Document:

ex_10-2.htm

Exhibit 10.2

SECURED PROMISSORY NOTE

OF

WAFERGEN, INC.

	
$1,250,000

	
January 6, 2014

Wafergen, Inc., a Delaware corporation (the “Company”), for value received, hereby promises to pay to the order of IntegenX Inc., a California corporation (the “Holder”), at the address set forth in Section 8 hereof, in lawful money of the United States of America (“Dollars” or “$”) and in immediately available funds, the principal amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) (the “Principal”), plus all accrued and unpaid Interest (as defined below), as set forth in this Secured Promissory Note (this “Note”).  This Note is delivered pursuant to, and subject to the terms and conditions of, the Asset Purchase Agreement of even date herewith (the “Purchase Agreement”) by and between the Company and Holder.

 

The following is a statement of the rights of the Holder and the conditions to which this Note is subject, and to which the Company and, by the acceptance of this Note, the Holder agree:

 

    1.           Principal; Interest; Prepayment.

 

    (a)           Principal.  Principal shall be due and payable in a single installment on January 6, 2017 (the date the Principal shall be due, the “Maturity Date”).

 

    (b)           Interest. Interest on this Note (“Interest”), during the period from the date hereof through the Maturity Date, shall accrue at a fixed rate of eight per cent (8%) on the outstanding Principal balance, and shall be due and payable in a single installment on the Maturity Date.  Interest shall be calculated on the basis of a 360 day year.  The rate of interest payable under this Note from time to time shall in no event exceed the maximum rate, if any, permissible under applicable law.  If the rate of interest payable under this Note is ever reduced as a result of the preceding sentence and at any time thereafter the maximum rate permitted by applicable law shall exceed the rate of interest provided hereunder, then the rate provided for hereunder shall be increased to the maximum rate permitted by applicable law for such period as required so that the total amount of interest received by the Holder is that which would have been received by the Holder but for the operation of the preceding sentence.

 

    (c)           Prepayment.

 

    (i)           Optional Prepayment.  The Principal and Interest may be prepaid, in whole or in part, by the Company at any time, without the consent of the Holder and without premium or penalty.  If prepaid in part, such prepayment will be applied first to accrued but unpaid interest and then to unpaid principal.

 

    (ii)           Mandatory Prepayment.  If the Company or WaferGen Bio-Systems, Inc., a Nevada corporation and the sole member of the Company (“Parent”), completes an equity offering yielding net cash proceeds to the Company or Parent of at least $15,000,000 (a “Qualifying Equity Offering”), then the Principal and Interest shall be prepaid, without premium

 

  

  

  

or penalty, by the Company within forty-five (45) days of the closing of the Qualified Equity Offering.

 

2.           Security Agreement.  The Company’s performance of this Note is secured pursuant to that certain Security Agreement of even date herewith by and between Company and Holder (the “Security Agreement”).

 

3.           Events of Default.  If one or more of the following events (“Events of Default”) shall have occurred and be continuing:

 

(a)           the Company shall fail to pay when due (whether upon acceleration or otherwise) the Principal of, or Interest on, this Note and such failure to pay is not remedied within five (5) Business Days following written notice (as defined below);

 

(b)           the Company is in material breach of the Security Agreement, which breach shall not have been cured within fourteen (14) days after receipt of written notice thereof.

 

(c)           the Company shall commence a voluntary case or other proceeding seeking liquidation or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for itself or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors or shall take any corporate action to authorize any of the foregoing;

 

(d)           an involuntary case or other proceeding shall be commenced against the Company seeking liquidation or other relief with respect to its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official for them or any substantial part of their property, and such involuntary case or other proceeding shall remain undismissed for a period of ninety (90) days; or an order for relief shall be entered against the Company under bankruptcy laws as now or hereafter in effect; or

 

(e)           any of the preceding events set forth in Subsections (c) or (d) occurs with respect to the Parent,

 

then, and in every such event the Holder may, by written notice to the Company, declare this Note (together with accrued Interest thereon) to be, and the Principal (together with accrued Interest thereon) shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company.  As used herein, a “Business Day” means a day other than a Saturday, Sunday or a day on which commercial banks are authorized or required to be closed in the State of California.

 

4.           Payments; Extension of Maturity. All payments of the Principal and Interest to be made by the Company in respect of this Note shall be made in Dollars by wire transfer to an account designated by the Holder by written notice to the Company.  All amounts payable under this Note shall be subject to reduction by reason of Company’s or Parent’s setoff or counterclaim

 

 

  

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including pursuant to Section 6.6 of the Purchase Agreement.  If the Principal and accrued and unpaid Interest become due and payable on any day other than a Business Day, the Maturity Date shall be extended to the next succeeding Business Day, and to such payable amounts shall be added the Interest which shall have accrued during such extension period at the rate per annum herein specified. Upon payment of the Principal and accrued Interest, Holder’s rights under the Security Agreement and the Guaranty shall immediately terminate.

 

5.           Replacement of Note.  Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, and (in case of loss, theft or destruction) of indemnity reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and (if mutilated) upon surrender and cancellation of this Note, the Company shall make and deliver to the Holder a new note of like tenor in lieu of this Note.  Upon request by the Holder, the Company shall amend this Note and deliver to the holders a replacement note reflecting any decrease in the Principal pursuant to the terms of this Note.  Any replacement note made and delivered in accordance with this Section 5 shall be dated as of the date hereof.

 

6.           No Waivers by Delay or Partial Exercise.  No delay by the Holder in exercising any powers or rights hereunder shall operate as a waiver of such power or right, nor shall any single or partial exercise of any power or right preclude other or further exercise thereof, or the exercise of any other power or right hereunder or otherwise.

 

7.           Further Assurances.  The Holder and the Company agree to execute such other documents, instruments, agreements and consents, and take such other actions as may be reasonably requested by the other parties hereto to effectuate the purposes of this Note.

 

8.           Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, and if not, then on the next Business Day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent as follows:

 

	  	
If to the Holder:

	
IntegenX Inc.

	  	  	
5720 Stoneridge Drive, Suite 300

	  	  	
Pleasanton, California 94588

	  	  	
Facsimile:  (925) 574-7373

	  	  	
Attention: President

	  	  	  
	  	
with a copy to:

	
IntegenX Inc.

	  	  	
5720 Stoneridge Drive, Suite 300

	  	  	
Pleasanton, California 94588

	  	  	
Facsimile:  (925) 574-7373

	  	  	
Attention: General Counsel

 

  

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If to the Company:

	
Wafergen, Inc.

	  	  	
7400 Paseo Padre Parkway

	  	  	
Fremont, California 94555

	  	  	
Facsimile:  (510) 793-8992

	  	  	
Attention: Ivan Trifunovich

	  	  	  
	  	
with a copy to:

	
K&L Gates LLP

	  	  	
4350 Lassiter at North Hills Avenue, Suite 300

	  	  	
Raleigh, North Carolina 27609

	  	  	
Facsimile:  (919) 516-2028

	  	  	
Attention: D. Scott Coward, Esq.

Any of Company or Holder may change the address(es) to which notices to it are to be sent by giving notice of such change to the other party in accordance with this Section 8.

 

      9.           Headings.  Headings used in this Note are inserted for convenience only and shall not affect the meaning of any term or provision of this Note.

 

  10.           Assignment.  This Note and the rights and obligations hereunder shall not be assignable or transferable by the Holder without the prior written consent of the Company.   Any instrument purporting to make an assignment in violation of this Section 10 shall be void.

 

  11.           Miscellaneous.  This Note shall inure to the benefit of the Company and the Holder, and all their respective successors and permitted assigns.  Nothing in this Note is intended or shall be construed to give to any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Note or any provision herein contained.

 

  12.           GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

  

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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first above written.

	  	
WAFERGEN, INC.

 

 

	  	
By:

	
/s/ Ivan Trifunovich

	  	
Name:

	
Ivan Trifunovich

	  	
Title:

	
Chief Executive Officer

 

[SIGNATURE PAGE TO SECURED PROMISSORY NOTE]ex_10-3.htm

Exhibit 10.3

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (the “Agreement”) is made as of January 6, 2014, by and between WAFERGEN, INC., a Delaware corporation (the “Company”), and INTEGENX INC., a California corporation (the “Secured Party”).

 

RECITALS:

 

WHEREAS, Company and Secured Party contemplate entering into that certain Asset Purchase Agreement of even date herewith (the “Purchase Agreement”; capitalized terms used but not defined herein shall have the meanings ascribed to them in the Purchase Agreement), pursuant to which, among other things, (i) Secured Party shall sell to Purchaser, and Purchaser shall acquire, the Transferred Assets and (ii) Purchaser shall deliver that certain Secured Promissory Note of even date herewith, made payable to Secured Party in the original principal amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) (the “Note”); and

WHEREAS, To induce Secured Party to accept the Note, Company has agreed to enter into this Agreement with Secured Party to grant a lien on the Transferred Assets as security for the Secured Obligations (as defined below).

NOW, THEREFORE, in order to induce Secured Party to accept the Note, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           Grant of Security Interest.  As security for the Secured Obligations (as defined below), Company hereby grants to Secured Party a security interest (the “Security Interest”) in the Transferred Assets (hereinafter, the “Collateral”).  The Security Interest shall constitute a first lien against the Collateral, subject only to purchase money security interests.

 

2.           Definition of Secured Obligations.  The term “Secured Obligations” means the Company’s obligations under the Note.

 

3.           Perfection.  Company shall perform any and all reasonable steps requested by Secured Party to perfect the Security Interest herein given, including but not limited to, the execution and filing of financing or continuation statements in form and substance reasonably satisfactory to Secured Party.  Company shall notify Secured Party in writing of any change of Company’s name, corporate structure or identity.

 

4.           Covenants of Company.

 

    (a)           Company agrees to defend the title to the Collateral against all persons and against all claims and all demands whatsoever;

 

    (b)           Company shall retain possession of the Collateral (except for inventory, raw materials and work in process used or sold in the ordinary course of business) during the existence of this agreement and Company agrees not to sell, exchange, assign, loan, deliver, mortgage or otherwise dispose of same without the prior written consent of the Secured Party;

 

  

  

  

    (c)           Company agrees to keep the collateral free and clear of all liens, charges, encumbrances, taxes and assessments, and to pay, when due, all taxes, assessments and licenses fees relating to the Collateral;

 

    (d)           Company shall keep the Collateral insured against loss by fire (including extended coverage), theft and other hazards as the Secured Party may require; Company shall give prompt written notice to the Secured Party and to insurers of loss or damage to the Collateral and shall promptly file proofs of loss with insurers. The risk of loss, damage or deterioration of or to said goods shall rest upon Company, and no such loss, damage or deterioration shall in any way diminish or discharge the liability of Company to perform in full the Secured Obligations and Company agrees to give immediate notice to the Secured Party of any loss or damage to any of the Collateral or loss of possession thereof.

 

5.           Default and Remedies.  “Event of Default” shall have the meaning given to such term in the Note.  If an Event of Default occurs, Secured Party shall have the rights and remedies of a secured party under the Uniform Commercial Code as adopted in California, including, without limitation, the right of sale or disposition of the Collateral, or any part thereof.  Until there shall be an Event of Default, the Company shall have the right to remain and continue in the quiet and peaceable possession of the Collateral and shall have the full and free enjoyment of the same.

 

6.           Application of Proceeds.  The proceeds of any sale of, or other realization upon, all or any part of the Collateral shall be paid to and applied by Secured Party in the following order of priorities:

 

    (a)           First:  To the payment of the costs and expenses of such sale or other realization, including the reasonable out-of-pocket expenses of Secured Party;

 

    (b)           Second:  To the payment of any amounts outstanding under the Secured Obligations (with payments applied first to interest and then to principal); and

 

    (c)           Third:  The balance (if any) of such proceeds shall be paid to Company or its successors or assigns.

 

If, upon the sale, license or other disposition of the Collateral, the proceeds thereof are insufficient to pay all amounts to which the Secured Party is legally entitled, the Company will be liable for the deficiency, together with interest thereon, at the rate of twelve per cent (12%) per annum or the lesser amount permitted by applicable law. To the extent permitted by applicable law, the Company waives all claims, damages and demands against the Secured Party arising out of the repossession, removal, retention or sale of the Collateral, unless due to the gross negligence or willful misconduct of the Secured Party.

 

7.           Counsel Fees and Expenses.  If Secured Party retains counsel for the purpose of collecting any money which may be due under or secured in any way by this Security Agree­ment, or to recover the Collateral, or to protect its interest therein by reason of a default or breach by Company, then and in that event Company agrees to pay counsel fees together with any and all disbursements incurred by Secured Party in connection with the taking, maintaining, and disposing of the Collateral.

 

  

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8.           Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, and if not, then on the next Business Day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent as follows:

 

	  	
If to the Holder:

	
IntegenX Inc.

	  	  	
5720 Stoneridge Drive, Suite 300

	  	  	
Pleasanton, California 94588

	  	  	
Facsimile:  (925) 574-7373

	  	  	
Attention: President

	  	  	  
	  	
with a copy to:

	
IntegenX Inc.

	  	  	
5720 Stoneridge Drive, Suite 300

	  	  	
Pleasanton, California 94588

	  	  	
Facsimile:  (925) 574-7373

	  	  	
Attention: General Counsel

	  	  	  
	  	
If to the Company:

	
Wafergen, Inc.

	  	  	
7400 Paseo Padre Parkway

	  	  	
Fremont, California 94555

	  	  	
Facsimile:  (510) 793-8992

	  	  	
Attention: Ivan Trifunovich

	  	  	  
	  	
with a copy to:

	
K&L Gates LLP

	  	  	
4350 Lassiter at North Hills, Suite 300

	  	  	
Raleigh, North Carolina 27609

	  	  	
Facsimile:  (919) 516-2028

	  	  	
Attention: D. Scott Coward, Esq.

Any party may change the address(es) to which notices to it are to be sent by giving notice of such change to the other party in accordance with this Section 7.

 

9.           Further Assurances.  Company shall deliver to Secured Party such instruments as are necessary to carry out the intent hereof, and shall join with Secured Party in executing financing statements in appropriate form for perfecting the security interests granted hereby.  This Agreement, and the security interest created hereunder, shall terminate automatically upon satisfaction in full of the Secured Obligations.  Secured Party shall, upon the termination of this Agreement, deliver to Company termination statements (and other appropriate instruments) in form and substance satisfactory to Company.

 

10.           Failure To Enforce Terms.  The failure of Secured Party to enforce any of the terms or provisions of this Agreement or Secured Party’s failure to declare a default hereunder shall apply only to that particular instance, and shall not operate as a continuing waiver.

 

  

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11.           Gender and Number.  Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular shall be held to include the plural, and vice versa, unless the context requires otherwise.

 

12.           Headings.  The headings used in this Agreement are used for reference purposes and convenience and shall not constitute part of this Agreement in construing the terms and provisions hereof.

 

13.           Applicable Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding the conflict of laws provisions thereof.

 

14.           Modification.  No change or modification of this Agreement shall be valid or binding upon the parties hereto unless such change or modification shall be in writing and shall be signed by the parties hereto.

 

15.           Entire Agreement.  This Agreement supersedes any and all other understandings and agreements, either oral or in writing, between the parties hereto with respect to the subject matter hereof and constitutes the only agreements between the parties with respect to said subject matter.

 

16.           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

 

17.           Assignment.  This Agreement and the rights and obligations hereunder shall not be assignable or transferable by the Company without the prior written consent of the Secured Party.   Any instrument purporting to make an assignment in violation of this Section 16 shall be void.

 

18.           No Conflict.  The execution, delivery and performance of this Agreement by the Company does not conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing the Company’s debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected. No consent (including, without limitation, from members or creditors of the Company) is required for the Company to enter into and perform its obligations hereunder.

 

19.           Miscellaneous.  This Agreement shall inure to the benefit of the Company and the Secured Party, and all their respective successors and permitted assigns.  Nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained.

 

[SIGNATURE PAGE FOLLOWS]

  

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IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as of the date first above written.

 

	  	
SECURED PARTY:

	  	  	  
	  	  	
INTEGENX INC.

	  	  	  	  
	  	  	
By:

	
/s/ Robert A. Schueren

	  	  	
Name:

	
Robert A. Schueren

	  	  	
Its:

	
President and Chief Executive Officer

	  	
COMPANY:

	  	  	  
	  	  	
WAFERGEN, INC.

	  	  	  	  
	  	  	
By:

	
/s/ Ivan Trifunovich

	  	  	
Name:

	
Ivan Trifunovich

	  	  	
Its:

	
President and Chief Executive Officer

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