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EXHIBIT 10.22
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement"), dated as of April 21,
1999, has been executed by the undersigned (the "Subscriber") in connection with
the offering and sale (the "Offering") of (i) an aggregate of up to $4,500,000
aggregate principal amount 6% Convertible Debentures due 2004 (the "Debentures")
of Bio-Plexus, Inc., a Connecticut corporation (the "Company"), for a purchase
price of $1,000 per $1,000 principal amount of Debentures, convertible into
shares of common stock, no par value, of the Company (the "Common Stock"), and
possessing such other rights and preferences as are set forth in the form of
Debenture attached hereto as Exhibit A, (the "Form of Debenture") and (ii)
warrants (the "Warrants") exerciseable for the purchase of up to 500,000 shares
of Common Stock, and having such other rights and terms as set forth in the form
of Warrant attached hereto as Exhibit B (the "Form of Warrant"). The
solicitation of this Agreement and, if accepted by the Company, the offer and
sale of the Debentures and the Warrants, are being made in reliance upon the
provisions of Section 4(2) of the United States Securities Act of 1933, as
amended (the "Securities Act") and Regulation D ("Regulation D") promulgated by
the Securities and Exchange Commission (the "SEC") under the Securities Act.
The shares of Common Stock issuable upon conversion of the Debentures
(the "Underlying Debenture Shares") and the shares of Common Stock issuable upon
exercise of the Warrants (the "Underlying Warrant Shares") are sometimes
collectively referred to in this Agreement as the "Underlying Stock." The
Debentures, the Warrants and the Underlying Stock issuable are sometimes
collectively referred to in this Agreement as the "Securities." Upon the terms
and subject to the conditions set forth herein, the Subscriber hereby agrees to
purchase, and the Company hereby agrees to issue and sell the aggregate
principal amount of Debentures set forth in this Agreement at the aggregate
purchase price set forth in Section 14. In consideration of the mutual promises,
representations, warranties and conditions set forth hereto, and intending to be
legally bound hereby, the Company and the Subscriber hereby agree as follows:
1. Agreement to Subscribe; the Subscriber
1.1 Purchase and Issuance of Debentures. On the basis of the
representations and warranties contained in this Agreement and subject
to the terms and conditions hereinafter set forth, the Subscriber
hereby subscribes for the specified principal amount of Debentures and
the specified number of Warrants upon and subject to the conditions set
forth elsewhere in this Agreement and at the aggregate purchase price
set forth in Section 14. The closing of the purchase (the "Closing")
shall occur on April 21, 1999 (the "Closing Date"); provided that (a)
the purchase price has been delivered by the Subscriber to the Company,
a mutually acceptable escrow agent or as otherwise agreed between the
parties (in immediately available funds via a wire transfer pursuant to
instructions previously delivered for such purpose), (b) the principal
amount of Debentures subscribed for hereby and such number of Warrants
as agreed to herein shall have been issued and delivered by
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the Company to the Subscriber, a mutually acceptable escrow agent or as
otherwise agreed between the parties and (c) all other conditions
precedent to the obligations of the Subscriber and the Company set
forth herein shall have been satisfied or waived in writing.
1.2 Nature of the Subscriber. The Subscriber is either purchasing the
Debentures and Warrants for its own account or as an agent for a
principal (under a discretionary or similar account), in which case all
of the representations, warranties, covenants and agreements of the
Subscriber herein shall be deemed to apply to such principals and not
to the Subscriber and to have been made by such principal and not by
the Subscriber. In such case, the Subscriber so acting as agent
represents and warrants that (a) its principals have confirmed to the
Subscriber the accuracy of such representations and warranties with
respect to its principals, and (b) the Subscriber has full authority to
act on behalf of its principals in executing and delivering this
Agreement and consummating the transactions contemplated hereby.
1.3 Company's Put Right. Beginning nine (9) months from the Closing Date
and ending 90 days thereafter, the Company may exercise its option (the
"Put Option"), without the consent of the holders of the Debentures and
Warrants (the "Holders"), to obligate the Holders to purchase up to
such principal amount of Debentures which brings the aggregate
principal amount of the Debentures to be sold by the Company to
$2,500,000 (the "Put Debentures"); provided, however, that the Holders
shall not be obligated to purchase such amount of Debentures if the
aggregate value of the Put Debentures is less than $500,000 or greater
than $1,000,000. Furthermore, written notice of the Company's intention
to issue and sell the Put Debentures (the "Put Notice Date") shall be
given to each Holder not less than thirty (30) days prior to the date
of issuance and sale of the Put Debentures (the "Put Closing Date");
provided, however, the Company may not issue such notice unless the
following conditions are met or have been waived by the Holder: (i) the
Company has obtained written approval from its shareholders, whether
the transaction is viewed singly or is integrated with prior
transactions, under the non-quantitative maintenance requirements for
The Nasdaq Small-Cap Market (the "Nasdaq SmallCap") issuers, for the
issuance of a number of shares of Common Stock which is greater than or
equal to 20% of the number of shares of Common Stock outstanding as of
the Closing Date, subject to Paragraph 12 of the Form of Debenture;
(ii) the Registration Statement (as defined in Section 5.1 herein) has
been declared effective and no stop order has been threatened for each
of the 120 business days preceding the Put Notice Date; (iii) the
Company has not elected to redeem the Debentures pursuant to Paragraph
6 of the Form of Debenture; (iv) the representations and warranties of
the Company set forth in this Agreement are true and correct in all
material respects as of the Put Closing Date as though made on such
date; (v) the other conditions precedent to the obligations of the
Subscriber and the Company set forth herein shall have been satisfied
or waived in writing prior to the Put Closing Date; (vi) there has not
been an announcement of a pending change in control at the Company;
(vii) the trading in the Common Stock shall not have been suspended by
the SEC or the National Association of Securities Dealers, Inc. (the
"NASD"), the Common Stock shall not have been delisted from the Nasdaq
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SmallCap, and trading in securities generally as reported by the Nasdaq
SmallCap shall not have been suspended or limited or minimum prices
shall not have been established on securities whose trades are reported
by the Nasdaq SmallCap (excluding disruptions from business
announcement that result in any halt(s) in trading of not more than one
(1) day on each occasion); (viii) the sum of: (a) the remaining
outstanding principal amount of the Debentures and (b) the Put
Debentures is less than 10% of the current market capitalization of the
Company; (ix) the Closing Price (as defined in the Form of Debenture)
of the Company for the 20 days prior to the Put Notice Date has been
greater than or equal to the Closing Price of the Company on the
Closing Date; and (x) no event shall have occurred which has had, in
the Subscriber's sole discretion, a Material Adverse Effect (as defined
in Section 3.6 herein). The obligation of the Subscriber hereunder to
acquire and pay for the Put Debentures on the Put Closing Date is
subject to the satisfaction by the Company of the following conditions:
(i) the Registration Statement (as defined in Section 5.1 herein) has
been effective and no stop order has been threatened for each of the
120 business days preceding the Put Notice Date; (ii) the
representations and warranties of the Company set forth in this
Agreement are true and correct in all material respects as of the Put
Closing Date as though made on such date; (iii) the other conditions
precedent to the obligations of the Subscriber and the Company set
forth herein shall have been satisfied or waived in writing prior to
the Put Closing Date; (iv) there has not been an announcement of a
pending change in control at the Company; (v) the trading in the Common
Stock shall not have been suspended by the SEC or the NASD, the Common
Stock shall not have been delisted from the Nasdaq SmallCap, and
trading in securities generally as reported by the Nasdaq SmallCap
shall not have been suspended or limited or minimum prices shall not
have been established on securities whose trades are reported by the
Nasdaq SmallCap (excluding disruptions from business announcement that
result in any halt(s) in trading of not more than one (1) day on each
occasion); (vi) the sum of: (a) the remaining outstanding principal
amount of the Debentures and (b) the Put Debentures is less than 10% of
the current market capitalization of the Company; (vii) the Closing
Price (as defined in the Form of Debenture) of the Company for the 20
days prior to the Put Notice Date has been greater than or equal to the
Closing Price of the Company on the Closing Date; (viii) the average
Closing Price of the Company for the period from the Put Notice Date
through, and including, the Put Closing Date has not been less than 90%
of the closing bid price on the Put Notice Date; and (ix) no event
shall have occurred which has had, in the Subscriber's sole discretion,
a Material Adverse Effect (as defined in Section 3.6 herein). The
Conversion Price (as defined in the Form of Debenture) of the Put
Debentures shall be identical to that of the Debentures. The Company
shall only be entitled to exercise the Put Option on one occasion.
1.4 Holders' Call Right. Beginning twelve (12) months from the Closing Date
and ending 90 days thereafter, each of the Holders may exercise its
option (the "Call Option"), without the consent of the Company, to
obligate the Company to sell up to such amount of Debentures which
brings the aggregate value of the Debentures to $2,500,000 (the "Call
Debentures"); provided, however, that the Company shall not be
obligated to sell such amount of Debentures if the aggregate value of
the Call Debentures is less than $500,000
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or greater than $1,000,000. The Conversion Price of the Call Debentures
shall be identical to that of the Debentures. Each Holder shall only be
entitled to exercise its Call Option on one occasion.
1.5 Conditions Precedent to the Obligation of the Company to Sell the
Debentures. The obligation hereunder of the Company to issue and sell
the Debentures to the Subscriber is subject to the satisfaction, at or
before the Closing, of each of the conditions set forth below. Each of
these conditions are for the Company's sole benefit and may be waived
by the Company at any time in its sole discretion.
(a) Accuracy of the Subscriber's Representations and Warranties.
The representations and warranties of the Subscriber shall be
true and correct as of the date when made and in all material
respects as of the Closing Date as though made at each such
time.
(b) Performance by the Subscriber. The Subscriber shall have
performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Subscriber at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of
any of the transactions contemplated by this Agreement, and no
valid proceeding shall have been commenced which may have the
effect of prohibiting or adversely affecting any of the
transactions contemplated hereby.
(d) Legal Investment. At the time of the Closing, the purchase of
the Securities by the Subscriber shall be legally permitted by
all statutes, rules and regulations to which the Subscriber
and the Company are subject.
(e) Officer's Certificate. The Subscriber shall have delivered to
the Company a certificate in form and substance reasonably
satisfactory to the Company, executed by an authorized
representative of the Subscriber, to the effect that all the
conditions to the Closing shall have been satisfied and that
the representations and warranties of the Subscriber contained
in the Agreement are true and correct in all material respects
on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on
the date hereof.
1.6 Conditions Precedent to the Obligation of the Subscriber to Purchase
the Debentures and Warrants. The obligation of the Subscriber hereunder
to acquire and pay for the Debentures and Warrants is subject to the
satisfaction, at or before the Closing, of each of the following
conditions. Each of these conditions is for the Subscriber's sole
benefit and may be waived in writing by the Subscriber at any time in
its sole discretion.
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(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true
and correct as of the date when made and in all material
respects as of the Closing Date as though made at each such
time.
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all
covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits or adversely effects
any of the transactions contemplated by this Agreement, and no
proceeding shall have been commenced which may have the effect
of prohibiting or adversely affecting any of the transactions
contemplated hereby.
(d) Adverse Changes. For the period from December 31, 1998 until
Closing, except as (i) publicly disclosed in the Company's
press releases or filings (the "Exchange Act Reports")
pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (ii) issued or made on or prior to the
date hereof listed on Schedule 1.6(d) hereto (collectively,
"Prior Public Disclosures"), or (iii) disclosed to and
acknowledged in writing by the Company and the Subscriber, no
event shall have occurred or be threatened to occur which has
had or is likely to have a Material Adverse Effect (as defined
in Section 3.6 hereof) on the Company.
(e) No Suspension of Trading in or Delisting of Common Stock. The
trading in the Common Stock shall not have been suspended by
the SEC or the NASD; the Common Stock shall not have been
delisted from the Nasdaq SmallCap and the Company shall not
have received any notice of threatened or pending proceedings
for delisting the Common Stock from the Nasdaq SmallCap; and
trading in securities generally as reported by the Nasdaq
SmallCap shall not have been suspended or limited or minimum
prices shall not have been established on securities whose
trades are reported by the Nasdaq SmallCap.
(f) Legal Opinion. The Company shall have delivered to the
Subscriber opinions of independent counsel to the Company,
each substantially in the form of Exhibit C attached hereto.
(g) Officer's Certificate. The Company shall have delivered to the
Subscriber a certificate in form and substance reasonably
satisfactory to the Subscriber, executed by an executive
officer of the Company, to the effect that all the conditions
to the Closing shall have been satisfied and that the
representations and warranties of the Company contained in the
Agreement are true and correct in all
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respects on and as of the date hereof with the same force and
effect as though such representations and warranties had been
made on the date hereof.
(h) Registration Rights Agreement. The Company and the Subscriber
shall have entered into the Registration Rights Agreement
contemplated by Section 5.1.
(i) Debentures. The Company shall have executed and delivered the
Debentures substantially in the form attached hereto in the
Form of Debenture.
(j) Warrants. The Company shall have executed and delivered the
Warrants substantially in the form attached hereto in the Form
of Warrant.
(k) Reservation of Shares. The Company shall have reserved such
number of shares of Common Stock as is required pursuant to
Section 5.2.
(l) Legal Investment. At the time of the Closing, the purchase of
the Securities by the Subscriber shall be legally permitted by
all statutes, rules and regulations to which the Subscriber
and the Company are subject.
(m) Other Matters. The Company shall have delivered to the
Subscriber a certificate of good standing and tax status of
the Company certified as of a recent date by the Secretary of
State of the State of Connecticut, and from each other
jurisdiction in which the Company is qualified to do business.
2. Representations and Warranties of Subscriber
The Subscriber represents and warrants to the Company that:
2.1 No Government Recommendation or Approval. The Subscriber understands
that no United States federal or state agency or similar agency of any
other country, has passed upon or made any recommendation or
endorsement of the Company or of the Offering.
2.2 Intent. The Subscriber is purchasing the Securities for its own account
and not with a view towards distribution and the Subscriber has no
present arrangement to sell the Securities to or through any person or
entity; provided, however, that by making the representation herein,
the Subscriber does not agree to hold the Securities for any minimum or
other specific term and reserves the right to dispose of the Securities
at any time in accordance with federal and state securities laws
applicable to such disposition. The Subscriber understands that the
Securities must be held indefinitely unless such Securities are
subsequently registered under the Securities Act or an exemption from
registration is available. The Subscriber has been advised or is aware
of the provisions of Rule 144 promulgated under the Securities Act.
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2.3 Sophisticated Investor. The Subscriber is an "accredited investor" (as
defined in Rule 501 of Regulation D), and the Subscriber has such
experience in business and financial matters that it is capable of
evaluating the merits and risks of an investment in the Securities. The
Subscriber acknowledges that the Securities are speculative, illiquid
and involve a high degree of risk.
2.4 Independent Investigation. The Subscriber, in making the decision to
purchase the Debentures subscribed for hereunder, has relied upon an
independent investigation made by it and/or its representatives and has
not relied on any information or representations made by third parties
or on any oral or written representations or assurances from the
Company or any representative or agent of the Company other than as set
forth in this Agreement, the Registration Rights Agreement, the
Debenture and the Prior Public Disclosures. The Subscriber has had a
reasonable opportunity to ask questions of, and receive answers and
documents from, the Company concerning the Company and the Offering.
The Subscriber acknowledges that the price and terms of the Debentures
offered hereby have been determined by negotiation based in part on the
market price for the Common Stock, and that it does not necessarily
bear any relationship to the assets, book value or potential
performance of the Company or any other recognized criteria of value.
2.5 Authority. This Agreement has been duly authorized and validly executed
and delivered by the Subscriber and is a valid and binding agreement
enforceable in accordance with its terms, subject to general principles
of equity and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally.
2.6 No Legal Advice from Company. The Subscriber acknowledges that it has
had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with its own legal counsel and
investment and tax advisors. Except for any statements or
representations of the Company made in this Agreement, the Registration
Rights Agreement, the Debenture and the legal opinion called for by
Section 1.6 hereof, the Subscriber is relying solely on such counsel
and advisors and not on any statements or representations of the
Company or any of its representatives or agents for legal, tax or
investment advice with respect to this investment, the transactions
contemplated by this Agreement or the securities laws of any
jurisdiction.
2.7 No Brokers. The Subscriber has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or
similar payments by the Company relating to this Agreement or the
transactions contemplated hereby.
2.8 Not an Affiliate. The Subscriber is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of Securities Act) of
the Company.
2.9 Reliance on Representations and Warranties. The Subscriber understands
that the Debentures are being offered and sold to it in reliance on
specific provisions of United States federal and state securities laws
and that the Company is relying upon the truth and
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accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Subscriber set forth in this
Agreement in order to determine the applicability of such provisions.
3. Representations and Warranties of Company
The Company represents and warrants to the Subscriber that:
3.1 Company Status. The Company has registered its Common Stock pursuant to
Section 12(g) of the Exchange Act, is in full compliance with all
reporting requirements of the Exchange Act, and the Company has
maintained all requirements for the continued listing of its Common
Stock, and such Common Stock is currently listed and traded on the
Nasdaq SmallCap.
3.2 Current Public Information. The Exchange Act Reports are the only
filings made by the Company with the SEC since March 31, 1999 pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. The Exchange
Act Reports have been filed with the SEC on a timely basis.
3.3 No Directed Selling Efforts or General Solicitation in Regard to this
Transaction. The Company has not conducted any general solicitation (as
that term is used in Regulation D) with respect to any of the
Securities, nor has it made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would require registration of the Securities under the Securities Act.
3.4 Valid Issuance of Debentures and Common Stock. (a) The Company has an
authorized capitalization consisting of 18,000,000 shares of Common
Stock, no par value, and 3,000,000 shares of preferred stock, no par
value. The Company has issued and outstanding on the date hereof (i)
13,448,998 shares of Common Stock, none of which shares are held in
treasury and (ii) no shares of preferred stock. As of the date hereof,
the Company has outstanding the following securities convertible into
or exercisable or exchangeable for Common Stock (the "Derivative
Securities"): warrants to purchase 932,628 shares of Common Stock and
options to purchase 842,000 shares of Common Stock. From the date
hereof to the Closing, there will be no changes in the authorized
capital stock or Derivative Securities, except as contemplated by this
Agreement. Other than as set forth in this Section and the 3,000,000
shares of Preferred Stock, no par value, previously authorized by the
board of directors of the Company (the "Board of Directors"), there are
no classes or series of preferred stock authorized, issued or reserved
for issuance. There currently are no shares of Preferred Stock, no par
value, of the Company issued and outstanding. The Company may not issue
any shares of its Preferred Stock, no par value, for so long as the
Debentures remain outstanding, unless such issuance is made in
compliance with the terms and provisions of Sections 5.6 and 5.13(b)
hereof.
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(b) All of the issued shares of capital stock of the Company have been
duly and validly authorized and issued and are fully paid and
non-assessable; prior to the Closing Date, the authorized
capitalization shall include the Debentures and the Warrants and upon
issuance of the Debentures and the Warrants, and payment therefor as
provided in this Agreement, the Debentures and the Warrants shall be
duly and validly issued; the Underlying Debenture Shares issuable upon
conversion of the Debentures, when issued and delivered in accordance
with the terms of the Debentures, will be duly and validly issued,
fully paid and non-assessable, obligations of the Company enforceable
against the Company in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may
be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or at law) and
shares of Common Stock have been duly reserved for issuance upon the
exercise thereof pursuant to the conversion rights set forth in the
Debentures; the Underlying Warrant Shares issuable upon exercise of the
Warrants, when issued and delivered in accordance with the terms of the
Warrants, will be duly and validly issued, fully paid and
non-assessable, obligations of the Company enforceable against the
Company in accordance with their terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or at law) and
shares of Common Stock have been duly reserved for issuance upon the
exercise thereof pursuant to the exercise rights set forth in the
Warrants; and the holders of outstanding capital stock of the Company
are not and shall not be entitled to preemptive or other rights
afforded by the Company to subscribe for the capital stock or other
securities of the Company as a result of the sale of the Debentures,
the Warrants or the issuance of Underlying Stock upon the conversion
thereof.
3.5 Dilution. The number of shares of Common Stock issuable upon conversion
of the Debentures may increase substantially in certain circumstances,
including, but not necessarily limited to, the circumstance wherein the
trading price of the Common Stock declines prior to conversion of the
Debentures. The Company's executive officers and directors have studied
and fully understand the nature of the Securities being sold hereby and
recognize that they have a potentially dilutive effect. The Board of
Directors has concluded, in its good faith business judgment, that such
issuance is in the best interest of the Company. The Company
specifically acknowledges that its obligation to issue the shares of
Common Stock upon conversion of the Debentures is binding upon the
Company and enforceable regardless of the dilution such issuance may
have on the ownership interests of other shareholders of the Company.
3.6 Organization and Qualification. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State
of Connecticut and has the requisite corporate power to own its
properties and assets and to carry on its business as now being
conducted. The Company does not have any subsidiaries. The Company is
duly
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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
other than those in which the failure so to qualify would not have a
Material Adverse Effect. "Material Adverse Effect" means (x) any
material adverse change affecting the legality, validity or
enforceability of the Debentures, Warrants, this Agreement or the
Registration Rights Agreement (any such document, a "Transaction
Document"), (y) any event which would adversely impair the Company's
ability to perform fully on a timely basis the obligations under any
Transaction Document or (z) any material adverse effect on the
business, operations, properties or financial condition of the Company.
3.7 Authorization; Enforcement. (a) The Company has the requisite corporate
power and authority to enter into and perform the transactions
contemplated by this Agreement and each of the Transaction Documents,
to issue the Debentures and the Warrants in accordance with the terms
hereof and to perform its obligations under the terms of the Debentures
and the Warrants; (b) the execution and delivery of this Agreement and
each of the Transaction Documents, the issuance and delivery of the
Debentures, the issuance and delivery of the Warrants and the
consummation by the Company of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action,
and no further consent or authorization of the Company or its Board of
Directors or shareholders is required (except the shareholder approval
which may be required under the non-quantitative maintenance
requirements for Nasdaq SmallCap issuers); (c) this Agreement has been,
and on or before the Closing Date each of the Transaction Documents
will be, duly executed and delivered by the Company; and (d) this
Agreement constitutes, and upon execution and delivery thereof each of
the Transaction Documents shall constitute, legal, valid and binding
obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws
relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general
application.
3.8 Corporate Documents. The Company has furnished or made available to the
Subscriber true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's By-Laws, as in effect on the date
hereof (the "By-Laws"; together with the Certificate of Incorporation,
the "Charter Documents"), certified in each case by the Secretary of
the Company. The Company is not in violation of any of the provisions
of its Charter Documents or other organizational documents.
3.9 No Conflicts. The execution, delivery and performance of this
Agreement, including the conversion of the Debentures or the Warrants
into Common Stock, the Registration Rights Agreement, the issuance of
the Debentures, the Warrants, the Underlying Debenture Shares upon
conversion of the Debentures, the Underlying Warrant Shares upon
exercise of the Warrants and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i)
result in a violation of the
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Charter Documents or (ii) result in the creation of any lien, charge,
security interest or encumbrance upon any of the assets of the Company
pursuant to the terms or provisions of or, conflict with, or constitute
a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, or result in a violation of
any federal, state, local or foreign law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any property or
asset of the Company is bound or affected (except for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a
Material Adverse Effect). The business of the Company is not being
conducted in violation of any law, ordinance or regulations of any
governmental entity, except for violations or potential violations
which either individually or in the aggregate do not and will not have
a Material Adverse Effect. The Company is not required under federal,
state or local law, rule or regulation in the United States to obtain
any consent, authorization or order of, or make any filing or
registration with, any court or governmental or self-regulatory agency
in order for it to execute, deliver or perform any of its obligations
under this Agreement or the Registration Rights Agreement or issue and
sell the Debentures, the Warrants or the Underlying Stock in accordance
with the terms hereof and thereof (other than any SEC, NASD, Nasdaq
SmallCap or state securities filings which may be required to be made
by the Company subsequent to the Closing, and any registration
statement which may be filed pursuant to the Registration Rights
Agreement).
3.10 Exchange Act Reports. The Company has delivered or made available to
the Subscriber true and complete copies of the Exchange Act Reports
(including, without limitation, proxy information and solicitation
materials). As of their respective dates, the Exchange Act Reports
complied (and as of its effective date, the Registration Statement for
the Underlying Stock will comply) in all material respects with the
requirements of the Exchange Act (or in the case of such Registration
Statement, the Securities Act) and the rules and regulations of the SEC
promulgated thereunder and other applicable federal, state and local
laws, rules and regulations, and none of the Exchange Act Reports
contained (and, as of its effective date, such Registration Statement
will not contain) any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited financial
statements of the Company included in the Exchange Act Reports or
incorporated by reference in the Registration Statement comply in all
material respects as to form with applicable accounting requirements
and the published rules and regulations of the SEC or other applicable
rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved
(except (a) as may be otherwise indicated in such financial statements
or the notes thereto or (b) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be
condensed or
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summary statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in Schedule 3.10, the Company has
timely filed (including filing such documents by incorporation by
reference) all agreements or documents to which the Company is a party
that are required to be filed as exhibits to the Exchange Act Reports.
3.11 No Material Adverse Change. Since December 31, 1998, the date through
which the most recent Annual Report of the Company on Form 10-K has
been prepared and filed with the SEC, except as disclosed in the Prior
Public Disclosures or as disclosed by the Company to the Subscriber and
acknowledged in writing by the Subscriber, no Material Adverse Effect
has occurred or exists with respect to the Company.
3.12 No Brokers. Except as set forth on Schedule 3.12, the Company has not
taken any action which would give rise to a claim by any person for
brokerage commissions, finder's fees or similar payments by the
Subscriber relating to this Agreement or the transactions contemplated
hereby.
3.13 Effectiveness of SEC Filings. The SEC has not issued any stop order or
other order suspending the effectiveness of any registration statement
filed by the Company under the Exchange Act or the Securities Act.
3.14 No Material Litigation Proceedings. Except as disclosed in the Exchange
Act Reports, the Company is not a party to or the subject of any
litigation, arbitration or other proceeding which if adversely
determined would individually or in the aggregate have a Material
Adverse Effect. Except as set forth on Schedule 3.14 hereto, there is
no action, suit, proceeding or investigation pending, or, to the
knowledge of the Company, threatened, against the Company before or by
any court, regulatory body or administrative agency or any other
governmental agency or body, domestic or foreign, or any action, suit,
proceeding or investigation pending, or, to the knowledge of the
Company, threatened, which challenges the validity of any action taken
by the Company or to be taken pursuant to or in connection with this
Agreement, the Registration Rights Agreement or the issuance of the
Debentures.
3.15 Governmental Approvals. The Company has obtained approval of the United
States Food and Drug Administration (the "FDA"), or other regulatory
agency, for each of the products that it currently offers and for each
component included in such products, to the extent that such approval
is required.
3.16 Intellectual Property. Except as set forth in Schedule 3.16A, the
Company has full and exclusive right, title and interest in, free and
clear of all liens or other encumbrances to its patents. The Company
has filed the patent applications set forth on Schedule 3.16B. Except
as set forth on Schedule 3.16C, there is (i) no pending or, to the
knowledge of the Company, threatened claim or challenge of or
proceeding for infringement, misuse or
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misappropriation of or interference with any intellectual property
owned, licensed or controlled by any third party arising out of any
product or process now being used, manufactured or distributed, or ever
having been used, manufactured or distributed at any time previously,
by or on behalf of the Company and (ii) no pending or threatened or
potential claim, challenge or proceeding by the Company against any
third party for infringement, misuse or misappropriation of or
interference with any intellectual property owned, licensed or
controlled by the Company.
3.17 No Integration. Neither the Company nor any of its affiliates nor any
person acting on the Company's behalf has, directly or indirectly, at
any time within the past six (6) months made, nor will any such party
make within six (6) months of the Closing Date, any offer or sale of
any security or solicitation of any offer to buy any security under
circumstances that would eliminate the availability of the exemption
from registration under Regulation D under the Securities Act in
connection with the offer and sale of the Securities as contemplated
hereby.
3.18 Investment Company. The Company is not, and is not controlled by or
under common control with an affiliate of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
3.19 Consents and Approvals. Except as specifically set forth in Schedule
3.19, the Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the
execution, delivery and performance by the Company of any of the
Transaction Documents, other than (i) the filing of the Registration
Statement with the SEC, which shall be filed in accordance with and in
the time periods set forth in the Registration Rights Agreement, and
(ii) any filings, notices or registrations under applicable federal and
state securities laws (together with the consents, waivers,
authorizations, orders, notices and filings referred to in Schedule
3.19, the "Required Approvals"). A "Person" means an individual or
corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other
entity of any kind.
3.20 Solicitation Materials. The Company has not distributed any offering
materials in connection with the offering and sale of the Securities.
The Company confirms that it has not provided the Subscribers or their
agents or counsel with any information that constitutes or might
constitute material non-public information. The Company understands and
confirms that the Subscribers shall be relying on the foregoing
representations in effecting transactions in securities of the Company.
3.21 Exclusivity. The Company shall not issue and sell the Debentures or the
Warrants to any Person other than the Subscribers pursuant to this
Agreement other than with the prior written consent of each of the
Subscribers.
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3.22 Permits. The Company possesses all franchises, certificates, licenses,
authorizations and permits or similar authority necessary to conduct
its business as described in the Prior Public Disclosures except where
the failure to possess such permits would not, individually or in the
aggregate, have a Material Adverse Effect ("Material Permits"), and
neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.
3.23 Insurance. The Company maintains property and casualty, general
liability, workers' compensation, environmental hazard, personal injury
and other similar types of insurance with financially sound and
reputable insurers that is adequate, consistent with industry
standards. The Company has not received notice from, or has any
knowledge of any threat by, any insurer (that has issued any insurance
policy to the Company) that such insurer intends to deny coverage under
or cancel, discontinue or not renew any insurance policy presently in
force.
3.24 Taxes. All applicable tax returns required to be filed by the Company
have been filed, or if not yet filed have been granted extensions of
the filing dates which extensions have not expired, and all taxes,
assessments, fees and other governmental charges upon the Company or
upon any of its respective properties, income or franchises, shown in
such returns and on assessments received by the Company to be due and
payable have been paid, or adequate reserves therefor have been set up
if any of such taxes are being contested in good faith; or if any of
such tax returns have not been filed or if any such taxes have not been
paid or so reserved for, the failure to so file or to pay would not in
the aggregate or individually have a Material Adverse Effect.
3.25 No Integrated Offering. Neither the Company, nor any of its Affiliates,
nor any Person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any
offers to buy any securities under circumstances that would cause the
offering of the Securities pursuant to this Agreement to be integrated
with prior offerings by the Company for purposes of the Securities Act
or any applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of the NASD, as applicable.
3.26 Year 2000 Compliance. The Company has initiated a review and assessment
of all areas within its business and operations that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Company may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999). Based on the foregoing, except as
set forth on Schedule 3.26, the Company believes that the computer
applications that are currently material to its business and operations
are reasonably expected to be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000, except to the
extent that a failure to do so would not reasonably be expected to have
a Material Adverse Effect.
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3.27 Schedules. The Schedules to this Agreement furnished by or on behalf of
the Company do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements made therein not misleading.
3.28 Form S-3 Eligible. The Company meets the requirements for use of Form
S-3 under the Securities Act.
4. Covenants of the Subscriber
4.1 Resales. The Subscriber shall not make any offers or sales of the
Securities other than pursuant to a registration statement under the
Securities Act or pursuant to an exemption from registration under the
Securities Act. The Subscriber will comply with applicable prospectus
delivery requirements.
5. Covenants of the Company. For so long as any of the Debentures remain
outstanding, the Company covenants to the Subscriber as follows:
5.1 Registration Rights. The Company will file within 30 days of the date
hereof, and use its best efforts to cause to become effective, as
promptly as possible, but in no event later than 90 days after the date
hereof, a registration statement ("Registration Statement") on Form S-3
under the Securities Act covering the resale of the Underlying Stock
issuable on conversion of the Debentures and shall take all action
necessary to qualify the Underlying Stock under all applicable state
"blue sky" laws, in accordance with terms of the Registration Rights
Agreement (the "Registration Rights Agreement") in the form of Exhibit
D hereto, which the Company and the Subscriber shall enter into at the
Closing of this Agreement.
5.2 Reservation of Common Stock. As of the Closing, the Company will
reserve and the Company shall continue to reserve and keep available at
all times after the Closing, free of preemptive rights, shares of
Common Stock for the purpose of enabling the Company to satisfy two
times the number of shares necessary to satisfy any obligation to issue
shares of its Common Stock upon (i) conversion of the Debentures, as if
all the Debentures were converted as of the Closing and at all times
thereafter, and (ii) exercise of the Warrants, as if the Warrants were
exercised as of the Closing and at all times thereafter. The number of
shares so reserved may be reduced by the number of shares actually
delivered pursuant to conversion of a portion of the Debentures
(provided that in no event shall the number of shares so reserved be
less than one and a half times the number required to satisfy the
remaining conversion rights on the unconverted Debentures and the
unexercised Warrants) and the number of shares so reserved shall be
increased to reflect stock splits and stock dividends and
distributions.
5.3 Listing of Underlying Shares. The Company hereby agrees, promptly
following the Closing of the transaction contemplated by this
Agreement, to take such action to cause the Underlying Stock to be
listed on Nasdaq SmallCap as promptly as possible but no later than the
effective date of the Registration Statement referred to in Section
5.1. The
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Company further agrees, if the Company applies to have the Common Stock
traded on any other principal stock exchange or market, that it will
include in such application the Underlying Stock and will take such
other action as is necessary to cause the Underlying Stock to be listed
on such other exchange or market as promptly as possible. Until at
least two (2) years after the last to occur of: the last of the
Debentures has been converted into Underlying Debenture Shares or the
last of the Warrants has been exercised for the Underlying Warrant
Shares, (i) the Company will cause its Common Stock to continue to be
registered under Sections 12(b) or 12(g) of the Exchange Act, will
comply in all respects with its reporting and filing obligations under
such Exchange Act, will comply with all requirements related to any
registration statement filed pursuant to this Agreement or the
Registration Rights Agreement and will not take any action or file any
document (whether or not permitted by the Securities Act or the
Exchange Act or the rules and regulations thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting and
filing obligations under the Securities Act and Exchange Act, except as
permitted herein and (ii) the Company will take all action within its
power to continue the listing and trading of its Common Stock on the
Nasdaq SmallCap and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of
the NASD.
5.4 Restrictions on Transferability; Legends on Certificates; Transfer
Agent Instructions.
(a) The Subscriber acknowledges and agrees that the Debentures, the
Warrants and, when issued, the shares of Underlying Stock, will be
issued pursuant to a private placement exemption from the registration
requirements imposed by the Securities Act and applicable state
securities laws and, as such, constitute "restricted securities" under
such laws and may not be resold without registration under the
Securities Act and state securities laws or pursuant to an exemption
from such registration requirements. The Subscriber represents that it
is familiar with the Securities Act and the rules and regulations
promulgated thereunder as presently in effect, including, without
limitation, Rule 144 promulgated under the Securities Act, and the
requirements of applicable state securities laws and understands the
limitations on resale of the Securities imposed thereby. Without in any
way limiting the representations set forth above, the Subscriber
further acknowledges and agrees not to sell or transfer any portion of
the Debentures, the Warrants or the Underlying Stock unless (i) there
is then an effective registration statement under the Securities Act
and applicable state securities laws covering such proposed transfer
and such transfer is made pursuant to such registration statement and
otherwise in accordance with applicable securities laws, or (ii) the
shares are transferred or sold in an exempt transaction under the
Securities Act and applicable state securities laws and the Subscriber
provides the Company and, if required, its counsel or transfer agent,
with an opinion of counsel to such effect, which legal opinion shall in
form and substance be reasonably acceptable to the Company.
(b) The Subscriber acknowledges and agrees that, in light of the fact
that the Debentures, the Warrants and the Underlying Stock constitute
"restricted securities" the certificates representing such shares will
bear a restrictive legend indicating the resale
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limitations imposed upon such Securities and that the stock transfer
books of the Company (including any such books maintained on the
Company's behalf by the transfer agent for its Common Stock) will bear
a notation to such effect.
(c) The Company covenants and agrees that, promptly following execution
and delivery of this Agreement, it shall issue irrevocable instructions
(the "Irrevocable Transfer Agent Instructions") to its transfer agent
for its Common Stock, and any subsequent transfer agent, such
instructions to be in form and substance acceptable to the Subscriber,
to facilitate trades of the Underlying Stock and to permit the
Subscriber to timely deliver within the required settlement period
certificates representing such shares in connection with any transfer
or disposition of the Underlying Stock. The Company further covenants
and agrees that no instruction, other than the Irrevocable Transfer
Agent Instructions, will be given by the Company to its transfer agent
and that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this
Agreement and the Registration Rights Agreement. The Subscriber and the
Company acknowledge and agree that their respective obligations
pursuant to this Section 5.4 are subject to compliance by each of them
with applicable securities laws. The Company covenants that it will use
its best efforts to cause the Company's transfer agent to deliver
certificates representing shares issued in connection with a transfer
of Underlying Stock as promptly as practicable but in no event later
than three (3) business days after delivery by the Subscriber of all
required documentation in respect of such transfer to both the Transfer
Agent and the Company as required pursuant to Paragraph 8(b) of the
Debenture. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Subscribers by
vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 5.4 will be
inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Section 5.4, that the Subscribers
shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without
any bond or other security being required.
5.5 Corporate Existence. The Company will take all steps necessary to
preserve and continue the corporate existence of the Company.
5.6 Right of First Refusal. In the event that at any time or from time to
time during the 180 day period immediately following the Closing Date,
the Company proposes to issue or sell any equity securities or debt
securities which are convertible into or exchangeable for its Common
Stock (other than (i) securities issued or sold pursuant to an
underwritten public offering by the Company, (ii) securities issued or
sold or in connection with a merger or consolidation or sale of all or
substantially all of the Company's assets, (iii) securities issued
under or pursuant to the Company's existing 1991 Long Term Incentive
Plan or 1995 Non-Employee Director's Stock Option Plan, (iv) securities
issued upon exercise of outstanding warrants or options and (v)
securities issued to any unaffiliated third party that is a strategic
partner and which involves the issuance of
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securities and one or more of the following: a transfer of technology,
the sale by the Company of products or services, or the purchase by the
Company of the products or services of such third party, whether singly
or together with other securities), then the Company shall give written
notice (the "Proposal Notice") to the Subscriber of such proposed
issuance, specifying the terms and conditions thereof in reasonable
detail, and the Subscriber shall have the right, exercisable by written
notice delivered within 30 days of the date of receipt by the
Subscriber of the Proposal Notice, to subscribe for and purchase all or
some of the Common Stock or other securities proposed to be issued, on
the same terms and conditions specified in the Proposal Notice.
5.7 Use of Proceeds. The Company shall use all the proceeds received from
the sale of the Securities pursuant to this Agreement for general
corporate purposes, including working capital.
5.8 Notice of Adverse Change. The Company will notify the Subscriber
promptly (but in any event within seven days) after becoming aware of
the existence of any condition or event which has had a Material
Adverse Effect on the Company.
5.9 Dividends and Distributions. The Company shall not make or fix a record
date for the determination of holders of Common Stock or other equity
securities or declare a cash dividend or other distribution payable in
cash or property of the Company, until the Company has delivered to the
Subscriber all of the shares of Common Stock issuable upon conversion
of the Debentures or paid all sums of cash due to such Subscriber upon
redemption of the Debentures, as applicable, such that after such
delivery or payment upon any such conversion or redemption no more than
10% of the Debentures issued on the Closing Date remain outstanding;
provided, however, that nothing in this Section 5.9 shall prevent or
restrict the right of the Company to declare and pay dividends on such
securities payable in the form of shares of Common Stock.
5.10 Filing of Current Report on Form 8-K. On or before the second business
day following the Closing Date, the Company shall file a Current Report
on Form 8-K with the SEC in a form reasonably acceptable to the
Subscriber describing the terms of the transaction consummated at the
Closing.
5.11 Form D. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof
to the Subscriber promptly after such filing.
5.12 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated
with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of any or all of
such securities to any Subscriber.
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5.13 Certain Agreements. (a) As long as any Subscriber owns Debentures, the
Company shall not, without the consent of the holders of all of the
Debentures then outstanding, (i) amend its Charter Documents or other
organizational documents so as to adversely affect any rights of any
Subscriber; (ii) declare, authorize, set aside or pay any dividend or
other distribution with respect to the Common Stock as would adversely
affect the rights of any Subscriber hereunder or under the Debentures;
(iii) repay, repurchase or offer to repay, repurchase or otherwise
acquire shares of its Common Stock in any manner; or (iv) enter into
any agreement with respect to any of the foregoing.
(b) As long as any of the Debentures issued pursuant to this Agreement
are still outstanding, the Company may, without the consent of the
Holders, only engage in the following transactions: (i) issue any form
of non-convertible debt; (ii) issue or sell any of its equity or debt
securities which are convertible into or exchangeable for its Common
Stock, so long as such securities are (A) restricted from being sold by
the purchaser of such securities for a period of at least two (2)
years, and (B) not issued on terms which are equal or less favorable to
the Company than the terms set forth in the Transaction Documents; or
(iii) issue or sell unregistered shares of Common Stock (the
"Unregistered Shares") to existing shareholders, vendors, distributors
or strategic partners of the Company, so long as such Unregistered
Shares are (X) restricted from being sold for a period of at least one
(1) year, and (Y) not sold for a discount greater than 10% of the
Closing Price (as defined in the Debenture) of the Common Stock on the
day of such sale or issuance; provided, however, that any transaction
pursuant to this Section 5.13(b), must be in compliance with the
provisions of Section 5.6 hereof.
5.14 Certain Acquisitions. Until the delivery by the Company to the
Subscriber of the Underlying Debenture Shares, or all sums of cash upon
redemption of the Debentures, as applicable, such that after such
delivery upon any such conversion or redemption no more than 10% of the
Aggregate Principal Amount (as defined in the Form of Debenture) of the
Debentures issued on the Closing Date remain outstanding, the Company
will not effect any acquisition of any business, whether through
acquisition of assets or securities, unless, as evidenced in a detailed
writing provided to the Subscribers prior to any such acquisition,
either (i) the earnings before interest, taxes, depreciation and
amortization ("EBITDA") of such acquired business for such acquired
business' most recent four fiscal quarters completed prior to the date
on which the agreement for such acquisition is entered into is at least
$1 or (ii) the Company's projected net cash provided by or used for
operating activities of the Company and its subsidiaries on a
consolidated basis (including such acquired business) for the first six
full calendar months following such acquisition (based on the
historical burn rate of the Company and its subsidiaries on a
consolidated basis (including such acquired business) for the six full
calendar months prior to such acquisition) evidences either that at
least $1 will be provided by operating activities or that the net
amount of cash used in operating activities will not exceed the
Company's and such acquired business' estimated cash position at the
beginning of such six month period.
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5.15 Notice of Breaches.
(a) Each of the Company and each Subscriber shall give prompt written
notice to the other of any breach of any representation, warranty or
other agreement contained in this Agreement, the Debentures, the
Warrants or the Registration Rights Agreement as well as any events or
occurrences arising after the date hereof and prior to the Closing
Date, which would reasonably be likely to cause any representation or
warranty or other agreement of such party, as the case may be,
contained herein to be incorrect or breached as of the Closing Date.
However, no disclosure by any party pursuant to this Section 5.15 shall
be deemed to cure any breach of any representation, warranty or other
agreement contained herein or in the Registration Rights Agreement.
(b) Notwithstanding the generality of Section 5.15(a), the Company
shall promptly notify each Subscriber of any notice or claim (written
or oral) that it receives from any lender of the Company to the effect
that the consummation of the transactions contemplated by this
Agreement, the Debentures, the Warrants or the Registration Rights
Agreement violates or would violate any written agreement or
understanding between such lender and the Company, and the Company
shall promptly furnish by facsimile to each Subscriber a copy of any
written statement in support of or relating to such claim or notice.
(c) The default by any Subscriber of any of its obligations,
representations or warranties under this Agreement or any of the
Transaction Documents shall not be imputed to, and shall have no effect
upon, any other Subscriber or affect the Company's obligations under
this Agreement or any of the Transaction Documents to any
non-defaulting Subscriber with respect to any outstanding Debentures,
Warrants, Underlying Debenture Shares or Underlying Warrant Shares.
5.16 Authorized Shares of the Company. The Company agrees, as soon as
practicable after the Closing, but no later than at the Company's next
shareholder meeting, to use its best efforts to increase its authorized
capitalization, consisting of 18,000,000 shares of Common Stock on the
Closing Date, to 25,000,000 shares of Common Stock.
6. Legends; Subsequent Transfer of Securities; Denominations
6.1 Legend. The Company will issue one or more Debentures certificates
evidencing the Debentures in the name of the Subscriber and in such
number of shares to be specified by the Subscriber prior to (or from
time to time subsequent to) Closing. The Debentures, and any shares of
Common Stock issued upon conversion thereof, will bear the following
legend (the "Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY
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STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO
THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
Following the effectiveness of the Registration Statement, the Company
will issue certificates representing the Securities without the Legend
to any transferee other than holders who are "affiliates" of the
Company (as such term is defined under the Securities Act), promptly
upon request, if (i) the holder thereof is permitted to dispose of such
Securities pursuant to Rule 144(k) under the Securities Act, (ii) the
Securities are sold to a purchaser or purchasers in a transaction
exempt from registration under the Securities Act, as evidenced by an
opinion of counsel to the transferor delivered and reasonably
satisfactory in form and substance to the Company or (iii) the
Securities are sold to a purchaser or purchasers pursuant to an
effective registration statement and the prospectus delivery
requirements under the Securities Act are met.
6.2 Subscriber's Compliance. Nothing in this Section 6 shall affect in any
way the Subscriber's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities.
6A. Payment Set Aside
To the extent that the Company makes a payment or payments to the
Subscriber hereunder or pursuant to the Registration Rights Agreement
or the Form of Debenture or the Subscriber enforces or exercises its
rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded,
repaid or otherwise restored to the Company, a trustee, receiver or any
other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made
or such enforcement or set-off had not occurred.
7. Governing Law; Jurisdiction
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW OR CHOICE OF LAW, EXCEPT FOR MATTERS ARISING UNDER THE
SECURITIES ACT OR THE EXCHANGE ACT WHICH MATTERS SHALL BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH SUCH LAWS.
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8. Assignment; Entire Agreement; Amendment
8.1 Assignment. Neither this Agreement nor any rights hereunder may be
assigned by either party without the prior written consent of the other
party hereto; provided, however, the Subscriber may assign its rights
under this Agreement to an affiliate of the Subscriber who agrees to be
bound by the terms hereof. To the extent that the Subscriber assigns
this Agreement with the prior written consent of the Company or to an
affiliate of the Subscriber, the provisions of this Agreement, the Form
of Debenture and the Registration Rights Agreement shall inure to the
benefit of, and be enforceable by, any transferee of any of the
Securities purchased by the Subscriber hereunder with respect to the
Securities held by such person.
8.2 Entire Agreement; Amendment. This Agreement, the Debenture, the
Warrant, the Registration Rights Agreement and the other documents
delivered pursuant hereto and thereto constitute the full and entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to
any other party in any manner by any warranties, representations or
covenants except as specifically set forth in this Agreement or
therein. Except as expressly provided in this Agreement, neither this
Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
9. Publicity
The Company and the Subscriber agree that neither of them will disclose
or include in any public announcement, any information in respect of
the transactions contemplated herein, including, without limitation,
the name of the Subscriber, without the prior written consent of the
other party hereto, except that nothing herein shall prevent or impede
the right of either party to make such disclosure as is required by law
or applicable regulation, to the extent that it determines in good
faith, that it is legally obligated to do so; provided, however, the
Company shall file with the SEC a Current Report on Form 8-K pursuant
to Section 5.10 herein. Except as may be required by law, the Company
and the Subscriber shall consult with each other before issuing any
press release or otherwise making any public statements with respect to
this Agreement and shall not issue any such press release or make any
such public statement prior to such consultation.
10. Notices, Etc.; Expenses; Indemnity
10.1 Notices. Any notice, demand or request required or permitted to be
given by either the Company or the Subscriber pursuant to the terms of
this Agreement shall be in writing and shall be deemed given when
delivered personally, by overnight courier service or by facsimile,
with a hard copy to follow by overnight or two day courier, addressed
to the other party at the address of the party set forth at the end of
this Agreement or such other address as a party may request by
notifying the other in writing. Copies of all notices to the Subscriber
shall be sent to its designee or representative and copies of all
notices to
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the Company shall be sent to its President, or to such other corporate
officer as it may hereafter designate.
10.2 Costs and Expenses. The Company shall be responsible for the
Subscriber's legal fees and expenses, due and payable at Closing,
incurred in connection with entering into this Agreement and the
transactions contemplated hereby, but not to exceed $35,000 in the
aggregate.
10.3 Indemnification. Each party shall indemnify the other against any loss,
cost or damages (including reasonable attorney's fees and expenses)
incurred as a result of such parties' breach of any representation,
warranty, covenant or agreement in this Agreement.
10.4 Consent to Jurisdiction. The Company (including, but not limited to,
its affiliates, subsidiaries, officers, directors and controlling
persons) and each Subscriber hereby (i) irrevocably submits to the
exclusive jurisdiction of any New York State court or Federal court
sitting in the Borough of Manhattan, The City of New York in any action
related to, connected with or arising out of, in whole or in part, this
Agreement, the Debentures, the Warrants or the Registration Rights
Agreement, including, but not limited to, transactions in the
securities of the Company subsequent to the purchase by such Subscriber
or Persons claimed to be affiliated with such Subscriber, (ii) agrees
that all claims in such action shall be decided in such court, (iii)
waives, to the fullest extent it may effectively do so, the defense of
inconvenient forum and (iv) consents to the service of process by
certified mail, return receipt requested. Nothing herein shall affect
the right of any party to serve legal process in any manner permitted
by law or affect its right to bring any action in any other court. The
provisions of this Section 10.4 shall survive any termination or
completion of this Agreement, the Debentures, the Warrants or the
Registration Rights Agreement.
11. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one
instrument.
12. Survival; Severability
The representations, warranties, covenants and agreements of the
parties hereto shall survive the Closing for a period of one year
notwithstanding any due diligence investigation conducted by or on
behalf of the Subscriber; provided, however that representations,
warranties, covenants and agreements which, by their terms survive for
a period longer than one year shall survive for such longer period, as
elsewhere set forth in this Agreement. In the event that any provision
of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall
continue in full force and effect without said provision; provided that
no such severability shall be effective if it materially changes the
economic benefit of this Agreement to any party.
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13. Titles and Subtitles
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
14. Amount
The undersigned hereby subscribes for an initial subscription amount of
$2,500,000 aggregate principal amount of Debentures and up to an
additional $2,000,000 aggregate principal amount of Debentures.
[SIGNATURE PAGES FOLLOW]
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Subscriber's Representative Name of the Subscriber:
___________________________________
______________________________
Name:
By:
______________________________ By: ___________________________________
Address
______________________________
Telephone
Date of Subscription: __________________
______________________________
Fax Place of Execution: New York
Place of Organization or Citizenship:
Place of Residency and/or Principal Place of
Business
________________________________
________________________________
Attn: ___________________________
(Telephone): ____________________
(Fax): __________________________
Registration instructions:
(Name) (Please Print) ___________
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THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 21st DAY OF APRIL,
1999.
BIO-PLEXUS, INC.
By: ________________________________
Name:
Title:
Address: 000 Xxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
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