EXHIBIT 99.2
NOTE AMENDMENT AGREEMENT
This NOTE AMENDMENT AGREEMENT ("Agreement") is entered into
as of January 11, 1999, by and between Selfcare, Inc., a Delaware
corporation (the "Company"), with headquarters located at 000
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000; XXXXXXX
ASSOCIATES, L.P., a Delaware limited partnership ("Xxxxxxx"),
with offices located at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000; and WESTGATE INTERNATIONAL, L.P., a Cayman
Islands limited partnership ("Westgate," and together with
Xxxxxxx, the "Holders"), with an address at c/o Midland Bank
Trust Corporation (Cayman) Limited, X.X. Xxx 0000, Xxxx Xxxxxx,
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx, regarding to the following:
RECITALS
A. Pursuant to a Securities Purchase Agreement dated as of
October 27, 1997 (the "Securities Purchase Agreement") the
Holders purchased from the Company $10,000,000 face amount of the
Company's Senior Subordinated Convertible Notes (the "Notes"),
convertible into shares of the Company's common stock, par value
$.001 per share (the "Common Stock"), and also received Stock
Purchase Warrants (the "Warrants") to acquire an aggregate of
106,700 shares of Common Stock. Capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the
Securities Purchase Agreement.
B. Certain disputes have arisen among the parties hereto, and
the parties desire to amend (and prepay a portion of) the Notes,
cancel the Warrants, dismiss a pending lawsuit and settle all of
these disputes, all as provided below.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective
promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Holders hereby agree as follows:
ARTICLE I
AMENDMENT OF NOTES
1.1 Prepayment and Amendment of Notes. Upon the execution
hereof, the Company shall pay to each Holder, by wire transfer of
immediately available funds, an amount equal to $429,524.62
(representing a 10% premium over the principal and interest
represented thereby). Upon the execution hereof, the Notes shall
be amended to conform to the forms annexed hereto (the "Amended
Notes") and a new Amended Note shall be delivered to each Holder
against delivery of the Holder's existing Note and Warrant
Certificate. The face amount of each Holder's Amended Note shall
be $1,207,500 (representing a 15% premium over the remaining
principal and interest of the existing Note). The Amended Notes
shall provide for a six-month maturity, interest at 8% per annum,
a fixed conversion price of $2.00 (except in the case of certain
Events of Default) and redemption by the Company on seven (7)
days notice.
1.2 Current Conversion Notices. The Conversion Notices
delivered on January 7, 1999 for 190,000 Common Shares are hereby
withdrawn, but only subject to the Company's compliance with the
next sentence. Pursuant to the outstanding Conversion Notices
covering an aggregate of 500,000 Common Shares at a Conversion
Price of $1.8125, the Company shall deliver all of such 500,000
Common Shares no later than the close of business on January 20,
1999, and each Holder hereby waives any remedies for late
delivery of such Common Shares if delivered by such date.
1.3 Warrants. In consideration of the Company's agreement to
amend the Notes on the terms described below, all of the Warrants
shall be cancelled effective as of the date hereof.
1.4 Legal Opinion. The Holders' obligation to consummate the
transaction contemplated hereby on the date hereof shall be
conditioned upon the delivery to Holders, on the date hereof, of
a legal opinion of Xxxxxxx, Procter & Xxxx LLP with respect to
the transactions contemplated hereby, in form and substance
satisfactory to the Holders.
ARTICLE II
REPRESENTATIONS AND WARRANTS
2.1 Holders' Representations. Each of the Holders repeats each
of the representations and warranties contained in Sections 2.1,
2.2, 2.3, 2.5, 2.6, 2.7 and 2.8 of the Securities Purchase
Agreement, as if made on the date hereof with respect to such
Holders' Amended Note and to this Agreement (as opposed to the
Securities Purchase Agreement).
2.2 Company's Representations. The Company represents and
warrants to each Holder as of the date hereof, as follows:
(a) Organization and Qualification. Each of the Company and its
direct and indirect subsidiaries (collectively, "Subsidiaries")
is a corporation duly organized and existing in good standing
under the laws of the jurisdiction in which it is incorporated,
and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. The Company and
each of its Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction where the failure so to qualify or be in good
standing would have a Material Adverse Effect. "Material Adverse
Effect" means any effect which, individually or in the aggregate
with all other effects, is or reasonably would be expected to be
materially adverse to the business, operations, properties,
financial condition or operating results of the Company and its
Subsidiaries, taken as a whole on a consolidated basis, or to the
transactions contemplated hereby;
(b) The Company has the requisite corporate power and authority
to enter into and perform this Agreement, and to issue, sell and
perform its obligations with respect to the Amended Notes in
accordance with the terms hereof and thereof and to issue the
applicable Common Shares upon conversion of the Notes, in
accordance with their terms;
(c) The execution, delivery and performance of this Agreement by
the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation the
issuance of the Amended Notes) have been duly authorized by all
necessary corporate action and no further consent or
authorization of the Company, its board of directors, or its
stockholders or any other person, body or agency, and no filing
with any person, body or agency, is required with respect to any
of the transactions contemplated hereby or thereby;
(d) This Agreement has been duly executed and delivered by the
Company, and the Amended Notes have been duly executed and
delivered by the Company; and
(e) This Agreement, the Notes, and the Registration Rights
Agreement constitute, and upon issuance the Amended Notes will
constitute legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their
respective terms, except
(i) to the extent that such validity or enforceability may
be subject to or affected by any bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors' rights
or remedies of creditors generally, or by other equitable
principles of general application, and
(ii) as rights to indemnity and contribution under the
Registration Rights Agreement may be limited by federal or state
securities laws.
ARTICLE III
COVENANTS
3.1 Company's Covenants.
(a) The Company's covenants contained in Sections 4.3, 4.4, 4.5
(except that for purposes of such Section 4.5 the "Purchase
Price" of the Amended Notes shall be the original principal
amount thereof), 4.6, 4.7, 5.1 and 5.2 of the Securities Purchase
Agreement shall remain in full force and effect with respect to
the Amended Notes.
(b) The Company agrees to use its best efforts by February 8,
1999 to amend the SEC Registration Statement covering the Notes
(or merely supplement the applicable prospectus, if lawful) to
reflect the amendments thereto effected by this Agreement and in
any event to file such amendment (or prospectus supplement) no
later than January 19, 1999. When the SEC notifies the Company
that such amendment or supplement is not being reviewed or that
the SEC's comments have been satisfied, the Company shall
immediately so notify the Holders and cause such amendment or
supplement to become effective within two (2) business days
thereafter. The Company shall respond to any SEC comments within
seven (7) days after receipt of such comments. Notwithstanding
the foregoing, the Holders' remedies for any failure of the
Company despite the Company's good faith efforts, to file such
amendment or supplement by January 19, 1999 or to have such
amendment or supplement effective by February 8, 1999, shall be
limited to the remedies provided for in the Registration Rights
Agreement and the optional extension of the Maturity Date and
also (if such delay continues beyond March 5, 1999), the
redemption notice period as provided in the Amended Notes. The
Registration Rights Agreement among the parties hereto shall
remain in full force and effect with respect to the Amended Notes
and underlying Common Stock.
(c) Notwithstanding Section 4.5 of the Securities Purchase
Agreement, no Delisting Payments shall accrue as a result of the
Company's failure to list additional Common Shares beyond those
previously listed, unless and until the Company obtains the
formal ratification and approval of its Shareholders to the
issuance and conversion of the Amended Notes ("Shareholder
Approval").
3.2 Holders' Covenants.
(a) The Holders' covenants contained in Section 4.6 of the
Securities Purchase Agreement shall remain in full force and
effect with respect to the Amended Notes and the Holders shall
continue to be bound by Sections 5.1 and 5.2 with respect to the
Amended Notes and underlying Common Stock.
(b) Within two (2) business days after the delivery of the
500,000 Common Shares referred in Section 1.2 above, the Holders
shall dismiss with prejudice the action pending in the Court of
Chancery of the State of Delaware entitled Xxxxxxx Associates,
L.P., et al. v. Selfcare, Inc.
(c) Until payment in full of the Holders' Amended Notes, the
Holders, collectively, will not effect any short sale in the
Company's Common Stock if the Holders' aggregate short position
in the Company's Common Stock would thereby exceed 100% of the
number of shares of Common Stock into which the Amended Notes are
then convertible. In addition, each Holder agrees that, until
payment in full of the Holder's Amended Note, such Holder shall
not purchase any shares of the Company's Common Stock except (i)
that the Holder may purchase shares of Common Stock to the extent
necessary to comply with requests or demands by lenders of the
Company's Common Stock to return such Common Stock; (ii) to the
extent necessary to cover short sales made (A) prior to, or after
failure to obtain, Shareholder Approval, or (B) following
Shareholder Approval because the Company has failed to timely
honor one or more Conversion Notices herein; or (iii) following
Shareholder Approval, to the extent that the Holder acquires
shares of Common Stock to cover short sales made hereafter during
any period during which the Company's Registration Statement is
not fully effective and current, provided that promptly following
the return to effectiveness of the Registration Statement, the
Holder makes corresponding conversions of the Amended Note into
the same amounts of shares; and (iv) the Holder may freely
acquire shares of Common Stock through permitted conversions of
the Holder's Amended Note. Following satisfaction in full of
such Holder's Note by payment and/or conversions, such Holder
shall refrain from any and all purchases or sales (whether long
or short) of the Company's securities for a period of five (5)
years (without the Company's prior written consent).
The foregoing restrictions shall not apply during the
pendency of an Event of Default (excluding an Event of Default
described in Section 11.1 (i) or (j) thereof) under any Holder's
Amended Note.
ARTICLE IV
RELEASES; NO DEFENSES OR COUNTERCLAIMS
4.1 Mutual Releases.
(a) Each of the Holders hereby irrevocably and completely
releases and discharges the Company and its successors and
assigns from and against any and all claims, liabilities,
damages, demands, charges, causes of action and suits, whether
known or unknown, which the Holders have or may have ever had,
arising out of or in connection with the Notes, the Common
Shares, the Securities Purchase Agreement or any related
document, in each case to the extent arising out of any acts,
circumstances, or events occurring prior to the date hereof.
(b) The Company hereby releases and discharges each of the
Holders and each of their respective affiliates (including,
without limitation, Stonington Management Corporation and Martley
International, Inc.) and each of its and their present and former
partners, officers, employees, agents, successors and assigns
from and against any and all claims, liabilities, damages,
demands, charges, causes of action and suits, whether known or
unknown, which such releasors have or may have ever had, arising
out of or in connection with the Notes, the Common Shares, the
Securities Purchase Agreement or any related document, in each
case to the extent arising out of any acts, circumstances or
events occurring prior to the date hereof.
(c) Notwithstanding subparagraphs 4.1 (a) and (b) above, the
foregoing releases shall not apply to claims arising under this
Agreement or the Amended Notes, nor to claims by the Holders for
breach of any of the Company's representations or warranties (but
not covenants) contained in the Securities Purchase Agreement.
4.2 No Defense or Counterclaims.
(a) The Company acknowledges and agrees that its obligations
under this Agreement, the Registration Rights Agreement and the
Amended Notes are intended to be unconditional and not subject to
any defenses whatsoever. Accordingly, the Company agrees not to
suspend performance of or repudiate any of its obligations under
such agreements and not to assert any defenses or counterclaims
against the Holders with respect thereto. Nothing contained in
this Section 4.2(a), however, shall prevent the Company from
contesting the Holders' claims or assertions as to the scope or
existence of the Company's obligations apart from any affirmative
defenses. If the Company at any time believes that it has a
claim against or is entitled to any relief from either or both
Holders, the Company shall assert such claim(s) or seek such
relief only in a proceeding which is entirely independent of any
proceeding brought by either or both of the Holders to enforce
any of such agreements.
(b) The Company hereby acknowledges and agrees as follows:
(i) The Company hereby withdraws its previous allegations
(the "Allegations") that the Holders may have violated any
securities or other laws in connection with the Company's
securities or the Securities Purchase Agreement.
(ii) The Company has determined that it is in its best
interests to obtain the benefits of this Agreement and, in
consideration therefore, the Company hereby covenants not to
commence any action or proceeding against the Holders or any of
their affiliates or controlling persons arising under any
securities or similar laws with respect to any transactions
occurring prior to the date hereof or to intentionally suggest
or recommend that any other party do so.
(iii) The Company has not commenced any legal action or
proceeding against the Holders or any of their affiliates or
controlling persons nor, directly or indirectly, disclosed any of
the specific Allegations to any outside parties, excluding
counsel, but expressly including non-management shareholders and
any regulatory authorities and securities exchanges. The Company
agrees (subject to applicable law and legal or regulatory
process) to keep confidential and not to disclose to any third
party any of the Allegations, provided that any inadvertent
breaches of such confidentiality obligation by employees or
agents of the Company who are not officers or directors of the
Company shall not be deemed a breach of such confidentiality
obligation. The Company also agrees that if, as a result of the
Company's breach of such confidentiality obligation, a third
party threatens or commences an action based upon the Allegations
against the Holders or any of their partners, officers,
employees, agents, successors or assigns, the Company shall
reimburse any and all of such parties for any costs, expenses
and/or settlement costs (including reasonable attorneys' fees and
disbursements) incurred in connection therewith as such expenses
are incurred, unless the plaintiff in such action obtains a final
nonappealable judgment in such action in its favor. (The Company
hereby acknowledges its view that the Allegations need not be
disclosed publicly by the Company as a general matter of public
disclosure obligations under applicable securities laws.)
Without limiting any other remedies of the Holders, the Holders
shall be entitled to injunctive or other appropriate equitable
relief in the event of any actual or threatened breach of such
confidentiality covenant (without the necessity of posting any
bond).
ARTICLE V
GOVERNING LAW; MISCELLANEOUS
5.1 Governing Law: Jurisdiction. This Agreement shall be
governed by and construed in accordance with Delaware law. The
parties hereto irrevocably consent to the jurisdiction of the
United States federal courts and state courts located in the
County of New Castle in the State of Delaware or the Borough of
Manhattan in the State of New York in any suit or proceeding
based on or arising under this Agreement or the transactions
contemplated hereby and irrevocably agree that all claims in
respect of such suit or proceeding may be determined in such
courts. The Company and each Holder irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit
or proceeding in such forum. The Company and each Holder further
agrees that service of process upon the Company or such Holder,
as applicable, mailed by first class mail in accordance with
Section 5.6 shall be deemed in every respect effective service of
process upon the Company or such Holder in any suit or proceeding
arising hereunder. Nothing herein shall affect any Holder's or
the Company's right to serve process in any other manner
permitted by law. The parties hereto agree that a final
non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
such judgment or in any other lawful manner. THE PARTIES HERETO
IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY JURY UNDER APPLICABLE
LAW.
5.2 Counterparts. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile
transmission, all of which counterparts shall be considered one
and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the
other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery
shall promptly cause additional original executed signature pages
to be delivered to the other parties.
5.3 Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement.
5.4 Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction.
5.5 Entire Agreement: Amendments. This Agreement and the
Exhibits and Schedules hereto and the certificates and agreements
required to be delivered hereby and thereby contain the entire
understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein
or therein, neither the Company nor any Holder makes any
representation, warranty, covenant or undertaking with respect to
such matters. No provision of this Agreement may be waived other
than by an instrument in writing signed by the party to be
charged with enforcement and no provision of this Agreement may
be amended other than by an instrument in writing signed by the
Company and each Holder.
5.6 Notice. Any notice herein required or permitted to be given
shall be in writing and may be personally served or delivered by
nationally-recognized overnight courier or by facsimile machine
confirmed telecopy, and shall be deemed delivered at the time and
date of receipt (which shall include telephone line facsimile
transmission). The addresses for such communications shall be:
If to the Company:
Selfcare, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxxxxxx
and with a copy to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, P.C. & Xxxxxx
Xxxxxxxxxx, III, P.C.
If to either Holder:
c/o Stonington Management Corporation
000 Xxxxx Xxxxxx, 00xx Xx.
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx
and with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Each party shall provide notice to the other party of any change
in address.
5.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors
and assigns. Neither the Company nor any Holder shall assign
this Agreement or any rights or obligations hereunder without the
prior written consent of the other, which consent by the Company
shall not be unreasonably withheld or unreasonably delayed.
Notwithstanding the foregoing, each Holder may, subject to and in
compliance with Article 5 of the Securities Purchase Agreement,
assign all or part of its rights and obligations hereunder to any
of its "affiliates," as that term is defined under the Securities
Act, or to a "Financial Institution" (as defined below), without
the consent of the Company so long as such affiliate or Financial
Institution is an accredited investor (within the meaning of
Regulation D under the Securities Act) and agrees in writing to
be bound by the applicable provisions of this Agreement. A
"Financial Institution" shall include those institutions commonly
called financial institutions as well as banks, savings and
loans, mutual funds, private investment partnerships (commonly
called "hedge funds"), investment banks, brokers, dealers,
pension and profit sharing plans, insurance companies, and
similar entities. This provision shall not limit a Holder's
right to transfer Company securities pursuant to the terms of
this Agreement or the instruments or documents referenced herein,
or to assign the Holder's rights hereunder to any such transferee
pursuant to the terms of this Agreement or the instruments or
documents referenced herein.
5.8 Survival. The representations and warranties of the Company
and each Holder and the agreements and covenants set forth herein
shall survive the Closing. The Company and each Holder agrees to
indemnify and hold harmless each Holder or the Company, as the
case may be, and each of such party's respective officers,
directors, employees, partners, agents and affiliates for loss or
damage or expenses (including reasonable attorneys fees) arising
as a result of or related to any breach or alleged breach by the
Company or any Holder, as the case may be, of any of their
respective representations or covenants set forth herein,
including advancement of expenses as they are incurred. Except
as modified hereby, the Securities Purchase Agreement shall
remain in full force and effect.
5.9 Publicity. As soon as practicable following the date
hereof, the Company shall issue a press release in the form
consented to by the Holders with respect to the transactions
contemplated hereby (which consent shall not be unreasonably
withheld).
5.10 Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
5.11 Remedies. No provision of this Agreement providing for any
remedy to a Holder shall limit any remedy which would otherwise
be available to such Holder at law or in equity. The Company and
each Holder acknowledges that a breach by it of its respective
obligations hereunder will cause irreparable harm to each Holder,
in the case of the Company, and the Company, in the case of a
Holder. Accordingly, the Company and each Holder acknowledges
that the remedy at law for a breach of its respective obligations
under this Agreement will be inadequate and agrees, in the event
of a breach or threatened breach by the Company or a Holder, as
the case may be, of the provisions of this Agreement, that a
Holder or the Company, as the case may be, shall be entitled, in
addition to all other available remedies, to an injunction
restraining any breach and requiring immediate compliance,
without the necessity of showing economic loss and without any
bond or other security being required.
5.12 Several Liability. Notwithstanding anything in this
Agreement to the contrary, the obligations, representations,
warranties, and liabilities of the Holders hereunder shall be
several and not joint.
[Signature Page follows]
IN WITNESS WHEREOF, the undersigned Holders and the Company
have caused this Agreement to be duly executed as of the date
first above written.
HOLDERS:
XXXXXXX ASSOCIATES, L.P.
By: /s/ Xxxx Xxxxxx
_____________________________
Name: Xxxx Xxxxxx
Title: President
WESTGATE INTERNATIONAL, L.P.
By: Martley International, Inc., as
Attorney-in-Fact
By: /s/ Xxxx Xxxxxx
___________________________
Name: Xxxx Xxxxxx
Title: President
SELFCARE, INC.
By: /s/ Xxx Xxxxxxxxx
__________________________
Name: Xxx Xxxxxxxxx
Title: CEO
