EXHIBIT 10.18
NOTE PURCHASE AGREEMENT
-----------------------
AGREEMENT (this "Agreement"), dated as of June 23, 1999, between Rho
Management Trust I (the "Purchaser") and xxxxxxxxxx.xxx, Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H :
In order to provide bridge financing for the Company, the Company
desires to sell a Promissory Note in the principal amount of One Million Dollars
($1,000,000) in the form set forth on Exhibit A hereto (the "Note").
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the Company and the Purchaser do hereby agree as
follows:
1. Purchase and Sale. Subject to the provisions of this Agreement,
-----------------
on the Closing Date (as hereinafter defined) the Company will sell to the
Purchaser, and Purchaser will purchase from the Company, a Note in the principal
amount of One Million Dollars ($1,000,000) (the "Purchase Price").
2. Closing of Purchase and Sale.
----------------------------
2.1 Closing; Closing Date. The purchase and sale of the Note to
---------------------
the Purchaser (the "Closing") will take place at the offices of Xxxxxx Xxxx and
Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. local time
on June 23, 1999, or at such other place or time as may be agreed upon by the
Company and the Purchaser (the "Closing Date").
2.2 Transactions at the Closing. At the Closing, subject to the
---------------------------
terms and conditions set forth herein, the Company will deliver to Purchaser a
Note in the principal amount of One Million Dollars ($1,000,000), in Purchaser's
name, against payment in full by Purchaser of the Purchase Price, by delivery of
a check drawn or a wire transfer of funds made to the order of the Company in
the amount of the Purchase Price.
2.3 Conditions to Closing. The obligation of the Purchaser to
---------------------
disburse the funds in the amount of the Purchase Price (the "Loan") is subject
to the condition precedent that, on the Closing Date, the Purchaser shall have
received the Note required by Section 2.2.
3. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants that:
3.1 The Company is a corporation duly organized and existing
under the laws of the State of Delaware, and is properly qualified to do
business and in good standing
in every jurisdiction in which the Company is doing business, except where
failure to so qualify will not have a material adverse effect on the Company.
3.2 The execution, delivery and performance of this Agreement
and any instrument or agreement required of the Company hereunder are within the
Company's powers, have been duly authorized and are not in conflict with the
terms of the Certificate of Incorporation or Bylaws of the Company, as each has
been amended, or any instrument or agreement to which the Company is a party or
by which the Company is bound or affected.
3.3 No approval, consent, exemption or other action by, or
notice to or filing with, any governmental authority or other third party is
necessary in connection with the execution, delivery, performance or enforcement
of this Agreement or any instrument or agreement required hereunder, except as
may have been obtained or contemplated hereby.
3.4 There is no law, rule or regulation, nor is there any
judgment, decree or order of any court or governmental authority binding on the
Company, that would be contravened by the execution, delivery, performance or
enforcement of this Agreement or any instrument or agreement required of the
Company hereunder.
3.5 This Agreement and the Note are each the legal, valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditors' rights generally,
and subject to rules of law governing specific performance, injunctive relief
and other equitable remedies.
3.6 The Company shall use the proceeds from the sale of the Note
for general working capital in the ordinary course of the Company's business,
unless otherwise approved by the Board of Directors of the Company.
4. Covenants. The Company covenants and agrees that so long as the
---------
principal balance of the Loan plus such interest as may be due at the time in
question (the "Debt") is outstanding, the Company will promptly notify Purchaser
in writing of any event listed in Section 5 hereof ("Event of Default") or any
event that, upon a lapse of time or notice or both, would become an Event or
Default.
5. Events of Default. Regardless of the terms of the Note issued
-----------------
hereunder, the occurrence of any of the following events, at the option of the
Purchaser, shall make the entire amount of the Debt immediately due and payable:
5.1 The Company shall fail to pay, within five (5) days after
the date when due, any principal due under the Note.
5.2 Any representation or warranty herein shall prove to have
been false or misleading in any material respect when made or when deemed to
have been made.
5.3 The Company shall file any petition or action for relief
under the Bankruptcy Reform Act of 1978, Title 11 of the U.S. Code, in effect
from time to time, or under
any other bankruptcy, reorganization, insolvency or moratorium law, or any
other law or laws for the relief of, or relating to, debtors.
5.4 An involuntary petition or action for relief shall be filed
under the Bankruptcy Reform Act of 1978, Title 11 of the U.S. Code against the
Company or a custodian, receiver, trustee, assignee for the benefit of creditors
(or any similar official) shall be appointed to take possession, custody or
control of the properties of the Company, and such proceeding or appointment
continues undismissed or unstayed for a period of thirty (30) days.
5.5 Any breach or default shall occur under this Agreement or
this Agreement shall become ineffective.
6. Subordination of Loan.
---------------------
6.1 The Loan shall be subordinated, junior and subject in right
of payment, to the extent and in the manner hereinafter provided, to the prior
payment of all Senior Indebtedness (as hereinafter defined) of the Company now
outstanding. For purposes of this Section 6, the term "Senior Indebtedness"
means (i) all indebtedness of the Company for borrowed money from banks; (ii)
obligations of the Company with respect to equipment financing; and (iii)
indebtedness of the Company evidenced by promissory notes issued in connection
with the private placement thereof by GunnAllen Financial, Inc.
6.2 No payment on account of principal of or interest on the
Loan shall be made if at the time of such payment or immediately after giving
effect thereto, (i) there shall exist a default in any payment with respect to
any Senior Indebtedness or (ii) there shall have occurred an event of default
(other than a payment default) with respect to any Senior Indebtedness, as
defined in the instrument(s) under which the same is outstanding, with respect
to which the holders thereof have given notice of an intent to accelerate the
maturity thereof, and such event of default shall not have been cured or waived
or shall not have ceased to exist.
6.3 Subject to the prior payment in full of all Senior
Indebtedness, Purchaser shall be subject to the rights of the holders of Senior
Indebtedness to receive payments or distributions of the assets of the Company
made on such Senior Indebtedness until all principal and interest on the Note
shall be paid in full; and for purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which Purchaser would be entitled except for the subordination
provisions of Section 6.1 above shall, as between Purchaser and the Company
and/or its creditors other than the holders of Senior Indebtedness, be deemed to
be a payment on account of the Senior Indebtedness.
6.4 The provisions of this Section 6 are, and are intended
solely, for the purposes of defining the relative rights of Purchaser and the
holders of Senior Indebtedness. Nothing in this Section 6 shall impair, as
between the Company and the Purchaser, the unconditional and absolute obligation
of the Company to repay the Loan, together with all interest thereon, to
Purchaser, nor shall anything herein prevent the Purchaser from exercising all
remedies otherwise permitted by applicable law or hereunder upon default.
7. Miscellaneous.
-------------
7.1 Any communications between or among the parties hereto or
notices or requests provided herein to be given may be given by mailing the
same, postage prepaid, or by facsimile to the other party as follows:
If to the Company:
xxxxxxxxxx.xxx, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx and Xxxxxx, LLP
0000 Xxxxxxxxx Xxxxx Xxxx
XxXxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, III, Esq.
Facsimile: (000) 000-0000
If to the Purchaser:
Rho Management Trust I
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
7.2 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
-------- -------
that neither the Company nor the Purchaser may assign, amend, or waive this
Agreement, the Note, or any of the rights hereunder or thereunder without the
prior written consent of the other party, provided, further, however, that
-------- ------- -------
Purchaser may assign this Agreement, the Note, or any of the rights hereunder or
thereunder to a beneficiary of Purchaser without the prior written consent of
the Company.
7.3 The Company will pay (a) reasonable legal fees and expenses
of counsel for the Purchaser incurred in connection with the preparation,
negotiation and execution of this Agreement and the Note; (b) all stamp,
documentary transfer and other similar transfer taxes (if any) payable with
respect to this Agreement and the issuance of the Note other than taxes based
upon the net income (including any federal and state income taxes) of Purchaser;
(c) all costs of complying with the securities or Blue Sky laws of any
jurisdiction with respect to the offering or sale of the Note; and (d) the cost
of delivering the Note to Purchaser. Adequate documentation of such expenses
will be provided to the Company.
7.4 No delay or omission by Purchaser to exercise any right
under this Agreement shall impair any such right, nor shall it be construed to
be a waiver thereof. No waiver of any single breach or default under this
Agreement shall be deemed a waiver of any other breach or default. Any waiver,
consent, or approval under this Agreement must be in writing to be effective.
7.5 This Agreement and the Note integrate all the terms and
conditions mentioned herein or incidental hereto, and supersede all oral
negotiations and prior writings in respect to the subject matter hereof. In the
event of any conflict between the terms, conditions and provisions of this
Agreement and the Note, the terms, conditions and provisions of this Agreement
shall prevail.
7.6 This Agreement, and any instrument or agreement required
hereunder, shall be governed by and construed in accordance with the internal
laws of the State of Delaware, without regard to principles of conflicts of law.
In the event any provision of this Agreement or the application of any such
provision to any party is held by a court of competent jurisdiction to be
contrary to law, the remaining provisions of this Agreement will remain in full
force and effect.
7.7 This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and such counterparts together will constitute one instrument.
7.8 The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining provisions of
this Agreement or any instrument or agreement required hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
COMPANY:
xxxxxxxxxx.xxx, Inc.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title:Chief Financial Officer
PURCHASER:
RHO MANAGEMENT TRUST I
By: Rho Management Company, Inc., its
Investment Advisor
By:
----------------------------------
Name:
Title:
