NOTE PURCHASE AGREEMENT
NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of May 23, 2006, by
and between Vyteris Holdings (Nevada), Inc., a Nevada corporation ("Seller"),
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Specialty Group, LLC, a Delaware limited liability company
("Buyer").
W I T N E S S E T H:
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WHEREAS, Seller desires to issue to Buyer, and Buyer desires to purchase
from Seller, a convertible subordinated promissory note, substantially in the
form of EXHIBIT A hereto, in the principal amount of $500,000 (the "Note");
WHEREAS, Seller has agreed to effect the registration of the shares of
Common Stock underlying the Note under the Securities Act of 1933, as amended,
pursuant to a registration statement substantially in the form of EXHIBIT B
hereto (the "Registration Rights Agreement"); and
WHEREAS, Seller, pursuant to that certain securities purchase agreement
dated as of August 19, 2005, as same may be amended from time to time
("Securities Purchase Agreement") issued a series of senior secured convertible
debentures, including debentures issued after the original issuance date (the
"Debentures") in the aggregate principal amount of $10.5 million (the "Senior
Debt").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth herein and for good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties
agree as follows:
1. SALE AND PURCHASE OF THE NOTE
1.1. SALE AND PURCHASE. Subject to the terms and conditions of this
Agreement, at the Closing (as defined in Section 2.1 hereof), Seller shall issue
to Buyer, and Buyer shall purchase from Seller, for the Purchase Price (as
defined in Section 1.2(a) hereof), the Note.
1.2. PURCHASE PRICE AND PAYMENT.
(a) PURCHASE PRICE. The purchase price for the Note shall be $500,000
(the "Purchase Price").
(b) PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid to
Seller by Buyer on the Closing Date (as defined in Section 2.1 hereof) via
federal funds wire transfer(s) of immediately available funds, in accordance
with written instructions provided to Buyer prior to the date hereof.
2. CLOSING.
2.1. TIME AND PLACE. The closing of the sale and purchase of the Note (the
"Closing") shall be deemed to take place at the offices of ▇▇▇▇▇▇▇ Krooks LLP,
655 Third Avenue, 20th Floor, New York, New York, at 10:00 a.m., local time, on
the date hereof, or at such later time or date as Buyer and Seller may mutually
agree in writing. The date upon which the Closing shall occur is herein called
the "Closing Date".
2.2. CLOSING DELIVERIES.
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(a) SELLER DELIVERIES. At the Closing, Seller shall deliver or cause
to be delivered to Buyer the following:
(i) the duly executed Note;
(ii) the duly executed Registration Rights Agreement; and
(iii) copies of any consents necessary to effectuate this
Agreement and to consummate the transactions contemplated hereby.
(b) BUYER DELIVERY. At the Closing, Buyer shall deliver or cause to
be delivered to Seller the Purchase Price.
3. TERMS OF THE NOTE.
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3.1. AMOUNT. The principal amount of the Note shall be $500,000.
3.2. MATURITY. Unless otherwise converted into the Conversion Shares (as
defined in Section 3.4 hereof) in accordance with the provisions hereof, the
Note shall mature on December 1, 2008, unless such date shall be otherwise
extended in writing by Buyer, in its sole discretion (such date, the "Maturity
Date"). On the Maturity Date, unless, and to the extent, converted into
Conversion Shares in accordance with the provisions hereof, all outstanding
principal and any accrued and unpaid interest due and owing under the Note shall
be immediately paid by Seller.
3.3. INTEREST, INTEREST RATE, PAYMENT. (a) The Note shall bear interest
(other than interest accruing as a result of a failure by Seller to pay any
amount when due as set forth in clause (b) below) at a rate equal to ten (10%)
percent (the "Interest Rate") per annum on a 360day year. Interest (other than
interest accruing as a result of a failure by Seller to pay any amount when due
as set forth in subparagraph (b) below) shall be due and payable in cash
semiannually in arrears following the end of each semi-annual period, commencing
with the semiannual period ended June 30, 2006, pro rated for partial periods;
PROVIDED, HOWEVER, that any interest accruing on overdue amounts pursuant to
subparagraph (b) of this Section 3.3 shall be payable on demand.
(b) If all or a portion of the principal amount of the Note or any
interest payable thereon shall not be repaid when due whether on the applicable
repayment date, by acceleration or otherwise, such overdue amounts shall bear
interest at a rate per annum that is three percent (3%) above the Interest Rate
I.E., 13%) from the date of such non-payment until such amount is paid in full
(as well after as before judgment).
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(c) All payments to be made by Seller hereunder or pursuant to the
Note shall be made, without setoff or counterclaim, in lawful money of the
United States by check or wire transfer in immediately available funds.
3.4. CONVERSION. (a) Subject to Sections 3.4(b) and 3.5 hereof, at any time
prior to the Maturity Date, the Seller shall have the option to convert the
entire principal and interest accrued and owing on the Note, -or any portion of
the principal and/or interest thereof, into shares (the "Conversion Shares") of
Common Stock at the Conversion Price. For purposes hereof, "Conversion Price"
shall mean $2.40 per share; PROVIDED, that if at any time on or after the
issuance date of the Note, Seller subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise) its
shares of Common Stock into a greater number of shares, then after the date of
record for effecting such subdivision, the Conversion Price shall be
proportionately reduced, or if Seller combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a smaller number of shares, the Conversion Price shall be
proportionately increased.
Upon conversion, Buyer shall be entitled to receive the number of Conversion
Shares calculated by dividing the amount being converted by the Conversion
Price. No fractional shares of Conversion Shares shall be issued upon
conversion. In lieu of any fractional shares to which Buyer would otherwise be
entitled, Seller shall pay cash in an amount equal to such fraction multiplied
by the Conversion Price. The Note shall not be subject to automatic conversion
or to any conversion at the option of Seller.
(b) Notwithstanding the provision of Section 3.4(a), if an equity
security or other derivative security convertible or exercisable into an equity
security of the Company ("Applicable Security") is sold in connection with a
Qualified Financing (as hereinafter defined) at any time prior to payment in
full of the principal balance of the Note, all of the principal and interest due
thereunder shall automatically become converted into the Applicable Security
with the same rights and privileges granted to investors in the Qualified
Financing. The number of Applicable Securities received upon conversion pursuant
to this Section 3(b) shall be determined by dividing the aggregate principal
amount due under the Note, together with any accrued but unpaid interest to the
date of conversion, by the price per Applicable Security paid in the Qualified
Financing. For the purposes of the Note, a "Qualified Financing" shall mean the
Company's next private financing of Applicable Securities to investors (i)
yielding aggregate gross proceeds (exclusive of conversion of the Note) to the
Company of at least $500,000 and (ii) which does not invoke or trigger the
provisions of Section 4(b) of the Debentures or Section 6(c) of the Warrants (as
such term is defined in the Securities Purchase Agreement.
3.5. CONVERSION PROCEDURES. In order to exercise the conversion rights set
forth in Section 3.4(a) hereof, Buyer shall surrender the Note, appropriately
endorsed, to Seller at Seller's principal office, accompanied by written notice
to Seller setting forth the amount of principal and interest to be converted,
the name or names (with address(es)) in which the Conversion Shares issuable
upon such conversion shall be issued and registered on the books of Seller. For
purposes hereof, the "Conversion Date" shall be deemed to be the date the Note
and notice is received by Seller for conversion. Within five (5) business days
after the Conversion Date, Seller shall deliver to Buyer (i) a stock certificate
for the Conversion Shares or (ii) a notice certified by Seller's Secretary that
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the Conversion Shares due on such conversion have been issued to and registered
on the books of Seller in the name or names specified by Buyer. In the case of
conversion of less than the entire principal of and interest under the Note,
Seller shall cancel said Note and shall execute and deliver a new Note of like
tenor for the unconverted amount of the Note dated the date of execution by
Seller upon initial issuance of the Note notwithstanding any subsequent
substitution.
3.6. SUBORDINATION. The Note is expressly and fully subordinated, as to
payment and liquidation, to the payment in full of the Debentures and the
Obligations (as such term is defined in the Securities Purchase Agreement) and
the holder of the Note acknowledges and agrees that the Seller is expressly
restricted from pre-paying any amounts in respect of the principal of the Note
(upon acceleration or otherwise) until payment in full of the Debentures. The
holder of this Note shall not commence any judicial or other collection efforts
or exercise any other remedies prior to the date that is ninety-one (91) days
following the payment in full of the Debentures. The Note is, and is intended to
be, "Subordinated Debt" as such term is defined in the Securities Purchase
Agreement.
3.7. PREPAYMENT RIGHTS UPON MERGER, CONSOLIDATION, ETC. (a) If, prior to
the Conversion Date, but subject to the provisions of Section 3.6 above, Seller
proposes to consolidate with, or merge into, another corporation or entity, or
to effect any sale or conveyance to another corporation or entity of all or
substantially all of the assets of Seller, or effect any other corporate
reorganization, in which the stockholders of the Seller immediately prior to
such consolidation, merger or reorganization own capital stock of the entity
surviving such merger, consolidation or reorganization representing less than
fifty (50%) percent of the combined voting power of the outstanding securities
of such entity immediately after such consolidation, merger or reorganization
(collectively, a "Liquidation Event"), then Seller shall provide Buyer with at
least ten (10) days' prior written notice of any such proposed action, and Buyer
will, at its option, have the right to demand immediate prepayment of all
amounts due and owing under the Note. Buyer will give Seller written notice of
such demand within five (5) days after receiving notice of the Liquidation
Event. All amounts (including all accrued and unpaid interest) due and owing
under the Note shall be paid by Seller to Buyer within five (5) days from the
date of such written notice via federal funds wire transfer(s) of immediately
available funds, in accordance with written instructions to be provided to
Seller by Buyer within at least two (2) business days after giving Seller such
written notice. The provisions of this Section 3.7(a) shall similarly apply to
successive consolidations or mergers.
(b) Except as set forth in Sections 3.6, 3.7 (a) and 9 hereof, Seller
shall not prepay prior to the Maturity Date all or part of this Note without the
express written consent of Buyer.
3.8 INTENTIONALLY DELETED
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3.9 ASSURANCES WITH RESPECT OF CONVERSION RIGHTS. Seller shall not, by
amendment of its Certificate of Incorporation or By-laws or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by Seller but shall at all times in good faith assist in the carrying
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out of 4 all the provisions of this Agreement and in taking of all such actions
as may be necessary or appropriate in order to protect the conversion rights of
Buyer against impairment.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
warrants to Buyer as follows:
4.1 DUE ORGANIZATION AND QUALIFICATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. Seller has all requisite power and authority to own, lease and operate
its assets and properties and to carry on its business as presently conducted
and as presently contemplated. Seller is duly qualified to transact business and
is in good standing in each jurisdiction in which the nature of its business or
the locations of its property requires such qualification, except where the
failure to do so would not have a material adverse effect on Seller's business,
operations, assets or condition (financial or otherwise).
4.2 POWER AND AUTHORITY. Seller has the requisite corporate power and
authority to execute and deliver this Agreement and all other agreements
contemplated by this Agreement (including, without limitation, the Note and the
Registration Rights Agreement) and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and all
other agreements contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and is the valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, moratorium, insolvency,
reorganization or other similar laws now or hereafter in effect generally
affecting the enforcement of creditors' rights, specific performance, injunctive
or other equitable remedies. When executed and delivered by Seller at the
Closing, each of the Note and the Registration Rights Agreement will be the
valid and binding obligation of Seller, enforceable against Seller in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization or other similar laws now or hereafter in
effect generally affecting the enforcement of creditors' rights, specific
performance, injunctive or other equitable remedies.
4.3. CAPITALIZATION. The capitalization of the Seller as of the date of
this Agreement, including its authorized capital stock, the number of shares
issued and outstanding, the number of shares issuable and reserved for issuance
pursuant to the Seller's stock option plans and agreements, the number of shares
issuable and reserved for issuance pursuant to securities (other than the Note)
exercisable for, or convertible into or exchangeable for any shares of Common
Stock and the number of shares initially to be reserved for issuance upon
conversion of the Note is set forth on Schedule 4.3 hereto. All issued and
outstanding shares of capital stock of the Seller have been validly issued,
fully paid and non-assessable. Except as disclosed on Schedule 4.3 hereto, the
Seller owns all of the capital stock of each subsidiary, which capital stock is
validly issued, fully paid and non-assessable, and no shares of the capital
stock of the Seller or any of the subsidiaries are subject to preemptive rights
or any other similar rights of the shareholders of the Seller or any such
subsidiary or any liens created by or through the Seller or any such subsidiary.
Except as disclosed on Schedule 4.3 or as contemplated herein, there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, any shares of capital stock
of the Seller or any 5 of the subsidiaries, or arrangements by which the Seller
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or any of the subsidiaries is or may become bound to issue additional shares of
capital stock of the Seller or any of the subsidiaries (whether pursuant to
anti-dilution, "reset" or other similar provisions). Schedule 4.3 identifies all
Debt of the Seller and the subsidiaries currently outstanding in excess of
$100,000 individually or in the aggregate as of the date hereof.
4.4. FINANCIAL STATEMENTS, OTHER INFORMATION. Seller has filed with the
Securities and Exchange Commission ("Commission") all reports, schedules,
registration statements and definitive proxy statements that Seller was required
to file with Commission on or after December 31, 2004 (collectively, the "SEC
DOCUMENTS"). Seller is not aware of any event occurring or expected to occur as
of the date of this Agreement (other than the transactions effected hereby) that
would require the filing of, or with respect to which Seller intends to file, a
Form 8-K after the date of this Agreement. Each SEC Document, as of the date of
the filing thereof with the Commission (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such amending or
superseding filing), complied in all material respects with the requirements of
the Securities Act of 1933, as amended ("Securities Act") or Securities Exchange
Act of 1934, as amended ("Exchange Act'), as applicable, and the rules and
regulations promulgated thereunder and, as of the date of such filing (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing), such SEC Document (including all exhibits and
schedules thereto and documents incorporated by reference therein) did not
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. All
documents that are required to be filed as exhibits to the SEC Documents have
been filed as required. Except as set forth in Schedule 4.4, Seller has no
liabilities, contingent or otherwise, other than liabilities incurred in the
ordinary course of business that, under GAAP, are not required to be reflected
in the financial statements included in Schedule 4.4. Except as set forth in
Schedule 4.4, as of their respective dates, the financial statements of Seller
included in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto. The financial statements included in the
SEC Documents have been and will be prepared in accordance with GAAP
consistently applied at the times and during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto,
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements, or (iii) as set forth in
the SEC Documents), and fairly present in all material respects the financial
position of Seller as of the dates thereof and the results of its operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end adjustments).
4.5. AUTHORIZATION OF THE NOTE AND CONVERSION SHARES. All corporate action
on the part of Seller necessary for the authorization, issuance, sale and/or
delivery of the Note and the capital stock issuable upon conversion of the Note
(the "Conversion Shares") has been taken and when issued, sold and delivered in
accordance with this Agreement and/or the Note, the Conversion Shares will be
validly issued and outstanding, fully paid and nonassessable and not subject to
preemptive, first refusal or any other similar rights of any stockholder of
Seller or others.
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4.6 COMPLIANCE WITH LAWS. To its knowledge, Seller is in compliance in all
material respects with all Federal, state, local and foreign laws, statutes,
ordinances, regulations, orders, judgments, injunctions, awards or decrees
(collectively, "Laws") applicable to it or any of its properties or operations.
Seller has not received any notice of material violation or alleged material
violation of any Law by it. Seller has all material licenses, permits, orders
and approvals of Federal, state, local and foreign governmental or regulatory
bodies necessary for the conduct of its business and operations as presently
conducted.
4.7 NO BREACH, CONSENTS. Except as set forth on SCHEDULE 4.7 hereto, the
execution, delivery and performance of this Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby will not (i)
result in any lien, pledge, mortgage, security interest, claim, lease, charge,
option, easement, servitude or other encumbrance whatsoever (collectively,
"Liens") upon any of the property of Seller (other than in favor of Buyer) or
(ii) violate, conflict with or breach any of the terms and conditions of, result
in a material modification of, accelerate or trigger the rights of any person
under, or constitute (or with notice or lapse of time or both would constitute)
a default under (a) any material instrument, contract or other agreement to
which Seller is a party or by or to which it or any of its properties is bound
or subject; (b) Seller's Certificate of Incorporation or By-laws (and all
amendments thereto up through the date hereof); or (c) any Law applicable to
Seller or any of its properties or operations. Except as set forth on SCHEDULE
4.7, no consent, approval or authorization of, or declaration or filing with,
any governmental authority, stockholder of Seller or other person is required on
the part of Seller in connection with the execution, delivery or performance of
this Agreement or the consummation by it of the transactions contemplated
hereby.
4.8 LITIGATION. Except as set forth on SCHEDULE 4.8 hereto, there are no
material suits or actions, administrative, arbitration or other proceedings or
governmental investigations pending or, to Seller's knowledge, threatened
against or affecting Seller or any of its properties or assets. There are no
judgments, orders, injunctions, decrees or awards against Seller that are not
satisfied or remain outstanding.
4.9. BROKERS. Neither Seller nor any of Seller's officers, directors,
employees or stockholders has employed any broker or finder in connection with
the transactions contemplated by this Agreement and no fee is or will be due and
owing to any broker or finder in connection with the transactions contemplated
by this Agreement.
4.10 INTELLECTUAL PROPERTY. All of Seller's (i) trademarks, trade names,
registered trademarks, trademark applications, service marks, registered service
marks and service ▇▇▇▇ applications, (ii) patents and patent applications, and
(iii) licenses with respect to the use of patents or trademarks owned by other
parties, are set forth on SCHEDULE 4.10 hereto. Except as set forth on SCHEDULE
4.10, there is not pending nor, to Seller's knowledge, threatened any claim,
suit or action contesting or challenging the rights of Seller in or to any of
the material item of intellectual property owned or used by Seller in the
conduct of its business (the "Intellectual Property") or the validity of any of
the Intellectual Property. To Seller's knowledge, there is no infringement upon
or unauthorized use of any of the Intellectual Property by any third party. No
officer, director, equityholder or affiliate of Seller nor any of their
respective associates has any right to or interest in any of the Intellectual
Property, including, without limitation, any right to payments (by royalty or
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otherwise) in respect of any use or transfer thereof.
4.11 PERFORMANCE OF AGREEMENTS. Except as set forth on SCHEDULE 4.11
hereto, no default by Seller exists in the due performance under any material
agreement to which Seller is a party or to which any of its assets is subject.
4.12 NO WAIVER OF PRIOR OR FUTURE DEFAULTS. Seller hereby acknowledges and
agrees that this Agreement and Buyer's purchase from Seller of the Note,
pursuant to the terms and conditions hereof, shall not constitute or operate as
a waiver or release of any default, or any future defaults, under the Default
Notes.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to Seller as follows:
5.1 DUE ORGANIZATION. Buyer is a duly organized legal entity, validly
existing and in good standing under the laws of the state of its organization.
5.2 POWER OF BUYER. Buyer has the requisite company power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly executed and delivered by Buyer and is the valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
moratorium, insolvency, reorganization or other similar laws generally affecting
the enforcement of creditors' rights, specific performance, injunctive or other
equitable remedies.
5.3 NO BREACH. The execution, delivery and performance of this Agreement
by Buyer and the consummation by Buyer of the transactions contemplated hereby
will not violate, conflict with or otherwise result in the breach of any of the
terms and conditions of, result in a material modification of or constitute (or
with notice or lapse of time or both would constitute) a default under (i) any
of the organizational documents of Buyer; (ii) any material instrument, contract
or other agreement to which Buyer is a party or by or to which it or any of its
properties is bound or subject; or (iii) any Law applicable to Buyer or any of
its properties or operations.
5.4 GOVERNMENTAL AND OTHER CONSENTS. No consent, approval or authorization
of, or declaration or filing with, any governmental authority or other person is
required on the part of Buyer in connection with the execution, delivery and
performance of this Agreement by it or the consummation of the transactions
contemplated hereby.
5.5 INVESTMENT REPRESENTATIONS. Buyer is acquiring the Note (the
"Securities"), and any capital stock issuable upon exercise of the Securities,
for Buyer's own account, for investment and not with a view to, or for sale in
connection with, any distribution of such securities or any part thereof. Buyer
(i) has such knowledge and experience in financial and business affairs that it
is capable of evaluating the merits and risks involved in purchasing the
Securities, (ii) is able to bear the economic risks involving in purchasing the
Securities, (iii) is an "accredited investor" as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act and (iv) has had the
opportunity to ask questions of, and receive answers from, Seller and persons
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acting on Seller's behalf concerning Seller's business, management, and
financial affairs and the terms and conditions of the Securities. Buyer's state
of residence is New York.
5.6. NO BROKER. Buyer has not employed any broker or finder in connection
with the transactions contemplated by this Agreement.
6. COVENANTS AND AGREEMENTS.
6.1 PRE-CLOSING COVENANTS AND AGREEMENTS. The parties hereto covenant and
agree to perform or take any and all such actions to effectuate the following
from the date hereof until the earlier of the Closing Date or the termination of
this Agreement:
(a) FURTHER ASSURANCES. Each of the parties shall, prior to or at the
Closing, as may be appropriate, execute such documents and other papers and take
such other further actions as may be reasonably required to carry out the
provisions hereof and effectuate the transactions contemplated hereby, and in
the Note and the Registration Rights Agreement. Each party shall use its best
efforts to fulfill or obtain the fulfillment of the conditions to its obligation
to effect the Closing, including promptly obtaining any consents required in
connection herewith.
(b) ADDITIONAL DISCLOSURE. Seller shall promptly notify Buyer of, and
furnish Buyer with, any information it may reasonably request with respect to
the occurrence of any event or condition or the existence of any fact that would
cause any of the conditions to Buyer's obligation to consummate the transactions
contemplated by this Agreement not to be fulfilled.
6.2 POST-CLOSING COVENANTS AND AGREEMENTS. Buyer and Seller covenant and
agree from and after the Closing Date to perform or take the following actions:
(a) RESERVE FOR CONVERSION SHARES. Seller shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock or
other securities for the purpose of issuing Common Stock or other securities
upon the conversion of the Note. If at any time the number of authorized but
unissued shares of Common Stock or other securities shall not be sufficient to
satisfy the conversion of the Note, if any, Seller shall forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock or other securities to such number of shares as shall be
sufficient for such purpose. If any capital reorganization or any Liquidation
Event of Seller shall be effected in such a way that holders of Common Stock
shall be entitled to receive capital stock, securities or assets with respect to
or in exchange for Common Stock, then, as a condition of such reorganization,
reclassification or Liquidation Event, lawful and adequate provisions shall be
made whereby the holder of the Note shall thereafter, upon conversion, have the
right to receive such shares of capital stock, securities or assets as may be
issued or payable with respect to or in exchange for the number of outstanding
shares of such Common Stock into which the Note held at the time of such capital
reorganization, reclassification or Liquidation Event is convertible.
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7. CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO CLOSE.
7.1 CLOSING. The obligation of Buyer to complete the Closing is subject to
the fulfillment on or prior to the Closing Date of all of the following
conditions, any one or more of which may be waived by Buyer in writing:
(a) AGREEMENTS AND CONDITIONS. On or before the Closing Date, Seller shall
have complied with and duly performed and satisfied in all material respects all
agreements and conditions on its part to be complied with and performed by such
date pursuant to this Agreement.
(b) CONSENTS. Seller shall have obtained any consents necessary to
effectuate this Agreement and to consummate the transactions contemplated hereby
and delivered copies thereof to Buyer.
(c) NOTE. Seller shall have duly executed and delivered to Buyer the Note.
(d) REGISTRATION RIGHTS AGREEMENT. Seller shall have duly executed and
delivered to Buyer the Registration Rights Agreement.
8. CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO CLOSE.
8.1 CLOSING. The obligation of Seller to complete the Closing is subject
to the fulfillment on or prior to the Closing Date of all of the following
conditions, any one or more of which may be waived by Seller in writing:
(a) AGREEMENTS AND CONDITIONS. On or before the Closing Date, Buyer shall
have complied with and performed and satisfied in all material respects all
agreements and conditions to be complied with and performed by such date
pursuant to this Agreement.
(b) PAYMENT OF PURCHASE PRICE. Buyer shall have paid to Seller the
Purchase Price.
(c) REGISTRATION RIGHTS AGREEMENT. Buyer shall have duly executed and
delivered to Seller the Registration Rights Agreement.
9. EVENTS OF DEFAULT. If any of the following events (each, an "Event of
Default") shall occur and be continuing:
(i) Seller shall fail to pay any amount payable under the Note within three
(3) business days after such payment becomes due in accordance with the terms
thereof,
(ii) Seller shall fail to pay when due (following the expiration of
applicable notice and cure periods, if any), whether upon acceleration,
prepayment obligation or otherwise, any indebtedness and/or other sums payable,
individually or in the aggregate, involving an amount in excess of $100,000;
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(iii) Any representation or warranty made or deemed made by Seller herein
or in any other agreement, certificate or instrument contemplated by this
Agreement or that is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this Agreement
shall have been incorrect in any material respect on or as of the date made or
deemed made;
(iv) Seller shall default, in any material respect, in the observance or
performance of any other agreement contained in this Agreement or any other
agreement or instrument contemplated by this Agreement, and such default shall
continue unremedied for a period of twenty (20) days after notice to Seller of
such default;
(v) Seller shall substantially curtail, alter, modify or change its
business operations, as reasonably determined by Buyer; or
(vi) (a) Seller shall commence any case, proceeding or other action (x)
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, conservatorship or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (y) seeking appointment or a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or Seller shall make a general
assignment for the benefit of its creditors; or (b) there shall be commenced
against Seller any case, proceeding or other action of a nature referred to in
clause (a) above that (A) results in the entry of an order for relief of any
such adjudication of appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or (c) there shall be commenced
against Seller any case, proceeding other action seeking issuance of a warrant
of attachment, execution, distrait or similar process against all or any
substantial part of its assets that results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or (d) Seller
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in any of the acts set forth in clauses (a), (b) or (c)
above; or (e) Seller shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due,
then, and in any such event, but in all events subject to the provisions of
Section 3.6 above, (x) if such event is an Event of Default specified in
subsection (vi) above of this Section 9 with respect to Seller, automatically
the Note (with all accrued and unpaid interest thereon) and all other amounts
owing under this Agreement and the Note shall immediately become due and
payable, and (y) if such event is any other Event of Default, Buyer may, by
written notice to Seller, declare the Note (with all accrued and unpaid interest
thereon) and all other amounts owing under this Agreement and the Note to be due
and payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section 9, presentation,
demand, protest and all other notices of any kind are hereby expressly waived by
Seller.
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10. MISCELLANEOUS.
10.1. PUBLICITY. Subject to the requirements of the Federal securities
laws, no publicity release or announcement concerning this Agreement or the
transactions contemplated hereby shall be issued without advance approval of the
form and substance thereof by Buyer and Seller jointly.
10.2. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given when delivered by hand or by
facsimile transmission, when telexed, or upon receipt when mailed by registered
or certified mail (return receipt requested), postage prepaid, to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(i) If to Seller:
Vyteris Holdings (Nevada), Inc.
▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which copy shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Buyer:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Specialty Group, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which copy shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
10.3. ENTIRE AGREEMENT; EXERCISE OF RIGHTS. (a) This Agreement (including
the Schedules and Exhibits hereto) and the other Loan Documents (as defined in
Section 10.6 hereof) embody the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof. No amendment of any
provision of this Agreement shall be effective unless it is in writing and
signed by each of the parties hereto and no waiver of any provision of this
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Agreement, nor consent to any departure by either party from it, shall be
effective unless it is in writing and signed by the affected party, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
(b) No failure on the part of a party to exercise, and no delay in
exercising, any right under this Agreement, or any agreement contemplated
hereby, shall operate as a waiver hereof by such party, nor shall any single or
partial exercise of any right under this Agreement, or any agreement
contemplated hereby, preclude any other or further exercise thereof or the
exercise of any other right.
10.4. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely within such jurisdiction.
10.5. EXPENSES. Seller and Buyer shall, subject to the immediately
succeeding sentence, bear their respective expenses incurred in connection with
the negotiation, preparation, execution and performance of this Agreement and
the consummation of the transactions contemplated hereby, including, without
limitation, all fees and expenses of agents, representatives, counsel, brokers
or finders, and accountants.
10.6. TRANSFERABILITY. Subject to securities laws restrictions of general
applicability, this Agreement, the Note and the Registration Rights Agreement
(collectively, the "Loan Documents") and all rights hereunder and thereunder are
freely and separately transferable and assignable, in whole or in part, by
Buyer. The foregoing transferees and assignees shall be entitled to the rights
provided in the Loan Documents. Seller may not assign or delegate any of its
obligations under the Loan Documents without the prior written consent of Buyer.
For purposes hereof, a sale or exchange by Seller of all or substantially all of
its assets shall constitute an assignment/delegation requiring Buyer's prior
written consent.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Note Purchase
Agreement on the date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇, SPECIALTY GROUP, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Nonmember Manager
VYTERIS HOLDINGS (NEVADA), INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: V.P. Operations/Principal
Accounting Officer
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EXHIBIT A
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Form of Note
EXHIBIT B
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Form of Registration Rights Agreement
SCHEDULES
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