UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)*
BIO-PLEXUS, INC.
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(Name of Issuer)
COMMON STOCK (NO PAR VALUE)
- ---------------------------------------------------------------------------
(Title of Class of Securities)
09057C 106
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(CUSIP Number)
KENNETH MAIMAN, ESQ. ROBERT C. SCHWENKEL, ESQ.
APPALOOSA MANAGEMENT L.P. FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
26 MAIN STREET, FIRST FLOOR ONE NEW YORK PLAZA
CHATHAM, NJ 07928 NEW YORK, NY 10004
(973) 701-7000 (212) 859-8000
- ---------------------------------------------------------------------------
(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications)
APRIL 28, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box |_|.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 09057C 106
1 NAME OF REPORTING PERSON/
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Appaloosa Management L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 10,033,333
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 10,033,333
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,033,333
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
41.1%
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 09057C 106
1 NAME OF REPORTING PERSON/
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
David A. Tepper
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES 10,033,333
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 10,033,333
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,033,333
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
41.1%
14 TYPE OF REPORTING PERSON*
IN
<PAGE>
This Amendment No. 3 to the statement on Schedule 13D filed on
behalf of Appaloosa Management L.P. (the "Manager") and David A. Tepper
("Mr. Tepper" and, together with the Manager, collectively, the "Reporting
Persons") on November 1, 1999, as amended by Amendment No. 1 filed on
January 5, 2000 and Amendment No. 2 filed on April 3, 2000 (collectively,
the "Schedule 13D"), relates to shares of the common stock, no par value
(the "Common Stock"), of Bio-Plexus, Inc., a Connecticut corporation (the
"Company"). Capitalized terms used but not otherwise defined herein shall
have the meaning ascribed to such terms in the Schedule 13D. The Schedule
13D is hereby amended and supplemented as follows:
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
--------------------------------------------------
The Convertible Notes, the Rollover Warrants and the Rollover
Shares were purchased with the funds of the Purchasers for an aggregate
purchase price of $17.5 million in cash.
ITEM 4. PURPOSE OF TRANSACTION.
-----------------------
On April 28, 2000, the Company and the Purchasers consummated the
Rollover Transactions and entered into the Convertible Note Purchase
Agreement, pursuant to which the Purchasers acquired from the Company (i)
Convertible Notes with an original issue price of $16.75 million, (ii) the
Rollover Warrants and (iii) the Rollover Shares with an aggregate purchase
price of $17.5 million. Simultaneously with the closing of the Rollover
Transactions (a) the Company issued to the Purchasers the Additional $3
Warrants to purchase 200,000 shares of Common Stock pursuant to the Letter
Agreement and (b) the Company cancelled the $3 Warrants and issued to the
Purchasers the Replacement Warrants pursuant to the Second Letter
Agreement. With the proceeds from the Rollover Transactions, the Company
repaid the principal and interest due on the Bridge Note, the New Note and
the Third Note. The Convertible Note Purchase Agreement, the form of
Convertible Note, the form of Rollover Warrants, the form of Additional $3
Warrants and the form of Replacement Warrants are attached hereto as
Exhibits 1 through 5 respectively and are incorporated in and made a part
of this Schedule 13D in their entirety by this reference.
The Convertible Notes are zero coupon notes, have an original
issue price of $16.75 million in the aggregate and will initially accrue
interest at a semi-annual compound rate of 15% per annum, payable at
maturity, with the Accretion Rate (as defined in the Convertible Note
Purchase Agreement) being subject to reduction as follows:
a. upon the appointment of a new Chief Executive Officer by the
Board of Directors (which was satisfied on April 25, 2000
with the appointment of John S. Metz, effective April 28,
2000) and the achievement of certain operational milestones
(the "First Milestone"), the interest rate of the
Convertible Notes will decrease from 15% to 12%;
b. assuming the conditions set forth in the preceding paragraph
(a) have occurred, upon the Company achieving Product Sales
Revenues (as defined in the Convertible Note Purchase
Agreement) equal to or exceeding $15 million for the
trailing 12-month period (the "Second Milestone"), the
interest rate of the Convertible Notes will decrease from
12% to 10%; and
c. assuming the conditions set forth in the preceding
paragraphs (a) and (b) have occurred, upon the Company
achieving Product Sales Revenues equal to or exceeding $25
million for the trailing 12 month period (the "Third
Milestone"), the interest rate of the Convertible Notes will
decrease from 10% to 7.5%.
The Convertible Notes mature in five years and have a conversion
price of $3.00 per share (subject to anti-dilution adjustments). Based upon
the original issue price of $16.75 million, the Convertible Notes are
initially convertible into an aggregate of 5,583,333 shares of Common
Stock. During the term of the Convertible Note Purchase Agreement, the
number of shares of Common Stock into which the Convertible Notes will be
convertible will depend upon the Accretion Rate.
Covenants under the Convertible Note Purchase Agreement
-------------------------------------------------------
Under the terms of the Convertible Note Purchase Agreement, the
Company has agreed to certain covenants. The Company has agreed that it
shall not acquire or merge with any other entity, nor shall it sell all or
substantially all of its assets to any other entity.
The Company is required to exceed/not to exceed certain specified
levels of minimum Operating Profit or maximum Operating Loss (each, as
defined in the Convertible Note Purchase Agreement) for three-month periods
and Product Sales Revenues for three- and twelve-month periods and certain
specified levels of consolidated Capital Expenditures (as defined in the
Convertible Note Purchase Agreement) for six-month periods. As with all of
the covenants, the failure to achieve these levels will constitute an event
of default under the Convertible Note Purchase Agreement pursuant to which
the Purchasers may accelerate the maturity of the Convertible Notes and
declare them immediately due and payable.
Any change in, or appointment of, key executive officers of the
Company, including, but not limited to, the Chief Executive Officer, the
Chief Financial Officer, Executive Vice Presidents, Chief Operating
Officer, General Counsel, or similar positions requires the affirmative
vote of the Purchaser Designees (as defined in the Convertible Note
Purchase Agreement).
The Company has agreed that it will use a portion of the net
proceeds from the Rollover Transactions for the specified purposes set
forth in its Proxy Statement, filed on April 3, 2000. The remaining net
proceeds to be used for working capital will be deposited in a restricted
account and disbursed in amounts equal to quarterly operating budgets
prepared by the Company and approved by the Board of Directors (including
the affirmative vote of the Purchaser Designees). The Company must remain
in compliance with the terms of the Convertible Note Purchase Agreement in
order for the remaining net proceeds to be disbursed.
Except as set forth in a schedule to the Convertible Note
Purchase Agreement, the Company has agreed that it shall not create, incur,
assume, or directly or indirectly guarantee or in any other manner become
directly or indirectly liable for the payment of any Indebtedness (as
defined in the Convertible Note Purchase Agreement), including, but not
limited to, the issuance of debt securities and capitalized lease
obligations. For purposes of the Convertible Note Purchase Agreement,
Permitted Indebtedness (as defined in the Convertible Note Purchase
Agreement) includes Indebtedness and obligations under the Convertible
Notes, any Indebtedness and obligations outstanding on the date of the
closing of the Rollover Transactions and indebtedness incurred in the
ordinary course of business and consistent with past practice not to exceed
$1,000 individually or in the aggregate.
The Company has agreed that it shall not offer or issue any
shares of Preferred Stock (as defined in the Convertible Note Purchase
Agreement) or Common Stock for any purpose whatsoever, except for shares of
Common Stock issuable upon (i) exercise of warrants issued to the
Purchasers and its affiliates, (ii) the conversion of the Notes and (iii)
pursuant to Schedule 6.9 of the Convertible Note Purchase Agreement. The
Company has agreed that it shall not declare any dividends on any shares of
its Capital Stock (as defined in the Convertible Note Purchase Agreement),
or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, retirement, exchange or
other acquisition of any shares of its Capital Stock, whether outstanding
on the date of the closing of the Rollover Transactions or thereafter, or
make any other distribution in respect thereof, either directly or
indirectly, whether in cash, securities, property or in obligations of the
Company or any of its Subsidiaries (as defined in the Convertible Note
Purchase Agreement).
The Company has agreed that it shall not, or permit any of its
Subsidiaries to, directly or indirectly, make or cause or permit, (i) any
direct or indirect advance to, (ii) any loan or other extension of credit
to, (iii) any Guarantee (as defined in the Convertible Note Purchase
Agreement) of any Indebtedness of, (iv) any capital contribution to, (v)
any purchase or other acquisition of any Equity Interests (as defined in
the Convertible Note Purchase Agreement) in, (vi) any purchase or other
acquisition of assets (other than in the ordinary course of business) from
or (vii) any merger with, any Person, including, without limitation, any of
the Company's Subsidiaries in each case other than Permitted Investments
(as defined in the Convertible Note Purchase Agreement).
The Company has agreed that it shall not, and shall not permit
any of its Subsidiaries to, engage in any business if, as a result, the
general nature of the business in which the Company and its Subsidiaries,
taken as a whole, would then be engaged would be substantially changed from
the general nature of the business in which the Company is engaged on the
date of the Convertible Note Purchase Agreement.
The Company has agreed that it shall not, and shall not permit
any of its Subsidiaries to, Transfer (as defined in the Convertible Note
Purchase Agreement) any property or assets, unless the property or asset
that is the subject of such Transfer constitutes (i) inventory held for
sale, (ii) marketable securities available for sale, or (iii) real estate,
equipment, fixtures, supplies or materials no longer required in the
operation of the business of the Company or such Subsidiary or that is
obsolete, and, in the case of any Transfer described in clause (i) or
(iii), such Transfer is in the ordinary course of business.
The Company has agreed that it shall not, and shall not permit
any Subsidiaries to, enter into any Contract (as defined in the Convertible
Note Purchase Agreement), or any amendment, modification, extension or
supplement to any of its existing Contract or the By-Laws or Certificate of
Incorporation of the Company, that prohibits the Company from honoring and
observing its obligations under the Transaction Documents (as defined in
the Convertible Note Purchase Agreement).
The Company has agreed that it shall furnish to the Manager as
soon as practicable, but in any event no later than 10 days before the end
of each of the quarterly periods of each fiscal year of the Company, an
operating budget (each, a "Quarterly Budget") approved and adopted by a
majority of the Board of Directors (which majority shall include the
Purchaser Designees, if any) for the Company and its Subsidiaries, taken as
a whole, for the next quarterly period (provided that the Company need not
furnish the Collateral Agent with a Quarterly Budget for the quarterly
period commencing on April 1, 2000). Each Quarterly Budget shall specify,
among other things, the amount of funds needed by the Company and its
Subsidiaries in the next quarter to operate the business of the Company and
its Subsidiaries.
In order to secure the payment in full and performance of the
Secured Obligations (as defined in the Convertible Note Purchase
Agreement), the Company and the Manager entered into a Security Agreement,
dated as of April 28, 2000 (the "Security Agreement"), pursuant to which
the Company granted to the Manager, for ratable benefit of the Purchasers,
a first priority interest and lien on all of the assets (other than certain
real property and other equipment leases) of the Company. The Company also
granted to the Manager, for the ratable benefit of the Purchasers, a second
priority interest and lien on certain real property of the Company. The
Security Agreement is attached as Exhibit 6 hereto and is incorporated in
and made a part of this Schedule 13D in its entirety by this reference.
Simultaneously with the closing of the Rollover Transactions, the
Company and the Purchasers entered into the Rollover Registration Rights
Agreement. Pursuant to the Rollover Registration Rights Agreement, the
Purchasers have the right to demand that the Company effect the
registration under the Securities Act of 1993, as amended (the "Securities
Act"), of all or part of their Registrable Securities having an aggregate
anticipated offering price of at least $1 million. Registrable Securities
are defined to include (i) shares of Common Stock issuable upon conversion
of the Convertible Notes, (ii) the Rollover Shares, (iii) shares of Common
Stock issuable upon the exercise of the Rollover Warrants, the Additional
$3 Warrants, the Replacement Warrants and the $5 Warrants and (iv) any
other additional shares of Common Stock the Purchasers may otherwise
acquire. The Rollover Registration Rights Agreement is attached hereto as
Exhibit 7 and is incorporated in and made a part of this Schedule 13D in
its entirety by this reference.
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER.
--------------------------------------
In connection with the Rollover Transactions, the Manager
acquired (i) for the account of Appaloosa, a Convertible Note with an
original issue price of $7,257,000, a $7 Rollover Warrant to purchase
649,911 shares of Common Stock, 108,318 Rollover Shares and an Additional
$3 Warrant to purchase 86,655 shares of Common Stock; (ii) for the account
of Palomino, a Convertible Note with an original issue price of $8,271,000,
a $7 Rollover Warrant to purchase 740,716 shares of Common Stock, 123,453
Rollover Shares and an Additional $3 Warrant to purchase 98,762 shares of
Common Stock; and (iii) for the account of Tersk, a Convertible Note with
an original issue price of $1,222,000, a $7 Rollover Warrant to purchase
109,373 shares of Common Stock, 18,229 Rollover Shares and an Additional $3
Warrant to purchase 14,583 shares of Common Stock.
Accordingly, as of the date hereof, Appaloosa, Palomino and Tersk
each hold (i) warrants to acquire 1,832,816, 2,063,228 and 303,956 shares of
Common Stock, respectively (or 4,200,000 warrants in the aggregate) and
(ii) 108,318, 123,453 and 18,229 shares of Common Stock, respectively (or
250,000 shares in the aggregate).
In addition, Appaloosa, Palomino and Tersk hold in aggregate
principal amount $16.75 million of Convertible Notes, which are
convertible, as of the date hereof, into 5,583,333 shares of Common Stock.
(a) As of the date hereof and assuming conversion of the
Convertible Notes into shares of Common Stock and the exercise of the
Rollover Warrants, the Additional $3 Warrants, the Replacement Warrants and
the $5 Warrants (which were acquired on October 21, 1999), the Reporting
Persons may be deemed to be the beneficial owners of an aggregate of
10,033,333 shares of Common Stock, which constitute approximately 41.1% of
the issued and outstanding Common Stock.
(b) As of the date hereof, each of the Manager and Mr. Tepper may
be deemed to have the sole voting and dispositive power with respect to
10,033,333 shares of Common Stock (assuming the exercise of all warrants
described above and the conversion of the Convertible Notes into shares of
Common Stock).
(c) Except as described in this Schedule 13D, the Reporting
Persons have not effected any transactions in the Common Stock during the
sixty days preceding the date of this Schedule 13D.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
-------------------------------------------------------------
The responses set forth in Items 4 and 5 of this Schedule 13D are
incorporated herein by this reference in their entirety.
Other than as set forth in this Item 6 and Items 3, 4, and 5
above, none of the Reporting Persons is a party to any contract,
arrangement, understanding or relationship with respect to any securities
of the Issuer, and none of the securities as to which this Schedule 13D
relates is pledged or is otherwise subject to a contingency the occurrence
of which would give another person voting power or investment power over
such securities.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
---------------------------------
Exhibit 1 -- Convertible Note Purchase Agreement
Exhibit 2 -- Form of Convertible Note
Exhibit 3 -- Form of Rollover Warrant
Exhibit 4 -- Form of Additional $3 Warrant
Exhibit 5 -- Form of Replacement Warrant
Exhibit 6 -- Security Agreement
Exhibit 7 -- Rollover Registration Rights Agreement
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: May 3, 2000
Appaloosa Management L.P.
By: Appaloosa Partners Inc.,
Its General Partner
By: /s/ David A. Tepper
---------------------------------
David A. Tepper
President
/s/ David A. Tepper
--------------------------
David A. Tepper
<PAGE>
EXHIBIT INDEX
Exhibit 1 -- Convertible Note Purchase Agreement
Exhibit 2 -- Form of Convertible Note
Exhibit 3 -- Form of Rollover Warrant
Exhibit 4 -- Form of Additional $3 Warrant
Exhibit 5 -- Form of Replacement Warrant
Exhibit 6 -- Security Agreement
Exhibit 7 -- Rollover Registration Rights Agreement
Exhibit 1
---------
CONVERTIBLE NOTE PURCHASE AGREEMENT
AMONG
BIO-PLEXUS, INC.,
THE PURCHASERS
LISTED ON EXHIBIT A HERETO
AND
APPALOOSA MANAGEMENT, L.P.,
as Collateral Agent
Dated as of April 28, 2000
<PAGE>
TABLE OF CONTENTS
1. Issuance and Sale of Notes, Common Stock and $7 Warrants................1
--------------------------------------------------------
1.1. Definitions.............................................1
-----------
1.2. Issuance, Purchase and Sale.............................1
---------------------------
1.3. Closing.................................................2
-------
1.4. Deliveries by the Company...............................2
-------------------------
1.5. Deliveries by the Purchasers............................3
----------------------------
2. Representations and Warranties of the Company...........................3
---------------------------------------------
2.1. Organization; Subsidiaries..............................3
--------------------------
2.2. Due Authorization.......................................4
-----------------
2.3. Capitalization..........................................4
--------------
2.4. SEC Reports Correspondence..............................5
--------------------------
2.5. Financial Statements....................................5
--------------------
2.6. Litigation..............................................5
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2.7. Title to Properties; Insurance..........................6
------------------------------
2.8. Consents, etc...........................................6
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2.9. No Material Adverse Change..............................6
--------------------------
2.10. Taxes...................................................7
-----
2.11. Compliance with ERISA...................................7
---------------------
2.12. Labor Relations.........................................8
---------------
2.13. Intellectual Property Rights............................8
----------------------------
2.14. Possession of Franchises, Licenses, Etc.................9
----------------------------------------
2.15. Compliance with Laws....................................9
--------------------
2.16. Conflicting Agreements and Certificate
of Incorporation......................................9
--------------------------------------
2.17. Suppliers...............................................9
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2.18. Products...............................................10
--------
2.19. Offering of the Securities.............................10
--------------------------
2.20. Existing Indebtedness; Future Liens....................10
-----------------------------------
2.21. Environmental Matters..................................10
---------------------
2.22. Solvency...............................................11
--------
2.23. Security Documents.....................................11
------------------
2.24. Brokers or Finders.....................................11
------------------
2.25. Holding Company Act and Investment Company Act.........11
----------------------------------------------
2.26. Related Party Transactions.............................11
--------------------------
2.27. Year 2000..............................................11
---------
2.28. Disclosure.............................................12
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3. Representations and Warranties of the Purchasers.......................12
------------------------------------------------
3.1. Organization and Qualification.........................12
------------------------------
3.2. Due Authorization......................................12
-----------------
3.3. Acquisition for Investment.............................13
--------------------------
3.4. Offering of Securities.................................13
----------------------
3.5. Accredited Investor....................................13
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i
<PAGE>
4. Registration, Exchange and Transfer of Notes...........................13
--------------------------------------------
4.1. The Note Register; Persons Deemed Owners...............13
----------------------------------------
4.2. Issuance of New Notes Upon Exchange or Transfer........13
-----------------------------------------------
5. Payment of Notes.......................................................14
----------------
5.1. Home Office Payment....................................14
-------------------
5.2. Limitation on Interest.................................14
----------------------
5.3. Payment of Principal & Interest........................14
-------------------------------
6. Covenants of the Company...............................................15
------------------------
6.1. Maintenance of Office or Agency........................15
-------------------------------
6.2. Money for Security Payments to be Held in Trust........15
-----------------------------------------------
6.3. Existence..............................................15
---------
6.4. Maintenance of Properties..............................16
-------------------------
6.5. Payment of Taxes and Other Claims......................16
---------------------------------
6.6. Limitation on Indebtedness.............................16
--------------------------
6.7. Limitation on Encumbrances.............................16
--------------------------
6.8. Limitation on Related Party Transactions...............16
----------------------------------------
6.9. Limitation on Dividends; Stock Issuances...............17
----------------------------------------
6.10. Subsidiary Guarantees..................................17
---------------------
6.11. Additional Offerings of Securities.....................17
----------------------------------
6.12. Pledges of Intercompany Notes..........................18
-----------------------------
6.13. No Speculative Transactions............................18
---------------------------
6.14. Restricted Investments.................................18
----------------------
6.15. Financial Covenants....................................18
-------------------
6.16. Sale-and-Leaseback Transactions........................18
-------------------------------
6.17. Line of Business.......................................18
----------------
6.18. Sale of Assets.........................................19
--------------
6.19. Indenture Relating to the Notes........................19
-------------------------------
6.20. Financial Statements and Information...................19
------------------------------------
6.21. Inspection.............................................20
----------
6.22. Compliance with Laws...................................21
--------------------
6.23. Supplemental Disclosure................................21
-----------------------
6.24. Proceeds...............................................21
--------
6.25. Insurance; Damage to or Destruction of Collateral......22
-------------------------------------------------
6.26. Rights of Required Holders to Designate Directors;
Board Composition....................................22
--------------------------------------------------
-----------------------------------------------------
6.27. Executive Officers.....................................23
------------------
6.28. Board and Committee Notice Requirement.................23
--------------------------------------
6.29. Reimbursement of Certain Expenses......................23
---------------------------------
6.30. Limitation of Agreements...............................24
------------------------
6.31. Reserved...............................................24
--------
6.32. Preparation of Quarterly Budgets.......................24
--------------------------------
6.33. Operations in Accordance with the Business Plan........24
-----------------------------------------------
6.34. Operational Covenants..................................24
---------------------
7. Events of Default and Remedies.........................................24
------------------------------
7.1. Events of Default and Remedies.........................24
------------------------------
7.2. Default Rate...........................................26
------------
7.3. Acceleration of Maturity...............................27
------------------------
ii
<PAGE>
7.4. Other Remedies.........................................27
--------------
7.5. Conduct No Waiver; Collection Expenses.................27
--------------------------------------
7.6. Annulment of Acceleration..............................27
-------------------------
7.7. Remedies Cumulative....................................27
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8. Redemption.............................................................28
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8.1. Optional Redemption....................................28
-------------------
8.2. Partial Redemption.....................................28
------------------
8.3. Change of Control......................................28
-----------------
8.4. Redemption Procedures..................................28
---------------------
9. Conversion.............................................................29
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9.1. Holder's Option to Convert into Common Stock...........29
--------------------------------------------
9.2. Exercise of Conversion Privilege.......................29
--------------------------------
9.3. Fractions of Shares; Interest..........................30
-----------------------------
9.4. Reservation of Stock; Listing..........................30
-----------------------------
9.5. Rights.................................................30
------
9.6. Adjustment of Conversion Ratio.........................30
------------------------------
9.7. Merger or Consolidation................................33
-----------------------
9.8. Notice of Certain Corporate Actions....................33
-----------------------------------
9.9. Reports as to Adjustments..............................34
-------------------------
10. The Collateral Agent...................................................34
--------------------
10.1. Appointment............................................34
-----------
10.2. Delegation of Duties...................................34
--------------------
10.3. Exculpatory Provisions.................................34
----------------------
10.4. Reliance by the Collateral Agent.......................35
--------------------------------
10.5. Notice of Default......................................35
-----------------
10.6. Non-Reliance on Collateral Agent and Other
Purchasers...........................................35
------------------------------------------
10.7. Indemnification........................................36
---------------
10.8. Collateral Agent in its Individual Capacity............36
-------------------------------------------
10.9. Successor Collateral Agent.............................36
--------------------------
11. Interpretation.........................................................37
--------------
11.1. Definitions............................................37
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11.2. Accounting Principles..................................49
---------------------
12. Miscellaneous..........................................................49
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12.1. Payments; Indemnity....................................49
-------------------
12.2. Severability...........................................50
------------
12.3. Specific Enforcement...................................50
--------------------
12.4. Entire Agreement.......................................50
----------------
12.5. Counterparts...........................................51
------------
12.6. Notices and other Communications.......................51
--------------------------------
12.7. Amendments.............................................52
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12.8. Successors and Assigns.................................52
----------------------
12.9. Expenses...............................................52
--------
12.10. Survival...............................................52
--------
12.11. Transfer of Notes and Common Stock.....................52
----------------------------------
iii
<PAGE>
12.12. GOVERNING LAW..........................................53
-------------
12.13. Submission to Jurisdiction.............................53
--------------------------
12.14. Service of Process.....................................53
------------------
12.15. WAIVER OF JURY TRIAL...................................54
--------------------
12.16. Public Announcements...................................54
--------------------
12.17. Further Assurances.....................................54
------------------
12.18. Substitution of Purchaser..............................54
-------------------------
12.19. Signatures.............................................54
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iv
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THIS CONVERTIBLE NOTE PURCHASE AGREEMENT, dated as of April 28,
2000 (this "Agreement"), is made among BIO-PLEXUS, INC., a Connecticut
corporation (the "Company"), the purchasers listed on Exhibit A (each such
party, a "Purchaser" and, collectively, the "Purchasers"), and APPALOOSA
MANAGEMENT L.P., as Collateral Agent (the "Collateral Agent").
WHEREAS, the Company has previously issued to Appaloosa
Investment Limited Partnership I 7.5% Secured Note, 15% Secured Note and
Second 15% Secured Note (collectively, the "Bridge Notes");
WHEREAS, the Bridge Notes provide that, subject to the terms and
conditions specified therein, the parties thereto will enter into this
Agreement;
WHEREAS, upon the terms and subject to the conditions set forth
in this Agreement, the Purchasers wish to purchase from the Company, and
the Company wishes to issue and sell to the Purchasers, (i) Zero Coupon
Secured Convertible Notes, due April 28, 2005 (the "Notes"), in the form
attached hereto as Exhibit1.4i with an original issue price of $16.75
million (the "Issue Price"), (ii) an aggregate of 250,000 shares (the
"Shares") of Common Stock, no par value, of the Company (the "Common
Stock") and (iii) warrants to purchase 1,500,000 shares of Common Stock
with an exercise price of $7 per share in the form attached as Exhibit
1.4ii (the "$7 Warrants");
WHEREAS, the Notes shall be convertible (under the circumstances
described herein) into shares of Common Stock; and
WHEREAS, the Purchasers and the Company desire to provide for
such purchase and sale and to establish various rights and obligations in
connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein set forth, the parties
hereto agree as follows:
1. Issuance and Sale of Notes, Common Stock and $7 Warrants.
--------------------------------------------------------
1.1. Definitions. Certain capitalized terms used in the Agreement
are defined in Section 11.1 hereof; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement.
1.2. Issuance, Purchase and Sale. (a) Upon the terms and subject
to the conditions set forth herein, the Company is issuing and selling to
the Purchasers, and the Purchasers are purchasing from the Company, the
Notes, the Shares and the $7 Warrants for an aggregate cash purchase price
of $17.5 million (the "Purchase Price"). The Notes shall be in the form of
Exhibit 1.4(i).
(b) The parties agree that the fair market value of the Notes is
$16,700,000 , the fair market value of the Shares is $750,000 and the fair
market value of the $7 Warrants is $50,000. Each party agrees to file all
Tax Returns consistent with such allocation and to take no position
inconsistent with such allocation, unless required by Law.
(c) The parties hereto agree that, for purposes of Treas. Reg.
Sec. 1.1275-4(b)(3)(ii), (x) the comparable yield is 7.5% with respect to
the Notes, and (y) the projected payment schedule with respect to the Notes
will reflect the foregoing comparable yield.
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1.3. Closing. The closing of the transactions contemplated hereby
(the "Closing") will take place simultaneously with the execution hereof at
the offices of Fried, Frank, Harris, Shriver & Jacobson, New York, New
York.
1.4. Deliveries by the Company. At the Closing, the Company is
delivering to each Purchaser (and to such other parties as otherwise set
forth below) the following:
(i) duly executed Notes in the amount set forth opposite
such Purchaser's name on Exhibit 1.4i;
(ii) duly executed $7 Warrants in the number set forth
opposite such Purchaser's name on Exhibit 1.4ii;
(iii) duly executed $3 Warrants in the number set forth
opposite such Purchaser's name on Exhibit 1.4iii;
(iv) an opinion of the Company's counsel, dated as of the
date hereof, addressed to such Purchaser in the form of Exhibit
1.4iv;
(v) an Officer's Certificate, dated as of the date hereof,
certifying that (A) the representations and warranties contained
in Section 2 hereof are true and correct and (B) the transactions
contemplated hereby and in the Transaction Documents have been
approved and adopted by the requisite vote of the stockholders of
the Company in accordance with applicable Law, the applicable
rules of NASDAQ and the Company's Certificate of Incorporation
and By-Laws at a properly called special meeting of the
stockholders of the Company;
(vi) a good standing certificate for the Company, dated no
earlier than seven days prior to the date hereof, from the
Secretary of State of the State of Connecticut;
(vii) a copy of the resolutions of the Board of Directors
adopting the execution of each of the Transaction Documents and
the performance of the transactions contemplated by the
Transaction Documents, which resolutions shall be certified as
true, correct and effective as of the date hereof by an officer
of the Company;
(viii) a duly executed copy of the Security Agreement in the
form attached hereto as Exhibits 1.4viiiA, and copies of any
other Collateral Documentation including Financing Statements
required to perfect the Holders' security interest in the
Collateral;
(ix) a duly executed copy of the Registration Rights
Agreement attached as Exhibit 1.4ix;
(x) an opinion from an independent valuation consultant or
appraiser reasonably satisfactory to the Purchasers in form and
substance reasonably satisfactory to the Purchasers supporting
the conclusions that, after giving effect to the transactions
contemplated by the Transaction Documents, the Company will not
be insolvent by the incurrence of Indebtedness incurred in
connection therewith, or be left with unreasonably small capital
with which to engage in its business, or have incurred debts
beyond its ability to pay such debts as they mature;
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(xi) a copy of the Company's employment agreement with Carl
Sahi, which employment agreement shall be in form and substance
reasonably satisfactory to the Purchasers and which shall be
certified as true, correct and effective as of the date hereof by
an officer of the Company;
(xii) copies of all of the Company's directors and officers
liability insurance policies, which insurance policies shall be
in form and substance reasonably satisfactory to the Purchasers
and which shall be certified as true, correct and effective as of
the date hereof by an officer of the Company;
(xiii) reimbursement of the Purchasers' costs and expenses
(including the reasonable fees and expenses of their counsel,
Fried, Frank, Harris, Shriver & Jacobson) incurred in connection
with the transactions contemplated by the Transaction Documents
to be paid as set forth in Section 1.5;
(xiv) evidence of repayment in full of the principal amount
of each of the Bridge Notes, plus all accrued and unpaid interest
due and payable thereon; and
(xv) such other instruments and documents as reasonably
requested by each Purchaser.
1.5. Deliveries by the Purchasers. At the Closing, each Purchaser
is delivering to the Restricted Account or to such other parties as
otherwise set forth below the amount set forth opposite such Purchaser's
name in Exhibit 1.5, such amount being equal to the pro-rata portion of the
Purchase Price allocable to such Purchaser for the Notes, the Shares and
the $7 Warrants being purchased by such Purchaser as set forth opposite
such Purchaser's name in Exhibit 1.5, less its costs and expenses
(including the fees and expenses of its counsel, Fried, Frank, Harris,
Shriver & Jacobson, which amounts shall be wire transferred by the
Collateral Agent, on behalf of the Company, in immediately available funds
to one or more accounts designated by such parties on or prior to the date
hereof).
2. Representations and Warranties of the Company.
---------------------------------------------
The Company represents and warrants to each Holder as follows:
2.1. Organization; Subsidiaries. (a) The Company is a corporation
duly organized and existing in good standing under the laws of the State of
Connecticut and has the corporate power to own its property and to carry on
its business as now being conducted. The Company is duly 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 and where the failure to so
qualify could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(b) The Company does not have any Subsidiaries. Except as set
forth on Schedule 2.1(b), the Company does not own, directly or indirectly,
or have the right or obligation to acquire, any interest in any business
association or other Person.
2.2. Due Authorization. (a) The Company has all right, power and
authority to enter into, deliver and perform the Transaction Documents and
to consummate the transactions contemplated thereby. The execution and
delivery of each Transaction Document by the Company and the performance
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by it of the transactions contemplated thereby (including, without
limitation, the issuance and sale of the Notes, the Shares, the $7
Warrants, the $3 Warrants and issuance of shares of Common Stock upon
conversion of the Notes and the exercise of the $7 Warrants and the $3
Warrants) and compliance by the Company with all the provisions of each
Transaction Document (as applicable) have been duly authorized by all
requisite corporate proceedings on the part of the Company (including,
without limitation, approval by the requisite vote of holders of the
outstanding Common Stock). Each of the Transaction Documents has been duly
executed and delivered on behalf of the Company, and each such Transaction
Document constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its respective
terms, except to the extent that such enforceability (i) may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally or (ii) is subject to general
principles of equity. The Shares and shares of Common Stock issuable upon
conversion of the Notes and exercise of the $7 Warrants and the $3 Warrants
have been validly reserved for issuance and, upon issuance, will be validly
issued and outstanding, fully paid and nonassessable.
(b) The Board of Directors has taken all necessary action so that
no "fair price," "moratorium," "control share acquisition," "interested
holder" or other similar anti-takeover statute or regulation (including,
without limitation, Sections 33-840 through 33-845 of the Connecticut
Business Corporation Act) or any applicable anti-takeover provision in the
Company's Certificate of Incorporation or By-Laws prohibits the
transactions contemplated by this Agreement. To the knowledge of the
Company, no other state takeover statute is applicable to the transactions
contemplated by this Agreement.
2.3. Capitalization. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock, of which, as of the date
hereof, 14,505,908 shares were issued and outstanding, 380,150 shares were
reserved for issuance upon the exercise of outstanding stock options
pursuant to the Company's option plans, and as of April 3, 2000, 3,958,244
shares were reserved for issuance upon the exercise of the outstanding
warrants, and 1,786,359 shares were reserved for issuance upon the
conversion of the Company's 6% Convertible Debentures, due 2004 (the
"Convertible Debentures") and (ii) 3,000,000 shares of Preferred Stock, no
par value (the "Preferred Stock"), of which, as of the date hereof, no
shares were issued and outstanding. All of the outstanding shares of Common
Stock are validly issued and are fully paid and nonassessable. No class of
Capital Stock of the Company is entitled to preemptive rights. Except as
set forth on Schedule 2.3, there are no outstanding options, warrants,
subscription rights, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, shares of any class
of Capital Stock of the Company, or Contracts, by which the Company is or
may become bound to issue additional shares of its Capital Stock or
options, warrants or other rights to purchase or acquire any shares of its
Capital Stock. Except as set forth on Schedule 2.3, no warrants, bonds,
debentures, notes or other Indebtedness or other security having the right
to vote (or convertible into or exercisable for securities having the right
to vote) on any matters on which stockholders of the Company may vote were
issued or outstanding. Except as set forth on Schedule 2.3 or as
contemplated by the Transaction Documents, the Company is not a party to,
and, to the Company's best knowledge, there is, and immediately after the
Closing, there will be, no agreement, restriction or encumbrance (such as a
preemptive or similar right of first refusal, right of first offer, proxy,
voting agreement, voting trust, registration rights agreement,
shareholders' agreement, etc., whether or not the Company is a party
thereto) with respect to the purchase, sale or voting of any shares of
Capital Stock of the Company (whether outstanding or issuable upon
conversion, exchange or exercise of outstanding securities) or other
securities of the Company pursuant to any provision of Law, the Certificate
of Incorporation or By-Laws, any agreement or otherwise. Except as set
forth on Schedule 2.3 or as contemplated by the Transaction Documents, no
Person has the right to nominate or elect one or more
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directors of the Company. Immediately following the transactions
contemplated hereby, the Company's capitalization will be as set forth in
Schedule 2.3. The Company has not declared or paid any dividend or made any
other distribution of cash, stock or other property to its stockholders
since January 1, 1996.
2.4. SEC Reports Correspondence. The Company has filed all proxy
statements, reports and other documents required to be filed by it under
the Exchange Act from and after January 1, 1995, and the Company has
furnished each Purchaser true and complete copies of all annual reports,
quarterly reports, proxy statements and other reports under the Exchange
Act filed by the Company from and after such date, each as filed with the
SEC (collectively, the "SEC Reports"). Each SEC Report was in compliance in
all material respects with the requirements of its respective report form
and did not on the date of filing contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and as of the
date hereof there is no fact or facts not disclosed in the SEC Reports that
relate specifically to the Company and that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
Company has made available for inspection by each Purchaser copies of all
correspondence between the Company and the SEC from and after January 1,
1995.
2.5. Financial Statements. The financial statements (including
any related schedules and/or notes) included in the SEC Reports have been
prepared in accordance with GAAP consistently followed (except as indicated
in the notes thereto) throughout the periods involved and fairly present
the consolidated financial condition, results of operations, cash flows and
changes in stockholders' equity of the Company as of the respective dates
thereof and for the respective periods then ended (in each case subject, as
to interim statements, to changes resulting from year-end adjustments, none
of which was material in amount or effect). Except as set forth on Schedule
2.5, the Company is not subject to any Liabilities, except (i) Liabilities
in the respective amounts reflected or reserved against in the Company's
balance sheet as of December 31, 1999 included in the SEC Reports or (ii)
Liabilities incurred in the ordinary course of business since December 31,
1999 which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
2.6. Litigation. (a) Except as set forth on Schedule 2.6, there
is no Litigation pending or, to the knowledge of the Company, threatened
against the Company or any of its properties or assets by or before any
court, arbitrator or other Governmental Entity.
(b) The Company is not in default under or in breach of any Order
of any court, arbitrator or other Governmental Entity, and the Company is
not subject to or a party to any Order of any court, arbitrator or other
Governmental Entity arising out of any claim, demand, notice, action, suit
or proceeding under any Law.
2.7. Title to Properties; Insurance. (a) Except as set forth on
Schedule 2.7(a), the Company has good and valid title to, or, in the case
of property leased by it as lessee, a valid and subsisting leasehold
interest in, its properties and assets, free of all Liens.
(b) Schedule 2.7(b) sets forth a complete and correct list of all
insurance coverage carried by the Company, the carrier and the terms and
amount of coverage. All of the material assets of the Company and all
aspects of the Company's business that are of insurable character are
covered by insurance with insurers against risks of liability, casualty and
fire and other losses and liabilities customarily obtained to cover
comparable businesses and assets in amounts, scope and coverage that are
consistent with prudent industry practice. The Company is not in default
with respect to its obligations under any such insurance policy maintained
by it. All such policies and other instruments are in full force
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and effect and no premiums with respect thereto are past due and owed. The
Company has not failed to give any notice or present any material claim
under any such insurance policy in due and timely fashion or as required by
any of such insurance policies. The Company has not otherwise, through any
act, omission or non-disclosure, jeopardized or impaired full recovery of
any claim under such policies, and there are no claims by the Company under
any of such policies to which any insurance company is denying liability or
defending under a reservation of rights or similar clause. The Company has
not received notice of any pending or threatened termination of any of such
policies or any premium increases for the current policy period with
respect to any of such policies and the consummation of the transactions
contemplated by the Transaction Documents will not result in any such
termination or premium increase.
2.8. Consents, etc. Except as set forth on Schedule 2.8, the
Company is not required to obtain any consent, approval or authorization
of, or to make any registration declaration or filing with, any
Governmental Entity or third party as a condition to or in connection with
the valid execution and delivery of any of the Transaction Documents
(including, without limitation, the issuance and sale of the Notes, the
Shares, the $7 Warrants and the $3 Warrants), or the performance by the
Company of its obligations in respect of any thereof, except for (i)
filings required pursuant to state and federal securities laws to effect
any registration of Securities pursuant to this Agreement and the
Registration Rights Agreement, (ii) the filing of the Financing Statements
and the Open-end Subordinate Mortgage, Security Agreement, dated as of the
date hereof, between the Company and the Collateral Agent (iii) filings to
be made with the U.S. Patent and Trademark Office or the U.S. Copyright
Office to perfect the Holders' first priority security interest in the
Intellectual Property constituting Collateral under the Collateral
Documentation, (iv) the filing on Form 8-K under the Exchange Act to report
the consummation of the transactions contemplated hereby and (v) the
approval of the stockholders of the Company, which approval has been
previously obtained.
2.9. No Material Adverse Change. Since December 31, 1999, no
event has occurred or failed to occur that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
2.10. Taxes. Except as set forth on Schedule 2.10:
(a) The Company (i) has timely filed all Tax Returns (including,
but not limited to, those filed on a consolidated, combined or unitary
basis) required to have been filed by the Company, all of which Tax Returns
are true, correct and complete in all material respects, (ii) has within
the time and manner prescribed by Law paid all Taxes required to be paid in
respect of the periods covered by such Tax Returns or otherwise due to any
Governmental Entity, (iii) has established and maintained on its books and
records, accruals and reserves that are adequate for the payment of all
Taxes not yet due and payable and attributable to any period preceding the
date hereof, and (iv) has not received notice of any deficiencies for any
Tax from any Governmental Entity against the Company, which deficiency has
not been satisfied. The Company is not the subject of any currently ongoing
audit or judicial or administrative proceeding relating to Taxes, nor is
any such audit pending or, to the Company's knowledge, threatened. With
respect to any taxable period ended prior to December 31, 1994, all Tax
Returns of the Company have been audited by the Internal Revenue Service or
are closed by the applicable statute of limitations. The accruals and
reserves for Taxes on the Company's balance sheet as of December 31, 1999
included in the SEC Reports are complete and adequate in all respects to
cover any and all Liabilities of the Company for Taxes through such date.
There are no Liens with respect to Taxes upon any of the properties or
assets, real or personal, tangible or intangible, of the Company (other
than Liens for Taxes not yet due). No claim has been made or threatened by
any Governmental Entity in a jurisdiction where the Company
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does not file Tax Returns that the Company is or may be subject to taxation
by such jurisdiction. The Company has not filed an election under Section
341(f) of the Code to be treated as a consenting corporation. The Company
is not or has not been a party to any Tax sharing agreement.
(b) The Company has duly withheld or collected all Taxes required
by Law to have been withheld or collected (including Taxes required by Law
to be withheld or collected in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party) and any such amounts required to be remitted to a Governmental
Entity have been timely remitted.
2.11. Compliance with ERISA. Schedule 2.11 sets forth a complete
and correct list of all (i) Benefit Plans, (ii) Employee Agreements,
including (in the case of each of (i) and (ii)) all amendments thereto, and
trust or funding agreements with respect thereto (excluding any grantor
trusts established to hold assets subject to the claims of the Company's
creditors) and (iii) summary plan descriptions and communications of any
material modifications to any employee or employees relating to any Benefit
Plan or Employee Agreement. Each Benefit Plan has been established and
operated in accordance with terms thereof and all other applicable Laws,
including but not limited to the Code and ERISA, and the Company and each
ERISA Affiliate are in compliance with the terms of each Employee
Agreement. Neither the Company nor any ERISA Affiliate presently sponsors,
maintains, contributes to, or is required to contribute to, nor has the
Company nor any ERISA Affiliate ever sponsored, maintained, contributed to,
or been required to contribute to, an "employee pension benefit plan"
(within the meaning of Section 3(2) of ERISA) which is subject to Title IV
of ERISA or Section 412 of the Code or a "multiemployer plan" (within the
meaning of Section 4001(a)(3) of ERISA). Neither the Company nor any ERISA
Affiliate has ever maintained or contributed to or been required to
maintain or contribute to any employee welfare benefit plan (within the
meaning of Section 3(1) of ERISA) which provides for post-retirement
medical, life insurance or other welfare-type benefits, and neither the
Company nor any ERISA Affiliate has any Liability for any such
post-retirement benefits to any present or former employee.
2.12. Labor Relations. Except as set forth in Schedule 2.12, no
unfair labor practice complaint or any complaint alleging sexual harassment
or sex, age, race or other employment discrimination has been brought
during the last three years against the Company before the National Labor
Relations Board, the Equal Employment Opportunity Commission or any other
Governmental Entity, nor is there any charge, investigation (formal or
informal) or complaint pending, or to the knowledge of the Company,
threatened, against the Company regarding any labor or employment matter.
There have been no governmental audits of the equal employment opportunity
practices of the Company and, to the knowledge of the Company, no
reasonable basis for any such audit exists. The Company (i) is in
compliance with all applicable Laws respecting employment, employment
practices, labor, terms and conditions of employment, collective bargaining
and wages and hours, and (ii) has withheld all amounts required by Law or
by agreement to be withheld from the wages, salaries and other payments to
its employees.
2.13. Intellectual Property Rights. Schedule 2.13(a) sets forth a
complete and correct list of all Intellectual Property of the Company (the
"Company Intellectual Property"). Except as set forth on Schedule 2.13(b),
the Company owns and possesses all right, title and interest in, or
possesses adequate licenses to (without the making of any payment to others
or the obligation to grant rights to others in exchange) all the Company
Intellectual Property, free and clear of any Liens, licenses or other
restrictions. The Company has the right to require the applicant of any
Company Intellectual Property which is an application, including but not
limited to patent applications, trademark applications, service mark
applications, copyright applications, and mask work applications, to
transfer ownership to the Company of
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the application and of the registration once it issues. All registered
patents, trademarks, service marks and copyrights listed on Schedule
2.13(a) are valid and subsisting and in full force and effect. The Company
Intellectual Property is all the Intellectual Property that is necessary
for the ownership, maintenance and operation of the Company's properties
and assets, the Company has the right to use all of the Company
Intellectual Property in all jurisdictions in which the Company conducts or
proposes to conduct its business, and the consummation of the transactions
contemplated hereby will not alter or impair any such rights. The Company
has no agreements to indemnify any Person for or against any interference,
infringement, misappropriation or other conflict with respect to any
Company Intellectual Property. Except as set forth in Schedule 2.13(b), no
third party has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Company Intellectual Property. The
Company has taken all reasonably necessary and desirable action to maintain
and protect each item of Company Intellectual Property. The validity,
ownership, enforceability, use or legality of the Company Intellectual
Property is not being questioned or opposed in any Litigation or Order to
which the Company, or any Person who has granted a license of Intellectual
Property to the Company, is a party or subject, nor, to the knowledge of
the Company, is any such Litigation or Order threatened. The conduct of the
Company as currently conducted and as currently proposed to be conducted
does not and will not infringe, interfere with, misappropriate or otherwise
come into conflict with any Intellectual Property of any other Person, and
the Company has not received any charge, complaint, claim, demand or notice
alleging any such infringement, interference, misappropriation or conflict
(including any claim that the Company must license or refrain from using
any Intellectual Property of any other Person). Except as set forth in
Schedule 2.13(b), the Company has not granted any licenses of Intellectual
Property to any Person.
2.14. Possession of Franchises, Licenses, Etc. The Company
possesses all franchises, certificates, licenses, permits and other
authorizations from Governmental Entities and other rights, free from
burdensome restrictions, that are necessary for the ownership, maintenance
and operation of its properties and assets, except for those the absence of
which could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, and the Company is not in violation of
any such franchise, certificates, licenses, permits, authorizations and
rights.
2.15. Compliance with Laws. The Company is in compliance with all
applicable Laws including, without limitation, all rules, regulations and
other Laws of the Food and Drug Administration (the "FDA") relating to the
design, development, manufacturing, sales and distribution of safety
medical products and accessories, except where the failure to comply could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. No Order has been issued nor any Law enacted which
prevents, nor does any Law prohibit the consummation of the transactions
contemplated by any of the Transaction Documents.
2.16. Conflicting Agreements and Certificate of Incorporation
Provisions. The Company has not entered into any Contract and the Company
is not subject to any Certificate of Incorporation or By-Law provision or
any Order that in any case could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. None of the
execution and delivery of any of the Transaction Documents, the issuance,
sale and delivery of the Notes, the Shares, the $7 Warrants or the $3
Warrants, and the fulfillment of or compliance with the terms and
provisions hereof or thereof will conflict with or result in a breach of
the terms, conditions, or provisions of, or give rise to a right of
termination under, or constitute a default under, or result in the creation
of any Lien, or result in any violation of, the Certificate of
Incorporation or By-Laws or other organizational documents of the Company
or any Contract of the Company. The Company has not defaulted under any
outstanding indenture or other debt instrument or with respect to the
payment of the principal of or interest on any
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outstanding obligations for borrowed money, and the Company is not in
default under any of its Contracts except where such default could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.17. Suppliers. Except as set forth on Schedule 2.17, no Major
Supplier has during the last twelve months materially increased or, to the
knowledge of the Company, threatened to materially increase its prices or
materially decreased or limited or, to the knowledge of the Company,
threatened to materially decrease or limit its provision of services or
supplies to the Company. During the last twelve months, there has been no
termination, cancellation or limitation of, or any material change in, the
business relationships of the Company with any Major Supplier. To the
knowledge of the Company, there will not be any such change in relations
with any Major Supplier or the triggering of any right of termination,
cancellation or penalty or other payment by or to any Major Supplier in
connection with or as a result of the transactions contemplated by the
Transaction Documents that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
2.18. Products. Except as set forth on Schedule 2.18, there are
no statements, citations or decisions by the FDA or any other Governmental
Entity stating that any product manufactured, sold, rented, leased,
designed, distributed or marketed at any time by the Company ("Products")
is defective or unsafe or fails to meet any standards promulgated by the
FDA or such Governmental Entity. Except as set forth on Schedule 2.18,
there is no (i) fact relating to any Product that, to the knowledge of the
Company, may impose upon the Company a duty to recall or retrofit such
Product or a duty to warn customers of a defect in such Product, (ii)
latent or overt design, manufacturing or other defect in any Product that
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or (iii) Liability for warranty claims or returns
with respect to any Product that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
2.19. Offering of the Securities. In connection with this
offering, neither the Company nor any Person acting on its behalf has
offered the Securities or any similar securities of the Company for sale
to, solicited any offers to buy the Securities or any similar securities of
the Company from or otherwise approached or negotiated with respect to the
Company with any Person other than the Purchasers and other "accredited
investors" (as defined in Rule 501(a) under the Securities Act). Neither
the Company nor any Person acting on its behalf has taken, or, except as
contemplated hereby, will take, any action (including, without limitation,
any offering of any securities of the Company under circumstances that
would require the integration of such offering with the offering of the
Securities under the Securities Act) that could reasonably be expected to
subject the offering, issuance or sale of the Securities to the
registration requirements of Section 5 of the Securities Act or violate the
provisions of any securities, "blue sky", or similar law of any applicable
jurisdiction.
2.20. Existing Indebtedness; Future Liens. (a) Schedule 2.20(a)
sets forth a complete and correct list of all outstanding Indebtedness of
the Company as of the date hereof. The Company has not defaulted, and no
waiver of default is currently in effect, in the payment of any principal
or interest on any such Indebtedness and no event or condition exists with
respect to any such Indebtedness that would permit (or that with notice or
the lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before
its regularly scheduled dates of payment. The Company has not received any
notice from any Person declaring or threatening to declare any Indebtedness
owed by the Company to such Person due and payable prior to the stated
maturity of such Indebtedness or before its regularly scheduled dates of
payment.
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(b) Except as set forth on Schedule 2.20(b), the Company has not
agreed or consented to cause or permit in the future (upon the happening of
a contingency or otherwise) any of its property, whether now owned or
hereafter acquired, to be subject to any Lien (other than Permitted Liens).
2.21. Environmental Matters. The Company has no knowledge of any
claim and has not received any notice of any claim, and no proceeding has
been instituted raising any claim against the Company or any of its real
properties now or formerly owned, leased or operated by it or other assets,
alleging any damage to the environment or violation of any Environmental
Laws. Except as set forth on Schedule 2.21, (i) the Company has no
knowledge of any facts that would give rise to any claim, public or
private, of violation of Environmental Laws or damage to the environment
emanating from, occurring on or affecting real properties now or formerly
owned, leased or operated by the Company or to other assets or their use,
(ii) the Company has not stored any Hazardous Materials on real properties
now or formerly owned, leased or operated by it and has not disposed of any
Hazardous Materials in a manner contrary to any Environmental Laws, and
(iii) all buildings on all real properties now owned, leased or operated by
the Company are in compliance with applicable Environmental Laws.
2.22. Solvency. The Company is not, and, after giving effect to
the issuance of the Notes and the sale of the Shares, the $7 Warrants and
the $3 Warrants and the application of the proceeds therefrom, will not be,
insolvent within the meaning of Title 11 of the United States Code or any
comparable state law provision.
2.23. Security Documents. Upon proper filing of the Financing
Statements (or assignments thereof) in the offices of the Secretary of
State of the State of Connecticut with respect to the Company (or
assignments thereof) and in the locations identified in the Security
Agreement, the Liens granted under the Transaction Documents shall, other
than as specifically provided therein, constitute a fully perfected
security interest in all right, title and interest of the Company in and to
the personal property or interests therein secured thereby prior to any
other security interests against such property or interests therein.
2.24. Brokers or Finders. Except for the fees payable to Pali
Capital LLC, no agent, broker, investment banker or other Person is or will
be entitled to any broker's fee or any other commission or similar fee from
the Company in connection with any of the transactions contemplated by this
Agreement.
2.25. Holding Company Act and Investment Company Act. The Company
is not: (i) a "public utility company" or a "holding company", or an
"affiliate" or a "subsidiary company" of a "holding company", or an
"affiliate" of such a "subsidiary company", as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended, or (ii) a
"public utility", as defined in the Federal Power Act, as amended, or (iii)
an "investment company" or an "affiliated person" thereof or an "affiliated
person" of any such "affiliated person", as such terms are defined in the
Investment Company Act of 1940, as amended.
2.26. Related Party Transactions. (a) Except as set forth on
Schedule 2.26, the Company has not entered into or been a party to any
transaction with any Related Party thereof except in the ordinary course
of, and pursuant to the reasonable requirements of, such Related Party's
business and upon fair and reasonable terms that are at least equivalent to
an arm's-length transaction with a Person not a Related Party.
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(b) Except as set forth on Schedule 2.26, the Company has not
entered into any lending or borrowing transaction with any director,
officer or employee of the Company.
2.27. Year 2000. Except as could not reasonably be expected to
result in a Material Adverse Effect, the software, computers and other
hardware and systems used by the Company continue to (i) accurately process
date information after January 1, 2000, including, but not limited to,
accepting date input, providing date output and performing calculations on
dates or portions of dates, (ii) function accurately and without
interruption after January 1, 2000 without any change in operations
associated with the advent of the new century, (iii) respond to two digit
year date input in a way that resolves the ambiguity as to century in a
disclosed, defined and predetermined manner, and (iv) store and provide
output of date information in ways that are unambiguous as to century. The
Company has contacted its principal vendors and Major Suppliers and other
Persons with whom the Company has material business relationships, and each
of such vendors, Major Suppliers and other Persons has notified the Company
that its software, computers and other hardware and systems are Year 2000
compliant in all material respects to the extent affecting the Company. The
ability of such vendors, Major Suppliers and other Persons to identify and
resolve their own Year 2000 issues could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
2.28. Disclosure. None of the Transaction Documents and schedules
thereto and certificates furnished to any Purchaser by or on behalf of the
Company in connection with the transactions contemplated thereby contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained therein not misleading.
There is no fact or information relating to the Company that could
reasonably be expected to be Material to the Company that has not been
disclosed to the Purchasers.
3. Representations and Warranties of the Purchasers. Each Purchaser,
severally and not jointly, represents and warrants to the Company with
respect to such Purchaser as follows:
3.1. Organization and Qualification. Such Purchaser is duly
organized and existing in good standing under the laws of the state of its
formation and has the power to own its respective property and to carry on
its respective business as now being conducted. Such Purchaser is duly
qualified to do business and in good standing in every jurisdiction in
which the nature of the respective business conducted or property owned by
it makes such qualification necessary, except where the failure to so
qualify would not prevent consummation of the transactions contemplated
hereby or reasonably be expected to have a material adverse effect on such
Purchaser's ability to perform its obligations hereunder.
3.2. Due Authorization. Such Purchaser has all right, power and
authority to enter into, deliver and perform the Transaction Documents to
which it is a party and to consummate the transactions contemplated
thereby. Such Purchaser's execution and delivery of each Transaction
Document to which it is a party and the performance by such Purchaser of
the transactions contemplated thereby and compliance by such Purchaser with
all the provisions of each Transaction Document to which it is a party (as
applicable) have been duly authorized by all requisite proceedings on the
part of such Purchaser. Each of the Transaction Documents to which it is a
party has been duly executed and delivered on behalf of such Purchaser, and
each such Transaction Document constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in
accordance with its respective terms, except to the extent that such
enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally or (ii) is subject to general principles of equity.
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3.3. Acquisition for Investment. Such Purchaser is acquiring the
Notes, the Shares, the $7 Warrants and the $3 Warrants being purchased by
it for its own account for the purpose of investment and not with a view to
or for sale in connection with any distribution thereof except in
compliance with all applicable securities Laws.
3.4. Offering of Securities. Such Purchaser has not been offered
the Securities for sale by any means of general solicitation or general
advertising including, but not limited to, any advertisements, articles,
notices or other communications published in any newspaper, magazine or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees were invited by any general solicitation or general
advertising.
3.5. Accredited Investor. Such Purchaser is an "accredited
investor" within the meaning of Rule 501 promulgated under the Securities
Act.
4. Registration, Exchange and Transfer of Notes.
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4.1. The Note Register; Persons Deemed Owners. The Company shall
maintain, at its office designated for notices in accordance with Section
12.6, a register for the Notes (the "Note Register"), in which the Company
shall record the name and address of the Person in whose name each Note has
been issued and the name and address of each transferee and prior owner of
each Note. The Company shall deem and treat the Person in whose name a Note
is so registered as the Holder and owner thereof for all purposes and shall
not be affected by any notice to the contrary, until due presentment of
such Note for registration of transfer as provided in this Section 4.
4.2. Issuance of New Notes Upon Exchange or Transfer. Upon
surrender for exchange or registration of transfer of any Note at the
office of the Company designated for notices in accordance with Section
12.6, the Company shall execute and deliver, at its expense, one or more
new Notes as requested by the Holder of the surrendered Note, each dated
the date so surrendered, but in the same Accreted Value as such surrendered
Note, and registered in the name of such Person or Persons as shall be
designated in writing by such Holder. Every Note surrendered for
registration of transfer shall be duly endorsed, or be accompanied by a
written instrument of transfer duly executed, by the Holder of such Note or
by his attorney duly authorized in writing. The Company may also condition
the issuance of any new Note or Notes to a Person other than the Holder
thereof on the payment of a sum sufficient to cover any stamp Tax or other
governmental charge imposed in respect of such transfer.
5. Payment of Notes.
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5.1. Home Office Payment. The Company will pay to each Holder or
any transferee thereof all sums becoming due on the Notes (including all
sums that become due on the Notes at the maturity thereof) (a) prior to the
date of execution of an indenture, if any (the "Indenture Date"), at the
account/address to be specified by such Holder or transferee for such
purpose by notice to the Company, by wire transfer of immediately available
funds, or at such other address or by such other method as such Holder or
transferee shall have designated by notice to the Company and (b) at any
time after the Indenture Date, by wire transfer to the Trustee, as
specified in the Indenture. Before selling or otherwise transferring any
Note, such Holder or transferee will make a notation thereon of the
aggregate amount of all payments, if any, of the Accreted Value thereof,
theretofore made.
5.2. Limitation on Interest. No provision of this Agreement or of
the Notes shall require the payment or permit the collection of interest in
excess of the maximum rate which is permitted by
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Law. If any such excess interest is provided for herein or in the Notes, or
shall be adjudicated to be so provided for, then the Company shall not be
obligated to pay such interest in excess of the maximum rate permitted by
Law, and the right to demand payment of any such excess interest is hereby
waived, any other provisions in this Agreement or in the Notes to the
contrary notwithstanding.
5.3. Payment of Principal & Interest. (a) In lieu of paying
interest on the Notes on a current basis, the Accreted Value of the Notes
shall be due and payable on the Stated Maturity; provided, however, that if
any amount payable hereunder is not paid when due (including, without
limitation, payment of the Accreted Value under Section 7.2), then in each
such case the overdue amount shall bear interest at a rate of 15% per
annum, compounded semi-annually, which interest shall accrue from the date
such overdue amount was due to the date payment of such amount, including
interest thereon, has been made or duly provided for (including any
interest accruing during the pendency of any bankruptcy or similar
proceeding, whether or not a claim for post-petition interest is allowed as
a claim in any such bankruptcy or proceeding). All such interest shall be
payable on demand. The accrual of such interest on overdue amounts shall,
in the case of any late payment of the Accreted Value or Change of Control
Redemption Price, be in lieu of, and not in addition to, the continued
accrual of the Accreted Value.
(b) The "Accreted Value" of the Notes shall mean, as at any date,
an amount equal to the sum of (i) the Issue Price and (ii) the Accreted
Amount. The "Accreted Amount" of the Notes as at any date shall mean the
amount accrued on the Issue Price of the Notes based upon the accretion
rate, in effect from time to time as provided below (the "Accretion Rate").
For purposes of the foregoing, the Accretion Rate, in effect as at any
date, shall be determined as follows:
(i) from the date hereof up to and including the First
Adjustment Date, an amount equal to 15% per annum, compounded
semi-annually, computed on the basis of a 360-day year consisting
of twelve 30-day months;
(ii) from the day following the First Adjustment Date up to
and including the Second Adjustment Date, an amount equal to 12%
per annum, compounded semi-annually, computed on the basis of a
360-day year consisting of twelve 30-day months;
(iii) from the day following the Second Adjustment Date up
to and including the Third Adjustment Date, an amount equal to
10% per annum, compounded semi-annually, computed on the basis of
a 360-day year consisting of twelve 30-day months; and
(iv) from the day following the Third Adjustment Date up to
and including the Stated Maturity, an amount equal to 7.5% per
annum, compounded semi-annually, computed on the basis of a
360-day year consisting of twelve 30-day months.
6. Covenants of the Company. The Company covenants that at all times
from and after the date hereof:
6.1. Maintenance of Office or Agency. The Company shall maintain
in Vernon, Connecticut an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company
in respect of the Notes may be served. The Company shall give prompt
written notice to the Holders of the location, and any change in the
location, of such office or agency. The Company may also from time to time
designate one or more other offices or agencies (in or outside Connecticut)
where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind
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such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in Vernon, Connecticut for such purposes. The
Company shall give prompt written notice to the Holders of any such
designation or rescission and of any change in the location of any such
other office or agency.
6.2. Money for Security Payments to be Held in Trust. On or
before each date on which payments are due on the Notes, the Company shall
segregate and hold in trust for the benefit of the Persons entitled thereto
a sum sufficient to make such payments when such payments are due, until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided.
6.3. Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its
existence, Material rights (charter and statutory) and franchises and the
existence, Material rights and franchises of all of its Subsidiaries.
Neither the Company nor any of its Subsidiaries shall enter into any
transaction of acquisition of, or merger or consolidation or amalgamation
with, any other Person (including any Subsidiary or Affiliate of the
Company or any of its Subsidiaries), or sell, transfer or otherwise dispose
of ("Transfer") all or substantially all of its assets to any Person, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or make any Material change in the present method of
conducting business or engage in any type of business other than of same
general type now conducted by it. The Company shall not, and shall not
permit any of its Subsidiaries to, amend or otherwise modify (i) the
Company's Certificate of Incorporation, (ii) the By-Laws or (iii) the
charter, by-laws or other organizational documents of any of the Company's
Subsidiaries.
6.4. Maintenance of Properties. The Company shall cause all
properties used or useful in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section 6.4 shall prevent the Company from discontinuing
the operation or maintenance of any of such property if such discontinuance
is, in the reasonable, good faith judgment of the Company, desirable in the
conduct of its business or the business of any Subsidiary and not
disadvantageous in any Material respect to the Holders.
6.5. Payment of Taxes and Other Claims. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all Taxes levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any
of its Subsidiaries, and (ii) all lawful claims for labor, materials and
supplies that, if unpaid, might by Law become a Lien upon the property of
the Company or any of its Subsidiaries; provided, however, that the Company
shall not be required to pay or discharge or cause to be paid or discharged
any such Tax amount, applicability or validity of which is being contested
in good faith by appropriate proceedings.
6.6. Limitation on Indebtedness. Except as forth on Schedule 6.6,
the Company shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or directly or indirectly guarantee or in any other
manner become directly or indirectly liable for the payment of any
Indebtedness (excluding Permitted Indebtedness and Indebtedness that is a
Guaranty of an Indebtedness of the Company or any of its Subsidiaries that
is otherwise Permitted Indebtedness).
6.7. Limitation on Encumbrances. Except as set forth on Schedule
6.7, the Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or otherwise suffer to
exist or cause or otherwise suffer to become effective any Lien in or on
any right, title
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or interest to any property (real or personal) that constitutes all or any
portion of the Collateral (a "Restricted Encumbrance", which term excludes
the Lien created in favor of the Holders) unless such Restricted
Encumbrance is a Permitted Lien.
6.8. Limitation on Related Party Transactions. (a) The Company
shall not, and shall not permit any of its Subsidiaries to, enter into or
be a party to any transaction with any Related Parties (other than any of
the Holders or their Affiliates) except in the ordinary course of, and
pursuant to the reasonable requirements of, such Related Party's business
and upon fair and reasonable terms that are at least equivalent to an
arm's-length transaction with a Person that is not a Related Party. In
addition, if any such transaction or series of related transactions
involves payments in excess of $25,000 in the aggregate, the terms of such
transactions must be disclosed in advance to each Holder. All such
transactions existing as of the date hereof are set forth on Schedule 6.8.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any lending or borrowing transaction with any
director, officer or employee of the Company or any of its Subsidiaries.
(c) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) enter into or adopt or amend any existing agreement or
arrangement relating to severance, (ii) enter into or adopt or amend any
existing severance plan, (iii) enter into or adopt or amend any Benefit
Plan or Employee Agreement or (iv) grant any bonus, salary increase,
severance or termination pay to, any employee, officer, director or
consultant other than in the ordinary course of business consistent with
past practice.
6.9. Limitation on Dividends; Stock Issuances. The Company shall
not offer or issue any shares of Preferred Stock or Common Stock for any
purpose whatsoever, except for shares of Common Stock issuable upon (i)
exercise of warrants issued to the Purchasers and its affiliates, (ii) the
conversion of the Notes and (iii) pursuant to Schedule 6.9. The Company
shall not declare any dividends on any shares of its Capital Stock, or make
any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, retirement, exchange or other
acquisition of any shares of its Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash, securities, property or in
obligations of the Company or any of its Subsidiaries.
6.10. Subsidiary Guarantees. The Company shall cause its future
direct and indirect Subsidiaries organized under the laws of any state of
the United States (or the District of Columbia) to jointly and severally
guarantee the obligations of the Company under the Notes and this Agreement
pursuant to the form of Guarantee and Security Agreement attached as
Exhibit 6.10.
6.11. Additional Offerings of Securities. Prior to seeking
financing from any third party consisting of an issuance of Equity
Securities (the "Proposed Securities") by the Company on or after the date
hereof, the Company shall notify the Holders of a description in reasonable
detail of the Proposed Securities, the amount proposed to be issued and the
consideration the Company desires to receive therefor (the "Notice"), which
Notice shall constitute an offer to the Holders with respect to the
Proposed Securities on the terms set forth therein. The Holders and the
Company shall, for not less than 20 days after receipt of the Notice
(unless the Holders earlier indicate that they have no interest in
purchasing the Proposed Securities), discuss the possibility of any of the
Holders acquiring the Proposed Securities, after which (if any of the
Holders has not agreed to purchase the Proposed Securities on the terms set
forth in the Notice or such other terms as are mutually acceptable to the
Company and such Holder) the Company shall be permitted to seek and obtain
third-party investors to acquire the Proposed Securities, provided that the
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closing of such acquisition by such third-party investor occurs within 90
days from the date of the Notice and provided, further, that the
acquisition of the Proposed Securities by such third-party investor is on
terms no more favorable to such third-party investor than those terms set
forth in the Notice. No Equity Securities shall be issued by the Company to
any Person unless the Company has first offered such Equity Securities to
the Holders in accordance with this Section 6.11. This Section 6.11 shall
not apply to the following issuances of securities: (i) pursuant to an
approved employee stock option plan, stock purchase plan, or similar
employee benefit program or agreement, where the primary purpose is not to
raise equity capital for the Company and (ii) the issuance of Equity
Securities as consideration in a business combination approved by each
member of the Board of Directors.
6.12. Pledges of Intercompany Notes. The Company shall, and shall
cause each of its Subsidiaries to, promptly pledge all Intercompany Notes
(and all security agreements and documents relating thereto) created after
the date hereof to the Collateral Agent as Collateral under the Collateral
Documentation. To the extent that, on or after the date hereof, the Company
makes any cash investment in any of its Subsidiaries (in accordance with
Section 6.14) that are organized under the Laws of and doing business in
the United States, such investment shall be required to be made in the form
of a loan, which shall be evidenced by an Intercompany Note and all such
Intercompany Notes shall be pledged by the Company to the Collateral Agent
as Collateral under the Collateral Documentation.
6.13. No Speculative Transactions. The Company shall not, and
shall not permit any of its Subsidiaries to, engage in any transaction
involving commodity options, futures contracts or similar transactions.
6.14. Restricted Investments. The Company shall not, or permit
any of its Subsidiaries to, directly or indirectly, make or cause or
permit, (i) any direct or indirect advance to, (ii) any loan or other
extension of credit to, (iii) any Guarantee of any Indebtedness of, (iv)
any capital contribution to, (v) any purchase or other acquisition of any
Equity Interests in, (vi) any purchase or other acquisition of assets
(other than in the ordinary course of business) from or (vii) any merger
with, any Person, including, without limitation, any of the Company's
Subsidiaries in each case other than Permitted Investments.
6.15. Financial Covenants. Until the Designation Event and the
new Chief Executive Officer and the Collateral Agent agree to a new set of
financial covenants, the Company shall maintain the financial covenants
specified in Schedule 6.15. From and after the occurrence of the
Designation Event, the Company and the Collateral Agent agree to negotiate
in good faith to establish a new set of financial covenants.
6.16. Sale-and-Leaseback Transactions. The Company shall not, and
shall not permit any of its Subsidiaries to, enter into any
Sale-and-Leaseback Transaction.
6.17. Line of Business. The Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business if, as a result,
the general nature of the business in which the Company and its
Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the business in which the
Company is engaged on the date of this Agreement.
6.18. Sale of Assets. The Company shall not, and shall not permit
any of its Subsidiaries to, Transfer any property or assets, unless the
property or asset that is the subject of such Transfer constitutes (i)
inventory held for sale, (ii) marketable securities available for sale, or
(iii) real estate, equipment, fixtures, supplies or materials no longer
required in the operation of the business of the
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Company or such Subsidiary or that is obsolete, and, in the case of any
Transfer described in clause (i) or (iii), such Transfer is in the ordinary
course of business.
6.19. Indenture Relating to the Notes. Upon the written request
of the Required Holders, the Company, at its expense, shall cause to be
prepared, executed and delivered within 30 days after such request an
indenture (including a new form of note, any necessary related
documentation and, from time to time thereafter, any necessary supplements
thereto) (the "Indenture") with respect to the Notes, which Indenture shall
contain terms and provisions substantially the same as those set forth in
Sections 6, 8, 9 and 13 hereof and such other terms and provisions as are
required under the Trust Indenture Act of 1939 and such other items and
provisions as are customary in indentures relating to publicly traded
senior secured debt securities having a rating comparable to the rating
that the Notes would receive if rated by a nationally recognized rating
agency. In such event, the Company shall also appoint as trustee under the
Indenture a national banking association reasonably acceptable to the
Required Holders having its principal offices in New York, New York, and
having capital, surplus, and undivided profits of at least $50,000,000. In
connection with the execution of the Indenture, the Holders shall exchange
all outstanding Notes for new notes in the form contemplated by the
Indenture, and upon such exchange such new notes shall be deemed to be
"Notes" for purposes hereof.
6.20. Financial Statements and Information. The Company shall
furnish to each Holder: (a) as soon as practicable and in any event within
45 days after the end of each of the four quarters of each fiscal year and
within 90 days of the end of each fiscal year, (i) copies of the quarterly
and annual reports and of the other information, documents, and other
reports that the Company files or is required to file with the SEC pursuant
to the Exchange Act and of any other reports or information that the
Company delivers or makes available to any of its security holders, at the
time of filing such reports with the SEC or of delivery to the Company's
security holders, as the case may be (but in no event later than the time
such filing or delivery is required pursuant to the Exchange Act) or (ii)
as soon as practicable and in any event within 45 days after the end of
each of the four quarters of each fiscal year and within 90 days of the end
of each fiscal year, quarterly reports for the four quarters of each fiscal
year of the Company and annual reports which the Company would have been
required to file under any provision of the Exchange Act if it had a class
of securities listed on a national securities exchange or was otherwise
required to file such reports under the Exchange Act, within 15 Business
Days of when such report would have been filed under Section 13 of the
Exchange Act, together with copies of a consolidating balance sheet of the
Company and its Subsidiaries as of the end of each such accounting period
and of the related consolidating statements of income and cash flow for the
portion of the fiscal year then ended, all in reasonable detail and all
certified by the principal financial officer of the Company to present
fairly the information contained therein in accordance with GAAP (and in
the case of annual reports, including financial statements, audited and
certified by the Company's independent public accountants as required under
the Exchange Act); (b) within 90 days after the end of each fiscal year, a
written statement by the Company's independent certified public accountants
stating as to the Company and its Subsidiaries whether in connection with
their audit examination, any Default or Event of Default has come to their
attention; (c)(i) within 45 days after the end of the four quarters of the
Company's fiscal year and within 90 days after the end of the Company's
fiscal year, an Officers' Certificate setting forth computations in
reasonable detail showing, as at the end of such quarter or fiscal year, as
the case may be, the Company's compliance with Sections 6.6, 6.7, 6.13,
6.14 and 6.15, and (ii) within 30 days after the end of each fiscal
quarter, an Officers' Certificate stating that as of the date of such
certificate, based upon such examination or investigation and review of
this Agreement, as in the opinion of such signer is necessary to enable the
signer to express an informed opinion with respect thereto, to the best
knowledge of such signer, the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Agreement, and is not
in default in the performance or observance of
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any of the terms, provisions and conditions hereof, and, to the best of
such signer's knowledge, no Default or Event of Default exists or has
existed during such period or, if a Default or Event of Default shall exist
or have existed, specifying all such defaults, and the nature and period of
existence thereof, and what action the Company has taken, is taking or
proposes to take with respect thereto; (d) promptly after becoming aware of
(i) the existence of a Default or Event of Default or any default under any
of the Collateral Documentation, (ii) any default or event of default under
any Indebtedness of the Company or any of its Subsidiaries, (iii) any
Litigation or proceeding affecting the Company or any of its Subsidiaries
in which the amount claimed is in excess of $50,000 or in which injunctive
relief is sought which if obtained could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or (iv) any change
that has or could reasonably be expected to have a Material Adverse Effect,
an Officers' Certificate specifying the nature and period of existence
thereof and what action the Company is taking or proposes to take with
respect thereto; and (e) such other information, including financial
statements and computations, relating to the performance of the provisions
of this Agreement and the affairs of the Company and any of its
Subsidiaries as each Holder may from time to time reasonably request. The
Company shall keep at its principal executive office a true copy of this
Agreement (as at the time in effect), and cause the same to be available
for inspection at said office, during normal business hours and after
reasonable notice to the Company by any Holder.
6.21. Inspection. (a) Any Holder shall have the right to visit
and inspect any of the properties of the Company or any of its
Subsidiaries, to examine the books of account and records of the Company or
any of its Subsidiaries, to be provided with copies and extracts therefrom,
to discuss the affairs, finances and accounts of the Company or any of its
Subsidiaries with, and to be advised as to the same by, its and their
officers and employees, and its and their independent public accountants
(and the Company authorizes such independent public accountants to discuss
the Company's or any of its Subsidiaries' financial matters with such
Holder and its representatives, regardless of whether any representative of
the Company is present, but provided that an officer of the Company will be
afforded a reasonable opportunity to be present at any such discussion),
all at such reasonable times and intervals during normal business hours,
and upon reasonable prior notice to the Company as such Holder and the
Company shall agree and at the expense of the Company (including the costs
incurred by such Holder in hiring accountants to conduct an audit). The
Company will likewise afford each Holder the opportunity to obtain any
information necessary to verify the accuracy of any of the representations
and warranties made by the Company hereunder or in any other Transaction
Document or compliance by the Company and its Subsidiaries with a covenant
made herein or in any other Transaction Document.
(b) By receipt of information under this Section 6.21, such
Holder agrees that all information (other than such information that is
publicly available or any other information that is in such Holder's
possession prior to any disclosure under this Section 6.21) provided to it
pursuant to this Section 6.21 shall be used by such Holder solely in
connection with its investment in the Company and for no other purpose, and
such Holder shall treat such information as confidential in accordance with
such reasonable internal procedures as it applies generally to information
of this kind and shall not disclose such information to any Person, except
(i) to any Governmental Entity having jurisdiction over such Holder in the
law or ordinary course of business, (ii) to any other Person pursuant to
subpoena or other process, whether legal, administrative or other (and such
Holder hereby agrees to provide the Company with prompt notice of any such
subpoena or other process), (iii) to such Holder's officers, directors,
trustees, employees, partners, legal counsel, financial advisors or
auditors or accountants who need access to such information in connection
with their duties, (iv) to any transferee or prospective purchaser of a
Note or interest therein who agrees to be bound by this paragraph, or (v)
to the extent necessary in the enforcement of each Holder's rights
hereunder and under the Notes during the continuance of a Default or Event
of Default.
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6.22. Compliance with Laws. The Company shall, and shall cause
each of its Subsidiaries to, comply with all Laws, ordinances or
governmental rules or regulations to which each of them is subject, and
shall obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership
of their respective properties or to the conduct of their respective
businesses. The Company shall timely file all proxy statements, reports and
other documents required to be filed by it under the Exchange Act and such
statements, reports and other documents shall be in compliance in all
Material respects with the requirements of its respective report form and
shall not on the date of filing contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
6.23. Supplemental Disclosure. From time to time as may be
requested by the Required Holders, the Company shall supplement each
Schedule hereto, or any representation herein or in any other Transaction
Document, with respect to any matter hereafter arising which, if existing
or occurring at the date of this Agreement, would have been required to be
set forth or described in such Schedule or as an exception to such
representation or which is necessary to correct any information in such
Schedule or representation which has been rendered inaccurate thereby (and,
in the case of any supplements to any Schedule, such Schedule shall be
appropriately marked to show changes made therein); provided that no such
supplement to any such Schedule or representation shall be or be deemed a
waiver of any Default or Event of Default resulting from the matters
disclosed therein; provided, further, that if such supplement discloses any
Default or Event of Default, the Company shall have 15 days to cure such
Default or Event of Default so long as such Default or Event of Default (i)
is not caused by the failure to pay amounts due under this Agreement and
(ii) the Collateral Manager believes that such Default or Event of Default
can be cured within such 15-day period.
6.24. Proceeds. The proceeds of the sale of the Notes, the Shares
and the $7 Warrants shall be placed in a restricted account (the
"Restricted Account"), and the disbursements of proceeds from the
Restricted Account shall be made in accordance with the procedures set
forth on Schedule 6.24 and in accordance with the terms of the Restricted
Account Agreement, dated as of the date hereof, by and among the Collateral
Agent, the Company and Savings Bank of Manchester. No part of the proceeds
from the sale of the Notes, the Shares and the $7 Warrants hereunder shall
be used, directly or indirectly, for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of Regulation
U of the Board of Governors of the Federal Reserve System or for any
purpose which violates or would be inconsistent with the provisions of
Regulation T, U or X of such Board.
6.25. Insurance; Damage to or Destruction of Collateral. The
Company shall, and shall cause each of its Subsidiaries to, at its sole
cost and expense, maintain the policies of insurance described on Schedule
2.7(b) in form and with insurers reasonably acceptable to the Required
Holders. If the Company or any of its Subsidiaries at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above or to pay all premiums relating thereto, the Collateral
Agent may (at the direction of the Required Holders) at any time or times
after ten days' written notice to the Company obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto that the Required Holders deem advisable. By doing so, the
Collateral Agent and the Holders shall not be deemed to have waived any
Default or Event of Default arising from the Company's or any of its
Subsidiaries' failure to maintain such insurance or pay any premiums
therefor. Neither the Collateral Agent nor the Required Holders shall have
any obligation to obtain insurance for the Company or any of its
Subsidiaries or to pay any premiums therefor. All sums so disbursed,
including reasonable
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attorneys' fees, court costs and other charges related
thereto, shall be payable on demand by the Company to the Collateral Agent
and shall be secured by the Collateral.
6.26. Rights of Required Holders to Designate Directors; Board
Composition. (a) Immediately after the Designation Event, the Company shall
expand the size of its Board of Directors from six to seven members and
shall at all times thereafter cause two individuals designated by the
Holders (any such individual so designated pursuant to this Section 6.26
from time to time, a "Purchaser Designee" and, together, the "Purchaser
Designees") to be appointed to the Board of Directors to fill the vacancies
created by such expansion, and the Company will take all necessary action
to cause a Purchaser Designee to be appointed to (i) each existing and
future committee of the Board of Directors, (ii) the board of directors or
governing body of any future Subsidiary of the Company (a "Subsidiary
Board") and (iii) each Committee of such Subsidiary Board. Thereafter, in
connection with any annual meeting of stockholders at which the term of a
Purchaser Designee is to expire, the Company will take all necessary action
to cause such Purchaser Designee to be elected to the Board of Directors.
In the event of any vacancy arising by reason of the resignation, death,
removal or inability to serve of any Purchaser Designee, the Holders shall
be entitled to designate a successor to fill such vacancy for the unexpired
term (and, thereafter, such successor shall be deemed a Purchaser Designee
for all purposes of this Section 6.26). Beginning on the date hereof, the
Company further agrees that the Holders shall be entitled to designate a
non-voting observer to attend and participate in (but not to vote at) all
meetings of the Board of Directors, each committee of the Board of
Directors, each Subsidiary Board and each committee of such Subsidiary
Board (the "Non-Voting Observer"); provided, however, that until the
Designation Event, the Board of Directors shall have the discretion to
exclude the Non-Voting Observer from any of the meetings of the Board of
Directors relating to the Company's relationship with any of the Holders or
the Collateral Agent. The Non-Voting Observer, if appointed, shall have the
same access to information concerning the business and operations of the
Company and its Subsidiaries at the same time as directors of the Company
and its Subsidiaries and shall be entitled to participate in discussions
and to consult with the Board of Directors and each Subsidiary Board
without voting, and the Board of Directors and each Subsidiary Board shall
give due consideration to the advice and recommendations of such Non-Voting
Observer.
(b) Without the prior written consent of the Holders, (i) the
Board of Directors shall not consist of more than seven members and (ii)
the Executive Committee of the Board of Directors shall not consist of more
than four members.
(c) Notwithstanding anything to the contrary contained herein,
after the Designation Event, so long as (i) the Holders (Y) in the
aggregate own at least 5% of the Common Stock (on a fully diluted basis) or
(Z) hold at least $10 million in the Issue Price of the Notes, (ii) there
has not been any change, event or development or series of changes, events
or developments that could or could reasonably be expected to have a
Material Adverse Effect, (iii) at least three individuals who are members
of the Board of Directors as of the date hereof remain members of the Board
of Directors, (iv) there is no material Litigation pending or threatened
against the Company and/or any Subsidiary, (v) the Board of Directors or
any Subsidiary Board has not failed to address in a timely fashion any
concerns raised by the Purchaser Designee(s) regarding the conduct of, or
breach of duty by, any officer or director of the Company or any Subsidiary
and (vi) the Company maintains officers and directors insurance policies
satisfactory to the Collateral Agent in its reasonable discretion, the
Holders agree that they shall use their reasonable efforts to appoint and
cause one Purchaser Designee to serve on the Board of Directors.
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6.27. Executive Officers. (a) The Company shall promptly, but in
no event later than June 30, 2000, hire a new Chief Executive Officer to
replace the existing Chief Executive Officer, whose appointment shall be
approved by the Board of Directors and the Holders.
(b) Without the approval of the Board of Directors, which
approval shall include the affirmative vote of each of the Purchaser
Designees, the Company shall not make any change in, or appointment of, key
executive officers of the Company, including, without limitation, the Chief
Executive Officer, the Chief Financial Officer, Executive Vice President,
Chief Operating Officer, General Counsel or similar positions; provided,
that if there are no Purchaser Designees at the time of such event, the
approval of the Holders will be required.
6.28. Board and Committee Notice Requirement. In addition to any
requirements specified in the By-Laws of the Company, the Company shall
notify each Purchaser Designee and the Non-Voting Observer, by telecopy, of
(a) every meeting (or action by written consent) of the Board of Directors
and (b) every meeting (or action by written consent) of any Subsidiary
Board and of any committee of the Board of Directors or Subsidiary Board,
at least three days in advance of such meeting (or distribution of written
consents), or, if such notice under the circumstances is not practicable,
as soon before the meeting (or distribution) as is practicable.
6.29. Reimbursement of Certain Expenses. The Company shall, upon
request therefor, promptly reimburse each Purchaser Designee and the
Non-Voting Observer for all reasonable expenses incurred by them in
connection with their attendance at meetings of the Board of Directors, any
Subsidiary Board or of committees of any of the foregoing and any other
activities undertaken by them in their capacity as directors of the Company
or any Subsidiary or observer, as applicable. The foregoing shall be in
addition to, and not in lieu of (or in duplication of), any indemnification
or reimbursement obligations of the Company under the Certificate of
Incorporation of the Company or the By-Laws or by Law. The Non-Voting
Observer shall be entitled to indemnification from the Company and its
Subsidiaries to the maximum extent permitted by Law as though he or she
were a director of the Company or the Subsidiary.
6.30. Limitation of Agreements. The Company shall not, and shall
not permit any Subsidiaries to, enter into any Contract, or any amendment,
modification, extension or supplement to any of its existing Contract or
the By-Laws or Certificate of Incorporation of the Company, that prohibits
the Company from honoring and observing its obligations under the
Transaction Documents.
6.31. Reserved.
6.32. Preparation of Quarterly Budgets. The Company shall furnish
to the Collateral Agent as soon as practicable, but in any event no later
than 10 days before the end of each of the quarterly periods of each fiscal
year of the Company, an operating budget (each, a "Quarterly Budget")
approved and adopted by a majority of the Board of Directors (which
majority shall include the Purchaser Designees, if any) for the Company and
its Subsidiaries, taken as a whole, for the next quarterly period (provided
that the Company need not furnish the Collateral Agent with a Quarterly
Budget for the quarterly period commencing on April 1, 2000). Each
Quarterly Budget shall specify, among other things, the amount of funds
needed by the Company and its Subsidiaries in the next quarter to operate
the business of the Company and its Subsidiaries (the amount of such funds,
the "Quarterly Amount").
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6.33. Operations in Accordance with the Business Plan. The
business and operations of the Company and its Subsidiaries shall be
conducted in accordance with the Quarterly Budget and a business plan of
the Company approved by the Collateral Agent.
6.34. Operational Covenants. The Company shall maintain the
covenants specified in Schedule 6.34.
7. Events of Default and Remedies.
-------------------------------
7.1. Events of Default and Remedies. "Event of Default", wherever
used herein, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any Order of any court or
any Order, rule or regulation of any Governmental Entity) (or, if the
giving of notice or lapse of time or both is required, then, prior to such
notice or lapse of time, a "Default"):
(a) default in the payment of the Accreted Value of or premium,
if any, and interest in respect of any Note when it becomes due and
payable; or
(b) default in the performance of any agreement or covenant in,
or provision of, this Agreement, the Notes, or the other documents
executed and delivered in connection with this Agreement (including
any Transaction Document) and to which the Company or any of its
Subsidiaries is a party (other than a covenant or a default in whose
performance is elsewhere in this Section specifically dealt with), or
any representation or warranty made in any document executed and
delivered in connection with this Agreement (including any Transaction
Document) was false in any material respect on the date as of which
made or deemed made; or
(c) the Company or any of its Subsidiaries shall: (A) default in
any payment of principal of or interest on any Indebtedness (other
than the Notes and any intercompany debt) or in the payment of any
Guarantee, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee was
created; or (B) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Guarantee
or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness or beneficiary
or beneficiaries of such Guarantee (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to become due
prior to its Stated Maturity, any applicable grace period having
expired, or such Guarantee to become payable, any applicable grace
period having expired, provided that the aggregate principal amount of
all such Indebtedness and Guarantee which would then become due or
payable as described in this Section 7.1(c) would equal or exceed
$500,000; or
(d) a final judgment or judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the
Company or any of its Subsidiaries and such judgment or judgments
remain undischarged for a period (during which execution shall not
effectively be stayed) of 60 days, provided that the aggregate of all
such judgments that are not covered by insurance under which the
Company or a Subsidiary is a beneficiary exceeds $500,000, or the
Required Holders shall determine that any Governmental Entity having
jurisdiction over the Company or any of its Subsidiaries including,
without limitation, the SEC, shall have taken or proposed to take any
action that the Required Holders believe could, individually or in the
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aggregate, reasonably be expected to have a Material Adverse Effect or
that adversely affects the Holders' security interest in the
Collateral; or
(e) the Company or any of its Subsidiaries (i) is generally not
paying, or admits in writing its inability to pay, its debts as they
become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(f) a court or other Governmental Entity of competent
jurisdiction enters an Order appointing, without consent by the
Company or any of its Subsidiaries, a custodian, receiver, trustee or
other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for
relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage
of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Company or any of
its Subsidiaries, or any such petition shall be filed against the
Company or any of its Subsidiaries and such petition shall not be
dismissed within 60 days; or
(g) a court or other Governmental Entity of competent
jurisdiction enters a final judgment holding any of the documents
delivered in connection with this Agreement (including any Transaction
Document) to be invalid or unenforceable and such judgment remains
unstayed and in effect for a period of 20 consecutive days; or the
Company or any of its Subsidiaries shall assert, in any pleading filed
in such a court, that any of the documents delivered in connection
with this Agreement are invalid or unenforceable; or
(h) any provision of any Transaction Document shall for any
reason cease to be valid, binding and enforceable in accordance with
its terms (or the Company or any of its Subsidiaries shall challenge
the enforceability of any Transaction Document or shall assert in
writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Transaction Documents has
ceased to be or otherwise is not valid, binding and enforceable in
accordance with its terms), or any security interest created under any
Transaction Document shall cease to be a valid and perfected security
interest, or Lien in any of the Collateral purported to be covered
thereby; or
(i) the Company or any of its Subsidiaries shall default in the
payment of any amounts due pursuant to the terms of any document
executed and delivered by the Company or such Subsidiary in connection
with this Agreement (other than payments elsewhere in this Section
specifically dealt with); or
(j) there shall exist with respect to any Benefit Plan any
"prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code); (ii) there shall exist with respect to any
Benefit Plan that is a "defined benefit plan" (within the meaning of
Section 3(35) of ERISA) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA or Section 412 of the Code, whether or
not waived); (iii) a "reportable event" (within the meaning of Section
4043 of ERISA, but excluding any reportable event with respect to
which the 30-day
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notice requirement of Section 4043 has been waived) shall occur, or
judicial or administrative proceedings shall have commenced, with respect
to any Benefit Plan that is a "defined benefit plan" (within the meaning of
Section 3(35) of ERISA), which reportable event or proceedings is, in the
reasonable opinion of the Holders, likely to result in the termination of
such Benefit Plan; (iv) there shall exist with respect to any Benefit Plan
that is a "multiemployer plan" (within the meaning of Section 4001(a)(3) of
ERISA) any "withdrawal liability" (within the meaning of Section 4201 of
ERISA); or (v) any Benefit Plan that is a "defined benefit plan" (within
the meaning of Section 3(35) of ERISA) shall terminate; and in the case of
each of clauses (i) through (v) above, such event or condition could
individually or in the aggregate with all other such events or conditions
have a Material Adverse Effect.
7.2. Default Rate. For so long as any Event of Default has
occurred and is continuing, all Notes then outstanding will bear interest
at a rate (the "Default Rate") equal to 15% per annum, compounded
semi-annually, computed on the basis of a 360-day year consisting of twelve
30-day months (including any interest accruing during the pendency of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowed as a claim in any such bankruptcy or proceeding). All
such interest shall be payable on demand.
7.3. Acceleration of Maturity. If any Event of Default (other
than an Event of Default specified in clause (e), (f), (g) or (h) of
Section 7.1) shall have occurred and be continuing, the Required Holders
may, by notice to the Company, declare the entire unpaid Accreted Value of,
and interest, if any, in respect of the Notes (to the full extent permitted
by applicable law) to be immediately due and payable (and such Accreted
Value shall be based on the Accreted Value of the Notes to the day prior to
such payment date), and upon such declaration all of such amount shall be
immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived, anything
in the Notes or in this Agreement to the contrary notwithstanding; provided
that if an Event of Default under clause (e), (f), (g) or (h) of Section
7.1 shall have occurred, the entire unpaid Accreted Value of each Note (to
the full extent permitted by applicable law), shall immediately become due
and payable, without any declaration and without presentment, demand,
protest or further notice, all of which are hereby waived, anything in the
Notes or this Agreement to the contrary notwithstanding.
7.4. Other Remedies. If any Event of Default shall have occurred
and be continuing, from and including the date of such Event of Default to
but not including the date such Event of Default is cured or waived, each
Holder may enforce its rights by suit in equity, by action at law, or by
any other appropriate proceedings, whether for the specific performance (to
the extent permitted by Law) of any covenant or agreement contained in this
Agreement or the Notes or in aid of the exercise of any power granted in
this Agreement or the Notes, and each Holder may enforce the payment of any
Note held by such Holder and any of its other legal or equitable rights.
7.5. Conduct No Waiver; Collection Expenses. No course of dealing
on the part of any Holder, nor any delay or failure on the part of any
Holder to exercise any of its rights, shall operate as a waiver of such
right or otherwise prejudice any Holder's rights, powers and remedies. If
the Company fails to pay, when due, any payment in respect of any Note, the
Company will pay the Holder of such Note, to the extent permitted by Law,
on demand, all costs and expenses incurred by such Holder in the collection
of any amount due in respect of any Note hereunder, including reasonable
legal fees incurred by such Holder in enforcing its rights hereunder.
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7.6. Annulment of Acceleration. If a declaration is made in
accordance with Section 7.2, then and in every such case, the Required
Holders may, by an instrument delivered to the Company, annul such
declaration and the consequences thereof.
7.7. Remedies Cumulative. No right or remedy conferred upon or
reserved to each Purchaser or the Collateral Agent or the Holders under
this Agreement is intended to be exclusive of any other right or remedy,
and every right and remedy shall be cumulative and in addition to every
other right and remedy given hereunder or now and hereafter existing under
applicable law. Every right and remedy given by this Agreement or by
applicable Law to each Holder or the Collateral Agent or the Holders may be
exercised from time to time and as often as may be deemed expedient by such
Holder or the Collateral Agent or the Holders.
8. Redemption.
----------
8.1. Optional Redemption. Subject to each Holder's right of
conversion set forth in Section 9, the Company shall have the right, at its
sole option and election made in accordance with Section 8.4 and subject to
Section 8.4, to redeem the Notes after April 28, 2002, in whole or in part,
at a redemption price of 145% of the Accreted Value of the Notes to the day
prior to the redemption date (the "Optional Redemption Price"); provided,
however, that if such redemption date occurs after April 28, 2003, the
Optional Redemption Price shall decrease to 110% of the Accreted Value of
the Notes on the day prior to the redemption date.
8.2. Partial Redemption. If less than all of the Notes at the
time outstanding are to be redeemed, the aggregate Accreted Value of the
Notes to be redeemed shall be prorated among the outstanding Notes;
provided, however, that in the event that the aggregate Accreted Value of
the Notes then outstanding is $1,000,000 or less, the Company shall be
required to redeem all of such outstanding Notes if it elects to redeem any
such Notes.
8.3. Change of Control. The Company shall make an offer, in
accordance with the procedures set forth in Section 8.4(b), to acquire the
Notes for cash at a redemption price of 110% of the Accreted Value of the
Notes on the day prior to the redemption date (the "Change of Control
Redemption Price"), in the event of (i) a Change of Control, a merger,
consolidation or other combination involving the Company, or (ii) a Change
of Control of a Subsidiary of the Company or a group of Subsidiaries of the
Company occurs and such Subsidiary or group of Subsidiaries, individually
or in the aggregate, together with their consolidated Subsidiaries and all
other Subsidiaries previously subject to a Change of Control, if any,
represent more than 50% of the revenues or net assets of the Company and
its Subsidiaries on a consolidated basis as of the last date of the
immediately preceding fiscal quarter of the Company or for the twelve month
period then ended.
8.4. Redemption Procedures. (a) Notice of any redemption of Notes
pursuant to Section 8.1 shall be mailed at least 30 but not more than 60
days prior to the date fixed for redemption to each Holder of a Note to be
redeemed, at such Holder's address as it appears in the Note Register. In
order to facilitate the redemption of Notes, the Board of Directors may fix
a record date for the determination of Notes to be redeemed which shall be
a date at least 20 days following the date of the notice.
(b) Promptly following a Change of Control (but in no event more
than five Business Days thereafter), the Company shall mail to each Holder,
at such Holder's address as it appears in the Note Register, notice of such
Change of Control, which notice shall set forth such Holder's right to
require the Company to redeem any or all Notes held by it. The Company
shall thereafter, during a period of 90 days
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from the date of such notice, redeem any Note, in whole or in part, at the
option of the Holder thereof, upon at least five days' written notice to
the Company by such Holder specifying (i) the Accreted Value of Notes to be
redeemed and (ii) the redemption date.
(c) On the date of any redemption being made pursuant to Section
8.1, 8.2 or 8.3 that is specified in a notice given pursuant to this
Section 8.4, the Company shall wire transfer to such Holder the Optional
Redemption Price or the Change of Control Redemption Price, as the case may
be, for the Accreted Value of such Holder's Notes and premium, if any, so
redeemed.
9. Conversion.
----------
9.1. Holder's Option to Convert into Common Stock. Subject to the
provisions for adjustment hereinafter set forth, any Note or any portion of
the outstanding Accreted Value of such Note shall be convertible at the
option of the Holder thereof at any time after the Closing into fully paid
and nonassessable shares of Common Stock at a conversion price, determined
as hereinafter provided, in effect at the time of conversion.
The number of shares of Common Stock issuable upon conversion of
a Note shall be determined by dividing the Accreted Value of such Note or
portion thereof surrendered for conversion on the day prior to the
conversion date by the Conversion Price. The "Conversion Price" shall
initially be $3.00 per share, subject to adjustment as provided in this
Section 9.
9.2. Exercise of Conversion Privilege. (a) Conversion of the
Notes may be effected by any Holder thereof upon the surrender to the
Company at the office of the Company designated for notices in accordance
with Section 14.6 or at the office of any agent or agents of the Company,
as may be designated by the Board of Directors (the "Transfer Agent"), of
the Notes to be converted, accompanied by a written notice stating that
such Holder elects to convert all or a specified portion of the Accreted
Value of such Notes in accordance with the provisions of this Section 9 and
specifying the name or names in which such Holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case any Holder's
notice shall specify a name or names other than that of such Holder, such
notice shall be accompanied by payment of all transfer Taxes payable upon
the issuance of shares of Common Stock in such name or names. Other than
such Taxes, the Company will pay any and all issue and other Taxes (other
than Taxes based on income) that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of Notes pursuant hereto.
As promptly as practicable, and in any event within five Business Days
after the surrender of such Notes and the receipt of such notice relating
thereto and, if applicable, payment of all transfer Taxes (or the
demonstration to the satisfaction of the Company that such Taxes have been
paid), the Company shall deliver or cause to be delivered (i) a certificate
or certificates representing the number of validly issued, fully paid and
nonassessable full shares of Common Stock to which the Holder of the Notes
being converted shall be entitled and (ii) if less than the entire Accreted
Value of any Note surrendered is being converted, a new Note in the
Accreted Value that remains outstanding upon such partial conversion. Such
conversion shall be deemed to have been made at the close of business on
the date of giving such notice so that the rights of any Holder thereof as
to the Note or Notes (or portion thereof) being converted shall cease
except for the right to receive shares of Common Stock in accordance
herewith, and the Person entitled to receive the shares of Common Stock
shall be treated for all purposes as having become the record holder of
such shares of Common Stock at such time, so long as such Holder's Notes
are delivered to the Company within two Business Days after the date of the
giving of notice.
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(b) For the avoidance of doubt, both the Holders and the Company
acknowledge that the Holders' right to convert the Notes into Common Stock
remains in effect until any redemption and will not be suspended by any
notice of redemption.
9.3. Fractions of Shares; Interest. In connection with the
conversion of any Note into Common Stock, no fractional shares shall be
issued, but in lieu thereof the Company shall pay a cash adjustment in
respect of each fractional interest in an amount equal to such fractional
interest multiplied by the Current Market Price per share of Common Stock
on the Trading Day on which any Note is deemed to have been converted. If
more than one Note shall be surrendered for conversion by the same Holder
at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the aggregate Accreted
Value of Notes so surrendered, together with cash in lieu of any fractional
share of Common Stock.
9.4. Reservation of Stock; Listing. (a) The Company shall at all
times reserve and keep available for issuance upon the conversion of the
Notes, free from any preemptive rights, such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of the aggregate Face Amount of the Notes into Common
Stock, and shall take all action required to increase the authorized number
of shares of Common Stock, if necessary, to permit the conversion of the
then Accreted Value of the Notes.
(b) If at the time of conversion, the Common Stock is listed on a
national securities exchange, or is designated as a "national market system
security" on the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), the Company shall take all action necessary to
cause the shares of Common Stock issuable upon conversion of the Notes to
be listed on such exchange, subject to official notice of issuance.
9.5. Rights. If the Company shall issue shares of Common Stock
upon conversion of any Notes as contemplated by this Section 9, the Company
shall issue together with each such share of Common Stock any rights issued
to holders of Common Stock, irrespective of whether such rights shall be
exercisable at such time, but only if such rights are issued and
outstanding and held by other holders of Common Stock at such time and have
not expired.
9.6. Adjustment of Conversion Ratio. The Conversion Price will be
subject to adjustment from time to time as follows:
(a) In case the Company shall at any time or from time to
time after the date hereof (A) pay a dividend, or make a distribution, on
the outstanding shares of Common Stock in shares of Common Stock, (B)
subdivide the outstanding shares of Common Stock; (C) combine the
outstanding shares of Common Stock into a smaller number of shares; or (D)
issue by reclassification of the shares of Common Stock any shares of
capital stock of the Company, then, and in each such case, the Conversion
Price in effect immediately prior to such event or the record date
therefor, whichever is earlier, shall be adjusted so that the Holder of any
Note thereafter surrendered for conversion into Common Stock shall be
entitled to receive the number of shares of Common Stock of the Company
that such Holder would have owned or would have been entitled to receive
after the happening of any of the events described above, had such Notes
been surrendered for conversion immediately prior to the happening of such
event or the record date therefor, whichever is earlier. An adjustment made
pursuant to this clause (a) shall become effective (x) in the case of any
such dividend or distribution, immediately after the close of business on
the record date for the determination of holders of shares of Common Stock
entitled to receive such dividend or distribution, or (y) in the case of
such subdivision, reclassification or combination, at the close of business
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on the day upon which such corporate action becomes effective. No
adjustment shall be made pursuant to this clause (a) in connection with any
transaction to which Section 9.7 applies.
(b) Except for issuances pursuant to Schedule 9.6(b), (i) if
at any time the Company shall issue shares of Common Stock (or rights,
warrants or other securities convertible into or exchangeable for shares of
Common Stock (collectively "Convertible Securities")) at a price per share
(or having a conversion price per share) less than the Conversion Price per
share of Common Stock as of the date of issuance of such shares (or, in the
case of Convertible Securities, less than the Conversion Price as of the
date of issuance of the Convertible Securities in respect of which shares
of Common Stock were issued), including, without limitation, any shares of
Common Stock issued by the Company upon the conversion of the Call
Debentures or (ii) if on any Conversion Date, there are Call Debentures
outstanding and the Ramius Conversion Price is below the Conversion Price
(regardless of whether any shares of Common Stock have been issued to
holders of the Call Debentures), then the Conversion Price shall be
adjusted by multiplying (A) the Conversion Price in effect on the day
immediately prior to such date by (B) a fraction, the numerator of which
shall be the sum of (1) the number of shares of Common Stock outstanding on
such date and (2) the number of shares of Common Stock purchasable with the
aggregate consideration receivable by the Company for the total number of
shares of Common Stock so issued (or into which the rights, warrants or
other convertible securities may convert), and the denominator of which
shall be the sum of (x) the number of shares of Common Stock outstanding on
such date and (y) the number of additional shares of Common Stock issued
(or into which the Convertible Securities may convert). Notwithstanding
anything to the contrary contained herein, (a) in calculating any
adjustment to the Conversion Price pursuant to clause (ii) above, once
shares of Common Stock are actually issued upon the conversion of the Call
Debentures, only those shares of Common Stock that remain issuable under
those Call Debentures which have not yet been converted shall be taken into
consideration and (b) on any date that the Company issues any shares of
Common Stock pursuant to the Call Debentures, the Company shall, on the
same date, deliver a notice to the Collateral Agent specifying whether any
adjustment to the Conversion Price will be required pursuant to this
Section 9.6 as a result of such issuance.
An adjustment made pursuant to this Section 9.6(b) shall be
made on the next Business Day following the date on which any such issuance
is made and shall be effective retroactively to the close of business on
the date of such issuance. For purposes of this Section 9.6(b), the
aggregate consideration receivable by the Company in connection with the
issuance of shares of Common Stock or of Convertible Securities shall be
deemed to be equal to the sum of the aggregate offering price (before
deduction of underwriting discounts or commissions and expenses payable to
third parties) of all such Common Stock and Convertible Securities plus the
minimum aggregate amount, if any, payable upon exercise or conversion of
any such Convertible Securities. The issuance or reissuance of any shares
of Common Stock (whether treasury shares or newly issued shares) pursuant
to (i) a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the Conversion Price pursuant to Section 9.6(a) or (ii) any
stock option plan or program of the Company currently in effect involving
the grant of options to employees of the Company at the Current Market
Price shall not be deemed to constitute an issuance of Common Stock or
Convertible Securities by the Company to which this Section 9.6(b) applies.
No adjustment shall be made pursuant to this Section 9.6(b) in connection
with any transaction to which Section 9.7 applies.
(c) In case the Company shall at any time or from time to
time after the date hereof declare, order, pay or make a dividend or other
distribution (including, without limitation, any distribution of stock or
other securities or property or Convertible Securities of the Company or
any of its Subsidiaries by way of dividend or spinoff), on its Common
Stock, then, and in each such case, the Conversion Price shall be adjusted
by multiplying (1) the applicable Conversion Price on the day immediately
prior to the record date fixed for the determination of stockholders
entitled to receive such dividend or distribution by (2) a fraction, the
numerator of which shall be the average Current Market Price of the Common
Stock for the period of 20 Trading Days preceding such record date, and the
denominator of which shall be such average Current Market Price of the
Common Stock less the Fair Market Value per share of Common Stock (as
determined in good faith by the board of directors of the Company, a
certified resolution with respect to which shall be mailed to each Holder)
of such dividend or distribution. No adjustment shall be made pursuant to
this Section 9.6(c) in connection with any transaction to which Section 9.7
applies.
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(d) In case a tender or exchange offer made by the Company
or any Affiliate of the Company for all or any portion of the Common Stock
shall expire and such tender or exchange offer shall involve the payment by
the Company or such Affiliate of consideration per share of Common Stock
having a Fair Market Value at the last time (the "Expiration Time") tenders
or exchanges may be made pursuant to such tender or exchange offer (as it
shall have been amended) that exceeds the Current Market Price per share of
Common Stock on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction contemplated by this
subsection (d) by a fraction (which shall not be greater than one) of which
the numerator shall be the number of shares of Capital Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time
multiplied by the Current Market Price per share of Common Stock on the
Trading Day next succeeding the Expiration Time and of which the
denominator shall be the sum of (i) the Fair Market Value of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such maximum, being referred
to as the "Purchased Shares") and (ii) the product of the number of shares
of Capital Stock outstanding (less any Purchased Shares) at the Expiration
Time and the Current Market Price per share of Common Stock on the Trading
Day next succeeding the Expiration Time, such reduction to become
retroactively effective immediately prior to the opening of business on the
day following the Expiration Time.
(e) For purposes of this Section 9.6, the number of shares
of Common Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the account of the Company.
(f) The term "dividend," as used in this Section 9.6, shall
mean a dividend or other distribution upon Capital Stock of the Company.
(g) Anything in this Section 9.6 to the contrary
notwithstanding, the Company shall not be required to give effect to any
adjustment in the Conversion Price unless and until the net effect of one
or more adjustments (each of which shall be carried forward), determined as
above provided, shall have resulted in a change of the Conversion Price by
at least one one-hundredth of one share of Common Stock, and when the
cumulative net effect of more than one adjustment so determined shall be to
change the Conversion Price by at least one one-hundredth of one share of
Common Stock, such change in Conversion Price shall thereupon be given
effect.
(h) The certificate of any firm of independent public
accountants of recognized national standing selected by the Board of
Directors (which may be the firm of independent public accountants
regularly employed by the Company) shall be presumptively correct for any
computation made under this Section 9.6.
(i) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the number of
shares of Common Stock issuable upon exercise of the right of conversion
granted by this Section 9.6 or in the Conversion Price then in effect shall
be required by reason of the taking of such record.
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9.7. Merger or Consolidation. In the case of any
recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or a substantial portion of the Company's assets to another
Person or other transaction which is effected in such a manner that holders
of Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock (each of the foregoing being referred to as a "Transaction"),
each Note then outstanding shall thereafter be convertible into, in lieu of
the Common Stock issuable upon such conversion prior to consummation of
such Transaction, the kind and amount of shares of stock and other
securities and property receivable (including cash) upon the consummation
of such Transaction by a holder of that number of shares of Common Stock
into which the Accreted Value of such Note was convertible immediately
prior to such Transaction. In each such case, the Company shall also make
appropriate provisions (in form and substance satisfactory to the Required
Holders) to insure that the provisions of this Section 9.6 shall thereafter
be applicable to the Notes (including, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing
entity is other than the Company, an immediate adjustment of the Conversion
Price to the value for the Common Stock reflected by the terms of such
consolidation, merger or sale, and a corresponding immediate adjustment in
the number of shares of Common Stock acquirable and receivable upon
conversion of the Notes, in each case if the value so reflected is less
than the Conversion Price in effect immediately prior to such
consolidation, merger or sale). The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof,
the successor corporation (if other than the Company) resulting from
consolidation or merger or the corporation purchasing such assets assumes
by written instrument (in form reasonably satisfactory to the Required
Holders), the obligation to deliver to each such Holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to acquire. In case securities or
property other than Common Stock shall be issuable or deliverable upon
conversion as aforesaid, then all references in this Section 9 shall be
deemed to apply, so far as appropriate and nearly as may be, to such other
securities or property.
9.8. Notice of Certain Corporate Actions. In case at any time or
from time to time the Company shall pay any stock dividend or make any
other non-cash distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall
be any capital reorganization or reclassification of the Common Stock or
consolidation or merger of the Company with or into another corporation, or
any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the
Company, then, in any one or more of such cases, the Company shall give at
least 20 days' prior written notice (the time of mailing of such notice
shall be deemed to be the time of giving thereof) to the Holders of the
Notes at their addresses as shown in the Note Register as of the date on
which (i) a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or
winding up shall take place, as the case may be, provided that in the case
of any Transaction to which Section 9.7 applies the Company shall give at
least 30 days' prior written notice as aforesaid. Such notice shall also
specify the date as of which the holders of the Common Stock of record
shall participate in such dividend, distribution or subscription rights or
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
consolidation, merger, sale or conveyance or participate in such
dissolution, liquidation or winding up, as the case may be. Failure to give
such notice shall not invalidate any action so taken.
9.9. Reports as to Adjustments. Upon any adjustment of the
Conversion Price then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation
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of the conversion provisions set forth in this Section 9, then, and in each
such case, the Company shall promptly deliver to each Holder and the
Transfer Agent of the Notes and Common Stock, a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company setting
forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the
Conversion Price then in effect following such adjustment, and shall set
forth in reasonable detail the method of calculation of each and a brief
statement of the facts requiring such adjustment. Where appropriate, such
notice to any Holder may be given in advance and included as part of the
notice required under the provisions of Section 9.8.
10. The Collateral Agent.
--------------------
10.1. Appointment. Each Purchaser for itself and for future
Holders hereby irrevocably designates and appoints Appaloosa Management
L.P. as the Collateral Agent under this Agreement, and irrevocably
authorizes the Collateral Agent to take such action on such Purchaser's
behalf and any future Holder's behalf and to exercise such powers and
perform such duties as are expressly delegated to the Collateral Agent by
the terms of the Transaction Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Collateral Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Purchaser or future Holder, and no
implied covenants, functions, responsibilities, duties, obligations or
Liabilities shall be read into this Agreement or any of the Transaction
Documents or otherwise exist against the Collateral Agent.
10.2. Delegation of Duties. The Collateral Agent may execute any
of its duties under the Transaction Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care, except as otherwise
provided in Section 10.3.
10.3. Exculpatory Provisions. Neither the Collateral Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact,
Affiliates or Subsidiaries shall be (i) liable for any action taken or
omitted to be taken by any of them under or in connection with the
Transaction Documents, or (ii) responsible in any manner to any of the
Purchasers or future Holders for any recitals, statements, representations
or warranties made by the Company or any of its Subsidiaries or any officer
thereof contained in the Transaction Documents or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Collateral Agent under or in connection with, the
Transaction Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Transaction Documents or
for any failure of the Company or any of its Subsidiaries to perform its
obligation thereunder. The Collateral Agent shall not be under any
obligation to any Purchaser or future Holder to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, any Transaction Document, or to inspect the properties,
books or records of the Company or any of its Subsidiaries.
10.4. Reliance by the Collateral Agent. The Collateral Agent
shall be entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company), independent
accountants and other experts selected by the Collateral Agent. The
Collateral Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Collateral
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Agent. The Collateral Agent shall be fully justified in failing or refusing
to take any action under any Transaction Document unless it shall first
receive such advice or concurrence of the Required Holders (or, where
unanimous consent of the Holders is expressly required hereunder or
thereunder, such Holders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Holders against any and all
Liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Collateral Agent shall in all cases
be fully protected in acting, or in refraining from acting, under any
Transaction Document in accordance with a request of the Required Holders,
and such request and any action taken or failure to act pursuant thereto
shall be binding upon all Purchasers and all future Holders of the Notes.
10.5. Notice of Default. The Collateral Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Collateral Agent has received written notice
from a Holder or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Collateral Agent receives such a notice,
the Collateral Agent shall promptly give notice thereof to all Holders. The
Collateral Agent shall take such action with respect to such Default or
Event of Default as shall be directed by the Required Holders, provided
that (i) the Collateral Agent shall not be required to take any action that
exposes the Collateral Agent to any Liability or that is contrary to this
Agreement or applicable Law and (ii) unless and until the Collateral Agent
shall have received such directions, the Collateral Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with respect to such default or Event or Default as it shall deem advisable
in the best interests of the Holders.
10.6. Non-Reliance on Collateral Agent and Other Purchasers. Each
Purchaser for itself and all future Holders of the Notes acquired by such
Purchaser expressly acknowledges that neither the Collateral Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representation or warranties to it
and that no act by the Collateral Agent hereafter taken, including any
review of the affairs of the Company and its Subsidiaries, shall be deemed
to constitute any representation or warranty by the Collateral Agent to any
such Purchaser or Holder. Each Purchaser for itself and all future Holders
of the Notes acquired by such Purchaser represents to the Collateral Agent
that it has, independently and without reliance upon the Collateral Agent
or any other Holder, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operation, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and made its own
decision to make its investment hereunder and to enter into this Agreement.
Each Purchaser also represents for itself and all future Holders of the
Notes acquired by such Purchaser that it will, independently and without
reliance upon the Collateral Agent or any other Holder, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under the Transaction Documents, and to make
such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the
Holders by the Collateral Agent hereunder, the Collateral Agent shall not
have any duty or responsibility to provide any Holder with any credit or
other information concerning the business, financial condition, assets,
liabilities, net assets, properties, results of operations, value,
prospects and other condition or creditworthiness of the Company and its
Subsidiaries which may come into the possession of the Collateral Agent or
any of its officers, directors, employees, agents, attorneys-in-fact,
Affiliates or any of its Subsidiaries.
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10.7. Indemnification. The Purchasers and the future Holders
jointly and severally agree to indemnify the Collateral Agent in its
capacity as such (to the extent not reimbursed by the Company and its
Subsidiaries and without limiting the obligation of the Company and its
Subsidiaries to do so), from and against any and all Liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever that may at any time be
imposed on, incurred by or asserted against the Collateral Agent in any way
relating to or arising out of the Transaction Documents or any documents
contemplated by or referred to herein or the transactions contemplated
hereby or any action taken or omitted by the Collateral Agent under or in
connection with any of the foregoing, provided that no Purchaser or future
Holder shall be liable for the payment of any portion of such Liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Collateral Agent's
gross negligence or willful misconduct. The agreements contained in this
Section 10.7 shall survive the payment of the Notes and all other amounts
payable hereunder.
10.8. Collateral Agent in its Individual Capacity. The Collateral
Agent and its Affiliates and Subsidiaries may make loans to, accept
deposits from and generally engage in any kind of business with the Company
and its Subsidiaries as though the Collateral Agent were not the Collateral
Agent hereunder. With respect to its loans made or renewed by it or any
Note issued to it, the Collateral Agent shall have the same rights and
powers, duties and Liabilities under the Transaction Documents as any
Holder and may exercise the same as though it were not the Collateral Agent
and the terms "Purchaser", "Purchasers", "Holder" and "Holders" shall
include the Collateral Agent in its individual capacity.
10.9. Successor Collateral Agent. The Collateral Agent may resign
as Collateral Agent upon 30 days' notice to the Company (and the Company
shall promptly notify the Holders thereof). If the Collateral Agent shall
resign as Collateral Agent under the Transaction Documents, then the
Required Holders shall appoint a successor agent for the Holders whereupon
such successor agent shall succeed to the rights, powers and duties of the
Collateral Agent and the term "Collateral Agent" shall mean such successor
agent effective upon its appointment, and the former Collateral Agent's
rights, powers and duties as Collateral Agent shall be terminated, without
any other or further act or deed on the part of such former Collateral
Agent or any of the parties to this Agreement or any Holders of the Notes.
After any retiring Collateral Agent's resignation hereunder as Collateral
Agent, the provisions of this Section 10 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Collateral
Agent under the Transaction Documents.
11. Interpretation.
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11.1. Definitions.
------------
"$3 Warrants" means warrants to purchase 200,000 shares of Common
Stock with an exercise price of $3 per share in the form attached hereto as
Exhibit 1.4iii.
"$7 Warrants" shall have the meaning ascribed thereto in the
Recitals.
"7.5% Secured Note" shall mean the 7.5% Secured Note in the
initial aggregate principal amount of $3,000,000 issued by the Company to
Appaloosa on October 21, 1999, as such 7.5% Secured note may be amended
from time to time.
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"15% Secured Note" shall mean the 15% Secured Note in the initial
aggregate principal amount of $1,650,000 issued by the Company to Appaloosa
on January 5, 2000, as such 15% Secured Note may be amended form time to
time.
"Accreted Amount" shall have the meaning ascribed thereto in
Section 5.3.
"Accretion Rate" shall have the meaning ascribed thereto in
Section 5.3.
"Accreted Value" shall have the meaning ascribed thereto in
Section 5.3.
"Action" shall mean see ss. 12.1(b)(i).
"Agreement" shall have the meaning ascribed thereto in the
Preamble.
"Affiliate" shall have the respective meanings ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act. "Affiliate" shall also include partners of a Person. Notwithstanding
the foregoing, "Affiliate" shall not include the limited partners of any
Purchaser or Holder or any limited partners of a limited partner of any
Purchaser or Holder.
"Beneficially Own" with respect to any securities shall mean
having "beneficial ownership" of such securities (as determined pursuant to
Rule 13d-3 under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. "Beneficial
Owners" and "Beneficially Owned" shall have correlative meanings.
"Benefit Plan" shall mean each plan, program, policy, payroll
practice, commitment or other arrangement providing for compensation,
severance, termination pay, bonuses, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits of any
kind, whether formal or informal, funded or unfunded, written or oral and
whether or not legally binding, including, without limitation, each
"employee benefit plan" (within the meaning of Section 3(3) of ERISA), in
the case of each of the foregoing, maintained, sponsored or contributed to
by the Company or any ERISA Affiliate or pursuant to which the Company or
any ERISA Affiliate has or may have any Liability, but excluding individual
Employee Agreements.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Bridge Notes" shall have the meaning ascribed thereto in the
Recitals.
"Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"By-Laws" shall mean the By-Laws of the Company as currently in
effect.
"Call Debentures" shall mean the Debentures issued under Section
1.4 of the Subscription Agreement.
"Capital Expenditures" shall mean expenditures made or
liabilities incurred for the acquisition of any fixed assets or
improvements, replacements, substitutions or additions thereto which have a
useful life of more than one year, including the total principal portion of
Capitalized Lease Obligations.
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"Capital Stock" shall mean, in the case of the Company, any and
all shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Capitalized Lease" shall mean, with respect to any Person, any
lease or any other agreement for the use of property which, in accordance
with GAAP, should be capitalized on the lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and
include, as of any date as of which the amount thereof is to be determined,
the amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such Person in respect of a Capitalized
Lease of such Person.
"Certificate of Incorporation" shall mean the Certificate of
Incorporation of the Company as currently in effect.
"Change of Control" shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 35% or more of the
combined voting power of the then outstanding Voting Securities
of the Company, but excluding, for this purpose, any such
acquisition by (i) the Company or any of its Subsidiaries, (ii)
any Benefit Plan (or related trust) of the Company or any of its
Subsidiaries, or (iii) any corporation with respect to which,
following such acquisition, 50% or more of the combined voting
power of the then outstanding Voting Securities of such
corporation is then Beneficially Owned, directly or indirectly,
by individuals and entities who were the Beneficial Owners of
Voting Securities of the Company immediately prior to such
acquisition in substantially the same proportion as their
ownership, immediately prior to such acquisition, of the combined
voting power of the then outstanding Voting Securities of the
Company; or
(b) a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all the Persons
who were the Beneficial Owners of the Voting Securities of the
Company immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or
consolidation Beneficially Own, directly or indirectly, more than
35% of the combined voting power of the then outstanding Voting
Securities of the corporation resulting from such reorganization,
merger or consolidation; or
(c) the Incumbent Board shall cease for any reason to
constitute at least 50% of the members of the Board of Directors;
or
(d) the sale, lease or other disposition of all or a
substantial part of the Company's assets in one transaction or a
series of related transactions.
"Change of Control Redemption Price" shall have the meaning
ascribed thereto in Section 8.3.
"Closing" shall have the meaning ascribed thereto in Section 1.3.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean all real and personal property and
interests in real and personal property including, without limitation,
Intellectual Property, rights under leases and royalty rights and
agreements, now owned or hereafter acquired by the Company or its
Subsidiaries in or upon which a Lien is granted or made under the
Collateral Documentation.
"Collateral Agent" shall have the meaning ascribed thereto in the
Preamble.
"Collateral Documentation" shall mean the Guarantee and Security
Agreement, the Security Agreement, the Financing Statements, the
Intercompany Notes and the endorsements thereof to the Collateral Agent
(for the benefit of the Holders) or to the Holders, and all other deeds of
trust, assignments, endorsements, pledged stock, collateral assignments and
other instruments, documents, agreements or conveyances at any time
creating or evidencing Liens or assigning Liens to the Collateral Agent
(for the benefit of the Holders) or to the Holders, to secure the
obligations of the Company or any of its Subsidiaries under the Notes and
the Registration Rights Agreement.
"Commencement Date" shall have the meaning ascribed thereto in
Schedule 6.34.
"Common Stock" shall have the meaning ascribed thereto in the
Recitals.
"Company" shall have the meaning ascribed thereto in the
Preamble.
"Company Intellectual Property" shall have the meaning ascribed
thereto in Section 2.13.
"Consolidated" or "consolidated", when used with reference to any
financial term in this Agreement (but not when used with respect to any Tax
Return or Tax Liability), shall mean the aggregate for two or more Persons
of the amounts signified by such term for all such Persons, with
inter-company items eliminated and, with respect to earnings, after
eliminating the portion of earnings properly attributable to minority
interests, if any, in the capital stock of any such Person or attributable
to shares of preferred stock of any such Person not owned by any other such
Person.
"Contracts" shall mean all agreements, contracts, leases,
purchase orders, arrangements, commitments and licenses to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound.
"Conversion Date" shall mean the date on which a Holder delivers
a conversion notice to the Company in accordance with Section 9.2.
"Conversion Price" shall have the meaning ascribed thereto in
Section 9.1.
"Convertible Debentures" shall have the meaning ascribed thereto
in Section 2.3.
"Convertible Securities" shall have the meaning ascribed thereto
in Section 9.6(b).
"Current Market Price", when used with reference to shares of
Common Stock or other securities on any date, shall mean the closing price
per share of Common Stock or such other securities on such date and, when
used with reference to shares of Common Stock or other securities for any
period shall mean the average of the daily closing prices per share of
Common Stock or such other securities for such period. If the Common Stock
or such other securities are listed or admitted to trading on a national
securities exchange, the closing price shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in
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the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Stock or such other securities are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the Common Stock or such other securities are listed or admitted to trading
or, if the Common Stock or such other securities are not so listed on any
national securities exchange, as reported in the transaction reporting
system applicable to securities designated as a "national market system
security" or NASDAQ. If the Common Stock or such other securities are not
publicly held or so listed or designated, "Current Market Price" shall mean
the fair market value per share of Common Stock or of such other securities
as determined in good faith by the Board of Directors based on an opinion
of an independent investment banking firm with an established national
reputation with respect to the valuation of securities.
"Debentures" shall have the meaning ascribed thereto in the
Subscription Agreement.
"Default" shall have the meaning ascribed thereto in Section 7.1.
"Default Rate" shall have the meaning ascribed thereto in Section
7.2.
"Designation Event" shall mean the appointment of a Chief
Executive Officer of the Company, acceptable to the Holders, by the Board
of Directors, in accordance with Section 6.27 thereof.
"Employee Agreement" shall mean each management, employment,
severance, consulting, non-compete, confidentiality, or similar agreement
or Contract between the Company or any ERISA Affiliate and any employee
pursuant to which the Company or any ERISA Affiliate has or may have any
Liability.
"Environmental Laws" shall mean any and all Laws, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or
the release of any materials into the environment, including but not
limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"Equity Interests" shall mean any capital stock, partnership
interest, joint venture interest or other equity interest or warrants,
options or other rights to acquire any capital stock, partnership interest,
joint venture interest or other equity interest.
"Equity Securities" shall mean, with respect to any Person,
shares of capital stock or other equity interest of such Person, and any
rights, options or warrants to purchase stock or other securities
exchangeable for or convertible into capital stock of or other equity
interest in such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean each business or entity which is a
member of a "controlled group of corporations," under "common control" or
an "affiliated service group" with the Company within the meaning of
Sections 414(b), (c) or (m) of the Code, or required to be aggregated with
the Company under Section 414(o) of the Code, or is under "common control"
with the Company, within the meaning of Section 4001(a)(14) of ERISA.
"Event of Default" shall have the meaning ascribed thereto in
Section 7.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in
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effect at the time. Reference to a particular section of the Securities
Exchange Act of 1934, as amended, shall include reference to the comparable
section, if any, of any such successor federal statute.
"Expiration Time" shall have the meaning ascribed thereto in
Section 9.6(d).
"Fair Market Value" shall mean, as to shares of Common Stock or
any other securities of the Company or any other issuer that are publicly
traded, the average of the Current Market Prices of such shares or
securities during the period of five consecutive Trading Days preceding the
date as of that the Fair Market Value of such shares or securities is to be
determined. The "Fair Market Value" of any security which is not publicly
traded or of any other property shall mean the fair value thereof as
determined in good faith by the Board of Directors based on an opinion of
an independent investment banking firm with an established national
reputation with respect to the valuation of securities.
"FDA" shall have the meaning ascribed thereto in Section 2.15.
"Financing Statements" means Form UCC-1 financing statements to
be filed in all jurisdictions necessary or desirable in order to perfect
the Holders' security interest in the Collateral and shall include any Form
UCC-1 financing statements assigned to the Holders and filings to be made
in the U.S. Patent and Trademark Office and the U.S. Copyright Office.
"First Adjustment Date" shall mean the first date on which both
the Designation Event and the Commencement Date have occurred.
"GAAP" shall mean U.S. generally accepted accounting principles,
consistently applied.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.
"Guarantee and Security Agreement" shall mean the agreement, in
the form of Exhibit 6.10, to be entered into between the Collateral Agent
and the Company's future domestic Subsidiaries, providing for a security
interest in such domestic Subsidiaries' Collateral and Guarantees from such
Subsidiaries (as such agreement may be amended, supplemented, restated or
otherwise modified from time to time).
"Guaranty" or "Guarantee" by any Person shall mean all
obligations (other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of any Person
guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all
obligations incurred through an agreement, contingent or otherwise, by such
Person: (i) to purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply funds (x)
for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (iii) to lease property or to purchase
securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. For the purposes of any
computations made under this Agreement, a Guarantee in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to
the outstanding amount of the Indebtedness for borrowed money that has been
guaranteed, and a Guarantee in respect of any other
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Liability or any dividend shall be deemed to be Indebtedness equal to the
maximum aggregate amount of such Liability or dividend.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
"Holder" shall mean, at any time of reference, a Person in whose
name a Note is registered in the Note Register at such time.
"Incumbent Board" shall mean the individuals who, immediately
after the Closing, constitute the Board of Directors; provided, however,
that any individual becoming a director subsequent to the Closing whose
election, or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be deemed to be a member of the Incumbent Board.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien or security
interest on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all Guarantees of such Person, (viii) all
obligations (including, but not limited to, reimbursement obligations)
relating to the issuance of letters of credit for the account of such
Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Indemnified Person" shall have the meaning ascribed thereto in
Section 12.1(b).
"Indenture" shall have the meaning ascribed thereto in Section
6.19.
"Indenture Date" shall have the meaning ascribed thereto in
Section 5.1.
"Intellectual Property" shall mean (a) Patents, (b) all
trademarks, service marks, trade dress, logos, trade names, domain names
and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connection
therewith, (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (d) all
mask works and all applications, registrations and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas,
compositions, manufacturing
39
<PAGE>
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, (h) all copies and tangible embodiments of the foregoing (in
whatever form or medium), (i) all licenses, sublicenses, permissions or
agreements in connection with the foregoing and (j) all rights, now
existing or hereafter coming into existence, (I) to all income, royalties,
damages and other payments (including in respect of all past, present and
future infringements) now or hereafter due or payable under or with respect
to any of the foregoing, (II) to sue for all past, present and future
infringements with respect to any of the foregoing and (III) otherwise
accruing under or pertaining to any of the foregoing throughout the world.
"Intercompany Notes" shall mean any notes from the Subsidiaries
or Affiliates of the Company in favor of the Company, as the same may be
amended, modified or supplemented from time to time in accordance with
their terms, and all other promissory notes or other instruments evidencing
Indebtedness of Affiliates or Subsidiaries of the Company to the Company or
between the Company and its Affiliates.
"Issue Price" shall have the meaning ascribed thereto in the
Preamble.
"Law" shall include any foreign, federal, state, or local law,
statute, rule, regulation, Order or other restriction of any court or other
Governmental Entity.
"Liability" shall mean any debt, liability or obligation, whether
known or unknown, asserted or unasserted, accrued, absolute, contingent or
otherwise, whether due or to become due.
"Lien" shall mean, with respect to any Person, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured party to
or of such Person under any conditional sale or other title retention
agreement or Capital Lease, upon or with respect to any property or asset
of such Person (including in the case of stock, stockholder agreements,
voting trust agreements and all similar arrangements).
"Litigation" shall mean any claim, demand, notice, action, suit,
proceeding, arbitration, investigation, civil, criminal or administrative
action, audit, inquiry or hearing by or before any Governmental Entity or
private arbitration tribunal.
"Major Supplier" shall mean a supplier of $20,000 or more in
materials or services to the Company during the last twelve months.
"Material" shall mean material in relation to the properties,
business, prospects, operations, earnings, assets, Liabilities, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries
taken as a whole, whether or not in the ordinary course of business.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the properties, business, prospects, operations, earnings, assets,
Liabilities or the condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole, whether or not in the ordinary course of
business, (b) the ability of the Company or any of its Subsidiaries to
perform its obligations under any of the Transaction Documents to which it
is a party, (c) the validity or enforceability of any of the Transaction
Documents, (d) the rights, remedies, powers and privileges of the Holders
under any of the Transaction Documents or (e) the timely payment or
performance of the Secured Obligations.
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<PAGE>
"NASDAQ" shall have the meaning ascribed thereto in Section
9.4(b).
"Net Income" shall mean, with respect to any period, the net
income or net loss of the Company and its Subsidiaries in accordance with
GAAP on a consolidated basis as reflected in the financial statements
furnished to the Holders in accordance with Section 6.20.
"Non-Voting Observer" shall have the meaning ascribed thereto in
Section 6.26.
"Note Register" shall have the meaning ascribed thereto in
Section 4.1.
"Notes" shall have the meaning ascribed thereto in the Recitals.
"Notice" shall have the meaning ascribed thereto in Section 6.11.
"Officers' Certificate" shall mean a certificate signed by any
two officers of the Company, one of whom must be the Chairman of the Board
of Directors, the President, the Chief Executive Officer, the Treasurer or
a Vice President of the Company.
"Optional Redemption Price" shall have the meaning ascribed
thereto in Section 8.1.
"Order" shall mean any judgment, order, injunction, ruling,
decree, stipulation or award of any Governmental Entity or private
arbitration tribunal.
"Outstanding" or "outstanding" shall mean, when used with
reference to the Notes at a particular time, all Notes theretofore issued
as provided in this Agreement, except (i) Notes theretofore reported as
lost, stolen, damaged or destroyed, or surrendered for transfer, exchange
or replacement, in respect to which replacement Notes have been issued,
(ii) Notes theretofore paid in full, and (iii) Notes therefore canceled by
the Company, except that, for the purpose of determining whether Holders of
the requisite aggregate Accreted Value of Notes have made or concurred in
any waiver, consent, approval, notice or other communication under this
Agreement, Notes registered in the name of, or Beneficially Owned by, the
Company or any Subsidiary of any thereof, shall not be deemed to be
outstanding.
"Patents" shall mean, collectively, (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice) and all
improvements thereon, (b) all patents, patent applications and patent
disclosures, (c) all reissues, divisions, continuations, revisions
reexaminations, renewals, extensions and continuations-in-part thereof) and
(d) all rights, now existing or hereafter coming into existence, (i) to all
income, royalties, damages, and other payments (including in respect of all
past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to sue for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Permitted Indebtedness" means, without duplication, any of the
following Indebtedness of the Company or any of its Subsidiaries, as the
case may be: (i) Indebtedness and obligations under the Notes; (ii) any
Indebtedness and obligations outstanding on the date hereof, as set forth
on Schedule 6.6; (iii) Indebtedness of a domestic Subsidiary of the Company
to the Company as long as such Subsidiary has executed the Guarantee and
Security Agreement and such Indebtedness is evidenced by Intercompany Notes
and the Intercompany Notes are pledged to the Collateral Agent as
Collateral; or (iv) Indebtedness
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incurred in the ordinary course of business and consistent with past
practice not to exceed $1,000 individually or in the aggregate.
"Permitted Investments" shall mean (a) direct obligations of the
United States of America, or of any of its agencies, or obligations
guaranteed as to principal and interest by the United States of America, or
of any of its agencies, in either case maturing not more than 90 days from
the date of acquisition of such obligation; (b) deposit accounts in, and
certificates of deposit, repurchase agreements or bankers acceptances of
any bank or trust company organized under the laws of the United States of
America or any state or licensed to conduct a banking or trust business in
the United States of America or any state and having capital, surplus and
undivided profits of at least $35,000,000, maturing not more than 90 days
from the date of acquisition; (c) commercial paper rated A-1 or better or
P-1 by Standard & Poor's Ratings Service, a division of The McGraw-Hill
Companies or Moody's Investors Services, Inc., respectively, maturing not
more than 90 days from the date of acquisition; (d) money market funds
sponsored by commercial or investment banks unaffiliated with the Company
or any of its Subsidiaries; and (e) loans or advances of money by the
Company to its wholly owned domestic Subsidiaries that have executed the
Guarantee and Security Agreement as long as such loans or advances are
evidenced by Intercompany Notes and the Intercompany Notes are pledged to
the Collateral Agent as Collateral.
"Permitted Liens" means (i) Liens existing on the date hereof and
set forth on Schedule 6.7, all of which are subordinate to the Lien of the
Collateral Documentation (other than as set forth in Schedule 6.7); (ii)
Liens (other than any Lien imposed under ERISA or any Environmental Laws)
for Taxes, assessments or charges of any Governmental Entity for claims not
yet due or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, and with respect
to which adequate reserves or other appropriate provisions are being
maintained in accordance with the provisions of GAAP and enforcement
thereof is stayed; (iii) Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other Liens (other than any Lien imposed under
ERISA) not voluntarily granted for amounts not yet due or which are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with the
provisions of GAAP, and enforcement thereof is stayed; (iv) Liens (other
than any Lien imposed under ERISA), incurred or deposited made in the
ordinary course of business including, without limitation, surety bonds and
appeal bonds, in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts; (v) easements (including without limitation reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other similar restrictions,
charges or encumbrances (whether or not recorded) and other Liens incurred
in the ordinary course of business, that do not secure Indebtedness or the
deferred purchase price of any asset and that do not interfere materially
with the ordinary conduct of the business of the Company or any Subsidiary
of the Company and that do not materially detract from the value of the
property to which they attach or materially impair the use thereof to the
Company or any Subsidiary of the Company; and (vi) building restrictions,
zoning laws and other statutes, laws, rules, regulations, ordinances and
restrictions, and any amendments thereto, now or at any time hereafter
adopted by any governmental authority having jurisdiction.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
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"Preferred Stock" shall have the meaning ascribed thereto in
Section 2.3.
"Product Sales Revenues" shall mean sale of medical products
manufactured by the Company calculated in accordance with GAAP.
"Products" shall have the meaning ascribed thereto in Section
2.18.
"Proposed Securities" shall have the meaning ascribed thereto in
Section 6.11.
"Purchase Price" shall have the meaning ascribed thereto in
Section 1.2(a).
"Purchased Shares" shall have the meaning ascribed thereto in
Section 9.6(d).
"Purchaser" and "Purchasers" shall have the meaning ascribed
thereto in the Preamble.
"Purchaser Designee" and "Purchaser Designees" shall have the
meanings ascribed thereto in Section 6.26.
"Quarterly Amount" shall have the meaning ascribed thereto in
Section 6.32.
"Quarterly Budget" shall have the meaning ascribed thereto in
Section 6.32.
"Ramius Conversion Price" shall have the meaning ascribed to
"Conversion Price" in the Convertible Debentures issued under the
Subscription Agreement.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated the date hereof, between the Purchasers and the
Company (as amended, supplemented, restated or otherwise modified from time
to time) with respect to the Notes.
"Related Parties" shall mean Affiliates of the Company or any of
its Subsidiaries and directors or officers of the Company or any of its
Subsidiaries (including any family members of such directors and officers).
"Required Holders" shall mean, at any time, the Holders of at
least 51% of the aggregate Accreted Value of the Notes at the time
outstanding (exclusive of Notes then owned by the Company or any of its
Affiliates).
"Restricted Account" shall have the meaning ascribed thereto in
Section 6.24.
"Restricted Encumbrance" shall have the meaning ascribed thereto
in Section 6.7.
"Sale-and-Leaseback Transaction" shall mean a transaction or
series of transactions pursuant to which the Company or any Subsidiary
shall Transfer to any Person (other than the Company or a Subsidiary) any
property, whether now owned or hereafter acquired, and, as part of the same
transaction or series of transactions, the Company or any Subsidiary shall
rent or lease as lessee (other than pursuant to a Capitalized Lease), or
similarly acquire the right to possession or use of, such property or one
or more properties which it intends to use for the same purpose or purposes
as such property.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Reports" shall have the meaning ascribed thereto in Section
2.4.
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"Second Adjustment Date" shall mean the date on which the Company
achieves Product Sales Revenues equal to or exceeding $15 million for the
trailing 12 month period.
"Second 15% Secured Note" shall mean the 15% Secured Note in the
initial aggregate principal amount of $2,200,000 issued by the Company to
Appaloosa on April 3, 2000, as such 15% Secured Note may be amended from
time to time.
"Secured Obligations" shall mean any and all obligations of the
Company or any of its Subsidiaries at any time and from time to time for
the performance of its agreements, covenants and undertakings under or in
respect of the Transaction Documents to which the Company or such
Subsidiary is a party.
"Securities" shall mean the Notes, the Shares, the Warrants and
the shares of Common Stock issuable upon the conversion of the Notes and
exercise of the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Act shall include
reference to the comparable section, if any, of such successor federal
statute.
"Security Agreement" shall mean the agreement, dated as of the
date hereof, between the Collateral Agent and the Company (as amended,
supplemented, restated or otherwise modified from time to time) providing
for a security interest in the Collateral.
"Semi-Annual Accrual Date" shall have the meaning ascribed
thereto in Section 5.3(a).
"Shares" shall have the meaning ascribed thereto in the Recitals.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, shall mean the date specified in such
Security as the fixed date on which the principal of such Security or such
installment of interest is due and payable.
"Subsidiary" means, with respect to any Person, (i) a corporation
a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof, (ii) any other Person (other
than a corporation), including, without limitation, a joint venture, in
which such Person, one or more Subsidiaries thereof or such Person and one
or more Subsidiaries thereof, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest entitled to
vote in the election of directors, managers or trustees thereof (or other
Persons performing similar functions), (iii) the management of which is
otherwise controlled, directly or indirectly, by such Person or (iv) any
other Person required to be consolidated with such Person in accordance
with generally accepted accounting principles. For purposes of this
definition (and for the determination of whether or not a Subsidiary is a
wholly owned Subsidiary of a Person), any directors' qualifying shares or
investment by foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Subsidiary Board" shall have the meaning ascribed thereto in
Section 6.26(a).
"Subscription Agreement" shall mean the Subscription Agreement,
dated as of April 21, 1999, between the Company and the undersigned
thereto, as such agreement may be amended and restated from time to time.
44
<PAGE>
"Tax" and "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, property, sales, use, value added, license, excise,
franchise, capital, net worth, estimated, withholding, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, inventory,
asset, gains, transfer or excise tax, or any other tax, levy, custom, duty,
impost, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or additions to tax,
imposed by any Governmental Entity and, including, without limitation, any
Taxes of another Person owing under a contract, as transferee or successor,
under Treas. Reg. ss. 1.1502-6 or analogous state, local or foreign law, or
otherwise.
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
"Third Adjustment Date" shall mean the date on which the Company
achieves Product Sales Revenues equal to or exceeding $25 million for the
trailing 12 month period.
"Total Revenue" shall mean, with respect to any period, the total
revenues of the Company and its Subsidiaries in accordance with GAAP on a
consolidated basis as reflected in the financial statements furnished to
the Holders in accordance with Section 6.20.
"Trading Day" shall mean a Business Day or, if the Common Stock
is listed or admitted to trading on any national securities exchange, a day
on which such exchange is open for the transaction of business.
"Transaction" shall have the meaning ascribed thereto in Section
9.7.
"Transaction Documents" shall mean this Agreement, the Notes, the
$7 Warrants, the $3 Warrants, the Registration Rights Agreement, the
Security Agreement and the Guarantee and Security Agreement.
"Transfer" shall have the meaning ascribed thereto in Section
6.3.
"Transfer Agent" shall have the meaning ascribed thereto in
Section 9.2.
"Voting Securities" shall mean at any time shares of any class of
Capital Stock of the Company (or other corporation) which are then entitled
to vote generally in the election of directors of the Company (or such
other corporation).
11.2. Accounting Principles. The character or amount of any
asset, liability, capital account or reserve and of any item of income or
expense required to be determined pursuant to this Agreement, and any
consolidation or other accounting computation required to be made pursuant
to this Agreement, and the construction of any definition in this Agreement
containing a financial term shall be determined or made, as the case may
be, in accordance with GAAP, to the extent applicable, unless such
principles are inconsistent with the express requirements of this
Agreement.
12. Miscellaneous.
-------------
12.1. Payments; Indemnity. (a) The Company agrees that, so long
as any Holder shall hold any Notes, it will make all payments hereunder and
under the Notes in immediately available funds by
45
<PAGE>
wire transfer on the date due in such manner as each Holder may reasonably
request in writing. Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day. If the date
for payment is extended to the next succeeding Business Day by reason of
the preceding sentence, the period of such extension will be included in
the computation of the interest payable on such next succeeding Business
Day.
(b) (i) The Company and its Subsidiaries shall jointly and
severally indemnify and hold harmless each Purchaser, each Holder and each
of their respective Affiliates, and each such Person's respective officers,
directors, partners, members, employees, attorneys, agents and
representatives (each, an "Indemnified Person") from and against any and
all suits, actions, proceedings, claims (collectively, "Actions"), damages,
losses, Liabilities and out-of-pocket expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or
defense, including those incurred upon any appeal) which may be instituted
or asserted against or incurred by any such Indemnified Person as the
result of credit having been extended, suspended or terminated under this
Agreement and the other Transaction Documents and the administration of
such credit, and in connection with or arising out of the transactions
contemplated hereunder and thereunder and any actions or failures to act in
connection therewith.
(ii) Upon receipt by any Indemnified Person of any Action
against such Indemnified Person with respect to which indemnity may be
sought under this Agreement or any other Transaction Document, such
Indemnified Person shall promptly notify the Company in writing, provided
that failure so to notify the Company shall not relieve the Company from
any Liability that the Company may have on account of this indemnity or
otherwise, except to the extent the Company shall have been materially
prejudiced by such failure. The Company shall, at its option, assume the
defense of any Action including the employment of counsel reasonably
satisfactory to such Indemnified Person. Any Indemnified Person shall have
the right to employ separate counsel in any such Action and participate in
the defense thereof but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person, unless: (i) the Company has failed
promptly to assume the defense and employ counsel or (ii) the named parties
to such Action (including any impleaded parties) include such Indemnified
Person and the Company, and such Indemnified Person and the Company shall
have been advised by counsel that there may be one or more legal defenses
available to such Indemnified Person that are different from or in addition
to those available to the Company or there is or may be a conflict between
the Company and any Indemnified Person (in which case the Company may not
assume the defense). In the event that any Indemnified Person shall become
entitled to separate counsel under this Agreement or any other Transaction
Document, the Company shall not in such event be responsible hereunder for
the fees and expenses of more than one firm of separate counsel in
connection with any Action in the same jurisdiction, in addition to any
local counsel. In addition, the Company will not, without prior written
consent of such Indemnified Person, settle, compromise or consent to the
entry of any judgment in or otherwise seek to terminate any pending or
threatened Action in which indemnification may be sought hereunder (whether
or not any Indemnified Person is a party thereto) unless such settlement,
compromise, consent or termination includes an unconditional release of
such Indemnified Person from all liabilities and expenses arising out of
such Action.
(c) The Company shall bear all sales, documentary, transfer,
stamp or other similar Taxes and all filing fees and expenses incurred in
connection with the transactions contemplated by this Agreement and shall
indemnify and hold harmless each Indemnified Purchaser from and against any
such Taxes.
46
<PAGE>
12.2. Severability. If any term, provision, covenant or
restriction of this Agreement or any Exhibit or Schedule hereto is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement and such Exhibits and Schedules shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable.
12.3. Specific Enforcement. The Holders, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Holders shall be entitled to an
injunction to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States or any state thereof having jurisdiction, this being in
addition to any other remedy to which they may be entitled at Law or
equity.
12.4. Entire Agreement. The Transaction Documents (including the
Schedules and Exhibits hereto and thereto) contain the entire understanding
of the parties with respect to the transactions contemplated hereby and
thereby.
12.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
12.6. Notices and other Communications. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be deemed given,
if in writing and delivered personally, by telecopy or sent by registered
mail, postage prepaid, if to:
The Company, to:
129 Reservoir Road
Vernon, CT 06066
Attention: Chief Executive Officer
Fax: (860) 870-6118
With a copy to:
Paul, Hastings, Janofsky & Walker LLP
1055 Washington Boulevard
Stamford, Connecticut 06901
Attention: Esteban A. Ferrer, Esq.
Fax: (203) 359-3031
The Purchasers, to each Purchaser's address
as set forth in the Note Register
47
<PAGE>
The Collateral Agent, to:
Appaloosa Management, L.P.
26 Main Street, 1st Floor
Chatham, New Jersey 07928
Attention: Mr. James E. Bolin
Fax: (973) 701-7309
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Robert C. Schwenkel, Esq.
Fax: (212) 859-4000
or to such other address as any party may, from time to time, designate in
a written notice given in a like manner.
12.7. Amendments. This Agreement may be amended as to the
Purchasers, any Holder and their respective successors and assigns, and the
Company may take any action herein prohibited, or omit to perform any act
required to be performed by it, if the Company shall obtain the written
consent of the Required Holders. This Agreement may not be waived, changed,
modified, or discharged orally, but only by an agreement in writing signed
by the party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent
to such waiver, change, modification or discharge on behalf of such party.
12.8. Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns (including, without limitation,
any subsequent Holder of a Note).
12.9. Expenses. The Company agrees to pay to each Holder all
reasonable costs and expenses incurred by such Holder relating to any
future amendment or supplement to any of the Transaction Documents or any
of the Notes (or any proposal by the Company for such amendment or
supplement) whether or not consummated or any waiver or consent with
respect thereto (or any proposal for such waiver or consent) whether or not
consummated, and all costs and expenses of such Holder relating to the
enforcement of any of the Transaction Documents.
12.10. Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby shall
survive the Closing and the delivery of the Transaction Documents,
regardless of any investigation made by or on behalf of any party; provided
that, all covenants, agreements, representations and warranties contained
herein shall terminate when all the Notes and amounts due hereunder have
been paid in full; provided, however, that notwithstanding anything to the
contrary contained herein, Sections 12.1(b), 12.6, 12.12, 12.13, 12.14 and
12.15 shall survive forever.
12.11. Transfer of Notes and Common Stock. Each Holder
understands and agrees that the Notes and the Shares have not been
registered under
48
<PAGE>
the Securities Act or the securities laws of any state and that they may be
sold or otherwise disposed of only in one or more transactions registered
under the Securities Act and, where applicable, such laws or transactions
as to which an exemption from the registration requirements of the
Securities Act and, where applicable, such laws are available. Each Holder
acknowledges that, except as provided in the Registration Rights Agreement,
such Holder has no right to require the Company to register the Notes. Each
Holder understands and agrees that each Note or certificate representing
the Notes shall bear the following legends:
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR
INFORMATION REGARDING THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE
ISSUE PRICE, ISSUE DATE, THE YIELD TO MATURITY OF THE SECURITY,
AND, FOR PURPOSES OF TREAS. REG. SEC. 1.1275-4(b)(3)(ii), THE
COMPARABLE YIELD AND PROJECTED PAYMENT SCHEDULE, CONTACT THE
COMPANYAT 129 RESERVOIR ROAD, VERNON, CT 06066.
THE TRANSFER OF THIS NOTE IS RESTRICTED BY AND PURSUANT TO THE
CONVERTIBLE NOTE PURCHASE AGREEMENT DATED AS OF APRIL 28, 2000, A
COPY OF WHICH IS ON FILE AT THE OFFICES OF THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
12.12. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
12.13. Submission to Jurisdiction. If any Litigation shall be
brought by any Holder in order to enforce any right or remedy under this
Agreement or any of the Notes, the Company hereby consents and will submit,
and will cause each of its Subsidiaries to submit, to the jurisdiction of
any state or federal court of competent jurisdiction sitting within the
area comprising the Southern District of New York on the date of this
Agreement. The Company hereby irrevocably waives any objection, including,
but not limited to, any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such Litigation in such jurisdiction.
12.14. Service of Process. Nothing herein shall affect the right
of any Holder to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Company in any
other jurisdiction.
12.15. WAIVER OF JURY TRIAL. The Company hereby waives any right
it may have to a trial by jury in respect of any action, proceeding or
litigation directly or indirectly arising out of, under or in connection
with, this Agreement and the Notes.
49
<PAGE>
12.16. Public Announcements. Neither the Company nor any
Purchaser shall make any public statements, including, without limitation,
any press releases, with respect to this Agreement and the transactions
contemplated hereby without the prior written consent of the other party
(which consent shall not be unreasonably withheld) except as may be
required by Law. If a public statement is required to be made by Law, the
parties shall consult with each other in advance as to the contents and
timing thereof.
12.17. Further Assurances. Each of the Company and its
Subsidiaries agrees that it shall and shall cause each other to, at the
Company's expense and upon the reasonable request of the Collateral Agent,
duly execute and deliver, or cause to be duly executed and delivered, to
the Collateral Agent such further instruments, agreements and documents
(including, without limitation, financing statements under the Code,
security agreements in respect of Intellectual Property, stock powers
executed in blank and other items necessary or desirable in connection with
the perfection of Liens in the Collateral) and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion of the
Collateral Agent to carry out more effectively the provisions and purposes
of the Transaction Documents.
12.18. Substitution of Purchaser. Each Purchaser shall have the
right to substitute one of its Affiliates as the purchaser of the Notes, by
written notice to the Company, which notice shall be signed by both such
Purchaser and such Affiliate, shall contain such Affiliate's agreement to
be bound by this Agreement and shall contain a confirmation by such
Affiliate of the accuracy with respect to it of the representations set
forth in Section 3. Upon receipt of such notice, wherever the word
"Purchaser" is used in this Agreement (other than in this Section 14.17),
such word shall be deemed to refer to such Affiliate in lieu of the
Purchaser. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to any
Purchaser all of the Notes then held by such Affiliate, upon receipt by the
Company of notice of such transfer, wherever the word "Purchaser" is used
in this Agreement (other than in this Section 14.17), such word shall no
longer be deemed to refer to such Affiliate, but shall refer to such
Purchaser, and such Purchaser shall have all the rights of an original
Holder of the Notes under this Agreement.
12.19. Signatures. This Agreement shall be effective upon
delivery of original signature pages or facsimile copies thereof executed
by each of the parties hereto.
50
<PAGE>
IN WITNESS WHEREOF, the Company, the Purchasers and the
Collateral Agent have caused this Agreement to be executed and delivered by
their respective officers or partners thereunto duly authorized.
BIO-PLEXUS, INC.
By:/s/ Kimberley A. Cady
--------------------------------------
Name: Kimberley A. Cady
Title: Chief Financial Officer and
Vice President of Finance
APPALOOSA MANAGEMENT L.P.,
as Collateral Agent
By: Appaloosa Partners Inc., its
General Partner
By:/s/ James E. Bolin
--------------------------------------
Name: James E. Bolin
Title: Vice President
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management L.P., its
General Partner
By: Appaloosa Partners Inc., its General
Partner
By:/s/ James E. Bolin
--------------------------------------
Name: James E. Bolin
Title: Vice President
PALOMINO FUND LTD.
By: Appaloosa Management L.P., its
Investment Adviser
By: Appaloosa Partners Inc., its General
Partner
By:/s/ James E. Bolin
--------------------------------------
Name: James E. Bolin
Title: Vice President
TERSK LLC
By: Appaloosa Management L.P., its
Managing Member
By: Appaloosa Partners Inc., its General
Partner
By:/s/ James E. Bolin
--------------------------------------
Name: James E. Bolin
Title: Vice President
51
Exhibit 2
---------
BIO-PLEXUS, INC.
SECURED CONVERTIBLE NOTE
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR
INFORMATION REGARDING THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE
PRICE, ISSUE DATE, THE YIELD TO MATURITY OF THE SECURITY, AND, FOR PURPOSES
OF TREAS. REG. SEC. 1.1275-4(b)(3)(ii), THE COMPARABLE YIELD AND PROJECTED
PAYMENT SCHEDULE, CONTACT THE COMPANYAT 129 RESERVOIR ROAD, VERNON, CT
06066.
THE TRANSFER OF THIS NOTE IS RESTRICTED BY AND PURSUANT TO THE
CONVERTIBLE NOTE PURCHASE AGREEMENT DATED AS OF APRIL 28, 2000, A COPY OF
WHICH IS ON FILE AT THE OFFICES OF THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO
THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
No. R-___ April 28, 2000
- ------------------
FOR VALUE RECEIVED, the undersigned, BIO-PLEXUS, INC. (herein
called the "Company"), a corporation organized and existing under the laws
of the State of Connecticut, hereby unconditionally promises to pay to the
order of _____________, or registered assigns, the sum of _____________
DOLLARS ($ __________) plus the amount accreted on such sum at the
Accretion Rate in lawful money of the United status of America and in
immediately available funds on April __, 2005 (the "Maturity Date").
Defined terms used herein but not otherwise defined shall have the meanings
ascribed to them in the Convertible Note Purchase Agreement, dated as of
the date hereof, by and among the Company, the Purchasers listed on Exhibit
A thereto, and Appaloosa Management, L.P., as Collateral Agent (the "Note
Purchase Agreement") This Note shall not bear any interest, except that if
any amount payable under the Note Purchase Agreement is not paid when due,
then the overdue amount shall bear interest at a rate of 15% per annum
compounded semi-annually (to the extent
<PAGE>
payment of such interest shall be legally enforceable), which interest
shall accrue from the date such overdue amount was due to the date of
payment of such amount. All such interest shall be payable on demand. This
Note is also subject to optional and mandatory prepayments from time to
time as specified in the Note Purchase Agreement, but not otherwise.
Payments of principal of, interest on and any Premium (as defined
below) with respect to this Note are to be made at the account/address as
the holder of this Note shall have designated by written notice to the
Company. "Premium" shall mean any amount (other than principal or interest)
due in respect of the Notes pursuant to the Note Purchase Agreement.
This Note is one of the Notes issued pursuant to the Note
Purchase Agreement. Each holder of this Note will be deemed, by its
acceptance hereof, to have made the representations set forth in Section 3
of the Note Purchase Agreement and to have agreed to be bound by the
restrictions on transfer set forth in Section 12.11 of the Note Purchase
Agreement.
This Note is a registered note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of transfer
duly executed, by the registered holder hereof or such holder's attorney
duly authorized in writing, a new Note for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person
in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not
be affected by any notice to the contrary or held liable for allocations of
income, losses, gains, deductions or credits, which are made in good faith
to such registered holder.
This Note is secured and guaranteed as provided in the
Transaction Documents. Reference is made to the Transaction Documents for a
description of the assets in which a security interest has been granted,
the nature and extent of the security and the guarantees, the terms and
conditions upon which the security interests and each guarantee were
granted and the rights of the holder of this Note in respect thereof.
If an Event of Default occurs, all unpaid amounts on this Note
shall become, or may be declared to be, immediately due and payable, all as
provided in the Note Purchase Agreement.
THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS NOTE, THE NOTE
PURCHASE AGREEMENT, OR ANY OTHER TRANSACTION DOCUMENTS.
- 2 -
<PAGE>
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW
YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH
STATE.
ALL PARTIES NOW AND HEREAFTER LIABLE WITH RESPECT TO THIS NOTE,
WHETHER MAKER, PRINCIPAL, SURETY, GUARANTOR, ENDORSER OR OTHERWISE, HEREBY
WAIVE PRESENTMENT, DEMAND, PROTEST AND ALL OTHER NOTICES OF ANY KIND.
IF ANY ACTION, PROCEEDING OR LITIGATION SHALL BE BROUGHT BY THE
HOLDER OF THIS NOTE IN ORDER TO ENFORCE ANY RIGHT OR REMEDY UNDER THIS
NOTE, THE COMPANY HEREBY CONSENTS AND WILL SUBMIT, AND WILL CAUSE EACH OF
ITS SUBSIDIARIES TO SUBMIT, TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION SITTING WITHIN THE AREA COMPRISING THE
SOUTHERN DISTRICT OF NEW YORK. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, BUT NOT LIMITED TO, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, PROCEEDING OR LITIGATION
IN SUCH JURISDICTION.
[END OF PAGE]
- 3 -
<PAGE>
BIO-PLEXUS, INC.
By:
--------------------------
Name:
Title:
- 4 -
Exhibit 3
---------
WARRANT
To Purchase Shares of Common Stock of
BIO-PLEXUS, INC.
At a Purchase Price of
$7.00 per Share
(Subject to Adjustment as Provided herein)
No. of Shares of Common Stock: _________
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
1. DEFINITIONS 1
2. EXERCISE OF WARRANT 4
2.1. MANNER OF EXERCISE. 4
2.2. PAYMENT OF TAXES. 5
2.3. FRACTIONAL SHARES. 5
3. TRANSFER, DIVISION AND COMBINATION 5
3.1. TRANSFER. 5
3.2. DIVISION AND COMBINATION. 6
3.3. EXPENSES. 6
3.4. MAINTENANCE OF BOOKS. 6
4. ADJUSTMENTS 6
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. 6
4.2. CERTAIN OTHER DISTRIBUTIONS. 7
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. 8
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. 9
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. 9
4.6. SUPERSEDING ADJUSTMENT. 10
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. 10
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. 12
4.9. OTHER ACTION AFFECTING COMMON STOCK. 13
4.10. CERTAIN LIMITATIONS. 13
5. NOTICES TO WARRANT HOLDERS 13
5.1. NOTICE OF ADJUSTMENTS. 13
5.2. NOTICE OF CORPORATE ACTION. 13
6. RIGHTS OF HOLDERS 14
6.1 NO IMPAIRMENT. 14
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY 15
- i -
<PAGE>
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS 15
9. RESTRICTIONS ON TRANSFERABILITY 15
9.1. RESTRICTIVE LEGEND. 15
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. 16
9.3. TERMINATION OF RESTRICTIONS. 16
10. PREEMPTIVE RIGHTS 16
11. SUPPLYING INFORMATION 18
12. LOSS OR MUTILATION 18
13. LIMITATION OF LIABILITY 18
14. MISCELLANEOUS 18
14.1. NONWAIVER AND EXPENSES. 18
14.2. NOTICE GENERALLY. 18
14.3. REMEDIES. 19
14.4. SUCCESSORS AND ASSIGNS. 19
14.5. AMENDMENT. 19
14.6. SEVERABILITY. 20
14.7. HEADINGS. 20
14.8. GOVERNING LAW. 20
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<PAGE>
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS
OF SUCH ACT OR SUCH LAWS
No. of Shares of Common Stock: _________
WARRANT
To Purchase Shares of Common Stock of
BIO-PLEXUS, INC.
THIS IS TO CERTIFY THAT _______________, or its registered
assigns (the "Holder"), is entitled, at any time prior to the Expiration
Date (as hereinafter defined), to purchase from BIO-PLEXUS, INC., a
Connecticut corporation (the "Company"), _________ (subject to adjustment
as provided herein) shares of Common Stock (as hereinafter defined), in
whole or in part, at a purchase price of $7.00 per share (subject to
adjustment as provided herein), all on the terms and conditions and
pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the date hereof, other than (i)
Warrant Stock, (ii) shares of Common Stock issuable upon the exercise of
the warrants issued by the Company to the Holder and its affiliates on
October 21, 1999 and on the date hereof, (iii) shares of Common Stock
issuable upon the conversion of the Notes issued under the Convertible Note
Purchase Agreement and (iv) the 250,000 Shares of Common Stock issued under
the Convertible Note Purchase Agreement.
"Average Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the daily volume weighted
average sale price per share of Common Stock for such date. The closing
price for each day shall be the last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc., Automated Quotation System or such other system
then in use, or, if on any such date the Common Stock or such other
securities are not quoted by any such organization, the average of the
closing bid and asked prices as
<PAGE>
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If the Common
Stock is listed or admitted to trading on a national securities exchange,
the closing price shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Common
Stock is not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Common Stock is listed or admitted to trading.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in
the State of New York.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, no par value, of the Company as constituted on
the date hereof, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the
Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof and
(ii) shares of common stock of any successor or acquiring corporation (as
defined in Section 4.8) received by or distributed to the holders of Common
Stock of the Company in the circumstances contemplated by Section 4.8.
"Convertible Note Purchase Agreement" shall mean the convertible
note purchase agreement, dated as of the date hereof, among the Company,
the purchasers listed on Exhibit A thereto and Appaloosa Management L.P.,
as collateral agent.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable or exercisable, with or without payment of additional
consideration in cash or property, for Additional Shares of Common Stock,
either immediately or upon the occurrence of a specified date or a
specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the average of the Average
Market Price for the twenty Business Days ending five days prior to such
date.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Warrant on such date. The
Current Warrant Price as of the date of the issuance of this Warrant is $7.
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<PAGE>
"Expiration Date" shall mean a date which is nine years from the
issuance of this Warrant.
"Holder" shall mean the Person in whose name this Warrant is
registered on the books of the Company maintained for such purpose.
"Holders" shall mean, collectively, each Holder of a Warrant, in the event
of any division of this Warrant.
"Majority Holders" shall mean the holders of Warrants exercisable
for in excess of 50% of the aggregate number of shares of Warrant Stock
then purchasable upon exercise of all Warrants.
"Notes" shall mean the notes to be issued pursuant to the
Convertible Note Purchase Agreement.
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock, except shares then owned or
held by or for the account of the Company or any subsidiary thereof, and
shall include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
For the purposes of Sections 4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock
Outstanding shall include all shares of Common Stock issuable in respect of
options or warrants to purchase, or securities convertible into, shares of
Common Stock, the exercise or conversion price of which is less than the
Current Market Price as of any date on which the number of shares of Common
Stock Outstanding is to be determined.
"Permitted Issuances" shall mean issuances of shares of Common
Stock and upon exercise of the warrants and options and other convertible
securities, in each case listed on Schedule 1.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by merger or
otherwise of such entity.
"Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Security" or "Securities" shall mean any equity or debt security
of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the
Company may be bound of any character relating to, or obligating the
Company to issue, grant, award, transfer or sell any issued or unissued
shares of the Company's Capital Stock or other securities of the Company).
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<PAGE>
"Trading Day" means a Business Day or, if the Common Stock is
listed or admitted to trading in any national securities exchange, a day on
which such exchange is open for the transaction of business.
"Transfer" shall mean any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may
be exercised.
"Warrant Stock" shall mean the shares of Common Stock purchased
by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. At any time or from time to time from and
after the date hereof and until 5:00 P.M., New York time, on the Expiration
Date, Holder may exercise this Warrant, on any Business Day, for all or any
part of the number of shares of Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 129 Reservoir Road,
Vernon, CT 06066 (i) a written notice of Holder's election to exercise this
Warrant, which notice shall specify the number of shares of Common Stock to
be purchased, (ii) payment of the aggregate Current Warrant Price for such
shares and (iii) this Warrant. Such notice shall be substantially in the
form appearing at the end of this Warrant as Exhibit A, duly executed by
Holder. Thirty days after receipt of the items specified in the second
preceding sentence, the Company shall execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable
upon such exercise, together with cash in lieu of any fraction of a share,
as hereinafter provided. The stock certificate or certificates so delivered
shall be in such denomination or denominations as Holder shall request in
the notice and shall be registered in the name of Holder or, subject to
Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other
Person so designated shall be deemed to have become a holder of record of
such shares for all purposes, as of the date which is thirty days after the
date of the notice, together with the Current Warrant Price and this
Warrant, are received by the Company as described above. If this Warrant
shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Stock,
deliver to Holder a new Warrant evidencing the right of Holder to purchase
the unpurchased shares of Common Stock called for by this Warrant, which
new
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<PAGE>
Warrant shall in all other respects be identical with this Warrant, or, at
the request of Holder, appropriate notation may be made on this Warrant and
the same returned to Holder.
Payment of the Current Warrant Price shall be made at the option
of Holder by (i) certified or official bank check, (ii) wire transfer of
immediately available funds, (iii) tendering Notes having an Accreted Value
(as defined in the Convertible Note Purchase Agreement) equal to the
Current Warrant Price (the Company hereby agreeing to reissue any Notes of
a Holder into one or more Notes in denominations requested by such Holder)
or (iv) the surrender of this Warrant to the Company, with a duly executed
exercise notice marked to reflect "Net Issue Exercise," and, in either
case, specifying the number of shares of Common Stock to be purchased,
during normal business hours on any Business Day. Upon a Net Issue
Exercise, Holder shall be entitled to receive shares of Common Stock equal
to the value of this Warrant (or the portion thereof being exercised by Net
Issue Exercise) by surrender of this Warrant to the Company together with
notice of such election, in which event the Company shall issue to Holder a
number of shares of the Company's Common Stock computed as of the date of
surrender of this Warrant to the Company using the following formula:
X = Y x (A-B)
---------
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y=the number of shares of Warrant Stock being exercised under this
Warrant;
A=the Current Market Price of one share of the Company's Common
Stock (at the date of such calculation);
B=the Current Warrant Price (as adjusted to the date of such
calculation).
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant shall be validly issued, fully paid and
nonassessable. The Company shall pay all expenses in connection with, and
all taxes (other than income taxes or capital gain tax of the Holder) and
other governmental charges that may be imposed with respect to, the issue
or delivery thereof.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the Current Market
Price per share of Common Stock on the date of exercise.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred
to in Section 2.1, together with a written assignment of this Warrant
substantially in the form of Exhibit B hereto duly executed by Holder and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company
shall, subject to Section 9, execute and deliver a new Warrant or
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<PAGE>
Warrants in the name of the assignee or assignees and in the denomination
specified in such instrument of assignment, and shall issue to the assignor
a new Warrant evidencing the portion of this Warrant not so assigned, and
this Warrant shall promptly be canceled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant may
be divided into multiple Warrants or combined with other Warrants upon
presentation hereof at the aforesaid office or agency of the Company,
together with a written notice specifying the names and denominations in
which new Warrants are to be issued, signed by Holder. Subject to
compliance with Section 3.1 and with Section 9, as to any transfer which
may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office, books for the registration and the registration of
transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable and/or the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time
as set forth in this Section 4. The Company shall give each Holder notice
of any event described below which requires an adjustment pursuant to this
Section 4 at the time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record
holder of the same number of shares of Common Stock for which this Warrant
is exercisable immediately prior to the occurrence of such event would own
or be entitled
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<PAGE>
to receive after the happening of such event, and (ii) the Current Warrant
Price per share shall be adjusted to equal (A) the Current Warrant Price
multiplied by the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to the adjustment divided by (B) the
number of shares for which this Warrant is exercisable immediately after
such adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of stock or any
other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to
such adjustment and a fraction (A) the numerator of which shall be the
Current Market Price per share of Common Stock at the date of taking such
record and (B) the denominator of which shall be such Current Market Price
per share of Common Stock minus the amount allocable to one share of Common
Stock of any such cash so distributable and of the fair value (as
determined in good faith by the Board of Directors of the Company) of any
and all such evidences of indebtedness, shares of stock, other securities
or property or warrants or other subscription or purchase rights so
distributable, and (ii) the Current Warrant Price shall be adjusted to
equal (A) the Current Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value or from no par value to par value) into shares of Common Stock and
shares of any other class of stock shall be deemed a distribution by the
Company to the holders of its Common Stock of such shares of such other
class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the
meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If at any time
the Company shall (except as hereinafter provided) issue or sell any
Additional Shares of
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<PAGE>
Common Stock, other than Permitted Issuances, in exchange for consideration
in an amount per Additional Share of Common Stock less than the Current
Warrant Price at the time the Additional Shares of Common Stock are issued,
then (i) the Current Warrant Price as to the number of shares for which
this Warrant is exercisable prior to such adjustment shall be reduced to a
price determined by multiplying (A) the Current Warrant Price by (B) a
fraction, the numerator of which shall be the sum of (x) the number of
shares of Common Stock Outstanding immediately prior to such issue or sale
multiplied by the then applicable Current Warrant Price (the "Adjustment
Price") and (y) the aggregate consideration receivable by the Company for
the total number of shares of Common Stock so issued, and the denominator
of which shall be the sum of (a) the total number of shares of Common Stock
Outstanding on such date and (b) the number of Additional Shares issued,
multiplied by the Adjustment Price; and (ii) the number of shares of Common
Stock for which this Warrant is exercisable shall be adjusted to equal the
product obtained by multiplying the Current Warrant Price in effect
immediately prior to such issue or sale by the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to such issue
or sale and dividing the product thereof by the Current Warrant Price
resulting from the adjustment made pursuant to clause (i) above. For
purposes of this Section 4.3 and for the purposes of making adjustments of
the number of shares of Common Stock for which this Warrant is exercisable
and the Current Warrant Price as provided in this Section 4, the aggregate
consideration receivable by the Company in connection with the issuance of
shares of Common Stock or of rights, warrants or other securities
convertible into shares of Common Stock shall be deemed to be equal to the
sum of the aggregate offering price (before deduction of underwriting
discounts or commissions and expenses payable to third parties) of all such
Common Stock, rights, warrants and convertible securities plus the
aggregate amount (as determined on the date of issuance), if any, payable
upon exercise or conversion of any such rights, warrants and convertible
securities into shares of Common Stock. If, subsequent to the date of
issuance of such rights, warrants or Convertible Securities, the exercise
or conversion price thereof is reduced, such aggregate amount shall be
recalculated and the Current Warrant Price and number of shares of Common
Stock for which the Warrant is exercisable adjusted retroactively to give
effect to such reduction. If Common Stock is sold as a unit with other
securities, the aggregate consideration received for such Common Stock
shall be deemed to be net of the Fair Market Value of such other
securities.
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities (other than Permitted Issuances), whether or not the
rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon the exercise of
such warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Warrant Price in
effect immediately prior to the time of such issue or sale, then the number
of shares for which this Warrant is exercisable and the Current Warrant
Price shall be adjusted as provided in Section 4.3 on the basis that the
maximum number of Additional Shares of Common Stock issuable pursuant to
all such warrants or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued and outstanding and the Company shall have received all of the
consideration payable therefor, if any, as of the date of the actual
issuance of the number such warrants or other rights. No further
adjustments of the Current Warrant Price shall be made upon the actual
issue
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<PAGE>
of such Common Stock or of such Convertible Securities upon exercise of
such warrants or other rights or upon the actual issue of such Common Stock
upon such conversion or exchange of such Convertible Securities.
Notwithstanding the foregoing, no adjustment shall be required under this
Section 4.4 solely by reason of the issuance or distribution of stock
purchase rights pursuant to a shareholder rights plan or any other rights
plan of the Company, provided that the adjustments required by this Section
4.4 shall be made if any "flip-in" or "flip-over" event shall occur under
such stockholder rights plan.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any Convertible Securities (other
than Permitted Issuances), whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which
Common Stock is issuable upon such conversion or exchange shall be less
than the Current Warrant Price in effect immediately prior to the time of
such issue or sale, then the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as provided in
Section 4.3 on the basis that the maximum number of Additional shares of
Common Stock necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and outstanding
and the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such Convertible
Securities. No adjustment of the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be made under this Section
4.5 upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any warrants or other subscription or purchase
rights therefor, if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 4.4.
No further adjustments of the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be made upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities and, if any issue or sale of such Convertible Securities is made
upon exercise of any warrant or other right to subscribe for or to purchase
any such Convertible Securities for which adjustments of the number of
shares for which this Warrant is exercisable and the Current Warrant Price
have been or are to be made pursuant to other provisions of this Section 4,
no further adjustments of the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be made by reason of such
issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall have been made pursuant to Section 4.4 or Section 4.5
as the result of any issuance of warrants, rights or Convertible
Securities, such warrants or rights, or the right of conversion or exchange
in such other Convertible Securities, shall expire, and all of such
warrants or rights, or the right of conversion or exchange with respect to
all or a portion of such other Convertible Securities, as the case may be,
shall not have been exercised and no outstanding Warrant shall have been
exercised (in whole or in part), then for each outstanding Warrant such
previous adjustment shall be rescinded and annulled and the Additional
Shares of Common Stock which were deemed to have been issued by virtue of
the computation made in connection with the adjustment so
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<PAGE>
rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments
of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional Shares
of Common Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall be
the amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a subscription
offering, the public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends). To
the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at
the time of such issuance as determined in good faith by the Board of
Directors of the Company. In case any Additional Shares of Common Stock or
any Convertible Securities or any warrants or other rights to subscribe for
or purchase such Additional Shares of Common Stock or Convertible
Securities shall be issued in connection with any merger in which the
Company issues any securities, the amount of consideration therefor shall
be deemed to be the fair value, as determined in good faith by the Board of
Directors of the Company, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible
Securities, warrants or other rights, as the case may be. The consideration
for any Additional Shares of Common Stock issuable pursuant to any warrants
or other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other
rights plus the additional consideration payable to the Company upon
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Company
for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a consideration equal to
the amount of such dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur,
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<PAGE>
except that any adjustment of the number of shares of Common Stock for
which this Warrant is exercisable that would otherwise be required may be
postponed (except in the case of a subdivision or combination of shares of
the Common Stock, as provided for in Section 4.1) up to, but not beyond the
date of exercise if such adjustment either by itself or with other
adjustments not previously made results in an increase or decrease of less
than 1% of the shares of Common Stock for which this Warrant is exercisable
immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as soon as
such adjustment, together with other adjustments required by this Section 4
and not previously made, would result in a minimum adjustment or on the
date of exercise. For the purpose of any adjustment, any specified event
shall be deemed to have occurred at the close of business on the date of
its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account
to the nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them
to receive a dividend or distribution or subscription or purchase rights
and shall, thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(e) Escrow of Warrant Stock. If Holder exercises this Warrant
after any property becomes distributable pursuant to this Section 4 by
reason of the taking of any record of the holders of Common Stock, but
prior to the occurrence of the event for which such record is taken, any
additional shares of Common Stock issuable upon exercise by reason of such
adjustment shall be deemed the last shares of Common Stock for which this
Warrant is exercised (notwithstanding any other provision to the contrary
herein) and such shares or other property shall be held in escrow for
Holder by the Company to be issued to Holder when and to the extent that
the event actually takes place, upon payment of the then Current Warrant
Price. Notwithstanding any other provision to the contrary herein, if the
event for which such record was taken fails to occur or is rescinded, then
such escrowed shares shall be canceled by the Company and escrowed property
returned.
(f) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Majority Holders, and
any dispute shall be resolved by an investment banking firm of recognized
national standing selected by the Majority Holders and acceptable to the
Company.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to
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<PAGE>
another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares
of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition
to or in lieu of common stock of the successor or acquiring corporation
("Other Property"), are to be received by or distributed to the holders of
Common Stock of the Company, then Holder shall have the right thereafter to
receive, upon exercise of this Warrant and payment of the Current Warrant
Price, the number of shares of common stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a
holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of
each and every covenant and condition of this Warrant to be performed and
observed by the Company and all the obligations and liabilities hereunder,
subject to such modifications as may be deemed appropriate (as determined
by resolution of the Board of Directors of the Company) in order to provide
for adjustments of shares of the Common Stock for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section
4.8, "common stock of the successor or acquiring corporation" shall include
stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and
which is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible
into or exchangeable for any such stock, either immediately or upon the
arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4.8 shall similarly apply to
successive reorganizations, reclassifications, mergers, consolidations or
disposition of assets.
4.9. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from
time to time the Company shall take any action in respect of its Common
Stock, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of the
Holders, the number of shares of Common Stock or other stock for which this
Warrant is exercisable and/or the purchase price thereof shall be adjusted
in such manner as may be equitable in the circumstances.
4.10. CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price
to be less than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which
a share of such Common Stock may be purchased upon exercise of the
Warrants, shall be adjusted pursuant to Section 4, the Company shall
forthwith prepare a certificate to be executed by the chief financial
officer of the
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<PAGE>
Company setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated
(including a description of the basis on which the Board of Directors of
the Company determined the fair value of any evidences of indebtedness,
shares of stock, other securities or property or warrants or other
subscription or purchase rights referred to in Section 4.2 or 4.7(a)),
specifying the number of shares of Common Stock for which this Warrant is
exercisable and (if such adjustment was made pursuant to Section 4.8 or
4.9) describing the number and kind of any other shares of stock or Other
Property for which this Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate
to be delivered to each Holder in accordance with Section 14.2. The Company
shall keep at its principal office copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective purchaser of a Warrant
designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend (other
than a cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution,
or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any
sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation,
or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder
(i) at least 20 days' prior written notice of the date on which a record
date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 20 days'
prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common
Stock shall be entitled to any such dividend, distribution or right, and
the amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and
the time, if any such time is to be fixed, as of which the holders of
Common Stock shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification,
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<PAGE>
merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up. Each such written notice shall be sufficiently
given if addressed to Holder at the last address of Holder appearing on the
books of the Company and delivered in accordance with Section 13.2.
6. RIGHTS OF HOLDERS
6.1 NO IMPAIRMENT. The Company shall not by any action, including,
without limitation, amending its Certificate of Incorporation, by-laws or
comparable governing instruments or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations under this
Warrant.
Upon the request of Holder, the Company will at any time during
the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to Holder, the continuing validity of this Warrant
and the obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the date hereof, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon
exercise of any Warrant and payment therefor in accordance with the terms
of such Warrant, shall be duly and validly issued and fully paid and
nonassessable.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any
provision of Section 4 refers to the taking of a record of such holders,
the Company will in each such case take such a record and will take such
record as of the close of business on a Business Day. The Company will not
at any time, except upon dissolution, liquidation or winding up of the
Company, close its stock transfer books or Warrant transfer books so as to
result in preventing or delaying the exercise or transfer of any Warrant.
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<PAGE>
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in
this Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any
Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees
to be bound by the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. Except as otherwise provided in this Section
9, each Warrant and each certificate for Warrant Stock initially issued
upon the exercise of a Warrant, and each certificate for Warrant Stock
issued to any subsequent transferee of any such certificate, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"[THIS WARRANT AND THE SECURITIES REPRESENTED
HEREBY] [THE SECURITIES REPRESENTED BY THIS
CERTIFICATE] HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of
Restricted Common Stock, the holder of such Warrants or Restricted Common
Stock shall give ten days' prior written notice (a "Transfer Notice") to
the Company of such holder's intention to effect such Transfer, describing
the manner and circumstances of the proposed Transfer, and obtain from
counsel to such holder who shall be reasonably satisfactory to the Company,
an opinion that the proposed Transfer of such Warrants or such Restricted
Common Stock may be effected without registration under the Securities Act.
After receipt of the Transfer Notice and opinion, the Company shall, within
five days thereof, notify the holder of such Warrants or such Restricted
Common Stock as to whether such opinion is reasonably satisfactory and, if
so, such holder shall thereupon be entitled to Transfer such Warrants or
such Restricted Common Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted
Common Stock issued upon such Transfer and each Warrant issued upon such
Transfer shall bear the restrictive legend set forth in Section 9.1, unless
in the opinion of such counsel such legend is not required in order to
ensure compliance with the Securities Act. The holder of the Warrants or
the Restricted Common Stock, as the case may be, giving the Transfer Notice
shall not be entitled to Transfer such Warrants or such Restricted Common
Stock until receipt of notice from the Company under this Section 9.2 that
such opinion is reasonably satisfactory.
9.3. TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of this Section 9, the restrictions imposed by this Section upon
the transferability of the Warrants, the
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<PAGE>
Warrant Stock and the Restricted Common Stock and the legend requirements
of Section 9.1 shall terminate as to any particular Warrant or share of
Warrant Stock or Restricted Common Stock (i) when and so long as such
security shall have been effectively registered under the Securities Act
and disposed of pursuant thereto or (ii) when the Company shall have
received an opinion of counsel reasonably satisfactory to it that such
shares may be transferred without registration thereof under the Securities
Act.
10. PREEMPTIVE RIGHTS
(a) The Company shall not issue, sell or exchange, or agree to
issue, sell or exchange (collectively, "Issue," and any issuance, sale or
exchange resulting therefrom, an "Issuance") any Securities unless the
Company shall have first given written notice (the "Section 10 Notice") to
each holder of Warrants or Warrant Stock (for purposes of this Section,
each a "Section 10 Offeree") that shall (i) state the Company's intention
to Issue Securities, the amount to be issued, sold or exchanged, the terms
of such Securities, the purchase price therefor and a summary of the other
material terms of the proposed issuance, sale or exchange and (ii) offer (a
"Section 10 Offer") to Issue to each Section 10 Offeree and their
affiliates such Section 10 Offeree's Proportionate Percentage (as defined
below) of such Securities (with respect to each Section 10 Offeree, the
"Offered Securities") upon the terms and subject to the conditions set
forth in the Section 10 Notice, which Section 10 Offer by its terms shall
remain open and irrevocable for a period of 15-days from the date it is
delivered by the Company to such holder, as the case may be (and, to the
extent the Section 10 Offer is accepted during such 15-day period, until
the closing of the Issuance contemplated by the Section 10 Offer).
"Proportionate Percentage" for the purposes of this Section shall mean the
quotient obtained by dividing: (A) the Warrant Stock held by such Section
10 Offeree (assuming for purposes of this Section 10 that all issued and
outstanding Warrants have been exercised) on the date of the Section 10
Offer, by (B) the Warrant Stock issued and outstanding on the date of the
Section 10 Offer.
(b) Notice of a Section 10 Offeree's intention to accept a
Section 10 Offer, in whole or in part, shall be evidenced by a writing
signed by such party and delivered to the Company prior to the end of the
15-day period of such Section 10 Offer (each, a "Notice of Acceptance"),
setting forth the portion of the Offered Securities that the Section 10
Offeree elects to purchase, which election shall be binding.
(c) In the event that a Notice of Acceptance is not given by a
Section 10 Offeree in respect of all the Offered Securities, the Company
shall have 60 days following the 15-day period referred to in clause (b)
above to Issue all or any part of such remaining Offered Securities not
covered by the Notice of Acceptance to any other Person(s), but only at a
price not less than the price, and on terms no more favorable to the person
than the terms, stated in the Section 10 Offer Notice. If the Company does
not consummate the Issuance of all or part of the remaining Offered
Securities to such other Person(s) within such period, the right provided
hereunder shall be deemed to be revived and such securities shall not be
offered unless first re-offered to each Section 10 Offeree in accordance
with this Section 10. Upon the closing of the Issuance to such other
Person(s) (the "Other Buyers") of all or part of the remaining Offered
Securities, each Section 10 Offeree shall purchase from the Company, and
the Company shall Issue to each such Section 10 Offeree, the Offered
Securities covered by the Notice of Acceptance delivered to the
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<PAGE>
Company by the Section 10 Offeree, on the terms specified in the Section 10
Offer. The purchase by a Section 10 Offeree of any Offered Securities is
subject in all cases to the execution and delivery by the Company and the
Section 10 Offeree of a purchase agreement relating to such Offered
Securities in form and substance similar in all material respects to the
extent applicable to that executed and delivered between the Company and
the Other Buyers.
11. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and
each holder of Restricted Common Stock in supplying such information as may
be reasonably necessary for such holder to complete and file any reports or
forms presently or hereafter required by the Commission as a condition to
the availability of an exemption from the Securities Act for the sale of
any Warrant or Restricted Common Stock.
12. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably
satisfactory to it (it being understood that, in the case of the initial
holder, the written agreement of Appaloosa Management L.P. shall be
sufficient indemnity), and in case of mutilation upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a
new Warrant of like tenor to such Holder; provided, in the case of
mutilation, no indemnity shall be required if this Warrant in identifiable
form is surrendered to the Company for cancellation.
13. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any Common Stock or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
14. MISCELLANEOUS
14.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to Holder such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys'
fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of
its rights, powers or remedies hereunder.
14.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant
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<PAGE>
shall be sufficiently given or made if in writing and either delivered in
person with receipt acknowledged or sent by registered or certified mail,
return receipt requested, postage prepaid, or by telecopy and confirmed by
telecopy answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of the Company maintained
for such purpose.
(b) If to the Company at
Bio-Plexus, Inc.
129 Reservoir Road
Vernon, CT 06066
Attention: Chief Executive Officer
Fax: (860) 870-6118
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback, or three Business Days after the same
shall have been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, approval, declaration,
delivery or other communication to the person designated above to receive a
copy shall in no way adversely affect the effectiveness of such notice,
demand, request, approval, declaration, delivery or other communication.
14.3. REMEDIES. Each holder of Warrant and Warrant Stock, in addition
to being entitled to exercise all rights granted by law, including recovery
of damages, will be entitled to specific performance of its rights under of
this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Warrant and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
14.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections
3.1 and 9, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the
successors and assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this
Warrant and, with respect to Section 9 hereof, holders of Warrant Stock,
and shall be enforceable by any such Holder or holder of Warrant Stock.
14.5. AMENDMENT. This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written consent of the
Company and the Majority Holders, provided that no such Warrant may be
modified or amended to reduce the number of shares of Common Stock for
which such Warrant is exercisable or to increase the price at which such
shares may be purchased upon exercise of such Warrant (before giving effect
to any
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<PAGE>
adjustment as provided therein) without the prior written consent of the
Holder thereof, provided however, that the foregoing shall not limit the
operation of Section 4.6.
14.6. SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Warrant.
14.7. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
14.8. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES OF AMERICA, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY
ACTION, PROCEEDING OR INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL
AUTHORITY ("LITIGATION") ARISING OUT OF OR RELATING TO THIS WARRANT AND THE
TRANSACTIONS CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION
RELATING THERETO EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF
ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS
RESPECTIVE ADDRESS SET FORTH IN THIS WARRANT SHALL BE EFFECTIVE SERVICE OF
PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY SUCH COURT. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS OF THE STATE
OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE LOCATED IN THE
COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY
JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by an officer thereunto duly authorized.
Dated: April __, 2000
BIO-PLEXUS, INC.
By:
----------------------------
Name:
Title:
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Exhibit 4
---------
WARRANT
To Purchase Shares of Common Stock of
BIO-PLEXUS, INC.
At a Purchase Price of
$3.00 per Share
(Subject to Adjustment as Provided herein)
No. of Shares of Common Stock: _________
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
1. DEFINITIONS 1
2. EXERCISE OF WARRANT 4
2.1. MANNER OF EXERCISE. 4
2.2. PAYMENT OF TAXES. 5
2.3. FRACTIONAL SHARES. 5
3. TRANSFER, DIVISION AND COMBINATION 6
3.1. TRANSFER. 6
3.2. DIVISION AND COMBINATION. 6
3.3. EXPENSES. 6
3.4. MAINTENANCE OF BOOKS. 6
4. ADJUSTMENTS 6
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. 6
4.2. CERTAIN OTHER DISTRIBUTIONS. 7
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. 8
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. 8
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. 9
4.6. SUPERSEDING ADJUSTMENT. 10
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION 10
4.8. REORGANIZATION, RECLASSIFICATION, MERGER,
CONSOLIDATION OR DISPOSITION OF ASSETS. 12
4.9. OTHER ACTION AFFECTING COMMON STOCK. 13
4.10. CERTAIN LIMITATIONS. 13
5. NOTICES TO WARRANT HOLDERS 13
5.1. NOTICE OF ADJUSTMENTS. 13
5.2. NOTICE OF CORPORATE ACTION. 13
6. RIGHTS OF HOLDERS 14
6.1 NO IMPAIRMENT. 14
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY
GOVERNMENTAL AUTHORITY 15
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8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS 15
9. RESTRICTIONS ON TRANSFERABILITY 15
9.1. RESTRICTIVE LEGEND. 15
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR
REGISTRATION. 16
9.3. TERMINATION OF RESTRICTIONS. 16
10. PREEMPTIVE RIGHTS 16
11. SUPPLYING INFORMATION 17
12. LOSS OR MUTILATION 17
13. LIMITATION OF LIABILITY 18
14. MISCELLANEOUS 18
14.1. NONWAIVER AND EXPENSES. 18
14.2. NOTICE GENERALLY. 18
14.3. REMEDIES. 19
14.4. SUCCESSORS AND ASSIGNS. 19
14.5. AMENDMENT. 19
14.6. SEVERABILITY. 19
14.7. HEADINGS. 19
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<PAGE>
Exhibit C
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS
OF SUCH ACT OR SUCH LAWS
No. of Shares of Common Stock: _________
WARRANT
To Purchase Shares of Common Stock of
BIO-PLEXUS, INC.
THIS IS TO CERTIFY THAT _______________, or its registered
assigns (the "Holder"), is entitled, at any time prior to the Expiration
Date (as hereinafter defined), to purchase from BIO-PLEXUS, INC., a
Connecticut corporation (the "Company"), _________ (subject to adjustment
as provided herein) shares of Common Stock (as hereinafter defined), in
whole or in part, at a purchase price of $3.00 per share (subject to
adjustment as provided herein), all on the terms and conditions and
pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the date hereof, other than (i)
Warrant Stock, (ii) shares of Common Stock issuable upon the exercise of
the warrants issued by the Company to the Holder and its affiliates on
October 21, 1999 and on the date hereof, (iii) shares of Common Stock
issuable upon the conversion of the Notes issued under the Convertible Note
Purchase Agreement and (iv) the 250,000 Shares of Common Stock to be issued
under the Convertible Note Purchase Agreement.
"Average Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the daily volume weighted
average sale price per share of Common Stock for such date. The closing
price for each day shall be the last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc., Automated Quotation System or such other system
then in use, or, if on any such date the Common Stock or such other
securities are not quoted by any such organization, the average of the
closing bid and asked prices as
<PAGE>
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If the Common
Stock is listed or admitted to trading on a national securities exchange,
the closing price shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Common
Stock is not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Common Stock is listed or admitted to trading.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in
the State of New York.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, no par value, of the Company as constituted on
the date hereof, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the
Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof and
(ii) shares of common stock of any successor or acquiring corporation (as
defined in Section 4.8) received by or distributed to the holders of Common
Stock of the Company in the circumstances contemplated by Section 4.8.
"Convertible Note Purchase Agreement" shall mean the convertible
note purchase agreement, dated as of the date hereof, among the Company,
the purchasers listed on Exhibit A thereto and Appaloosa Management L.P.,
as collateral agent.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable or exercisable, with or without payment of additional
consideration in cash or property, for Additional Shares of Common Stock,
either immediately or upon the occurrence of a specified date or a
specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the average of the Average
Market Price for the twenty Business Days ending five days prior to such
date.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Warrant on such date. The
Current Warrant Price as of the date of the issuance of this Warrant is
$3.00.
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<PAGE>
"Expiration Date" shall mean a date which is five years from the
issuance of this Warrant.
"Holder" shall mean the Person in whose name this Warrant is
registered on the books of the Company maintained for such purpose.
"Holders" shall mean, collectively, each Holder of a Warrant, in the event
of any division of this Warrant.
"Majority Holders" shall mean the holders of Warrants exercisable
for in excess of 50% of the aggregate number of shares of Warrant Stock
then purchasable upon exercise of all Warrants.
"Notes" shall mean the notes to be issued pursuant to the
Convertible Note Purchase Agreement.
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock, except shares then owned or
held by or for the account of the Company or any subsidiary thereof, and
shall include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
For the purposes of Sections 4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock
Outstanding shall include all shares of Common Stock issuable in respect of
options or warrants to purchase, or securities convertible into, shares of
Common Stock, the exercise or conversion price of which is less than the
Current Market Price as of any date on which the number of shares of Common
Stock Outstanding is to be determined.
"Permitted Issuances" shall mean issuances of shares of Common
Stock and upon exercise of the warrants and options and other convertible
securities, in each case listed on Schedule 1.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by merger or
otherwise of such entity.
"Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Security" or "Securities" shall mean any equity or debt security
of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the
Company may be bound of any character relating to, or obligating the
Company to issue, grant, award, transfer or sell any issued or unissued
shares of the Company's Capital Stock or other securities of the Company).
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<PAGE>
"Trading Day" means a Business Day or, if the Common Stock is
listed or admitted to trading in any national securities exchange, a day on
which such exchange is open for the transaction of business.
"Transfer" shall mean any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may
be exercised.
"Warrant Stock" shall mean the shares of Common Stock purchased
by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. At any time or from time to time from and
after the date hereof and until 5:00 P.M., New York time, on the Expiration
Date, Holder may exercise this Warrant, on any Business Day, for all or any
part of the number of shares of Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 129 Reservoir Road,
Vernon, CT 06066 (i) a written notice of Holder's election to exercise this
Warrant, which notice shall specify the number of shares of Common Stock to
be purchased, (ii) payment of the aggregate Current Warrant Price for such
shares and (iii) this Warrant. Such notice shall be substantially in the
form appearing at the end of this Warrant as Exhibit A, duly executed by
Holder. Thirty days after receipt of the items specified in the second
preceding sentence, the Company shall execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable
upon such exercise, together with cash in lieu of any fraction of a share,
as hereinafter provided. The stock certificate or certificates so delivered
shall be in such denomination or denominations as Holder shall request in
the notice and shall be registered in the name of Holder or, subject to
Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other
Person so designated shall be deemed to have become a holder of record of
such shares for all purposes, as of the date which is thirty days after the
date of the notice, together with the Current Warrant Price and this
Warrant, are received by the Company as described above. If this Warrant
shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Stock,
deliver to Holder a new Warrant evidencing the right of Holder to purchase
the unpurchased shares of Common Stock called for by this Warrant, which
new
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<PAGE>
Warrant shall in all other respects be identical with this Warrant, or,
at the request of Holder, appropriate notation may be made on this Warrant
and the same returned to Holder.
Payment of the Current Warrant Price shall be made at the option
of Holder by (i) certified or official bank check, (ii) wire transfer of
immediately available funds, (iii) tendering Notes having an Accreted Value
(as defined in the Convertible Note Purchase Agreement) equal to the
Current Warrant Price (the Company hereby agreeing to reissue any Notes of
a Holder into one or more Notes in denominations requested by such Holder)
or (iv) the surrender of this Warrant to the Company, with a duly executed
exercise notice marked to reflect "Net Issue Exercise," and, in either
case, specifying the number of shares of Common Stock to be purchased,
during normal business hours on any Business Day. Upon a Net Issue
Exercise, Holder shall be entitled to receive shares of Common Stock equal
to the value of this Warrant (or the portion thereof being exercised by Net
Issue Exercise) by surrender of this Warrant to the Company together with
notice of such election, in which event the Company shall issue to Holder a
number of shares of the Company's Common Stock computed as of the date of
surrender of this Warrant to the Company using the following formula:
X = Y x (A-B)
---------
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y=the number of shares of Warrant Stock being exercised under this
Warrant;
A=the Current Market Price of one share of the Company's Common
Stock (at the date of such calculation);
B=the Current Warrant Price (as adjusted to the date of such
calculation).
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant shall be validly issued, fully paid and
nonassessable. The Company shall pay all expenses in connection with, and
all taxes (other than income taxes or capital gain tax of the Holder) and
other governmental charges that may be imposed with respect to, the issue
or delivery thereof.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the Current Market
Price per share of Common Stock on the date of exercise.
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<PAGE>
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred
to in Section 2.1, together with a written assignment of this Warrant
substantially in the form of Exhibit B hereto duly executed by Holder and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company
shall, subject to Section 9, execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees and in the denomination specified
in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be canceled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant may
be divided into multiple Warrants or combined with other Warrants upon
presentation hereof at the aforesaid office or agency of the Company,
together with a written notice specifying the names and denominations in
which new Warrants are to be issued, signed by Holder. Subject to
compliance with Section 3.1 and with Section 9, as to any transfer which
may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office, books for the registration and the registration of
transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable and/or the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time
as set forth in this Section 4. The Company shall give each Holder notice
of any event described below which requires an adjustment pursuant to this
Section 4 at the time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
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<PAGE>
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record
holder of the same number of shares of Common Stock for which this Warrant
is exercisable immediately prior to the occurrence of such event would own
or be entitled to receive after the happening of such event, and (ii) the
Current Warrant Price per share shall be adjusted to equal (A) the Current
Warrant Price multiplied by the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment divided by
(B) the number of shares for which this Warrant is exercisable immediately
after such adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of stock or any
other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to
such adjustment and a fraction (A) the numerator of which shall be the
Current Market Price per share of Common Stock at the date of taking such
record and (B) the denominator of which shall be such Current Market Price
per share of Common Stock minus the amount allocable to one share of Common
Stock of any such cash so distributable and of the fair value (as
determined in good faith by the Board of Directors of the Company) of any
and all such evidences of indebtedness, shares of stock, other securities
or property or warrants or other subscription or purchase rights so
distributable, and (ii) the Current Warrant Price shall be adjusted to
equal (A) the Current Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value or from no par value to par value) into shares of Common Stock and
shares of any other class of stock shall be deemed a distribution by the
Company to the holders of its Common Stock of such shares of such other
class of stock within the meaning of this Section 4.2 and, if the
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<PAGE>
outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the
meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If at any time
the Company shall (except as hereinafter provided) issue or sell any
Additional Shares of Common Stock, other than Permitted Issuances, in
exchange for consideration in an amount per Additional Share of Common
Stock less than the Current Warrant Price at the time the Additional Shares
of Common Stock are issued, including, without limitation, any shares of
Common Stock issued by the Company upon the conversion of the Call
Debentures (as defined in the Convertible Note Purchase Agreement) or (b)
if on any Conversion Date (as defined in the Convertible Note Purchase
Agreement) there are Call Debentures outstanding and the Ramius Conversion
Price (as defined in the Convertible Note Purchase Agreement) is below the
Current Warrant Price (regardless of whether any shares of Common Stock
have been issued to holders of The Call Debentures) then (i) the Current
Warrant Price as to the number of shares for which this Warrant is
exercisable prior to such adjustment shall be reduced to a price determined
by multiplying (A) the Current Warrant Price by (B) a fraction, the
numerator of which shall be the sum of (x) the number of shares of Common
Stock Outstanding immediately prior to such issue or sale multiplied by the
then applicable Current Warrant Price (the "Adjustment Price") and (y) the
aggregate consideration receivable by the Company for the total number of
shares of Common Stock so issued, and the denominator of which shall be the
sum of (a) the total number of shares of Common Stock Outstanding on such
date and (b) the number of Additional Shares issued, multiplied by the
Adjustment Price; and (ii) the number of shares of Common Stock for which
this Warrant is exercisable shall be adjusted to equal the product obtained
by multiplying the Current Warrant Price in effect immediately prior to
such issue or sale by the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such issue or sale and dividing
the product thereof by the Current Warrant Price resulting from the
adjustment made pursuant to clause (i) above. For purposes of this Section
4.3 and for the purposes of making adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Current Warrant
Price as provided in this Section 4, the aggregate consideration receivable
by the Company in connection with the issuance of shares of Common Stock or
of rights, warrants or other securities convertible into shares of Common
Stock shall be deemed to be equal to the sum of the aggregate offering
price (before deduction of underwriting discounts or commissions and
expenses payable to third parties) of all such Common Stock, rights,
warrants and convertible securities plus the aggregate amount (as
determined on the date of issuance), if any, payable upon exercise or
conversion of any such rights, warrants and convertible securities into
shares of Common Stock. If, subsequent to the date of issuance of such
rights, warrants or Convertible Securities, the exercise or conversion
price thereof is reduced, such aggregate amount shall be recalculated and
the Current Warrant Price and number of shares of Common Stock for which
the Warrant is exercisable adjusted retroactively to give effect to such
reduction. If Common Stock is sold as a unit with other securities, the
aggregate consideration received for such Common Stock shall be deemed to
be net of the Fair Market Value of such other securities. Notwithstanding
anything to the contrary contained herein, (i) in calculating any
adjustment to the Current Warrent Price pursuant to clause (b) above, once
shares of Common Stock are actually issued upon the conversion of the Call
Debentures, only those shares of Common Stock that remain issuable under
those Call Debentures which have not yet been converted shall be taken into
consideration and (ii) on any date that the Company issues any shares of
Common Stock pursuant to the Call Debentures, the Company shall, on the
same date, deliver a notice to the Collateral Agent (as defined in the
Convertible Note Purchase Agreement) specifying whether any adjustment to
the Conversion Price will be required pursuant to this Section 4.3 as a
result of such issuance.
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities (other than Permitted Issuances), whether or not the
rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon the
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<PAGE>
exercise of such warrants or other rights or upon conversion or exchange of
such Convertible Securities shall be less than the Current Warrant Price in
effect immediately prior to the time of such issue or sale, then the number
of shares for which this Warrant is exercisable and the Current Warrant
Price shall be adjusted as provided in Section 4.3 on the basis that the
maximum number of Additional Shares of Common Stock issuable pursuant to
all such warrants or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued and outstanding and the Company shall have received all of the
consideration payable therefor, if any, as of the date of the actual
issuance of the number such warrants or other rights. No further
adjustments of the Current Warrant Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise
of such warrants or other rights or upon the actual issue of such Common
Stock upon such conversion or exchange of such Convertible Securities.
Notwithstanding the foregoing, no adjustment shall be required under this
Section 4.4 solely by reason of the issuance or distribution of stock
purchase rights pursuant to a shareholder rights plan or any other rights
plan of the Company, provided that the adjustments required by this Section
4.4 shall be made if any "flip-in" or "flip-over" event shall occur under
such stockholder rights plan.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any Convertible Securities (other
than Permitted Issuances or the Call Debentures), whether or not the rights
to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Current Warrant Price in effect immediately
prior to the time of such issue or sale, then the number of shares for
which this Warrant is exercisable and the Current Warrant Price shall be
adjusted as provided in Section 4.3 on the basis that the maximum number of
Additional shares of Common Stock necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued and outstanding and the Company shall have received all of the
consideration payable therefor, if any, as of the date of actual issuance
of such Convertible Securities. No adjustment of the number of shares for
which this Warrant is exercisable and the Current Warrant Price shall be
made under this Section 4.5 upon the issuance of any Convertible Securities
which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other
rights pursuant to Section 4.4. No further adjustments of the number of
shares for which this Warrant is exercisable and the Current Warrant Price
shall be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities and, if any issue or sale of such
Convertible Securities is made upon exercise of any warrant or other right
to subscribe for or to purchase any such Convertible Securities for which
adjustments of the number of shares for which this Warrant is exercisable
and the Current Warrant Price have been or are to be made pursuant to other
provisions of this Section 4, no further adjustments of the number of
shares for which this Warrant is exercisable and the Current Warrant Price
shall be made by reason of such issue or sale.
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<PAGE>
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall have been made pursuant to Section 4.4 or Section 4.5
as the result of any issuance of warrants, rights or Convertible
Securities, such warrants or rights, or the right of conversion or exchange
in such other Convertible Securities, shall expire, and all of such
warrants or rights, or the right of conversion or exchange with respect to
all or a portion of such other Convertible Securities, as the case may be,
shall not have been exercised and no outstanding Warrant shall have been
exercised (in whole or in part), then for each outstanding Warrant such
previous adjustment shall be rescinded and annulled and the Additional
Shares of Common Stock which were deemed to have been issued by virtue of
the computation made in connection with the adjustment so rescinded and
annulled shall no longer be deemed to have been issued by virtue of such
computation.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments
of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional Shares
of Common Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall be
the amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a subscription
offering, the public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends). To
the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at
the time of such issuance as determined in good faith by the Board of
Directors of the Company. In case any Additional Shares of Common Stock or
any Convertible Securities or any warrants or other rights to subscribe for
or purchase such Additional Shares of Common Stock or Convertible
Securities shall be issued in connection with any merger in which the
Company issues any securities, the amount of consideration therefor shall
be deemed to be the fair value, as determined in good faith by the Board of
Directors of the Company, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible
Securities, warrants or other rights, as the case may be. The consideration
for any Additional Shares of Common Stock issuable pursuant to any warrants
or other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other
rights plus the additional consideration payable to the Company upon
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Company
for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription
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<PAGE>
for or purchase of such Convertible Securities, plus the additional
consideration, if any, payable to the Company upon the exercise of the
right of conversion or exchange in such Convertible Securities. In case of
the issuance at any time of any Additional Shares of Common Stock or
Convertible Securities in payment or satisfaction of any dividends upon any
class of stock other than Common Stock, the Company shall be deemed to have
received for such Additional Shares of Common Stock or Convertible
Securities a consideration equal to the amount of such dividend so paid or
satisfied.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable that
would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for
in Section 4.1) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made
results in an increase or decrease of less than 1% of the shares of Common
Stock for which this Warrant is exercisable immediately prior to the making
of such adjustment. Any adjustment representing a change of less than such
minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the purpose
of any adjustment, any specified event shall be deemed to have occurred at
the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account
to the nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them
to receive a dividend or distribution or subscription or purchase rights
and shall, thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(e) Escrow of Warrant Stock. If Holder exercises this Warrant
after any property becomes distributable pursuant to this Section 4 by
reason of the taking of any record of the holders of Common Stock, but
prior to the occurrence of the event for which such record is taken, any
additional shares of Common Stock issuable upon exercise by reason of such
adjustment shall be deemed the last shares of Common Stock for which this
Warrant is exercised (notwithstanding any other provision to the contrary
herein) and such shares or other property shall be held in escrow for
Holder by the Company to be issued to Holder when and to the extent that
the event actually takes place, upon payment of the then Current Warrant
Price. Notwithstanding any other provision to the contrary herein, if the
event for which such record was taken fails to occur or is rescinded, then
such escrowed shares shall be canceled by the Company and escrowed property
returned.
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<PAGE>
(f) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Majority Holders, and
any dispute shall be resolved by an investment banking firm of recognized
national standing selected by the Majority Holders and acceptable to the
Company.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another corporation
and, pursuant to the terms of such reorganization, reclassification,
merger, consolidation or disposition of assets, shares of common stock of
the successor or acquiring corporation, or any cash, shares of stock or
other securities or property of any nature whatsoever (including warrants
or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"),
are to be received by or distributed to the holders of Common Stock of the
Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant and payment of the Current Warrant Price, the
number of shares of common stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and Other Property
receivable upon or as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets by a holder of the number of
shares of Common Stock for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and
all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of
the Board of Directors of the Company) in order to provide for adjustments
of shares of the Common Stock for which this Warrant is exercisable which
shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 4. For purposes of this Section 4.8, "common stock of
the successor or acquiring corporation" shall include stock of such
corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject
to redemption and shall also include any evidences of indebtedness, shares
of stock or other securities which are convertible into or exchangeable for
any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 4.8 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
4.9. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from
time to time the Company shall take any action in respect of its Common
Stock, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of the
Holders, the number of shares of Common Stock or other stock for which this
Warrant is exercisable and/or the purchase price thereof shall be adjusted
in such manner as may be equitable in the circumstances.
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<PAGE>
4.10. CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price
to be less than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which
a share of such Common Stock may be purchased upon exercise of the
Warrants, shall be adjusted pursuant to Section 4, the Company shall
forthwith prepare a certificate to be executed by the chief financial
officer of the Company setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board of
Directors of the Company determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants or
other subscription or purchase rights referred to in Section 4.2 or
4.7(a)), specifying the number of shares of Common Stock for which this
Warrant is exercisable and (if such adjustment was made pursuant to Section
4.8 or 4.9) describing the number and kind of any other shares of stock or
Other Property for which this Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate
to be delivered to each Holder in accordance with Section 14.2. The Company
shall keep at its principal office copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective purchaser of a Warrant
designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend (other
than a cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution,
or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any
sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation,
or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder
(i) at least 20 days' prior written notice of the date on which a record
date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification,
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merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, at least 20 days' prior written
notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall
be entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if
any such time is to be fixed, as of which the holders of Common Stock shall
be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up. Each such written notice shall be sufficiently
given if addressed to Holder at the last address of Holder appearing on the
books of the Company and delivered in accordance with Section 13.2.
6. RIGHTS OF HOLDERS
6.1 NO IMPAIRMENT. The Company shall not by any action, including,
without limitation, amending its Certificate of Incorporation, by-laws or
comparable governing instruments or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations under this
Warrant.
Upon the request of Holder, the Company will at any time during
the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to Holder, the continuing validity of this Warrant
and the obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the date hereof, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon
exercise of
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<PAGE>
any Warrant and payment therefor in accordance with the terms of such
Warrant, shall be duly and validly issued and fully paid and nonassessable.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any
provision of Section 4 refers to the taking of a record of such holders,
the Company will in each such case take such a record and will take such
record as of the close of business on a Business Day. The Company will not
at any time, except upon dissolution, liquidation or winding up of the
Company, close its stock transfer books or Warrant transfer books so as to
result in preventing or delaying the exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in
this Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any
Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees
to be bound by the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. Except as otherwise provided in this Section
9, each Warrant and each certificate for Warrant Stock initially issued
upon the exercise of a Warrant, and each certificate for Warrant Stock
issued to any subsequent transferee of any such certificate, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"[THIS WARRANT AND THE SECURITIES REPRESENTED
HEREBY] [THE SECURITIES REPRESENTED BY THIS
CERTIFICATE] HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of
Restricted Common Stock, the holder of such Warrants or Restricted Common
Stock shall give ten days' prior written notice (a "Transfer Notice") to
the Company of such holder's intention to effect such Transfer, describing
the manner and circumstances of the proposed Transfer, and obtain from
counsel to such holder who shall be reasonably satisfactory to the Company,
an opinion that the proposed Transfer of such Warrants or such Restricted
Common Stock may be effected without registration under the Securities Act.
After receipt of the Transfer Notice and opinion, the Company shall, within
five days thereof,
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<PAGE>
notify the holder of such Warrants or such Restricted Common Stock as to
whether such opinion is reasonably satisfactory and, if so, such holder
shall thereupon be entitled to Transfer such Warrants or such Restricted
Common Stock, in accordance with the terms of the Transfer Notice. Each
certificate, if any, evidencing such shares of Restricted Common Stock
issued upon such Transfer and each Warrant issued upon such Transfer shall
bear the restrictive legend set forth in Section 9.1, unless in the opinion
of such counsel such legend is not required in order to ensure compliance
with the Securities Act. The holder of the Warrants or the Restricted
Common Stock, as the case may be, giving the Transfer Notice shall not be
entitled to Transfer such Warrants or such Restricted Common Stock until
receipt of notice from the Company under this Section 9.2 that such opinion
is reasonably satisfactory.
9.3. TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of this Section 9, the restrictions imposed by this Section upon
the transferability of the Warrants, the Warrant Stock and the Restricted
Common Stock and the legend requirements of Section 9.1 shall terminate as
to any particular Warrant or share of Warrant Stock or Restricted Common
Stock (i) when and so long as such security shall have been effectively
registered under the Securities Act and disposed of pursuant thereto or
(ii) when the Company shall have received an opinion of counsel reasonably
satisfactory to it that such shares may be transferred without registration
thereof under the Securities Act.
10. PREEMPTIVE RIGHTS
(a) The Company shall not issue, sell or exchange, or agree to
issue, sell or exchange (collectively, "Issue," and any issuance, sale or
exchange resulting therefrom, an "Issuance") any Securities unless the
Company shall have first given written notice (the "Section 10 Notice") to
each holder of Warrants or Warrant Stock (for purposes of this Section,
each a "Section 10 Offeree") that shall (i) state the Company's intention
to Issue Securities, the amount to be issued, sold or exchanged, the terms
of such Securities, the purchase price therefor and a summary of the other
material terms of the proposed issuance, sale or exchange and (ii) offer (a
"Section 10 Offer") to Issue to each Section 10 Offeree and their
affiliates such Section 10 Offeree's Proportionate Percentage (as defined
below) of such Securities (with respect to each Section 10 Offeree, the
"Offered Securities") upon the terms and subject to the conditions set
forth in the Section 10 Notice, which Section 10 Offer by its terms shall
remain open and irrevocable for a period of 15-days from the date it is
delivered by the Company to such holder, as the case may be (and, to the
extent the Section 10 Offer is accepted during such 15-day period, until
the closing of the Issuance contemplated by the Section 10 Offer).
"Proportionate Percentage" for the purposes of this Section shall mean the
quotient obtained by dividing: (A) the Warrant Stock held by such Section
10 Offeree (assuming for purposes of this Section 10 that all issued and
outstanding Warrants have been exercised) on the date of the Section 10
Offer, by (B) the Warrant Stock issued and outstanding on the date of the
Section 10 Offer.
(b) Notice of a Section 10 Offeree's intention to accept a
Section 10 Offer, in whole or in part, shall be evidenced by a writing
signed by such party and delivered to the Company prior to the end of the
15-day period of such Section 10 Offer (each, a "Notice of
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<PAGE>
Acceptance"), setting forth the portion of the Offered Securities that the
Section 10 Offeree elects to purchase, which election shall be binding.
(c) In the event that a Notice of Acceptance is not given by a
Section 10 Offeree in respect of all the Offered Securities, the Company
shall have 60 days following the 15-day period referred to in clause (b)
above to Issue all or any part of such remaining Offered Securities not
covered by the Notice of Acceptance to any other Person(s), but only at a
price not less than the price, and on terms no more favorable to the person
than the terms, stated in the Section 10 Offer Notice. If the Company does
not consummate the Issuance of all or part of the remaining Offered
Securities to such other Person(s) within such period, the right provided
hereunder shall be deemed to be revived and such securities shall not be
offered unless first re-offered to each Section 10 Offeree in accordance
with this Section 10. Upon the closing of the Issuance to such other
Person(s) (the "Other Buyers") of all or part of the remaining Offered
Securities, each Section 10 Offeree shall purchase from the Company, and
the Company shall Issue to each such Section 10 Offeree, the Offered
Securities covered by the Notice of Acceptance delivered to the Company by
the Section 10 Offeree, on the terms specified in the Section 10 Offer. The
purchase by a Section 10 Offeree of any Offered Securities is subject in
all cases to the execution and delivery by the Company and the Section 10
Offeree of a purchase agreement relating to such Offered Securities in form
and substance similar in all material respects to the extent applicable to
that executed and delivered between the Company and the Other Buyers.
11. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and
each holder of Restricted Common Stock in supplying such information as may
be reasonably necessary for such holder to complete and file any reports or
forms presently or hereafter required by the Commission as a condition to
the availability of an exemption from the Securities Act for the sale of
any Warrant or Restricted Common Stock.
12. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably
satisfactory to it (it being understood that, in the case of the initial
holder, the written agreement of Appaloosa Management L.P. shall be
sufficient indemnity), and in case of mutilation upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a
new Warrant of like tenor to such Holder; provided, in the case of
mutilation, no indemnity shall be required if this Warrant in identifiable
form is surrendered to the Company for cancellation.
13. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any Common Stock or as a
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<PAGE>
stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
14. MISCELLANEOUS
14.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to Holder such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys'
fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of
its rights, powers or remedies hereunder.
14.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged
or sent by registered or certified mail, return receipt requested, postage
prepaid, or by telecopy and confirmed by telecopy answerback, addressed as
follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of the Company maintained
for such purpose.
(b) If to the Company at
Bio-Plexus, Inc.
129 Reservoir Road
Vernon, CT 06066
Attention: CHIEF EXECUTIVE OFFICER
Fax: (860) 870-6118
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback, or three Business Days after the same
shall have been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, approval, declaration,
delivery or other communication to the person designated above to receive a
copy shall in no way adversely affect the effectiveness of such notice,
demand, request, approval, declaration, delivery or other communication.
14.3. REMEDIES. Each holder of Warrant and Warrant Stock, in addition
to being entitled to exercise all rights granted by law, including recovery
of damages, will be entitled to specific performance of its rights under of
this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
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<PAGE>
the provisions of this Warrant and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
14.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections
3.1 and 9, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the
successors and assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this
Warrant and, with respect to Section 9 hereof, holders of Warrant Stock,
and shall be enforceable by any such Holder or holder of Warrant Stock.
14.5. AMENDMENT. This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written consent of the
Company and the Majority Holders, provided that no such Warrant may be
modified or amended to reduce the number of shares of Common Stock for
which such Warrant is exercisable or to increase the price at which such
shares may be purchased upon exercise of such Warrant (before giving effect
to any adjustment as provided therein) without the prior written consent of
the Holder thereof, provided however, that the foregoing shall not limit
the operation of Section 4.6.
14.6. SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Warrant.
14.7. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
14.8. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES OF AMERICA, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY
ACTION, PROCEEDING OR INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL
AUTHORITY ("LITIGATION") ARISING OUT OF OR RELATING TO THIS WARRANT AND THE
TRANSACTIONS CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION
RELATING THERETO EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF
ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS
RESPECTIVE ADDRESS SET FORTH IN THIS WARRANT SHALL BE EFFECTIVE SERVICE OF
PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY SUCH COURT. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS OF THE STATE
OF NEW YORK OR THE UNITED STATES OF AMERICA, IN
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<PAGE>
EACH CASE LOCATED IN THE COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY
AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH
COURT THAT ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. EACH OF THE PARTIES IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION
ARISING OUT OF OR RELATING TO THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by an officer thereunto duly authorized.
Dated: April __, 2000
BIO-PLEXUS, INC.
By:
---------------------------
Name:
Title:
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Exhibit 5
---------
WARRANT
To Purchase Shares of Common Stock of
BIO-PLEXUS, INC.
At a Purchase Price of
$4.00 per Share
(Subject to Adjustment as Provided herein)
No. of Shares of Common Stock: _________
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
1. DEFINITIONS 1
2. EXERCISE OF WARRANT 4
2.1. MANNER OF EXERCISE. 4
2.2. PAYMENT OF TAXES. 5
2.3. FRACTIONAL SHARES. 5
3. TRANSFER, DIVISION AND COMBINATION 5
3.1. TRANSFER. 5
3.2. DIVISION AND COMBINATION. 5
3.3. EXPENSES. 6
3.4. MAINTENANCE OF BOOKS. 6
4. ADJUSTMENTS 6
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. 6
4.2. CERTAIN OTHER DISTRIBUTIONS. 6
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. 7
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. 8
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. 9
4.6. SUPERSEDING ADJUSTMENT. 9
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER
THIS SECTION. 10
4.8. REORGANIZATION, RECLASSIFICATION, MERGER,
CONSOLIDATION OR DISPOSITION OF ASSETS. 11
4.9. OTHER ACTION AFFECTING COMMON STOCK. 12
4.10. CERTAIN LIMITATIONS. 12
5. NOTICES TO WARRANT HOLDERS 12
5.1. NOTICE OF ADJUSTMENTS. 12
5.2. NOTICE OF CORPORATE ACTION. 13
6. RIGHTS OF HOLDERS 14
6.1 NO IMPAIRMENT. 14
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY 14
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS 14
9. RESTRICTIONS ON TRANSFERABILITY 15
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9.1. RESTRICTIVE LEGEND. 15
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. 15
9.3. TERMINATION OF RESTRICTIONS. 16
10. PREEMPTIVE RIGHTS 16
10A REDEMPTION 17
11. SUPPLYING INFORMATION 18
12. LOSS OR MUTILATION 18
13. LIMITATION OF LIABILITY 18
14. MISCELLANEOUS 18
14.1. NONWAIVER AND EXPENSES. 18
14.2. NOTICE GENERALLY. 18
14.3. REMEDIES. 19
14.4. SUCCESSORS AND ASSIGNS. 19
14.5. AMENDMENT. 19
14.6. SEVERABILITY. 20
14.7. HEADINGS. 20
14.8. GOVERNING LAW. 20
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Exhibit D
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS
OF SUCH ACT OR SUCH LAWS
No. of Shares of Common Stock: _________
WARRANT
To Purchase Shares of Common Stock of
BIO-PLEXUS, INC.
THIS IS TO CERTIFY THAT _______________, or its registered
assigns (the "Holder"), is entitled, at any time prior to the Expiration
Date (as hereinafter defined), to purchase from BIO-PLEXUS, INC., a
Connecticut corporation (the "Company"), _________ (subject to adjustment
as provided herein) shares of Common Stock (as hereinafter defined), in
whole or in part, at a purchase price of $4.00 per share (subject to
adjustment as provided herein), all on the terms and conditions and
pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the date hereof, other than (i)
Warrant Stock, (ii) shares of Common Stock issuable upon the exercise of
the warrants issued by the Company to the Holder and its affiliates on
October 21, 1999 and on the date hereof, (iii) shares of Common Stock
issuable upon the conversion of the Notes issued under the Convertible Note
Purchase Agreement and (iv) the 250,000 Shares of Common Stock issued under
the Convertible Note Purchase Agreement.
"Average Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the daily volume weighted
average sale price per share of Common Stock for such date. The closing
price for each day shall be the last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc., Automated Quotation System or such other system
then in use, or, if on any such date the Common Stock or such other
securities are not quoted by any such organization, the average of the
closing bid and asked prices as
<PAGE>
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If the Common
Stock is listed or admitted to trading on a national securities exchange,
the closing price shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Common
Stock is not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Common Stock is listed or admitted to trading.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in
the State of New York.
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, no par value, of the Company as constituted on
the date hereof, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the
Company of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof and
(ii) shares of common stock of any successor or acquiring corporation (as
defined in Section 4.8) received by or distributed to the holders of Common
Stock of the Company in the circumstances contemplated by Section 4.8.
"Convertible Note Purchase Agreement" shall mean the convertible
note purchase agreement to be entered into by and among the Company, the
purchasers listed on Exhibit A thereto and Appaloosa Management L.P., as
collateral agent.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable or exercisable, with or without payment of additional
consideration in cash or property, for Additional Shares of Common Stock,
either immediately or upon the occurrence of a specified date or a
specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the average of the Average
Market Price for the twenty Business Days ending five days prior to such
date.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Warrant on such date. The
Current Warrant Price as of the date of the issuance of this Warrant is
$4.00.
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<PAGE>
"Expiration Date" shall mean a date which is five years from the
issuance of this Warrant.
"Holder" shall mean the Person in whose name this Warrant is
registered on the books of the Company maintained for such purpose.
"Holders" shall mean, collectively, each Holder of a Warrant, in the event
of any division of this Warrant.
"Majority Holders" shall mean the holders of Warrants exercisable
for in excess of 50% of the aggregate number of shares of Warrant Stock
then purchasable upon exercise of all Warrants.
"Notes" shall mean the notes to be issued pursuant to the
Convertible Note Purchase Agreement.
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock, except shares then owned or
held by or for the account of the Company or any subsidiary thereof, and
shall include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
For the purposes of Sections 4.3, 4.4, 4.5, 4.6 and 4.7, Common Stock
Outstanding shall include all shares of Common Stock issuable in respect of
options or warrants to purchase, or securities convertible into, shares of
Common Stock, the exercise or conversion price of which is less than the
Current Market Price as of any date on which the number of shares of Common
Stock Outstanding is to be determined.
"Permitted Issuances" shall mean issuances of shares of Common
Stock and upon exercise of the warrants and options and other convertible
securities, in each case listed on Schedule 1.
"Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor by merger or
otherwise of such entity.
"Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Security" or "Securities" shall mean any equity or debt security
of the Company (including, without limitation, subscriptions, options,
warrants, rights, stock-based or stock-related awards or convertible or
exchangeable securities to which the Company is a party or by which the
Company may be bound of any character relating to, or obligating the
Company to issue, grant, award, transfer or sell any issued or unissued
shares of the Company's Capital Stock or other securities of the Company).
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<PAGE>
"Trading Day" means a Business Day or, if the Common Stock is
listed or admitted to trading in any national securities exchange, a day on
which such exchange is open for the transaction of business.
"Transfer" shall mean any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may
be exercised.
"Warrant Stock" shall mean the shares of Common Stock purchased
by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. At any time or from time to time from and
after the date hereof and until 5:00 P.M., New York time, on the Expiration
Date, Holder may exercise this Warrant, on any Business Day, for all or any
part of the number of shares of Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 129 Reservoir Road,
Vernon, CT 06066 (i) a written notice of Holder's election to exercise this
Warrant, which notice shall specify the number of shares of Common Stock to
be purchased, (ii) payment of the aggregate Current Warrant Price for such
shares and (iii) this Warrant. Such notice shall be substantially in the
form appearing at the end of this Warrant as Exhibit A, duly executed by
Holder. Thirty days after receipt of the items specified in the second
preceding sentence, the Company shall execute or cause to be executed and
deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable
upon such exercise, together with cash in lieu of any fraction of a share,
as hereinafter provided. The stock certificate or certificates so delivered
shall be in such denomination or denominations as Holder shall request in
the notice and shall be registered in the name of Holder or, subject to
Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other
Person so designated shall be deemed to have become a holder of record of
such shares for all purposes, as of the date which is thirty days after the
date of the notice, together with the Current Warrant Price and this
Warrant, are received by the Company as described above. If this Warrant
shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Stock,
deliver to Holder a new Warrant evidencing the right of Holder to purchase
the unpurchased shares of Common Stock called for by this Warrant, which
new Warrant shall in all other respects be identical with this Warrant, or,
at the request of Holder,
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<PAGE>
appropriate notation may be made on this Warrant and the same returned to
Holder. Payment of the Current Warrant Price shall be made at the option of
Holder by (i) certified or official bank check or (ii) wire transfer of
immediately available funds
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant shall be validly issued, fully paid and
nonassessable. The Company shall pay all expenses in connection with, and
all taxes (other than income taxes or capital gain tax of the Holder) and
other governmental charges that may be imposed with respect to, the issue
or delivery thereof.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of this Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase
upon such exercise, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the Current Market
Price per share of Common Stock on the date of exercise.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred
to in Section 2.1, together with a written assignment of this Warrant
substantially in the form of Exhibit B hereto duly executed by Holder and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company
shall, subject to Section 9, execute and deliver a new Warrant or Warrants
in the name of the assignee or assignees and in the denomination specified
in such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be canceled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant may
be divided into multiple Warrants or combined with other Warrants upon
presentation hereof at the aforesaid office or agency of the Company,
together with a written notice specifying the names and denominations in
which new Warrants are to be issued, signed by Holder. Subject to
compliance with Section 3.1 and with Section 9, as to any transfer which
may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office, books for the registration and the registration of
transfer of the Warrants.
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<PAGE>
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable and/or the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time
as set forth in this Section 4. The Company shall give each Holder notice
of any event described below which requires an adjustment pursuant to this
Section 4 at the time of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record
holder of the same number of shares of Common Stock for which this Warrant
is exercisable immediately prior to the occurrence of such event would own
or be entitled to receive after the happening of such event, and (ii) the
Current Warrant Price per share shall be adjusted to equal (A) the Current
Warrant Price multiplied by the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment divided by
(B) the number of shares for which this Warrant is exercisable immediately
after such adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of stock or any
other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
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<PAGE>
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to
such adjustment and a fraction (A) the numerator of which shall be the
Current Market Price per share of Common Stock at the date of taking such
record and (B) the denominator of which shall be such Current Market Price
per share of Common Stock minus the amount allocable to one share of Common
Stock of any such cash so distributable and of the fair value (as
determined in good faith by the Board of Directors of the Company) of any
and all such evidences of indebtedness, shares of stock, other securities
or property or warrants or other subscription or purchase rights so
distributable, and (ii) the Current Warrant Price shall be adjusted to
equal (A) the Current Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value or from no par value to par value) into shares of Common Stock and
shares of any other class of stock shall be deemed a distribution by the
Company to the holders of its Common Stock of such shares of such other
class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the
meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If at any time
the Company shall (except as hereinafter provided) issue or sell any
Additional Shares of Common Stock, other than Permitted Issuances, in
exchange for consideration in an amount per Additional Share of Common
Stock less than the Current Warrant Price at the time the Additional Shares
of Common Stock are issued, then (i) the Current Warrant Price as to the
number of shares for which this Warrant is exercisable prior to such
adjustment shall be reduced to a price determined by multiplying (A) the
Current Warrant Price by (B) a fraction, the numerator of which shall be
the sum of (x) the number of shares of Common Stock Outstanding immediately
prior to such issue or sale multiplied by the then applicable Current
Warrant Price (the "Adjustment Price") and (y) the aggregate consideration
receivable by the Company for the total number of shares of Common Stock so
issued, and the denominator of which shall be the sum of (a) the total
number of shares of Common Stock Outstanding on such date and (b) the
number of Additional Shares issued, multiplied by the Adjustment Price; and
(ii) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by multiplying
the Current Warrant Price in effect immediately prior to such issue or sale
by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such issue or sale and dividing the
product thereof by the Current Warrant Price resulting from the adjustment
made pursuant to clause (i) above. For purposes of this Section 4.3 and for
the purposes of making adjustments of the number of shares of Common Stock
for which this Warrant is exercisable and the Current Warrant Price as
provided in this Section 4, the aggregate consideration receivable by the
Company in connection with the issuance of shares of Common Stock or of
rights, warrants or other securities convertible into shares of Common
Stock shall be deemed to be equal to the sum of the aggregate offering
price (before deduction of underwriting discounts or commissions and
expenses payable to third parties) of all such Common Stock, rights,
warrants and convertible
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<PAGE>
securities plus the aggregate amount (as determined on the date of
issuance), if any, payable upon exercise or conversion of any such rights,
warrants and convertible securities into shares of Common Stock. If,
subsequent to the date of issuance of such rights, warrants or Convertible
Securities, the exercise or conversion price thereof is reduced, such
aggregate amount shall be recalculated and the Current Warrant Price and
number of shares of Common Stock for which the Warrant is exercisable
adjusted retroactively to give effect to such reduction. If Common Stock is
sold as a unit with other securities, the aggregate consideration received
for such Common Stock shall be deemed to be net of the Fair Market Value of
such other securities.
4.4. ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities (other than Permitted Issuances), whether or not the
rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon the exercise of
such warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Warrant Price in
effect immediately prior to the time of such issue or sale, then the number
of shares for which this Warrant is exercisable and the Current Warrant
Price shall be adjusted as provided in Section 4.3 on the basis that the
maximum number of Additional Shares of Common Stock issuable pursuant to
all such warrants or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued and outstanding and the Company shall have received all of the
consideration payable therefor, if any, as of the date of the actual
issuance of the number such warrants or other rights. No further
adjustments of the Current Warrant Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise
of such warrants or other rights or upon the actual issue of such Common
Stock upon such conversion or exchange of such Convertible Securities.
Notwithstanding the foregoing, no adjustment shall be required under this
Section 4.4 solely by reason of the issuance or distribution of stock
purchase rights pursuant to a shareholder rights plan or any other rights
plan of the Company, provided that the adjustments required by this Section
4.4 shall be made if any "flip-in" or "flip-over" event shall occur under
such stockholder rights plan.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any Convertible Securities (other
than Permitted Issuances), whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which
Common Stock is issuable upon such conversion or exchange shall be less
than the Current Warrant Price in effect immediately prior to the time of
such issue or sale, then the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as provided in
Section 4.3 on the basis that the maximum number of Additional shares of
Common Stock necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and outstanding
and the Company shall have received all of the consideration payable
therefor, if any, as of the
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<PAGE>
date of actual issuance of such Convertible Securities. No adjustment of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall be made under this Section 4.5 upon the issuance of any
Convertible Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Section 4.4. No further adjustments of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and, if any issue or
sale of such Convertible Securities is made upon exercise of any warrant or
other right to subscribe for or to purchase any such Convertible Securities
for which adjustments of the number of shares for which this Warrant is
exercisable and the Current Warrant Price have been or are to be made
pursuant to other provisions of this Section 4, no further adjustments of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall be made by reason of such issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the number of shares for which this Warrant is exercisable and the Current
Warrant Price shall have been made pursuant to Section 4.4 or Section 4.5
as the result of any issuance of warrants, rights or Convertible
Securities, such warrants or rights, or the right of conversion or exchange
in such other Convertible Securities, shall expire, and all of such
warrants or rights, or the right of conversion or exchange with respect to
all or a portion of such other Convertible Securities, as the case may be,
shall not have been exercised and no outstanding Warrant shall have been
exercised (in whole or in part), then for each outstanding Warrant such
previous adjustment shall be rescinded and annulled and the Additional
Shares of Common Stock which were deemed to have been issued by virtue of
the computation made in connection with the adjustment so rescinded and
annulled shall no longer be deemed to have been issued by virtue of such
computation.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments
of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional Shares
of Common Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall be
the amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered by
the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering without a subscription
offering, the public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends). To
the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at
the time of such issuance as determined in good faith by the Board
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<PAGE>
of Directors of the Company. In case any Additional Shares of Common Stock
or any Convertible Securities or any warrants or other rights to subscribe
for or purchase such Additional Shares of Common Stock or Convertible
Securities shall be issued in connection with any merger in which the
Company issues any securities, the amount of consideration therefor shall
be deemed to be the fair value, as determined in good faith by the Board of
Directors of the Company, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible
Securities, warrants or other rights, as the case may be. The consideration
for any Additional Shares of Common Stock issuable pursuant to any warrants
or other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or other
rights plus the additional consideration payable to the Company upon
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Company
for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such Convertible
Securities, plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a consideration equal to
the amount of such dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable that
would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for
in Section 4.1) up to, but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made
results in an increase or decrease of less than 1% of the shares of Common
Stock for which this Warrant is exercisable immediately prior to the making
of such adjustment. Any adjustment representing a change of less than such
minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would
result in a minimum adjustment or on the date of exercise. For the purpose
of any adjustment, any specified event shall be deemed to have occurred at
the close of business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account
to the nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them
to receive a dividend or distribution or subscription or purchase rights
and shall, thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the
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<PAGE>
taking of such record and any such adjustment previously made in respect
thereof shall be rescinded and annulled.
(e) Escrow of Warrant Stock. If Holder exercises this Warrant
after any property becomes distributable pursuant to this Section 4 by
reason of the taking of any record of the holders of Common Stock, but
prior to the occurrence of the event for which such record is taken, any
additional shares of Common Stock issuable upon exercise by reason of such
adjustment shall be deemed the last shares of Common Stock for which this
Warrant is exercised (notwithstanding any other provision to the contrary
herein) and such shares or other property shall be held in escrow for
Holder by the Company to be issued to Holder when and to the extent that
the event actually takes place, upon payment of the then Current Warrant
Price. Notwithstanding any other provision to the contrary herein, if the
event for which such record was taken fails to occur or is rescinded, then
such escrowed shares shall be canceled by the Company and escrowed property
returned.
(f) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Company shall be required to make a determination in good
faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Majority Holders, and
any dispute shall be resolved by an investment banking firm of recognized
national standing selected by the Majority Holders and acceptable to the
Company.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another corporation
and, pursuant to the terms of such reorganization, reclassification,
merger, consolidation or disposition of assets, shares of common stock of
the successor or acquiring corporation, or any cash, shares of stock or
other securities or property of any nature whatsoever (including warrants
or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"),
are to be received by or distributed to the holders of Common Stock of the
Company, then Holder shall have the right thereafter to receive, upon
exercise of this Warrant and payment of the Current Warrant Price, the
number of shares of common stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and Other Property
receivable upon or as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets by a holder of the number of
shares of Common Stock for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization, reclassification,
merger, consolidation or disposition of assets, the successor or acquiring
corporation (if other than the Company) shall expressly assume the due and
punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and
all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of
the Board of Directors of the Company) in order to provide for adjustments
of shares of the Common Stock for which this Warrant is exercisable which
shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 4. For purposes
- 11 -
<PAGE>
of this Section 4.8, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is
not preferred as to dividends or assets over any other class of stock of
such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities
which are convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event and any warrants or other rights to subscribe for or
purchase any such stock. The foregoing provisions of this Section 4.8 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.9. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from
time to time the Company shall take any action in respect of its Common
Stock, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of the
Holders, the number of shares of Common Stock or other stock for which this
Warrant is exercisable and/or the purchase price thereof shall be adjusted
in such manner as may be equitable in the circumstances.
4.10. CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price
to be less than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which
a share of such Common Stock may be purchased upon exercise of the
Warrants, shall be adjusted pursuant to Section 4, the Company shall
forthwith prepare a certificate to be executed by the chief financial
officer of the Company setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the Board of
Directors of the Company determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants or
other subscription or purchase rights referred to in Section 4.2 or
4.7(a)), specifying the number of shares of Common Stock for which this
Warrant is exercisable and (if such adjustment was made pursuant to Section
4.8 or 4.9) describing the number and kind of any other shares of stock or
Other Property for which this Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate
to be delivered to each Holder in accordance with Section 14.2. The Company
shall keep at its principal office copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective purchaser of a Warrant
designated by a Holder thereof.
5.2. NOTICE OF CORPORATE ACTION. If at any time
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend (other
than a cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws
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<PAGE>
of the jurisdiction of incorporation of the Company) or other distribution,
or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any
sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation,
or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder
(i) at least 20 days' prior written notice of the date on which a record
date shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 20 days'
prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the
date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common
Stock shall be entitled to any such dividend, distribution or right, and
the amount and character thereof, and (ii) the date on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and
the time, if any such time is to be fixed, as of which the holders of
Common Stock shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books of the Company and delivered in accordance with
Section 13.2.
6. RIGHTS OF HOLDERS
6.1 NO IMPAIRMENT. The Company shall not by any action, including,
without limitation, amending its Certificate of Incorporation, by-laws or
comparable governing instruments or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking
of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body
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<PAGE>
having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during
the period this Warrant is outstanding acknowledge in writing, in form
reasonably satisfactory to Holder, the continuing validity of this Warrant
and the obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the date hereof, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon
exercise of any Warrant and payment therefor in accordance with the terms
of such Warrant, shall be duly and validly issued and fully paid and
nonassessable.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any
provision of Section 4 refers to the taking of a record of such holders,
the Company will in each such case take such a record and will take such
record as of the close of business on a Business Day. The Company will not
at any time, except upon dissolution, liquidation or winding up of the
Company, close its stock transfer books or Warrant transfer books so as to
result in preventing or delaying the exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in
this Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any
Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees
to be bound by the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. Except as otherwise provided in this Section
9, each Warrant and each certificate for Warrant Stock initially issued
upon the exercise of a Warrant, and each certificate for Warrant Stock
issued to any subsequent transferee of any such certificate, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"[THIS WARRANT AND THE SECURITIES REPRESENTED
HEREBY] [THE SECURITIES REPRESENTED BY THIS
CERTIFICATE] HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
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<PAGE>
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
9.2. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of
Restricted Common Stock, the holder of such Warrants or Restricted Common
Stock shall give ten days' prior written notice (a "Transfer Notice") to
the Company of such holder's intention to effect such Transfer, describing
the manner and circumstances of the proposed Transfer, and obtain from
counsel to such holder who shall be reasonably satisfactory to the Company,
an opinion that the proposed Transfer of such Warrants or such Restricted
Common Stock may be effected without registration under the Securities Act.
After receipt of the Transfer Notice and opinion, the Company shall, within
five days thereof, notify the holder of such Warrants or such Restricted
Common Stock as to whether such opinion is reasonably satisfactory and, if
so, such holder shall thereupon be entitled to Transfer such Warrants or
such Restricted Common Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted
Common Stock issued upon such Transfer and each Warrant issued upon such
Transfer shall bear the restrictive legend set forth in Section 9.1, unless
in the opinion of such counsel such legend is not required in order to
ensure compliance with the Securities Act. The holder of the Warrants or
the Restricted Common Stock, as the case may be, giving the Transfer Notice
shall not be entitled to Transfer such Warrants or such Restricted Common
Stock until receipt of notice from the Company under this Section 9.2 that
such opinion is reasonably satisfactory.
9.3. TERMINATION OF RESTRICTIONS.
Notwithstanding the foregoing provisions of this Section 9, the
restrictions imposed by this Section upon the transferability of the
Warrants, the Warrant Stock and the Restricted Common Stock and the legend
requirements of Section 9.1 shall terminate as to any particular Warrant or
share of Warrant Stock or Restricted Common Stock (i) when and so long as
such security shall have been effectively registered under the Securities
Act and disposed of pursuant thereto or (ii) when the Company shall have
received an opinion of counsel reasonably satisfactory to it that such
shares may be transferred without registration thereof under the Securities
Act.
10. PREEMPTIVE RIGHTS
(a) The Company shall not issue, sell or exchange, or agree to
issue, sell or exchange (collectively, "Issue," and any issuance, sale or
exchange resulting therefrom, an "Issuance") any Securities unless the
Company shall have first given written notice (the "Section 10 Notice") to
each holder of Warrants or Warrant Stock (for purposes of this Section,
each a "Section 10 Offeree") that shall (i) state the Company's intention
to Issue Securities, the amount to be issued, sold or exchanged, the terms
of such Securities, the purchase price therefor and a summary of the other
material terms of the proposed issuance, sale or
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<PAGE>
exchange and (ii) offer (a "Section 10 Offer") to Issue to each Section 10
Offeree and their affiliates such Section 10 Offeree's Proportionate
Percentage (as defined below) of such Securities (with respect to each
Section 10 Offeree, the "Offered Securities") upon the terms and subject to
the conditions set forth in the Section 10 Notice, which Section 10 Offer
by its terms shall remain open and irrevocable for a period of 15-days from
the date it is delivered by the Company to such holder, as the case may be
(and, to the extent the Section 10 Offer is accepted during such 15-day
period, until the closing of the Issuance contemplated by the Section 10
Offer). "Proportionate Percentage" for the purposes of this Section shall
mean the quotient obtained by dividing: (A) the Warrant Stock held by such
Section 10 Offeree (assuming for purposes of this Section 10 that all
issued and outstanding Warrants have been exercised) on the date of the
Section 10 Offer, by (B) the Warrant Stock issued and outstanding on the
date of the Section 10 Offer.
(b) Notice of a Section 10 Offeree's intention to accept a
Section 10 Offer, in whole or in part, shall be evidenced by a writing
signed by such party and delivered to the Company prior to the end of the
15-day period of such Section 10 Offer (each, a "Notice of Acceptance"),
setting forth the portion of the Offered Securities that the Section 10
Offeree elects to purchase, which election shall be binding.
(c) In the event that a Notice of Acceptance is not given by a
Section 10 Offeree in respect of all the Offered Securities, the Company
shall have 60 days following the 15-day period referred to in clause (b)
above to Issue all or any part of such remaining Offered Securities not
covered by the Notice of Acceptance to any other Person(s), but only at a
price not less than the price, and on terms no more favorable to the person
than the terms, stated in the Section 10 Offer Notice. If the Company does
not consummate the Issuance of all or part of the remaining Offered
Securities to such other Person(s) within such period, the right provided
hereunder shall be deemed to be revived and such securities shall not be
offered unless first re-offered to each Section 10 Offeree in accordance
with this Section 10. Upon the closing of the Issuance to such other
Person(s) (the "Other Buyers") of all or part of the remaining Offered
Securities, each Section 10 Offeree shall purchase from the Company, and
the Company shall Issue to each such Section 10 Offeree, the Offered
Securities covered by the Notice of Acceptance delivered to the Company by
the Section 10 Offeree, on the terms specified in the Section 10 Offer. The
purchase by a Section 10 Offeree of any Offered Securities is subject in
all cases to the execution and delivery by the Company and the Section 10
Offeree of a purchase agreement relating to such Offered Securities in form
and substance similar in all material respects to the extent applicable to
that executed and delivered between the Company and the Other Buyers.
10A REDEMPTION.
(a) Whenever the Average Market Price shall have equaled or
exceeded $10.00 per share during a period of 90 consecutive trading days
ending on the fifth trading day prior to the date on which the notice
contemplated by the next clause of this sentence is given, the Company may,
on 30 days' prior written notice, redeem up to half of the Warrant at a
price of $0.01 per share of Common Stock (subject to adjustment in the
event of any stock splits or other similar events as provided in Section 4
hereof). Whenever the Average Market Price shall have equaled or exceeded
$10.00 per share during a period of 180 consecutive trading days ending on
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<PAGE>
the fifth trading day prior to the date on which the notice contemplated by
the next clause of this sentence is given, the Company may, on 30 days'
prior written notice, redeem up to the entire Warrant at a price of $0.01
per share of Common Stock (subject to adjustment in the event of any stock
splits or other similar events as provided in Section 4 hereof).
(b) The notice of redemption shall specify (i) the redemption
price, (ii) the redemption date, which shall in no event be less than 45
days after the date of mailing of such notice, (iii) the place where this
Warrant shall be delivered and the redemption price shall be paid and (iv)
that the right to exercise the Warrant shall terminate at 5:00 p.m. (New
York time) on the Business Day immediately preceding the date fixed for
redemption.
(c) Any right to exercise a Warrant shall terminate at 5:00 p.m.
(New York time) on the Business Day immediately preceding the redemption
date. The redemption price payable to the Holders shall be mailed to such
persons at their addresses of record.
11. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant and
each holder of Restricted Common Stock in supplying such information as may
be reasonably necessary for such holder to complete and file any reports or
forms presently or hereafter required by the Commission as a condition to
the availability of an exemption from the Securities Act for the sale of
any Warrant or Restricted Common Stock.
12. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably
satisfactory to it (it being understood that, in the case of the initial
holder, the written agreement of Appaloosa Management L.P. shall be
sufficient indemnity), and in case of mutilation upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a
new Warrant of like tenor to such Holder; provided, in the case of
mutilation, no indemnity shall be required if this Warrant in identifiable
form is surrendered to the Company for cancellation.
13. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any Common Stock or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
14. MISCELLANEOUS
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<PAGE>
14.1. NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to Holder such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys'
fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of
its rights, powers or remedies hereunder.
14.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged
or sent by registered or certified mail, return receipt requested, postage
prepaid, or by telecopy and confirmed by telecopy answerback, addressed as
follows:
(a) If to any Holder or holder of Warrant Stock, at its
last known address appearing on the books of the Company
maintained for such purpose.
(b) If to the Company at
Bio-Plexus, Inc.
129 Reservoir Road
Vernon, CT 06066
Attention: Chief Executive Officer
Fax: (860) 870-6118
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback, or three Business Days after the same
shall have been deposited in the United States mail. Failure or delay in
delivering copies of any notice, demand, request, approval, declaration,
delivery or other communication to the person designated above to receive a
copy shall in no way adversely affect the effectiveness of such notice,
demand, request, approval, declaration, delivery or other communication.
14.3. REMEDIES. Each holder of Warrant and Warrant Stock, in addition
to being entitled to exercise all rights granted by law, including recovery
of damages, will be entitled to specific performance of its rights under of
this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Warrant and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
14.4. SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections
3.1 and 9, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the
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<PAGE>
successors of the Company and the successors and assigns of Holder. The
provisions of this Warrant are intended to be for the benefit of all
Holders from time to time of this Warrant and, with respect to Section 9
hereof, holders of Warrant Stock, and shall be enforceable by any such
Holder or holder of Warrant Stock.
14.5. AMENDMENT. This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written consent of the
Company and the Majority Holders, provided that no such Warrant may be
modified or amended to reduce the number of shares of Common Stock for
which such Warrant is exercisable or to increase the price at which such
shares may be purchased upon exercise of such Warrant (before giving effect
to any adjustment as provided therein) without the prior written consent of
the Holder thereof, provided however, that the foregoing shall not limit
the operation of Section 4.6.
14.6. SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Warrant.
14.7. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
14.8. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO THE PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED
STATES OF AMERICA, IN EACH CASE LOCATED IN THE COUNTY OF NEW YORK, FOR ANY
ACTION, PROCEEDING OR INVESTIGATION IN ANY COURT OR BEFORE ANY GOVERNMENTAL
AUTHORITY ("LITIGATION") ARISING OUT OF OR RELATING TO THIS WARRANT AND THE
TRANSACTIONS CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION
RELATING THERETO EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF
ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS
RESPECTIVE ADDRESS SET FORTH IN THIS WARRANT SHALL BE EFFECTIVE SERVICE OF
PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY SUCH COURT. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
OBJECTION TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN THE COURTS OF THE STATE
OF NEW YORK OR THE UNITED STATES OF AMERICA, IN EACH CASE LOCATED IN THE
COUNTY OF NEW YORK, AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST
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<PAGE>
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY
JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS
WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by an officer thereunto duly authorized.
Dated: April __, 2000
BIO-PLEXUS, INC.
By:
----------------------------
Name:
Title:
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Exhibit 6
---------
SECURITY AGREEMENT
AMONG
BIO-PLEXUS, INC.,
as Obligor
and
Appaloosa Management, L.P.,
as Collateral Agent
Dated as of April 28, 2000
<PAGE>
TABLE OF CONTENTS
-----------------
Article I. Definitions and Interpretation....................................1
1.01 Certain Defined Terms...............................................1
---------------------
1.02 Interpretation......................................................4
--------------
Article II. Collateral.......................................................4
2.01 Grant of First Priority Security Interest...........................4
-----------------------------------------
2.02 Grant of Second Priority Security Interest..........................6
------------------------------------------
2.03 Intellectual Property...............................................7
---------------------
2.04 Perfection..........................................................7
----------
2.05 Preservation and Protection of Security Interests...................8
-------------------------------------------------
2.06 Reserved............................................................9
--------
2.07 Special Provisions Relating to Securities Collateral................9
----------------------------------------------------
2.08 Use of Intellectual Property.......................................10
----------------------------
2.09 Instruments........................................................10
-----------
2.10 Use of Collateral..................................................10
-----------------
2.11 Rights and Obligations.............................................11
----------------------
2.12 Release of Motor Vehicles..........................................11
-------------------------
2.13 Termination........................................................12
-----------
Article III. Cash Proceeds of Collateral....................................12
3.01 Collateral Account.................................................12
------------------
3.02 Certain Proceeds...................................................12
----------------
3.03 Investment of Balance in Collateral Account........................13
-------------------------------------------
Article IV. Representations and Warranties..................................13
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<PAGE>
4.01 Title..............................................................13
-----
4.02 Intellectual Property..............................................14
---------------------
4.03 Goods..............................................................14
-----
Article V. Covenants........................................................14
5.01 Books and Records..................................................14
-----------------
5.02 Removals, Etc......................................................15
-------------
5.03 Stock Collateral...................................................15
----------------
5.04 Intellectual Property..............................................15
---------------------
Article VI. Remedies........................................................17
6.01 Events of Default, Etc.............................................17
----------------------
6.02 Deficiency.........................................................18
----------
6.03 Private Sale.......................................................18
------------
6.04 Application of Proceeds............................................19
-----------------------
Article VII. Miscellaneous..................................................20
7.01 Waiver.............................................................20
------
7.02 Notices............................................................20
-------
7.03 Expenses, Etc......................................................21
-------------
7.04 Amendments.........................................................21
----------
7.05 Successors and Assigns.............................................21
----------------------
7.06 Survival...........................................................21
--------
7.07 Agreements Superseded..............................................21
---------------------
7.08 Severability.......................................................22
------------
7.09 Captions...........................................................22
--------
7.10 Counterparts.......................................................22
------------
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<PAGE>
7.11 GOVERNING LAW......................................................22
-------------
7.12 Submission to Jurisdiction.........................................22
--------------------------
7.13. Service of Process.................................................23
------------------
7.14. WAIVER OF JURY TRIAL...............................................23
--------------------
- iii -
<PAGE>
Annex I - Schedule of Pledged Debt
Annex II - Jurisdictions for Filing of Financing Statements
Annex III - Business Locations
- iv -
<PAGE>
SECURITY AGREEMENT
------------------
This SECURITY AGREEMENT (this "Agreement"), dated as of April 28,
2000, is made by and among BIO-PLEXUS, INC., a Connecticut corporation (the
"Obligor"), and Appaloosa Management, L.P., as collateral agent (the
"Collateral Agent"), for the benefit of the holders of the Obligor's Notes.
WHEREAS, pursuant to the Convertible Note Purchase Agreement, dated as
of the date hereof (as amended, supplemented, restated or otherwise
modified from time to time, the "Note Purchase Agreement"), among the
purchasers listed on Exhibit A thereto (the "Purchasers"), the Collateral
Agent and the Obligor, the Purchasers are purchasing, among other things,
Notes from the Obligor in the aggregate principal amount of $16.75 million;
WHEREAS, as a condition, and material inducement, to the Purchasers'
agreement to purchase the Notes, the Purchasers required that the Obligor
deliver this Agreement to the Collateral Agent;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Obligor agrees with
the Collateral Agent as follows:
Article I. Definitions and Interpretation.
1.01 Certain Defined Terms. Unless otherwise defined, all capitalized
terms used in this Agreement that are defined in the Note Purchase
Agreement (including those terms incorporated therein by reference) shall
have the respective meanings assigned to them in the Note Purchase
Agreement. In addition, the following terms shall have the following
meanings under this Agreement:
"Accounts" shall have the meaning assigned to that term in Section
2.01(b).
"Additional Debt" shall have the meaning assigned to that term in
Section 2.01(a).
"Additional Shares" shall have the meaning assigned to that term in
Section 5.03.
"Casualty Event" shall mean, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of,
such property for which such Person or any of its Subsidiaries receives
insurance proceeds, or proceeds of a condemnation award or other
compensation.
"Collateral" shall have the meaning assigned to that term in Section
2.02.
<PAGE>
"Collateral Account" shall have the meaning assigned to that term in
Section 3.01.
"Documents" shall have the meaning assigned to that term in Section
2.01(f).
"Domestic Corporation" shall mean any corporation organized under the
laws of any state of the United States of America (or the District of
Columbia).
"Equipment" shall have the meaning assigned to that term in Section
2.01(e).
"Equity Rights" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive
rights or agreements of any kind (including any stockholders' or voting
trust agreements) for the issuance, sale, registration or voting of, or
outstanding securities convertible into, any additional shares of capital
stock of any class, or partnership or other ownership interests of any type
in, such Person.
"First Priority Collateral" shall have the meaning assigned to that
term in Section 2.01.
"Foreign Corporation" shall mean any corporation that is not a
Domestic Corporation.
"Holder" shall mean, at any time of reference, a Person in whose name
a Note is registered in the Note Register at such time.
"Instruments" shall have the meaning assigned to that term in Section
2.01(c).
"Inventory" shall have the meaning assigned to that term in Section
2.01(d).
"Issuers" shall mean, collectively, each Subsidiary, directly or
indirectly, of the Obligor that is the issuer (as defined in the Uniform
Commercial Code) of any shares of capital stock now owned or hereafter
acquired by the Obligor.
"Loan Documents" shall mean the Note Purchase Agreement, the Notes,
this Agreement, the Guarantee and Security Agreement and the Registration
Rights Agreement.
"Motor Vehicles" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title to any such property is
governed by a certificate of title or ownership.
"Patent Collateral" shall mean all Patents, whether now owned or
hereafter acquired by the Obligor.
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"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Pledged Debt" shall have the meaning assigned to that term in Section
2.01(a).
"Pledged Stock" shall have the meaning assigned to that term in
Section 2.01(a).
"Second Priority Collateral" shall have the meaning assigned to that
term in Section 2.02.
"Securities Collateral" means the Stock Collateral and the Pledged
Debt.
"Signing Date" shall mean the date on which the Obligor shall sign and
deliver this Agreement.
"Stock Collateral" shall have the meaning assigned to that term in
Section 2.01(a).
"Trademark Collateral" shall mean all Trademarks, whether now owned or
hereafter acquired by the Obligor. Notwithstanding the foregoing, the
Trademark Collateral shall not include any Trademark which would be
rendered invalid, abandoned, void or unenforceable by reason of its being
included as part of the Trademark Collateral.
"Trademarks" shall mean, collectively, (a) all trade names,
trademarks, service marks, logos, trade dress, domain names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith and
all business, or portion thereof, pertaining thereto and all registrations
and applications in connection with any of the foregoing, (b) all renewals
and extensions of any of the foregoing and (c) all rights, now existing or
hereafter coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present and future
infringements) now or hereafter due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world,
together, in each case, with the product lines and goodwill of the business
connected with the use of, or otherwise symbolized by, each of the
foregoing.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State of New York from time to time or, by reason of
mandatory application, any other applicable jurisdiction.
1.02 Interpretation. In this Agreement, unless otherwise indicated,
the singular includes the plural and plural the singular; words importing
either gender include the
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other gender; references to statutes or regulations are to be construed as
including all statutory or regulatory provisions consolidating, amending or
replacing the statute or regulation referred to; references to "writing"
include printing, typing, lithography and other means of reproducing words
in a tangible visible form; the words "including," "includes" and "include"
shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to agreements and
other contractual instruments shall be deemed to include all subsequent
amendments, extensions and other modifications to such instruments
(without, however, limiting any prohibition on any such amendments,
extensions and other modifications by the terms of any Loan Document); and
references to Persons include their respective permitted successors and
assigns and, in the case of governmental Persons, Persons succeeding to
their respective functions and capacities.
Article II. Collateral.
2.01 Grant of First Priority Security Interest. As collateral security
for the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) and performance of the Secured Obligations and
obligations of every kind and nature of the Obligor now or hereafter
incurred, existing or created, to any of the Purchasers (including, without
limitation, under the Note Purchase Agreement), the Obligor hereby pledges
and grants to the Collateral Agent, for the ratable benefit of the Holders,
a first priority security interest in all of the Obligor's right, title and
interest in and to the following property, whether now owned or hereafter
acquired by the Obligor and whether now existing or hereafter coming into
existence including, without limitation, all real and personal property and
interests in real and personal property (collectively, the "First Priority
Collateral"):
(a)(i) all of the shares of capital stock of the Issuers now
owned or hereafter acquired by the Obligor together with in each case the
certificates representing the same; provided that the Obligor shall not be
required to pledge hereunder, and nothing herein shall be deemed to
constitute a pledge hereunder, of more than 65% of the total combined
voting power of all classes of stock of any Foreign corporation
(collectively, the "Pledged Stock"); (ii) all shares, securities, moneys or
property representing a dividend on, or a distribution or return of capital
in respect of, any of the Pledged Stock, resulting from a split-up,
revision, reclassification or other like change of any of the Pledged Stock
or otherwise received in exchange for any of the Pledged Stock and all
Equity Rights issued to the holders of, or otherwise in respect of, any of
the Pledged Stock; and (iii) without affecting the obligations of the
Obligor under any provision prohibiting such action under any Loan
Document, in the event of any consolidation or merger in which any Issuer
is not the surviving corporation, all shares of each class of the capital
stock of the successor corporation (unless such successor corporation is
the Obligor itself) formed by or
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resulting from such consolidation or merger (collectively, and together
with the property described in clauses (i) and (ii) above, the "Stock
Collateral"); (iv) the Indebtedness described in Annex I and issued by the
obligors named therein (the "Pledged Debt"); (v) all additional
Indebtedness for money borrowed or for the deferred purchase price of
property from time to time owed to the Obligor by any Person, "Additional
Debt"); (vi) all notes or other instruments evidencing the Indebtedness
referred to in clauses (iv) and (v) above;
(b) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of the Obligor constituting a right to the payment
of money, whether or not earned by performance, including, without
limitation, (i) in payments due and to become due to the Obligor under the
(1) Development and License Agreement, dated as of January 28, 1997,
between Johnson & Johnson Medical, Inc. and the Company, as such agreement
may be amended from time to time (the "Development and License Agreement")
and (2) License Agreement, dated as of October 1998, between the Company
and TFX Medical, Incorporated (as such agreement may be amended from time
to time), (ii) in payments due and to become due to the Obligor under any
existing or future licensing, supply, development, or similar agreements,
(iii) in repayment of any loans or advances (including loans and advances
to Subsidiaries of the Obligor), (iv) in payment for goods (including
Inventory and Equipment) sold or leased or for services rendered and (v) in
payment of tax refunds and in payment of any guarantee of any of the
foregoing (collectively, the "Accounts");
(c) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of the Obligor evidencing,
representing, arising from or existing in respect of, relating to, securing
or otherwise supporting the payment of, any of the Accounts (collectively,
the "Instruments");
(d) all inventory (as defined in the Uniform Commercial Code) and
all other goods (including Motor Vehicles) of the Obligor that are held by
the Obligor for sale, lease or furnishing under a contract of service
(including to its Subsidiaries or Affiliates), that are so leased or
furnished or that constitute raw materials, work in process or material
used or consumed in its business, including all spare parts and related
supplies, all goods obtained by the Obligor in exchange for any such goods,
all products made or processed from any such goods and all substances, if
any, commingled with or added to any such goods (collectively, the
"Inventory");
(e) except for the equipment subject to the equipment leases
referred to in Schedule 2.7(a) of the Note Purchase Agreement, all
equipment (as defined in the Uniform Commercial Code) and all other goods
(including Motor Vehicles) of the Obligor that are used or bought for use
primarily in its business, including all spare parts and related supplies,
all goods obtained by the Obligor in exchange for any such goods,
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<PAGE>
all substances, if any, commingled with or added to such goods and all
upgrades and other improvements to such goods, in each case to the extent
not constituting Inventory (collectively, the "Equipment");
(f) all documents of title (as defined in the Uniform Commercial
Code) or other receipts of the Obligor covering, evidencing or representing
Inventory or Equipment (collectively, the "Documents");
(g) all contracts and other agreements of the Obligor relating to
the sale or other disposition of all or any part of the Inventory,
Equipment or Documents and all rights, warranties, claims and benefits of
the Obligor against any Person arising out of, relating to or in connection
with all or any part of the Inventory, Equipment or Documents of the
Obligor, including any such rights, warranties, claims or benefits against
any Person storing or transporting any such Inventory or Equipment or
issuing any such Documents;
(h) all other accounts or general intangibles of the Obligor not
constituting Accounts, including, to the extent related to all or any part
of the other Collateral, all books, correspondence, credit files, records,
invoices, tapes, cards, computer runs and other papers and documents in the
possession or under the control of the Obligor or any computer bureau or
service company from time to time acting for the Obligor;
(i) the balance from time to time in the Collateral Account;
(j) all other tangible and intangible property of the Obligor,
including all Patent Collateral, Trademark Collateral or any other
Intellectual Property (provided, however, that with respect to Patents
jointly developed by the Obligor and Johnson & Johnson Medical, Inc. under
the Development and License Agreement, only to the extent consented to by
Johnson & Johnson Medical, Inc.); and
(k) all proceeds and products in whatever form of all or any part
of the other Collateral, including all proceeds of insurance and all
condemnation awards and all other compensation for any Casualty Event with
respect to all or any part of the other Collateral (together with all
rights to recover and proceed with respect to the same), and all
accessories to, substitutions for and replacements of all or any part of
the other Collateral.
2.02 Grant of Second Priority Security Interest. As collateral
security for the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) and performance of the Secured
Obligations, the Obligor hereby pledges and grants to the Collateral Agent,
for the ratable benefit of the Holders a second priority security interest
in all of the Obligor's right, title and interest in and to the real
property in which Victor and Margaret DiMattia have a perfected first
priority security interest
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pursuant to the Mortgage Deed, Security Agreement, Assignment of Rents and
Fixture Filing, dated October 28, 1994, between Victor and Margaret
DiMattia and the Company, whether now existing or hereafter coming into
existence (collectively, the "Second Priority Collateral" and together with
the First Priority Collateral, the "Collateral").
2.03 Intellectual Property. For the purpose of enabling the Collateral
Agent to exercise its rights, remedies, powers and privileges under Article
VI at such time or times as the Collateral Agent shall be lawfully entitled
to exercise such rights, remedies, powers and privileges, and for no other
purpose, the Obligor hereby grants to the Collateral Agent, the right to
immediately, without demand of performance and without additional notice,
or demand whatsoever to the Obligor, sell at public or private sale or
otherwise realize upon, all right, title, and interest in all or any of the
Intellectual Property and any associated good will or business, or portion
thereof, pertaining thereto, as the case may be, or any interest that the
Obligor may have therein, and after deducting all expenses (including all
reasonable expenses for brokers' fees and legal services) from the proceeds
of such sale or other disposition of the Intellectual Property and any
associated good will, as the case may be, the Collateral Agent shall apply
the residue of such proceeds toward the payment of all liabilities.
2.04 Perfection. Concurrently with the execution and delivery of this
Agreement, the Obligor shall (i) file such financing statements and other
documents in such offices as shall be necessary or as the Collateral Agent
may request to perfect and establish, with regard to First Priority
Collateral, the first priority (subject only to Liens permitted under
Section 6.7 of the Note Purchase Agreement) of, and with regard to Second
Priority Collateral, the second priority of, the Liens granted by this
Agreement (including promptly filing the Patent Collateral Security
Agreement and Trademark Collateral Security Agreement, in the forms
executed on the date hereof by the Obligor, in the United States Patent and
Trademark Office), (ii) deliver and pledge to the Collateral Agent any and
all Instruments, endorsed or accompanied by such instruments of assignment
and transfer in such form and substance as the Collateral Agent may
request, (iii) cause the Collateral Agent to be listed as the lienholder on
all certificates of title or ownership relating to Motor Vehicles owned by
the Obligor and deliver to the Collateral Agent originals of all such
certificates of title or ownership for the Motor Vehicles together with the
odometer statements for each respective Motor Vehicle, (iv) deliver and
pledge to the Collateral Agent all certificates for the Pledged Stock and
notes, instruments or other documents evidencing the Pledged Debt,
accompanied by undated stock or bond powers, as the case may be, duly
executed in blank and (v) take all such other actions as shall be necessary
or as the Collateral Agent may request to perfect and establish (A) with
regard to the First Priority Collateral, the first priority (subject only
to such Permitted Liens), and (B) with regard to the Second Priority
Collateral, the second priority of Liens granted by this Agreement. The
Collateral Agent shall have the right, at any time in its discretion and
with notice to the Obligor, to transfer to or to register in its
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name or in the name of any of its nominees any or all of the Pledged Stock
or Pledged Debt.
2.05 Preservation and Protection of Security Interests. The Obligor
shall:
(a) upon the acquisition after the Signing Date by the Obligor of
any Securities Collateral, promptly either (x) transfer and deliver to the
Collateral Agent all such Securities Collateral (together with the
certificates or instruments representing such Securities Collateral
securities duly endorsed in blank or accompanied by undated powers duly
executed in blank) or (y) take such other action as the Collateral Agent
shall deem necessary or appropriate to perfect, and establish the priority
of, the Liens granted by this Agreement in such Securities Collateral;
(b) upon the acquisition after the Signing Date by the Obligor of
any Instrument, promptly deliver and pledge to the Collateral Agent all
such Instruments, endorsed or accompanied by such instruments of assignment
and transfer in such form and substance as the Collateral Agent may
request;
(c) upon the acquisition after the Signing Date by the Obligor of
any Equipment or Motor Vehicle covered by a certificate of title or
ownership, promptly cause the Collateral Agent to be listed as the
lienholder on such certificate of title and within 45 days of the
acquisition of such property deliver evidence of the same to the Collateral
Agent;
(d) upon the Obligor's acquiring, or otherwise becoming entitled
to the benefits of, any copyright (or copyrightable material), Patent (or
patentable invention), Trademark (or associated goodwill) or other
Intellectual Property or upon or prior to the Obligor's filing, either
directly or through any agent, licensee or other designee, of any
application with any governmental Person for any copyright, Patent,
Trademark, or other Intellectual Property, in each case after the Signing
Date, execute and deliver such contracts, agreements and other instruments
as the Collateral Agent may request to evidence, validate, perfect and
establish the first priority (subject only to Liens permitted under Section
6.7 of the Note Purchase Agreement) of the Liens granted by this Agreement
in such and any related Intellectual Property; and
(e) give, execute, deliver, file or record any and all financing
statements, notices, contracts, agreements or other instruments, obtain any
and all governmental approvals and take any and all steps that may be
necessary or as the Collateral Agent may request to create, perfect,
establish with regard to the First Priority Collateral, the first priority
(subject only to Liens permitted under Section 6.7 of the Note Purchase
Agreement) of, or with regard to the Second Priority Collateral, the second
priority of, or to preserve the validity, perfection with regard to the
First Priority Collateral, first priority (subject only to such Permitted
Liens) of, or with regard to the Second Priority Collateral,
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second priority of, the Liens granted by this Agreement or to enable the
Collateral Agent to exercise and enforce its rights, remedies, powers and
privileges under this Agreement with respect to such Liens, including
causing any or all of the Securities Collateral to be transferred of record
into the name of the Collateral Agent or its nominee (and the Collateral
Agent agrees that if any Securities Collateral is transferred into its name
or the name of its nominee, the Collateral Agent will thereafter promptly
give to the Obligor copies of any notices and communications received by it
with respect to the Stock Collateral pledged by the Obligor), provided that
notices to account debtors in respect of any Accounts or Instruments shall
be subject to the provisions of Section 3.02(b).
2.06 Reserved.
2.07 Special Provisions Relating to Securities Collateral. (a) So long
as no Event of Default shall have occurred and be continuing, the Obligor
shall have the right to exercise all voting, consensual and other powers of
ownership pertaining to the Securities Collateral for all purposes not
inconsistent with the terms of any Loan Document, provided that the Obligor
agrees that it will not vote the Securities Collateral in any manner that
is inconsistent with the terms of any Loan Document; and the Collateral
Agent shall, at the Obligor' expense, execute and deliver to the Obligor or
cause to be executed and delivered to the Obligor all such proxies, powers
of attorney, dividends and other orders and other instruments, without
recourse, as the Obligor may reasonably request for the purpose of enabling
the Obligor to exercise the rights and powers which it is entitled to
exercise pursuant to this Section 2.07(a).
(b) So long as no Event of Default shall have occurred and be
continuing, the Obligor shall be entitled to receive and retain any
dividends or distributions on the Securities Collateral paid in cash.
(c) If any Event of Default shall have occurred and be
continuing, and whether or not the Holders or the Collateral Agent exercise
any available right to declare any Secured Obligation due and payable or
seek or pursue any other right, remedy, power or privilege available to
them under applicable law, this Agreement or any other Loan Document, all
dividends and other distributions on the Securities Collateral shall be
paid directly to the Collateral Agent and retained by it in the Collateral
Account as part of the Securities Collateral, subject to the terms of this
Agreement, and, if the Collateral Agent shall so request, the Obligor
agrees to execute and deliver to the Collateral Agent appropriate
additional dividend, distribution and other orders and instruments to that
end, provided that if such Event of Default is cured, any such dividend or
distribution paid to the Collateral Agent prior to such cure shall, upon
request of the Obligor (except to the extent applied to the Secured
Obligations), be returned by the Collateral Agent to the Obligor.
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2.08 Use of Intellectual Property. Subject to such action not
otherwise constituting a Default and so long as no Event of Default shall
have occurred and be continuing, the Obligor will be permitted to exploit,
use, enjoy, protect, license, sublicense, assign, sell, dispose of or take
other actions with respect to the Intellectual Property in the ordinary
course of the business of the Obligor subject to the rights of the
Collateral Agent, whose rights shall not be subordinated, impaired or
diminished. In furtherance of the foregoing, so long as no Event of Default
shall have occurred and be continuing, the Collateral Agent shall from time
to time, upon the request of the Obligor, execute and deliver any
instruments, certificates or other documents, in the form so requested,
which the Obligor shall have certified are appropriate (in its reasonable
judgment) to allow it to take any action permitted above. The exercise of
rights, remedies, powers and privileges under Article VI by the Collateral
Agent shall not terminate the rights of the holders of any licenses or
sublicenses theretofore granted by the Obligor in accordance with the first
sentence of this Section 2.08.
2.09 Instruments. So long as no Default or Event of Default shall have
occurred and be continuing, the Obligor may retain for collection in the
ordinary course of business any Instruments obtained by it in the ordinary
course of business, and the Collateral Agent shall, promptly upon the
request, and at the expense of the Obligor, make appropriate arrangements
for making any Instruments pledged by the Obligor available to the Obligor
for purposes of presentation, collection or renewal. Any such arrangement
shall be effected, to the extent deemed appropriate by the Collateral
Agent, against trust receipt or like document.
2.10 Use of Collateral. So long as no Event of Default shall have
occurred and be continuing, the Obligor shall, in addition to its rights
under Sections 2.07, 2.08 and 2.09 hereof and Section 6.18 of the Note
Purchase Agreement, in respect of the Collateral contemplated in those
sections, be entitled to use and possess the other Collateral and to
exercise its rights, title and interest in all contracts, agreements,
licenses and governmental approvals, subject to the rights, remedies,
powers and privileges of the Collateral Agent under Articles III and VI and
to such use, possession or exercise not otherwise constituting a Default.
2.11 Rights and Obligations. (a) The Obligor shall remain liable to
perform its duties and obligations under the contracts and agreements
included in the Collateral in accordance with their respective terms to the
same extent as if this Agreement had not been executed and delivered. The
exercise by the Collateral Agent of any right, remedy, power or privilege
in respect of this Agreement shall not release the Obligor from any of its
duties and obligations under such contracts and agreements and the Obligor
shall save, indemnify and keep the Collateral Agent harmless from and
against all expense, loss or damage suffered by reason of such exercise.
The Collateral Agent shall have no duty, obligation or liability under such
contracts and agreements or with respect to any
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governmental approval included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall the Collateral Agent be
obligated to perform any of the duties or obligations of the Obligor under
any such contract or agreement or any such governmental approval or to take
any action to collect or enforce any claim (for payment) under any such
contract or agreement or governmental approval.
(b) No Lien granted by this Agreement in the Obligor's right,
title and interest in any contract, agreement or governmental approval
shall be deemed to be a consent by the Collateral Agent to any such
contract, agreement or governmental approval.
(c) No reference in this Agreement to proceeds or to the sale or
other disposition of Collateral shall authorize the Obligor to sell or
otherwise dispose of any Collateral except to the extent otherwise
expressly permitted by the terms of any Loan Document.
(d) The Collateral Agent shall not be required to take steps
necessary to preserve any rights against prior parties to any part of the
Collateral.
2.12 Release of Motor Vehicles. So long as no Default shall have
occurred and be continuing, upon the request of, and at the expense of, the
Obligor, the Collateral Agent shall execute and deliver to the Obligor such
instruments as the Obligor shall reasonably request to remove the notation
of the Collateral Agent as lienholder on any certificate of title for any
Motor Vehicle; provided that any such instruments shall be delivered, and
the release shall be effective, only upon receipt by the Collateral Agent
of a certificate from the Obligor stating that the Motor Vehicle the Lien
on which is to be released is to be sold or has suffered a casualty loss
(with title passing to the appropriate casualty insurance company in
settlement of the claim for such loss).
2.13 Termination. When all Secured Obligations shall have been
indefeasibly paid in full, this Agreement shall terminate, and the
Collateral Agent shall, at the expense of the Obligor, forthwith cause to
be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral
and money received in respect of the Collateral, to or on the order of the
Obligor and to be released, canceled and granted back all licenses and
rights referred to in Section 2.03. The Collateral Agent shall also, at the
expense of the Obligor, execute and deliver to the Obligor upon such
termination such Uniform Commercial Code termination statements,
certificates for terminating the Liens on the Motor Vehicles and such other
documentation as shall be reasonably requested by the Obligor to effect the
termination and release of the Liens granted by this Agreement on the
Collateral.
Article III. Cash Proceeds of Collateral.
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3.01 Collateral Account. There is hereby established with the
Collateral Agent a cash collateral account (the "Collateral Account") in
the name and under the exclusive domain and control of the Collateral Agent
into which there shall be deposited from time to time the cash proceeds of
any of the Collateral (including proceeds resulting from insurance or
condemnation) required to be delivered to the Collateral Agent pursuant to
this Agreement and into which the Obligor may from time to time deposit any
additional amounts which it wishes to pledge to the Collateral Agent as
additional collateral security under this Agreement. The balance from time
to time in the Collateral Account shall constitute part of the Collateral
and shall not constitute payment of the Secured Obligations until applied
as provided in this Agreement. If any Event of Default shall have occurred
and be continuing, the Collateral Agent may in its discretion apply
(subject to collection) the balance from time to time outstanding to the
credit of the Collateral Account to the payment of the Secured Obligations
in the manner specified in Article VI. The balance from time to time in the
Collateral Account shall be subject to withdrawal only as provided in this
Agreement.
3.02 Certain Proceeds. (a) If any Default or Event of Default shall
have occurred and be continuing, the Obligor shall, upon request of the
Collateral Agent, promptly notify (and the Obligor hereby authorizes the
Collateral Agent so to notify) each account debtor in respect of any
Accounts or Instruments that such Collateral has been assigned to the
Collateral Agent under this Agreement and that any payments due or to
become due in respect of such Collateral are to be made directly to the
Collateral Agent. All such payments made to the Collateral Agent shall be
immediately deposited in the Collateral Account.
(b) The Obligor agrees that if the proceeds of any Collateral
(including payments made in respect of Accounts and Instruments) shall be
received by it following the occurrence and during the continuation of a
Default, the Obligor shall as promptly as possible deposit such proceeds
into the Collateral Account. Until so deposited, all such proceeds shall be
held in trust by the Obligor for and as the property of the Collateral
Agent and shall not be commingled with any other funds or property of the
Obligor.
3.03 Investment of Balance in Collateral Account. Amounts on deposit
in the Collateral Account shall be invested from time to time in such
Permitted Investments as the Obligor (or, if any Default or Event of
Default shall have occurred and be continuing, the Collateral Agent) shall
determine. All such investments shall be held in the name and be under the
control of the Collateral Agent. At any time after the occurrence and
during the continuance of an Event of Default, the Collateral Agent may in
its discretion at any time and from time to time elect to liquidate any
such investments and to apply or cause to be applied the proceeds of such
action to the payment of the Secured Obligations in the manner specified in
Article VI.
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Article IV. Representations and Warranties.
The Obligor hereby represents and warrants to the Collateral Agent for
the benefit of the Holders as follows:
4.01 Title. The Obligor is the sole beneficial owner of the Collateral
in which it purports to grant a Lien pursuant to this Agreement, and,
except as set forth in Schedule 4.01, such Collateral is free and clear of
all Liens. The first priority Liens with regard to First Priority
Collateral and the second priority Liens with regard to Second Priority
Collateral granted by this Agreement in favor of the Collateral Agent for
the benefit of the Collateral Agent and the Holders have attached and, upon
filing of the respective financing statements in the jurisdictions listed
on Annex II, this Agreement is effective to create a perfected first
priority security interest in all of such First Priority Collateral and to
create a perfected second priority security interest in all such Second
Priority Collateral, prior to all other Liens to the extent that a security
interest can be perfected by filing pursuant to the Uniform Commercial
Code. With respect to the Pledged Stock and the Pledged Debt, the pledge of
such Collateral and delivery to the Collateral Agent of certificates or
other instruments representing the same pursuant to this Agreement creates
a valid and perfected first priority security interest in such Collateral
in favor of the Collateral Agent for the benefit of the Holders.
4.02 Intellectual Property. (a) Except pursuant to licenses and other
user agreements entered into by the Obligor in the ordinary course of
business, the Obligor owns and possesses the right to use, and has done
nothing to authorize or enable any other Person to use, any Patent or
Trademark or any other Intellectual Property.
(b) The Obligor owns any Trademarks registered in the United
States of America to which the last sentence of the definition of Trademark
Collateral applies.
4.03 Goods. Any goods now or hereafter manufactured or otherwise
produced by the Obligor or any of its Subsidiaries included in the
Collateral have been and will be produced in compliance with the
requirements of the Fair Labor Standards Act.
Article V. Covenants.
5.01 Books and Records. The Obligor shall: (a) keep full and accurate
books and records relating to the Collateral and stamp or otherwise mark
such books and records in such manner as the Collateral Agent may
reasonably require in order to reflect the Liens granted by this Agreement;
(b) furnish to the Collateral Agent from time to time (but, unless a
Default shall have occurred and be continuing, no more frequently than
quarterly) statements and schedules further identifying and describing the
Patent Collateral, the Trademark Collateral and any other collateral in
Intellectual Property and such other reports in connection with the Patent
Collateral, the Trademark Collateral and
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<PAGE>
any other collateral in Intellectual Property as the Collateral Agent may
reasonably request, all in reasonable detail; (c) prior to filing, either
directly or through an agent, licensee or other designee, any application
for any Patent, Trademark, or any other Intellectual Property furnish to
the Collateral Agent prompt notice of such proposed filing; and (d) permit
representatives of the Collateral Agent, upon reasonable notice, at any
time during normal business hours to inspect and make abstracts from its
books and records pertaining to the Collateral, permit representatives of
the Collateral Agent to be present at the Obligor's place of business to
receive copies of all communications and remittances relating to the
Collateral and forward copies of any notices or communications received by
the Obligor with respect to the Collateral, all in such manner as the
Collateral Agent may reasonably request.
5.02 Removals, Etc. Without at least 30 days' prior written notice to
the Collateral Agent, the Obligor shall (i) not maintain any of its books
and records with respect to the Collateral at any office or maintain its
principal place of business at any place, or permit any Inventory or
Equipment to be located anywhere, other than (a) at the address initially
indicated for notices to it under Article VII, (b) at one of the other
business locations presently owned or operated by the Obligor or any of its
Affiliates and identified in Annex II or III or (c) in transit from one of
such locations to another, or (ii) change its corporate name, or the name
under which it does business, from the name shown on the signature pages to
this Agreement.
5.03 Stock Collateral. The Obligor will cause the Stock Collateral to
constitute at all times 100% (or, in the case of capital stock issued by
any Foreign Corporation, 65%) of the total number of shares of each class
of capital stock of each Issuer then outstanding. The Obligor shall cause
all such shares to be duly authorized, validly issued, fully paid and
nonassessable and to be free of any contractual restriction or any
restriction under the charter or bylaws of the respective Issuer of such
Stock Collateral, upon the transfer of such Stock Collateral (except for
any such restriction contained in any Loan Document). The Obligor agrees
that it will (i) cause each Issuer of the Pledged Stock not to issue any
shares of stock or other securities in addition to or in substitution for
the Pledged Stock, (ii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all additional shares of capital
stock issued to the Obligor (the "Additional Shares") and any and all
Additional Debt, and (iii) promptly (and in any event within three business
days) deliver to the Collateral Agent an amendment to this Agreement, duly
executed by the Obligor, in respect of the Additional Shares or Additional
Debt, together with all certificates, notes or other instruments
representing or evidencing the same. The Obligor agrees that all Additional
Shares and Additional Debt listed on any such amendment delivered to the
Collateral Agent shall for all purposes hereunder constitute Pledged Stock
and Pledged Debt, respectively, and (iii) is deemed to have made, upon such
delivery, the representations and warranties contained in Article IV hereof
with respect to such Collateral.
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<PAGE>
5.04 Intellectual Property. (a) The Obligor (either itself or through
licensees) will, for each Trademark, (i) to the extent consistent with past
practice and good business judgment, continue to use such Trademark on each
and every trademark class of goods applicable to its current line as
reflected in its current catalogs, brochures and price lists in order to
maintain such Trademark in full force and effect free from any claim of
abandonment for nonuse, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of registration and (iv) not (and not
permit any licensee or sublicensee to) do any act or knowingly omit to do
any act whereby any Trademark material to the conduct of its business may
become invalidated.
(b) The Obligor (either itself or through licensees) will not do
any act or knowingly omit to do any act whereby any Patent or any other
Intellectual Property material to the conduct of its business may become
abandoned or dedicated.
(c) The Obligor shall notify the Collateral Agent immediately if
it knows or has reason to know that any Intellectual Property material to
the conduct of its business may become abandoned or dedicated, or of any
adverse determination or development (including the institution of, or any
such determination or development in, any proceeding before any
governmental Person) regarding the Obligor's ownership of any Intellectual
Property material to its business, its right to apply for registration or
register the same (as the case may be), or its right to keep, use and
maintain the same.
(d) The Obligor will take all necessary steps that are consistent
with good business practices in any proceeding before any appropriate
governmental Person to maintain and pursue each application relating to any
Intellectual Property (and to obtain the relevant registrations) and to
maintain each registration material to the conduct of its business,
including but not limited to payment of maintenance fees, filing of
applications for renewal, affidavits of use, affidavits of incontestability
and opposition, interference and cancellation proceedings.
(e) In the event that any Intellectual Property material to the
conduct of its business is infringed, misappropriated or diluted by, or
comes in conflict with, a third party, the Obligor shall notify the
Collateral Agent within ten days after it learns of such event and shall,
if consistent with good business practice, promptly sue for infringement,
misappropriation or dilution, seek temporary restraints and preliminary
injunctive relief to the extent practicable, seek to recover any and all
damages for such infringement, misappropriation or dilution and take such
other actions as are appropriate under the circumstances to protect such
Collateral.
(f) The Obligor shall prosecute diligently any application for
any Intellectual Property pending as of the date of this Agreement or
thereafter made until the
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<PAGE>
termination of this Agreement, make application on uncopyrighted but
copyrightable material, unpatented but patentable inventions and
unregistered but registerable Trademarks and preserve and maintain all
rights in applications for any Intellectual Property; provided, however,
that the Obligor shall have no obligation to make any such application if
making such application would be unnecessary or imprudent in the good faith
business judgment of the Obligor. Any expenses incurred in connection with
such an application shall be borne by the Obligor.
(g) The Collateral Agent shall have the right but shall in no way
be obligated to bring suit in its own name to enforce the Patents and
Trademarks or any other Intellectual Property and any license under such
Intellectual Property, in which event the Obligor shall, at the request of
the Collateral Agent, do any and all lawful acts and execute and deliver
any and all proper documents required by the Collateral Agent in aid of
such enforcement action.
Article VI. Remedies.
6.01 Events of Default, Etc. If any Event of Default shall have
occurred and be continuing:
(a) the Collateral Agent in its discretion may require the
Obligor to, and the Obligor shall, assemble the Collateral owned by it at
such place or places, reasonably convenient to both the Collateral Agent
and the Obligor, designated in the Collateral Agent's request;
(b) the Collateral Agent in its discretion may make any
reasonable compromise or settlement it deems desirable with respect to any
of the Collateral and may extend the time of payment, arrange for payment
in installments, or otherwise modify the terms of, all or any part of the
Collateral;
(c) the Collateral Agent in its discretion may, in its name or in
the name of the Obligor or otherwise, demand, sue for, collect or receive
any money or property at any time payable or receivable on account of or in
exchange for all or any part of the Collateral, but shall be under no
obligation to do so;
(d) the Collateral Agent in its discretion may, upon five
business days' prior written notice to the Obligor of the time and place,
with respect to all or any part of the Collateral which shall then be or
shall thereafter come into the possession, custody or control of the
Collateral Agent, or its agents, sell, lease or otherwise dispose of all or
any part of such Collateral, at such place or places as the Collateral
Agent deems best, for cash, for credit or for future delivery (without
thereby assuming any credit risk) and at public or private sale, without
demand of performance or notice of intention to effect any such disposition
or of time or place of any such sale (except such notice as is required
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<PAGE>
above or by applicable statute and cannot be waived), and the Collateral
Agent or any other Person may be the purchaser, lessee or recipient of any
or all of the Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale) and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of the Obligor, any
such demand, notice and right or equity being hereby expressly waived and
released. In the event of any sale, assignment, license or other
disposition of any of the Trademark Collateral, the goodwill connected with
and symbolized by, and (in the case of pending applications for which no
statements of use have been filed) the goodwill connected with the
business, or portion thereof, pertaining to the Trademark Collateral
subject to such disposition shall be included, and the Obligor shall supply
to the Collateral Agent or its designee, for inclusion in such sale,
assignment, license or other disposition, all Intellectual Property
relating to such Trademark Collateral. The Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which
the sale may be so adjourned; and
(e) the Collateral Agent shall have, and in its discretion may
exercise, all of the rights, remedies, powers and privileges with respect
to the Collateral of a secured party under the Uniform Commercial Code
(whether or not the Uniform Commercial Code is in effect in the
jurisdiction where such rights, remedies, powers and privileges are
asserted) and such additional rights, remedies, powers and privileges to
which a secured party is entitled under the laws in effect in any
jurisdiction where any rights, remedies, powers and privileges in respect
of this Agreement or the Collateral may be asserted, including the right,
to the maximum extent permitted by law, to exercise all voting, consensual
and other powers of ownership pertaining to the Collateral as if the
Collateral Agent were the sole and absolute owner of the Collateral (and
the Obligor agrees to take all such action as may be appropriate to give
effect to such right).
The proceeds of, and other realization upon, the Collateral by
virtue of the exercise of remedies under this Section 6.01 and of the
exercise of the license granted to the Collateral Agent in Section 2.03
shall be applied in accordance with Section 6.04.
6.02 Deficiency. If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section 6.01 and of
the exercise of the license granted to the Collateral Agent in Section 2.03
are insufficient to cover the costs and expenses (including attorneys fees)
of such exercise and the payment in full of the other Secured Obligations,
the Obligor shall remain liable for any deficiency.
6.03 Private Sale. (a) The Collateral Agent shall incur no liability
as a result of the sale, lease or other disposition of all or any part of
the Collateral at any private sale
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<PAGE>
pursuant to Section 6.01 conducted in a commercially reasonable manner. The
Obligor hereby waives any claims against the Collateral Agent arising by
reason of the fact that the price at which the Collateral may have been
sold at such a private sale was less than the price which might have been
obtained at a public sale or was less than the aggregate amount of the
Secured Obligations, even if the Collateral Agent accepts the first offer
received and does not offer the Collateral to more than one offeree.
(b) The Obligor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws, the Collateral Agent may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who
will agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to distribution or resale. The
Obligor acknowledges that any such private sales may be at prices and on
terms less favorable to the Collateral Agent than those obtainable through
a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that the Collateral Agent
shall have no obligation to engage in public sales and no obligation to
delay the sale of any Collateral for the period of time necessary to permit
the respective Issuer of such Collateral to register it for public sale.
6.04 Application of Proceeds. Except as otherwise expressly provided
in this Agreement and except as provided below in this Section 6.04, the
proceeds of, or other realization upon, all or any part of the Collateral
by virtue of the exercise of remedies under Section 6.01 or of the exercise
of the license granted in Section 2.03, and any other cash at the time held
by the Collateral Agent under Article III or this Article VI, shall be
applied by the Collateral Agent:
First, to the payment of the costs and expenses of such exercise of
remedies, including reasonable out-of-pocket costs and expenses of the
Collateral Agent, the fees and expenses of its agents and counsel and all
other expenses incurred and advances made by the Collateral Agent in that
connection;
Second, to the Collateral Agent for amounts due and unpaid on the
Notes for principal and interest and all other amounts due and unpaid under
the Loan Documents; and
Third, to the Obligor or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
As used in this Article VI, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in
kind of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding
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<PAGE>
as to the Obligor or any issuer of, or account debtor or other obligor on,
any of the Collateral.
Article VII. Miscellaneous.
7.01 Waiver. No failure on the part of the Collateral Agent or any
Holder to exercise and no delay in exercising, and no course of dealing
with respect to, any right, remedy, power or privilege under this Agreement
shall operate as a waiver of such right, remedy, power or privilege, nor
shall any single or partial exercise of any right, remedy, power or
privilege under this Agreement preclude any other or further exercise of
any such right, remedy, power or privilege or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and
privileges provided in this Agreement are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
7.02 Notices. All notices and, consents, requests, instructions,
approvals, financial statements, reports and other communications to be
given under this Agreement shall be deemed given, if in writing and
delivered personally, by telecopy or sent by registered mail, postage
prepaid to:
if to the Obligor: Bio-Plexus, Inc.
129 Reservoir Road
Vernon, CT 06066
Attention: Chief Executive Officer
Fax: (860) 870-6118
with a copy to: Paul, Hastings, Janofsky & Walker LLP
1055 Washington Boulevard
Stanford, CT 06901
Attention: Esteban A. Ferrer, Esq.
Fax: (203) 359-3031
if to the Collateral Agent: Appaloosa Management, L.P.
26 Main St., 1st Floor
Chatham, NJ 07928
Attention: Mr. James E. Bolin
Fax: (973) 701-7309
with a copy to: Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
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<PAGE>
Attention: Robert C. Schwenkel, Esq.
Fax: (212) 859-4000
7.03 Expenses, Etc. The Obligor agrees to pay or to reimburse the
Collateral Agent for all costs and expenses (including reasonable
attorney's fees and expenses) that may be incurred by the Collateral Agent
in any effort to enforce any of the provisions of Article VI, or any of the
obligations of the Obligor in respect of the Collateral or in connection
with (a) the preservation of the Lien of, or the rights of the Collateral
Agent under this Agreement or (b) any actual or attempted sale, lease,
disposition, exchange, collection, compromise, settlement or other
realization in respect of, or care of, the Collateral, including all such
costs and expenses (and reasonable attorney's fees and expenses) incurred
in any bankruptcy, reorganization, workout or other similar proceeding.
7.04 Amendments. This Agreement may be amended as to the Collateral
Agent and its respective successors and assigns, and the Obligor may take
any action herein prohibited, or omit to perform any act required to be
performed by it, if the Obligor shall obtain the written consent of the
Collateral Agent. This Agreement may not be waived, changed, modified, or
discharged orally, but only by an agreement in writing signed by the party
or parties against whom enforcement of any waiver, change, modification or
discharge is sought or by parties with the right to consent to such waiver,
change, modification or discharge on behalf of such party.
7.05 Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
7.06 Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby shall
survive the Closing and the delivery of the Loan Documents, regardless of
any investigation made by or on behalf of any party.
7.07 Agreements Superseded. Except with respect to express references
to other Loan Documents, this Agreement supersedes all prior agreements and
understandings, written or oral, among the parties with respect to the
subject matter of this Agreement.
7.08 Severability. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement and such
exhibits shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining
terms, provisions,
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<PAGE>
covenants and restrictions without including any of such which may be
hereafter declared invalid, void or unenforceable.
7.09 Captions. The table of contents and captions and section headings
appearing in this Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any
provision of this Agreement.
7.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
7.12 Submission to Jurisdiction. If any action, proceeding or
litigation shall be brought by the Collateral Agent in order to enforce any
right or remedy under this Agreement, the Obligor hereby consents and will
submit, and will cause each of its Subsidiaries to submit, to the
jurisdiction of any state or federal court of competent jurisdiction
sitting within the area comprising the Southern District of New York on the
date of this Agreement. The Obligor hereby irrevocably waives any
objection, including, but not limited to, any objection to the laying of
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action, proceeding or litigation
in such jurisdiction.
7.13. Service of Process. Nothing herein shall affect the right of the
Collateral Agent to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Obligor in
any other jurisdiction.
7.14. WAIVER OF JURY TRIAL. THE OBLIGOR HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
AGREEMENT.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
BIO-PLEXUS, INC.
By:/s/ Kimberley A. Cady
------------------------------
Name: Kimberley A. Cady
Title: Chief Financial Officer
and Vice President of
Finance
APPALOOSA MANAGEMENT, L.P.
By:/s/ James E. Bolin
------------------------------
Name: James E. Bolin
Title: Vice President
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Exhibit 7
---------
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of April 28, 2000 (this
"Registration Rights Agreement"), by and among BIO-PLEXUS, INC., a
Connecticut corporation (the "Company"), APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I ("Appaloosa"), PALOMINO FUND LTD. ("Palomino") and TERSK, LLC
("Tersk") (collectively, the "Purchasers").
1. Background. The Company and the Purchasers have entered into a
Convertible Note Purchase Agreement, dated as of April 28, 2000 (as
amended, supplemented, amended and restated, restructured or otherwise
modified from time to time, the "Convertible Note Purchase Agreement"),
whereby the Purchasers purchased from the Company (i) Zero Coupon Secured
Convertible Notes, due April 28, 2005, issued by the Company in the
aggregate principal amount of $16.75 million (the "Notes"), (ii) an
aggregate of 250,000 shares (the "Shares") of Common Stock, no par value
(the "Common Stock"), of the Company and (iii) warrants to purchase
1,500,000 shares of Common Stock with an exercise price of $7.00 per share.
The execution and delivery of this Registration Rights Agreement is
required by Section 1.4(ix) of the Convertible Note Purchase Agreement.
2. Definitions. Capitalized terms used but not defined herein
shall have the respective meanings given to them in the Convertible Note
Purchase Agreement. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
"Commission" means the Securities and Exchange Commission.
"Incidental Registration" is defined in Section 3.2.
"NASDAQ" is defined in Section 3.3(j).
"Participating Holders" means the holders of Registrable
Securities participating in the particular registration.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 3, including, without
limitation, all registration, filing and applicable fees of the Commission,
stock exchange or NASD registration and filing fees and all listing fees
and fees with respect to the inclusion of securities in NASDAQ (as defined
in Section 3.3(j)), all fees and expenses of complying with state
securities or blue sky laws (including fees and disbursements of counsel to
the underwriters or the Participating Holders in connection with "blue sky"
qualification of the Registrable Securities and determination of their
eligibility for investment under the laws of the various jurisdictions),
all word processing, duplicating and printing expenses, all messenger and
delivery expenses, the fees and disbursements of counsel for the Company
and of its independent public accountants including the expenses of "cold
comfort" letters required by or incident to such registration, all fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, all transfer taxes, and the reasonable fees and
<PAGE>
expenses of one counsel to the Participating Holders (selected by the
Requisite Percentage of Participating Holders); provided, however, that
Registration Expenses shall exclude and the Participating Holders shall pay
underwriters' fees and underwriting discounts and commissions in respect of
the Registrable Securities being registered.
"Registrable Securities" mean (i) the shares of Common Stock
issuable upon the conversion of the Notes, (ii) the Shares, (iii) the
shares of Common Stock issuable upon exercise of the Warrants and (iv) any
other additional shares of Common Stock the Purchasers may otherwise
acquire. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities (a) when a registration statement with
respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) when such securities shall
have been otherwise transferred, new certificates for them not bearing a
legend restricting further transfer under the Securities Act shall have
been delivered by the Company and subsequent public distribution of them
shall not require registration of them under the Securities Act, (c) when
such securities are sold pursuant to Rule 144 (or similar rule adopted by
the Commission) under the Securities Act or (d) when such securities cease
to be outstanding.
"Requested Registration" is defined in Section 3.1(a).
"Requisite Percentage of Participating Holders" means
Participating Holders of Registrable Securities who hold a majority of the
Registrable Securities that are then being held by all Participating
Holders.
"Warrants" means the $7 Warrants, the $5 Warrants issued by the
Company to Appaloosa, Tersk and Palomino on October 21, 1999, the $3
Warrants issued by the Company to Appaloosa, Tersk and Palomino on October
21, 1999, the $3 Warrants issued by the Company to Appaloosa, Tersk and
Palomino on the date hereof and the $4 Warrants issuable by the Company
upon cancellation of the $3 Warrants issued on October 21, 1999 (as
provided in that certain Side Letter, dated as of April 3, 2000, between
the Company and Appaloosa).
3. Registration Under Securities Act, etc.
--------------------------------------
3.1 Requested Registrations.
-----------------------
(a) Request for Registration. Subject to the limitations
imposed by Section 3.1(c), at any time and from time to time, one or more
holders of Registrable Securities shall have the right to require the
Company to file a registration statement under the Securities Act covering
all or any part of their respective Registrable Securities, by delivering a
written request therefor to the Company specifying the number and amount of
Registrable Securities and the intended method of distribution thereof. Any
such request pursuant to this Section 3.1(a) is referred to herein as a
"Requested Registration." The Company shall give prompt written notice of
each Requested Registration to all other holders of record of Registrable
Securities, and thereupon the Company shall use its best efforts to effect
the registration under the Securities Act so as to permit promptly the
sale, in accordance with the intended method of distribution, of the
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<PAGE>
Registrable Securities which the Company has been so requested to register
in the Requested Registration and all other Registrable Securities which
the Company has been requested to register by the holders thereof by
written request given to the Company within 30 days after the giving of
such written notice by the Company.
(b) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 3.1 in connection with
an underwritten offering by one or more Participating Holders of
Registrable Securities, no securities other than Registrable Securities
shall be included among the securities covered by such registration unless
(i) such inclusion is pursuant to and subject to the terms of the
applicable underwriting agreement or arrangements and (ii) in the opinion
of the underwriter, the inclusion of such securities will not have a
material adverse effect on the offering (including, without limitation, on
the pricing of the offering). If the offering is not an underwritten
offering, there is no limitation on the inclusion of other securities
therein.
(c) Limitations on Requested Registrations; Expenses. The
rights of holders of Registrable Securities to request Requested
Registrations pursuant to Section 3.1(a) are subject to the following
limitations: (i) the Company shall not be obligated to effect a Requested
Registration having an aggregate anticipated offering price of less than
U.S. $1,000,000 unless such offering shall cover all remaining Registrable
Securities; (ii) the Company shall not be obligated to effect a Requested
Registration within six months after the effective date of any other
registration of securities (other than pursuant to a registration on Form
S-8 or any successor or similar form which is then in effect); and (iii)
the Company will pay all Registration Expenses only in connection with the
first three Requested Registrations of Registrable Securities pursuant to
this Section 3.1 that have become effective under the Securities Act.
(d) Registration Statement Form. Registrations under this
Section 3.1 shall be on Form S-1, Form S-3 or any successor forms, if
permitted, or such appropriate registration form of the Commission as shall
be selected by the Company and as shall be reasonably acceptable to the
Requisite Percentage of Participating Holders. The Company agrees to
include in any such registration statement all information which, in the
opinion of counsel to the Participating Holders and counsel to the Company,
is required to be included.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 3.1 shall not be deemed to have been
effected (including for purposes of paragraph (c) of this Section 3.1) (i)
unless a registration statement with respect thereto has become effective
and has been kept continuously effective for a period of at least 180 days
(or such shorter period which shall terminate when all the Registrable
Securities covered by such registration statement have been sold pursuant
thereto), (ii) if, after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement
of the Commission or other Governmental Entity or court for any reason not
attributable to the Participating Holders and has not thereafter become
effective, or (iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure
on the part of the Participating Holders.
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(f) Selection of Underwriters. The managing underwriter or
underwriters of each underwritten offering of the Registrable Securities
registered under this Section 3.1 shall be selected by the Requisite
Percentage of Participating Holders (and shall be reasonably acceptable to
the Company).
(g) Cutbacks in Requested Registration. If the managing
underwriter of any underwritten offering shall advise the Company in
writing (with a copy to each Participating Holder) that, in its opinion,
the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering within a price range
acceptable to the Requisite Percentage of Participating Holders, the
Company will include in such registration, to the extent of the number
which the Company is so advised can be sold in such offering, Registrable
Securities requested to be included in such registration, pro rata among
the Participating Holders requesting such registration in accordance with
the Registrable Securities held by each such Participating Holder so
requested to be registered, and any securities of the Company and other
investors included in such registration pursuant to Section 3.1(b) shall be
reduced proportionately.
(h) Postponement. The Company shall be entitled once in any
six-month period to postpone for a reasonable period of time (but not
exceeding 90 days) the filing of any registration statement required to be
prepared and filed by it pursuant to this Section 3.1 if the Board of
Directors of the Company determines, in its reasonable judgment, that such
registration and offering would interfere with any financing, corporate
reorganization or other material transaction or development involving the
Company or any subsidiary or would require premature disclosure thereof,
and promptly gives the holders of Registrable Securities requesting
registration thereof pursuant to this Section 3.1 written notice of such
determination, containing a statement of the reasons for such postponement
and an approximation of the anticipated delay. If the Company shall so
postpone the filing of a registration statement, the Participating Holders
representing the Requisite Percentage of Participating Holders shall have
the right to withdraw the request for registration by giving written notice
to the Company within 20 days after receipt of the notice of postponement
and, in the event of such withdrawal, such request shall not be counted
toward the number of Requested Registrations (including for purposes of
paragraph (c) of this Section 3.1).
(i) Holder's Right to Withdraw. The Requisite Percentage of
Participating Holders shall have the right to withdraw the request for
registration pursuant to Section 3.1 at any time by giving written notice
to the Company of its request to withdraw and such request shall not be
counted toward the number of Requested Registrations (including for
purposes of paragraph (c) of this Section 3.1).
3.2 Incidental Registration.
-----------------------
(a) Incidental Registration. If, at any time, the Company
proposes or is required to register any of its securities under the
Securities Act (other than pursuant to registrations on such form or
similar form(s) solely for registration of securities in connection with an
employee benefit plan or dividend reinvestment plan) (an "Incidental
Registration"), the
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Company will give prompt written notice to all holders of record of
Registrable Securities of its intention to so register its securities and
of such holders' rights under this Section 3.2. Upon the written request of
any holder of Registrable Securities made within 20 days following the
receipt of any such written notice (which request shall specify the maximum
number of Registrable Securities intended to be disposed of by such holder
and the intended method of distribution thereof), the Company will use its
best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register
by the holders thereof together with any other securities the Company is
obligated to register pursuant to incidental registration rights of other
security holders of the Company. No registration effected under this
Section 3.2 shall relieve the Company of its obligation to effect any
Requested Registration under Section 3.1.
(b) Abandonment or Delay. If, at any time after the Company
has 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 Company shall determine not to
register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination and its reasons
therefor to all holders of record of Registrable Securities and (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 any obligation of the Company to pay the
Registration Expenses in connection therewith), without prejudice, however,
to the rights of any holder or holders of Registrable Securities entitled
to do so to request that such registration be effected as a registration
under Section 3.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities.
(c) Holder's Right to Withdraw. Each holder of Registrable
Securities shall have the right to withdraw its request for inclusion of
its Registrable Securities in any registration statement pursuant to this
Section 3.2 at any time by giving written notice to the Company of its
request to withdraw.
(d) Unlimited Number of Registrations; Expenses. There is no
limitation on the number of Incidental Registrations which the Company is
obligated to effect pursuant to this Section 3.2. The Company will pay all
Registration Expenses in connection with any registration of Registrable
Securities requested pursuant to this Section 3.2.
(e) Underwriters' Cutback in Incidental Registrations. If
the managing underwriter of any underwritten offering shall inform the
Company by letter of its belief that the number of Registrable Securities
requested to be included in such registration would materially adversely
affect such offering, then the Company will include in such registration,
first, the securities proposed by the Company to be sold for its own
account, and, second, the Registrable Securities and all other securities
of the Company to be included in such registration to the extent of the
number and type which the Company is so advised can be sold in (or during
the time of) such offering, pro rata among the Participating Holders and
such other holders requesting such registration in accordance with the
Registrable Securities held by each Participating Holder and all other
securities held by each such other holder so requested to be registered.
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3.3 Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Sections 3.1
or 3.2 hereof, the Company will as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect such
registration (and shall include all financial statements required
by the Commission to be filed therewith) and thereafter use its
best efforts to cause such registration statement to become
effective; provided, however, that before filing such
registration statement (including all exhibits) or any amendment
or supplement thereto or comparable statements under securities
or blue sky laws of any jurisdiction, the Company shall furnish
such documents to the Participating Holders, their counsel and
each underwriter, if any, participating in the offering of the
Registrable Securities and its counsel; and provided, further,
however, that the Company may discontinue any registration of its
securities which are not Registrable Securities at any time prior
to the effective date of the registration statement relating
thereto;
(b) notify each Participating Holder of the Commission's
requests for amending or supplementing the registration statement
and the prospectus, and prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such registration
statement for such period as shall be required for the
disposition of all of such Registrable Securities, provided, that
such period need not exceed 180 days;
(c) furnish, without charge, to each Participating Holder
such number of conformed copies of such registration statement
and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such
other documents, as such Participating Holder may reasonably
request;
(d) use its best efforts (i) to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such securities or blue sky laws of
such states of the United States of America where an exemption is
not available and as the Participating Holders shall reasonably
request, (ii) to keep such registration or qualification in
effect for so long as such registration statement remains in
effect and (iii) to take any other action which may be reasonably
necessary or advisable to enable such Participating Holders to
consummate the disposition in such jurisdictions of the
securities to be sold by such Participating Holders, except that
the Company shall not for any such purpose be required to
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qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of
this subsection (d) be obligated to be so qualified or to consent
to general service of process in any such jurisdiction;
(e) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other federal or state or foreign governmental
agencies or authorities as may be necessary in the opinion of
counsel to the Company and counsel to the Participating Holders
to consummate the disposition of such Registrable Securities;
(f) furnish to each Participating Holder and each
underwriter, if any, participating in the offering of the
securities covered by such registration statement, a signed
counterpart of
(i) an opinion of outside counsel (or inside counsel if
satisfactory to each underwriter) for the Company, and
(ii) a "comfort" letter signed by the independent
public accountants who have certified the Company's
financial statements included or incorporated by reference
in such registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and,
in the case of the accountants' comfort letter, with respect to
events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates
such opinions and comfort letters are customarily dated) and, in
the case of the legal opinion, such other legal matters, and, in
the case of the accountants' comfort letter, such other financial
matters, as the Requisite Percentage of Participating Holders, or
the underwriters, may reasonably request;
(g) promptly notify each Participating Holder and each
managing underwriter, if any, participating in the offering of
the securities covered by such registration statement (i) when
such registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or
post-effective amendment to such registration statement has been
filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective;
(ii) of any request by the Commission for amendments or
supplements to such registration statement or the prospectus
related thereto or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of
any proceedings for that purpose; (iv) 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 under
the securities or blue sky laws of any
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<PAGE>
jurisdiction or the initiation of any proceeding for such
purpose; (v) at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which,
the prospectus included in such registration statement, as then
in effect, includes an 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 not misleading, in the
light of the circumstances under which they were made, and in the
case of this clause (v), at the request of any Participating
Holder, promptly prepare and furnish to it and each managing
underwriter, if any, participating in the offering of the
Registrable Securities a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of
such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under
which they were made; and (vi) at any time when the
representations and warranties of the Company contemplated by
Section 3.4(a) hereof cease to be true and correct;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the
first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule
158 promulgated thereunder, and promptly furnish to each such
Participating Holder a copy of any amendment or supplement to
such registration statement or prospectus;
(i) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration;
(j) use its best efforts to cause all Registrable Securities
covered by such registration statement to be listed on a national
securities exchange or to secure designation of all such
Registrable Securities on the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") "Small Cap
Market";
(k) deliver promptly to counsel to the Participating Holders
and each underwriter, if any, participating in the offering of
the Registrable Securities, copies of all correspondence between
the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its
staff with respect to such registration statement;
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<PAGE>
(1) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the registration
statement;
(m) if required, provide a CUSIP number for all Registrable
Securities, no later than the effective date of the registration
statement; and
(n) make available its employees and personnel and otherwise
provide reasonable assistance to the underwriters (taking into
account the needs of the Company's businesses) in their marketing
of Registrable Securities.
The Company may require each Participating Holder as to the Registrable
Securities of whom any registration is being effected to furnish the
Company such information regarding such holder and the distribution of such
securities as the Company may from time to time reasonably request in
writing.
Each holder of Registrable Securities agrees that upon receipt of
any notice from the Company of the happening of any event of the kind
described in subsection (g)(iii) or (v) of this Section 3.3, the
Participating Holder will forthwith discontinue such holder's disposition
of Registrable Securities pursuant to the registration statement relating
to such Registrable Securities until, in the case of subsection (g)(iii) of
this Section 3.3, such stop order is removed or proceedings therefor
terminated, and, in the case of subsection (g)(v) of this Section 3.3, such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by subsection (g)(v) of this Section 3.3 and, if so directed
by the Company, 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 relating to such Registrable Securities current at the
time of receipt of such notice.
3.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by Participating Holders
pursuant to a registration requested under Section 3.1, the Company will
use its best efforts to enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Company, each such holder and the
underwriters and to contain such representations and warranties by the
Company and such other terms as are generally prevailing in agreements of
that type, including, without limitation, indemnities to the effect and to
the extent provided in Section 3.6 hereof. The Participating Holders will
cooperate with the Company in the negotiation of the underwriting agreement
and will give consideration to the reasonable suggestions of the Company
regarding the form thereof. The Participating Holders shall be parties to
such underwriting agreement and may, at their option, require that any or
all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall
also be made to and for the benefit of the Participating Holders and that
any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of the Participating Holders. No Participating Holder shall
be required to make any representations or warranties to
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<PAGE>
or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder, such
holder's ownership of and title to the Registrable Securities, such
holder's intended method of distribution and any other representations
required by law, and any liability of the Participating Holder to any
underwriter or other person under such underwriting agreement shall be
limited to liability arising from misstatements in or omissions from its
representations and warranties and shall be limited to an amount equal to
the net proceeds that the Participating Holder derives from such
registration.
(b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 3.2 hereof and such securities are to be
distributed by or through one or more underwriters, the Company will, if
requested by any Participating Holder, use its best efforts to arrange for
such underwriters to include all the Registrable Securities to be offered
and sold by such Participating Holder among the securities of the Company
to be distributed by such underwriters. The Participating Holders shall be
parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such Participating Holders and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Participating Holders. No Participating Holder shall be required to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding
such holder, such holder's ownership of and title to the Registrable
Securities, such holder's intended method of distribution and any other
representations required by law, and any liability of the Participating
Holder to any underwriter or other person under such underwriting agreement
shall be limited to liability arising from misstatements in or omissions
from its representations and warranties and shall be limited to an amount
equal to the net proceeds that the Participating Holder derives from such
registration.
3.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the Participating
Holders, their underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and, to the extent practicable, each amendment thereof or
supplement thereto, and give each of them such access to its books and
records and such opportunities to discuss the business of the Company with
its officers and employees and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of
such holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
3.6 Indemnification.
---------------
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless, to the fullest
extent permitting by law, each Participating Holder, its
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directors, officers, partners, attorneys, agents and affiliates or general
and limited partners (and the directors, officers, employees, stockholders
and affiliates thereof), and each other Person who participates as an
underwriter in the offering or sale of such securities and each other
Person, if any, who controls such Participating Holder or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages, or liabilities, joint or several (or actions or
proceedings, whether commenced or threatened) to which such Participating
Holder or any such director, officer, partner, agent or affiliate or
underwriter or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities,
joint or several (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under
the Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein in light of
the circumstances in which they were made not misleading, and the Company
will reimburse such Participating Holder and each such director, officer,
partner, agent or affiliate, or general or limited partner, underwriter and
controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on
behalf of such Participating Holder or underwriter, as the case may be,
specifically stating that it is for use in the preparation thereof; and
provided, further, that the Company shall not be liable to any Person who
participates as an underwriter in the offering or sale of Registrable
Securities or any other Person, if any, who controls such underwriter
within the meaning of the Securities Act, in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or
give a copy of the final prospectus, as the same may be then supplemented
or amended, to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force regardless of any investigation made
by or on behalf of such Participating Holder or any such director, officer,
partner, attorney, agent or affiliate or controlling Person and shall
survive the transfer of such securities by such Participating Holder.
(b) Indemnification by the Participating Holders. As a
condition to including any Registrable Securities in any registration
statement, the Company shall have received an undertaking reasonably
satisfactory to it from the Participating Holders to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
subsection (a) of this Section 3.6) the Company, each director and officer
of the Company, and each other Person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any
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<PAGE>
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, but only if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by
such Participating Holder specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; provided, however,
that the liability of such indemnifying party under this Section 3.6(b)
shall be limited to the amount of net proceeds received by such
indemnifying party in the offering giving rise to such liability. Such
indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of such
securities by the Participating Holder.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subsections of this Section
3.6, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of
the commencement of such action or proceeding; provided, however, that the
failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under the preceding
subsections of this Section 3.6, except to the extent that the indemnifying
party is materially prejudiced by such failure to give notice, and shall
not relieve the indemnifying party from any liability which it may have to
the indemnified party otherwise than under this Section 3.6. In case any
such action or proceeding is brought against an indemnified party, the
indemnifying party shall be entitled to participate therein and, unless in
the opinion of outside counsel to the indemnified party a conflict of
interest between such indemnified and indemnifying parties may exist in
respect of such claim, to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party; provided,
however, that if the defendants in any such action or proceeding include
both the indemnified party and the indemnifying party and if in the opinion
of outside counsel to the indemnified party there may be legal defenses
available to such indemnified party and/or other indemnified parties which
are different from or in addition to those available to the indemnifying
party, the indemnified party or parties shall have the right to select
separate counsel to defend such action or proceeding on behalf of such
indemnified party or parties, provided, further, that the indemnifying
party shall be obligated to pay for only one counsel for all indemnified
parties. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation (unless the first proviso in the
preceding sentence shall be applicable). No indemnifying party shall be
liable for any settlement of any action or proceeding effected without its
written consent. No indemnifying party shall, without the consent of the
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.
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<PAGE>
(d) Contribution. If the indemnification provided for in
this Section 3.6 shall for any reason be held by a court to be unavailable
to an indemnified party under subsection (a) or (b) hereof in respect of
any loss, claim, damage or liability, or any action in respect thereof,
then, in lieu of the amount paid or payable under subsection (a) or (b)
hereof, the indemnified party and the indemnifying party under subsection
(a) or (b) hereof shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating the same) (i) in such proportion as is
appropriate to reflect the relative fault of the Company and the
Participating Holders which resulted in such loss, claim, damage or
liability, or action in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as shall be appropriate
to reflect not only the relative fault but also the relative benefits
received by the Company and the Participating Holders from the offering of
the securities covered by such registration statement as well as any other
relevant equitable considerations. The parties hereto agree that it would
not be just and equitable if contributions pursuant to this Section 3.6(d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to above. 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. The Participating Holders' obligations to contribute as
provided in this subsection (d) are several and not joint in proportion to
the relative value of their respective Registrable Securities covered by
such registration statement. In addition, no Person shall be obligated to
contribute hereunder any amounts in payment for any settlement of any
action or claim effected without such Person's consent, which consent shall
not be unreasonably withheld. Notwithstanding anything in this subsection
(d) to the contrary, no indemnifying party (other than the Company) shall
be required to contribute any amount in excess of the net proceeds received
by such party from the sale of the Registrable Securities in the offering
to which the losses, claims, damages or liabilities of the indemnified
parties relate.
(e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subsections of this Section 3.6
(with appropriate modifications) shall be given by the Company and each
Participating Holder with respect to any required registration or other
qualification of securities under any federal or state law or regulation of
any governmental authority other than the Securities Act. The
indemnification agreements contained in this Section 3.6 shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the transfer of
any of the Registrable Securities by any of the Participating Holders.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 3.6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
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<PAGE>
3.7 Certain Rights of the Holder If Named in a Registration
Statement. If any statement contained in a registration statement under the
Securities Act or in any filing under the state securities laws of any
jurisdiction refers to any Participating Holder by name or otherwise as the
holder of any securities of the Company, then such Participating Holder
shall have the right to require (i) the insertion therein of language, in
form and substance satisfactory to such Participating Holder, to the effect
that the holding by such Participating Holder of such securities does not
necessarily make such Participating Holder a "controlling person" of the
Company within the meaning of the Securities Act and is not to be construed
as a recommendation by such Participating Holder of the investment quality
of the Company's debt or equity securities covered thereby and that such
holding does not imply that such Participating Holder will assist in
meeting any future financial requirements of the Company or (ii) in the
event that such reference to such Participating Holder by name or otherwise
is not, in the reasonable judgment of such Participating Holder as advised
by its counsel, required by the Securities Act or any of the rules and
regulations promulgated thereunder, or any state securities laws of any
jurisdiction, the deletion of the reference to such Participating Holder.
3.8 Unlegended Warrant Shares. In connection with the offering of
any Registrable Securities registered pursuant to this Article 3, the
Company shall (i) facilitate the timely preparation and delivery to
Participating Holders and the underwriters, if any, participating in such
offering, of unlegended Warrant Shares representing ownership of such
Registrable Securities being sold in such denominations and registered in
such names as requested by such Participating Holders or such underwriters
and (ii) instruct any transfer agent and registrar of such Registrable
Securities to release any stop transfer orders with respect to any such
Registrable Securities.
3.9 Limitation on Sale or Distribution of Other Securities. The
Company hereby agrees that, if it shall previously have received a request
for registration pursuant to Section 3.1 or 3.2 hereof, and if such
previous registration shall not have been withdrawn or abandoned, (i) the
Company shall not effect any public or private offer, sale or other
distribution of its securities or effect any registration of any of its
equity securities under the Securities Act (subject to the provisions of
Section 3.2 hereof) (other than a registration on Form S-8 or any successor
or similar form which is then in effect), whether or not for sale for its
own account, until a period of 180 days (or such shorter period as the
Requisite Majority of Participating Holders shall agree) shall have elapsed
after the effective date of such previous registration (and the Company
shall so provide in any registration rights agreements hereafter entered
into with respect to any of its securities); and (ii) the Company shall use
its best efforts to cause each holder of its equity securities purchased
from the Company at any time after the date of this Agreement other than in
a public offering to agree not to effect any public sale or distribution of
any such securities during such 180 day period, including a sale pursuant
to Rule 144 under the Securities Act.
3.10 No Required Sale. Nothing in this Agreement shall be deemed
to create an independent obligation on the part of any Participating Holder
to sell any Registrable Securities pursuant to any effective registration
statement.
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<PAGE>
4. Rule 144. The Company shall take all actions reasonably necessary
to enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144, or (b) any similar rule or regulation
hereafter adopted by the Commission including, without limiting the
generality of the foregoing, filing on a timely basis all reports required
to be filed by the Exchange Act. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the
consent of (i) the Company and (ii) the holders of at least 51% of the then
outstanding Registrable Securities. The Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by
it, in each case only if the Company shall have obtained the written
consent to such action or omission to act, of holders of at least 51% of
the then outstanding Registrable Securities. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any
consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company (accompanied by a written acknowledgment of, and consent to, such
election by such nominee), be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or
holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable
Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects to be treated as the holder of such Registrable
Securities, the Company may require assurances reasonably satisfactory to
it of such owner's beneficial ownership of such Registrable Securities.
7. Notices. All communications provided for hereunder shall be
personally delivered or sent by telecopier (and confirmed by telephone) or
by a reputable overnight courier, and shall be addressed as follows:
(a) if to any of the Purchasers, addressed to it at such address
as it shall have furnished to the Company in writing;
(b) if to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing,
or, until any such other holder so furnishes to the Company an address,
then to and at the address of the last holder of such Registrable
Securities who has furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner set forth in
the Convertible Note Purchase Agreement, or at such other address as the
Company shall have furnished to each holder of Registrable Securities at
the time outstanding.
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<PAGE>
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by the
Company. This Agreement and/or the registration and other rights contained
herein (including these assignment rights) may be assigned by the
Purchasers to any one or more transferees or distributees of all or part of
such Purchaser's Registrable Securities. A holder of Registrable Securities
shall be permitted, in connection with a transfer or disposition of
Registrable Securities, to impose conditions or constraints on the ability
of the transferee, as a holder of Registrable Securities, to request a
registration pursuant to Section 3.1 and shall provide the Company with
copies of such conditions or constraints and the identity of such
transferees.
9. Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive
the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any
provision of this Agreement (including the indemnification provisions
thereof), the successful party shall be entitled to recover reasonable
attorneys' fees in addition to its costs and expenses and any other
available remedy.
10. No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. Except as set forth on Schedule 10(a) hereto, the
Company has not previously entered into any agreement with respect to its
securities granting any registration rights to any Person other than the
registration rights granted pursuant to this Agreement. Except as set forth
on Schedule 10(b) hereto, the rights granted to the holders of Registrable
Securities hereunder do not in any way conflict with and are not
inconsistent with any other agreements to which the Company is a party or
by which it is bound. The Company further agrees that if any other
registration rights agreement entered into after the date of this Agreement
with respect to any of its securities contains terms which are more
favorable to, or less restrictive on, the other party thereto than the
terms and conditions contained in this Agreement are (insofar as they are
applicable) to the Purchasers, then the terms and conditions of this
Agreement shall immediately be deemed to have been amended without further
action by the Company or any of the holders of Registrable Securities so
that such holders shall be entitled to the benefit of any such more
favorable or less restrictive terms or conditions.
11. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only
and shall not limit or otherwise affect the meaning hereof.
12. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of New
York, without regard to the conflicts of laws principles thereof.
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<PAGE>
Each of the parties hereto hereby irrevocably and unconditionally consents
to submit to the exclusive jurisdiction of the courts of the State of New
York and the United States of America located in New York, New York for any
action or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any action or
proceeding relating thereto except in such courts). Each of the parties
hereto hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action or proceeding arising out of this Agreement
or the transactions contemplated hereby in the courts of the State of New
York or the United States of America located in New York, New York, and
hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum. The Company
hereby waives any right it may have to a trial by jury in respect of any
action, proceeding or litigation directly or indirectly arising out of,
under or in connection with, this Agreement.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
BIO-PLEXUS, INC.
By: /s/ Kimberley A. Cady
----------------------------------
Name: Kimberley A. Cady
Title: Chief Financial Officer and
Vice President of Finance
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management, L.P.,
its General Partner
By: Appaloosa Partners Inc.,
its General Partner
By: /s/ James E. Bolin
----------------------------------
Name: James E. Bolin
Title: Vice President
PALOMINO FUND LTD.
By: Appaloosa Management, L.P.,
its Investment Advisor
By: Appaloosa Partners Inc.,
its General Partner
By: /s/ James E. Bolin
----------------------------------
Name: James E. Bolin
Title: Vice President
TERSK LLC
By: /s/ James E. Bolin
----------------------------------
Name: James E. Bolin
Title: Vice President
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