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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1999
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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BIO-PLEXUS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CONNECTICUT
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
06-1211921
(I.R.S. EMPLOYER IDENTIFICATION NO.)
129 RESERVOIR ROAD
VERNON, CONNECTICUT 06066
(860) 870-6112
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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RICHARD L. HIGGINS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BIO-PLEXUS, INC.
129 RESERVOIR ROAD
VERNON, CONNECTICUT 06066
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
WALTER W. SIMMERS, ESQ.
PEPE & HAZARD LLP
GOODWIN SQUARE
225 ASYLUM STREET
HARTFORD, CONNECTICUT 06103-4302
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) PRICE REGISTRATION FEE
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Common Stock, without par
value............................ 3,500,000 $5.75 $20,125,000 $5,595
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(1) Represents shares issuable upon conversion of debentures (and interest
accrued thereon) in the original aggregate principal amount of $2,500,000
and 500,000 shares issuable upon exercise of warrants each issued by the
Registrant to certain institutional investors in a private placement
transaction. See "Selling Stockholders" for a description of certain
assumptions made by the Registrant to determine the number of shares of
Common Stock to be registered hereunder. Pursuant to Rule 416 under the
Securities Act of 1933, any additional shares of Common Stock issued either
as a result of the provisions of the debentures or warrants pursuant to
which the Common Stock will be issued or by reason of a reduction in the
conversion price of the debentures or exercise price of the warrants in
accordance with the respective terms thereof are deemed to be registered
herewith.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act, based upon the average of the high
and low prices for the Registrant's Common Stock on the Nasdaq SmallCap
Market on May 25, 1999, and the maximum aggregate offering price of
$20,125,000 is the product of $5.75 and the number of shares of the
Registrant's Common Stock being registered hereby.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT WILL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT WILL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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EXPLANATORY NOTE
This Registration Statement on Form S-3 (Registration No. 333- ) (the
"Registration Statement") of Bio-Plexus, Inc. (the "Company") registers
3,500,000 shares of Common Stock for resale by the holders thereof. Such shares
represent (i) 816,993 shares of Common Stock (the "Conversion Shares") issuable
upon the conversion of the $2,500,000 original aggregate principal amount of 6%
Convertible Debentures due 2004 (the "Debentures") issued in a private placement
in April, 1999 (the "April Offering"), (ii) an additional indeterminate amount
of shares of Common Stock (the "PIK Shares") that may be issued as interest
accrued on the Debentures, (iii) 500,000 shares of Common Stock issuable upon
the exercise of warrants issued in the April Offering, and (iv) additional
shares of Common Stock that may be issued as a result of adjustments to the
Debentures and Warrants in amounts agreed upon between the Company and the
selling stockholders. The number of Conversion Shares is not currently
calculable and cannot be calculated until conversion of the Debentures, because
it is based on a conversion price that is equal to the lesser of (a) a "Fixed
Conversion Price" of initially $3.06 per share and subject to adjustments, or
(b) a "Floating Conversion Price" calculated based on the average of the five
lowest closing prices during the thirty-five trading days preceding the date of
conversion. The number of shares issuable upon such conversion will vary
inversely with the market price of the Common Stock. However, for purposes of
calculating the number of shares of Common Stock included in this Registration
Statement, we have determined by agreement with the selling stockholders to
register that number of shares which represent 200% of the Conversion Shares and
Warrant Shares issuable on the closing date of the April Offering or the date
this Registration Statement is initially filed with the Securities and Exchange
Commission whichever produces the greatest number of registrable securities. The
Company calculated the number of Conversion Shares based on an assumed
conversion price of $2.00, which represents the Floating Conversion Price in
effect on April 21, 1999, the closing date of the April Offering. The actual
number of shares of Common Stock issuable upon conversion of the Debentures
could be materially more or less than the number of shares registered hereunder.
All of the Conversion Shares will be sold for the accounts of the selling
stockholders and the Company will receive no proceeds therefrom.
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SUBJECT TO COMPLETION, DATED MAY 28, 1999
PROSPECTUS
BIO-PLEXUS, INC.
3,500,000 SHARES
COMMON STOCK
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On behalf of certain shareholders ("Selling Stockholders") of the
Bio-Plexus, Inc. ("Bio-Plexus" or the "Company"), we are registering for resale
up to 3,500,000 shares of our common stock, without par value ("Common Stock").
See "Selling Stockholders" for more information. The shares that we are
registering consist of:
(i) 816,993 shares (the "Conversion Shares") issuable upon conversion
of the $2,500,000 original aggregate principal amount of the Company's
outstanding 6% Convertible Debentures due 2004 (the "Debentures") issued in
a private placement in April, 1999 (the "April Offering");
(ii) an additional indeterminate amount of shares of Common Stock (the
"PIK Shares") that may be issued as interest accrued on the Debentures;
(iii) 500,000 shares of Common Stock (the "Warrant Shares") issuable
upon the exercise of warrants (the "Warrants") issued by the Company in the
April Offering; and
(iv) additional shares of Common Stock that may be issued as a result
of adjustments to Debentures and Warrants in amounts agreed upon by the
Company and the Selling Stockholders.
The Conversion Shares, PIK Shares and Warrant Shares are collectively
referred to in this Prospectus as the "Shares." The number of Conversion Shares
and PIK Shares offered for resale by this Prospectus will be determined by
formulae set forth in the Debentures and related Registration Rights Agreement
(filed as Exhibit 10.25). See "Selling Stockholders" for more information. This
number is subject to adjustment and could be materially more or less than the
estimate depending on a variety of factors, certain of which are outside the
control of the Company, including, without limitation, the future market price
of the Common Stock and the decision of the holders of the Debentures as to when
and in what amounts to convert their Debentures. The estimate set forth in this
Prospectus is not intended to constitute a prediction as to future market price
of the Common Stock or when and in what amounts holders will elect to convert
their Debentures. See "Risk Factors -- Effect of Conversion of the Debentures".
The actual number of shares of Common Stock issuable upon conversion of the
Debentures and exercise of the Warrants could be materially more or less than
the number of Shares registered hereunder.
We will deliver this Prospectus to purchasers upon resale of the
above-described Shares as required by applicable law or the regulations of the
United States Securities and Exchange Commission ("SEC"). This Prospectus is
neither an offer to sell these Shares nor a solicitation of an offer to buy the
Shares in any state where the offer or sale is not permitted. No underwriting
arrangements have been entered into by the Selling Stockholders. However, the
Selling Stockholders have advised us that they may offer the Shares registered
under this Prospectus to purchasers from time to time in transactions taking
place on the Nasdaq SmallCap Market, in negotiated transactions, through the
writing of options on the Shares, or a combination of such methods of sale, at
fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, or at negotiated
prices. The Selling Stockholders may sell these Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agent or to
whom they may sell as principal, or both. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the Selling Stockholders
in connection with the sales of the Shares.
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We will not receive any proceeds from the resale of these Shares by the
Selling Stockholders. See "Selling Stockholders" for additional information. We
will receive, however, certain cash consideration if the Selling Stockholders
exercise the Warrants. See "Use of Proceeds" for additional information. We have
agreed to bear all expenses (other than selling commissions) in connection with
the registration and sale of the Shares being offered by the Selling
Stockholders. We have also agreed to indemnify the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act").
The Selling Stockholders and their intermediaries through which the Shares
registered under this Prospectus are sold may be considered "underwriters"
(within the meaning of the Securities Act) with respect to the resale of such
shares, and any profits realized or commissions received may be considered
underwriting compensation. See "Plan of Distribution" for additional
information.
The Common Stock is traded on the Nasdaq SmallCap Market under the symbol
"BPLX." On May 25, 1999, the closing bid price of the Common Stock as reported
on the SmallCap Market of the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") was $5.4375 per share. As of May 28, 1999
there are 13,509,081 shares of Common Stock issued and outstanding.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE AND SUBSTANTIAL DILUTION AND SHOULD BE CONSIDERED CAREFULLY
AND ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE
"RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1999.
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BIO-PLEXUS, INC.
TABLE OF CONTENTS
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SUMMARY..................................................... 1
THE COMPANY................................................. 1
RISK FACTORS................................................ 4
USE OF PROCEEDS............................................. 8
SELLING STOCKHOLDERS........................................ 8
PLAN OF DISTRIBUTION........................................ 10
LEGAL MATTERS............................................... 11
EXPERTS..................................................... 12
WHERE YOU CAN OBTAIN MORE INFORMATION....................... 12
INCORPORATION BY REFERENCE OF CERTAIN INFORMATION........... 12
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SUMMARY
You should read the following summary together with the more detailed
information contained elsewhere in this Prospectus regarding our Company, the
shares of our Common Stock being registered by this Prospectus, and the
financial statements and related notes. In particular, you should read the
section entitled "Risk Factors," which explains that your investment in shares
of our Common Stock involves a high degree of risk. This Prospectus contains
forward-looking statements concerning future events or performance of our
Company. You should not rely excessively on these forward-looking statements,
because they are only predictions based on our current expectations and
assumptions. Forward-looking statements often contain words like "intend,"
"plan," "future," "estimate," "anticipate," "believe" or "expect." Many known
and unknown risks and uncertainties could cause our actual results to differ
materially from those indicated in these forward-looking statements. You should
review carefully the risks and uncertainties identified in this Prospectus,
including those explained below and in our other SEC filings such as our Form
10-K for the fiscal year ended December 31, 1998.
You should rely only on the information contained or incorporated by
reference in this Prospectus and in any accompanying prospectus supplement. No
one has been authorized to provide you with different information. The shares of
Common Stock of our Company are not being offered in any jurisdiction where the
offer is not permitted. You should not assume that the information in this
Prospectus or any prospectus supplement is accurate as of any date other than
the date provided on the front page of the documents. We have no obligation to
update or announce revisions to any forward-looking statements to reflect actual
events or developments.
We are registering for resale the shares of our Common Stock issuable upon
conversion of the Debentures and exercise of the Warrants that we issued to
certain institutional investors. On April 21, 1999, we negotiated a private
placement of up to $4,500,000 aggregate principal amount 6% Convertible
Debentures due 2004 pursuant to a Subscription Agreement dated as of April, 1999
and executed by the Selling Stockholders, to initially purchase $2,500,000
aggregate principal amount of Debentures. The Debentures accrue interest at the
rate of 6.0% per annum, payable quarterly in arrears, and the interest is
payable either in cash or in the issuance of additional Debentures, at our
option. The Debentures are convertible at any time at the option of the holders
into shares of Common Stock, at a conversion price that is equal to the lesser
of (a) a "Fixed Conversion Price" of initially $3.06 per share and subject to
adjustments, or (b) a "Floating Conversion Price" calculated based on the
average of the five lowest closing prices during the thirty-five trading days
preceding the date of conversion. The Debentures may be wholly or partially
redeemed at our option for an amount not to exceed 130% of the face value plus
accrued and unpaid interest at any time after the date of issuance. We and the
Selling Stockholders have limited put and call options, respectively, for
additional Debentures. The financing also included the Warrant to purchase
500,000 shares of Common Stock at an exercise price of $3.38 per share subject
to certain adjustments. The imputed interest rate on the debt will be
significantly higher than the stated rate due to the value of the Warrants.
Additionally, we will incur a material charge in the second quarter for the
beneficial conversion feature of the securities.
THE COMPANY
Bio-Plexus, Inc. was incorporated under the laws of the State of
Connecticut in September 1987 for the purpose of designing, developing,
manufacturing and selling safety medical products. Our executive offices and
manufacturing facility are located at 129 Reservoir Road, Vernon, Connecticut
06066, and our telephone number is (860) 870-6112. All references herein to the
"Company" refer to Bio-Plexus, Inc. unless otherwise indicated by context.
We are engaged principally in the design, development and manufacture of
safety medical products used by healthcare professionals. Our initial products
have been safety blood collection needles and related accessory products that
are marketed under the Punctur-Guard(R) and Drop-It(R) trade names. The safety
blood collection needle utilizes a patented technology that greatly reduces the
risk of accidental needlesticks by internally blunting the needle prior to
removal from the patient. Our primary focus has been the design, development,
testing and evaluation of our safety blood collection needle, and the design and
development of
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the molds, machinery and systems used to manufacture the blood collection
needle. More recently, we have focused our efforts on developing strategic
partnerships with major healthcare companies in order to assist with the
development and expansion of our product lines.
Our Punctur-Guard(R) blood collection needle is a patented safety needle
which reduces the risk of accidental needle sticks through a self-blunting
mechanism. The Punctur-Guard(R) needle is the only safety needle on the market
which is activated prior to its removal from the patient, eliminating exposure
to a contaminated sharp. Our first Punctur-Guard(R) product was a safety blood
collection needle. The Company manufactures and sells three varieties of safety
blood collection needles, two types of needle holders and a needle disposal
container. The blood collection needle is similar in appearance, size,
performance and general operation to standard blood collection needles, and
works with substantially all standard blood collection accessories.
The blood collection needle assembly consists of a mechanically activated,
hollow, internal cannula with a blunt end, called a blunting member, placed
within a blood collection needle. The blunting member advances through the
needle by applied mechanical pressure. When the needle is inserted into the
patient, the blunting member is in its retracted position. Prior to removing the
needle from the patient, the operator applies slight additional forward force to
the blood collection tube, allowing the blunting member to advance forward and
lock into place beyond the needle's tip. The blunting member does not cause any
additional patient discomfort, and because it is hollow, fluids flow through the
needle in the same manner as through standard blood collection needles.
In addition to our blood collection needles, we manufacture needle holders
and needle disposal containers. The Drop-It(R) product line consists of the
Drop-It(R) Quick Release Needle Holder and Drop-It(R) Needle Disposal Container.
These products are designed to work in conjunction with the blood collection
needle to increase the ease-of-use for the healthcare professional. The needle
holder features simple one-handed disposal of a needle, with a push button for
quick release. The needle can also be automatically released when used with the
Drop-It(R) Needle Disposal Container.
The Drop-It(R) Needle Disposal Container is a one-quart, tray-mountable
container. The container offers fast, one handed needle disposal with push
button or automatic release when used with a Drop-It(R) Quick Release Needle
Holder. It offers temporary and permanent locking tabs, is injection molded for
uniform thickness, and meets OSHA Standards for needle disposal containers. The
Company also developed and manufactures a standard needle holder which can be
used with both Punctur-Guard(R) and standard blood collection needles.
As a company, we have received both ISO 9002 and EN 46002 certifications.
ISO 9002 is a general international standard for quality assurance in
production, installation and servicing. EN 46002 provides particular quality
system requirements for suppliers of medical devices that are more specific than
the general requirements specified in ISO 9002. We also label our products with
the CE Mark, which indicates that we are following Medical Device Directives in
Europe which include the standards set forth under ISO 9002 and EN 46002.
From the latter part of 1996 to the present, we have focused our efforts on
establishing joint venture agreements on one or more of our major product lines.
We have entered into a Development and License Agreement and a Supply Agreement
with Johnson & Johnson Medical ("JJM") of Arlington, Texas. Under the terms of
the original agreements, we would develop and manufacture safety needle
assemblies for JJM utilizing our self-blunting technology, which will be used by
JJM, under an exclusive worldwide license granted by us, to manufacture and sell
a new safety intravenous catheter ("I.V. catheter").
In recent years, we have entered into additional strategic partnerships,
namely:
- a distribution agreement with Fisher HealthCare of Houston, Texas, the
second largest operating unit of Fisher Scientific. Fisher Scientific is
one of the world leaders in serving science, providing more than 245,000
products and services to research, healthcare, industrial, educational
and government customers in 145 countries. The distribution agreement
allows Fisher HealthCare to purchase and distribute all of the Bio-Plexus
blood collection products.
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- a non-exclusive supply and distribution agreement for the United States
and Canada with Graphic Controls Corporation, a subsidiary of Tyco and a
major supplier of sharps containers in the United States. The agreement
allows Graphic Controls to purchase and distribute Bio-Plexus Drop-It(R)
Needle Disposal Containers and Drop-It(R)Quick Release Needle Holders.
- an exclusive License Agreement and Design, Development and Asset Transfer
Agreement for a safety Peripherally Inserted Central Catheter ("PICC")
introducer with TFX Medical ("TFX"), a division of Teleflex Incorporated,
the industry's dominant supplier of PICC introducers. The License
Agreement includes certain minimum annual volume requirements and ongoing
royalties on the sale of PICC introducer catheters featuring
Punctur-Guard(R) technology. Under the Design, Development and Asset
Transfer Agreement, we will design and develop safety needle assemblies
to be used with the TFX peelable catheter, and will modify existing
manufacturing equipment to be transferred to TFX pursuant to the terms
and conditions of the agreement.
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RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS
INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION IN THIS
PROSPECTUS, THE FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY BY POTENTIAL
PURCHASERS IN EVALUATING AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED
HEREBY. THE RISKS DESCRIBED BELOW AND ELSEWHERE IN THIS PROSPECTUS ARE NOT
INTENDED TO BE AN EXHAUSTIVE LIST OF THE GENERAL OR SPECIFIC RISKS INVOLVED, BUT
MERELY IDENTIFY CERTAIN RISKS THAT ARE NOW FORESEEN BY THE COMPANY. THESE RISK
FACTORS SHOULD BE READ IN CONJUNCTION WITH THE PUBLIC DISCLOSURE DOCUMENTS WHICH
ARE INCORPORATED IN THIS PROSPECTUS BY REFERENCE.
HISTORY OF LOSSES/UNCERTAIN PROFITABILITY
We have experienced annual operating losses and negative operating cash
flow since our incorporation in 1987. For the three months ended March 31, 1999,
we had net income of approximately $3,000. As of March 31, 1999, we had an
accumulated deficit of approximately $63 million.
POTENTIAL DELISTING FROM THE NASDAQ STOCK MARKET
Although our Common Stock is traded on the Nasdaq SmallCap Market, there is
no assurance that the Common Stock will continue to be included in such market,
or that an active market for such stock will exist. The requirements for
continued listing on the Nasdaq SmallCap Market include that the Company
maintain net assets of at least $2.0 million. As of March 31, 1999 we were in
compliance with such requirements. However, additional funding sources may be
necessary to maintain the Nasdaq minimum net asset requirements over the next
several months. The delisting of the Company's stock from the Nasdaq SmallCap
Market could cause disruption in trading of the Common Stock, and would have a
material adverse effect on our business, assets, liabilities, financial
condition, operations or prospects. There is no assurance any potential future
financing will be successful.
NEED FOR ADDITIONAL FUNDS
Future funds may be needed to be raised before we achieve profitability.
The amount of such funds will vary based upon a number of factors including --
- the level of sales of current products,
- the commercial introduction of new products,
- changes in business plan, and
- other unforeseeable events.
Such funds may not be available or may not be available on terms acceptable to
us. The lack of additional funds when needed could have a material adverse
effect on our business, assets, liabilities, financial condition, operations or
prospects. Furthermore, the issuance of additional shares of capital stock could
also be dilutive to investors in the Company.
NEED TO REDUCE MANUFACTURING COST PER NEEDLE
We continue to improve and refine our manufacturing processes. For us to be
successful, we must manufacture and sell sufficient quantities of blood
collection needles and other products under rigorous quality control standards
at a reasonable cost. Failure to produce and sell sufficient quantities of
products, at a cost per product sufficiently below our selling price, while
meeting appropriate quality control standards, could have a material adverse
effect on our business, assets, liabilities, financial condition, operations or
prospects.
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UNCERTAIN MARKET ACCEPTANCE
The use of safety medical products, including safety needles, is relatively
new. Although the market for needles is large and safety needle legislation has
passed in several states, actual sales of our products may be much less than the
market's potential. Market acceptance of our products will depend in large part
upon our ability to demonstrate the operational advantages, safety and cost
effectiveness of our blood collection needle compared to both standard and other
safety needles. The higher cost of our products may be an impediment to market
acceptance, and there can be no assurances that our products will achieve full
market acceptance.
NEED FOR GREATER MARKET PENETRATION
Sales of our products are currently significantly below the levels required
to achieve profitability. Failure to achieve a timely and significant increase
in sales may have a substantial adverse effect on our business, assets,
liabilities, financial condition, operations or prospects.
DEPENDENCE ON A SINGLE TECHNOLOGY
Our strategy is to develop a series of safety needles and related products
based upon our patented internal blunting cannula structure. This narrow focus
on a particular product line and technology makes us vulnerable to the
development of superior competing products and changes in technology which could
eliminate the need for our products. While we believe there will be no
significant change in the need for, or the desirability of, our products in the
foreseeable future, there can be no assurance that such changes will not occur.
ABILITY TO MANAGE GROWTH
We intend to pursue our current strategy of expanding production
capabilities, while reducing production costs, and devoting substantial
resources to other areas, such as the research and development of new products.
Failure to properly manage growth could have a material adverse effect on our
business, assets, liabilities, financial condition, operations or prospects.
DEPENDENCE ON KEY SUPPLIERS
We purchase our needle cannula from a single supplier located in a foreign
country. In addition, certain other components of our blood collection needles
are each manufactured by separate single major suppliers. We own or otherwise
control the molds used by such suppliers to manufacture the component parts of
our needles and could establish alternative manufacturing arrangements if
necessary. However, certain of such components have lead times of several
months, and changes in suppliers would disrupt production schedules which could
have a material adverse effect on our business, assets, liabilities, financial
condition, operations or prospects. The Company is subject to the risks of both
increased supplier prices and unfavorable exchange rate fluctuations. Recently,
we have not experienced any significant cost increases as a result of increased
supplier prices and fluctuating exchange rates.
DEPENDENCE ON CONTINUED RESEARCH AND DEVELOPMENT
The development of additional applications and products using our patented
internal blunting cannula structure may be important to the longer-term success
of the Company. There can be no assurance that any of such applications or
products will be developed or, if developed, that they will be successful. There
can be no assurance that the development of future products will be completed,
that clinical trials of such products, when and if undertaken, will be
successful, or that there will be a significant demand for such products if
development is completed.
DEPENDENCE ON PATENTS AND PROPRIETARY RIGHTS
Our future success depends in part on our ability to maintain the
proprietary nature of our technology through a combination of patents and other
intellectual property protection devices. We have been granted three patents in
the U.S. and in a number of foreign countries, and have pending applications for
our self-
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blunting safety needle in the U.S. and in a number of foreign countries. We
believe such patents will be sufficient to protect the structure and design of
our current and proposed products. However, there can be no assurance that the
protection provided by such patents will be broad enough to prevent competitors
from introducing similar devices or that such patents, if challenged, will be
upheld by the courts of any jurisdiction. Patent infringement litigation, either
to enforce our patents or defend us from patent infringement suits, would be
expensive, and if it occurs, could divert our resources from other planned uses.
Further, any adverse outcome in such litigation could have a material adverse
effect on our business, assets, liabilities, financial condition, operations or
prospects. In addition, patent applications filed in foreign countries and
patents granted in such countries are subject to laws, rules and procedures
which differ from those in the United States. Patent protection in such
countries may be different from patent protection provided by U.S. laws and may
not be as favorable to us. We also attempt to protect our proprietary
information by limiting access to our facilities and by requiring the execution
of a confidentiality agreement by any person (including contractors and Company
employees) to whom such proprietary information needs to be disclosed. There can
be no assurance that our program of patent protection, confidentiality
agreements and restricted access to our facilities will be sufficient to protect
our proprietary technology from competitors nor whether we will be able to
secure patents on any future products.
COMPETITION
The blood collection needle market is highly competitive. The leading
manufacturers of standard needles are Becton-Dickinson and Company, Sherwood
Medical Company, Inc., a subsidiary of American Home Products Corporation, and
Terumo Medical Corporation of Japan. Becton-Dickinson, as well as numerous other
smaller companies, also manufacture safety needles that use plastic sleeves or
shields as protective devices. Our safety needles compete with both standard and
safety needles. We believe that the Punctur-Guard blood collection needle is
superior in design, quality and convenience of use to all other safety needles
on the market today and can compete effectively against safety and standard
needles. However, many of our competitors have longer operating histories and
are substantially larger, better financed and better situated in the market than
us. Some of these larger competitors have the potential marketing advantage of
being able to offer multiple products to our current or prospective customers.
Such competitors may use their economic strength or market position to influence
the market. One or more of these competitors could also improve their current
products or develop new products which may compete more effectively with our
products. New competitors may arise and may develop products which compete with
our products. In addition, new technologies may arise which could lower or
eliminate the demand for our products.
PRODUCT LIABILITY
The manufacture and sale of medical devices entails an inherent risk of
liability in the event of product failure or claim of harm caused by product
operation. We are not aware of any claim against us based upon the use or the
failure of our blood collection needles. We maintain product liability insurance
against any such claims in amounts we believe to be adequate. There can be no
assurance that if we are found liable, the claim will not exceed the limits of
our insurance. There is also no assurance that we will be able to continue to
obtain product liability insurance on acceptable terms. Product liability claims
could have a material adverse effect on our business, assets, liabilities,
financial condition, operations or prospects.
DEPENDENCE ON KEY PERSONNEL
Our success depends upon the skills, experience and efforts of our
executive officers and certain marketing and technical people. We are
particularly dependent upon the services of Richard L. Higgins, our President,
and Thomas K. Sutton, our Executive Vice President. The loss of the services of
Messrs. Higgins and Sutton or any of our other key personnel could have a
material adverse effect on our business, assets, liabilities, financial
condition, operations or prospects. We have no employment agreement with either
Messrs. Higgins or Sutton.
6
<PAGE> 12
GOVERNMENT REGULATION
Government regulation is a significant factor in the development and
marketing of our products and in our ongoing manufacturing and research and
development activities.
Our blood collection needle is a Class II device under the regulatory
structure of the Federal Food, Drug, and Cosmetic Act (the "FDC Act") which is
administered by the United States Food and Drug Administration (the "FDA"). We
are free to market and sell the Punctur-Guard(R) blood collection needle subject
to ongoing regulatory controls by the FDA. Among other things, the FDA requires
that we adhere to certain "Good Manufacturing Practices" ("GMP") regulations
which include validation testing, quality assurance, quality control and
documentation procedures. Our facilities are also subject to periodic
inspections. In addition, performance standards may be adopted for blood
collection needles which our product would then be required to meet. Failure to
meet those standards would require us to discontinue the marketing of the
product. Furthermore, future regulations may be imposed which might have a
material adverse effect on our business, assets, liabilities, financial
condition, operations or prospects and/or one or more of our products. Finally,
since the FDA continually regulates and inspects medical devices and their
manufacture, any actual or potential product failure could result in the
imposition of administrative and/or judicial sanctions, including product
recall, which might have a material adverse effect on our business, assets,
liabilities, financial condition, operations or prospects.
In 1996, pursuant to Section 510(k) of the FDC Act (21 U.S.C. 360(k)) and
the regulations promulgated thereunder, we received approval ("510(k) approval")
from the FDA for our winged intravenous set, Drop-It(R) holder, and needle
disposal container. In 1998, Johnson & Johnson Medical, Inc. ("JJM"), one of the
Company's strategic partners (as described more fully below), received 510(k)
approval for its safety I.V. catheter using Punctur-Guard(R) blunting
technology.
The Company cannot predict the time period in which the FDA will act on new
product submittals. FDA action may take longer than we anticipate, affecting
product introductions. In addition, future regulations could impose greater
limitations and controls on our products. There is no assurance that FDA
approval for a particular product will be granted.
Distribution of our products in countries other than the United States may
be subject to foreign regulation. There can be no assurance that we will be able
to obtain the approvals necessary to market our products outside of the United
States.
POTENTIAL VOLATILITY OF STOCK PRICE
The stock market has from time to time experienced significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. The market price of the publicly traded Common Stock,
similar to that of the common stock of other bio-technology companies, may be
highly volatile. Factors which may have a significant effect on the market price
of our Common Stock and may cause it to fluctuate dramatically include --
- fluctuations in the Company's operating results,
- changes in actual earnings or in earnings estimates by analysts,
- government regulation,
- general conditions in the medical products and/or healthcare markets,
- recessionary cycles,
- changing interest rates,
- our announcements of technological developments,
- our competitors' announcements of technological developments, and
- other events largely outside our control.
7
<PAGE> 13
DIVIDENDS
The Company has not paid dividends since its inception and does not intend
to pay any dividends on the Common Stock for the foreseeable future.
ANTI-TAKEOVER PROVISIONS
The Connecticut Business Corporation Act contains certain provisions that
may have the effect of discouraging unsolicited takeover bids from third
parties.
STRATEGIC PARTNERS
Our future may depend on our ability to secure strategic partners for the
development, manufacture and marketing of our products. In January 1997, we
entered into a long-term partnership with JJM for the development of a new
safety I.V. catheter using Punctur-Guard(R) technology. Pursuant to that
agreement, JJM has been granted the worldwide license to market and sell the
catheter developed under that agreement. In April 1998, the agreement was
amended to, among other things, transfer manufacturing of the safety needle
assemblies to JJM.
In October 1998, we entered into an agreement with TFX Medical, a division
of Teleflex Incorporated, for the development and production of a PICC
Introducer Catheter featuring Punctur-Guard(R) technology. Pursuant to that
agreement, the Company will design and develop safety needle assemblies to be
used with the TFX Peelable Catheter, and will modify existing manufacturing
equipment to be transferred to TFX pursuant to the terms and conditions of the
agreement.
We are currently negotiating with several other potential strategic
partners. However, we are not certain that we will be able to secure additional
strategic partnerships for our products on terms favorable to us.
EFFECT OF CONVERSION OF THE DEBENTURES
Depending upon the date on which the Debentures are converted, the number
of Conversion Shares and PIK Shares issuable under the Debentures to the Selling
Stockholders could represent a significant percentage of the outstanding shares
of Common Stock. Sale of the Conversion Shares and PIK Shares issuable under the
Debentures or the sale of shares of Common Stock after this offering in the
public market could materially adversely affect the market price of the Common
Stock.
USE OF PROCEEDS
We will receive certain cash consideration if any of the Selling
Stockholders exercises its respective Warrant. We intend to use any cash
proceeds that we receive from exercise of the warrants for working capital
purposes. Otherwise, we will not receive any proceeds from the resale of any of
the Shares registered under this Prospectus. We will pay all of the costs of the
registration of the Shares of Common Stock registered under this Prospectus
(other than selling commissions). See "Selling Stockholders" for additional
information.
SELLING STOCKHOLDERS
The following table sets forth information with respect to the Selling
Stockholders, the shares of Common Stock beneficially owned by the Selling
Stockholders, and the Shares of Common Stock issuable upon conversion of the
Debentures and exercise of the Warrants, which Shares we have agreed to register
for resale by the Selling Stockholders. Except as otherwise disclosed in this
Prospectus, the Selling Stockholders neither have nor within the past three
years had any position, office or other material relationship with our Company
or any of our affiliates. Because the Selling Stockholders may offer all or a
portion of the Shares of
8
<PAGE> 14
Common Stock registered hereby pursuant to this Prospectus, we cannot estimate
the number of Shares that will be held by the selling shareholders after such
sales.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OWNED PERCENTAGE NUMBER OF
BEFORE OF SHARES OFFERED
NAME OF SELLING STOCKHOLDER OFFERING(1)(2) CLASS(3) HEREBY(4)
- --------------------------- -------------- ---------- --------------
<S> <C> <C> <C>
Leonardo, L.P. ....................................... 368,758 2.7% 980,000
c/o Angelo Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, NY 10167
Attn: Gary Wolf
AG Super Fund International Partners, L.P. ........... 52,680 * 140,000
c/o Angelo Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, NY 10167
Attn: Gary Wolf
Ramius Fund, Ltd. .................................... 131,699 1% 350,000
c/o Angelo Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, NY 10167
Attn: Gary Wolf
GAM Arbitrage Investments, Inc. ...................... 52,680 * 140,000
c/o Angelo Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, NY 10167
Attn: Gary Wolf
Raphael, L.P. ........................................ 52,680 * 140,000
c/o Angelo Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, NY 10167
Attn: Gary Wolf
AGR Halifax Fund, Ltd. ............................... 658,497 4.6% 1,750,000
c/o Ramius Capital Group, LLC
757 Third Avenue, 27th Floor
New York, NY 10017
Attn: Jeffrey M. Solomon
</TABLE>
- ---------------
* Indicates less than 1 percent.
(1) Beneficial ownership is determined in accordance with SEC rules and
generally includes voting or investment power with respect to securities.
Shares of our Common Stock that are issuable upon exercise of the Debentures
and Warrants, to the extent that such securities are currently exercisable
within 60 days of May 28, 1999, are treated as outstanding for computing
each Selling Shareholder's percentage ownership of shares of our Common
Stock.
(2) Assumes that all of the shares of Common Stock registered under this
Prospectus are resold pursuant to this Prospectus and that the Selling
Stockholders will not hold any other shares of Common Stock.
(3) Beneficial ownership is determined as of May 27, 1999 and with regard to the
holders of the Debentures, is based on a conversion price equal to $3.06
(which is the conversion price in effect on such date). Assumes conversion
of all of the Debentures and exercise of all the Warrants.
(4) Represents 200% of the number of shares of Common Stock that would have been
issuable upon conversion of the Debentures and 200% of the number of shares
of Common Stock issuable to the Selling Stockholders upon exercise of their
Warrants to purchase common shares as of April 21, 1999, the closing date of
the April Offering. The actual number of Shares registered and offered under
this Prospectus were determined by agreement between the Company and the
Selling Stockholders. The number of
9
<PAGE> 15
Conversion Shares and PIK Shares cannot be determined at this time because that
number depends on (a) closing bid prices of the Common Stock prior to conversion
and (b) certain antidilution adjustments.
(5) Under the Registration Rights Agreement (included as Exhibit 10.25 to the
Registration Statement -- See "Exhibits" and "Where You Can Obtain More
Information" for more information), we agreed to register certain shares of
Common Stock for resale by the Selling Stockholders to permit the resale
from time to time in the market or in privately-negotiated transactions. We
will prepare and file such amendments and supplements to the Registration
Statement and accompanying Prospectus as may be necessary in accordance with
the rules and regulations of the Securities Act of 1933, to keep it
effective until the earlier of three years from the effective date or the
date on which the Shares covered by the Registration Statement have been
sold or may be sold without restriction pursuant to Rule 144 of the
Securities Act.
(6) There are several limitations on the number of Conversion Shares that we are
required to issue:
(i) The Company is not required to issue upon conversion of the
Debentures, in the aggregate, more than a number of shares of Common Stock
equal to 19.99% of the number of shares of Common Stock outstanding on the
date of issuance.
(ii) No holder of Debentures covered by this Prospectus may convert
such Debentures if the conversion would cause that holder to beneficially
own more than 5% of the Company's Common Stock (other than shares deemed to
be beneficially owned through the conversion right in the Debentures owned
by such Selling Stockholder, except upon 61 days prior notice to the
Company).
(iii) For the first 30,000 shares of the Company's Common Stock traded
on Nasdaq on any conversion date, the holders of the Debentures may only
convert the Debentures into shares of Common Stock equal to 25% of the
Company's trading volume on Nasdaq.
(7) Angelo, Gordon & Co., L.P. is the trading manager of Leonardo, L.P., GAM
Arbitrage Investments, Inc., AG Super Fund International Partners, L.P.,
Raphael, L.P. and Ramius, L.P. (the "Angelo Gordon Entities") and
consequently has voting control and investment discretion over securities
held by the Angelo Gordon Entities.
PLAN OF DISTRIBUTION
The Selling Stockholders have advised us that they may offer the shares of
Common Stock registered under this Prospectus to purchasers from time to time:
- in transactions in the Nasdaq SmallCap Market System, in negotiated
transactions, or by a combination of these methods;
- at fixed prices that may be changed;
- at market prices prevailing at the time of the resale;
- at prices related to such market prices; or
- at negotiated prices.
At the date of this Prospectus, the Selling Stockholders have not entered
into any underwriting arrangements. The Selling Stockholders may sell the shares
registered under this Prospectus to or through:
- ordinary brokers' transactions;
- transactions involving cross or block trades or otherwise on the Nasdaq
SmallCap Market;
- purchases by brokers, dealers or underwriters as principal and resale by
such purchasers for their own accounts pursuant to this Prospectus;
- "at the market" to or through market makers or into an existing market
for our Common Stock;
- in other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents;
10
<PAGE> 16
- through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise);
- in privately negotiated transactions;
- to cover short sales; or
- any combination of the foregoing.
From time to time, one or more of the Selling Stockholders may pledge,
hypothecate or grant a security interest in some or all of the Shares of Common
Stock registered under this Prospectus owned by them, and the pledgees, secured
parties or persons to whom such Shares have been hypothecated shall, upon
foreclosure in the event of default, be deemed to be Selling Stockholders under
this Prospectus. The number of Shares of Common Stock registered under this
Prospectus and beneficially owned by those Selling Stockholders who so transfer,
pledge, donate or assign those shares will decrease as and when they take such
actions. The plan of distribution for Shares sold under this Prospectus will
otherwise remain unchanged, except that the transferees, pledgees, donees or
other successors will be Selling Stockholders under this Prospectus. In
addition, a Selling Stockholder may, from time to time, sell short shares of
Common Stock. In such instances, this Prospectus may be delivered in connection
with such short sales and the Shares of Common Stock offered hereby may be used
to cover such short sales.
A Selling Stockholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the Common
Stock in the course of hedging the positions they assume with that Selling
Stockholder, including, without limitation, in connection with distributions of
the Common Stock by the broker-dealers. A Selling Stockholder also may enter
into option or other transactions with broker-dealers that involve the delivery
of the Shares of Common Stock registered under this Prospectus to the broker-
dealers, who then may resell or otherwise transfer these Shares. A Selling
Stockholder also may loan or pledge the Shares of Common Stock registered under
this Prospectus to a broker-dealer and the broker-dealer may sell the Shares so
loaned or upon a default may sell or otherwise transfer the pledged Shares.
Broker, dealers, underwriters or agents participating in the distribution
of the Shares of Common Stock registered under this Prospectus as agents may
receive compensation in the form of commissions, discounts or concessions from
the Selling Stockholders and/or purchasers of the Common Stock for whom the
broker-dealers may act as agent, or to whom they may sell as principal, or both
(which compensation as to a particular broker-dealer may be less than or in
excess of customary commissions). The Selling Stockholders and any
broker-dealers who act in connection with the sale of the Shares of Common Stock
under this Prospectus may be deemed to be"underwriters" within the meaning of
the Securities Act of 1933, and any commissions they receive and proceeds of any
sale of the Shares of Common Stock may be deemed to be underwriting discounts
and commissions under the Securities Act of 1933. Neither we nor any of the
Selling Stockholders can presently estimate the amount of this compensation. We
know of no existing arrangements between any of the Selling Stockholders, any
other shareholder, broker, dealer, underwriter or agent relating to the sale or
distribution of the Shares registered under this Prospectus.
We will pay substantially all of the expenses relating to the registration,
offer and sale of the Shares of Common Stock registered under this Prospectus to
the public other than commissions or discounts of underwriters, broker-dealers
or agents. We also have agreed to indemnify the Selling Stockholders and certain
related persons against any losses, claims, damages or liabilities under the
Securities Act of 1933 or otherwise that arise out of, or are based upon, any
untrue or alleged untrue statement of a material fact or the omission or alleged
omission in stating a material fact under this Registration Statement or
Prospectus. To the extent that indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers and
controlling persons, we have been advised that, in the opinion of the SEC, this
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore, unenforceable.
LEGAL MATTERS
The validity of the securities offered hereby have been passed upon for our
Company by Pepe & Hazard LLP, Hartford, Connecticut.
11
<PAGE> 17
EXPERTS
The audited financial statements included in this Prospectus have been
audited by various independent accountants. The firms and periods covered by
these audits are indicated in the individual accountants' reports. Such
financial statements have been so included in reliance on the reports of the
various independent accountants given on the authority of such firms as experts
in auditing and accounting.
WHERE YOU CAN OBTAIN MORE INFORMATION
We are required to follow the reporting requirements of the Securities
Exchange Act of 1934. To comply with these requirements, we file a number of
reports, including annual and quarterly reports, proxy statements, information
statements and other information with the SEC. You may inspect and copy any of
this information that we have filed with the SEC at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the SEC's regional offices located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 W.
Madison Street, Suite 1400, Chicago, IL 60661-2511. You may obtain information
on the operation of the public reference room by calling the Commission at
1-800-SEC-0330. You also may obtain copies of such material at prescribed rates
from the Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. You also may inspect such reports, proxy
statements, information statements and other information concerning us at the
offices of The Nasdaq Stock Market, Inc. at 1735 K Street, N.W., Washington,
D.C. 20006. You also may access the materials that we file electronically with
the SEC at the SEC's website (http://www.sec.gov), which contains the reports,
proxy statements, information statements and other information that we file
electronically with the SEC.
We have filed with the SEC a Registration Statement on Form S-3 under the
Securities Act of 1933, with respect to the shares covered by this Prospectus.
This Prospectus does not contain all of the information set forth in the
Registration Statement, because certain parts are omitted in accordance with the
rules and regulations of the SEC. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete and, with respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, we refer you to such
exhibit for a more complete description of the matter involved. Each such
statement is deemed qualified in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We incorporate by reference in this Prospectus and encourage you to read
the following documents that we have filed with the SEC (File No. 0-24128)
pursuant to the requirements of the Securities Exchange Act of 1934:
(1) Our Registration Statement on Form 8-A filed with the Commission
on March 13, 1997 registering the Common Stock of the Company under Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act");
(2) Our Annual Report on Form 10-K for the year ended December 31,
1998;
(3) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;
(4) Our Current Report on Form 8-K dated April 30, 1999;
(5) The description of our Common Stock contained in our Registration
Statement on Form 8-A filed with the SEC on May 13, 1994, including any
amendments or reports filed for the purpose of updating the description;
12
<PAGE> 18
(6) All documents that we subsequently filed with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
prior to termination of the offering of shares of our Common Stock for
resale as described in this Prospectus. We also incorporate by reference as
part of this Prospectus and encourage you to read all reports and other
documents that we have filed (or will file) with the SEC under the
Securities Exchange Act of 1934, that are after the date of this Prospectus
and before the termination of the offering of the shares registered under
this Prospectus.
You should understand that, if any statement contained in a report or
document that is incorporated by reference in this Prospectus is supplemented,
modified or superseded, then the later filed report or document will supplement,
modify or supersede the statements contained in this Prospectus.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this Prospectus is delivered, upon the written or oral
request of that person, a copy of any and all documents incorporated by
reference in this Prospectus (not including, however, the exhibits to those
documents unless those exhibits are specifically incorporated by reference in
such documents). Requests should be sent to the attention of the Secretary of
our Company, at 129 Reservoir Road, Vernon, Connecticut 06066 or you may call
and ask for the Secretary of our Company at (860) 870-6112.
13
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated cumulative expenses of this registration of Shares of Common
Stock for resale by the Selling Stockholders, all of which are to be paid by the
registrant in connection with the issuance and distribution of the Shares being
registered, are estimated as follows:
<TABLE>
<CAPTION>
AMOUNT
-------
<S> <C>
Registration Fee -- SEC..................................... $ 5,595(1)
Nasdaq SmallCap Market Listing Fee.......................... 7,500
Accounting Fees and Expenses................................ 10,000*
Legal Fees and Expenses (including Blue Sky)................ 20,000*
Printing and engraving expenses............................. 5,000*
Miscellaneous............................................... 2,000*
Total....................................................... $50,095
</TABLE>
- ---------------
* Estimated
(1) Registration fee paid upon the initial filing of this Registration
Statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
We maintain directors' and officers' liability insurance with policy limits
as are reasonable and customary for our industry. The policy covers losses
arising from, among other things, claims of breach of duty, neglect, error,
alleged misstatement, misleading statement or omission by the directors and
officers in their capacity as such. Payment for loss would be made to or on our
behalf where we are required or permitted to indemnify directors or officers for
covered losses pursuant to statutory of common law, our Certificate of
Incorporation, as amended, or Bylaws, as amended, or by agreement. The policy
provides for retentions at various limits.
We hereby incorporate by reference Sections 33-771, 33-772, 33-774 and
33-776 of the Connecticut Business Corporation Act as follows:
CONNECTICUT BUSINESS CORPORATION ACT SECTION 33-771 PROVIDES IN PART:
(a) Except as provided in subsection (d) of this section, a
corporation may indemnify an individual made a party to a proceeding
because he is or was a director against liability incurred in the
proceeding if: (1) He conducted himself in good faith; and (2) he
reasonably believed (A) in the case of conduct in his official capacity
with the corporation, that his conduct was in its best interests, and (B)
in all other cases, that his conduct was at least not opposed to its best
interests; and (3) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for
a purpose he reasonably believed to be in the interests of the participants
in and beneficiaries of the plan is conduct that satisfies the requirement
of subparagraph (B) of subdivision (2) of subsection (a) of this section.
(c) The termination of a proceeding by judgment, order, settlement or
conviction or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of
conduct described in this section.
(d) A corporation may not indemnify a director under this section: (1)
In connection with a proceeding by or in the right of the corporation in
which the director was adjudged liable to the corporation; or (2) in
connection with any other proceeding charging improper personal benefit to
him,
II-1
<PAGE> 20
whether or not involving action in his official capacity, in which he was
adjudged liable on the basis that personal benefit was improperly received
by him.
(e) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
CONNECTICUT BUSINESS CORPORATION ACT SECTION 33-772 PROVIDES:
Unless limited by its certificate of incorporation, a corporation shall
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which he was a party because he is or was a
director of the corporation against reasonable expenses incurred by him in
connection with the proceeding.
CONNECTICUT BUSINESS CORPORATION ACT SECTION 33-774 PROVIDES:
Unless a corporation's certificate of incorporation provides otherwise, a
director of the corporation who is a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another court of
competent jurisdiction. On receipt of an application, the court after giving any
notice the court considers necessary may order indemnification if it determines:
(1) The director is entitled to mandatory indemnification under section 33-772,
in which case the court shall also order the corporation to pay the director's
reasonable expenses incurred to obtain court-ordered indemnification; or (2) the
director is fairly and reasonable entitled to indemnification in view of all the
relevant circumstances, whether or not he met the standard of conduct set forth
in section 33-771 or was adjudged liable as described in subsection (d) of said
section, but if he was adjudged so liable his indemnification is limited to
reasonable expenses incurred.
CONNECTICUT BUSINESS CORPORATION ACT SECTION 33-776 PROVIDES IN PART:
Unless a corporation's certificate of incorporation provides otherwise:
(1) An officer of the corporation who is not a director is entitled to
mandatory indemnification under section 33-772, and is entitled to apply
for court-ordered indemnification under section 33-774, in each case to the
same extent as a director.
(3) Notwithstanding subdivision (4) of this section, a corporation may
also indemnify and advance expenses to an officer, employee or agent who is
not a director to the extent, consistent with public policy, that may be
provided by contract, its certificate of incorporation, bylaws, or general
or specific action of its board of directors, each of which may delegate to
its general counsel or other specified officer or officers the ability to
authorize such indemnification and the responsibility to determine whether
any conditions to such indemnification or advance of expenses have been
established.
ARTICLE IX OF THE REGISTRANT'S BYLAWS PROVIDES:
The Corporation shall indemnify shareholders, directors, officers,
employees and agents of the Corporation to the maximum extent permitted
by the Stock Corporation Act of the State of Connecticut. Expenses of a
party which may be indemnifiable under the Stock Corporation Act
incurred in defending a proceeding shall be paid by the Corporation in
advance of the final disposition of such proceeding as authorized by the
Board of Directors upon agreement of the eligible party to repay such
amount if he is later found not entitled to be indemnified by the
Corporation under the Stock Corporation Act.
Effective January 1, 1997, the Stock Corporation Act of the State of
Connecticut was been repealed, superseded by the Business Corporation Act of the
State of Connecticut.
In addition, the Registrant maintains directors' and officers' liability
insurance policies.
II-2
<PAGE> 21
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
See Exhibit Index included immediately preceding the Exhibits to this
Registration Statement, which is incorporated herein by reference.
ITEM 17. UNDERTAKINGS. The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") that are incorporated by reference in this
Registration Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering. The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable,
each filing of any employer benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the indemnification provisions described herein, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceedings) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Vernon, Connecticut on the 28th day of May 1999.
BIO-PLEXUS, INC.
By: /s/ RICHARD L. HIGGINS
------------------------------------
Richard L Higgins
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ RICHARD L. HIGGINS President, Chief Executive Officer and May 28, 1999
- ------------------------------------------------ Director (Principal Executive
Richard L. Higgins Officer)
/s/ KIMBERLEY A. CADY Vice President and Chief Financial May 28, 1999
- ------------------------------------------------ Officer (Principal Financial Officer
Kimberley A. Cady and Principal Accounting Officer)
/s/ DAVID HIMICK Director May 28, 1999
- ------------------------------------------------
David Himick
/s/ HERMAN GROSS Director May 28, 1999
- ------------------------------------------------
Herman Gross
/s/ RICHARD RIBAKOVE Director May 28, 1999
- ------------------------------------------------
Richard Ribakove
</TABLE>
II-4
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. DESCRIPTION
--- -----------
<S> <C>
1.1 Form of Underwriting Agreement between Advest, Inc. and the
Company(1)
1.2 Form of Advest, Inc. Warrant(1)
1.3 Form of Advest, Inc. Registration Rights Agreement(1)
1.4 Form of Underwriting Agreement among Advest, Inc. as
representative of the several underwriters named therein and
the Company(2)
3.1 Certificate of Incorporation of the Company, as amended(3)
3.2 Bylaws of the Company, as amended(4)
4.1 Loan Agreement, dated January 7, 1992, between the Company
and CII(1)
4.2 Loan Agreement dated July 27, 1993, between the Company and
the CDA(1)
4.3 Form of Unsecured Term Notes with Detachable Warrants to
Purchase Common Stock(5)
4.4 Loan Agreement, dated March 7, 1995, between the Company and
the CDA(6)
4.4a Letter agreement dated March 31, 1997 between the Company
and CDA(7)
4.5 Promissory Note, dated October 28, 1994, between the Company
and Victor and Margaret DeMattia(6)
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(7)
4.6a Letter agreement between the Company and Ronald A. Haverl
and Carl R. Sahi regarding voting of Class A Common Stock(8)
5.1 Opinion of Pepe & Hazard LLP, Hartford, Connecticut(12)
10.1 Lease, dated March 7, 1989, between the Company and T&S
Limited Partnership, as amended(1)
10.2 Royalty Agreement, dated November 6, 1989, between the
Company and CII, as amended(1)
10.3 Master Lease Agreement, dated April 30, 1993, between the
Company and Aberlyn Capital Management and its Affiliate,
Aberlyn(1)
10.4 Purchase and Sale Agreement, as amended, for 129 Reservoir
Road, Vernon, Connecticut, dated October 28, 1994, between
the Company and Victor and Margaret DeMattia(6)
10.5 Lease, dated March 11, 1994, between the Company and Thomas
D. Buccino d/b/a The Mill Works(1)
10.6 Marketing and Distribution Agreement dated March 16, 1995,
between the Company and Allegiance(9)
10.7 1991 Long-Term Incentive Plan(9)
10.8 Stock Warrant granted by the Company to Ronald A. Haverl(9)
10.9 Stock Warrant granted by the Company to Carl R. Sahi(9)
10.10 Stock Warrant granted by the Company to Ronald A. Haverl(9)
10.11 Stock Warrant granted by the Company to Carl R. Sahi(9)
10.12 Master Equipment Lease Agreement dated as of March 8, 1995,
between the Company and Financing for Science International,
Inc.(10)
10.13 1995 Non-Employee Directors' Stock Option Plan(10)
10.14 Note and Warrant Purchase Agreement, Form of Private
Placement Note, Security Agreement, and Form of Warrant(10)
10.15 Letter Agreement with Aberlyn Capital Management Limited
Partnership(10)
10.16 Employment Agreement dated January 13, 1997 between the
Company and Lucio Improta(7)
</TABLE>
II-5
<PAGE> 24
<TABLE>
<CAPTION>
NO. DESCRIPTION
--- -----------
<S> <C>
10.17 Term Sheet dated August 1, 1997 describing arrangement
between the Company and Ronald Haverl(11)
10.18 Development and License Agreement dated January 28, 1997 by
and between the Company and Johnson & Johnson Medical,
Inc.(3)
10.19 Supply Agreement dated January 28, 1997 by and between the
Company and Johnson & Johnson Medical, Inc.(3)
10.20 Term Promissory Note issued to Carl R. Sahi(3)
10.21 Warrant for shares of common stock issued to Carl R. Sahi(3)
10.22 Subscription Agreement by and among the Company and the
Selling Stockholders(12)
10.23 Form of Debenture granted by the Company to the Selling
Stockholders(12)
10.24 Form of Warrant granted by the Company to the Selling
Stockholders(12)
10.25 Registration Rights Agreement by and among the Company and
the Selling Stockholders(12)
23.1 Consent of Mahoney Sabol & Company, LLP(12)
23.2 Consent of PricewaterhouseCoopers LLP(12)
23.3 Consent of Pepe & Hazard LLP (included in Exhibit 5.1)(12)
</TABLE>
- ---------------
(1) Incorporated by reference to the similarly described exhibits filed in
connection with the Registrant's registration statement on Form S-1 filed
on April 1, 1994 (File No. 33-77202).
(2) Incorporated by reference to the similarly described exhibit filed in
connection with Registrant's Amendment No. 2 to the registration statement
on Form S-1 filed on September 15, 1995 (File No. 33-95554).
(3) Incorporated by reference to the similarly described exhibits included with
Registrant's Quarterly Report on Form 10-Q for the quarter ended September
30, 1998 (File No. 0-24128).
(4) Incorporated by reference to the similarly described exhibit included with
the Registrant's Annual Report on Form 10-K filed on April 13, 1998 (File
No. 0-24128).
(5) Incorporated by reference to the similarly described exhibit filed in
connection with the Registrant's registration statement on Form S-1 filed
on April 1, 1994 (File No. 33-77202).
(6) Incorporated by reference to the similarly described exhibits included with
the Registrant's Annual Report on Form 10-K filed on March 30, 1995 (File
No. 0-24128).
(7) Incorporated by reference to the similarly described exhibits included with
the Registrant's Quarterly Report on Form 10-Q for the quarter ended on
March 31, 1997 (File No. 0-24128).
(8) Incorporated by reference to the similarly described exhibit included with
the Registrant's Quarterly Report on Form 10-Q for the quarter ended on
June 30, 1997 (File No. 0-24128).
(9) Incorporated by reference to the similarly described exhibits included with
the Registrant's Amendment No. 2 to Annual Report on Form 10-K filed on
June 30, 1995 (File No. 0-24128).
(10) Incorporated by reference to the similarly described exhibits included with
the Registrant's Quarterly Report on Form 10-Q for the quarter ended on
June 30, 1995 (File No. 0-24128).
(11) Incorporated by reference to the similarly described exhibit included with
the Registrant's Annual Report on Form 10-K/A filed on April 30, 1998 (File
No. 0-24128).
(12) Filed with this Registration Statement.
II-6
<PAGE> 1
EXHIBIT 5.1
[PEPE & HAZARD LLP LETTERHEAD]
May 28, 1999
Bio-Plexus, Inc.
129 Reservoir Road
Vernon, CT 06066
RE: Registration Statement on Form S-3 of Bio-Plexus, Inc.
(the"Company")
Ladies and Gentlemen:
We have acted as counsel to Bio-Plexus, Inc., a Connecticut corporation
(the "Company"), with respect to the offering by certain selling shareholders of
up to 3,500,000 shares (the "Shares") of the Common Stock of the Company,
without par value per share (the "Common Stock") under the Registration
Statement, filed by the Company under the Securities Act of 1933, as amended. As
such counsel, we have examined such corporate records, certificates and other
documents and have made such other factual and legal investigations as we have
deemed relevant and necessary as the basis for the opinions hereinafter
expressed. In such examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity to original documents of all documents submitted to us as
conformed or photostatic copies. Unless otherwise defined herein, capitalized
terms shall have the meanings assigned to them in the Registration Statement.
Based on the foregoing, we are of the opinion that:
1. The shares of Common Stock initially issuable upon the exercise of
the warrants covered by the Registration Statement have been duly authorized and
reserved for issuance, and upon exercise of such warrants and the payment of the
exercise price in accordance with the terms of the warrants, such shares of
Common Stock will be validly issued, fully paid, and non-assessable by the
Company.
2. The shares of Common Stock initially issuable upon the conversion of
the each of the Debentures by the Company Stockholders have been duly authorized
and reserved for issuance, and upon issuance, each will be validly issued, fully
paid, and non-assessable by the Company.
<PAGE> 2
Bio-Plexus, Inc.
May 28, 1999
Page 2
3. The other shares of Common Stock covered by the Registration
Statement have been duly authorized, are fully paid, and non-assessable by the
Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
PEPE & HAZARD LLP
By: /s/ Walter W. Simmers
----------------------------
Walter W. Simmers
A Partner
<PAGE> 1
EXHIBIT 10.22
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement"), dated as of April 21,
1999, has been executed by the undersigned (the "Subscriber") in connection with
the offering and sale (the "Offering") of (i) an aggregate of up to $4,500,000
aggregate principal amount 6% Convertible Debentures due 2004 (the "Debentures")
of Bio-Plexus, Inc., a Connecticut corporation (the "Company"), for a purchase
price of $1,000 per $1,000 principal amount of Debentures, convertible into
shares of common stock, no par value, of the Company (the "Common Stock"), and
possessing such other rights and preferences as are set forth in the form of
Debenture attached hereto as Exhibit A, (the "Form of Debenture") and (ii)
warrants (the "Warrants") exerciseable for the purchase of up to 500,000 shares
of Common Stock, and having such other rights and terms as set forth in the form
of Warrant attached hereto as Exhibit B (the "Form of Warrant"). The
solicitation of this Agreement and, if accepted by the Company, the offer and
sale of the Debentures and the Warrants, are being made in reliance upon the
provisions of Section 4(2) of the United States Securities Act of 1933, as
amended (the "Securities Act") and Regulation D ("Regulation D") promulgated by
the Securities and Exchange Commission (the "SEC") under the Securities Act.
The shares of Common Stock issuable upon conversion of the Debentures
(the "Underlying Debenture Shares") and the shares of Common Stock issuable upon
exercise of the Warrants (the "Underlying Warrant Shares") are sometimes
collectively referred to in this Agreement as the "Underlying Stock." The
Debentures, the Warrants and the Underlying Stock issuable are sometimes
collectively referred to in this Agreement as the "Securities." Upon the terms
and subject to the conditions set forth herein, the Subscriber hereby agrees to
purchase, and the Company hereby agrees to issue and sell the aggregate
principal amount of Debentures set forth in this Agreement at the aggregate
purchase price set forth in Section 14. In consideration of the mutual promises,
representations, warranties and conditions set forth hereto, and intending to be
legally bound hereby, the Company and the Subscriber hereby agree as follows:
1. Agreement to Subscribe; the Subscriber
1.1 Purchase and Issuance of Debentures. On the basis of the
representations and warranties contained in this Agreement and subject
to the terms and conditions hereinafter set forth, the Subscriber
hereby subscribes for the specified principal amount of Debentures and
the specified number of Warrants upon and subject to the conditions set
forth elsewhere in this Agreement and at the aggregate purchase price
set forth in Section 14. The closing of the purchase (the "Closing")
shall occur on April 21, 1999 (the "Closing Date"); provided that (a)
the purchase price has been delivered by the Subscriber to the Company,
a mutually acceptable escrow agent or as otherwise agreed between the
parties (in immediately available funds via a wire transfer pursuant to
instructions previously delivered for such purpose), (b) the principal
amount of Debentures subscribed for hereby and such number of Warrants
as agreed to herein shall have been issued and delivered by
<PAGE> 2
the Company to the Subscriber, a mutually acceptable escrow agent or as
otherwise agreed between the parties and (c) all other conditions
precedent to the obligations of the Subscriber and the Company set
forth herein shall have been satisfied or waived in writing.
1.2 Nature of the Subscriber. The Subscriber is either purchasing the
Debentures and Warrants for its own account or as an agent for a
principal (under a discretionary or similar account), in which case all
of the representations, warranties, covenants and agreements of the
Subscriber herein shall be deemed to apply to such principals and not
to the Subscriber and to have been made by such principal and not by
the Subscriber. In such case, the Subscriber so acting as agent
represents and warrants that (a) its principals have confirmed to the
Subscriber the accuracy of such representations and warranties with
respect to its principals, and (b) the Subscriber has full authority to
act on behalf of its principals in executing and delivering this
Agreement and consummating the transactions contemplated hereby.
1.3 Company's Put Right. Beginning nine (9) months from the Closing Date
and ending 90 days thereafter, the Company may exercise its option (the
"Put Option"), without the consent of the holders of the Debentures and
Warrants (the "Holders"), to obligate the Holders to purchase up to
such principal amount of Debentures which brings the aggregate
principal amount of the Debentures to be sold by the Company to
$2,500,000 (the "Put Debentures"); provided, however, that the Holders
shall not be obligated to purchase such amount of Debentures if the
aggregate value of the Put Debentures is less than $500,000 or greater
than $1,000,000. Furthermore, written notice of the Company's intention
to issue and sell the Put Debentures (the "Put Notice Date") shall be
given to each Holder not less than thirty (30) days prior to the date
of issuance and sale of the Put Debentures (the "Put Closing Date");
provided, however, the Company may not issue such notice unless the
following conditions are met or have been waived by the Holder: (i) the
Company has obtained written approval from its shareholders, whether
the transaction is viewed singly or is integrated with prior
transactions, under the non-quantitative maintenance requirements for
The Nasdaq Small-Cap Market (the "Nasdaq SmallCap") issuers, for the
issuance of a number of shares of Common Stock which is greater than or
equal to 20% of the number of shares of Common Stock outstanding as of
the Closing Date, subject to Paragraph 12 of the Form of Debenture;
(ii) the Registration Statement (as defined in Section 5.1 herein) has
been declared effective and no stop order has been threatened for each
of the 120 business days preceding the Put Notice Date; (iii) the
Company has not elected to redeem the Debentures pursuant to Paragraph
6 of the Form of Debenture; (iv) the representations and warranties of
the Company set forth in this Agreement are true and correct in all
material respects as of the Put Closing Date as though made on such
date; (v) the other conditions precedent to the obligations of the
Subscriber and the Company set forth herein shall have been satisfied
or waived in writing prior to the Put Closing Date; (vi) there has not
been an announcement of a pending change in control at the Company;
(vii) the trading in the Common Stock shall not have been suspended by
the SEC or the National Association of Securities Dealers, Inc. (the
"NASD"), the Common Stock shall not have been delisted from the Nasdaq
2
<PAGE> 3
SmallCap, and trading in securities generally as reported by the Nasdaq
SmallCap shall not have been suspended or limited or minimum prices
shall not have been established on securities whose trades are reported
by the Nasdaq SmallCap (excluding disruptions from business
announcement that result in any halt(s) in trading of not more than one
(1) day on each occasion); (viii) the sum of: (a) the remaining
outstanding principal amount of the Debentures and (b) the Put
Debentures is less than 10% of the current market capitalization of the
Company; (ix) the Closing Price (as defined in the Form of Debenture)
of the Company for the 20 days prior to the Put Notice Date has been
greater than or equal to the Closing Price of the Company on the
Closing Date; and (x) no event shall have occurred which has had, in
the Subscriber's sole discretion, a Material Adverse Effect (as defined
in Section 3.6 herein). The obligation of the Subscriber hereunder to
acquire and pay for the Put Debentures on the Put Closing Date is
subject to the satisfaction by the Company of the following conditions:
(i) the Registration Statement (as defined in Section 5.1 herein) has
been effective and no stop order has been threatened for each of the
120 business days preceding the Put Notice Date; (ii) the
representations and warranties of the Company set forth in this
Agreement are true and correct in all material respects as of the Put
Closing Date as though made on such date; (iii) the other conditions
precedent to the obligations of the Subscriber and the Company set
forth herein shall have been satisfied or waived in writing prior to
the Put Closing Date; (iv) there has not been an announcement of a
pending change in control at the Company; (v) the trading in the Common
Stock shall not have been suspended by the SEC or the NASD, the Common
Stock shall not have been delisted from the Nasdaq SmallCap, and
trading in securities generally as reported by the Nasdaq SmallCap
shall not have been suspended or limited or minimum prices shall not
have been established on securities whose trades are reported by the
Nasdaq SmallCap (excluding disruptions from business announcement that
result in any halt(s) in trading of not more than one (1) day on each
occasion); (vi) the sum of: (a) the remaining outstanding principal
amount of the Debentures and (b) the Put Debentures is less than 10% of
the current market capitalization of the Company; (vii) the Closing
Price (as defined in the Form of Debenture) of the Company for the 20
days prior to the Put Notice Date has been greater than or equal to the
Closing Price of the Company on the Closing Date; (viii) the average
Closing Price of the Company for the period from the Put Notice Date
through, and including, the Put Closing Date has not been less than 90%
of the closing bid price on the Put Notice Date; and (ix) no event
shall have occurred which has had, in the Subscriber's sole discretion,
a Material Adverse Effect (as defined in Section 3.6 herein). The
Conversion Price (as defined in the Form of Debenture) of the Put
Debentures shall be identical to that of the Debentures. The Company
shall only be entitled to exercise the Put Option on one occasion.
1.4 Holders' Call Right. Beginning twelve (12) months from the Closing Date
and ending 90 days thereafter, each of the Holders may exercise its
option (the "Call Option"), without the consent of the Company, to
obligate the Company to sell up to such amount of Debentures which
brings the aggregate value of the Debentures to $2,500,000 (the "Call
Debentures"); provided, however, that the Company shall not be
obligated to sell such amount of Debentures if the aggregate value of
the Call Debentures is less than $500,000
3
<PAGE> 4
or greater than $1,000,000. The Conversion Price of the Call Debentures
shall be identical to that of the Debentures. Each Holder shall only be
entitled to exercise its Call Option on one occasion.
1.5 Conditions Precedent to the Obligation of the Company to Sell the
Debentures. The obligation hereunder of the Company to issue and sell
the Debentures to the Subscriber is subject to the satisfaction, at or
before the Closing, of each of the conditions set forth below. Each of
these conditions are for the Company's sole benefit and may be waived
by the Company at any time in its sole discretion.
(a) Accuracy of the Subscriber's Representations and Warranties.
The representations and warranties of the Subscriber shall be
true and correct as of the date when made and in all material
respects as of the Closing Date as though made at each such
time.
(b) Performance by the Subscriber. The Subscriber shall have
performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Subscriber at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of
any of the transactions contemplated by this Agreement, and no
valid proceeding shall have been commenced which may have the
effect of prohibiting or adversely affecting any of the
transactions contemplated hereby.
(d) Legal Investment. At the time of the Closing, the purchase of
the Securities by the Subscriber shall be legally permitted by
all statutes, rules and regulations to which the Subscriber
and the Company are subject.
(e) Officer's Certificate. The Subscriber shall have delivered to
the Company a certificate in form and substance reasonably
satisfactory to the Company, executed by an authorized
representative of the Subscriber, to the effect that all the
conditions to the Closing shall have been satisfied and that
the representations and warranties of the Subscriber contained
in the Agreement are true and correct in all material respects
on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made on
the date hereof.
1.6 Conditions Precedent to the Obligation of the Subscriber to Purchase
the Debentures and Warrants. The obligation of the Subscriber hereunder
to acquire and pay for the Debentures and Warrants is subject to the
satisfaction, at or before the Closing, of each of the following
conditions. Each of these conditions is for the Subscriber's sole
benefit and may be waived in writing by the Subscriber at any time in
its sole discretion.
4
<PAGE> 5
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true
and correct as of the date when made and in all material
respects as of the Closing Date as though made at each such
time.
(b) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all
covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits or adversely effects
any of the transactions contemplated by this Agreement, and no
proceeding shall have been commenced which may have the effect
of prohibiting or adversely affecting any of the transactions
contemplated hereby.
(d) Adverse Changes. For the period from December 31, 1998 until
Closing, except as (i) publicly disclosed in the Company's
press releases or filings (the "Exchange Act Reports")
pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (ii) issued or made on or prior to the
date hereof listed on Schedule 1.6(d) hereto (collectively,
"Prior Public Disclosures"), or (iii) disclosed to and
acknowledged in writing by the Company and the Subscriber, no
event shall have occurred or be threatened to occur which has
had or is likely to have a Material Adverse Effect (as defined
in Section 3.6 hereof) on the Company.
(e) No Suspension of Trading in or Delisting of Common Stock. The
trading in the Common Stock shall not have been suspended by
the SEC or the NASD; the Common Stock shall not have been
delisted from the Nasdaq SmallCap and the Company shall not
have received any notice of threatened or pending proceedings
for delisting the Common Stock from the Nasdaq SmallCap; and
trading in securities generally as reported by the Nasdaq
SmallCap shall not have been suspended or limited or minimum
prices shall not have been established on securities whose
trades are reported by the Nasdaq SmallCap.
(f) Legal Opinion. The Company shall have delivered to the
Subscriber opinions of independent counsel to the Company,
each substantially in the form of Exhibit C attached hereto.
(g) Officer's Certificate. The Company shall have delivered to the
Subscriber a certificate in form and substance reasonably
satisfactory to the Subscriber, executed by an executive
officer of the Company, to the effect that all the conditions
to the Closing shall have been satisfied and that the
representations and warranties of the Company contained in the
Agreement are true and correct in all
5
<PAGE> 6
respects on and as of the date hereof with the same force and
effect as though such representations and warranties had been
made on the date hereof.
(h) Registration Rights Agreement. The Company and the Subscriber
shall have entered into the Registration Rights Agreement
contemplated by Section 5.1.
(i) Debentures. The Company shall have executed and delivered the
Debentures substantially in the form attached hereto in the
Form of Debenture.
(j) Warrants. The Company shall have executed and delivered the
Warrants substantially in the form attached hereto in the Form
of Warrant.
(k) Reservation of Shares. The Company shall have reserved such
number of shares of Common Stock as is required pursuant to
Section 5.2.
(l) Legal Investment. At the time of the Closing, the purchase of
the Securities by the Subscriber shall be legally permitted by
all statutes, rules and regulations to which the Subscriber
and the Company are subject.
(m) Other Matters. The Company shall have delivered to the
Subscriber a certificate of good standing and tax status of
the Company certified as of a recent date by the Secretary of
State of the State of Connecticut, and from each other
jurisdiction in which the Company is qualified to do business.
2. Representations and Warranties of Subscriber
The Subscriber represents and warrants to the Company that:
2.1 No Government Recommendation or Approval. The Subscriber understands
that no United States federal or state agency or similar agency of any
other country, has passed upon or made any recommendation or
endorsement of the Company or of the Offering.
2.2 Intent. The Subscriber is purchasing the Securities for its own account
and not with a view towards distribution and the Subscriber has no
present arrangement to sell the Securities to or through any person or
entity; provided, however, that by making the representation herein,
the Subscriber does not agree to hold the Securities for any minimum or
other specific term and reserves the right to dispose of the Securities
at any time in accordance with federal and state securities laws
applicable to such disposition. The Subscriber understands that the
Securities must be held indefinitely unless such Securities are
subsequently registered under the Securities Act or an exemption from
registration is available. The Subscriber has been advised or is aware
of the provisions of Rule 144 promulgated under the Securities Act.
6
<PAGE> 7
2.3 Sophisticated Investor. The Subscriber is an "accredited investor" (as
defined in Rule 501 of Regulation D), and the Subscriber has such
experience in business and financial matters that it is capable of
evaluating the merits and risks of an investment in the Securities. The
Subscriber acknowledges that the Securities are speculative, illiquid
and involve a high degree of risk.
2.4 Independent Investigation. The Subscriber, in making the decision to
purchase the Debentures subscribed for hereunder, has relied upon an
independent investigation made by it and/or its representatives and has
not relied on any information or representations made by third parties
or on any oral or written representations or assurances from the
Company or any representative or agent of the Company other than as set
forth in this Agreement, the Registration Rights Agreement, the
Debenture and the Prior Public Disclosures. The Subscriber has had a
reasonable opportunity to ask questions of, and receive answers and
documents from, the Company concerning the Company and the Offering.
The Subscriber acknowledges that the price and terms of the Debentures
offered hereby have been determined by negotiation based in part on the
market price for the Common Stock, and that it does not necessarily
bear any relationship to the assets, book value or potential
performance of the Company or any other recognized criteria of value.
2.5 Authority. This Agreement has been duly authorized and validly executed
and delivered by the Subscriber and is a valid and binding agreement
enforceable in accordance with its terms, subject to general principles
of equity and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally.
2.6 No Legal Advice from Company. The Subscriber acknowledges that it has
had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with its own legal counsel and
investment and tax advisors. Except for any statements or
representations of the Company made in this Agreement, the Registration
Rights Agreement, the Debenture and the legal opinion called for by
Section 1.6 hereof, the Subscriber is relying solely on such counsel
and advisors and not on any statements or representations of the
Company or any of its representatives or agents for legal, tax or
investment advice with respect to this investment, the transactions
contemplated by this Agreement or the securities laws of any
jurisdiction.
2.7 No Brokers. The Subscriber has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or
similar payments by the Company relating to this Agreement or the
transactions contemplated hereby.
2.8 Not an Affiliate. The Subscriber is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of Securities Act) of
the Company.
2.9 Reliance on Representations and Warranties. The Subscriber understands
that the Debentures are being offered and sold to it in reliance on
specific provisions of United States federal and state securities laws
and that the Company is relying upon the truth and
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<PAGE> 8
accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Subscriber set forth in this
Agreement in order to determine the applicability of such provisions.
3. Representations and Warranties of Company
The Company represents and warrants to the Subscriber that:
3.1 Company Status. The Company has registered its Common Stock pursuant to
Section 12(g) of the Exchange Act, is in full compliance with all
reporting requirements of the Exchange Act, and the Company has
maintained all requirements for the continued listing of its Common
Stock, and such Common Stock is currently listed and traded on the
Nasdaq SmallCap.
3.2 Current Public Information. The Exchange Act Reports are the only
filings made by the Company with the SEC since March 31, 1999 pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. The Exchange
Act Reports have been filed with the SEC on a timely basis.
3.3 No Directed Selling Efforts or General Solicitation in Regard to this
Transaction. The Company has not conducted any general solicitation (as
that term is used in Regulation D) with respect to any of the
Securities, nor has it made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that
would require registration of the Securities under the Securities Act.
3.4 Valid Issuance of Debentures and Common Stock. (a) The Company has an
authorized capitalization consisting of 18,000,000 shares of Common
Stock, no par value, and 3,000,000 shares of preferred stock, no par
value. The Company has issued and outstanding on the date hereof (i)
13,448,998 shares of Common Stock, none of which shares are held in
treasury and (ii) no shares of preferred stock. As of the date hereof,
the Company has outstanding the following securities convertible into
or exercisable or exchangeable for Common Stock (the "Derivative
Securities"): warrants to purchase 932,628 shares of Common Stock and
options to purchase 842,000 shares of Common Stock. From the date
hereof to the Closing, there will be no changes in the authorized
capital stock or Derivative Securities, except as contemplated by this
Agreement. Other than as set forth in this Section and the 3,000,000
shares of Preferred Stock, no par value, previously authorized by the
board of directors of the Company (the "Board of Directors"), there are
no classes or series of preferred stock authorized, issued or reserved
for issuance. There currently are no shares of Preferred Stock, no par
value, of the Company issued and outstanding. The Company may not issue
any shares of its Preferred Stock, no par value, for so long as the
Debentures remain outstanding, unless such issuance is made in
compliance with the terms and provisions of Sections 5.6 and 5.13(b)
hereof.
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<PAGE> 9
(b) All of the issued shares of capital stock of the Company have been
duly and validly authorized and issued and are fully paid and
non-assessable; prior to the Closing Date, the authorized
capitalization shall include the Debentures and the Warrants and upon
issuance of the Debentures and the Warrants, and payment therefor as
provided in this Agreement, the Debentures and the Warrants shall be
duly and validly issued; the Underlying Debenture Shares issuable upon
conversion of the Debentures, when issued and delivered in accordance
with the terms of the Debentures, will be duly and validly issued,
fully paid and non-assessable, obligations of the Company enforceable
against the Company in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may
be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or at law) and
shares of Common Stock have been duly reserved for issuance upon the
exercise thereof pursuant to the conversion rights set forth in the
Debentures; the Underlying Warrant Shares issuable upon exercise of the
Warrants, when issued and delivered in accordance with the terms of the
Warrants, will be duly and validly issued, fully paid and
non-assessable, obligations of the Company enforceable against the
Company in accordance with their terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or at law) and
shares of Common Stock have been duly reserved for issuance upon the
exercise thereof pursuant to the exercise rights set forth in the
Warrants; and the holders of outstanding capital stock of the Company
are not and shall not be entitled to preemptive or other rights
afforded by the Company to subscribe for the capital stock or other
securities of the Company as a result of the sale of the Debentures,
the Warrants or the issuance of Underlying Stock upon the conversion
thereof.
3.5 Dilution. The number of shares of Common Stock issuable upon conversion
of the Debentures may increase substantially in certain circumstances,
including, but not necessarily limited to, the circumstance wherein the
trading price of the Common Stock declines prior to conversion of the
Debentures. The Company's executive officers and directors have studied
and fully understand the nature of the Securities being sold hereby and
recognize that they have a potentially dilutive effect. The Board of
Directors has concluded, in its good faith business judgment, that such
issuance is in the best interest of the Company. The Company
specifically acknowledges that its obligation to issue the shares of
Common Stock upon conversion of the Debentures is binding upon the
Company and enforceable regardless of the dilution such issuance may
have on the ownership interests of other shareholders of the Company.
3.6 Organization and Qualification. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State
of Connecticut and has the requisite corporate power to own its
properties and assets and to carry on its business as now being
conducted. The Company does not have any subsidiaries. The Company is
duly
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<PAGE> 10
qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary
other than those in which the failure so to qualify would not have a
Material Adverse Effect. "Material Adverse Effect" means (x) any
material adverse change affecting the legality, validity or
enforceability of the Debentures, Warrants, this Agreement or the
Registration Rights Agreement (any such document, a "Transaction
Document"), (y) any event which would adversely impair the Company's
ability to perform fully on a timely basis the obligations under any
Transaction Document or (z) any material adverse effect on the
business, operations, properties or financial condition of the Company.
3.7 Authorization; Enforcement. (a) The Company has the requisite corporate
power and authority to enter into and perform the transactions
contemplated by this Agreement and each of the Transaction Documents,
to issue the Debentures and the Warrants in accordance with the terms
hereof and to perform its obligations under the terms of the Debentures
and the Warrants; (b) the execution and delivery of this Agreement and
each of the Transaction Documents, the issuance and delivery of the
Debentures, the issuance and delivery of the Warrants and the
consummation by the Company of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action,
and no further consent or authorization of the Company or its Board of
Directors or shareholders is required (except the shareholder approval
which may be required under the non-quantitative maintenance
requirements for Nasdaq SmallCap issuers); (c) this Agreement has been,
and on or before the Closing Date each of the Transaction Documents
will be, duly executed and delivered by the Company; and (d) this
Agreement constitutes, and upon execution and delivery thereof each of
the Transaction Documents shall constitute, legal, valid and binding
obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws
relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general
application.
3.8 Corporate Documents. The Company has furnished or made available to the
Subscriber true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's By-Laws, as in effect on the date
hereof (the "By-Laws"; together with the Certificate of Incorporation,
the "Charter Documents"), certified in each case by the Secretary of
the Company. The Company is not in violation of any of the provisions
of its Charter Documents or other organizational documents.
3.9 No Conflicts. The execution, delivery and performance of this
Agreement, including the conversion of the Debentures or the Warrants
into Common Stock, the Registration Rights Agreement, the issuance of
the Debentures, the Warrants, the Underlying Debenture Shares upon
conversion of the Debentures, the Underlying Warrant Shares upon
exercise of the Warrants and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i)
result in a violation of the
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<PAGE> 11
Charter Documents or (ii) result in the creation of any lien, charge,
security interest or encumbrance upon any of the assets of the Company
pursuant to the terms or provisions of or, conflict with, or constitute
a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, or result in a violation of
any federal, state, local or foreign law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any property or
asset of the Company is bound or affected (except for such conflicts,
defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a
Material Adverse Effect). The business of the Company is not being
conducted in violation of any law, ordinance or regulations of any
governmental entity, except for violations or potential violations
which either individually or in the aggregate do not and will not have
a Material Adverse Effect. The Company is not required under federal,
state or local law, rule or regulation in the United States to obtain
any consent, authorization or order of, or make any filing or
registration with, any court or governmental or self-regulatory agency
in order for it to execute, deliver or perform any of its obligations
under this Agreement or the Registration Rights Agreement or issue and
sell the Debentures, the Warrants or the Underlying Stock in accordance
with the terms hereof and thereof (other than any SEC, NASD, Nasdaq
SmallCap or state securities filings which may be required to be made
by the Company subsequent to the Closing, and any registration
statement which may be filed pursuant to the Registration Rights
Agreement).
3.10 Exchange Act Reports. The Company has delivered or made available to
the Subscriber true and complete copies of the Exchange Act Reports
(including, without limitation, proxy information and solicitation
materials). As of their respective dates, the Exchange Act Reports
complied (and as of its effective date, the Registration Statement for
the Underlying Stock will comply) in all material respects with the
requirements of the Exchange Act (or in the case of such Registration
Statement, the Securities Act) and the rules and regulations of the SEC
promulgated thereunder and other applicable federal, state and local
laws, rules and regulations, and none of the Exchange Act Reports
contained (and, as of its effective date, such Registration Statement
will not contain) any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited financial
statements of the Company included in the Exchange Act Reports or
incorporated by reference in the Registration Statement comply in all
material respects as to form with applicable accounting requirements
and the published rules and regulations of the SEC or other applicable
rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved
(except (a) as may be otherwise indicated in such financial statements
or the notes thereto or (b) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be
condensed or
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summary statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in Schedule 3.10, the Company has
timely filed (including filing such documents by incorporation by
reference) all agreements or documents to which the Company is a party
that are required to be filed as exhibits to the Exchange Act Reports.
3.11 No Material Adverse Change. Since December 31, 1998, the date through
which the most recent Annual Report of the Company on Form 10-K has
been prepared and filed with the SEC, except as disclosed in the Prior
Public Disclosures or as disclosed by the Company to the Subscriber and
acknowledged in writing by the Subscriber, no Material Adverse Effect
has occurred or exists with respect to the Company.
3.12 No Brokers. Except as set forth on Schedule 3.12, the Company has not
taken any action which would give rise to a claim by any person for
brokerage commissions, finder's fees or similar payments by the
Subscriber relating to this Agreement or the transactions contemplated
hereby.
3.13 Effectiveness of SEC Filings. The SEC has not issued any stop order or
other order suspending the effectiveness of any registration statement
filed by the Company under the Exchange Act or the Securities Act.
3.14 No Material Litigation Proceedings. Except as disclosed in the Exchange
Act Reports, the Company is not a party to or the subject of any
litigation, arbitration or other proceeding which if adversely
determined would individually or in the aggregate have a Material
Adverse Effect. Except as set forth on Schedule 3.14 hereto, there is
no action, suit, proceeding or investigation pending, or, to the
knowledge of the Company, threatened, against the Company before or by
any court, regulatory body or administrative agency or any other
governmental agency or body, domestic or foreign, or any action, suit,
proceeding or investigation pending, or, to the knowledge of the
Company, threatened, which challenges the validity of any action taken
by the Company or to be taken pursuant to or in connection with this
Agreement, the Registration Rights Agreement or the issuance of the
Debentures.
3.15 Governmental Approvals. The Company has obtained approval of the United
States Food and Drug Administration (the "FDA"), or other regulatory
agency, for each of the products that it currently offers and for each
component included in such products, to the extent that such approval
is required.
3.16 Intellectual Property. Except as set forth in Schedule 3.16A, the
Company has full and exclusive right, title and interest in, free and
clear of all liens or other encumbrances to its patents. The Company
has filed the patent applications set forth on Schedule 3.16B. Except
as set forth on Schedule 3.16C, there is (i) no pending or, to the
knowledge of the Company, threatened claim or challenge of or
proceeding for infringement, misuse or
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misappropriation of or interference with any intellectual property
owned, licensed or controlled by any third party arising out of any
product or process now being used, manufactured or distributed, or ever
having been used, manufactured or distributed at any time previously,
by or on behalf of the Company and (ii) no pending or threatened or
potential claim, challenge or proceeding by the Company against any
third party for infringement, misuse or misappropriation of or
interference with any intellectual property owned, licensed or
controlled by the Company.
3.17 No Integration. Neither the Company nor any of its affiliates nor any
person acting on the Company's behalf has, directly or indirectly, at
any time within the past six (6) months made, nor will any such party
make within six (6) months of the Closing Date, any offer or sale of
any security or solicitation of any offer to buy any security under
circumstances that would eliminate the availability of the exemption
from registration under Regulation D under the Securities Act in
connection with the offer and sale of the Securities as contemplated
hereby.
3.18 Investment Company. The Company is not, and is not controlled by or
under common control with an affiliate of, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
3.19 Consents and Approvals. Except as specifically set forth in Schedule
3.19, the Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the
execution, delivery and performance by the Company of any of the
Transaction Documents, other than (i) the filing of the Registration
Statement with the SEC, which shall be filed in accordance with and in
the time periods set forth in the Registration Rights Agreement, and
(ii) any filings, notices or registrations under applicable federal and
state securities laws (together with the consents, waivers,
authorizations, orders, notices and filings referred to in Schedule
3.19, the "Required Approvals"). A "Person" means an individual or
corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other
entity of any kind.
3.20 Solicitation Materials. The Company has not distributed any offering
materials in connection with the offering and sale of the Securities.
The Company confirms that it has not provided the Subscribers or their
agents or counsel with any information that constitutes or might
constitute material non-public information. The Company understands and
confirms that the Subscribers shall be relying on the foregoing
representations in effecting transactions in securities of the Company.
3.21 Exclusivity. The Company shall not issue and sell the Debentures or the
Warrants to any Person other than the Subscribers pursuant to this
Agreement other than with the prior written consent of each of the
Subscribers.
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3.22 Permits. The Company possesses all franchises, certificates, licenses,
authorizations and permits or similar authority necessary to conduct
its business as described in the Prior Public Disclosures except where
the failure to possess such permits would not, individually or in the
aggregate, have a Material Adverse Effect ("Material Permits"), and
neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.
3.23 Insurance. The Company maintains property and casualty, general
liability, workers' compensation, environmental hazard, personal injury
and other similar types of insurance with financially sound and
reputable insurers that is adequate, consistent with industry
standards. The Company has not received notice from, or has any
knowledge of any threat by, any insurer (that has issued any insurance
policy to the Company) that such insurer intends to deny coverage under
or cancel, discontinue or not renew any insurance policy presently in
force.
3.24 Taxes. All applicable tax returns required to be filed by the Company
have been filed, or if not yet filed have been granted extensions of
the filing dates which extensions have not expired, and all taxes,
assessments, fees and other governmental charges upon the Company or
upon any of its respective properties, income or franchises, shown in
such returns and on assessments received by the Company to be due and
payable have been paid, or adequate reserves therefor have been set up
if any of such taxes are being contested in good faith; or if any of
such tax returns have not been filed or if any such taxes have not been
paid or so reserved for, the failure to so file or to pay would not in
the aggregate or individually have a Material Adverse Effect.
3.25 No Integrated Offering. Neither the Company, nor any of its Affiliates,
nor any Person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any
offers to buy any securities under circumstances that would cause the
offering of the Securities pursuant to this Agreement to be integrated
with prior offerings by the Company for purposes of the Securities Act
or any applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of the NASD, as applicable.
3.26 Year 2000 Compliance. The Company has initiated a review and assessment
of all areas within its business and operations that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Company may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999). Based on the foregoing, except as
set forth on Schedule 3.26, the Company believes that the computer
applications that are currently material to its business and operations
are reasonably expected to be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000, except to the
extent that a failure to do so would not reasonably be expected to have
a Material Adverse Effect.
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3.27 Schedules. The Schedules to this Agreement furnished by or on behalf of
the Company do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements made therein not misleading.
3.28 Form S-3 Eligible. The Company meets the requirements for use of Form
S-3 under the Securities Act.
4. Covenants of the Subscriber
4.1 Resales. The Subscriber shall not make any offers or sales of the
Securities other than pursuant to a registration statement under the
Securities Act or pursuant to an exemption from registration under the
Securities Act. The Subscriber will comply with applicable prospectus
delivery requirements.
5. Covenants of the Company. For so long as any of the Debentures remain
outstanding, the Company covenants to the Subscriber as follows:
5.1 Registration Rights. The Company will file within 30 days of the date
hereof, and use its best efforts to cause to become effective, as
promptly as possible, but in no event later than 90 days after the date
hereof, a registration statement ("Registration Statement") on Form S-3
under the Securities Act covering the resale of the Underlying Stock
issuable on conversion of the Debentures and shall take all action
necessary to qualify the Underlying Stock under all applicable state
"blue sky" laws, in accordance with terms of the Registration Rights
Agreement (the "Registration Rights Agreement") in the form of Exhibit
D hereto, which the Company and the Subscriber shall enter into at the
Closing of this Agreement.
5.2 Reservation of Common Stock. As of the Closing, the Company will
reserve and the Company shall continue to reserve and keep available at
all times after the Closing, free of preemptive rights, shares of
Common Stock for the purpose of enabling the Company to satisfy two
times the number of shares necessary to satisfy any obligation to issue
shares of its Common Stock upon (i) conversion of the Debentures, as if
all the Debentures were converted as of the Closing and at all times
thereafter, and (ii) exercise of the Warrants, as if the Warrants were
exercised as of the Closing and at all times thereafter. The number of
shares so reserved may be reduced by the number of shares actually
delivered pursuant to conversion of a portion of the Debentures
(provided that in no event shall the number of shares so reserved be
less than one and a half times the number required to satisfy the
remaining conversion rights on the unconverted Debentures and the
unexercised Warrants) and the number of shares so reserved shall be
increased to reflect stock splits and stock dividends and
distributions.
5.3 Listing of Underlying Shares. The Company hereby agrees, promptly
following the Closing of the transaction contemplated by this
Agreement, to take such action to cause the Underlying Stock to be
listed on Nasdaq SmallCap as promptly as possible but no later than the
effective date of the Registration Statement referred to in Section
5.1. The
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Company further agrees, if the Company applies to have the Common Stock
traded on any other principal stock exchange or market, that it will
include in such application the Underlying Stock and will take such
other action as is necessary to cause the Underlying Stock to be listed
on such other exchange or market as promptly as possible. Until at
least two (2) years after the last to occur of: the last of the
Debentures has been converted into Underlying Debenture Shares or the
last of the Warrants has been exercised for the Underlying Warrant
Shares, (i) the Company will cause its Common Stock to continue to be
registered under Sections 12(b) or 12(g) of the Exchange Act, will
comply in all respects with its reporting and filing obligations under
such Exchange Act, will comply with all requirements related to any
registration statement filed pursuant to this Agreement or the
Registration Rights Agreement and will not take any action or file any
document (whether or not permitted by the Securities Act or the
Exchange Act or the rules and regulations thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting and
filing obligations under the Securities Act and Exchange Act, except as
permitted herein and (ii) the Company will take all action within its
power to continue the listing and trading of its Common Stock on the
Nasdaq SmallCap and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of
the NASD.
5.4 Restrictions on Transferability; Legends on Certificates; Transfer
Agent Instructions.
(a) The Subscriber acknowledges and agrees that the Debentures, the
Warrants and, when issued, the shares of Underlying Stock, will be
issued pursuant to a private placement exemption from the registration
requirements imposed by the Securities Act and applicable state
securities laws and, as such, constitute "restricted securities" under
such laws and may not be resold without registration under the
Securities Act and state securities laws or pursuant to an exemption
from such registration requirements. The Subscriber represents that it
is familiar with the Securities Act and the rules and regulations
promulgated thereunder as presently in effect, including, without
limitation, Rule 144 promulgated under the Securities Act, and the
requirements of applicable state securities laws and understands the
limitations on resale of the Securities imposed thereby. Without in any
way limiting the representations set forth above, the Subscriber
further acknowledges and agrees not to sell or transfer any portion of
the Debentures, the Warrants or the Underlying Stock unless (i) there
is then an effective registration statement under the Securities Act
and applicable state securities laws covering such proposed transfer
and such transfer is made pursuant to such registration statement and
otherwise in accordance with applicable securities laws, or (ii) the
shares are transferred or sold in an exempt transaction under the
Securities Act and applicable state securities laws and the Subscriber
provides the Company and, if required, its counsel or transfer agent,
with an opinion of counsel to such effect, which legal opinion shall in
form and substance be reasonably acceptable to the Company.
(b) The Subscriber acknowledges and agrees that, in light of the fact
that the Debentures, the Warrants and the Underlying Stock constitute
"restricted securities" the certificates representing such shares will
bear a restrictive legend indicating the resale
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limitations imposed upon such Securities and that the stock transfer
books of the Company (including any such books maintained on the
Company's behalf by the transfer agent for its Common Stock) will bear
a notation to such effect.
(c) The Company covenants and agrees that, promptly following execution
and delivery of this Agreement, it shall issue irrevocable instructions
(the "Irrevocable Transfer Agent Instructions") to its transfer agent
for its Common Stock, and any subsequent transfer agent, such
instructions to be in form and substance acceptable to the Subscriber,
to facilitate trades of the Underlying Stock and to permit the
Subscriber to timely deliver within the required settlement period
certificates representing such shares in connection with any transfer
or disposition of the Underlying Stock. The Company further covenants
and agrees that no instruction, other than the Irrevocable Transfer
Agent Instructions, will be given by the Company to its transfer agent
and that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this
Agreement and the Registration Rights Agreement. The Subscriber and the
Company acknowledge and agree that their respective obligations
pursuant to this Section 5.4 are subject to compliance by each of them
with applicable securities laws. The Company covenants that it will use
its best efforts to cause the Company's transfer agent to deliver
certificates representing shares issued in connection with a transfer
of Underlying Stock as promptly as practicable but in no event later
than three (3) business days after delivery by the Subscriber of all
required documentation in respect of such transfer to both the Transfer
Agent and the Company as required pursuant to Paragraph 8(b) of the
Debenture. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Subscribers by
vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 5.4 will be
inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Section 5.4, that the Subscribers
shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without
any bond or other security being required.
5.5 Corporate Existence. The Company will take all steps necessary to
preserve and continue the corporate existence of the Company.
5.6 Right of First Refusal. In the event that at any time or from time to
time during the 180 day period immediately following the Closing Date,
the Company proposes to issue or sell any equity securities or debt
securities which are convertible into or exchangeable for its Common
Stock (other than (i) securities issued or sold pursuant to an
underwritten public offering by the Company, (ii) securities issued or
sold or in connection with a merger or consolidation or sale of all or
substantially all of the Company's assets, (iii) securities issued
under or pursuant to the Company's existing 1991 Long Term Incentive
Plan or 1995 Non-Employee Director's Stock Option Plan, (iv) securities
issued upon exercise of outstanding warrants or options and (v)
securities issued to any unaffiliated third party that is a strategic
partner and which involves the issuance of
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<PAGE> 18
securities and one or more of the following: a transfer of technology,
the sale by the Company of products or services, or the purchase by the
Company of the products or services of such third party, whether singly
or together with other securities), then the Company shall give written
notice (the "Proposal Notice") to the Subscriber of such proposed
issuance, specifying the terms and conditions thereof in reasonable
detail, and the Subscriber shall have the right, exercisable by written
notice delivered within 30 days of the date of receipt by the
Subscriber of the Proposal Notice, to subscribe for and purchase all or
some of the Common Stock or other securities proposed to be issued, on
the same terms and conditions specified in the Proposal Notice.
5.7 Use of Proceeds. The Company shall use all the proceeds received from
the sale of the Securities pursuant to this Agreement for general
corporate purposes, including working capital.
5.8 Notice of Adverse Change. The Company will notify the Subscriber
promptly (but in any event within seven days) after becoming aware of
the existence of any condition or event which has had a Material
Adverse Effect on the Company.
5.9 Dividends and Distributions. The Company shall not make or fix a record
date for the determination of holders of Common Stock or other equity
securities or declare a cash dividend or other distribution payable in
cash or property of the Company, until the Company has delivered to the
Subscriber all of the shares of Common Stock issuable upon conversion
of the Debentures or paid all sums of cash due to such Subscriber upon
redemption of the Debentures, as applicable, such that after such
delivery or payment upon any such conversion or redemption no more than
10% of the Debentures issued on the Closing Date remain outstanding;
provided, however, that nothing in this Section 5.9 shall prevent or
restrict the right of the Company to declare and pay dividends on such
securities payable in the form of shares of Common Stock.
5.10 Filing of Current Report on Form 8-K. On or before the second business
day following the Closing Date, the Company shall file a Current Report
on Form 8-K with the SEC in a form reasonably acceptable to the
Subscriber describing the terms of the transaction consummated at the
Closing.
5.11 Form D. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof
to the Subscriber promptly after such filing.
5.12 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated
with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of any or all of
such securities to any Subscriber.
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<PAGE> 19
5.13 Certain Agreements. (a) As long as any Subscriber owns Debentures, the
Company shall not, without the consent of the holders of all of the
Debentures then outstanding, (i) amend its Charter Documents or other
organizational documents so as to adversely affect any rights of any
Subscriber; (ii) declare, authorize, set aside or pay any dividend or
other distribution with respect to the Common Stock as would adversely
affect the rights of any Subscriber hereunder or under the Debentures;
(iii) repay, repurchase or offer to repay, repurchase or otherwise
acquire shares of its Common Stock in any manner; or (iv) enter into
any agreement with respect to any of the foregoing.
(b) As long as any of the Debentures issued pursuant to this Agreement
are still outstanding, the Company may, without the consent of the
Holders, only engage in the following transactions: (i) issue any form
of non-convertible debt; (ii) issue or sell any of its equity or debt
securities which are convertible into or exchangeable for its Common
Stock, so long as such securities are (A) restricted from being sold by
the purchaser of such securities for a period of at least two (2)
years, and (B) not issued on terms which are equal or less favorable to
the Company than the terms set forth in the Transaction Documents; or
(iii) issue or sell unregistered shares of Common Stock (the
"Unregistered Shares") to existing shareholders, vendors, distributors
or strategic partners of the Company, so long as such Unregistered
Shares are (X) restricted from being sold for a period of at least one
(1) year, and (Y) not sold for a discount greater than 10% of the
Closing Price (as defined in the Debenture) of the Common Stock on the
day of such sale or issuance; provided, however, that any transaction
pursuant to this Section 5.13(b), must be in compliance with the
provisions of Section 5.6 hereof.
5.14 Certain Acquisitions. Until the delivery by the Company to the
Subscriber of the Underlying Debenture Shares, or all sums of cash upon
redemption of the Debentures, as applicable, such that after such
delivery upon any such conversion or redemption no more than 10% of the
Aggregate Principal Amount (as defined in the Form of Debenture) of the
Debentures issued on the Closing Date remain outstanding, the Company
will not effect any acquisition of any business, whether through
acquisition of assets or securities, unless, as evidenced in a detailed
writing provided to the Subscribers prior to any such acquisition,
either (i) the earnings before interest, taxes, depreciation and
amortization ("EBITDA") of such acquired business for such acquired
business' most recent four fiscal quarters completed prior to the date
on which the agreement for such acquisition is entered into is at least
$1 or (ii) the Company's projected net cash provided by or used for
operating activities of the Company and its subsidiaries on a
consolidated basis (including such acquired business) for the first six
full calendar months following such acquisition (based on the
historical burn rate of the Company and its subsidiaries on a
consolidated basis (including such acquired business) for the six full
calendar months prior to such acquisition) evidences either that at
least $1 will be provided by operating activities or that the net
amount of cash used in operating activities will not exceed the
Company's and such acquired business' estimated cash position at the
beginning of such six month period.
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<PAGE> 20
5.15 Notice of Breaches.
(a) Each of the Company and each Subscriber shall give prompt written
notice to the other of any breach of any representation, warranty or
other agreement contained in this Agreement, the Debentures, the
Warrants or the Registration Rights Agreement as well as any events or
occurrences arising after the date hereof and prior to the Closing
Date, which would reasonably be likely to cause any representation or
warranty or other agreement of such party, as the case may be,
contained herein to be incorrect or breached as of the Closing Date.
However, no disclosure by any party pursuant to this Section 5.15 shall
be deemed to cure any breach of any representation, warranty or other
agreement contained herein or in the Registration Rights Agreement.
(b) Notwithstanding the generality of Section 5.15(a), the Company
shall promptly notify each Subscriber of any notice or claim (written
or oral) that it receives from any lender of the Company to the effect
that the consummation of the transactions contemplated by this
Agreement, the Debentures, the Warrants or the Registration Rights
Agreement violates or would violate any written agreement or
understanding between such lender and the Company, and the Company
shall promptly furnish by facsimile to each Subscriber a copy of any
written statement in support of or relating to such claim or notice.
(c) The default by any Subscriber of any of its obligations,
representations or warranties under this Agreement or any of the
Transaction Documents shall not be imputed to, and shall have no effect
upon, any other Subscriber or affect the Company's obligations under
this Agreement or any of the Transaction Documents to any
non-defaulting Subscriber with respect to any outstanding Debentures,
Warrants, Underlying Debenture Shares or Underlying Warrant Shares.
5.16 Authorized Shares of the Company. The Company agrees, as soon as
practicable after the Closing, but no later than at the Company's next
shareholder meeting, to use its best efforts to increase its authorized
capitalization, consisting of 18,000,000 shares of Common Stock on the
Closing Date, to 25,000,000 shares of Common Stock.
6. Legends; Subsequent Transfer of Securities; Denominations
6.1 Legend. The Company will issue one or more Debentures certificates
evidencing the Debentures in the name of the Subscriber and in such
number of shares to be specified by the Subscriber prior to (or from
time to time subsequent to) Closing. The Debentures, and any shares of
Common Stock issued upon conversion thereof, will bear the following
legend (the "Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY
20
<PAGE> 21
STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO
THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
Following the effectiveness of the Registration Statement, the Company
will issue certificates representing the Securities without the Legend
to any transferee other than holders who are "affiliates" of the
Company (as such term is defined under the Securities Act), promptly
upon request, if (i) the holder thereof is permitted to dispose of such
Securities pursuant to Rule 144(k) under the Securities Act, (ii) the
Securities are sold to a purchaser or purchasers in a transaction
exempt from registration under the Securities Act, as evidenced by an
opinion of counsel to the transferor delivered and reasonably
satisfactory in form and substance to the Company or (iii) the
Securities are sold to a purchaser or purchasers pursuant to an
effective registration statement and the prospectus delivery
requirements under the Securities Act are met.
6.2 Subscriber's Compliance. Nothing in this Section 6 shall affect in any
way the Subscriber's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities.
6A. Payment Set Aside
To the extent that the Company makes a payment or payments to the
Subscriber hereunder or pursuant to the Registration Rights Agreement
or the Form of Debenture or the Subscriber enforces or exercises its
rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded,
repaid or otherwise restored to the Company, a trustee, receiver or any
other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made
or such enforcement or set-off had not occurred.
7. Governing Law; Jurisdiction
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW OR CHOICE OF LAW, EXCEPT FOR MATTERS ARISING UNDER THE
SECURITIES ACT OR THE EXCHANGE ACT WHICH MATTERS SHALL BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH SUCH LAWS.
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<PAGE> 22
8. Assignment; Entire Agreement; Amendment
8.1 Assignment. Neither this Agreement nor any rights hereunder may be
assigned by either party without the prior written consent of the other
party hereto; provided, however, the Subscriber may assign its rights
under this Agreement to an affiliate of the Subscriber who agrees to be
bound by the terms hereof. To the extent that the Subscriber assigns
this Agreement with the prior written consent of the Company or to an
affiliate of the Subscriber, the provisions of this Agreement, the Form
of Debenture and the Registration Rights Agreement shall inure to the
benefit of, and be enforceable by, any transferee of any of the
Securities purchased by the Subscriber hereunder with respect to the
Securities held by such person.
8.2 Entire Agreement; Amendment. This Agreement, the Debenture, the
Warrant, the Registration Rights Agreement and the other documents
delivered pursuant hereto and thereto constitute the full and entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to
any other party in any manner by any warranties, representations or
covenants except as specifically set forth in this Agreement or
therein. Except as expressly provided in this Agreement, neither this
Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or
termination is sought.
9. Publicity
The Company and the Subscriber agree that neither of them will disclose
or include in any public announcement, any information in respect of
the transactions contemplated herein, including, without limitation,
the name of the Subscriber, without the prior written consent of the
other party hereto, except that nothing herein shall prevent or impede
the right of either party to make such disclosure as is required by law
or applicable regulation, to the extent that it determines in good
faith, that it is legally obligated to do so; provided, however, the
Company shall file with the SEC a Current Report on Form 8-K pursuant
to Section 5.10 herein. Except as may be required by law, the Company
and the Subscriber shall consult with each other before issuing any
press release or otherwise making any public statements with respect to
this Agreement and shall not issue any such press release or make any
such public statement prior to such consultation.
10. Notices, Etc.; Expenses; Indemnity
10.1 Notices. Any notice, demand or request required or permitted to be
given by either the Company or the Subscriber pursuant to the terms of
this Agreement shall be in writing and shall be deemed given when
delivered personally, by overnight courier service or by facsimile,
with a hard copy to follow by overnight or two day courier, addressed
to the other party at the address of the party set forth at the end of
this Agreement or such other address as a party may request by
notifying the other in writing. Copies of all notices to the Subscriber
shall be sent to its designee or representative and copies of all
notices to
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<PAGE> 23
the Company shall be sent to its President, or to such other corporate
officer as it may hereafter designate.
10.2 Costs and Expenses. The Company shall be responsible for the
Subscriber's legal fees and expenses, due and payable at Closing,
incurred in connection with entering into this Agreement and the
transactions contemplated hereby, but not to exceed $35,000 in the
aggregate.
10.3 Indemnification. Each party shall indemnify the other against any loss,
cost or damages (including reasonable attorney's fees and expenses)
incurred as a result of such parties' breach of any representation,
warranty, covenant or agreement in this Agreement.
10.4 Consent to Jurisdiction. The Company (including, but not limited to,
its affiliates, subsidiaries, officers, directors and controlling
persons) and each Subscriber hereby (i) irrevocably submits to the
exclusive jurisdiction of any New York State court or Federal court
sitting in the Borough of Manhattan, The City of New York in any action
related to, connected with or arising out of, in whole or in part, this
Agreement, the Debentures, the Warrants or the Registration Rights
Agreement, including, but not limited to, transactions in the
securities of the Company subsequent to the purchase by such Subscriber
or Persons claimed to be affiliated with such Subscriber, (ii) agrees
that all claims in such action shall be decided in such court, (iii)
waives, to the fullest extent it may effectively do so, the defense of
inconvenient forum and (iv) consents to the service of process by
certified mail, return receipt requested. Nothing herein shall affect
the right of any party to serve legal process in any manner permitted
by law or affect its right to bring any action in any other court. The
provisions of this Section 10.4 shall survive any termination or
completion of this Agreement, the Debentures, the Warrants or the
Registration Rights Agreement.
11. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one
instrument.
12. Survival; Severability
The representations, warranties, covenants and agreements of the
parties hereto shall survive the Closing for a period of one year
notwithstanding any due diligence investigation conducted by or on
behalf of the Subscriber; provided, however that representations,
warranties, covenants and agreements which, by their terms survive for
a period longer than one year shall survive for such longer period, as
elsewhere set forth in this Agreement. In the event that any provision
of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall
continue in full force and effect without said provision; provided that
no such severability shall be effective if it materially changes the
economic benefit of this Agreement to any party.
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<PAGE> 24
13. Titles and Subtitles
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
14. Amount
The undersigned hereby subscribes for an initial subscription amount of
$2,500,000 aggregate principal amount of Debentures and up to an
additional $2,000,000 aggregate principal amount of Debentures.
[SIGNATURE PAGES FOLLOW]
24
<PAGE> 25
Subscriber's Representative Name of the Subscriber:
___________________________________
______________________________
Name:
By:
______________________________ By: ___________________________________
Address
______________________________
Telephone
Date of Subscription: __________________
______________________________
Fax Place of Execution: New York
Place of Organization or Citizenship:
Place of Residency and/or Principal Place of
Business
________________________________
________________________________
Attn: ___________________________
(Telephone): ____________________
(Fax): __________________________
Registration instructions:
(Name) (Please Print) ___________
25
<PAGE> 26
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 21st DAY OF APRIL,
1999.
BIO-PLEXUS, INC.
By: ________________________________
Name:
Title:
Address: 129 Reservoir Road
Vernon, Connecticut 06066
26
<PAGE> 1
EXHIBIT 10.23
(FORM OF FACE OF DEBENTURE)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED WITHIN THE "UNITED STATES" OR TO "U.S. PERSONS"
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THIS SECURITY,
BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF
THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE
TRANSFER THIS SECURITY, PRIOR TO THE DATE WHICH IS ONE YEAR AFTER THE DATE OF
ORIGINAL ISSUANCE HEREOF EXCEPT (A) TO BIO-PLEXUS, INC., (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AS CONFIRMED
IN AN OPINION OF COUNSEL ACCEPTABLE IN FORM AND SUBSTANCE TO THE ISSUER OF THIS
SECURITY AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (III)
IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT
OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER,
SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (II)(D) IS SUBJECT TO
THE RIGHT OF THE ISSUER OF THIS SECURITY TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM AND
SUBSTANCE.
<PAGE> 2
BIO-PLEXUS, INC.
(Incorporated in the State of Connecticut)
6% CONVERTIBLE DEBENTURES DUE 2004
No. R-_______________ U.S. $____________
Bio-Plexus, Inc., a corporation duly incorporated and existing under
the laws of the State of Connecticut (the "Company"), for value received, hereby
promises to pay to
, or
registered assigns, the principal sum of United States Dollars on April 21, 2004
(the "Maturity Date"), subject to earlier redemption by the Company. The
Debentures will be convertible on or after the date of issuance. The Debentures
will accrue interest at a rate of 6% per annum, due and payable quarterly in
arrears, on the last day of March, June, September and December of each year,
commencing June 30, 1999, as described further under the Terms and Conditions of
the Debentures. Interest hereon shall be calculated on the basis of a 365 day
year.
Reference is hereby made to the further provisions of this Debenture
set forth under the Terms and Conditions of the Debentures on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed in its corporate name by the manual or facsimile signature of a duly
authorized signatory, as attested to by another duly authorized signatory of the
Company.
Dated: April 21, 1999
BIO-PLEXUS, INC.
By:________________________________
Name:
Title:
ATTEST:
By:________________________________
Name:
Title:
2
<PAGE> 3
[Form of Reverse]
Terms and Conditions of the Debentures
1. General.
(a) This Debenture is one of a duly authorized issue of Debentures
of the Company designated as its 6% Convertible Debenture due 2004 (herein
called the "DEBENTURES").
(b) The Debentures are issuable, without coupons, in denominations
of U.S. $1,000 and integral multiples thereof. The Securities, and transfers
thereof, shall be in registered form as provided in Paragraph 2 hereof. The
registered holder of a Debenture shall (to the fullest extent permitted by
applicable law) be treated at all times, by all persons and for all purposes as
the absolute owner of such Security, regardless of any notice of ownership,
theft or loss or of any writing thereon.
2. Interest. (a) Each Debenture shall be entitled to receive,
cumulative annual interest at the rate of 6.0% per annum on the principal amount
thereof. Such interest shall be due and payable quarterly in arrears on the last
day of March, June, September and December of each year (each, an "INTEREST
PAYMENT DATE"), commencing on June 30, 1999. Interest shall accumulate daily
from the Issuance Date (as defined herein), whether or not earned or declared,
until such Debenture has been converted or redeemed as herein provided. To the
extent interest is not paid on the applicable Interest Payment Date, such
interest shall be cumulative and shall compound quarterly until the date of
payment of such interest. The interest so payable will be paid to the person in
whose name the Debentures (or one or more predecessor shares) are registered on
the records of the Company regarding registration and transfers of the
Debentures (the "DEBENTURE"); provided, however, that the Company's obligation
to a transferee of a Debenture arises only if such transfer, sale or other
disposition is made in accordance with the terms and conditions hereof and the
Subscription Agreement, dated as of the Issuance Date, by and between the
Company and the Subscribers set forth on the signature pages thereof (the
"SUBSCRIPTION AGREEMENT").
(b) The interest is payable in such coin or currency of the United
States of America as at the time of payment is legal tender, to the persons in
whose names the applicable Debenture is duly registered on the Debenture
Register (each, a "HOLDER," collectively, the "HOLDERS") on the tenth day prior
to the applicable Interest Payment Date and at the address last appearing on the
Debenture Register as designated in writing by such Holder thereof from time to
time; provided, however, that, in lieu of paying such interest in coin or
currency, the Company may, at its option, in full or in part, pay interest on
the Debentures on any Interest Payment Date by increasing the Debentures by the
amount of such interest such that the sum of (i) the amount of such increase in
the principal amount and (ii) the amount of cash interest paid in part, if any,
is equal to the amount of the cash interest which would otherwise be paid on
such Interest Payment Date if such interest were paid entirely in cash. Any such
increase in the principal amount (plus
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<PAGE> 4
the amount of cash interest, if any, paid together therewith) shall constitute
full payment of such interest. When any interest is added to the principal
amount, such interest shall, for all purposes of the Debenture, be deemed to be
part of the principal amount for purposes of determining interest thereafter
payable hereunder and amounts thereafter convertible into Common Stock
hereunder, and all references herein to the principal amount shall mean the
principal amount, as adjusted pursuant to these provisions.
(c) If the Company shall elect to pay any part of an interest
payment by increasing the principal amount as described in Paragraph 2(b), the
Company will provide notice setting forth the new principal amount to each
Holder (an "INTEREST NOTICE") on or prior to the applicable Interest Payment
Date.
(d) If the interest due hereunder is not paid or the Interest Notice
is not delivered to each Holder within ten (10) calendar days after the
applicable Interest Payment Date, the Company shall no longer have the right to
choose the method by which interest is to be paid, and each Holder may elect
either a cash interest payment or interest payable by increasing the principal
amount.
(e) Except as specifically provided herein, an election by the
Company to pay interest, in full or in part, in cash on any Interest Payment
Date shall not preclude the Company from electing any other available
alternative in respect of all or any portion of any subsequent interest payment.
(f) So long as any Debentures are outstanding, no dividends,
including, without limitation, dividends or distributions paid in shares of, or
options, warrants or rights to subscribe for, or purchase shares of, equity
securities of the Company (whether with respect to dividends or upon
liquidation, dissolution, winding up or otherwise), including Common Stock or
any debt securities on a parity with the Debentures (whether with respect to
dividends or upon liquidation, dissolution or winding up) (collectively, the
"PARITY SECURITIES"), shall be declared or paid or set apart for payment or
other distribution upon the equity securities or the Parity Securities, nor
shall any equity securities or Parity Securities be redeemed, purchased or
otherwise acquired for any consideration (or any monies to be paid to, or made
available for, a sinking fund for the redemption of any shares of any such
stock) by the Company, directly or indirectly (except by conversion to, or
exchange for, equity securities or Parity Securities, respectively), unless, in
each case, (i) the full cumulative interest on all outstanding Debentures have
been paid or (ii) otherwise consented to by the Holders of not less than
two-thirds (2/3) of the then outstanding aggregate principal amount of
Debentures; provided, however, the restrictions set forth in this Paragraph 1(f)
shall not apply to dividends payable in shares of Common Stock.
3. Rank.
(a) Without the prior express written consent of the Holders
of not less than two-thirds (2/3) of the then outstanding aggregate principal
amount of Debentures; the Company shall not hereafter (i) issue any Debentures,
(ii) authorize or issue any debt securities
4
<PAGE> 5
of senior rank to the Debentures in respect of dividend rights or priority of
payment, (iii) authorize or issue any Parity Securities with terms and
conditions more favorable than the terms herein, or (iv) authorize or make any
amendment to the Company's Certificate of Incorporation or By-laws, which would
materially and adversely affect the rights or relative priority of the Holders
of the Debentures relative to the holders of Parity Securities or the holders of
any other class of capital stock.
(b) In the event of the merger, consolidation or other
business combination of the Company with or into another corporation, the
Debentures shall maintain their relative powers provided for herein and no
merger, consolidation or other business combination shall result inconsistent
therewith.
4. Transfers. The Debentures have been issued subject to investment
representations of the original purchaser of such Debentures and may be
transferred or exchanged only in compliance with the Securities Act of 1933, as
amended (the "ACT"), and applicable state securities laws. Prior to due
presentment for transfer of each Debenture, the Company may treat the Holder as
the owner thereof for the purpose of receiving payments as herein provided and
all other purposes, and the Company shall not be affected by notice to the
contrary.
5. Definitions. For purposes hereof the following definitions shall
apply:
"AGGREGATE PRINCIPAL AMOUNT" shall mean with respect to the
Debentures, the sum of (a) the principal amount thereof, plus (b) accumulated
but unpaid interest thereon (whether or not earned or declared).
"CLOSING PRICE" shall mean the price of one share of Common Stock
determined as follows:
(a) If the Common Stock is listed on the Nasdaq National
Market or The Nasdaq SmallCap Market (collectively, "NASDAQ"), the closing bid
price, as reported by Bloomberg, L.P. on the date of valuation (or, if there is
no closing bid price for such date, the most recent previous closing bid price);
(b) If the Common Stock is listed on a national securities
exchange, the last reported closing bid price on such exchange on the date of
valuation (or, if there is no last reported closing bid price on that date, the
most recent previous closing bid price);
(c) If neither (a) nor (b) apply, but the Common Stock is
quoted in the over-the-counter market on the pink sheets or bulletin board, the
closing bid price on the date of valuation; and
(d) If none of clause (a), (b) or (c) above applies, the
market value as determined by a nationally recognized investment banking firm or
other nationally recognized
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<PAGE> 6
financial advisor retained in good faith by the Board of Directors of the
Company for such purpose, taking into consideration among other factors, the
earnings history, book value and prospects for the Company, and the prices at
which shares or Common Stock recently have been traded. Such determination shall
be conclusive and binding on all persons.
"COMMON STOCK" shall mean the common stock, no par value, of the
Company.
"CONVERSION PRICE" shall mean an amount that is equal to the lesser
of (a) the Fixed Conversion Price or (b) the Floating Conversion Price, unless
otherwise specified herein.
"CONVERSION RATE" shall mean the number of shares of Common Stock
issuable upon conversion of each $1,000 Aggregate Principal Amount of the
Debentures as to such aggregate principal amount of Debentures as of the Holder
Conversion Date (as defined in Paragraph 8):
Aggregate Principal Amount
--------------------------
Conversion Price
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FIXED CONVERSION PRICE" shall initially mean the amount of $3.06.
On each anniversary of the Issuance Date (the "ANNIVERSARY DATE") the Fixed
Conversion Price will be adjusted to equal the lesser of either: (i) the Fixed
Conversion Price, as measured on the previous Anniversary Date (or, for the
first Anniversary Date, the amount of $3.06) or (ii) the amount of 120% of the
average of the Closing Price during the 20 days prior to the current Anniversary
Date; provided, however, that if the Company offers, sells, contracts to sell or
otherwise issues or agrees to issue any convertible debt or convertible equity
securities of the Company, in a private placement transaction (other than
pursuant to any existing stock or option or similar existing equity-based
compensation plan for employees, officers, directors or consultants), with a
maximum conversion price per share of Common Stock of an amount less than the
Fixed Conversion Price, then the "Fixed Conversion Price" shall mean such lower
conversion price for the Debentures not yet converted. The Fixed Conversion
Price shall also be subject to adjustment from time to time ratably for any
events set forth in Paragraph 10 hereof.
"FLOATING CONVERSION PRICE" shall mean the average of the five (5)
lowest Closing Prices during the Valuation Period.
"HIGH TRADE PRICE" shall mean the highest trade price, as reported
by Bloomberg, L.P. on the date of valuation.
"ISSUANCE DATE" shall mean the initial date of issuance of the
Debentures.
"PERSON" means and includes an individual, a partnership, a joint
venture, a corporation, a company, a trust, an unincorporated organization and a
government or any department or agency thereof.
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"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, dated as of the Issuance Date, by and between the Company and the
purchasers named therein.
"REGISTRATION STATEMENT" shall mean the registration statement(s)
filed by the Company with the SEC to register the shares of Common Stock
issuable upon conversion of the Debentures and the Warrants.
"SEC" shall mean the Securities and Exchange Commission and any
successor entity thereto.
"TRIGGERING EVENT" means the occurrence of any of the following
events:
(a) the Common Stock is either delisted or suspended from
trading on NASDAQ, The New York Stock Exchange, Inc. or The American Stock
Exchange, Inc. for a period of five (5) consecutive trading days, for a period
of thirty (30) non-consecutive trading days within the last twelve (12) months,
or any such delisting or suspension is threatened in writing or pending
(excluding disruptions from business announcements that result in any halt(s) in
trading of not more than one day on each occasion and other than as a result of
the suspension of trading in securities on such market in general), provided,
however, that if such delisting or suspension is only threatened, the Company
shall have thirty (30) days to cure the threatened delisting or suspension; or
(b) any money judgment (including any arbitration award, but
only if reduced to a judgment, but excluding any arbitration award rewarded in
respect of such proceedings commenced pursuant to Paragraphs 5A(d) and 8(h)),
writ or warrant of attachment, or similar process in excess of Two Hundred and
Fifty Thousand Dollars ($250,000) in the aggregate shall be entered or filed
against the Company, its subsidiaries or any of their properties or other assets
and which shall remain unpaid, unvacated, unbonded or unstayed for a period of
sixty (60) days or in any event later than ten (10) days prior to the date of
any proposed sale thereunder; or
(c) the Company fails, as of the date of the Company's next
shareholders' meeting, to obtain shareholder approval of an increase in its
authorized capitalization to 25,000,000 shares of Common Stock; or
(d) any breach by the Company pursuant to Section 5.15 of the
Subscription Agreement.
"VALUATION PERIOD" shall mean the thirty-five (35) trading days
immediately preceding, but not including, the Holder Conversion Date (as defined
herein), subject to adjustment from time to time ratably for any events set
forth in Paragraph 10 hereof that occur during such thirty-five (35) trading day
period.
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<PAGE> 8
6. Paragraph 6 Transactions. (a) If at any time (i) there occurs any
merger, consolidation or other business combination of the Company, with or into
any other corporation, entity or person (whether or not the Company is the
surviving corporation) or there occurs any other corporate reorganization or
transaction or series of related transactions, and as a result thereof the
shareholders of the Company pursuant to such merger, consolidation,
reorganization or other transaction own in the aggregate less than 50% of the
voting power and common equity of the ultimate parent corporation or other
entity surviving or resulting from such merger, consolidation, reorganization or
other transaction, (ii) the Company transfers all or substantially all of the
Company's assets to another corporation or other entity or person, or (iii) a
purchase, tender or exchange offer is made to and accepted by the holders of
more than 50% of the outstanding shares of Common Stock (each of the foregoing
items (i) to (iii), a "PARAGRAPH 6 TRANSACTION"), then the Holders of the
Debentures then outstanding may participate in any such transaction as a class
with the common stockholders on the same basis as if the Debentures had been
converted one day prior to the announcement date (or record date for such
distribution, dividend or offer) of such transaction.
(b) At the option of each Holder, the Company shall redeem all
or any portion of such Holder's Debentures effective as of the effective date of
a Paragraph 6 Transaction, and the Holder shall be entitled to receive a
redemption price per $1,000 principal amount of Debentures being redeemed equal
to 130% of the aggregate value of the Debentures. Each Holder shall be entitled
to make an election for redemption at any time up to five (5) days prior to the
effective date of any Paragraph 6 Transaction; provided, however, at the
discretion of such Holder, such Holder may, at any time, elect to convert its
Debentures into fully paid, validly issued and nonassessable shares of Common
Stock in accordance with the terms of Paragraph 8 hereof, for such number of
shares of Common Stock as determined by the application of the Conversion Rate
so long as the Company has not redeemed such Debentures.
7. Redemption at the Option of the Company.
(a) To the extent the Company shall have funds legally
available for such redemption, the Company may, provided that the notice
provisions set forth in this Paragraph 7 hereof have been complied with, redeem,
at its option, the Debentures, at any time after the Issuance Date, in whole or
in part, at a redemption price per $1,000 Aggregate Principal Amount of
Debentures equal to the lesser of: (i) the sum of (A) 118% of the Aggregate
Principal Amount of the Debentures and, (B) an additional 1% of the Aggregate
Principal Amount of the Debentures for each month since the Issuance Date; or
(ii) the sum of (A) 130% of the Aggregate Principal Amount of the Debentures.
(b) Notice of the Company's intention to redeem the Debentures
pursuant to this Paragraph 7 shall be given not less than thirty (30) days prior
to the date of redemption by first class mail, postage prepaid, to the Holders.
Each such notice shall state: (i) a redemption date (each, a "REDEMPTION DATE");
(ii) the place or places where the certificates representing the Debentures are
to be surrendered for payment of the redemption price; and (iii) the redemption
price and the calculation of such price (the "COMPANY REDEMPTION NOTICE").
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<PAGE> 9
(c) After a Company Redemption Notice is given pursuant to
Paragraph 7(b), upon surrender in accordance with such notice of Debentures,
such Debentures shall be redeemed by the Company at the redemption price.
8. Conversion at the Option of the Holder. Subject to the
limitations of Paragraph 15, the Holder shall have the following conversion
rights:
(a) Holder's Right to Convert. Debentures shall be convertible
at any time on or after the Issuance Date, in whole or in part, at the option of
the Holder thereof, into fully paid, validly issued and nonassessable shares of
Common Stock in accordance with the terms herein for such number of shares of
Common Stock as determined by the application of the Conversion Rate.
(b) Mechanics of Conversion. In order to convert any
Debentures (in whole or in part) into full shares of Common Stock, the
applicable Holder shall surrender to the Transfer Agent the certificate(s)
representing the Debentures to be converted, by either overnight courier or
two-day courier, to the principal office of the Transfer Agent, and shall give
written notice in the form of Exhibit 2 (the "CONVERSION NOTICE") by facsimile
(with the original of such notice forwarded with the foregoing courier) to both
the Transfer Agent and the Company at such office to the effect that such Holder
elects to have converted principal amount of Debentures (plus accumulated but
unpaid interest thereon) specified therein (such notice and election shall be
irrevocable by the Holder); provided, however, that the Company shall not be
obligated to issue certificate(s) evidencing shares of Common Stock issuable
upon such conversion unless either the certificate(s) evidencing the Debentures
being converted is delivered to the Company as provided above, or if the Holder
notifies the Company that such certificate(s) has been lost, stolen or
destroyed, such Holder follows such procedures as are set forth in Paragraph 19.
If less than all of the principal amount represented by such certificate or
certificates is to be converted, the Company shall issue and deliver to or on
the order of the Holder thereof, at the expense of the Company, a new
certificate or certificates representing the unconverted principal amount, to
the same extent as if the certificate theretofore representing such unconverted
principal amount had not been surrendered on conversion. The effective date of
conversion (the "HOLDER CONVERSION DATE") shall be deemed to be the date on
which the Company receives by facsimile the Conversion Notice.
(c) The Company shall use its best efforts to issue and
deliver within three (3) business days after receipt by the Company of such
certificate(s) evidencing the Debentures being converted, to such Holder, or to
its designee, certificates for the number of shares of Common Stock to which
such Holder shall be entitled hereunder or, if requested by the Holder, issue
such shares in electronic format (i.e., DWAC), together with a certificate,
certified by an appropriate officer of the Company, setting forth the
calculation of the Conversion Rate and, if appropriate, a certificate evidencing
the principal amount of Debentures covered by the submitted for conversion. The
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder of such
shares of
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<PAGE> 10
Common Stock on the Holder Conversion Date.
(d) Each certificate representing Debentures surrendered to
the Company for conversion pursuant to this Paragraph 8 shall, on the Holder
Conversion Date and subject to issuance of the shares of Common Stock issuable
upon conversion thereof, be canceled and retired by the Company. Upon issuance
of the shares of Common Stock issuable upon conversion of the Debentures
pursuant to this Paragraph 8, the Debentures formerly represented thereby shall
be deemed to be canceled and shall no longer be considered to be issued and
outstanding for any purpose, including without limitation, for purposes of
accumulating interest thereon. Such principal amount outstanding shall be
retired and shall not be subject to reissuance by the Company.
(e) Notwithstanding the foregoing, if upon receipt by the
Company of a Conversion Notice it is determined that the Conversion Price on the
Holder Conversion Date is less than $1.75 (the "FLOOR PRICE"), then the Company
may, if written notice pursuant to Paragraph 8(f) had been previously delivered
to the Holder, in lieu of issuing shares of Common Stock pursuant to this
Paragraph 8, pay the Holder the "equivalent value" of the shares of Common Stock
in United States Dollars (the "EQUIVALENT VALUE ELECTION"). "EQUIVALENT VALUE"
for purposes of this paragraph 8 is defined as:
High Trade Price on the Holder Conversion Date
----------------------------------------------
Conversion Price
(f) If at anytime, the Conversion Price is determined to be
less than the Floor Price and the Company intends, if it were to receive
Conversion Notice from any Holder, to exercise its Equivalent Value Election
pursuant to Paragraph 8(e), the Company must provide the Holder one (1) day's
written notice (the "FLOOR PRICE NOTICE") prior to making such an election. The
Company will not be entitled to exercise its Equivalent Value Election unless
Floor Price Notice was delivered to the Holder in a timely manner.
9. Maturity.
(a) On the date that is the fifth anniversary of the Issuance
Date, or such later date to which such date has been extended pursuant to
Paragraph 10 hereof (the "MATURITY DATE"), the Company shall redeem all of the
Debentures then outstanding at a redemption price per $1,000 Aggregate Principal
Amount of Debentures equal to 110% of the Aggregate Principal Amount of the
Debentures outstanding.
(b) Upon redemption of the outstanding Debentures, the Company
shall give the Holders written notice of such redemption not less than ten (10)
days prior to the Maturity Date, and such written notice shall specify (i) the
Maturity Date, (ii) the place or places to which certificates representing the
Debentures are to be surrendered for redemption, and (iii) the redemption price,
which shall be equal to the aggregate value of the Debentures per $1,000
principal amount of Debentures as of the Maturity Date. In order to redeem any
Debentures, the
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<PAGE> 11
applicable Holder shall surrender the stock certificate(s) representing the
Debentures called for redemption, by either overnight courier or two-day
courier, to the place or places specified in the written notice of redemption,
including the written notice in the form of Exhibit 1 herein, and the Company
shall redeem such Debentures (plus any accumulated but unpaid interest thereon)
on the Maturity Date; provided, however, that the Company shall not be obligated
to pay the applicable redemption price unless either the certificate evidencing
the Debentures being redeemed is delivered to the Company as provided above, or
if the Holder notifies the Company that such certificate(s) has been lost,
stolen or destroyed and follows such procedures as are set forth in Paragraph
19.
(d) Each certificate representing Debentures surrendered to
the Company for redemption pursuant to this Paragraph 9 shall, on the Maturity
Date and subject to payment or setting aside for payment of the redemption price
payable upon redemption, be canceled and retired by the Company. Upon payment or
setting aside for payment of the redemption price payable upon redemption of the
Debentures pursuant to this Paragraph 9, the shares of Debentures formerly
represented thereby shall be deemed to be canceled and shall no longer be
considered to be issued and outstanding for any purpose, including without
limitation, for purposes of accruing interest thereon.
10. Stock Splits; Dividends; Adjustments; Reorganizations.
(a) Stock Splits and Combinations. The Company shall not
effect any stock split, subdivision or combination with an effective date within
thirty (30) trading days of the Maturity Date.
(b) Certain Dividends and Distributions. The Company shall not
make, or fix a record date for the determination of holders of Common Stock or
other securities entitled to receive, a dividend or other distribution payable
in additional shares of Common Stock, with an effective date within thirty (30)
trading days of the Maturity Date.
(c) Adjustment for Other Dividends and Distributions. In the
event the Company at any time or from time to time after the Issuance Date
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Company other than shares of Common Stock, then and in each such event,
provision shall be made so that the Holders shall receive upon conversion of
their Debentures pursuant to Paragraphs 8 hereof, in addition to the number of
shares of Common Stock receivable thereupon, the amount of such other securities
of the Company to which a Holder on the relevant record or payment date, as
applicable, of the number of shares of Common Stock so receivable upon
conversion would have been entitled, plus any dividends or other distributions
which would have been received with respect to such securities had such Holder
thereafter, during the period from the date of such event to and including the
Holder Conversion Date, retained such securities, subject to all other
adjustments called for during such period under this Paragraph 10 with respect
to the rights of the Holders. For purposes of this Paragraph 10(c), the number
of
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<PAGE> 12
shares of Common Stock so receivable upon conversion by the Holder shall be
deemed to be that number which the Holder would have received upon conversion of
the Debentures if the Holder Conversion Date had been the day preceding the date
upon which the Company announced the making of such dividend or other
distribution.
(d) Adjustment of Floating Conversion Price upon Issuance of
Convertible Securities. If the Company in any manner issues or sells securities
that are convertible into or exchangeable for Common Stock at a price which
varies with the market price of the Common Stock (the formulation for such
variable price being herein referred to as the "VARIABLE PRICE") and such
Variable Price is not calculated using the same formula used to calculate the
Floating Conversion Price in effect immediately prior to the time of such issue
or sale, the Company shall provide written notice thereof via facsimile and
overnight courier to each holder of the Debentures ("VARIABLE NOTICE") on the
date of issuance of such convertible securities. If the holders of shares of
Debentures representing at least two-thirds (2/3) of the outstanding principal
amount of the Debentures then outstanding provide written notice via facsimile
and overnight courier (the "VARIABLE PRICE ELECTION NOTICE") to the Company
within five (5) business days of receiving a Variable Notice that such holders
desire to replace the Floating Conversion Price then in effect with the Variable
Price described in such Variable Notice, then from and after the date of the
Company's receipt of the Variable Price Election Notice the Floating Conversion
Price will automatically be replaced with the Variable Price (together with such
modifications to this Form of Debenture as may be required to give full effect
to the substitution of the Variable Price for the Floating Conversion Price). In
the event that a holder delivers a Conversion Notice at any time after the
Company's issuance of convertible securities with a Variable Price but before
such holder's receipt of the Company's Variable Notice, then such holder shall
have the option by written notice to the Company to rescind such Conversion
Notice or to have the Conversion Price be equal to such Variable Price for the
conversion effected by such Conversion Notice.
(e) Adjustment for Reclassification, Exchange and
Substitution. In the event that at any time or from time to time after the
Issuance Date, the Common Stock issuable upon the conversion of the Debentures
is changed into the same or a different number of shares of any class or classes
of stock, whether by recapitalization, reclassification or otherwise (other than
a subdivision or combination of shares or stock dividend or reorganization
provided for elsewhere in this Paragraph 10 or a merger, consolidation or other
business transaction provided for in Paragraph 6), then and in each such event
each Holder shall thereafter have the right upon conversion to receive the kind
and amount of shares of stock and other securities, cash and property receivable
upon such recapitalization, reclassification or other change, by holders of the
number of shares of Common Stock which the Holder of Debentures would have
received had it converted such shares immediately prior to such
recapitalization, reclassification or other change, at the Conversion Price then
in effect (the kind, amount and price of such stock and other securities to be
subject to adjustments as herein provided). Prior to the consummation of any
recapitalization, reclassification or other change contemplated hereby, the
Company will make appropriate provision (in form and substance satisfactory to
the Holders of a majority of the Debentures then outstanding) to ensure that
each of the Holders of the Debentures will thereafter have the right to acquire
and receive in lieu of or in addition to (as the case may be) the shares of
Common Stock
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otherwise acquirable and receivable upon the conversion of such Holder's
Debentures, such shares of stock, securities or assets that would have been
issued or payable in such recapitalization, reclassification or other change
with respect to or in exchange for the number of shares of Common Stock which
would have been acquirable and receivable upon the conversion of such Holder's
Debentures had such recapitalization, reclassification or other change not taken
place (without taking into account any limitations or restrictions on the timing
or amount of conversions). In the event of such recapitalization,
reclassification or other change, the formulae set forth herein for conversion
and redemption shall be equitably adjusted to reflect such change in number of
shares or, if shares of a new class of stock are issued, to reflect the market
price of the class or classes of stock (applying the same factors used in
determining the Conversion Price for shares of Common Stock) issued in
connection with the above described events.
(f) Reorganization. If at any time or from time to time after
the Issuance Date there is a capital reorganization of the Common Stock (other
than a recapitalization, subdivision, combination, reclassification or exchange
of shares provided for elsewhere in this Paragraph 10) then, as a part of such
reorganization, provisions shall be made so that the Holders shall thereafter be
entitled to receive upon conversion of its Debentures the number of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock deliverable upon conversion would have been entitled to receive
had the holder of Debentures converted such shares immediately prior to such
capital reorganization, at the Conversion Price then in effect. In any such
case, appropriate adjustments shall be made in the application of the provisions
of this Paragraph 10 with respect to the rights of the Holders after such
capital reorganization to the extent that the provisions of this Paragraph 10
shall be applicable after that event and be as equivalent as may be practicable,
including, by way of illustration and not limitation, by equitably adjusting the
formulae set forth herein for conversion and redemption to reflect the market
price of the securities or property (applying the same factors used in
determining the Conversion Price for shares of Common Stock) issued in
connection with the above described events.
(g) Certain Events. If any event occurs of the type
contemplated by the provisions of this Paragraph 10 but not expressly provided
for by such provisions, then the Company's Board of Directors will make an
appropriate adjustment in the Conversion Price so as to protect the rights of
the holders of the Debentures; provided, however, that no such adjustment will
increase the Conversion Price as otherwise determined pursuant to this Paragraph
10.
(h) Dispute. In the event of a dispute between a Holder and
the Company with respect to any of the adjustments required pursuant to the
provisions of this Paragraph 10, such Holder shall be entitled to receive the
number of shares of Common Stock as to which no dispute exists and, within sixty
(60) days of receipt of the Schedule of Computations (as defined below), to
submit such dispute to the American Arbitration Association for resolution
according to the then applicable rules thereof, which determination shall be
final and binding on all parties. If it shall be determined that a Holder should
have received additional shares of Common Stock or other securities upon such
conversion (the "UNDELIVERED SHARES") then, within three (3) trading days of
receipt of written notice of such determination, the Company shall issue to such
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<PAGE> 14
Holder that number of additional shares of Common Stock or other securities as
shall have a value, based upon the then Conversion Price for shares of Common
Stock, as shall equal the Undelivered Shares times the Conversion Price for
shares of Common Stock on the date of conversion. The cost of such proceeding
shall be shared 50% by the Holder involved in such dispute and 50% by the
Company, except that the prevailing party, as determined by the arbitrator
presiding over the arbitration, shall be entitled to recover reasonable
attorney's fees, in addition to other costs and expenses and any other available
remedy.
(i) Schedule of Computations. The Company shall provide
written notice to the Holders of all adjustments pursuant to this Paragraph 10
shall be notified within three (3) trading days of the occurrence thereof and
such notice shall be accompanied by a schedule setting forth a detailed
calculation of such adjustments (the "SCHEDULE OF COMPUTATIONS"). If so
requested by a Holder, the Company shall provide to such Holder within ten (10)
trading days of its request therefor a certificate of concurrence to the
Schedule of Computations by the independent certified public accountants of the
Company. Any dispute between the Company and the Holders with respect to the
matters set forth in such Schedule of Computations may at the option of the
Holders be submitted to one of the national accounting firms currently known as
the "big five" selected by the holders of a majority in interest of the
principal amount of the Debentures then outstanding, provided, however, that the
Company shall have ten (10) days after receipt of notice from such Holders of
their selection of such firm to object thereto, in which case the holders of a
majority in interest of the principal amount of Debentures then outstanding
shall select another firm and the Company shall have no right of objection. The
firm selected by the holders of a majority in interest of the principal amount
of the Debentures then outstanding as provided in the preceding sentence shall
be instructed to deliver a written opinion as to such matters to the Company and
the Holders within thirty (30) days after submission to it of such dispute. Such
opinion shall be final and binding on the parties hereto. The fees and expenses
of such accounting firm shall be paid 50% by the Company and 50% by the Holders.
11. Fractional Shares. No fractional shares of Common Stock or strip
representing fractional shares of Common Stock shall be issuable hereunder. The
number of shares of Common Stock that are issuable upon any conversion shall be
rounded up or down to the nearest whole share.
12. Reservation of Stock; Conversion Default.
(a) Reservation Requirement. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock such number of shares of Common Stock as shall be necessary for the
purpose of effecting the conversion of Debentures, which shares shall be free of
preemptive rights, for the purpose of enabling the Company to satisfy any
obligation to issue shares of its Common Stock, or other securities, upon
conversion of all Debentures pursuant hereto. The Company shall initially
reserve a number of shares of Common Stock equal to two times the number of
shares necessary to satisfy its obligations on conversion of the Debentures if
all such shares were converted on the Issuance Date.
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(b) Default. If the Company (i) notifies a Holder via
facsimile or pursuant to a public disclosure, including, but not limited to a
press release, that the Company cannot, or does not intend to, or (ii) fails to,
issue shares of Common Stock registered for resale under the Registration
Statement for any reason (a "CONVERSION DEFAULT"), including, without
limitation, because the Company (x) is either (1) unable to have a Registration
Statement declared effective by the SEC within 150 days of the Issuance Date, as
provided for in Section 2 of the Registration Rights Agreement or (2) subject to
a Triggering Event, as set forth in Paragraph 5 hereof, (y) does not have a
sufficient number of shares of Common Stock or other securities authorized and
available, or (z) is otherwise prohibited by applicable law or by the rules and
regulations of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over the Company or its
securities, including without limitation the Exchange Cap (as defined in
Paragraph 15), from issuing all of the Common Stock which is to be issued to a
Holder, then the Company shall issue as many shares of Common Stock as it is
able to issue in accordance with such Holder's Conversion Notice, and with
respect to the unconverted principal amount of Debentures, notify the Holder of
such failure (a "DEFAULT NOTICE") which notice shall indicate (I) the reason why
the Company is unable to fully satisfy such holder's Conversion Notice, (II) the
principal amount of Debentures which cannot be converted and (III) the
applicable mandatory redemption price (as calculated pursuant to the terms
below). Such Holder may, after receipt of such Default Notice or becoming aware
of such Conversion Default, deliver written notice via facsimile to the Company
("REMEDIES NOTICE") of its election pursuant to this Paragraph 12.
(c) Each Holder pursuant to such Default Notice shall have the
following options, at its election: (i) the right to demand from the Company
immediate redemption of its Debentures in cash at 130% of the Aggregate Value;
(ii) if the Company's inability to fully convert Debentures is pursuant to
Paragraph 12(b)(ii)(y) above, require the Company to issue restricted shares of
Common Stock in accordance with such Holder's Conversion Notice; (iii) void its
Conversion Notice and have returned the nonconverted Debentures that were to be
converted pursuant to such Holder's Conversion Notice; or (iv) if the Company's
inability to fully convert the Debentures is pursuant to the Exchange Cap
described in Paragraph 12(b)(ii)(z), require the Company to use its best efforts
to take all steps necessary in order to exceed such Exchange Cap; provided,
however, the Holder may elect any of the other options set forth in this
Paragraph 12(c) if the Company shall fail to be able to exceed such Exchange Cap
within 45 days of the Company's receipt of the applicable Remedies Notice.
Notwithstanding the foregoing, no Remedies Notice may be delivered by a Holder
subsequent to receipt by such Holder of notice from the Company (sent by
overnight or two-day courier with a copy sent by facsimile) of the availability
of sufficient shares of Common Stock or other securities to perfect conversion
(a "POST-DEFAULT CONVERSION") of all the Debentures; provided that such rights
as set forth herein and election as set forth in the Remedies Notice shall be
reinstated if the Company shall thereafter fail to perfect such Post-Default
Conversion by delivery of Common Stock certificates or certificates representing
other securities in accordance with the applicable provisions hereof and payment
of all accumulated and unpaid interest in cash with respect thereto within five
(5) days of delivery of the notice of Post-Default Conversion.
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(d) In addition to the foregoing, upon a Conversion Default,
the interest rate on all of the Debentures (including Debentures for which a
Conversion Notice has not yet been sent), shall for the period during which such
Debentures have not been duly converted or redeemed as herein provided, be
increased by 2.0% (i.e., from 6.0% to 8.0%) commencing on the first day of the
thirty (30) day period (or part thereof) following a Conversion Default and an
additional 1.0% commencing on the first day of each thirty (30) day period or
periods (or part thereof) thereafter until such Debentures have been duly
converted or redeemed as herein provided; provided, however, that if the
Company's inability to fully convert Debentures is pursuant to Paragraph
12(b)(ii)(z) above, the Company shall have sixty (60) days to cure such default
prior to giving rise to the right of the Holder to exercise remedies pursuant to
this Paragraph 12, including, without limitation, the right to receive interest
at the higher rate. Any such interest which is not paid when due shall
accumulate interest until paid at the rate from time to time applicable to
interest on the Debentures as to which the Conversion Default has occurred.
13. Taxes. The Company shall pay any and all taxes attributable to
the issuance and delivery of Common Stock or other securities upon conversion of
the Debentures.
14. Voting Rights. The Holders shall have no voting rights, except
as required by law, including but not limited to the Connecticut General
Corporation Law, and as expressly provided herein.
15. Limitation on Number of Conversion Shares. (a) The Company shall
not be obligated to issue upon conversion of the Debentures, in the aggregate,
more than a number of shares of Common Stock equal to 19.99% of the number of
shares of Common Stock outstanding on the Issuance Date (such amount to be
proportionately and equitably adjusted from time to time in the event of stock
splits, stock dividends, combinations, reverse stock splits, reclassification,
capital reorganization and similar events relating to the Common Stock) (the
"EXCHANGE CAP"), if issuance of a larger number of shares of Common Stock would
constitute a breach of the Company's obligations under the rules or regulations
of NASDAQ or any other principal securities exchange or market upon which the
Common Stock is or becomes traded. The Exchange Cap shall be allocated among the
Holders pro rata based on the total principal amount outstanding of the
Debentures. Assuming the Company has not previously obtained (or attempted to
obtain) Shareholder Approval (as defined below), then the Company shall issue to
any Holder so requesting conversion of Debentures its pro rata portion of the
Exchange Cap in the same ratio that the principal amount of Debentures held by
any such Holder bears to the aggregate principal amount of Debentures then
outstanding and, with respect to the aggregate principal amount of the
Debentures that remains outstanding after such issuance (the "REMAINING
PRINCIPAL AMOUNT"), the Company shall at the Holder's request, (x) as promptly
as possible but in no event later than 60 days after such Conversion Date,
convene a meeting of the holders of the Common Stock and use its best efforts to
obtain the Shareholder Approval or a waiver of such approval from the
appropriate exchange and (y) as promptly as possible from time to time, after a
written request by the Holder, issue shares of Common Stock at a Conversion
Price equal to the Closing Price on the trading day immediately preceding the
date of such
16
<PAGE> 17
request for all or a portion of Remaining Principal Amount (plus any unpaid and
accrued interest thereon) held by such Holder (whether or not subject to the
Conversion Notice). "SHAREHOLDER APPROVAL" means the approval by a majority of
the total votes cast on the proposal, in person or by proxy, at a meeting of the
shareholders of the Company held in accordance with the Company's certificate of
incorporation and by-laws, of the issuance by the Company of shares of Common
Stock exceeding the Exchange Cap as a consequence of the conversion of the
Debentures into Common Stock at a price less than the greater of the book or
market value on the Issuance Date.
(b) Notwithstanding anything to the contrary contained herein,
after giving effect to the issuance of Common Stock pursuant to each Conversion
Notice, the total number of shares of Common Stock deemed beneficially owned by
the Holder submitting such Conversion Notice (excluding shares that might
otherwise be deemed beneficially owned by reason of the conversion right in the
Debentures owned by such Holder), together with all shares of Common Stock
deemed beneficially owned by such Holder's "affiliates" as defined in Rule 144
of the Securities Act, shall not exceed 4.99% of the total issued and
outstanding shares of the Common Stock; provided, however, that the Holder may
waive the restrictions of this Paragraph 15(b) upon written notice to the
Company delivered sixty-one (61) days prior to the effective date of such
waiver.
(c) Notwithstanding anything to the contrary contained herein,
upon exercise of each Holder's conversion option, pursuant to Paragraph 8, each
Holder may, for the first 30,000 shares of the Company's Common Stock traded on
NASDAQ on the Holder Conversion Date, only convert Debentures into shares of
Common Stock equal to 25% of the Company's trading volume on NASDAQ on the
Holder Conversion Date. There are no conversion restrictions on the conversion
of Debentures into shares of Common Stock after the first 30,000 shares of the
Company's Common Stock traded on the Holder Conversion Date.
16. No Reissuance of Debentures. No shares of Debentures acquired by
the Company by reason of redemption, purchase, conversion or otherwise shall be
reissued.
17. No Impairment. The Company shall not intentionally take any
action which would impair the rights and privileges of the Debentures set forth
herein or the rights of the Holders thereof.
18. Registration Suspension. In the event that at any time or from
time to time any Registration Statement is suspended or trading in the Common
Stock on NASDAQ is suspended for a period of time (excluding disruptions from
business announcements that result in any halt(s) in trading of not more than
one (1) day on each occasion) and other suspension of trading on such market in
general (each, a "BLACKOUT PERIOD"), the Maturity Date hereunder shall, at the
option of each Holder, be extended for a period equal to 1.5 times the number of
days in such Blackout Period. Furthermore, additional provisions pertaining to
the suspension of effectiveness of such registration statement set forth in
Paragraph 5A of the Registration Rights
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<PAGE> 18
Agreement shall be applicable in the event of a Blackout Period, and such
provisions as specifically incorporated by reference herein.
19. Replacement Certificate. In the event that any Holder notifies
the Company that a stock certificate evidencing Debentures has been lost,
stolen, destroyed or mutilated, the Company shall issue a replacement stock
certificate evidencing the Debentures identical in tenor and date (or if such
certificate is being issued for shares not covered in a redemption or
conversion, in the applicable tenor and date) to the original stock certificate
evidencing the Debentures, provided that the Holder executes and delivers to the
Company an affidavit of lost stock certificate and an agreement reasonably
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with such Debenture certificate; provided, however, the Company
shall not be obligated to re-issue replacement certificates if the Holder
contemporaneously requests the Company to convert or redeem the full principal
amount evidenced by such lost, stolen, destroyed or mutilated certificate.
20. Notices. All notices to the holders of Debentures will be mailed
to registered holders of Debentures at their registered addresses as the same
shall appear in the Debenture Register on the day fifteen days prior to such
mailing.
21. Governing Law. The Debentures shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
principles of conflicts of law.
22. Countersignature and Registration. This Debenture shall not
become valid or obligatory for any purpose until the certificate representing
this Debenture shall have been duly executed by the Company and such signature
attested to by an authorized Officer thereof.
23. Warranty of the Company. The Company hereby certifies and
warrants that all acts, conditions and things required to be done and performed
and to have happened precedent to the creation and issuance of this Debenture,
and to constitute the same legal, valid and binding obligations of the Company
enforceable in accordance with their terms, have been done and performed and
have happened in due and strict compliance with all applicable laws.
24. Descriptive Headings. The descriptive headings appearing herein
are for convenience of reference only and shall not alter, limit or define the
provisions hereof.
[SIGNATURE PAGES TO FOLLOW]
18
<PAGE> 19
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed by an officer thereunto duly authorized this 21st day of April, 1999.
BIO-PLEXUS, INC.
By: _______________________________
Name:
Title:
19
<PAGE> 20
EXHIBIT 1
REDEMPTION NOTICE
Reference is made to the Debenture to which this exhibit is appended (the
"DEBENTURE CERTIFICATE") of Bio-Plexus, Inc., a Connecticut corporation (the
"COMPANY"). In accordance with and pursuant to the Debentures, the undersigned
hereby elects to have the Company redeem the principal amount of 6% Convertible
Debentures due 2004 (the "DEBENTURE") of the Company, indicated below by
tendering the certificate(s) representing the Debentures specified below as of
the date specified below.
Date of Redemption: ___________________________________
Principal Amount of Debentures
to be redeemed: ___________________________________
Certificate no(s). of Debentures to be
redeemed: ___________________________________
Please confirm the following information:
Redemption Price: ___________________________________
The undersigned holder hereby represents, warrants and reaffirms to the Company,
as of the date hereof, the accuracy of the representations and warranties made
by it in Article 2 of the Subscription Agreement dated April 21, 1999 executed
by the undersigned and accepted by the Company.
Please issue any check drawn on an account of the Company into which the
Debentures are being redeemed, and, if applicable, issue any Debentures, in the
following name and to the following address:
Pay to: ___________________________________
___________________________________
___________________________________
___________________________________
Facsimile Number: ___________________________________
Authorization: ___________________________________
By: _______________________________
Title: ____________________________
Dated: ___________________________________
<PAGE> 21
EXHIBIT 2
CONVERSION NOTICE
Reference is made to the debenture certificate (the "DEBENTURE CERTIFICATE") of
Bio-Plexus, Inc., a Connecticut corporation (the "COMPANY"). In accordance with
and pursuant to the Debenture Certificate, the undersigned hereby elects to have
the Company convert the principal amount of 6% Convertible Debentures due 2004
(the "DEBENTURES"), of the Company, indicated below into shares of Common Stock,
no par value (the "COMMON STOCK"), of the Company, by tendering the
certificate(s) representing the Debentures specified below as of the date
specified below.
Date of Conversion: ___________________________________
Principal amount of Debentures to be redeemed: _________________________________
Certificate no(s). of Debentures to be converted: __________
Please confirm the following information:
Redemption Price: ___________________________________
Please issue the Common Stock and, if applicable, any check drawn on an account
of the Company into which the Debentures are being converted in the following
name and to the following address:
Issue to: ___________________________________
___________________________________
___________________________________
___________________________________
Facsimile Number: ___________________________________
Authorization: ___________________________________
By: _______________________________
Title: ____________________________
Dated: ___________________________________
<PAGE> 1
EXHIBIT 10.24
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES WHICH
OPINION IS REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT IS
RESTRICTED AS DESCRIBED HEREIN.
BIO-PLEXUS, INC.
Warrant for the Purchase of Shares of Common Stock,
no par value
THIS WARRANT EXPIRES ON APRIL 21, 2004
No. W - ___________________ __________ Shares
THIS CERTIFIES that, for value received, ________________________ with
an address at _______________________________ (including any transferee,
successor or assign, the "Holder"), is entitled to subscribe for and purchase
from Bio-Plexus, Inc., a Connecticut corporation (the "Company"), upon the terms
and conditions set forth herein, at any time or from time to time before 5:00
P.M. on April 21, 2004, Eastern time (the "Exercise Period"), ________ shares of
the Company's Common Stock, no par value ("Common Stock"), at a price equal to
$____ per share (the "Exercise Price").
As used herein the term "this Warrant" shall mean and include this
Warrant and any Warrant or Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
The number of shares of Common Stock issuable upon exercise of this
Warrant (the "Warrant Shares") and the Exercise Price may be adjusted as herein
set forth.
<PAGE> 2
1. (a) This Warrant may be exercised during the Exercise Period, as to
the whole or any lesser number of whole Warrant Shares, by the surrender of this
Warrant (with the election at the end hereof duly executed) to the Company at
its office at Bio-Plexus, Inc., 129 Reservoir Road, Vernon, Connecticut 06066,
or at such other place as is designated in writing by the Company. Subject to
Section 1(b) hereof, such executed election must be accompanied by payment in an
amount equal to the Exercise Price multiplied by the number of Warrant Shares
for which this Warrant is being exercised. Such payment may be made by wire
transfer or by certified or bank cashier's check payable to the order of the
Company, or as provided in Section 1(b) hereof.
(b) All or any part of this Warrant may be exercised on a "cashless"
basis, by stating in the Exercise Notice such intention and either (x) the
maximum number (the "Maximum Number") of shares of Common Stock the Holder
desires to purchase in consideration of cancellation of Warrants in payment for
such exercise, or (y) the amount of then outstanding principal and accrued
interest under Notes submitted with such Exercise Notice, to be deemed to be
prepaid pursuant to such exercise. The number of shares of Common Stock the
Holder shall receive (the "Cashless Exercise Number") upon such exercise
pursuant to clause (x) of this Section 1(b) shall equal the difference between
the Maximum Number and the quotient that is obtained when the product of the
Maximum Number and the then current Exercise Price is divided by the then
Current Market Price per share (as hereinafter defined). The amount credited
toward the payment due from the Holder upon such exercise in respect of
prepayment of Notes pursuant to clause (y) of this Section 1(b) shall equal the
amount of principal and interest deemed prepaid thereby.
2. Upon each exercise of the Holder's rights to purchase Warrant
Shares, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the transfer books of
the Company shall then be closed or certificates representing such Warrant
Shares shall not then have been actually delivered to the Holder. The Company
shall use its best efforts to issue and deliver within three (3) days after each
such exercise of this Warrant a certificate representing the Warrant Shares
issuable upon such exercise, registered in the name of the Holder or its
designee, or, if requested by the Holder, issue such shares in electronic format
(i.e., DWAC). If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the right of the Holder to purchase the balance of the
Warrant Shares (or portions thereof) subject to purchase hereunder.
3. (a) Any Warrants issued upon the transfer or exercise in part of
this Warrant shall be numbered and shall be registered in a Warrant Register as
they are issued. The Company shall be entitled to treat the registered holder of
any Warrant on the Warrant Register as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to or
interest in such Warrant on the part of any other person, and shall not be
liable for any registration or transfer of Warrants which are registered or to
be registered in the name of a fiduciary or the nominee of a fiduciary unless
made with the actual knowledge that a fiduciary or nominee is committing a
breach of trust in requesting such registration or transfer, or with the
knowledge of such facts that its participation therein amounts to bad faith.
This
2
<PAGE> 3
Warrant shall be transferable only on the books of the Company upon delivery
thereof duly endorsed by the Holder or by its duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment, or
authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person or
entity entitled thereto. This Warrant may be exchanged, at the option of the
Holder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Warrant Shares (or portions thereof), upon surrender
to the Company or its duly authorized agent. Notwithstanding the foregoing, the
Company shall have no obligation to cause Warrants to be transferred on its
books to any person if, in the opinion of counsel to the Company, such transfer
does not comply with the provisions of the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations thereunder.
(b) The Holder acknowledges that it has been advised by the Company
that neither this Warrant nor the Warrant Shares have been registered under the
Act, that this Warrant is being or has been issued and the Warrant Shares may be
issued on the basis of the statutory exemption provided by Section 4(2) of the
Act or Regulation D promulgated thereunder, or both, relating to transactions by
an issuer not involving any public offering. The Holder acknowledges that it has
been informed by the Company of, or is otherwise familiar with, the nature of
the limitations imposed by the Act and the rules and regulations thereunder on
the transfer of securities. In particular, the Holder agrees that no sale,
assignment or transfer of this Warrant or the Warrant Shares issuable upon
exercise hereof shall be valid or effective, and the Company shall not be
required to give any effect to any such sale, assignment or transfer, unless (i)
the sale, assignment or transfer of this Warrant or such Warrant Shares is
registered under the Act, it being understood that neither this Warrant nor such
Warrant Shares are currently registered for sale and that the Company has no
obligation or intention to so register this Warrant or such Warrant Shares
except as specifically provided herein, or (ii) this Warrant or such Warrant
Shares are sold, assigned or transferred in accordance with all the requirements
and limitations of Rule 144 under the Act, it being understood that Rule 144 is
not available at the time of the original issuance of this Warrant for the sale
of this Warrant or such Warrant Shares and that there can be no assurance that
Rule 144 sales will be available at any subsequent time, or (iii) such sale,
assignment, or transfer is otherwise exempt from registration under the Act.
(c) Following any assignment or other transfer resulting in the
issuance of warrants to purchase Warrant Shares purchasable hereunder to more
than one person or entity, all elections that may be made by the Holders under
such warrants shall be made by written notice of Holders representing rights to
purchase a majority of the Warrant Shares for which such warrants are then
exercisable.
4. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the rights to purchase all Warrant Shares granted pursuant to
this Warrant, such number of shares of Common Stock as shall, from time to time,
be sufficient therefor. The Company
3
<PAGE> 4
covenants that all shares of Common Stock issuable upon exercise of this
Warrant, upon receipt by the Company of the full Exercise Price therefor, shall
be validly issued, fully paid, nonassessable, and free of preemptive rights.
5. (a) In case the Company shall at any time after the date this Warrant is
first issued (i) declare a dividend on the outstanding Common Stock of the
Company payable in shares of its Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then, in each case, the Exercise Price, and the number of
Warrant Shares issuable upon exercise of this Warrant, in effect at the time of
the record date for such dividend or of the effective date of such subdivision,
or combination, shall be proportionately adjusted so that the Holder after such
time shall be entitled to receive the aggregate number and kind of shares for
such consideration which, if such Warrant had been exercised immediately prior
to such time at the then-current exercise price, it would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
or combination. Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) In case the Company shall issue or fix a record date for the
issuance to all holders of Common Stock of rights, options, or warrants to
subscribe for or purchase Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share (or having a conversion or
exchange price per share, if a security convertible into or exchangeable for
Common Stock) less than the Current Market Price (as thereinafter defined) per
share of Common Stock on such record date, then, in each case, the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock so to be offered (or the aggregate initial conversion
or exchange price of the convertible or exchangeable securities so to be
offered) would purchase at such Current Market Price and the denominator of
which shall be the number of shares of Common Stock outstanding on such record
date plus the number of additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible or exchangeable
securities so to be offered are initially convertible or exchangeable);
provided, however, that no such adjustment shall be made which results in an
increase in the Exercise Price. Such adjustment shall become effective at the
close of business on such record date; provided, however, that, to the extent
the shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock) are not delivered, the Exercise Price shall be
readjusted after the expiration of such rights, options, or warrants (but only
with respect to Warrants exercised after such expiration), to the Exercise Price
which would then be in effect had the adjustments made upon the issuance of such
rights, options, or warrants been made upon the basis of delivery of only the
number of shares of Common Stock (or securities convertible into or exchangeable
for shares of Common Stock) actually issued. In case any subscription price may
be paid in consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the board of directors of the Company, whose determination shall be conclusive
absent manifest error. Shares of Common Stock owned by or held for the account
of the Company or any
4
<PAGE> 5
majority-owned subsidiary shall not be deemed outstanding for the purpose of any
such computation.
(c) In case the Company shall distribute to all holders of Common
Stock (including any such distribution made to the stockholders of the Company
in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness, cash (other than any cash
dividend which, together with any cash dividends paid within the 12 months prior
to the record date for such distribution, does not exceed 5% of the Current
Market Price at the record date for such distribution) or assets (other than
distributions and dividends payable in shares of Common Stock), or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities
convertible into or changeable for shares of Common Stock (excluding those with
respect to the issuance of which an adjustment of the Exercise Price is provided
pursuant to Section 5(b) hereof), then, in each case, the Exercise Price shall
be adjusted by multiplying the Exercise Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such
distribution by a fraction, the numerator of which shall be the Current Market
Price per share of Common Stock on such record date, less the fair market value
(as determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error) of the portion of the
evidences of indebtedness or assets so to be distributed, or of such rights,
options, or warrants or convertible or exchangeable securities, or the amount of
such cash, applicable to one share, and the denominator of which shall be such
Current Market Price per share of Common Stock. Such adjustment shall become
effective at the close of business on such record date.
(d) In case the Company shall issue shares of Common Stock or
rights, options, or warrants to subscribe for or purchase Common Stock, or
securities convertible into or exchangeable for Common Stock (excluding shares,
rights, options, warrants, or convertible or exchangeable securities issued or
issuable (i) in any of the transactions with respect to which an adjustment of
the Exercise Price is provided pursuant to Sections 5(a), 5(b), or 5(c) above,
(ii) upon any issuance of securities pursuant to this offering of Warrants and
Notes or the exercise of securities so issued, (iii) upon exercise of this
Warrant or any other outstanding warrants issued by the Company, (iv) upon any
adjustment of the number of shares of Common Stock issuable upon exercise of the
Warrants pursuant to the Preamble hereof, or (v) upon issuance or exercise of
stock options granted to the directors or employees of the Company pursuant to
the Company's 1991 Long Term Incentive Plan and 1995 Non-Employee Director's
Compensation Plan at a price per share (determined, in the case of such rights,
options, warrants, or convertible or exchangeable securities, by dividing (x)
the total amount received or receivable by the Company in consideration of the
sale and issuance of such rights, options, warrants, or convertible or
exchangeable securities, plus the minimum aggregate consideration payable to the
Company upon exercise, conversion, or exchange thereof, by (y) the maximum
number of shares covered by such rights, options, warrants, or convertible or
exchangeable securities) lower than the Current Market Price per share of Common
Stock, in effect immediately prior to such issuance, then the Exercise Price
shall be reduced on the date of such issuance to a price (calculated to the
nearest cent) determined by
5
<PAGE> 6
multiplying the Exercise Price in effect immediately prior to such issuance by a
fraction, (1) the numerator of which shall be an amount equal to the sum of (A)
the number of shares of Common Stock outstanding immediately prior to such
issuance plus (B) the quotient obtained by dividing the consideration received
by the Company upon such issuance by such Current Market Price, and (2) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such issuance; provided, however, that no such
adjustment shall be made which results in an increase in the Exercise Price. For
the purposes of such adjustments, the maximum number of shares which the holders
of any such rights, options, warrants, or convertible or exchangeable securities
shall be entitled to initially subscribe for or purchase or convert or exchange
such securities into shall be deemed to be issued and outstanding as of the date
of such issuance, and the consideration received by the Company therefor shall
be deemed to be the consideration received by the Company for such rights,
options, warrants, or convertible or exchangeable securities, plus the minimum
aggregate consideration or premiums stated in such rights, options, warrants, or
convertible or exchangeable securities to be paid for the shares covered
thereby. No further adjustment of the Exercise Price shall be made as a result
of the actual issuance of shares of Common Stock on exercise of such rights,
options, or warrants or on conversion or exchange of such convertible or
exchangeable securities. On the expiration or the termination of such rights,
options, or warrants, or the termination of such right to convert or exchange,
the Exercise Price shall be readjusted (but only with respect to this Warrant if
exercised after such expiration or termination) to such Exercise Price as would
have obtained had the adjustments made upon the issuance of such rights,
options, warrants, or convertible or exchangeable securities been made upon the
basis of the delivery of only the number of shares of Common Stock actually
delivered upon the exercise of such rights, options, or warrants or upon the
conversion or exchange of any such securities; and on any change of the number
of shares of Common Stock deliverable upon the exercise of any such rights,
options, or warrants or conversion or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by the
Company upon such exercise, conversion, or exchange, including, without
limitation, a change resulting from the antidilution provisions thereof. In case
the Company shall issue shares of Common Stock or any such rights, options,
warrants, or convertible or exchangeable securities for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then the "price per share" and the "consideration received by the Company" for
purposes of the first sentence of this Section 5(d) shall be as determined in
good faith by the board of directors of the Company, whose determination shall
be conclusive absent manifest error. Shares of Common Stock owned by or held for
the account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any such computation.
(e) For the purpose of any computation under this Section 5, the
"Current Market Price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices for the 30 consecutive trading days
immediately preceding the date in question. The closing price for each day shall
be the last reported closing sales price or the last reported closing bid price,
as the case may be, on the principal national securities exchange (including,
for purposes hereof, the Nasdaq Small Cap Market) on which the Common Stock is
listed or admitted to trading or, if the Common Stock is not listed or admitted
to trading on any national securities exchange, the highest reported bid price
for the Common
6
<PAGE> 7
Stock as furnished by the National Association of Securities Dealers, Inc.
through Nasdaq or a similar organization if Nasdaq is no longer reporting such
information. If on any such date the Common Stock is not listed or admitted to
trading on any national securities exchange and is not quoted by Nasdaq or any
similar organization, the fair value of a share of Common Stock on such date, as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error, shall be used.
(f) No adjustment in the Exercise Price shall be required if such
adjustment is less than $.05; provided, however, that any adjustments which by
reason of this Section 5 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 5 shall be made to the nearest cent or to the nearest one-thousandth of
a share, as the case may be.
(g) In any case in which this Section 5 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the Holder, if the Holder exercised this Warrant after such
record date, the shares of Common Stock, if any, issuable upon such exercise
over and above the shares of Common Stock, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due bill or other
appropriate instrument evidencing the Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(h) Upon each adjustment of the Exercise Price as a result of the
calculations made in Sections 5(b), 5(c), or 5(d) hereof, this Warrant shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of shares (calculated to the nearest thousandth) obtained by dividing (A)
the product obtained by multiplying the number of shares purchasable upon
exercise of this Warrant prior to adjustment of the number of shares by the
Exercise Price in effect prior to adjustment of the Exercise Price by (B) the
Exercise Price in effect after such adjustment of the Exercise Price.
(i) Whenever there shall be an adjustment as provided in this Section,
the Company shall within three (3) trading days of the occurrence of such
adjustment cause written notice thereof to be sent by certified mail, postage
prepaid, to the Holder, at its address as it shall appear in the Warrant
Register, which notice shall be accompanied by a schedule setting forth a
detailed calculation of such adjustment (the "Schedule of Computations"). If so
requested by the Holder, the Company shall provide to such Holder within ten
(10) days of its request therefor a certificate of concurrence to the Schedule
of Computations by the independent certified public accountants of the Company.
(j) The Company shall not be required to issue fractions of shares
of Common Stock or other capital stock of the Company upon the exercise of this
Warrant. If any fraction of a share would be issuable on the exercise of this
Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same
7
<PAGE> 8
fraction of the Current Market Price of such share of Common Stock on the date
of exercise of this Warrant.
6. (a) In case of any consolidation with or merger of the Company with
or into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise of this Warrant solely the kind and
amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such consolidation,
merger, sale, lease, or conveyance, and (ii) make effective provision in its
certificate of incorporation or otherwise, if necessary, to effect such
agreement. Such agreement shall provide for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 5.
(b) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the Holder shall
have the right thereafter to receive upon exercise of this Warrant solely the
kind and amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such reclassification, change,
consolidation, or merger by a holder of the number of shares of Common Stock for
which this Warrant might have been exercised immediately prior to such
reclassification, change, consolidation, or merger. Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
7. In case at any time the Company shall propose to:
(a) pay any dividend or make any distribution on shares of Common
Stock in shares of Common Stock or make any other distribution (other than
regularly scheduled cash dividends which are not in a greater amount per share
than the most recent such cash dividend) to all holders of Common Stock; or
8
<PAGE> 9
(b) issue any rights, warrants, or other securities to all holders
of Common Stock entitling them to purchase any additional shares of Common Stock
or any other rights, warrants, or other securities; or
(c) effect any reclassification or change of outstanding shares of
Common Stock, or any consolidation, merger, sale, lease, or conveyance of
property, described in Section 6 hereof; or
(d) effect any liquidation, dissolution, or winding-up of the
Company; or
(e) take any other action which would cause an adjustment to the
Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by certified mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least 15
days prior to (i) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such dividend, distribution, rights,
warrants, or other securities are to be determined, (ii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up, or (iii) the date of such other action which would
require an adjustment to the Exercise Price; provided, however, notwithstanding
the foregoing, the Company shall not provide the Holder with any information
required by this Section 7 if, in the reasonable opinion of the Company, such
information would constitute material non-public information.
8. The issuance of any shares or other securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such shares or other securities, shall be made without charge to the Holder for
any tax or other charge in respect of such issuance. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
9. The Warrant Shares issued upon exercise of this Warrant shall be
subject to a stop transfer order and the certificate or certificates evidencing
such Warrant Shares shall bear the following legend:
9
<PAGE> 10
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH
SECURITIES, WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS."
The Company covenants that it will use its best efforts to cause the Company's
transfer agent to deliver certificates representing shares issued in connection
with a transfer of the Warrant Shares as promptly as practicable but in no event
later than three (3) business days after delivery by the Holder of all required
documentation in respect of such transfer. The Company covenants that it will
use its best efforts to cause the Company's transfer agent to deliver unlegended
certificates representing the Warrant Shares, if any, delivered in connection
with a transfer of such Warrant Shares as promptly as practicable but in no
event later than three (3) business days after delivery by the Holder of all
required documentation in respect of such transfer, including a representation
by the Holder to the Company and/or the transfer agent that such shares are
being delivered in connection with a sale pursuant to an effective resale
registration statement.
10. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of this Warrant (and upon surrender of any
Warrant if mutilated), including an affidavit of the Holder that this Warrant
has been lost, stolen, destroyed or mutilated, together with an indemnity
against any claim that may be made against the Company on account of such lost,
stolen, destroyed or mutilated Warrant, and upon reimbursement of the Company's
reasonable incidental expenses, the Company shall execute and deliver to the
Holder a new Warrant of like date, tenor, and denomination.
11. The Holder of this Warrant shall not have solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Warrant.
12. This Warrant shall be construed in accordance with the laws of the
State of Connecticut applicable to contracts made and performed within such
State, without regard to principles governing conflicts of law.
13. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, or by Federal Express, Express Mail or similar overnight
delivery or courier service or delivered
10
<PAGE> 11
(in person or by telecopy, telex or similar telecommunications equipment)
against receipt to the party to whom it is to be given, (i) if to the Company,
at its address at Bio-Plexus, Inc., 129 Reservoir Road, Vernon, Connecticut
06066, Attention: President and Chief Executive Officer, with a copy to: Pepe &
Hazard LLP, Goodwin Square, Hartford, Connecticut 06103, Attention: Walter W.
Simmer, Esq., Facsimile: (860) 522-2796, (ii) if to the Holder, at its address
set forth on the first page hereof, or (iii) in either case, to such other
address as the party shall have furnished in writing in accordance with the
provisions of this Section 13. Notice to the estate of any party shall be
sufficient if addressed to the party as provided in this Section 13. Any notice
or other communication given by certified mail shall be deemed given at the time
of certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof. Any notice given by other
means permitted by this Section 13 shall be deemed given at the time of receipt
thereof.
14. No course of dealing and no delay or omission on the part of the
Holder in exercising any right or remedy shall operate as a waiver thereof or
otherwise prejudice the Holder's rights, powers or remedies. No right, power or
remedy conferred by this Warrant upon the Holder shall be exclusive of any other
right, power or remedy referred to herein or now or hereafter available at law,
in equity, by statute or otherwise, and all such remedies may be exercised
singly or concurrently.
15. This Warrant may be amended only by a written instrument executed
by the Company and the Holder hereof. Any amendment shall be endorsed upon this
Warrant, and all future Holders shall be bound thereby.
Dated: April 21, 1999
BIO-PLEXUS,
INC.
_____________________________
Name:
Title:
[Seal]
_____________________________________
11
<PAGE> 12
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, _____________________ hereby sells, assigns, and
transfers unto _________________ a Warrant to purchase __________ shares of
Common Stock, no par value, of Bio-Plexus, Inc. (the "Company"), together with
all right, title, and interest therein, and does hereby irrevocably constitute
and appoint ___________________ attorney to transfer such Warrant on the books
of the Company, with full power of substitution.
Dated: _________________
Name of Holder: ___________________
____________________________
Signature
____________________________
Print Name
____________________________
Title (if entity)
____________________________
Signature Guarantee
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
12
<PAGE> 13
To: Bio-Plexus, Inc.
129 Reservoir Road
Vernon, Connecticut 06066
ELECTION TO EXERCISE
The undersigned hereby exercises its rights to purchase _______ Warrant
Shares covered by the within Warrant, and tenders payment herewith in the
aggregate amount of $________, including (i) $_______ by certified or bank
cashier's check, (ii) $_________ by deemed prepayment of Notes held by
_________, and/or (iii) cancellation of Warrants to purchase ___ Warrant Shares
based upon a Maximum Number (as therein defined) of ______, in accordance with
the terms thereof, and requests that certificates for such securities be issued
in the name of, and delivered to:
_________________________________________________________________
________________________________________________________________
________________________________________________________________
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant and the remaining portion of the within Warrant be
not cancelled in payment of the Exercise Price, that a new Warrant for the
balance of the Warrant Shares covered by the within Warrant be registered in the
name of, and delivered to, the undersigned at the address stated below.
________________________________________________________________
________________________________________________________________
________________________________________________________________
(Print Name, Address and Social Security
or Tax Identification Number)
13
<PAGE> 14
Name of Holder:
______________________
Dated: _________________
___________________________________
Signature
___________________________________
Print Name
___________________________________
Title (if entity)
Address:_____________________________________________________________________
____________________________
Signature Guarantee
14
<PAGE> 1
EXHIBIT 10.25
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Registration Rights
Agreement") entered into as of April 21, 1999, by and between the purchasers set
forth on the signature pages hereof (each, a "Purchaser," and collectively, the
"Purchasers") and Bio-Plexus, Inc., a Connecticut corporation, with offices at
129 Reservoir Road, Vernon, Connecticut 06066 (the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to the Subscription Agreement, dated as of the
date hereof (the "Agreement"), by and between the Company and the Purchasers,
the Company has agreed to sell, and the Purchasers have agreed to purchase up to
$4,500,000 aggregate principal amount of 6% Convertible Debentures due 2004 of
the Company (the "Debentures") and with such other rights as are set forth in
the form of debenture (the "Form of Debenture") and warrants (the "Warrants")
exercisable for the purchase of up to 500,000 shares of Common Stock, no par
value, of the Company (the "Common Stock"), and having such other rights and
terms as are set forth in the form of warrant (the "Form of Warrant");
WHEREAS, the Debentures are convertible into shares of Common
Stock (the "Underlying Debenture Shares");
WHEREAS, the Warrants are exercisable for shares of Common Stock
(the "Underlying Warrant Shares," and, together with the Underlying Debenture
Shares, the "Shares"); and
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Purchasers' purchase of the Debentures and the Warrants, the Company has
agreed to provide the Purchasers with certain registration rights with respect
to the Underlying Debenture Shares and the Underlying Warrant Shares issuable to
the Purchasers as set forth in this Registration Rights Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Agreement
and this Registration Rights Agreement, the Company and the Purchasers agree as
follows:
1. Certain Definitions. As used in this Registration Rights
Agreement, the following terms shall have the following respective meanings, and
terms not otherwise defined herein shall have their respective meanings as
assigned to them in the Agreement:
"Business Day" means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.
<PAGE> 2
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Effectiveness Date" means with respect to the Registration
Statement the 90th day following the Closing Date (as defined in the Stock
Subscription Agreement).
"Filing Date" means the 30th day following the Closing Date.
"Holder" shall include the applicable Purchaser and any transferee
of the Debentures, Shares or Registrable Securities which have not been sold to
the public, to whom the registration rights conferred by this Registration
Rights Agreement have been transferred in compliance with Section 12 of this
Registration Rights Agreement.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a company, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Prospectus" means any prospectus relating to the Underlying
Debenture Shares issuable upon conversion of the Debentures or the Underlying
Warrant Shares issuable upon exercise of the Warrants, as applicable, as filed
with the Commission pursuant to Rule 424(b) under the Securities Act or, if no
such filing is required, any form of final prospectus relating to the Underlying
Debenture Shares or the Underlying Warrant Shares included in the Registration
Statement, as the case may be, at time the Registration Statement is declared
effective by the Commission, in either case, including all the amendments and
supplements to the prospectus or Registration Statement, including
post-effective amendments and all material, if any, incorporated by reference
therein.
The terms "register," "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses to be incurred by
the Company in connection with Purchasers' exercise of their registration rights
under this Registration Rights Agreement, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, and the accounting fees and
expenses (excluding the compensation of regular employees of the Company, which
shall be paid in any event by the Company), excluding any brokerage, sales or
underwriting commission or compensation associated with the offer and sale of
the Registrable Securities which shall be paid by the Purchasers. With respect
to the "due diligence" examination of the Company, the Registration Expenses
shall include only fees and disbursements, not to exceed $5,000, for one (1)
designated counsel for all the Holders of Debentures and Warrants.
"Registration Statement" shall have the meaning set forth in
Section 2(a) herein.
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<PAGE> 3
"Registrable Securities" shall mean any Shares or other securities
issued or issuable to the Purchasers or any Holder upon the conversion of any
Debenture or any Shares or other securities issued or issuable to the Purchasers
or any Holder upon the exercise of the Warrants; provided, however, Registrable
Securities shall include, but not be limited to, a number of shares of Common
Stock equal to no less than 200% of the maximum number of shares of Common Stock
which would be issuable upon conversion of the Debentures and upon exercise of
the Warrants, assuming such conversion and exercise occurred either (i) on the
Closing Date or (ii) the date of filing of the Registration Statement, whichever
date would produce a greater number of Registrable Securities. Such registered
shares of Common Stock shall be allocated among the holders pro rata based on
the total number of Registrable Securities issued or issuable as of each date
that a Registration Statement is declared effective by the Commission.
"Regulation D" shall mean Regulation D as promulgated pursuant to
the Securities Act, and as it may be subsequently amended.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all brokerage fees, underwriting
discounts and selling commissions applicable to the offer and sale of
Registrable Securities and all fees and disbursements of counsel for Holders.
2. Registration Requirements. The Company shall use its diligent
best efforts to effect the registration of the Registrable Securities
contemplated by the Agreement (including, without limitation, the execution of
an undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act) as would
permit or facilitate the sale or distribution of all the Registrable Securities
in the manner (including manner of sale) and in all states reasonably requested
by the Holders under a broad-based plan of distribution reasonably acceptable to
the Holders. Such best efforts by the Company shall include, without limitation,
the following:
(a) The Company shall, as soon as practicable after the date
hereof but in no event later than 30 days after the date hereof, file (i)
a registration statement with the Commission pursuant to Rule 415 under
the Securities Act on Form S-3 under the Securities Act (or in the event
that the Company is ineligible to use such form, such other form as the
Company is eligible to use under the Securities Act) covering the
Registrable Securities so requested to be registered (the "Registration
Statement"); (ii) such blue sky filings as shall have been requested by
the Holders; and (iii) any required filings with the National Association
of Securities Dealers, Inc., The Nasdaq Small-Cap Market, or such other
exchange or market on which the Common Stock is traded. Thereafter, the
Company shall use its best efforts to have such Registration Statement and
other filings declared effective as promptly as practicable. The Company
shall not permit any securities other than the Registrable Securities to
be included in the Registration Statement and shall use its best efforts
to cause the Registration Statement to be declared
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<PAGE> 4
effective under the Securities Act as promptly as possible after the
filing thereof, but in any event prior to the 90th day following the date
hereof, and to keep such Registration Statement continuously effective
under the Securities Act until the date which is three (3) years after the
date that such Registration Statement is declared effective by the
Commission or such earlier date when all Registrable Securities covered by
such Registration Statement have been sold or may be sold without any
restriction pursuant to Rule 144 as determined by the counsel to the
Company pursuant to a written opinion letter, addressed to the Company's
transfer agent to such effect (the "Effectiveness Period"). If an
additional Registration Statement is required to be filed because the
actual number of shares of Common Stock into which the Debentures are
convertible and the Warrants are exercisable exceeds the number of shares
of Common Stock initially registered in respect of the Underlying
Debenture Shares and the Underlying Warrant Shares based upon the
computation on the Closing Date or the filing of the Registration
Statement, as applicable, the Company shall have fifteen (15) Business
Days to file such additional Registration Statement, and the Company shall
use its best efforts to cause such additional Registration Statement to be
declared effective by the Commission as soon as possible, but in no event
later than 90 days after filing.
(b) If after 120 days from the date hereof, the Registration
Statement has not been declared effective by the Commission, the Holders
shall have, in addition to, and without limiting, any other rights they
may have at law, in equity or under the Debenture, the Warrant, the
Agreement or this Registration Rights Agreement (including the right to
specific performance), the right to receive, as liquidated damages, an
amount equal to 1.5% of the Aggregate Principal Amount (as defined in the
Debenture), in cash, for each 30-day period after such 120-day period that
such Registration Statement is not effective (which payment shall be pro
rated for any period of less than 30 days). In addition to the foregoing,
if after 150 days from the date hereof, the Registration Statement has not
been declared effective by the Commission, then upon demand of any Holder,
the Company shall redeem all or any specified portion of the Debentures
held by such Holder at a redemption price equal to 130% of the sum of (x)
the Aggregate Principal Amount thereof, plus (y) accrued but unpaid
dividends thereon (whether or not earned or declared), if any, together
with all other payments due under this Section 2(b) and under the
Debentures, the Warrants and the Agreement.
(c) If the Holders intend to distribute the Registrable
Securities covered by the Registration Statement by means of an
underwriting, the Holders shall so advise the Company. The Holders will
have the right to select the investment bankers for such underwriting
subject to such investment bankers being reasonably satisfactory to the
Company.
(d) The Company shall enter into such customary agreements
(including a customary underwriting agreement with the underwriter or
underwriters, if any) and take all such other reasonable actions in
connection therewith in order to
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<PAGE> 5
expedite or facilitate the disposition of such Registrable Securities. If
the Registrable Securities are being offered and sold in an underwritten
offering, the Company shall:
(i) make such representations and warranties to the
Holders and the underwriter or underwriters, if any, in form, substance
and scope as are customarily made by issuers to underwriters in secondary
underwritten offerings;
(ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters, if any, opinions of
counsel to the Company, dated the date of delivery of any Registrable
Securities sold pursuant to the Registration Statement (which opinions (in
form, scope and substance), shall be reasonably satisfactory to the
managing underwriter or underwriters, if any) addressed to the Holders and
each underwriter, if any, covering the matters customarily covered in
opinions requested in secondary underwritten offerings and, in the case of
an underwritten offering, such other matters as may be reasonably
requested by the Holders;
(iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an
underwritten offering, at the time of delivery of any Registrable
Securities sold pursuant thereto), a "comfort" letter from the Company's
independent certified public accountants addressed to the Holders and each
underwriter, if any, stating that such accountants are independent public
accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder, and otherwise in customary
form and covering such financial and accounting matters as are customarily
covered by letters of the independent certified public accountants
delivered in connection with secondary underwritten public offerings;
(iv) if an underwriting agreement is entered into, the
same shall set forth in full the indemnification and contribution
provisions and procedures of Sections 6 and 7 with respect to all parties
to be indemnified pursuant to such sections; and
(v) the Company shall deliver such documents and
certificates as may be reasonably requested by the Holders of the
Registrable Securities being sold or the managing underwriter or
underwriters, if any, to evidence compliance with clause (i) above and
with any customary conditions contained in the underwriting agreement, if
any, or other agreement entered into by the Company;
the foregoing in this Section 2(d) shall be done at each closing under
such underwriting or similar agreement or as and to the extent required
thereunder; provided, however, the foregoing in Section 2(d) shall be
required on only one (1) occasion.
(e) The Company shall make available for inspection by a
representative or representatives of the Holders, any underwriter
participating in any disposition pursuant to a Registration Statement, and
any attorney or accountant retained by such Holders or underwriter, all
financial and other records customary for such purposes, pertinent
corporate documents and properties of the Company, and cause the
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<PAGE> 6
Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, attorney or
accountant in connection with such Registration Statement. The Holders and
each of their representatives, underwriters, attorneys and accountants
will agree to keep all non-public information supplied to it confidential
until such information is included in the Registration Statement filed
with the Commission.
3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Registration Rights Agreement shall be borne by the Company,
and all Selling Expenses shall be borne by the Holders.
4. Registration on Form S-3. The Company shall use its best efforts
to qualify for registration on Form S-3 or any comparable or successor form or
forms, or in the event that the Company is ineligible to use such form, such
form as the Company is eligible to use under the Securities Act.
5. Registration Procedures. In the case of each registration
effected by the Company pursuant to this Registration Rights Agreement, the
Company will keep the Holders advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense, the Company will
use its best efforts to:
(a) Keep such registration effective for the period ending at
the earlier of the following: (i) three (3) years after the date that such
Registration Statement is declared effective by the Commission or (ii)
such time when all Registrable Securities covered by such Registration
Statement have been sold or may be sold without any restriction pursuant
to Rule 144 as determined by the counsel to the Company pursuant to a
written opinion letter, addressed to the Company's transfer agent to such
effect.
(b) Furnish such number of prospectuses, and amendments and
supplements thereto, and other documents incident thereto as any Holder
from time to time may reasonably request.
(c) Prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period; cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule
424 under the Securities Act; and comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or supplement to
such Prospectus.
(d) Notify each Holder of Registrable Securities included in
the Registration Statement, counsel for the Holders and the managing
underwriters, if any, promptly, and (if requested by any such Person)
confirm such notice (a "Notice") in
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<PAGE> 7
writing, (1) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has
become effective, (2) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or the initiation
of any proceedings for that purposes, (3) if at any time the
representations and warranties of the Company contained in agreements
contemplated by Section 2(d) cease to be true and correct, (4) of the
receipt by the Company of any notification with respect to the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (5) of the happening of any event as a result of which the
Prospectus included in the Registration Statement (as then in effect)
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus or any preliminary
Prospectus, in light of the circumstances under which they were made) not
misleading and (6) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate
or that there exist circumstances not yet disclosed to the public which
make further sales under such Registration Statement inadvisable pending
such disclosure and post-effective amendment.
(e) Upon the occurrence of any event contemplated by Section
5(d)(2) through (6) and immediately upon the expiration of any Blocking
Period (as defined in Section 5A), prepare, if the occurrence of such
event or period requires such preparation, a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading.
(f) Make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Registration Statement, or
the lifting of any suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
possible moment.
(g) Ensure that all Registrable Securities subject to the
Registration Statement shall at all times be registered or qualified for
offer and sale under the securities or blue sky laws of such jurisdictions
as any Holder or underwriter reasonably requests in writing; use its best
efforts to keep each such registration or qualification effective,
including through new filings or amendments or renewals, during the period
such Registration Statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the applicable Registration Statement; provided, however, that the Company
will not be required to qualify to do business or take any action that
would subject it to taxation or general service of process in any
jurisdiction where it is not then so qualified or subject.
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(h) Use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by
the National Association of Securities Dealers, Inc. as may be necessary
to enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Securities in accordance with the chosen method or methods of
distribution.
(i) Cause all Registrable Securities included in such
Registration Statement to be listed, by the date of first sale of
Registrable Securities pursuant to such Registration Statement, on the
principal securities exchange or automated interdealer system on which the
same type of securities of the Company are then listed or traded.
5A. Suspensions of Effectiveness. The Company may suspend
dispositions under the Registration Statement and notify the Holders that they
may not sell the Registrable Securities pursuant to any Registration Statement
or Prospectus (a "Blocking Notice") if the Company's board of directors
determines in its reasonable good faith judgment that the Company's obligation
to ensure that such Registration Statement and Prospectus are current and
complete would require the Company to take actions that might reasonably be
expected to have a materially adverse detrimental effect on the Company and its
shareholders; provided that the Company shall diligently and expeditiously take
all actions it reasonably determines to be necessary or advisable to cause such
Prospectus to be current and complete and to remove such suspension pursuant to
a Blocking Notice or the Notice described below or as a result of the
circumstances described in Section 5(d)(2) through (6) within sixty (60) days.
Each Holder agrees by acquisition of the Registrable Securities that, upon
receipt of a Blocking Notice or "Notice" from the Company of the existence of
any fact of the kind described in the following sentence, such Holder shall not
dispose of, sell or offer for sale the Registrable Securities pursuant to the
Registration Statement until such Holder receives (i) copies of the supplemented
or amended Prospectus, or until counsel for the Company shall have determined
that such disclosure is not required due to subsequent events, (ii) notice in
writing (the "Advice") from the Company that the use of the Prospectus may be
resumed and (iii) copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus. Pursuant to the immediately
preceding sentence, the Company may provide such Notice to such Holder upon the
determination by the Company of the existence of any fact or the happening or
any event that makes any statement of a material fact made in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue in any material respect, or that
requires the making of any additions to or changes in the Registration Statement
or the Prospectus, in order to make the statements therein not misleading in any
material respect. If so directed by the Company in connection with any such
notice, each Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Registrable Securities that was current immediately
prior to the time of receipt of such notice. In the event the Company shall give
any such Blocking Notice or Notice, the time regarding the effectiveness of such
Registration Statement set forth in Section 5(a), the expiration date of the
Debentures and/or the expiration date of the Warrants may, at the option of each
Holder, be extended by one and one-half (1-1/2) times the number of days during
the period from and including the date of the giving of such Blocking Notice or
Notice to and including the date when the Holders shall
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<PAGE> 9
have received the copies of the supplemented or amended Prospectus, the Advice
and any additional or supplemental filings that are incorporated by reference in
the Prospectus. Delivery of a Blocking Notice or Notice and the related
suspension of any Registration Statement shall not constitute a default under
this Registration Rights Agreement and shall not create any obligation to pay
liquidated damages under Section 2 hereof. However, if the Holder's ability to
sell under the Registration Statement is suspended for more than the thirty (30)
day period described above (whether or not consecutive) during any twelve (12)
month period (an "Excess Blocking Period"), then during the period of such
suspension, such interest payable on all of the Debentures shall be increased by
2% (i.e., from 6% to 8%) commencing on the first day of the thirty (30) day
period (or part thereof) following the beginning of an Excess Blocking Period;
an additional 2% commencing on the first day of each of the second and third
such thirty (30) day periods (or part thereof) thereafter; and an additional 1%
percent on the first day of each consecutive thirty (30) day period (or part
thereof) thereafter until the Excess Blocking Period terminates. In addition, if
the Excess Blocking Period continues for more than an aggregate of 180 days in
any 360-day period, then at Holder's option, the Company shall redeem Holder's
Debentures at a redemption price equal to 130% of the sum of (x) the Aggregate
Principal Amount thereof plus (y) accrued and unpaid dividends thereon (whether
or not earned or declared) to the date of redemption, together with all payments
due under this Section and the Agreement.
6. Indemnification.
(a) Company Indemnity. The Company will indemnify each Holder, each
of its officers, directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Registration Rights Agreement, and
each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act or
any state securities law or in either case, any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each Holder, each of its officers, directors and partners,
and each person controlling such Holder, each such underwriter and each person
who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission (or alleged untrue statement or omission) that is made in reliance upon
and in conformity with written information furnished to the Company by such
Holder or the underwriter for use therein. The indemnity agreement contained in
this Section 6(a) shall not
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<PAGE> 10
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent will not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, if Registrable Securities
held by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors, officers, partners, and each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder, each other Holder (if
any), and each of their officers, directors and partners, and each person
controlling such other Holder within the meaning of Section 15 of the Securities
Act and the rules and regulations thereunder against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statement therein not
misleading, and will reimburse the Company and such other Holders and their
directors, officers and partners, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by such Holder
for use therein; provided that no Holder shall be liable under this indemnity
for an amount in excess of the net proceeds received by such Holder from the
sale of the Registrable Securities pursuant to such registration statement. The
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any such claims, losses, damages or liabilities if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under this
Article (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at the Indemnified Party's expense; provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 6 except to the extent that the Indemnifying Party is materially and
adversely affected by such failure to provide notice. The Indemnifying Party
shall not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for such Indemnified Party; provided,
however, that if separate firm(s) of
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<PAGE> 11
attorneys are required due to a conflict of interest, then the Indemnifying
Party shall be liable for the reasonable fees and expenses of each such separate
firm. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.
7. Contribution. (a) If the indemnification provided for in Section
6 herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) as between the Company on the one hand and the Holder or
underwriters, as the case may be, on the other, in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Holder or underwriters, as the case may be, on the other from the
offering of the Registrable Securities, or if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
of the Holder or underwriters, as the case may be, on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations and (ii)
as between the Company on the one hand and the Holder on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and of
the Holder in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations.
(b) The relative benefits received by the Company on the one hand
and the Holders or the underwriters, as the case may be, on the other shall be
deemed to be in the same proportion as the proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company from the initial sale of the Registrable Securities by the
Company to the Holders pursuant to this Registration Rights Agreement bear to
the net proceeds received by the Holders from the sale of Registrable Securities
pursuant to the Registration Statement or the total underwriting discounts and
commissions received by the underwriters as set forth in the table on the cover
page of the Prospectus, as the case may be. The relative fault of the Company on
the one hand and of the Holders or underwriters, as the case may be, on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, by the Holders or by the underwriters.
(c) In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under clauses (a) or (b) of Section 6 hereof had
been available under the circumstances.
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<PAGE> 12
(d) The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rated allocation (even if the Holders or the underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account the equitable considerations referred to in the immediately
preceding paragraphs. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraphs shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no Holder or
underwriter shall be required to contribute any amount in excess of the amount
by which (i) in the case of such Holder, the total price at which the shares of
Common Stock offered by such Holder and distributed to the public, or offered to
the public, exceed the amount paid by such Holder for the underlying Debentures
converted into such shares of Common Stock, (ii) in the case of an underwriter,
the total price at which the Registrable Securities purchased by it and
distributed to the public were offered to the public exceeds, in any such case,
the amount of any damages that the Holders or underwriter have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Changes in Common Stock. If, and as often as, there is any change
in the Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
9. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Debentures and the Shares to the public without registration, at
all times after 90 days after any registration statement covering a public
offering of securities of the Company under the Securities Act shall have become
effective, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and
(c) furnish to each Holder forthwith upon request a written
statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange
Act, a copy of the most recent annual or quarterly report of the Company,
and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or
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<PAGE> 13
regulation of the Commission allowing such Holder to sell any Debentures
or Shares without registration.
10. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (a) any termination of this Registration Rights Agreement or any
underwriting agreement, (b) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company and (c) the consummation of
the sale or successive resales of the Registrable Securities.
11. Information by Holder. Each Holder shall promptly furnish to the
Company such information regarding such Holder and the distribution proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Registration Rights Agreement; provided, however,
each Holder shall be given at least ten (10) days to respond to such request.
All information provided to the Company by such Holder shall be accurate and
complete in all material respects and such Holder shall promptly notify the
Company if any such information becomes incorrect or incomplete. If such Holder
does not timely provide such information as is determined by the Company to be
required by the Securities Act to be included in the Registration Statement and
is requested, the Company may exclude the Registrable Securities of such Holder
from the Registration Statement without breach of this Registration Rights
Agreement and such Holder shall not be entitled to the liquidated damages
contemplated by Section 2(b) to the extent that such delay in the Registration
Statement becoming effective is caused by such failure to timely provide
information unless such Holder shall be able to demonstrate to the Company's
satisfaction that such failure to timely provide did not proportionately
contribute to the event giving rise to the damages obligation; provided,
however, at least one (1) day's prior written notice of the Company's intention
to exclude the Registrable Securities of such Holder from the Registration
Statement shall be given to each Holder.
12. Transfer or Assignment of Registration Rights. The rights
granted to the Purchasers by the Company under this Registration Rights
Agreement to cause the Company to register Registrable Securities, may be
transferred or assigned to a transferee or assignee together with any transfer
or assignment of the Registrable Securities, provided that the Company is given
written notice by any applicable Holder at the time of or within twenty (20)
days after said transfer or assignment, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being transferred or assigned, and provided further that
the transferee or assignee of such rights agrees in writing to be bound by this
Registration Rights Agreement.
13. Representations and Warranties of the Company. The Company
represents and warrants that there are no agreements, understandings or
commitments, oral or written, between the Company and the holders of its
securities pursuant to which such holders have a right to require the Company to
register or qualify any of its securities under the Securities Act or any
applicable state securities laws, except for the rights granted to the holders
of warrants to
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<PAGE> 14
purchase an aggregate of 925,693 shares of Common Stock issued by the Company in
private placements in September 1992, April 1993, October 1993, March 1994,
April 1994, June 1994, March 1995, June 1995, August 1995, June 1996, September
1998, December 1998 and January 1999.
14. Miscellaneous.
(a) Entire Agreement. This Registration Rights Agreement, the
Agreement and the Debentures contain the entire understanding and agreement of
the parties, and may not be modified or terminated except by a written agreement
signed by the parties.
(b) Notices. Any notice, demand or request required or permitted to
be given by either the Company or the Purchaser pursuant to the terms of this
Registration Rights Agreement shall be in writing and shall be deemed given when
delivered personally, by overnight courier service or by facsimile, with a hard
copy to follow by overnight or two day courier, addressed to the other party at
the address of the party set forth at the end of this Registration Rights
Agreement or such other address as a party may request by notifying the other in
writing. Copies of all notices (a) to the Purchaser shall be sent to the address
set forth on the signature pages hereof, (b) to a Holder other than Purchaser,
shall be sent to the address thereof furnished by like notice to the Company,
and (c) to the Company shall be sent to Richard L. Higgins, Bio-Plexus, Inc.,
129 Reservoir Road, Vernon, Connecticut 06066, Telecopy: (860) 870-6118, with a
copy to Walter W. Simmers, Esq., Pepe & Hazard LLP, Goodwin Square, Hartford,
Connecticut 06103, Telecopy: (860) 522-2796, or to such other corporate officer
as it may hereafter designate.
(c) Gender of Terms. All terms used herein shall be deemed to
include the feminine and the neuter, and the singular and the plural, as the
context requires.
(d) GOVERNING LAW; CONSENT OF JURISDICTION. THIS REGISTRATION RIGHTS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF
LAW EXCEPT FOR MATTERS ARISING UNDER THE SECURITIES ACT OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, WHICH MATTERS SHALL BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH SUCH LAWS.
(e) Severability. Notwithstanding any provision of this Registration
Rights Agreement, neither the Company nor any other party hereto shall be
required to take any action which would be in violation of any applicable
Federal or state securities law. The invalidity or unenforceability of any
provision of this Registration Rights Agreement in any jurisdiction shall not
affect the validity, legality or enforceability of any other provision of this
Registration Rights Agreement in such jurisdiction or the validity, legality or
enforceability of this Registration Rights Agreement, including any such
provision, in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by law.
(f) Further Assurances. Each of the parties hereto shall execute
such documents and other papers and perform such further acts as may be
reasonably required or
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<PAGE> 15
desirable to carry out the provisions of this Registration Rights Agreement and
the transactions contemplated hereby.
(g) No Inconsistent Agreements. The Company has not, as of the date
hereof entered into and currently in effect, nor shall the Company on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Company has not
previously entered into any agreement currently in effect granting any
registration rights with respect to any of its securities to any Person. Without
limiting the generality of the foregoing, without the written consent of the
Holders of a majority of the then outstanding Registrable Securities, the
Company shall not grant to any Person the right to request the Company to
register any securities of the Company under the Securities Act unless the
rights so granted are subject in all respects to the prior rights in full of the
Holders set forth herein, and are not otherwise in conflict with the provisions
of this Agreement.
(h) Titles. The titles used in this Registration Rights Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Registration Rights Agreement.
(i) Counterparts. This Registration Rights Agreement may be executed
in any number of counterparts, each of which shall be enforceable against the
parties actually executing such counterparts and all of which together
constitute one instrument.
(j) No Piggyback on Registrations. Neither the Company nor any of
its security holders (other than the Holders in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement, and the
Company shall not after the date hereof enter into any agreement providing such
right to any of its security holders, unless the right so granted is subject in
all respects to the prior rights in full of the Holders set forth herein, and is
not otherwise in conflict with the provisions of this Agreement.
(k) Piggy-Back Registrations. If at any time when there is not an
effective Registration Statement covering the Shares, the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each holder of Registrable Securities written notice of such
determination and, if within thirty (30) days after receipt of such notice, any
such holder shall so request in writing, (which request shall specify the
Registrable Securities intended to be disposed of by the Purchasers), the
Company will cause the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the holder, to
the extent requisite to permit the disposition of the Registrable Securities so
to be registered, provided that if at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the
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Company shall determine for any reason not to register or to delay registration
of such securities, the Company may, at its election, give written notice of
such determination to such holder and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not from
its obligation to pay expenses in accordance with Section 3 hereof), and (ii) in
the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities being registered pursuant to this Section
14(k) for the same period as the delay in registering such other securities. The
Company shall include in such registration statement all or any part of such
Registrable Securities such holder requests to be registered; provided, however,
that the Company shall not be required to register any Registrable Securities
pursuant to this Section 14(k) that are eligible for sale pursuant to Rule
144(k) of the Securities Act. In the case of an underwritten public offering, if
the managing underwriter(s) should reasonably object to the inclusion of the
Registrable Securities in such registration statement, then if the Company after
consultation with the managing underwriter(s) should reasonably determine that
the inclusion of such Registrable Securities would materially adversely affect
the offering contemplated in such registration statement, and based on such
determination recommends inclusion in such registration statement of fewer or
none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro-rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration), if the
Company after consultation with the managing underwriter(s) recommends the
inclusion of fewer Registrable Securities, or (y) none of the Registrable
Securities of the Holders shall be included in such registration statement, if
the Company after consultation with the managing underwriter(s) recommends the
inclusion of none of such Registrable Securities; provided, however, that if
securities are being offered for the account of other persons or entities as
well as the Company, such reduction shall not represent a greater fraction of
the number of Registrable Securities intended to be offered by the Holders than
the fraction of similar reductions imposed on such other persons or entities
(other than the Company).
(l) Escrowed Funds. The Company shall maintain $100,000 (the
"Escrowed Funds") in an escrow account pursuant to an escrow agreement (the
"Escrow Agreement") until the Registration Statement is declared effective. The
first $100,000 of payments to be made pursuant to the terms of either the
Subscription Agreement, the Registration Rights Agreement, the Debentures or the
Warrants (the "Transaction Documents"), including any payments made by the
Company in connection with a redemption of the Debentures or any penalty
payments or other damages assessed for failure to perform the obligations of the
Company set forth in the Transaction Documents, shall be payable out of the
Escrowed Funds, to the extent available, and any remaining payments due under
the Transaction Documents shall be due and payable immediately upon demand in
immediately available funds.
(m) Most Favored Registration Rights. The Company shall not grant to
any person any registration rights ("New Registration Rights") with respect to
securities of the Company if such New Registration Rights are, in the reasonable
opinion of any Purchaser, superior in any fashion to the registration rights
granted to any Purchaser pursuant to this
-16-
<PAGE> 17
Agreement, unless the holders of a majority of the Registrable Securities
consent to such New Registration Rights in writing.
[SIGNATURE PAGES TO FOLLOW]
-17-
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed as of the date first above written.
BIO-PLEXUS, INC.
By: ___________________________________
Name:
Title:
LEONARDO, L.P.
By: Angelo, Gordon & Co., L.P.
Its: General Partner
By: ___________________________________
Name: Michael L. Gordon
Title: Chief Operating Officer
Address:
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, New York 10167
Attn: Gary Wolf
Telephone: (212) 692-2058
Telecopy: (212) 867-6449
-18-
<PAGE> 19
AG SUPER FUND INTERNATIONAL
PARTNERS, L.P.
By: Angelo, Gordon & Co., L.P.
Its: General Partner
By: ___________________________________
Name: Michael L. Gordon
Title: Chief Operating Officer
Address:
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, New York 10167
Attn: Gary Wolf
Telephone: (212) 692-2058
Telecopy: (212) 867-6449
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By: ___________________________________
Name: Michael L. Gordon
Title: Managing Officer
Address:
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, New York 10167
Attn: Gary Wolf
Telephone: (212) 692-2058
Telecopy: (212) 867-6449
-19-
<PAGE> 20
GAM ARBITRAGE INVESTMENTS, INC.
By: Angelo, Gordon & Co., L.P.
Its: Investment Advisor
By: ___________________________________
Name: Michael L. Gordon
Title: Chief Operating Officer
Address:
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, New York 10167
Attn: Gary Wolf
Telephone: (212) 692-2058
Telecopy: (212) 867-6449
RAPHAEL, L.P.
By: ___________________________________
Name: Michael L. Gordon
Title: Chief Operating Officer
Address:
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, New York 10167
Attn: Gary Wolf
Telephone: (212) 692-2058
Telecopy: (212) 867-6449
-20-
<PAGE> 21
AGR HALIFAX FUND, LTD.
By: AG Ramius Partners, L.L.C.
Its: Investment Advisor
By: ___________________________________
Name: Jeffrey M. Solomon
Title: Managing Officer
Address:
c/o Ramius Capital Group, LLC
757 Third Avenue, 27th Floor
New York, New York 10017
Attn: Jeffrey M. Solomon
Telephone: (212) 845-7917
Telecopy: (212) 845-7999
-21-
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of Bio-Plexus, Inc.
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 (No. 333- ) of Bio-Plexus, Inc. of our
report dated March 5, 1999 appearing on page F-2 of the Annual Report on Form
10-K for the year ended December 31, 1998, and to all references to our firm
under the caption "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Mahoney Sabol & Company, LLP
Mahoney Sabol & Company, LLP
Hartford, Connecticut
May 28, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 of Bio-Plexus, Inc. of our report dated April 11, 1997
appearing on page F-3 of the Annual Report on Form 10-K, and to all references
to our firm under the caption "Experts" in the Prospectus, which is part of the
Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Hartford, Connecticut
May 28, 1999
