EX 10.1 FORBEARANCE AGREEMENT
DATED JANUARY 16, 2009.
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (this
“Agreement”) is made as of the 16th day of January,
2009, by and among XENOMICS, INC., a Florida corporation having
offices located at One Deer Park Drive, Suite F, Monmouth Junction,
New Jersey 08852 (the “Company”), and
those holders of the “Debentures” (as that term is
defined below) who have executed this Agreement (the
“Undersigned Holders”). All of the holders
of the Debentures are referred to herein collectively as
the “Holders.”
WHEREAS, on or about November 14, 2006, each
Holder purchased from the Company a 6% Convertible Debenture Note
(each a “Debenture,” and all of them, collectively, the
“Debentures”). All capitalized terms used in
this Agreement without definition shall have the meanings ascribed
to them in the Debenture; and
WHEREAS, the Company is in breach of various
covenants, representations and warranties under the Debentures and
the other documents that were executed or exchanged in connection
therewith (the “Transaction Documents”), including
without limitation: (i) its failure to pay interest when due under
the Debentures, (ii) its failure to pay any and all late fees due
under the Debentures, (iii) its failure to timely file the initial
Registration Statement as required under the terms and conditions
of the Registration Rights Agreement, (iv) its failure to qualify
the Registrable Securities (as that term is defined in the
Registration Rights Agreement) for quotation in a Trading Market
for a period of five (5) days’ starting on June 20, 2007, (v)
its failure to satisfy all amounts due and owing under the
Debentures on the Maturity Date, and (vi) its acceptance of
financing in the principal amount of $120,000 from Kira Sheinerman
Ph.D. in 2008 that did not qualify as “Permitted
Indebtedness” under the Debenture and which was intended to
assist the Company in meeting its operating
expenses. The Company’s breaches under the
Transaction Documents are referred to herein singularly and/or
collectively as the “Breaches”; and
WHEREAS, as a result of the Breaches, events of
default have occurred and are continuing under the Transaction
Documents. In addition to any other rights that the
Holders may have, upon an occurrence of an “Event of
Default,” as defined under the Debenture, the Company is
required to redeem the outstanding Debentures for an amount equal
to the sum of (i) 130% of the principal amount, (ii) all accrued
and unpaid interest, and (iii) Late Fees and the costs of
collection (i.e., together the “Mandatory Default
Amount”). Furthermore, the failure to file the
Registration Statement requires the Company to make a monthly
payment to each Holder in an amount equal to 1.5% of the aggregate
purchase price paid by said Holder for the Debenture;
and
WHEREAS, the Company has requested that the
Holders waive all of the Company’s defaults that have
heretofore occurred or that exist as of the date hereof under any
of the Transaction Documents (the “Existing Defaults”);
and
WHEREAS, the Undersigned Holders are willing to
waive the Existing Defaults in accordance with the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and each of the Undersigned
Holders hereby agree as follows:
1.
Ratification of Existing Agreements . Except as
otherwise modified herein, upon the satisfaction of the conditions
set forth in Section 4 hereof, all of the Company’s
obligations, indebtedness and liabilities to the Undersigned
Holders, as evidenced by or otherwise arising under the Transaction
Documents are ratified and confirmed in all respects by the
Company, subject to the terms of this Agreement.
2.
Waiver of Default Events . Subject to the
satisfaction of the conditions set forth in Section 4 of this
Agreement, each of the Undersigned Holders hereby agrees to waive
each of the Existing Defaults, including but not limited to any
defaults that would give rise to the right to any payment under
Section 4(d) of the Debenture, and will forbear from taking any
action on any of the Existing Defaults which may be continuing from
the date hereof until the earlier of (a) the occurrence of a new
Event of Default that is not cured within the applicable grace or
cure period, if any or (b) the Maturity Date (as revised in Section
3(a) hereof). Notwithstanding the foregoing, and so as
to avoid any confusion or doubt, the Undersigned Holders are not
waiving any new Event of Default (as defined in a Transaction
Document) that may arise from and after the date hereof, including
without limitation, any Event of Default that may arise in the case
of the commencement of any legal proceeding against the Company
(whether the same relates to circumstances that occurred prior to
or after the date hereof) under Sections 8.a)ii or 8.a)iii of the
Debenture, as modified by this Agreement.
3.
Amendments to Transaction Documents . Notwithstanding any
provision to the contrary set forth herein, the terms and
conditions of the Transaction Documents are hereby amended as
follows:
(a) The
definition of “Maturity Date” in the Debenture is
hereby amended to December 31, 2010.
(b) From
and after the date hereof, and continuing until the first to occur
of an occurrence of a new Event of Default arising from and after
the date hereof (that is not cured within an applicable grace or
cure period, if any) or the Maturity Date (as revised in Section
3(a) above), the Company shall pay interest to each Holder, on a
quarterly basis commencing on April 1, 2009 (and continuing on each
July 1, October 1 and January 1 thereafter) on the aggregate
unconverted and then outstanding principal amount of the Debenture
at a rate equal to 11% per annum, by the issuance of non-assessable
shares of Common Stock at a conversion rate equal to $.50 per
share. The Company and each of the Holders hereby agree
that all such shares of Common Stock issued under this Section 3(b)
shall be “Registrable Securities,” as that term is
defined in the Registration Right Agreement, subject to the terms
and conditions of the Registration Rights Agreement, as amended by
the terms of Section 3(c) hereof.
(c) The
definition of the “Filing Date” in the Registration
Rights Agreement is hereby amended by deleting the date “May
14, 2007” and replacing it with the date “December 31,
2010.”
(d) Section
8.a)i. of the Debenture is hereby amended to read in its entirety
as follows:
“i. any
default in the payment of (A) the principal amount of any
Debenture, or (B) interest (including Late Fees) on, or liquidated
damages in respect of, any Debenture, as and when the same shall
become due and payable (whether on a Conversion Date or the
Maturity Date or by acceleration or otherwise) which default is not
cured within 5 Trading Days after written notice from the
Holder.
(e) Section
8.a)ii. of the Debenture is hereby amended to read in its entirety
as follows:
“ii. the
Company shall materially fail to observe or perform any other
covenant or agreement contained in this Debenture or any other
Debenture which failure is (1) not cured, if possible to cure,
within the earlier to occur of A) 10 Trading Days after notice of
such default sent by the Holder or by any other Holder, and (B) 15
Trading Days after the Company shall become or should have become
aware of such failure, and (2) said Holder commences a
lawsuit against the Company as a result of said uncured
breach;”
(f) Section
8.a)iii. of the Debenture is hereby amended to read in its entirety
as follows:
“iii. a
default or event of default (subject to any grace or cure period
provided for in the applicable agreement, document or instrument)
shall occur under (A) any of the Transaction Documents and as a
result thereof, a lawsuit is commenced against the Company, or (B)
any other material agreement, lease, document or instrument to
which the Company or any Subsidiary is bound and a judgment in an
amount not less than $100,000 has been entered against the Company
as a result thereof;”
(g) Section
8.a)v.(vi) of the Debenture is hereby deleted.
(h) Section
8.a)v.(vii) of the Debenture is hereby deleted.
(i) Section
8.a)vii. of the Debenture is hereby amended by adding the phrase
“from and after December 31, 2010” to the end
thereof.
(j) Section
8.a)xii. of the Debenture is hereby amended to read in its entirety
as follows:
“xii. any
monetary judgment, writ or similar final process shall be entered
or filed against the Company, any Subsidiary or any of their
respective property or other assets for more than $100,000, and
shall remain unvacated, unbonded or unstayed for a period of 45
calendar days (or such longer period of time as agreed to by the
Majority Holders).”
(k) Section
8 of the Debenture is hereby further amended by adding the
following new clauses:
“(ix) the
failure by the Company’s shareholders to elect the
“Debenture Holder Director” or the “Additional
Director,” as those terms are described in Section 7 of that
certain Forbearance Agreement, dated as of January 16, 2009, by and
among the Company and the Holders (the “Forbearance
Agreement”), or their respective successors, in accordance
with the terms and conditions of the Forbearance Agreement, or the
removal of the Debenture Holder Director or the Additional Director
without the prior written consent of the “Majority
Holders,” as defined in the Forbearance Agreement, while any
of the Debentures remain unpaid or unsatisfied;
(x) the
occurrence of any of the following without the prior written
consent of at least a majority of the Executive Committee or
Compensation Committee of the Company’s Board of Directors,
as the case may be, including in any case the affirmative consent
of the Debenture Holder Director appointed and qualified in
accordance with the terms of the Forbearance Agreement, who will
serve on both of those committees: (1) the issuance of
any shares of Common Stock to any director, except as permitted
under the Forbearance Agreement, (2) the issuance of any options to
purchase shares of capital stock to any employee, consultant, and
officer and/or director of the Company, (3) the offer of any
compensation package to any officer of the Company or proposed
officer of the Company that would enable said officer to purchase
in excess of 500,000 shares of capital stock of the Company
(whether by option grant, warrant or otherwise), provided, however,
that shares purchased by any officer in the open market
or in connection with a capital raise by the Company will be exempt
from these limitations, or (iv) the appointment or hiring of a
chief executive officer of the Company;
(xi) the
breach by the Company of any of its obligations set forth in the
Forbearance Agreement; provided, however, if such breach is not
related to the Company’s failure to pay the Holder amounts
due under the Transaction Documents as modified by this Forbearance
Agreement, such breach shall not be deemed an Event of Default
unless the Company fails to cure said breach within thirty (30)
days after its receipt of written notice thereof;
or”
(l)
The definition of the term
“Mandatory Default Amount” contained in the Debenture
is hereby amended to read in its entirety as
follows:
“The outstanding principal
amount owed under this Debenture, plus all accrued and unpaid
interest and all other amounts, costs, expenses and liquidated
damages due in respect of this Debenture (but excluding any sums
that were satisfied pursuant to the terms of the Forbearance
Agreement).”
In the
event of a conflict between the terms and conditions set forth in
Section 3 of this Agreement and the terms and conditions set forth
in any of the Transaction Documents, the terms and conditions of
the Transaction Documents shall be deemed to be amended so as to be
consistent with the amendments set forth in this Section
3. For the avoidance of doubt, it is understood and
agreed that each of the Existing Defaults is being irrevocably
waived by the Holders, subject to the terms of Section 4 hereof,
but the Holders are not waiving any new Event of Default (as
defined in a Transaction Document) that may arise from and after
the date hereof, including without limitation, any Event of Default
that may arise in the case of the commencement of any legal
proceeding against the Company (whether the same relates to
circumstances that occurred prior to or after the date hereof)
under Sections 8.a)ii or 8.a)iii of the Debenture, as modified by
this Agreement.
4.
Conditions Precedent to Holders Obligations
. Notwithstanding anything to the contrary set forth
herein, the terms and conditions of this Agreement shall not be
effective, and the Holders shall have no obligation to waive the
Events of Default under this Agreement, unless and until all of the
following conditions precedent have been satisfied:
(a) Each
and every Holder shall have executed this Agreement on or before
January 30, 2009, pursuant to which they agree to be bound by the
terms and conditions set forth herein. In connection
therewith, each Holder hereby acknowledges that their respective
signature page will be held in escrow by Herrick, Feinstein LLP
(the “Escrow Agent”) pursuant to the escrow agreement
attached hereto until the signature pages from all of the Holders
have been obtained. The date upon which all of such
signature pages are obtained by the Escrow Agent is hereinafter
referred to as the “Effective Date.” Upon
receipt of all signature pages, the Escrow Agent shall forward a
fully-executed copy of each Agreement to each Holder.
Notwithstanding the forgoing, in the event that all such signature
pages have not been received by the Escrow Agent on or before
January 30, 2009, the Escrow Agent shall destroy or return each
signature page to the respective Holder that signed the same, and
all of the terms and conditions of this Forbearance Agreement shall
be null and void and of no force and/or effect
whatsoever.
(b) The
Company has issued the “Payment Shares” (defined below)
to each Holder as described below, which shares of Common Stock are
issued in full payment of: (i) all accrued and unpaid interest on
the Debentures (including all interest that has accrued at the 18%
default rate from June 27, 2007 through the date hereof) and late
fees at the Interest Conversion Rate set forth in the Debenture,
and (ii) for all amounts due and owing under Section 2(b) of the
Registration Rights Agreement for the period from May 1, 2007
through the date hereof. The Company and each of the Holders hereby
agree that all such shares of Common Stock issued under this
Section 4(b) shall be “Registrable Securities,” as that
term is defined in the Registration Right Agreement, subject to the
terms and conditions of the Registration Rights Agreement, as
amended by Section 3(c) hereof. It is agreed and
understood that the Company shall issue 2.655191 shares of Common
Stock in return for each dollar owed on account of the items listed
in subsections (i) and (ii) of this Section 4(b) (such shares, the
“Payment Shares”), and that the issuance of said
Payment Shares to the Holders shall be deemed to satisfy the
Company’s obligations to make payment to the Holders under
the Transaction Documents on account of any amounts due to the
Holders as of the date hereof by virtue of the Existing Defaults
(whereas the due date for the payment of the principal amounts due
to the Holders under the Debentures is, pursuant to this Agreement,
changed to December 31, 2010). It is further agreed and
understood that any Common Stock issued pursuant to this Section
4(b) or Section 6(c) hereof shall be deemed “Exempt
Securities” as defined under the Transaction Documents whose
issuance shall not trigger any penalty or anti-dilution provision
contained in the Transaction Documents.
(c) The
Holders shall have received a true and correct list of
“Options,” as that term is defined below; and the
authorizations, on January 9, 2009, to issue additional Options to
Mr. John Brancaccio, and on October 2, 2008, to issue Additional
Options to Dr. Sheinerman and to Dr. Picker, shall have been
rescinded.
5.
Representations and Warranties .
A. The
Company hereby represents and warrants to the Undersigned Holders
that:
(a) The
execution, delivery and performance by the Company of this
Agreement have been duly authorized by all necessary action on the
part of the Company and do not contravene (i) the organizational
documents of the Company, (ii) any applicable law or regulation, or
(iii) any other material agreement or undertaking by which the
Company is bound.
(b) This
Agreement is the legal, valid and binding obligation of the Company
and is enforceable against the Company in accordance with its
terms.
(c) There
is no pending or, to the best of the Company’s knowledge,
threatened action or proceeding before any court, judicial body,
administrative agency or arbitrator which could materially
adversely affect the ability of the Company to perform its
obligations under this Agreement.
(d) The
authorized capital stock of the Company consists of 100,000,000
shares of common stock, par value $.0001 per share and 20,000,000
shares of preferred stock, authorized stated value $10.00 per
share. There are 25,112.396 shares of common stock issued and
outstanding and there are 95,600 shares of preferred stock issued
and outstanding. The Company has only issued the
options, warrants, purchase rights, subscription rights, exchange
rights or other contracts or commitments that could require the
Company to issue, sell, or otherwise cause to become outstanding
any of its capital stock (together, “Options”) for
17,368,187 shares of capital stock of the Company, excluding shares
issuable upon conversion of the debentures. A complete
list of all Options held by the officers, directors and employees
of the Company, which contains (i) the holder of each such Option,
(ii) the date of issuance of each such Option, (iii) the number of
shares of the Company subject to each such Option, (iv) the
exercise price of each such Option, and (v) the expiration date of
each such Option, has been provided to the Holders
contemporaneously herewith. Except as disclosed therein,
there are no outstanding or authorized Options, nor are
there any agreements or plans to issue any such Options
other than in accordance with the terms and conditions of this
Agreement.
&n
