<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
MARK ONE
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_________________to_________________
Commission file number 0-24128
BIO-PLEXUS, INC.
(Exact name of Registrant as specified in its Charter)
Connecticut 06-1211921
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
384 Q Merrow Road, Tolland Connecticut 06084
(Address of principal executive offices including zip code)
(860) 871-8601
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months ( or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Shares Outstanding as of May 12, 1997
- --------------------- -------------------------------------
Class A Common Stock, no par value 20,000
Common Stock, no par value 7,759,490
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BIO-PLEXUS, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheet at March 31, 1997 and
December 31, 1996 1
Condensed Statement of Operations for the three months
ended March 31, 1997 and 1996 2
Condensed Statement of Cash Flows for the three months
ended March 31, 1997 and 1996 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 2. Change in Securities 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 11
<PAGE> 3
BIO-PLEXUS, INC.
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,010,000 $ 1,322,000
Accounts receivable 627,000 386,000
Inventories
Raw materials 1,179,000 1,314,000
Work-in-process 369,000 271,000
Finished goods 360,000 271,000
------------ ------------
1,908,000 1,856,000
------------ ------------
Other current assets 421,000 430,000
------------ ------------
Total current assets 7,966,000 3,994,000
------------ ------------
Fixed assets, net 8,143,000 8,305,000
Deferred debt financing expenses 431,000 164,000
Patents, net of amortization 82,000 55,000
Other assets 302,000 302,000
------------ ------------
$ 16,924,000 $ 12,820,000
============ ============
LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $ 3,075,000 $ 3,225,000
Accounts payable and accrued expenses 1,424,000 1,693,000
Accrued interest payable 159,000 27,000
Accrued employee costs 371,000 462,000
------------ ------------
Total current liabilities 5,029,000 5,407,000
------------ ------------
CII debt, net 146,000 131,000
Deferred revenue 1,400,000 --
Other long-term debt, net 8,945,000 7,276,000
Accrued financing expense - CII debt -- 550,000
Redeemable Class A common stock 20,000 20,000
Redeemable common stock warrants 149,000 149,000
Shareholders' equity (deficit)
Common stock, no par value, 12,000,000 authorized,
7,759,490 and 7,046,552 shares issued and
outstanding 51,242,000 46,887,000
Accumulated deficit (50,007,000) (47,600,000)
------------ ------------
Total shareholders' equity (deficit) 1,235,000 (713,000)
------------ ------------
$ 16,924,000 $ 12,820,000
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
1
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BIO-PLEXUS, INC
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
----------- -----------
<S> <C> <C>
Revenue
Sales $ 1,112,000 $ 453,000
Licensing fees (Note 3) 1,500,000 --
----------- -----------
Total revenue 2,612,000 453,000
----------- -----------
Costs and expenses:
Research and development 425,000 380,000
Other operating and engineering costs 1,610,000 942,000
Selling, general and administrative 1,876,000 1,594,000
----------- -----------
Total operating costs and expenses 3,911,000 2,916,000
----------- -----------
Financing expenses:
CII debt:
Interest expense 1,000 6,000
Amortization of deferred debt financing 33,000 29,000
Other financing expenses (Note 4) 1,074,000 276,000
----------- -----------
Total financing expenses 1,108,000 311,000
----------- -----------
Net loss $(2,407,000) $(2,774,000)
----------- -----------
Net loss per common share (Note 2) $ (0.33) $ (0.42)
=========== ===========
Weighted average common shares
outstanding (Note 2) 7,371,577 6,576,783
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
2
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BIO-PLEXUS, INC.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1997 1996
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (2,407,000) $ (2,774,000)
Adjustments to reconcile net loss to cash used
by operating activities:
Depreciation and amortization 353,000 296,000
Inducement expense on conversion (Note 4) 640,000 --
Amortization of deferred debt financing
expenses 33,000 29,000
Amortization of debt discount 76,000 116,000
(Increase) in accounts receivable (241,000) (174,000)
(Increase) decrease in inventories (52,000) 388,000
(Decrease) in accounts payable and accrued liabilities (418,000) (148,000)
Increase in accrued interest payable 132,000 86,000
(Decrease) increase in accrued employee costs (91,000) 68,000
Increase in deferred revenue (Note 3) 1,400,000 --
Other 11,000 5,000
------------ ------------
Net cash used in operating activities (564,000) (2,108,000)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases and construction of fixed assets including
acquisition of land (191,000) (412,000)
Cost of patents (29,000) (8,000)
------------ ------------
Net cash used in investing activities (220,000) (420,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of common stock warrants 250,000 --
Proceeds from exercise of common stock options 50,000 28,000
Proceeds from long-term debt 4,700,000 --
Repayments of long-term debt (528,000) (321,000)
------------ ------------
Net cash provided by (used in)
financing activities 4,472,000 (293,000)
------------ ------------
Net increase (decrease) in cash and cash
equivalents 3,688,000 (2,821,000)
Cash and cash equivalents, beginning of
period 1,322,000 11,842,000
------------ ------------
Cash and cash equivalents, end of period $ 5,010,000 $ 9,021,000
============ ============
Supplemental cash flow disclosures:
Cash payments of interest $ 274,000 $ 218,000
Cash payments of income taxes -- 7,000
Surrender of debt upon warrant exercise 3,353,000 35,000
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
3
<PAGE> 6
BIO-PLEXUS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The interim condensed financial statements included herein are
unaudited. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of financial
position and the results of operations and cash flows for the periods presented
have been included. The results of operations for the interim period is not
necessarily indicative of the results of operations to be expected for the full
year. These financial statements should be read in conjunction with the
financial statements and the notes included in the 1996 Annual Report to
Shareholders of Bio-Plexus, Inc.
NOTE 2 - LOSS PER SHARE
Net loss per common share is determined based on the weighted average
number of common shares outstanding during the period. In determining weighted
average common shares outstanding, common share equivalents are excluded from
the computation as their effect is anti-dilutive.
Conversion of $2,184,000 of unsecured term notes and a conversion of
the remaining balance of a $2,500,000 term loan occurred during the first
quarter of 1997. If the conversion of the debt had taken place on January 1,
1997, the net loss per common share would have been ($.30) for the three
months ended March 31, 1997. This amount was calculated by adjusting the
reported net loss by the interest on the converted debt and the associated
amortization of debt discount, and adjusting the weighted average shares for
the shares issued on conversion.
NOTE 3 - LICENSING AGREEMENTS
On January 28, 1997, the Company entered into a Development and License
Agreement and a Supply Agreement with Johnson & Johnson Medical, Inc. ("JJMI")
of Arlington, Texas. Under the terms of the agreements, Bio-Plexus, Inc. will
develop and manufacture safety needle assemblies for JJMI utilizing its
self-blunting technology, which will be used by JJMI, under an exclusive
world-wide license granted by the Company, to manufacture and sell a new safety
I.V. catheter. The Company received $2,900,000 in licensing fees and funding to
complete the development of the safety needle assemblies and for the development
of manufacturing equipment and tooling. JJMI has agreed to acquire initial
production equipment in amounts up to $1,800,000, to purchase certain minimum
quantities of safety needle assemblies annually, and to pay certain minimum
annual royalties. During the first quarter, the $1,500,000 licensing fee revenue
was recognized and the $1,400,000 development funding has been deferred and will
be recognized over the term of the related development project.
4
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NOTE 4 - OTHER SIGNIFICANT CAPITAL TRANSACTIONS
In January and February, warrants relating to the 1993 and 1994
unsecured term notes were exercised into shares of common stock. The Company
reduced the exercise price from $9.00 to $7.00 on the warrants and agreed to
make payments in lieu of interest through 1997 at a rate of 8%. As a result of
the transaction, warrant holders surrendered $2,184,000 of the term notes and
exercised warrants for 311,967 shares of common stock. A one time charge of
$640,000 was incurred due to the reduction in the warrant exercise price and the
cash payments in lieu of interest through 1997.
In January, warrants related to Private Placement Notes sold in 1995
were exercised for 35,714 shares of common stock at an exercise price of $7 per
common share. Net proceeds to the Company as a result of the exercise were
$250,000.
On January 30, 1997, pursuant to Regulation S of the Securities Act of
1933, the Company issued 5% Convertible Debentures due February 4, 1999 in the
aggregate principal sum of $5,000,000 (the "Debentures"). Interest is payable
quarterly in arrears beginning April 30, 1997 until repayment or conversion of
the debt occurs. The Debentures are convertible into common shares in one-third
step progression, 45, 75 and 105 days from the closing at the lesser of $9.00
per common share or 80% of the average closing bid price over the ten day
trading period ending on the day prior to the date notice of conversion is filed
with the number of shares not to exceed 1,350,000. Beginning June 30, 1997 the
Debentures will be convertible into common stock at the lesser of $9.00 per
common share or 75% of the average closing bid price of the Company's common
stock, as reported by Bloomberg L.P., over the ten day trading period ending on
the day prior to the date the notice of conversion is filed with the Company. In
the event the above calculation results in shares to be issued greater than
1,350,000, the Company would redeem the outstanding debentures at the price paid
plus any accrued interest thereon. In the event the closing bid price of the
Company's stock exceeds $14.70 per share for twenty consecutive trading days
during any period of time 45 days after the closing, all outstanding Debentures
will automatically convert into common stock within ten business days.
On February 11, 1997, the Company entered into a Royalty Modification
agreement with Connecticut Innovations Inc. ("CII") to satisfy the $550,000
royalty obligation via the issuance of 78,572 shares of common stock.
On March 31, 1997 the Company entered into an agreement to retire the
remaining balance of a three-year $2,500,000 term loan that was entered into in
March 1995 by prepaying $1,050,000 of the principal amount of the outstanding
note and converting the balance of the principal amount of the note, including
interest accrued through March 31, 1997, into 241,627 shares of common stock
based on a conversion price of $4.50 per share. The Company may be required to
purchase certain shares at March 31, 1998, under defined circumstances.
NOTE 5 - COMMITMENTS
As of March 31, 1997, the Company had capital expenditure purchase
commitments outstanding of approximately $475,000, expected to be financed
through an existing financing arrangement.
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain statements included in this Management's Discussion and
Analysis of the Results of Operations and Financial Condition which are not
historical facts may be deemed to contain forward looking statements with
respect to events the occurrence of which involves risks and uncertainties,
including, without limitation, the Company's expectation regarding gross profit
and operating income.
OVERVIEW
Since its inception in September 1987 through March 31, 1997,
Bio-Plexus has incurred cumulative ongoing losses totaling $50,007,000. During
the same period, the Company's principal focus has been the design, development,
testing and evaluation of its blood collection safety needle and the design and
development of the molds, needle assembly machines and production processes
needed for manufacturing the blood collection safety needle.
Operating revenues increased to $1,112,000 in the first quarter of
1997, compared to $453,000 for the same period in 1996. Additionally, in January
1997, the Company recognized licensing fee revenue of $1,500,000, resulting in
total revenues for the first quarter of $2,612,000. Operating costs and
expenses, consisting of marketing, general and administrative expenses together
with research and development costs and other operating and engineering expenses
increased by $995,000 to $3,911,000 in the first three months of 1997, compared
to $2,916,000 over the same period the prior year.
The Company is currently constructing production equipment and tooling
for winged intravenous sets which it expects to begin marketing on a limited
basis in the near future. With the addition of the new blood collection needle
assembly and packaging system, the Company believes it will have sufficient
capacity to meet its production needs for blood collection needles for the
balance of 1997, when the system is fully operational. The Company also
continues to review its cost of operations. In order to achieve profitability,
further significant reductions in per-unit manufacturing costs and increases in
sales and manufacturing capacity and capabilities are necessary. The Company
expects substantial progress in sales growth in 1997, but expects that ongoing
losses from operations will continue at least for the balance of the year.
During 1997, the Company has determined it will attempt to establish
joint development, manufacturing and marketing agreements on one or more of its
major product lines, similar to the agreement it reached with JJMI on its
safety I.V. catheter. Such arrangements could assist the Company in raising
additional capital and help fund research and development of new products, as
well as accelerate the rate of sales growth. However, such arrangements could
also decrease revenue per unit for the Company, as a result of sharing revenue
with a strategic partner. The Company believes the overall benefits and
potential for greater market share outweigh the disadvantages of a possible
decline in per unit revenue, or other disadvantages that may result from such
arrangements.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
The Company had operating revenues of $1,112,000 for the quarter ended
March 31, 1997, compared with revenues of $453,000 for the prior year. The
increase in sales is attributable to the expansion of its account base and the
initiation of sales overseas through certain European distributors.
Research and development expenses were $425,000 for the quarter ended
March 31, 1997, compared to $380,000 for the prior year. The Company's efforts
in each of these periods reflects the
6
<PAGE> 9
continuing focus on improving the design and development of needle assembly
systems for the blood collection needle, and the production molds used to
produce its plastic components, as well as its efforts to develop new products.
The increase in these costs in the first quarter of 1997, compared to the same
period a year ago, resulted in part from accelerated research and development on
its winged set and safety I.V. catheter.
Other operating and engineering costs were $1,610,000 for the quarter
ended March 31, 1997, compared with $942,000 for the prior year. This increase
is attributable to higher cost of goods sold resulting from a significantly
higher sales volume over the same period last year.
Selling, general and administrative expenses were $1,876,000 for the
quarter ended March 31, 1997, compared with $1,594,000 for the prior year. This
increase resulted primarily from the addition of sales and marketing staff and
related activities during the latter part of 1996, and the addition of a Vice
President, International Marketing and Sales.
Financing expenses for the month ended March 31, 1997 were $1,108,000
compared to $311,000 for the prior year. The increase resulted primarily from an
increase in other financing expenses. Other financing expenses include other
interest expense less interest income, and, in the first quarter of 1997, a one
time charge of $640,000 related to the conversion of warrants to common stock.
The one time charge consists of $491,000 of inducement expense directly related
to the reduction of the exercise price on the debt conversion from $9.00 to
$7.00, and $149,000 of cash payments to be made in 1997 in lieu of interest.
Other interest expense increased to $486,000 in 1997 from $414,000 in
1996, as a result of higher average outstanding balances under the Company's
equipment lease financing.
LIQUIDITY AND CAPITAL RESOURCES
The Company's need for additional funds has continued from period to
period, as a result of its ongoing research and development activities
surrounding the Punctur-Guard(R) blood collection needle and production
processes, its need for additional capital expenditures on molds and production
equipment, its efforts to develop new products, and the expansion of its staff.
To date, the Company has financed its operations primarily through borrowings
and the sale of equity securities. Through March 31, 1997, the Company has
received net proceeds of approximately $28,840,000 through borrowings and the
sale of debt securities and $40,469,000 through the sale of equity securities.
Of the net equity proceeds, $17,575,000 was received from its 1995 public
offering, $14,191,000 was received from the Company's initial public offering
and the balance of $8,703,000 was received through the private placement of
equity securities.
7
<PAGE> 10
On February 18, 1997, the Nasdaq Stock Market informed the Company that
it would move the Company's securities to the Nasdaq SmallCap Market effective
February 20, 1997, because the Company no longer met the Nasdaq National Market
listing requirements. To maintain its listing on the SmallCap Market, the
Company will need to meet its ongoing listing requirements, including its net
tangible asset requirement of $1,000,000. At the time of the move to the
SmallCap Market, Nasdaq informed the Company it met the SmallCap Market initial
listing requirements.
The Company's primary capital requirements for 1997 will include
additional equity to meet Nasdaq SmallCap listing requirements and funds for
working capital to sustain ongoing operations including debt service, and to
continue its research and development efforts to improve and increase
manufacturing capacity and capabilities and reduce manufacturing costs. The
Company also anticipates additional capital expenditures both for its blood
collection needle program as well as new products, including further research
and development on its winged intravenous set and safety I.V. catheter. The
Company is considering the development of a strategic partnership with one or
more major companies to raise additional funds and assist with the development
and expansion of its product line, in addition to the agreement it already has
in place with JJMI on the safety I.V. catheter. Its overall strategy is to
minimize expenditures on new product research and development, as well as
production capacity for new products until such time as either additional
financing is secured or until it determines that additional strategic
partnerships are feasible. The Company believes its current resources together
with funds
8
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generated from sales of its products, will be sufficient to fund its cash
requirements for the first half of 1997. These estimated cash requirements do
not include significant expenditures in new product areas and amounts needed
could vary based on the actual growth of sales and the level of additional
investment and time required to further increase manufacturing capacity and
capabilities, and reduce manufacturing costs. In addition to considering
strategic partnerships, the Company is reviewing alternative financing
strategies to raise funds in 1997, and is also reviewing opportunities to reduce
overhead costs. Failure to raise needed capital would have an adverse effect on
the Company and its ability to sustain operations beyond the first half of 1997.
To date the Company has not been adversely impacted by inflation.
PART II. OTHER INFORMATION
ITEM 2. Change in Securities
In January 1997, the Company reduced the exercise
price of certain warrants issued in 1993 and 1994 from $9.00
to $7.00 per share and agreed to continue payments in lieu of
interest through 1997 on related notes issued with such
warrants. As a result of such action, holders of warrants for
290,538 shares exercised their warrants for such shares by
the surrender of the related notes. The shares of common stock
were issued pursuant to an exemption from registration under
Section 3(a)(9) of the Securities Act of 1933, as amended (the
"Securities Act").
In January, 1997, the Company also issued 35,714
shares of common stock to a warrant holder upon the exercise
of the holder's warrant. The shares of common stock were
issued pursuant to an exemption from registration under
Section 4(2) of the Securities Act.
On February 11, 1997, the Company issued to CII
100,000 shares of common stock upon the conversion of an
outstanding note held by CII. The shares of common stock were
issued pursuant to an exemption from registration under
Section 3(a)(9) of the Securities Act.
On March 31, 1997, the Company and the Connecticut
Development Authority ("CDA") entered into a letter agreement,
which among other things, modified an outstanding note to make
it convertible into common stock and effected the conversion
of a portion of the note into 241,627 shares of common stock.
The shares of common stock were issued pursuant to an
exemption from registration under Section 3(a)(9) of the
Securities Act.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
------ ----------- ----------------
<S> <C>
4.4.a Letter agreement dated March 31, 1997 Filed with this Report.
between the Company and CDA.
4.6 Offshore Convertible Securities Subscription Filed with this Report.
Agreement dated January 30, 1997 between
the Company and Shepherd Investments
International Ltd., as amended by Letter
agreement dated March 25, 1997, and as
further amended by Letter agreement dated
April 16, 1997.
</TABLE>
9
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<TABLE>
<S> <C>
10.16 Employment Agreement dated January 13, 1997 Filed with this Report.
between the Company and Lucio Improta.
27 Financial Data Schedule. Filed with this Report.
</TABLE>
(b) Reports on Form 8-K
(1) A report on Form 8-K was filed on February 14, 1997,
reporting the sale of $5.0 million aggregate principal
amount of convertible debentures pursuant to Regulation S.
(2) A report on Form 8-K was filed on February 28, 1997,
reporting a change in the listing of the Company's shares
of common stock from the Nasdaq National Market to the
Nasdaq SmallCap Market.
10
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Bio-Plexus, Inc.
(Registrant)
May 15, 1997 /s/ Ronald A. Haverl
_____________________ ________________________________
(Date) Ronald A. Haverl
Chairman of the Board, Chief
Executive Officer, and Treasurer
(Principal Executive, Financing
and Accounting Officer
11
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BIO-PLEXUS, INC.
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
No. Description Page
- ------- ----------- ----
<S> <C> <C>
4.4a Letter Agreement dated March 31, 1997 between the Company
and CDA.
4.6 Offshore Convertible Securities Subscription Agreement dated
January 30, 1997 between the Company and Shepherd Investments
International Ltd., as amended by Letter Agreement dated
March 25, 1997, and as further amended by Letter Agreement
dated April 16, 1997.
10.16 Employment Agreement dated January 13, 1997 between the
Company and Lucio Improta.
27 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 4.4.a
March 31, 1997
Connecticut Development Authority
845 Brook Street
Rocky Hill, CT 06067
Re: Modification and Conversion of Note and Related Matters
Gentlemen:
This letter will evidence the agreement of Bio-Plexus, Inc. ("BP") and
the Connecticut Development Authority ("CDA") regarding the modification and
conversion of a certain note held by CDA and related matters.
On March 7, 1995 CDA and BP entered into a financing transaction
pursuant to which CDA advanced BP $2.5 million and BP issued CDA a note in that
principal amount (the "Note). The principal amount of the Note has been paid
down to $2,121,410 as of the date of this letter agreement.
BP desires to repay a portion of the Note and CDA desires to convert
the unpaid balance of the Note into shares of BP common stock, without par value
("Shares").
In consideration of the mutual and dependent promises set forth
herein, BP and CDA agree as follows:
1. Modification of Note
The Note is hereby amended to provide for it to be
convertible into Shares in accordance with this letter agreement.
2. Repayment of the Note
Upon entering into this letter agreement, BP will pay
$1,050,000 against the principal amount of the Note and CDA will
release all liens against the assets of BP related to the Note.
3. Conversion of Balance of Note
Upon entering into this letter agreement, CDA will convert the
remaining balance of the Note, including interest through March
31,1997, ($1,087,320.81) into 241,627 Shares at $4.50 per Share. The
Note will be surrendered to BP by CDA and BP will issue CDA
certificates for such Shares.
<PAGE> 2
Connecticut Development Authority
March 31, 1997
Page 2
4. Sale of Shares
Subsequent to the conversion of the Note CDA may hold or sell
the CDA Shares. Any sale of more than an average of 1,000 Shares per
trading day will require the consent of BP, which consent will not be
unreasonably withheld. The sole concern of BP with respect to any such
sale is to minimize the adverse impact of such a sale upon the public
market for the Shares. However, in no event will CDA be required by
this paragraph to hold any Shares beyond March 31, 1998.
5. Redemption of CDA Shares
BP will redeem Shares issued hereunder and held by CDA upon
the following terms and conditions:
i. If CDA has received net aggregate proceeds
from the sale of Shares equal to $1,125,000,
BP will redeem all remaining Shares issued
to CDA hereunder at a price of one cent per
Share. CDA shall notify BP if such event
occurs and BP shall promptly redeem the
remaining Shares.
ii. If by March 31, 1998, CDA has not received
net aggregate proceeds of $1,125,000 from
the sale of Shares issued hereunder and CDA
still holds some Shares, BP will redeem all
such remaining Shares for an aggregate
redemption price equal to the difference
between $1,125,000 and the amount received
by CDA for the sale of all Shares issued
hereunder other than said remaining Shares.
iii. Redemption payments shall be made in cash.
6. Representations and Warrants of BP
BP represents and warrants to CDA as follows:
a. BP has all requisite corporate power and authority to
enter into this Letter Agreement and to issue and
sell the Shares. The issuance and sale of the shares
by BP to CDA has been duly and validly authorized by
all requisite corporate proceeding on the part of BP
and do not constitute or will not result in: (i) a
conflict, default or violation of or under the
Certificate of Incorporation or By-laws of BP; (ii) a
default or violation under any mortgage, note, lease
agreement or other instrument or obligation to which
BP is a party; or (iii) a violation of any statute,
rule, regulation, order, judgment or decree of any
court, public body or authority with jurisdiction
over BP; or (iv)
<PAGE> 3
Connecticut Development Authority
March 31, 1997
Page 3
creation of imposition of any lien, charge or
encumbrance of any property of BP; or (v) an event
which would require any consent from any third party
which has not been obtained.
b. Upon the issuance and delivery of the shares to CDA,
all of such Shares shall have been duly authorized
and validly issued and fully paid and nonassessable,
subject to no grant of rights, liens, or other
rights, claims or options.
c. BP has the requisite corporate power and authority to
execute, deliver and perform its obligations under
this letter agreement. The execution and delivery of
this agreement and BP's performance of its
obligations hereunder have been duly and validly
authorized by BP and this agreement, as executed and
delivered, will constitute a valid and binding
obligation of BP enforceable against BP in accordance
with its terms.
d. Immediately prior to the issuance of the Shares,
7,517,869 shares of BP are authorized, issued and
outstanding. The average daily trading volume of the
Shares for each full week of March, 1997 was 30,840,
29,880, 58,660, and 5,940, respectively; and for each
such week the average trading price per Share was
$5.95, $5.55, $5.03 and $5.30.
e. The Shares are currently listed and traded on the
NASDAQ Small Capital Market (the "Exchange"). BP is a
reporting company under the Securities and Exchange
Act of 1934 (the "Act"), and is current in the filing
of all information and reports required thereunder.
BP has no plans to discontinue such listing or
trading.
f. The business of BP has been and is presently being
conducted in compliance with applicable federal,
state and local governmental laws, rules, regulations
and ordinances. There are no suits, actions, claims,
investigations or proceedings pending, or, to the
knowledge of BP, threatened against BP and there are
no outstanding orders, judgments, injunctions, awards
or decrees pending against BP, which alone or in
combination could have a material adverse effect upon
BP.
g. There is no existing, condition or event which at
present or which with the passage of time can
reasonably be expected to have a material adverse
change in the business, assets, operations, affairs,
prospects or financial condition of BP.
h. BP has all franchise, permits, licenses and other
similar authorizations necessary for the conduct of
its business as now being conducted and
<PAGE> 4
Connecticut Development Authority
March 31, 1997
Page 4
contemplated and is not aware of any state of facts
that would make impossible or impractical to continue
or obtain any similar authorizations necessary for
the conduct of its business as planned to be
conducted.
7. Conditions of Closing
a. As part of the conversion of the Note, CDA will
receive an opinion of counsel to BP substantially to
the effect that:
i. The Shares issued to CDA have been duly
authorized, validly issued and are fully
paid and nonassessable, free and clear of
any adverse liens, claims or encumbrances.
ii. The Shares may be freely traded pursuant to
Rule 144 promulgated by the Securities and
Exchange Commission.
iii. No authorizations, approvals, or permits of
any governmental authority or regulatory
body, is required in connection with the
lawful issuance and sale of the Shares to
CDA.
b. BP will pay for all of the reasonable fees, costs and
expenses of CDA incurred in connection with this
transaction, including, without limitation, the
reasonable fees and costs of CDA's counsel.
8. Additional Agreements
a. Subject to the terms hereof, this letter agreement
constitutes the entire agreement of the parties as to
the repayment of the Note and supersedes all prior
agreements whether written or oral related to the
Note other than the warrants for Shares issued in
connection with the Note and the terms of the Letter
Agreement dated June 14, 1995 as such terms relate to
such warrants. Specifically, but not in limitation of
the foregoing, the Loan Agreement and Security
Agreement each dated March 7, 1995 and the Collateral
Assignment and Security Agreement, dated July 27,
1993 as amended on March 7, 1995 are hereby cancelled
and are of no further force or effect. Warrants for
Shares issued in connection with the Note and the
terms of the Letter Agreement dated June 14, 1995
remain in full force and effect except as modified
herein.
b. CDA and BP will take such further actions as are
necessary or desirable to effectuate the purposes of
the foregoing terms and conditions.
<PAGE> 5
Connecticut Development Authority
March 31, 1997
Page 5
c. This letter agreement may not be modified except by a
writing executed by both parties.
d. This agreement shall be binding upon and inure to the
benefit of the parties and their respective
successors and assigns.
e. This agreement shall be governed by and construed
under the laws of the State of Connecticut.
9. Effective Date
The parties agree that the effective date of this letter
agreement for all purposes shall be March 31, 997.
10. Notices
Any notice or other communication of one party to the other
shall be in writing and delivered by facsimile transaction, hand
delivery or U.S. mail addressed to CDA at the above address and
addressed to BP at 384 Q Merrow Road, Tolland, CT 06084. Any notice
shall be effective upon receipt.
If the foregoing accurately reflects CDA's understanding of its
agreement with BP on the matters set forth above, please sign and return a copy
of this letter agreement to BP.
Sincerely,
BIO-PLEXUS, INC.
By:_______________________________
Accepted and Agreed:
CONNECTICUT DEVELOPMENT AUTHORITY
By:_____________________________
<PAGE> 1
EXHIBIT 4.6
OFFSHORE CONVERTIBLE SECURITIES SUBSCRIPTION AGREEMENT
Bio-Plexus, Inc./Shepherd Investments International Ltd.
January 30, 1997
THIS OFFSHORE CONVERTIBLE SECURITIES SUBSCRIPTION AGREEMENT
(hereinafter the "Agreement") has been executed by the undersigned in connection
with the sale of certain convertible debentures (hereinafter the "Debentures"),
convertible into shares of common stock (hereinafter the "Common Shares") of
Bio-Plexus, Inc. (BPLX), 384 Q Merrow Road, Tolland, CT 06084, a corporation
organized under the laws of Connecticut (hereinafter "SELLER") to Shepherd
Investments International Ltd., located at c/o International Fund
Administration, 48 Par-La-Ville Road, Suite 464, Hamilton, HM 11, Bermuda, a
corporation organized under the laws of the British Virgin Islands (hereinafter
"BUYER"). SELLER and BUYER (hereinafter collectively the "parties") each hereby
represents, warrants and agrees as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE
(i) BUYER hereby subscribes for Five Million Dollars U.S.
($5,000,000) principal amount of Debentures, convertible into Common
Shares in accordance with the terms set forth in the form of Debenture
attached as Exhibit A to this Agreement.
(ii) BUYER shall pay the purchase price by delivering same day
funds in United States Dollars to an escrow agent or as otherwise
agreed between the parties, to be delivered to the order of SELLER upon
delivery of the Debentures.
(iii) This Agreement has been executed in connection with an
offering (the "Offering") by SELLER pursuant to Regulation S
("Regulation S") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"). BUYER will be notified of the date of
the completion of the Offering.
2. BUYER'S REPRESENTATIONS AND COVENANTS
BUYER represents and warrants to SELLER as follows:
(i) BUYER is not a "U.S. Person" as defined by Rule 902 of
Regulation S, was not organized under the laws of any U.S.
jurisdiction, and was not formed for the purpose of investing in
securities not registered under the Securities Act. BUYER is an
Accredited Investor within the definition of Regulation D as
promulgated by the Securities and Exchange Commission;
(ii) At the time the buy order for this transaction was
originated, BUYER was outside the United States;
<PAGE> 2
Offshore Convertible Securities Subscription Agreement:
Bio-Plexus, Inc./Shepherd Investments International Ltd. January 30, 1997
Page 2
(iii) No offer to purchase the Debentures was made in the
United States;
(iv) BUYER is either (a) purchasing the Debentures for its own
account for investment purposes and not with a view towards
distribution, or (b) acting as agent for a principal that has made the
representations contained in Exhibit B hereto;
(v) All subsequent offers and sales of the Debentures or the
Common Shares will be made (a) outside the United States in compliance
with Rule 903 or Rule 904 of Regulation S, (b) pursuant to registration
of the Debentures or the Common Shares under the Securities Act, or (c)
pursuant to an exemption from such registration. BUYER understands the
conditions of the exemption from registration afforded by Section 4(1)
of the Securities Act and acknowledges that there can be no assurance
that it will be able to rely on such exemption. In any case, BUYER will
not resell the Debentures or the Common Shares to U.S. Persons or
within the United States until after the end of the forty-five (45) day
period commencing on the date of completion of the Offering (the
"Restricted Period");
(vi) BUYER has no existing short position with respect to the
common stock of SELLER and agrees not to enter into any short sales or
other hedging transactions with respect to the common stock of SELLER
at any time after the execution of this Agreement by BUYER and prior to
the date on which BUYER files a notice of conversion with SELLER. BUYER
further agrees that, at all times after the execution of this Agreement
by BUYER and prior to the date on which the Debentures become
convertible, it will keep its purchase of the Debentures or the Common
Shares confidential, except as required by law and except as necessary
in the ordinary course of BUYER's business;
(vii) BUYER understands that the Debentures are being offered
and sold to it in reliance on specific provisions of federal and state
securities laws and that SELLER is relying upon the truth and accuracy
of the representations, warranties, agreements, acknowledgments and
understandings of BUYER set forth herein in order to determine the
applicability of such provisions. Accordingly, BUYER agrees to notify
SELLER of any events which would cause the representations and
warranties of BUYER to be untrue or breached at any time after the
execution of this Agreement by BUYER and prior to the expiration of the
restricted Period;
(viii) Any offering documents received by BUYER include
statements to the effect that neither the Debentures nor the Common
Shares have been registered under the
<PAGE> 3
Offshore Convertible Securities Subscription Agreement:
Bio-Plexus, Inc./Shepherd Investments International Ltd. January 30, 1997
Page 3
Securities Act and such securities may not be offered or sold in the
United States or to U.S. Persons during the Restricted Period;
(ix) BUYER, in making the decision to purchase the Debentures
subscribed for, has relied upon independent investigations made by it
and has not relied on any information or representations made by third
parties;
(x) In the event of resale of the Debentures or the Common
Shares during the Restricted Period, BUYER shall provide a written
confirmation or other written notice to any distributor, dealer, or
person receiving a selling concession, fee, or other remuneration in
respect of the debentures or the Common Shares stating that such
purchaser is subject to the same restrictions on offers and sales that
apply to the undersigned, and shall require that any such purchaser
shall provide such written confirmation or other notice upon resale
during the Restricted Period;
(xi) BUYER has not taken any action that would cause SELLER to
be subject to any claim for commission or other fee or remuneration by
any broker, finder, or other person and BUYER hereby indemnifies SELLER
against any such claim caused by the actions of BUYER or any of its
employees or agents; and
(xii) BUYER's purchase of the Debentures or the Common Shares
pursuant to this Agreement is not part of a plan or scheme to evade the
registration provisions of the Securities Act.
(xiii) BUYER acknowledges that in no event shall BUYER be
entitled to convert any portion of the principal of or interest on the
Debentures in excess of that amount upon conversion of which the sum of
(1) the number of Common Shares beneficially owned by BUYER and its
affiliates (other than shares of Common Shares which may be deemed
beneficially owned through the ownership of the unconverted portion of
the principal amount of, and interest on, the Debentures) and (2) the
number of Common Shares issuable upon the conversion of the principal
amount of, and interest on, the portion of the Debentures with respect
to which the determination of this proviso is being made, would result
in beneficial ownership by BUYER and its affiliates of more than 9.9%
of the outstanding shares of Seller's common stock. For purposes of the
proviso to the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 16 of the Securities
Exchange Act of 1934, as amended, except as otherwise provided in
clause (1) hereof.
<PAGE> 4
Offshore Convertible Securities Subscription Agreement:
Bio-Plexus, Inc./Shepherd Investments International Ltd. January 30, 1997
Page 4
3. SELLER'S REPRESENTATIONS AND COVENANTS
SELLER represents and warrants to BUYER as follows:
(i) Each of SELLER and its subsidiaries, if any, have been
duly incorporated and are validly existing and in good standing under
the laws of their respective jurisdictions of incorporation. SELLER is
a "Domestic Issuer" and a "Reporting Issuer," as such terms are as
defined by Rule 902 of Regulation S. SELLER has registered its common
stock pursuant to Section 12(b) or (g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), is in full compliance with
all reporting requirements of either Section 13(a) or 15(d) of the
Exchange Act, and SELLER's common stock trades on the Nasdaq;
(ii) SELLER has furnished BUYER with copies of SELLER's most
recent Annual Report on its Form 10-K filed with the Securities and
Exchange Commission and all Forms 10-Q and 8-K filed thereafter (the
"Public Documents") and an Offering Memorandum dated December 26, 1996
(the "Offering Memorandum"). Neither the Public Documents nor the
Offering Memorandum includes an untrue statement of a material fact or
omits to state any material fact necessary in order to make the
statements contained therein, in light of the circumstances under which
they were made, not misleading;
(iii) SELLER has not offered the Debentures or the Common
Shares to any person in the United States, any identifiable group of
U.S. citizens abroad, or to any U.S. Person;
(iv) At the time the buy order was originated, SELLER
reasonably believed BUYER was outside the United States and was not a
U.S. Person;
(v) SELLER and/or its agents reasonably believe that the sale
of Debentures has not been prearranged with a BUYER in the United
States;
(vi) SELLER has not conducted any "directed selling efforts"
with respect to the Debentures or the Common Shares;
(vii) The Debentures or the Common Shares when issued and
delivered will be duly and validly authorized and issued, and with
respect to the Common Shares, fully-paid and nonassessable and will not
subject the holders thereof to personal liability by reason of being
such holders. There are no preemptive rights of any shareholder of
SELLER with respect to the Debentures or the Common Shares;
<PAGE> 5
Offshore Convertible Securities Subscription Agreement:
Bio-Plexus, Inc./Shepherd Investments International Ltd. January 30, 1997
Page 5
(viii) This Agreement has been duly authorized, validly
executed and delivered on behalf of SELLER and is a valid and binding
agreement in accordance with its terms, subject to general principles
of equity and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally;
(ix) The execution and delivery of this Agreement and the
consummation of the issuance of the Debentures or the Common Shares and
the transactions contemplated by this Agreement do not and will not
conflict with or result in a breach by SELLER, or any of its
subsidiaries, if any, of any of the terms or provisions of, or
constitute a default under, the articles of incorporation or bylaws of
SELLER or any of its subsidiaries, if any, or any indenture, mortgage,
deed of trust or other material agreement or instrument to which SELLER
or any of its subsidiaries, if any, is a party or by which it or any of
their respective properties or assets are bound, or any existing
applicable decree, judgment or order of any court, Federal or State
regulatory body, administrative agency or other governmental body
having jurisdiction over SELLER or any of its subsidiaries, if any, or
any of their respective properties or assets;
(x) No authorization, approval or consent of any governmental
body is legally required for the issuance and sale of the Debentures or
the Common Shares as contemplated by this Agreement;
(xi) SELLER will issue one or more Debentures in the name of
BUYER in such denominations to be specified by BUYER prior to closing.
Upon conversion of the Debentures, SELLER will issue one or more
certificate(s) representing the Common Shares in the name of BUYER
without a restrictive legend and in such denominations to be specified
by BUYER prior to conversion. SELLER further warrants that no
instructions other than these instructions, and instructions for a
"stop transfer" until the end of the Restricted Period, have been given
to the transfer agent and also warrants that the Debentures and the
Common Shares shall otherwise be freely transferable by the BUYER on
the books and records of SELLER subject to compliance with Federal and
State securities laws. SELLER will notify the transfer agent of the
date of completion of the Offering and of the date of expiration of the
Restricted Period. Nothing in this section shall affect in any way
BUYER's obligations and agreement to comply with all applicable
securities laws upon resale of the Debentures and the Common Shares;
(xii) SELLER has taken and will take no action that will
affect in any way the running of the Restricted Period or the ability
of BUYER to resell the Debentures or the Common Shares in accordance
with applicable securities laws and this Agreement;
<PAGE> 6
Offshore Convertible Securities Subscription Agreement:
Bio-Plexus, Inc./Shepherd Investments International Ltd. January 30, 1997
Page 6
(xiii) SELLER will comply with all applicable securities laws
and regulations with respect to the sale of the Debentures or the
Common Shares, including but not limited to the filing of all reports
required to be filed in connection therewith with the Securities and
Exchange Commission or any stock exchange or Nasdaq or any other
regulatory authority; and
(xiv) SELLER agrees that it will not issue a press release or
other communication to the public containing BUYER's name or other
identifying information without BUYER's written consent.
4. REGISTRATION. If upon conversion of the Debentures effected by BUYER
pursuant to the terms of this Agreement and the Form of Debenture
following the expiration of the Restricted Period, SELLER fails to
issue certificate(s) for Common Shares issuable upon such conversion to
BUYER bearing no restrictive legend for any reason other than SELLER's
reasonable good faith belief that the representations and warranties
made by BUYER in this Agreement were untrue when made, then SELLER
shall be required, at the request of the BUYER and at SELLER's expense,
to effect the registration of the Common Shares issuable upon
conversion of the Debentures under the Securities Act and relevant Blue
Sky laws as promptly as is practicable. SELLER and the BUYER shall
cooperate in good faith in connection with the furnishing of
information required for such registration and the taking of such other
actions as may be legally or commercially necessary in order to effect
such registration. SELLER shall file a registration statement within 30
days of BUYER's demand therefor and shall use its best efforts to cause
such registration statement to become effective as soon as practicable
thereafter and in any event within 90 days of the date of the initial
filing thereof. Such best efforts shall include, but not be limited to,
promptly responding to all comments received from the staff of the
Securities and Exchange Commission ("SEC") and promptly preparing and
filing amendments to such registration statement which are responsive
to the comments received from the staff of the SEC. Once declared
effective by the SEC, SELLER shall cause such registration statement to
remain effective until the earlier of (i) the sale by BUYER of all
Common Shares registered or (ii) February 4, 1999. In the event that
SELLER has not effected the registration of the Common Shares issuable
upon the conversion of the Debentures under the Act and relevant Blue
Sky Laws within ninety (90) days after the date of filing of the
registration statement, SELLER shall pay to BUYER by wire transfer, as
liquidated damages for such failure and not as a penalty, an amount in
cash equal to $100,000. Such payment shall be made to BUYER immediately
upon expiration of the 90-day period referenced in the preceding
sentence if the registration of the Common Shares is not effected by
such date; provided, however,
<PAGE> 7
Offshore Convertible Securities Subscription Agreement:
Bio-Plexus, Inc./Shepherd Investments International Ltd. January 30, 1997
Page 7
that the payment of such liquidated damages shall not relieve SELLER
from its obligations to register the Common Shares pursuant to this
Section 4.
5. CONVERSION.
(i) Up to one third (1/3) of the Debentures will be
convertible into Common Shares beginning on or after forty-five (45)
days from the Closing of the purchase of the Debentures, with an
additional one third (1/3) of the remaining Debentures becoming
convertible on or after seventy-five (75) days from the Closing and the
final one third (1/3) of the debentures becoming convertible on or
after one hundred five (105) days from the Closing. The Debentures will
be convertible into Common Shares at the lesser of $9.00 per Common
Share or 80% of the average closing bid price of SELLER's common stock,
as reported by Bloomberg, L.P., over the ten (10) day trading period
ending on the day prior to the date the notice of conversion is filed
with SELLER.
(ii) SELLER may issue no more than 1,350,000 Common Shares
upon conversion of the Debentures. In the event that limit is reached
before BUYER has converted all of its Debentures, SELLER shall redeem
the outstanding Debentures at the price paid therefor by BUYER, plus
any accrued but unpaid interest thereon, within ten (10) business days
of the date on which the 1,350,000 Common Share limit was reached.
(iii) SELLER shall use its best efforts to issue and deliver
to BUYER an unlegended certificate for the number of Common Shares to
which BUYER shall be entitled within three (3) business days after
BUYER has fulfilled all conditions required for conversion as set forth
in this Agreement (the "Deadline"). SELLER understands that a delay in
the issuance of the unlegended Common Shares beyond the Deadline could
result in economic loss to BUYER. As compensation to BUYER for such
loss, and not as a penalty, SELLER agrees to pay liquidated damages to
BUYER for late issuance of unlegended Common Shares upon conversion in
the amount of one percent (1%) of the requested conversion amount, per
day, beginning on the sixth (6th) business day from the date of receipt
by SELLER of both the duly executed notice of conversion and the
original Debentures to be converted, all in accordance with this
Agreement and the requirements of SELLER's transfer agent; provided,
however, that no such liquidated damages shall apply if SELLER fails to
deliver unlegended Common Shares upon conversion for the sole reason
that SELLER has a reasonable good faith belief that the representations
and warranties made by BUYER in this Agreement were untrue when made.
Said liquidated damages shall accrue each day through the date the
unlegended Common Shares are issued to BUYER upon conversion, and shall
be paid by wire transfer to an account designated by BUYER upon the
earlier to occur of (A) issuance
<PAGE> 8
Offshore Convertible Securities Subscription Agreement:
Bio-Plexus, Inc./Shepherd Investments International Ltd. January 30, 1997
Page 8
of the unlegended Common Shares to BUYER, or (B) each monthly
anniversary of the receipt by SELLER of such BUYER's notice of
conversion and Debentures to be converted. Except as noted above,
nothing herein shall waive SELLER's obligations to deliver unlegended
Common Shares upon conversion of the Debentures or limit BUYER's right
to pursue actual damages for SELLER's failure to issue and deliver
unlegended Common Shares to BUYER in accordance with the terms of this
Agreement.
(iv) SELLER agrees that, in addition to any other remedies
which may be available to BUYER, in the event SELLER fails for any
reason to effect delivery to BUYER of certificate(s) representing
Common Shares within seven (7) business days following receipt by
SELLER of a notice of conversion or exchange, BUYER may revoke the
notice of conversion or exchange, by delivering a notice of such effect
to SELLER, whereupon SELLER and BUYER shall each be restored to their
respective positions immediately prior to delivery of such notice.
(v) In the event the closing bid price of SELLER's common
stock equals or exceeds $14.70 per share for twenty (20) consecutive
trading days during any period of time which is after forty-five (45)
days from the Closing, all outstanding Debentures will automatically be
converted into Common Shares within ten (10) business days following
the end of said twenty (20) trading day period.
6. THIRD PARTY BENEFICIARY. The parties acknowledge and agree that
Shoreline Pacific, the Institutional Division of Financial West Group
("Shoreline Pacific"), shall be deemed a third party beneficiary of
SELLER'S agreements and representations set forth in this Agreement,
entitled to enforce the terms thereof, and to indemnification for any
damages resulting to Shoreline Pacific from any actual or threatened
breach thereof by SELLER, both in Shoreline Pacific's personal capacity
and, should Shoreline Pacific so elect, on behalf of BUYER.
7. CLOSING. The Debentures shall be delivered to BUYER and the funds
therefor shall be delivered to SELLER on February 3, 1997, or at such
time to be mutually agreed between the parties ("Closing").
8. CONDITIONS TO CLOSING
(i) BUYER understands that SELLER's obligation to sell the
Debentures is conditioned upon delivery by BUYER into escrow at Closing
or otherwise as agreed between BUYER and SELLER Five Million U.S.
Dollars ($5,000,000).
<PAGE> 9
Offshore Convertible Securities Subscription Agreement:
Bio-Plexus, Inc./Shepherd Investments International Ltd. January 30, 1997
Page 9
(ii) SELLER understands that BUYER's obligation to purchase
the Debentures is conditioned upon delivery of the Debentures as
described herein, and provision of an opinion of counsel confirming the
matters set out in Section 3(i), (vii), (viii), (ix), and (x) above.
9. MISCELLANEOUS.
(i) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without reference to
choice of law principles. The parties jointly consent to personal
jurisdiction in any state or federal court located in the State of New
York, waive any objection as to jurisdiction or venue, and agree not to
assert any defense based on lack of jurisdiction or venue. Facsimile
signatures of this agreement shall be binding on all parties hereto.
All terms used herein that are defined in Regulation S under the
Securities Act shall have the meanings set forth therein.
(ii) This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
<PAGE> 10
Offshore Convertible Securities Subscription Agreement:
Bio-Plexus, Inc./Shepherd Investments International Ltd. January 30, 1997
Page 10
IN WITNESS WHEREOF, this Agreement was duly executed, on the date first written
above.
Official Signatory of BUYER:
SHEPHERD INVESTMENTS INTERNATIONAL LTD.
/s/ Brian J. Stark
- ----------------------------------------
Name:
Staro Asset Management, L.L.C.
on behalf of Shepherd Investments International Ltd.
SHEPHERD INVESTMENTS INTERNATIONAL LTD.
/s/ Michael A. Roth
- ----------------------------------------
Name:
Staro Asset Management, L.L.C.
on behalf of Shepherd Investments International Ltd.
Official Signatory of SELLER:
BIO-PLEXUS, INC.
- ----------------------------------------
Ronald A. Haverl
Chief Executive Officer
<PAGE> 11
EXHIBIT A
FORM OF DEBENTURE
<PAGE> 12
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT"), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS SUCH TERMS ARE
DEFINED IN REGULATIONS UNDER THE 1933 ACT), FOR A PERIOD OF FORTY-FIVE (45) DAYS
AFTER COMPLETION OF THE OFFERING PURSUANT TO WHICH THESE DEBENTURES WERE ISSUED,
AND THEREAFTER MAY ONLY BE OFFERED OR SOLD PURSUANT TO REGISTRATION UNDER OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
5% CONVERTIBLE DEBENTURE DUE FEBRUARY 4, 1999
$200,000 February 4, 1997
Number ___
FOR VALUE RECEIVED, and subject to the terms hereof, Bio-Plexus, Inc.,
a Connecticut corporation (the "Company"), hereby promises to pay to Shepherd
Investments International Ltd., a corporation organized under the laws of the
British Virgin Islands, or its registered assigns (the "Holder") on February 4,
1999 (the "Maturity Date"), the principal amount of Two Hundred Thousand U.S.
Dollars ($200,000), and to pay interest on the principal amount hereof, in such
amounts, at such times and on such terms and conditions as are specified herein.
This Debenture is one of twenty-five (25) Debentures (the "Debentures") issued
by the Company to the Holder, each in the principal amount of $200,000 U.S., for
an aggregate purchase price of Five Million U.S. Dollars ($5,000,000).
ARTICLE 1. Interest
The Company shall pay interest on the unpaid principal amount of this
Debenture (this "Debenture") at the rate of Five Percent (5%) per year, payable
quarterly in arrears in cash beginning on April 30, 1997, until the principal
hereof is paid in full or has been converted. Interest on this Debenture shall
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from February 4, 1997. Interest shall be computed on the
basis of a 360-day year of twelve 30-day months.
ARTICLE 2. Method of Payment
This Debenture must be surrendered to the Company in order for the
Holder to receive payment of the principal amount hereof. The Company shall pay
the principal of and interest on this Debenture in United States Dollars.
However, the Company may pay principal and interest by a check payable in such
money. The Company may draw a check for the payment of interest to the order of
the Holder of this Note and mail it to the Holder's address as shown on the
Register (as defined in Section 7.2 below). Interest and principal payments
shall be
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<PAGE> 13
subject to withholding under applicable United States Federal Internal Revenue
Service Regulations.
ARTICLE 3. Conversion
SECTION 3.1. Conversion Privilege
(a) The Holder of the Debentures shall have the right, at its option
and subject to the provisions of this Section 3.1, to convert the Debentures
into shares of common stock, no par value per share, of the Company ("Common
Stock") before the close of business on the Maturity Date as follows: up to
one-third of the total aggregate principal amount of the Debentures is
convertible on or after 45 days from the closing of the purchase hereof (the
"Closing"), with an additional one-third convertible on or after 75 days from
Closing, and the remaining one-third convertible on or after 105 days from
Closing. The number of shares of Common Stock issuable upon the conversion of
this Debenture is determined by dividing the principal amount hereof to be
converted plus all accrued interest thereon minus any required withholding by
the conversion price in effect on the conversion date (as defined in paragraph
(b) of this Section 3.1 below) and rounding the result to the nearest 1/lOOth of
a share. On conversion, no payment of or adjustment (other than as provided in
the previous sentence) for accrued interest shall be made whether or not such
conversion occurs before, on or after an interest payment date.
(b) The Debentures will be convertible into Common Stock at the lesser
of Nine Dollars U.S. ($9.00) per Common Share or eighty percent (80%) of the
average closing bid price of the Company's Common Stock, as reported by
Bloomberg, L.P., over the ten (10) day trading period ending on the day prior to
the date the notice of conversion is filed with the Company.
(c) Less than all of the principal amount of the Debentures may be
converted into Common Stock if the portion converted is $10,000 or a whole
multiple of $l0,000 and the provisions of this Section 3 that apply to the
conversion of all of the Debentures also apply to the conversion of a portion
thereof. All accrued interest on this Debenture shall be added to the amount
converted if less than all of the principal amount of this Debenture is
converted and shall be deemed to be paid and discharged thereby.
(d) In the event any portion of the Debentures remains outstanding on
the second anniversary of the date hereof, the unconverted portion of the
Debentures will automatically be converted into shares of Common Stock on such
date in the manner set forth in this Section 3.1.
(e) Notwithstanding the above-stated provisions, the Company may issue
no more than 1,350,000 Common Shares upon conversion of any or all of the
Debentures totaling $5,000,000. In the event that limit is reached before the
Holder has fully converted all of the
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<PAGE> 14
Debentures, the Company shall redeem the outstanding portion thereof at the
price paid therefor by the Holder, plus any accrued but unpaid interest, within
ten (10) business days of the date on which the 1,350,000 Common Share limit was
reached.
(f) In the event the closing bid price (defined in Section 3.7(b)) for
the shares of the Company's Common Stock equals or exceeds $14.70 per share for
twenty (20) consecutive trading days during any period of time which is after
forty-five (45) days from the Closing, all outstanding Debentures will
automatically be converted into shares of Common Stock in the manner set forth
in this Section 3.1. Such conversion shall occur within ten (10) business days
following the end of the twenty (20) trading day period described in the
foregoing sentence.
SECTION 3.2. Conversion Procedure. To convert this Debenture into
Common Stock, the Holder must (a) complete and sign the Notice of Conversion
attached hereto, (b) surrender the Debenture to the Company, (c) furnish
appropriate endorsements and transfer documents if so requested by the Company
and (d) subject to Section 3.4 pay any transfer or similar tax if required by
the Company. The conversion date shall be the date upon which the Company
receives both the completed Notice of Conversion (by mail, facsimile or
otherwise) and the original Debentures to be converted. Within three (3)
business days after receipt of the Notice of Conversion and original Debentures
to be converted, the Company shall deliver an unlegended certificate for the
number of full shares of Common Stock issuable upon the conversion and a check
for any fraction of a share. The person in whose name the certificate of Common
Stock is to be registered shall be treated as a shareholder of record on and
after the conversion date. No payment or adjustment shall be made for accrued
interest on a converted Debenture whether the conversion date is on, at or after
an interest payment date. If one person converts more than one Debenture at the
same time, the number of full shares issuable upon the conversion shall be based
on the total principal amount of Debentures converted. Upon surrender of a
Debenture that is to be converted in part, the Company shall issue to the Holder
a new Debenture equal in principal amount to the unconverted portion of the
Debenture surrendered.
SECTION 3.3. Fractional Shares. The Company shall not issue a
fractional share of Common Stock upon the conversion of this Debenture. Instead,
the Company shall pay in lieu of any fractional share the cash value thereof at
the then current market price of the Common Stock as determined under Section
3.7 below.
SECTION 3.4. Taxes on Conversion. The Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon the conversion of this Debenture. However, the Holder shall
pay any such tax which is due because the shares are issued in a name other than
its name.
SECTION 3.5. Company to Reserve Stock. The Company shall reserve out of
its authorized but unissued Common Stock or Common Stock held in treasury enough
shares of Common Stock to permit the conversion of this Debenture. All shares of
Common Stock which may be issued upon the conversion hereof shall be fully paid
and nonassessable.
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<PAGE> 15
SECTION 3.6. Restrictions on Transfer. This Debenture and the Common
Stock issuable upon the conversion hereof have not been registered under the
Securities Act of 1933 (the "Act") and have been sold pursuant to Regulation S
under the Act ("Regulation S"). The Debentures may not be transferred or resold
in the United States, or to a U.S. Person, or to or for the account or benefit
of a U.S. Person (as defined in Regulation S) for a period of forty-five (45)
days from the date hereof and thereafter may only be offered or sold pursuant to
registration under or an exemption from the Act.
SECTION 3.7. Current Market Price.
(a) In Sections 3.1 and 3.3, the current market price per share of
Common Stock on any date is the average of the closing bid price of the Common
Stock over the ten (10) day trading day period ending on the day prior to the
date the Notice of Conversion is filed with the Company.
(b) As used in this Section 3.7, the term closing bid price shall mean
(i) the closing bid price of the Company's Common Stock on any such trading
date, as reported by Bloomberg, L.P. or (ii) in the event the Common Stock is
not reported on such system, the fair market value of the Common Stock as
determined by the Board of Directors of the Company in its good faith judgment.
SECTION 3.8. Mergers, Etc. If the Company merges or consolidates with
another corporation or sells or transfers all or substantially all of its assets
to another person and the holders of the Common Stock are entitled to receive
stock, securities or property in respect of or in exchange for Common Stock,
then as a condition of such merger, consolidation, sale or transfer, the Company
and any such successor, purchaser or transferee shall amend this Debenture to
provide that it may thereafter be converted on the terms and subject to the
conditions set forth above into the kind and amount of stock, securities or
property receivable upon such merger, consolidation, sale or transfer by a
holder of the number of shares of Common Stock into which this Debenture might
have been converted immediately before such merger, consolidation, sale or
transfer.
ARTICLE 4. Mergers
The Company shall not consolidate or merge into, or transfer all or
substantially all of its assets to, any person, unless such person assumes the
obligations of the Company under this Debenture and immediately after such
transaction no Event of Default (as defined below) exists. Any reference herein
to the Company shall refer to such surviving or transferee corporation and the
obligations of the Company shall terminate upon such assumption.
ARTICLE 5. Reports
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<PAGE> 16
The Company will mail to the Holder hereof at its address as shown on
the Register a copy of any annual, quarterly or current report that it files
with the Securities and Exchange Commission promptly after the filing thereof
and a copy of any annual, quarterly or other report or proxy statement that it
gives to its shareholders generally at the time such report or statement is sent
to shareholders.
ARTICLE 6. Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs if (a) the
Company does not make the payment of the principal of this Debenture when the
same becomes due and payable at maturity, upon redemption or otherwise, (b) the
Company does not make a payment of interest when such interest becomes due and
payable and such default continues for a period of 5 days thereafter, (c) the
Company fails to issue shares of Common Stock upon conversion, (d) the Company
fails to comply with any of its other agreements in this Debenture and such
failure continues for the period and after the notice specified below, (e) the
Company pursuant to or within the meaning of any Bankruptcy Law (as hereinafter
defined): (i) commences a voluntary case; (ii) consents to the entry of an order
for relief against it in an involuntary case; (iii) consents to the appointment
of a Custodian (as hereinafter defined) of it or for all or substantially all of
its property; (iv) makes a general assignment for the benefit of its creditors;
or (v) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that: (A) is for relief against the Company in an involuntary
case; (B) appoints a Custodian of the Company or for all or substantially all of
its property or (C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for 60 days. As used in this Section 6.1,
the term "Bankruptcy Law" means Title 11 of the United States Code or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law. A default under clause (d) above is not an Event of Default
until the holders of at least 25% of the aggregate principal amount of the
Debentures notify the Company of such default and the Company does not cure it
within 5 days after the receipt of such notice, which must specify the default,
demand that it be remedied and state that it is a "Notice of Default."
SECTION 6.2. Acceleration. If an Event of Default occurs and is
continuing, the Holder hereof by notice to the Company, may declare the
principal of and accrued interest on this Debenture to be due and payable. Upon
such declaration, the principal and interest hereof shall be due and payable
immediately.
ARTICLE 7. Registered Debentures
SECTION 7.1. Series. This Debenture is one of a numbered series of
twenty-five (25) Debentures, each in the principal amount of $200,000, for a
total aggregate principal amount of $5,000,000, which are identical except as to
any restriction on the conversion or transfer thereof in order to comply with
the terms hereof, the Securities Act of 1933 and the regulations of the
Securities and Exchange Commission promulgated thereunder.
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<PAGE> 17
SECTION 7.2. Record Ownership. The Company shall maintain a register of
the holders of the Debentures (the "Register") showing their names and addresses
and the serial numbers and principal amounts of Debentures issued to or
transferred of record by them from time to time. The Register may be maintained
in electronic, magnetic or other computerized form. The Company may treat the
person named as the Holder of this Debenture in the Register as the sole owner
of this Debenture. The Holder of this Debenture is the person exclusively
entitled to receive payments of interest on this Debenture, receive
notifications with respect to this Debenture, convert it into Common Stock and
otherwise exercise all of the rights and powers as the absolute owner hereof.
SECTION 7.3. Registration of Transfer. Transfers of this Debenture may
be registered on the books of the Company maintained for such purpose pursuant
to Section 7.2 above (i.e., the Register). Transfers shall be registered when
this Debenture is presented to the Company with a request to register the
transfer hereof and the Debenture is duly endorsed by the appropriate person,
reasonable assurances are given that the endorsements are genuine and effective,
and the Company has received evidence satisfactory to it that such transfer is
rightful and in compliance with all applicable laws, including tax laws and
state and federal securities laws. When this Debenture is presented for transfer
and duly transferred hereunder, it shall be canceled and a new Debenture showing
the name of the transferee as the record holder thereof shall be issued in lieu
hereof. When this Debenture is presented to the Company with a reasonable
request to exchange it for an equal principal amount of Debentures of other
denominations, the Company shall make such exchange and shall cancel this
Debenture and issue in lieu thereof Debentures having a total principal amount
equal to this Debenture in the denominations requested by the Holder. The
Company may charge a reasonable fee for any registration of transfer or exchange
other than one occasioned by a notice of redemption or the conversion hereof.
SECTION 7.4. Worn and Lost Debentures. If this Debenture becomes worn,
defaced or mutilated but is still substantially intact and recognizable, the
Company or its agent may issue a new Debenture in lieu hereof upon its
surrender. Where the Holder of this Debenture claims that the Debenture has been
lost, destroyed or wrongfully taken, the Company shall issue a new Debenture in
place of the original Debenture if the Holder so requests by written notice to
the Company actually received by the Company before it is notified that the
Debenture has been acquired by a bona fide purchaser and the Holder has
delivered to the Company an indemnity bond in such amount and issued by such
surety as the Company deems satisfactory together with an affidavit of the
Holder setting forth the facts concerning such loss, destruction or wrongful
taking and such other information in such form with such proof or verification
as the Company may request.
ARTICLE 8. Notices
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<PAGE> 18
Except as otherwise provided in this Debenture, any notice which is
required or convenient under the terms of this Debenture shall be duly given if
it is in writing and (a) delivered in person (b) mailed by first class mail,
postage prepaid, or (c) sent by private overnight mail service (such as Federal
Express) and directed to the Holder of the Debenture at its address as it
appears on the Register or if to the Company to its principal executive offices.
Such notice shall be effective, when personally delivered, upon receipt, when so
sent by first class mail, four business days after deposit with the United
States Postal Service, or when so sent by private overnight mail service, the
next business day after deposit.
ARTICLE 9. Time
Where this Debenture authorizes or requires the payment of money or the
performance of a condition or obligation on a Saturday or Sunday or a public
holiday, or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday, such payment may be made or condition or obligation performed on the
next succeeding business day, and if the period ends at a specified hour, such
payment may be made or condition performed, at or before the same hour of such
next succeeding business day, with the same force and effect as if made or
performed in accordance with the terms of this Debenture. Where time is extended
by virtue of the provisions of this Article 9, such extended time shall not be
included in the computation of interest.
ARTICLE 10. Waivers
The holders of a majority in principal amount of the Debentures may
waive a default or rescind the declaration of an Event of Default and its
consequences except for a default in the payment of principal of or interest on
any Debenture.
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<PAGE> 19
ARTICLE 11. Rules of Construction
In this Debenture, unless the context otherwise requires, words in the
singular number include the plural, and in the plural include the singular, and
words of the masculine gender include the feminine and the neuter, and when the
sense so indicates, words of the neuter gender may refer to any gender. The
numbers and titles of sections contained in this Debenture are inserted for
convenience of reference only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof. Wherever,
in this Debenture, a determination of the Company is required or allowed, such
determination shall be made by a majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the Company and the Holder of this Debenture.
ARTICLE 12. Governing Law
The validity, terms, performance and enforcement of this Debenture
shall be governed and construed by the provisions hereof and in accordance with
the laws of the State of New York applicable to agreements that are negotiated,
executed, delivered and performed solely in the State of New York.
IN WITNESS WHEREOF, the Company has duly executed this Debenture as of
the date first written above.
Bio-Plexus, Inc.
By:___________________________________
Ronald A. Haverl
Chief Executive Officer
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<PAGE> 20
NOTICE OF CONVERSION
[To be completed and signed only upon conversion of Debenture]
The undersigned, the Holder of this Debenture, hereby elects to
exercise the right to convert it into common stock, no par value per share, of
Bio-Plexus, Inc. as follows:
[Complete if less than Dollars $ )*
all of principal amount _______________________________________________
is to be converted] ($10,000 or integral multiples of $10,000)
[Signature must be _______________________________________________
guaranteed if (Name of Holder of shares if different than
registered holder of registered Holder of Debenture)
stock differs from
registered Holder of _______________________________________________
Debenture] (Address of Holder if different than address of
registered Holder of Debenture)
_______________________________________________
(Social Security or EIN of Holder of shares if
different than Holder of Debenture)
*If the principal amount of the Debenture to be converted is less than the
entire principal amount thereof, a new Debenture for the balance of the
principal amount shall be returned to the Holder of the Debenture.
Date:________________ Sign:_______________________________________
(Signature must conform in all respects
to name of Holder shown on face of this
Debenture)
Signature Guaranteed:
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<PAGE> 21
Assignment of Debenture
The undersigned hereby sell(s) and assign(s) and transfer(s) unto
________________________________________________________________________________
(name, address and SSN or EIN of assignee)
_________________________________________________ Dollars ($)___________________
(principal amount of Debenture, $10,000 or integral multiples of $10,000)
of principal amount of this Debenture together with all accrued interest hereon.
Date:__________________ Sign:_______________________________________
(Signature must conform in all respects
to name of Holder shown on face of
Debenture)
Signature Guaranteed:
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<PAGE> 22
EXHIBIT B
In connection with the Offshore Convertible Securities Subscription
Agreement between Bio-Plexus, Inc. ("Seller") and Shepherd Investments
International Ltd., dated January 30, 1997 (the "Agreement"), the undersigned
represents and warrants as follows:
(i) The undersigned is not a U.S. Person as defined by Rule 902 of
Regulation S, was not organized under the laws of any U.S. jurisdiction, and was
not formed for the purpose of investing in securities not registered under the
Securities Act of 1933, as amended (the "Securities Act");
(ii) At the time the buy order for the Debentures (as such term is
defined in the Agreement) was originated, the undersigned was outside the United
States;
(iii) No offer to purchase the Debentures was made in the United
States;
(iv) The undersigned is purchasing the Debentures for its own account
for investment purposes and not with a view towards distribution;
(v) All subsequent offers and sales of the Debentures or the Common
Shares will be made (a) outside the United States in compliance with Rule 903 or
Rule 904 of Regulation S, (b) pursuant to registration of the Debentures or the
Common Shares under the Securities Act or (c) pursuant to an exemption from such
registration. The undersigned understands the conditions of the exemption from
registration afforded by Section 4(1) of the Securities Act and acknowledges
that there can be no assurance that it will be able to rely on such exemption.
In any case, the Debentures or the Common Shares will not be resold to U.S.
Persons or within the United States until after the end of the "Restricted
Period" (as such term is defined in the Agreement);
(vi) The undersigned has no existing short position with respect to the
common stock of Seller and agrees not to enter into any short sales or other
hedging transactions with respect to the common stock of Seller at any time
after the execution of this Agreement by the undersigned and prior to the date
on which the Debentures become convertible. The undersigned further agrees that,
at all times after the execution of these representations by the undersigned and
prior to the date on which the Debentures become convertible, it will keep its
purchase of the Debentures or the Common Shares confidential, except as required
by law and except as necessary in the ordinary course of the undersigned's
business;
(vii) The undersigned understands that the Debentures are being offered
and sold to it in reliance on specific provisions of federal and state
securities laws and that Seller is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings set
forth herein in order to determine the applicability of such provisions.
Accordingly, the undersigned agrees to notify Seller of any events which would
cause the
<PAGE> 23
representations and warranties of the undersigned to be untrue or breached at
any time after the execution of these representations by the undersigned and
prior to the expiration of the Restricted Period;
(viii) Any offering documents received by the undersigned include
statements to the effect that the neither the Debentures nor the Common Shares
have been registered under the Securities Act and may not be offered or sold in
the United States or to U.S. Persons during the Restricted Period;
(ix) The undersigned, in making the decision to purchase the Debentures
subscribed for, has relied upon independent investigations made by it and has
not relied on any information or representations made by third parties;
(x) In the event of resale of the Debentures or the Common Shares
during the Restricted Period, the undersigned shall provide a written
confirmation or other written notice to any distributor, dealer or person
receiving a selling concession, fee or other remuneration in respect of the
Debentures or the Common Shares stating that such purchaser is subject to the
same restrictions on offers and sales that apply to the undersigned, and shall
require that any such purchaser shall provide such written confirmation or other
notice upon resale during the Restricted Period;
(xi) The undersigned has not taken any action that would cause Seller
to be subject to any claim for commission or other fee or remuneration by any
broker, finder or other person and hereby indemnifies Seller against any such
claim caused by the actions of the undersigned or any of its employees or
agents;
(xii) The undersigned's purchase of the Common Shares pursuant to the
Agreement is not part of a plan or scheme to evade the registration provisions
of the Securities Act.
<PAGE> 24
BIO-PLEXUS, INC.
P.O. BOX 826
TOLLAND, CT 06084
March 25, 1997
Shepherd Investments International Ltd.
c/o International Fund Administration
45 Par-La-Ville Road, Suite 464
Hamilton, HM 11, Bermuda
Re: BIO-PLEXUS, INC. W/SHEPHERD INVESTMENTS TO INTERNATIONAL LTD.
AMENDMENT TO TERMS OF CONVERTIBLE DEBENTURES DUE FEBRUARY 4, 1999
Dear Sirs/Madames:
As you know, Shepherd Investments International Ltd. (hereafter, "Shepherd
Investments") is the holder of $5,000,000 U.S. principal amount of Convertible
Debentures of Bio-Plexus, Inc. (the "Debenture" or Debentures"), purchased
pursuant to the Offshore Convertible Securities Subscription Agreement dated
January 30, 1997 (the "Subscription Agreement") between Shepherd Investments and
Bio-Plexus, Inc. ("Bio-Plexus").
The Subscription Agreement and the Debentures provide for conversion of the
Debentures into shares of common stock of Bio-Plexus beginning on or after
March 23, 1997.
In order to encourage Shepherd Investments to hold the Debentures and to
convert them into common shares until on or after June 30, 1997, we have agreed
to amend the following sections of the Subscription Agreement and Debentures as
set forth below:
Section 5(i) of the Subscription Agreement shall be deleted in its entirety and
replaced with the following provisions:
(i) Up to one third (1/3) of the Debentures will be convertible
into Common Shares beginning on or after forty-five (45) days from the Closing
of the purchase of the Debentures, with an additional one third (1/3) of the
remaining Debentures becoming convertible on or after seventy-five (75) days
from the Closing and the final one third (1/3) of the Debentures becoming
convertible on or after one hundred five (105) days from the Closing. Debentures
converted prior to June 30, 1997 shall be convertible into Common Shares at the
lesser of $9.00 per Common Shares or 80% of the average closing bid price of
Seller's common stock as reported by Bloomberg, L.P., over the ten (10) day
trading period ending on the day prior to the date the notice of conversion is
filed with Seller. Debentures converted by Buyer on or after June 30,
<PAGE> 25
Shepherd Investments International Inc.
March 25, 1997
Page 2
1997 shall be convertible into Common Shares at the lesser of $9.00
per Common Share of 75% of the average closing bid price of
Seller's common stock, as reported by Bloomberg, L.P., over the ten
(10) day trading period ending on the day prior to the date the
notice of conversion is filed with Seller.
Section 3.1(b) of Article 3 of the Debenture shall be deleted in its entirety
and replaced with the following provision:
(b) Prior to June 30, 1997, the Debentures will be convertible into
Common Stock at the lesser of Nine Dollars U.S. ($9.00) per Common
Share or eighty percent (80%) of the average closing bid price of
the Company's common stock, as reported by Bloomberg, L.P., over
the ten (10) day trading period ending on the day prior to the date
the notice of conversion is filed with the Company. Beginning on
June 30, 1997, the Debentures will be convertible into Common Stock
at the lesser of Nine Dollars U.S. ($9.00) per Common Share or
seventy-five percent (75%) of the average closing bid price of the
Company's common stock, as reported by Bloomberg, L.P., over the
ten (10) day trading period ending on the day prior to the date the
notice of conversion is filed with the Company.
Please indicate your agreement and acceptance to the foregoing by signing below
and returning a copy of this letter as the undersigned. Within five (5) business
days of our receipt of this signed letter from you, we will provide you with new
Debentures incorporating the above revised section, and within three (3)
business days of your receipt of the new Debentures, you agree to return the
original Debentures to my attention. Except as amended hereby, the Subscription
Agreement and Debentures shall otherwise remain unchanged.
Facsimile signatures of this letter agreement shall be binding on the parties
hereto.
Sincerely,
- -------------------------
Ronald A. Haverl, Chief Executive Officer
AGREED AND ACCEPTED:
Shepherd Investments International Ltd.
- -------------------------
Name:
Title:
<PAGE> 26
BIO-PLEXUS, INC.
P.O. BOX 826
TOLLAND, CT 06084
April 16, 1997
Mr. Michael A. Roth
Shepherd Investments International Ltd.
c/o International Fund Administration
48 Par-La-Ville Road, Suite 464
Hamilton, HM 11, Bermuda
RE: BIO-PLEXUS, INC. W/SHEPHERD INVESTMENTS INTERNATIONAL LTD.
AMENDMENT TO TERMS OF CONVERTIBLE DEBENTURES DUE FEBRUARY 4, 1999
Dear Michael:
Further to our discussions, we hereby agree to amend the Offshore Convertible
Securities Subscription Agreement dated January 30, 1997 (the "Subscription
Agreement") by and between Shepherd Investments International Ltd. Bio-Plexus,
Inc. by deleting Section 2 (xiii) of the Subscription Agreement in its entirety
and replacing it with the following paragraph:
(xiii) BUYER acknowledges that in no event shall BUYER be entitled
to convert any portion of the principal of or interest on the Debentures
in excess of that amount upon conversion of which the sum of (1) the
number of Common Shares beneficially owned by BUYER and its affiliates
(other than shares of Common Shares which may be deemed beneficially
owned through the ownership of the unconverted portion of the principal
amount of, and interest on, the Debentures) and (2) the number of Common
Shares issuable upon the conversion of the principal amount of, and
interest on, the portion of the Debentures with respect to which the
determination of this provision is being made, would result in beneficial
ownership by BUYER and its affiliates of more than 4.9% of the
outstanding shares of SELLER'S common stock. For purposes of the
provision to the immediately preceding sentence, beneficial ownership
shall be determined in accordance with Section 16 of the Securities
Exchange Act of 1934, as amended, except at otherwise provided in clause
(1) hereof.
Except as set forth herein, the Subscription Agreement shall otherwise remain
unchanged.
<PAGE> 27
Bio-Plexus, Inc. w/Shepherd Investments International Ltd.
April 16, 1997
Page 2
Please indicate your agreement to and acceptance of the foregoing by signing
below and returning a copy of this letter to the undersigned.
Facsimile signature of this letter agreement shall be binding on the parties
hereto.
Sincerely,
- ---------------------------
Ronald A. Haverl
Chief Executive Officer
AGREED AND ACCEPTED
Shepherd Investments International Ltd.
- ----------------------------
Name:
Title:
Date:
<PAGE> 1
EXHIBIT 10.16
CONTRACT OF EMPLOYMENT AND NON-COMPETITION AGREEMENT
BETWEEN BIO-PLEXUS, INC. AND MR. LUCIO IMPROTA
POSITION TITLE: VICE PRESIDENT OF INTERNATIONAL MARKETING
This Contract of Employment and Non-competition Agreement (hereinafter
referred to as "Agreement"), is made and concluded this 13 day of January 1997,
by and between Bio-Plexus, Inc., a Connecticut corporation, (hereinafter
referred to as "Employer"), and Mr. Lucio Improta (hereinafter referred to as
"Employee"), for a period of minimum of one and one-half years.
WITNESSETH:
After a nine month's consultancy basis evaluation of the international
marketing skills and experience by the Employer and in consideration of the
employment of Employee by Employer as Vice President of International Marketing,
and of the compensation and benefits to be paid by Employer to Employee under
the terms of such employment, and in accordance with the job description set
forth in EXHIBIT A attached hereto, or in such other similar capacity as may be
determined by Employer, Employee and Employer (hereinafter referred to
collectively as "Parties") hereby agree as follows:
BEST EFFORTS
1. Employee shall devote, during normal working hours, his entire time,
skill, labor, attention and best efforts to the affairs of Employer during the
term of his employment and perform the duties set forth in Exhibit A, and such
similar duties, at such times and places and in such manner, as Employer may
from time to time direct.
COMPLETE ATTENTION
1. Employee shall not engage in or become interested in any other
business or calling that would require his personal attendance during business
hours, and shall not engage in any business, calling or enterprise that is or
may be contrary to the welfare, interest or benefit of the business of Employer.
2. The Employer is aware and acknowledges that Employee is a fifty (50)
percent shareholder in Bioservices s.r.l. and a fifteen (15) percent shareholder
in H-S Hospital Service s.r.l. Employee is not now or in the future actively
engaged in the operation of the companies. Employee is also a seventy (70)
percent shareholder in F.R.C. International s.r.l. of Rome and said shares will
be transferred or sold at an agreed date.
PROPRIETARY INFORMATION
1. Employee shall use his best efforts and exercise utmost diligence to
protect and
<PAGE> 2
safeguard the Confidential Information of Employer, and that of its customers,
contractors and others with whom Employer has a business relationship. Neither
during the period of employment by Employer nor thereafter shall Employee,
directly or indirectly, use for himself or for another, or disclose to another,
any Confidential Information (whether or not acquired, learned, obtained or
developed by Employee alone or in conjunction with others) of Employer, except
to the extent that such disclosure or use may be required in connection with his
employment under this Agreement or may be consented to in writing by Employer.
Employee shall deliver promptly to Employer at the termination of his
employment, or at any other time as employer may request, without retaining any
copies, notes or excerpts thereof, all memoranda, brochures, mailing lists,
manuals, diaries, notes, records, formulae, sketches, plans, drawings, customer
lists, cost information, specifications, all sales and marketing plans and
supplies or other documents relating, directly or indirectly, to any
Confidential Information made or compiled by, delivered or made available to, or
otherwise obtained by Employee.
It is understood that Confidential Information does not include
information that is already of public knowledge, or that subsequently becomes of
public knowledge through the action of Employer or a third party, or that was
known by Employee prior to employment by Employer as may be established by prior
documentation of Employee.
The provisions of this proprietary information clause shall continue in
full force and effect after termination of Employee's employment, whether such
termination is in accordance with this Agreement or for any reason whatsoever,
with or without cause, and whether voluntary or involuntary.
It is further understood that the provisions of this proprietary
information clause is not intended to prevent Employee from using the skill of
his calling in subsequent employment.
The Parties agree that in the event of a breach by Employee of the
provisions of this clause, Employer cannot reasonably or adequately be
compensated in damages in an action of law, therefore, in the event of
Employee's breach or threatened breach, Employer shall be entitled to an
injunction restricting Employee from disclosing, in whole or in part, any
confidential information learned in the course of employment by Employer.
Nothing herein shall be construed as prohibiting Employer from pursuing any
other remedies available to Employer from such breach or threatened breach,
including the recovery of damages from Employee as well as applicable attorney's
fees and costs.
Employee further recognizes and acknowledges that his employment herein
shall in no way limit Employer or any of its other employees, agents, servants
or representatives, upon direction by Employer, from contacting at its sole
discretion, any of its customers.
COVENANT NOT TO COMPETE AND NON-SOLICITATION PROVISIONS
1. Employee acknowledges and covenants that Employer deals with
marketing, sales
-2-
<PAGE> 3
and technical data, including, but not limited to current and future marketing
methods and strategies, manufacturing technologies, invoices, customer credit
information, price lists, secret lists of actual and potential customers,
short-term and long-term marketing strategies, promotional material, immediate
and long-range pricing policies, (hereinafter collectively referred to as
"Data"); that Employee's employment necessarily requires and will require direct
and complete knowledge of the Data and that such knowledge is and will be
acquired by Employee in a relation of trust and confidence to Employer, that
Employee will hold in a fiduciary capacity for the benefit of Employer and will
keep secret and will not use or disclose the Data and any knowledge thereof and
any part or item thereof to any person, firm, corporation, association,
partnership or other business entity, competing with the products manufactured
by Bio-Plexus, Inc. or products which have similar technology as Bio-Plexus.
2. For a period of one (1) year after termination of Employee's
employment pursuant to this Agreement or expiration of this Agreement, Employee
shall not, within the functional areas in which he worked or had significant
responsibilities for Employer during the term of this Agreement, directly or
indirectly, for his own account or as an employee (in a capacity of his current
position, i.e. Vice President of International Marketing), stockholder,
director, officer, participant or consultant of another, engage in any
enterprise or business competing with the same products manufactured by
Bio-Plexus or products with similar technology at said termination or expiration
of this Agreement similar to the type of business conducted by Employer at said
termination or expiration, or have any dealings of a nature competitive with
Employer's business with any person, firm, corporation, association or other
entity who is a principal, employee or customer of Employer at the time of said
termination or expiration or who was a principal, employee or customer, or who
Employee knew because of his involvement that Employer intended to solicit as a
principal, at any time within a period of one (1) year prior to said termination
or expiration. Employee and Employer agree that in the event of Employee's
actual breach of the provisions of this covenant, Employer cannot reasonably or
adequately be compensated in damages in an action of law, therefore, in the
event of Employee's breach or threatened breach, Employer shall be entitled to
an injunction restraining Employee therefrom. Nothing shall be construed as
prohibiting Employer from pursuing any other available remedies for such breach
or threatened breach, including the recovery of damages from Employee, including
applicable attorney's fees and costs.
3. Furthermore, Employee agrees not to contact, call upon, sell to,
solicit or attempt to solicit, or, if asked, not to service directly or
indirectly, for himself or on behalf of, or in conjunction with, any other
person, firm, partnership. business entity or corporation, competing with the
same products manufactured by Bio-Plexus or products with similar technology,
any customers of Employer which were customers of Employer prior to or during
Employee's term of employment hereunder, or any potential customer with which
any business contacts associated with Bio-Plexus products, have been made during
Employee's term of employment, within the field of activity then being engaged
in by Employer for a period of one (1) year after termination of Employee's
employment for just cause by Employer or Employee resigns.
-3-
<PAGE> 4
4. The parties hereto believe that these restrictive covenants are
reasonable and are in no way intended to restrict Employee, upon termination of
his employment with Employer from continuing to earn a living, as an employee,
in his prior trade, business specialty or other area of prior experience.
However, if at any time it shall be determined by any court of competent
jurisdiction that this covenant or any portion of it, as written, is
unenforceable because the restrictions are unreasonable, the parties hereto
agree that such portions as shall have been determined to be unreasonably
restrictive shall thereupon be deemed so amended as to make such restrictions
reasonable in the determination of such court, and the said covenants, as so
modified, shall be enforceable and enforced between the Parties to the same
extent as if such amendments had been made prior to the date of any alleged
breach of said covenants.
COMPENSATION
1. Employee shall receive and Employer shall pay, as compensation for
all services performed by Employee under the terms of this Agreement, the
compensation set forth in EXHIBIT B attached hereto.
CHOICE OF LAW
1. This Agreement shall be interpreted and enforced in accordance with
the laws of the State of Connecticut.
SUCCESSORS AND ASSIGNS
1. This Agreement shall be binding upon the Parties, their respective
heirs, executors, administrators, successors and assigns; however, neither this
Agreement nor the obligations, duties and responsibilities set forth herein
shall be assignable or delegable by Employee without the prior written consent
of Employer.
SEPARABILITY OF PROVISION
1. The invalidity or unenforceability of any provision, or portion of
any provision of this Agreement, shall in no way affect the validity or
unenforceability of any other provisions or portions of provisions.
ENTIRE AGREEMENT
1. This Agreement cannot be changed, modified, or discharged orally,
but only if consented to in writing by both Employee and Employer. This
Agreement contains all of the agreements of the Parties hereto relative to the
subject matter hereof. Neither party hereto has relied upon any representation,
express or implied, made by the other party hereto or his agent in entering into
this Agreement, except as provided herein.
-4-
<PAGE> 5
TERMINATION
NOTICE REQUIREMENTS
1. Employee's employment by Employer may be terminated by either
Employee or Employer upon thirty (30) days written notice to the other party to
this Agreement with or without cause, provided that Employer may at any time
terminate the employment of Employee without notice and without liability for
expenses incident to termination "where just cause exists" for the termination.
"Just cause" defined as: Employee's absence without notice and without good
cause, neglect of duty, disrespectful behavior, theft, embezzlement,
insubordination, disclosure of Confidential Information to any unauthorized
person, firm, partnership or corporation, or such other behavior as Employer
determines warrants termination for just cause. If Employee serves written
notice that he is terminating this Agreement, Employee shall, if so requested by
Employer, continue to render his services for the thirty (30) day notice period.
2. If there is a dispute concerning whether just cause for the
termination of Employee's employment exists, the Parties agree to submit this
question for resolution to the American Arbitration Association in accordance
with its rules and procedures and to share equally in the cost and expenses of
such submission.
3. Upon Employees termination of employment by Employer (for just
cause) and/or the employees voluntary termination, Employee shall notify
Employer, in writing, of any subsequent employment, including self-employment,
for a one (1) year period following his separation from Employer. Said notice
shall include Employee's position and the name and location of Employee's
employer.
TERMINATION ARRANGEMENTS
Severance monies as defined below shall be paid to Employee upon
termination of the Agreement under the following circumstances:
1. If the employer terminates the Employee without just cause and/or
the Employee terminates the Agreement as a result of Employer's violation(s) of
the terms and conditions of the Agreement with said violation determined by an
arbitrator in accordance with the procedures established in Section 2 under
Termination Notice Requirements; the Employer will pay Employee the following
monies:
-5-
<PAGE> 6
a. SALARY: (i) One hundred and fifty thousand ($150,000)
constituting one year of salary; or (ii) the salary for the unexpired term of
the one and one-half year agreement; whichever is greater; and
b. COMMISSIONS: Any and all commissions due and owing as
defined in Exhibit B.
2. No severance monies will be paid if termination of the employment
relationship occurs under the following conditions:
a. Employee resigns; or
b. Employer terminates Employee for just cause.
3. In the event that, following termination of this Agreement under
section 2 above, employee shall engage, directly or indirectly, in the business
of selling or distributing items similar to those distributed by employer in the
international market area, or shall therein engage in any competitive business
venture or enterprise or be employed by or connected with any person, firm or
corporation in the business of selling or distributing items in the
international market area similar to those distributed by employer, Employee
shall not be entitled to any severance payments. This remedy is in addition to
Employers rights to injunctive relief for the violation of the provisions of
this Agreement.
DEATH DURING EMPLOYMENT
1. If Employee dies during the term of this employment, Employer shall
pay to the estate of Employee the compensation which would otherwise be payable
to Employee, together with six (6) months salary from date of death, along with
any wages and/or bonuses, including commissions (as described in Exhibit B)
generated by contracts existing at the time of Employees death for a period not
to exceed one year from the date of Employees death.
EXPENSES
1. Employee shall be entitled to reimbursement for any reasonable
expenses he might incur which have been approved in advance by the CEO, or
President of Bio-Plexus, Inc.
VACATION
1. Employee shall be entitled to holidays and three (3) weeks of
vacation and shall further be entitled to his customary salary during such
periods. Any vacation shall be scheduled by Employee with the permission of a
duly authorized officer of Employer.
-6-
<PAGE> 7
RETURN OF EQUIPMENT UPON TERMINATION
1. Upon termination of this Agreement by either party, all sales
manuals, policy and procedures manuals, price lists, customer account lists and
copies of invoices and mailing lists, samples, brochures, technical information,
credit information or such other materials as may be given Employee by Employer,
its employees, officers or agents shall be promptly returned to Employer within
10 days of termination and Employee will retain no copies thereof.
GENERAL NOTICE REQUIREMENTS
1. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing, and if sent registered or certified mail to
Employees residence and to Employer's principal office.
HEADINGS
1. The headings contained in this Agreement are included for
convenience only and shall not be construed as a part of this Agreement.
GENERAL PROVISIONS
1. Employers failure to demand strict performance and compliance with
any part of this Agreement during Employee's employment shall not be deemed to
be a waiver of any of Employee's rights under this Agreement or by operation of
law. The waiver by Employee of any breach of any provisions of this Agreement by
Employer shall not operate or be construed as a waiver of any subsequent breach
of this Agreement by Employee. Employee admits that in the event of termination
of employment his training and capabilities are such that he can obtain
employment with an organization which does not compete with the service of
products of Employer.
VISA REIMBURSEMENT
1. Mr. Improta agrees to reimburse Bio-Plexus, Inc. for costs
associated with the Visa sponsorship for Mr. and Mrs. Improta in the event that
Mr. Improta voluntarily terminates his employment with Bio-Plexus within one and
one-half years of the signing of this contract.
EFFECTIVE DATE
1. This Agreement is effective upon the date of its execution by the
Parties.
-7-
<PAGE> 8
CONTRACT RENEWAL PROVISION(S)
1. If Employer does not provide written notice of termination for just
cause as described above, prior to the expiration of the one and one-half year
duration period of this Agreement, the employment relationship and all of the
terms of this Agreement (including the benefits described in Exhibit B) shall be
extended for an additional one and one-half year period (the "Extension
Period"), provided that nothing shall prohibit the parties from terminating the
Agreement during this extended one and one-half year period in accordance with
the terms described above and throughout this Agreement. In no event shall this
Agreement be extended beyond the extension period absent the specific written
agreement of the parties to do so.
IN WITNESS WHEREOF, the Parties hereto have hereunto set their hands
and seals the day and year first above written.
___________________________________ ___________________________
Employee (signature) and Print Name Date
___________________________________ ___________________________
Employer Representative Date
___________________________________ ___________________________
Witness Date
-8-
<PAGE> 9
EXHIBIT B
COMPENSATION: The salary for this position is $150,000.00 PER ANNUM, WITH
$5,769.23 earned and paid biweekly on Wednesdays.
ADDITIONAL Compensation:
1. $400.00/mt. toward car rental. To be paid directly to
car rental agency. This $400.00 includes insurance,
gas and maintenance
2. 1% commission on international sales of Bio-Plexus
products sold to distributorships established by Mr.
Improta to be paid for a period of three (3) years
beginning from the date of the first payment received
on each contract; and, 1% commission on any
International Sales of Bio-Plexus products sold
directly by Mr. Improta for which Bio-Plexus receives
full payment during Mr. Improta's employment.
3. $20,000 in relocation expenses. Tax status of
relocation expenses to be determined by expense
receipts.
4. Full Family Health and Dental Insurance, 20% of
premium is paid by Employee per Section 125.
5. Employer agrees to provide term life insurance for a
face value of $500,000.00 for the benefit of
Employees designated beneficiary.
-9-
<PAGE> 10
EFFECTIVE DATE
1. This Agreement is effective upon the date of its execution by the
Parties.
CONTRACT RENEWAL PROVISION(S)
1. If Employer does not provide written notice of termination for just
cause as described above, prior to the expiration of the one and one-half year
duration period of this Agreement, the employment relationship and all of the
terms of this Agreement (including the benefits described in Exhibit B) shall be
extended for an additional one and one-half year period (the "extension
period"), provided that nothing shall prohibit the parties from terminating the
Agreement during this extended one and one-half year period in accordance with
the terms described above and throughout this Agreement. In no event shall this
Agreement be extended beyond the extension period absent the specific written
agreement of the parties to do so.
IN WITNESS WHEREOF, the Parties hereto have hereunto set their hands
and seals the day and year first above written.
___________________________________ ___________________________
Employee (signature) and Print Name Date
___________________________________ ___________________________
Employer Representative Date
___________________________________ ___________________________
Witness Date
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,010,000
<SECURITIES> 0
<RECEIVABLES> 627,000
<ALLOWANCES> 0
<INVENTORY> 1,908,000
<CURRENT-ASSETS> 7,966,000
<PP&E> 8,143,000<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,924,000
<CURRENT-LIABILITIES> 5,029,000
<BONDS> 9,091,000
0
0
<COMMON> 51,242,000
<OTHER-SE> 169,000<F2>
<TOTAL-LIABILITY-AND-EQUITY> 16,924,000
<SALES> 1,112,000
<TOTAL-REVENUES> 2,612,000
<CGS> 0
<TOTAL-COSTS> 3,911,00
<OTHER-EXPENSES> 621,000<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 487,000
<INCOME-PRETAX> 2,407,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,407,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,407,000
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
<FN>
<F1>This value is net of depreciation.
<F2>Value represents redeemable common stock and redeemable common stock warrants.
<F3>Amount includes $52,000 of interest income.
</FN>
</TABLE>
