EXHIBIT 10.19
$ 50,000,000.00 New York, New York
December 21, 1999
1. OBLIGATION TO PAY
FOR VALUE RECEIVED, the undersigned Xxxxxxxx promises to pay to the
order of XXXXXXX XXXXXXX, an individual residing in South Norwalk, Connecticut
(the "Lender"), the principal sum of Fifty Million Dollars ($50,000,000.00), on
June 30, 2005, or such amount thereof as shall be outstanding hereunder on such
date, plus interest payable at the rate and in the manner provided in paragraph
3 of this Note, plus any costs and expenses incurred in the enforcement of this
Note as provided in paragraph 7 of this Note. This Note is transferable by the
holder hereof.
This Note is issued pursuant to the Loan Agreement (as hereinafter defined),
reference to which is hereby made for other terms applicable to this Note.
2. DEFINITIONS
Except as otherwise defined herein, all capitalized terms used herein
which are defined in the Loan Agreement shall have the meaning ascribed to them
therein. In addition, the following terms as used herein shall be defined as
follows:
(a) "Common Stock" shall mean the capital common stock of the Borrower,
consisting of 50,000,000 authorized shares $.01 par value.
(b) "Event of Default" shall mean any of the events set forth in
Paragraph 7 hereof.
(c) "First Advance Date" shall mean the date of the first advance under
this Note and the Loan Agreement.
(d) "Interest Adjustment Date" shall mean the first day of each month
during the term of this Note.
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(e) "Loan Agreement" shall mean a Revolving Credit and Loan Agreement
of even date herewith between Borrower and the Lender pursuant to which this
Note is issued, as the same may be amended and supplemented from time to time.
(f) "Loan Documents" shall mean this Note, the Loan Agreement, the
Second Amended and Restated Registration Rights Agreement, the Amended and
Restated Security Agreement, the Amended and Restated Patent Security Agreement,
the Amended and Restated Stock Pledge Agreement, the Amended and Restated
Subsidiary Guaranty, the Amended and Restated Subsidiary Security Agreement, the
IEP Guaranty, the IEP Security Agreement, the UCC-1 financing statements
executed in connection with the security agreements, the Warrant Agreement, and
each and every other document executed or delivered in connection with the
closing of this transaction, each such document being referred to individually
as a "Loan Document".
(g) "Prime Rate" shall mean the prime rate (or substantially equivalent
index, if such bank discontinues its prime rate) of First Union National Bank as
announced from time to time, or, if such bank shall cease to exist without any
successor-in-interest, then the prime rate (or substantially equivalent index,
if no prime rate exists at such bank at such time) of any national or regional
bank selected by Lender having a comparable or larger asset size.
(h) "Warrant" shall mean that certain warrant to purchase 6 million
shares of Common Stock at a price of $5.00 per share.
3. INTEREST
The outstanding principal balance of this Note shall bear interest from
the date hereof until the earlier of maturity, imposition of the Default Rate
(as hereinafter defined) or payment in full, at a rate per annum equal to the
Prime Rate in effect on each Interest Adjustment Date (calculated on the basis
of a 360-day year for the actual number of days elapsed), on which date the
interest rate shall be increased or decreased to the extent of any increase or
decrease in the Prime Rate from the Prime Rate in effect on the immediately
preceding Interest Adjustment Date. After maturity, or upon the occurrence of
and during the
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continuance of an Event of Default, if earlier, the interest rate hereunder
shall be increased to a rate equal to six (6.0) percentage points in excess of
the rate which would otherwise be in effect hereunder.
Notwithstanding any provision of this Note to the contrary, in the
event that at any time the applicable rate of interest payable by Borrower to
Lender as stated in this Note (the "Contract Rate") exceeds the highest or
maximum rate of interest permissible to be charged by Xxxxxx under the laws of
the State of Connecticut or under federal law, or is determined by a tribunal or
court of competent jurisdiction to be excessive and unenforceable (in each case,
the "Maximum Legal Rate"), then the interest rate payable under this Note shall
automatically be reduced to the Maximum Legal Rate for such period as the
Maximum Legal Rate is higher than the Contract Rate. If subsequently the
Contract Rate becomes less than the Maximum Legal Rate, then the interest rate
payable under this Note shall automatically be decreased to the Contract Rate.
Any amounts paid in excess of the Maximum Legal Rate shall be considered to have
been payments in reduction of principal, and the outstanding principal balance
shall be adjusted to reflect such prepayments of principal.
4. PAYMENTS
Accrued interest shall be due and payable monthly on the seventh day of
each month. Interest may, at the option of the holder hereof, be deducted from
the amount of the proceeds of any disbursements hereunder.
Upon maturity, the outstanding principal balance of this Note, together
with unpaid interest accrued thereon and any other sums payable hereunder, shall
be payable in full.
All sums received hereunder shall be applied first to the payment of
late charges, costs and expenses payable to Lender hereunder, then to interest
(in the order in which earliest earned) and the balance to principal. Borrower
shall have the right to prepay this Note in full or in part at any time without
penalty.
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All payments shall be made in accordance with the terms of the Loan
Agreement and shall delivered to Lender at its address at Xxxxxxx Xxxxxxx, c/o
Xxxxxx X. Xxxxxxx, P.C., 000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 or at such other address as shall be designated by Xxxxxx in a written
notice to the Borrower.
This Note may also be prepaid in part or in full by the holder of this
Note exercising the Warrant in accordance with the terms of the Warrant. No
partial prepayment of this Note by exercise of the Warrant shall xxxxx
Xxxxxxxx's obligation to make monthly interest payments on the outstanding
amount under this Note, nor shall such partial prepayment extend the maturity
date of this Note.
5. ADVANCES
Advances shall be made hereunder from time to time in accordance with
terms of the Loan Agreement, reference to which is hereby made for the
provisions regarding advances. At no time shall the aggregate of all advances
outstanding from time to time exceed $50,000,000.00.
6. LATE CHARGE
If any monthly payment of interest is not received by the Lender or any
holder hereof within 15 days after its due date, there shall be imposed on the
Borrower a late charge equal to five (5.0%) percent of such overdue payment.
7. ENFORCEMENT
Upon the occurrence of an Event of Default (as hereinafter defined),
the entire principal balance remaining unpaid plus accrued interest shall, at
the option of the holder hereof, become immediately due and payable, and the
Borrower shall have all of the rights and remedies provided in the Loan
Agreement and shall be entitled to be reimbursed for its costs and expenses as
set forth therein.
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An Event of Default is defined as any one of the following: (i) default
in the payment of any principal, interest or other amounts within ten (10) days
after such payment is due hereunder; (ii) breach of any provisions of this Note;
or (iii) the occurrence of any Event of Default under the Loan Agreement.
No extension of time for payment, or delay in enforcement hereof, nor
any renewal of this Note with or without notice, shall release the obligation of
the Borrower to the Lender or holder hereof or shall operate as a waiver of any
of its rights.
Presentment, demand, protest and notice of dishonor are hereby waived
by the Borrower.
8. RIGHT OF SETOFF
Upon the occurrence of and during the continuance of any Event of
Default hereunder, the Lender is hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being expressly waived by
the Borrower) to set-off and apply any and all indebtedness at any time owing by
the Lender to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this Note
or the Loan Agreement, irrespective of whether or not the Lender shall have made
any demand under this Note or the Loan Agreement. The Lender agrees promptly to
notify the Borrower after any such setoff and application made by the Lender,
provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Lender under this provision are
in addition to other rights and remedies (including, without limitation, any
common law right of setoff) which the Lender may have.
9. WAIVER OF RIGHTS
BORROWER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A
COMMERCIAL TRANSACTION. BORROWER HEREBY WAIVES, TO THE EXTENT PERMITTED BY LAW,
THE BENEFITS OF ALL VALUATION, APPRAISEMENT, HOMESTEAD, EXEMPTION, STAY,
REDEMPTION AND MORATORIUM LAWS, NOW IN FORCE OR WHICH MAY HEREAFTER BECOME LAW.
10. SUBMISSION TO JURISDICTION; WAIVER OF BOND
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THE BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY LOCAL, STATE,
OR FEDERAL COURT LOCATED WITHIN THE STATE OF CONNECTICUT AND WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE, BASED ON IMPROPER VENUE OR FORUM NON
CONVENIENS, TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON BORROWER, AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO BORROWER AT THE
ADDRESS SET FORTH BELOW AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE
BEEN POSTED TO BORROWER'S ADDRESS. THE BORROWER WAIVES ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE
LENDER. NOTHING CONTAINED IN THIS PARAGRAPH AFFECTS THE RIGHT OF THE LENDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECTS THE RIGHT OF
THE LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR BORROWER'S
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
11. WAIVER OF JURY TRIAL
THE BORROWER WAIVES ANY RIGHT TO TRIAL BY JURY WHICH BORROWER MAY HAVE
IN ANY PROCEEDING BETWEEN XXXXXX AND BORROWER.
12. WAIVER OF PLAINTIFF'S RIGHTS
THE BORROWER HEREBY AGREES NOT TO COMMENCE ANY LEGAL PROCEEDING AGAINST
THE LENDER IN THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED
WITHIN THE STATE OF FLORIDA UNLESS THE LENDER EXPRESSLY CONSENTS THERETO IN
WRITING.
13. GOVERNING LAW
This Note and its interpretation, construction, validity and
enforceability shall be governed by the laws of the State of Connecticut.
KOS PHARMACEUTICALS, INC.
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By: _______________________________
Name: Xxxxxx X. Xxxx
Title: President
STATE OF )
) ss.:
COUNTY OF )
On the ______ day of __________ ___, ____, before me came Xxxxxx X.
Xxxx, to me known, who, being by me duly sworn, did depose and say that he
resides at No.________________________________________________________________;
that he is the President of Kos Pharmaceuticals, Inc., the corporation described
in and which executed, the foregoing instrument; that the foregoing instrument
was executed without corporate seal by order of the Board of Directors of said
corporation; that he signed his name thereto by like order.
__________________________________
Notary Public
My commission expires:
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