1
Exhibit 10.33
THIS CONVERTIBLE NOTE PURCHASE AGREEMENT, dated as of April
28, 2000 (this "Agreement"), is made among BIO-PLEXUS, INC., a Connecticut
corporation (the "Company"), the purchasers listed on Exhibit A (each such
party, a "Purchaser" and, collectively, the "Purchasers"), and APPALOOSA
MANAGEMENT L.P., as Collateral Agent (the "Collateral Agent").
WHEREAS, the Company has previously issued to Appaloosa
Investment Limited Partnership I 7.5% Secured Note, 15% Secured Note and Second
15% Secured Note (collectively, the "Bridge Notes");
WHEREAS, the Bridge Notes provide 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 April 28, 2005 (the "Notes"), in the form attached hereto
as Exhibit 1.4i with an original issue price of $16.75 million (the "Issue
Price"), (ii) an aggregate of 250,000 shares (the "Shares") of Common Stock, no
par value, of the Company (the "Common Stock") and (iii) warrants to purchase
1,500,000 shares of Common Stock with an exercise price of $7 per share in the
form attached as Exhibit 1.4ii (the "$7 Warrants");
WHEREAS, the Notes shall be convertible (under the
circumstances described herein) into shares of 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, Common Stock and $7 Warrants.
1.1 Definitions. Certain capitalized terms used in the
Agreement are defined in Section 11.1 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, the Shares and the $7 Warrants for an aggregate cash purchase price of
$17.5 million (the "Purchase Price"). The Notes shall be in the form of Exhibit
1.4(i).
(b) The parties agree that the fair market value of the Notes
is $16,700,000 , the fair market value of the Shares is $750,000 and the fair
market value of the $7 Warrants is $50,000. Each party agrees to file all Tax
Returns consistent with such allocation and to take no position inconsistent
with such allocation, unless required by Law.
(c) The parties hereto agree that, for purposes of Treas. Reg.
Sec. 1.1275-4(b)(3)(ii), (x) the comparable yield is 7.5% with respect to the
Notes, and (y) the projected payment schedule with respect to the Notes will
reflect the foregoing comparable yield.
2
1.3 Closing. The closing of the transactions contemplated
hereby (the "Closing") will take place simultaneously with the execution hereof
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 amount set forth
opposite such Purchaser's name on Exhibit 1.4i;
(ii) duly executed $7 Warrants in the number set
forth opposite such Purchaser's name on Exhibit 1.4ii;
(iii) duly executed $3 Warrants in the number set
forth opposite such Purchaser's name on Exhibit 1.4iii;
(iv) an opinion of the Company's counsel, dated as of
the date hereof, addressed to such Purchaser in the form of Exhibit
1.4iv;
(v) an Officer's Certificate, dated as of the date
hereof, certifying that (A) the representations and warranties
contained in Section 2 hereof are true and correct and (B) the
transactions contemplated hereby and in the Transaction Documents have
been approved and adopted by the requisite vote of the stockholders of
the Company in accordance with applicable Law, the applicable rules of
NASDAQ and the Company's Certificate of Incorporation and By-Laws at a
properly called special meeting of the stockholders of the Company;
(vi) a good standing certificate for the Company,
dated no earlier than seven days prior to the date hereof, from the
Secretary of State of the State of Connecticut;
(vii) a copy of the resolutions of the Board of
Directors adopting the execution of each of the Transaction Documents
and the performance of the transactions contemplated by the Transaction
Documents, which resolutions shall be certified as true, correct and
effective as of the date hereof by an officer of the Company;
(viii) a duly executed copy of the Security Agreement
in the form attached hereto as Exhibits 1.4viiiA, and copies of any
other Collateral Documentation including Financing Statements required
to perfect the Holders' security interest in the Collateral;
(ix) a duly executed copy of the Registration Rights
Agreement attached as Exhibit 1.4ix;
(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 transactions
contemplated by the Transaction Documents, 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 Company's employment agreement
with Xxxx Xxxx, which employment agreement shall be in form and
substance reasonably satisfactory to the Purchasers
-2-
3
and which shall be certified as true, correct and effective as of the
date hereof by an officer of the Company;
(xii) copies of all of the Company's directors and
officers liability insurance policies, which insurance policies shall
be in form and substance reasonably satisfactory to the Purchasers and
which shall be certified as true, correct and effective as of the date
hereof by an officer of the Company;
(xiii) reimbursement of the Purchasers' costs and
expenses (including the reasonable fees and expenses of their counsel,
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx) incurred in connection with
the transactions contemplated by the Transaction Documents to be paid
as set forth in Section 1.5;
(xiv) evidence of repayment in full of the principal
amount of each of the Bridge Notes, plus all accrued and unpaid
interest due and payable thereon; and
(xv) 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 Restricted Account or to such other parties as
otherwise set forth below the amount set forth opposite such Purchaser's name in
Exhibit 1.5, such amount being equal to the pro-rata portion of the Purchase
Price allocable to such Purchaser for the Notes, the Shares and the $7 Warrants
being purchased by such Purchaser as set forth opposite such Purchaser's name in
Exhibit 1.5, less its costs and expenses (including the fees and expenses of its
counsel, Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, which amounts shall be wire
transferred by the Collateral Agent, on behalf of the Company, in immediately
available funds to one or more accounts designated by such parties on or prior
to the date hereof).
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 not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(a) 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. (a) The Company has all right, power
and authority to enter into, deliver and perform the Transaction Documents 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, the $7 Warrants, the $3 Warrants and issuance
of shares of Common Stock upon conversion of the Notes and the exercise of the
$7 Warrants and the $3 Warrants) and compliance by the Company with all the
provisions of each Transaction Document (as applicable) have been duly
authorized
-3-
4
by all requisite corporate proceedings on the part of the Company (including,
without limitation, approval by the requisite vote of holders 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
shares of Common Stock issuable upon conversion of the Notes and exercise of the
$7 Warrants and the $3 Warrants have been validly reserved for issuance and,
upon issuance, will be validly issued and outstanding, fully paid and
nonassessable.
(b) The Board of Directors has taken all necessary action so
that no "fair price," "moratorium," "control share acquisition," "interested
holder" or other similar anti-takeover statute or regulation (including, without
limitation, Sections 33-840 through 33-845 of the Connecticut Business
Corporation Act) or any applicable anti-takeover provision in the Company's
Certificate of Incorporation or By-Laws prohibits the transactions contemplated
by this Agreement. To the knowledge of the Company, no other state takeover
statute is applicable to the transactions contemplated by this Agreement.
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, 14,505,908 shares were issued and outstanding, 380,150 shares were
reserved for issuance upon the exercise of outstanding stock options pursuant to
the Company's option plans, and as of April 3, 2000, 3,958,244 shares were
reserved for issuance upon the exercise of the outstanding warrants, and
1,786,359 shares were reserved for issuance upon the conversion of the Company's
6% Convertible Debentures, due 2004 (the "Convertible Debentures") 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 of the Company 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 is, and
immediately after the 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,
-4-
5
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 that relate specifically to
the Company and that 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 was
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 the Company's balance sheet as of
December 31, 1999 included in the SEC Reports or (ii) Liabilities incurred in
the ordinary course of business since December 31, 1999 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,
its 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 that 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
-5-
6
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. Except as set forth on Schedule 2.8, the
Company is not required to obtain any 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, the Shares, the $7 Warrants and the $3
Warrants), 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) the filing of the
Financing Statements and the Open-end Subordinate Mortgage, Security Agreement,
dated as of the date hereof, between the Company and the Collateral Agent (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) the 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, which approval has been previously obtained.
2.9 No Material Adverse Change. Since December 31, 1999, no
event has occurred or failed to occur that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
2.10 Taxes. Except as set forth 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 of the Company have
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, 1999 included in the SEC Reports are complete
and adequate in all respects to cover any and all Liabilities of the Company 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 such
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.
-6-
7
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 are 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. Except as set forth in Schedule 2.12, no
unfair labor practice complaint or any complaint alleging sexual harassment or
sex, age, race or other employment 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, and 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, 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 no agreements to indemnify any Person
for or against any interference, infringement, misappropriation or other
conflict with respect to any Company Intellectual Property. Except as set forth
in Schedule 2.13(b), no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Company Intellectual
Property. The Company has taken all reasonably necessary and desirable action to
maintain and protect each item of
-7-
8
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 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 such franchise,
certificates, licenses, permits, authorizations and rights.
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 Certificate of Incorporation
Provisions. The Company has not entered into any Contract and the Company is not
subject to any Certificate of Incorporation or By-Law provision or any Order
that in any case could, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. None of the execution and delivery of any of
the Transaction Documents, the issuance, sale and delivery of the Notes, the
Shares, the $7 Warrants or the $3 Warrants, and 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 Contracts except 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 the triggering of any right of termination, cancellation or penalty or other
payment by or to any Major Supplier in connection with or as
-8-
9
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 such Product or a duty to warn
customers of a defect in such 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. In connection with this
offering, 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 that would require the integration of such offering
with the offering of the Securities under the Securities Act) that 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(a)
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. The Company has not received any notice from any Person declaring or
threatening to declare any Indebtedness owed by the Company to such Person due
and payable prior to the stated maturity of such Indebtedness or before its
regularly scheduled dates of payment.
(b) Except as set forth on Schedule 2.20(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 and has not 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 that 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
-9-
10
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, the $7 Warrants and the $3
Warrants 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
the State of Connecticut with respect to the Company (or assignments thereof)
and in the locations identified in the Security Agreement, the Liens granted
under the Transaction Documents shall, other than as specifically provided
therein, constitute a fully perfected security interest in all right, title and
interest of the Company in and to the personal property or interests therein
secured thereby prior to any other security interests against such property or
interests therein.
2.24 Brokers or Finders. Except for the fees payable to Pali
Capital LLC, 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 Related Party's business and
upon fair and reasonable terms that are at least equivalent to an arm's-length
transaction with a Person not a Related 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. Except as could not reasonably be expected to
result in a Material Adverse Effect, the software, computers and other hardware
and systems used by the Company continue to (i) accurately process date
information 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 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 has 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 other Persons to
-10-
11
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. None of the Transaction Documents and
schedules thereto and certificates 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 therein not misleading.
There is no fact or information relating to the Company that could reasonably be
expected to be Material to the Company that has not been disclosed to the
Purchasers.
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, the Shares, the $7 Warrants and the $3 Warrants 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 any distribution thereof except in compliance with all
applicable securities Laws.
3.4 Offering of Securities. Such Purchaser has not been
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.
-11-
12
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 Accreted Value 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 Holder
or any transferee thereof all sums becoming due on the Notes (including all sums
that become due on the Notes at the maturity thereof) (a) prior to the date of
execution of an indenture, if any (the "Indenture Date"), at the account/address
to be specified by such Holder 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 Holder 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 Holder or transferee will make
a notation thereon of the aggregate amount of all payments, if any, of the
Accreted Value thereof, 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 Payment of Principal & Interest. (a) In lieu of paying
interest on the Notes on a current basis, the Accreted Value of the Notes shall
be due and payable on the Stated Maturity; provided, however, that if any amount
payable hereunder is not paid when due (including, without limitation, payment
of the Accreted Value under Section 7.2), then in each such case the overdue
amount shall bear interest at a rate of 15% per annum, compounded semi-annually,
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 (including any interest accruing during the pendency of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowed as a claim in any such bankruptcy or proceeding). 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 Accreted Value or Change
of Control Redemption Price, be in lieu of, and not in addition to, the
continued accrual of the Accreted Value.
-12-
13
(b) The "Accreted Value" of the Notes shall mean, as at any
date, an amount equal to the sum of (i) the Issue Price and (ii) the Accreted
Amount. The "Accreted Amount" of the Notes as at any date shall mean the amount
accrued on the Issue Price of the Notes based upon the accretion rate, in effect
from time to time as provided below (the "Accretion Rate"). For purposes of the
foregoing, the Accretion Rate, in effect as at any date, shall be determined as
follows:
(i) from the date hereof up to and including the
First Adjustment Date, an amount equal to 15% per annum, compounded
semi-annually, computed on the basis of a 360-day year consisting of
twelve 30-day months;
(ii) from the day following the First Adjustment Date
up to and including the Second Adjustment Date, an amount equal to 12%
per annum, compounded semi-annually, computed on the basis of a 360-day
year consisting of twelve 30-day months;
(iii) from the day following the Second Adjustment
Date up to and including the Third Adjustment Date, an amount equal to
10% per annum, compounded semi-annually, computed on the basis of a
360-day year consisting of twelve 30-day months; and
(iv) from the day following the Third Adjustment Date
up to and including the Stated Maturity, an amount equal to 7.5% per
annum, compounded semi-annually, computed on the basis of a 360-day
year consisting of twelve 30-day months.
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 on 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
-13-
14
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 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
that, 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
amount, applicability or validity of which is being contested in good faith by
appropriate proceedings.
6.6 Limitation on Indebtedness. Except as forth on Schedule
6.6, 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 that is a Guaranty of an
Indebtedness of the Company or any of its Subsidiaries that is otherwise
Permitted Indebtedness).
6.7 Limitation on Encumbrances. Except as set forth on
Schedule 6.7, 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 pursuant to the
reasonable requirements of, such Related Party's business and upon fair and
reasonable terms that are at least equivalent to an arm's-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 such 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
-14-
15
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 warrants issued to the Purchasers and its affiliates, (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
the obligations of the Company under the Notes and this Agreement pursuant to
the form of Guarantee and Security Agreement attached as Exhibit 6.10.
6.11 Additional Offerings of Securities. Prior to seeking
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, further, 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) the
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 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) that 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.
-15-
16
6.13 No Speculative Transactions. The Company shall not, and
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, or permit
any of its Subsidiaries to, directly or indirectly, 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. Until the Designation Event and the
new Chief Executive Officer and the Collateral Agent agree to a new set of
financial covenants, the Company shall maintain the financial covenants
specified in Schedule 6.15. From and after the occurrence of the Designation
Event, the Company and the Collateral Agent agree to negotiate in good faith to
establish a new set of financial covenants.
6.16 Sale-and-Leaseback Transactions. The Company shall not,
and shall not permit any of its Subsidiaries 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 is 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) (the "Indenture")
with respect to the Notes, which Indenture 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
the 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 connection
with the execution of the Indenture, the Holders shall exchange all outstanding
Notes for new notes in the form contemplated by the 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 that the
Company files or is
-16-
17
required to file with the SEC pursuant to the Exchange Act and of any other
reports or information that 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 15 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 90 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 45 days after the end of the
four quarters of the Company's fiscal year and within 90 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 30 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 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 under 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 of its
-17-
18
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
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
herein 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
Holder'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 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 15
days to cure such Default or Event of Default 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 15-day period.
-18-
19
6.24 Proceeds. The proceeds of the sale of the Notes, the
Shares and the $7 Warrants shall be placed in a restricted account (the
"Restricted Account"), and the disbursements of proceeds from the Restricted
Account shall be made in accordance with the procedures set forth on Schedule
6.24 and in accordance with the terms of the Restricted Account Agreement, dated
as of the date hereof, by and among the Collateral Agent, the Company and
Savings Bank of Manchester. No part of the proceeds from the sale of the Notes,
the Shares and the $7 Warrants 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 Regulation T, U or X of such Board.
6.25 Insurance; Damage to or Destruction of Collateral. 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) 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 that the Required Holders deem
advisable. By doing so, the Collateral Agent and the Holders shall not be deemed
to have waived any Default or Event of Default arising from the Company's or any
of its Subsidiaries' failure to maintain such insurance or pay any premiums
therefor. Neither the Collateral Agent nor the Required Holders shall have any
obligation to obtain insurance for the Company or any of its Subsidiaries or to
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.
6.26 Rights of Required Holders to Designate Directors; Board
Composition. (a) Immediately after the Designation Event, the Company shall
expand the size of its Board of Directors from six to seven members and shall at
all times thereafter cause two individuals designated by the Holders (any such
individual 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 existing and future committee of the Board of Directors,
(ii) the board of directors or governing body of any future Subsidiary of the
Company (a "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). Beginning on the date hereof,
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, each committee of the Board of Directors,
each Subsidiary Board and each committee of such Subsidiary Board (the
"Non-Voting Observer"); provided, however, that until the Designation Event, the
Board of Directors shall have the discretion to exclude the Non-Voting Observer
from any of the meetings of the Board of Directors relating to the Company's
relationship with any of the Holders or the Collateral Agent. The Non-Voting
Observer, if appointed, shall have the same access to information concerning the
business and operations of the Company and its Subsidiaries at the same time as
directors of the Company and its Subsidiaries and shall be entitled to
participate in discussions and to consult with the Board of Directors and each
Subsidiary Board without voting, and the Board of Directors and each Subsidiary
Board shall give due consideration to the advice and recommendations of such
Non-Voting Observer.
-19-
20
(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 consist of more than
four members.
(c) Notwithstanding anything to the contrary contained herein,
after the Designation Event, so long as (i) the Holders (Y) in the aggregate own
at least 5% of the Common Stock (on a fully diluted basis) or (Z) hold at least
$10 million in the Issue Price 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 individuals who are members of the Board of Directors as of the date
hereof remain members of the Board of Directors, (iv) there is no material
Litigation pending or threatened against the Company and/or any Subsidiary, (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 and (vi) the Company maintains officers and directors insurance
policies satisfactory to the Collateral Agent in its reasonable discretion, the
Holders agree that they shall use their reasonable efforts to 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 June 30, 2000, hire a new Chief Executive Officer to
replace the existing Chief Executive Officer, whose appointment shall be
approved by the Board of Directors and the Holders.
(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, Chief Operating
Officer, General Counsel or similar positions; provided, that if there are no
Purchaser Designees at the time of such event, the approval of the Holders will
be required.
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, 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 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 Subsidiaries to, enter into any Contract, or any amendment,
modification, extension or supplement to any of its existing Contract or the
By-Laws or Certificate of Incorporation of the Company, that prohibits the
Company from honoring and observing its obligations under the Transaction
Documents.
-20-
21
6.31 Reserved.
6.32 Preparation of Quarterly Budgets. The Company shall
furnish to the Collateral Agent as soon as practicable, but in any event no
later than 10 days before the end of each of the quarterly periods of each
fiscal year of the Company, an operating budget (each, a "Quarterly Budget")
approved and adopted by a majority of the Board of Directors (which majority
shall include the Purchaser Designees, if any) for the Company and its
Subsidiaries, taken as a whole, for the next quarterly period (provided that the
Company need not furnish the Collateral Agent with a Quarterly Budget for the
quarterly period commencing on April 1, 2000). Each Quarterly Budget shall
specify, among other things, the amount of funds needed by the Company and its
Subsidiaries in the next quarter to operate the business of the Company and its
Subsidiaries (the amount of such funds, the "Quarterly Amount").
6.33 Operations in Accordance with the Business Plan. The
business and operations of the Company and its Subsidiaries shall be conducted
in accordance with the Quarterly Budget and a business plan of the Company
approved by the Collateral Agent.
6.34 Operational Covenants. The Company shall maintain the
covenants specified in Schedule 6.34.
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 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
-21-
22
(d) a final judgment or judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Subsidiaries and such judgment or judgments remain 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 Governmental Entity
having jurisdiction over the Company or any 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 shall challenge the enforceability of
any Transaction Document or shall assert in 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 that is a
"defined benefit plan" (within the meaning of Section 3(35) of ERISA) any
-22-
23
"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 that 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 that
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 that 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 Default Rate. For so long as any Event of Default has
occurred and is continuing, all Notes then outstanding will bear interest at a
rate (the "Default Rate") equal to 15% per annum, compounded semi-annually,
computed on the basis of a 360-day year consisting of twelve 30-day months
(including any interest accruing during the pendency of any bankruptcy or
similar proceeding, whether or not a claim for post-petition interest is allowed
as a claim in any such bankruptcy or proceeding). All such interest shall be
payable on demand.
7.3 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 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 Accreted
Value of each Note (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.
7.4 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.
7.5 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
the Holder of such Note, 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.
-23-
24
7.6 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.
7.7 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 Holder or
the Collateral Agent or the Holders may be exercised from time to time and as
often as may be deemed expedient by such Holder or the Collateral Agent or the
Holders.
8. Redemption.
8.1 Optional Redemption. Subject to each 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 and subject to Section
8.4, to redeem the Notes after April 28, 2002, 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 April 28, 2003, the Optional Redemption
Price shall decrease to 110% of the Accreted Value of the Notes on the day 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 on 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 of a Note 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
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 Note, in
whole or in part, at the option of the
-24-
25
Holder thereof, 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 that 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 such Holder's 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 the Holder thereof at any time after the Closing into fully paid and
nonassessable 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 such Note or
portion thereof surrendered for conversion on the day prior to the conversion
date by the Conversion Price. The "Conversion Price" shall initially be $3.00
per share, subject to adjustment as provided in this Section 9.
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 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 that 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) 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.
-25-
26
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 each
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
any Note is deemed to have been converted. If 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 aggregate 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 then
Accreted Value 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; or (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 that
such Holder would have owned or would have been entitled to receive after the
happening of any of the events described above, had such Notes been 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) Except for issuances pursuant to Schedule 9.6(b), (i) 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
-26-
27
having a conversion price per share) less than 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), including, without limitation, any shares of Common Stock
issued by the Company upon the conversion of the Call Debentures or (ii) if on
any Conversion Date, there are Call Debentures outstanding and the Ramius
Conversion Price is below the Conversion Price (regardless of whether any shares
of Common Stock have been issued to holders of the Call Debentures), 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). Notwithstanding anything to
the contrary contained herein, (a) in calculating any adjustment to the
Conversion Price pursuant to clause (ii) above, once shares of Common Stock are
actually issued upon the conversion of the Call Debentures, only those shares of
Common Stock that remain issuable under those Call Debentures which have not yet
been converted shall be taken into consideration and (b) on any date that the
Company issues any shares of Common Stock pursuant to the Call Debentures, the
Company shall, on the same date, deliver a notice to the Collateral Agent
specifying whether any adjustment to the Conversion Price will be required
pursuant to this Section 9.6 as a result of such issuance.
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 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 the 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.
-27-
28
(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 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 9.6, shall
mean a dividend or other distribution upon Capital 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 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
-28-
29
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 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 such 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 Holders of the Notes at their addresses 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 such 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
-29-
30
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 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 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
-30-
31
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 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 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 investment 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 that 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
-31-
32
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 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 capacity.
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 thereof). 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.
"$3 Warrants" means warrants to purchase 200,000 shares of
Common Stock with an exercise price of $3 per share in the form attached hereto
as Exhibit 1.4iii.
"$7 Warrants" shall have the meaning ascribed thereto in the
Recitals.
"7.5% Secured Note" shall mean the 7.5% Secured Note in the
initial aggregate principal amount of $3,000,000 issued by the Company to
Appaloosa on October 21, 1999, as such 7.5% Secured note may be amended from
time to time.
"15% Secured Note" shall mean the 15% Secured Note in the
initial aggregate principal amount of $1,650,000 issued by the Company to
Appaloosa on January 5, 2000, as such 15% Secured Note may be amended form time
to time.
"Accreted Amount" shall have the meaning ascribed thereto in
Section 5.3.
"Accretion Rate" shall have the meaning ascribed thereto in
Section 5.3.
"Accreted Value" shall have the meaning ascribed thereto in
Section 5.3.
"Action" shall mean see Section 12.1(b)(i).
-32-
33
"Agreement" shall have the meaning ascribed thereto in the
Preamble.
"Affiliate" shall have the respective meanings ascribed to
such term 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. "Beneficial Owners" and
"Beneficially Owned" shall have correlative meanings.
"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 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.
"Bridge Notes" shall have the meaning ascribed thereto in the
Recitals.
"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 mean the By-Laws of the Company as currently
in effect.
"Call Debentures" shall mean the Debentures issued under
Section 1.4 of the Subscription Agreement.
"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" shall mean, 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 GAAP, 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.
-33-
34
"Certificate of Incorporation" shall mean the Certificate of
Incorporation of the Company as currently in effect.
"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 of its Subsidiaries, (ii) any Benefit Plan (or related
trust) of the Company or any of its Subsidiaries, or (iii) any corporation with
respect to which, following such 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
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 of Directors; 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.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall mean 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" shall mean the Guarantee and
Security Agreement, 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 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 and the Registration Rights Agreement.
-34-
35
"Commencement Date" shall have the meaning ascribed thereto in
Schedule 6.34.
"Common Stock" shall have the meaning ascribed thereto in the
Recitals.
"Company" shall have the meaning ascribed thereto in the
Preamble.
"Company Intellectual Property" shall have the meaning
ascribed thereto in Section 2.13.
"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 Date" shall mean the date on which a Holder
delivers a conversion notice to the Company in accordance with Section 9.2.
"Conversion Price" shall have the meaning ascribed thereto in
Section 9.1.
"Convertible Debentures" shall have the meaning ascribed
thereto in Section 2.3.
"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 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.
"Debentures" shall have the meaning ascribed thereto in the
Subscription Agreement.
"Default" shall have the meaning ascribed thereto in Section
7.1.
-35-
36
"Default Rate" shall have the meaning ascribed thereto in
Section 7.2.
"Designation Event" shall mean the appointment of a Chief
Executive Officer of the Company, acceptable to the Holders, by the Board of
Directors, in accordance with Section 6.27 thereof.
"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" shall mean 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" shall mean 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 such Person.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA Affiliate" shall mean 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
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).
"Fair Market Value" shall mean, as to shares of Common Stock
or any other securities of the Company or any other issuer that 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 that
the Fair Market Value of such shares or securities 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 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.
"FDA" shall have the meaning ascribed thereto in Section 2.15.
-36-
37
"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.
"First Adjustment Date" shall mean the first date on which
both the Designation Event and the Commencement Date have occurred.
"GAAP" shall mean U.S. generally accepted accounting
principles, consistently applied.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.
"Guarantee and Security Agreement" shall mean the agreement,
in the form of Exhibit 6.10, to be entered into between the Collateral Agent and
the Company's future domestic Subsidiaries, providing for a security interest in
such domestic Subsidiaries' Collateral and Guarantees from such Subsidiaries (as
such agreement may be amended, supplemented, restated or otherwise modified from
time to time).
"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 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 that 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.
"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.
"Incumbent Board" shall mean the individuals who, immediately
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
-37-
38
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(b).
"Indenture" shall have the meaning ascribed thereto in Section
6.19.
"Indenture Date" shall have the meaning ascribed thereto in
Section 5.1.
"Intellectual Property" shall mean (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, 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), (i) all licenses,
sublicenses, permissions or agreements in connection with the foregoing and (j)
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.
"Intercompany Notes" shall mean 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 or
between the Company and its Affiliates.
"Issue Price" shall have the meaning ascribed thereto in the
Preamble.
-38-
39
"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" shall mean, 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) the properties, business, prospects, operations, earnings, assets,
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 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" shall mean 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.
"Optional Redemption Price" shall have the meaning ascribed
thereto in Section 8.1.
-39-
40
"Order" shall mean any judgment, order, injunction, ruling,
decree, stipulation or award of any Governmental Entity or private arbitration
tribunal.
"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 Beneficially Owned 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; (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; or (iv)
Indebtedness incurred in the ordinary course of business and consistent with
past practice not to exceed $1,000 individually or in the aggregate.
"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 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 Ratings
Service, a division of The XxXxxx-Xxxx Companies 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 6.7, all of which are subordinate to the Lien of the
Collateral Documentation (other than as set forth in Schedule 6.7); (ii) Liens
(other than any Lien imposed under ERISA or any Environmental Laws) for Taxes,
assessments or charges of any Governmental Entity for claims not yet due or that
are being
-40-
41
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, that do not secure Indebtedness or the deferred
purchase price of any asset and that do not interfere materially with the
ordinary conduct of the business of the Company or any Subsidiary of the Company
and that 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.
"Purchase Price" shall have the meaning ascribed thereto in
Section 1.2(a).
"Purchased Shares" shall have the meaning ascribed thereto in
Section 9.6(d).
"Purchaser" and "Purchasers" shall have the meaning ascribed
thereto in the Preamble.
"Purchaser Designee" and "Purchaser Designees" shall have the
meanings ascribed thereto in Section 6.26.
"Quarterly Amount" shall have the meaning ascribed thereto in
Section 6.32.
"Quarterly Budget" shall have the meaning ascribed thereto in
Section 6.32.
"Ramius Conversion Price" shall have the meaning ascribed to
"Conversion Price" in the Convertible Debentures issued under the Subscription
Agreement.
-41-
42
"Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated the date hereof, between the Purchasers and the Company
(as amended, supplemented, restated or otherwise modified from time to time)
with respect to the Notes.
"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 such directors and officers).
"Required Holders" shall mean, 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 Account" shall have the meaning ascribed thereto
in Section 6.24.
"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.
"Second Adjustment Date" shall mean the date on which the
Company achieves Product Sales Revenues equal to or exceeding $15 million for
the trailing 12 month period.
"Second 15% Secured Note" shall mean the 15% Secured Note in
the initial aggregate principal amount of $2,200,000 issued by the Company to
Appaloosa on April 3, 2000, as such 15% Secured Note may be amended from time to
time.
"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 the Company or such Subsidiary 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 (as amended,
supplemented, restated or otherwise modified from time to time) providing for a
security interest in the Collateral.
-42-
43
"Semi-Annual Accrual Date" shall have the meaning ascribed
thereto in Section 5.3(a).
"Shares" shall have the meaning ascribed thereto in the
Recitals.
"Stated Maturity", when used with respect to any Security or
any installment of interest thereon, shall mean 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.
"Subsidiary Board" shall have the meaning ascribed thereto in
Section 6.26(a).
"Subscription Agreement" shall mean the Subscription
Agreement, dated as of April 21, 1999, between the Company and the undersigned
thereto, as such agreement may be amended and restated from time to time.
"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.
Section 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.
"Third Adjustment Date" shall mean the date on which the
Company achieves Product Sales Revenues equal to or exceeding $25 million for
the trailing 12 month period.
"Total Revenue" shall mean, with respect to any period, the
total 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.
-43-
44
"Transaction" shall have the meaning ascribed thereto in
Section 9.7.
"Transaction Documents" shall mean this Agreement, the Notes,
the $7 Warrants, the $3 Warrants, the Registration Rights Agreement, the
Security Agreement and the Guarantee and Security 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).
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 any 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 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 (collectively, "Actions"), 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 Agreement 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 that 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
-44-
45
satisfactory to such 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 such
Indemnified Person that 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 Agreement or any other
Transaction Document, the Company 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 such 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 or Schedule 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 and Schedules 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 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.
-45-
46
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: Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
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 X. Xxxxx
Fax: (000) 000-0000
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
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, modification or discharge on behalf of such party.
-46-
47
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 Holder
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 Holder acknowledges that, except
as provided in the Registration Rights Agreement, such Holder has no right to
require the Company to register the Notes. Each Holder 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 ISSUE PRICE, ISSUE DATE, THE YIELD TO MATURITY OF THE
SECURITY, AND, FOR PURPOSES OF TREAS. REG. SEC.
1.1275-4(b)(3)(ii), THE COMPARABLE YIELD AND PROJECTED PAYMENT
SCHEDULE, CONTACT THE COMPANY AT 000 XXXXXXXXX XXXX, XXXXXX,
XX 00000.
THE TRANSFER OF THIS NOTE IS RESTRICTED BY AND PURSUANT TO THE
CONVERTIBLE NOTE PURCHASE AGREEMENT DATED AS OF APRIL 28,
2000, A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE
COMPANY.
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.
-47-
48
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. Each of the Company and 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 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
effectively the provisions and purposes of the Transaction Documents.
12.18 Substitution of Purchaser. Each Purchaser shall have the
right to substitute 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.
-48-
49
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: /s/ Xxxxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxx
Title: Chief Financial Officer and
Vice President of Finance
APPALOOSA MANAGEMENT L.P.,
as Collateral Agent
By: Appaloosa Partners Inc., its
General Partner
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management L.P., its
General Partner
By: Appaloosa Partners Inc., its
General Partner
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
PALOMINO FUND LTD.
By: Appaloosa Management L.P., its
Investment Adviser
By: Appaloosa Partners Inc., its
General Partner
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
TERSK LLC
By: Appaloosa Management L.P., its
Managing Member
By: Appaloosa Partners Inc., its
General Partner
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
-49-
