EXHIBIT 10.1
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), ANY STATE SECURITIES LAW OR ANY OTHER SECURITIES LAWS
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
No. 1 U.S. $10,000,000
Date: September 28, 2001
ORGANOGENESIS INC.
7% CONVERTIBLE SUBORDINATED NOTE
DUE MARCH 29, 2004
FOR VALUE RECEIVED, Organogenesis Inc. a corporation organized and
existing under the laws of the State of Delaware, having a principal place of
business at 000 Xxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Company") promises
to pay to Novartis Pharma AG, or its registered assigns (the "Holder"), the
principal sum of Ten Million Dollars ($10,000,000), on March 29, 2004 or such
earlier date that this Note is required to be repaid as provided hereunder (as
such date may be extended pursuant to Section 1.1, the "Maturity Date") and to
pay interest on the principal sum outstanding under this Note at the rate of 7%
per annum (or otherwise as described in Section 1.3) as described herein.
Section 1. Payment.
1.1 Payment of Principal. The Company shall pay all outstanding
principal due on this Note on the Maturity Date or earlier as provided in
Section 5.2 herein. Such payment on the Maturity Date shall be made in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debt. Any earlier conversion of the
principal and interest thereon in accordance with provisions of Section 5 shall
be in the form of Common Stock on the principal balance so converted and in the
manner described in Section 1.3 as to the payment of accrued interest.
Notwithstanding the foregoing, the Company may, by written notice to the Holder
delivered on or before March 1, 2004, extend the Maturity Date hereof to a date
no later than the first anniversary of the issuance of this Note in the event
that each of the other 7% Convertible Subordinated Notes of the Company due
March 29, 2004 then outstanding have been duly amended to extend the maturity
date thereof to a date no earlier than the Maturity Date as extended pursuant to
this sentence.
1.2 Prepayment of Principal and Interest. Except as set forth in
Section 5 herein, this Note may not be prepaid in whole or in part at any time.
1.3 Payment of Interest. The Company shall pay all outstanding
interest due on this Note semi-annually or earlier as provided in Section 5.2
herein. Interest will be payable on each of September 30 and March 31 (each an
"Interest Payment Date") of each year this Note is outstanding. Interest shall
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance and shall continue
until the following Interest Payment Date. Notwithstanding the foregoing, upon
receipt of a notice of conversion in accordance with the provisions of Section 5
herein by either the Holder or the Company, interest shall be payable in full
within five (5) days following conversion of the Note as to all accrued interest
due on the principal sum outstanding under this Note that has been converted
into the Company's Common Stock through such conversion date. Interest shall be
calculated on the basis of a 360-day year and for the actual number of days
elapsed. Interest hereunder will be paid to the person in whose name this Note
is registered on the records of the Company regarding registration and transfers
of the Note (the "Note Register"). All sums hereunder shall bear interest,
payable on demand, at the rate of 10% per annum from the Maturity Date through
the date of payment or such earlier date in which this Note is accelerated or
converted through and including the date of payment, or from the Interest
Payment Date until the date of payment. All of the foregoing payments of
interest (other than payments subsequent to the Maturity Date) shall be made in
(a) such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debt, (b) in Common
Stock (as defined in Section 6), or (c) in any combination of (a) and (b), at
the Company's option (subject to the provisions of this Section 1.3 and Section
5.12). For purposes of clause (b), the value of one share of Common Stock shall
be, on the Interest Payment Date, the Maturity Date or on the date of conversion
of the Convertible Note pursuant to Section 5 hereof, as applicable, an amount
that is equal to the average of the Per Share Market Value for one share of
Common Stock for the twenty (20) Trading Days immediately preceding such date.
Notwithstanding the foregoing, the Company is not permitted to pay any sums due
hereunder in the Company's Common Stock at any time when resale of such Common
Stock by the Holder shall be restricted or limited by the terms and conditions
of the Securities Act and the rules and regulations promulgated thereunder or
shares of Common Stock are not listed for trading. Notwithstanding anything to
the contrary contained herein, the Company may not issue shares of Common Stock
in payment of the interest on principal if: (i) there is an insufficient number
of authorized shares of Common Stock reserved (pursuant to Section 9.2 of the
Securities Purchase Agreement, dated as of February 23, 2001, executed by the
Company and the original Holder, as amended from time to time (the "Purchase
Agreement") for issue for full conversion of all of the Notes issued pursuant to
the Purchase Agreement; (ii) such shares are not either registered for resale or
freely transferable by the Holder without volume restrictions pursuant to Rule
144(k) promulgated under the Act, as determined by outside counsel to the
Company reasonably acceptable to the Holder pursuant to a written opinion letter
addressed and in form and substance acceptable to the Holder and the transfer
agent for such shares; (iii) such shares are not listed or quoted on the
American Stock Exchange or any Other Exchange (as defined in the Purchase
Agreement); (iv) at any time when the Company is not in compliance with Section
5.10(g) of the Purchase Agreement with respect to such shares, (v) at any time
when the issuance of such shares would violate the
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listing agreement of the Company with the American Stock Exchange or any Other
Exchange (as defined in the Purchase Agreement) or (vi) an Event of Default has
occurred and is continuing or an event that, with the passage of time or giving
of notice or both would constitute an Event of Default, has occurred and is
continuing.
Section 2. Owner of Note. Prior to due presentment to the Company for
transfer of this Note, the Company and any agent of the Company may treat the
person in whose name this Note is duly registered on the Note Register as the
owner hereof for the purpose of receiving payment as herein provided and for all
other purposes, whether or not this Note is overdue, and neither the Company nor
any such agent shall be affected by notice to the contrary.
Section 3. Subordination.
3.1 Note Subordinated to Senior Debt. The payment of principal of,
interest on, and all other amounts payable with respect to, this Note
(collectively, the "Subordinated Payments") are hereby subordinated and junior
in right of payment, to the extent and in the manner set forth herein to all
Senior Debt. As used herein, the term "Senior Debt" shall mean with respect to
the Company (i) (A) all indebtedness for money borrowed from any bank, trust
company, insurance company or other financial institution, including commercial
paper and accounts receivable sold or assigned by the Company to such
institutions outstanding as of February 23, 2001, (B) all obligations of the
Company as lessee under leases of real or personal property outstanding as of
February 23, 2001 and (C) any indebtedness or obligations from any refinancing,
replacements or extensions of any of the foregoing to the extent that the
principal amount so refinanced, replaced or extended is not increased as a
result thereof; provided any such indebtedness or obligation under this clause
(i) is not convertible into Common Stock and (ii) (A) all other indebtedness for
money borrowed from any bank, trust company, insurance company or other
financial institution, including commercial paper and accounts receivable sold
or assigned by the Company to such institutions designated as Senior by the
Company in a written notice to the Holder and (B) all obligations of the Company
as lessee under other leases of real or personal property designated as Senior
Debt by the Company in a written notice to the Holder, provided, any such
indebtedness or obligation under this clause (ii) is not convertible into Common
Stock, provided further, that at no time shall the aggregate amount of principal
and rental payments (as applicable) designated by the Company as Senior Debt
pursuant to this clause (ii) exceed $20,000,000 (and any purported designation
in excess thereof shall be void and of no effect). This Section 3 shall
constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Debt, whether now
outstanding or hereafter created, incurred, assumed or guaranteed, and such
provisions are made for the benefit of the holders of Senior Debt. This Note is
binding upon the Company and its permitted successors and assigns and the Holder
and its endorsees, each of whom, by its acceptance of this Note, agrees to be
bound by and comply with all of the provisions of this Note. For the avoidance
of doubt, nothing in this Section 3.1 shall prohibit the Company from incurring
indebtedness for money borrowed or obligations under leases not constituting
Senior Debt hereunder.
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3.2 Payment Upon Dissolution, Etc. Upon any payment or distribution
of assets or securities of the Company of any kind or character, whether in
cash, property or securities, by way of set-off or otherwise of the Company (all
such payments and distributions being referred to collectively as
"Distributions"), upon any dissolution, winding up, liquidation (partial or
complete) or reorganization of the Company (whether voluntary or involuntary and
whether in bankruptcy, insolvency, receivership or other proceedings, or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Company or otherwise), each of the Company and the
Holder, by acceptance hereof, covenants and agrees that:
(a) all Senior Debt shall first be paid in full, or provision made
for such payment, in accordance with the terms of such Senior Debt and the
documents evidencing such Senior Debt (hereinafter, "Senior Debt
Documents") before any payment or distribution of any Distribution is made
on account of any Subordinated Payments and before the Holder shall be
entitled to retain any amounts so paid or distributed in respect thereof;
(b) any payments or distribution of any Distribution to which the
Holder would be entitled except for the provisions of this Section, shall
be paid or delivered by the Company or any debtor, custodian, receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making
such payment or distribution, directly to the holders of Senior Debt or
their representative or representatives or to the trustee or agent under
any Senior Debt Document, as their respective interests may appear, to the
extent necessary to pay in full all Senior Debt remaining unpaid in
accordance with the terms of such Senior Debt and the Senior Debt
Documents, after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Debt, before any payment or distribution
is made to the Holder of this Note; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of any Distribution shall be received by the Holder of this
Note before all Senior, Debt is paid in full, or provision made for the
payment thereof; in accordance with the terms of such Senior Debt and the
Senior Debt Documents, such payment or distribution shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
such Senior Debt or their representative or representatives, or to the
trustee or agent under any Senior Debt Document, as their respective
interests may appear, to the extent necessary to pay in full all Senior
Debt remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt.
The Company shall give prompt written notice to the holders of the
Convertible Notes of any dissolution, winding up, total liquidation or
reorganization of the Company within the meaning of this Section 3.2. Upon any
payment or distribution of assets of the Company referred to in this Section
3.2, the holders of the Convertible Notes shall be entitled to rely upon a
certificate of the trustee in bankruptcy, receiver, assignee for the benefit of
creditors or other liquidating agent making such payment or distribution,
delivered to the holders of the Notes, for the purpose of ascertaining the
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persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Section 3.2.
3.3 No Payment Under Certain Circumstances. No cash payment shall
be made or agreed to be made, directly or indirectly, in cash, property or
securities, or by way of set-off or otherwise, by the Company of any
Subordinated Payment with respect to this Note if, at the time of such payment
or immediately after giving effect thereto, the Company shall be in default in
the payment of any principal of, premium, if any, or interest on, or any other
amounts due with respect to, any Senior Debt.
3.4 No Impairment. Nothing contained in this Note is intended to or
shall impair, as between the Company, its creditors other than the holders of
Senior Debt and the Holder, the obligation of the Company, which is absolute and
unconditional, to pay to the Holder, subject to the rights of the holders of
Senior Debt, this Note, as and when the same shall become due and payable in
accordance with its terms (subject to the, applicable requirements of the
Internal Revenue Code concerning withholding of taxes), or is intended to or
shall affect the relative rights of the holders and creditors of the Company
other than the holders of Senior Debt, nor shall anything herein or therein
prevent the Holder from exercising all remedies otherwise permitted by
applicable law or under the terms of this Note subject to the rights, if any,
under this Note, of the holders of Senior Debt in respect of Distributions
received upon the exercise of any such remedy.
3.5 Subrogation. Subject to the payment in full of all Senior Debt
at the time outstanding, the Holder shall be subrogated (equally and ratably
with the holders of all indebtedness of the Company which, by its express terms,
ranks on a parity with this Note and is entitled to like rights of subrogation)
to the rights of the holders of Senior Debt (to the extent of payments or
distributions previously made to such holders of Senior Debt pursuant to this
Note) to receive payments or distributions of assets or securities of the
Company payable or distributable to holders of the Senior Debt until all
Subordinated Payments with respect to this Note shall be paid in full. For
purposes of such subrogation, no payments or distributions on the Senior Debt
shall, as between the Company, its creditors other than the holders of Senior
Debt, and the Holder, be deemed to be a payment of distribution by the Company
to or on account of the Senior Debt, and no payments or distributions to the
Holder of assets or securities by virtue of the subrogation herein provided for
shall, as between the Company, its creditors other than the holders of Senior
Debt, and the Holder, be deemed to be a payment to or on account of this Note.
The provisions of this Section are and are intended solely for the purpose of
defining the relative rights of the Holder, on the one hand, and the holders of
Senior Debt, on the other hand.
3.6 No Impairment of Rights. No right of any present or future
holder of any Senior Debt of the Company to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Note,
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regardless of any knowledge thereof with which any such holder may have or be
otherwise charged.
3.7 Waiver of Notice. The Holder, by its acceptance hereof; waives
all notice of the acceptance of the subordination provisions contained herein by
each holder of Senior Debt, whether no outstanding or hereafter incurred, and
waives reliance by each such holder upon such provisions.
3.8 Subordination Rights Not Impaired by Acts/Omissions of the
Company or Holders of Senior Debt. The holders of Senior Debt may at any time or
from time to time, and in their absolute discretion, change the manner, place or
terms of payment of, change or extend the time of payment of, renew or alter,
any Senior Debt, or amend or supplement any Senior Debt Document, or exercise or
refrain from exercising any other of their rights under the Senior Debt
including without limitation the waiver of default hereunder, all without notice
to or assent from the Holder. No right of any present or future holders of any
Senior Debt to enforce subordination as provided herein shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act by any such holder or by any
noncompliance by the Company with the terms of this Note, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
Section 4. Default.
4.1 Event of Default. As used herein, the term "Event of Default",
means any one of the following events (whatever the reason and whether it shall
be voluntary or involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or regulation of any
Federal, state, local or foreign administrative or governmental body):
(a) any default in the payment of the principal of, interest on or
liquidated damages in respect of, this Note, as and when the same shall
become due and payable on the Conversion Date, the Maturity Date, by
acceleration or otherwise and which for payments of interest only shall
continue for a period of three (3) days after the date such payment was
due;
(b) any representation or warranty of the Company shall prove to have
been incorrect when given under this Note, the Purchase Agreement or under
any document delivered hereunder or thereunder;
(c) the Company shall fail to observe or perform in any covenant or
agreement under, or otherwise commit any breach of; this Note or the
Purchase Agreement, and such failure or breach shall not have been remedied
within 30 days after the date on which notice of such failure or breach
shall have been given;
(d) the Company or any of its subsidiaries shall commence, or there
shall be commenced against such entity a case under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the
6
Company or any of its subsidiaries commences any other proceeding under
any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or her after in effect relating to the Company or any
subsidiary thereof or there is commenced against the Company or any
subsidiary thereof any such bankruptcy, insolvency or other proceeding
which remains undismissed for a period of 60 days; or the Company or any
subsidiary thereof is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or
the Company or any subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property which
continues undischarged or unstayed for a period of 60 days; or the Company
or any subsidiary thereof makes a general assignment for the benefit of
creditors; or the Company or any subsidiary thereof shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; or the Company or any subsidiary thereof
shall call a meeting of its creditors with a view to arranging a
composition or adjustment of its debts; or the Company or any subsidiary
thereof shall by any act or failure to act indicate its consent to,
approval of or acquiescence in any of the foregoing; or any corporate or
other action is taken by the Company or any subsidiary thereof for the
purpose of effecting any of the foregoing; or
(e) the Common Stock shall be delisted from the American Stock
Exchange or any other national securities exchange or market on which such
Common Stock is listed for trading or suspended from trading thereon
without being relisted or having such suspension lifted, as the case may
be, within 30 Trading Days.
4.2 Effect of Event of Default. If during the time that any portion
of this Note remains outstanding, any Event of Default occurs and is continuing,
and in every such case, then the Holder may, by notice to the Company, declare
the full principal amount of this Note, together with all accrued but unpaid
interest hereon and other amounts owing hereunder to the date of acceleration,
to be immediately due and payable in cash without presentment, demand, protest
or other notice of any kind, all of which are waived by the Company,
notwithstanding anything herein contained to the contrary, and the Holder may
immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law. Such declaration may be rescinded and annulled by the Holder at
any time prior to payment hereunder. No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent thereon.
Section 5. Conversion.
5.1 Conversion by Xxxxxx. Subject to Sections 5.11 and 5.12 and the
last sentence of this Section, at any time upon fifteen (15) days' prior written
notice to the Company at any time and from time to time from the date hereof and
prior to the close of business on the Maturity Date or earlier as set forth in
this Section 5, the principal sums due under this Note shall be convertible into
shares of Common Stock at the Conversion
7
Price, at the option of the Holder in whole or in part. The Company may waive
the fifteen (15) day notice requirement at its sole discretion as to any Holder
or Holders. The Holder shall effect conversions by surrendering this Note (or
such portions thereof) to be converted, together with the form of conversion
notice attached hereto as Exhibit A (the "Holder Conversion Notice") to the
Company. Each Holder Conversion Notice shall specify the principal amount of
this Note to be converted (which may not be less than $100,000 or such lesser
principal amount of this Note then held in the aggregate by such Holder) and the
date on which such conversion is to be effected (which, in any event, shall be
no less than fifteen (15) days from the date of such notice unless waived, by
the Company as set forth above) (the "Holder Conversion Date"). If no Holder
Conversion Date is specified in a Holder Conversion Notice, the Holder
Conversion Date shall be the date that is fifteen (15) days after the date that
the Holder Conversion Notice is deemed delivered pursuant to Section 5.10. Each
Holder Conversion Notice may be revoked and rescinded at the election of the
Holder exercised in its sole discretion prior to the Holder Conversion Date. If
the Holder is converting less than all of the principal amount represented by
this Note or if a conversion hereunder cannot be effected in hull for any
reason, the Company shall honor such conversion to the extent permissible
hereunder and shall promptly deliver to such Holder (in the manner and within
the time set forth in Section 5.10) a new Note for such principal amount as has
not been converted. Interest on the Note shall continue to accrue through the
Holder Conversion Date. Notwithstanding the foregoing, no Holder shall be
permitted to exercise its conversion rights under this Section if and to the
extent that (i) such Holder is (or as a result of such conversion would become)
an Affiliate (as such term is defined in Rule 405 promulgated under the
Securities Act) of the Company and, as a result of such Affiliate status, the
resale by the Holder of such Common Stock would be restricted or limited by the
terms and conditions of the Securities Act and the rules and regulations
promulgated thereunder or (ii) the issuance of Common Stock upon conversion
would violate the listing agreement of the Company with the American Stock
Exchange or any Other Exchange (as defined in the Purchase Agreement).
5.2 Company Conversion. Subject to Section 5.12 and this Section
5.2, at the Company's option, at any time on or after March 31, 2002, the
principal amount of this Note may be prepaid in whole or in part by (a)
conversion of such principal sums into shares of Common Stock at the Conversion
Price, (b) cash or (c) any combination of payment in Common Stock at the
Conversion Price and cash, provided however, that the Company is not permitted
to deliver a Company Conversion Notice (as defined below) payable in whole or in
part in Common Stock, (i) at any time when the public resale of such Common
Stock by the Holder shall be restricted or limited (as to amount or timing) by
the terms and conditions of the Securities Act and the rules and regulations
promulgated thereunder or any applicable state securities laws (including,
without limitation, by reason of the Holder's status as an Affiliate of the
Company or the failure of the Company to effect a registration statement, and as
a consequence of such failure such Common Stock is not freely tradable by the
Holder), (ii) at any time when shares of Common Stock are not listed for trading
on the American Stock Exchange or any Other Exchange (as defined in the Purchase
Agreement), (iii) at any time when the Company is not in compliance with Section
5.10(g) of the Purchase Agreement with respect to such Common Stock, (iv) at any
time when the issuance of Common Stock
8
upon conversion would violate the listing agreement of the Company with the
American Stock Exchange or any Other Exchange (as defined in the Purchase
Agreement) or (v) if an Event of Default has occurred and is continuing or an
event that, with the passage of time or giving of notice or both would
constitute an Event of Default, has occurred and is continuing. The Company
shall effect such conversion by delivering to the Holder a written notice in the
form attached hereto as Exhibit B (the "Company Conversion Notice"), which
Company Conversion Notice, once given, shall be irrevocable. Each Company
Conversion Notice shall specify the principal amount together with accrued
interest of this Note (which may not be less than $100,000 or such lesser
principal amount and accrued interest of this Note then held in the aggregate by
such Holder) to be converted. The Company shall deliver such Company Conversion
Notice at least fifteen (15) days before the date of conversion (such date being
hereinafter referred to as the "Company Conversion Date"). Upon its receipt of a
Company Conversion Notice, the Holder shall surrender the principal amount of
this Note subject to such notice at the office of the Company or of any transfer
agent for this Note or Common Stock. If the Company is converting less than the
aggregate principal amount of this Note, the Company shall, upon conversion of
the principal amount of this Note subject to such Company Conversion Notice and
receipt of this Note surrendered for conversion, deliver to the Holder, a
replacement Note for such principal amount of this Note as has not been
converted. Each of a Holder Conversion Notice and a Company Conversion Notice is
sometimes referred to herein as a "Conversion Notice," and each of a "Holder
Conversion Date" and a "Company Conversion Date" is sometimes referred to herein
as a "Conversion Date."
5.3 Delivery of Certificates. Not later than five (5) Trading Days
after the Conversion Date, the Company will deliver to the Holder (i) a
certificate or certificates which shall be free of restrictive legends and
trading restrictions representing the number of shares of the Common Stock being
acquired upon the conversion of the Note, (ii) a new Note in a principal amount
equal to the principal amount of the Note not converted; and (iii) a check in
the amount of all accrued and unpaid interest (if the Company has elected to pay
accrued interest in cash), together with all other amounts then due and payable
in accordance with the terms hereof, in respect of the portion of this Note
tendered for conversion or, if the Company has elected to pay accrued interest
in shares of the Common Stock, certificates, which shall be free of restrictive
legends and trading restrictions, representing such number of shares of the
Common Stock as equals such interest due as set forth in Section 1.3 herein;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon conversion of the principal
amount of this Note until this Note is either delivered for conversion to the
Company or any transfer agent for this Note or the Common Stock, or the Holder
notifies the Company that such Note has been lost, stolen or destroyed and
provides a bond (or other adequate security) reasonably satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection
therewith (in which case the Company shall issue a replacement Note in like
principal amount). The Company shall, upon request of the Holder, use its best
efforts to deliver any certificate or certificates required to be delivered by
the Company under this Section electronically through the Depository Trust
Corporation or another established clearing corporation performing similar
functions. If in the case of any Conversion Notice such
9
certificate or certificates, including for purposes hereof, any shares of the
Common Stock to be issued on the Conversion Date on account of accrued but
unpaid interest hereunder, are not delivered to or as directed by the applicable
Holder by the fifth Trading Day after the Conversion Date, the Holder shall be
entitled by written notice to the Company at any time on or before its receipt
of such certificate or certificates thereafter, to rescind such conversion, in
which event the Company shall immediately return the Note tendered for
conversion.
If the Company shall fail to issue to a Holder on a timely basis as
described in this Section 5.3 the number of shares of Common Stock to which such
Holder is entitled upon such Holder's conversion of this Convertible Note, the
Company shall pay damages to such Holder equal to the greater of (A) actual
damages incurred by such holder as a result of such Holder's having needed to
"buy in" shares of Common Stock to satisfy its securities delivery requirements
("Buy In Actual Damages") and (B) on each date such conversion is not timely
effected, an amount equal to one percent (1%) of the product of (A) the number
of shares of Common Stock not issued to the Holder on a timely basis and to
which such holder is entitled and (B) the Closing Bid Price of the Common Stock
on the last possible date on which the Company could have issued such Common
Stock to such holder with out violating this Section 5.3.
5.4 Conversion Price. The "Conversion Price" shall be $4.84
provided that, (a) if any public resale of Common Stock by the Holder shall be
restricted or limited by the terms and conditions of the Securities Act and the
rules and regulations promulgated thereunder or any applicable state securities
laws (including, without limitation, by reason of the Holder's status as an
Affiliate of the Company or the failure of the Company to effect a registration
statement, and as a consequence of such failure such Common Stock is not freely
tradable by the Holder), or (b) if trading in the Common Stock shall be
suspended for any reason for more than five Trading Days, or (c) if the
conversion rights of the Holder of this Note hereunder are suspended for any
reason (any such failure being referred to as an "Event," and for purposes of
clauses (a) and (c) the date on which such Event occurs, or for purposes of
clause (b) the date on which such five (5) Trading Day period is exceeded, being
referred to as "Event Date"), the Conversion Price shall be decreased by 1% on
the Event Date and each monthly anniversary thereof until such time as the
applicable Event is cured (i.e., the Conversion Price would decrease by 1% as of
the Event Date and 2% as of the one month anniversary of such Event Date). Any
decrease in the Conversion Price pursuant to this Section shall remain in effect
notwithstanding the fact that the Event causing such decrease has been
subsequently cured and further monthly decreases have ceased. The provisions of
this Section are not exclusive and shall in no way limit the Company's
obligations under the Purchase Agreement.
5.5 Adjustments to Conversion Price. The Conversion Price and
number of shares of Common Stock issuable upon conversion of this Note are
subject to adjustment from time to time as set forth in this Section 5.5 or
otherwise. Upon each such adjustment of the Conversion Price pursuant to this
Section 5.5 or otherwise, the Holder shall thereafter be entitled to convert
this Note, at the Conversion Price resulting from such adjustment, the number of
shares of Common Stock obtained by multiplying
10
the Conversion Price in effect immediately prior to such adjustment by the
number of shares of Common Stock issuable upon conversion of this Note
immediately prior to such adjustment and dividing the product thereof by the
Conversion Price resulting from such adjustment.
(a) If the Company shall at any time while this Note is outstanding
(i) pay a stock dividend or otherwise make a distribution or distributions
on shares of its Common Stock or any other equity or equity equivalent
securities payable in shares of the Common Stock, (ii) subdivide
outstanding shares of the Common Stock into a larger number of shares, or
(iii) combine outstanding shares of the Common Stock into a smaller number
of shares, the Conversion Price then in effect shall be multiplied by a
fraction of which the numerator shall be the number of shares of the Common
Stock (excluding treasury shares, if any) outstanding before such event and
of which the denominator shall be the number of shares of the Common Stock
(excluding treasury shares, if any) outstanding after such event. Any
adjustment made pursuant to this Section 5.5(a) shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or reclassification.
(b) If the Company shall at any time while this Note is outstanding,
issue rights or warrants to all holders of the Common Stock (and not to the
Holder in its capacity as holder of this Note in an amount equal to its pro
rata portion as if this Note had been converted into Common Stock on the
record date therefor) entitling them to subscribe for or purchase shares of
the Common Stock at a price per share less than the Per Share Market Value
of the Common Stock at the record date mentioned below, the Conversion
Price then in effect shall be multiplied by a fraction, of which the
denominator shall be the number of shares of the Common Stock (excluding
treasury shares, if any) outstanding on the date of issuance of such rights
or warrants plus the number of additional shares of the Common Stock
offered for subscription or purchase, and of which the numerator shall be
the number of shares of the Common Stock (excluding treasury shares, if
any) outstanding on the date of issuance of such rights or warrants plus
the number of shares which the aggregate offering price of the total number
of shares so offered would purchase at such Per Share Market Value. Such
adjustment shall be made whenever such rights or warrants are issued, and
shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights or warrants.
However, upon the expiration of any right or warrant to purchase shares of
the Common Stock the issuance of which resulted in an adjustment in the
Conversion Price pursuant to this Section 5.5(b), if any such right or
warrant shall expire and shall not have been exercised, the Conversion
Price shall immediately upon such expiration be recomputed and effective
immediately upon such expiration be increased to the price which it would
have been (but reflecting any other adjustments in the Conversion Price
made pursuant to the provisions of this Section 5.5 after the issuance of
such rights or warrants) had the adjustment of the Conversion Price made
upon the
11
issuance of such rights or warrants been made on the basis of offering for
subscription or purchase, only that number of shares of the Common Stock
actually purchased upon the exercise of such rights or warrants actually
exercised.
(c) If the Company shall at any time while this Note is outstanding,
distribute to all holders of the Common Stock (and not to the Holder in its
capacity as holder of this Note in an amount equal to its pro rata portion
as if this Note had been converted into Common Stock on the record date
therefor) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any Company security (excluding those referred to
in Sections 5.5 (a) and (b) above), then in each such case the Conversion
Price at which the Note shall thereafter be convertible shall be determined
by multiplying the Conversion Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive
such distribution by a fraction of which the denominator shall be the Per
Share Market Value of the Common Stock determined as of the record date
mentioned above, and of which the numerator shall be such Per Share Market
Value of the Common Stock on such record date less the then fair market
value at such record date of the portion of such assets or evidence of
indebtedness so distributed as determined by the Board of Directors in good
faith applicable to one outstanding share of the Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
(d) All calculations under this Section 5.5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(e) Whenever the Conversion Price is adjusted pursuant to Section 5.5
(a), (b) or (c), the Company shall promptly mail to the Holder of this Note
in accordance with Section 5.10, a notice setting forth the conversion
Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.
(f) In case of any reclassification or change of the shares of Common
Stock issuable upon conversion of this Note (other than a change in par
value, or as a result of a subdivision or combination (covered by (a)
above), but including any change in the shares into one or more classes or
series of shares), or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive shares of stock (other than Common Stock),
other securities, property or cash) of the shares of Common Stock (other
than a change in par value, or as a result of a subdivision or combination,
but including any change in the shares into one or more classes or series
of shares), then the Holder shall have the right thereafter to convert this
Note only into the shares of stock and other securities of the Company and
property receivable or deemed to be held by holders of Common Stock
following such reclassification, change, consolidation or merger, and the
Holder shall thereafter upon conversion of this Note be entitled to receive
such amount of
12
securities or property attributable to the number of shares of Common Stock
such Holder would have been entitled to receive had such Holder converted
this Note immediately prior to such action. The terms of any such
reclassification or other action shall include such terms so as to continue
to give to the Holder the right to receive the securities or property set
forth in this Section 5.5(1) upon any exercise following such
reclassification or other action.
(g) In case of any consolidation of the Company with, or merger of
the Company with or into, another corporation (other than a merger or
consolidation in which the Company is the surviving or continuing
corporation), or in case of any sale, lease or conveyance to another
corporation of the property and assets of any nature of the Company as an
entirety or substantially as an entirety, such successor, leasing or
purchasing corporation, as the case may be, shall (i) execute an agreement,
signed by the successor, leasing or purchasing corporation and the Holder,
providing that the Holder shall have the right thereafter to receive upon
conversion of this Note, solely the kind and amount of shares of stock and
other securities, property, cash or any combination thereof receivable upon
such consolidation, merger, sale, lease or conveyance by a holder of the
number of shares of Common Stock for which this Note might have been
converted immediately prior to such consolidation, merger, sale, lease or
conveyance, and (ii) make effective provision in its certificate of
incorporation or otherwise, if necessary, to effect such agreement. Such
agreement shall provide for adjustments which shall be as nearly equivalent
as practicable to the adjustments in this Section 5.5.
(h) If:
A. the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
B. the Company shall declare a special nonrecurring cash
dividend on or a redemption (other than redemptions of the
stock of employees upon their termination of employment with
the Company) of its Common Stock or
C. the Company shall authorize the granting to all holders of
the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any
rights; or
D. the approval of any stockholders of the Company shall be
required in connection with any reclassification of the
Common Stock of the Company, any consolidation or merger to
which the Company is a party, any sale or transfer of all or
substantially all of the assets of the Company, or any
compulsory share exchange whereby the
13
Common Stock is converted into other securities, cash or
property; or
E. the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of this Note, and shall cause to be mailed to the
Holder of this Note at its last address as it shall appear upon the stock books
of the Company, no later than forty-five (45) calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is not to be taken, the date as of which the holders
of the Common Stock of record to e entitled to such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange; provided however, that the failure to mail such
notice or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice. The
Holder is entitled to convert this Note during the period commencing the date of
such notice to the effective date of the event triggering such notice.
5.6 Conditions Adversely Affecting Holder. If at any time conditions
shall arise by reason of action taken by the Company which in the good faith
opinion of the Board of Directors are not adequately covered by the other
provisions hereof and which night adversely affect the rights of the Holder
(different than or distinguished from the effect generally on rights of holders
of any class of the Company's capital stock) or if at any time any such
conditions are expected to arise by reason of any action contemplated by the
Company, the Company shall mail a written notice briefly describing the action
contemplated and the adverse effects of such action on the rights of the Holder
at least thirty (30) calendar days prior to the effective date of such action,
and an appraiser mutually acceptable to the Holder and the Company shall give
its opinion as to the adjustment, if any (not inconsistent with the standards
established in this Section 5), of the Conversion Price (including, if
necessary, any adjustment as to the securities into which this Note may
thereafter be convertible) and any distribution which is or would be required to
preserve without diluting the rights of the Holder. The determination of the
appraiser shall be final.
5.7 Reservation of Common Stock. The Company covenants that it will
at all times reserve and keep available out of its authorized and unissued
shares of Common Stock solely for the purpose of issuance upon conversion of
this Note and payment of interest on this Note, each as herein provided, free
from preemptive rights or any other actual contingent purchase rights of persons
other than the Holder, such number of shares of Common Stock as shall be from
time to time sufficient to effect the
14
conversion of this Note (taking into account the adjustments and restrictions of
Section 5.5) and payment of interest hereunder in Common Stock in accordance
with the terms hereof and of the Purchase Agreement. The Company covenants that
all shares of the Common Stock that shall be so issuable, when issued, shall be
duly and validly authorized, issued and fully paid, nonassessable, shall be
issued to the Holder pursuant to an effective registration statement in
compliance with the Securities Act, and shall be freely tradable.
5.8 No Fractional Shares. Upon a conversion hereunder the Company
shall not be required to issue stock certificates representing fractions of
shares of Common Stock, but may if otherwise permitted, make a cash payment in
respect of any final fraction of a share based on the Conversion Price at such
time. If the Company elects not, or is unable, to make such a cash payment, the
holder shall be entitled to receive, in lieu of the final fraction of a share,
one whole share of Common Stock.
5.9 Payment of Transfer Taxes, Etc. The issuance of certificates,
for shares of Common Stock on conversion of this Note shall be made without
charge to the Holder hereof for any documentary stamp or similar taxes that may
be payable in respect of the issue or delivery of such certificate, provided
that the Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the Holder of this Note
so converted and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
5.10 Notices. Any and all notices or other communications or
deliveries to be provided by the Holder of this Note hereunder, including,
without limitation, any Holder Conversion Notice, shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service or sent by certified or registered mail, postage prepaid,
addressed to the Company, at 000 Xxx Xxxx, Xxxxxx, XX 00000 (facsimile number
(000) 000-0000, Attention: President and Chief Executive Officer and Chief
Financial Officer, with copy to Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxx X. Xxxxx, Esquire (facsimile
number (000) 000-0000), or such other address or facsimile number as the Company
may specify for such purposes by notice to the Holder delivered in accordance
with this Section. Any and all notices or other communications or deliveries to
be provided by the Company hereunder shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight courier
service or sent by certified or registered mail, postage prepaid, addressed to
the Holder of this Note at the facsimile telephone number or address of such
Holder appearing on the books of the Company, or if no such facsimile telephone
number or address appears, at the principal place of business of the holder with
a copy to Xxxxx Xxxxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx X. Xxxxxx, Esquire (facsimile no.: (000) 000-0000). Any
notice or other communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such date is a
Business Day and such notice or communication is delivered via facsimile at the
15
facsimile telephone number specified in this Section prior to 4:30 p.m. (Eastern
Standard time), (ii) the Business Day immediately succeeding the date of
transmission, if such date of transmission is not a Business Day or such notice
or communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 4:30 p.m. (Eastern Standard time) on any
date and earlier than 11:59 p.m. (Eastern Standard time) on such date, (iii)
four days after deposit in the United States mails, (iv) the Business Day
following the date of mailing, if send by nationally recognized overnight
courier service, or (v) upon actual receipt by the party to whom such notice is
required to be given.
5.11 Other Actions. Notwithstanding anything in this Article V to
the contrary, in the event of the occurrence of any of the following: (i) any
Persons is or becomes the "beneficial owner" as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, as amended, directly or indirectly,
of more than 35% of the Common Stock or (ii) individuals who at the date hereof
constituted the Board of Directors (together with any such individuals whose
election by the Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a majority of the directors then
still in office who were directors on the date hereof or persons whose election
as directors or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors then in office,
(iii) a tender or exchange offer made to the stockholders of the Company, (iv)
the Company delivers a Company Conversion Notice of its intent to prepay this
Note in cash or in any combination of cash and Common Stock, or (v) the Company
enters into an agreement for the consolidation of the Company with, or merger of
the Company with or into, another corporation, or the sale, lease or conveyance
to another corporation of the property and assets of any nature of the Company
as an entirety or substantially as an entirety, the Holder shall be entitled to
convert this Note in whole or in part into shares of Common Stock immediately
upon prior written notice to the Company. The Holder shall effect conversion by
surrendering this Note (or such portions thereof) to be converted together with
a Conversion Notice, which shall specify the principal amount of this Note to be
converted and the Holder Conversion Date (which shall be no less than five (5)
days from the date of such notice).
5.12 Restrictions on Common Stock Conversions. If this Note is
issued after the occurrence of an Anniversary MAE (as defined in the Purchase
Agreement), after the occurrence of a development, circumstance or event which
constitutes a Material Adverse Effect (as defined in the Purchase Agreement) or
after a material adverse change to the financial condition or operations of the
Company (collectively, an "MAE Event"), then, notwithstanding any provision to
the contrary in Section 1.3 or 5.2, the Company shall not have the right to pay
any principal of or interest on, this Note by conversion into Common Stock
unless and until, in the reasonable judgment of the Holder, the business,
properties, operations, prospects, condition (financial and otherwise) and
results of operation of the Company and its Subsidiaries have been restored to a
position as if such MAE Event had not occurred (including, without limitation,
recoupment by the Company of net worth equal to the aggregate amount of all
costs, expenses and liabilities (whether direct, indirect, actual or contingent)
incurred by the Company and its Subsidiaries, if any, in connection with such
MAE Event (or the correction or negation of
16
the effect thereof)). If (A) this Note is issued after the occurrence of an MAE
Event, (B) the Company does not then have the right to pay interest or principal
on this Note by conversion into Common Stock by operation of the immediately
preceding sentence and (C) the Holder has issued a Holder Conversion Notice,
then, notwithstanding the issuance of such Holder Conversion Notice, the Company
shall have the right, in lieu of such conversion, to prepay all (but not less
than all) of the principal amount of this Note then outstanding, together with
accrued and unpaid interest thereon, in cash provided that such payment in full
is made on or before the Holder Conversion Date set forth in such Holder
Conversion Notice.
Section 6. Definitions. For the purposes hereof; the following terms
shall have the following meanings:
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in Boston are
authorized or required by law or other government action to close.
"Common Stock" means the common stock, $.0l par value per share, of
the Company and stock of any other class into which such shares may hereafter
have been reclassified or changed.
"Original Issue Date" shall mean the date of the first issuance of
this Note regardless of the number of transfers of this Note and regardless of
the number of instruments which may be issued to evidence this Note.
"Per Share Market Value" means on any particular date (a) the closing
price per share of the Common Stock on such date on the American Stock Exchange
or other stock exchange or quotation system on which the Common Stock is then
listed or if there is no such price on such date, then the closing price on such
exchange or quotation system on the date nearest preceding such date, or (b) if
the Common Stock is not listed then on the American Stock Exchange or any stock
exchange or quotation system, the closing price for a share of Common Stock in
the OTC Bulletin Board or the over-the-counter market, as reported by the
National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (c) if the Common Stock is not then reported by the National
Quotation Bureau Incorporated (or similar organization or agency succeeding to
its functions of reporting prices), then the average of the "Pink Sheet" quotes
for the relevant conversion period, as determined in good faith by the Holder,
or (d) if the Common Stock is not then publicly traded, the fair market value of
a share of Common Stock as determined by a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (which may be the firm that regularly
examines the financial statements of the Company) (an "Appraiser") mutually
selected in good faith by the Holders of a majority in interest of the Notes and
the Company. Any determination made by the Appraiser shall be final and binding
upon the Company and the Holder.
17
"Person" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"Trading Day" means (a) a day on which the Common Stock is traded on
the American Stock Exchange or other stock exchange or market on which the
Common Stock has been listed, or (b) if the Common Stock is not listed on the
American Stock Exchange or any stock exchange or market, a day on which the
Common Stock is traded in the over-the-counter market, as reported by the OTC
Bulletin Board, or (c) if the Common Stock is not quoted on the OTC Bulletin
Board, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices).
Section 7. No Impairment. Except as expressly provided in Section 3
or as elsewhere provided herein, no provision of this Note shall alter or impair
the obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Note at the time, place, and rate, and in
the securities, coin and currency, herein prescribed.
Section 8. Indemnity. The Company hereby agrees to indemnify the
holder of this Note against, and hold the holder hereof harmless from, any and
all claims, losses, costs and expenses incurred by the holder hereof incidental
to or in any way relating to the enforcement of this Note, the protection of its
rights hereunder or the transactions contemplated hereby, including but not
limited to reasonable attorneys' fees and expenses incurred by the holder hereof
(whether or not a proceeding has been commenced).
Section 9. Submission to Jurisdiction. The Company and, by its
acceptance hereof; the Holder each hereby (i) irrevocably submits to the non-
exclusive jurisdiction of any New York State or United States federal court
sitting in New York City, in the Borough of Manhattan, solely for the purposes
of any suit, action or proceeding arising out of or related to the transactions
contemplated by this Note; (ii) irrevocably waives, to the fullest extent
permitted by Jaw, any objection that it may now or hereafter have to the laying
of venue of any such action or proceeding in any court of the State of New York
or of the United States sitting in New York City, in the Borough of Manhattan,
and any claim that any such action or proceeding brought in any such court has
been brought in an inconvenient forum, and (iii) irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Company at the address appearing below its signature on
the signature page hereof or, in the case of the Holder, to the Holder at
Xxxxxxxxxxxx 00, XX-0000, Xxxxx, Xxxxxxxxxxx, with copy (which shall not serve
as service) to Xxxxx Xxxxxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, such service to become effective 30 days after such mailing or in
any other manner permitted by applicable law. In connection with the service of
any such legal process, the Company and the Holder each hereby agrees that
service of process as provided above shall be deemed adequate service. Nothing
contained herein shall preclude the Company
18
or the Holder from instituting legal proceedings in the courts of any other
jurisdiction having or claiming jurisdiction in respect of this Note.
Section 10. No Right As Stockholder. This Note shall not entitle the
Holder to any of the rights of a stockholder of the Company, including without
limitation, the right to vote, to receive dividends and other distributions, or
to receive any notice of, or to attend, meetings of stockholders or any other
proceedings of the Company, unless and to the extent converted into shares of
Common Stock in accordance with the terms hereof.
Section 11. Lost Note. If this Note shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution
for a lost, stolen or destroyed Note, a new Note for the principal amount of
this Note so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Note, and of the ownership
hereof; and indemnity (which, in the case of the original Holder hereof; shall
be in the form of its unsecured indemnity agreement), if requested, all
reasonably satisfactory to the Company.
Section 12. Governing Law: Waiver of Jury Trial. This Note shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to conflicts of laws thereof. THE COMPANY AND, BY ITS
ACCEPTANCE HEREOF, THE HOLDER WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF, BASED UPON, OR IN ANY WAY CONNECTED TO, THIS NOTE.
Section 13. Waivers. Any waiver by the Company or the Holder of a breach of
any provision of this Note shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Note. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Note. Any waiver must
be in writing.
Section 14. Invalidity. If any provision of this Note is invalid, illegal
or unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
Section 15. Business Day. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day (or, if such next succeeding Business
Day falls in the next calendar month, the preceding Business Day in the
appropriate calendar month).
19
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
by an officer thereunto duly authorized as of the date first above indicated.
ORGANOGENESIS INC.
By: /s/ Xxxxxxx Xxxxxxxxxx
----------------------
Xxxxxxx Xxxxxxxxxx, President and Chief
Executive Officer
Attest:
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Chief Financial Officer
20
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Note)
The undersigned hereby elects to convert Note No. [ ] into shares of Common
Stock, $.0l par value per share (the "Common Stock"), of ORGANOGENESIS INC.
(the "Company") according to the conditions hereof, as of the date written
below. If shares are to be issued in the name of a person other than
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.
Conversion calculations:
------------------------------------------------------
Date to Effect Conversion
------------------------------------------------------
Principal Amount of Note to be Converted
------------------------------------------------------
Remaining Principal Balance Following Note Conversion
------------------------------------------------------
Number of shares of Common Stock to be Issued
------------------------------------------------------
Applicable Conversion Price
------------------------------------------------------
Signature
------------------------------------------------------
Name
------------------------------------------------------
Address
The Company undertakes to promptly upon its receipt of this conversion notice
(and, in any case prior to the time it effects the conversion requested hereby),
notify the converting holder by facsimile of the number of shares of Common
Stock outstanding on such date and the number of shares of Common Stock which
would be issuable to the holder if the conversion requested in this conversion
notice were effected in full.
A-1
EXHIBIT B
ORGANOGENESIS INC.
NOTICE OF CONVERSION OR REDEMPTION
AT THE ELECTION OF TILE COMPANY
The undersigned in the name and on behalf of ORGANOGENESIS INC. (the "Company")
hereby notifies the addressee hereof that the Company hereby elects to exercise
its right to [convert [in part] the above Note No. [ ]into shares of Common
Stock, $.01 par value per share (the Common Stock), of the Company] [and to]
[redeem [in part] the above Note No. [ ] in cash] according to the conditions
hereof; as of the date written below. No fee will be charged to the Holder for
any conversion hereunder, except for such transfer taxes, if any, which may be
incurred by the Company if shares are to be issued in the name of a person other
than the person to whom this notice is addressed.
Conversion calculations:
------------------------------------------------------
Date to Effect Conversion or Redemption
------------------------------------------------------
Principal Amount of Note to be Converted or Redeemed
------------------------------------------------------
Remaining Principal Balance Following Note Conversion
------------------------------------------------------
Amount of payment in cash, if any
------------------------------------------------------
Applicable Conversion Price
------------------------------------------------------
Signature
------------------------------------------------------
Name
------------------------------------------------------
Address
B-1
