--------------------------------------------------
FINANCING AGREEMENT
DATED AS OF NOVEMBER 16, 1994
--------------------------------------------------
TABLE OF CONTENTS
Page No.
-------
SECTION 1 - AUTHORIZATION, PURCHASE AND SALE
OF THE NOTES AND WARRANTS 1
1.1 Authorization 1
1.2 Sale and Purchase of the Notes and Warrants 1
1.3 Certain Defined Terms 2
SECTION 2 - CLOSINGS, PAYMENT AND DELIVERY 2
2.1 Closing Dates and Place of Closings 2
2.2 Payment and Delivery 3
2.3 Termination by the Purchaser 3
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF
THE COMPANY 3
3.1 Organization and Standing; Articles and Bylaws 3
3.2 Corporate Power 3
3.3 Subsidiaries 3
3.4 Capitalization 4
3.5 Authorization 4
3.6 Contracts 5
3.7 Financial Information 6
3.8 Absence of Undisclosed Liabilities 6
3.9 Absence of Certain Changes 6
3.10 Taxes 7
3.11 Transactions with Related Parties 7
3.12 Litigation 7
3.13 Consents 7
3.14 Title to Properties; Liens and Encumbrances 7
3.15 Leases 8
3.16 Franchises, Licenses, Trademarks, Patents and Other Rights 8
3.17 Issuance Taxes 9
3.18 Offering 9
3.19 Compliance with Other Instruments 9
3.20 Employees 9
i
3.21 Business of the Company 10
3.22 Use of Proceeds 10
3.23 Applicability of, and Compliance with, Other Laws 11
3.24 Disclosure 12
3.25 Warranties and Representations at Closing 12
SECTION 4 - REPRESENTATIONS AND WARRANTIES OF
PURCHASER 12
4.1 Experience 12
4.2 Investment 12
4.3 Rule 144 12
4.4 Access to Data 12
4.5 Accredited Investor 13
SECTION 5 - CONDITIONS TO CLOSING OF PURCHASER 13
5.1 Representations and Warranties Correct 13
5.2 Performance 13
5.3 Compliance and Secretary's Certificates 13
5.4 Opinion of Company Counsel 13
5.5 Legal Investment 13
5.6 Qualifications 13
5.7 Proceedings and Documents 13
5.8 Collateral Assignment and Security Agreement 14
5.9 Good Standing Certificates 14
5.10 Tax Matters 14
5.11 Insurance Certificates and Policies 14
5.12 Application Fee 14
5.13 Non-Competition and Proprietary Information Agreements 14
5.14 Life Insurance 14
5.15 No Environmental Matters Pending 15
5.16 Statement on Use of Proceeds 15
5.17 Payment of Obligations 15
5.18 Officers' Agreement 15
SECTION 6 - CONDITIONS TO CLOSING OF COMPANY 15
6.1 Representations 15
6.2 Legal Investment 15
ii
SECTION 7 - COVENANTS OF THE COMPANY 15
7.1 Basic Financial Information 15
7.2 Additional Information and Rights 17
7.3 Prompt Payment of Taxes, etc. 18
7.4 Maintenance of Properties and Leases 18
7.5 Insurance 18
7.6 Key Person Life Insurance 19
7.7 Accounts and Records 19
7.8 Compliance with Requirements of Governmental Authorities 19
7.9 Maintenance of Corporate Existence, etc. 19
7.10 Sale/Purchase of Assets; Merger 20
7.11 Availability of Stock for Exercise 20
7.12 Confidentiality and Non-Competition Agreements 21
7.13 Use of Proceeds 21
7.14 Transactions with Affiliates 21
7.15 Compliance by Subsidiaries 21
7.16 Maintenance of Connecticut Presence 21
7.17 Connecticut Employment 22
7.18 Equal Opportunity 22
7.19 Certain Distributions/Payments 23
7.20 Employee Stock Purchases 23
SECTION 8 -EVENTS OF DEFAULT 24
8.1 Events of Default 24
8.2 Annulment of Acceleration of Notes 26
8.3 Notice 26
8.4 Other Remedies 27
SECTION 9 - RIGHT TO PUT SHARES 27
9.1 Right to Put 27
9.2 Method of Exercise 27
9.3 Time of Exercise 27
9.4 Put Closing 27
SECTION 10 - RIGHT TO CALL SHARES 28
10.1 Right to Call 28
10.2 Method of Exercise 28
iii
10.3 Time of Exercise 28
10.4 Call Closing 28
SECTION 11 -DEFINITIONS 28
SECTION 12 - REGISTRATION RIGHTS 32
12.1 Certain Definitions 32
12.2 Requested Registration 33
12.3 Company Registration 35
12.4 Registration Rights 36
12.5 Expenses of Registration 36
12.6 Registration Procedures 36
12.7 Indemnification 37
12.8 Information by Holder 38
12.9 Rule 144 Reporting 38
SECTION 13- MISCELLANEOUS 39
13.1 Governing Law 39
13.3 Survival 39
13.3 Successors and Assigns 39
13.4 Entire Agreement; Amendment 39
13.5 Notices, etc. 39
13.6 Delays or Omissions 40
13.7 Separability 40
13.8 Agent's Fees and Services 40
13.9 Legal Fees and Expenses 40
13.10 Trial by Jury 41
13.11 Waiver 41
13.12 Titles and Subtitles 41
13.13 Counterparts 41
iv
SCHEDULES AND EXHIBITS
Schedule I - Schedule of Purchasers
Schedule II - Schedule of Exceptions/Disclosures
Exhibit A - Form of Note
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Secretary's Certificate
Exhibits D1
and D2 - Forms of Opinion of Counsel to Company
Exhibit E - Form of Collateral Assignment
Exhibit F - Form of Security Agreement
Exhibit G - Form of Officers' Agreement
Exhibit H - Form of Notice of Put
Exhibit I - Form of Notice of Call
v
FINANCING AGREEMENT
THIS FINANCING AGREEMENT (this "Agreement") is made and entered into as
of the 16th day of November, 1994, by and between BIOS Laboratories, Inc. (the
"Company"), a Delaware corporation, and the party listed on Schedule I hereto
(the "Schedule of Purchasers"). The party listed on the Schedule of Purchasers
is hereinafter referred to as the "Purchaser."
WHEREAS, the Company has requested that the Purchaser lend the Company
the sum of up to Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Loan");
and
WHEREAS, the Purchaser has approved the lending of such sum upon the
terms and conditions hereinafter set forth in order to stimulate and encourage
the growth and development of the economy of the State of Connecticut and to
promote technology-based development in the State of Connecticut;
WHEREAS, the Company owes arrearages of interest to the Purchaser in
the amount of $53,125.02, half of which shall be paid at the closing of the Loan
and half of which shall be embodied in the promissory note evidencing the Loan;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the Company and the Purchaser hereby
agree as follows:
SECTION 1: AUTHORIZATION, PURCHASE AND SALE OF THE NOTE.
1.1 AUTHORIZATION. The Company has, or before the Closing (as defined
in Section 2.1 hereof) will have, authorized the issuance and sale of the Senior
Convertible Note in the principal amount of $276,562.51 due three (3) years from
the date of issuance thereof (the "Note"), substantially in the form set forth
in Exhibit A hereto.
1.2 SALE AND PURCHASE OF THE NOTE.
(a) Subject to the terms and conditions of this Agreement
and in reliance upon the representations, warranties and agreements
contained herein, the Company will issue and sell to the Purchaser, and
the Purchaser will purchase from the Company at the Closing, a Note in
the aggregate principal amount of $276,562.51 against payment by the
Purchaser to the Company of the amount of $150,000.00 representing the
initial advance by the Purchaser under the Loan (the "Initial
Advance"). Arrearages of interest in the amount of $26,562.51 shall be
deemed advanced by the Purchaser for purposes of the Note.
(b) Following the Closing and subject to the terms and
conditions set forth in this Section 1.2(b), the Purchaser shall make
one additional advance to the Company in
the amount of $100,000.00 (the "Second Advance"); provided, however,
that in no event shall the Purchaser be obligated to make the Second
Advance after June 30, 1995. The Purchaser shall not be obligated to
make the Second Advance unless and until the following conditions have
been satisfied:
(i) As of the date of the Second Advance, the
representations and warranties made herein shall be true and
correct and there shall be no Event of Default under this
Agreement nor any event that with the passage of time or the
giving of notice or both would ripen into an Event of Default;
(ii) There shall have been no material adverse
change in the financial condition or business operations of
the Company since, as applicable, the date of the last
financial statements or other financial reports delivered to
the Purchaser on or prior to the Closing Date;
(iii) The Company shall have prepared a marketing
plan satisfactory to the Purchaser and shall have employed an
individual satisfactory to the Purchaser to implement such
marketing plan;
(iv) The Company shall have obtained additional
financing in the amount of at least $150,000.00 on terms
deemed satisfactory to the Purchaser;
(v) ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have entered into
a non-competition agreement with the Company satisfactory in
form and substance to the Purchaser;
(vi) The Company shall have paid in full all of
the Company's outstanding obligations due and owing to the
Purchaser and to the State of Connecticut acting by and
through the Department of Economic Development (the "DED");
and
(vii) The Purchaser shall have received a
certificate signed by an officer of the Company representing
that the conditions set forth in clause (i) and (ii) hereof
have been satisfied.
(c) The Company and the Purchaser, having adverse
interests and as a result of arm's length bargaining, agree that the
Purchaser has not rendered or agreed to render any services to the
Company in connection with this Agreement or the issuance of the Note.
1.3 CERTAIN DEFINED TERMS. Certain capitalized terms used in this
Agreement shall have the respective meanings ascribed to them in Section 11
hereof.
- 2 -
SECTION 2: CLOSINGS, PAYMENT AND DELIVERY
2.1 CLOSING DATES AND PLACE OF CLOSINGS. The closing (the "Closing") of
the purchase and sale of the Note hereunder in the amount set forth in Section
1.2 hereof shall be held on such date (the "Closing Date") that the Company
fulfills the conditions of closing set forth in Section 5 hereof, as shall have
been agreed to by the Company and the Purchaser. The place of the Closing
(including the place of delivery to the Purchaser by the Company of the Note and
the place of payment to the Company by the Purchaser of the purchase price
therefor) shall be at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, One American Row,
Hartford, Connecticut, or such other place as shall have been agreed to by the
Company and the Purchaser.
2.2 PAYMENT AND DELIVERY. At the Closing, the Purchaser will pay to the
Company, in cash, by check or wire transfer (or any combination thereof), the
amount of the Initial Advance, and the Company will deliver to the Purchaser a
Note in the principal amount of $276,562.51.
2.3 TERMINATION BY THE PURCHASER. Notwithstanding any other provision
hereof, if the conditions of the Closing set forth in Section 5 hereof are not
fulfilled prior to November 30, 1994, the Purchaser may in its absolute
discretion at any time thereafter terminate its obligation hereunder and shall
have no further responsibilities hereunder.
SECTION 3: REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as expressly set forth (with reference to a subsection in this
Section 3) on Schedule II (the "Schedule of Exceptions/Disclosures") with a
specific reference to a subsection of this Section 3, the Company hereby
represents and warrants to the Purchaser as follows:
3.1 ORGANIZATION AND STANDING; ARTICLES AND BYLAWS. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite power to own the
properties owned by it and to conduct the business as it is being conducted by
it and as contemplated by the presentation material (the "Plan") prepared by the
Company and delivered to the Purchaser. The Company is duly qualified and
registered to do business in and is in good standing in every state in which the
property owned by it and/or the nature of its activities requires that it be so
qualified and registered.
The Company has furnished the Purchaser and special counsel for the
Purchaser with true, correct and complete copies of the Company's Certificate of
Incorporation and Bylaws, and all amendments thereto through and including the
Closing Date and copies of the minutes of all Board of Directors, Committees of
the Board, and shareholder meetings of the Company since March 1, 1994.
3.2 CORPORATE POWER. The Company has all requisite corporate power to
enter into this Agreement and the other Financing Documents and will have on the
Closing Date all requisite corporate power to sell the Note and to carry out and
perform its obligations under the terms of this Agreement and the other
Financing Documents.
- 3 -
3.3 SUBSIDIARIES. The Company has no subsidiaries and does not own of
record or beneficially any capital stock or equity interest or investment in any
other corporation, partnership, association or business entity, or if the
Company has any subsidiary or subsidiaries, each subsidiary is listed on the
Schedule of Exceptions/Disclosures and each of the representations and
warranties set forth in this Section 3 is also made by the Company with respect
to each such subsidiary as if such subsidiary were the "Company" and the
Schedule of Exceptions/Disclosures shall apply to each such subsidiary in the
same manner as if such subsidiary were the "Company."
3.4 CAPITALIZATION. The Schedule of Exceptions/Disclosures contains a
true and correct list of all securities of the Company (including the amounts
thereof) outstanding immediately prior to the Closing, and the holders of any
interest in such securities. Immediately prior to the Closing, the Company's
authorized capital stock will consist of 750,000 shares of Common Stock, of
$.001 par value each, of which 199,660 shares will be issued and outstanding on
the Closing Date. Upon consummation of the Closing, all issued and outstanding
shares of capital stock of the Company will have been duly authorized and
validly issued, will be fully paid and nonassessable, will be owned of record
and beneficially by the shareholders and in the amounts set forth in the
Schedule of Exceptions/Disclosures and will have been offered, issued, sold and
delivered by the Company in compliance with applicable federal and state
securities laws. Except as set forth in the Schedule of Exceptions/Disclosures,
there are no outstanding preemptive or other preferential rights, conversion
rights or other rights, options, warrants or agreements granted or issued by or
binding upon the Company for the purchase or acquisition of any shares of its
capital stock. No holder of Common Stock has granted any option or other right
to purchase from such shareholder any interest in any share of Common Stock. The
Company holds 12,600 shares of its capital stock in its treasury.
3.5 AUTHORIZATION. All action on the part of the Company, its directors
and shareholders necessary for the authorization, execution, delivery and
performance by the Company of this Agreement, and the other Financing Documents
and for the consummation of the transactions contemplated herein and therein,
and for the authorization, issuance and delivery of the Note and of the
Conversion Shares has been taken or will be taken prior to the Closing. This
Agreement and the other Financing Documents are each a valid and binding
obligation of the Company, enforceable in accordance with their respective
terms. Except as set forth on the Schedule of Exceptions/Disclosures, the
execution and delivery by the Company of this Agreement and the other Financing
Documents and compliance herewith and therewith, and the issuance and sale of
the Note and the Conversion Shares will not with or without notice or the
passage of time or both result in any violation of and will not conflict with,
or result in a breach of any of the terms of, or constitute a default under any
provision of, any state or federal law to which the Company is subject, the
Company's Certificate of Incorporation or Bylaws, as amended, or any mortgage,
indenture, agreement, instrument, judgment, decree, order, rule or regulation or
other restriction to which the Company is a party or by which it or any of its
property is bound, or may be affected, or (except as provided in the Financing
Documents) result in the creation of any mortgage, pledge, lien, encumbrance or
charge upon any of the properties or assets of the Company pursuant to any such
term or give to any other person or entity the right to accelerate
- 4 -
the time for performance of any obligation of the Company. No shareholder has
any preemptive rights or rights of first refusal by reason of or in connection
with the issuance of the Note. The Conversion Shares have been duly and validly
reserved by action of the Board of Directors (and are in addition to any other
shares reserved for any other purpose) and are not subject to any preemptive
rights or rights of first refusal, and, upon such issuance, will be validly
issued, fully paid and nonassessable, and will be free of any liens or
encumbrances.
3.6 CONTRACTS.
(a) The Schedule of Exceptions/ Disclosures sets forth a
true and correct list of all material contracts, obligations,
commitments, agreements, plans and the like ("Contracts"), whether
written or oral, and all administrative, judicial and similar orders to
which the Company is a party or by which it or any of its properties
are bound, or affected, including, without limitation, the following:
(i) any employment, bonus or consulting
agreement, pension, profit sharing, deferred compensation,
stock bonus, retirement, stock option, stock purchase, phantom
stock or similar plan, or agreement evidencing rights to
purchase, phantom stock or similar plan, or agreement among
shareholders of the Company;
(ii) any loan or other agreement, note, indenture
or instrument relating to, or evidencing, indebtedness for
borrowed money, or mortgaging, pledging or granting or
creating a lien or security interest or other encumbrance on
any property of the Company or any agreement or instrument
evidencing any guaranty by the Company of payment or
performance by any other party;
(iii) any agreement with any dealer, sales
representative, broker or other distributor, jobber,
advertiser or sales agency;
(iv) any agreement with any labor union or
collective bargaining organization or any other labor
agreement;
(v) any contract for the furnishing , purchase
or lease of machinery, equipment, goods or services
(including, without limitation, any agreement with processors
and subcontractors) involving more than $10,000;
(vi) any indenture, agreement or other document
(including private placement brochures) relating to the future
sale or repurchase of securities;
(vii) any agreement to register under the
Securities Act of 1933, as amended (the "Securities Act"), any
of the securities of the Company;
(viii) any joint venture contract or arrangement or
other agreement involving a sharing of profits or expenses;
-5-
(ix) any agreement (other than distributorship
agreements or similar agreements providing for the
distribution of Company products with dealers, distributors
and sales representatives of the Company) limiting the freedom
of the Company to compete in any line of business or in any
geographic area or with any party; and
(x) any agreement providing for disposition of
any line of business, assets or securities of the Company, or
any agreement with respect to the acquisition of any line of
business, assets or shares of any other business, any
agreement of merger or consolidation or letter of intent with
respect to any of the foregoing.
(b) A copy of each of the Contracts has been delivered to
the Purchaser and a summary of each oral agreement is listed in the
Schedule of Exceptions/Disclosures. The Company has complied with all
material provisions of each such Contract. No event has occurred and no
condition exists which with notice or the passage of time or both would
constitute a default under any such Contract. To the Company's
knowledge, no party to any such Contract has threatened to terminate or
has any intentions of terminating its obligations thereunder.
3.7 FINANCIAL INFORMATION. Copies of the Company's balance sheet dated
September 30, 1994 (the "Balance Sheet"), and the related statements of
operations and cash flows for the period from July 1, 1994 through September 30,
1994 (collectively, the "Financial Statements") have been delivered to the
Purchaser, present fairly the financial position of the Company as of such date,
have been prepared in accordance with generally accepted accounting principles,
consistently applied, and show all material liabilities, absolute or contingent,
of the Company required to be recorded thereon in accordance with generally
accepted accounting principles as of the date thereof.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. The Company does not have, and
does not know of, any liabilities (fixed or contingent, including without
limitation any tax liabilities due or to become due), which, either individually
or in the aggregate, are material and not disclosed on the Balance Sheet.
3.9 ABSENCE OF CERTAIN CHANGES. Since the date of the Balance Sheet,
there has not been:
(a) any change in the condition, assets, liabilities,
prospects or business of the Company from that shown on the Balance
Sheet or other Financial Statements or as described in or contemplated
by the Plan which, either individually or in the aggregate, has been or
is reasonably likely to be materially adverse;
-6-
(b) any damage to, or destruction or loss of, any of the
properties or assets of the Company (whether or not covered by
insurance) materially adversely affecting the business or plans of the
Company or the Technology;
(c) any declaration, setting aside or payment of any
dividend or other distribution in respect of any of the Company's
capital stock, or any direct or indirect redemption, purchase or other
acquisition of any of such stock (or any warrant, option or other right
with respect to such stock) by the Company or any repayment of Company
debt held by any Related Party or by any Affiliate;
(d) any organizational activity, collective bargaining
activity, labor disputes or labor trouble; or
(e) any event or condition of any character, which,
either individually or in the aggregate, materially adversely affects
the business, operations or plans of the Company.
3.10 TAXES. The Company has filed or will file within the time
prescribed by law (including extensions of time approved by any appropriate
taxing authority) all tax returns and reports required to be filed with the
United States Internal Revenue Service or with the State of Connecticut, and
(except to the extent that the failure to file would not have a material adverse
effect on the condition or operations of the Company) with all other
jurisdictions where such filing is required by law; and the Company has paid all
taxes, interest, penalties, assessments or deficiencies due in connection
therewith.
3.11 TRANSACTIONS WITH RELATED PARTIES. There is no loan, lease or
other continuing transaction between the Company and any Related Party or any
Affiliate.
3.12 LITIGATION. Except as set forth on the Schedule of
Exceptions/Disclosures, there is neither pending nor threatened any action,
suit, proceeding or claim, whether or not purportedly on behalf of the Company,
to which the Company or any key employee of the Company is or may be named as a
party or to which the Company's or any such person's property is or may be
subject. To the best of the Company's knowledge and belief, there is no basis
for any such action, suit, proceeding or claim, in which an unfavorable outcome,
ruling or finding in any such matter or for more than one of such matters, taken
together, might have a material adverse effect on the condition, financial or
otherwise, operations or prospects of the Company or on the Technology. The
Company has no knowledge of any unasserted claim, the assertion of which is
likely and which, if asserted, will seek damages, an injunction or other legal,
equitable, monetary or nonmonetary relief which if granted would have a material
adverse effect on the condition, financial or otherwise, operations or prospects
of the Company.
3.13 CONSENTS. Except as set forth on the Schedules of
Exceptions/Disclosures, no consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority on the part
of the Company, including qualification under applicable state securities laws
of the offer and sale of the Note or of the issuance of the Conversion Shares is
required in connection with the valid execution and delivery of this Agreement,
or the other
-7-
Financing Documents, the offer, sale or issuance of the Note, the conversion of
the Note or the issuance of the Conversion Shares upon such conversion or the
consummation of any other transaction contemplated on the Closing Date or by
this Agreement.
3.14 TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as set forth
on the Schedules of Exceptions/Disclosures, the Company has good and marketable
title to all of its properties and assets, free from all mortgages, pledges,
liens, security interests, conditional sale agreements, encumbrances or charges.
3.15 LEASES. Set forth in the Schedule of Exceptions/Disclosures is a
correct and complete list of all leases (including, with respect to each lease,
the material provisions of such lease, including the term, the amount of rent
called for and a description of the leased property) under which the Company is
a lessee other than leases of personal property requiring rental payments of
less than $10,000 per year. The Company enjoys peaceful and undisturbed
possession under all such leases, all of such leases are valid and subsisting
and none of them are in default in any respect, and no event has occurred and no
condition exists which with notice or the passage of time or both would
constitute such a default.
3.16 FRANCHISES, LICENSES, TRADEMARKS, PATENTS AND OTHER RIGHTS.
(a) All (i) franchises, permits, licenses and other
similar authority, (ii) patents, patent applications, patent rights,
service marks, trademarks, trademark applications, trademark rights,
trade names, trade name rights and copyrights (whether registered or
not), and (iii) know-how, technology and trade secrets, which, in any
case, are owned, possessed or used by any Related Party or which any
Related Party has the right to own, possess or use, and which in any
way are or may be usable now or in the future for the conduct of the
Company's business as now conducted or as planned to be conducted, have
been duly and validly transferred in full to the Company. The documents
and instruments evidencing such transfer are listed in the Schedule of
Exceptions/Disclosures, and a copy thereof has been delivered to
special counsel for the Purchaser.
(b) The Company has all franchises, permits, licenses and
other similar authority, necessary for the conduct of its business as
now being conducted by it and believes it can obtain any similar
authority necessary for the conduct of its business as planned to be
conducted, and it is not in violation, nor will the transactions
contemplated by this Agreement cause a violation of the terms or
provisions of any such franchise, permit, license or other similar
authority.
(c) The Schedule of Exceptions/Disclosures lists all
patents, patent applications, patent rights, trademarks, trademark
applications, trademark rights, trade names, trade name rights, service
marks and copyrights (whether registered or not) owned or possessed by
the Company, (collectively, the "Listed Rights"). The Listed Rights
constitute all the patents, patent applications, patent rights,
trademarks, trademark applications, trademark rights, trade names,
trade name rights, service marks and copyrights (whether registered or
not) necessary to the conduct of the Company's
-8-
business as now being conducted, and the Company believes that it can
obtain any such rights necessary for the conduct of its business as
planned to be conducted. The Company has and possesses the know-how,
technology and trade secrets not included in the Listed Rights (such
know-how, technology and trade secrets being collectively called the
"Intellectual Property") which it believes to be necessary (i) to
conduct the Company's business as now being conducted and (ii) with
additional know-how, technology and trade secrets which the Company
plans to develop, for the conduct of its business as planned to be
conducted. (The Listed Rights and the Intellectual Property
collectively constitute the "Technology"). There is neither pending,
nor, to the best of the Company's knowledge and belief, threatened, any
claim or litigation against the Company contesting the validity or
right to use any of the Listed Rights or any of the Intellectual
Property, nor is the Company aware of any basis therefor, and the
Company has received no notice of infringement upon or conflict with
any asserted right of others. To the best of the Company's knowledge
and belief, no person, corporation or other entity is infringing or
violating the Listed Rights or any of the Intellectual Property. Except
as set forth on the Schedules of Exceptions/Disclosures, the Company
does not have any obligation to compensate others for the use of any
Listed Right or any Intellectual Property, nor has the Company granted
any license or other right to use, in any manner, any of the Listed
Rights or Intellectual Property, whether or not requiring the payment
of royalties.
3.17 ISSUANCE TAXES. All taxes imposed by any state in connection with
the issuance, sale and delivery of the Note shall have been fully paid, and all
laws imposing such taxes shall have been fully complied with, prior to the
Closing Date.
3.18 OFFERING. Within the past six (6) months, the Company has not,
either directly or through any agent, offered the Note or any security or
securities similar to the Note for sale to, or solicited any offers to buy the
Note or any part thereof or any such similar security or securities from, or
otherwise approached or negotiated in respect thereof with, any party or parties
other than the Purchaser or institutional or other sophisticated investors, each
of which was offered all or a portion of the Note at private sale for
investment.
Subject in part to the truth and accuracy of the Purchaser's
representations set forth in this Agreement, the offer, sale and issuance of the
Note and Conversion Shares to the Purchaser as contemplated by this Agreement
are exempt from the registration requirements of the Securities Act and all
applicable state securities laws, and neither the Company nor anyone acting on
its behalf will take any action hereafter that would cause the loss of such
exemption.
3.19 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
of any term of its Certificate of Incorporation or Bylaws, as amended. Neither
the Company nor any of its property is in violation of any term of any mortgage,
indenture, contract, agreement, instrument, judgment, decree, order, statute,
rule or regulation to which the Company or any of such property is subject.
-9-
3.20 EMPLOYEES.
(a) No employee of the Company and no Related Party is,
or is now expected to be, in violation of any term of any employment
contract, patent disclosure agreement, non-competition agreement, or
any other contract or agreement with any prior employer or any other
person, corporation, or other entity or any restrictive covenant in
such an agreement, or any obligation imposed by common law or
otherwise, relating to the right of any such employee or Related Party
to be employed by the Company or companies similarly situated because
of the nature of the business conducted or to be conducted by the
Company or companies similarly situated or relating to the use of trade
secrets or proprietary information of others, and the continued
employment of the Company's employees and/or Related parties does not
subject the Company or the Purchaser to any liability for any such
violation.
(b) Each of the Company's present or former employees who
has had access to proprietary information of the Company has executed a
confidentiality and non-disclosure agreement. To the best of the
Company's knowledge and belief, no employee or former employee of the
Company is, or is now expected to be, in violation of the terms of the
aforesaid agreement or of any other obligation relating to the use of
confidential or proprietary information of the Company. Each of such
confidentiality and non-disclosure agreements is in full force and
effect.
(c) To the best of the Company's knowledge, no officer or
key employee of the Company has any present intent of terminating his
or her employment with the Company.
(d) The Schedule of Exceptions/Disclosures contains a
List of Key Employees of the Company.
3.21 BUSINESS OF THE COMPANY. The Company has no knowledge or belief
that (i) there is pending or threatened any claim or litigation against or
affecting the Company contesting its right to manufacture, sell or use any
product or service presently manufactured, sold or used or planned to be
manufactured, sold or used by the Company in connection with its operations,
(ii) there exists, or there is pending or planned, any statute, rule, law,
regulation, standard or code which would materially adversely affect the
condition, financial or otherwise, the operations or the prospects of the
Company, or (iii) there is any other fact which in the future may materially
adversely affect the Company's condition, financial or otherwise, operations or
prospects. The Company currently intends to engage in the business of
developing, manufacturing and marketing innovative gene analysis products for
use in the characterization of genes in normal and diseased states. It also
develops and markets molecular diagnostic tools for providers of diagnostic
services.
3.22 USE OF PROCEEDS. The Company is a technology-based company engaged
in product innovation. The Company will use the proceeds of the offering for
implementing its marketing objectives, operating costs, sales and marketing
activities, working capital
-10-
requirements to be expended for the benefit of operations of the Company at its
Connecticut facility and other general corporate purposes. The Company will not
use the proceeds of the offering for other purposes, including, but not limited
to, the repayment of indebtedness, including trade payables; PROVIDED, HOWEVER,
the Company may use the proceeds of the offering for the payment of trade
payables incurred in the ordinary course of business after August 15, 1994. The
Company is unable to obtain sufficient assistance to undertake the activities
for which the proceeds will be used from commercial sources alone.
None of the transactions contemplated in this Agreement
(including, without limitation, the use of the proceeds from the sale of the
Note and Conversion Shares) will violate or result in a violation of Section 7
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
regulations issued pursuant thereto, including, without limitation, Regulations
G, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter 11. The Company does not own or intend to carry or purchase any "margin
security" within the meaning of said Regulation G, including margin securities
originally issued by it. None of the proceeds from the sale of the Note and
Conversion Shares will be used to purchase or carry (or refinance any borrowing
the proceeds of which were used to purchase or carry) any "security" within the
meaning of the Exchange Act.
3.23 APPLICABILITY OF, AND COMPLIANCE WITH, OTHER LAWS.
(a) The Company does not have or make contributions to
any pension plans, defined benefit plans or defined contribution plans
for its employees which are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), except as set forth on the
Schedule of Exceptions/Disclosures. With respect to such plans, if any,
listed on the Schedule of Exceptions/Disclosures, the Company is in
compliance with the applicable provisions of ERISA. The Company has not
incurred any unremedied accumulated funding deficiency within the
meaning of ERISA or any unsatisfied liability to the Pension Benefit
Guaranty Corporation established under ERISA in connection with any
employee pension plan established or maintained by the Company under
the jurisdiction of ERISA. No Reportable Event or Prohibited
Transaction (as defined in Section 4043 of ERISA) has occurred with
respect to any plan administered by the Company.
(b) The Company's employment practices and policies are
in material compliance with (i) all applicable laws of the United
States and each applicable jurisdiction relating to equal employment
opportunity, and any rules, regulations, administrative orders and
Executive Orders relating thereto; and (ii) the applicable terms,
relating to equal opportunity, of any contract, agreement or grant the
Company has with, from or relating (by way of subcontract or otherwise)
to any other contract, agreement or grant of, any federal or state
governmental unit. The Company has not been the subject of any charge
of employment discrimination made against it by the United States Equal
Employment Opportunity Commission or any other governmental unit, and
is not presently subject to any formal or informal proceedings before,
or investigations by, such Commission or governmental unit. To the
Company's knowledge, neither the Company
-11-
nor any of its employees nor any Related Parties are presently under
investigation by any commission or governmental agency for purposes of
security clearance or otherwise.
(c) To the best of the Company's knowledge, neither the
Company nor any property owned or occupied by the Company is in
violation of any Federal or State Environmental Law of any sort or in
violation of any Federal or State "OSHA" Law, so-called. The Schedule
of Exceptions/Disclosures contains a list of all environmental permits
held by the Company.
3.24 DISCLOSURE. Neither this Agreement, the Schedule of
Exceptions/Disclosures, the Balance Sheet, the Financial Statements, the other
Financing Documents nor any other written statement furnished to the Purchaser
or its counsel in connection with the offer and sale of the Note, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein or herein not misleading in
the light of the circumstances under which they were made. There is no fact
which the Company has not disclosed to the Purchaser in writing that materially
adversely affects or, so far as the Company can now foresee, will materially
adversely affect the properties, business, prospects, profits or condition
(financial or otherwise) of the Company or the ability of the Company to perform
this Agreement and the other Financing Documents. The forecasts, projections,
estimates and other forward-looking matters furnished to the Purchaser were
prepared on the basis of the Company's best estimates. The Company does not have
any reason to believe that any assumptions or statements of opinion contained in
such forecasts, projections, estimates or other forward-looking matters are
unreasonable or false, and the Company believes that the Purchaser may
reasonably rely thereon.
3.25 WARRANTIES AND REPRESENTATIONS AT CLOSING. All of the foregoing
warranties and representations are true, complete and correct as of the date
hereof and will be true, complete and correct at the Closing Date as if made at
the time thereof and with respect thereto.
SECTION 4: REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Company as follows:
4.1 EXPERIENCE. It is experienced in evaluating and investing in
companies such as the Company.
4.2 INVESTMENT. It is acquiring the Note and any Conversion Shares
which it may acquire for investment for its own account and not with the view
to, or for resale in connection with, any distribution thereof. It understands
that the Note has not been registered under the Securities Act by reason of an
exemption from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of its investment intent as
expressed herein.
4.3 RULE 144. It acknowledges that the Conversion Shares must be held
indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is
-12-
available. It has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions (which conditions cannot presently be satisfied).
4.4 ACCESS TO DATA. It has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management, and it
has been furnished with copies of documents which it has requested.
4.5 ACCREDITED INVESTOR. It is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act.
SECTION 5: CONDITIONS TO CLOSING OF PURCHASER
The obligation of the Purchaser to purchase the Note to be purchased by
it at the Closing is subject to the fulfillment to its satisfaction on or prior
to the Closing Date of each of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct in all respects at the Closing as if
made at and as of the Closing and with respect thereto, after giving effect to
the sale and issuance of the Note at the Closing.
5.2 PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
the Closing Date shall have been so performed or complied with in all respects.
5.3 COMPLIANCE AND SECRETARY'S CERTIFICATES. The Company shall have
executed and delivered to the Purchaser a certificate, substantially in the form
of Exhibit B to this Agreement, dated the Closing Date, certifying to the
fulfillment of the conditions specified in Sections 5.1 and 5.2 of this
Agreement and such other matters as the Purchaser may reasonably request, and
the Purchaser shall have received a certificate from the Secretary of the
Company, substantially in the form of Exhibit C to this Agreement, dated the
Closing Date, with respect to the matters therein set forth.
5.4 OPINION OF COMPANY COUNSEL. The Purchaser shall have received from
▇▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to the Company, and from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special
counsel to the Company, opinions addressed to it, dated the Closing Date, to the
effect and in substantially the forms set forth in Exhibits D1 and D2 hereto.
5.5 LEGAL INVESTMENT. At the time of the Closing, the purchase of the
Note to be purchased by the Purchaser hereunder and of the Conversion Shares
shall be legally permitted by all laws and regulations to which it and the
Company are subject.
5.6 QUALIFICATIONS. All authorizations, approvals, consents or permits
of any governmental authority , regulatory body or third party that are required
in connection with the
-13-
lawful issuance and sale of the Note pursuant to this Agreement, the conversion
of the Note or the issuance of the Conversion Shares upon such exercise shall
have been duly obtained and shall be effective on and as of the Closing Date,
including, if necessary, permits from applicable state securities authorities,
qualifying the offer and sale of the Note.
5.7 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
taken by the Company in connection with the transactions contemplated hereby and
all documents and instruments incident to such transactions shall be
satisfactory in substance and form to the Purchaser and special counsel for the
Purchaser.
5.8 COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT. The Company shall
have duly executed and delivered to the Purchaser a collateral assignment (the
"Collateral Assignment") and a security agreement (the "Security Agreement") to
the effect and substantially in the forms set forth in Exhibit E and Exhibit F
to this Agreement, respectively, and shall have executed such other documents
and instruments as may be necessary, including, but not limited to a UCC-1
financing statement, to perfect the security interest of the Purchaser in the
collateral specified in the Security Agreement, including the Company's Listed
Rights and Intellectual Property.
5.9 GOOD STANDING CERTIFICATES. The Company shall have delivered to the
Purchaser a certificate of recent date from the Secretary of State of the State
of Delaware with respect to the Company's and each subsidiary's due
incorporation, good standing, legal corporate existence, due authorization to
conduct business and the payment of all franchise taxes, and, certificates from
the Secretary of State in each jurisdiction in which the Company or any
subsidiary is required to be qualified to do business with respect to the
Company's or such subsidiary's good standing and due authorization to conduct
business therein and payment of all qualification fees.
5.10 TAX MATTERS. The Company shall have delivered to the Purchaser tax
status letters from the Connecticut Department of Revenue Services with respect
to the corporation business tax and sales and use tax respecting the Company and
each subsidiary.
5.11 INSURANCE CERTIFICATES AND POLICIES. The Company shall have
delivered to the Purchaser a certificate or certificates of insurance
establishing the existence of hazard insurance and liability insurance as
required by Section 7.5, which insurance shall name the Purchaser as an
additional insured as its interest may appear, together with copies of such
insurance policies.
5.12 APPLICATION FEE. The Company shall have paid to the Purchaser an
application fee of $1,250.00 and a reservation fee (which will be refunded to
the Company at the Closing) of $2,500.00.
5.13 NON-COMPETITION AND PROPRIETARY INFORMATION AGREEMENTS. All Key
Employees of the Company and of each subsidiary shall have entered into
non-competition agreements, and all employees of the Company shall have entered
into proprietary information and invention agreements, in each case satisfactory
to the Purchaser, copies of which shall have been delivered to the Purchaser.
-14-
5.14 LIFE INSURANCE. The Company shall have delivered to the Purchaser
a copy of the life insurance policies on ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ in the amount of at
least $250,000 and ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in the amount of at least $250,000, each
such policy naming the Company as the owner and beneficiary thereof, and life
insurance assignments, on American Bankers Association Form No. 10, naming the
Purchaser as assignee of such insurance.
5.15 NO ENVIRONMENTAL MATTERS PENDING. The Company shall have delivered
to the Purchaser an affidavit in form and substance acceptable to the Purchaser
certifying that there are no actions involving the Department of Environmental
Protection pending against the Company or against any property owned or occupied
by the Company and that the environmental condition of the property upon which
the Company conducts its business, and the Company's activities thereon with
respect to the storage and handling of hazardous materials is in material
compliance with all environmental laws.
5.16 STATEMENT ON USE OF PROCEEDS. The Company shall have delivered to
the Purchaser an in-house monthly budget forecast and use of proceeds statement,
in form and substance satisfactory to the Purchaser in its sole discretion,
setting forth the Company's intended use of the proceeds of the Loan.
5.17 PAYMENT OF OBLIGATIONS. The Purchaser shall have received payment
of one half of all of the Company's outstanding obligations to pay interest due
and owing to the Purchaser as of the date hereof, the other one half of such
obligations being included in the Note. The Company shall also have paid to DED
all of the Company's outstanding obligations due and owing to DED.
5.18 OFFICERS' AGREEMENT. The Purchaser shall have received an
Officers' Agreement to the effect and substantially in the form of Exhibit G,
executed by ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇ ▇▇▇▇▇.
SECTION 6: CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell the Note to be purchased at the
Closing is subject to the fulfillment to its satisfaction on or prior to the
Closing Date of each of the following conditions:
6.1 REPRESENTATIONS. The representations made by the Purchaser pursuant
to Section 4 hereof shall be true and correct when made and shall be true and
correct on the Closing Date.
6.2 LEGAL INVESTMENT. At the time of the Closing, the conditions set
forth in Sections 5.5 and 5.6 shall have occurred and the purchase of the Note
to be purchased by the Purchaser hereunder shall be legally permitted by all
laws and regulations to which the Purchaser and the Company are subject.
SECTION 7: COVENANTS OF THE COMPANY
-15-
The Company hereby covenants and agrees, that so long as the Purchaser
owns any Note or 25% of the Conversion Shares:
7.1 BASIC FINANCIAL INFORMATION. The Company will furnish the following
reports to the Purchaser:
(a) As soon as practicable after the end of each fiscal
year of the Company, and in any event within ninety (90) days
thereafter, a consolidated (and consolidating) balance sheet of the
Company and its subsidiaries, if any, as at the end of such fiscal
year, and consolidated (and consolidating) statements of income and
source and application of funds of the Company and its subsidiaries, if
any, for such year, prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in each
case in comparative form the figures for the previous fiscal year, all
in reasonable detail and performed (without scope limitations imposed
by the Company) by independent public accountants of recognized
standing selected by the Company and satisfactory to the Purchaser;
(b) Beginning with the first fiscal year in which
Company's annual revenues exceed five million dollars ($5,000,000) and
continuing thereafter, as soon as practicable after the end of each
fiscal year of the Company, and in any event within ninety (90) days
thereafter, a consolidated (and consolidating) balance sheet of the
Company and its subsidiaries, if any, as at the end of such fiscal
year, and consolidated (and consolidating) statements of income and
source and application of funds of the Company and its subsidiaries, if
any, for such year, prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in each
case in comparative form the figures for the previous fiscal year, all
in reasonable detail and audited (without scope limitations imposed by
the Company) by independent public accountants of recognized standing
selected by the Company and satisfactory to the Purchaser;
(c) As soon as practicable after the end of the first,
second and third quarterly accounting periods in each fiscal year of
the Company, and in any event within forty-five (45) days thereafter, a
consolidated (and consolidating) balance sheet of the Company and its
subsidiaries, if any, as of the end of each such quarterly period, and
consolidated (and consolidating) statements of income and source and
application of funds of the Company and its subsidiaries, if any, for
such period and for the current fiscal year to date, prepared in
accordance with generally accepted accounting principles consistently
applied and setting forth in comparative form the figures for the
corresponding periods of the previous fiscal year, subject to changes
resulting from year-end adjustments or year-end audit adjustments, as
the case may be, and setting forth any events which could reasonably be
expected to have an adverse effect upon the Company's finances or the
results of its operations, all in reasonable detail and certified by
the principal financial or accounting officer of the Company;
(d) From the date the Company becomes subject to the
reporting requirements of the Exchange Act, and in lieu of the
financial information required pursuant to
-16-
Sections 7.1(a), (b), and (c) but within the time periods required for
the furnishing thereof, copies of its reports filed on Form 10-K, Form
10-Q, Form 8-K, or any successor form or forms;
(e) Each set of financial statements delivered to the
Purchaser pursuant to Section 7.1 will be accompanied by a certificate
of the President or Treasurer of the Company setting forth:
(i) Covenant Compliance - any information
required in order to establish whether the Company was in
compliance with the requirements of this Section 7 during the
period covered by the income statement then being furnished;
and
(ii) Event of Default - that the signer has
reviewed the relevant terms of this Agreement and has made, or
caused to be made, under his or her supervision, a review of
the transactions and conditions of the Company and its
subsidiaries, if any, from the beginning of the accounting
period covered by the income statements being delivered
therewith to the date of the certificate and that such review
has not disclosed the existence during such period of any
condition or event which constitutes a breach or default under
this Agreement or any of the other Financing Documents or, if
any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the
Company has taken or proposes to take with respect thereto.
7.2 ADDITIONAL INFORMATION AND RIGHTS. The Company will:
(a) Permit the Purchaser (or its designated
representative) to visit and inspect any of the properties of the
Company, including its books of account, and to discuss its affairs,
finances and accounts with the Company's officers and its independent
public accountants, all at such reasonable times and as often as any
such party may reasonably request;
(b) Deliver to the Purchaser the reports and data
described below:
(i) As soon as available, information and data
on any material adverse changes in or any event or condition
which materially adversely affects the business, operations or
plans of the Company;
(ii) Immediately upon becoming aware of any
condition or event which constitutes a breach of this
Agreement or any of the other Financing Documents, written
notice specifying the nature and period of existence thereof
and what action the Company is taking or proposes to take with
respect thereto; and
-17-
(iii) With reasonable promptness, such other
information and data with respect to the Company and its
subsidiaries as the Purchaser may from time to time reasonably
request;
(c) Hold meetings of its Directors at least quarterly and
will not hold any meetings of its Directors on less than ten (10) days'
written notice and will permit the Purchaser to send a representative
(without voting rights) to each meeting of the Board of Directors of
the Company and all committees of such Board, except in emergencies, in
which case the Purchaser shall receive notice no less favorable than
any other outside director. The Company shall give the Purchaser notice
of each such meeting in the form and manner such notice is given to the
Company's directors. The Company will not permit its directors or
shareholders to conduct any material business by written consent
without giving at least ten (10) days' written notice to the Purchaser,
which notice shall contain an exact copy of the consent resolution
proposed to be adopted.
(d) The Company will, at the request of the Purchaser,
form an "Advisory Board" on terms satisfactory to the Purchaser (which
Advisory Board shall not have the powers of the Company's Board of
Directors), and elect and maintain thereon one or more nominees of the
Purchaser so long as the Purchaser shall so desire.
7.3 PROMPT PAYMENT OF TAXES, ETC. The Company will promptly pay and
discharge, or cause to be paid and discharged, when due and payable, unless
contested by the Company in good faith, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, property or
business of the Company or any subsidiary. In the event any such taxes,
assessment and governmental charges or levies are contested in good faith by the
Company, the Company shall notify the Purchaser in writing prior to the date on
which they are due and payable.
7.4 MAINTENANCE OF PROPERTIES AND LEASES. The Company will keep its
properties in good repair, working order and condition, and from time to time
make all needful and proper, or legally required, repairs, renewals,
replacements, additions and improvements thereto; and the Company and its
subsidiaries, if any, will at all times materially comply with each provision of
all leases to which any of them is a party or under which any of them occupies,
or has possession of, any property .
7.5 INSURANCE. The Company will keep its assets and those of its
subsidiaries which are of an insurable character insured by financially sound
and reputable insurers, which are licensed to provide such insurance in the
State of Connecticut, against loss or damage by fire, extended coverage and
explosion in amounts sufficient to prevent the Company or any subsidiary from
becoming a co-insurer and not in any event less than the greater of (a) the
outstanding principal amount of the Notes plus any other indebtedness of the
Company to the Purchaser and (b) the replacement value of the property insured.
The Company will maintain, with financially sound and reputable insurers, which
are licensed to provide such insurance in the State of Connecticut, insurance
against other hazards and risks and liability to persons and property to the
extent and in the manner customary for companies in similar businesses similarly
situated. All such policies of
-18-
insurance shall be occurrence policies with "tail coverage" so-called respecting
all prior "claims made" policies, all in a form satisfactory to the Purchaser
and shall name the Purchaser as an additional insured as its interest may
appear. All such policies shall also contain a provision requiring that the
insurer give the Purchaser a minimum of thirty (30) days' written notice prior
to any change therein or cancellation thereof and a provision that the interest
of the Purchaser shall not be impaired or invalidated by any act or neglect of
the Company nor by the occupation by the premises on which the property is
located for purposes more hazardous than are permitted by the policy. The
Company shall give immediate written notice to the Purchaser and to insurers of
loss or damage to the property and shall promptly file proof of loss with
insurers.
7.6 KEY PERSON LIFE INSURANCE. The Company will maintain or cause to be
maintained, with financially sound and reputable insurers, term life insurance
on the lives of ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in the amount of
$250,000 each until conversion or payment of the Note. All policies of such
insurance, whether new, replacement or renewal policies shall be assigned to
Purchaser as collateral for the payment of the Note.
7.7 ACCOUNTS AND RECORDS. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
Generally Accepted Accounting Principles applied on a consistent basis.
7.8 COMPLIANCE WITH REQUIREMENTS OF GOVERNMENTAL AUTHORITIES. The
Company shall duly observe and conform to all requirements of governmental
authorities relating to the conduct of its business or to its property or
assets. Without limiting the generality of the foregoing, the Company will:
(a) Comply with all minimum funding requirements
applicable to any pension plans, employee benefit plans or employee
contribution plans which are subject to ERISA or to the Internal
Revenue Code of 1986, as amended (the "Code"), and comply in all other
respects with the provisions of ERISA and the provisions of the Code
applicable to such plans; and
(b) Comply with all applicable laws of the United States
and of each applicable jurisdiction relating to equal employment
opportunity, any rules, regulations, administrative orders and
Executive Orders relating thereto and the applicable terms, relating to
equal employment opportunity, of any contract, agreement or grant the
Company has with, from or relating (by way of subcontract or otherwise)
to any other contract, agreement or grant of, any federal or state
governmental unit; and keep all records required to be kept, and file
all reports, affirmative action plans and forms required to be filed,
pursuant to any such applicable law or the terms of any such government
contract.
(c) So conduct its business that neither the Company nor
any property owned or occupied by the Company is in violation of any
Federal or State Environmental Law of any sort or in violation of any
Federal or State "OSHA" Law so-called.
-19-
7.9 MAINTENANCE OF CORPORATE EXISTENCE, ETC. The Company shall:
(a) Maintain in full force and effect its corporate
existence, rights, government approvals and franchises and all licenses
and all Listed Rights and other rights to use patents, processes,
licenses, trademarks, trade names or copyrights owned or possessed by
it; and
(b) Not transfer, assign or license any of its Listed
Rights or Intellectual Property now owned or hereafter acquired by it
without the written consent of the Purchaser, which consent the
Purchaser may withhold in its discretion; PROVIDED, HOWEVER, that such
consent shall not be unreasonably withheld in the event the Company
proposes to sublicense the Technology under the license granted to the
Company under the Collateral Assignment to a joint venture or strategic
partner on a non-exclusive basis, provided: (i) the sublicense,
including, but not limited to, any proceeds or payments of royalties
thereunder, is subject to the Secured Party's first priority security
interest in the Technology, and the sublicensee has acknowledged such
first priority security interest in writing, and (ii) there exists no
Event of Default nor any event that with the passage of time or the
giving of notice or both would ripen into an Event of Default.
7.10 SALE/PURCHASE OF ASSETS; MERGER. Subject to Section 9 hereof, the
Company will not (without the written consent of the Purchaser, which consent
the Purchaser may withhold in its discretion):
(a) Sell or otherwise dispose of the capital stock in any
subsidiary or of all or a substantial part of the Company's assets or
business or of all or a substantial part of the assets or business of
any subsidiary (whether by sale of assets, exclusive license or
otherwise);
(b) Purchase or otherwise acquire capital stock in any
corporation or equity interest in any other entity or lend more than
$1,000 to any person or entity or purchase a substantial part of the
operating assets of any person or entity; or
(c) Consolidate with or merge into or with any other
person or entity or permit any other person or entity to consolidate
with or merge into it (except that a 100% Subsidiary may consolidate
with or merge into the Company or another 100% Subsidiary) or a
controlling interest in the Company or any subsidiary is acquired by
one or more parties (through merger, consolidation or otherwise);
provided that the foregoing restriction does not apply to the merger of
another corporation into the Company, if:
(i) The Company is the surviving corporation and
more than 50% of the outstanding common stock of the surviving
corporation is owned by persons who prior to such merger owned
Common Stock of the Company;
-20-
(ii) After giving effect to the proposed merger
or consolidation the surviving corporation will be engaged in
substantially the same lines of business; and
(iii) Immediately after the consummation of the
transaction, and after giving effect thereto, no default under
this Agreement or any other Financing Document would exist.
7.11 AVAILABILITY OF STOCK FOR EXERCISE. The Company will, from time to
time, in accordance with the laws of the state of its incorporation, increase
the authorized amount of Common Stock if at any time the number of shares of
Common Stock remaining unissued and available for issuance shall be insufficient
to permit conversion in full of the Note (or the unconverted portion thereof).
7.12 CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS.
(a) The Company will require all officers, department
heads and those performing similar functions, and all other persons now
or hereafter employed by the Company or a subsidiary who may be deemed
to be a "Key Employee" to execute a non-competition agreement, and all
employees, officers and consultants of the Company to execute a
proprietary information and non-disclosure agreement, in favor of the
Company and the Purchaser, all in form and substance satisfactory to
the Purchaser, in each case as a condition precedent to the employment
of such individuals and to induce the Purchaser to enter into this
Agreement, and in each case Purchaser shall under the terms thereof
have the right to enforce the same if the Company shall fail to do so
to the Purchaser's satisfaction.
(b) The Company will cause all technological
developments, inventions, discoveries or improvements made by employees
of the Company and its subsidiaries to be fully documented in
engineering notebooks in accordance with the best prevailing industrial
professional standards, and where possible and appropriate, cause all
employees to file and prosecute United States and foreign patent
applications relating to and protecting such developments.
7.13 USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Note for the purposes described in Section 3.22 hereof.
7.14 TRANSACTIONS WITH AFFILIATES. The Company will not enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate except in the
ordinary course of and pursuant to the reasonable requirements of the Company's
business and upon fair and reasonable terms no less favorable to the Company
than would obtain in a comparable arm's-length transaction with a person not an
Affiliate.
-21-
7.15 COMPLIANCE BY SUBSIDIARIES. The Company will cause any subsidiary
which it may now have and/or which it may organize or acquire in the future to
comply fully with all terms and provisions of Section 7 to the same extent as if
such subsidiary or subsidiaries were the "Company" herein.
7.16 MAINTENANCE OF CONNECTICUT PRESENCE. The Company shall not
relocate (as that term is defined in Section 32-5a of the Connecticut General
Statutes) outside of the State of Connecticut so long as the Purchaser owns any
Note. The Company will maintain a "Connecticut Presence" so long as the
Purchaser owns any Note. A Connecticut Presence shall mean (a) maintaining the
Company's principal place of business (including its executive offices and
officers) in the State of Connecticut, (b) basing a majority of its employees
and those of its subsidiaries in the State of Connecticut, (c) conducting a
majority of its operations and those of its subsidiaries, including
manufacturing activities conducted directly or through subcontractors and
vendors, in the State of Connecticut, and (d) maintaining the Company's and each
subsidiary's principal bank accounts in the State of Connecticut.
7.17 CONNECTICUT EMPLOYMENT. For so long as the Purchaser owns any Note
or 25% of the Conversion Shares:
(a) The Company shall create jobs in the State of
Connecticut and shall use its best efforts to employ residents of
Connecticut in these jobs.
(b) The Company shall not relocate (as that term is
defined in Section 32-5a of the Connecticut General Statutes) within
the State of Connecticut without first obtaining the express written
consent of the Purchaser, which consent the Purchaser may withhold in
its discretion. If the Company relocates within the State of
Connecticut, it will offer employment at its new location to its
employees from the original location if such employment is available.
(c) The Company shall furnish to the Purchaser copies of
the quarterly reports filed by the Company and any of its subsidiaries
with the Connecticut Department of Labor and upon request, employment
records and such other personnel records to the extent permitted by law
as the Purchaser may reasonably request to verify the creation or
retention of Connecticut employment.
(d) The Company hereby authorizes the Purchaser to
examine, and will at any time at the request of the Purchaser provide
Purchaser with such additional authorization satisfactory to the
Connecticut Department of Labor as may be necessary to enable the
Purchaser to examine all records of said Department relating to the
Company and/or any of its subsidiaries.
7.18 EQUAL OPPORTUNITY. The Company agrees and warrants that it is an
equal opportunity employer and that it does not discriminate. The Company
further agrees and warrants that:
-22-
(a) The Company will not discriminate or permit
discrimination against any employee or applicant for employment because
of sex, sexual orientation, race, color, religious creed, age, martial
status, mental retardation, physical disability, national origin, or
ancestry. Such action shall include, but not be limited to, the
following: Employment upgrading, demotion or transfer; recruitment
advertising; lay-off or termination; rates of pay or other forms of
compensation; and selection for training, including apprenticeship.
(b) The Company agrees to take affirmative action to
insure that applicants with job-related qualifications are employed.
(c) The Company will, in its solicitation for employees,
state that it is an "affirmative action-equal opportunity employer."
(d) The Company agrees to provide each labor union or
representative of workers with which the Company has a collective
bargaining agreement or other contract or understanding and each vendor
with which the Company has a contract or understanding, a notice to be
provided by the Commission of Human Rights and Opportunities (the
"CHRO") and to post copies of the notice in conspicuous places
available to employees and applicants for employment.
(e) The Company agrees to cooperate with the Purchaser,
the State of Connecticut and/or any of its agencies and the CHRO to
insure that the purpose of this equal opportunity clause is being
carried out.
(f) The Company agrees to comply with all relevant
regulations and orders issued by the CHRO, to provide the CHRO with
such information as it may request, and to permit the CHRO access to
pertinent books, records, and accounts concerning the contractor's
employment practices and procedures.
(g) The Company agrees to comply with all of the
requirements set out by Section 4a-60 of the Connecticut General
Statutes, as it may be amended.
(h) The Company agrees to post a notice of this
acceptance of the foregoing equal employment opportunity provisions at
its place of business, clearly visible, in such form as is satisfactory
to the Purchaser.
7.19 CERTAIN DISTRIBUTIONS/PAYMENTS. The Company will not and will not
permit any Subsidiary (except a 100% Subsidiary) to make any (i) declaration,
setting aside or payment of any dividend or other distribution in respect of any
of the Company's capital stock, or (ii) direct or indirect redemption, purchase
or other acquisition of any of such stock (or any warrant, option or other right
with respect to such stock) except in any case stock, warrants, options or other
rights owned by the Purchaser, or (iii) any repayment of Company debt held by
any Related Party or by any Affiliate or subsidiary debt held by any Related
Party or by any Affiliate.
-23-
7.20 EMPLOYEE STOCK PURCHASES. The Company will not issue (which term
shall, for the purpose of this Section 7.20, include without limitation the
issuance of any shares of, or the grant of any warrants, options or other rights
to purchase any shares of, or any commitment to issue) any shares of its capital
stock (which term shall, for the purpose of this Section 7.20, include without
limitation, securities convertible into capital stock, or rights to acquire
capital stock), to employees or officers or directors of the Company or any
subsidiary thereof, except the number of shares of Common Stock (as adjusted for
stock dividends, stock splits and similar corporate events) issued or reserved
for issuance pursuant to any option plan disclosed on the Schedule of
Exceptions/Disclosures and then only at prices no less than 50% of the Current
Market Value of such stock at the time of the grant of option.
-24-
SECTION 8: EVENTS OF DEFAULT
8.1 EVENTS OF DEFAULT. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) The Company shall fail to pay any installment of
principal or interest on any of the Notes within ten (10) days after
the date such payment is due; or
(b) Any representation or warranty made by the Company in
this Agreement or by the Company or any Related Party or Affiliate in
any of the other Financing Documents or by the Company (or by any
Related Party or Affiliate) in any certificate, instrument or written
statement contemplated by or made or delivered pursuant to or in
connection with this Agreement or any of the other Financing Documents,
shall prove to have been incorrect when made; or
(c) The Company shall fail to perform or observe any
other term, covenant or agreement contained in this Agreement, any of
the Notes or in any of the other Financing Documents on its part to be
performed or observed and any such failure remains unremedied for 15
business days after such failure becomes known to an officer of the
Company or to a director of the Company or to a holder of 10% or more
of the common stock in the Company; or
(d) The Company or any subsidiary shall fail to pay any
indebtedness for borrowed money (other than as evidenced by the Notes)
owing by the Company or such subsidiary (as the case may be) or any
interest or premium thereon, when due (or, if permitted by the terms of
the relevant document, within any applicable grace period) whether such
indebtedness shall become due by scheduled maturity, by required
prepayment, by acceleration, by demand or otherwise, or shall fail to
perform any term, covenant or agreement on its part to be performed
under any agreement or instrument (other than this Agreement or the
Notes) evidencing or securing or relating to any indebtedness owing by
the Company or any subsidiary, as the case may be, when required to be
performed (or, if permitted by the terms of the relevant document,
within any applicable grace period) if the effect of such failure to
pay or perform is to accelerate, or to permit the holder or holders of
such indebtedness or the trustee or trustees under any such agreement
or instrument to accelerate, the maturity of such indebtedness; or
(e) The Company or any subsidiary shall be involved in
financial difficulties as evidenced (i) by its admitting in writing its
inability to pay its debts generally as they become due; (ii) by its
commencement of a voluntary case under Chapter 7 or 11 (or any similar
provision) of the United States Bankruptcy Code as from time to time in
effect, or by its authorizing, by appropriate proceedings of its Board
of Directors or other governing body, the commencement of such a
voluntary case; (iii) by its filing an answer or other pleading
admitting or failing to deny the material allegations of a petition
filed against it commencing an involuntary case under said Chapter 7 or
11 (or any similar provision) or seeking, consenting to or acquiescing
in the relief therein provided, or by its
-25-
failing to controvert timely the material allegations of any such
petition; (iv) by the entry of an order for relief in any involuntary
case commenced under said Chapter 7 or 11 (or any similar provision);
(v) by its seeking relief as a debtor under any applicable law, other
than said Chapter 7 or 11 (or any similar provision) of any
jurisdiction relating to the liquidation or reorganization of debtors
or to the modification or alteration of the rights of creditors, or by
its consenting to or acquiescing in such relief; (vi) by the entry of
an order by a court of competent jurisdiction (a) finding it to be
bankrupt or insolvent, (b) ordering or approving its liquidation,
reorganization or any modification or alteration of the rights of its
creditors, or (c) assuming custody of or appointing a receiver or other
custodian for all or a substantial part of its property; (vii) by its
making an assignment for the benefit of, or entering into a composition
with, creditors, or appointing or consenting to the appointment of a
receiver or other custodian for all or a substantial part of its
property; or (viii) by it taking any formal corporate action in
furtherance of the foregoing; or
(f) Any judgment, writ, warrant of attachment or
execution or similar process shall be issued or levied against a
material portion of the property of the Company or any subsidiary and
such judgment, writ, or similar process shall not be released, vacated
or fully bonded within 60 days after its issue or levy; or
(g) Any undischarged final judgment in excess of $10,000
shall be entered against the Company, which judgment is not paid in
full within 60 days of its entry; or
(h) If any collateral securing any Note or the
performance of the other Financing Documents is substantially damaged
in any manner and is not covered by insurance on which Purchaser is a
loss payee and which is deemed adequate by the Purchaser; or
(i) If the United States of America, any state, or any
agency or subdivision thereof, imposes a tax, levy, or assessment on or
concerning any of the Notes, which the Company cannot lawfully or does
not pay when due; or
(j) If title to any portion or all of the collateral
securing the Notes or the performance of the other Financing Documents
becomes vested in other than the Company, or is encumbered by financing
without the Purchaser's prior written consent; or
(k) If any Related Party or Affiliate shall fail to
perform or observe any term, covenant or agreement contained in any of
the Financing Documents on the part of such Related Party or Affiliate
to be performed and any such failure remains unremedied for 15 business
days after such failure becomes known to an officer of the Company or
to a director of the Company or to a holder of 10% or more of the
common stock in the Company; or
(l) If any party to any of the non-competition agreements
or any of the proprietary information and non- disclosure agreements
referred to above shall fail to perform or observe any term covenant or
agreement contained therein and the Company
-26-
shall fail to commence the enforcement thereof within 15 business days
after such failure becomes known to an officer of the Company or to a
director of the company or to a holder of 10% or more of the common
stock in the Company and thereafter to proceed with such enforcement in
a diligent manner;
then, and in any such event, while such event shall be continuing, any holder
of any of the Notes then outstanding may, by notice to the Company, declare
the entire unpaid principal amount of the Notes and all interest accrued and
unpaid thereon to be forthwith due and payable, whereupon the Notes, all such
accrued interest and all such amounts shall become and be forthwith due and
payable (unless there shall have occurred an Event of Default under
subsection 8.1(e) in which case all such amounts shall automatically become
due and payable), without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived by the Company; and the
Company shall forthwith pay to such holder the entire principal of and
interest accrued on such Notes. In the event the Company fails to maintain a
Connecticut Presence pursuant to Section 7.16 prior to the date ten (10)
years from the date hereof, in addition to the other remedies available to
the Purchaser hereunder, at law or in equity, the Purchaser shall be entitled
to demand from the Company the entire principal of and interest accrued on
such Notes plus an amount calculated to yield a twenty-eight percent (28%)
annually compounded rate of return from the Closing Date on the Investment,
which amounts shall be immediately due and payable and secured by the
Financing Documents.
8.2 ANNULMENT OF ACCELERATION OF NOTES. If a declaration is made
pursuant to Section 8.1 by any holder or holders of the Notes, then and in
every such case, the holders of greater than 50% in aggregate principal
amount of the Notes then outstanding (exclusive of Notes then directly or
indirectly owned by the Company, any of its subsidiaries, any Affiliates
and/or any Related Person) may, by written instrument filed with the Company,
rescind and annul such declaration, and the consequences thereof, provided
that at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this Agreement or
any other Financing Document;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement and under
any Financing Document (except any principal, interest or premium on
the Notes which has become due and payable by reason of such
declaration) shall have been duly paid; and
(c) each and every other default and Event of Default
shall have been waived pursuant to the Agreement or any other Financing
Document or otherwise made good or cured; and provided further that no
such rescission and annulment shall extend to or affect any subsequent
default or Event of Default or impair any right consequent thereon.
8.3 NOTICE. If an Event of Default occurs, the Company shall give
prompt notice thereof to the holders of all Notes.
-27-
8.4 OTHER REMEDIES. Notwithstanding the provisions of Section 8.1
above, if any Event of Default shall occur, the holder or holders of greater
than 50% in principal amount of Notes then outstanding shall be entitled
inter alia to request and obtain injunctive relief and such other remedies as
may be appropriate to cure any outstanding Event of Default and/or to bar or
forestall further Events of Default, all of which remedies shall be
cumulative and non-exclusive, and the exercise of any rights, power or
remedies shall not preclude the right to exercise any other rights, powers or
remedies available at law or in equity.
SECTION 9: RIGHT TO PUT SHARES
9.1 RIGHT TO PUT. The Purchaser shall have the right to sell to
the Company, and the Company agrees to purchase from the Purchaser, in one or
more transactions, the Conversion Shares, for the Put Price on the terms and
conditions herein set forth (the "Put").
9.2 METHOD OF EXERCISE. On the terms and conditions herein set
forth, the Purchaser may exercise its rights hereunder to sell all or any
part of the Conversion Shares by delivering to the Company a notice of Put (a
"Notice of Put") in the form attached hereto as Exhibit H.
9.3 TIME OF EXERCISE. The rights of the Purchaser to Put any or
all of the Conversion Shares shall become exercisable:
(a) At any time, and each time, upon the occurrence of,
or upon the taking of action by the Board of
Directors, stockholders, or officers of the Company
to authorize, any of the following events:
(i) on or prior to the date ten (10) years from
the Closing Date, the Company ceases to
maintain a Connecticut Presence; or
(ii) prior to the time the Company issues any of
its shares of capital stock pursuant to a
registration statement declared effective by
the Securities and Exchange Commission under
the Securities Act, the Company engages in
the activity or activities prohibited by the
terms of Section 7.10, whether or not
consented to by the Purchaser.
(b) At any time after seven (7) years from the date
hereof.
9.4 PUT CLOSING. The closing (the "Put Closing") of the
purchase and sale of the Conversion Shares pursuant to this Section 9 shall
be held on the date (the "Put Date") which is the thirtieth (30th) business
day after delivery of the Notice of Put. At the Put Closing, the Purchaser
will deliver the Conversion Shares to the Company, and the Company will
deliver to the Purchaser the Put Price for the Conversion Shares made the
subject of the Notice of Put in cash, certified or bank check, or by wire
transfer. If the Purchaser shall have sold less than all of its Conversion
Shares, the Company shall deliver to the Purchaser a new certificate (as
requested
-28-
by the Purchaser) evidencing the Conversion Shares of the Purchaser not made
the subject of the Notice of Put.
SECTION 10. RIGHT TO CALL SHARES
10.1 RIGHT TO CALL. The Company shall have the right to require
the Purchaser, and the Purchaser agrees, to sell to the Company all, but not
less than all, of the Conversion Shares, for the Call Price on the terms and
conditions herein set forth (the "Call").
10.2 METHOD OF EXERCISE. On the terms and conditions herein set
forth, the Company may exercise its rights hereunder to purchase all of the
Conversion Shares by delivering to the Holder a notice of Call (a "Notice of
Call") in the form attached hereto as Exhibit I.
10.3 TIME OF EXERCISE. The rights of the Company to Call all of
the Conversion Shares shall become exercisable on or after seven (7) years
from the date hereof so long as there exists no Event of Default; PROVIDED,
HOWEVER, that in no event shall the Company have the right to Call within the
six-month period prior to an offering of any of the Company's shares of
capital stock pursuant to a registration statement filed under the Securities
Act.
10.4 CALL CLOSING. The closing (the "Call Closing") of the
purchase and sale of the Conversion Shares pursuant to this Section 10 shall
be held on the date (the "Call Date") which is the thirtieth (30th) business
day after delivery of the Notice of Call. At the Call Closing, the Purchaser
will deliver the Conversion Shares to the Company, and the Company will
deliver to the Purchaser the Call Price for the Conversion Shares made the
subject of the Notice of Call in cash, certified or bank check, or by wire
transfer.
SECTION 11: DEFINITIONS
As used in this Agreement, capitalized terms shall have the
respective meanings set forth in this Agreement or set forth below or in the
Section of this Agreement referred to below:
AFFILIATE shall mean a person (other than a subsidiary) (1) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (2) which
beneficially owns or holds 5% or more of any class of the voting stock of the
Company or (3) 5% or more of the voting stock (or in the case of a person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or one of its subsidiaries. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise.
AGREEMENT shall mean this Financing Agreement.
BALANCE SHEET - Section 3.7.
CHRO - Section 7.18.
-29-
CALL - Section 10.1. The term "Call," when used as a verb, shall
also mean the exercise of the Call.
CALL CLOSING - Section 10.4.
CALL DATE - Section 10.4.
CALL PRICE shall mean the greater of (a) the aggregate Current
Market Value of the Conversion Shares on the Call Date, and (b) an amount
which yields a return of the aggregate amount of the Investment plus an
amount calculated to yield a twenty-five (25%) annually compounded rate of
return from the Closing Date on the Investment.
CLOSING(S) - Section 2.1.
CLOSING DATE(S) - Section 2.1.
CODE shall mean the Internal Revenue Code of 1986, as amended.
COMMON STOCK shall mean the common stock of the Company, par value
$.001.
COMPANY shall mean BIOS Laboratories, Inc., a Delaware corporation.
CONNECTICUT PRESENCE - Section 7.16.
CONTRACTS - Section 3.6.
CONVERSION SHARES - shall mean, at any time, shares of Common Stock
(i) issued and then outstanding upon conversion of the Note, (ii) issuable
upon conversion of the Note, and (iii) issued and then outstanding or
issuable in respect of the Common Stock referred to in clauses (i) and (ii)
of this definition upon any stock split, stock dividend, recapitalization or
similar event.
CURRENT MARKET VALUE - as to a share of Common Stock shall mean on
any date:
(a) the average of the daily closing prices for the
thirty (30) consecutive business days ending no more than fifteen (15)
business days before the day in question (as adjusted for any stock
dividend, split, combination or reclassification that took effect
during such 30 business day period) with the closing price for each day
being the last reported sales price regular way or, in case no such
reported sales took place on such day, the average of the last reported
bid and asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or
admitted to trading (or if the Common Stock is not at the time listed
or admitted for trading on any such exchange, then such price as shall
be equal to the average of the last reported bid and asked prices, as
reported by the National Association of Securities Dealers Automated
Quotations System ("Nasdaq") on such day, or if, on any day in
question, the
-30-
security shall not be quoted on Nasdaq, then such price as shall be
equal to the average of the last reported bid and asked prices on such
day as reported by The National Quotation Bureau Incorporated or any
similar reputable quotation and reporting service, if such quotation is
not reported by The National Quotation Bureau Incorporated); or
(b) if the Common Stock is not traded in such manner that
the quotations referred to in clause (a) above are available for the
period required hereunder, the value determined in good faith by the
Board of Directors of the Company or, if such determination cannot be
made or is reasonably objected to by the Purchaser within twenty (20)
days of its notification thereof, by a nationally recognized
independent investment banking firm (which has no past or present
relationship with the Company or the Purchaser) selected in good faith
by the Board of Directors of the Company, or if such selection cannot
be made or is reasonably objected to by the Purchaser within twenty
(20) days of its notification thereof, by a nationally recognized
independent investment banking firm selected by the American
Arbitration Association in Hartford, Connecticut in accordance with its
rules.
ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
EVENT OF DEFAULT - Section 8.1.
EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as
amended from time to time.
FINANCIAL STATEMENTS - Section 3.7.
FINANCING DOCUMENTS shall mean this Agreement, the Note and all
other documents set forth in any of the other schedules and exhibits hereto
(other than Exhibits D1 and D2), under which, upon execution thereof, the
Company or any Related Party shall have any obligation to the Purchaser, all
in the respective forms thereof as executed and as amended from time to time.
INITIAL ADVANCE - Section 1.2(a).
INTELLECTUAL PROPERTY - Section 3.16.
INVESTMENT - shall mean the aggregate amount of the advances made
under the Note.
KEY EMPLOYEES shall mean any employee who makes or has made a
material contribution to the Technology owned by the Company and/or to its
marketing and/or to its management.
LISTED RIGHTS - Section 3.16.
-31-
NOTE(S) - Section 1.1.
NOTICE OF CALL - Section 10.2.
NOTICE OF PUT - Section 9.2.
OFFICER'S AGREEMENT - Section 5.18.
PLAN - Section 3.1.
PURCHASER shall mean the party listed on Schedule I hereto.
PUT - Section 9.1. The term "Put," when used as a verb, shall also
mean the exercise of the Put.
PUT CLOSING - Section 9.4.
PUT DATE - Section 9.4.
PUT PRICE shall mean:
(1) with respect to the Purchaser's right to Put under Section
9.3(a)(i), the greater of (a) the aggregate Current Market
Value of the Conversion Shares on the Put Date, (b) the
aggregate book value of the Conversion Shares and (c) an
amount which yields a return of the aggregate amount of the
Investment plus an amount calculated to yield a twenty-eight
percent (28%) annually compounded rate of return from the
Closing Date on the Investment; and
(2) with respect to the Purchaser's right to Put under Sections
9.3(a)(ii) and 9.3(b), the greater of (a) the aggregate
Current Market Value of the Conversion Shares on the Put Date,
and (b) an amount which yields a return of the aggregate
amount of the Investment plus an amount calculated to yield a
twenty five percent (25%) annually compounded rate of return
from the Closing Date on the Investment;
unless, in either case, the Put is exercised for less than all of the
Conversion Shares, in which case the Put Price shall be multiplied by a
fraction, the numerator of which is the number of Conversion Shares
being Put and the denominator of which is the number of Conversion
Shares initially issued.
RELATED PARTY shall mean any officer, director, significant employee
or consultant of the Company or any holder of 5% or more of any class of
capital stock of the Company or any member of the immediate family of any
such officer, director, employee, consultant or shareholder or any entity
controlled by any such officer, director, employee, consultant or
-32-
shareholder or a member of the immediate family of any such officer,
director, employee, consultant or shareholder.
SCHEDULE OF EXCEPTIONS/DISCLOSURE shall mean Schedule II attached
hereto.
SCHEDULE OF PURCHASERS shall mean Schedule I attached hereto.
SECOND ADVANCE - Section 1.2(b).
SECURITIES ACT shall mean the Securities Act of 1933, as amended
from time to time.
SECURITY AGREEMENT - Section 5.10.
TECHNOLOGY - Section 3.16(c).
100% SUBSIDIARY shall mean an entity all of the capital stock or
other ownership interests in which are owned directly or indirectly by the
Company.
SECTION 12. REGISTRATION RIGHTS
12.1. CERTAIN DEFINITIONS. As used in this Section 12, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Registrable Securities" shall mean the Conversion Shares less any
Conversion Shares theretofore sold to the public or in a private placement.
The terms "register," "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in compliance with Section 12.2 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, all fees and
disbursements of counsel for any Holder and any blue sky fees and expenses
excluded from the definition of "Registration Expenses."
-33-
"Holder" shall mean any holder of outstanding Conversion Shares or
Registrable Securities which (except for purposes of determining "Holders"
under Section 12.7 hereof) have not been sold to the public.
"Other Shareholders" shall mean holders of securities of the Company
who are entitled by contract with the Company or who are permitted by the
Company to have securities included in a registration of the Company's
securities.
12.2. REQUESTED REGISTRATION.
(A) REQUEST FOR REGISTRATION. If at any time the
Company shall receive from any Holder a written request that the Company
effect a registration with respect to all or a part of the Registrable
Securities, the Company will:
(i) promptly give written notice of the
proposed registration to all other Holders; and
(ii) as soon as practicable, use its diligent
best efforts to effect such registration (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the
Securities Act) as may be so requested and as would permit or facilitate the
sale and distribution of all or such portion of such Registrable Securities
as are specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request as
are specified in a written request given by such Holder or Holders within
thirty (30) days after receipt of such written notice from the Company;
provided that the Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 12.2:
(A) after the Company has effected
three (3) such registrations pursuant to this Section 12.2(a) and such
registrations have been declared or ordered effective and the sales of such
Registrable Securities shall have closed, provided, however, that any such
registration shall not be counted as a registration for purposes of this
clause (A) if the securities of directors, officers or Other Shareholders, if
any, included therein comprise greater than fifty percent (50%) of all
securities included in such registration;
(B) prior to the date the Company
issues any of its shares pursuant to a registration statement declared
effective by the Commission under the Securities Act; or
(C) if, in the opinion of counsel
for the Company, which opinion shall be reasonably satisfactory to the
Holder, the Holder has the right to sell the Registrable Securities
immediately under Rule 144(k) of the Securities Act.
-34-
Subject to the foregoing clauses (A), (B) and (C), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Holder.
The registration statement filed pursuant to the request of the
Holder may, subject to the provisions of Section 12.2(b) below, include other
securities of the Company which are held by officers or directors of the
Company or which are held by parties who, by virtue of agreements with the
Company, are entitled to include their securities in any such registration.
(b) UNDERWRITING. If the Holder intends to distribute
the Registrable Securities covered by its request by means of an
underwriting, it shall so advise the Company as a part of its request made
pursuant to this Section 12.2 and the Company shall include such information
in the written notice referred to in Section 12.2(a)(i) above. The right of
any Holder to registration pursuant to this Section 12.2 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent
provided herein.
If officers or directors of the Company holding other securities of
the Company shall request inclusion in any registration pursuant to this
Section 12.2, or if Other Shareholders request such inclusion, the Holder
shall, on behalf of all Holders, offer to include the securities of such
officers, directors and Other Shareholders in the underwriting and may
condition such offer on their acceptance of all applicable provisions of this
Section 12. The Company shall (together with all Holders, officers, directors
and Other Shareholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such
underwriting by the Holder and reasonably acceptable to the Company.
Notwithstanding any other provision of this Section 12.2, if the
representative of the underwriter or underwriters advises the Holder in
writing that marketing factors make it advisable to impose a limitation on
the number of shares to be underwritten, the securities of the Company (other
than Registrable Securities) held by officers or directors of the Company and
by Other Shareholders shall be excluded from such registration to the extent
so required by such limitation and if a limitation of the number of shares is
still required, the Holder shall so advise all Holders of Registrable
Securities whose securities would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in
the registration and underwriting shall be allocated among all such Holders
in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such persons at the time of filing the
registration statement. No Registrable Securities or any other securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration.
If any Holder of Registrable Securities, officer, director or Other
Shareholder above disapproves of the terms of the underwriting, such party
may elect to withdraw therefrom by written notice to the Company, the
underwriter and the Holder. The securities so withdrawn shall also be
withdrawn from registration.
-35-
If the underwriter has not limited the number of Registrable
Securities or other securities to be underwritten, the Company may include
its securities for its own account in such registration if the underwriter so
agrees and if the number of Registrable Securities and other securities which
would otherwise have been included in such registration and underwriting will
not thereby be limited.
12.3. COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If the Company shall
determine to register any of its securities either for its own account or the
account of a security holder or holders, other than a registration relating
solely to employee benefit plans, or a registration relating solely to a
Commission Rule 145 transaction, or a registration on any registration form
which does not permit secondary sales, the Company will:
(i) promptly give to each Holder written
notice thereof (which shall include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities under the applicable
blue sky or other state securities laws); and
(ii) include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made by any Holder within fifteen (15) days
after receipt of the written notice from the Company described in clause (i)
above, subject to any limitations on the number of shares as set forth in
Section 12.3(b) below.
(b) UNDERWRITING. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as part of the written
notice given pursuant to Section 12.3(a)(i). In such event, the right of any
Holder to registration pursuant to Section 12.3 shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company, directors and officers and the
Other Shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter
or underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 12.3, if the
underwriter determines that marketing factors require a limitation on the
number of shares to be underwritten, the underwriter may (subject to the
allocation priority set forth below) exclude from such registration and
underwriting some or all of the Registrable Securities which would otherwise
be underwritten pursuant hereto. The Company shall so advise all holders of
securities requesting registration, and the number of shares of securities
that are entitled to be included in the registration and underwriting shall
be allocated in the following manner. The number of shares that may be
included in the registration and underwriting on behalf of such Holders,
directors and officers and Other Shareholders shall be allocated among such
Holders, directors and officers
-36-
and Other Shareholders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities and other securities which they
had requested to be included in such registration at the time of filing the
registration statement.
If any Holder of Registrable Securities or any officer, director or
Other Shareholder disapproves of the terms of any such underwriting, it, he
or she may elect to withdraw therefrom by written notice to the Company and
the underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
12.4. REGISTRATION RIGHTS. In the event that the Company grants
registration rights, including demand registration rights, to any other
holder of securities of the Company who owns or acquires, in the aggregate,
less than One Million Dollars ($1,000,000) of the Company's securities, the
Company will promptly give to the Holder written notice thereof and, if in
the opinion of the Holder such registration rights are more favorable than
the registration rights provided under this Agreement, the Holder shall so
notify the Company within thirty (30) days of receipt of the foregoing notice
from the Company, whereupon such registration rights shall automatically be
deemed to be incorporated in this Agreement.
12.5. EXPENSES OF REGISTRATION. The Company shall bear all
Registration Expenses incurred in connection with any registration,
qualification and compliance by the Company pursuant to Section 12.2 hereof.
All Selling Expenses shall be borne by the holders of the securities so
registered pro rata on the basis of the number of their shares so registered.
12.6. REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to this Section 12, the Company will keep
each Holder advised in writing as to the initiation of each registration and
as to the completion thereof. The Company will, at its expense:
(a) keep such registration effective for a period of
one hundred twenty (120) days or until the Holder or Holders have completed
the distribution described in the registration statement relating thereto,
whichever first occurs;
(b) furnish such number of prospectuses and other
documents incident thereto as a Holder from time to time may reasonably
request; and
(c) use its best efforts to register or qualify the
Registrable Securities under the securities laws or blue-sky laws of such
jurisdictions as any Holder may request; provided, however, that the Company
shall not be obligated to register or qualify such Registrable Securities in
any particular jurisdiction in which the Company would be required to execute
a general consent to service of process in order to effect such registration,
qualification or compliance, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder.
-37-
12.7. INDEMNIFICATION.
(a) The Company, with respect to each registration,
qualification and compliance effected pursuant to this Section 12, will
indemnify and hold harmless each Holder, each of its officers, directors,
partners, and agents, and each party controlling such Holder, and each
underwriter, if any, and each party who controls any underwriter, against all
claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any prospectus, offering circular or other
document (including any related registration statement, notification or the
like) incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule
or regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of its
officers, directors, partners, and agents, and each party controlling such
Holder, each such underwriter and each party who controls any such
underwriter, for any legal and any other expenses incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission based solely upon written
information furnished to the Company by such Holder or underwriter, as the
case may be, and stated to be specifically for use in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance.
(b) Each Holder and Other Shareholder will, if
Registrable Securities held by it, him or her are included in the securities
as to which such registration, qualification or compliance is being effected,
indemnify and hold harmless the Company, each of its directors and officers
and each underwriter, if any, of the Company's securities covered by such a
registration statement, each party who controls the Company or such
underwriter, each other such Holder and Other Shareholder and each of their
respective officers, directors, partners, and agents, and each party
controlling such Holder or Other Shareholder, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company and
such Holders, Other Shareholders, directors, officers, partners, agents,
parties, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document solely in reliance upon and
in conformity with written information furnished to the Company by such
Holder or Other Shareholder and stated to be specifically for use in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any
-38-
such registration, qualification or compliance; provided, however, that the
obligations of such Holders and Other Shareholders hereunder shall be limited
to an amount equal to the proceeds to each such Holder or Other Shareholder
of securities sold as contemplated herein.
(c) Each party entitled to indemnification under this
Section 12.7 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld), and
the Indemnified Party may participate in such defense at such party's expense
(unless the Indemnified Party shall have been advised by counsel that actual
or potential differing interests or defenses exist or may exist between the
Indemnifying Party and the Indemnified Party, in which case such expense
shall be paid by the Indemnifying Party), and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 12. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall provide such information as may be
reasonably requested by an Indemnifying Party in order to enable such
Indemnifying Party to defend a claim as to which indemnity is sought.
12.8. INFORMATION BY HOLDER. Each Holder of Registrable
Securities, and each Other Shareholder holding securities included in any
registration, shall furnish to the Company such information regarding such
Holder or Other Shareholder as the Company may reasonably request in writing
and as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Section 12.
12.9. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit
the sale of the Registrable Securities to the public without registration,
the Company agrees to:
(a) Make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act,
at all times from and after ninety (90) days following the effective date of
the first registration under the Securities Act filed by the Company for an
offering of its securities to the general public;
(b) File with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Securities Exchange Act at any time after it has become subject to
such reporting requirements; and
(c) So long as the Holder owns any Registrable
Securities, furnish to the Holder forthwith upon request a written statement
by the Company as to its compliance with the
-39-
reporting requirements of Rule 144 (at any time from and after ninety (90)
days following the effective date of the first registration statement in
connection with an offering of its Securities to the general public), and of
the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so
filed as the Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing the Holder to sell any such securities
without registration.
SECTION 13: MISCELLANEOUS
13.1 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
Connecticut.
13.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the Closing and any investigation made
by the Purchaser in the manner set forth herein.
13.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, however, that the Company may not assign its rights
hereunder.
13.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof. Except as otherwise
expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated, except by a written instrument
signed by the Company and the holders of sixty-six and two thirds percent (66
2/3%) or more of the aggregate principal amount of the Notes, but in no event
shall this Section 13.4 be amended or the obligation of the Purchaser
hereunder increased, except upon the written consent of the Purchaser.
13.5 NOTICES, ETC.
(a) All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by
first-class, registered or certified mail, postage prepaid, or
delivered either by hand or by messenger, or sent via telex,
telecopier, computer mail or other electronic means if confirmed by
telephone, addressed (a) if to the Purchaser, as indicated on the
Schedule of Purchasers attached hereto, or at such other address as the
Purchaser shall have furnished to the Company in writing, or (b) if to
any other holder of any Note at such address as such holder shall have
furnished to the Company in writing, or, until any such holder so
furnishes an address to the Company, then to and at the address of the
last holder thereof who has so furnished an address to the Company, or
(c) if to the Company, at ▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇
-40-
06511, or at such other address as the Company shall have furnished to
the Purchaser and each such other holder in writing.
(b) Any notice or other communications so addressed and
mailed, postage prepaid, by registered or certified mail (in each case,
with return receipt requested) shall be deemed to be given when so
mailed. Any notice so addressed and otherwise delivered shall be deemed
to be given when actually received by the addressee.
13.6 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any holder of any Note or Conversion
Shares, upon any breach or default of the Company under this Agreement or any
of the other Financing Documents, shall impair any such right, power or
remedy of such holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies,
either under this Agreement or any of the other Financing Documents or by law
or otherwise afforded to any holder, shall be cumulative and not alternative.
13.7 SEPARABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
13.8 AGENT'S FEES AND SERVICES.
The Company represents and warrants that neither it nor any
subsidiary has retained any finder or broker or other person or firm in
connection with the transactions contemplated by this Agreement. The Company
accepts sole responsibility for and agrees to pay all agent's fees to any
broker, finder or other person or firm claiming the right to receive
compensation of any sort in connection with the transactions contemplated
herein. In addition, the Company hereby agrees to indemnify and to hold the
Purchaser harmless of and from any liability for any commission or
compensation in the nature of an agent's fee to any broker, finder or other
person or firm (and the costs and expenses of defending against such
liability or asserted liability) claiming the right to receive compensation
of any sort arising from any act by the Company or any of its employees or
representatives.
13.9 LEGAL FEES AND EXPENSES. The Company shall bear its own
expenses and legal fees incurred on its behalf with respect to this Agreement
and the transactions contemplated hereby, whether or not a closing takes
place. On each Closing Date (or if no closing shall take place, within thirty
(30) days of receiving any statement or invoice therefor), the Company will
pay the reasonable legal fees and out-of-pocket expenses of the Purchaser and
special counsel to the Purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company shall also pay the reasonable
legal fees and the fees of experts and consultants engaged
-41-
by the Purchaser incurred with respect to the enforcement of any of the
Financing Documents and/or with respect to responding to any request made by
the Company for the consent of the Purchasers to any action that the Company
wishes to take that is either barred under terms of any Financing Document or
requires the consent of the Purchaser therefor.
13.10 TRIAL BY JURY. THE COMPANY HEREBY WAIVES ITS RIGHT TO CLAIM A
TRIAL BY JURY WITH RESPECT TO ANY ACTION BY OR AGAINST PURCHASER ARISING
HEREUNDER.
13.11 WAIVER. THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH
THIS AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT
ALLOWED UNDER CONNECTICUT GENERAL STATUTES SECTION 52-278a TO 52-278g
INCLUSIVE, OR BY ANY OTHER APPLICABLE LAW, STATE OR FEDERAL, HEREBY WAIVES
ITS RIGHTS TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH
ANY PURCHASER, AND/OR THE SUCCESSORS OR ASSIGNS OF ANY PURCHASER MAY DESIRE
TO USE.
13.12 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience or reference only and are
not to be considered in construing this Agreement.
13.13 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which when so executed and delivered shall constitute a complete and
original instrument but all of which together shall constitute one and the
same agreement, and it shall not be necessary when making proof of this
Agreement or any counterpart thereof to account for any other counterpart.
-42-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as
of the day and year first written above.
BIOS LABORATORIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Title President
-------------------------------
CONNECTICUT INNOVATIONS,
INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title Acting Executive Director
-------------------------------
-43-
SCHEDULE I
SCHEDULE OF PURCHASERS
NAME AND ADDRESS
Connecticut Innovations,
Incorporated
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Executive Director
-44-
EXHIBIT H
NOTICE OF PUT
1. In accordance with a Financing Agreement (the "Agreement") dated as of
_____________, 1994 between the undersigned (the "Holder") and BIOS
Laboratories, Inc. (the "Company"), the undersigned hereby exercises
its right to sell, and does hereby sell upon receipt of the Put Price,
_________________________ (___________) Conversion Shares.
2. Attached hereto is certificate number ____ representing _______
Conversion Shares held by the Holder, which certificate is either duly
endorsed in favor of the Company or accompanied by a separate stock
power in favor of the Company.
3. The Put Price is to be paid in the manner set forth in the Agreement.
4. All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings assigned to them in the Agreement.
5. If this Notice of Put does not relate to all Conversion Shares held by
the Holder, the name in which a new certificate is to be issued for the
shares of Common Stock not covered hereby is:
6. Other Instructions:
CONNECTICUT INNOVATIONS,
INCORPORATED
By:
-----------------------------------
Title:
--------------------------------
Dated:
--------------------------------
EXHIBIT I
NOTICE OF CALL
1. In accordance with a Financing Agreement (the "Financing Agreement")
dated _____________, 1994 between BIOS Laboratories, Inc. (the
"Company") and Connecticut Innovations, Incorporated (the "Holder"),
the Company hereby exercises its right to purchase, and does hereby
purchase upon the Holder's receipt of the Call Price, all of the
Conversion Shares held by Holder.
2. The Call Price is to be paid in the manner set forth in the Agreement.
3. All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings ascribed to them in the Agreement.
BIOS LABORATORIES, INC.
By:
---------------------------------
Title:
------------------------------
Date:
-------------------------------