Document:

Warburg Rights

Exhibit 10.33

 

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT, dated as of March 19, 1999, by and between
SangStat Medical Corporation, a Delaware corporation (the "Company"), and Warburg Dillon Read LLC
(the "Purchaser") entered into in connection with the issuance of one or more Convertible Notes due
2004 convertible into shares of Common Stock, par value $.001 per share ("Common Stock") of the
Company.

 

1.Certain Definitions.

For purposes of this Registration Rights Agreement, the following terms shall
have the following respective meanings:

(a)"Commission" shall mean the Securities and Exchange Commission, or
any other federal agency at the time administering the Exchange Act or the Securities Act, whichever
is the relevant statute for the particular purpose.

(b)"Convertible Note" shall mean any of the Convertible Notes due 2004
of the Company to be issued and sold to the Purchaser pursuant to the Convertible Note Purchase
Agreement dated as of March 19, 1999, and any Convertible Note issued in exchange therefor or in
lieu thereof.

(c)"Effective Time" shall mean the date on which the Commission
declares the Shelf Registration effective or on which the Shelf Registration otherwise becomes
effective.

(d)"Exchange Act" shall mean the Securities Exchange Act of 1934, or
any successor thereto, as the same shall be amended from time to time.

(e)"Issue Date" shall mean the date on which a Convertible Note is
initially issued.

(f)The term "person" shall mean a corporation, association,
partnership, organization, business, individual, government or political subdivision thereof or
governmental agency.

(g)"Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.

(h)"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.

(i)"Shares" means the shares of Common Stock issuable upon exercise of
the Convertible Note.

(j)"Shelf Registration" shall have the meaning assigned thereto in
Section 2 hereof.

In addition, capitalized terms not defined herein shall have the meaning ascribed
in the Convertible Note.

2.Shelf Registration of Shares.

(a)Not later than December 19, 1999, the Company shall file under the
Securities Act a "shelf" registration statement providing for the registration of, and the sale on a
continuous or delayed basis by the Purchaser of, all Shares issuable upon conversion of the
Convertible Notes, pursuant to Rule 415 under the Securities Act and/or any similar rule that may be
adopted by the Commission (the "Shelf Registration"). The Company agrees to use its best efforts to
cause the Shelf Registration to become or be declared effective no later than 45 calendar days
after the filing thereof and to keep such Shelf Registration continuously effective for a period
ending on the earliest to occur of (i) the second anniversary of the last Issue Date of any
Convertible Note, (ii) notification to the Company by the Purchaser that it has sold all Shares
issuable upon conversion of the Convertible Notes so owned by it, or (iii) such time as the
Purchaser may sell all of such shares pursuant to Rule 144(k) under the Securities Act. The Company
further agrees, if necessary, to supplement or make amendments to the Shelf Registration, if
required by the rules, regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration or by the Securities Act or rules and regulations thereunder for
shelf registration, and the Company agrees to furnish to the Purchaser copies of any such supplement
or amendment prior to its being used and/or filed with the Commission, and will not file any such
supplement or amendment to which the Purchaser reasonably objects.

(b)Notwithstanding the foregoing, following the effectiveness of the Shelf
Registration, the Company may, at any time, suspend the effectiveness of such Shelf Registration for
up to 60 days, as appropriate (a "Suspension Period"), by giving notice to the Purchaser, if the
Company shall have determined that the Company may be required to disclose any material corporate
development which disclosure may have a material adverse effect on the Company. The Company will use
its best efforts to minimize the length of any Suspension Period. Notwithstanding the foregoing, no
more than one Suspension Period may occur within any 180 day period, and no Suspension Period shall
be effective at any time the Company or any affiliate of the Company is publicly offering shares of
the capital stock of the Company. The Purchaser agrees that, upon receipt of any notice from the
Company of a Suspension Period, the Purchaser shall forthwith discontinue disposition of shares
covered by the Shelf Registration until the Purchaser (i) is advised in writing by the Company that
the use of the applicable prospectus may be resumed, (ii) has received copies of a supplemental or
amended prospectus, if applicable, and (iii) has received copies of any additional or supplemental
filings which are incorporated or deemed to be incorporated by reference in such prospectus.

3.Registration Procedures.

(a)In connection with any obligation of the Company to register Shares or the
Convertible Note (collectively, "Securities"), the Company shall use its best efforts to effect or
cause such registration to permit the sale of the Securities by the Purchaser in accordance with the
intended method or methods of distribution thereof described in the applicable registration
statement. In connection therewith, the Company shall, within the time specified above:
(i)prepare and file with the Commission a registration statement on any
form which may be utilized by the Company and which shall permit the disposition of the Securities
in accordance with the intended method or methods thereof, as specified in writing by the
Purchaser;

(ii)comply with the provisions of the Securities Act with respect to the
disposition of all of the Securities covered by such registration statement in accordance with the
intended methods of disposition by the Purchaser set forth in such registration statement;

(iii)provide (A) the Purchaser, (B) the underwriters (which
term, for purposes of these Registration Rights, shall include a person deemed to be an underwriter
within the meaning of Section 2(11) of the Securities Act), if any, thereof, (C) the sales
or placement agent, if any, therefor, (D) counsel for such underwriters or agent, and
(E) counsel for the Purchaser the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the Commission, and each
amendment or supplement thereto; 

(iv)for a reasonable period prior to the filing of such registration
statement, and throughout the periods specified in Section 2 hereof, make available for
inspection by the parties referred to in Section 3(a)(iii) above who shall certify to the
Company that they have a current intention to sell the Securities pursuant to the registration
statement such financial and other information and books and records of the Company, and cause the
officers, employees, counsel and independent certified public accountants of the Company to respond
to such inquiries, as shall be reasonably necessary, in the judgment of the respective counsel
referred to in such Section, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that each such party shall
be required to maintain in confidence and not to disclose to any other person any information or
records provided by the Company until such time as (A) such information becomes a matter of
public record (whether by virtue of its inclusion in such registration statement or otherwise), or
(B) such person shall be required so to disclose such information pursuant to the subpoena or
order of any court or other governmental agency or body having jurisdiction over the matter (subject
to the requirements of such order, and only after such person shall have given the Company prompt
prior written notice of such requirement), or (C) such information is required to be set forth
in such registration statement or the prospectus included therein or in an amendment to such
registration statement or an amendment or supplement to such prospectus in order that such
registration statement, prospectus, amendment or supplement, as the case may be, does not contain an
untrue statement of a material fact or omit to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;

(v)promptly notify the Purchaser, the sales or placement agent, if any,
therefor and the managing underwriter or underwriters, if any, thereof and confirm such advice in
writing, (A) when such registration statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to
such registration statement or any post-effective amendment, when the same has become effective,
(B) of any comments by the Commission and by the Blue Sky or securities commissioner or
regulator of any state with respect thereto or any request by the Commission for amendments or
supplements to such registration statement or prospectus or for additional information, (C) of
the issuance by the Commission of any stop order suspending the effectiveness of such registration
statement or the initiation or overt threatening of any proceedings for that purpose, (D) if at
any time the representations and warranties of the Company contemplated by Section 5 hereof
cease to be true and correct in all material respects, (E) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or overt threatening of any proceeding for such purpose, or
(F) at any time when a prospectus is required to be delivered under the Securities Act, if such
registration statement, prospectus, prospectus amendment or supplement or post-effective amendment,
or any document incorporated by reference in any of the foregoing, contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then existing;

(vi)use its best efforts to obtain the withdrawal of any order suspending
the effectiveness of such registration statement or any post-effective amendment thereto at the
earliest practicable date;

(vii)if requested by any managing underwriter or underwriters, any
placement or sales agent or the Purchaser, promptly incorporate in a prospectus supplement or post-
effective amendment such information as is required by the applicable rules and regulations of the
Commission that such managing underwriter or underwriters, such agent or the Purchaser specify
should be included therein relating to the terms of the sale of such Securities, including, without
limitation, information with respect to the amount or number of Securities being sold by the
Purchaser or agent or to any underwriters, the name and description of the Purchaser, agent or
underwriter, the offering price of such Securities and any discount, commission or other
compensation payable in respect thereof, the purchase price being paid therefor by such underwriters
and with respect to any other terms of the offering of the Securities to be sold by the Purchaser or
agent or to such underwriters; and make all required filings of such prospectus supplement or post-
effective amendment promptly after notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;

(viii)furnish to the Purchaser, each placement or sales agent, if any,
therefor, each underwriter, if any, thereof and the respective counsel referred to in
Section 3(a)(iii) a copy of such registration statement in the form in which it became
effective, each such amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein) and such number of copies of such registration
statement (excluding exhibits thereto and documents incorporated by reference therein unless
specifically so requested by the Purchaser, agent or underwriter, as the case may be) and of the
prospectus included in such registration statement (including each preliminary prospectus and any
summary prospectus), in conformity with the requirements of the Securities Act, and such other
documents, as the Purchaser, agent, if any, and underwriter, if any, may reasonably request in order
to facilitate the offering and disposition of the Securities owned by the Purchaser, offered or sold
by such agent or underwritten by such underwriter and to permit the Purchaser, agent and underwriter
to satisfy the prospectus delivery requirements of the Securities Act; and the Company hereby
consents to the use of such prospectus (including such preliminary and summary prospectus) and any
amendment or supplement thereto by the Purchaser and by any such agent and underwriter, in each case
in the form most recently provided to such party by the Company, in connection with the offering and
sale of the Securities covered by the prospectus (including such preliminary and summary prospectus)
or any supplement or amendment thereto;

(ix)use its best efforts to (A) register or qualify the Securities
to be included in such registration statement under such securities laws or blue sky laws of such
jurisdictions as the Purchaser and each placement or sales agent, if any, therefor and underwriter,
if any, thereof shall reasonably request, (B) keep such registrations or qualifications in
effect and comply with such laws so as to permit the continuance of offers, sales and dealings
therein in such jurisdictions during the respective periods such registration statements are
required to remain effective under Section 2 above and for so long as may be necessary to
enable the Purchaser or any agent or underwriter to complete its distribution of Securities pursuant
to such registration statement and (C) take any and all other actions as may be reasonably
necessary or advisable to enable the Purchaser, agent, if any, and underwriter, if any, to
consummate the disposition in such jurisdictions of such Securities; provided,
however, that the Company shall not be required for any such purpose to (I) qualify as a
foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but
for the requirements of this Section 3(a)(ix) or (II) consent to general service of
process in any such jurisdiction;

(x)use its best efforts to obtain the consent or approval of each
governmental agency or authority, whether federal, state or local, which may be required to effect
the Shelf Registration or the offering or sale in connection therewith or to enable the Purchaser to
offer, or to consummate the disposition of, its Securities;

(xi)cooperate with the Purchaser and the managing underwriters, if any,
to facilitate the timely preparation and delivery of any certificates representing Securities to be
sold, which certificates shall be printed, lithographed or engraved, or produced by any combination
of such methods, and which shall not, once sold under the Shelf Registration, bear any restrictive
legends; and, in the case of an underwritten offering, enable such Securities to be in such
denominations and registered in such names as the managing underwriters may request at least two
business days prior to any sale of the Securities:

(xii)notify the Purchaser in writing of any proposal by the Company to
amend or waive any provision of these Registration Rights pursuant to Section 7(g) hereof and
of any amendment or waiver effected pursuant thereto, each of which notices shall contain the text
of the amendment or waiver proposed or effected, as the case may be;

(xiii)in the event that any broker-dealer registered under the Exchange
Act shall underwrite any Securities or participate as a member of an underwriting syndicate or
selling group or "assist in the distribution" (within the meaning of the Rules of Fair Practice and
the By-Laws of the National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as an
underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise,
assist such broker-dealer in complying with the requirements of such Rules and By-Laws, including,
without limitation, by providing such information to such broker-dealer as may be required in order
for such broker-dealer to comply with the requirements of the Rules of Fair Practice of the
NASD;

(xiv)comply with all applicable rules and regulations of the Commission,
and make generally available to its security holders as soon as practicable but in any event not
later than eighteen months after the effective date of such registration statement, an earning
statement of the Company and its subsidiaries complying with Section 11(a) of the Securities
Act (including, at the option of the Company, Rule 158 thereunder); and

(xv)use its best efforts to have the Shares approved for trading on the
Nasdaq National Market.

(b)In the event that the Company would be required, pursuant to
Section 3(a)(v)(F) above, to notify the Purchaser, the placement or sales agent, if any,
therefor and the managing underwriters, if any, thereof, the Company shall without delay prepare and
furnish to the Purchaser, to each placement or sales agent, if any, and to each underwriter, if any,
a reasonable number of copies of a prospectus supplemented or amended in form and substance
reasonably satisfactory to them, so that, as thereafter delivered to purchasers of Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading in light of
the circumstances then existing. The Purchaser agrees that upon receipt of any notice from the
Company pursuant to Section 3(a)(v)(F) hereof, the Purchaser shall forthwith discontinue the
disposition of Securities pursuant to the registration statement applicable to such Securities until
the Purchaser shall have received copies of such amended or supplemented prospectus, and if so
directed by the Company, the Purchaser shall deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in the Purchaser's possession of the prospectus
covering such Securities at the time of receipt of such notice.

(c)The Company may require the Purchaser to furnish to the Company such
information regarding the Purchaser and the Purchaser's intended method of distribution of the
Securities as the Company may from time to time reasonably request in writing, but only to the
extent that such information is required in order to comply with the Securities Act. The Purchaser
agrees to notify the Company as promptly as practicable of any inaccuracy or change in information
previously furnished by the Purchaser to the Company or of the occurrence of any event in either
case as a result of which any prospectus relating to such registration contains or would contain an
untrue statement of a material fact regarding the Purchaser or the Purchaser's intended method of
distribution of such Securities or omits to state any material fact regarding the Purchaser or the
Purchaser's intended method of distribution of such Securities required to be stated therein or
necessary to make the statements therein not misleading in light of the circumstances then existing,
and promptly to furnish to the Company any additional information required to correct and update any
previously furnished information or required so that such prospectus shall not contain, with respect
to the Purchaser or the distribution of such Securities, an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing. The Purchaser agrees that upon
delivering any notice to the Company pursuant to this Section 3(c), the Purchaser shall forthwith
discontinue the disposition of Securities pursuant to the registration statement applicable to such
Securities until the Purchaser shall have the received copies of such amended or supplemented
prospectus, and if so directed by the Company, the Purchaser shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in the Purchaser's possession
of the prospectus covering such Securities at the time of receipt of such notice.

4.Registration Expenses.

The Company agrees to bear and to pay or cause to be paid promptly upon request
being made therefor all expenses incident to the Company's performance of or compliance with these
Registration Rights including, without limitation, (i) all Commission and any NASD registration
and filing fees and expenses, (ii) all fees and expenses in connection with the qualification
of the Securities for offering and sale under the State securities and blue sky laws referred to in
Section 3(a)(x) hereof, including reasonable fees and disbursements of counsel for the
placement or sales agent or underwriters in connection with such qualifications, (iii) all fees
and expenses in connection with the approval for trading of the Shares on the Nasdaq National
Market, (iv) all expenses relating to the preparation, printing, distribution and reproduction of
each registration statement required to be filed hereunder, each prospectus included therein or
prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the
certificates representing the Securities and all other documents relating hereto, (v) internal
expenses (including, without limitation, all salaries and expenses of the Company's officers and
employees performing legal or accounting duties), and (vi) fees, disbursements and expenses of
counsel and independent certified public accountants of the Company (including the expenses of any
opinions or "cold comfort" letters required by or incident to such performance and compliance)
(collectively, the "Registration Expenses"). Notwithstanding the foregoing, the Purchaser shall pay
all agency fees and commissions and underwriting discounts and commissions attributable to the sale
of the Securities and the fees and disbursements of any counsel or other advisors or experts
retained by the Purchaser in connection therewith.

5.Representations and Warranties.

The Company represents and warrants to, and agrees with, the Purchaser that:

(a)Each registration statement covering Securities and each prospectus (including any
preliminary or summary prospectus) contained therein or furnished pursuant to Section 3(a)(ix)
hereof and any further amendments or supplements to any such registration statement or prospectus,
when it becomes effective or is filed with the Commission, as the case may be, and, in the case of
an underwritten offering of Securities, at the time of the closing under the underwriting agreement
relating thereto will conform in all material respects to the requirements of the Securities Act,
and will not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading; and at all
times subsequent to the Effective Time when a prospectus would be required to be delivered under the
Securities Act, other than from (i) such time as a notice has been given to the Purchaser
pursuant to Section 3(a)(vi)(F) hereof until (ii) such time as the Company furnishes an
amended or supplemented prospectus pursuant to Section 3(b) hereof, each such registration
statement, and each prospectus (including any summary prospectus) contained therein or furnished
pursuant to Section 3(c)(ix) hereof, as then amended or supplemented, will conform in all
material respects to the requirements of the Securities Act, and will not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the circumstances then
existing; provided, however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished in writing to the
Company by the Purchaser expressly for use therein.

(b)Any documents incorporated by reference in any prospectus referred to in Section 5(a)
hereof, when they become or became effective or are or were filed with the Commission, or if
amended, when amended, as the case may be, will conform or conformed in all material respects to the
requirements of the Exchange Act, and none of such documents will contain or contained an untrue
statement of a material fact or will omit or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided, however,
that this representation and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing to the Company by the
Purchaser expressly for use therein.

6.Indemnification.

(a)Indemnification by the Company. Upon the registration of Securities pursuant to
Section 2 hereof, and in consideration of the agreements of the Purchaser contained herein, and
as an inducement to the Purchaser to purchase the Convertible Notes, the Company shall, and it
hereby agrees to, indemnify and hold harmless the Purchaser and each person who participates as a
placement or sales agent or as an underwriter in any offering or sale of such Securities against any
losses, claims, damages or liabilities, joint or several, to which the Purchaser or any such agent
or underwriter may become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any registration
statement under which such Securities were registered under the Securities Act, or any preliminary,
final or summary prospectus contained therein or furnished by the Company to the Purchaser, agent or
underwriter, or any amendment or supplement thereto, or arise out of or are based upon the 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 the Company shall, and it hereby agrees to,
reimburse the Purchaser, such agent and such underwriter for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable to any
such person in any such case to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, or preliminary, final or summary prospectus, or amendment or
supplement in reliance upon and in conformity with written information furnished to the Company by
such person expressly for use therein. 

(b)Indemnification by the Purchaser and any Agents and Underwriters. The Company may
require, as a condition to including any Securities in any registration statement filed pursuant to
Section 2 hereof and to entering into any underwriting agreement with respect thereto, that the
Company shall have received an undertaking reasonably satisfactory to it from the Purchaser and from
each underwriter named in any such underwriting agreement, severally and not jointly, to
(i) indemnify and hold harmless the Company against any losses, claims, damages or liabilities
to which the Company may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact contained in such
registration statement, or any preliminary, final or summary prospectus contained therein or
furnished by the Company to the Purchaser, agent or underwriter, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by the Purchaser or underwriter expressly for use
therein, and (ii) reimburse the Company for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such action or claim as such expenses
are incurred.

(c)Notices of Claims, Etc. Promptly after receipt by an indemnified party under
subsection (a) or (b) above of written notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party
pursuant to the indemnification provisions of or contemplated by this Section 6, notify such
indemnifying party in writing of the commencement of such action; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to any indemnified
party other than under the indemnification provisions of or contemplated by Section 6(a) or
6(b) hereof. In case any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled
to participate therein and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. 

(d)Contribution. Each party hereto agrees that, if for any reason the indemnification
provisions contemplated by Section 6(a) or Section 6(b) are unavailable to or insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by indemnified party on the one hand and the indemnifying party on the
other from the issuance of the Convertible Notes and sale of the Securities. If, however, the
allocation provided by the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also the relative fault
of the indemnifying party and the indemnified party in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Purchaser on the other shall be deemed to be in the same proportion as the
total purchase price received by the Company upon issuance of the Convertible Note bears to the
difference between the proceeds from the offering of the Securities received by the Purchaser and
such purchase price. The relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates to information
supplied by such indemnifying party or by such indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contributions pursuant to this
Section 6(d) were determined by pro rata allocation (even if the Purchaser or any agents or
underwriters or all of them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred to in this
Section 6(d). The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. Notwithstanding the provisions
of this Section 6(d), the Purchaser shall not be required to contribute any amount in excess of
the amount by which the dollar amount of the proceeds received by the Purchaser from the sale of any
Securities (after deducting any fees, discounts and commissions applicable thereto) exceeds the
amount of any damages which the Purchaser have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission, and no underwriter shall be
required to contribute any amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to the public were offered to the public exceeds the
amount of any damages which such underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent misrepresentation. The
Purchaser's and any underwriters' obligations in this Section 6(d) to contribute shall be
several in proportion to the principal amount of Securities registered or underwritten, as the case
may be, by them and not joint.

(e)The obligations of the Company under this Section 6 shall be in addition to any
liability which the Company may otherwise have and shall extend, upon the same terms and conditions,
to each officer, director and partner of the Purchaser, any agent and any underwriter and each
person, if any, who controls the Purchaser or any agent or underwriter within the meaning of the
Securities Act; and the obligations of the Purchaser and any agents and underwriters contemplated by
this Section 6 shall be in addition to any liability which the Purchaser or any such agent or
underwriter, respectively, may otherwise have and shall extend, upon the same terms and conditions,
to each officer and director of the Company (including any person who, with his consent, is named in
any registration statement as about to become a director of the Company) and to each person, if any,
who controls the Company within the meaning of the Securities Act.

7.Miscellaneous.

(a)No Inconsistent Agreements. The Company represents, warrants, covenants and agrees
that it has not granted, and shall not grant, registration rights with respect to Securities or any
other securities which would be inconsistent with the terms contained in these Registration Rights.

(b)Specific Performance. The parties hereto acknowledge that there may be no adequate
remedy at law if any party fails to perform any of its obligations hereunder and that each party may
be irreparably harmed by any such failure, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled to compel specific
performance of the obligations of any other party under these Registration Rights in accordance with
the terms and conditions of these Registration Rights, in any court of the United States or any
State thereof having jurisdiction.

(c)Notices. Any notice or other communication required or permitted to be given
hereunder shall be deemed effectively given when personally delivered, telexed, transmitted by
facsimile or mailed by pre-paid certified mail, return receipt requested, or by telephone when
confirmed in writing by one of the preceding methods addressed as follows (as applicable):

If to the Company, to:

SangStat Medical Corporation

1505 Adams Drive

Menlo Park, CA 94025

Attention: General Counsel

Telephone Number: (650) 328-0300

Facsimile Transmission Number: (650) 328-8892

If to Warburg Dillon Read LLC, to:

Warburg Dillon Read LLC

677 Washington Blvd.

Stamford, CT 06901

Attention:General Counsel

Capital Markets

Telephone Number: (203) 719-3000

Facsimile Transmission Number: (203) 719-6097

or to such other address or number and to the attention of such other person as either party may
designate by written notice to the other party. Notice shall be effective upon actual receipt.

(d)Survival. The respective indemnities, agreements, representations, warranties and
each other provision set forth in these Registration Rights or made pursuant hereto shall remain in
full force and effect regardless of any investigation (or statement as to the results thereof) made
by or on behalf of the Purchaser, any director, officer or partner of the Purchaser, any agent or
underwriter or any director, officer or partner thereof, or any controlling person of any of the
foregoing.

(e)Law Governing. These Registration Rights shall be governed by and construed in
accordance with the laws of the State of New York.

(f)Headings. The descriptive headings of the several Sections and paragraphs of these
Registration Rights are inserted for convenience only, do not constitute a part of these
Registration Rights and shall not affect in any way the meaning or interpretation of these
Registration Rights.

(g)Entire Agreement; Amendments. These Registration Rights and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. These Registration Rights supersede
all prior agreements and understandings between the parties with respect to its subject matter.
These Registration Rights may be amended and the observance of any term of these Registration Rights
may be waived (either generally or in a particular instance and either retroactively or
prospectively) only by a written instrument duly executed by the Company and the Purchaser.

(h)Assignment. In connection with any permitted transfer of a Convertible Note or any
portion thereof in a principal amount of not less than $500,000 the Purchaser may assign its rights
hereunder in respect of such Convertible Note to the transferee. Upon such assignment the transferee
shall, insofar as the transferred Convertible Note is concerned, be entitled to all of the rights,
and be subject to all of the obligations, of the Purchaser under these Registration Rights, and all
references to the "Purchaser" herein shall thereafter be deemed to refer to the Purchaser, or such
transferee, or both, as the circumstances warrant; provided that the right to request
registration of Shares under Section 2 hereof may only be exercised by holders of a majority in
interest of the Securities then subject to these Registration Rights.

(i)Counterparts. This agreement may be executed by the parties counterparts, each of
which shall be deemed to be an original, but all such respective counterparts shall together
constitute one and the same instrument.

Agreed to and accepted as of the date referred to above.

SANGSTAT MEDICAL CORPORATION

 

By/s/ Jean-Jacques Bienaimé
Name: Jean-Jacques Bienaimé

Title: President & CEO

WARBURG DILLON READ LLC

 

By:/s/ Robert Morgan

Name: Robert Morgan

Title:Managing Director, Equities<PAGE>   1
                                                            Exhibit 10.30

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT OR SUCH LAWS.

                              BIO-PLEXUS, INC.

                             7.5% SECURED NOTE

No. R-1                                        Dated as of October 21, 1999

$3,000,000

FOR VALUE RECEIVED, the undersigned, BIO-PLEXUS, INC. (herein called the
"Company"), a corporation organized and existing under the laws of the State of
Connecticut, hereby unconditionally promises to pay to the order of Appaloosa
Investment Limited Partnership I, L.P., or its registered assigns (the
"Holder"), the principal sum of THREE MILLION DOLLARS ($3,000,000) in
immediately available lawful money of the United States of America, together
with interest on the unpaid balance hereof, in accordance with the terms and
conditions set forth below.
<PAGE>   2
     1.   Payment.

          1.1. Principal. The entire unpaid principal balance of this Note
shall be paid in full by the Company on the Due Date.

          1.2. Home Office Payment. The Company will pay to each Holder or any
transferee thereof all sums becoming due on this Note at the account/address to
be specified by such Holder or transferee for such purpose by notice to the
Company, by wire transfer of immediately available funds, or at such other
address or by such other method as such Holder or transferee shall have
designated by notice to the Company.

          1.3. Prepayment. Subject to Section 8.8, (i) upon at least ten days
prior notice to the Holder, this Note may be prepaid, without premium or
penalty, in whole or in part by the Company at any time and from time to time
and (ii) concurrently with the receipt of any proceeds received by the Company
in respect of any sale of Debentures pursuant to section 1.4 of the Subscription
Agreement, the Company shall make a mandatory prepayment of the Note in an
amount equal to 100% of such proceeds; provided, that, upon any prepayment under
(i) or (ii) above, all accrued and unpaid interest shall be paid on the
principal of the Note being repaid.

          1.4. Interest. The unpaid principal balance of this Note outstanding
at any time shall accrue interest, at a rate per annum equal to 7.5%. Interest
shall begin to accrue from the date hereof and shall be computed on the basis of
a year of 360 days and actual days elapsed and shall be payable in one lump sum
on the Due Date.

          1.5. Default Interest. If the Company shall fail to pay any principal
amount of, or interest on, or other amount payable under, this Note when due and
payable (whether at the Due Date, the Acceleration Date or otherwise), such
principal amount, interest or other amount shall thereafter bear interest, until
paid in full (after as well as before judgment) to the extent lawful, at a rate
per annum equal to 12%. The Company shall pay such default interest in cash on
demand from time to time.

          1.6. Limitation on Interest. No provision of this Note shall require
the payment or permit the collection of interest in excess of the maximum rate
which is permitted by Law. If any such excess interest is provided for herein,
or shall be adjudicated to be so provided for, then the Company shall not be
obligated to pay such interest in excess of the maximum rate permitted by Law,
and the right to demand payment of any such excess interest is hereby waived,
any other provisions in this Note to the contrary notwithstanding.

     2. Deliveries by the Company. Simultaneously with the execution of this
Note, the Company is delivering to the Holder the following:
<PAGE>   3
          (a) an opinion of the Company's counsel, dated as of the date hereof,
addressed to such Holder in the form of Exhibit 2(a) hereto;

          (b) a good standing certificate for the Company, dated no earlier than
seven days prior to the date hereof, from the State of Connecticut;

          (c) a copy of the resolutions of the Board of Directors authorizing
the execution of each of the Transaction Documents and the performance of the
transactions contemplated by the Transaction Documents which shall be certified
as true, correct and effective as of the date hereof by an officer of the
Company;

          (d) a duly executed copy of the Security Agreement in the form
attached hereto as Exhibit 2(d), and copies of any other Collateral
Documentation including Financing Statements required to perfect the Holder's
security interest in the Collateral;

          (e) duly executed warrants to purchase 1,000,000 shares of Common
Stock in the aggregate with an exercise price of $3 per share in the form
attached hereto as Exhibit 2(e)(i) (the "$3 Warrants") and duly executed
warrants to purchase 1,500,000 shares of Common Stock in the aggregate with an
exercise price of $5 per share in the form attached hereto as Exhibit 2(e)(ii)
(the "$5 Warrants", together with the $3 Warrants, the "Warrants"); and

          (f) the Holder's costs and expenses (including the reasonable fees and
expenses of its counsel, Fried, Frank, Harris, Shriver & Jacobson, in an
aggregate amount not to exceed $50,000 which amounts shall be deducted from the
proceeds of this Note and shall be wired transferred by the Holder, on behalf of
the Company, to one or more accounts designated by such party on or prior to the
date hereof) incurred in connection with the transactions contemplated hereby.

     3. Representations and Warranties of the Company. The Company represents
and warrants to the Holder as follows:

          3.1. Organization; Subsidiaries. (a) The Company is a corporation duly
organized and existing in good standing under the laws of the State of
Connecticut and has the corporate power to own its property and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary and where the failure to so qualify could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          (b) The Company does not have any Subsidiaries. Except as set forth on
Schedule 3.1(b), the Company does not own, directly or indirectly, or have the
right or obligation to acquire, any interest in any business
<PAGE>   4
association or other Person.

          3.2. Due Authorization. The Company has all right, power and authority
to enter into, deliver and perform the Transaction Documents to which it is a
party and to consummate the transactions contemplated thereby. The execution and
delivery of each Transaction Document by the Company and the performance by it
of the transactions contemplated thereby (including, without limitation, the
issuance and sale of this Note and the Warrants and issuance of shares of Common
Stock upon exercise of the Warrants) and compliance by the Company with all the
provisions of each Transaction Document (as applicable) has been duly authorized
by all requisite corporate proceedings on the part of the Company. Each of the
Transaction Documents has been duly executed and delivered on behalf of the
Company, and each such Transaction Document constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its respective terms, except to the extent that such enforceability (i) may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally or (ii) is subject to
general principles of equity. The shares of Common Stock issuable upon exercise
of the Warrants have been validly reserved for issuance, and upon issuance, will
be validly issued and outstanding, fully paid and nonassessable.

          3.3. Capitalization. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock, of which, as of the date
hereof, 13,643,308 shares were issued and outstanding, 579,650 shares were
reserved for issuance upon the exercise of outstanding stock options pursuant to
the Company's option plans, 1,395,386 shares were reserved for issuance upon the
exercise of the outstanding warrants, and 2,472,876 shares were reserved for
issuance upon the conversion of certain 6% Convertible Debentures due 2004 and
(ii) 3,000,000 shares of Preferred Stock, no par value (the "Preferred Stock"),
of which, as of the date hereof, no shares were issued and outstanding. All of
the outstanding shares of Common Stock are validly issued and are fully paid and
nonassessable. No class of Capital Stock of the Company is entitled to
preemptive rights. Except as set forth on Schedule 3.3, there are no outstanding
options, warrants, preemptive rights, subscription rights, calls or commitments
of any character whatsoever relating to, or securities or rights convertible
into, shares of any class of Capital Stock of the Company, or Contracts, by
which the Company is or may become bound to issue additional shares of its
Capital Stock or options, warrants or other rights to purchase or acquire any
shares of its Capital Stock. Except as set forth on Schedule 3.3, no warrants,
bonds, debentures, notes or other Indebtedness or other security having the
right to vote (or convertible into or exercisable for securities having the
right to vote) on any matters on which stockholders may vote were issued or
outstanding. Except as set forth on Schedule 3.3 or as contemplated by the
Transaction Documents, the Company is not a party to, and, to the Company's best
knowledge, there are, and immediately after the Closing, there will be, no
agreement,
<PAGE>   5
restriction or encumbrance (such as a preemptive or similar right of first
refusal, right of first offer, proxy, voting agreement, voting trust,
registration rights agreement, shareholders' agreement, etc., whether or not the
Company is a party thereto) with respect to the purchase, sale or voting of any
shares of Capital Stock of the Company (whether outstanding or issuable upon
conversion, exchange or exercise of outstanding securities) or other securities
of the Company pursuant to any provision of Law, the Certificate of
Incorporation or By-Laws, any agreement or otherwise. Except as set forth on
Schedule 3.3, no person has the right to nominate or elect one or more directors
of the Company. Immediately following the transactions contemplated hereby, the
Company's capitalization will be as set forth on Schedule 3.3. The Company has
not declared or paid any dividend or made any other distribution of cash, stock
or other property to its stockholders since January 1, 1996.

          3.4. SEC Reports Correspondence. The Company has filed all proxy
statements, reports and other documents required to be filed by it under the
Exchange Act from and after January 1, 1995 (collectively, the "SEC Reports").
Each SEC Report was in compliance in all material respects with the requirements
of its respective report form and did not on the date of filing contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and as of the date
hereof there is no fact or facts not disclosed in the SEC Reports which relate
specifically to the Company and which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

          3.5. Financial Statements. The financial statements (including any
related schedules and/or notes) included in the SEC Reports have been prepared
in accordance with GAAP consistently followed (except as indicated in the notes
thereto) throughout the periods involved and fairly present the consolidated
financial condition, results of operations, cash flows and changes in
stockholders' equity of the Company as of the respective dates thereof and for
the respective periods then ended (in each case subject, as to interim
statements, to changes resulting from year-end adjustments, none of which were
material in amount or effect). Except as set forth on Schedule 3.5, the Company
is not subject to any Liabilities, except (i) Liabilities in the respective
amounts reflected or reserved against in the Company's balance sheet as of
December 31, 1998 included in the SEC Reports or (ii) Liabilities incurred in
the ordinary course of business since
<PAGE>   6
December 31, 1998 which could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

          3.6. No Material Adverse Change. Since December 31, 1998, no event has
occurred or failed to occur which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

          3.7. Intellectual Property Rights. Schedule 3.7 sets forth a complete
and correct list of all Intellectual Property of the Company (the "Company
Intellectual Property"). Except as set forth on Schedule 3.7, the Company owns
and possesses all right, title and interest in, or possesses adequate licenses
to (without the making of any payment to others or the obligation to grant
rights to others in exchange) all the Company Intellectual Property, free and
clear of any Liens, licenses or other restrictions. The Company has the right to
require the applicant of any Company Intellectual Property which is an
application, including but not limited to patent applications, trademark
applications, service mark applications, copyright applications, or mask work
applications, to transfer ownership to the Company of the application and of the
registration once it issues. All registered patents, trademarks, service marks
and copyrights listed on Schedule 3.7 are valid and subsisting and in full force
and effect. The Company Intellectual Property is all the Intellectual Property
that is necessary for the ownership, maintenance and operation of the Company's
properties and assets and the Company has the right to use all of the Company
Intellectual Property in all jurisdictions in which the Company conducts or
proposes to conduct its business, and the consummation of the transactions
contemplated hereby will not alter or impair any such rights. The Company has
never agreed to indemnify any person for or against any interference,
infringement, misappropriation or other conflict with respect to any Company
Intellectual Property. Except as set forth in Schedule 3.7, no third party has
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Company Intellectual Property. The Company has taken all reasonably
necessary and desirable action to maintain and protect each item of Company
Intellectual Property. The validity, ownership, enforceability, use or legality
of the Company Intellectual Property is not being questioned or opposed in any
Litigation or Order to which the Company or any Person who has granted a license
of Intellectual Property to the Company, is a party or subject, nor, to the
knowledge of the Company, is any such Litigation or Order threatened. The
conduct of the Company as currently conducted and as currently proposed to be
conducted does not and will not infringe, interfere with, misappropriate or
otherwise come into conflict with any Intellectual Property of any other Person,
and the Company has not received any charge, complaint, claim, demand or notice
alleging any such infringement, interference, misappropriation or conflict
(including any claim that the Company must license or refrain from using any
Intellectual Property of any other Person). Except as set forth on Schedule 3.7,
the Company has not granted any licenses of Intellectual Property to any Person.
<PAGE>   7
          3.8. Existing Indebtedness; Future Liens. (a) Schedule 3.8 sets forth
a complete and correct list of all outstanding Indebtedness of the Company as of
the date hereof. Except as set forth on Schedule 3.8, the Company has not
defaulted and no waiver of default is currently in effect, in the payment of any
principal or interest on any such Indebtedness and no event or condition exists
with respect to any such Indebtedness that would permit (or that with notice or
the lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment. The Company has not received any notice
from any Person declaring or threatening to declare any Indebtedness owed by the
Company to such Person due and payable prior to the stated maturity of such
Indebtedness or before its regularly scheduled dates of payment.

               (b) The Company has not agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to any Lien
(other than Permitted Liens).

          3.9. Litigation. (a) Except as set forth on Schedule 3.9, there is no
Litigation pending or, to the knowledge of the Company, threatened against the
Company or any of its properties or assets by or before any court, arbitrator or
other Governmental Entity.

          (b) The Company is not in default under or in breach of any Order of
any court, arbitrator or other Governmental Entity, and the Company is not
subject to or a party to any Order of any court, arbitrator or other
Governmental Entity arising out of any claim, demand, notice, action, suit or
proceeding under any Law.

          3.10. Compliance with Laws. The Company is in compliance with all
applicable Laws including, without limitation, all rules, regulations and other
Laws of the Food and Drug Administration relating to the design, development,
manufacturing, sales and distribution of safety medical products and
accessories, except where the failure to comply could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. No
Order has been issued nor any Law enacted which prevents, nor does any Law
prohibit the consummation of the transactions contemplated by any of the
Transaction Documents.

          3.11. Offering of the Securities. In connection with offering of this
Note and the issuance of the Warrants, neither the Company nor any Person acting
on its behalf has offered the Note, the Warrants or any similar securities of
the Company for sale to, solicited any offers to buy the Note, the Warrants or
any similar securities of the Company from or otherwise approached or negotiated
with respect to the Company with any Person other than the Purchasers and other
"accredited investors" (as defined in Rule 501(a) under the Securities Act).
Neither the Company
<PAGE>   8
nor any Person acting on its behalf has taken or, except as contemplated hereby
will take any action (including, without limitation, any offering of any
securities of the Company under circumstances which would require the
integration of such offering with the offering of the Note and the issuance of
the Warrants under the Securities Act) which could reasonably be expected to
subject the offering, issuance or sale of the Note and the Warrants to the
registration requirements of Section 5 of the Securities Act or violate the
provisions of any securities, "blue sky", or similar law of any applicable
jurisdiction.

          3.12. Solvency. The Company is not, and after giving effect to the
issuance of this Note and the application of the proceeds therefrom will not be,
insolvent within the meaning of Title 11 of the United States Code or any
comparable state law provision.

          3.13. Security Documents. Except as set forth in Schedule 3.13, upon
proper filing of the Financing Statements (or assignments thereof) in the
offices of the Secretary of State of Connecticut with respect to the Company (or
assignments thereof) and in the locations identified in the Security Agreement,
the Liens granted under the Transaction Documents shall constitute a fully
perfected first priority security interest in all right, title and interest of
the Company in and to the personal property therein prior to any other security
interests against such property or interests therein.

          3.14. Disclosure. Neither any Transaction Document nor any Schedule
hereto and thereto, nor any certificate furnished to any Holder by or on behalf
of the Company in connection with the transactions contemplated hereby and
thereby, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not misleading. The financial forecasts furnished by the Company to the
Holder has been prepared in good faith based upon reasonable assumptions. There
is no fact or information relating to the Company that could reasonably be
expected to be material to the Company that has not been disclosed to the
Holder.

     4. Covenants of the Company. The Company covenants that for so long as this
Note is outstanding or any amounts are due and unpaid hereunder:

          4.1. Limitation on Indebtedness. The Company shall not, and shall not
permit any of its Subsidiaries to, create, incur, assume or directly or
indirectly guarantee or in any other manner become directly or indirectly liable
for the payment of any Indebtedness (excluding Permitted Indebtedness and
Indebtedness which is a Guaranty of an Indebtedness of the Company or any of its
Subsidiaries that is otherwise Permitted
<PAGE>   9
Indebtedness).

          4.2. Limitation on Encumbrances. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or otherwise suffer to exist or cause or otherwise suffer to become effective
any Lien in or on any right, title or interest to any property (real or
personal) that constitutes all or any portion of the Collateral (a "Restricted
Encumbrance," which term excludes the Lien created in favor of the Holder)
unless such Restricted Encumbrance is a Permitted Lien.

          4.3. Limitation on Dividends; Stock Issuances. The Company shall not
offer or issue any shares of Preferred Stock or Common Stock for any purpose
whatsoever, except for (i) shares of Common Stock issuable upon the exercise of
the Warrants and (ii) pursuant to Schedule 4.3. The Company shall not declare
any dividends on any shares of its Capital Stock, or make any payment on account
of, or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, retirement, exchange or other acquisition of any shares of its
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash,
securities, property or in obligations of the Company or any of its
Subsidiaries.

          4.4. Stockholders' Meetings. As promptly as practicable hereafter but
in no event no later than December 31, 1999, the Company shall take all action
necessary, in accordance with applicable Law and its Certificate of
Incorporation and By-laws, to convene a special meeting of its stockholders (the
"Company Meeting") for the purpose of considering and voting upon the approval
of the Rollover Transactions, including, without limitation, the issuance and
sale of the Convertible Notes, the Shares and the Rollover Warrant, and any
other transactions contemplated in furtherance thereof under applicable Law. The
Company will use its best efforts to obtain such stockholders' approval,
including, without limitation, taking all lawful actions to solicit such
approval. The Board of Directors will recommend that its stockholders vote in
favor of and approve the Rollover Transactions, including, without limitation,
the issuance and sale of the Convertible Notes, the Shares and the Warrants, and
any other transactions contemplated in furtherance thereof under applicable Law.

          4.5. Proxy Statement. The Company shall promptly prepare and file with
the SEC as soon as practicable the Proxy Statement, which shall comply as to
form in all material respects with the applicable provisions of the Exchange Act
and the rules and regulations thereunder. The Company shall use its best
efforts, and the Holder will cooperate with the Company, to have the Proxy
Statement cleared by the SEC as promptly as practicable. The Company shall, as
promptly as practicable, provide copies of any written
<PAGE>   10
comments received from the SEC with respect to the Proxy Statement to the Holder
and advise the Holder of any oral comments with respect to the Proxy Statement
received from the SEC. The Holder agrees that none of the information supplied
or to be supplied by it for inclusion or incorporation by reference in the Proxy
Statement and each amendment or supplement thereto, at the time of mailing
thereof and at the time of the Company Meeting, will contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company agrees
that none of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Proxy Statement and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the Company Meeting, will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Company will provide the Holder with a reasonable
opportunity to review and comment on the Proxy Statement and any amendment or
supplement thereto prior to filing such with the SEC, and will provide the
Holder with a copy of all such filings made with the SEC. No amendment or
supplement to the information supplied by the Holder for inclusion in the Proxy
Statement shall be made without the approval of such Holder, which approval
shall not be unreasonably withheld or delayed.

          4.6. Operations in Accordance with the Business Plan. The business and
operations of the Company and its Subsidiaries shall be conducted in accordance
with a business plan of the Company approved by the Holder.

          4.7. Proceeds. The proceeds of the sale of this Note shall be used for
the purposes set forth on Schedule 4.7. No part of the proceeds from the sale of
this Note hereunder shall be used, directly or indirectly, for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective meanings of
Regulation U of the Board of Governors of the Federal Reserve System or for any
purpose which violates or would be inconsistent with the provisions of
Regulations T, U or X of said Board.

          4.8. Additional Offerings of Securities. The Company shall not seek
financing from any third party consisting of an issuance of Equity Securities
without the written consent of the Holder (which may be withheld at the Holder's
absolute discretion).

          4.9. Existence. Neither the Company nor any of its Subsidiaries shall
enter into any transaction for the acquisition of, or merger or consolidation or
amalgamation with, any other Person (including any Subsidiary or Affiliate of
the Company or any of its Subsidiaries), or enter into any transaction or series
of transactions that could result in a Change of Control, or sell, transfer or
otherwise dispose of
<PAGE>   11
("Transfer") all or substantially all of its assets in one transaction or series
of transactions to any Person, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or make any material change in the
present method of conducting business or engage in any type of business other
than of same general type now conducted by it. The Company shall not, and shall
not permit any of its Subsidiaries to, Transfer any property or assets, unless
the property or asset that is the subject of such Transfer constitutes (i)
inventory held for sale, (ii) marketable securities available for sale, or (iii)
real estate, equipment, fixtures, supplies or materials no longer required in
the operation of the business of the Company or such Subsidiary or that is
obsolete, and, in the case of any Transfer described in clause (i) or (iii),
such Transfer is in the ordinary course of business consistent with past
practice.

          4.10. Access. Subject to a written confidentiality agreement, the
Company shall, and shall cause the Company's officers, directors, employees and
agents to, afford to the Holder and each of its Affiliates, officers, directors,
employees, counsel, investment bankers, accountants, advisors, agents and other
representatives (collectively, "Representatives"), reasonable access during
normal business hours to its officers, employees, accountants, agents,
properties, offices and other facilities, and to the books and records of the
Company (including, without limitation, all interim financial statements, tax
returns and work papers of its accountants), legal documents of the Company, and
shall furnish the Holder and its Representatives all financial, operating,
technical and other data and information which any of them may from time to time
reasonably request.

          4.11. Release of Liens. The Company shall take all actions necessary
to promptly (but in no event later than seven days from the date hereof) file
necessary documentation to remove evidence of any prior liens and/or security
interests on any Company Intellectual Property (other than security interests on
any Company Intellectual Property granted to Holder in connection with the
transactions contemplated hereby), including, without limitation, all prior
liens and/or security interests on any Company Intellectual Property on record
with the United States Patent and Trademark Office.

          4.12. 6% Convertible Debentures due 2004. The Company shall not
exercise its Put Option without the written consent of the Holder.

     5. Events of Default and Remedies.
<PAGE>   12
          5.1. Events of Default and Remedies. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any Order of any court or any Order, rule or
regulation of any Governmental Entity) (or if the giving of notice or lapse of
time or both is required, then, prior to such notice or lapse of time, a
"Default"):

               (a) default in the payment of any interest upon this Note
     when it becomes due and payable; or

               (b) default in the payment of any principal of this Note when it
     becomes due and payable; or

               (c) default in the performance of any agreement or covenant in,
     or provision of, this Note or the other documents executed and delivered in
     connection with this Note (including any other Transaction Document) and to
     which the Company or any of its Subsidiaries is a party (other than a
     covenant or a default in whose performance is elsewhere in this Section
     specifically dealt with) which is not cured within thirty (30) days, or any
     representation or warranty made in any document executed and delivered in
     connection with this Note (including any other Transaction Document) was
     false in any material respect on the date as of which made or deemed made;
     or

               (d) the Company Meeting shall not have been held on or prior to
     December 31, 1999 or the approval of the Company's stockholders described
     in Section 4.4 shall not have been obtained at the Company Meeting on or
     prior to December 31, 1999; or

               (e) the Company or any of its Subsidiaries shall: (A) default in
     any payment of principal of or interest on any Indebtedness (other than
     this Note and any intercompany debt) or in the payment of any Guarantee,
     beyond the period of grace, if any, provided in the instrument or agreement
     under which such Indebtedness or Guarantee was created; or (B) default in
     the observance or performance of any other agreement or condition relating
     to any such Indebtedness or Guarantee or contained in any instrument or
     agreement evidencing, securing or relating thereto, or any other event
     shall occur or condition exist, the effect of which default or other event
     or condition is to cause, or to permit the holder or holders of such
     Indebtedness or beneficiary or beneficiaries of such Guarantee (or a
     trustee or agent on behalf of such holder or holders or beneficiary or
     beneficiaries) to cause, with
<PAGE>   13
     the giving of notice if required, such Indebtedness to become due prior to
     its stated maturity, any applicable grace period having expired, or such
     Guarantee to become payable, any applicable grace period having expired,
     provided that the aggregate principal amount of all such Indebtedness and
     Guarantee which would then become due or payable as described in this
     Section 5.1(e) would equal or exceed $100,000; or

               (f) a final judgment or judgments for the payment of money are
     entered by a court or courts of competent jurisdiction against the Company
     or any of its Subsidiaries and such remains undischarged for a period
     (during which execution shall not effectively be stayed) of 60 days,
     provided that the aggregate of all such judgments that are not covered by
     insurance under which the Company or a Subsidiary is a beneficiary exceeds
     $100,000, or the Holder shall determine that any regulatory body having
     jurisdiction over the Company or any of its Subsidiaries including, without
     limitation, the SEC, shall have taken or proposed to take any action that
     the Holder believes could, individually or in the aggregate, reasonably be
     expected to have a Material Adverse Effect or that adversely affects the
     Holder's security interest in the Collateral; or

               (g) the Company or any of its Subsidiaries (i) is generally not
     paying, or admits in writing its inability to pay, its debts as they become
     due, (ii) files, or consents by answer or otherwise to the filing against
     it of, a petition for relief or reorganization or arrangement or any other
     petition in bankruptcy, for liquidation or to take advantage of any
     bankruptcy, insolvency, reorganization, moratorium or other similar law of
     any jurisdiction, (iii) makes an assignment for the benefit of its
     creditors, (iv) consents to the appointment of a custodian, receiver,
     trustee or other officer with similar powers with respect to it or with
     respect to any substantial part of its property, (v) is adjudicated as
     insolvent or to be liquidated, or (vi) takes corporate action for the
     purpose of any of the foregoing; or

               (h) a court or other Governmental Entity of competent
     jurisdiction enters an Order appointing, without consent by the Company or
     any of its Subsidiaries, a custodian, receiver, trustee or other officer
     with similar powers with respect to it or with respect to any substantial
     part of its property, or constituting an order for relief or approving a
     petition for relief or reorganization or any other petition in bankruptcy
     or for liquidation or to take advantage of any bankruptcy or insolvency law
     of any jurisdiction, or ordering the dissolution, winding-up or liquidation
     of the Company or any of its Subsidiaries, or any such petition shall be
     filed against the Company or any of its Subsidiaries and such petition
     shall not be
<PAGE>   14
     dismissed within 60 days; or

               (i) a court or other Governmental Entity of competent
     jurisdiction enters a final judgment holding this Note or any of the
     documents delivered in connection with this Note (including any other
     Transaction Document) to be invalid or unenforceable and such judgment
     remains unstayed and in effect for a period of 20 consecutive days; or the
     Company or any of its Subsidiaries shall assert, in any pleading filed in
     such a court, that this Note or any of the documents delivered in
     connection with this Note (including any other Transaction Document) are
     invalid or unenforceable; or

               (j) any material provision of any Transaction Document shall for
     any reason cease to be valid, binding and enforceable in accordance with
     its terms (or the Company or any of its Subsidiaries shall challenge the
     enforceability of any Transaction Document or shall assert in writing, or
     engage in any action or inaction based on any such assertion, that any
     provision of any of the Transaction Documents has ceased to be or otherwise
     is not valid, binding and enforceable in accordance with its terms), or any
     first priority security interest created under any Transaction Document
     shall cease to be a valid and perfected security interest, or Lien in any
     of the Collateral purported to be covered thereby; or

               (k) the Company or any of its Subsidiaries shall default in the
     payment of any amounts due pursuant to the terms of any document executed
     and delivered by the Company or such Subsidiary in connection with this
     Note (other than payments elsewhere in this Section specifically dealt
     with).

          5.2. Acceleration of Maturity. If any Event of Default (other than an
Event of Default specified in clause (g), (h), (i) or (j) of Section 5.1) shall
have occurred and be continuing, the Holder may, by notice to the Company,
declare the entire unpaid principal amount of this Note, plus all accrued and
unpaid interest thereon (together with the Holder's costs and expenses pursuant
to Section 8.8) , to be immediately due and payable, and upon such declaration
all of such amount shall be immediately due and payable (the "Declared
Acceleration Date"), in each and every case without presentment, demand, protest
or further notice, all of which are hereby waived, anything in this Note to the
contrary notwithstanding; provided that if an Event of Default under clause (g),
(h), (i) or (j) of Section 5.1 shall have occurred, the entire unpaid principal
amount of this Note (to the full extent permitted by applicable Law), plus all
accrued and unpaid interest thereon (together with the Holder's costs and
expenses pursuant to Section 8.8), shall immediately become due and payable (the
"Automatic Acceleration Date"), without any declaration and without presentment,
demand, protest or further notice, all
<PAGE>   15
of which are hereby waived, anything in this Note to the contrary
notwithstanding.

          5.3. Other Remedies. If any Event of Default shall have occurred and
be continuing, from and including the date of such Event of Default to but not
including the date such Event of Default is cured or waived, each Holder may
enforce its rights by suit in equity, by action at law, or by any other
appropriate proceedings, whether for the specific performance (to the extent
permitted by Law) of any covenant or agreement contained in this Note or in aid
of the exercise of any power granted in this Note, and each Holder may enforce
the payment of any Note held by such Holder and any of its other legal or
equitable rights.

          5.4. Conduct; No Waiver; Collection Expenses. No course of dealing on
the part of the Holder, nor any delay or failure on the part of the Holder to
exercise any of its rights, shall operate as a waiver of such right or otherwise
prejudice the Holder's rights, powers and remedies. If the Company fails to pay,
when due, any payment in respect of this Note, the Company will pay such Holder,
to the extent permitted by Law, on demand, all costs and expenses incurred by
such Holder in the collection of any amount due in respect of this Note
hereunder, including reasonable legal fees incurred by such Holder in enforcing
its rights hereunder.

          5.5. Annulment of Acceleration. If a declaration is made in accordance
with Section 5.2, then and in every such case, the Holder may, by an instrument
delivered to the Company, annul such declaration and the consequences thereof.

          5.6. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Holder under this Note is intended to be exclusive of any other
right or remedy, and every right and remedy shall be cumulative and in addition
to every other right and remedy given hereunder or now and hereafter existing
under applicable Law. Every right and remedy given by this Note or by applicable
Law to the Holder may be exercised from time to time and as often as may be
deemed expedient by such Holder.

     6.   Rollover.

          6.1. Rollover. Within five Business Days after the stockholders'
approval referred to in Section 4.4 has been obtained (the "Rollover Date"),
subject to Section 6.2, the Company and the Purchasers shall enter into (i) the
Convertible Note Purchase Agreement substantially in the form attached hereto as
Exhibit 6.1(i) (the "Convertible Note Purchase Agreement"), (ii) a warrant to
purchase 1,500,000 shares of Common Stock with an exercise price of $7
substantially in the form attached hereto as Exhibit 6.1(ii) (the "Rollover
Warrant"), (iii) the Registration Rights Agreement substantially in the form
attached hereto
<PAGE>   16
as Exhibit 6.1(iii) (the "Rollover Registration Rights Agreement") and (iv) the
Convertible Note Security Agreement substantially in the form attached hereto as
Exhibit 6.1(iv) (the "Convertible Note Security Agreement"); provided, however,
that if a Governmental Entity shall determine that any of the transactions
contemplated by the Rollover Transactions violate any applicable rules or
regulations of such Governmental Entity, the Holder shall, at the Holder's sole
discretion, either (i) abandon the Rollover Transactions or (ii) modify the
structure of the Rollover Transactions in a manner to comply with such rule or
regulation. Concurrently with the foregoing, subject to Section 6.2, the Company
shall issue 250,000 shares of Common Stock (the "Shares") to the Holder or one
or more of its Affiliates at $3.00 per share.

          6.2. Conditions to Rollover. (a) The obligation of each party to
consummate the Rollover Transactions shall be subject to there having been no
enactment, issuance, promulgation, enforcement or entering into of any Law by a
Governmental Entity that effects or has the effect of making any of the Rollover
Transactions illegal or otherwise restraining or prohibiting such transactions.

               (b) The obligation of the Purchasers to consummate the Rollover
Transactions shall be subject to the following conditions:

                    (i) no change (or any condition, event or development
          involving a prospective change) shall have occurred or be threatened
          that could, individually or in the aggregate, reasonably be expected
          to have a Material Adverse Effect;

                    (ii) no Default shall have occurred and be continuing;

                    (iii) concurrently with the consummation of the Rollover
          Transactions, the principal amount of this Note, plus all accrued and
          unpaid interest on this Note, shall have been repaid in full;

                    (iv) the final forms of the Convertible Note Purchase
          Agreement, the Rollover Warrant, the Rollover Registration Rights
          Agreement and the Convertible Note Security Agreement shall be
          satisfactory to the Purchasers in their sole discretion;

                    (v) the Company shall have delivered to the Purchasers any
          document, instrument or certificate required to be delivered by the
          Company pursuant to the Rollover Transaction Documents; and

                    (vi) each Purchaser shall have received such other
          instruments and documents reasonably requested by such Purchaser.

               (c) The obligation of the Company to consummate the
<PAGE>   17
Rollover Transactions shall be subject to the delivery by each Purchaser to the
Company of any document, instrument or certificate required to be delivered by
such Purchaser pursuant to the Rollover Transaction Documents.

          6.3. Failure to Consummate the Rollover Transactions. Notwithstanding
anything herein to the contrary, if the Company shall fail to consummate the
Rollover Transactions described in Section 6.1 for any reason whatsoever, then
the Company's sole liability to the Holder will be the: (i) payment of the
Holder's costs and expenses pursuant to Section 8.8; (ii) payment of principal
and interest under this Note (and default interest, if applicable); and (iii)
execution of the Registration Rights Agreement by the Company pursuant to
Section 6.4. In addition, for the avoidance of doubt, the Company acknowledges
and agrees that the Warrants are fully vested as of the date hereof and that
they shall remain in full force and effect even if the Rollover Transactions are
not consummated for any reason.

          6.4. Registration Rights Agreement. In the event the approval of the
Company's stockholders described in Section 4.4 shall not have been obtained at
the Company Meeting on or prior to December 31, 1999, or in the event that the
Rollover Transactions shall not have occurred on or prior to the Rollover Date,
the Company shall immediately execute the Registration Rights Agreement attached
hereto as Exhibit 6.3 (the "Registration Rights Agreement") and deliver such
executed Registration Rights Agreement by fax to the Holder.

     7.   Interpretation.

          7.1. Definitions.

          "$3 Warrants" shall have the meaning ascribed thereto in Section
1.4(vii).

          "$5 Warrants" shall have the meaning ascribed thereto in Section
1.4(vii).

          "Acceleration Date" shall mean the Declared Acceleration Date or the
Automatic Acceleration Date, as the case may be.

          "Action" shall have the meaning ascribed thereto in Section
8.1(b)(i).

          "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act. "Affiliate" shall also include partners of a Person.
Notwithstanding the foregoing, "Affiliate" shall not include the limited
partners of the Holder or any limited partners of a limited
<PAGE>   18
partner of the Holder.

          "Automatic Acceleration Date" shall have the meaning ascribed thereto
in Section 5.2.

          "Board of Directors" shall mean the Board of Directors of the
Company.

          "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by Law or executive order to close.

          "Capital Stock" means, in the case of the Company, any and all shares
(however designated) of the capital stock of the Company now or hereafter
outstanding.

          "Capitalized Lease" shall mean, with respect to any Person, any lease
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the lessee's
or user's balance sheet.

          "Capitalized Lease Obligation" of any Person shall mean and include,
as of any date as of which the amount thereof is to be determined, the amount of
the liability capitalized or disclosed (or which should be disclosed) in a
balance sheet of such Person in respect of a Capitalized Lease of such Person.

          "Change of Control" shall mean

                    (a) the acquisition by any individual, entity or group
          (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
          Act) of beneficial ownership (within the meaning of Rule 13d-3
          promulgated under the Exchange Act) of 30% or more of the combined
          voting power of the then outstanding Voting Securities of the Company,
          but excluding, for this purpose, any such acquisition by (i) the
          Company or any Subsidiary), (ii) any Benefit Plan (or related trust)
          of the Company or any Subsidiary or (iii) the Holder or any of its
          Affiliates or in connection with the Rollover Transactions; or

                    (b) the Incumbent Board shall cease for any reason to
          constitute at least 50% of the members of the Board.

          "Collateral" means all real and personal property and interests in
real and personal property including, without limitation, Intellectual Property,
rights under leases and royalty rights and agreements, now owned or hereafter
acquired by the Company or its Subsidiaries in or upon which a Lien is granted
or made under the Collateral Documentation.
<PAGE>   19
          "Collateral Documentation" means the Security Agreement, the Financing
Statements, and all other deeds of trust, assignments, endorsements, pledged
stock, collateral assignments and other instruments, documents, agreements or
conveyances at any time creating or evidencing Liens or assigning Liens to the
Holder, to secure the obligations of the Company or any of its Subsidiaries
under this Note and the Registration Rights Agreement.

          "Common Stock" shall mean the Common Stock, no par value, of the
Company.

          "Company" shall have the meaning ascribed thereto in the
Preamble.

          "Company Meeting" shall have the meaning ascribed thereto in
Section 4.4.

          "Contracts" shall mean all agreements, contracts, leases, purchase
orders, arrangements, commitments and licenses to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound.

          "Convertible Note Purchase Agreement" shall have the meaning ascribed
thereto in Section 6.1.

          "Convertible Note Security Agreement" shall have the meaning ascribed
thereto in Section 6.1.

          "Debentures" shall have the meaning ascribed thereto in the
Subscription Agreement.

          "Declared Acceleration Date" shall have the meaning ascribed thereto
in Section 5.2.

          "Default" shall have the meaning ascribed thereto in Section 5.1.

          "Due Date" shall mean the earlier of the Maturity Date and the
Acceleration Date, as applicable.

          "Environmental Laws" means any and all Laws, permits, concessions,
grants, franchises, licenses, agreements or governmental restrictions relating
to pollution and the protection of the environment or the release of any
materials into the environment, including but not limited to those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

          "Equity Interests" means any capital stock, partnership interest,
joint venture interest or other equity interest or warrants, options or other
rights to acquire any capital stock, partnership interest, joint venture
interest or other equity interest.

          "Equity Securities" shall mean with respect to any Person, shares of
capital stock or other equity interest of such Person, and any rights, options
or warrants to purchase stock or other securities exchangeable for or
convertible into capital stock of or other equity interest in the Company.
<PAGE>   20
          "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

          "Event of Default" shall have the meaning ascribed thereto in
Section 5.1.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include reference to the comparable section, if any, of any such successor
federal statute.

          "Financing Statements" means Form UCC-1 financing statements to be
filed in all jurisdictions necessary or desirable in order to perfect the
Holder's security interest in the Collateral and shall include any Form UCC-1
financing statements assigned to the Holder and filings to be made in the U.S.
Patent and Trademark Office and the U.S. Copyright Office.

          "GAAP" shall mean U.S. generally accepted accounting principles.

          "Governmental Entity" shall mean any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory or self-regulatory body or authority.

          "Guaranty" or "Guarantee" by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of any Person guaranteeing, or in effect
guaranteeing, any Indebtedness, dividend or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through an agreement,
contingent or otherwise, by such Person: (i) to purchase such Indebtedness or
obligation or any property or assets constituting security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or payment of such
Indebtedness or obligation, (iii) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of such Indebtedness or obligation, or (iv) otherwise to assure the
owner of the Indebtedness or obligation of the primary obligor against loss in
respect thereof. For the purposes of any computations made under this Note, a
Guarantee in respect of any Indebtedness for borrowed money shall be deemed to
be Indebtedness equal to the outstanding amount of the Indebtedness for borrowed
money which has
<PAGE>   21
been guaranteed, and a Guarantee in respect of any other Liability or any
dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such Liability or dividend.

          "Holder" shall have the meaning ascribed thereto in the Preamble.

          "Incumbent Board" shall mean the individuals who, immediately after
the Closing, constitute the Board of Directors; provided, however, that any
individual becoming a director subsequent to the Closing whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be deemed to be a member of the Incumbent Board.

          "Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (other than accounts
payable to suppliers and similar accrued liabilities incurred in the ordinary
course of business and paid in a manner consistent with industry practice), (v)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by such Person
whether or not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such Person, (vii) all Guarantees of such
Person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account of
such Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.

          "Indemnified Person" shall have the meaning ascribed thereto in
Section 8.1(b).

          "Intellectual Property" means (a) Patents, (b) all trademarks, service
marks, trade dress, logos, trade names, domain names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrightable works,
all copyrights and all applications, registrations and renewals in connection
therewith, (d) all mask works and all applications, registrations
<PAGE>   22
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, (h) all copies and tangible embodiments of the
foregoing (in whatever form or medium) and (i) all licenses, sublicenses,
permissions or agreements in connection with the foregoing.

          "Law" shall include any foreign, federal, state, or local law,
statute, rule, regulation, Order or other restriction of any court or other
Governmental Entity.

          "Liability" shall mean any debt, liability or obligation, whether
known or unknown, asserted or unasserted, accrued, absolute, contingent or
otherwise, whether due or to become due.

          "Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).

          "Litigation" shall mean any claim, demand, notice, action, suit,
proceeding, arbitration, investigation, civil, criminal or administrative
action, audit, inquiry or hearing by or before any Governmental Entity or
private arbitration tribunal.

          "Material Adverse Effect" shall mean a material adverse effect on (a)
the properties, business, prospects, operations, earnings, assets, Liabilities
or the condition (financial or otherwise) of the Company and its Subsidiaries
taken as a whole, whether or not in the ordinary course of business, (b) the
ability of the Company or any of its Subsidiaries to perform its obligations
under any of the Transaction Documents to which it is a party, (c) the validity
or enforceability of any of the Transaction Documents, (d) the rights, remedies,
powers and privileges of the Holder under any of the Transaction Documents or
(e) the timely payment or performance of the Secured Obligations.

          "Maturity Date" shall mean the earlier of December 31, 1999 and the
Rollover Date.
<PAGE>   23
          "Order" shall mean any judgment, order, injunction, ruling, decree,
stipulation or award of any Governmental Entity or private arbitration tribunal.

          "Patents" shall mean, collectively, (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice) and all
improvements thereon, (b) all patents, patent applications and patent
disclosures, (c) all reissues, divisions, continuations, revisions
reexaminations, renewals, extensions and continuations-in-part thereof) and (d)
all rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to sue for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.

          "Permitted Indebtedness" means, without duplication, any of the
following Indebtedness of the Company or any of its Subsidiaries, as the case
may be: (i) Indebtedness and obligations under this Note; (ii) any Indebtedness
and obligations outstanding on the date hereof, as set forth on Schedule 4.1; or
(iii) Indebtedness incurred in the ordinary course of business and consistent
with past practice not to exceed $10,000 individually or in the aggregate.

          "Permitted Liens" means: (i) Liens existing on the date hereof and set
forth on Schedule 4.2, all of which are subordinate to the Lien of the
Collateral Documentation except as set forth in Schedule 4.2; (ii) Liens (other
than any Lien imposed under ERISA or any Environmental Laws) for taxes,
assessments or charges of any Governmental Entity for claims not yet due or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with the
provisions of GAAP and enforcement thereof is stayed; (iii) Liens of landlords,
carriers, warehousemen, mechanics, materialmen and other Liens (other than any
Lien imposed under ERISA) not voluntarily granted for amounts not yet due or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with the
provisions of GAAP, and enforcement thereof is stayed; (iv) Liens (other than
any Lien imposed under ERISA), incurred or deposited made in the ordinary course
of business, including without limitation, surety bonds and appeal bonds, in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the
<PAGE>   24
performance of tenders, bids, leases, contracts (other than for the repayment of
indebtedness), statutory obligations and other similar obligations or arising as
a result of progress payments under government contracts; (v) easements
(including without limitation reciprocal easement agreements and utility
agreements), rights-of-way, covenants, consents, reservations, encroachments,
variations and other similar restrictions, charges or encumbrances (whether or
not recorded) and other Liens incurred in the ordinary course of business, which
do not secure indebtedness or the deferred purchase price of any asset and which
do not interfere materially with the ordinary conduct of the business of the
Company or any Subsidiary of the Company and which do not materially detract
from the value of the property to which they attach or materially impair the use
thereof to the Company or any Subsidiary of the Company; and (vi) building
restrictions, zoning laws and other statutes, laws, rules, regulations,
ordinances and restrictions, and any amendments thereto, now or at any time
hereafter adopted by any Governmental Entity having jurisdiction.

          "Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include any
successor (by merger or otherwise) of such entity.

          "Preferred Stock" shall have the meaning ascribed thereto in
Section 3.3.

          "Proxy Statement" shall mean the proxy statement in a definitive form
relating to the Company Meeting.

          "Put Option" shall have the meaning ascribed thereto in the
Subscription Agreement.

          "Purchaser" shall mean the purchasers listed on Exhibit A to the
Convertible Note Purchase Agreement.

          "Registration Rights Agreement" shall have the meaning ascribed
thereto in Section 6.3.

          "Representatives" shall have the meaning ascribed thereto in
Section 4.10.

          "Restricted Encumbrance" shall have the meaning ascribed thereto
in Section 4.2.

          "Rollover Date" shall have the meaning ascribed thereto in
Section 6.1.

          "Rollover Registration Rights Agreement" shall have the meaning
ascribed
thereto in Section 6.1.

          "Rollover Transactions" shall mean the transactions contemplated by
Section 6 of this Note.
<PAGE>   25
          "Rollover Transaction Documents" shall mean the Convertible Note
Purchase Agreement, the Rollover Warrant, the Rollover Registration Rights
Agreement, the Convertible Note Security Agreement and any documents and
instruments required to be executed or delivered pursuant to any of the
foregoing agreements.

          "Rollover Warrant" shall have the meaning ascribed thereto in
Section 6.1.

          "SEC" shall mean the United States Securities and Exchange
Commission.

          "SEC Reports" shall have the meaning ascribed thereto in Section
3.4.

          "Secured Obligations" shall mean any and all obligations of the
Company or any of its Subsidiaries at any time and from time to time for the
performance of its agreements, covenants and undertakings under or in respect of
the Transaction Documents to which it is a party.

          "Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.

          "Security Agreement" shall mean the agreement, dated as of the date
hereof, between Appaloosa Investment Limited Partnership I, L.P. and the
Company, providing for a security interest in the Collateral.

          "Shares" shall have the meaning ascribed thereto in Section 6.1.

          "Subscription Agreement" shall mean the Subscription Agreement, dated
as of April 21, 1999, by and among the Company and certain subscribers thereto.

          "Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof, (ii) any other Person (other than a corporation),
including without limitation a joint venture, in which such Person, one or more
Subsidiaries thereof or such Person and one or more Subsidiaries thereof,
directly or indirectly, at the date of determination thereof, has at least
majority ownership interest entitled to vote in the election of directors,
managers or trustees thereof (or other Persons performing similar functions),
(iii) the management of which is
<PAGE>   26
otherwise controlled, directly or indirectly, by such Person or (iv) any other
Person required to be consolidated with such Person in accordance with generally
accepted accounting principles. For purposes of this definition (and for the
determination of whether or not a Subsidiary is a wholly-owned Subsidiary of a
Person), any directors' qualifying shares or investment by foreign nationals
mandated by applicable law shall be disregarded in determining the ownership of
a Subsidiary.

          "Transaction Documents" shall mean this Note, the Warrants, the
Security Agreement, the Voting Agreement and the Registration Rights
Agreement.

          "Transfer" shall have the meaning ascribed thereto in 4.9.

          "Voting Securities" shall mean at any time shares of any class of
Capital Stock of the Company (or other corporation) which are then entitled to
vote generally in the election of directors of the Company (or such other
corporation).

          "Warrants" shall have the meaning ascribed thereto in Section
2(f).

          7.2. Accounting Principles. The character or amount of any asset,
liability, capital account or reserve and of any item of income or expense
required to be determined pursuant to this Note, and any consolidation or other
accounting computation required to be made pursuant to this Note, and the
construction of any definition in this Note containing a financial term, shall
be determined or made, as the case may be, in accordance with GAAP, to the
extent applicable, unless such principles are inconsistent with the express
requirements of this Note.

     8.   Miscellaneous.

          8.1. Payment; Indemnity; Taxes. (a) If the date on which any payment
under this Note is required to be made occurs on a day other than a Business
Day, such payment shall be due and payable on the next succeeding Business Day.

          (b) (i) The Company and its Subsidiaries shall jointly and severally
indemnify and hold harmless the Holder and its Representatives (each, an
"Indemnified Person") from and against any and all suits, actions, proceedings,
claims (collectively, "Actions"), damages, losses, Liabilities and out-of-pocket
expenses (including reasonable attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Note and the other Transaction Documents and the administration of such credit,
and in connection with or arising out of the transactions contemplated
<PAGE>   27
hereunder and thereunder and any actions or failures to act in connection
therewith.

               (ii) Upon receipt by any Indemnified Person of any Action against
such Indemnified Person with respect to which indemnity may be sought under this
Note or any other Transaction Document, such Indemnified Person shall promptly
notify the Company in writing, provided that failure so to notify the Company
shall not relieve the Company from any liability which the Company may have on
account of this indemnity or otherwise, except to the extent the Company shall
have been materially prejudiced by such failure. The Company shall, at its
option, assume the defense of any Action including the employment of counsel
reasonably satisfactory to the Indemnified Person. Any Indemnified Person shall
have the right to employ separate counsel in any such action and participate in
the defense thereof but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person, unless: (i) the Company has failed promptly
to assume the defense and employ counsel or (ii) the named parties to such
Action (including any impleaded parties) include such Indemnified Person and the
Company, and such Indemnified Person and the Company shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to the Company or there is or
may be a conflict between the Company and any Indemnified Person (in which case
the Company may not assume the defense). In the event that any Indemnified
Person shall become entitled to separate counsel under this Note or any other
Transaction Document, the Company shall not in such event be responsible
hereunder for the fees and expenses of more than one firm of separate counsel in
connection with any Action in the same jurisdiction, in addition to any local
counsel. In addition, the Company will not, without prior written consent of the
Indemnified Person, settle, compromise or consent to the entry of any judgment
in or otherwise seek to terminate any pending or threatened Action in which
indemnification may be sought hereunder (whether or not any Indemnified Person
is a party thereto) unless such settlement, compromise, consent or termination
includes an unconditional release of such Indemnified Person from all
liabilities and expenses arising out of such Action.

          (c) The Company shall bear all sales, documentary, transfer, stamp or
other similar taxes and all filing fees and expenses incurred in connection with
the transactions contemplated by this Note and shall indemnify and hold harmless
each Indemnified Purchaser from and against any such taxes.
<PAGE>   28
          8.2. Severability. If any term, provision, covenant or restriction of
this Note or any exhibit hereto is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Note and such exhibits shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such which may be hereafter declared invalid, void or
unenforceable.

          8.3. Specific Enforcement. The Holder, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Note were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Holder shall be entitled to an injunction to prevent
breaches of the provisions of this Note and to enforce specifically the terms
and provisions hereof in any court of the United States or any state thereof
having jurisdiction, this being in addition to any other remedy to which they
may be entitled at Law or equity.

          8.4. Entire Agreement. The Transaction Documents (including the
Schedules and Exhibits hereto and thereto) contain the entire understanding of
the parties with respect to the transactions contemplated hereby and thereby.

          8.5. Notices and other Communications. All notices, consents,
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be deemed given, if
in writing and delivered personally, by telecopy or sent by registered mail,
postage prepaid, if to:

          The Company, to:

          129 Reservoir Road
          Vernon, CT 06066
          Attention: Carl Sahi
          Fax: (860) 870-6118

          With a copy to:

          Pepe & Hazard LLP
          Goodwin Square
          Hartford, CT 06103
          Attention: Walter W. Simmers, Esq.
          Fax: (860) 522-2796

          The Holder, to:

          c/o Appaloosa Management, L.P.
          26 Main Street, 1st Floor
<PAGE>   29
          Chatham, New Jersey 07928
          Attention: Mr. James Bolin
          Fax: (973) 701-7055

          With a copy to:

          Fried, Frank, Harris, Shriver & Jacobson
          One New York Plaza
          New York, NY  10004
          Attention: Robert C. Schwenkel, Esq.
          Fax: (212) 859-4000

or to such other address as any party may, from time to time, designate in a
written notice given in a like manner.

          8.6. Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of the Holder and its respective
successors and assigns. The Company many not assign this Note without the
written consent of the Holder.

          8.7. Amendments. No amendment or waiver of any provision of this Note,
nor consent to any departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Holder and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

          8.8. Expenses. The Company agrees to promptly (but in no event later
than 2 business days) pay the Holder all costs and expenses (including the fees
and expenses of its counsel) incurred by it in connection with the transactions
contemplated hereby (to the extent not already paid by the Company on the date
hereof) and the Rollover Transactions (regardless of whether the Rollover
Transactions are consummated) upon the earlier to occur of (i) the prepayment of
the entire outstanding principal amount of the Note in accordance Section 1.3
and (ii) the Due Date. In addition, the Company agrees to pay to the Holder all
reasonable costs and expenses incurred by such Holder relating to any future
amendment or supplement to any of the Transaction Documents (or any proposal by
the Company for such amendment or supplement) whether or not consummated or any
waiver or consent with respect thereto (or any proposal for such waiver or
consent) whether or not consummated, and all costs and expenses of such Holder
relating to the enforcement of any of the Transaction Documents

          8.9 Survival. All covenants, agreements, representations and
warranties contained herein in connection with the transactions contemplated
hereby shall survive the date hereof and the delivery of the Transaction
Documents, regardless of any investigation made by or on behalf of any party;
provided, that, all covenants, agreements, representations and warranties
contained herein shall terminate when this Note and any amounts due hereunder
have been indefeasibly repaid in full; provided, however, that notwithstanding
anything to the contrary contained herein, Sections 6.3, 8.1(b), 8.2, 8.3, 8.4,
8.5 and 8.8 shall survive forever.
<PAGE>   30

          8.10. Public Announcements. Neither the Company nor the Holder shall
make any public statements, including, without limitation, any press releases,
with respect to this Note or the other Transaction Documents and the
transactions contemplated hereby or thereby without the prior written consent of
the other party (which consent shall not be unreasonably withheld) except as may
be required by Law. If a public statement is required to be made by Law, the
parties shall consult with each other in advance as to the contents and timing
thereof.

          8.11. Governing Law. thIS NOTE AND THE OTHER TRANSACTION DOCUMENTS
shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the State of NEW YORK EXCluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State.

          8.12. Submission to Jurisdiction. If any Litigation shall be brought
by the Holder in order to enforce any right or remedy under this Note or any of
the other Transaction Documents, the Company hereby consents and will submit,
and will cause each of its Subsidiaries to submit, to the jurisdiction of any
state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Note. The
Company hereby irrevocably waives any objection, including, but not limited to,
any objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
Litigation in such jurisdiction.

          8.13. Service of Process. Nothing herein shall affect the right of the
Holder to serve process in any other manner permitted by Law or to commence
legal proceedings or otherwise proceed against the Company in any other
jurisdiction.

          8.14. Waiver of Jury Trial. The Company hereby waives any right it may
have to a trial by jury in respect of any action, proceeding or litigation
directly or indirectly arising out of, under or in connection with, THIS NOTE OR
ANY OF THE OTHER TRANSACTION DOCUMENTS

<PAGE>   31

          IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the date first above written.

                                      BIO-PLEXUS, INC.

                                      By: /s/ Carl Sahi
                                         ------------------------------
                                         Name:  Carl Sahi
                                         Title: President & CEO

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