorporation, (ii) the By-Laws or (iii) the charter, by-laws or other
organizational documents of any of the Company's Subsidiaries.
6.4. Maintenance of Properties. The Company shall cause all properties
used or useful in the conduct of its business or the business
26
of any Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section 6.4
shall prevent the Company from discontinuing the operation or maintenance of any
of such property if such discontinuance is, in the reasonable, good faith
judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any Material respect to
the Holders.
6.5. Payment of Taxes and Other Claims. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all Taxes levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any of
its Subsidiaries, and (ii) all lawful claims for labor, materials and supplies
which, if unpaid, might by Law become a Lien upon the property of the Company or
any of its Subsidiaries; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such Tax
whose amount, applicability or validity is being contested in good faith by
appropriate proceedings.
6.6. Limitation on Indebtedness. The Company shall not, and shall not
permit any of its Subsidiaries to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or indirectly liable
for the payment of any Indebtedness (excluding Permitted Indebtedness and
Indebtedness which is a Guaranty of an Indebtedness of the Company or any of its
Subsidiaries that is otherwise Permitted Indebtedness).
6.7. Limitation on Encumbrances. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or otherwise suffer to exist or cause or otherwise suffer to become effective
any Lien in or on any right, title or interest to any property (real or
personal) that constitutes all or any portion of the Collateral (a "Restricted
Encumbrance," which term excludes the Lien created in favor of the Holders)
unless such Restricted Encumbrance is a Permitted Lien.
6.8. Limitation on Related Party Transactions. (a) The Company shall
not, and shall not permit any of its Subsidiaries to, enter into or be a party
to any transaction with any Related Parties (other than any of the Holders or
their Affiliates) except in the ordinary course of, and
27
pursuant to the reasonable requirements of, such party's business and upon fair
and reasonable terms that are at least equivalent to an arms length transaction
with a Person that is not a Related Party. In addition, if any such transaction
or series of related transactions involves payments in excess of $[25,000] in
the aggregate, the terms of those transactions must be disclosed in advance to
each Holder. All such transactions existing as of the date hereof are set forth
on Schedule 6.8.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any lending or borrowing transaction with any
director, officer or employee of the Company or any of its Subsidiaries.
(c) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) enter into or adopt or amend any existing agreement or
arrangement relating to severance, (ii) enter into or adopt or amend any
existing severance plan, (iii) enter into or adopt or amend any Benefit Plan or
Employee Agreement or (iv) grant any bonus, salary increase, severance or
termination pay to, any employee, officer, director or consultant other than in
the ordinary course of business consistent with past practice.
6.9. Limitation on Dividends; Stock Issuances. The Company shall not
offer or issue any shares of Preferred Stock or Common Stock for any purpose
whatsoever, except for shares of Common Stock issuable upon (i) exercise of the
Warrants, (ii) the conversion of the Notes and (iii) pursuant to Schedule 6.9.
The Company shall not declare any dividends on any shares of its Capital Stock,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, retirement, exchange or other
acquisition of any shares of its Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash, securities, property or in obligations of the
Company or any of its Subsidiaries.
6.10. Subsidiary Guarantees. The Company shall cause its future direct
and indirect Subsidiaries organized under the laws of any state of the United
States (or the District of Columbia) to jointly and severally guarantee form of
obligations of the Company under the Notes and this Agreement pursuant to the
form of Guarantee and Security Agreement attached hereto as Exhibit 6.10. The
Company shall cause its Subsidiaries organized under the laws of any
jurisdiction other than any state of the United States or the District of
Columbia to jointly and severally guarantee the obligations of the Company under
the Notes and this Agreement pursuant to a guarantee agreement.
6.11. Additional Offerings of Securities. Prior to seeking
28
financing from any third party consisting of an issuance of Equity Securities
(the "Proposed Securities") by the Company on or after the date hereof, the
Company shall notify the Holders of a description in reasonable detail of the
Proposed Securities, the amount proposed to be issued and the consideration the
Company desires to receive therefor (the "Notice"), which Notice shall
constitute an offer to the Holders with respect to the Proposed Securities on
the terms set forth therein. The Holders and the Company shall, for not less
than 20 days after receipt of the Notice (unless the Holders earlier indicate
that they have no interest in purchasing the Proposed Securities), discuss the
possibility of any of the Holders acquiring the Proposed Securities, after which
(if any of the Holders has not agreed to purchase the Proposed Securities on the
terms set forth in the Notice or such other terms as are mutually acceptable to
the Company and such Holder) the Company shall be permitted to seek and obtain
third party investors to acquire the Proposed Securities, provided that the
closing of such acquisition by such third party investor occurs within 90 days
from the date of the Notice and provided that the acquisition of the Proposed
Securities by such third party investor is on terms no more favorable to such
third party investor than those terms set forth in the Notice. No Equity
Securities shall be issued by the Company to any Person unless the Company has
first offered such Equity Securities to the Holders in accordance with this
Section 6.11. This Section 6.11 shall not apply to the following issuances of
securities: (i) pursuant to an approved employee stock option plan, stock
purchase plan, or similar employee benefit program or agreement, where the
primary purpose is not to raise equity capital for the Company and (ii) issuance
of Equity Securities as consideration in a business combination approved by each
member of the Board of Directors.
6.12. Pledges of Intercompany Notes. The Company shall, and shall
cause each of its future Subsidiaries to, promptly pledge all Intercompany Notes
(and all security agreements and documents relating thereto) created after the
date hereof to the Collateral Agent as Collateral under the Collateral
Documentation. To the extent that, on or after the date hereof, the Company
makes any cash investment in any of its Subsidiaries (in accordance with Section
6.14) which are organized under the laws of and doing business in the United
States, such investment shall be required to be made in the form of a loan,
which shall be evidenced by an Intercompany Note and all such Intercompany Notes
shall be pledged by the Company to the Collateral Agent as Collateral under the
Collateral Documentation.
6.13. No Speculative Transactions. The Company shall not, and
29
shall not permit any of its Subsidiaries to, engage in any transaction involving
commodity options, futures contracts or similar transactions.
6.14. Restricted Investments. The Company shall not, directly or
indirectly, make or cause or permit, or permit any of its Subsidiaries to, make
or cause or permit, (i) any direct or indirect advance to, (ii) any loan or
other extension of credit to, (iii) any guarantee of any Indebtedness of, (iv)
any capital contribution to, (v) any purchase or other acquisition of any Equity
Interests in, (vi) any purchase or other acquisition of assets (other than in
the ordinary course of business) from or (vii) any merger with, any Person,
including, without limitation, any of the Company's Subsidiaries in each case
other than Permitted Investments.
6.15. Financial Covenants. (a) The Company's Operating Profit (as
defined below) shall be greater than the amounts listed in the following chart
for the applicable period. "Operating Profit" shall mean, for any given period,
Net Income for such period (exclusive of (A) all amounts in respect of any
extraordinary gains or losses, (B) gains and losses arising from the sale or
other disposition of assets not in the ordinary course of business, (C) earnings
and losses from discontinued operations and (D) fees and expenses incurred by
the Company (including reasonable attorneys' and accountants' fees and expenses)
in connection with the offer and sale of the Notes) plus, to the extent
reflected as a charge in the statement of Consolidated Net Income for such
period, the sum of: (i) all taxes measured by income (whether paid or deferred)
and (ii) interest expense (net of interest income).
--------------------------------------------------------------------------------------
MINIMUM OPERATING PROFIT MINIMUM OPERATING PROFIT
(LOSS) FOR THREE-MONTH FOR TWELVE-MONTH PERIOD
DATE PERIOD ENDING ON DATE ENDING ON DATE INDICATED
INDICATED
--------------------------------------------------------------------------------------
December 31, 1999 N/A N/A
--------------------------------------------------------------------------------------
March 30, 2000 N/A N/A
--------------------------------------------------------------------------------------
June 30, 2000 N/A N/A
--------------------------------------------------------------------------------------
September 30, 2000 ($ 400,000) N/A
--------------------------------------------------------------------------------------
30
December 31, 2000 $ 0 N/A
--------------------------------------------------------------------------------------
March 31, 2001 $ 500,000 N/A
--------------------------------------------------------------------------------------
June 30, 2001 $1,000,000 $1,000,000
--------------------------------------------------------------------------------------
September 30, 2001 $2,000,000 $3,000,000
--------------------------------------------------------------------------------------
December 31, 2001 $2,500,000 $5,500,000
--------------------------------------------------------------------------------------
March 30, 2002 $5,000,000 $10,500,000
--------------------------------------------------------------------------------------
June 30, 2002 $5,000,000 $14,500,000
--------------------------------------------------------------------------------------
September 30, 2002 $5,000,000 $17,500,000
--------------------------------------------------------------------------------------
December 31, 2002 $5,000,000 $20,000,000
--------------------------------------------------------------------------------------
March 30, 2003 and the last $5,000,000 $22,500,000
day of each calendar quarter
thereafter
--------------------------------------------------------------------------------------
(b) The Company's Product Sales Revenues (excluding revenues
generated by licensing, distribution, supply or similar arrangements) shall be
greater than the amounts listed in the following chart for the applicable
period.
--------------------------------------------------------------------------------------
MINIMUM PRODUCT SALES MINIMUM TOTAL REVENUE FOR
REVENUE FOR THREE-MONTH TWELVE-MONTH PERIOD ENDING
DATE PERIOD ENDING ON DATE ON DATE INDICATED
INDICATED
--------------------------------------------------------------------------------------
December 31, 1999 $1,250,000 N/A
--------------------------------------------------------------------------------------
March 30, 2000 $1,750,000 N/A
--------------------------------------------------------------------------------------
31
June 30, 2000 $3,500,000 $7,000,000
--------------------------------------------------------------------------------------
September 30, 2000 $5,000,000 $12,200,000
--------------------------------------------------------------------------------------
December 31, 2000 $6,500,000 $15,500,000
--------------------------------------------------------------------------------------
March 31, 2001 $8,500,000 $22,500,000
--------------------------------------------------------------------------------------
June 30, 2001 $11,500,000 $31,000,000
--------------------------------------------------------------------------------------
September 30, 2001 $12,500,000 $39,000,000
--------------------------------------------------------------------------------------
December 31, 2001 $15,000,000 $47,500,000
--------------------------------------------------------------------------------------
March 31, 2002 $20,000,000 $59,000,000
--------------------------------------------------------------------------------------
June 30, 2002 $22,500,000 $70,000,000
--------------------------------------------------------------------------------------
September 30, 2002 $22,500,000 $80,000,000
--------------------------------------------------------------------------------------
March 30, 2003 and the last $25,000,000 $100,000,000
day of each calendar quarter
thereafter
--------------------------------------------------------------------------------------
(c) The Company's Consolidated Capital Expenditures shall be no
greater than the amounts listed in the following chart for the applicable
period.
-------------------------------------------------------------
MAXIMUM PERMITTED CAPITAL
EXPENDITURES FOR SIX-MONTH
DATE PERIOD ENDING ON DATE
INDICATED
-------------------------------------------------------------
March 30, 2000 $3,500,000
-------------------------------------------------------------
September 30, 2000 $3,500,000
-------------------------------------------------------------
32
March 31, 2001 $2,700,000
-------------------------------------------------------------
September 30, 2001 $2,700,000
-------------------------------------------------------------
March 30, 2002 and the last
day of each calendar quarter $2,000,000
thereafter
-------------------------------------------------------------
6.16. Sale and Leaseback Transactions. The Company shall not, and
shall not permit any Subsidiary to, enter into any Sale-and-Leaseback
Transaction.
6.17. Line of Business. The Company shall not, and shall not permit
any of its Subsidiaries to, engage in any business if, as a result, the general
nature of the business in which the Company and its Subsidiaries, taken as a
whole, would then be engaged would be substantially changed from the general
nature of the business in which the Company and its Subsidiaries, taken as a
whole, are engaged on the date of this Agreement.
6.18. Sale of Assets. The Company shall not, and shall not permit any
of its Subsidiaries to, Transfer any property or assets, unless the property or
asset that is the subject of such Transfer constitutes (i) inventory held for
sale, (ii) marketable securities available for sale, or (iii) real estate,
equipment, fixtures, supplies or materials no longer required in the operation
of the business of the Company or such Subsidiary or that is obsolete, and, in
the case of any Transfer described in clause (i) or (iii), such Transfer is in
the ordinary course of business.
6.19. Indenture Relating to the Notes. Upon the written request of the
Required Holders, the Company, at its expense, shall cause to be prepared,
executed and delivered within 30 days after such request an indenture (including
a new form of note, any necessary related documentation and, from time to time
thereafter, any necessary supplements thereto) with respect to the Notes, which
indenture (and form of note) shall contain terms and provisions substantially
the same as those set forth in Sections 6, 8, 9 and 13 hereof and such other
terms and provisions as are required under the Trust Indenture Act of 1939 and
such other items and provisions as are customary in indentures relating to
publicly traded senior secured debt securities having a rating comparable to the
rating that the Notes would receive if rated by a nationally recognized rating
agency. In such event, the Company shall also appoint as trustee under such
indenture a national banking association reasonably acceptable to the Required
Holders having its principal offices in New York, New York, and having capital,
surplus, and undivided profits of at least $50,000,000. In
33
connection with the execution of any such indenture, the Holders shall exchange
all outstanding Notes for new notes in the form contemplated by such indenture,
and upon such exchange such new notes shall be deemed to be "Notes" for purposes
hereof.
6.20. Financial Statements and Information. The Company shall furnish
to each Holder: (a) as soon as practicable and in any event within 45 days after
the end of each of the four quarters of each fiscal year and within 90 days of
the end of each fiscal year, (i) copies of the quarterly and annual reports and
of the other information, documents, and other reports which the Company files
or is required to file with the SEC pursuant to the Exchange Act and of any
other reports or information which the Company delivers or makes available to
any of its security holders, at the time of filing such reports with the SEC or
of delivery to the Company's security holders, as the case may be (but in no
event later than the time such filing or delivery is required pursuant to the
Exchange Act) or (ii) as soon as practicable and in any event within 45 days
after the end of each of the four quarters of each fiscal year and within 90
days of the end of each fiscal year, quarterly reports for the four quarters of
each fiscal year of the Company and annual reports which the Company would have
been required to file under any provision of the Exchange Act if it had a class
of securities listed on a national securities exchange or was otherwise required
to file such reports under the Exchange Act, within fifteen Business Days of
when such report would have been filed under Section 13 of the Exchange Act,
together with copies of a consolidating balance sheet of the Company and its
Subsidiaries as of the end of each such accounting period and of the related
consolidating statements of income and cash flow for the portion of the fiscal
year then ended, all in reasonable detail and all certified by the principal
financial officer of the Company to present fairly the information contained
therein in accordance with GAAP (and in the case of annual reports, including
financial statements, audited and certified by the Company's independent public
accountants as required under the Exchange Act); (b) within ninety days after
the end of each fiscal year, a written statement by the Company's independent
certified public accountants stating as to the Company and its Subsidiaries
whether in connection with their audit examination, any Default or Event of
Default has come to their attention; (c)(i) within forty-five days after the end
of the four quarters of the Company's fiscal year and within ninety days after
the end of the Company's fiscal year, an Officers' Certificate setting forth
computations in reasonable detail showing, as at the end of such quarter or
fiscal year, as the case may be, the Company's compliance with Sections 6.6,
6.7, 6.13, 6.14 and 6.15, and (ii) within thirty days after the end of each
fiscal quarter, an Officers' Certificate stating that as of the date of such
certificate, based upon such examination or investigation and review of this
Agreement, as in the opinion of such signer is necessary to enable the signer to
express an informed opinion with respect thereto, to the best
34
knowledge of such signer, the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Agreement, and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof, and to the best of such signer's knowledge, no Default or
Event of Default exists or has existed during such period or, if a Default or
Event of Default shall exist or have existed, specifying all such defaults, and
the nature and period of existence thereof, and what action the Company has
taken, is taking or proposes to take with respect thereto; (d) promptly after
becoming aware of (i) the existence of a Default or Event of Default or any
default in any of the Collateral Documentation, (ii) any default or event of
default under any Indebtedness of the Company or any of its Subsidiaries, (iii)
any Litigation or proceeding affecting the Company or any of its Subsidiaries in
which the amount claimed is in excess of $[50,000] or in which injunctive relief
is sought which if obtained could individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect or (iv) any change that has or
could reasonably be expected to have a Material Adverse Effect, an Officers'
Certificate specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto; and (e)
such other information, including financial statements and computations,
relating to the performance of the provisions of this Agreement and the affairs
of the Company and any of its Subsidiaries as each Holder may from time to time
reasonably request. The Company shall keep at its principal executive office a
true copy of this Agreement (as at the time in effect), and cause the same to be
available for inspection at said office, during normal business hours and after
reasonable notice to the Company by any Holder.
6.21. Inspection. (a) Any Holder shall have the right to visit and
inspect any of the properties of the Company or any of its Subsidiaries, to
examine the books of account and records of the Company or any of its
Subsidiaries, to be provided with copies and extracts therefrom, to discuss the
affairs, finances and accounts of the Company or any of its Subsidiaries with,
and to be advised as to the same by, its and their officers and employees, and
its and their independent public accountants (and the Company authorizes such
independent public accountants to discuss the Company's or any Subsidiaries'
financial matters with such Holder and its representatives, regardless of
whether any representative of the Company is present, but provided that an
officer of the Company will be afforded a reasonable opportunity to be present
at any such discussion), all at such reasonable times and intervals during
normal business hours, and upon reasonable prior notice to the Company as such
Holder and the Company shall agree and at the expense of the Company (including
the costs incurred by such Holder in hiring accountants to conduct an audit).
The Company will likewise afford each Holder the opportunity to obtain any
information necessary to verify the accuracy of any of the representations
35
and warranties made by the Company hereunder or in any other Transaction
Document or compliance by the Company and its Subsidiaries with a covenant made
hereunder or in any other Transaction Document.
(b) By receipt of information under this Section 6.21, such
Holder agrees that all information (other than such information that is publicly
available or any other information that is in such Holder's possession prior to
any disclosure under this Section 6.21) provided to it pursuant to this Section
6.21 shall be used by such Holder solely in connection with its investment in
the Company and for no other purpose, and such Holder shall treat such
information as confidential in accordance with such reasonable internal
procedures as it applies generally to information of this kind and shall not
disclose such information to any Person, except (i) to any Governmental Entity
having jurisdiction over such Holder in the law or ordinary course of business,
(ii) to any other Person pursuant to subpoena or other process, whether legal,
administrative or other (and such Holder hereby agrees to provide the Company
with prompt notice of any such subpoena or other process), (iii) to such
Holder's officers, directors, trustees, employees, partners, legal counsel,
financial advisors or auditors or accountants who need access to such
information in connection with their duties, (iv) to any transferee or
prospective purchaser of a Note or interest therein who agrees to be bound by
this paragraph, or (v) to the extent necessary in the enforcement of each
Purchaser's rights hereunder and under the Notes during the continuance of a
Default or Event of Default.
6.22. Compliance with Laws. The Company shall, and shall cause each of
its Subsidiaries to, comply with all Laws, ordinances or governmental rules or
regulations to which each of them is subject, and shall obtain and maintain in
effect all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses. The Company shall timely file all
proxy statements, reports and other documents required to be filed by it under
the Exchange Act and such statements, reports and other documents shall be in
compliance in all Material respects with the requirements of its respective
report form and shall not on the date of filing contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
6.23. Supplemental Disclosure. From time to time as may be requested
by the Required Holders, the Company shall supplement each Schedule hereto, or
any representation herein or in any other Transaction Document, with respect to
any matter hereafter arising which, if
36
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such Schedule or as an exception to such
representation or which is necessary to correct any information in such Schedule
or representation which has been rendered inaccurate thereby (and, in the case
of any supplements to any Schedule, such Schedule shall be appropriately marked
to show changes made therein); provided that no such supplement to any such
Schedule or representation shall be or be deemed a waiver of any Default or
Event of Default resulting from the matters disclosed therein; provided,
further, that if such supplement discloses any Default or Event of Default, the
Company shall have fifteen days to cure such defaults so long as such Default or
Event of Default (i) is not caused by the failure to pay amounts due under this
Agreement and (ii) the Collateral Manager believes that such Default or Event of
Default can be cured within such fifteen days period.
6.24. Proceeds. The proceeds of the sale of the Notes and the Shares
shall be used to redeem the outstanding Old Notes and for the purposes set forth
on Schedule 6.24. Any part of the proceeds from the sale of the Notes and the
Shares not used to redeem the Old Notes and for the purposes set forth in
Schedule 6.24 shall be placed in an escrow account, and the disbursements of
proceeds from such escrow account shall be made in accordance with the
procedures set forth on Schedule 6.24. No part of the proceeds from the sale of
the Notes and the Shares hereunder shall be used, directly or indirectly, for
the purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of Regulation U of the Board of Governors of the Federal
Reserve System or for any purpose which violates or would be inconsistent with
the provisions of Regulations T, U or X of said Board.
6.25. Insurance; Damage to or Destruction of Collateral. (a) The
Company shall, and shall cause each of its Subsidiaries to, at its sole cost and
expense, maintain the policies of insurance described on Schedule 2.7(b) in form
and with insurers reasonably acceptable to the Required Holders. If the Company
or any of its Subsidiaries at any time or times hereafter shall fail to obtain
or maintain any of the policies of insurance required above or to pay all
premiums relating thereto, the Collateral Agent may (at the direction of the
Required Holders) may at any time or times after ten days written notice to the
Company obtain and maintain such policies of insurance and pay such premiums and
take any other action with respect thereto which the Required Holders deem
advisable. Neither the Collateral Agent nor the Required Holders shall have any
obligation to obtain insurance for the Company or any of its Subsidiaries or pay
any premiums therefor. By doing so, the Collateral Agent and the Holders shall
not be deemed to have waived any Default or Event of Default arising
37
from the Company's or any of its Subsidiaries' failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
reasonable attorneys' fees, court costs and other charges related thereto, shall
be payable on demand by the Company to the Collateral Agent and shall be secured
by the Collateral.
(b) The Company shall at all times maintain, with financially
sound and reputable insurers, "key man" term life insurance on the life of Xx.
Xxxx Xxxx in the amount of $______ in form reasonably satisfactory to the
Holders. Such "key man" term life insurance policy shall be owned by the Company
and the Company shall be named as the payee of all benefits thereunder.
6.26. Rights of Required Holders to Designate Directors; Board
Composition. (a) Prior to or simultaneously with the Closing, the Company shall
expand the size of its Board of Directors from five to seven members and shall
at all times cause two persons designated by the Holders (any such person so
designated pursuant to this Section 6.26 from time to time, a "Purchaser
Designee", and together, the "Purchaser Designees") to be appointed to the Board
of Directors to fill the vacancies created by such expansion, and the Company
will take all necessary action to cause a Purchaser Designee to be appointed to
(i) each present and future committee of the Board of Directors (ii) the board
of directors or governing body of any future Subsidiary of the Company (the
"Subsidiary Board") and (iii) each Committee of such Subsidiary Board.
Thereafter, in connection with any annual meeting of stockholders at which the
term of a Purchaser Designee is to expire, the Company will take all necessary
action to cause such Purchaser Designee to be elected to the Board of Directors.
In the event of any vacancy arising by reason of the resignation, death, removal
or inability to serve of any Purchaser Designee, the Holders shall be entitled
to designate a successor to fill such vacancy for the unexpired term (and,
thereafter, such successor shall be deemed a Purchaser Designee for all purposes
of this Section 6.26). The Company further agrees that the Holders shall be
entitled to designate a non-voting observer to attend and participate in (but
not to vote at) all meetings of the Board of Directors, committee of the Board
of Directors, each Subsidiary Board and committee of such Subsidiary Board (the
"Non-Voting Observer"). The Non-Voting Observer, if appointed, shall have the
same access to information concerning the business and operations of the Company
and its Subsidiaries and at the same time as directors of the Company and its
Subsidiaries and shall be entitled to participate in discussions and consult
with the Board of Directors and each Subsidiary Board without voting, and the
Board of Directors and
38
each Subsidiary Board shall give due consideration to the advice and
recommendations of such Non-Voting Observer.
(b) Without the prior written consent of the Holders, (i) the
Board of Directors shall not consist of more than seven members and (ii) the
Executive Committee of the Board of Directors shall not exceed four members.
(c) Notwithstanding anything to the contrary contained herein,
so long as (i) (Y) the Holders in the aggregate (i) own at least 5% of the
Common Stock (on a fully-diluted basis) or (Z) hold $10 million of the Notes,
(ii) there has not been any change, event or development or series of changes,
events or developments that could or could reasonably be expected to have a
Material Adverse Effect, (iii) at least [three] people who are members of the
Board of Directors as of the date hereof remain members of the Board of
Directors at any time, (iv) there is no material litigation that is pending or
threatened against the Company and/or any Subsidiary and (v) the Board of
Directors or any Subsidiary Board has not failed to address in a timely fashion
any concerns raised by the Purchaser Designee(s) regarding the conduct of, or
breach of duty by, any officer or director of the Company or any Subsidiary, the
Holders agree that they shall appoint and cause one Purchaser Designee to serve
on the Board of Directors.
6.27. Executive Officers. [(a) The Company shall promptly, but in no
event later than ____ days from [the date of the Note Purchase Agreement], hire
a permanent Chief Executive Officer, whose appointment shall be approved by the
Board of Directors (which approval shall include the affirmative vote of each of
the Purchaser Designees).
(b) Without the approval of the Board of Directors, which
approval shall include the affirmative vote of each of the Purchaser Designees,
the Company shall not make any change in, or appointment of, key executive
officers of the Company, including, without limitation, the Chief Executive
Officer, the Chief Financial Officer, Executive Vice President of Marketing,
Vice President of International Business Development, Chief Operating Officer,
General Counsel or similar positions.
6.28. Board and Committee Notice Requirement. In addition to any
requirements specified in the By-Laws of the Company, the Company shall notify
each Purchaser Designee and the Non-Voting Observer, by telecopy, of (a) every
meeting (or action by written consent) of the Board of Directors and (b) every
meeting (or action by written consent) of any Subsidiary Board and of any
committee of the Board of Directors or Subsidiary Board, at least three days in
advance of such meeting (or distribution of written consents), or, if such
notice under the circumstances is not practicable,
39
as soon before the meeting (or distribution) as is practicable.
6.29. Reimbursement of Certain Expenses. The Company shall, upon
request therefor, promptly reimburse each Purchaser Designee and the Non-Voting
Observer for all reasonable expenses incurred by them in connection with their
attendance at meetings of the Board of Directors, any future Subsidiary Board or
of committees of any of the foregoing and any other activities undertaken by
them in their capacity as directors of the Company or any Subsidiary or
observer, as applicable. The foregoing shall be in addition to, and not in lieu
of (or in duplication of), any indemnification or reimbursement obligations of
the Company under the Certificate of Incorporation of the Company or the By-Laws
or by Law. The Non-Voting Observer shall be entitled to indemnification from the
Company and its Subsidiaries to the maximum extent permitted by Law as though he
or she were a director of the Company or the Subsidiary.
6.30. Limitation of Agreements. The Company shall not, and shall not
permit any Subsidiary to, enter into any Contract, or any amendment,
modification, extension or supplement to any existing Contract or the By-Laws or
Certificate of Incorporation of the Company, which prohibits the Company from
honoring and observing its obligations under the Transaction Documents.
6.31. Redemption of Convertible Debentures. As soon as practicable
after the date hereof, but in no event later than [ ] days from the date hereof,
the Company shall cause all of its outstanding 6% Convertible Debentures (the
"Convertible Debentures") to be redeemed in accordance with the terms and
conditions thereof.
6.32. Operations in Accordance with the Business Plan. The business
and operations of the Company and its Subsidiaries shall be conducted in
accordance with the business plan of the Company, dated August 31, 1999,
previously furnished by the Company to the Purchasers.
7. Events of Default and Remedies.
7.1. Events of Default and Remedies. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any Order of any court or any Order, rule or
regulation of any Governmental Entity) (or, if the giving of notice or lapse of
time or both is required, then, prior to such notice or lapse of time, a
"Default"):
(a) default in the payment of the Accreted Value of or premium,
if any, and interest in respect of any Note when it becomes
40
due and payable; or
(b) default in the performance of any agreement or covenant in,
or provision of, this Agreement, the Notes, or the other documents executed
and delivered in connection with this Agreement (including any Transaction
Document) and to which the Company or any of its Subsidiaries is a party
(other than a covenant or a default in whose performance is elsewhere in
this Section specifically dealt with), or any representation or warranty
made in any document executed and delivered in connection with this
Agreement (including any Transaction Document) was false in any material
respect on the date as of which made or deemed made; or
(c) the Company or any of its Subsidiaries shall: (A) default in
any payment of principal of or interest on any Indebtedness (other than the
Notes and any intercompany debt) or in the payment of any Guarantee, beyond
the period of grace, if any, provided in the instrument or agreement under
which such Indebtedness or Guarantee was created; or (B) default in the
observance or performance of any other agreement or condition relating to
any such Indebtedness or Guarantee or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity, any applicable
grace period having expired, or such Guarantee to become payable, any
applicable grace period having expired, provided that the aggregate
principal amount of all such Indebtedness and Guarantee which would then
become due or payable as described in this Section 7.1(c) would equal or
exceed $500,000; or
(d) a final judgment or judgments for the payment of money are
entered by a court or courts of competent jurisdiction against any Company
or any of its Subsidiaries and such remains undischarged for a period
(during which execution shall not effectively be stayed) of 60 days,
provided that the aggregate of all such judgments that are not covered by
insurance under which the Company or a Subsidiary is a beneficiary exceeds
$500,000, or the Required Holders shall determine that any regulatory body
having jurisdiction over the Company or any
41
of its Subsidiaries including, without limitation, the SEC, shall have
taken or proposed to take any action that the Required Holders believe
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or that adversely affects the Holders' security
interest in the Collateral; or
(e) the Company or any of its Subsidiaries (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing against
it of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of
any jurisdiction, (iii) makes an assignment for the benefit of its
creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is adjudicated as
insolvent or to be liquidated, or (vi) takes corporate action for the
purpose of any of the foregoing; or
(f) a court or other Governmental Entity of competent
jurisdiction enters an Order appointing, without consent by the Company or
any of its Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or insolvency law
of any jurisdiction, or ordering the dissolution, winding-up or liquidation
of the Company or any of its Subsidiaries, or any such petition shall be
filed against the Company or any of its Subsidiaries and such petition
shall not be dismissed within 60 days; or
(g) a court or other Governmental Entity of competent
jurisdiction enters a final judgment holding any of the documents delivered
in connection with this Agreement (including any Transaction Document) to
be invalid or unenforceable and such judgment remains unstayed and in
effect for a period of 20 consecutive days; or the Company or any of its
Subsidiaries shall assert, in any pleading filed in such a court, that any
of the documents delivered in connection with this Agreement are invalid or
unenforceable; or
(h) any provision of any Transaction Document shall for any
reason cease to be valid, binding and enforceable in accordance with its
terms (or the Company or any of its Subsidiaries [(or the Trustee in the
case of the Intercreditor Agreement)] shall challenge the enforceability of
any Transaction Document or shall assert in
42
writing, or engage in any action or inaction based on any such assertion,
that any provision of any of the Transaction Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its
terms), or any security interest created under any Transaction Document
shall cease to be a valid and perfected security interest, or Lien in any
of the Collateral purported to be covered thereby; or
(i) the Company or any of its Subsidiaries shall default in the
payment of any amounts due pursuant to the terms of any document executed
and delivered by the Company or such Subsidiary in connection with this
Agreement (other than payments elsewhere in this Section specifically dealt
with); or
(j) there shall exist with respect to any Benefit Plan any
"prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code); (ii) there shall exist with respect to any Benefit Plan
which is a "defined benefit plan" (within the meaning of Section 3(35) of
ERISA) any "accumulated funding deficiency" (as defined in Section 302 of
ERISA or Section 412 of the Code, whether or not waived); (iii) a
"reportable event" (within the meaning of Section 4043 of ERISA, but
excluding any reportable event with respect to which the 30-day notice
requirement of Section 4043 has been waived) shall occur, or judicial or
administrative proceedings shall have commenced, with respect to any
Benefit Plan which is a "defined benefit plan" (within the meaning of
Section 3(35) of ERISA), which reportable event or proceedings is, in the
reasonable opinion of the Holders, likely to result in the termination of
such Benefit Plan; (iv) there shall exist with respect to any Benefit Plan
which is a "multiemployer plan" (within the meaning of Section 4001(a)(3)
of ERISA) any "withdrawal liability" (within the meaning of Section 4201 of
ERISA); or (v) any Benefit Plan which is a "defined benefit plan" (within
the meaning of Section 3(35) of ERISA) shall terminate; and in the case of
each of clauses (i) through (v) above, such event or condition could
individually or in the aggregate with all other such events or conditions
have a Material Adverse Effect.
7.2. Acceleration of Maturity. If any Event of Default (other than an
Event of Default specified in clause (e), (f), (g) or (h) of Section 7.1) shall
have occurred and be continuing, the Required Holders may, by notice to the
Company, declare the entire unpaid Accreted Value of, and interest, if any, in
respect of the Notes (to the full extent permitted by applicable law) to be
immediately due and payable (and such Accreted Value shall be based on the
Accreted Value of the Notes to the day prior to
43
such payment date), and upon such declaration all of such amount shall be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived, anything in the Notes
or in this Agreement to the contrary notwithstanding; provided that if an Event
of Default under clause (e), (f), (g) or (h) of Section 7.1 shall have occurred,
the entire unpaid Face Amount of the Notes (to the full extent permitted by
applicable law), shall immediately become due and payable, without any
declaration and without presentment, demand, protest or further notice, all of
which are hereby waived, anything in the Notes or this Agreement to the contrary
notwithstanding.
7.3. Other Remedies. If any Event of Default shall have occurred and
be continuing, from and including the date of such Event of Default to but not
including the date such Event of Default is cured or waived, each Holder may
enforce its rights by suit in equity, by action at law, or by any other
appropriate proceedings, whether for the specific performance (to the extent
permitted by Law) of any covenant or agreement contained in this Agreement or
the Notes or in aid of the exercise of any power granted in this Agreement or
the Notes, and each Holder may enforce the payment of any Note held by such
Holder and any of its other legal or equitable rights.
7.4. Conduct No Waiver; Collection Expenses. No course of dealing on
the part of any Holder, nor any delay or failure on the part of any Holder to
exercise any of its rights, shall operate as a waiver of such right or otherwise
prejudice any Holder's rights, powers and remedies. If the Company fails to pay,
when due, any payment in respect of any Note, the Company will pay such Holder,
to the extent permitted by Law, on demand, all costs and expenses incurred by
such Holder in the collection of any amount due in respect of any Note
hereunder, including reasonable legal fees incurred by such Holder in enforcing
its rights hereunder.
7.5. Annulment of Acceleration. If a declaration is made in accordance
with Section 7.2, then and in every such case, the Required Holders may, by an
instrument delivered to the Company, annul such declaration and the consequences
thereof.
7.6. Remedies Cumulative. No right or remedy conferred upon or
reserved to each Purchaser or the Collateral Agent or the Holders under this
Agreement is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right and
remedy given hereunder or now and hereafter existing under applicable law. Every
right and remedy given by this Agreement or by applicable Law to each Purchaser
or the Collateral Agent or the Holders may be exercised from time to time and as
often as may be deemed expedient by such Purchaser or the Collateral Agent or
the Holders.
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8. Redemption
8.1. Optional Redemption. Subject to Holder's right of conversion set
forth in Section 9, the Company shall have the right, at its sole option and
election made in accordance with Section 8.4(d) and subject to Section 8.4(d),
to redeem the Notes after __________, 2001, in whole or in part, at a redemption
price of 145% of the Accreted Value of the Notes to the day prior to the
redemption date (the "Optional Redemption Price"); provided, however, that if
such redemption date occurs after ___________, 2002, the Optional Redemption
Price shall decrease to 110% of the Accreted Value of the Notes prior to the
redemption date.
8.2. Partial Redemption. If less than all of the Notes at the time
outstanding are to be redeemed, the aggregate Accreted Value of the Notes to be
redeemed shall be prorated among the outstanding Notes; provided, however, that
in the event that the aggregate Accreted Value of the Notes then outstanding is
[$1,000,000] or less, the Company shall be required to redeem all of such
outstanding Notes if it elects to redeem any such Notes.
8.3. Change of Control. The Company shall make an offer, in accordance
with the procedures set forth in Section 8.4(b), to acquire the Notes for cash
at a redemption price of 110% of the Accreted Value of the Notes to the day
prior to the redemption date (the "Change of Control Redemption Price"), in the
event of (i) a Change of Control, a merger, consolidation or other combination
involving the Company, or (ii) a Change of Control of a Subsidiary of the
Company or a group of Subsidiaries of the Company occurs and such Subsidiary or
group of Subsidiaries, individually or in the aggregate, together with their
consolidated Subsidiaries and all other Subsidiaries previously subject to a
Change of Control, if any, represent more than 50% of the revenues or net assets
of the Company and its Subsidiaries on a consolidated basis as of the last date
of the immediately preceding fiscal quarter of the Company or for the twelve
month period then ended.
8.4. Redemption Procedures. (a) Notice of any redemption of Notes
pursuant to Section 8.1 shall be mailed at least 30 but not more than 60 days
prior to the date fixed for redemption to each Holder to be redeemed, at such
Holder's address as it appears in the Note Register. In order to facilitate the
redemption of Notes, the Board of Directors may fix a record date for the
determination of Notes to be redeemed which shall be a date at least 20 days
following the date of the notice.
(b) Promptly following a Change of Control (but in no event
45
more than five Business Days thereafter), the Company shall mail to each Holder,
at such Holder's address as it appears in the Note Register, notice of such
Change of Control, which notice shall set forth such Holder's right to require
the Company to redeem any or all Notes held by it. The Company shall thereafter,
during a period of 90 days from the date of such notice redeem any Notes, in
whole or in part, at the option of such Holder, upon at least five days' written
notice to the Company by such Holder specifying (i) the Accreted Value of Notes
to be redeemed and (ii) the redemption date.
(c) On the date of any redemption being made pursuant to Section
8.1, 8.2 or 8.3 which is specified in a notice given pursuant to this Section
8.4, the Company shall wire transfer to such Holder the Optional Redemption
Price or the Change of Control Redemption Price, as the case may be, for the
Accreted Value of Notes and premium, if any, so redeemed.
9. Conversion
9.1. Holder's Option to Convert into Common Stock. Subject to the
provisions for adjustment hereinafter set forth, any Note or any portion of the
outstanding Accreted Value of such Note shall be convertible at the option of
Holder at any time after the Closing into fully paid and non-assessable shares
of Common Stock at a conversion price, determined as hereinafter provided, in
effect at the time of conversion.
The number of shares of Common Stock issuable upon conversion of a
Note shall be determined by dividing the Accreted Value of the Note to the day
prior to the conversion date or portion thereof surrendered for conversion by
the Conversion Price. The "Conversion Price" shall initially be $3.00 per share,
subject to adjustment as provided in this Section 9 and Section 6.31(c).
9.2. Exercise of Conversion Privilege. (a) Conversion of the Notes may
be effected by any Holder thereof upon the surrender to the Company at the
office of the Company designated for notices in accordance with Section 14.6 or
at the office of any agent or agents of the Company, as may be designated by the
Board of Directors (the "Transfer Agent"), of the Notes to be converted,
accompanied by a written notice stating that such Holder elects to convert all
or a specified portion of the Accreted Value of such Notes in accordance with
the provisions of this Section 9 and specifying the name or names in which such
Holder wishes the certificate or certificates for shares of Common Stock to be
issued. In case any Holder's notice shall specify a name or names other than
that of such Holder, such
46
notice shall be accompanied by payment of all transfer taxes payable upon the
issuance of shares of Common Stock in such name or names. Other than such taxes,
the Company will pay any and all issue and other taxes (other than taxes based
on income) that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Notes pursuant hereto. As promptly as practicable,
and in any event within five Business Days after the surrender of such Notes and
the receipt of such notice relating thereto and, if applicable, payment of all
transfer taxes (or the demonstration to the satisfaction of the Company that
such taxes have been paid), the Company shall deliver or cause to be delivered
(i) a certificate or certificates representing the number of validly issued,
fully paid and nonassessable full shares of Common Stock to which the holder of
the Notes being converted shall be entitled and (ii) if less than the entire
Accreted Value of any Note surrendered is being converted, a new Note in the
Accreted Value which remains outstanding upon such partial conversion. Such
conversion shall be deemed to have been made at the close of business on the
date of giving such notice so that the rights of any holder thereof as to the
Note or Notes (or portion thereof) being converted shall cease except for the
right to receive shares of Common Stock in accordance herewith, and the Person
entitled to receive the shares of Common Stock shall be treated for all purposes
as having become the record holder of such shares of Common Stock at such time,
so long as such holder's Notes are delivered to the Company within two Business
Days after the date of the giving of notice.
(b) In case any Notes are to be redeemed pursuant to Section 8.1,
such right of conversion shall cease and terminate as to the Notes to be
redeemed at the close of business on the Business Day preceding the date fixed
for redemption unless (i) the Company shall default in the payment of the
Optional Redemption Price or (ii) a holder of a Note to be redeemed has given
notice to the Company of such holder's election to convert all or any portion of
a Note prior to the date fixed for redemption. For the avoidance of doubt, both
the Holders and the Company acknowledge that the Holders' right to convert the
Notes into Common Stock remains in effect until any redemption and will not be
suspended by any notice of redemption.
9.3. Fractions of Shares; Interest. In connection with the conversion
of any Note into Common Stock, no fractional shares shall be issued, but in lieu
thereof the Company shall pay a cash adjustment in respect of such fractional
interest in an amount equal to such fractional interest multiplied by the
Current Market Price per share of Common Stock on the Trading Day on which such
Note is deemed to have been converted. If
47
more than one Note shall be surrendered for conversion by the same Holder at the
same time, the number of full shares of Common Stock issuable on conversion
thereof shall be computed on the basis of the aggregate Accreted Value of Notes
so surrendered, together with cash in lieu of any fractional share of Common
Stock.
9.4. Reservation of Stock; Listing. (a) The Company shall at all times
reserve and keep available for issuance upon the conversion of the Notes, free
from any preemptive rights, such number of its authorized but unissued shares of
Common Stock as will from time to time be sufficient to permit the conversion of
the Face Amount of the Notes into Common Stock, and shall take all action
required to increase the authorized number of shares of Common Stock, if
necessary, to permit the conversion of the Face Amount of the Notes.
(b) If at the time of conversion, the Common Stock is listed on a
national securities exchange, or is designated as a "national market system
security" on the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), the Company shall take all action necessary to
cause the shares of Common Stock issuable upon conversion of the Notes to be
listed on such exchange, subject to official notice of issuance.
9.5. Rights. If the Company shall issue shares of Common Stock upon
conversion of any Notes as contemplated by this Section 9, the Company shall
issue together with each such share of Common Stock any rights issued to holders
of Common Stock, irrespective of whether such rights shall be exercisable at
such time, but only if such rights are issued and outstanding and held by other
holders of Common Stock at such time and have not expired.
9.6. Adjustment of Conversion Ratio. The Conversion Price will be
subject to adjustment from time to time as follows:
(a) In case the Company shall at any time or from time to time
after the date hereof (A) pay a dividend, or make a distribution, on the
outstanding shares of Common Stock in shares of Common Stock, (B) subdivide the
outstanding shares of Common Stock; (C) combine the outstanding shares of Common
Stock into a smaller number of shares; (D) issue by reclassification of the
shares of Common Stock any shares of capital stock of the Company, then, and in
each such case, the Conversion Price in effect immediately prior to such event
or the record date therefor, whichever is earlier, shall be adjusted so that the
holder of any Note thereafter surrendered for conversion into Common Stock shall
be entitled to receive the number of shares of Common Stock of the Company which
such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such Notes been
48
surrendered for conversion immediately prior to the happening of such event or
the record date therefor, whichever is earlier. An adjustment made pursuant to
this clause (a) shall become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of such subdivision,
reclassification or combination, at the close of business on the day upon which
such corporate action becomes effective. No adjustment shall be made pursuant to
this clause (a) in connection with any transaction to which Section 9.7 applies.
(b) If at any time the Company shall issue shares of Common Stock
(or rights, warrants or other securities convertible into or exchangeable for
shares of Common Stock (collectively "Convertible Securities")) at a price per
share (or having a conversion price per share) less than the greater of (1) the
Conversion Price per share of Common Stock as of the date of issuance of such
shares (or, in the case of Convertible Securities, less than the Conversion
Price as of the date of issuance of the Convertible Securities in respect of
which shares of Common Stock were issued) and (2) the Current Market Price for
the period of 20 Trading Days preceding the earlier of the issuance or public
announcement of the issuance of such additional shares of Common Stock or
Convertible Securities (the "20 day Price"), then the Conversion Price shall be
adjusted by multiplying (A) the Conversion Price in effect on the day
immediately prior to such date by (B) a fraction, the numerator of which shall
be the sum of (1) the number of shares of Common Stock outstanding on such date
and (2) the number of shares of Common Stock purchasable with the aggregate
consideration receivable by the Company for the total number of shares of Common
Stock so issued (or into which the rights, warrants or other convertible
securities may convert), and the denominator of which shall be the sum of (x)
the number of shares of Common Stock outstanding on such date and (y) the number
of additional shares of Common Stock issued (or into which the Convertible
Securities may convert).
An adjustment made pursuant to this Section 9.6(b) shall be made
on the next Business Day following the date on which any such issuance is made
and shall be effective retroactively to the close of business on the date of
such issuance. For purposes of this Section 9.6(b), the aggregate consideration
receivable by the Company in connection with the issuance of shares of Common
Stock or of Convertible Securities shall be deemed to be equal to the sum of the
aggregate offering price (before deduction of underwriting discounts or
commissions and expenses payable to third parties) of all such Common Stock and
Convertible Securities plus the minimum aggregate amount, if any, payable upon
exercise or conversion of any such Convertible Securities. The issuance or
reissuance of any
49
shares of Common Stock (whether treasury shares or newly issued shares) pursuant
to (i) a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the Conversion Price pursuant to Section 9.6(a) or (ii) any stock
option plan or program of the Company currently in effect involving the grant of
options to employees of the Company at Current Market Price shall not be deemed
to constitute an issuance of Common Stock or Convertible Securities by the
Company to which this Section 9.6(b) applies. No adjustment shall be made
pursuant to this Section 9.6(b) in connection with any transaction to which
Section 9.7 applies.
(c) In case the Company shall at any time or from time to time
after the date hereof declare, order, pay or make a dividend or other
distribution (including, without limitation, any distribution of stock or other
securities or property or Convertible Securities of the Company or any of its
Subsidiaries by way of dividend or spinoff), on its Common Stock, then, and in
each such case, the Conversion Price shall be adjusted by multiplying (1) the
applicable Conversion Price on the day immediately prior to the record date
fixed for the determination of stockholders entitled to receive such dividend or
distribution by (2) a fraction, the numerator of which shall be the average
Current Market Price of the Common Stock for the period of 20 Trading Days
preceding such record date, and the denominator of which shall be such average
Current Market Price of the Common Stock less the Fair Market Value per share of
Common Stock (as determined in good faith by the board of directors of the
Company, a certified resolution with respect to which shall be mailed to each
Holder) of such dividend or distribution. No adjustment shall be made pursuant
to this Section 9.6(c) in connection with any transaction to which Section 9.7
applies.
(d) In case a tender or exchange offer made by the Company or any
Affiliate of the Company for all or any portion of the Common Stock shall expire
and such tender or exchange offer shall involve the payment by the Company or
such Affiliate of consideration per share of Common Stock having a Fair Market
Value at the last time (the "Expiration Time") tenders or exchanges may be made
pursuant to such tender or exchange offer (as it shall have been amended) that
exceeds the Current Market Price per share of Common Stock on the Trading Day
next succeeding the Expiration Time, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subsection (d) by a fraction (which shall not be
greater than one) of
50
which the numerator shall be the number of shares of Capital Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time multiplied
by the Current Market Price per share of Common Stock on the Trading Day next
succeeding the Expiration Time and of which the denominator shall be the sum of
(i) the Fair Market Value of the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares") and (ii) the product of
the number of shares of Capital Stock outstanding (less any Purchased Shares) at
the Expiration Time and the Current Market Price per share of Common Stock on
the Trading Day next succeeding the Expiration Time, such reduction to become
retroactively effective immediately prior to the opening of business on the day
following the Expiration Time.
(e) For purposes of this Section 9.6, the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of the Company.
(f) The term "dividend," as used in this Section 9.5, shall mean
a dividend or other distribution upon stock of the Company.
(g) Anything in this Section 9.6 to the contrary notwithstanding,
the Company shall not be required to give effect to any adjustment in the
Conversion Price unless and until the net effect of one or more adjustments
(each of which shall be carried forward), determined as above provided, shall
have resulted in a change of the Conversion Price by at least one one-hundredth
of one share of Common Stock, and when the cumulative net effect of more than
one adjustment so determined shall be to change the Conversion Price by at least
one one-hundredth of one share of Common Stock, such change in Conversion Price
shall thereupon be given effect.
(h) The certificate of any firm of independent public accountants
of recognized national standing selected by the Board of Directors (which may be
the firm of independent public accountants regularly employed by the Company)
shall be presumptively correct for any computation made under this Section 9.6.
(i) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion granted by this Section
9.6 or in the Conversion Price then in effect shall
51
be required by reason of the taking of such record.
9.7. Merger or Consolidation. In the case of any recapitalization,
reorganization, reclassification, consolidation, merger, sale of all or a
substantial portion of the Company's assets to another Person or other
transaction which is effected in such a manner that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock (each of
the foregoing being referred to as a "Transaction"), each Note then outstanding
shall thereafter be convertible into, in lieu of the Common Stock issuable upon
such conversion prior to consummation of such Transaction, the kind and amount
of shares of stock and other securities and property receivable (including cash)
upon the consummation of such Transaction by a holder of that number of shares
of Common Stock into which the Accreted Value of such Note was convertible
immediately prior to such Transaction. In each such case, the Company shall also
make appropriate provisions (in form and substance satisfactory to the Required
Holders) to insure that the provisions of this Section 9.6 shall thereafter be
applicable to the Notes (including, in the case of any such consolidation,
merger or sale in which the successor entity or purchasing entity is other than
the Company, an immediate adjustment of the Conversion Price to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale,
and a corresponding immediate adjustment in the number of shares of Common Stock
acquirable and receivable upon conversion of the Notes, in each case if the
value so reflected is less than the Conversion Price in effect immediately prior
to such consolidation, merger or sale). The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor corporation (if other than the Company) resulting from consolidation
or merger or the corporation purchasing such assets assumes by written
instrument (in form reasonably satisfactory to the Required Holders), the
obligation to deliver to each such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire. In case securities or property other than Common Stock
shall be issuable or deliverable upon conversion as aforesaid, then all
references in this Section 9 shall be deemed to apply, so far as appropriate and
nearly as may be, to such other securities or property.
9.8. Notice of Certain Corporate Actions. In case at any time or from
time to time the Company shall pay any stock dividend or make any other non-cash
distribution to the holders of its Common Stock, or shall offer for subscription
pro rata to the holders of its Common Stock any additional shares of stock of
any class or any other right, or there shall be any capital reorganization or
reclassification of the Common Stock or consolidation or merger of the Company
with or into another corporation, or
52
any sale or conveyance to another corporation of the property of the Company as
an entirety or substantially as an entirety, or there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the Company, then, in any
one or more of said cases the Company shall give at least 20 days' prior written
notice (the time of mailing of such notice shall be deemed to be the time of
giving thereof) to the registered holders of the Notes at the addresses of each
as shown in the Note Register as of the date on which (i) a record shall be
taken for such stock dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, sale or conveyance,
dissolution, liquidation or winding up shall take place, as the case may be,
provided that in the case of any Transaction to which Section 9.7 applies the
Company shall give at least 30 days' prior written notice as aforesaid. Such
notice shall also specify the date as of which the holders of the Common Stock
of record shall participate in said dividend, distribution or subscription
rights or shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale or conveyance or participate in such dissolution,
liquidation or winding up, as the case may be. Failure to give such notice shall
not invalidate any action so taken.
9.9. Reports as to Adjustments. Upon any adjustment of the Conversion
Price then in effect and any increase or decrease in the number of shares of
Common Stock issuable upon the operation of the conversion provisions set forth
in this Section 9, then, and in each such case, the Company shall promptly
deliver to each Holder and the Transfer Agent of the Notes and Common Stock, a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company
setting forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the Conversion
Price then in effect following such adjustment, and shall set forth in
reasonable detail the method of calculation of each and a brief statement of the
facts requiring such adjustment. Where appropriate, such notice to any Holder
may be given in advance and included as part of the notice required under the
provisions of Section 9.8.
10. The Collateral Agent.
10.1. Appointment. Each Purchaser for itself and for future Holders
hereby irrevocably designates and appoints Appaloosa Management L.P. as the
Collateral Agent under this Agreement, and irrevocably authorizes the Collateral
Agent to take such action on such Purchaser's behalf and any future Holder's
behalf and to exercise such powers and perform such duties as are expressly
delegated to the Collateral Agent by the terms of the Transaction Documents,
together with such other powers as
53
are reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Purchaser or future Holder, and no implied covenants,
functions, responsibilities, duties, obligations or Liabilities shall be read
into this Agreement or any of the Transaction Documents or otherwise exist
against the Collateral Agent.
10.2. Delegation of Duties. The Collateral Agent may execute any of
its duties under the Transaction Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys-in-fact selected by
it with reasonable care, except as otherwise provided in Section 10.3.
10.3. Exculpatory Provisions. Neither the Collateral Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact, Affiliates or
Subsidiaries shall be (i) liable for any action taken or omitted to be taken by
any of them under or in connection with the Transaction Documents, or (ii)
responsible in any manner to any of the Purchasers or future Holders for any
recitals, statements, representations or warranties made by the Company or any
of its Subsidiaries or any officer thereof contained in the Transaction
Documents or in any certificate, report, statement or other document referred to
or provided for in, or received by the Collateral Agent under or in connection
with, the Transaction Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Transaction Documents or for
any failure of the Company or any of its Subsidiaries to perform its obligation
thereunder. The Collateral Agent shall not be under any obligation to any
Purchaser or future Holder to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, any
Transaction Document, or to inspect the properties, books or records of the
Company or any of its Subsidiaries.
10.4. Reliance by the Collateral Agent. The Collateral Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Company), independent accountants and other experts selected by the Collateral
Agent. The Collateral Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Collateral Agent.
The Collateral Agent shall be fully justified in failing or refusing to take any
action under any Transaction Document unless it shall first receive such advice
or concurrence of the Required Holders (or, where unanimous consent of the
Holders is expressly required hereunder or thereunder, such Holders) as it deems
appropriate or it shall first be indemnified to its satisfaction by the Holders
against any and all Liability and expense
54
which may be incurred by it by reason of taking or continuing to take any such
action. The Collateral Agent shall in all cases be fully protected in acting, or
in refraining from acting, under any Transaction Document in accordance with a
request of the Required Holders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Purchasers and all
future Holders of the Notes.
10.5. Notice of Default. The Collateral Agent shall not be deemed to
have knowledge or notice of the occurrence of any default or Event of Default
hereunder unless the Collateral Agent has received written notice from a Holder
or the Company referring to this Agreement, describing such default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Collateral Agent receives such a notice, the Collateral Agent shall promptly
give notice thereof to all Holders. The Collateral Agent shall take such action
with respect to such default or Event of Default as shall be directed by the
Required Holders; provided that (i) the Collateral Agent shall not be required
to take any action that exposes the Collateral Agent to any Liability or that is
contrary to this Agreement or applicable law and (ii) unless and until the
Collateral Agent shall have received such directions, the Collateral Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such default or Event or Default as it shall deem
advisable in the best interests of the Holders.
10.6. Non-Reliance on Collateral Agent and Other Purchasers. Each
Purchaser for itself and all future Holders of the Notes acquired by such
Purchaser expressly acknowledges that neither the Collateral Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or
Affiliates has made any representation or warranties to it and that no act by
the Collateral Agent hereafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by the Collateral Agent to any such Purchaser or Holder. Each
Purchaser for itself and all future Holders of the Notes acquired by such
Purchaser represents to the Collateral Agent that it has, independently and
without
55
reliance upon the Collateral Agent or any other Holder, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operation, property, financial and other
condition and creditworthiness of the Company and its Subsidiaries, and made its
own decision to make its loan hereunder and to enter into this Agreement. Each
Purchaser also represents for itself and all future Holders of the Notes
acquired by such Purchaser that it will, independently and without reliance upon
the Collateral Agent or any other Holder, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
the Transaction Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Company and its Subsidiaries. Except for
notices, reports and other documents expressly required to be furnished to the
Holders by the Collateral Agent hereunder, the Collateral Agent shall not have
any duty or responsibility to provide any Holder with any credit or other
information concerning the business, financial condition, assets, liabilities,
net assets, properties, results of operations, value, prospects and other
condition or creditworthiness of the Company and its Subsidiaries which may come
into the possession of the Collateral Agent or any of its officers, directors,
employees, agents, attorneys-in-fact, Affiliates or any of its Subsidiaries.
10.7. Indemnification. The Purchasers and the future Holders jointly
and severally agree to indemnify the Collateral Agent in its capacity as such
(to the extent not reimbursed by the Company and its Subsidiaries and without
limiting the obligation of the Company and its Subsidiaries to do so), from and
against any and all Liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time be imposed on, incurred by or asserted against
the Collateral Agent in any way relating to or arising out of the Transaction
Documents or any documents contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted by the
Collateral Agent under or in connection with any of the foregoing; provided that
no Purchaser or future Holder shall be liable for the payment of any portion of
such Liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the Collateral
Agent's gross negligence or willful misconduct. The agreements contained in this
Section 10.7 shall survive the payment of the Notes and all other amounts
payable hereunder.
10.8. Collateral Agent in its Individual Capacity. The Collateral
Agent and its Affiliates and Subsidiaries may make loans to, accept deposits
from and generally engage in any kind of business with the Company and its
Subsidiaries as though the Collateral Agent were not the Collateral Agent
hereunder. With respect to its loans made or renewed by it or any Note issued to
it, the Collateral Agent shall have the same rights and powers, duties and
Liabilities under the Transaction Documents as any
56
Holder and may exercise the same as though it were not the Collateral Agent and
the terms "Purchaser", "Purchasers", "Holder" and "Holders" shall include the
Collateral Agent in its individual capacities.
10.9. Successor Collateral Agent. The Collateral Agent may resign as
Collateral Agent upon 30 days' notice to the Company (and the Company shall
promptly notify the Holders). If the Collateral Agent shall resign as Collateral
Agent under the Transaction Documents, then the Required Holders shall appoint a
successor agent for the Holders whereupon such successor agent shall succeed to
the rights, powers and duties of the Collateral Agent and the term "Collateral
Agent" shall mean such successor agent effective upon its appointment, and the
former Collateral Agent's rights, powers and duties as Collateral Agent shall be
terminated, without any other or further act or deed on the part of such former
Collateral Agent or any of the parties to this Agreement or any Holders of the
Notes. After any retiring Collateral Agent's resignation hereunder as Collateral
Agent, the provisions of this Section 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Collateral Agent under
the Transaction Documents.
11. Interpretation.
11.1. Definitions.
"$7 Warrants" shall have the meaning ascribed thereto in Section
1.4(ii).
"Accreted Value" shall have the meaning ascribed thereto in Section
5.3.
"Agreement" shall have the meaning ascribed thereto in the Preamble.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act. "Affiliate" shall also include partners of a Person.
Notwithstanding the foregoing, "Affiliate" shall not include the limited
partners of any Purchaser or Holder or any limited partners of a limited partner
of any Purchaser or Holder.
"Beneficially Own" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
"Benefit Plan" shall mean each plan, program, policy, payroll
practice, commitment or other arrangement providing for compensation, severance,
termination pay, bonuses, performance awards, stock or stock-related awards,
fringe benefits or other employee benefits of any kind, whether formal or
informal, funded or unfunded, written or oral and
57
whether or not legally binding, including, without limitation, each "employee
benefit plan" (within the meaning of Section 3(3) of ERISA), in the case of each
of the foregoing, maintained, sponsored or contributed to by the Company or any
ERISA Affiliate or pursuant to which the Company or any ERISA Affiliate has or
may have any Liability, but excluding individual Employee Agreements.
"Board of Directors" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"By-Laws" shall have the meaning ascribed thereto in Section 1.4(xi).
"Capital Expenditures" shall mean [expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the total principal portion of Capitalized Lease Obligations.].
"Capital Stock" means, in the case of the Company, any and all shares
(however designated) of the capital stock of the Company now or hereafter
outstanding.
"Capitalized Lease" shall mean, with respect to any Person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the lessee's
or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and include,
as of any date as of which the amount thereof is to be determined, the amount of
the liability capitalized or disclosed (or which should be disclosed) in a
balance sheet of such Person in respect of a Capitalized Lease of such Person.
"Change of Control" shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35% or more of the combined
voting power of the then outstanding Voting Securities of the Company,
but excluding, for this purpose, any such acquisition by (i) the
Company or any Subsidiary, (ii) any Benefit Plan (or related trust) of
the Company or any Subsidiary, or (iii) any corporation with respect
to which, following such
58
acquisition, 50% or more of the combined voting power of the then
outstanding Voting Securities of such corporation is then beneficially
owned, directly or indirectly, by individuals and entities who were
the beneficial owners of Voting Securities of the Company immediately
prior to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the
combined voting power of the then outstanding Voting Securities of the
Company; or
(b) a reorganization, merger or consolidation, in each case,
with respect to which all or substantially all the Persons who were
the respective Beneficial Owners of the Voting Securities of the
Company immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation Beneficially Own, directly or indirectly, more than 35%
of the combined voting power of the then outstanding Voting Securities
of the corporation resulting from such reorganization, merger or
consolidation; or
(c) the Incumbent Board shall cease for any reason to
constitute at least 50% of the members of the Board; or
(d) the sale, lease or other disposition of all or a
substantial part of the Company's assets in one transaction or a
series of related transactions.
"Change of Control Redemption Price" shall have the meaning ascribed
thereto in Section 8.3.
"Closing" shall have the meaning ascribed thereto in Section 1.3.
"Closing Date" shall have the meaning ascribed thereto in Section
1.3(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" means all real and personal property and interests in
real and personal property including, without limitation, Intellectual Property,
rights under leases and royalty rights and agreements, now owned or hereafter
acquired by the Company or its Subsidiaries in or upon which a Lien is granted
or made under the Collateral Documentation.
"Collateral Agent" shall have the meaning ascribed thereto in the
Preamble.
"Collateral Documentation" means the Guarantee and Security
Agreements, the Security Agreement, the Financing Statements, the Intercompany
Notes and the endorsements thereof to the Collateral Agent (for the benefit of
the Holders) or to the Holders, and all other deeds
59
of trust, assignments, endorsements, pledged stock, collateral assignments and
other instruments, documents, agreements or conveyances at any time creating or
evidencing Liens or assigning Liens to the Collateral Agent (for the benefit of
the Holders) or to the Holders, to secure the obligations of the Company or any
of its Subsidiaries under the Notes, [the Intercreditor Agreement] and the
Registration Rights Agreement.
"Common Stock" shall have the meaning ascribed thereto in the
Recitals.
"Company" shall have the meaning ascribed thereto in the Preamble.
"Consolidated" or "consolidated", when used with reference to any
financial term in this Agreement (but not when used with respect to any tax
return or tax Liability), shall mean the aggregate for two or more Persons of
the amounts signified by such term for all such Persons, with inter-company
items eliminated and, with respect to earnings, after eliminating the portion of
earnings properly attributable to minority interests, if any, in the capital
stock of any such Person or attributable to shares of preferred stock of any
such Person not owned by any other such Person.
"Contracts" shall mean all agreements, contracts, leases, purchase
orders, arrangements, commitments and licenses to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound.
"Conversion Price" shall have the meaning ascribed thereto in Section
9.1.
"Convertible Debentures" shall have the meaning ascribed thereto in
Section 6.32.
"Convertible Securities" shall have the meaning ascribed thereto in
Section 9.6(b).
"Current Market Price", when used with reference to shares of Common
Stock or other securities on any date, shall mean the closing price per share of
Common Stock or such other securities on such date and, when used with reference
to shares of Common Stock or other securities for any period shall mean the
average of the daily closing prices per share of Common Stock or such other
securities for such period. If the Common Stock or such other securities are
listed or admitted to trading on a national securities exchange, the closing
price shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock
60
Exchange or, if the Common Stock or such other securities are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common Stock or such
other securities are listed or admitted to trading or, if the Common Stock or
such other securities are not so listed on any national securities exchange, as
reported in the transaction reporting system applicable to securities designated
as a "national market system security" or NASDAQ. If the Common Stock or such
other securities are not publicly held or so listed or designated, "Current
Market Price" shall mean the Fair Market Value per share of Common Stock or of
such other securities as determined in good faith by the Board of Directors
based on an opinion of an independent investment banking firm with an
established national reputation with respect to the valuation of securities.
"Default" shall have the meaning ascribed thereto in Section 7.1.
"Employee Agreement" shall mean each management, employment,
severance, consulting, non-compete, confidentiality, or similar agreement or
Contract between the Company or any ERISA Affiliate and any employee pursuant to
which the Company or any ERISA Affiliate has or may have any Liability.
"Environmental Laws" means any and all Laws, permits, concessions,
grants, franchises, licenses, agreements or governmental restrictions relating
to pollution and the protection of the environment or the release of any
materials into the environment, including but not limited to those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.
"Equity Interests" means any capital stock, partnership interest,
joint venture interest or other equity interest or warrants, options or other
rights to acquire any capital stock, partnership interest, joint venture
interest or other equity interest.
"Equity Securities" shall mean with respect to any Person, shares of
capital stock or other equity interest of such Person, and any rights, options
or warrants to purchase stock or other securities exchangeable for or
convertible into capital stock of or other equity interest in the Company.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means each business or entity which is a member of a
"controlled group of corporations," under "common control" or an "affiliated
service group" with the Company within the meaning of Sections
61
414(b), (c) or (m) of the Code, or required to be aggregated with the Company
under Section 414(o) of the Code, or is under "common control" with the Company,
within the meaning of Section 4001(a)(14) of ERISA.
"Event of Default" shall have the meaning ascribed thereto in Section
7.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include reference to the comparable section, if any, of any such successor
federal statute.
"Expiration Time" shall have the meaning ascribed thereto in Section
9.6(d).
"Face Amount" shall have the meaning ascribed thereto in the Recitals
"Fair Market Value" shall mean, as to shares of Common Stock or any
other securities of the Company or any other issuer which are publicly traded,
the average of the Current Market Prices of such shares or securities during the
period of five consecutive trading days preceding the date as of which the Fair
Market Value of a security is to be determined. The "Fair Market Value" of any
security which is not publicly traded or of any other property shall mean the
fair value thereof as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or property
selected in good faith by the Board of Directors or a committee thereof.
"FDA" shall have the meaning ascribed there to in Section 2.15.
"Financing Statements" means Form UCC-1 financing statements to be
filed in all jurisdictions necessary or desirable in order to perfect the
Holders' security interest in the Collateral and shall include any Form UCC-1
financing statements assigned to the Holders and filings to be made in the U.S.
Patent and Trademark Office and the U.S. Copyright Office.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Governmental Entity" shall mean any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
"Guaranty" or "Guarantee" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of any Person guaranteeing, or in effect
guaranteeing, any Indebtedness, dividend or
62
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase or
payment of such Indebtedness or obligation, (y) to maintain working capital or
other balance sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation, (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of such Indebtedness or
obligation, or (iv) otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect thereof. For the
purposes of any computations made under this Agreement, a Guarantee in respect
of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal
to the outstanding amount of the Indebtedness for borrowed money which has been
guaranteed, and a Guarantee in respect of any other Liability or any dividend
shall be deemed to be Indebtedness equal to the maximum aggregate amount of such
Liability or dividend.
"Guarantee and Security Agreement" shall mean the agreement, in the
form of Exhibit 6.10 hereto, to be entered into between the Collateral Agent and
the Company's future domestic Subsidiaries, providing for a security interest in
the domestic Subsidiaries' Collateral and Guarantees from such Subsidiaries.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"Holder" shall mean, at any time of reference, a Person in whose name
a Note is registered in the Note Register at such time.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
"HSR Notification" shall mean the notification of the particular
transaction pursuant to the requirements of the HSR Act.
"Incumbent Board" shall mean the individuals who, immediately
63
after the Closing, constitute the Board of Directors; provided, however, that
any individual becoming a director subsequent to the Closing whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be deemed to be a member of the Incumbent Board.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (other than accounts
payable to suppliers and similar accrued liabilities incurred in the ordinary
course of business and paid in a manner consistent with industry practice), (v)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by such Person
whether or not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such Person, (vii) all Guarantees of such
Person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account of
such Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.
"Indemnified Person" shall have the meaning ascribed thereto in
Section 12.1.
"Indenture Date" shall have the meaning ascribed thereto in Section
5.1.
"Intellectual Property" means (a) Patents, (b) all trademarks, service
marks, trade dress, logos, trade names, domain names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrightable works,
all copyrights and all applications, registrations and renewals in connection
therewith, (d) all mask works and all applications, registrations and renewals
in connection therewith, (e) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs,
64
drawings, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, (h) all copies and tangible embodiments of the foregoing (in whatever
form or medium) and (i) all licenses, sublicenses, permissions or agreements in
connection with the foregoing.
"Intercompany Notes" means any notes from the Subsidiaries or
Affiliates of the Company in favor of the Company, as the same may be amended,
modified or supplemented from time to time in accordance with their terms, and
all other promissory notes or other instruments evidencing Indebtedness of
Affiliates or Subsidiaries of the Company to the Company between the Company and
its Affiliates.
["Intercreditor Agreement" shall mean the agreement, dated as of the
date hereof, between the Collateral Agent and [ ]].
"Law" shall include any foreign, federal, state, or local law,
statute, rule, regulation, Order or other restriction of any court or other
Governmental Entity.
"Liability" shall mean any debt, liability or obligation, whether
known or unknown, asserted or unasserted, accrued, absolute, contingent or
otherwise, whether due or to become due.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Litigation" shall mean any claim, demand, notice, action, suit,
proceeding, arbitration, investigation, civil, criminal or administrative
action, audit, inquiry or hearing by or before any Governmental Entity or
private arbitration tribunal.
"Major Supplier" shall mean a supplier of $20,000 or more in materials
or services to the Company during the last twelve months.
"Material" shall mean material in relation to the properties,
business, prospects, operations, earnings, assets, Liabilities, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries taken
as a whole, whether or not in the ordinary course of business.
"Material Adverse Effect" shall mean a material adverse effect on (a)
properties, business, prospects, operations, earnings, assets,
65
Liabilities or the condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole, whether or not in the ordinary course of
business, (b) the ability of the Company or any of its Subsidiaries to perform
its obligations under any of the Transaction Documents to which it is a party,
(c) the validity or enforceability of any of the Transaction Documents, (d) the
rights, remedies, powers and privileges of the Holders under any of the
Transaction Documents or (e) the timely payment or performance of the Secured
Obligations.
"NASDAQ" shall have the meaning ascribed thereto in Section 9.4(b).
"Net Income" shall mean, with respect to any period, the net income or
net loss of the Company and its Subsidiaries in accordance with GAAP on a
consolidated basis as reflected in the financial statements furnished to the
Holders in accordance with Section 6.20.
"Non-Voting Observer" shall have the meaning ascribed thereto in
Section 6.26.
"Note Purchase Agreement" shall have the meaning ascribed thereto in
the preamble.
"Note Register" shall have the meaning ascribed thereto in Section
4.1.
"Notes" shall have the meaning ascribed thereto in the Recitals.
"Notice" shall have the meaning ascribed thereto in Section 6.11.
"Officers' Certificate" means a certificate signed by any two officers
of the Company, one of whom must be the Chairman of the Board of Directors, the
President, the Chief Executive Officer, the Treasurer or a Vice President of the
Company.
"Old Notes" shall mean the notes issued under the Note Purchase
Agreement.
"Operating Profit" shall have the meaning ascribed thereto in Section
6.15.
"Optional Redemption Price" shall have the meaning ascribed thereto in
Section 8.1.
"Order" shall mean any judgment, order, injunction, ruling, decree,
stipulation or award of any Governmental Entity or private arbitration tribunal.
"Original Issue Discount" shall have the meaning ascribed thereto in
Section 5.3.
"Original Issue Price" shall mean ___________________.
66
"Outstanding" or "outstanding" shall mean when used with reference to
the Notes at a particular time, all Notes theretofore issued as provided in this
Agreement, except (i) Notes theretofore reported as lost, stolen, damaged or
destroyed, or surrendered for transfer, exchange or replacement, in respect to
which replacement Notes have been issued, (ii) Notes theretofore paid in full,
and (iii) Notes therefore canceled by the Company, except that, for the purpose
of determining whether Holders of the requisite aggregate Accreted Value of
Notes have made or concurred in any waiver, consent, approval, notice or other
communication under this Agreement, Notes registered in the name of, or owned
beneficially by, the Company or any Subsidiary of any thereof, shall not be
deemed to be outstanding.
"Patents" shall mean, collectively, (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice) and all
improvements thereon, (b) all patents, patent applications and patent
disclosures, (c) all reissues, divisions, continuations, revisions
reexaminations, renewals, extensions and continuations-in-part thereof) and (d)
all rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to xxx for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.
"Permitted Indebtedness" means, without duplication, any of the
following Indebtedness of the Company or any of its Subsidiaries, as the case
may be: (i) Indebtedness and obligations under the Notes; (ii) any Indebtedness
and obligations outstanding on the date hereof, as set forth on Schedule 6.6; or
(iii) Indebtedness of a domestic Subsidiary of the Company to the Company as
long as such Subsidiary has executed the Guarantee and Security Agreement and
such Indebtedness is evidenced by Intercompany Notes and the Intercompany Notes
are pledged to the Collateral Agent as Collateral.
"Permitted Investments" shall mean (a) direct obligations of the
United States of America, or of any of its agencies, or obligations guaranteed
as to principal and interest by the United States of America, or of any of its
agencies, in either case maturing not more than 90 days from the date of
acquisition of such obligation; (b) deposit accounts in, and certificates of
deposit, repurchase agreements or bankers acceptances of any bank or trust
company organized under the laws of the United States of America or any state or
licensed to conduct a banking or trust business
67
in the United States of America or any state and having capital, surplus and
undivided profits of at least $35,000,000, maturing not more than 90 days from
the date of acquisition; (c) commercial paper rated A-1 or better or P-1 by
Standard & Poor's Corporation or Xxxxx'x Investors Services, Inc., respectively,
maturing not more than 90 days from the date of acquisition; (d) money market
funds sponsored by commercial or investment banks unaffiliated with the Company
or any of its Subsidiaries; and (e) loans or advances of money by the Company to
its wholly-owned domestic Subsidiaries that have executed the Guarantee and
Security Agreement as long as such loans or advances are evidenced by
Intercompany Notes and the Intercompany Notes are pledged to the Collateral
Agent as Collateral.
"Permitted Liens" means (i) Liens existing on the date hereof and set
forth on Schedule ___, all of which are subordinate to the Lien of the
Collateral Documentation; (ii) Liens (other than any Lien imposed under ERISA or
any Environmental Laws) for taxes, assessments or charges of any governmental
authority for claims not yet due or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with the provisions of GAAP and enforcement thereof is
stayed; (iii) Liens of landlords, carriers, warehousemen, mechanics, materialmen
and other Liens (other than any Lien imposed under ERISA) not voluntarily
granted for amounts not yet due or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with the provisions of GAAP, and enforcement thereof is
stayed; (iv) Liens (other than any Lien imposed under ERISA), incurred or
deposited made in the ordinary course of business, including without limitation,
surety bonds and appeal bonds, in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, leases, contracts (other than for the
repayment of indebtedness), statutory obligations and other similar obligations
or arising as a result of progress payments under government contracts; (v)
easements (including without limitation reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and other similar restrictions, charges or
encumbrances (whether or not recorded) and other Liens incurred in the ordinary
course of business, which do not secure indebtedness or the deferred purchase
price of any asset and which do not interfere materially
68
with the ordinary conduct of the business of the Company or any Subsidiary of
the Company and which do not materially detract from the value of the property
to which they attach or materially impair the use thereof to the Company or any
Subsidiary of the Company; and (vi) building restrictions, zoning laws and other
statutes, laws, rules, regulations, ordinances and restrictions, and any
amendments thereto, now or at any time hereafter adopted by any governmental
authority having jurisdiction.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Preferred Stock" shall have the meaning ascribed thereto in
Section 2.3.
"Product Sales Revenues" shall mean sale of medical products
manufactured by the Company calculated in accordance with GAAP.
"Products" shall have the meaning ascribed thereto in Section
2.18.
"Proposed Securities" shall have the meaning ascribed thereto in
Section 6.11.
"Prospectus" shall mean the prospectus included in a registration
statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any portion
of the Common Stock covered by the Registration Statement, and by all other
amendments and supplements to a prospectus, including post-effective amendments,
and in each case including all material incorporated by reference therein.
"Proxy Statement" shall mean the proxy statement in a definitive form
relating to the Company Meeting.
"Purchase Price" shall have the meaning ascribed thereto in
Section 1.2.
"Purchased Shares" shall have the meaning ascribed thereto in
Section 9.6(d).
"Purchaser" shall have the meaning ascribed thereto in the
Preamble.
"Purchaser Designee" shall have the meaning ascribed thereto in
Section 6.26.
"Registration Default" shall have the meaning ascribed thereto in
Section 6.31.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated the date hereof between the Purchasers and the Company with
respect to the Notes.
69
"Related Parties" shall mean Affiliates of the Company or any of its
Subsidiaries and directors or officers of the Company or any of its Subsidiaries
(including any family members of directors and officers).
"Required Holders" means, at any time, the holders of at least 51% of
the aggregate Accreted Value of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).
"Restricted Encumbrance" shall have the meaning ascribed thereto
in Section 6.7.
"Sale-and-Leaseback Transaction" shall mean a transaction or series of
transactions pursuant to which the Company or any Subsidiary shall Transfer to
any Person (other than the Company or a Subsidiary) any property, whether now
owned or hereafter acquired, and, as part of the same transaction or series of
transactions, the Company or any Subsidiary shall rent or lease as lessee (other
than pursuant to a Capitalized Lease), or similarly acquire the right to
possession or use of, such property or one or more properties which it intends
to use for the same purpose or purposes as such property.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Reports" shall have the meaning ascribed thereto in Section
2.4.
"Secured Obligations" shall mean any and all obligations of the
Company or any of its Subsidiaries at any time and from time to time for the
performance of its agreements, covenants and undertakings under or in respect of
the Transaction Documents to which it is a party.
"Securities" shall mean the Notes, the Shares, the Warrants and the
shares of Common Stock issuable upon the conversion of the Notes and exercise of
the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.
"Security Agreement" shall mean the agreement, dated as of the date
hereof, between the Collateral Agent and the Company, providing for a security
interest in the Collateral.
"Semi-Annual Accrual Date" shall have the meaning ascribed thereto in
Section 5.3.
"Shares" shall have the meaning ascribed thereto in the
70
Recitals.
"Stated Maturity" when used with respect to any security or any
installment of interest thereon, means the date specified in such security as
the fixed date on which the principal of such security or such installment of
interest is due and payable.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof, (ii) any other Person (other than a corporation),
including without limitation a joint venture, in which such Person, one or more
Subsidiaries thereof or such Person and one or more Subsidiaries thereof,
directly or indirectly, at the date of determination thereof, has at least
majority ownership interest entitled to vote in the election of directors,
managers or trustees thereof (or other Persons performing similar functions),
(iii) the management of which is otherwise controlled, directly or indirectly,
by such Person or (iv) any other Person required to be consolidated with such
Person in accordance with generally accepted accounting principles. For purposes
of this definition (and for the determination of whether or not a Subsidiary is
a wholly-owned Subsidiary of a Person), any directors' qualifying shares or
investment by foreign nationals mandated by applicable law shall be disregarded
in determining the ownership of a Subsidiary.
"Tax" and "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, property, sales, use, value added, license, excise,
franchise, capital, net worth, estimated, withholding, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, inventory,
asset, gains, transfer or excise tax, or any other tax, levy, custom, duty,
impost, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or additions to tax,
imposed by any Governmental Entity and, including, without limitation, any
Taxes of another person owing under a contract, as transferee or successor,
under Treas. Reg. ss. 1.1502-6 or analogous state, local or foreign law, or
otherwise.
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
"Total Revenue" shall mean, with respect to any period, the total
71
revenues of the Company and its Subsidiaries in accordance with GAAP on a
consolidated basis as reflected in the financial statements furnished to the
Holders in accordance with Section 6.20.
"Trading Day" shall mean a Business Day or, if the Common Stock is
listed or admitted to trading on any national securities exchange, a day on
which such exchange is open for the transaction of business.
"Transaction" shall have the meaning ascribed thereto in Section
9.7.
"Transaction Documents" shall mean this Agreement, the Notes, the
Warrants, the Registration Rights Agreement, the Security Agreement, the
Guarantee and Security Agreement, [the Intercreditor Agreement and the
Escrow Agreement].
"Transfer" shall have the meaning ascribed thereto in Section
6.3.
"Transfer Agent" shall have the meaning ascribed thereto in
Section 9.2.
"Voting Securities" shall mean at any time shares of any class of
Capital Stock of the Company (or other corporation) which are then entitled to
vote generally in the election of directors of the Company (or such other
corporation).
"Warrants" shall mean the $7 Warrants and $5 Warrants (as defined in
the Note Purchase Agreement).
11.2. Accounting Principles. The character or amount of any asset,
liability, capital account or reserve and of any item of income or expense
required to be determined pursuant to this Agreement, and any consolidation or
other accounting computation required to be made pursuant to this Agreement, and
the construction of any definition in this Agreement containing a financial
term, shall be determined or made, as the case may be, in accordance with GAAP,
to the extent applicable, unless such principles are inconsistent with the
express requirements of this Agreement.
12. Miscellaneous.
12.1. Payments; Indemnity. (a) The Company agrees that, so long as
each Holder shall hold any Notes, it will make all payments hereunder and under
the Notes in immediately available funds by wire transfer on the date due in
such manner as each Holder may reasonably request in writing. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of any Note
that is due on a date other than a Business Day shall be made on the next
succeeding Business Day. If the date for
72
payment is extended to the next succeeding Business Day by reason of the
preceding sentence, the period of such extension will be included in the
computation of the interest payable on such next succeeding Business Day.
(b)(i) The Company and its Subsidiaries shall jointly and
severally indemnify and hold harmless each Purchaser, each Holder and each of
their respective Affiliates, and each such Person's respective officers,
directors, partners, members, employees, attorneys, agents and representatives
(each, an "Indemnified Person") from and against any and all suits, actions,
proceedings, claims, damages, losses, Liabilities and out-of-pocket expenses
(including reasonable attorneys' fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal) which may be
instituted or asserted against or incurred by any such Indemnified Person as the
result of credit having been extended, suspended or terminated under this
Agreement and the other Transaction Documents and the administration of such
credit, and in connection with or arising out of the transactions contemplated
hereunder and thereunder and any actions or failures to act in connection
therewith.
(ii) Upon receipt by any Indemnified Person of any Action against
such Indemnified Person with respect to which indemnity may be sought under this
Note or any other Transaction Document, such Indemnified Person shall promptly
notify the Company in writing, provided that failure so to notify the Company
shall not relieve the Company from any liability which the Company may have on
account of this indemnity or otherwise, except to the extent the Company shall
have been materially prejudiced by such failure. The Company shall, at its
option, assume the defense of any Action including the employment of counsel
reasonably satisfactory to the Indemnified Person. Any Indemnified Person shall
have the right to employ separate counsel in any such action and participate in
the defense thereof but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person, unless: (i) the Company has failed promptly
to assume the defense and employ counsel or (ii) the named parties to such
Action (including any impleaded parties) include such Indemnified Person and the
Company, and such Indemnified Person and the Company shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to the Company or there is or
may be a conflict between the Company and any Indemnified Person (in which case
the Company may not assume the defense). In the event that any Indemnified
Person shall become entitled to separate counsel under this Note or any other
Transaction Document, the Company
73
shall not in such event be responsible hereunder for the fees and expenses of
more than one firm of separate counsel in connection with any Action in the same
jurisdiction, in addition to any local counsel. In addition, the Company will
not, without prior written consent of the Indemnified Person, settle, compromise
or consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened Action in which indemnification may be sought hereunder
(whether or not any Indemnified Person is a party thereto) unless such
settlement, compromise, consent or termination includes an unconditional release
of such Indemnified Person from all liabilities and expenses arising out of such
Action.
(c) The Company shall bear all sales, documentary, transfer,
stamp or other similar Taxes and all filing fees and expenses incurred in
connection with the transactions contemplated by this Agreement and shall
indemnify and hold harmless each Indemnified Purchaser from and against any such
Taxes.
12.2. Severability. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement and such exhibits shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable.
12.3. Specific Enforcement. The Holders, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Holders shall be entitled to an injunction to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they may be entitled at Law or equity.
12.4. Entire Agreement. The Transaction Documents (including the
Schedules and Exhibits hereto and thereto) contain the entire understanding of
the parties with respect to the transactions contemplated hereby and
74
thereby.
12.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
12.6. Notices and other Communications. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be deemed given, if
in writing and delivered personally, by telecopy or sent by registered mail,
postage prepaid, if to:
The Company, to:
000 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxx
With a copy to:
Pepe & Hazard LLP
Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
The Purchasers, to each Purchaser's address
as set forth in the Note Register
The Collateral Agent, to:
Appaloosa Management, L.P.
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxx Xxxxx
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner.
12.7. Amendments. This Agreement may be amended as to the Purchasers,
any Holder and their respective successors and assigns, and the Company may take
any action herein prohibited, or omit to perform any act required to be
performed by it, if the Company shall obtain the written consent of the Required
Holders. This Agreement may not be waived, changed, modified, or discharged
orally, but only by an agreement in writing signed by the party or parties
against whom enforcement of any waiver, change, modification or discharge is
sought or by parties with the right to consent to such waiver, change,
75
modification or discharge on behalf of such party.
12.8. Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note).
12.9. Expenses. The Company agrees to pay to each Holder all
reasonable costs and expenses incurred by such Holder relating to any future
amendment or supplement to any of the Transaction Documents or any of the Notes
(or any proposal by the Company for such amendment or supplement) whether or not
consummated or any waiver or consent with respect thereto (or any proposal for
such waiver or consent) whether or not consummated, and all costs and expenses
of such Holder relating to the enforcement of any of the Transaction Documents.
12.10. Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant hereto in
connection with the transactions contemplated hereby shall survive the Closing
and the delivery of the Transaction Documents, regardless of any investigation
made by or on behalf of any party; provided, that, all covenants, agreements,
representations and warranties contained herein shall terminate when all the
Notes and amounts due hereunder have been paid in full; provided, however, that
notwithstanding anything to the contrary contained herein, Sections 12.1(b),
12.6, 12.12, 12.13, 12.14 and 12.15 shall survive forever.
12.11. Transfer of Notes and Common Stock. Each Purchaser understands
and agrees that the Notes and the Shares have not been registered under the
Securities Act or the securities laws of any state and that they may be sold or
otherwise disposed of only in one or more transactions registered under the
Securities Act and, where applicable, such laws or transactions as to which an
exemption from the registration requirements of the Securities Act and, where
applicable, such laws are available. Each Purchaser acknowledges that, except as
provided in the Registration Rights Agreement, such Purchaser has no right to
require the Company to register the Notes. Each Purchaser understands and agrees
that each Note or certificate representing the Notes shall bear the following
legends:
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR
INFORMATION REGARDING THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE
PURCHASE PRICE, DATE OF ISSUANCE OF YIELD TO MATURITY OF THE NOTE,
CONTACT [name or title of contact] AT [address].
"THE TRANSFER OF [THE SECURITIES REPRESENTED BY THIS CERTIFICATE]
[THIS NOTE] IS RESTRICTED BY AND PURSUANT TO A NOTE PURCHASE AGREEMENT
DATED AS OF AUGUST _, 1999, A COPY OF WHICH IS ON FILE
76
AT THE OFFICES OF THE COMPANY."
"[THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE] [THIS NOTE HAS]
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
12.12. Governing Law. THIS AGREEMENT AND THE NOTES shall be construed
and enforced in accordance with, and the rights of the parties shall be governed
by, the law of the State of NEW YORK excluding choice-of-law principles of the
law of such State that would require the application of the laws of a
jurisdiction other than such State.
12.13. Submission to Jurisdiction. If any Litigation shall be brought
by any Holder in order to enforce any right or remedy under this Agreement or
any of the Notes, the Company hereby consents and will submit, and will cause
each of its Subsidiaries to submit, to the jurisdiction of any state or federal
court of competent jurisdiction sitting within the area comprising the Southern
District of New York on the date of this Agreement. The Company hereby
irrevocably waives any objection, including, but not limited to, any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any such Litigation in such
jurisdiction.
12.14. Service of Process. Nothing herein shall affect the right of
any Holder to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Company in any other
jurisdiction.
12.15. Waiver of Jury Trial. The Company hereby waives any right it
may have to a trial by jury in respect of any action, proceeding or litigation
directly or indirectly arising out of, under or in connection with, THIS
AGREEMENT AND THE NOTES.
12.16. Public Announcements. Neither the Company nor any Purchaser
shall make any public statements, including, without limitation, any press
releases, with respect to this Agreement and the transactions contemplated
hereby without the prior written consent of the other party (which consent shall
not be unreasonably withheld) except as may be required by law. If a public
statement is required to be made by law, the parties shall consult with each
other in advance as to the contents and timing thereof.
12.17. Further Assurances. The Company and each of its Subsidiaries
agrees that it shall and shall cause each other to, at the Company's expense and
upon the reasonable request of the Collateral Agent, duly execute and deliver,
or cause to be duly executed and delivered, to
77
the Collateral Agent such further instruments, agreements and documents
(including, without limitation, financing statements under the Code, security
agreements in respect of Intellectual Property, stock powers executed in blank
and other items necessary or desirable in connection with the perfection of
Liens in the Collateral) and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of the Collateral Agent to carry
out more effectually the provisions and purposes of the Transaction Documents.
12.18. Substitution of Purchaser. Each Purchaser shall have the right
to substitute any one of its Affiliates as the purchaser of the Notes, by
written notice to the Company, which notice shall be signed by both such
Purchaser and such Affiliate, shall contain such Affiliate's agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 3.
Upon receipt of such notice, wherever the word "Purchaser" is used in this
Agreement (other than in this Section 14.17), such word shall be deemed to refer
to such Affiliate in lieu of the Purchaser. In the event that such Affiliate is
so substituted as a purchaser hereunder and such Affiliate thereafter transfers
to any Purchaser all of the Notes then held by such Affiliate, upon receipt by
the Company of notice of such transfer, wherever the word "Purchaser" is used in
this Agreement (other than in this Section 14.17), such word shall no longer be
deemed to refer to such Affiliate, but shall refer to such Purchaser, and such
Purchaser shall have all the rights of an original Holder of the Notes under
this Agreement.
12.19. Signatures. This Agreement shall be effective upon
delivery of original signature pages or facsimile copies thereof executed
by each of the parties hereto.
78
IN WITNESS WHEREOF, the Company, the Purchasers and the Collateral
Agent have caused this Agreement to be executed and delivered by their
respective officers or partners thereunto duly authorized.
BIO-PLEXUS, INC.
By:
------------------------------------
Name:
Title:
APPALOOSA MANAGEMENT L.P.,
as Collateral Agent
By: Appaloosa Partners, Inc., its
Investment Adviser
By:
------------------------------------
Name:
Title:
79
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management, L.P., its
General Partner
By: Appaloosa Partners Inc., its General
Partner
By:
------------------------------------
Name:
Title:
PALOMINO FUND LTD.
By: Appaloosa Management, L.P., its
Investment Adviser
By: Appaloosa Partners Inc., its General
Partner
By:
------------------------------------
Name:
Title:
