EXHIBIT 10.59
NOTE PURCHASE AND WARRANT AGREEMENT
THIS AGREEMENT made as of this 17th day of September, 1997 between
Income Partners LP (the "Purchaser") and FIBERCORE, INC. and its affiliates (the
"Company") a Nevada Corporation.
WHEREAS, the Company is desirous of obtaining working capital through
the short-term financing of certain of its assets,
WHEREAS, the Company is willing to issue certain short-term, secured
promissory notes (the "Notes") with warrants to several purchasers, in order to
obtain such working capital, and
WHEREAS, each such purchaser who acquires the Notes will be subject to
the same Note Purchase and Warrant Agreement.
NOW THEREFORE, in consideration of the premises and mutual covenants and
agreements herein contained, the parties agree as follows:
1. Offer
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1.1. The Purchaser hereby agrees to purchase the Note subject to the
conditions hereinafter set forth:
Upon execution and delivery of this Agreement by both parties and the
execution and delivery of the Note (Exhibit A) by the Company to the Purchaser,
the Purchaser will commit to pay to the Company up to Fifty Thousand ($50,000)
dollars, in not more than four (4) equal monthly installments of Twelve-Thousand
Five Hundred ($12,500) dollars, with the first installment due and payable on
the date hereof. The amount of Purchaser's outstanding commitment under this
Agreement, at any time, will be Purchaser's pro-rata participation in the
aggregate amount of all Notes sold under the same terms and conditions, less the
sum of (a) Purchaser's pro-rata participation in the aggregate amount of funds
received under Section 1 (a) and (b) for all Notes and (b) Purchaser's pro-rata
participation in the aggregate amount funded.
1.3. The Company grants the Purchaser warrants (the "Warrant") to
purchase common stock of the Company for a purchase price of $.6875 per share,
(the closing price of the Company's common as of the date hereof), exercisable
in whole or in part at any time. Each Warrant which expires on September 30,
2002 shall entitle the Purchaser to acquire one (1) share of common stock and
shall be in form and substance as Exhibit B attached hereto. The Purchaser shall
receive that number of Warrants equal to 10% of the commitment amount plus that
number of Warrants equal to 60% of the amount funded.
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2. Acceptance
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2.1. The Company agrees to sell to the Purchaser the Note subject to
the terms and conditions of this Agreement and to grant the Warrants referred to
in Section 1.3.
3. Delivery of Warrants
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3.1. The execution of this Agreement shall constitute the registration
of Warrants in the Purchaser's name.
4. Representations and Warranties of the Company
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4.1. The Company hereby represents and warrants to the Purchaser as
follows:
(a) Organization and Standing of the Company. The Company is a
corporation duly organized and validly existing under the laws
of the State of Nevada and is in good standing under such
laws. The Company is not in violation of its Certificate of
Incorporation or Bylaws. The Company has all requisite
corporate power and authority for the ownership and operation
of its properties and assets, and to carry on its business as
presently conducted or now proposed to be conducted.
(b) Corporate Action. The Company has all the necessary corporate
power and has taken the corporate action required to enter
into this Agreement and to consummate the transactions
contemplated hereby. All corporate action on the part of the
Company for the authorization, execution, delivery and
performance of this Agreement by the Company, the
authorization, sale, issuance, and delivery of the Note and
Warrants and the performance of the Company's obligations
hereunder has been taken, except such acts as may be required
to effectuate the provisions of this Note, Warrant and
Agreement, which actions are authorized in Section 6.7. This
Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligations of the
Company enforceable in accordance with its terms. The issuance
of the Note and Warrant does not require any further corporate
action, will not be subject to preemptive rights or other
preferential rights in any present stockholders of the Company
and will not conflict with any provisions of any agreement to
which the Company is a part or by which it is bound.
(c) Government Approvals. No authorization, consent, approval,
license, exemption, from or filing of registration with any
court or governmental department, commission, board, bureau,
agency or instrumentality, domestic, or foreign, is or will be
necessary for the execution and delivery by the Company of
this Agreement, and except for certain filings under state
securities laws, the offer and sale of the shares will be
exempt from the registration requirements of applicable
federal and state securities laws.
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(d) Compliance with Other Instruments. Neither the execution,
issuance and delivery of this Agreement or the Note, nor the
consummation by the Company of any transaction contemplated
hereby or thereby, constitutes or results in or will
constitute or result in a default or violation of any term or
provision of the Certificate of Incorporation and By-laws of
the Company, as amended and in effect, and the terms and
provisions of the mortgages, indentures, leases, agreements
and other instruments and of all judgments, decrees,
governmental orders, statutes, rules or regulations by which
the Company or its properties are bound.
5. Purchaser Representations
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5.1 In connection with this subsection, the Purchaser hereby makes the
following acknowledgments and representations:
(a) The execution of this Agreement has been duly authorized by
all necessary action on the part of the Purchaser, has been
duly executed and delivered, and constitutes a valid, legal,
binding, and enforceable agreement of the Purchaser;
(b) The Purchaser is acquiring the Note and the Warrants for its
own account, for investment, and not with a view to any
"distribution" thereof within the meaning of the Securities
Act of 1933, as amended (the "Act");
(c) The Purchaser understands that because the Note and the
Warrants have not been registered under the Act, it cannot
dispose of any of the Note and Warrants unless such Note and
the Warrants are subsequently registered under the Act or
exemptions from such registration are available. The Purchase
acknowledges and understands (i) that it has no right to
require the Company to register the Note, the Warrants or any
shares obtained through the conversion or exercise of the
foregoing or (ii) that exemptions from such registration may
not be available. The Purchaser further understands that the
Company may, as a condition to the transfer of any part of the
Note or Warrants, require that the request for transfer be
accompanied by an opinion of counsel, in form and substance
satisfactory to the Company, to the effect that the proposed
transfer does not result in a violation of the Act, unless
such transfer is covered by an effective registration
statement under the Act. The Purchaser understands that each
certificate representing the shares will bear the following
legend or one substantially similar thereto:
The securities represented by this certificate have not been
registered under the Securities Act of 1933. These securities
have been acquired by investment and not with a view to
distribution or resale, and may not be sold, mortgaged,
pledged, hypothecated or otherwise transferred without an
effective registration statement for such shares under the
Securities Act of 1933, or an opinion of counsel satisfactory
to the corporation that registration is not required under
such Act.
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(d) The Purchaser understands the offering is being made pursuant
to the exemption from registration with the Securities and
Exchange Commission (the "Commission") afforded by Section
4(2) of the Act and/or Regulation D adopted by the Commission
relating to transactions by an issuer not involving any public
offering, and similar federal, state, and foreign laws or
policies. Consequently, any offering materials have not been
subject to review and comment by the staff of the commission
or by any state or foreign securities commission.
(e) The Purchaser acknowledges that during the course of this
transaction and prior to sale, it has had the opportunity to
ask questions of any receive answers from the Company
concerning the terms and conditions of its investment, and to
obtain any additional information of the same kind that is
specified in Part I of a Registration Statement on Form SB-2
under the Act. The Purchaser or its purchaser representative
has examined the information furnished by the Company and,
through discussions and examination of such materials as the
Purchaser has requested, has obtained sufficient information
upon which to make an investment decision. The Purchaser is
familiar with the type of investment which the shares
constitutes, and has reviewed the merit and risks of this
investment to the extent deemed advisable by the Purchaser.
The Purchaser has such knowledge and experience in financial
and business affairs that it is capable of evaluating the
merits and risk of investing in the shares, and acknowledges
that it is able to bear the economic risks of this investment.
Further, the Purchaser understands all matters in the
Agreement.
(f) The investment in the Company by the Purchaser does not
constitute a principal portion of the Purchaser's total assets
and the Purchaser is able to afford a complete loss of the
investment contemplated herein.
6. Covenants of the Company
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6.1. Annual Reports. The Company agrees to use its best efforts to
deliver to the Purchaser, as soon as practicable after the end of each fiscal
year and in any event within 120 days thereafter, a consolidated balance sheet
of the Company as at the end of such fiscal year, a consolidated statement of
operations and a consolidated statement of cash flow of the Company for such
year, prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and certified by
independent public accountants selected by the Company.
6.2. Quarterly Reports. The Company agrees to use its best efforts to
deliver to the Purchaser as soon as practicable after the end of each of the
first three quarterly fiscal periods in each fiscal year and in any event within
60 days thereafter, a consolidated balance sheet of the Company as at the end of
such period, a consolidated statement of operations and a consolidated statement
of cash flow of the Company for such period, in each case prepared in accordance
with generally accepted accounting principles consistently applied and setting
forth in comparative form the figures for the corresponding periods of the
previous fiscal year, all in reasonable detail
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and certified, subject to changes resulting from audit adjustments, by the
principal financial or accounting officer of the Company.
6.3. Inspection. The Company agrees to permit any authorized
representative of the Purchaser to visit the Company to discuss its affair and
finances with its officers, all upon reasonable notice to the Company, at such
reasonable times and as often as may be reasonable requested.
6.4. Purchaser's Right to Receive Reports. The Company shall deliver
the reports or give the rights specified in Paragraph 6.1., 6.2., and 6.3. to
the Purchaser until the earlier of (i) the closing date of the Company's first
underwritten public offering pursuant to an effective registration statement
filed under the Act; or (ii) until the Purchaser no longer holds the Note or any
Warrants.
6.5. Distributions and Payments. The Company shall not (i) pay any
dividend or make any other distribution to its equity holders or (ii) make any
principal or interest payments on any loans that are subordinate to this Note
unless and until the full principal amount of, and interest on, this Note shall
have been paid in full.
6.6 Indemnification. The Company shall indemnify the Payee and hold it
harmless from and against any liabilities, obligations, losses, costs and
expenses (including without limitation attorneys' fees and expenses) arising out
of or incurred in connection with (i) the breach by the Company of any of the
representations contained in Section 4, and (ii) the enforcement of this
indemnity.
6.7. Company Action. The Company shall authorize and empower such
officers as may be necessary to enter into, execute and deliver any and all
documents and certificates, and to make all filings necessary to effectuate this
Agreement , the Note, and the Warrant.
6.8. Statement of Anticipated Funds Usage. The Company shall deliver to
the Purchaser, ten (10) days prior to a scheduled monthly funding installment, a
reasonably detailed statement showing the uses for such funding.
6.9 Inter-Creditor Dealings. The Company shall treat the Purchaser, in
all respects, in a manner consistent with that of other purchasers, including
but limited to the fact that all payments and distributions shall be made to
each purchaser in accordance with their pro-rata participation.
7. No Waiver
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7.1. Notwithstanding any of the representations, warranties,
acknowledgments or agreements made herein by the Purchaser, the Purchaser does
not thereby or in any other manner waive any rights granted to it under Federal
and state securities laws.
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8. Survival of Representation, Warranties and Agreements
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Notwithstanding any investigation made by any party to this Agreements,
all covenants, agreements representations, and warranties made by the Company
and the Purchaser herein shall survive the execution of this Agreement, the
delivery to the Purchaser of the shares being purchased and the payment
therefore.
9. Transferability
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9.1. The Purchaser agrees not to transfer or assign this Agreement, or
any of its interest herein, and further agrees that any assignment or transfer
of the shares shall be made only in accordance with applicable securities laws
and that an appropriate legend with respect thereto may be placed by the Company
on any certificate evidencing such shares.
10. Miscellaneous
Notices. All notices or other communications given or made hereunder
shall be in writing and shall be delivered:
to the Purchaser at:
Income Partners LP
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and to the Company:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
10.2. Governing Law. This Agreement shall be construed in accordance
with the laws of the Commonwealth of Massachusetts without giving effect to the
conflict of laws.
10.3. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by all parties.
10.4. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and by the Purchaser.
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10.5. Heading. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
10.6. Severability. In case any provision contained in this Agreement
should be invalid, illegal, or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
10.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other party.
10.8. Pronouns. All pronouns shall be deemed to refer to the masculine,
feminine neuter, singular or plural, as the identity of the person or persons,
firm or other entity may require in the context thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives the day and year first above
written.
FIBERCORE, INC.
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------ ----------------------------------------
TITLE: Chief Financial Officer and
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Treasurer
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The Note Purchase and Warrant Agreement
Exhibit A
SECURED PROMISSORY NOTE
$50,000.00 Charlton, MA
Due September 30, 1998 Dated: September 17, 1997
FOR VALUE RECEIVED, FiberCore, Inc., a Nevada corporation and its affiliates
"Payer" or the "Company"), hereby promises to pay to the order of Income
Partners LP ("Payee") ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, the principal
sum of Fifty Thousand ($50,000.00), or such lesser amount if the amount advanced
under this Note is less than the principal sum, together with any unpaid
interest thereon. Said principal and interest shall be payable as provided
herein.
1. Payment of Principal and Interest
---------------------------------
All or any part of the principal amount of this Note together with
accrued and unpaid interest, if any, shall be payable on the earlier of:
The receipt of proceeds, as and when received from the sale, financing,
liquidation or any other disposal of any part or all of the inventory listed in
Schedule 1, annexed hereto, or
The receipt of proceeds from any new funding arrangement/venture (which
includes, by way of example and not limitation, stock and debt issuance's in
respect of investments in the Company, and collection of fees for services), or
(c) September 30, 1998
2. Interest
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This Note shall bear interest at the initial rate of 9.5% for the
period September 17, 997 to September 30, 1997. Thereafter, the Note shall bear
interest for each 3-month period beginning October 1, 1997, at the prime
interest rate as published in the Wall Street Journal on the business day
immediately preceding the 3-month period plus one-percent (1%). Interest will be
payable quarterly on the 1st day of the month following the 3-month interest
period (April 1, July 1, October 1, and January 1) during the term hereof.
In the event the Payer fails to make a quarterly interest payment when
due, the Payer agrees to pay an additional amount equal to 1/2 of 1% (.5%) on
the then outstanding principal as a late payment fee. The failure to make a
quarterly interest payment shall not constitute an Event
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of Default, as defined below.
3. Prepayments
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The principal amount of this Note may be prepaid in whole at any time
or in part from time to time, with accrued interest on the amount repaid to the
date of repayment, in each case without penalty or premium.
4. Conversion
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The outstanding principal amount of this Note including any accrued and
unpaid interest is convertible, at the option of the Payee, at any time prior to
repayment into common shares of the Company at the rate of $0.6875 per share.
5. Security
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To secure all payments of the Company to the Payee, the Company hereby
grants and conveys to the Payee a first perfected security interest in (a) all
the inventory, work-in-process, returned goods and goods in transit and (b) all
accounts receivable.
6. Events of Default
-----------------
Upon the occurrence of any of the following:
(a) The Company shall fail to pay any of the principal of or
interest on this Note when due; or
(b) The Company shall fail to perform any other covenant,
agreement or promise whether contained in this Note or the
Agreement which is incorporated by reference herein; or
(c) The filing by or against the Company of a petition in
bankruptcy, reorganization, insolvency, arrangement, or other
similar proceeding; or
(d) The Company shall sell all or any substantial part of its
assets, shall merge or consolidate with or into any other
entity, or more than 25% of the equity ownership of the
Company shall be sold to an unaffiliated third party
purchaser; or
(e) ▇▇▇▇ ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ shall cease to directors
and/or officers of the Company and/or the number of common
shares held or beneficially owned by each of them,
respectively, decreases by more than 25%; then , in any of
those events (each such event being hereinafter referred to as
an "Event of Default"), this Note, although not yet due,
shall, upon written notice of acceleration from the Payee of
this Note to the Company (or automatically in the
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case of an Event of Default described in subsection (c))
become and immediately be due and payable both as to principal
and accrued and unpaid interest, without presentment, demand,
protest or notice of any kind, all of which is expressly
waived, as set forth in Section 8.
7. Obligations Unconditional
-------------------------
The obligations to make the payments provided for in this Note are
absolute and unconditional and not subject to any defense, set-off,
counterclaim, rescission, recoupment, or adjustment whatever, whether or not the
holder of this Note is a holder in due course. No forbearance, indulgence, delay
or failure by the Payee to exercise any right or remedy with respect to this
Note, nor any course of dealing between the Company and Payee, shall operate as
a waiver, nor as an acquiescence in any default, nor shall any single or partial
exercise of any right or remedy preclude any other or further exercise thereof
or the exercise of any other right or remedy. This Note may not be modified or
discharged orally, but only in writing duly executed by the Company and the
Payee.
8. Waiver
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The Company hereby expressly waives any presentment, demand, protest or
notice of any kind now or hereafter required by law in connection with this
Note.
9. Governing Law
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This Note shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts, without regard to conflicts of law
rules and principles.
TO INDUCE HOLDER TO ENTER INTO THE COMMERCIAL TRANSACTION EVIDENCED BY
THIS NOTE AND THE SAID AGREEMENT, EACH MAKER, ENDORSER AND GUARANTOR HEREOF
AGREES THAT THIS TRANSACTION IS COMMERCIAL AND NOT A CONSUMER TRANSACTION AND,
TO THE EXTENT ALLOWED BY LAW, WAIVES ANY RIGHT TO NOTICE OF HEARING ON THE RIGHT
OF THE HOLDER UNDER ANY STATUTE OR STATUTES AFFECTING PREJUDGEMENT REMEDIES AND
AUTHORIZES HOLDER'S ATTORNEY TO ISSUE A WRIT FOR PREJUDGEMENT REMEDY WITHOUT
COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THE WAIVER.
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IN WITNESS WHEREOF, the undersigned has caused this Note to be duly
executed and delivered as of the date set forth above.
FiberCore, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer and Treasurer
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