Exhibit 6
Form of Convertible Note Purchase Agreement
CONVERTIBLE NOTE PURCHASE AGREEMENT
AMONG
BIO-PLEXUS, INC.,
THE PURCHASERS
LISTED ON EXHIBIT A HERETO
AND
APPALOOSA MANAGEMENT L.P.,
as Collateral Agent
Dated as of __________1999
TABLE OF CONTENTS
Page
1. Issuance and Sale of Notes and Common Stock...........................1
1.1. Definitions..............................................1
1.2. Issuance, Purchase and Sale..............................1
1.3. Closing..................................................2
1.4. Deliveries by the Company................................2
1.5. Deliveries by the Purchasers.............................3
2. Representations and Warranties of the Company.........................4
2.1. Organization; Subsidiaries...............................4
2.2. Due Authorization........................................4
2.3. Capitalization...........................................5
2.4. SEC Reports Correspondence...............................5
2.5. Financial Statements.....................................6
2.6. Litigation...............................................6
2.7. Title to Properties; Insurance...........................6
2.8. Consents, etc............................................7
2.9. No Material Adverse Change...............................7
2.10. Taxes....................................................7
2.11. Compliance with ERISA....................................8
2.12. Labor Relations..........................................9
2.13. Intellectual Property Rights.............................9
2.14. Possession of Franchises, Licenses, Etc.................10
2.15. Compliance with Laws....................................10
2.16. Conflicting Agreements and Charter Provisions...........10
2.17. Suppliers...............................................11
2.18. Products................................................11
2.19. Offering of the Securities..............................11
2.20. Existing Indebtedness; Future Liens.....................12
2.21. Environmental Matters...................................12
2.22. Solvency................................................12
2.23. Security Documents......................................13
2.24. Brokers or Finders......................................13
2.25. Holding Company Act and Investment Company Act..........13
2.26. Related Party Transactions..............................13
2.27. Year 2000...............................................13
2.28. Disclosure..............................................14
3. Representations and Warranties of the Purchasers.....................14
3.1. Organization and Qualification..........................14
3.2. Due Authorization.......................................14
3.3. Acquisition for Investment..............................15
3.4. Offering of Securities..................................15
3.5. Accredited Investor.....................................15
4. Registration, Exchange and Transfer of Notes.........................15
4.1. The Note Register; Persons Deemed Owners................15
4.2. Issuance of New Notes Upon Exchange or Transfer.........15
5. Payment of Notes.....................................................16
5.1. Home Office Payment.....................................16
5.2. Limitation on Interest..................................16
5.3. Accreted Value..........................................16
5.4. Interest................................................17
5.5. Principal...............................................18
6. Covenants of the Company.............................................18
6.1. Maintenance of Office or Agency.........................18
6.2. Money for Security Payments to be Held in Trust.........18
6.3. Existence...............................................18
6.4. Maintenance of Properties...............................19
6.5. Payment of Taxes and Other Claims.......................19
6.6. Limitation on Indebtedness..............................19
6.7. Limitation on Encumbrances..............................19
6.8. Limitation on Related Party Transactions................20
6.9. Limitation on Dividends; Stock Issuances................20
6.10. Subsidiary Guarantees...................................20
6.11. Additional Offerings of Securities......................21
6.12. Pledges of Intercompany Notes...........................21
6.13. No Speculative Transactions.............................22
6.14. Restricted Investments..................................22
6.15. Financial Covenants.....................................22
6.16. Sale and Leaseback Transactions.........................24
6.17. Line of Business........................................24
6.18. Sale of Assets..........................................24
6.19. Indenture Relating to the Notes.........................25
6.20. Financial Statements and Information....................25
6.21. Inspection..............................................26
6.22. Compliance with Laws....................................27
6.23. Supplemental Disclosure.................................28
6.24. Proceeds................................................28
6.25. Insurance; Damage to or Destruction of Collateral.......28
6.26. Rights of Required Holders to Designate Directors;
Board Composition.....................................29
6.27. Executive Officers......................................30
6.28. Board and Committee Notice Requirement..................30
6.29. Reimbursement of Certain Expenses.......................31
6.30. Limitation of Agreements................................31
6.31. Redemption of Convertible Debentures....................31
6.32. Operations in Accordance with the Business Plan.........31
7. Events of Default and Remedies.......................................31
7.1. Events of Default and Remedies..........................31
7.2. Acceleration of Maturity................................34
7.3. Other Remedies..........................................34
7.4. Conduct No Waiver; Collection Expenses..................35
7.5. Annulment of Acceleration...............................35
7.6. Remedies Cumulative.....................................35
8. Redemption 35
8.1. Optional Redemption.....................................35
8.2. Partial Redemption......................................36
8.3. Change of Control.......................................36
8.4. Redemption Procedures...................................36
9. Conversion 37
9.1. Holder's Option to Convert into Common Stock............37
9.2. Exercise of Conversion Privilege........................37
9.3. Fractions of Shares; Interest...........................38
9.4. Reservation of Stock; Listing...........................38
9.5. Rights..................................................38
9.6. Adjustment of Conversion Ratio..........................39
9.7. Merger or Consolidation.................................42
9.8. Notice of Certain Corporate Actions.....................43
9.9. Reports as to Adjustments...............................43
10. The Collateral Agent.................................................43
10.1. Appointment.............................................43
10.2. Delegation of Duties....................................44
10.3. Exculpatory Provisions..................................44
10.4. Reliance by the Collateral Agent........................44
10.5. Notice of Default.......................................45
10.6. Non-Reliance on Collateral Agent and Other Purchasers...45
10.7. Indemnification.........................................46
10.8. Collateral Agent in its Individual Capacity.............46
10.9. Successor Collateral Agent..............................47
11. Interpretation.......................................................47
11.1. Definitions.............................................47
11.2. Accounting Principles...................................62
12. Miscellaneous........................................................62
12.1. Payments; Indemnity.....................................62
12.2. Severability............................................64
12.3. Specific Enforcement....................................64
12.4. Entire Agreement........................................64
12.5. Counterparts............................................64
12.6. Notices and other Communications........................64
12.7. Amendments..............................................65
12.8. Successors and Assigns..................................66
12.9. Expenses................................................66
12.10. Survival................................................66
12.11. Transfer of Notes and Common Stock......................66
12.12. GOVERNING LAW...........................................67
12.13. Submission to Jurisdiction..............................67
12.14. Service of Process......................................67
12.15. WAIVER OF JURY TRIAL....................................67
12.16. Public Announcements....................................67
12.17. Further Assurances......................................68
12.18. Substitution of Purchaser...............................68
12.19. Signatures..............................................68
THIS CONVERTIBLE NOTE PURCHASE AGREEMENT, dated as of _________,
1999 (this "Agreement"), is made among BIO-PLEXUS, INC., a Connecticut
corporation (the "Company"), the purchasers listed on Exhibit A hereto
(each such party, a "Purchaser" and collectively, the "Purchasers"), and
APPALOOSA MANAGEMENT L.P., as Collateral Agent (the "Collateral Agent").
WHEREAS, the parties hereto have previously entered into a Note
Purchase Agreement (the "Note Purchase Agreement");
WHEREAS, the Note Purchase Agreement provides that, subject to
the terms and conditions specified therein, the parties thereto will enter
into this Agreement;
WHEREAS, upon the terms and subject to the conditions set forth
in this Agreement, the Purchasers wish to purchase from the Company, and
the Company wishes to issue and sell to the Purchasers, (i) Zero Coupon
Secured Convertible Notes due [______, 2004] (the "Notes") issued by the
Company in the aggregate principal amount of $____________ (the "Face
Amount") and (ii) an aggregate of 250,000 shares (the "Shares") of Common
Stock, no par value, of the Company (the "Common Stock");
WHEREAS, the Notes shall be convertible (under the circumstances
described herein) into shares of Common Stock, no par value, of the Company
(the "Common Stock"); and
WHEREAS, the Purchasers and the Company desire to provide for
such purchase and sale and to establish various rights and obligations in
connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein set forth, the parties
hereto agree as follows:
1. Issuance and Sale of Notes and Common Stock.
-------------------------------------------
1.1. Definitions. Certain capitalized terms used in the Agreement
are defined in Section 13 hereof; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement.
1.2. Issuance, Purchase and Sale. (a) Upon the terms and subject
to the conditions set forth herein, the Company is issuing and selling to
the Purchasers and the Purchasers are purchasing from the Company, the
Notes and the Shares for an aggregate cash purchase price of [$________]
(the "Purchase Price"). The Notes shall be in the form of Exhibit 1.2
hereto.
(b) The parties agree that the fair market value of the Notes is
$_____ and the fair market value of the Common Stock purchased hereby is
$[750,000]. Each party agrees to file all tax returns consistent with such
allocation and to take no position in consistent with such allocation,
unless required by law.
1.3. Closing. (a) The closing of the transactions contemplated
hereby (the "Closing") will take place simultaneously herewith at the
offices of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, New York, New York.
1.4. Deliveries by the Company. At the Closing, the Company is
delivering to each Purchaser (and to such other parties as otherwise set
forth below) the following:
(i) duly executed Notes in the principal amount set forth
opposite such Purchaser's name on Exhibit 1.4i hereto;
(ii) a duly executed warrant to purchase 1,500,000 shares of
Common Sock with an exercise price of $7 per share in the form
attached hereto as Exhibit 1.4 hereto (the "$7 Warrants");
(iii) an opinion of the Company's counsel, dated as of the
date hereof, addressed to such Purchaser in the form of Exhibit
1.4ii hereto;
(iv) an Officers' Certificate, dated as of the date hereof,
certifying that: the (A) representations and warranties contained
in Section 2 hereof are true and correct; and (B) holders of more
than 50% of the Company's outstanding Common Stock have approved
the Rollover Transactions at a properly called special meeting of
the stockholders of the Company;
(v) a good standing certificate for the Company, dated no
earlier than seven days prior to the date hereof, from the State
of Connecticut;
(vi) a copy of the resolutions of the Board of Directors
authorizing the execution of each of the Transaction Documents
and the performance of the transactions contemplated by the
Transaction Documents which shall be certified as true, correct
and effective as of the date hereof by an officer of the Company;
(vii) duly executed copies of the Security Agreement [and
the Intercreditor Agreement] in the forms attached hereto as
Exhibits 1.4A and B, and copies of any other Collateral
Documentation including Financing Statements required to perfect
the Holders' security interest in the Collateral;
(viii) a duly executed copy of the Registration Rights
Agreement attached hereto as Exhibit 1.4vii;
(ix) a duly executed copy of the Escrow Agreement attached
hereto as Exhibit 1.4viii;
(x) an opinion from an independent valuation consultant or
appraiser reasonably satisfactory to the Purchasers in form and
substance reasonably satisfactory to the Purchasers supporting
the conclusions that, after giving effect to the Rollover
Transactions, the Company will not be insolvent by the incurrence
of Indebtedness incurred in connection therewith, or be left with
unreasonably small capital with which to engage in its business,
or have incurred debts beyond its ability to pay such debts as
they mature];
(xi) a copy of the Amended and Restated By-laws of the
Company in form and substance reasonably satisfactory to the
Purchasers (the "By-Laws") and which shall be certified as true,
correct and effective as of the date hereof by an officer of the
Company;
(xii) the Purchasers' costs and expenses (including the
reasonable fees and expenses of its counsel, Fried, Frank,
Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇) incurred in connection with the
transactions contemplated by the Transaction Documents to be paid
as set forth in Section 1.5(i)(Y); and
(xiii) such other instruments and documents as reasonably
requested by each Purchaser.
1.5. Deliveries by the Purchasers. At the Closing, each Purchaser
is delivering to the Company (or such other parties as otherwise set forth
below) the following:
(i) the amount set forth opposite such Purchaser's name in
Exhibit 1.5i, such amount being equal to the pro-rata portion of
the Purchase Price allocable to such Purchaser for the principal
amount of Notes being purchased by such Purchaser as set forth
opposite such Purchaser's name in Exhibit 1.5i hereto, less (Y)
its costs and expenses (including the fees and expenses of its
counsel, Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and
accountants, which amounts shall be wire transferred by Appaloosa
in immediately available funds to one or more accounts designated
by such parties on or prior to the date hereof) [and (Y)
$________ to be wire transferred in immediately available funds
to _______ (the "Escrow Agent") pursuant to the Escrow Agreement,
dated as of the date hereof, by and between the Company, the
Escrow Agent and the [Collateral Agent]]; and
[(ii) a duly executed copy of the Escrow Agreement].
2. Representations and Warranties of the Company.
---------------------------------------------
The Company represents and warrants to each Holder as follows:
2.1. Organization; Subsidiaries. (a) The Company is a corporation
duly organized and existing in good standing under the laws of the State of
Connecticut and has the corporate power to own its property and to carry on
its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary and where the failure to so
qualify could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(b) The Company does not have any Subsidiaries. Except as
set forth on Schedule 2.1(b), the Company does not own, directly or
indirectly, or have the right or obligation to acquire, any interest in any
business association or other Person.
2.2. Due Authorization. The Company has all right, power and
authority to enter into, deliver and perform the Transaction Documents to
which it is a party and to consummate the transactions contemplated
thereby. The execution and delivery of each Transaction Document by the
Company and the performance by it of the transactions contemplated thereby
(including, without limitation, the issuance and sale of the Notes, the
Shares and issuance of shares of Common Stock upon conversion of the Notes)
and compliance by the Company with all the provisions of each Transaction
Document (as applicable) has been duly authorized by all requisite
corporate proceedings on the part of the Company, (including, without
limitation, approval by holders of more than 50% of the outstanding Common
Stock). Each of the Transaction Documents has been duly executed and
delivered on behalf of the Company, and each such Transaction Document
constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its respective terms,
except to the extent that such enforceability (i) may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally or (ii) is subject to general
principles of equity. The Shares and the shares of Common Stock issuable
upon conversion of the Notes have been validly reserved for issuance, and
upon issuance, will be validly issued and outstanding, fully paid and
nonassessable.
2.3. Capitalization. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock, of which, as of the date
hereof, 13,643,308 shares were issued and outstanding, 809,750 shares were
reserved for issuance upon the exercise of outstanding stock options
pursuant to the Company's option plans, 1,380,386 shares were reserved for
issuance upon the exercise of the outstanding warrants, and 2,500,000
shares were reserved for issuance upon the conversion of certain 6%
Convertible Debentures due 2004 and (ii) 3,000,000 shares of Preferred
Stock, no par value (the "Preferred Stock"), of which, as of the date
hereof, no shares were issued and outstanding. All of the outstanding
shares of Common Stock are validly issued and are fully paid and
nonassessable. No class of Capital Stock of the Company is entitled to
preemptive rights. Except as set forth on Schedule 2.3, there are no
outstanding options, warrants, subscription rights, calls or commitments of
any character whatsoever relating to, or securities or rights convertible
into, shares of any class of Capital Stock of the Company, or Contracts, by
which the Company is or may become bound to issue additional shares of its
Capital Stock or options, warrants or other rights to purchase or acquire
any shares of its Capital Stock. Except as set forth on Schedule 2.3, no
warrants, bonds, debentures, notes or other Indebtedness or other security
having the right to vote (or convertible into or exercisable for securities
having the right to vote) on any matters on which stockholders may vote
were issued or outstanding. Except as set forth on Schedule 2.3 or as
contemplated by the Transaction Documents, the Company is not a party to,
and, to the Company's best knowledge, there are, and immediately after the
Closing, there will be, no agreement, restriction or encumbrance (such as a
preemptive or similar right of first refusal, right of first offer, proxy,
voting agreement, voting trust, registration rights agreement,
shareholders' agreement, etc., whether or not the Company is a party
thereto) with respect to the purchase, sale or voting of any shares of
Capital Stock of the Company (whether outstanding or issuable upon
conversion, exchange or exercise of outstanding securities) or other
securities of the Company pursuant to any provision of law, the Certificate
of Incorporation or By-Laws, any agreement or otherwise. Except as set
forth on Schedule 2.3 or as contemplated by the Transaction Documents, no
person has the right to nominate or elect one or more directors of the
Company. Immediately following the transactions contemplated hereby, the
Company's capitalization will be as set forth in Schedule 2.3. The Company
has not declared or paid any dividend or made any other distribution of
cash, stock or other property to its stockholders since January 1, 1996.
2.4. SEC Reports Correspondence. The Company has filed all proxy
statements, reports and other documents required to be filed by it under
the Exchange Act from and after January 1, 1995; and the Company has
furnished each Purchaser true and complete copies of all annual reports,
quarterly reports, proxy statements and other reports under the Exchange
Act filed by the Company from and after such date, each as filed with the
SEC (collectively, the "SEC Reports"). Each SEC Report was in compliance in
all material respects with the requirements of its respective report form
and did not on the date of filing contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and as of the
date hereof there is no fact or facts not disclosed in the SEC Reports
which relate specifically to the Company and which could, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
The Company has made available for inspection by each Purchaser copies of
all correspondence between the Company and the SEC from and after January
1, 1995.
2.5. Financial Statements. The financial statements (including
any related schedules and/or notes) included in the SEC Reports have been
prepared in accordance with GAAP consistently followed (except as indicated
in the notes thereto) throughout the periods involved and fairly present
the consolidated financial condition, results of operations, cash flows and
changes in stockholders' equity of the Company as of the respective dates
thereof and for the respective periods then ended (in each case subject, as
to interim statements, to changes resulting from year-end adjustments, none
of which were material in amount or effect). Except as set forth on
Schedule 2.5, the Company is not subject to any Liabilities, except (i)
Liabilities in the respective amounts reflected or reserved against in the
Company's balance sheet as of December 31, 1998 included in the SEC Reports
or (ii) Liabilities incurred in the ordinary course of business since
December 31, 1998 which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
2.6. Litigation. (a) Except as set forth on Schedule 2.6, there
is no Litigation pending or, to the knowledge of the Company, threatened
against the Company or any of its properties or assets by or before any
court, arbitrator or other Governmental Entity.
(b) The Company is not in default under or in breach of any
Order of any court, arbitrator or other Governmental Entity, and the
Company is not subject to or a party to any Order of any court, arbitrator
or other Governmental Entity arising out of any claim, demand, notice,
action, suit or proceeding under any Law.
2.7. Title to Properties; Insurance. (a) Except as set forth on
Schedule 2.7(a), the Company has good and valid title to, or, in the case
of property leased by it as lessee, a valid and subsisting leasehold
interest in, the Company's properties and assets, free of all Liens.
(b) Schedule 2.7(b) sets forth a complete and correct list
of all insurance coverage carried by the Company, the carrier and the terms
and amount of coverage. All of the material assets of the Company and all
aspects of the Company's business that are of insurable character are
covered by insurance with insurers against risks of liability, casualty and
fire and other losses and liabilities customarily obtained to cover
comparable businesses and assets in amounts, scope and coverage which are
consistent with prudent industry practice. The Company is not in default
with respect to its obligations under any such insurance policy maintained
by it. All such policies and other instruments are in full force and effect
and no premiums with respect thereto are past due and owed. The Company has
not failed to give any notice or present any material claim under any such
insurance policy in due and timely fashion or as required by any of such
insurance policies. The Company has not otherwise through any act, omission
or non-disclosure, jeopardized or impaired full recovery of any claim under
such policies, and there are no claims by the Company under any of such
policies to which any insurance company is denying liability or defending
under a reservation of rights or similar clause. The Company has not
received notice of any pending or threatened termination of any of such
policies or any premium increases for the current policy period with
respect to any of such policies and the consummation of the transactions
contemplated by the Transaction Documents will not result in any such
termination or premium increase.
2.8. Consents, etc. The Company is not required to obtain any
consent, approval or authorization of, or to make any registration
declaration or filing with, any Governmental Entity or third party as a
condition to or in connection with the valid execution and delivery of any
of the Transaction Documents (including, without limitation, the issuance
and sale of the Notes and the Shares), or the performance by the Company of
its obligations in respect of any thereof, except for (i) filings required
pursuant to state and federal securities laws to effect any registration of
Securities pursuant to this Agreement and the Registration Rights
Agreement, (ii) filing of the Financing Statements [and Mortgages], (iii)
filings to be made with the U.S. Patent and Trademark Office or the U.S.
Copyright Office to perfect the Holders' first priority security interest
in the Intellectual Property constituting Collateral under the Collateral
Documentation, (iv) filing on Form 8-K under the Exchange Act to report the
consummation of the transactions contemplated hereby and (v) the approval
of the stockholders of the Company referred to in Section 6.33.
2.9. No Material Adverse Change. Since December 31, 1998, no
event has occurred or failed to occur which could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
2.10. Taxes. Except as set for on Schedule 2.10:
(a) The Company (i) has timely filed all Tax Returns
(including, but not limited to, those filed on a consolidated, combined or
unitary basis) required to have been filed by the Company, all of which Tax
Returns are true, correct and complete in all material respects; (ii) has
within the time and manner prescribed by Law paid all Taxes, required to be
paid in respect of the periods covered by such Tax Returns or otherwise due
to any Governmental Entity; (iii) has established and maintained on its
books and records, accruals and reserves that are adequate for the payment
of all Taxes not yet due and payable and attributable to any period
preceding the date hereof; and (iv) has not received notice of any
deficiencies for any Tax from any Governmental Entity against the Company,
which deficiency has not been satisfied. The Company is not the subject of
any currently ongoing audit or judicial or administrative proceeding
relating to Taxes, nor is any such audit pending or, to the Company's
knowledge, threatened. With respect to any taxable period ended prior to
[December 31, 1994], all Tax Returns including the Company has been audited
by the Internal Revenue Service or are closed by the applicable statute of
limitations. The accruals and reserves for Taxes on the Company's balance
sheet as of December 31, 1998 included in the SEC Reports are complete and
adequate in all respects to cover any and all Liabilities of the Company
for Taxes through such date. There are no Liens with respect to Taxes upon
any of the properties or assets, real or personal, tangible or intangible,
of the Company (other than Liens for Taxes not yet due). No claim has been
made or threatened by any Governmental Entity in a jurisdiction where the
Company does not file Tax Returns that the Company is or may be subject to
taxation by that jurisdiction. The Company has not filed an election under
Section 341(f) of the Code to be treated as a consenting corporation. The
Company is not or has not been a party to any tax sharing agreement.
(b) The Company has duly withheld or collected all Taxes
required by Law to have been withheld or collected (including Taxes
required by Law to be withheld or collected in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder or
other third party) and any such amounts required to be remitted to a
Governmental Entity have been timely remitted.
2.11. Compliance with ERISA. Schedule 2.11 sets forth a complete
and correct list of all (i) Benefit Plans, (ii) Employee Agreements,
including (in the case of each of (i) and (ii)) all amendments thereto, and
trust or funding agreements with respect thereto (excluding any grantor
trusts established to hold assets subject to the claims of the Company's
creditors) and (iii) summary plan descriptions and communications of any
material modifications to any employee or employees relating to any Benefit
Plan or Employee Agreement. Each Benefit Plan has been established and
operated in accordance with terms thereof and all other applicable Laws,
including but not limited to the Code and ERISA, and the Company and each
ERISA Affiliate is in compliance with the terms of each Employee Agreement.
Neither the Company nor any ERISA Affiliate presently sponsors, maintains,
contributes to, or is required to contribute to, nor has the Company nor
any ERISA Affiliate ever sponsored, maintained, contributed to, or been
required to contribute to, an "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA) which is subject to Title IV of ERISA or
Section 412 of the Code or a "multiemployer plan" (within the meaning of
Section 4001(a)(3) of ERISA). Neither the Company nor any ERISA Affiliate
has ever maintained or contributed to or been required to maintain or
contribute to any employee welfare benefit plan (within the meaning of
Section 3(1) of ERISA) which provides for post-retirement medical, life
insurance or other welfare-type benefits, and neither the Company nor any
ERISA Affiliate has any Liability for any such post-retirement benefits to
any present or former employee.
2.12. Labor Relations. No unfair labor practice complaint or any
complaint alleging sexual harassment or sex, age, race or other employment
discrimination has been brought during the last three years against the
Company before the National Labor Relations Board, the Equal Employment
Opportunity Commission or any other Governmental Entity, nor is there any
charge, investigation (formal or informal) or complaint pending, or to the
knowledge of the Company, threatened, against the Company regarding any
labor or employment matter. There have been no governmental audits of the
equal employment opportunity practices of the Company and, to the knowledge
of the Company, no reasonable basis for any such audit exists. The Company
(i) is in compliance with all applicable Laws respecting employment,
employment practices, labor, terms and conditions of employment, collective
bargaining and wages and hours, and (ii) has withheld all amounts required
by Law or by agreement to be withheld from the wages, salaries and other
payments to its employees.
2.13. Intellectual Property Rights. Schedule 2.13(a) sets forth a
complete and correct list of all Intellectual Property of the Company (the
"Company Intellectual Property"). Except as set forth on Schedule 2.13(b),
the Company owns and possesses all right, title and interest in, or
possesses adequate licenses to (without the making of any payment to others
or the obligation to grant rights to others in exchange) all the Company
Intellectual Property, free and clear of any Liens, licenses or other
restrictions. The Company has the right to require the applicant of any
Company Intellectual Property which is an application, including but not
limited to patent applications, trademark applications, service ▇▇▇▇
applications, copyright applications, or mask work applications, to
transfer ownership to the Company of the application and of the
registration once it issues. All registered patents, trademarks, service
marks and copyrights listed on Schedule 2.13(a) are valid and subsisting
and in full force and effect. The Company Intellectual Property is all the
Intellectual Property that is necessary for the ownership, maintenance and
operation of the Company's properties and assets and the Company has the
right to use all of the Company Intellectual Property in all jurisdictions
in which the Company conducts or proposes to conduct its business, and the
consummation of the transactions contemplated hereby will not alter or
impair any such rights. The Company has never agreed to indemnify any
person for or against any interference, infringement, misappropriation or
other conflict with respect to any Company Intellectual Property. No third
party has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Company Intellectual Property. The Company has
taken all necessary and desirable action to maintain and protect each item
of Company Intellectual Property. The validity, ownership, enforceability,
use or legality of the Company Intellectual Property is not being
questioned or opposed in any Litigation or Order to which the Company or
any Person who has granted a license of Intellectual Property to the
Company, is a party or subject, nor, to the knowledge of the Company, is
any such Litigation or Order threatened. The conduct of the Company as
currently conducted and as currently proposed to be conducted does not and
will not infringe, interfere with, misappropriate or otherwise come into
conflict with any Intellectual Property of any other Person, and the
Company has not received any charge, complaint, claim, demand or notice
alleging any such infringement, interference, misappropriation or conflict
(including any claim that the Company must license or refrain from using
any Intellectual Property of any other Person). Except as set forth in
Schedule 2.13(b), the Company has not granted any licenses of Intellectual
Property to any Person.
2.14. Possession of Franchises, Licenses, Etc. The Company
possesses all franchises, certificates, licenses, permits and other
authorizations from Governmental Entities and other rights, free from
burdensome restrictions, that are necessary for the ownership, maintenance
and operation of its properties and assets, except for those the absence of
which could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, and the Company is not in violation of
any thereof.
2.15. Compliance with Laws. The Company is in compliance with all
applicable Laws including, without limitation, all rules, regulations and
other Laws of the Food and Drug Administration (the "FDA") relating to the
design, development, manufacturing, sales and distribution of safety
medical products and accessories, except where the failure to comply could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. No Order has been issued nor any Law enacted which
prevents, nor does any Law prohibit the consummation of the transactions
contemplated by any of the Transaction Documents.
2.16. Conflicting Agreements and Charter Provisions. The Company
has not entered into any Contract and the Company is not subject to any
charter or by-law provision or any Order which in any case could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Neither the execution and delivery of any of the
Transaction Documents, nor the issuance, sale and delivery of the Notes or
the Shares, nor the fulfillment of or compliance with the terms and
provisions hereof or thereof, will conflict with or result in a breach of
the terms, conditions, or provisions of, or give rise to a right of
termination under, or constitute a default under, or result in the creation
of any Lien, or result in any violation of, the Certificate of
Incorporation or By-Laws or other organizational documents of the Company
or any Contract of the Company. The Company has not defaulted under any
outstanding indenture or other debt instrument or with respect to the
payment of the principal of or interest on any outstanding obligations for
borrowed money, and the Company is not in default under any of its
Contracts except, in the case of Contracts, where such default could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.17. Suppliers. Except as set forth on Schedule 2.17, no Major
Supplier has during the last twelve months materially increased or, to the
knowledge of the Company, threatened to materially increase its prices or
materially decreased or limited or, to the knowledge of the Company,
threatened to materially decrease or limit its provision of services or
supplies to the Company. During the last twelve months, there has been no
termination, cancellation or limitation of, or any material change in, the
business relationships of the Company with any Major Supplier. To the
knowledge of the Company, there will not be any such change in relations
with any Major Supplier or triggering of any right of termination,
cancellation or penalty or other payment in connection with or as a result
of the transactions contemplated by the Transaction Documents that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.18. Products. Except as set forth on Schedule 2.18, there are
no statements, citations or decisions by the FDA or any other Governmental
Entity stating that any product manufactured, sold, rented, leased,
designed, distributed or marketed at any time by the Company ("Products")
is defective or unsafe or fails to meet any standards promulgated by the
FDA or such Governmental Entity. Except as set forth on Schedule 2.18,
there is no (i) fact relating to any Product that, to the knowledge of the
Company, may impose upon the Company a duty to recall or retrofit any
Product or a duty to warn customers of a defect in any Product, (ii) latent
or overt design, manufacturing or other defect in any Product that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or (iii) Liability for warranty claims or returns with
respect to any Product that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
2.19. Offering of the Securities. Neither the Company nor any
Person acting on its behalf has offered the Securities or any similar
securities of the Company for sale to, solicited any offers to buy the
Securities or any similar securities of the Company from or otherwise
approached or negotiated with respect to the Company with any Person other
than the Purchasers and other "accredited investors" (as defined in Rule
501(a) under the Securities Act). Neither the Company nor any Person acting
on its behalf has taken or, except as contemplated hereby will take any
action (including, without limitation, any offering of any securities of
the Company under circumstances which would require the integration of such
offering with the offering of the Securities under the Securities Act)
which could reasonably be expected to subject the offering, issuance or
sale of the Securities to the registration requirements of Section 5 of the
Securities Act or violate the provisions of any securities, "blue sky", or
similar law of any applicable jurisdiction.
2.20. Existing Indebtedness; Future Liens. (a) Schedule 2.20 sets
forth a complete and correct list of all outstanding Indebtedness of the
Company as of the date hereof. The Company has not defaulted and no waiver
of default is currently in effect, in the payment of any principal or
interest on any such Indebtedness and no event or condition exists with
respect to any such Indebtedness that would permit (or that with notice or
the lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before
its regularly scheduled dates of payment.
(b) The Company has not agreed or consented to cause or
permit in the future (upon the happening of a contingency or otherwise) any
of its property, whether now owned or hereafter acquired, to be subject to
any Lien (other than Permitted Liens).
2.21. Environmental Matters. The Company has no knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of its real
properties now or formerly owned, leased or operated by it or other assets,
alleging any damage to the environment or violation of any Environmental
Laws. Except as set forth on Schedule 2.21, (i) the Company has no
knowledge of any facts which would give rise to any claim, public or
private, of violation of Environmental Laws or damage to the environment
emanating from, occurring on or affecting real properties now or formerly
owned, leased or operated by the Company or to other assets or their use;
(ii) the Company has not stored any Hazardous Materials on real properties
now or formerly owned, leased or operated by it and has not disposed of any
Hazardous Materials in a manner contrary to any Environmental Laws; and
(iii) all buildings on all real properties now owned, leased or operated by
the Company are in compliance with applicable Environmental Laws.
2.22. Solvency. The Company is not, and after giving effect to
the issuance of the Notes and the sale of the Shares and the application of
the proceeds therefrom will not be, insolvent within the meaning of Title
11 of the United States Code or any comparable state law provision.
2.23. Security Documents. Upon proper filing of the Financing
Statements (or assignments thereof) in the offices of the Secretary of
State of Connecticut with respect to the Company (or assignments thereof)
and in the locations identified in the Security Agreement, the Liens
granted under the Transaction Documents shall constitute a fully perfected
security interest in all right, title and interest of the Company in and to
the personal property therein prior to any other security interests against
such property or interests therein.
2.24. Brokers or Finders. No agent, broker, investment banker or
other Person is or will be entitled to any broker's fee or any other
commission or similar fee from the Company in connection with any of the
transactions contemplated by this Agreement.
2.25. Holding Company Act and Investment Company Act. The Company
is not: (i) a "public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or an
"affiliate" of such a "subsidiary company," as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended, or (ii) a
"public utility," as defined in the Federal Power Act, as amended, or (iii)
an "investment company" or an "affiliated person" thereof or an "affiliated
person" of any such "affiliated person," as such terms are defined in the
Investment Company Act of 1940, as amended.
2.26. Related Party Transactions. (a) Except as set forth on
Schedule 2.26, the Company has not entered into or been a party to any
transaction with any Related Party thereof except in the ordinary course
of, and pursuant to the reasonable requirements of, such party's business
and upon fair and reasonable terms that are at least equivalent to an arms
length transaction with a Person not a Related Party of such party.
(b) Except as set forth on Schedule 2.26, the Company has
not entered into any lending or borrowing transaction with any director,
officer or employee of the Company.
2.27. Year 2000. The software, computers and other hardware and
systems used by the Company will (i) accurately process date information
before, during and after January 1, 2000, including, but not limited to,
accepting date input, providing date output and performing calculations on
dates or portions of dates; (ii) function accurately and without
interruption before, during and after January 1, 2000 without any change in
operations associated with the advent of the new century; (iii) respond to
two digit year date input in a way that resolves the ambiguity as to
century in a disclosed, defined and predetermined manner; and (iv) store
and provide output of date information in ways that are unambiguous as to
century. The Company has contacted its principal vendors and Major
Suppliers and other Persons with whom the Company has material business
relationships, and each of such vendors, Major Suppliers and other Persons
have notified the Company that its software, computers and other hardware
and systems are Year 2000 compliant in all material respects to the extent
affecting the Company. The ability of such vendors, Major Suppliers and
other Persons to identify and resolve their own Year 2000 issues could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.28. Disclosure. Neither any Transaction Document nor any
Schedule thereto, nor any certificate furnished to any Purchaser by or on
behalf of the Company in connection with the transactions contemplated
thereby, contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained herein
and therein not misleading.
3. Representations and Warranties of the Purchasers. Each Purchaser,
severally and not jointly, represents and warrants to the Company with
respect to such Purchaser as follows:
3.1. Organization and Qualification. Such Purchaser is duly
organized and existing in good standing under the laws of the state of its
formation and has the power to own its respective property and to carry on
its respective business as now being conducted. Such Purchaser is duly
qualified to do business and in good standing in every jurisdiction in
which the nature of the respective business conducted or property owned by
it makes such qualification necessary, except where the failure to so
qualify would not prevent consummation of the transactions contemplated
hereby or reasonably be expected to have a material adverse effect on such
Purchaser's ability to perform its obligations hereunder.
3.2. Due Authorization. Such Purchaser has all right, power and
authority to enter into, deliver and perform the Transaction Documents to
which it is a party and to consummate the transactions contemplated
thereby. Such Purchaser's execution and delivery of each Transaction
Document to which it is a party and the performance by such Purchaser of
the transactions contemplated thereby and compliance by such Purchaser with
all the provisions of each Transaction Document to which it is a party (as
applicable) have been duly authorized by all requisite proceedings on the
part of such Purchaser. Each of the Transaction Documents to which it is a
party has been duly executed and delivered on behalf of such Purchaser, and
each such Transaction Document constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in
accordance with its respective terms, except to the extent that such
enforceability (i) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors'
rights generally or (ii) is subject to general principles of equity.
3.3. Acquisition for Investment. Such Purchaser is acquiring the
Notes and the Shares being purchased by it for its own account for the
purpose of investment and not with a view to or for sale in connection with
any distribution thereof except in compliance with all applicable
securities Laws.
3.4. Offering of Securities. Such Purchaser has not offered the
Securities for sale by any means of general solicitation or general
advertising including, but not limited to, any advertisements, articles,
notices or other communications published in any newspaper, magazine or
similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees were invited by any general solicitation or general
advertising.
3.5. Accredited Investor. Such Purchaser is an "accredited
investor" within the meaning of Rule 501 promulgated under the Securities
Act.
4. Registration, Exchange and Transfer of Notes.
--------------------------------------------
4.1. The Note Register; Persons Deemed Owners. The Company shall
maintain, at its office designated for notices in accordance with Section
12.6, a register for the Notes (the "Note Register"), in which the Company
shall record the name and address of the person in whose name each Note has
been issued and the name and address of each transferee and prior owner of
each Note. The Company shall deem and treat the person in whose name a Note
is so registered as the Holder and owner thereof for all purposes and shall
not be affected by any notice to the contrary, until due presentment of
such Note for registration of transfer as provided in this Section 4.
4.2. Issuance of New Notes Upon Exchange or Transfer. Upon
surrender for exchange or registration of transfer of any Note at the
office of the Company designated for notices in accordance with Section
12.6, the Company shall execute and deliver, at its expense, one or more
new Notes as requested by the Holder of the surrendered Note, each dated
the date so surrendered, but in the same aggregate Face Amount as such
surrendered Note, and registered in the name of such person or persons as
shall be designated in writing by such Holder. Every Note surrendered for
registration of transfer shall be duly endorsed, or be accompanied by a
written instrument of transfer duly executed, by the Holder of such Note or
by his attorney duly authorized in writing. The Company may also condition
the issuance of any new Note or Notes to a Person other than the Holder
thereof on the payment of a sum sufficient to cover any stamp tax or other
governmental charge imposed in respect of such transfer.
5. Payment of Notes.
----------------
5.1. Home Office Payment. The Company will pay to each Purchaser
or any transferee thereof all sums becoming due on the Notes (including all
sums which become due on the Notes at the maturity thereof) (a) prior to
the date of execution of an indenture (the "Indenture Date") at the
account/address to be specified by such Purchaser or transferee for such
purpose by notice to the Company, by wire transfer of immediately available
funds, or at such other address or by such other method as such Purchaser
or transferee shall have designated by notice to the Company and (b) at any
time after the Indenture Date, by wire transfer to the Trustee, as
specified in the indenture. Before selling or otherwise transferring any
Note, such Purchaser or transferee will make a notation thereon of the
aggregate amount of all payments of the Face Amount, if any, theretofore
made.
5.2. Limitation on Interest. No provision of this Agreement or of
the Notes shall require the payment or permit the collection of interest in
excess of the maximum rate which is permitted by Law. If any such excess
interest is provided for herein or in the Notes, or shall be adjudicated to
be so provided for, then the Company shall not be obligated to pay such
interest in excess of the maximum rate permitted by Law, and the right to
demand payment of any such excess interest is hereby waived, any other
provisions in this Agreement or in the Notes to the contrary
notwithstanding.
5.3. Accreted Value. The Notes have been issued at the original
issue discount ("Original Issue Discount") in the amount stated on the face
of each Note and the Notes will accrete in value to the Face Amount at the
Stated Maturity. Prior to the Stated Maturity, the Accreted Value for any
specified date means, the applicable amount provided below for each $1,000
Face Amount of the Notes:
(i) if the specified date occurs on one of the following
dates (each a "Semi-Annual Accrual Date"), the Accreted Value of such
Face Amount will equal the amount set forth opposite such Semi-Annual
Accrual Date:
Semi-Annual Accrual Date Accreted Value
------------------------ --------------
December 31, 1999...................... $
June 31, 2000 ......................... $
December 31, 2000...................... $
June 30 , 2001......................... $
December 31, 2001...................... $
June 30, 2002 ......................... $
December 31, 2002...................... $
June 31, 2003 ......................... $
December 31, 2003...................... $
June 30, 2004 ......................... $
(ii) if the specified date occurs before the first
Semi-Annual Accrual Date, the Accreted Value of such Face Amount will
equal the sum of (a) the Original Issue Price and (b) an amount equal
to the product of (1) the Accreted Value of such Face Amount for the
first Semi-Annual Accrual Date less the original issue price
multiplied by (2) a fraction, the numerator of which is the number of
days from the Closing Date to the specified date, using a 360-day year
of twelve 30-day months, and the denominator of which is the number of
days elapsed from the original issue date to the first Semi-Annual
Accrual Date, using a 360-day year of twelve 30-day months;
(iii) if the specified date occurs between two Semi-Annual
Accrual Dates, the Accreted Value of such Face Amount will equal the
sum of (a) the Accreted Value of such Face Amount for the Semi-Annual
Accrual Date immediately preceding such specified date and (b) an
amount equal to the product of (1) the Accreted Value of such Face
Amount for the immediately following Semi-Annual Accrual Date less the
Accreted Value of such Face Amount for the immediately preceding
Semi-Annual Accrual Date multiplied by (2) a fraction, the numerator
of which is the number of days from the immediately preceding
Semi-Annual Accrual Date to the specified date, using a 360-day year
of twelve 30-day months, and the denominator of which is 180; or
(iv) if the specified date occurs after the last Semi-Annual
Accrual Date, the Accreted Value will equal $1,000.
5.4. Interest. The Notes shall not bear interest (other than
accrued Original Issue Discount which shall be payable at Stated Maturity),
except that if any amount payable hereunder is not paid when due
(including, without limitation, payment of the Accreted Value or the entire
Face Amount of the Notes, as applicable, under Section 7.2), then in each
such case the overdue amount shall bear interest at a rate of [12%] per
annum compounded semi-annually (to the extent that the payment of such
interest shall be legally enforceable), which interest shall accrue from
the date such overdue amount was due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on
overdue amounts shall, in the case of any late payment of the Face Amount
or Change of Control Redemption Price, be in lieu of, and not in addition
to, the continued accrual of Original Issue Discount. Original Issue
Discount in the period during which the Notes remain outstanding shall
accrue at 7.5% per annum, compounded semi-annually, computed on the basis
of a 360-day year consisting of twelve 30-day months, beginning on
__________, 1999.
5.5. Principal. Unless otherwise provided herein, payment of the
Face Amount of the Notes shall be due and payable as provided in the Notes.
6. Covenants of the Company. The Company covenants that at all times
from and after the date hereof:
6.1. Maintenance of Office or Agency. The Company shall maintain
in [Vernon, Connecticut] an office or agency where Notes may be presented
or surrendered for payment, where Notes may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the
Company in respect of the Notes may be served. The Company shall give
prompt written notice to the Holders of the location, and any change in the
location, of such office or agency. The Company may also from time to time
designate one or more other offices or agencies (in or outside
[Connecticut]) where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations,
provided, however, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or
agency in [Vernon, Connecticut] for such purposes. The Company shall give
prompt written notice to the Holders of any such designation or rescission
and of any change in the location of any such other office or agency.
6.2. Money for Security Payments to be Held in Trust. On or
before each date in which payments are due on the Notes, the Company shall
segregate and hold in trust for the benefit of the Persons entitled thereto
a sum sufficient to make such payments when such payments are due, until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided.
6.3. Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its
existence, Material rights (charter and statutory) and franchises and the
existence, Material rights and franchises of all of its Subsidiaries.
Neither the Company nor any of its Subsidiaries shall enter into any
transaction of acquisition of, or merger or consolidation or amalgamation
with, any other Person (including any Subsidiary or Affiliate of the
Company or any of its Subsidiaries), or sell, transfer or otherwise dispose
of ("Transfer") all or substantially all of its assets to any Person, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or make any Material change in the present method of
conducting business or engage in any type of business other than of same
general type now conducted by it. The Company shall not, and shall not
permit any of its Subsidiaries to, amend or otherwise modify (i) the
Company's Certificate of Incorporation, (ii) the By-Laws or (iii) the
charter, by-laws or other organizational documents of any of the Company's
Subsidiaries.
6.4. Maintenance of Properties. The Company shall cause all
properties used or useful in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section 6.4 shall prevent the Company from discontinuing
the operation or maintenance of any of such property if such discontinuance
is, in the reasonable, good faith judgment of the Company, desirable in the
conduct of its business or the business of any Subsidiary and not
disadvantageous in any Material respect to the Holders.
6.5. Payment of Taxes and Other Claims. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all Taxes levied or imposed upon the Company or any of its
Subsidiaries or upon the income, profits or property of the Company or any
of its Subsidiaries, and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by Law become a Lien upon the property of
the Company or any of its Subsidiaries; provided, however, that the Company
shall not be required to pay or discharge or cause to be paid or discharged
any such Tax whose amount, applicability or validity is being contested in
good faith by appropriate proceedings.
6.6. Limitation on Indebtedness. The Company shall not, and shall
not permit any of its Subsidiaries to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or indirectly
liable for the payment of any Indebtedness (excluding Permitted
Indebtedness and Indebtedness which is a Guaranty of an Indebtedness of the
Company or any of its Subsidiaries that is otherwise Permitted
Indebtedness).
6.7. Limitation on Encumbrances. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or otherwise suffer to exist or cause or otherwise suffer to
become effective any Lien in or on any right, title or interest to any
property (real or personal) that constitutes all or any portion of the
Collateral (a "Restricted Encumbrance," which term excludes the Lien
created in favor of the Holders) unless such Restricted Encumbrance is a
Permitted Lien.
6.8. Limitation on Related Party Transactions. (a) The Company
shall not, and shall not permit any of its Subsidiaries to, enter into or
be a party to any transaction with any Related Parties (other than any of
the Holders or their Affiliates) except in the ordinary course of, and
pursuant to the reasonable requirements of, such party's business and upon
fair and reasonable terms that are at least equivalent to an arms length
transaction with a Person that is not a Related Party. In addition, if any
such transaction or series of related transactions involves payments in
excess of $[25,000] in the aggregate, the terms of those transactions must
be disclosed in advance to each Holder. All such transactions existing as
of the date hereof are set forth on Schedule 6.8.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any lending or borrowing transaction with any
director, officer or employee of the Company or any of its Subsidiaries.
(c) The Company shall not, and shall not permit any of its
Subsidiaries to, (i) enter into or adopt or amend any existing agreement or
arrangement relating to severance, (ii) enter into or adopt or amend any
existing severance plan, (iii) enter into or adopt or amend any Benefit
Plan or Employee Agreement or (iv) grant any bonus, salary increase,
severance or termination pay to, any employee, officer, director or
consultant other than in the ordinary course of business consistent with
past practice.
6.9. Limitation on Dividends; Stock Issuances. The Company shall
not offer or issue any shares of Preferred Stock or Common Stock for any
purpose whatsoever, except for shares of Common Stock issuable upon (i)
exercise of the Warrants, (ii) the conversion of the Notes and (iii)
pursuant to Schedule 6.9. The Company shall not declare any dividends on
any shares of its Capital Stock, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, retirement, exchange or other acquisition of any shares of its
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in
cash, securities, property or in obligations of the Company or any of its
Subsidiaries.
6.10. Subsidiary Guarantees. The Company shall cause its future
direct and indirect Subsidiaries organized under the laws of any state of
the United States (or the District of Columbia) to jointly and severally
guarantee form of obligations of the Company under the Notes and this
Agreement pursuant to the form of Guarantee and Security Agreement attached
hereto as Exhibit 6.10. The Company shall cause its Subsidiaries organized
under the laws of any jurisdiction other than any state of the United
States or the District of Columbia to jointly and severally guarantee the
obligations of the Company under the Notes and this Agreement pursuant to a
guarantee agreement.
6.11. Additional Offerings of Securities. Prior to seeking
financing from any third party consisting of an issuance of Equity
Securities (the "Proposed Securities") by the Company on or after the date
hereof, the Company shall notify the Holders of a description in reasonable
detail of the Proposed Securities, the amount proposed to be issued and the
consideration the Company desires to receive therefor (the "Notice"), which
Notice shall constitute an offer to the Holders with respect to the
Proposed Securities on the terms set forth therein. The Holders and the
Company shall, for not less than 20 days after receipt of the Notice
(unless the Holders earlier indicate that they have no interest in
purchasing the Proposed Securities), discuss the possibility of any of the
Holders acquiring the Proposed Securities, after which (if any of the
Holders has not agreed to purchase the Proposed Securities on the terms set
forth in the Notice or such other terms as are mutually acceptable to the
Company and such Holder) the Company shall be permitted to seek and obtain
third party investors to acquire the Proposed Securities, provided that the
closing of such acquisition by such third party investor occurs within 90
days from the date of the Notice and provided that the acquisition of the
Proposed Securities by such third party investor is on terms no more
favorable to such third party investor than those terms set forth in the
Notice. No Equity Securities shall be issued by the Company to any Person
unless the Company has first offered such Equity Securities to the Holders
in accordance with this Section 6.11. This Section 6.11 shall not apply to
the following issuances of securities: (i) pursuant to an approved employee
stock option plan, stock purchase plan, or similar employee benefit program
or agreement, where the primary purpose is not to raise equity capital for
the Company and (ii) issuance of Equity Securities as consideration in a
business combination approved by each member of the Board of Directors.
6.12. Pledges of Intercompany Notes. The Company shall, and shall
cause each of its future Subsidiaries to, promptly pledge all Intercompany
Notes (and all security agreements and documents relating thereto) created
after the date hereof to the Collateral Agent as Collateral under the
Collateral Documentation. To the extent that, on or after the date hereof,
the Company makes any cash investment in any of its Subsidiaries (in
accordance with Section 6.14) which are organized under the laws of and
doing business in the United States, such investment shall be required to
be made in the form of a loan, which shall be evidenced by an Intercompany
Note and all such Intercompany Notes shall be pledged by the Company to the
Collateral Agent as Collateral under the Collateral Documentation.
6.13. No Speculative Transactions. The Company shall not, and
shall not permit any of its Subsidiaries to, engage in any transaction
involving commodity options, futures contracts or similar transactions.
6.14. Restricted Investments. The Company shall not, directly or
indirectly, make or cause or permit, or permit any of its Subsidiaries to,
make or cause or permit, (i) any direct or indirect advance to, (ii) any
loan or other extension of credit to, (iii) any guarantee of any
Indebtedness of, (iv) any capital contribution to, (v) any purchase or
other acquisition of any Equity Interests in, (vi) any purchase or other
acquisition of assets (other than in the ordinary course of business) from
or (vii) any merger with, any Person, including, without limitation, any of
the Company's Subsidiaries in each case other than Permitted Investments.
6.15. Financial Covenants. (a) The Company's Operating Profit (as
defined below) shall be greater than the amounts listed in the following
chart for the applicable period. "Operating Profit" shall mean, for any
given period, Net Income for such period (exclusive of (A) all amounts in
respect of any extraordinary gains or losses, (B) gains and losses arising
from the sale or other disposition of assets not in the ordinary course of
business, (C) earnings and losses from discontinued operations and (D) fees
and expenses incurred by the Company (including reasonable attorneys' and
accountants' fees and expenses) in connection with the offer and sale of
the Notes) plus, to the extent reflected as a charge in the statement of
Consolidated Net Income for such period, the sum of: (i) all taxes measured
by income (whether paid or deferred) and (ii) interest expense (net of
interest income).
--------------------------------------------------------------------------------------
MINIMUM OPERATING PROFIT MINIMUM OPERATING PROFIT
(LOSS) FOR THREE-MONTH FOR TWELVE-MONTH PERIOD
DATE PERIOD ENDING ON DATE ENDING ON DATE INDICATED
INDICATED
--------------------------------------------------------------------------------------
December 31, 1999 N/A N/A
--------------------------------------------------------------------------------------
March 30, 2000 N/A N/A
--------------------------------------------------------------------------------------
June 30, 2000 N/A N/A
--------------------------------------------------------------------------------------
September 30, 2000 ($ 400,000) N/A
--------------------------------------------------------------------------------------
December 31, 2000 $ 0 N/A
--------------------------------------------------------------------------------------
March 31, 2001 $ 500,000 N/A
--------------------------------------------------------------------------------------
June 30, 2001 $1,000,000 $1,000,000
--------------------------------------------------------------------------------------
September 30, 2001 $2,000,000 $3,000,000
--------------------------------------------------------------------------------------
December 31, 2001 $2,500,000 $5,500,000
--------------------------------------------------------------------------------------
March 30, 2002 $5,000,000 $10,500,000
--------------------------------------------------------------------------------------
June 30, 2002 $5,000,000 $14,500,000
--------------------------------------------------------------------------------------
September 30, 2002 $5,000,000 $17,500,000
--------------------------------------------------------------------------------------
December 31, 2002 $5,000,000 $20,000,000
--------------------------------------------------------------------------------------
March 30, 2003 and the last $5,000,000 $22,500,000
day of each calendar quarter
thereafter
--------------------------------------------------------------------------------------
(b) The Company's Product Sales Revenues (excluding revenues
generated by licensing, distribution, supply or similar arrangements) shall
be greater than the amounts listed in the following chart for the
applicable period.
--------------------------------------------------------------------------------------
MINIMUM PRODUCT SALES MINIMUM TOTAL REVENUE FOR
REVENUE FOR THREE-MONTH TWELVE-MONTH PERIOD ENDING
DATE PERIOD ENDING ON DATE ON DATE INDICATED
INDICATED
--------------------------------------------------------------------------------------
December 31, 1999 $1,250,000 N/A
--------------------------------------------------------------------------------------
March 30, 2000 $1,750,000 N/A
--------------------------------------------------------------------------------------
June 30, 2000 $3,500,000 $7,000,000
--------------------------------------------------------------------------------------
September 30, 2000 $5,000,000 $12,200,000
--------------------------------------------------------------------------------------
December 31, 2000 $6,500,000 $15,500,000
--------------------------------------------------------------------------------------
March 31, 2001 $8,500,000 $22,500,000
--------------------------------------------------------------------------------------
June 30, 2001 $11,500,000 $31,000,000
--------------------------------------------------------------------------------------
September 30, 2001 $12,500,000 $39,000,000
--------------------------------------------------------------------------------------
December 31, 2001 $15,000,000 $47,500,000
--------------------------------------------------------------------------------------
March 31, 2002 $20,000,000 $59,000,000
--------------------------------------------------------------------------------------
June 30, 2002 $22,500,000 $70,000,000
--------------------------------------------------------------------------------------
September 30, 2002 $22,500,000 $80,000,000
--------------------------------------------------------------------------------------
March 30, 2003 and the last $25,000,000 $100,000,000
day of each calendar quarter
thereafter
--------------------------------------------------------------------------------------
(c) The Company's Consolidated Capital Expenditures shall be
no greater than the amounts listed in the following chart for the
applicable period.
-------------------------------------------------------------
MAXIMUM PERMITTED CAPITAL
EXPENDITURS FOR SIX-MONTH
DATE PERIOD ENDING ON DATE
INDICATED
-------------------------------------------------------------
March 30, 2000 $3,500,000
-------------------------------------------------------------
September 30, 2000 $3,500,000
-------------------------------------------------------------
March 31, 2001 $2,700,000
-------------------------------------------------------------
September 30, 2001 $2,700,000
-------------------------------------------------------------
March 30, 2002 and the last
day of each calendar quarter $2,000,000
thereafter
-------------------------------------------------------------
6.16. Sale and Leaseback Transactions. The Company shall not, and
shall not permit any Subsidiary to, enter into any Sale-and-Leaseback
Transaction.
6.17. Line of Business. The Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business if, as a result,
the general nature of the business in which the Company and its
Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the business in which the
Company and its Subsidiaries, taken as a whole, are engaged on the date of
this Agreement.
6.18. Sale of Assets. The Company shall not, and shall not permit
any of its Subsidiaries to, Transfer any property or assets, unless the
property or asset that is the subject of such Transfer constitutes (i)
inventory held for sale, (ii) marketable securities available for sale, or
(iii) real estate, equipment, fixtures, supplies or materials no longer
required in the operation of the business of the Company or such Subsidiary
or that is obsolete, and, in the case of any Transfer described in clause
(i) or (iii), such Transfer is in the ordinary course of business.
6.19. Indenture Relating to the Notes. Upon the written request
of the Required Holders, the Company, at its expense, shall cause to be
prepared, executed and delivered within 30 days after such request an
indenture (including a new form of note, any necessary related
documentation and, from time to time thereafter, any necessary supplements
thereto) with respect to the Notes, which indenture (and form of note)
shall contain terms and provisions substantially the same as those set
forth in Sections 6, 8, 9 and 13 hereof and such other terms and provisions
as are required under the Trust Indenture Act of 1939 and such other items
and provisions as are customary in indentures relating to publicly traded
senior secured debt securities having a rating comparable to the rating
that the Notes would receive if rated by a nationally recognized rating
agency. In such event, the Company shall also appoint as trustee under such
indenture a national banking association reasonably acceptable to the
Required Holders having its principal offices in New York, New York, and
having capital, surplus, and undivided profits of at least $50,000,000. In
connection with the execution of any such indenture, the Holders shall
exchange all outstanding Notes for new notes in the form contemplated by
such indenture, and upon such exchange such new notes shall be deemed to be
"Notes" for purposes hereof.
6.20. Financial Statements and Information. The Company shall
furnish to each Holder: (a) as soon as practicable and in any event within
45 days after the end of each of the four quarters of each fiscal year and
within 90 days of the end of each fiscal year, (i) copies of the quarterly
and annual reports and of the other information, documents, and other
reports which the Company files or is required to file with the SEC
pursuant to the Exchange Act and of any other reports or information which
the Company delivers or makes available to any of its security holders, at
the time of filing such reports with the SEC or of delivery to the
Company's security holders, as the case may be (but in no event later than
the time such filing or delivery is required pursuant to the Exchange Act)
or (ii) as soon as practicable and in any event within 45 days after the
end of each of the four quarters of each fiscal year and within 90 days of
the end of each fiscal year, quarterly reports for the four quarters of
each fiscal year of the Company and annual reports which the Company would
have been required to file under any provision of the Exchange Act if it
had a class of securities listed on a national securities exchange or was
otherwise required to file such reports under the Exchange Act, within
fifteen Business Days of when such report would have been filed under
Section 13 of the Exchange Act, together with copies of a consolidating
balance sheet of the Company and its Subsidiaries as of the end of each
such accounting period and of the related consolidating statements of
income and cash flow for the portion of the fiscal year then ended, all in
reasonable detail and all certified by the principal financial officer of
the Company to present fairly the information contained therein in
accordance with GAAP (and in the case of annual reports, including
financial statements, audited and certified by the Company's independent
public accountants as required under the Exchange Act); (b) within ninety
days after the end of each fiscal year, a written statement by the
Company's independent certified public accountants stating as to the
Company and its Subsidiaries whether in connection with their audit
examination, any Default or Event of Default has come to their attention;
(c)(i) within forty-five days after the end of the four quarters of the
Company's fiscal year and within ninety days after the end of the Company's
fiscal year, an Officers' Certificate setting forth computations in
reasonable detail showing, as at the end of such quarter or fiscal year, as
the case may be, the Company's compliance with Sections 6.6, 6.7, 6.13,
6.14 and 6.15, and (ii) within thirty days after the end of each fiscal
quarter, an Officers' Certificate stating that as of the date of such
certificate, based upon such examination or investigation and review of
this Agreement, as in the opinion of such signer is necessary to enable the
signer to express an informed opinion with respect thereto, to the best
knowledge of such signer, the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Agreement, and is not
in default in the performance or observance of any of the terms, provisions
and conditions hereof, and to the best of such signer's knowledge, no
Default or Event of Default exists or has existed during such period or, if
a Default or Event of Default shall exist or have existed, specifying all
such defaults, and the nature and period of existence thereof, and what
action the Company has taken, is taking or proposes to take with respect
thereto; (d) promptly after becoming aware of (i) the existence of a
Default or Event of Default or any default in any of the Collateral
Documentation, (ii) any default or event of default under any Indebtedness
of the Company or any of its Subsidiaries, (iii) any Litigation or
proceeding affecting the Company or any of its Subsidiaries in which the
amount claimed is in excess of $[50,000] or in which injunctive relief is
sought which if obtained could individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect or (iv) any change that has
or could reasonably be expected to have a Material Adverse Effect, an
Officers' Certificate specifying the nature and period of existence thereof
and what action the Company is taking or proposes to take with respect
thereto; and (e) such other information, including financial statements and
computations, relating to the performance of the provisions of this
Agreement and the affairs of the Company and any of its Subsidiaries as
each Holder may from time to time reasonably request. The Company shall
keep at its principal executive office a true copy of this Agreement (as at
the time in effect), and cause the same to be available for inspection at
said office, during normal business hours and after reasonable notice to
the Company by any Holder.
6.21. Inspection. (a) Any Holder shall have the right to visit
and inspect any of the properties of the Company or any of its
Subsidiaries, to examine the books of account and records of the Company or
any of its Subsidiaries, to be provided with copies and extracts therefrom,
to discuss the affairs, finances and accounts of the Company or any of its
Subsidiaries with, and to be advised as to the same by, its and their
officers and employees, and its and their independent public accountants
(and the Company authorizes such independent public accountants to discuss
the Company's or any Subsidiaries' financial matters with such Holder and
its representatives, regardless of whether any representative of the
Company is present, but provided that an officer of the Company will be
afforded a reasonable opportunity to be present at any such discussion),
all at such reasonable times and intervals during normal business hours,
and upon reasonable prior notice to the Company as such Holder and the
Company shall agree and at the expense of the Company (including the costs
incurred by such Holder in hiring accountants to conduct an audit). The
Company will likewise afford each Holder the opportunity to obtain any
information necessary to verify the accuracy of any of the representations
and warranties made by the Company hereunder or in any other Transaction
Document or compliance by the Company and its Subsidiaries with a covenant
made hereunder or in any other Transaction Document.
(b) By receipt of information under this Section 6.21, such
Holder agrees that all information (other than such information that is
publicly available or any other information that is in such Holder's
possession prior to any disclosure under this Section 6.21) provided to it
pursuant to this Section 6.21 shall be used by such Holder solely in
connection with its investment in the Company and for no other purpose, and
such Holder shall treat such information as confidential in accordance with
such reasonable internal procedures as it applies generally to information
of this kind and shall not disclose such information to any Person, except
(i) to any Governmental Entity having jurisdiction over such Holder in the
law or ordinary course of business, (ii) to any other Person pursuant to
subpoena or other process, whether legal, administrative or other (and such
Holder hereby agrees to provide the Company with prompt notice of any such
subpoena or other process), (iii) to such Holder's officers, directors,
trustees, employees, partners, legal counsel, financial advisors or
auditors or accountants who need access to such information in connection
with their duties, (iv) to any transferee or prospective purchaser of a
Note or interest therein who agrees to be bound by this paragraph, or (v)
to the extent necessary in the enforcement of each Purchaser's rights
hereunder and under the Notes during the continuance of a Default or Event
of Default.
6.22. Compliance with Laws. The Company shall, and shall cause
each of its Subsidiaries to, comply with all Laws, ordinances or
governmental rules or regulations to which each of them is subject, and
shall obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership
of their respective properties or to the conduct of their respective
businesses. The Company shall timely file all proxy statements, reports and
other documents required to be filed by it under the Exchange Act and such
statements, reports and other documents shall be in compliance in all
Material respects with the requirements of its respective report form and
shall not on the date of filing contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
6.23. Supplemental Disclosure. From time to time as may be
requested by the Required Holders, the Company shall supplement each
Schedule hereto, or any representation herein or in any other Transaction
Document, with respect to any matter hereafter arising which, if existing
or occurring at the date of this Agreement, would have been required to be
set forth or described in such Schedule or as an exception to such
representation or which is necessary to correct any information in such
Schedule or representation which has been rendered inaccurate thereby (and,
in the case of any supplements to any Schedule, such Schedule shall be
appropriately marked to show changes made therein); provided that no such
supplement to any such Schedule or representation shall be or be deemed a
waiver of any Default or Event of Default resulting from the matters
disclosed therein; provided, further, that if such supplement discloses any
Default or Event of Default, the Company shall have fifteen days to cure
such defaults so long as such Default or Event of Default (i) is not caused
by the failure to pay amounts due under this Agreement and (ii) the
Collateral Manager believes that such Default or Event of Default can be
cured within such fifteen days period.
6.24. Proceeds. The proceeds of the sale of the Notes and the
Shares shall be used to redeem the outstanding Old Notes and for the
purposes set forth on Schedule 6.24. Any part of the proceeds from the sale
of the Notes and the Shares not used to redeem the Old Notes and for the
purposes set forth in Schedule 6.24 shall be placed in an escrow account,
and the disbursements of proceeds from such escrow account shall be made in
accordance with the procedures set forth on Schedule 6.24. No part of the
proceeds from the sale of the Notes and the Shares hereunder shall be used,
directly or indirectly, for the purpose of "purchasing" or "carrying" any
"margin stock" within the respective meanings of Regulation U of the Board
of Governors of the Federal Reserve System or for any purpose which
violates or would be inconsistent with the provisions of Regulations T, U
or X of said Board.
6.25. Insurance; Damage to or Destruction of Collateral. (a) The
Company shall, and shall cause each of its Subsidiaries to, at its sole
cost and expense, maintain the policies of insurance described on Schedule
2.7(b) in form and with insurers reasonably acceptable to the Required
Holders. If the Company or any of its Subsidiaries at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above or to pay all premiums relating thereto, the Collateral
Agent may (at the direction of the Required Holders) may at any time or
times after ten days written notice to the Company obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which the Required Holders deem advisable. Neither the
Collateral Agent nor the Required Holders shall have any obligation to
obtain insurance for the Company or any of its Subsidiaries or pay any
premiums therefor. By doing so, the Collateral Agent and the Holders shall
not be deemed to have waived any Default or Event of Default arising from
the Company's or any of its Subsidiaries' failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
reasonable attorneys' fees, court costs and other charges related thereto,
shall be payable on demand by the Company to the Collateral Agent and shall
be secured by the Collateral.
(b) The Company shall at all times maintain, with financially
sound and reputable insurers, "key man" term life insurance on the life of
▇▇. ▇▇▇▇ ▇▇▇▇ in the amount of $______ in form reasonably satisfactory to
the Holders. Such "key man" term life insurance policy shall be owned by
the Company and the Company shall be named as the payee of all benefits
thereunder.
6.26. Rights of Required Holders to Designate Directors; Board
Composition. (a) Prior to or simultaneously with the Closing, the Company
shall expand the size of its Board of Directors from five to seven members
and shall at all times cause two persons designated by the Holders (any
such person so designated pursuant to this Section 6.26 from time to time,
a "Purchaser Designee", and together, the "Purchaser Designees") to be
appointed to the Board of Directors to fill the vacancies created by such
expansion, and the Company will take all necessary action to cause a
Purchaser Designee to be appointed to (i) each present and future committee
of the Board of Directors (ii) the board of directors or governing body of
any future Subsidiary of the Company (the "Subsidiary Board") and (iii)
each Committee of such Subsidiary Board. Thereafter, in connection with any
annual meeting of stockholders at which the term of a Purchaser Designee is
to expire, the Company will take all necessary action to cause such
Purchaser Designee to be elected to the Board of Directors. In the event of
any vacancy arising by reason of the resignation, death, removal or
inability to serve of any Purchaser Designee, the Holders shall be entitled
to designate a successor to fill such vacancy for the unexpired term (and,
thereafter, such successor shall be deemed a Purchaser Designee for all
purposes of this Section 6.26). The Company further agrees that the Holders
shall be entitled to designate a non-voting observer to attend and
participate in (but not to vote at) all meetings of the Board of Directors,
committee of the Board of Directors, each Subsidiary Board and committee of
such Subsidiary Board (the "Non-Voting Observer"). The Non-Voting Observer,
if appointed, shall have the same access to information concerning the
business and operations of the Company and its Subsidiaries and at the same
time as directors of the Company and its Subsidiaries and shall be entitled
to participate in discussions and consult with the Board of Directors and
each Subsidiary Board without voting, and the Board of Directors and each
Subsidiary Board shall give due consideration to the advice and
recommendations of such Non-Voting Observer.
(b) Without the prior written consent of the Holders, (i)
the Board of Directors shall not consist of more than seven members and
(ii) the Executive Committee of the Board of Directors shall not exceed
four members.
(c) Notwithstanding anything to the contrary contained
herein, so long as (i) (Y) the Holders in the aggregate (i) own at least 5%
of the Common Stock (on a fully-diluted basis) or (Z) hold $10 million of
the Notes, (ii) there has not been any change, event or development or
series of changes, events or developments that could or could reasonably be
expected to have a Material Adverse Effect, (iii) at least [three] people
who are members of the Board of Directors as of the date hereof remain
members of the Board of Directors at any time, (iv) there is no material
litigation that is pending or threatened against the Company and/or any
Subsidiary and (v) the Board of Directors or any Subsidiary Board has not
failed to address in a timely fashion any concerns raised by the Purchaser
Designee(s) regarding the conduct of, or breach of duty by, any officer or
director of the Company or any Subsidiary, the Holders agree that they
shall appoint and cause one Purchaser Designee to serve on the Board of
Directors.
6.27. Executive Officers. [(a) The Company shall promptly, but in
no event later than ____ days from [the date of the Note Purchase
Agreement], hire a permanent Chief Executive Officer, whose appointment
shall be approved by the Board of Directors (which approval shall include
the affirmative vote of each of the Purchaser Designees).
(b) Without the approval of the Board of Directors, which
approval shall include the affirmative vote of each of the Purchaser
Designees, the Company shall not make any change in, or appointment of, key
executive officers of the Company, including, without limitation, the Chief
Executive Officer, the Chief Financial Officer, Executive Vice President of
Marketing, Vice President of International Business Development, Chief
Operating Officer, General Counsel or similar positions.
6.28. Board and Committee Notice Requirement. In addition to any
requirements specified in the By-Laws of the Company, the Company shall
notify each Purchaser Designee and the Non-Voting Observer, by telecopy, of
(a) every meeting (or action by written consent) of the Board of Directors
and (b) every meeting (or action by written consent) of any Subsidiary
Board and of any committee of the Board of Directors or Subsidiary Board,
at least three days in advance of such meeting (or distribution of written
consents), or, if such notice under the circumstances is not practicable,
as soon before the meeting (or distribution) as is practicable.
6.29. Reimbursement of Certain Expenses. The Company shall, upon
request therefor, promptly reimburse each Purchaser Designee and the
Non-Voting Observer for all reasonable expenses incurred by them in
connection with their attendance at meetings of the Board of Directors, any
future Subsidiary Board or of committees of any of the foregoing and any
other activities undertaken by them in their capacity as directors of the
Company or any Subsidiary or observer, as applicable. The foregoing shall
be in addition to, and not in lieu of (or in duplication of), any
indemnification or reimbursement obligations of the Company under the
Certificate of Incorporation of the Company or the By-Laws or by Law. The
Non-Voting Observer shall be entitled to indemnification from the Company
and its Subsidiaries to the maximum extent permitted by Law as though he or
she were a director of the Company or the Subsidiary.
6.30. Limitation of Agreements. The Company shall not, and shall
not permit any Subsidiary to, enter into any Contract, or any amendment,
modification, extension or supplement to any existing Contract or the
By-Laws or Certificate of Incorporation of the Company, which prohibits the
Company from honoring and observing its obligations under the Transaction
Documents.
6.31. Redemption of Convertible Debentures. As soon as
practicable after the date hereof, but in no event later than [ ]
days from the date hereof, the Company shall cause all of its outstanding
6% Convertible Debentures (the "Convertible Debentures") to be redeemed in
accordance with the terms and conditions thereof.
6.32. Operations in Accordance with the Business Plan. The
business and operations of the Company and its Subsidiaries shall be
conducted in accordance with the business plan of the Company, dated August
31, 1999, previously furnished by the Company to the Purchasers.
7. Events of Default and Remedies.
------------------------------
7.1. Events of Default and Remedies. "Event of Default," wherever
used herein, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any Order of any court or
any Order, rule or regulation of any Governmental Entity) (or, if the
giving of notice or lapse of time or both is required, then, prior to such
notice or lapse of time, a "Default"):
(a) default in the payment of the Accreted Value of or
premium, if any, and interest in respect of any Note when it becomes
due and payable; or
(b) default in the performance of any agreement or covenant
in, or provision of, this Agreement, the Notes, or the other documents
executed and delivered in connection with this Agreement (including
any Transaction Document) and to which the Company or any of its
Subsidiaries is a party (other than a covenant or a default in whose
performance is elsewhere in this Section specifically dealt with), or
any representation or warranty made in any document executed and
delivered in connection with this Agreement (including any Transaction
Document) was false in any material respect on the date as of which
made or deemed made; or
(c) the Company or any of its Subsidiaries shall: (A)
default in any payment of principal of or interest on any Indebtedness
(other than the Notes and any intercompany debt) or in the payment of
any Guarantee, beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee was
created; or (B) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or Guarantee
or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness or beneficiary
or beneficiaries of such Guarantee (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to become due
prior to its stated maturity, any applicable grace period having
expired, or such Guarantee to become payable, any applicable grace
period having expired, provided that the aggregate principal amount of
all such Indebtedness and Guarantee which would then become due or
payable as described in this Section 7.1(c) would equal or exceed
$500,000; or
(d) a final judgment or judgments for the payment of money
are entered by a court or courts of competent jurisdiction against any
Company or any of its Subsidiaries and such remains undischarged for a
period (during which execution shall not effectively be stayed) of 60
days, provided that the aggregate of all such judgments that are not
covered by insurance under which the Company or a Subsidiary is a
beneficiary exceeds $500,000, or the Required Holders shall determine
that any regulatory body having jurisdiction over the Company or any
of its Subsidiaries including, without limitation, the SEC, shall have
taken or proposed to take any action that the Required Holders believe
could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect or that adversely affects the Holders'
security interest in the Collateral; or
(e) the Company or any of its Subsidiaries (i) is generally
not paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(f) a court or other Governmental Entity of competent
jurisdiction enters an Order appointing, without consent by the
Company or any of its Subsidiaries, a custodian, receiver, trustee or
other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for
relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage
of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Company or any of
its Subsidiaries, or any such petition shall be filed against the
Company or any of its Subsidiaries and such petition shall not be
dismissed within 60 days; or
(g) a court or other Governmental Entity of competent
jurisdiction enters a final judgment holding any of the documents
delivered in connection with this Agreement (including any Transaction
Document) to be invalid or unenforceable and such judgment remains
unstayed and in effect for a period of 20 consecutive days; or the
Company or any of its Subsidiaries shall assert, in any pleading filed
in such a court, that any of the documents delivered in connection
with this Agreement are invalid or unenforceable; or
(h) any provision of any Transaction Document shall for any
reason cease to be valid, binding and enforceable in accordance with
its terms (or the Company or any of its Subsidiaries [(or the Trustee
in the case of the Intercreditor Agreement)] shall challenge the
enforceability of any Transaction Document or shall assert in writing,
or engage in any action or inaction based on any such assertion, that
any provision of any of the Transaction Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its
terms), or any security interest created under any Transaction
Document shall cease to be a valid and perfected security interest, or
Lien in any of the Collateral purported to be covered thereby; or
(i) the Company or any of its Subsidiaries shall default in
the payment of any amounts due pursuant to the terms of any document
executed and delivered by the Company or such Subsidiary in connection
with this Agreement (other than payments elsewhere in this Section
specifically dealt with); or
(j) there shall exist with respect to any Benefit Plan any
"prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code); (ii) there shall exist with respect to any
Benefit Plan which is a "defined benefit plan" (within the meaning of
Section 3(35) of ERISA) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA or Section 412 of the Code, whether or
not waived); (iii) a "reportable event" (within the meaning of Section
4043 of ERISA, but excluding any reportable event with respect to
which the 30-day notice requirement of Section 4043 has been waived)
shall occur, or judicial or administrative proceedings shall have
commenced, with respect to any Benefit Plan which is a "defined
benefit plan" (within the meaning of Section 3(35) of ERISA), which
reportable event or proceedings is, in the reasonable opinion of the
Holders, likely to result in the termination of such Benefit Plan;
(iv) there shall exist with respect to any Benefit Plan which is a
"multiemployer plan" (within the meaning of Section 4001(a)(3) of
ERISA) any "withdrawal liability" (within the meaning of Section 4201
of ERISA); or (v) any Benefit Plan which is a "defined benefit plan"
(within the meaning of Section 3(35) of ERISA) shall terminate; and in
the case of each of clauses (i) through (v) above, such event or
condition could individually or in the aggregate with all other such
events or conditions have a Material Adverse Effect.
7.2. Acceleration of Maturity. If any Event of Default (other
than an Event of Default specified in clause (e), (f), (g) or (h) of
Section 7.1) shall have occurred and be continuing, the Required Holders
may, by notice to the Company, declare the entire unpaid Accreted Value of,
and interest, if any, in respect of the Notes (to the full extent permitted
by applicable law) to be immediately due and payable (and such Accreted
Value shall be based on the Accreted Value of the Notes to the day prior to
such payment date), and upon such declaration all of such amount shall be
immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived, anything
in the Notes or in this Agreement to the contrary notwithstanding; provided
that if an Event of Default under clause (e), (f), (g) or (h) of Section
7.1 shall have occurred, the entire unpaid Face Amount of the Notes (to the
full extent permitted by applicable law), shall immediately become due and
payable, without any declaration and without presentment, demand, protest
or further notice, all of which are hereby waived, anything in the Notes or
this Agreement to the contrary notwithstanding.
7.3. Other Remedies. If any Event of Default shall have occurred
and be continuing, from and including the date of such Event of Default to
but not including the date such Event of Default is cured or waived, each
Holder may enforce its rights by suit in equity, by action at law, or by
any other appropriate proceedings, whether for the specific performance (to
the extent permitted by Law) of any covenant or agreement contained in this
Agreement or the Notes or in aid of the exercise of any power granted in
this Agreement or the Notes, and each Holder may enforce the payment of any
Note held by such Holder and any of its other legal or equitable rights.
7.4. Conduct No Waiver; Collection Expenses. No course of dealing
on the part of any Holder, nor any delay or failure on the part of any
Holder to exercise any of its rights, shall operate as a waiver of such
right or otherwise prejudice any Holder's rights, powers and remedies. If
the Company fails to pay, when due, any payment in respect of any Note, the
Company will pay such Holder, to the extent permitted by Law, on demand,
all costs and expenses incurred by such Holder in the collection of any
amount due in respect of any Note hereunder, including reasonable legal
fees incurred by such Holder in enforcing its rights hereunder.
7.5. Annulment of Acceleration. If a declaration is made in
accordance with Section 7.2, then and in every such case, the Required
Holders may, by an instrument delivered to the Company, annul such
declaration and the consequences thereof.
7.6. Remedies Cumulative. No right or remedy conferred upon or
reserved to each Purchaser or the Collateral Agent or the Holders under
this Agreement is intended to be exclusive of any other right or remedy,
and every right and remedy shall be cumulative and in addition to every
other right and remedy given hereunder or now and hereafter existing under
applicable law. Every right and remedy given by this Agreement or by
applicable Law to each Purchaser or the Collateral Agent or the Holders may
be exercised from time to time and as often as may be deemed expedient by
such Purchaser or the Collateral Agent or the Holders.
8. Redemption
----------
8.1. Optional Redemption. Subject to Holder's right of conversion
set forth in Section 9, the Company shall have the right, at its sole
option and election made in accordance with Section 8.4(d) and subject to
Section 8.4(d), to redeem the Notes after __________, 2001, in whole or in
part, at a redemption price of 145% of the Accreted Value of the Notes to
the day prior to the redemption date (the "Optional Redemption Price");
provided, however, that if such redemption date occurs after ___________,
2002, the Optional Redemption Price shall decrease to 110% of the Accreted
Value of the Notes prior to the redemption date.
8.2. Partial Redemption. If less than all of the Notes at the
time outstanding are to be redeemed, the aggregate Accreted Value of the
Notes to be redeemed shall be prorated among the outstanding Notes;
provided, however, that in the event that the aggregate Accreted Value of
the Notes then outstanding is [$1,000,000] or less, the Company shall be
required to redeem all of such outstanding Notes if it elects to redeem any
such Notes.
8.3. Change of Control. The Company shall make an offer, in
accordance with the procedures set forth in Section 8.4(b), to acquire the
Notes for cash at a redemption price of 110% of the Accreted Value of the
Notes to the day prior to the redemption date (the "Change of Control
Redemption Price"), in the event of (i) a Change of Control, a merger,
consolidation or other combination involving the Company, or (ii) a Change
of Control of a Subsidiary of the Company or a group of Subsidiaries of the
Company occurs and such Subsidiary or group of Subsidiaries, individually
or in the aggregate, together with their consolidated Subsidiaries and all
other Subsidiaries previously subject to a Change of Control, if any,
represent more than 50% of the revenues or net assets of the Company and
its Subsidiaries on a consolidated basis as of the last date of the
immediately preceding fiscal quarter of the Company or for the twelve month
period then ended.
8.4. Redemption Procedures. (a) Notice of any redemption of Notes
pursuant to Section 8.1 shall be mailed at least 30 but not more than 60
days prior to the date fixed for redemption to each Holder to be redeemed,
at such Holder's address as it appears in the Note Register. In order to
facilitate the redemption of Notes, the Board of Directors may fix a record
date for the determination of Notes to be redeemed which shall be a date at
least 20 days following the date of the notice.
(b) Promptly following a Change of Control (but in no event
more than five Business Days thereafter), the Company shall mail to each
Holder, at such Holder's address as it appears in the Note Register, notice
of such Change of Control, which notice shall set forth such Holder's right
to require the Company to redeem any or all Notes held by it. The Company
shall thereafter, during a period of 90 days from the date of such notice
redeem any Notes, in whole or in part, at the option of such Holder, upon
at least five days' written notice to the Company by such Holder specifying
(i) the Accreted Value of Notes to be redeemed and (ii) the redemption
date.
(c) On the date of any redemption being made pursuant to
Section 8.1, 8.2 or 8.3 which is specified in a notice given pursuant to
this Section 8.4, the Company shall wire transfer to such Holder the
Optional Redemption Price or the Change of Control Redemption Price, as the
case may be, for the Accreted Value of Notes and premium, if any, so
redeemed.
9. Conversion
----------
9.1. Holder's Option to Convert into Common Stock. Subject to the
provisions for adjustment hereinafter set forth, any Note or any portion of
the outstanding Accreted Value of such Note shall be convertible at the
option of Holder at any time after the Closing into fully paid and
non-assessable shares of Common Stock at a conversion price, determined as
hereinafter provided, in effect at the time of conversion.
The number of shares of Common Stock issuable upon conversion of
a Note shall be determined by dividing the Accreted Value of the Note to
the day prior to the conversion date or portion thereof surrendered for
conversion by the Conversion Price. The "Conversion Price" shall initially
be $3.00 per share, subject to adjustment as provided in this Section 9 and
Section 6.31(c).
9.2. Exercise of Conversion Privilege. (a) Conversion of the
Notes may be effected by any Holder thereof upon the surrender to the
Company at the office of the Company designated for notices in accordance
with Section 14.6 or at the office of any agent or agents of the Company,
as may be designated by the Board of Directors (the "Transfer Agent"), of
the Notes to be converted, accompanied by a written notice stating that
such Holder elects to convert all or a specified portion of the Accreted
Value of such Notes in accordance with the provisions of this Section 9 and
specifying the name or names in which such Holder wishes the certificate or
certificates for shares of Common Stock to be issued. In case any Holder's
notice shall specify a name or names other than that of such Holder, such
notice shall be accompanied by payment of all transfer taxes payable upon
the issuance of shares of Common Stock in such name or names. Other than
such taxes, the Company will pay any and all issue and other taxes (other
than taxes based on income) that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of Notes pursuant hereto.
As promptly as practicable, and in any event within five Business Days
after the surrender of such Notes and the receipt of such notice relating
thereto and, if applicable, payment of all transfer taxes (or the
demonstration to the satisfaction of the Company that such taxes have been
paid), the Company shall deliver or cause to be delivered (i) a certificate
or certificates representing the number of validly issued, fully paid and
nonassessable full shares of Common Stock to which the holder of the Notes
being converted shall be entitled and (ii) if less than the entire Accreted
Value of any Note surrendered is being converted, a new Note in the
Accreted Value which remains outstanding upon such partial conversion. Such
conversion shall be deemed to have been made at the close of business on
the date of giving such notice so that the rights of any holder thereof as
to the Note or Notes (or portion thereof) being converted shall cease
except for the right to receive shares of Common Stock in accordance
herewith, and the Person entitled to receive the shares of Common Stock
shall be treated for all purposes as having become the record holder of
such shares of Common Stock at such time, so long as such holder's Notes
are delivered to the Company within two Business Days after the date of the
giving of notice.
(b) In case any Notes are to be redeemed pursuant to Section
8.1, such right of conversion shall cease and terminate as to the Notes to
be redeemed at the close of business on the Business Day preceding the date
fixed for redemption unless (i) the Company shall default in the payment of
the Optional Redemption Price or (ii) a holder of a Note to be redeemed has
given notice to the Company of such holder's election to convert all or any
portion of a Note prior to the date fixed for redemption. For the avoidance
of doubt, both the Holders and the Company acknowledge that the Holders'
right to convert the Notes into Common Stock remains in effect until any
redemption and will not be suspended by any notice of redemption.
9.3. Fractions of Shares; Interest. In connection with the
conversion of any Note into Common Stock, no fractional shares shall be
issued, but in lieu thereof the Company shall pay a cash adjustment in
respect of such fractional interest in an amount equal to such fractional
interest multiplied by the Current Market Price per share of Common Stock
on the Trading Day on which such Note is deemed to have been converted. If
more than one Note shall be surrendered for conversion by the same Holder
at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the aggregate Accreted
Value of Notes so surrendered, together with cash in lieu of any fractional
share of Common Stock.
9.4. Reservation of Stock; Listing. (a) The Company shall at all
times reserve and keep available for issuance upon the conversion of the
Notes, free from any preemptive rights, such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of the Face Amount of the Notes into Common Stock,
and shall take all action required to increase the authorized number of
shares of Common Stock, if necessary, to permit the conversion of the Face
Amount of the Notes.
(b) If at the time of conversion, the Common Stock is listed
on a national securities exchange, or is designated as a "national market
system security" on the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ"), the Company shall take all action
necessary to cause the shares of Common Stock issuable upon conversion of
the Notes to be listed on such exchange, subject to official notice of
issuance.
9.5. Rights. If the Company shall issue shares of Common Stock
upon conversion of any Notes as contemplated by this Section 9, the Company
shall issue together with each such share of Common Stock any rights issued
to holders of Common Stock, irrespective of whether such rights shall be
exercisable at such time, but only if such rights are issued and
outstanding and held by other holders of Common Stock at such time and have
not expired.
9.6. Adjustment of Conversion Ratio. The Conversion Price will be
subject to adjustment from time to time as follows:
(a) In case the Company shall at any time or from time to
time after the date hereof (A) pay a dividend, or make a distribution, on
the outstanding shares of Common Stock in shares of Common Stock, (B)
subdivide the outstanding shares of Common Stock; (C) combine the
outstanding shares of Common Stock into a smaller number of shares; (D)
issue by reclassification of the shares of Common Stock any shares of
capital stock of the Company, then, and in each such case, the Conversion
Price in effect immediately prior to such event or the record date
therefor, whichever is earlier, shall be adjusted so that the holder of any
Note thereafter surrendered for conversion into Common Stock shall be
entitled to receive the number of shares of Common Stock of the Company
which such holder would have owned or have been entitled to receive after
the happening of any of the events described above, had such Notes been
surrendered for conversion immediately prior to the happening of such event
or the record date therefor, whichever is earlier. An adjustment made
pursuant to this clause (a) shall become effective (x) in the case of any
such dividend or distribution, immediately after the close of business on
the record date for the determination of holders of shares of Common Stock
entitled to receive such dividend or distribution, or (y) in the case of
such subdivision, reclassification or combination, at the close of business
on the day upon which such corporate action becomes effective. No
adjustment shall be made pursuant to this clause (a) in connection with any
transaction to which Section 9.7 applies.
(b) If at any time the Company shall issue shares of Common
Stock (or rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock (collectively "Convertible
Securities")) at a price per share (or having a conversion price per share)
less than the greater of (1) the Conversion Price per share of Common Stock
as of the date of issuance of such shares (or, in the case of Convertible
Securities, less than the Conversion Price as of the date of issuance of
the Convertible Securities in respect of which shares of Common Stock were
issued) and (2) the Current Market Price for the period of 20 Trading Days
preceding the earlier of the issuance or public announcement of the
issuance of such additional shares of Common Stock or Convertible
Securities (the "20 day Price"), then the Conversion Price shall be
adjusted by multiplying (A) the Conversion Price in effect on the day
immediately prior to such date by (B) a fraction, the numerator of which
shall be the sum of (1) the number of shares of Common Stock outstanding on
such date and (2) the number of shares of Common Stock purchasable with the
aggregate consideration receivable by the Company for the total number of
shares of Common Stock so issued (or into which the rights, warrants or
other convertible securities may convert), and the denominator of which
shall be the sum of (x) the number of shares of Common Stock outstanding on
such date and (y) the number of additional shares of Common Stock issued
(or into which the Convertible Securities may convert).
An adjustment made pursuant to this Section 9.6(b) shall be
made on the next Business Day following the date on which any such issuance
is made and shall be effective retroactively to the close of business on
the date of such issuance. For purposes of this Section 9.6(b), the
aggregate consideration receivable by the Company in connection with the
issuance of shares of Common Stock or of Convertible Securities shall be
deemed to be equal to the sum of the aggregate offering price (before
deduction of underwriting discounts or commissions and expenses payable to
third parties) of all such Common Stock and Convertible Securities plus the
minimum aggregate amount, if any, payable upon exercise or conversion of
any such Convertible Securities. The issuance or reissuance of any shares
of Common Stock (whether treasury shares or newly issued shares) pursuant
to (i) a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the Conversion Price pursuant to Section 9.6(a) or (ii) any
stock option plan or program of the Company currently in effect involving
the grant of options to employees of the Company at Current Market Price
shall not be deemed to constitute an issuance of Common Stock or
Convertible Securities by the Company to which this Section 9.6(b) applies.
No adjustment shall be made pursuant to this Section 9.6(b) in connection
with any transaction to which Section 9.7 applies.
(c) In case the Company shall at any time or from time to
time after the date hereof declare, order, pay or make a dividend or other
distribution (including, without limitation, any distribution of stock or
other securities or property or Convertible Securities of the Company or
any of its Subsidiaries by way of dividend or spinoff), on its Common
Stock, then, and in each such case, the Conversion Price shall be adjusted
by multiplying (1) the applicable Conversion Price on the day immediately
prior to the record date fixed for the determination of stockholders
entitled to receive such dividend or distribution by (2) a fraction, the
numerator of which shall be the average Current Market Price of the Common
Stock for the period of 20 Trading Days preceding such record date, and the
denominator of which shall be such average Current Market Price of the
Common Stock less the Fair Market Value per share of Common Stock (as
determined in good faith by the board of directors of the Company, a
certified resolution with respect to which shall be mailed to each Holder)
of such dividend or distribution. No adjustment shall be made pursuant to
this Section 9.6(c) in connection with any transaction to which Section 9.7
applies.
(d) In case a tender or exchange offer made by the Company
or any Affiliate of the Company for all or any portion of the Common Stock
shall expire and such tender or exchange offer shall involve the payment by
the Company or such Affiliate of consideration per share of Common Stock
having a Fair Market Value at the last time (the "Expiration Time") tenders
or exchanges may be made pursuant to such tender or exchange offer (as it
shall have been amended) that exceeds the Current Market Price per share of
Common Stock on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction contemplated by this
subsection (d) by a fraction (which shall not be greater than one) of which
the numerator shall be the number of shares of Capital Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time
multiplied by the Current Market Price per share of Common Stock on the
Trading Day next succeeding the Expiration Time and of which the
denominator shall be the sum of (i) the Fair Market Value of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such maximum, being referred
to as the "Purchased Shares") and (ii) the product of the number of shares
of Capital Stock outstanding (less any Purchased Shares) at the Expiration
Time and the Current Market Price per share of Common Stock on the Trading
Day next succeeding the Expiration Time, such reduction to become
retroactively effective immediately prior to the opening of business on the
day following the Expiration Time.
(e) For purposes of this Section 9.6, the number of shares
of Common Stock at any time outstanding shall not include any shares of
Common Stock then owned or held by or for the account of the Company.
(f) The term "dividend," as used in this Section 9.5, shall
mean a dividend or other distribution upon stock of the Company.
(g) Anything in this Section 9.6 to the contrary
notwithstanding, the Company shall not be required to give effect to any
adjustment in the Conversion Price unless and until the net effect of one
or more adjustments (each of which shall be carried forward), determined as
above provided, shall have resulted in a change of the Conversion Price by
at least one one-hundredth of one share of Common Stock, and when the
cumulative net effect of more than one adjustment so determined shall be to
change the Conversion Price by at least one one-hundredth of one share of
Common Stock, such change in Conversion Price shall thereupon be given
effect.
(h) The certificate of any firm of independent public
accountants of recognized national standing selected by the Board of
Directors (which may be the firm of independent public accountants
regularly employed by the Company) shall be presumptively correct for any
computation made under this Section 9.6.
(i) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the number of
shares of Common Stock issuable upon exercise of the right of conversion
granted by this Section 9.6 or in the Conversion Price then in effect shall
be required by reason of the taking of such record.
9.7. Merger or Consolidation. In the case of any
recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or a substantial portion of the Company's assets to another
Person or other transaction which is effected in such a manner that holders
of Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock (each of the foregoing being referred to as a "Transaction"),
each Note then outstanding shall thereafter be convertible into, in lieu of
the Common Stock issuable upon such conversion prior to consummation of
such Transaction, the kind and amount of shares of stock and other
securities and property receivable (including cash) upon the consummation
of such Transaction by a holder of that number of shares of Common Stock
into which the Accreted Value of such Note was convertible immediately
prior to such Transaction. In each such case, the Company shall also make
appropriate provisions (in form and substance satisfactory to the Required
Holders) to insure that the provisions of this Section 9.6 shall thereafter
be applicable to the Notes (including, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing
entity is other than the Company, an immediate adjustment of the Conversion
Price to the value for the Common Stock reflected by the terms of such
consolidation, merger or sale, and a corresponding immediate adjustment in
the number of shares of Common Stock acquirable and receivable upon
conversion of the Notes, in each case if the value so reflected is less
than the Conversion Price in effect immediately prior to such
consolidation, merger or sale). The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof,
the successor corporation (if other than the Company) resulting from
consolidation or merger or the corporation purchasing such assets assumes
by written instrument (in form reasonably satisfactory to the Required
Holders), the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire. In case securities or
property other than Common Stock shall be issuable or deliverable upon
conversion as aforesaid, then all references in this Section 9 shall be
deemed to apply, so far as appropriate and nearly as may be, to such other
securities or property.
9.8. Notice of Certain Corporate Actions. In case at any time or
from time to time the Company shall pay any stock dividend or make any
other non-cash distribution to the holders of its Common Stock, or shall
offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right, or there shall
be any capital reorganization or reclassification of the Common Stock or
consolidation or merger of the Company with or into another corporation, or
any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the
Company, then, in any one or more of said cases the Company shall give at
least 20 days' prior written notice (the time of mailing of such notice
shall be deemed to be the time of giving thereof) to the registered holders
of the Notes at the addresses of each as shown in the Note Register as of
the date on which (i) a record shall be taken for such stock dividend,
distribution or subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, sale or conveyance, dissolution,
liquidation or winding up shall take place, as the case may be, provided
that in the case of any Transaction to which Section 9.7 applies the
Company shall give at least 30 days' prior written notice as aforesaid.
Such notice shall also specify the date as of which the holders of the
Common Stock of record shall participate in said dividend, distribution or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale or conveyance or participate
in such dissolution, liquidation or winding up, as the case may be. Failure
to give such notice shall not invalidate any action so taken.
9.9. Reports as to Adjustments. Upon any adjustment of the
Conversion Price then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion
provisions set forth in this Section 9, then, and in each such case, the
Company shall promptly deliver to each Holder and the Transfer Agent of the
Notes and Common Stock, a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Company setting forth in reasonable detail
the event requiring the adjustment and the method by which such adjustment
was calculated and specifying the Conversion Price then in effect following
such adjustment, and shall set forth in reasonable detail the method of
calculation of each and a brief statement of the facts requiring such
adjustment. Where appropriate, such notice to any Holder may be given in
advance and included as part of the notice required under the provisions of
Section 9.8.
10. The Collateral Agent.
--------------------
10.1. Appointment. Each Purchaser for itself and for future
Holders hereby irrevocably designates and appoints Appaloosa Management
L.P. as the Collateral Agent under this Agreement, and irrevocably
authorizes the Collateral Agent to take such action on such Purchaser's
behalf and any future Holder's behalf and to exercise such powers and
perform such duties as are expressly delegated to the Collateral Agent by
the terms of the Transaction Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Collateral Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Purchaser or future Holder, and no
implied covenants, functions, responsibilities, duties, obligations or
Liabilities shall be read into this Agreement or any of the Transaction
Documents or otherwise exist against the Collateral Agent.
10.2. Delegation of Duties. The Collateral Agent may execute any
of its duties under the Transaction Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care, except as otherwise
provided in Section 10.3.
10.3. Exculpatory Provisions. Neither the Collateral Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact,
Affiliates or Subsidiaries shall be (i) liable for any action taken or
omitted to be taken by any of them under or in connection with the
Transaction Documents, or (ii) responsible in any manner to any of the
Purchasers or future Holders for any recitals, statements, representations
or warranties made by the Company or any of its Subsidiaries or any officer
thereof contained in the Transaction Documents or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Collateral Agent under or in connection with, the
Transaction Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of the Transaction Documents or
for any failure of the Company or any of its Subsidiaries to perform its
obligation thereunder. The Collateral Agent shall not be under any
obligation to any Purchaser or future Holder to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, any Transaction Document, or to inspect the properties,
books or records of the Company or any of its Subsidiaries.
10.4. Reliance by the Collateral Agent. The Collateral Agent
shall be entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company), independent
accountants and other experts selected by the Collateral Agent. The
Collateral Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Collateral Agent. The
Collateral Agent shall be fully justified in failing or refusing to take
any action under any Transaction Document unless it shall first receive
such advice or concurrence of the Required Holders (or, where unanimous
consent of the Holders is expressly required hereunder or thereunder, such
Holders) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Holders against any and all Liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. The Collateral Agent shall in all cases be fully protected in
acting, or in refraining from acting, under any Transaction Document in
accordance with a request of the Required Holders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all
the Purchasers and all future Holders of the Notes.
10.5. Notice of Default. The Collateral Agent shall not be deemed
to have knowledge or notice of the occurrence of any default or Event of
Default hereunder unless the Collateral Agent has received written notice
from a Holder or the Company referring to this Agreement, describing such
default or Event of Default and stating that such notice is a "notice of
default". In the event that the Collateral Agent receives such a notice,
the Collateral Agent shall promptly give notice thereof to all Holders. The
Collateral Agent shall take such action with respect to such default or
Event of Default as shall be directed by the Required Holders; provided
that (i) the Collateral Agent shall not be required to take any action that
exposes the Collateral Agent to any Liability or that is contrary to this
Agreement or applicable law and (ii) unless and until the Collateral Agent
shall have received such directions, the Collateral Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with respect to such default or Event or Default as it shall deem advisable
in the best interests of the Holders.
10.6. Non-Reliance on Collateral Agent and Other Purchasers. Each
Purchaser for itself and all future Holders of the Notes acquired by such
Purchaser expressly acknowledges that neither the Collateral Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representation or warranties to it
and that no act by the Collateral Agent hereafter taken, including any
review of the affairs of the Company and its Subsidiaries, shall be deemed
to constitute any representation or warranty by the Collateral Agent to any
such Purchaser or Holder. Each Purchaser for itself and all future Holders
of the Notes acquired by such Purchaser represents to the Collateral Agent
that it has, independently and without reliance upon the Collateral Agent
or any other Holder, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operation, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and made its own
decision to make its loan hereunder and to enter into this Agreement. Each
Purchaser also represents for itself and all future Holders of the Notes
acquired by such Purchaser that it will, independently and without reliance
upon the Collateral Agent or any other Holder, and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit analysis, appraisals and decisions in taking or not taking
action under the Transaction Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of the Company
and its Subsidiaries. Except for notices, reports and other documents
expressly required to be furnished to the Holders by the Collateral Agent
hereunder, the Collateral Agent shall not have any duty or responsibility
to provide any Holder with any credit or other information concerning the
business, financial condition, assets, liabilities, net assets, properties,
results of operations, value, prospects and other condition or
creditworthiness of the Company and its Subsidiaries which may come into
the possession of the Collateral Agent or any of its officers, directors,
employees, agents, attorneys-in-fact, Affiliates or any of its
Subsidiaries.
10.7. Indemnification. The Purchasers and the future Holders
jointly and severally agree to indemnify the Collateral Agent in its
capacity as such (to the extent not reimbursed by the Company and its
Subsidiaries and without limiting the obligation of the Company and its
Subsidiaries to do so), from and against any and all Liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time be
imposed on, incurred by or asserted against the Collateral Agent in any way
relating to or arising out of the Transaction Documents or any documents
contemplated by or referred to herein or the transactions contemplated
hereby or any action taken or omitted by the Collateral Agent under or in
connection with any of the foregoing; provided that no Purchaser or future
Holder shall be liable for the payment of any portion of such Liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Collateral Agent's
gross negligence or willful misconduct. The agreements contained in this
Section 10.7 shall survive the payment of the Notes and all other amounts
payable hereunder.
10.8. Collateral Agent in its Individual Capacity. The Collateral
Agent and its Affiliates and Subsidiaries may make loans to, accept
deposits from and generally engage in any kind of business with the Company
and its Subsidiaries as though the Collateral Agent were not the Collateral
Agent hereunder. With respect to its loans made or renewed by it or any
Note issued to it, the Collateral Agent shall have the same rights and
powers, duties and Liabilities under the Transaction Documents as any
Holder and may exercise the same as though it were not the Collateral Agent
and the terms "Purchaser", "Purchasers", "Holder" and "Holders" shall
include the Collateral Agent in its individual capacities.
10.9. Successor Collateral Agent. The Collateral Agent may resign
as Collateral Agent upon 30 days' notice to the Company (and the Company
shall promptly notify the Holders). If the Collateral Agent shall resign as
Collateral Agent under the Transaction Documents, then the Required Holders
shall appoint a successor agent for the Holders whereupon such successor
agent shall succeed to the rights, powers and duties of the Collateral
Agent and the term "Collateral Agent" shall mean such successor agent
effective upon its appointment, and the former Collateral Agent's rights,
powers and duties as Collateral Agent shall be terminated, without any
other or further act or deed on the part of such former Collateral Agent or
any of the parties to this Agreement or any Holders of the Notes. After any
retiring Collateral Agent's resignation hereunder as Collateral Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Collateral Agent under the
Transaction Documents.
11. Interpretation.
--------------
11.1. Definitions.
"$7 Warrants" shall have the meaning ascribed thereto in Section
1.4(ii).
"Accreted Value" shall have the meaning ascribed thereto in
Section 5.3.
"Agreement" shall have the meaning ascribed thereto in the
Preamble.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act. "Affiliate" shall also include partners of a
Person. Notwithstanding the foregoing, "Affiliate" shall not include the
limited partners of any Purchaser or Holder or any limited partners of a
limited partner of any Purchaser or Holder.
"Beneficially Own" with respect to any securities shall mean
having "beneficial ownership" of such securities (as determined pursuant to
Rule 13d-3 under the Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing.
"Benefit Plan" shall mean each plan, program, policy, payroll
practice, commitment or other arrangement providing for compensation,
severance, termination pay, bonuses, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits of any
kind, whether formal or informal, funded or unfunded, written or oral and
whether or not legally binding, including, without limitation, each
"employee benefit plan" (within the meaning of Section 3(3) of ERISA), in
the case of each of the foregoing, maintained, sponsored or contributed to
by the Company or any ERISA Affiliate or pursuant to which the Company or
any ERISA Affiliate has or may have any Liability, but excluding individual
Employee Agreements.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"By-Laws" shall have the meaning ascribed thereto in Section
1.4(xi).
"Capital Expenditures" shall mean [expenditures made or
liabilities incurred for the acquisition of any fixed assets or
improvements, replacements, substitions or additions thereto which have a
useful life of more than one year, including the total principal portion of
Capitalized Lease Obligations.].
"Capital Stock" means, in the case of the Company, any and all
shares (however designated) of the capital stock of the Company now or
hereafter outstanding.
"Capitalized Lease" shall mean, with respect to any Person, any
lease or any other agreement for the use of property which, in accordance
with generally accepted accounting principles, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and
include, as of any date as of which the amount thereof is to be determined,
the amount of the liability capitalized or disclosed (or which should be
disclosed) in a balance sheet of such Person in respect of a Capitalized
Lease of such Person.
"Change of Control" shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 35% or more of the
combined voting power of the then outstanding Voting Securities
of the Company, but excluding, for this purpose, any such
acquisition by (i) the Company or any Subsidiary, (ii) any
Benefit Plan (or related trust) of the Company or any Subsidiary,
or (iii) any corporation with respect to which, following such
acquisition, 50% or more of the combined voting power of the then
outstanding Voting Securities of such corporation is then
beneficially owned, directly or indirectly, by individuals and
entities who were the beneficial owners of Voting Securities of
the Company immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the combined voting power of the
then outstanding Voting Securities of the Company; or
(b) a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all the Persons
who were the respective Beneficial Owners of the Voting
Securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation Beneficially Own,
directly or indirectly, more than 35% of the combined voting
power of the then outstanding Voting Securities of the
corporation resulting from such reorganization, merger or
consolidation; or
(c) the Incumbent Board shall cease for any reason to
constitute at least 50% of the members of the Board; or
(d) the sale, lease or other disposition of all or a
substantial part of the Company's assets in one transaction or a
series of related transactions.
"Change of Control Redemption Price" shall have the meaning
ascribed thereto in Section 8.3.
"Closing" shall have the meaning ascribed thereto in Section 1.3.
"Closing Date" shall have the meaning ascribed thereto in Section
1.3(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" means all real and personal property and interests
in real and personal property including, without limitation, Intellectual
Property, rights under leases and royalty rights and agreements, now owned
or hereafter acquired by the Company or its Subsidiaries in or upon which a
Lien is granted or made under the Collateral Documentation.
"Collateral Agent" shall have the meaning ascribed thereto in the
Preamble.
"Collateral Documentation" means the Guarantee and Security
Agreements, the Security Agreement, the Financing Statements, the
Intercompany Notes and the endorsements thereof to the Collateral Agent
(for the benefit of the Holders) or to the Holders, and all other deeds of
trust, assignments, endorsements, pledged stock, collateral assignments and
other instruments, documents, agreements or conveyances at any time
creating or evidencing Liens or assigning Liens to the Collateral Agent
(for the benefit of the Holders) or to the Holders, to secure the
obligations of the Company or any of its Subsidiaries under the Notes, [the
Intercreditor Agreement] and the Registration Rights Agreement.
"Common Stock" shall have the meaning ascribed thereto in the
Recitals.
"Company" shall have the meaning ascribed thereto in the
Preamble.
"Consolidated" or "consolidated", when used with reference to any
financial term in this Agreement (but not when used with respect to any tax
return or tax Liability), shall mean the aggregate for two or more Persons
of the amounts signified by such term for all such Persons, with
inter-company items eliminated and, with respect to earnings, after
eliminating the portion of earnings properly attributable to minority
interests, if any, in the capital stock of any such Person or attributable
to shares of preferred stock of any such Person not owned by any other such
Person.
"Contracts" shall mean all agreements, contracts, leases,
purchase orders, arrangements, commitments and licenses to which the
Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound.
"Conversion Price" shall have the meaning ascribed thereto in
Section 9.1.
"Convertible Debentures" shall have the meaning ascribed thereto
in Section 6.32.
"Convertible Securities" shall have the meaning ascribed thereto
in Section 9.6(b).
"Current Market Price", when used with reference to shares of
Common Stock or other securities on any date, shall mean the closing price
per share of Common Stock or such other securities on such date and, when
used with reference to shares of Common Stock or other securities for any
period shall mean the average of the daily closing prices per share of
Common Stock or such other securities for such period. If the Common Stock
or such other securities are listed or admitted to trading on a national
securities exchange, the closing price shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Stock or such other securities are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the Common Stock or such other securities are listed or admitted to trading
or, if the Common Stock or such other securities are not so listed on any
national securities exchange, as reported in the transaction reporting
system applicable to securities designated as a "national market system
security" or NASDAQ. If the Common Stock or such other securities are not
publicly held or so listed or designated, "Current Market Price" shall mean
the Fair Market Value per share of Common Stock or of such other securities
as determined in good faith by the Board of Directors based on an opinion
of an independent investment banking firm with an established national
reputation with respect to the valuation of securities.
"Default" shall have the meaning ascribed thereto in Section 7.1.
"Employee Agreement" shall mean each management, employment,
severance, consulting, non-compete, confidentiality, or similar agreement
or Contract between the Company or any ERISA Affiliate and any employee
pursuant to which the Company or any ERISA Affiliate has or may have any
Liability.
"Environmental Laws" means any and all Laws, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or
the release of any materials into the environment, including but not
limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"Equity Interests" means any capital stock, partnership interest,
joint venture interest or other equity interest or warrants, options or
other rights to acquire any capital stock, partnership interest, joint
venture interest or other equity interest.
"Equity Securities" shall mean with respect to any Person, shares
of capital stock or other equity interest of such Person, and any rights,
options or warrants to purchase stock or other securities exchangeable for
or convertible into capital stock of or other equity interest in the
Company.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means each business or entity which is a member
of a "controlled group of corporations," under "common control" or an
"affiliated service group" with the Company within the meaning of Sections
414(b), (c) or (m) of the Code, or required to be aggregated with the
Company under Section 414(o) of the Code, or is under "common control" with
the Company, within the meaning of Section 4001(a)(14) of ERISA.
"Event of Default" shall have the meaning ascribed thereto in
Section 7.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include reference to the comparable section, if any, of
any such successor federal statute.
"Expiration Time" shall have the meaning ascribed thereto in
Section 9.6(d).
"Face Amount" shall have the meaning ascribed thereto in the
Recitals
"Fair Market Value" shall mean, as to shares of Common Stock or
any other securities of the Company or any other issuer which are publicly
traded, the average of the Current Market Prices of such shares or
securities during the period of five consecutive trading days preceding the
date as of which the Fair Market Value of a security is to be determined.
The "Fair Market Value" of any security which is not publicly traded or of
any other property shall mean the fair value thereof as determined by an
independent investment banking or appraisal firm experienced in the
valuation of such securities or property selected in good faith by the
Board of Directors or a committee thereof.
"FDA" shall have the meaning ascribed there to in Section 2.15.
"Financing Statements" means Form UCC-1 financing statements to
be filed in all jurisdictions necessary or desirable in order to perfect
the Holders' security interest in the Collateral and shall include any Form
UCC-1 financing statements assigned to the Holders and filings to be made
in the U.S. Patent and Trademark Office and the U.S. Copyright Office.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.
"Guaranty" or "Guarantee" by any Person shall mean all
obligations (other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of any Person
guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all
obligations incurred through an agreement, contingent or otherwise, by such
Person: (i) to purchase such Indebtedness or obligation or any property or
assets constituting security therefor, (ii) to advance or supply funds (x)
for the purchase or payment of such Indebtedness or obligation, (y) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (iii) to lease property or to purchase
securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. For the purposes of any
computations made under this Agreement, a Guarantee in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to
the outstanding amount of the Indebtedness for borrowed money which has
been guaranteed, and a Guarantee in respect of any other Liability or any
dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such Liability or dividend.
"Guarantee and Security Agreement" shall mean the agreement, in
the form of Exhibit 6.10 hereto, to be entered into between the Collateral
Agent and the Company's future domestic Subsidiaries, providing for a
security interest in the domestic Subsidiaries' Collateral and Guarantees
from such Subsidiaries.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage,
handling, transportation, transfer, use, disposal, release, discharge,
spillage, seepage, or filtration of which is or shall be restricted,
prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and polychlorinated
biphenyls).
"Holder" shall mean, at any time of reference, a Person in whose
name a Note is registered in the Note Register at such time.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"HSR Notification" shall mean the notification of the particular
transaction pursuant to the requirements of the HSR Act.
"Incumbent Board" shall mean the individuals who, immediately
after the Closing, constitute the Board of Directors; provided, however,
that any individual becoming a director subsequent to the Closing whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be deemed to be a member of the Incumbent Board.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all Guarantees of such Person, (viii) all
obligations (including but not limited to reimbursement obligations)
relating to the issuance of letters of credit for the account of such
Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Indemnified Person" shall have the meaning ascribed thereto in
Section 12.1.
"Indenture Date" shall have the meaning ascribed thereto in
Section 5.1.
"Intellectual Property" means (a) Patents, (b) all trademarks,
service marks, trade dress, logos, trade names, domain names and corporate
names, together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, and
all applications, registrations and renewals in connection therewith, (c)
all copyrightable works, all copyrights and all applications, registrations
and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e) all
trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary
rights, (h) all copies and tangible embodiments of the foregoing (in
whatever form or medium) and (i) all licenses, sublicenses, permissions or
agreements in connection with the foregoing.
"Intercompany Notes" means any notes from the Subsidiaries or
Affiliates of the Company in favor of the Company, as the same may be
amended, modified or supplemented from time to time in accordance with
their terms, and all other promissory notes or other instruments evidencing
Indebtedness of Affiliates or Subsidiaries of the Company to the Company
between the Company and its Affiliates.
["Intercreditor Agreement" shall mean the agreement, dated as of
the date hereof, between the Collateral Agent and [ ]].
"Law" shall include any foreign, federal, state, or local law,
statute, rule, regulation, Order or other restriction of any court or other
Governmental Entity.
"Liability" shall mean any debt, liability or obligation, whether
known or unknown, asserted or unasserted, accrued, absolute, contingent or
otherwise, whether due or to become due.
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or
title of any vendor, lessor, lender or other secured party to or of such
Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements).
"Litigation" shall mean any claim, demand, notice, action, suit,
proceeding, arbitration, investigation, civil, criminal or administrative
action, audit, inquiry or hearing by or before any Governmental Entity or
private arbitration tribunal.
"Major Supplier" shall mean a supplier of $20,000 or more in
materials or services to the Company during the last twelve months.
"Material" shall mean material in relation to the properties,
business, prospects, operations, earnings, assets, Liabilities, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries
taken as a whole, whether or not in the ordinary course of business.
"Material Adverse Effect" shall mean a material adverse effect on
(a) properties, business, prospects, operations, earnings, assets,
Liabilities or the condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole, whether or not in the ordinary course of
business, (b) the ability of the Company or any of its Subsidiaries to
perform its obligations under any of the Transaction Documents to which it
is a party, (c) the validity or enforceability of any of the Transaction
Documents, (d) the rights, remedies, powers and privileges of the Holders
under any of the Transaction Documents or (e) the timely payment or
performance of the Secured Obligations.
"NASDAQ" shall have the meaning ascribed thereto in Section
9.4(b).
"Net Income" shall mean, with respect to any period, the net
income or net loss of the Company and its Subsidiaries in accordance with
GAAP on a consolidated basis as reflected in the financial statements
furnished to the Holders in accordance with Section 6.20.
"Non-Voting Observer" shall have the meaning ascribed thereto in
Section 6.26.
"Note Purchase Agreement" shall have the meaning ascribed thereto
in the preamble.
"Note Register" shall have the meaning ascribed thereto in
Section 4.1.
"Notes" shall have the meaning ascribed thereto in the Recitals.
"Notice" shall have the meaning ascribed thereto in Section 6.11.
"Officers' Certificate" means a certificate signed by any two
officers of the Company, one of whom must be the Chairman of the Board of
Directors, the President, the Chief Executive Officer, the Treasurer or a
Vice President of the Company.
"Old Notes" shall mean the notes issued under the Note Purchase
Agreement.
"Operating Profit" shall have the meaning ascribed thereto in
Section 6.15.
"Optional Redemption Price" shall have the meaning ascribed
thereto in Section 8.1.
"Order" shall mean any judgment, order, injunction, ruling,
decree, stipulation or award of any Governmental Entity or private
arbitration tribunal.
"Original Issue Discount" shall have the meaning ascribed thereto
in Section 5.3.
"Original Issue Price" shall mean ___________________.
"Outstanding" or "outstanding" shall mean when used with
reference to the Notes at a particular time, all Notes theretofore issued
as provided in this Agreement, except (i) Notes theretofore reported as
lost, stolen, damaged or destroyed, or surrendered for transfer, exchange
or replacement, in respect to which replacement Notes have been issued,
(ii) Notes theretofore paid in full, and (iii) Notes therefore canceled by
the Company, except that, for the purpose of determining whether Holders of
the requisite aggregate Accreted Value of Notes have made or concurred in
any waiver, consent, approval, notice or other communication under this
Agreement, Notes registered in the name of, or owned beneficially by, the
Company or any Subsidiary of any thereof, shall not be deemed to be
outstanding.
"Patents" shall mean, collectively, (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice) and all
improvements thereon, (b) all patents, patent applications and patent
disclosures, (c) all reissues, divisions, continuations, revisions
reexaminations, renewals, extensions and continuations-in-part thereof) and
(d) all rights, now existing or hereafter coming into existence, (i) to all
income, royalties, damages, and other payments (including in respect of all
past, present and future infringements) now or hereafter due or payable
under or with respect to any of the foregoing, (ii) to ▇▇▇ for all past,
present and future infringements with respect to any of the foregoing and
(iii) otherwise accruing under or pertaining to any of the foregoing
throughout the world, including all inventions and improvements described
or discussed in all such patents and patent applications.
"Permitted Indebtedness" means, without duplication, any of the
following Indebtedness of the Company or any of its Subsidiaries, as the
case may be: (i) Indebtedness and obligations under the Notes; (ii) any
Indebtedness and obligations outstanding on the date hereof, as set forth
on Schedule 6.6; or (iii) Indebtedness of a domestic Subsidiary of the
Company to the Company as long as such Subsidiary has executed the
Guarantee and Security Agreement and such Indebtedness is evidenced by
Intercompany Notes and the Intercompany Notes are pledged to the Collateral
Agent as Collateral.
"Permitted Investments" shall mean (a) direct obligations of the
United States of America, or of any of its agencies, or obligations
guaranteed as to principal and interest by the United States of America, or
of any of its agencies, in either case maturing not more than 90 days from
the date of acquisition of such obligation; (b) deposit accounts in, and
certificates of deposit, repurchase agreements or bankers acceptances of
any bank or trust company organized under the laws of the United States of
America or any state or licensed to conduct a banking or trust business in
the United States of America or any state and having capital, surplus and
undivided profits of at least $35,000,000, maturing not more than 90 days
from the date of acquisition; (c) commercial paper rated A-1 or better or
P-1 by Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Services, Inc.,
respectively, maturing not more than 90 days from the date of acquisition;
(d) money market funds sponsored by commercial or investment banks
unaffiliated with the Company or any of its Subsidiaries; and (e) loans or
advances of money by the Company to its wholly-owned domestic Subsidiaries
that have executed the Guarantee and Security Agreement as long as such
loans or advances are evidenced by Intercompany Notes and the Intercompany
Notes are pledged to the Collateral Agent as Collateral.
"Permitted Liens" means (i) Liens existing on the date hereof and
set forth on Schedule ___, all of which are subordinate to the Lien of the
Collateral Documentation; (ii) Liens (other than any Lien imposed under
ERISA or any Environmental Laws) for taxes, assessments or charges of any
governmental authority for claims not yet due or which are being contested
in good faith by appropriate proceedings promptly instituted and diligently
conducted, and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with the provisions of GAAP
and enforcement thereof is stayed; (iii) Liens of landlords, carriers,
warehousemen, mechanics, materialmen and other Liens (other than any Lien
imposed under ERISA) not voluntarily granted for amounts not yet due or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance
with the provisions of GAAP, and enforcement thereof is stayed; (iv) Liens
(other than any Lien imposed under ERISA), incurred or deposited made in
the ordinary course of business, including without limitation, surety bonds
and appeal bonds, in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts; (v) easements (including without limitation reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other similar restrictions,
charges or encumbrances (whether or not recorded) and other Liens incurred
in the ordinary course of business, which do not secure indebtedness or the
deferred purchase price of any asset and which do not interfere materially
with the ordinary conduct of the business of the Company or any Subsidiary
of the Company and which do not materially detract from the value of the
property to which they attach or materially impair the use thereof to the
Company or any Subsidiary of the Company; and (vi) building restrictions,
zoning laws and other statutes, laws, rules, regulations, ordinances and
restrictions, and any amendments thereto, now or at any time hereafter
adopted by any governmental authority having jurisdiction.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Preferred Stock" shall have the meaning ascribed thereto in
Section 2.3.
"Product Sales Revenues" shall mean sale of medical products
manufactured by the Company calculated in accordance with GAAP.
"Products" shall have the meaning ascribed thereto in Section
2.18.
"Proposed Securities" shall have the meaning ascribed thereto in
Section 6.11.
"Prospectus" shall mean the prospectus included in a registration
statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including any such
prospectus supplement with respect to the terms of the offering of any
portion of the Common Stock covered by the Registration Statement, and by
all other amendments and supplements to a prospectus, including
post-effective amendments, and in each case including all material
incorporated by reference therein.
"Proxy Statement" shall mean the proxy statement in a definitive
form relating to the Company Meeting.
"Purchase Price" shall have the meaning ascribed thereto in
Section 1.2.
"Purchased Shares" shall have the meaning ascribed thereto in
Section 9.6(d).
"Purchaser" shall have the meaning ascribed thereto in the
Preamble.
"Purchaser Designee" shall have the meaning ascribed thereto in
Section 6.26.
"Registration Default" shall have the meaning ascribed thereto in
Section 6.31.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement dated the date hereof between the Purchasers and the
Company with respect to the Notes.
"Related Parties" shall mean Affiliates of the Company or any of
its Subsidiaries and directors or officers of the Company or any of its
Subsidiaries (including any family members of directors and officers).
"Required Holders" means, at any time, the holders of at least
51% of the aggregate Accreted Value of the Notes at the time outstanding
(exclusive of Notes then owned by the Company or any of its Affiliates).
"Restricted Encumbrance" shall have the meaning ascribed thereto
in Section 6.7.
"Sale-and-Leaseback Transaction" shall mean a transaction or
series of transactions pursuant to which the Company or any Subsidiary
shall Transfer to any Person (other than the Company or a Subsidiary) any
property, whether now owned or hereafter acquired, and, as part of the same
transaction or series of transactions, the Company or any Subsidiary shall
rent or lease as lessee (other than pursuant to a Capitalized Lease), or
similarly acquire the right to possession or use of, such property or one
or more properties which it intends to use for the same purpose or purposes
as such property.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Reports" shall have the meaning ascribed thereto in Section
2.4.
"Secured Obligations" shall mean any and all obligations of the
Company or any of its Subsidiaries at any time and from time to time for
the performance of its agreements, covenants and undertakings under or in
respect of the Transaction Documents to which it is a party.
"Securities" shall mean the Notes, the Shares, the Warrants and
the shares of Common Stock issuable upon the conversion of the Notes and
exercise of the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Act shall include
reference to the comparable section, if any, of such successor federal
statute.
"Security Agreement" shall mean the agreement, dated as of the
date hereof, between the Collateral Agent and the Company, providing for a
security interest in the Collateral.
"Semi-Annual Accrual Date" shall have the meaning ascribed
thereto in Section 5.3.
"Shares" shall have the meaning ascribed thereto in the Recitals.
"Stated Maturity" when used with respect to any security or any
installment of interest thereon, means the date specified in such security
as the fixed date on which the principal of such security or such
installment of interest is due and payable.
"Subsidiary" means, with respect to any Person, (i) a corporation
a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof, (ii) any other Person (other
than a corporation), including without limitation a joint venture, in which
such Person, one or more Subsidiaries thereof or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest entitled to
vote in the election of directors, managers or trustees thereof (or other
Persons performing similar functions), (iii) the management of which is
otherwise controlled, directly or indirectly, by such Person or (iv) any
other Person required to be consolidated with such Person in accordance
with generally accepted accounting principles. For purposes of this
definition (and for the determination of whether or not a Subsidiary is a
wholly-owned Subsidiary of a Person), any directors' qualifying shares or
investment by foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Tax" and "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, property, sales, use, value added, license, excise,
franchise, capital, net worth, estimated, withholding, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, inventory,
asset, gains, transfer or excise tax, or any other tax, levy, custom, duty,
impost, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or additions to tax,
imposed by any Governmental Entity and, including, without limitation, any
Taxes of another person owing under a contract, as transferee or successor,
under Treas. Reg. ss. 1.1502-6 or analogous state, local or foreign law, or
otherwise.
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
"Total Revenue" shall mean, with respect to any period, the total
revenues of the Company and its Subsidiaries in accordance with GAAP on a
consolidated basis as reflected in the financial statements furnished to
the Holders in accordance with Section 6.20.
"Trading Day" shall mean a Business Day or, if the Common Stock
is listed or admitted to trading on any national securities exchange, a day
on which such exchange is open for the transaction of business.
"Transaction" shall have the meaning ascribed thereto in Section
9.7.
"Transaction Documents" shall mean this Agreement, the Notes, the
Warrants, the Registration Rights Agreement, the Security Agreement, the
Guarantee and Security Agreement, [the Intercreditor Agreement and the
Escrow Agreement].
"Transfer" shall have the meaning ascribed thereto in Section
6.3.
"Transfer Agent" shall have the meaning ascribed thereto in
Section 9.2.
"Voting Securities" shall mean at any time shares of any class of
Capital Stock of the Company (or other corporation) which are then entitled
to vote generally in the election of directors of the Company (or such
other corporation).
"Warrants" shall mean the $7 Warrants and $5 Warrants (as defined
in the Note Purchase Areement).
11.2. Accounting Principles. The character or amount of any
asset, liability, capital account or reserve and of any item of income or
expense required to be determined pursuant to this Agreement, and any
consolidation or other accounting computation required to be made pursuant
to this Agreement, and the construction of any definition in this Agreement
containing a financial term, shall be determined or made, as the case may
be, in accordance with GAAP, to the extent applicable, unless such
principles are inconsistent with the express requirements of this
Agreement.
12. Miscellaneous.
-------------
12.1. Payments; Indemnity. (a) The Company agrees that, so long
as each Holder shall hold any Notes, it will make all payments hereunder
and under the Notes in immediately available funds by wire transfer on the
date due in such manner as each Holder may reasonably request in writing.
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of any Note that is due on a date other than a Business Day
shall be made on the next succeeding Business Day. If the date for payment
is extended to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension will be included in the computation
of the interest payable on such next succeeding Business Day.
(b)(i) The Company and its Subsidiaries shall jointly and
severally indemnify and hold harmless each Purchaser, each Holder and each
of their respective Affiliates, and each such Person's respective officers,
directors, partners, members, employees, attorneys, agents and
representatives (each, an "Indemnified Person") from and against any and
all suits, actions, proceedings, claims, damages, losses, Liabilities and
out-of-pocket expenses (including reasonable attorneys' fees and
disbursements and other costs of investigation or defense, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit having been
extended, suspended or terminated under this Agreement and the other
Transaction Documents and the administration of such credit, and in
connection with or arising out of the transactions contemplated hereunder
and thereunder and any actions or failures to act in connection therewith.
(ii) Upon receipt by any Indemnified Person of any Action
against such Indemnified Person with respect to which indemnity may be
sought under this Note or any other Transaction Document, such Indemnified
Person shall promptly notify the Company in writing, provided that failure
so to notify the Company shall not relieve the Company from any liability
which the Company may have on account of this indemnity or otherwise,
except to the extent the Company shall have been materially prejudiced by
such failure. The Company shall, at its option, assume the defense of any
Action including the employment of counsel reasonably satisfactory to the
Indemnified Person. Any Indemnified Person shall have the right to employ
separate counsel in any such action and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Person, unless: (i) the Company has failed promptly to assume
the defense and employ counsel or (ii) the named parties to such Action
(including any impleaded parties) include such Indemnified Person and the
Company, and such Indemnified Person and the Company shall have been
advised by counsel that there may be one or more legal defenses available
to it which are different from or in addition to those available to the
Company or there is or may be a conflict between the Company and any
Indemnified Person (in which case the Company may not assume the defense).
In the event that any Indemnified Person shall become entitled to separate
counsel under this Note or any other Transaction Document, the Company
shall not in such event be responsible hereunder for the fees and expenses
of more than one firm of separate counsel in connection with any Action in
the same jurisdiction, in addition to any local counsel. In addition, the
Company will not, without prior written consent of the Indemnified Person,
settle, compromise or consent to the entry of any judgment in or otherwise
seek to terminate any pending or threatened Action in which indemnification
may be sought hereunder (whether or not any Indemnified Person is a party
thereto) unless such settlement, compromise, consent or termination
includes an unconditional release of such Indemnified Person from all
liabilities and expenses arising out of such Action.
(c) The Company shall bear all sales, documentary, transfer,
stamp or other similar Taxes and all filing fees and expenses incurred in
connection with the transactions contemplated by this Agreement and shall
indemnify and hold harmless each Indemnified Purchaser from and against any
such Taxes.
12.2. 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.
12.3. Specific Enforcement. The Holders, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Holders shall be entitled to an
injunction to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States or any state thereof having jurisdiction, this being in
addition to any other remedy to which they may be entitled at Law or
equity.
12.4. Entire Agreement. The Transaction Documents (including the
Schedules and Exhibits hereto and thereto) contain the entire understanding
of the parties with respect to the transactions contemplated hereby and
thereby.
12.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been
signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
12.6. Notices and other Communications. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be deemed given,
if in writing and delivered personally, by telecopy or sent by registered
mail, postage prepaid, if to:
The Company, to:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
With a copy to:
Pepe & Hazard LLP
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
The Purchasers, to each Purchaser's address
as set forth in the Note Register
The Collateral Agent, to:
Appaloosa Management, L.P.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
or to such other address as any party may, from time to time, designate in
a written notice given in a like manner.
12.7. Amendments. This Agreement may be amended as to the
Purchasers, any Holder and their respective successors and assigns, and the
Company may take any action herein prohibited, or omit to perform any act
required to be performed by it, if the Company shall obtain the written
consent of the Required Holders. This Agreement may not be waived, changed,
modified, or discharged orally, but only by an agreement in writing signed
by the party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent
to such waiver, change, modification or discharge on behalf of such party.
12.8. Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns (including, without limitation,
any subsequent holder of a Note).
12.9. Expenses. The Company agrees to pay to each Holder all
reasonable costs and expenses incurred by such Holder relating to any
future amendment or supplement to any of the Transaction Documents or any
of the Notes (or any proposal by the Company for such amendment or
supplement) whether or not consummated or any waiver or consent with
respect thereto (or any proposal for such waiver or consent) whether or not
consummated, and all costs and expenses of such Holder relating to the
enforcement of any of the Transaction Documents.
12.10. Survival. All covenants, agreements, representations and
warranties contained herein and in any certificates delivered pursuant
hereto in connection with the transactions contemplated hereby shall
survive the Closing and the delivery of the Transaction Documents,
regardless of any investigation made by or on behalf of any party;
provided, that, all covenants, agreements, representations and warranties
contained herein shall terminate when all the Notes and amounts due
hereunder have been paid in full; provided, however, that notwithstanding
anything to the contrary contained herein, Sections 12.1(b), 12.6, 12.12,
12.13, 12.14 and 12.15 shall survive forever.
12.11. Transfer of Notes and Common Stock. Each Purchaser
understands and agrees that the Notes and the Shares have not been
registered under the Securities Act or the securities laws of any state and
that they may be sold or otherwise disposed of only in one or more
transactions registered under the Securities Act and, where applicable,
such laws or transactions as to which an exemption from the registration
requirements of the Securities Act and, where applicable, such laws are
available. Each Purchaser acknowledges that, except as provided in the
Registration Rights Agreement, such Purchaser has no right to require the
Company to register the Notes. Each Purchaser understands and agrees that
each Note or certificate representing the Notes shall bear the following
legends:
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR
INFORMATION REGARDING THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE
PURCHASE PRICE, DATE OF ISSUANCE OF YIELD TO MATURITY OF THE
NOTE, CONTACT [name or title of contact] AT [address].
"THE TRANSFER OF [THE SECURITIES REPRESENTED BY THIS CERTIFICATE]
[THIS NOTE] IS RESTRICTED BY AND PURSUANT TO A NOTE PURCHASE
AGREEMENT DATED AS OF AUGUST _, 1999, A COPY OF WHICH IS ON FILE
AT THE OFFICES OF THE COMPANY."
"[THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE] [THIS NOTE
HAS] NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH
ACT OR SUCH LAWS."
12.12. Governing Law. THIS AGREEMENT AND THE NOTES shall be
construed and enforced in accordance with, and the rights of the parties
shall be governed by, the law of the State of NEW YORK EXCluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.
12.13. Submission to Jurisdiction. If any Litigation shall be
brought by any Holder in order to enforce any right or remedy under this
Agreement or any of the Notes, the Company hereby consents and will submit,
and will cause each of its Subsidiaries to submit, to the jurisdiction of
any state or federal court of competent jurisdiction sitting within the
area comprising the Southern District of New York on the date of this
Agreement. The Company hereby irrevocably waives any objection, including,
but not limited to, any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such Litigation in such jurisdiction.
12.14. Service of Process. Nothing herein shall affect the right
of any Holder to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Company in any
other jurisdiction.
12.15. Waiver of Jury Trial. The Company hereby waives any right
it may have to a trial by jury in respect of any action, proceeding or
litigation directly or indirectly arising out of, under or in connection
with, THIS AGREEMENT AND THE NOTES.
12.16. Public Announcements. Neither the Company nor any
Purchaser shall make any public statements, including, without limitation,
any press releases, with respect to this Agreement and the transactions
contemplated hereby without the prior written consent of the other party
(which consent shall not be unreasonably withheld) except as may be
required by law. If a public statement is required to be made by law, the
parties shall consult with each other in advance as to the contents and
timing thereof.
12.17. Further Assurances. The Company and each of its
Subsidiaries agrees that it shall and shall cause each other to, at the
Company's expense and upon the reasonable request of the Collateral Agent,
duly execute and deliver, or cause to be duly executed and delivered, to
the Collateral Agent such further instruments, agreements and documents
(including, without limitation, financing statements under the Code,
security agreements in respect of Intellectual Property, stock powers
executed in blank and other items necessary or desirable in connection with
the perfection of Liens in the Collateral) and do and cause to be done such
further acts as may be necessary or proper in the reasonable opinion of the
Collateral Agent to carry out more effectually the provisions and purposes
of the Transaction Documents.
12.18. Substitution of Purchaser. Each Purchaser shall have the
right to substitute any one of its Affiliates as the purchaser of the
Notes, by written notice to the Company, which notice shall be signed by
both such Purchaser and such Affiliate, shall contain such Affiliate's
agreement to be bound by this Agreement and shall contain a confirmation by
such Affiliate of the accuracy with respect to it of the representations
set forth in Section 3. Upon receipt of such notice, wherever the word
"Purchaser" is used in this Agreement (other than in this Section 14.17),
such word shall be deemed to refer to such Affiliate in lieu of the
Purchaser. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to any
Purchaser all of the Notes then held by such Affiliate, upon receipt by the
Company of notice of such transfer, wherever the word "Purchaser" is used
in this Agreement (other than in this Section 14.17), such word shall no
longer be deemed to refer to such Affiliate, but shall refer to such
Purchaser, and such Purchaser shall have all the rights of an original
Holder of the Notes under this Agreement.
12.19. Signatures. This Agreement shall be effective upon
delivery of original signature pages or facsimile copies thereof executed
by each of the parties hereto.
IN WITNESS WHEREOF, the Company, the Purchasers and the
Collateral Agent have caused this Agreement to be executed and delivered by
their respective officers or partners thereunto duly authorized.
BIO-PLEXUS, INC.
By:
------------------------------------
Name:
Title:
APPALOOSA MANAGEMENT L.P.,
as Collateral Agent
By: Appaloosa Partners, Inc., its
Investment Adviser
By:
------------------------------------
Name:
Title:
APPALOOSA INVESTMENT LIMITED
PARTNERSHIP I
By: Appaloosa Management, L.P., its
General Partner
By: Appaloosa Partners Inc., its General
Partner
By:
------------------------------------
Name:
Title:
PALOMINO FUND LTD.
By: Appaloosa Management, L.P., its
Investment Adviser
By: Appaloosa Partners Inc., its General
Partner
By:
------------------------------------
Name:
Title: