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Exhibit 10.73
NOTE AND WARRANT PURCHASE AGREEMENT
NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as
of
January 31, 2006, by and between Vyteris Holdings (Nevada), Inc., a
Nevada
corporation ("Seller"), and Spencer Trask Specialty Group, LLC, a
Delaware
limited liability company ("Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller desires to issue to Buyer, and Buyer desires to
purchase
from Seller, a convertible subordinated promissory note,
substantially in the
form of EXHIBIT A hereto, in the principal amount of $250,000 (the
"Note");
WHEREAS, in connection herewith, Seller has agreed to issue to
Buyer a
warrant (the "Warrant") to purchase 52,083 shares of Seller's
common stock, par
value $.001 ("Common Stock") as set forth in the warrant agreement
substantially
in the form of EXHIBIT B hereto (the "Warrant Agreement");
WHEREAS, Seller has agreed to effect the registration of the shares
of
Common Stock underlying the Note and the Warrants under the
Securities Act of
1933, as amended, pursuant to a registration statement
substantially in the form
of Exhibit C hereto (the "Registration Rights Agreement"); and
WHEREAS, Seller, pursuant to that certain securities purchase
agreement
dated as of August 19, 2005, as same may be amended from time to
time
("Securities Purchase Agreement") issued a series of senior secured
convertible
debentures, including debentures issued after the original issuance
date (the
"Debentures") in the aggregate principal amount of $10.5 million
(the "Senior
Debt").
NOW, THEREFORE, in consideration of the mutual covenants and
agreements
hereinafter set forth herein and for good and valuable
consideration, the
receipt and sufficiency of which are hereby mutually acknowledged,
the parties
agree as follows:
1. SALE AND
PURCHASE OF THE NOTE AND WARRANT
1.1. SALE
AND PURCHASE. Subject to the terms and conditions of this
Agreement, at the Closing (as defined in Section 2.1 hereof),
Seller shall issue
to Buyer, and Buyer shall purchase from Seller, for the Purchase
Price (as
defined in Section 1.2(a) hereof), the Note and the Warrant.
1.2.
PURCHASE PRICE AND PAYMENT.
(a)
PURCHASE PRICE. The purchase price for the Note and the
Warrant shall be $250,000 (the "Purchase Price").
(b)
PAYMENT OF PURCHASE PRICE. The Purchase Price shall be
paid to Seller by Buyer on the Closing Date (as defined in Section
2.1 hereof)
via federal funds wire
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transfer(s) of immediately available funds, in accordance with
written
instructions provided to Buyer prior to the date hereof.
2.
CLOSING.
2.1. TIME
AND PLACE. The closing of the sale and purchase of the Note
and Warrant (the "Closing") shall be deemed to take place at the
offices of
Littman Krooks LLP, 655 Third Avenue, 20th Floor, New York, New
York, at 10:00
a.m., local time, on the date hereof, or at such later time or date
as Buyer and
Seller may mutually agree in writing. The date upon which the
Closing shall
occur is herein called the "Closing Date".
2.2.
CLOSING DELIVERIES.
(a)
SELLER DELIVERIES. At the Closing, Seller shall deliver
or cause to be delivered to Buyer the following:
(i)
the duly executed Note;
(ii) the
duly executed Warrant Agreement;
(iii) the duly
executed Registration Rights Agreement;
and
(iv)
copies of any consents necessary to effectuate
this Agreement and to consummate the transactions contemplated
hereby.
(b)
BUYER DELIVERY. At the Closing, Buyer shall deliver or
cause to be delivered to Seller the Purchase Price.
3. TERMS OF
THE NOTE.
3.1.
AMOUNT. The principal amount of the Note shall be $250,000.
3.2.
MATURITY.
Unless otherwise converted into the Conversion Shares
(as defined in Section 3.4 hereof) in accordance with the
provisions hereof, the
Note shall mature on December 1, 2008, unless such date shall be
otherwise
extended in writing by Buyer, in its sole discretion (such date,
the "Maturity
Date"). On the Maturity Date, unless, and to the extent, converted
into
Conversion Shares in accordance with the provisions hereof, all
outstanding
principal and any accrued and unpaid interest due and owing under
the Note shall
be immediately paid by Seller.
3.3.
INTEREST; INTEREST RATE; PAYMENT. (a) The Note shall bear
interest (other than interest accruing as a result of a failure by
Seller to pay
any amount when due as set forth in clause (b) below) at a rate
equal to ten
(10%) percent (the "Interest Rate") per annum on a 360-day year.
Interest (other
than interest accruing as a result of a failure by Seller to pay
any amount when
due as set forth in subparagraph (b) below) shall be due and
payable in cash
semi-annually in arrears following the end of each semi-annual
period,
commencing with the semi-annual period ended June 30, 2006, pro
rated for
partial periods; PROVIDED, HOWEVER, that any
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interest accruing on overdue amounts pursuant to subparagraph (b)
of this
Section 3.3 shall be payable on demand.
(b)
If all or a portion of the principal amount of the Note
or any interest payable thereon shall not be repaid when due
whether on the
applicable repayment date, by acceleration or otherwise, such
overdue amounts
shall bear interest at a rate per annum that is three percent (3%)
above the
Interest Rate (I.E., 13%) from the date of such non-payment until
such amount is
paid in full (as well after as before judgment).
(c)
All payments to be made by Seller hereunder or pursuant
to the Note shall be made, without setoff or counterclaim, in
lawful money of
the United States by check or wire transfer in immediately
available funds.
3.4.
CONVERSION. Subject to Section 3.5 hereof, at any time prior to
the Maturity Date, the Seller shall have the option to convert the
entire
principal and interest accrued and owing on the Note, or any
portion of the
principal and/or interest thereof, into shares (the "Conversion
Shares") of
Common Stock at the Conversion Price. For purposes hereof,
"Conversion Price"
shall mean $2.40 per share; PROVIDED, that if at any time on or
after the
issuance date of the Note, Seller subdivides (by any stock split,
stock
dividend, recapitalization, reorganization, reclassification or
otherwise) its
shares of Common Stock into a greater number of shares, then after
the date of
record for effecting such subdivision, the Conversion Price shall
be
proportionately reduced, or if Seller combines (by reverse stock
split,
recapitalization, reorganization, reclassification or otherwise)
its shares of
Common Stock into a smaller number of shares, the Conversion Price
shall be
proportionately increased.
Upon conversion, Buyer shall be entitled to receive the number of
Conversion
Shares calculated by dividing the amount being converted by the
Conversion
Price. No fractional shares of Conversion Shares shall be issued
upon
conversion. In lieu of any fractional shares to which Buyer would
otherwise be
entitled, Seller shall pay cash in an amount equal to such fraction
multiplied
by the Conversion Price. The Note shall not be subject to automatic
conversion
or to any conversion at the option of Seller.
3.5.
CONVERSION PROCEDURES. In order to exercise the conversion
rights set forth in Section 3.4 hereof, Buyer shall surrender the
Note,
appropriately endorsed, to Seller at Seller's principal office,
accompanied by
written notice to Seller setting forth the amount of principal and
interest to
be converted, the name or names (with address(es)) in which the
Conversion
Shares issuable upon such conversion shall be issued and registered
on the books
of Seller. For purposes hereof, the "Conversion Date" shall be
deemed to be the
date the Note and notice is received by Seller for conversion.
Within five (5)
business days after the Conversion Date, Seller shall deliver to
Buyer (i) a
stock certificate for the Conversion Shares or (ii) a notice
certified by
Seller's Secretary that the Conversion Shares due on such
conversion have been
issued to and registered on the books of Seller in the name or
names specified
by Buyer. In the case of conversion of less than the entire
principal of and
interest under the Note, Seller shall cancel said Note and shall
execute and
deliver a new Note of like tenor for the unconverted amount of the
Note dated
the date of execution by Seller upon initial issuance of the
Note
notwithstanding any subsequent substitution.
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3.6.
SUBORDINATION. The Note is expressly and fully subordinated, as
to payment and liquidation, to the payment in full of the
Debentures and the
Obligations (as such term is defined in the Securities Purchase
Agreement) and
the holder of the Note acknowledges and agrees that the Seller is
expressly
restricted from pre-paying any amounts in respect of the principal
of the Note
(upon acceleration or otherwise) until payment in full of the
Debentures. The
holder of this Note shall not commence any judicial or other
collection efforts
or exercise any other remedies prior to the date that is ninety-one
(91) days
following the payment in full of the Debentures. The Note is, and
is intended to
be, "Subordinated Debt" as such term is defined in the Securities
Purchase
Agreement.
3.7.
PREPAYMENT RIGHTS UPON MERGER, CONSOLIDATION, ETC. (a) If,
prior
to the Conversion Date, but subject to the provisions of Section
3.6 above,
Seller proposes to consolidate with, or merge into, another
corporation or
entity, or to effect any sale or conveyance to another corporation
or entity of
all or substantially all of the assets of Seller, or effect any
other corporate
reorganization, in which the stockholders of the Seller immediately
prior to
such consolidation, merger or reorganization own capital stock of
the entity
surviving such merger, consolidation or reorganization representing
less than
fifty (50%) percent of the combined voting power of the outstanding
securities
of such entity immediately after such consolidation, merger or
reorganization
(collectively, a "Liquidation Event"), then Seller shall provide
Buyer with at
least ten (10) days' prior written notice of any such proposed
action, and Buyer
will, at its option, have the right to demand immediate prepayment
of all
amounts due and owing under the Note. Buyer will give Seller
written notice of
such demand within five (5) days after receiving notice of the
Liquidation
Event. All amounts (including all accrued and unpaid interest) due
and owing
under the Note shall be paid by Seller to Buyer within five (5)
days from the
date of such written notice via federal funds wire transfer(s) of
immediately
available funds, in accordance with written instructions to be
provided to
Seller by Buyer within at least two (2) business days after giving
Seller such
written notice. The provisions of this Section 3.7(a) shall
similarly apply to
successive consolidations or mergers.
(b)
Except as set forth in Sections 3.6, 3.7(a) and 9 hereof,
Seller
shall not prepay prior to the Maturity Date all or part of this
Note without the
express written consent of Buyer.
3.8
INTENTIONALLY DELETED
3.9
ASSURANCES WITH RESPECT OF CONVERSION RIGHTS. Seller shall not,
by amendment of its Certificate of Incorporation or By-laws or
through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to
avoid the
observance or performance of any of the terms to be observed or
performed
hereunder by Seller but shall at all times in good faith assist in
the carrying
out of all the provisions of this Agreement and in taking of all
such actions as
may be necessary or appropriate in order to protect the conversion
rights of
Buyer against impairment.
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4.
REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Buyer as follows:
4.1 DUE ORGANIZATION
AND QUALIFICATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of
the State of
Nevada. Seller has all requisite power and authority to own, lease
and operate
its assets and properties and to carry on its business as presently
conducted
and as presently contemplated. Seller is duly qualified to transact
business and
is in good standing in each jurisdiction in which the nature of its
business or
the locations of its property requires such qualification, except
where the
failure to do so would not have a material adverse effect on
Seller's business,
operations, assets or condition (financial or otherwise).
4.2
POWER AND AUTHORITY. Seller has the requisite corporate power
and authority to execute and deliver this Agreement and all other
agreements
contemplated by this Agreement (including, without limitation, the
Note, the
Registration Rights Agreement and Warrant Agreement) and to perform
its
obligations hereunder and thereunder. The execution, delivery and
performance of
this Agreement and all other agreements contemplated by this
Agreement have been
duly authorized by all necessary corporate action on the part of
Seller. This
Agreement has been duly executed and delivered by Seller and is the
valid and
binding obligation of Seller, enforceable against Seller in
accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy,
moratorium, insolvency, reorganization or other similar laws now or
hereafter in
effect generally affecting the enforcement of creditors' rights,
specific
performance, injunctive or other equitable remedies. When executed
and delivered
by Seller at the Closing, each of the Note, the Registration Rights
Agreement
and the Warrant Agreement will be the valid and binding obligation
of Seller,
enforceable against Seller in accordance with its terms, except as
such
enforceability may be limited by bankruptcy, moratorium,
insolvency,
reorganization or other similar laws now or hereafter in effect
generally
affecting the enforcement of creditors' rights, specific
performance, injunctive
or other equitable remedies.
4.3.
CAPITALIZATION. The capitalization of the Seller as of the date
of this Agreement, including its authorized capital stock, the
number of shares
issued and outstanding, the number of shares issuable and reserved
for issuance
pursuant to the Seller's stock option plans and agreements, the
number of shares
issuable and reserved for issuance pursuant to securities (other
than the Note
and Warrants) exercisable for, or convertible into or exchangeable
for any
shares of Common Stock and the number of shares initially to be
reserved for
issuance upon conversion of the Note and exercise of the Warrants,
is set forth
on Schedule 4.3 hereto. All issued and outstanding shares of
capital stock of
the Seller have been validly issued, fully paid and non-assessable.
Except as
disclosed on Schedule 4.3 hereto, the Seller owns all of the
capital stock of
each subsidiary, which capital stock is validly issued, fully paid
and
non-assessable, and no shares of the capital stock of the Seller or
any of the
subsidiaries are subject to preemptive rights or any other similar
rights of the
shareholders of the Seller or any such subsidiary or any liens
created by or
through the Seller or any such subsidiary. Except as disclosed on
Schedule 4.3
or as contemplated herein, there are no outstanding options,
warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever
relating to, or securities or rights convertible into or
exercisable or
exchangeable for, any shares of capital stock of the Seller or any
of the
subsidiaries, or arrangements by which the Seller or any of the
subsidiaries is
or may become bound to issue
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additional shares of capital stock of the Seller or any of the
subsidiaries
(whether pursuant to anti-dilution, "reset" or other similar
provisions).
Schedule 4.3 identifies all Debt of the Seller and the subsidiaries
currently
outstanding in excess of $100,000 individually or in the aggregate
as of the
date hereof.
4.4.
FINANCIAL STATEMENTS; OTHER INFORMATION. Seller has filed with
the Securities and Exchange Commission ("Commission") all reports,
schedules,
registra
