<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Mark
One
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_____________to
Commission file number 0-24128
BIO-PLEXUS, INC.
(Exact name of Registrant as specified in its Charter)
Connecticut 06-1211921
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
129 Reservoir Road, Vernon Connecticut 06066
(Address of principal executive offices including zip code)
(860) 870-6112
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No___.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding
Class of Common Stock as of May 5, 2000
Common Stock, no par value 14,541,628
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BIO-PLEXUS, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Condensed Balance Sheets at March 31, 2000
(unaudited) and December 31, 1999 1
Condensed Statements of Operations (unaudited) for the three months
ended March 31, 2000 and 1999 2
Condensed Statements of Cash Flows (unaudited) for the three months
ended March 31, 2000 and 1999 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 2. Changes in Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 16
</TABLE>
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BIO-PLEXUS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
(UNAUDITED)
------------ ------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,219,000 $ 867,000
Accounts receivable 408,000 908,000
Inventories:
Raw materials 469,000 621,000
Work-in-process 1,107,000 474,000
Finished goods 1,129,000 1,167,000
------------ ------------
2,705,000 2,262,000
------------ ------------
Other current assets 194,000 173,000
------------ ------------
Total current assets 4,526,000 4,210,000
------------ ------------
Fixed assets, net 4,514,000 4,384,000
Deferred debt financing expenses 768,000 465,000
Patents, net of amortization 340,000 335,000
Other assets 253,000 253,000
------------ ------------
$ 10,401,000 $ 9,647,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 716,000 $ 899,000
Note payable 4,235,000 1,340,000
Accounts payable and accrued expenses 1,281,000 786,000
Accrued interest payable 233,000 55,000
Accrued vacation 224,000 202,000
Other accrued employee costs 142,000 226,000
------------ ------------
Total current liabilities 6,831,000 3,508,000
------------ ------------
Long-term debt, net 1,800,000 2,262,000
Redeemable common stock warrants 149,000 149,000
Commitments and contingencies (Note 4) -- --
Shareholders' equity:
Convertible preferred stock, no par value, 3,000,000
authorized, no shares issued and outstanding -- --
Common stock, no par value, 25,000,000 authorized,
14,389,979 and 14,083,807 shares issued and outstanding 72,565,000 71,833,000
Accumulated deficit (70,944,000) (68,105,000)
------------ ------------
Total shareholders' equity 1,621,000 3,728,000
------------ ------------
$ 10,401,000 $ 9,647,000
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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BIO-PLEXUS, INC
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------
2000 1999
------------ ------------
Revenue:
<S> <C> <C>
Product $ 1,408,000 $ 1,169,000
Services 34,000 1,145,000
Licensing fees (Note 6) 100,000 --
------------ ------------
Total revenue 1,542,000 2,314,000
------------ ------------
Operating costs and expenses:
Product 748,000 830,000
Services 29,000 17,000
Research and development 323,000 304,000
Selling, general and administrative 1,574,000 1,104,000
------------ ------------
Total operating costs and expenses 2,674,000 2,255,000
------------ ------------
Operating (loss) profit (1,132,000) 59,000
Financing expenses:
Amortization of deferred debt financing 61,000 2,000
Interest expense 1,682,000 88,000
Other income (36,000) (34,000)
------------ ------------
Total financing expenses 1,707,000 56,000
------------ ------------
Net (loss) profit $ (2,839,000) $ 3,000
============ ============
Net loss per share of common stock:
Basic and diluted $ (0.20) $ 0.00
============ ============
Weighted average common shares outstanding (Note 2):
Basic 14,213,151 13,289,361
Diluted 14,213,151 13,322,396
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
2
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BIO-PLEXUS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net (loss) income $(2,839,000) $ 3,000
Adjustments to reconcile net loss to cash used
by operating activities:
Depreciation and amortization 131,000 143,000
Amortization of deferred debt financing expenses 61,000 2,000
Amortization of debt discount 1,444,000 4,000
Decrease (increase) in assets:
Accounts receivable 500,000 202,000
Inventories (443,000) 227,000
Other current assets (21,000) --
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 495,000 26,000
Accrued interest payable 178,000 (16,000)
Accrued vacation and other accrued employee costs (62,000) (78,000)
Accrued product replacement costs -- (80,000)
Decrease in deferred revenue (Note 6) -- (875,000)
Other 7,000 42,000
----------- -----------
Net cash used in operating activities (549,000) (400,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to fixed assets (255,000) --
Long-term investments (Note 3) -- 627,000
Cost of patents (11,000) (16,000)
----------- -----------
Net cash (used in) provided by investing activities (266,000) 611,000
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock (Note 3) -- 1,100,000
Proceeds from exercise of common stock options 83,000 --
Payments of deferred financing costs (364,000) --
Increase (Decrease) in notes payable (Note 3) 1,650,000 (250,000)
Repayments of long-term debt (Note 3) (202,000) (1,071,000)
----------- -----------
Net cash provided by (used in) financing activities 1,167,000 (221,000)
----------- -----------
Net increase (decrease) in cash and cash equivalents 352,000 (10,000)
Cash and cash equivalents, beginning of
period 867,000 535,000
----------- -----------
Cash and cash equivalents, end of period $ 1,219,000 $ 525,000
=========== ===========
Supplemental cash flow disclosures:
Cash payments of interest $ 60,000 $ 100,000
Cash payments of income taxes $ -- $ 3,000
Surrender of debt upon conversion to equity $ 642,000 $ --
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
3
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BIO-PLEXUS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and, in the opinion of
the management of the Company, include all adjustments which are of a normal
recurring nature, necessary for a fair presentation of financial position and
the results of operations and cash flows for the periods presented. However, the
financial statements do not include all information and footnotes required for a
presentation in accordance with generally accepted accounting principles. These
condensed financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's 1999 Annual Report on
Form 10-K. The results of operations for the interim periods are not necessarily
indicative of the results of operations to be expected for the full year.
NOTE 2 - EARNINGS PER SHARE
Basic Earnings Per Share ("EPS") is based on the weighted average number of
common shares outstanding for the period, excluding any dilutive common share
equivalents. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted.
In determining net loss per common share, common stock equivalents are excluded
from the computation as their effect is anti-dilutive.
NOTE 3 - SIGNIFICANT CAPITAL TRANSACTIONS
Stock Options
On February 29, 2000, a director of the Company effected a net exercise of
stock options to purchase 180,000 shares of Common Stock in exchange for 63,625
shares of Common Stock.
On March 9, 2000, an officer of the Company effected a net exercise of
stock options to purchase 32,000 shares of Common Stock in exchange for 14,950
shares of Common Stock.
During the first quarter of 2000, an employee exercised stock options to
purchase 30,000 shares of Common Stock.
Convertible Debentures
On April 27, 1999, the Company sold an aggregate principal amount of
$2,500,000 of its 6% Convertible Debentures due June 30, 2004 (the "6%
Debentures") to several purchasers (the "Debenture Holders"). The 6% Debentures
are convertible at any time at the option of the Debenture Holders into shares
of the Company's common stock at the lesser of a fixed conversion price of $3.06
per share (as may be adjusted from time to time) or a floating conversion price
at the time of the conversion if the floating price is less than $3.06 per share
(as may be adjusted from time to time). The 6% Debentures may be wholly or
partially
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redeemed at the option of the Company for an amount not to exceed 130% of the
face value thereof plus accrued and unpaid interest at any time after the date
of issuance. The Company and the Debenture Holders have limited put and call
options, respectively, for additional 6% Debentures. In connection with a
subsequent financing with Appaloosa Management, L.P., the Company agreed not to
exercise its put right under the 6% Debentures. During the ninety day period
commencing April 27, 2000 the Debenture Holders have the right to cause the
Company to issue to them up to $1,000,000 additional principal amount of the 6%
Debentures. The 6% Debentures also included a warrant to purchase 500,000 shares
of common stock at an exercise price of $3.38. As of March 31, 2000, the
Debenture Holders had converted a total of $1,808,000 of the outstanding
principal balance of the 6% Debentures into 600,747 shares of common stock.
Convertible Note Financing
On September 21, 1999, the Company received a commitment from Appaloosa
Management, L.P., of Chatham, New Jersey ("Appaloosa") for a total financing
package of $17.5 million, comprised of (i) $16.75 million of zero-coupon,
secured convertible notes due 2005 (the "Convertible Notes"), (ii) 250,000
shares of common stock, no par value (the "Common Stock") issued at a purchase
price of $3.00 per share (the "Permanent Financing Shares") and (iii) nine-year
warrants to purchase up to 1.5 million shares of Common Stock at an initial
exercise price of $7.00 per share (the "$7 Warrants" and, collectively with the
Convertible Notes and the Permanent Financing Shares, the "Permanent
Financing"). The Permanent Financing was consummated on April 28, 2000 after
receipt of stockholder approval of the terms of the Permanent Financing and
certain related matters.
Bridge Transactions
Pending consummation of the Permanent Financing, on October 21, 1999, the
Company issued to Appaloosa and entities affiliated therewith (the "Purchasers")
a 7.5% non-convertible secured note in the aggregate principal amount of $3
million (the "First Bridge Note"). In January 2000, the interest rate on the
First Bridge Note was increased to 12% per annum. In connection with the
issuance of the First Bridge Note, the Company also issued to the Purchasers (i)
a five-year warrant to purchase up to 1.0 million shares of Common Stock, at an
initial exercise price of $3.00 per share (the "$3 Warrants") and (ii) a
nine-year warrant to purchase up to 1.5 million shares of Common Stock at an
initial exercise price of $5.00 per share (the "$5 Warrants") (the $3 Warrants
and $5 Warrants are collectively referred to herein as the "First Bridge
Warrants"). At the Purchaser's election and upon the closing of the Permanent
Financing, the exercise price of the $3 Warrants increased to $4.00 per share of
Common Stock. The exercise price of the $5 Warrants increased to $7.00 per share
of Common Stock upon the closing of the Permanent Financing. The $5 Warrants
contain a net-exercise provision.
On January 5, 2000, the Company issued to the Purchasers a 15%
non-convertible secured note in the aggregate principal amount of $1.65 million
(the "Second Bridge Note"). In connection with the issuance of the Second Bridge
Note, the Company also agreed to issue and sell on the earlier of (i) April 30,
2000 and (ii) the closing of the Permanent Financing, five-year warrants to
acquire up to 200,000 shares of Common Stock at an initial exercise price of
$3.00 per share (the "Second Bridge Warrants"). The Second Bridge Warrants
contain a net-exercise provision.
5
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On April 3, 2000, the Company issued to the Purchasers a 15%
non-convertible secured note in the aggregate principal amount of $2.2 million
(the "Third Bridge Note"). No warrants or convertible securities were issued in
connection with the Third Bridge Note. The First Bridge Note, the Second Bridge
Note and the Third Bridge Note are collectively referred to as the "Bridge
Notes". The issuance of the Bridge Notes, the First Bridge Warrants and the
Second Bridge Warrants are collectively referred to as the "Bridge
Transactions".
The Bridge Notes were not convertible into shares of Common Stock and were
paid-in-full (together with accrued interest in the amount of $265,000) at the
closing of the Permanent Financing on April 28, 2000.
Permanent Financing
In order to consummate the Permanent Financing, the Company was required
by the rules of The NASDAQ Stock Market to obtain the approval of a majority of
the Company's stockholders of the terms and conditions of the Permanent
Financing. In addition, the Connecticut Business Corporation Act required that
the Company obtain stockholder approval of (i) an amendment to the Company's
certificate of incorporation (the "Charter Amendment") and (ii) an amendment to
the Company's 1991 Long-Term Incentive Plan (the "Incentive Plan Amendment").
The Charter Amendment and the Incentive Plan Amendment were required by the
terms of the Permanent Financing. The approval of the Company's stockholders of
the terms of the Permanent Financing, the Charter Amendment and the Incentive
Plan Amendment is collectively referred to as "Stockholder Approval".
Coinciding with Stockholder Approval obtained on April 28, 2000, the
Company issued to the Purchasers the Convertible Notes, the Permanent Financing
Shares and the $7 Warrants. The Convertible Notes are convertible into
shares of Common Stock at an initial conversion price of $3.00. The $7 Warrants
contain a net-exercise provision.
The Permanent Financing generated aggregate proceeds to the Company of
$17.5 million. After repayment of the Bridge Notes and costs and expenses
associated with the financing, the Company realized net proceeds of
approximately $9.6 million which will be available, along with existing
resources, for general working capital purposes, subject to the terms and
conditions of the Permanent Financing transaction agreements.
NOTE 4 - COMMITMENTS
As of March 31, 2000, the Company had capital expenditure purchase
commitments outstanding of approximately $1,280,000 which were primarily
comprised of machinery & equipment and tooling for the construction of its
winged intravenous set production line.
NOTE 5 - SEGMENT FINANCIAL DATA
The Company's operations consist of two worldwide business segments: (i)
Safety Medical Products and Accessories and (ii) Joint Venture Design &
Development. The Safety Medical Products and Accessories segment includes
operations associated with the manufacture of blood collection needles, needle
holders and needle disposal containers. The Joint Venture Design & Development
segment includes operations associated with product design and development,
product licensing, and
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the design, development and construction for machinery and tooling in connection
with joint venture partners.
Distinct reporting by such segments was deemed necessary by management
based on the significance of reported revenues and expenses and the Company's
intention to focus operating resources in both of these areas.
Information with respect to each of the Company's business segments is as
follows:
Segment Revenue
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------------------
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
Safety Medical Products and Accessories $ 1,345,000 $1,145,000 $ 891,000
Joint Venture Design & Development 197,000 1,169,000 651,000
---------- ---------- ----------
Total Consolidated Revenue $1,542,000 $2,314,000 $1,542,000
========== ========== ==========
</TABLE>
Major Customers
There were two customers, domestic distributors of the Company's products,
Allegiance Healthcare and Fisher HealthCare, that exceeded 10% of the Company's
Safety Medical Products and Accessories segment revenue for the periods
presented. The loss of business of any of the foregoing customers could
potentially have a material adverse effect on the business and prospects of the
Company. In the Joint Venture Design & Development segment, Johnson and Johnson
Medical, Inc. ("JJM") of Arlington, Texas and TFX Medical ("TFX"), a division of
Teleflex Incorporated, contributed to more than 10% of the revenues for the
periods presented. The following table represents the revenue associated with
these major customers by segment:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------------
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
TOTAL REVENUE MAJOR CUSTOMERS:
Safety Medical Products and
Accessories $1,166,000 $ 708,000 $ 822,000
Joint Venture Design & Development 197,000 1,095,000 651,000
OTHER DOMESTIC SALES 179,000 222,000 69,000
EXPORT SALES:
Safety Medical Products and
Accessories -- 289,000 --
Joint Venture Design & Development -- -- --
---------- ---------- ----------
TOTAL CONSOLIDATED REVENUE $1,542,000 $2,314,000 $1,542,000
========== ========== ==========
</TABLE>
During the periods presented, there were no material intersegment revenues.
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Segment Operating Profit (Loss)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Safety Medical Products and Accessories $ 603,000 $ 337,000 $ 61,000
Joint Venture Design & Development $ 162,000 826,000 251,000
----------- ----------- -----------
Total Consolidated Operating Profit (Loss) 765,000 1,163,000 312,000
----------- ----------- -----------
Selling, General and Administrative Expenses (1,574,000) (1,104,000) (1,243,000)
Other (323,000) -- (115,000)
Financing Expenses (1,707,000) (56,000) (159,000)
----------- ----------- -----------
Net Profit (Loss) ($2,839,000) $ 3,000 ($1,205,000)
=========== =========== ===========
</TABLE>
For the Safety Medical Products and Accessories segment, operating profit (loss)
consists of total revenues less product costs and expenses. In the Joint Venture
Design and Development segment, operating profit consists of total revenues less
certain operating costs and expenses and research and development expenses.
Segment Capital Expenditures
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Safety Medical Products and Accessories $ 255,000 $ -- $ 93,000
Joint Venture Design & Development -- -- --
----------- ----------- -----------
Total Consolidated Capital Expenditures $ 255,000 $ -- $ 93,000
=========== =========== ===========
</TABLE>
There has been no material change in identifiable assets related to
reportable segments since the 1999 Annual Report.
NOTE 6 - LICENSING AND DISTRIBUTION AGREEMENTS
On October 23, 1998, the Company entered into an exclusive License
Agreement and Design, Development and Asset Transfer Agreement for a safety
Peripherally Inserted Central Catheter ("PICC") introducer with TFX Medical. The
License Agreement includes certain minimum annual volume requirements and
ongoing royalties on the sale of PICC introducer catheters featuring the
Company's proprietary Punctur-Guard(R) technology. Under the Design, Development
and Asset Transfer Agreement, the Company would design and develop safety needle
assemblies to be used with the TFX peelable catheter, and would modify existing
manufacturing equipment to be transferred to TFX pursuant to the terms and
conditions of the agreement. On July 26, 1999, an agreement was entered into
with TFX to modify the License Agreement dated October 23, 1998. The amended
agreement included additional licensing fees and changes in royalty revenue in
exchange for TFX's right to exclusively market to one of its customers. In the
first quarter of 2000, the Company completed its obligations under the Design,
Development and Asset Transfer Agreements, and recognized licensing fee revenue
of $100,000.
NOTE 7 - SUBSEQUENT EVENTS
From April 1, 2000 to May 2, 2000, the Debenture Holders converted
$412,000 of outstanding principal balance of 6% Debentures into 148,615 shares
of common stock.
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On April 28, 2000, Mr. John S. Metz was appointed President and Chief
Executive Officer of the Company. Prior to joining the Company, Mr. Metz was
President of Strategic Acquisitions for the Professional Health Care business of
Kimberly-Clark Corporation. Mr. Metz has over twenty-five years of experience in
the medical product industry. The Company and Mr. Metz have entered into a
three-year employment agreement, which may be extended for successive twelve
month periods. In addition to a base salary, the agreement provides for annual
bonuses to be paid to Mr. Metz based upon the achievement of certain Company
performance levels, stock options to be issued under the Company's 1991
Long-Term Incentive Plan, and severance benefits under certain conditions.
On April 28, 2000, the Company obtained Stockholder Approval of the
terms and conditions of the Permanent Financing, the Charter Amendment and the
Incentive Plan Amendment. The Charter Amendment and the Incentive Plan Amendment
were required by the terms of the Permanent Financing.
Coinciding with Stockholder Approval, the Company issued to the
Purchasers (i) the Convertible Notes, (ii) the Permanent Financing Shares, and
(iii) the $7 Warrants. The Convertible Notes are convertible into shares of
Common Stock at an initial conversion price of $3.00. The $7 Warrants contain a
net-exercise provision.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The discussions set forth in this Management's Discussion and Analysis
of the Results of Operations and Financial Condition and elsewhere herein
contain certain statements which are not historical facts and are considered
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended. Forward-looking statements can be identified by the use of such
forward-looking terminology as "believes," "expects," "may," "will," "should,"
or "anticipates" or negatives thereof or other derivations thereon or comparable
terminology, or discussions of strategy that involve risks and uncertainties.
The Company's actual results could differ materially from those projected in the
forward-looking statements as a result of, among other factors, the Company's
expectation regarding gross profit and operating income, general economic
conditions and growth in the safety medical products industry, competitive
factors and pricing pressures, changes in product mix, product demand, risk of
dependence on third party suppliers, ability to obtain financing, and other risk
factors and uncertainties detailed in this report, described from time to time
in the Company's other Securities and Exchange Commission filings, or discussed
in the Company's press releases. All forward-looking statements included in this
document are based on information available to the Company on the date hereof,
and the Company assumes no obligation to update any such forward-looking
statements.
OVERVIEW
The Company's principal focus is the design, development, testing and
evaluation of its blood collection safety needle and accessory products, and the
design and development of the molds, needle assembly machines and production
processes needed for manufacturing the blood collection safety needle as well as
the design and development of new products. Since its inception in September
1987
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through March 31, 2000, the Company has incurred cumulative losses totaling
approximately $70,944,000. For the Company to achieve profitability, further
reductions in manufacturing costs and increases in sales are necessary, as well
as the addition of new product lines. The Company has also focused its efforts
on developing strategic partnerships with major healthcare companies in order to
bring other products to market featuring its patented internal blunting
technology.
In January 2000, the Company entered into a distribution agreement with
Owens & Minor, a major distributor of medical products to hospitals throughout
the United States. Owens & Minor, a Fortune 500 company headquartered in
Richmond, Virginia, is the nation's largest distributor of national brand
medical and surgical supplies. The company's distribution centers serve
hospitals, integrated healthcare systems and group purchasing organizations
nationwide. The distribution agreement allows Owens & Minor to purchase and
distribute all of the Bio-Plexus blood collection products.
On February 21, 2000, the Company entered into a distribution agreement
with McKessonHBOC Medical Group of Richmond, Virginia. McKessonHBOC's Supply
Management Business is a leading distributor of medical-surgical supplies to
more than 5,000 hospitals nationwide. The agreement allows McKessonHBOC to
purchase and distribute the Company's products on a non-exclusive basis without
territorial limitations or restrictions. The agreement is in effect for a period
of five years and shall continue automatically in effect for successive terms of
five years each until terminated by either party.
The Company believes that similar distribution agreements or strategic
partnerships may be possible with one or more major healthcare companies for its
other products. Such arrangements could assist the Company in raising additional
capital and help fund research and development of new products, as well as
accelerate the rate of sales growth. However, such arrangements could also
decrease the revenue per unit for the Company, as a result of sharing revenue
with its distribution or strategic partners. The Company believes the overall
benefits and potential for greater market share outweigh the disadvantages that
may result from such arrangements.
THE YEAR 2000 UPDATE
The Company has not experienced any major disruptions to its business nor is it
aware of any significant Year 2000-related disruptions affecting its
distributors and customers, strategic partners, and suppliers. Costs incurred by
the Company to achieve Year 2000 readiness were not material and were charged to
expense as incurred.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
The Company had product sales of $1,408,000 for the three months ended
March 31, 2000, compared to $1,169,000 for the comparable period in the prior
year. The increase was primarily attributable to an increase in sales of safety
medical devices over the prior year.
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<PAGE> 13
The Company had revenues from services totaling $34,000 for the three
months ended March 31, 2000, compared to $1,145,000 for the comparable period in
the prior year. The decrease was primarily attributable to completion of the
I.V. catheter development project for JJM in the first quarter of 1999.
The Company had licensing fee revenue of $100,000 in the first quarter
of 2000 which was attributable to the completion of the Design, Development and
Asset Transfer Agreement with TFX Medical.
Product costs were $748,000 for the three months ended March 31, 2000,
compared to $830,000 for the comparable period in the prior year despite greater
revenues from product sales. The decrease in these costs resulted primarily from
lower manufacturing costs associated with the blood collection needle product
line.
Research and development expenses were $323,000 for the three months
ended March 31, 2000, compared to $304,000 for the same period a year ago. The
increase in these costs resulted from an increase in engineering labor and
operating expenses in 2000 as compared to 1999 due to greater research and
development costs related to the winged intravenous set.
Selling, general and administrative expenses were $1,574,000 for the
three months ended March 31, 2000, compared to $1,104,000 for the same period a
year ago. The increase resulted from increases of approximately $370,000 in
sales and marketing expenses due to increased marketing activity and additional
sales and marketing personnel, and $98,000 in administrative expenses due to
increases in administrative personnel.
Financing expenses were $1,707,000 for the three months ended March 31,
2000, compared to $56,000 for the same period in 1999. The increase in these
costs resulted primarily from amortization expense of $1,245,000 from the debt
discount associated with the Bridge Transactions in the fourth quarter of 1999
and first quarter of 2000, from increased interest expense of $163,000
associated with the Bridge Transactions, and amortization of debt discount of
$195,000 relating to the 6% Debentures.
LIQUIDITY AND CAPITAL RESOURCES
The Company's need for additional funds has continued from period to
period, as a result of its ongoing losses from operations, and its continued
efforts to develop new products. To date, the Company has financed its
operations primarily through borrowings and the sale of equity securities.
Through March 31, 2000, the Company has received net proceeds of approximately
$36,356,000 through borrowings and the sale of debt securities and $50,547,000
through the sale of equity securities.
Cash used in operating activities for the three months ended March 31,
2000 totaled $549,000 and was primarily due to a net loss for the period of
$2,839,000, an increase in inventory balances due to higher anticipated sales
volumes partially offset by a decrease in accounts receivable due to lower
shipments at the end of the first quarter of 2000 compared to the fourth quarter
of 1999, increases in accounts payable and accrued expenses, increased accrued
interest payable, and depreciation and amortization expenses primarily
reflecting the amortization of deferred debt financing expenses.
11
<PAGE> 14
Net cash used in investing activities amounted to $266,000 for the
three month period primarily due to additions to fixed assets totaling $255,000,
consisting substantially of capitalized costs associated with the construction
of its winged intravenous set production line.
Net cash provided by financing activities amounted to $1,167,000 for
the three months ended March 31, 2000 primarily due to proceeds from the
issuance of notes payable of $1,650,000 partially offset by cash paid for
deferred finance costs relating to the Bridge Transactions and repayments of
long-term debt totaling $202,000.
At March 31, 2000, the Company's shareholders' equity decreased to
$1,621,000 from $3,728,000 due to a net loss for the three months ended March
31, 2000. Also, at March 31, 2000, current liabilities exceed current assets due
to the classification of the First Bridge Note and Second Bridge Note as current
liabilities. Both of these notes were repaid on April 28, 2000 upon the closing
of the Permanent Financing transactions.
The Company's primary cash requirement for the remainder of 2000 will
be for working capital to expand its operations for its current product lines as
well as to launch new products, to repay outstanding debt, and continue research
and development on its winged intravenous set and other new products. The
Company is considering the development of a strategic partnership with one or
more healthcare companies to assist in bringing additional products to market
featuring the Company's proprietary internal blunting technology.
In order to satisfy its current and anticipated need for capital, the
Company consummated the Permanent Financing on April 28, 2000 after receiving
Stockholder Approval. Upon the closing of the Permanent Financing, the Company
issued to the Purchasers the Convertible Notes, the Permanent Financing Shares
and the $7 Warrants.
The Permanent Financing generated aggregate proceeds to the Company of
$17.5 million. After repayment of the Bridge Notes and costs and expenses
associated with the Permanent Financing, the Company realized net proceeds of
approximately $9.6 million, which will be available along with existing
resources, for general working capital purposes, subject to the terms and
conditions of the Permanent Financing transaction documents.
The Company is continuing to explore additional financing alternatives
and potential strategic relationships which may provide the Company with
additional sources of working capital. There can be no assurances that the
Company will be able to secure such additional sources of working capital.
Failure to raise needed capital may have a material adverse impact on the
Company's operations, development plans and cash flows.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On February 29, 2000, a director of the Company effected a net exercise
of stock options to purchase 180,000 shares of Common Stock in exchange for
63,625 shares of Common Stock.
12
<PAGE> 15
On March 9, 2000, an officer of the Company effected a net exercise of
stock options to purchase 32,000 shares of Common Stock in exchange for 14,950
shares of Common Stock.
During the first quarter of 2000, the holders of the 6% Debentures
converted a total of $641,000 of principal balance into 209,627 shares of Common
Stock.
On January 5, 2000, the Company issued to the Purchasers the Second
Bridge Note and in connection with such issuance, the company agreed to issue
and sell on the earlier of (i) April 30, 2000 and (ii) the closing of the
Permanent Financing, the Second Bridge Warrants. The Second Bridge Warrants
contain a net-exercise provision.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held a Special Meeting of Stockholders on April 28, 2000.
The following proposals were voted upon at the Special Meeting:
Proposal No. 1 - Permanent Financing Proposal to approve the issuance and sale
of (i) the Convertible Notes, (ii) the Permanent Financing Shares and (iii) the
$7 Warrants, including the reservation and subsequent issuance of the shares of
Common Stock issuable upon conversion of the Convertible Notes and exercise of
the $7 Warrants (the "Permanent Financing Proposal") to the Purchasers, and to
approve and adopt the Convertible Note Purchase Agreement (the "Purchase
Agreement"), Warrants, (as defined in the Purchase Agreement) Registration
Rights Agreement, (as defined in the Purchase Agreement) and Security Agreement
(as defined in the Purchase Agreement) (collectively, the "Transaction
Documents") and the other transactions contemplated by the Transaction
Documents;
Proposal No. 2 - Charter Amendment Proposal to amend the Company's Certificate
of Incorporation to increase from 25 million (25,000,000) to 40 million
(40,000,000) the number of shares of Common Stock that the Company is authorized
to issue, which proposal was proposed, in part, to ensure that there are
sufficient shares of Common Stock reserved for the subsequent issuance of shares
of Common Stock upon conversion of the Convertible Notes and exercise of the $7
Warrants and as awards in connection with the Company's 1991 Long Term Incentive
Plan (the "Charter Amendment Proposal"); and
Proposal No. 3 - Incentive Plan Amendment Proposal to amend the Company's 1991
Long-Term Incentive Plan (as amended, the "Incentive Plan") to increase from one
million (1,000,000) to 2.5 million (2,500,000) the number of shares of Common
Stock subject to the Incentive Plan, which proposal was made to ensure that
there were sufficient shares of Common Stock reserved for the subsequent
issuance of awards to employees and consultants under the Incentive Plan (the
"Incentive Plan Amendment Proposal").
The stockholders approved the Permanent Financing, the Charter
Amendment and the Incentive Plan Amendment. The proposals required a vote of
holders of a majority of the issued and outstanding shares of common stock
present in person or represented by proxy at the Special Meeting and voting when
a quorum was present. The proposals were approved by the following vote:
Proposal 1: Permanent Financing Proposal
For 9,108,651
Against 138,623
Abstain 13,200
13
<PAGE> 16
Proposal 2: Charter Amendment Proposal
For 9,074,819
Against 173,255
Abstain 12,400
Proposal 3: Incentive Plan Amendment Proposal
For 8,922,021
Against 316,336
Abstain 22,117
There were no broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
--- ----------- ----------------
<S> <C> <C>
3.1 Certificate of Incorporation of the Incorporated by reference to Exhibit 3.1 to the
Company, as amended Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998 (File No. 0-24128).
3.2 Bylaws of the Company, as amended Incorporated by reference to Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K filed on
April 13, 1998 (File No. 0-24128)
3.3 Certificate of Amendment of Certificate of Filed with this Report.
Incorporation, dated April 28, 2000.
10.44 Employment Agreement dated April 26, 2000 Filed with this Report.
between the Company and John S. Metz
10.45 Security Agreement dated April 28, 2000 Filed with this Report.
between the Company and Appaloosa Investment
Limited Partnership I, L.P.
10.46 Form of Convertible Note Filed with this Report.
27 Financial Data Schedule Filed with this Report.
</TABLE>
(b) Reports on Form 8-K
A report on Form 8-K was filed on February 24, 2000 reporting an
adjournment of a Special Shareholder's Meeting that was to be held on February
28, 2000.
14
<PAGE> 17
A report on Form 8-K was filed on March 31, 2000 reporting the
Company's 1999 financial results.
A report on Form 8-K was filed on April 27, 2000 reporting that the
Company named John S. Metz as its President and Chief Executive Officer
effective April 28, 2000.
A report on Form 8-K was filed on May 11, 2000 reporting that the
Company, at a special meeting of stockholders held on Friday, April 28, 2000,
obtained stockholder approval for the $17.5 million financing with Appaloosa
Management, L.P. (the "Permanent Financing"), an amendment to the Company's
Certificate of Incorporation increasing the number of authorized shares of
Common Stock, an amendment to the Company's 1991 Long-Term Incentive Plan, and
reporting that following the stockholders meeting, the Company and Appaloosa
consummated the Permanent Financing.
15
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Bio-Plexus, Inc.
(Registrant)
May 15, 2000 /s/ John S. Metz
---------------- -------------------------------------
(Date) John S. Metz
President and Chief Executive Officer
May 15, 2000 /s/ Kimberley A. Cady
---------------- -------------------------------------
(Date) Kimberley A. Cady
Vice President of Finance and Chief
Financial Officer
16
<PAGE> 1
Exhibit 3.3
CERTIFICATE OF AMENDMENT
STOCK CORPORATION
Office of the Secretary of the State
30 Trinity Street / P.O. Box 150470 / Hartford, CT 06115-0470 / new / 1-97
- --------------------------------------------------------------------------------
Space For Office Use Only
FILING #0002105511 PG 01 OF 03 VOL B-00334
FILED 04/28/2000 04:00 PM PAGE 02491
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. NAME OF CORPORATION:
BIO-PLEXUS, INC.
- --------------------------------------------------------------------------------
2. THE CERTIFICATE OF INCORPORATION IS (check A., B. or C):
X A. AMENDED.
- -----
B. AMENDED AND RESTATED.
- -----
C. RESTATED.
- -----
- --------------------------------------------------------------------------------
3. TEXT OF EACH AMENDMENT/RESTATEMENT:
See Exhibit A attached hereto and made a part hereof.
(Please reference an 8 1/2 X 11 attachment if additional space is needed)
- --------------------------------------------------------------------------------
(CONN. - 1264 - 1/1/97)
<PAGE> 2
- --------------------------------------------------------------------------------
Space For Office Use Only
FILING #0002105511 PG 02 OF 03 VOL B-00334
FILED 04/28/2000 04:00 PM PAGE 02492
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
- --------------------------------------------------------------------------------
4. VOTE INFORMATION (check A., B. or C.)
X A. The resolution was approved by shareholders as follows:
- -----
(set forth all voting information required by Conn. Gen. Stat. section 33-800 as
amended in the space provided below)
The number of shares of Common Stock outstanding and eligible to vote was
14,369,746. The Company does not have any Preferred Stock currently outstanding.
The number of votes represented at the meeting were 7,562,566.
The total number of votes cast were:
FOR 7,376,911
AGAINST 173,255
ABSTAIN 12,400
The number of votes cast for the amendment was sufficient for approval.
- --------------------------------------------------------------------------------
B. The amendment was adopted by the board of directors without shareholder
action. No shareholder vote was required for adoption.
- -----
C. The amendment was adopted by the incorporators without shareholder
action. No shareholder vote was required for adoption.
- -----
- --------------------------------------------------------------------------------
5. EXECUTION
- --------------------------------------------------------------------------------
Dated this 28th day of April , 2000
-------------- -----------------
- --------------------------------------------------------------------------------
Chief Financial Officer
Kimberley A. Cady and Vice President
of Finance
/s/ Kimberley A. Cady
- --------------------------------------------------------------------------------
Print or type name Capacity of Signature
of signatory signatory
<PAGE> 3
FILING #0002105511 PG 03 OF 03 VOL B-00334
FILED 04/28/2000 04:00 PM PAGE 02493
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
Exhibit A
RESOLVED, that the Certificate of Incorporation be, and hereby is,
amended as follows:
FIRST: Article III Capitalization, is amended to increase
the number of authorized shares of Common Stock. Article III shall
read as follows:
"ARTICLE III
CAPITALIZATION
The aggregate number of shares which the Corporation shall have
authority to issue is Forty-Three Million (43,000,000), which shares are
divided into two classes: (i) Three Million (3,000,000) shares of Preferred
Stock, without par value (the "Preferred Stock"); and (ii) Forty Million
(40,000,000) shares of Common Stock, without par value (the "Common Stock")."
In all other respects the Certificate Amending and Restating the
Certificate of Incorporation of Bio-Plexus, Inc., filed October 22, 1992, as
amended by the Certificate Amending the Certificate of Incorporation of
Bio-Plexus, Inc., filed October 27, 1993, as amended by the Certificate
Amending the Certificate of Incorporation of Bio-Plexus, Inc., filed August 2,
1996, as amended by the Certificate of Correction of the Certificate of
Amendment of Bio-Plexus, Inc., filed June 30, 1997, as amended by the
Certificate of Amendment of Bio-Plexus, Inc., filed June 30, 1997, as amended
by the Certificate of Amendment of Bio-Plexus, Inc., filed June 30, 1997, as
amended by the Certificate of Amendment of Bio-Plexus, Inc., filed July 30,
1997, as amended by the Certificate of Amendment of Bio-Plexus, Inc., filed
August 10, 1998, as amended by the Certificate of Amendment of the Certificate
of Incorporation, filed July 29, 1999, is hereby ratified and confirmed.
The foregoing amendment to the Certificate of Incorporation was duly
adopted by the Corporation's stockholders on April 28, 2000.
<PAGE> 1
Exhibit 10.44
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of April 26,
2000, between Bio-Plexus, Inc., a Connecticut corporation having its principal
offices at 129 Reservoir Road, Vernon, Connecticut 06066 (the "Company"), and
John S. Metz, an individual residing at 3880 Downing Lane, Atlanta, Georgia
30319 ("Employee").
PREAMBLE
WHEREAS, the Company desires to employ Employee as President
and Chief Executive Officer of the Company; and
WHEREAS, the Company and Employee desire to set forth in
writing the terms and conditions of such employment.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the sufficiency
and receipt whereof is hereby acknowledged, the parties agree as follows:
1. Definitions. Unless otherwise defined herein, the following terms
shall have the following respective meanings:
"Annual Plan" means the Company's annual business plan approved by the
Company's Board of Directors and which shall contain agreed upon performance
targets for payment of Employee's bonus as provided in Section 3.2 and for the
award of Performance Options pursuant to Section 3.3(b).
"Appaloosa Agreement" means that certain Convertible Note Purchase
Agreement, as may be amended or supplemented from time to time, to be entered
into among the Company, Appaloosa Management L.P. ("Appaloosa"), as Collateral
Agent, and one or more entities affiliated with Appaloosa.
"Appaloosa Notes" means the zero coupon secured convertible notes of
the Company with a face value of $16.75 million issued to one or more entities
affiliated with Appaloosa.
"Benefit" means those benefits set forth in Section 3.4(a), (b), (d)
and (e) hereof.
"Cause" means (i) any felony conviction or admission of guilt, (ii) any
breach or nonobservance by Employee of any material covenant set forth herein,
(iii) any willful, intentional or deliberate disobedience or neglect by Employee
of the lawful and reasonable orders or directions of the Board of Directors of
the Company; provided that the Board of Directors of the Company has given
Employee written notice of such disobedience or neglect and Employee has failed
to cure such disobedience or neglect within a period reasonable under the
circumstances, or (iv) any willful or deliberate
<PAGE> 2
misconduct by employee that is materially injurious to the Company.
"Change in Control" means (i) any consolidation or merger involving the
Company if the shareholders of the Company immediately before such merger or
consolidation do not own, directly or indirectly, immediately following such
merger or consolidation, more than fifty percent (50%) of the combined voting
power of the outstanding voting securities of the corporation resulting from
such merger or consolidation in substantially the same proportion as their
ownership of the shares of Common Stock immediately before such merger or
consolidation; (ii) any sale, lease, license, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the business and/or assets of the Company or assets representing over 50% of
the operating revenue of the Company; or (iii) any person (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act) who is not on the Commencement
Date, a "controlling person" (as defined in Rule 405 under the Securities Act of
1933, as amended) (a "Controlling Person") of the Company who becomes (x) the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
over 50% of the combined voting power of the Company's then outstanding voting
securities entitled to vote generally or (y) a Controlling Person of the
Company. Notwithstanding the foregoing, the Company and Employee acknowledge and
agree that a "Change in Control" shall not include any transaction between the
Company and Appaloosa Management L.P. and its affiliates and related funds.
"Common Stock" means the common stock of the Company, without par
value.
"Diminution in Responsibility" means a material diminution in
Employee's duties or responsibilities (it being understood that removal of
Employee from the Company's Board of Directors (other than for cause or in the
case of a Change in Control) shall constitute a diminution in Employee's duties
or responsibilities) or the assignment to Employee of duties which are
materially inconsistent with his duties as President and Chief Executive Officer
of the Company or which materially impair Employee's ability to function in his
position; provided, however, that no Diminution in Responsibility shall be
deemed to have occurred solely as a result of the consummation by the Company of
a strategic corporate alliance, partnership or joint venture (in whatever form)
pursuant to which any substantial portion of the Company's marketing and sales
activities, or research and development activities, or manufacturing activities
come under the control of another company (and its affiliates) or any entity
unaffiliated with the Company on the Commencement Date.
"Long-Term Incentive Plan" means the Company's 1991 Long-Term Incentive
Plan, as amended.
"Permanent Disability" means Employee's inability to substantially
perform his duties and responsibilities hereunder by reason of any physical or
mental incapacity for a period of 180 consecutive days, or two or more periods
of 90 consecutive days each in any 360-day period.
<PAGE> 3
2. Employment.
(a) Subject to the terms and conditions of this Agreement,
Employee is hereby employed by the Company to serve as its President and Chief
Executive Officer. Employee accepts such employment, and agrees to discharge all
of the duties normally associated with said positions, to faithfully and to the
best of his abilities perform such other services consistent with his position
as a senior executive officer as may from time to time be assigned to him by the
Board of Directors of the Company, and to devote all of his business time, skill
and attention to such services. Employee shall do and perform all services,
acts, or things necessary or advisable to manage and conduct the business of the
Company, subject always to the policies set by the Board of Directors of the
Company. Employee shall have full authority to take all actions necessary for
the day-to-day operation of the Company, to formulate corporate policy, and to
administer corporate business in all respects. The authority of Employee
includes the power to employ and discharge corporate personnel (subject to any
restrictions on such actions to which the Company is subject by way of contract,
agreement or otherwise), except for members of the Board of Directors of the
Company, and to engage consultants on behalf of the Company.
(b) Notwithstanding the terms of subsection (a) above, Employee
may serve on the boards of directors of other companies, and in civic, cultural,
philanthropic and professional organizations, so long as such service does not
detract from the performance of Employee's duties hereunder. At all times during
which Employee remains President and Chief Executive Officer of the Company,
Employee shall serve as a member of the Company's Board of Directors and, at the
request of the Company's Board of Directors, as an officer or director of any
Company affiliate, in each case without additional remuneration therefor.
3. Compensation and Benefits.
3.1 Base Salary. During the term of Employee's employment
hereunder, the Company shall pay Employee a salary at the annual rate of
$250,000 or such greater amount as the Company's Board of Directors may from
time to time establish pursuant to the terms hereof (the "Base Salary"). Such
Base Salary shall be reviewed annually and may be increased, but not decreased,
by the Board of Directors in its sole discretion. The Base Salary shall be
payable in accordance with the Company's customary payroll practices for its
senior management personnel.
3.2 Bonus.
(a) For each fiscal year of the Company ending during the
Employment Term (as hereinafter defined), Employee shall receive a cash bonus
(the "Base Bonus") in an amount equal to:
<PAGE> 4
(i) once the Company satisfies the financial covenants to
be established pursuant to Section 6.15 of the
Appaloosa Agreement (the "Financial Covenants"), 50%
of the Base Salary; and
(ii) once the Company achieves certain specified target
performance levels (the "Target Performance Levels")
set forth in the Annual Plan, 60% of the Base Salary
(it being acknowledged and agreed that the sum of
subparagraphs (i) and (ii) of this Section 3.2 shall
not exceed 60% of the Base Salary in the aggregate);
provided, however, that if the Company fails to
establish Target Performance Levels, Employee shall
be entitled to a cash bonus equal to 60% of Base
Salary if the Company satisfies the Financial
Covenants applicable to such fiscal year.
Notwithstanding the foregoing, even if the Company fails to achieve the Target
Performance Levels or to satisfy the Financial Covenants in any fiscal year, the
Board of Directors of the Company (which shall include the affirmative vote of
the Purchasers Designees (as such term is defined in the Appaloosa Agreement))
may award Employee a cash bonus in an amount to be determined by the Company's
Board of Directors in its sole discretion. If Employee meets or exceeds certain
additional performance goals beyond the Target Performance Levels (or, in the
absence of specified Target Performance Levels, the Financial Covenants) (the
"Superior Performance Levels"), Employee shall be entitled to receive an
additional cash bonus equal to up to an additional 40% of the Base Salary (the
"Extra Bonus"). The sum of the Base Bonus and the Extra Bonus for any fiscal
year shall not exceed 100% of the Base Salary.
(b) Upon payment in full of the Appaloosa Notes, the Company and
Employee agree to negotiate in good faith to revise the terms of this Section
3.2 in order to establish a new mechanism for determining Employee's eligibility
for a cash bonus.
(c) Notwithstanding subsections (b) and (c) of this Section 3.2,
so long as Employee has been continuously employed by the Company from the
Commencement Date through December 31, 2000, the Company shall pay to Employee a
guaranteed minimum cash bonus of $75,000 for fiscal year 2000, regardless of
whether or not Employee meets or exceeds the Target Performance Levels and/or
the Superior Performance Levels. Collectively, the Base Bonus and the Extra
Bonus are referred to herein as the "Bonus".
3.3 Stock Options. (a) Upon receipt of stockholder approval of an
amendment to the Long Term Incentive Plan increasing the number of shares of the
Company's Common Stock subject to the Long Term Incentive Plan (the "Stockholder
Approval"), the Company will issue to Employee a Non-Qualified Stock Option
under the Long Term Incentive Plan to purchase up to 700,000 shares of Common
Stock (the
<PAGE> 5
"Initial Options"). The stock option agreement pursuant to which the
Initial Options are granted will provide that the Initial Options vest in
accordance with the following schedule and shall contain such other terms and
conditions as are reasonable and customary:
<TABLE>
<CAPTION>
Number of Years That Have Expired Number of Options Available for
Since the Commencement Date Exercise
<S> <C>
1 233,333
2 233,333
3 233,334
</TABLE>
The exercise price for the Initial Options shall be determined on a date
following Stockholder Approval and the Commencement Date (as hereinafter
defined) (but no later than thirty (30) days following the date of Stockholder
Approval) mutually agreed upon by the Board of Directors and Employee and shall
be equal to the closing price of a share of Common Stock as reported on The
NASDAQ SmallCap Stock Market (or such other stock market or automated quotation
system on which the Common Stock is then trading or quoted) on such date.
(b) In addition to (i) the Initial Options and (ii) any Bonus to
which Employee may be entitled pursuant to Section 3.2, the Company will grant
to Employee up to fifty thousand (50,000) Incentive Stock Options (the
"Performance Options") per fiscal year pursuant to the Long Term Incentive Plan
if the Company exceeds certain agreed upon performance goals set forth in the
Annual Plan. If there is no Annual Plan, or if there are no Target Performance
Levels set forth in the Annual Plan, Employee shall be entitled to that number
of Performance Options determined by the Company's Board of Directors if the
Company achieves or surpasses the Financial Covenants applicable to such fiscal
year. In the absence of (i) an Annual Plan (or in the absence of Target
Performance Levels in such Annual Plan) for fiscal year 2000 and (ii) Financial
Covenants for such fiscal year, Employee shall be entitled to that number of
Performance Options determined by the Company's Board of Directors if the
Company achieves or surpasses all of the projections set forth in Quarterly
Budgets (as such term is defined in the Appaloosa Agreement) required to be
prepared by the Company by Section 6.32 of the Appaloosa Agreement. The
Performance Options will be granted over a four-year period and the aggregate
number of Performance Options to be granted by the Company to Employee during
such four year period shall not exceed two hundred thousand (200,000). The
agreement(s) pursuant to which the Performance Options are granted will contain
such terms and conditions as established by the Board of Directors (or a
committee thereof), will provide that the Performance Options will vest ratably
over a three year period (e.g. each time Performance Options are granted such
options will vest
<PAGE> 6
over three years from the date of such grant), and will provide that the
exercise price of the Performance Options will be equal to the closing price of
a share of Common Stock as reported on The NASDAQ SmallCap Stock Market (or such
other stock market or automated quotation system on which the Common Stock is
then trading or quoted) on the date of grant of such options.
(c) Notwithstanding anything to the contrary, the stock option
agreements pursuant to which the Initial Options and the Performance Options, if
any, are issued shall provide, among other things, that upon Employee's death
any of such options which are exercisable by Employee at the time of his death
may be exercised by Employee's estate or successor for a one (1) year period
following Employee's death.
3.4 Benefits.
(a) Benefit Plans. During the Employment Term, Employee may
participate, on the same basis and subject to the same qualifications as other
personnel of the Company, in any benefit plans and policies of the Company in
effect or that will be developed over time; provided, however, that the Company
shall pay to or on behalf of Employee up to $6,000 per annum which funds shall
be used to pay the premiums for healthcare and dental coverage for Employee and
his family under any healthcare and/or dental benefit plans of the
Kimberly-Clark Corporation (or any successor thereto) selected by Employee;
provided, further, that so long as the Company is paying the foregoing amounts
to Employee, Employee shall not be entitled to coverage under the Company's
healthcare and dental benefit plans.
(b) Reimbursement of Expenses. During the Employment Term, Company
shall pay or promptly reimburse Employee, upon submission of proper invoices in
accordance with the Company's normal procedures, for all reasonable
out-of-pocket business, entertainment and travel expenses incurred by Employee
in the performance of his duties hereunder.
(c) Relocation Expenses. Upon the execution of this Agreement, the
Company shall pay to Employee fifty thousand dollars ($50,000) (the "Relocation
Bonus") (calculated on an after-tax basis) to cover Employee's expenses relating
to Employee's relocation to the Hartford, Connecticut area. If Employee (i)
voluntarily terminates his employment during the first twelve (12) months of the
Employment Term or (ii) is terminated by the Company for Cause during the first
twelve (12) months of the Employment Term, Employee shall repay the Relocation
Bonus to the Company within ten (10) business days of such termination.
(d) Vacation. During the Employment Term, Employee shall be
entitled to four weeks of vacation per year.
(e) Withholding. The Company shall be entitled to withhold from
amounts payable or benefits accorded to Employee under this Agreement all
federal, state
<PAGE> 7
and local income, employment and other taxes, as and in such amounts as may be
required by applicable law.
4. Employment Term.
The term of this Agreement (the "Employment Term") shall commence on or
before May 29, 2000 on the day Employee actually commences to perform his duties
on a full-time basis on behalf of the Company (the "Commencement Date") and
shall end on the close of business on the third anniversary of the Commencement
Date. Upon the mutual agreement of the Company and Employee, the Employment Term
may be extended for successive twelve month periods. Employee's employment
hereunder shall be coterminous with the Employment Term, unless sooner
terminated as provided in Section 5.
5. Termination; Severance Benefits.
5.1 Generally. Either the Board of Directors of the Company or
Employee may terminate Employee's employment hereunder, for any reason, at any
time prior to the expiration of the Employment Term, upon sixty (60) days prior
written notice to the other party. If termination is by the Company for Cause in
accordance with clause (i), (ii) or (iv) of the definition of Cause in Section 1
hereof, then no notice shall be required. If termination is by the Company for
Cause in accordance with clause (iii) of the definition of Cause in Section 1
hereof, then such notice shall be given as provided in such clause. Upon
termination of Employee's employment hereunder for any reason, Employee shall be
deemed simultaneously to have resigned as a member of the Board of Directors of
the Company and from any other position or office he may at the time hold with
the Company or any of its affiliates.
5.2 Termination by Employee. (a) No Reason. If prior to the
expiration of the Employment Term, Employee voluntarily resigns from his
employment other than for Cause, Employee shall (i) be entitled only to that
portion of Base Salary accrued through the date of termination of employment
hereunder (the "Accrued Salary"), (ii) receive no further Base Salary or Bonus
hereunder and (iii) cease to be covered under or be permitted to participate in
or receive any of the Benefits. In addition, except as otherwise provided for
herein or in the Long Term Incentive Plan or in the agreement pursuant to which
such options are granted, the Initial Options and, if applicable, the
Performance Options, shall automatically cease to vest and the exerciseability
of any of such options which have vested prior to the termination of Employee's
employment shall be governed by the agreement(s) pursuant to which such options
are granted.
(b) Diminution in Responsibility. If, prior to the expiration of
the Employment Term, Employee terminates his employment hereunder due to a
Diminution in Responsibility, Employee shall be entitled to (i) the Accrued
Salary, (ii) salary continuation for eighteen (18) months at Employee's Base
Salary as in effect as of the termination date and (iii) cease to be covered
under or be permitted to participate in or
<PAGE> 8
receive any of the Benefits. In addition, a pro-rata portion (based on the
number of days which have elapsed in the Employment Term) of all of the Initial
Options and Performance Options previously granted shall immediately become
fully vested.
5.3 Termination by the Company.
(a) Without Cause. If, prior to the expiration of the Employment
Term, the Company terminates Employee's employment hereunder without Cause,
Employee shall be entitled to (i) the Accrued Salary and (ii) salary
continuation for eighteen (18) months at Employee's Base Salary as in effect as
of the termination date. In addition, a pro-rata portion (based on the number of
days which have elapsed in the Employment Term) of all of the Initial Options
and any Performance Options previously granted shall immediately become fully
vested. Notwithstanding the foregoing, if Employee's employment is terminated
pursuant to this section during the first six months of the Employment Term and
subsequent to such termination Employee secures new employment in a Competitive
Business (as hereinafter defined), Employee shall so notify the Company and the
Company's obligation to make salary continuation payments to Employee as
provided in this Section 5.2(a)(ii) shall cease as of the date of receipt of
such notice and the Restrictive Covenants (as hereinafter defined) provided for
in Section 7 shall automatically be of no further force or effect with respect
to Employee. The provisions of the foregoing sentence shall have no effect on
any other rights or obligations of the Company or Employee provided for herein.
(b) For Cause. If, prior to the expiration of the Employment Term,
the Company terminates Employee's employment hereunder for Cause, Employee shall
(i) receive no further Base Salary or Bonus hereunder and (ii) cease to be
covered under or be permitted to participate in or receive any of the Benefits.
In addition, except as otherwise provided for herein or in the Long Term
Incentive Plan or in the agreement pursuant to which such options are granted,
the Initial Options and, if applicable, the Performance Options, shall
automatically cease to vest and the exerciseability of any of such options which
have vested prior to the termination of Employee's employment shall be governed
by the agreement(s) pursuant to which such options are granted. Notwithstanding
the foregoing, if Employee is terminated for Cause hereunder solely as a result
of being convicted of a felony, which conviction is ultimately reversed on
appeal or pardoned, Employee shall be deemed to have been terminated without
Cause as of the date of such termination for Cause. In such case, Employee shall
be entitled to the payments to which he would otherwise be entitled under
Section 5.3(a).
(c) Upon Permanent Disability. If, prior to the expiration of the
Employment Term, the Company terminates Employee's employment hereunder upon
Employee's Permanent Disability, Employee shall be entitled to (i) the Accrued
Salary and (ii) salary continuation for eighteen (18) months at Employee's Base
Salary as in effect as of the termination date. In addition, a pro-rata portion
(based on the number of days which have elapsed in the Employment Term) of all
of the Initial Options and any
<PAGE> 9
Performance Options previously granted shall immediately become fully vested.
Employee shall not be entitled to any of the Benefits except to the extent
provided in the benefit plans and programs of the Company in which Employee was
a participant prior to his termination due to Permanent Disability.
(d) Upon Death. If, prior to the expiration of the Employment
Term, Employee dies, Employee (or Employee's estate or successors) shall (i) be
entitled to the Base Salary accrued through the date of Employee's death, (ii)
be entitled to any Bonus and/or Performance Options to which Employee is
entitled for services provided in a prior fiscal year of the Company and which
Bonus and/or Performance Options have not yet been paid and/or issued, as the
case may be, prior to Employee's death and (iii) cease to be covered under or
receive any of the Benefits, except as may be provided in the benefit plans and
programs of the Company in which Employee was a participant prior to his death.
(e) Change in Control. In the event of a Change in Control
pursuant to which the Company, or any successor thereto, terminates Employee's
employment hereunder for any reason other than Cause during the nine (9) month
period following the occurrence of such Change in Control, Employee shall be
entitled to (i) the Accrued Salary, and (ii) a lump sum payment equal to two (2)
times his Base Salary in effect on the termination date of Employee's
employment. In addition, the Initial Options and any Performance Options
previously granted shall immediately become fully vested.
6. Confidentiality. Employee agrees to execute and deliver the
Company's standard form of confidentiality and inventions agreement.
7. Non-competition. For so long as Employee is an officer,
director, or employee of the Company, and for a period of time equal to (i) in
the case of the termination of Employee's employment pursuant to Sections 5.2(a)
or 5.3(b), six months after the date of such termination, (ii) in the case of
the termination of Employee's employment pursuant to Sections 5.2(b), 5.3(a) or
5.3(c), the period of salary continuation provided for in such section and (iii)
in the case of the termination of Employee's employment pursuant to Section
5.3(e), twenty four months after the date of such termination, Employee shall
not, in any county and/or city in the State of Connecticut, the United States of
America or any county or political subdivision in any state or country in the
world, for any reason whatsoever, (A) directly or indirectly engage in a
Competitive Business whether such engagement shall be as an employer, officer,
director, owner, employee, partner, member or other participant; provided,
however, that Employee shall not be deemed to be engaged in a Competitive
Business solely by his ownership of less than 5% of any class of securities
which class of securities have been registered under Section 12 of the
Securities Exchange Act of 1934, as amended or (B) assist others, whether as a
consultant, agent or independent contractor, in engaging in a Competitive
Business; or (C) induce (whether through recruitment, solicitation of employment
or otherwise) employees of the Company or any of its affiliates to terminate
<PAGE> 10
their employment therewith. For purposes of this Agreement, "Competitive
Business" shall mean any business involving the development of, or sales and
marketing of safety needles and related products.
(a) If Employee breaches, or threatens to commit a breach of any
of the provisions of this Section 7 (the "Restrictive Covenants"), the Company
shall have the right and remedy to have the Restrictive Covenants specifically
enforced by any court of competent jurisdiction, including but not limited to
the right to entry against Employee of restraining orders and injunctions
(preliminary, mandatory, temporary and permanent) against violations, threatened
or actual, and whether or not continuing, of any of the Restrictive Covenants,
it being acknowledged and agreed by Employee that any breach or threatened
breach of any of the Restrictive Covenants would cause irreparable and
continuing injury to the Company and that money damages would not provide an
adequate remedy to the Company. The foregoing right and remedy shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company at law or in equity.
(b) Employee acknowledges and agrees that the Restrictive
Covenants are reasonable and valid in geographic and temporal scope and in all
other respects. The Company and Employee further acknowledge and agree that if
any court of competent jurisdiction determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable for any reason, (i)
the Restrictive Covenants contained herein shall be restricted to such extent as
such court determines to be reasonable and (ii) that it is clearly the intent of
the parties that the remainder of the Restrictive Covenants and parts thereof
shall not thereby be affected and shall be given full effect, without regard to
the invalid portions. No provision herein shall be dependent upon the validity
of any other provision. Any modification of the Restrictive Covenants, or any
part thereof, by any court of competent jurisdiction shall only be effective
with respect to the operation of such covenant (or part thereof) in the
particular jurisdiction in which such adjudication is made.
8. General.
8.1 Governing Law. This Agreement shall be construed, interpreted
and governed by the laws of the State of Connecticut, without regard to the
conflicts of law rules thereof.
8.2 Authority. The Company hereby represents and warrants that it
has all corporate authority necessary to enter into this Agreement.
8.3 Advice of Counsel. Employee represents and warrants that he
has read and understands each of the provisions of this Agreement and that he
has sought and obtained the advice of legal counsel before agreeing to be bound
by the terms hereof.
<PAGE> 11
8.4 Binding Effect. This Agreement shall extend to and be binding
upon Employee, his legal representatives, heirs and distributees and upon the
Company, its successors and assigns regardless of any change in the business
structure of the Company, be it through spin-off, merger, sale of stock, sale of
assets or any other transaction.
8.5 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder shall be assigned or delegated by any party without the
prior written consent of the other party.
8.6 Entire Agreement. Except for any stock option or stock award
agreements between the parties, and the confidentiality and inventions agreement
between the parties, this Agreement contains the entire agreement of the parties
with respect to the subject matter hereof. No waiver, modification or change of
any provision of this Agreement shall be valid unless in writing and signed by
both parties.
8.7 Waiver. The waiver of any breach of any duty, term or
condition of this Agreement shall not be deemed to constitute a waiver of any
preceding or succeeding breach of the same or any other duty, term or condition
of this Agreement.
8.8 Severability. If any provision of this Agreement shall be
unenforceable in any jurisdiction in accordance with its terms, the provision
shall be enforceable to the fullest extent permitted in that jurisdiction and
shall continue to be enforceable in accordance with its terms in any other
jurisdiction and the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby.
8.9 Resolution of Disputes. Except for actions by the Company with
respect to Section 7 hereof, any disputes arising under or in connection with
this Agreement between Employee and the Company (or any officer, director,
employee or agent of the Company) shall be resolved by confidential binding
arbitration before a panel of three arbitrators, to be held in Hartford,
Connecticut (or in such other location as the Company may at the time be
headquartered) in accordance with the then-current National Rules for the
Resolution of Employment Disputes of the American Arbitration Association.
Judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
8.10 Notices. All notices pursuant to this Agreement shall be in
writing and shall be sent by prepaid certified mail, return receipt requested or
by recognized air courier service addressed as follows:
<PAGE> 12
(i) If to the Company to:
Bio-Plexus, Inc.
129 Reservoir Road
Vernon, Connecticut 06066
with a copy to:
Paul, Hastings, Janofsky & Walker
1055 Washington Boulevard
Stamford, Connecticut 06901
Attention: Esteban A. Ferrer, Esq.
(ii) If to Employee to:
Mr. John S. Metz
3880 Downing Lane
Atlanta, Georgia 30319
with a copy to:
Gleaton, Persons, Egan & Jones
Promenade Two, Suite 2990
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: Roger E. Harris, Esq.
or to such other addresses as may hereinafter be specified by notice in writing
by either of the parties, and shall be deemed given three business days after
the date so mailed or sent.
8.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall together
constitute one and the same agreement.
[Signature page follows this page]
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
WITNESS
/s/ Carl R. Sahi /s/ John S. Metz
- ----------------------------- -----------------------------
Name: JOHN S. METZ
BIO-PLEXUS, INC.
WITNESS
/s/ Cheryl Borden By: /s/ Richard D. Ribakove
- ----------------------------- -----------------------------
Name: Name: Richard D. Ribakove
Title: Chairman of the Board
<PAGE> 1
Exhibit 10.45
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.
"Collateral Account" shall have the meaning assigned to that term in
Section 3.01.
<PAGE> 2
"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.
"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.
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<PAGE> 3
"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 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.
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<PAGE> 4
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 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
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<PAGE> 5
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, 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
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<PAGE> 6
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 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
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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 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
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<PAGE> 8
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, 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.
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
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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 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.
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<PAGE> 10
(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.
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
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<PAGE> 11
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.
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.
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<PAGE> 12
(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 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
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<PAGE> 13
(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.
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
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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 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 above or by applicable statute and cannot be
waived), and the Collateral Agent or any other Person may be the purchaser,
lessee or recipient
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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 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.
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(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 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.
- 16 -
<PAGE> 17
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
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
- 17 -
<PAGE> 18
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, 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
- 18 -
<PAGE> 19
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.
- 19 -
<PAGE> 20
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:________________________
Name:
Title:
APPALOOSA MANAGEMENT, L.P.
By:________________________
Name:
Title:
- 20 -
<PAGE> 21
SECURITY AGREEMENT
AMONG
BIO-PLEXUS, INC.,
as Obligor
and
Appaloosa Management, L.P.,
as Collateral Agent
Dated as of April 28, 2000
- 21 -
<PAGE> 22
TABLE OF CONTENTS
<TABLE>
<S> <C>
Article I. Definitions and Interpretation ............................ 1
1.01 Certain Defined Terms ....................................... 1
1.02 Interpretation .............................................. 3
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 ....................................... 6
2.04 Perfection .................................................. 6
2.05 Preservation and Protection of Security Interests ........... 7
2.06 Reserved .................................................... 8
2.07 Special Provisions Relating to Securities Collateral ........ 8
2.08 Use of Intellectual Property ................................ 8
2.09 Instruments ................................................. 9
2.10 Use of Collateral ........................................... 9
2.11 Rights and Obligations ...................................... 9
2.12 Release of Motor Vehicles ................................... 10
2.13 Termination ................................................. 10
Article III. Cash Proceeds of Collateral ............................. 10
3.01 Collateral Account .......................................... 10
3.02 Certain Proceeds ............................................ 10
3.03 Investment of Balance in Collateral Account ................. 11
Article IV. Representations and Warranties ........................... 11
</TABLE>
- i -
<PAGE> 23
<TABLE>
<S> <C>
4.01 Title ....................................................... 11
4.02 Intellectual Property ....................................... 11
4.03 Goods ....................................................... 12
Article V. Covenants ................................................. 12
5.01 Books and Records ........................................... 12
5.02 Removals, Etc ............................................... 12
5.03 Stock Collateral ............................................ 12
5.04 Intellectual Property ....................................... 13
Article VI. Remedies ................................................. 14
6.01 Events of Default, Etc ...................................... 14
6.02 Deficiency .................................................. 15
6.03 Private Sale ................................................ 15
6.04 Application of Proceeds ..................................... 16
Article VII. Miscellaneous ........................................... 16
7.01 Waiver ...................................................... 16
7.02 Notices ..................................................... 17
7.03 Expenses, Etc ............................................... 17
7.04 Amendments .................................................. 17
7.05 Successors and Assigns ...................................... 18
7.06 Survival .................................................... 18
7.07 Agreements Superseded ....................................... 18
7.08 Severability ................................................ 18
7.09 Captions .................................................... 18
7.10 Counterparts ................................................ 18
7.11 GOVERNING LAW ............................................... 18
</TABLE>
- ii -
<PAGE> 24
<TABLE>
<S> <C>
7.12 Submission to Jurisdiction .................................. 18
7.13. Service of Process ......................................... 19
7.14. WAIVER OF JURY TRIAL ....................................... 19
</TABLE>
- iii -
<PAGE> 25
Annex I - Schedule of Pledged Debt
Annex II - Jurisdictions for Filing of Financing Statements
Annex III - Business Locations
- iv -
<PAGE> 1
Exhibit 10.46
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 COMPANY AT 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 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
<PAGE> 2
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.
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.
- 2 -
<PAGE> 3
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> 4
BIO-PLEXUS, INC.
By:
----------------------------------
Name:
Title:
- 4 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,219,000
<SECURITIES> 0
<RECEIVABLES> 408,000
<ALLOWANCES> 0
<INVENTORY> 2,705,000
<CURRENT-ASSETS> 4,526,000
<PP&E> 4,514,000<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,401,000
<CURRENT-LIABILITIES> 6,831,000
<BONDS> 1,800,000
0
0
<COMMON> 72,565,000
<OTHER-SE> 149,000<F2>
<TOTAL-LIABILITY-AND-EQUITY> 10,401,000
<SALES> 1,542,000
<TOTAL-REVENUES> 1,542,000
<CGS> 0
<TOTAL-COSTS> 2,674,000
<OTHER-EXPENSES> (36,000)<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,682,000
<INCOME-PRETAX> (2,839,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,839,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,839,000)
<EPS-BASIC> (0.20)
<EPS-DILUTED> (0.20)
<FN>
<F1>THIS VALUE IS NET OF DEPRECIATION.
<F2>VALUE REPRESENTS REDEEMABLE COMMON STOCK WARRANTS.
<F3>AMOUNT INCLUDES $36,000 OF INTEREST INCOME.
</FN>
</TABLE>
