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EXHIBIT 10.13
PREFERRED STOCK
PURCHASE AGREEMENT
between
INTRACEL CORPORATION
and
NORTHSTAR HIGH TOTAL RETURN FUND
Dated as of March 12, 1997
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Page
ARTICLE I THE SERIES A-2 PREFERRED.............................................1
SECTION 1.1. Issuance, Sale and Delivery of the Series A-2 Preferred........................1
SECTION 1.2. Closing Date...................................................................1
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................1
SECTION 2.1. Organization, Qualifications and Corporate Power...............................2
SECTION 2.2. Authorization of Agreements, etc...............................................2
SECTION 2.3. Validity.......................................................................3
SECTION 2.4. Authorized Capital Stock.......................................................3
SECTION 2.5. Financial Statements...........................................................4
SECTION 2.5A. Absence of Undisclosed Liabilities and Changes.................................5
SECTION 2.6. Events Subsequent to the Date of the Balance Sheet.............................5
SECTION 2.7. Litigation; Compliance with Law................................................5
SECTION 2.8. Title to Properties............................................................6
SECTION 2.9. Leasehold Interests............................................................6
SECTION 2.10. Insurance......................................................................6
SECTION 2.11. Taxes..........................................................................7
SECTION 2.12. Other Agreements...............................................................7
SECTION 2.13. Patents, Trademarks, etc.......................................................8
SECTION 2.14. Loans and Advances.............................................................9
SECTION 2.15. Assumptions, Guaranties, etc. of Indebtedness of Other Persons.................9
SECTION 2.16. Significant Customers and Suppliers............................................9
SECTION 2.17. Governmental Approvals.........................................................9
SECTION 2.18. Accuracy of Statements........................................................10
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SECTION 2.19. Employment Relations..........................................................10
SECTION 2.20. Compensation of Key Employees.................................................10
SECTION 2.21. Environmental Compliance......................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...................10
SECTION 3.1. Purchase of Series A-I Preferred..............................................10
SECTION 3.2. Authority.....................................................................11
SECTION 3.3. Projections...................................................................11
ARTICLE IV CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER.....................11
SECTION 4.1. Opinion of Company's Counsel..................................................12
SECTION 4.2. Representations and Warranties to be True and Correct.........................12
SECTION 4.3. Performance...................................................................12
SECTION 4.4. All Proceedings to be Satisfactory............................................12
SECTION 4.5. Supporting Documents..........................................................12
SECTION 4.6. Legal Fees....................................................................13
SECTION 4.7. Certificate of Designation....................................................13
SECTION 4.8. Consents......................................................................13
ARTICLE V COVENANTS OF THE COMPANY............................................13
SECTION 5.1. Financial Statements, Reports, etc............................................13
SECTION 5.2. Corporate Existence...........................................................15
SECTION 5.3. Properties, Business, Insurance...............................................15
SECTION 5.4. Inspection, Consultation and Advice...........................................15
SECTION 5.5. Restrictive Agreements Prohibited.............................................15
SECTION 5.6. Board of Directors Meetings...................................................16
SECTION 5.7. Compliance with Laws..........................................................16
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SECTION 5.8. Keeping of Records and Books of Account.......................................16
SECTION 5.9. Maintaining Nature of Business................................................16
SECTION 5.10. Obligations and Taxes.........................................................16
SECTION 5.11. Further Issuances of Series A-I Preferred.....................................16
SECTION 5.12. Notices......................................................................16
SECTION 5.13. Environmental Matters.........................................................17
SECTION 5.14. The Exchange Notes; Security Interest; Guaranty...............................18
SECTION 5.15. Waivers.......................................................................18
SECTION 5.17. Further Assurances............................................................19
ARTICLE VI MISCELLANEOUS......................................................19
SECTION 6.1. Expenses......................................................................19
SECTION 6.2. Survival of Agreements........................................................19
SECTION 6.3. Brokerage.....................................................................19
SECTION 6.4. Parties in Interest...........................................................20
SECTION 6.5. Notices; Payment of Dividends.................................................20
SECTION 6.6. Replacement of Certificates...................................................20
SECTION 6.7. Governing Law.................................................................21
SECTION 6.8. Entire Agreement..............................................................21
SECTION 6.9. Submission to Jurisdiction; Waivers...........................................21
SECTION 6.10. Counterparts..................................................................21
SECTION 6.11. Amendments....................................................................22
SECTION 6.12. Severability..................................................................22
SECTION 6.13. Titles and Subtitles..........................................................22
SCHEDULE I....................................................................24
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PREFERRED STOCK PURCHASE AGREEMENT, dated as of March 12, 1997 between Intracel
Corporation, a Massachusetts corporation (the "Company") and Northstar High
Total Return Fund (the "Purchaser").
WHEREAS, the Company wishes to issue and sell to the Purchaser an
aggregate of 40,000 shares (the "Shares") of the Company's Series A-2 Preferred
Stock, no par value (the "Series A-2 Preferred"), of which 155,000 shares are
authorized, for an aggregate purchase price of $4,000,000, which shares shall be
issued to the Purchaser in the amount and for the consideration set forth across
from the Purchaser's name as set forth on Schedule I hereto; and
WHEREAS, the Purchaser wishes to purchase the Series A-2 Preferred on
the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties hereto agree as follows:
ARTICLE I
THE SERIES A-2 PREFERRED
SECTION 1.1. Issuance, Sale and Delivery of the Series A-2 Preferred.
The Company agrees to issue and sell to the Purchaser, and the Purchaser hereby
agrees to purchase from the Company, the Shares.
SECTION 1.2. Closing Date. The closing of the sale and purchase of the
Shares (the "Closing"), will take place at the offices of Xxxxxxxx & Xxxxxxxx
LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, at 10:00 a.m., New York
time, as of the date hereof, or at such other place, time and date as may be
otherwise mutually agreed in writing by the parties hereto. The date on which
the Closing occurs is referred to herein as the "Closing Date". At the Closing,
the Company shall issue and deliver to the Purchaser a stock certificate or
certificates in definitive form, registered in the name of the Purchaser,
representing the Series A-2 Preferred being purchased by it at the Closing, as
indicated on Schedule I hereto. The parties hereto agree that the Shares as are
to be purchased by the Purchaser shall be delivered to the Purchaser's
designated custodian for delivery to the Purchaser's funding agent which shall,
upon receipt of such certificate, release for delivery the Notes (as hereinafter
defined) to be delivered by Purchaser pursuant to Schedule I hereto and wire
transfer immediately available funds in the amount of the cash consideration to
be paid by the Purchaser in accordance with Schedule I for such Shares to the
account of the Company previously designated by it.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as of the Closing
Date that:
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SECTION 2.1. Organization, Qualifications and Corporate Power. The
Company is a corporation duly organized (originally under the name of Boston
Biological Technologies, Inc.), validly existing and in good standing under the
laws of the Commonwealth of Massachusetts; Xxxxxxx, Inc. (the Company's wholly
owned subsidiary)("Xxxxxxx") is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware; and each of the
Company and Xxxxxxx is duly licensed or qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the business transacted by it or the character of the properties owned
or leased by it requires such licensing or qualification, except where the
failure so to qualify will not have a material adverse effect on the business,
operations, property or financial condition of the Company or Xxxxxxx,
respectively. Each of the Company and Xxxxxxx has the power and authority to own
and hold its properties and to carry on its business as now conducted and as
proposed to be conducted, to execute, deliver and perform this Agreement, and to
issue, sell and deliver the Series A-2 Preferred. The Company has no direct or
indirect subsidiaries, other than Xxxxxxx and the Company's ownership of
forty-five percent of the membership interests of the German-American Institute
for AIDS Research GmbH, a limited liability company formed under the laws of
Germany.
SECTION 2.2. Authorization of Agreements, etc. (a) The execution and
delivery by the Company of this Agreement, the performance by the Company of its
obligations hereunder and the issuance, sale and delivery of the Series A-2
Preferred have been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other agency of
government, the Articles of Organization of the Company, as amended (the
"Charter") or the By-laws of the Company, as amended, or any provision of any
indenture, agreement or other instrument to which either the Company or Xxxxxxx
is a party or by which either the Company or Xxxxxxx or any of its properties or
assets is bound, or conflict with, result in a breach of or constitute (whether
with or without notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company or Xxxxxxx other
than the Company's loan agreement with the Massachusetts Business Development
Corporation ("MBDC"), consent from which the Purchaser hereby expressly waives;
provided, however, that the Company shall either obtain the consent of MBDC to
the transactions contemplated by this Agreement by the date which is 60 days
after the Closing Date or, in the event the Company fails to obtain such consent
by such date, pay all amounts due under such loan agreement.
(b) The Series A-2 Preferred has been duly authorized and, when
issued in accordance with this Agreement, will be validly issued, fully
paid and nonassessable with no personal liability attaching to the
ownership thereof and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the Company.
The issuance, sale or delivery of the Series A-2 Preferred is not
subject to any preemptive right of stockholders of the Company or to any
right of first refusal or other right in favor of any person.
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(c) Except as set forth in Schedule 2.2(c), there is no party
without whose consent the Company could not pay dividends in cash to the
Purchaser as provided under the terms of the Series A-2 Preferred.
SECTION 2.3. Validity. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and
moratorium laws and other similar laws of general application affecting
enforcement of creditors' rights generally and (ii) the availability of
equitable remedies, including specific performance, which may be limited by
equitable principles of general applicability (regardless of whether enforcement
is sought in a proceeding in equity or at law).
SECTION 2.4. Authorized Capital Stock. The authorized capital stock of
(a) the Company consists of (i) 3,000,000 shares of Preferred Stock, no par
value per share (the "Preferred Stock"), of which 730,000 shares have been
designated Series A Preferred and 850,000 shares which have been designated
Series A-1 Preferred and 155,000 shares will have been designated Series A-2
Preferred in connection with this Closing and (ii) 5,000,000 shares of common
stock, no par value per share (the "Common Stock") and (b) Xxxxxxx consists of
1,000 shares of common stock, par value $.01 per share. Immediately prior to the
Closing, all of the capital stock of Xxxxxxx which is issued and outstanding
will be owned by the Company, 1,983,593 shares of Common Stock will be
outstanding, all of which will be validly issued and outstanding, fully paid and
nonassessable with no personal liability attaching to the ownership thereof,
557,653 shares of Series A Preferred will be outstanding pursuant to the
Convertible Stock Purchase Agreement, dated July 22, 1994, by and among the
Company and the Purchasers set forth on Schedule I thereto (the "1994 Stock
Purchase Agreement") and 601,569 shares of Series A-1 Preferred will be
outstanding pursuant to the Convertible Stock Purchase Agreement, dated as of
September 22, 1995 by and among the Company and the Purchasers set forth on
Schedule I thereto (the "1995 Stock Purchase Agreement") and 136,658 shares of
Series A-1 Preferred will be issued and outstanding pursuant to a Convertible
Preferred Stock Purchase Agreement dated November 16, 1995, between the Company
and Creditanstalt American Corporation and 40,000 shares of Series A-2 Preferred
will be issued on even date herewith pursuant to this Agreement. No other shares
of capital stock of the Company or Xxxxxxx have been issued or reserved for
issuance, except 385,000 shares of Common Stock reserved for issuance in the
event options granted pursuant to the 1989 and 1990-1991 Stock Option Plans of
the Company are exercised, 730,000 shares of Common Stock reserved for issuance
in the event of the conversion of the shares of Series A Preferred Stock and
52,000 shares of Common Stock reserved for issuance in the event of the exercise
of the Series A Warrant, both having been granted pursuant to the 1994 Stock
Purchase Agreement, 850,000 shares of Common Stock reserved for issuance in the
event of the conversion of the shares of Series A-I Preferred Stock granted
pursuant to the 1995 Stock Purchase Agreement, 86,462 shares of Common Stock
reserved for issuance in the event of the exercise of warrants granted pursuant
to the Warrant Agreement, dated September 22, 1995, between the Company and
Dublind Investments, L.L.C., 91,177 shares of Common Stock reserved for issuance
in the event of the exercise of the warrants granted pursuant to the Warrant
Agreement, dated November 16, 1995, between the Company and Creditanstalt
Bankverein ("Creditanstalt"), 94,010 shares of Common Stock reserved for
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issuance in the event of exercise of the warrants granted pursuant to the Series
A-II Warrant and Note Purchase Agreement, dated December 27, 1995, between the
Company and Purchaser, 159,073 shares of Common Stock reserved for issuance in
the event of exercise of the warrants granted pursuant to the Note and Series
A-III Warrant Purchase Agreement, dated June 11, 1996 between the Company and
CoreStates Enterprise Fund, a division of CoreStates Bank, N.A. ("CoreStates")
and 79,537 shares of Common Stock reserved for issuance in the event of the
exercise of the Warrant granted pursuant to the Note and Series A-IV Warrant
Purchase Agreement, dated June 21, 1996 between the Company and Purchaser (the
"Note Agreement"). The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of the Series A
Preferred Stock, the Series A-1 Preferred Stock and the Series A-2 Preferred
Stock are as set forth in both of the Certificates of Vote of Directors
Establishing a Series of a Class of Stock, and all such designations, powers,
preferences, rights, qualifications, limitations and restrictions are valid,
binding and enforceable and in accordance with all applicable laws. Except as
provided for in the Charter, the Company has no obligation (contingent or other)
to purchase, redeem or otherwise acquire any of its equity securities or any
interest therein or to pay any dividend or make any other distribution in
respect thereof. This Section 2.4 sets forth the aggregate number of outstanding
warrants, options, agreements, convertible securities or other commitments
pursuant to which the Company is or may become obligated to issue any shares of
its capital stock or other securities of the Company. Except as set forth above
in this Section 2.4, there are no preemptive or similar rights to purchase or
otherwise acquire shares of capital stock of the Company pursuant to any
provisions of law, the Charter or By-laws of the Company, in each case as
amended to the date hereof, or any agreement to which the Company is a party or
otherwise. Except as set forth above in this Section 2.4, or as contemplated
herein, immediately upon consummation at the Closing of the transactions
contemplated hereby there will be no agreement, restriction or encumbrance (such
as a right of first refusal, right of first offer, proxy, voting agreement,
voting trust, bring-along or come-along rights) with respect to the sale or
voting of any shares of capital stock of the Company (whether outstanding or
issuable upon conversion or exercise of outstanding securities) of which the
Company has knowledge.
SECTION 2.5. Financial Statements. The Company has furnished to the
Purchaser the audited balance sheet of the Company for the six months ended
December 31, 1995 (the "Balance Sheet") and the related audited statements of
income, stockholders' equity and cash flows of the Company for the six months
ended December 31, 1995, and the balance sheet of the Company as of September
30, 1996 and the related statements of income, stockholders' equity and cash
flows of the Company as of September 30, 1996. All such financial statements
have been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the financial position of the Company as
of December 31, 1995 and September 30, 1996, respectively, and the results of
its operations and cash flows as of December 31, 1995 and September 30, 1996,
respectively. Except as set forth on Schedule 2.12, since the date of the
Balance Sheet, (i) there has been no change in the assets, liabilities or
financial condition of the Company from that reflected in the Balance Sheet
except for changes in the ordinary course of business which in the aggregate
have not been materially adverse and (ii) none of the business, financial
condition, operations or property of the Company have been materially adversely
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affected by any occurrence or development, individually or in the aggregate,
whether or not insured against.
SECTION 2.5A. Absence of Undisclosed Liabilities and Changes. Except as
set forth on Schedule 2.5A attached hereto, as of the date hereof, (a) the
Company had no liabilities of any nature (matured or unmatured, fixed or
contingent) which were not provided for on the balance sheet of the Company as
of such date, except for (i) liabilities which, individually and in the
aggregate, were not material to the financial condition of the Company or (ii)
liabilities incurred in the ordinary course of the Company's business and not
required to be so provided for under generally accepted accounting principles,
and (b) all reserves established by the Company and set forth on such balance
sheet were adequate in all material respects. There are no loss contingencies
(as such term is used in Statement of Financial Accounting Standards No. 5
("Statement No. 5") issued by the Financial Accounting Standards Board in March
1975) which are not adequately provided for in such balance sheet as required by
Statement No. 5.
SECTION 2.6. Events Subsequent to the Date of the Balance Sheet. Except
as set forth in the attached Schedule 2.6, since the date of the Balance Sheet,
except as contemplated by this Agreement, neither the Company nor Xxxxxxx has
(i) issued any stock, bond or other corporate security, (ii) borrowed any amount
or incurred or become subject to any liability (absolute, accrued or
contingent), except current liabilities incurred and liabilities under contracts
entered into in the ordinary course of business, (iii) discharged or satisfied
any lien or encumbrance or incurred or paid any obligation or liability
(absolute, accrued or contingent) other than current liabilities shown on the
Balance Sheet and current liabilities incurred since the date of the Balance
Sheet in the ordinary course of business, (iv) declared or made any payment or
distribution to stockholders or purchased or redeemed any share of its capital
stock or other security, (v) mortgaged, pledged or subjected to lien any of its
assets, tangible or intangible, other than liens of current real property taxes
not yet due and payable, (vi) sold, assigned or transferred any of its tangible
assets except in the ordinary course of business, or canceled any debt or claim,
(vii) sold, assigned, transferred or granted any exclusive license with respect
to any material patent, trademark, trade name, service xxxx, copyright, trade
secret or other intangible asset other than in the ordinary course of business,
(viii) suffered any material loss of property or waived any right of substantial
value, (ix) made any change in officer compensation except in the ordinary
course of business and consistent with past practice, (x) made any material
change in the manner of business or operations of the Company or Xxxxxxx,
respectively, (xi) entered into any transaction except in the ordinary course of
business or as otherwise contemplated hereby or (xii) entered into any
commitment (contingent or otherwise) to do any of the foregoing.
SECTION 2.7. Litigation; Compliance with Law. Except as set forth in the
attached Schedule 2.6, there is no material (i) action, suit, claim, proceeding
or investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company or Xxxxxxx, respectively, at law or in equity, or
before or by any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, (ii)
arbitration proceeding relating to the Company or Xxxxxxx, respectively, pending
under a collective bargaining agreement or otherwise or (iii) governmental
inquiry pending or, to
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the knowledge of the Company, threatened against or affecting the Company or
Xxxxxxx, respectively (including, without limitation, any inquiry as to the
qualification of the Company or Xxxxxxx, respectively, to hold or receive any
license or permit). The Company has not received any opinion or memorandum or
legal advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which may be material to its
business, financial condition, operations or property. The Company is not in
default with respect to any order, writ, injunction or decree known to or served
upon the Company of any court or of any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign. There is no material action or suit by the Company pending
or threatened against others. Each of the Company and Xxxxxxx has complied in
all material respects with all laws, rules, regulations and orders applicable to
its business, operations, properties, assets, products and services, and each of
the Company and Xxxxxxx has all necessary permits, licenses and other
authorizations required to conduct its business as conducted and as proposed to
be conducted, except where the failure to own or possess such permits, licenses
or authorizations could not, either singly or in the aggregate, have a material
adverse effect on the business, operations, properties or financial condition of
the Company.
SECTION 2.8. Title to Properties. Except in instances that, either
singly or in the aggregate, could not have a material adverse effect on the
business, operations, properties or financial condition of the Company, and
except as disclosed in Schedule 2.8 hereof, each of the Company and Xxxxxxx has
good and marketable title to its properties and assets reflected on the Balance
Sheet (other than properties and assets disposed of in the ordinary course of
business since the date of the Balance Sheet), and all such properties and
assets are free and clear of mortgages, pledges, security interests, liens,
charges, claims, restrictions and other encumbrances, except for liens for
current taxes not yet due and payable and minor imperfections of title, if any,
not material in nature or amount and not materially detracting from the value or
materially impairing the use of the property subject thereto or impairing the
operations or proposed operations of the Company or Xxxxxxx, respectively.
SECTION 2.9. Leasehold Interests. Each lease or agreement to which the
Company or Xxxxxxx, respectively, is a party under which it is a lessee of any
property, real or personal (a list of all leases being attached hereto as
Schedule 2.9), is a valid and subsisting agreement without any material default
of the Company or Xxxxxxx, respectively, thereunder and, to the knowledge of the
Company, without any material default thereunder of any other party thereto. No
event has occurred and is continuing which, with due notice or lapse of time or
both, would constitute a default or event of default by the Company or Xxxxxxx,
respectively, under any such lease or agreement or, to the knowledge of the
Company, by any other party thereto.
SECTION 2.10. Insurance. The Company holds valid policies covering all
of the insurance required to be maintained by it under Section 5.3. Schedule
2.10 lists all insurance policies which the Company maintains with respect to
its businesses, properties and employees. Such policies are in full force and
effect and the Company has received no notice of termination from the insurance
carriers. Such policies, with respect to their amounts, deductibles and types of
coverage, are adequate in the reasonable commercial judgment of the Company to
insure against risks to which the Company and its respective businesses are
subject. Since the date of
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the Balance Sheet, there has been no material adverse change in the Company's
relationship with its insurers or in the premiums payable pursuant to such
policies.
SECTION 2.11. Taxes. The Company has filed or will file within the time
prescribed by law (including extensions of time approved by the appropriate
taxing authority) all tax returns, foreign, Federal, state, county and local,
required to be filed by it, and the Company has paid all taxes shown to be due
by such returns and extensions as well as all other taxes, assessments and
governmental charges which have become due or payable, including, without
limitation, all taxes which the Company is obligated to withhold from amounts
owing to employees, creditors and third parties. All such taxes with respect to
which the Company has become obligated have been paid and adequate reserves have
been established for all taxes accrued but not yet payable. No deficiency
assessment with respect to or proposed adjustment of the Company's foreign,
Federal, state, county or local taxes is pending or, to the knowledge of the
Company, threatened. There is no tax lien in favor of any foreign, Federal,
state, county or local authority, outstanding against the assets, properties or
business of the Company. Neither the Company nor any of its stockholders has
ever filed a consent pursuant to Section 341(f) of the internal Revenue Code of
1986, as amended (the "Code"), relating to collapsible corporations.
SECTION 2.12. Other Agreements. Except as set forth in the attached
Schedule 2.12, neither the Company nor Xxxxxxx is a party to or otherwise bound
by any written or oral contract or instrument or other restriction which
individually or in the aggregate could materially adversely affect the business,
financial condition, operations or property of the Company. Except as set forth
in the attached Schedule 2.12, or as a result of the transactions contemplated
in this Agreement, neither the Company nor Xxxxxxx is a party to or otherwise
bound by any written or oral:
(a) distributor, dealer, manufacturer's representative or sales
agency contract or agreement which is not terminable on less than ninety
(90) days' notice without cost or other liability to the Company;
(b) sales contract which entitles any customer to a rebate or
right of set-off, to return any product to the Company after acceptance
thereof or to delay the acceptance thereof, or which varies in any
material respect from the Company's standard form contracts;
(c) contract with any labor union (and, to the knowledge of the
Company, no organizational effort is being made with respect to any of
its employees);
(d) contract or other commitment with any supplier containing any
provision permitting any party other than the Company or Xxxxxxx to
renegotiate the price or other terms, or containing any pay-back or
other similar provision, upon the occurrence of a failure by the Company
or Xxxxxxx to meet its obligations under the contract when due or the
occurrence of any other event;
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(e) contract for the future purchase of fixed assets or for the
future purchase of materials, supplies or equipment in excess of its
normal operating requirements;
(f) contract for the employment of any officer, employee or other
person (whether of a legally binding nature or in the nature of informal
understandings) on a full-time or consulting basis which is not
terminable on notice without cost or other liability to the Company,
except normal severance arrangements and accrued vacation pay;
(g) agreement or indenture relating to the borrowing of money or
to the mortgaging or pledging of, or otherwise placing a lien or
security interest on, any asset of the Company or Xxxxxxx;
(h) guaranty of any obligation for borrowed money or otherwise;
(i) agreement, or group of related agreements with the same party
or any group of affiliated parties, under which the Company or Xxxxxxx
has advanced or agreed to advance money or has agreed to lease any
property as lessee or lessor;
(j) agreement or obligation (contingent or otherwise) to issue,
sell or otherwise distribute or to repurchase or otherwise acquire or
redeem any share of its capital stock or any of its other equity
securities;
(k) assignment, license or other agreement with respect to any
form of intangible property or Intellectual Property or the development
or use thereof;
(l) agreement under which it has granted any person any
registration rights;
(m) agreement under which it has limited or restricted its right
to compete with any person in any respect; or
(n) other contract or group of related contracts with the same
party involving more than $50,000 or continuing over a period of more
than one year from the date or dates thereof (including renewals or
extensions optional with another party), which contract or group of
contracts is not terminable by the Company or Xxxxxxx without penalty
upon notice of thirty (30) days or less, but excluding any contract or
group of contracts with a customer of the Company or Xxxxxxx for the
sale, lease or rental of the Company's or Xxxxxxx' products or services
if such contract or group of contracts was entered into by the Company
or Xxxxxxx in the ordinary course of business.
SECTION 2.13. Patents, Trademarks, etc. Set forth in Schedule 2.13 is a
list and brief description of all patents, patent rights, patent applications,
trademarks, trademark applications, service marks, service xxxx applications,
trade names and copyrights, and all applications for such which are in the
process of being prepared, owned by or registered in the name of the Company or
Xxxxxxx, or of which the Company or Xxxxxxx is a licensor or licensee or in
which the Company or Xxxxxxx has any right, and in each case a brief description
of the nature of such right. Except as set forth on Schedule 2.13, each of the
Company and Xxxxxxx owns or
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possesses adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, trade names, copyrights, manufacturing processes, formulas, trade
secrets and know-how (collectively, "Intellectual Property") necessary to the
conduct of its business as presently conducted, and no claim is pending or, to
the knowledge of the Company, threatened to the effect that the operations of
the Company or Xxxxxxx infringe upon or conflict with the rights of any other
person under any Intellectual Property, and to the knowledge of the Company
there is no basis for any such claim. No claim is pending or to the knowledge of
the Company threatened to the effect that any such Intellectual Property owned
or licensed by the Company or Xxxxxxx, or which the Company or Xxxxxxx otherwise
has the right to use, is invalid or unenforceable by the Company, and to the
knowledge of the Company there is no basis for any such claim. To the knowledge
of the Company, all technical information developed by and belonging to the
Company or Xxxxxxx, as applicable, which has not been patented, has been kept
confidential. The Company has not granted or assigned to any other person or
entity any right to manufacture, have manufactured, assemble or sell any
products or proposed products of the Company and to the knowledge of the Company
no other person or entity has asserted any such right.
SECTION 2.14. Loans and Advances. Except as set forth on Schedule 2.14,
neither the Company nor Xxxxxxx has any outstanding loans or advances to any
person and is not obligated to make any such loans or advances, except, in each
case, for advances to employees of the Company or Xxxxxxx in respect of
reimbursable business expenses anticipated to be incurred by them in connection
with their performance of services for the Company or Xxxxxxx.
SECTION 2.15. Assumptions, Guaranties, etc. of Indebtedness of Other
Persons. Neither the Company nor Xxxxxxx has assumed, guaranteed, endorsed or
otherwise become directly or contingently liable on any indebtedness of any
other person (including, without limitation, liability by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in a debtor, or otherwise to assure a creditor
against loss), except for guaranties by endorsement of negotiable instruments
for deposit or collection in the ordinary course of business.
SECTION 2.16. Significant Customers and Suppliers. No customer which
accounted for 10% or more of the Company's sales or revenues during the periods
covered by the financial statements referred to in Section 2.5 or which has been
significant to the Company thereafter has terminated, materially reduced or
threatened to terminate or materially reduce its purchases from the Company. As
of the date of this Agreement, there is no supplier to the Company which is a
sole-source supplier.
SECTION 2.17. Governmental Approvals. Subject to the accuracy of the
representations and warranties of the Purchaser set forth in Article III, no
registration or filing with, or consent or approval of or other action by, any
Federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and performance by the Company of
this Agreement and the issuance, sale and delivery of the Series A-2 Preferred,
other than filings pursuant to state securities laws in connection with the sale
of the Series A-2 Preferred.
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SECTION 2.18. Accuracy of Statements. Neither this Agreement nor any
Schedule, Exhibit, statement, list, document, certificate or other information
furnished by or on behalf of the Company to the Purchaser in connection with
this Agreement or any of the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
SECTION 2.19. Employment Relations. (a) The Company is in material
compliance with applicable federal, state or other applicable laws, domestic or
foreign, respecting employment and employment practices, safety, terms and
conditions of employment and wages and hours.
(b) The Company does not maintain or contribute to any employee
benefit plan ("Employee Benefit Plan") within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to ERISA but which is not in substantial
compliance with ERISA, or which has incurred any material liability to
the Pension Benefit Guaranty Company ("PBGC") in connection with any
Employee Benefit Plan covering any employees of the Company or any of
its subsidiaries or ceased operations at any facility or withdrawn from
any such Plan in a manner which could subject it to material liability
under Section 462(f), 4063 or 4064 of ERISA, and knows of no facts or
circumstances which might give rise to any material liability of the
Company to the PBGC under Title IV of ERISA.
SECTION 2.20. Compensation of Key Employees. Schedule 2.20 sets forth
the aggregate compensation (salaries, wages and bonuses) paid by the Company to
its four most highly compensated employees for the 1996 fiscal year and the
amount of such compensation scheduled to be paid to such employees for the 1997
fiscal year.
SECTION 2.21. Environmental Compliance. The Company is in compliance
with all applicable laws relating to environmental matters in each jurisdiction
where it is presently engaged in a material manufacturing business, except for
such failures to comply which, in the aggregate, could reasonably be expected
not to have a material adverse effect on the Company. The Company is not subject
to any liability under any such environmental laws, that, in the aggregate for
all such liabilities, could be reasonably expected to have a material adverse
effect on the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as of the Closing
Date that:
SECTION 3.1. Purchase of Series A-2 Preferred. (a) It is an "accredited
investor" within the meaning of Rule 501 under the Securities Act and was not
organized for the specific purpose of acquiring the Series A-2 Preferred.
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(b) It has sufficient knowledge and experience in investing
in companies in a similar stage of development to the Company so as to
be able to evaluate the risks and merits of its investment in the
Company and it is able financially to bear the risks thereof.
(c) It has had an opportunity to discuss the Company's business,
management and financial condition with the Company's management.
(d) It is purchasing the Series A-2 Preferred for its own account
for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof.
(e) It understands that (i) the Series A-2 Preferred has not been
registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration requirements of the Securities
Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated
under the Securities Act, (ii) the Series A-2 Preferred must be held
indefinitely unless a subsequent disposition thereof is registered under
the Securities Act or is exempt from such registration requirements,
(iii) the Series A-2 Preferred will bear a legend to such effect and
(iv) the Company will make a notation on its transfer ledger to such
effect.
SECTION 3.2. Authority. It has all requisite power and authority to
execute, deliver and perform this Agreement, and has taken all necessary action
to authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement on the
Closing Date will constitute, the legal, valid and binding obligation of the
Purchaser, enforceable in accordance with its terms, except (i) to the extent
that enforceability may be limited by bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (ii) that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceedings therefor may be brought.
SECTION 3.3. Projections. It understands that any and all financial
projections and other estimates delivered to it were based on the Company's
experience in the industry and on assumptions of fact and opinion which the
Company believes to have been, and to be, reasonable. It understands that the
Company cannot and does not assure or guarantee the attainment of such
projections or other estimates.
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to purchase and pay for the Series A-2
Preferred being purchased by it on the Closing Date is, at its option, subject
to the satisfaction of the Purchaser and its counsel, on or before the Closing
Date, of the following conditions:
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SECTION 4.1. Opinion of Company's Counsel. The Purchaser shall have
received from Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company, an opinion dated
the Closing Date, in the form attached as Exhibit B and otherwise satisfactory
in form and scope to the Purchaser and its counsel as to such other matters as
the Purchaser or its counsel may reasonably request.
SECTION 4.2. Representations and Warranties to be True and Correct. The
representations and warranties contained in Article II shall be true, complete
and correct on and as of such Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, and the
President of the Company shall have certified to such effect to the Purchaser in
writing.
SECTION 4.3. Performance. The Company shall have performed and complied
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the President of the Company shall
have certified to the Purchaser in writing to such effect and to the further
effect that all of the conditions set forth in this Article IV have been
satisfied.
SECTION 4.4. All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Purchaser and its counsel, and the Purchaser and its
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
SECTION 4.5. Supporting Documents. At the Closing, the Purchaser and
its counsel shall have received copies of the following documents:
(a) (i) the Charter, certified as of a recent date by the
Secretary of State of the Commonwealth of Massachusetts and (ii) a
certificate of said Secretary dated as of a recent date as to the due
incorporation and subsistence of the Company and listing all documents
of the Company on file with said Secretary;
(b) a certificate of the Clerk or an Assistant Clerk of the
Company dated the Closing Date and certifying: (i) that attached thereto
is a true and complete copy of the By-laws of the Company as in effect
on the date of such certification; (ii) that attached thereto is a true
and complete copy of all resolutions adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance of
this Agreement, the issuance, sale and delivery of the Series A-2
Preferred and that all such resolutions are in full force and effect and
are all the resolutions adopted in connection with the transactions
contemplated by this Agreement; (iii) that the Charter has not been
amended since the date of the last amendment referred to in the
certificate delivered pursuant to clause (a)(ii) above, except as
contemplated by Exhibit A; and (iv) to the incumbency and specimen
signature of each officer of the Company executing this Agreement or any
of the stock certificates representing the Series A-2 Preferred and any
certificate or instrument furnished pursuant hereto, and a certification
by another officer of the Company as to the
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incumbency and signature of the officer signing the certificate referred
to in this clause (b); and
(c) such additional supporting documents and other information
with respect to the operations of the Company as the Purchaser or its
counsel may reasonably request.
(d) Legal Fees. At the Closing, the Company shall pay the
reasonable fees and expenses of Reboul, MacMurray, Xxxxxx, Xxxxxxx &
Kristol incurred for Northstar in connection with the transactions
contemplated by this Agreement.
SECTION 4.6. Certificate of Designation. The Certificate of Vote of
Directors Establishing a Series or a Class of Stock with respect to the Series
A-2 Preferred in substantially the form of Exhibit A (the "Certificate of
Designation") shall have been filed with the Secretary of State of
Massachusetts.
SECTION 4.7. Consents. Except with respect to the consent of MBDC, the
obtaining of which consent the Purchaser has expressly waived, the written
consent of Creditanstalt Bankverein and any other party without whose consent
the Company could not effect the transactions contemplated hereby or pay cash
dividends to the Purchaser in respect of the Shares as provided for in the
Certificate of Designation shall have been received in form and substance
satisfactory to the Purchaser and its counsel.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Purchaser that so long as the
Purchaser (or an affiliate thereof) owns at least 25 % of the shares of Series
A-2 Preferred purchased by the Purchaser:
SECTION 5.1. Financial Statements, Reports, etc. The Company shall
furnish to each holder of Series A-2 Preferred:
(a) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Company, a copy of the consolidated
balance sheet of the Company and its subsidiaries with which it is
consolidated for financial statement purposes ("Subsidiaries") as at the
end of such year and the related consolidated statements of income,
stockholders' equity and cash flows for such year, setting forth in each
case comparisons to the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Ernst & Young or
other independent certified public accountants of nationally recognized
standing;
(b) as soon as available, but in any event not later than 30 days
after the end of each month of each fiscal year of the Company, the
unaudited consolidated balance sheet
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of the Company and its Subsidiaries as at the end of such month and the
related unaudited consolidated statements of income, stockholders'
equity and cash flows of the Company and its Subsidiaries for such month
and the portion of the fiscal year through the end of such month,
setting forth in each case comparisons to the figures for the previous
year certified by an executive officer of the Company (a "Responsible
Officer") as being fairly stated in all material respects (subject to
normal year-end audit adjustments);
(c) all such financial statements shall be complete and correct
in all material respects and shall be prepared in reasonable detail and
in accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such
accountants or officer, as the case may be, and disclosed therein) and
shall be accompanied by a management discussion and analysis in respect
of the fiscal periods reported on therein;
(d) concurrently with the delivery of the financial statements
referred to in clause (a) above, a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default (as such terms are
defined in the notes (the "Notes") issued pursuant to the Note
Agreement), except as specified in such certificate;
(e) concurrently with the delivery of the financial statements
referred to in clause (a) or clause (b) above, a certificate of a
Responsible Officer stating that, to the best of such officer's
knowledge, the Company during such period and as of the date of such
certificate has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement
to be observed, performed or satisfied by it, and that such officer has
obtained no knowledge of any Default or Event of Default during such
period or on or prior to the date of such certificate except as
specified in such certificate;
(f) not later than 30 days prior to the end of each fiscal year
of the Company, a copy of the projections by the Company for the
operating budget and cash flow budget of the Company and its
Subsidiaries for the succeeding fiscal year, such projections to be
accompanied by a certificate of a Responsible Officer to the effect that
such projections have been prepared on the basis of sound financial
planning practice and that such officer has no reason to believe they
are incorrect or misleading in any material respect;
(g) within 5 days after the same are sent, copies of all
financial statements and reports which the Company sends to its other
stockholders, and within 5 days after the same are filed, copies of all
financial statements and reports which the Company may make to, or file
with, the Securities and Exchange Commission or any successor or
analogous governmental authority;
(h) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Company's operations
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or financial affairs given to the Company by its independent certified
public accountants (and not otherwise contained in other materials
provided hereunder);
(i) during the month of October in each calendar year, a report
of a reputable insurance broker with respect to the Company's insurance;
(j) promptly, and in any case within five business days
thereafter, written notice of the commencement of any action, suit or
proceeding before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting
the Company or any of its Subsidiaries, and of any material adverse
development in connection with any of the foregoing, in each case
described in reasonable detail (including a description of the parties,
the venue and the nature of the claim); and
(k) promptly, such additional financial and other information as
the holder of Series A-2 Preferred may from time to time reasonably
request.
SECTION 5.2. Corporate Existence. The Company shall maintain its
corporate existence, rights and franchises in full force and effect.
SECTION 5.3. Properties, Business, Insurance. The Company shall maintain
with financially sound and reputable insurers, insurance against such casualties
and contingencies and of such types and in such amounts and with such deductible
as are customary for companies similarly situated, including but not limited to
fire and other risks insured against by extended coverage, product liability
insurance, key person insurance and public liability insurance against claims
for personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by the
Company, which insurance shall be deemed by the Company to be sufficient; and
maintain workers' compensation insurance and such other insurance as may be
required by law. The Company shall keep all property useful and necessary in its
business in good working order and condition in accordance with industry
standards and applicable law.
SECTION 5.4. Inspection, Consultation and Advice. The Company shall
permit the Purchaser at the expense of the Purchaser (unless occasioned by a
default by the Company of its obligations under this Agreement, or the terms of
the Series A-2 Preferred Stock, and then at the Company's expense), to visit and
inspect any of the properties of the Company, examine its books and take copies
and extracts therefrom, discuss the finances and accounts of the Company with
its officers, employees and public accountants (and the Company hereby
authorizes said accountants to discuss with the Purchaser such finances and
accounts), and consult with and advise the management of the Company and its
independent certified public accountants as to its finances and accounts, all at
reasonable times and upon reasonable notice.
SECTION 5.5. Restrictive Agreements Prohibited. The Company shall not
become a party to any agreement which by the terms thereof or as a result of the
performance thereof restricts the Company's performance of, or ability to
perform, this Agreement or the Charter.
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SECTION 5.6. Board of Directors Meetings. The Company shall use its
best efforts to ensure that meetings of its Board of Directors are held at least
semi-annually.
SECTION 5.7. Compliance with Laws. The Company shall comply with all
applicable laws, rules, regulations and orders, and each of its Contractual
Obligations (as defined in the Notes), in each case to the extent any such
noncompliance could materially adversely affect its business or condition,
financial or otherwise.
SECTION 5.8. Keeping of Records and Books of Account. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with generally accepted accounting principles consistently
applied, reflecting all financial transactions of the Company, and in which, for
each fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
SECTION 5.9. Maintaining Nature of Business. The Company will remain in
the business of researching and developing, manufacturing and distributing
biotechnology and healthcare products.
SECTION 5.10. Obligations and Taxes. The Company shall pay when due all
of its indebtedness and obligations promptly and in accordance with their terms
and pay and discharge promptly all taxes, assessments and governmental charges
or levies imposed upon it or its income or profits or in respect of its
properly, before the same shall become in default, as well as all lawful claims
for labor and supplies or otherwise which, if unpaid, might become a lien or
charge upon such properties or any part thereof, provided, however, that the
Company shall not be required to pay and discharge or to cause to be paid and
discharged any indebtedness, obligation, tax, assessment, charge, levy or claim
so long as the validity or amount thereof shall be contested in good faith by
appropriate proceedings and the Company shall have set aside on its books such
reserves as may be required by generally accepted accounting principles with
respect to any such tax, assessment, charge, levy or claim so contested.
SECTION 5.11. Further Issuances of Series A-2 Preferred. The Company
shall not, directly or indirectly, issue, offer to sell, effect any sale or
otherwise dispose of by any means any shares of Series A-2 Preferred or rights
to acquire such shares or securities convertible into or exchangeable for such
shares without the prior written consent of the majority of the holders of the
Series A-2 Preferred.
SECTION 5.12. Notices. The Company shall promptly give notice to each
holder of Series A-2 Preferred of:
(a) the occurrence of any Default or Event of Default;
(b) any (1) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries or (2) litigation,
investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority (as
such term is defined in the Notes), which in either case, if
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not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect (as such term
is defined in the Notes);
(c) any litigation or proceeding affecting the Company or any of
its Subsidiaries in which the amount involved is $250,000 or more and
not covered by insurance or in which injunctive or similar relief is
sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Company knows or has reason to know thereof:
(1) the occurrence or expected occurrence of any Reportable Event (as
such term is defined in the Notes) with respect to any Plan, a failure
to make any required contribution to a Plan (as such term is defined in
the Notes), the creation of any Lien in favor of the PBGC (as such term
is defined in the Notes) or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency (as such terms are defined in
the Notes) of, any Multiemployer Plan (as such term is defined in the
Notes) or (2) the institution of proceedings or the taking of any other
action by the PBGC or the Company or any Commonly Controlled Entity (as
such term is defined in the Notes) or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan;
(e) any material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of the Company
and its Subsidiaries taken as a whole;
(f) any application or registration relating to any material
patent or trademark of the Company or any of its Subsidiaries becoming
abandoned or dedicated, or of any adverse determination or development
(including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States
Patent and Trademark Office or any court or tribunal in any country)
regarding the Company's or Xxxxxxx' ownership of any material patent or
trademark or its right to register the same or to keep and maintain the
same.
Each notice pursuant to this Section 5.12 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Company proposes to take with respect
thereto.
SECTION 5.13. Environmental Matters. (a) The Company shall comply with,
and ensure compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws (as such term is defined in the Notes) and obtain
and comply with and maintain, and ensure that all tenants and subtenants obtain
and comply with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply with all lawful
orders and directives of all Governmental Authorities regarding
Environmental Laws.
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SECTION 5.14. The Exchange Notes; Security Interest; Guaranty. (a)
Immediately upon the issuance by the Company of one or more notes (the "Exchange
Notes") pursuant to the Certificate of Designation (which Exchange Notes shall
be in substantially the form of Exhibit C hereto), the Company and Xxxxxxx agree
to execute such agreements and other documents such that payment of the Exchange
Notes is guaranteed by Xxxxxxx and the Exchange Notes are secured by all of the
assets of the Company (including all intellectual property and the assets and
stock of subsidiaries formed after the date of this Agreement), with the
obligation of Xxxxxxx under the aforementioned guaranty to be secured by all of
the assets of Xxxxxxx (including all intellectual property), all the extent
practicable, to the same extent (limited only to the extent not then currently
possible) as payment of the Notes has been guaranteed and secured pursuant to
the:
(i) Junior Subordinated Security Agreement between the
Company, Xxxxxxx and Purchaser dated as of June 21, 1996;
(ii) Junior Subordinated Pledge Agreement between the
Company and Purchaser dated as of June 21, 1996;
(iii) Junior Subordinated subsidiary Guaranty by Xxxxxxx
in favor of Purchaser, as Lender, dated as of June 21, 1996;
(iv) Agreement (Patent) between the Company, as Grantor,
and Purchaser, as Lender, dated as of June 21, 1996;
(v) Agreement (Trademark) between the Company, as Grantor,
and Purchaser as Lender, dated as of June 21, 1996;
(vi) Agreement (Patent) between Xxxxxxx, as Grantor, and
Purchaser, as Lender, dated as of June 21, 1996;
(vii) Agreement (Trademark) between Xxxxxxx, as Grantor,
and Purchaser, as Lender, dated as of June 21, 1996;
(b) The Company and Xxxxxxx further agree to immediately take all
action necessary to perfect such security interests; provided, however,
that the preceding undertaking by the Company and Xxxxxxx shall not be
deemed to be a covenant by either of them that such security interests
shall have the same priority as those that have been heretofore securing
payment of the Notes.
SECTION 5.15. Waivers. The Company agrees that it will not enter into a
waiver with respect to a default under an agreement for borrowed money if such
waiver provides that cash dividends may not be paid under the terms of the
Certificate of Designation after the date on which the default has been cured
(other than a deemed cure of such default by reason of the existence of the
waiver).
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SECTION 5.16. Payment of Dividends. The Company agrees to pay all
dividends due to Northstar High Total Return Fund as follows:
For cash payments:
CTC NJ
ABA No. 000000000
BNF=TRUST
OBI=NORTHSTAR HIGH TOTAL RETURN FUND
For payments in kind:
Custodial Trust Corp.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn.: Xx. Xxx Xxxxxxxx
SECTION 5.17. Further Assurances. The Company and the Purchaser hereby
agree to take such further action as shall be commercially and reasonably
necessary to provide each party hereto with the benefits intended to be granted
by this Agreement to such party.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Expenses. (a) Except to the extent provided in Section
4.6, each party hereto will pay its own expenses in connection with the
transactions contemplated hereby whether or not such transactions shall be
consummated.
(b) The Company will also pay, and will save the Purchaser
harmless from, any and all liabilities with respect to any taxes, and
interest and penalties thereon (other than taxes which are measured
solely by the income of the Purchaser), which may be payable in respect
of the execution and delivery of this Agreement, or the issue of the
Series A-2 Preferred Stock.
SECTION 6.2. Survival of Agreements. Unless otherwise expressly stated
herein, or in any certificate or instrument delivered to the Purchaser pursuant
thereto, all covenants and agreements, made herein, or any certificate or
instrument delivered to the Purchaser pursuant to or in connection with this
Agreement shall survive the execution and delivery of this Agreement, and the
issuance, sale and delivery of the shares of the Series A-2 Preferred. All
statements contained in any certificate or other instrument delivered by the
Company hereunder or thereunder or in connection herewith or therewith shall be
deemed to constitute representations and warranties made by the Company.
SECTION 6.3. Brokerage. Each party hereto will indemnify and hold
harmless the other against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements,
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arrangements or understandings made or claimed to have been made by such party
with any third party.
SECTION 6.4. Parties in Interest. All representations, covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants and agreements
benefiting the Purchaser shall inure to the benefit of any and all subsequent
holders from time to time of shares of Series A-2 Preferred.
SECTION 6.5. Notices; Payment of Dividends. All notices, requests,
consents and other communications hereunder shall be in writing and shall be
delivered in person or mailed by certified or registered mail, return receipt
requested, or telexed in the case of non U.S. residents, addressed as follows:
(a) if to the Company, at Intracel Corporation, 0000 X.X.
Xxxxxx Xxxx., Xxxxxxxx, XX 00000, Attention: Xxxxx X. XxXxxxxx, with a
copy to Xxxxxx X. Xxxxxxxx, Xxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
(b) if to the Purchaser, at the address set forth beneath the
Purchaser's name; or, in any such case, at such other address or
addresses as shall have been furnished in writing by such party to the
others.
So long as the Purchaser or any affiliate of the Purchaser, or a nominee
of either, shall be the holder of Series A-2 Preferred, and in addition to any
provision contained in the Articles of Organization with respect to the method
of payment of dividends, the Company will pay all dividends on Series A-2
Preferred owned by such person by the method and at the addresses specified for
such purposes on the attached Schedule I, or by such other method or at such
other address as such person shall have specified to the Company in writing for
such purposes. The Company shall accord the benefits of this paragraph to any
institutional purchaser which shall have purchased shares of Series A-2
Preferred directly from the Purchaser or an affiliate of the Purchaser.
SECTION 6.6. Replacement of Certificates. Upon receipt of evidence
reasonable satisfactory to the Company of the loss, theft, destruction or
mutilation of any certificate evidencing ownership of shares of Series A-2
Preferred by the Purchaser or an affiliate of the Purchaser, or a nominee of
either (a "Certificate" for purposes of this Section 6.6) and, in the case of
loss, theft or destruction of any Certificate upon delivery of an indemnity bond
in such reasonable amount as the Company may determine (but if such holder is an
insurance company, an unsecured indemnity agreement from such holder shall
suffice) or, in the case of mutilation upon surrender of such Certificate for
cancellation to the Company at its principal office, the Company at its expense
will execute and deliver in lieu thereof a new Certificate for the same number
of shares as were evidenced by such lost, stolen, destroyed or mutilated
Certificate which
20
25
shall be in such form and tenor as not to cause any loss of accrued dividends on
the shares evidenced by the lost, stolen, destroyed or mutilated Certificate.
SECTION 6.7. Governing Law. This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the State of New York,
regardless of the jurisdiction of creation or domicile of the Company or its
successors or of the Purchaser (without giving effect to such jurisdiction's
choice of law principles that would result in the application of any law other
than that of the State of New York), except that the filing, perfection, effect
of perfection and enforcement of security interests and liens in other
jurisdictions shall be governed by the laws of the applicable jurisdictions in
accordance with the Uniform Commercial Code as then in effect under the laws of
the respective state of reference.
SECTION 6.8. Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto, constitutes the sole and entire agreement of the parties
with respect to the subject matter hereof. All Schedules and Exhibits hereto are
hereby incorporated herein by reference.
SECTION 6.9. Submission to Jurisdiction; Waivers. Each of the Company
and the Purchaser hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive
general jurisdiction of the Courts of the State of New York, the courts
of the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have
to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
(c) agrees that service or process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Company at its address set forth in Section 6.5 or at
such other address of which the Purchaser shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
SECTION 6.10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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SECTION 6.11. Amendments. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of the
Company and the holders of at least two-thirds of the outstanding shares of the
Series A-2 Preferred.
SECTION 6.12. Severability. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
SECTION 6.13. Titles and Subtitles. The titles and subtitles used in
this Agreement are for convenience only and are not to be considered in
construing or interpreting any term or provision of this Agreement.
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27
IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the day and year first above written.
INTRACEL CORPORATION
[Corporate Seal] By:
-------------------------------------------
Name: Xxxxx X. XxXxxxxx
Title: President and Chief Executive
Officer
Attest: By:
-------------------------------------------
Name:
Title:
-----------------------------------
Name: Xxxxxx Xxxxxxx SOLELY FOR PURPOSES OF SECTION 5.14
Title: Clerk XXXXXXX, INC.
By:
-------------------------------------------
Name:
Title:
PURCHASER:
NORTHSTAR HIGH TOTAL RETURN FUND
By:
-------------------------------------------
Name: Xxxxxx Xxx Dial
Title: Vice President
Address: 2 Pickwick Plaza, x/x Xxxxxx Xxx
Xxxx, Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
copy to: Xxxxx Xxxxxxxxx, Esq,
Reboul, MacMurray, Xxxxxx,
Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx
23
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EXHIBIT A
The following is a statement of the designation and the powers, privileges
and rights, and the qualifications, limitations, or restrictions thereof in
respect of the Series A-2 Preferred Stock of the Corporation, no par value per
share, which shall consist of and be limited to a number of shares not to
exceed 155,000 shares.
A. Series A-2 Preferred Stock.
1. Voting.
(a) General. Except as may otherwise be required hereby or by
law, the shares of Series A-2 Preferred Stock shall not
entitle the holder thereof to have any rights to vote or to
receive any notice of any meeting of the holders of the
Corporation's stock; provided, however, that in the event
the Corporation proposes to sell all or substantially all
of its assets, the holders of shares of Series A-2
Preferred Stock shall be entitled to a number of votes for
each share of Series A-2 Preferred Stock voting with the
holders of the Corporation's Common Stock, equal to 100
divided by the then-applicable "Conversion Price" for the
Corporation's Series A-1 Preferred Stock, (as such term is
defined in the Certificate of Vote of Directors
Establishing a Series or a Class of Stock with respect to
the Series A-1 Preferred Stock) at each meeting of
stockholders of the Corporation (and written actions of
stockholders in lieu of meetings) at which such sale of all
or substantially all of the assets of the Corporation is
considered.
(b) Covenants. So long as any shares of Series A-2 Preferred
Stock originally authorized remain outstanding, in addition
to any other rights provided by law, without first
obtaining the affirmative vote or written consent of the
holders of not less than 51% of the then outstanding shares
of the Series A-2 Preferred Stock, the Corporation shall
not:
(i) except for authorizations or issuances provided in
the Corporation's Articles of Organization with
respect to the Corporation's Series A Preferred Stock
and Series A-1 Preferred Stock, amend or repeal any
provision of, or add any provision to, the
Corporation's Articles of Organization or By-laws if
such action would materially alter or change the
preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, any Series
A-2 Preferred Stock, or increase or decrease the
number of shares of Series A-2 Preferred Stock
authorized hereby;
(ii) authorize or issue shares of any class or series of
stock not expressly authorized herein having any
preference or
29
priority as to dividends, assets or other rights superior to any such
preference or priority of the Series A-2 Preferred Stock, or authorize
or issue shares of stock of any class or any bonds, debentures, notes or
other obligations convertible into or exchangeable for, or having option
rights to purchase, any shares of stock of the Corporation having any
preference or priority as to dividends, assets or other rights superior
to any such preference or priority of the Series A-2 Preferred Stock;
(iii) pay or declare any dividend on any capital stock of the Corporation
which is junior to the Series A-2 Preferred Stock ("Junior Stock")
(other than (x) dividends payable in shares of the class or series upon
which such dividends are declared or paid, or payable in shares of
Common Stock with respect to Junior Stock other than Common Stock, and
(y) cash in lieu of fractional shares and aggregate dividends since the
last payment of a cash dividend on the Series A-2 Preferred Stock not in
excess of the aggregate cash dividend payment last made in respect of
the Series A-2 Preferred Stock) while the Series A-2 Preferred Stock
remains outstanding, or apply any of its assets to the redemption,
retirement, purchase or acquisition, directly or indirectly, through
subsidiaries or otherwise, of any Junior Stock, except from employees of
the Corporation, upon termination of employment or otherwise pursuant to
the terms of the employee stock purchase or employee stock option plans
of general application which provide for the repurchase of, or right of
first refusal with respect to such Junior Stock entered into with
participating employees;
(iv) recapitalize or reclassify any shares of Capital Stock.
(v) merge into or consolidate with any other corporation (except for a
merger or consolidation which provides the holders of the Series A-2
Preferred Stock with all cash consideration paid at closing equal to the
consideration which would have been received by such holders had the
Series A-2 Preferred Stock been redeemed on the date of such closing
under Section 4(a));
(vi) voluntarily liquidate, dissolve or wind up the Corporation;
(vii) materially change the principal business of the Corporation; or
2
30
(viii) enter into any agreement that would prohibit, other than
during any period in which the Corporation is in default
under the terms of such agreement, the payment of the
Dividends (as hereinafter defined).
(c) Consent. The Corporation shall obtain the consent of the holders
of not less than 51% of the then outstanding shares of the
Series A-2 Preferred Stock (which consent shall not be
unreasonably withheld) prior to entering into any transaction or
series of related transactions pursuant to which the Corporation
incurs any "Obligation" (as hereinafter defined) of $3,500,000
or more. For purposes of the foregoing sentence. "Obligation"
shall mean any monetary obligation of the Corporation other than
(i) trade payables and other unsecured obligations incurred by
the Corporation in its ordinary course of business, (ii) that
which exists as of the Original Issue Date (as hereinafter
defined), (iii) that is acquired or assumed in connection with
an acquisition, provided that such obligation is secured only by
the assets so acquired, and (iv) any refinancing or replacement
of any obligation of the type described in (ii) and (iii) above,
provided that such refinancings do not result in an increase in
the original principal amount of such obligation (and, in the
event any such refinancing does result in such an increase, only
the amount of such increase shall be deemed to be an
"Obligation" for purposes of this Section 1(c)).
2. Dividends.
(a) The holders of record of outstanding shares of the Series A-2
Preferred Stock shall be entitled to receive dividends (the
"Dividends") payable in cash at a rate equal to thirteen and
one-half percent (13.5%) (the "Dividend Rate") of the
Liquidation Preference (as defined in Section 4(a) hereof),
which shall accrue daily; provided, however, that,
notwithstanding the foregoing, the Dividends with respect to any
period may be paid by the Corporation through the issuance of
additional shares of Series A-2 Preferred Stock ("in kind") when
(i) there has occurred, and is continuing on the date such
Dividends are declared, an event which causes a default (or with
the passage of time or notice would result in a default) under
any agreement for borrowed money to which the Corporation is a
party or under the terms of any preferred stock issued by the
Corporation; the Corporation agrees to use its best efforts to
cure the event causing such default, or (ii) the Corporation
determines that such dividends shall be paid in kind (which
determination may be made by the Corporation with
3
31
respect to Dividends payable at any time but may not be
utilized by the Corporation with respect to more than ten
(10) payments of Dividends (in addition to the in kind
payments permitted by clause (i) above); provided further,
however, that the ability of the Corporation to pay
Dividends in kind pursuant to clause (i) and (ii) shall
terminate upon the date of repayment (the "Payoff Date") by
the Corporation of all obligations due by the Corporation
under that certain Credit Agreement dated as of November
16, 1995 between the Corporation, the lenders party thereto
and Creditanstalt Bankverein ("Creditanstalt"), as agent;
provided, further, however, that, notwithstanding the
foregoing, from and after February 28, 2007, the Dividend
Rate on all shares of Series A-2 Preferred Stock then
outstanding will increase to nineteen percent (19%) per
annum and the Dividend will be payable only in cash. In the
event a holder of Series A-2 Preferred Stock has not
received any Dividend (whether in cash or in kind) within
five (5) days after a Dividend Payment Date (as hereinafter
defined) (provided, that such holder shall provide notice
to the Corporation that such Dividend has not been paid),
the then-applicable Dividend Rate shall increase by two
percent (2%) for the period commencing on the respective
Dividend Payment Date and ending on the date on which such
Dividend is paid by the Corporation; provided, however,
that notwithstanding the foregoing, the Dividend Rate shall
not increase by two percent (2%) for such period if the
Corporation has in its possession evidence that such
Dividend was paid by it and sent for delivery to the
location directed by such holder in a manner which was
intended to provide for the delivery of such Dividend prior
to the expiration of such five (5) day period. All dividend
payments, regardless of form, shall be paid quarterly,
without notice from any holder of Series A-2 Preferred
Stock, at the rate of 3.375% of the Liquidation Preference,
on each of February 28, May 31, August 31 and November 30
(each, a "Dividend Payment Date") of each year commencing
on May 31, 1997. Each dividend paid in cash or in kind
shall be mailed to the holders of record of the Series A-2
Preferred Stock as their names and addresses appear on the
share register of the Corporation, or to such other name
and address as any holder of record shall have notified the
Corporation of Holders of Series A-2 Preferred Stock will
receive written notification from the Corporation if a
dividend is paid-in-kind, which notification will specify
the number of shares of Series A-2 Preferred Stock paid as
a dividend and the recipient's aggregate
4
32
holdings of Series A-2 Preferred Stock as of that Dividend
Payment Date and after giving effect to the dividend.
(b) Dividends shall accrue until paid whether or not they have
been declared and whether or not there are profits,
surplus, or other funds legally available for the payment
of dividends. At the earlier of: (i) the redemption of the
Series A-2 Preferred Stock; (ii) the filing of a
registration statement in respect of an underwritten public
offering; or (iii) the liquidation sale or merger of the
Corporation, any accrued but undeclared dividends shall be
paid in cash to the holders of record of outstanding shares
of Series A-2 Preferred Stock.
3. Liquidation
(a) Series A-2 Preferred Stock.
(i) Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary,
the holders of the shares of the Series A-2 Preferred
Stock, only after (x) the holders of the Series A
Preferred Stock shall have been paid in full the
amounts to which they shall be entitled pursuant to
the Certificate of Vote of Directors Establishing a
Series or a Class of Stock with respect to the Series
A Preferred Stock (the "Series A Statement") and (y)
the holders of the Series A-1 Preferred Stock shall
have been paid in full the amounts to which they
shall be entitled pursuant the Certificate of Vote of
Directors Establishing a Series or a Class of Stock
with respect to the Series A-1 Preferred Stock (the
"Series A-1 Statement"), shall be entitled, before
any distribution or payment is made with respect to
the Common Stock or Junior Stock, to be paid in cash
an amount equal to $100.00 per share of the Series
A-2 Preferred Stock plus an amount equal to all
accrued but unpaid dividends thereon, computed to the
date payment thereof is made in immediately available
funds.
(ii) If upon such liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary,
the assets to be distributed among the holders of the
Series A-2 Preferred Stock shall be insufficient to
permit distribution in full to the holders of the
Series A-2 Preferred Stock of the amounts set forth
in this Section 3(a), then the entire remaining
assets of the Corporation shall be distributed
ratably among the holders of the Series A-2 Preferred
Stock
5
33
(based on their respective holdings of Series A-2
Preferred Stock).
(b) Junior and Common Stock. Upon any such liquidation,
dissolution or winding up of the Corporation, only after
the holders of the Series A Preferred Stock, the Series
A-1 Preferred Stock and Series A-2 Preferred Stock shall
have been paid in full the amounts to which they shall
be entitled pursuant to the Series A Statement, the
Series A-1 Statement and Section 3(a) above,
respectively, may the remaining net assets of the
Corporation be distributed to the holders of Common
Stock and Junior Stock.
(c) Notice. Written notice of such liquidation, dissolution
or winding up, stating a payment date and the place
where said payments shall be made, shall be given by
mail, postage prepaid, or by telex to non-U.S.
residents, not less than 20 days prior to the payment
date stated therein, to the holders of record of the
Series A-2 Preferred Stock, such notice to be addressed
to each such holder at its address as shown on the
records of the Corporation.
4. Redemption by the Corporation.
(a) Optional Redemption.
(i) The Series A-2 Preferred Stock shall be redeemable
by the Corporation, in whole or in part, (x) at
any time prior to February 28, 2000, at a per
share redemption price equal to $100.00 per share
(the "Liquidation Preference") (with all Preferred
Stock which has been issued for payment of
dividends in kind valued at such Liquidation
Preference) plus an amount equal to the additional
dividends that would have been paid by the
Corporation with respect to the originally issued
Series A-2 Preferred Stock (but not the Series A-2
Preferred Stock issued as payment in kind pursuant
to Section 2 hereof) ("Original Preferred Stock")
had the Preferred Stock provided for dividends at
a rate equal to 17.6% per annum rather than 13.5%
per annum; provided, however, that if not all
Preferred Stock is so redeemed, the amount of such
additional dividends to be paid shall be the
product of (A) the amount of additional dividends
calculated as stated above as if all shares being
redeemed were shares of Original Preferred Stock
and (B) a fraction, the numerator of which is the
number of shares of Original Preferred Stock and
the denominator of which is the number of shares
of Series A-2 Preferred Stock then
6
34
outstanding, and (y) at any time after February
28, 2000, at a per share redemption price equal to
the Liquidation Preference (with all Series A-2
Preferred Stock which has been issued for payment
of dividends in kind valued at the Liquidation
Preference); provided, however, that
notwithstanding the foregoing, in the event that
the Payoff Date has not occurred at the time of
any proposed redemption pursuant to this clause
(i), the Corporation shall be required to obtain
the prior written consent of Creditanstalt prior
to the consummation of any such redemption.
(ii) Written notice of such redemption by the
Corporation, stating a payment date and the place
where said payments shall be made, shall be given
by mail, postage prepaid, or by telex to non-U.S.
residents, not less than 20 days prior to the
payment date stated therein, to the holders of
record of the Series A-2 Preferred Stock, such
notice to be addressed to each such holder at its
address shown on the records of the Corporation.
(iii) Upon receipt of such a notice, each holder of
Series A-2 Preferred Stock shall tender such
holder's shares to the Corporation for redemption,
at an address to be set forth in such notice, at
any time prior to 5:00 p.m. New York City time on
the 15th day following the notice given as
prescribed herein. After the notice of redemption
is sent, the Preferred Stock to which it relates
shall be deemed canceled and thereafter the
certificates evidencing such shares of Preferred
Stock shall represent only the right to receive
redemption proceeds as set forth in this Section.
(b) Cancellation of Redeemed Stock. Any shares of Series A-2
Preferred Stock redeemed pursuant to this Section 4 or
otherwise acquired by the Corporation in any manner
whatsoever shall be canceled and shall not under any
circumstances be reissued; and the Corporation may from
time to time take such appropriate corporate action as
may be necessary to reduce accordingly the number of
authorized shares of the Corporation's capital stock.
5. Right to Elect Directors.
(a) From and after the date on which the Series A-2
Preferred Stock is originally issued (the "Original
Issue Date"), if the Corporation shall be in arrears in
the payment of any three consecutive
7
35
quarterly dividends on the outstanding shares of Series A-2
Preferred Stock, the number of directors of the Corporation
shall (in addition to any other permitted changes in the size
and composition of the Board of Directors) be increased to a
number (which number of directors, as so increased, shall be
maintained by the Corporation during the period this Section 5
applies) equal to one less than the number obtained by
multiplying the then current number of directors of the
Corporation by two (the number equal to the difference between
the number so obtained and the then current number of directors
of the Corporation, the "Number of Preferred Directors") and the
holders of Series A-2 Preferred Stock, voting separately as a
class, shall have the exclusive right to elect the Number of
Preferred Directors in addition to the number to be elected by
the holders of Common stock or any other shares of preferred
stock of the Corporation, at a special meeting of stockholders
called for the election of directors, and at every subsequent
meeting at which the terms of office of each directors so
elected by the holders of Series A-2 Preferred Stock expire,
provided that such arrearage or failure exists on the date of
such meeting or subsequent meetings, as the case may be.
(b) The right of the holders of Series A-2 Preferred Stock voting
separately as a class to elect the Number of Preferred Directors
as aforesaid shall continue until such time as either all
dividends accumulated on the Series A-2 Preferred Stock shall
have been paid in full (subject to revesting at such time as the
Corporation shall again be subject to Section 5(a)) or the
holders of Series A-2 Preferred Stock shall have exchanged their
Series A-2 Preferred Stock pursuant to the provisions of
Section 6 hereof.
(c) At any meeting held for the purpose of electing directors at
which the holders of Series A-2 Preferred Stock shall have the
right, voting separately as a class, to elect the Number of
Preferred Directors as aforesaid, the presence in person or by
proxy of the holders of at least thirty-three and one-third
percent (33-1/3%) of the outstanding Series A-2 Preferred Stock
shall be required to constitute a quorum of such Series A-2
Preferred Stock.
(d) Any vacancy occurring in the office of director elected by the
holders of Series A-2 Preferred Stock shall be filed by the
holders of Series A-2 Preferred Stock. Each director to be
elected by the holders of Series A-2 Preferred Stock shall
agree, prior to his election to office, to resign upon the
request of the respective holders of the Series A-2 Preferred
Stock which have the right
8
36
hereunder to elect such director in the event of any
termination of the right of the holders of Series A-2
Preferred Stock to vote as a class for the Number of
Preferred Directors as herein provided, and upon any
such termination the director then in office elected by
the holders of Series A-2 Preferred Stock shall
forthwith resign. Unless otherwise required to resign as
aforesaid, the term of office of each director elected
by the holders of Series A-2 Preferred Stock shall
terminate upon the election of his successor at any
meeting of stockholders held for the purpose of electing
directors.
6. Exchange
(a) From and after the Original Issue Date, if the Corporation
shall be in arrears in the payment of any four consecutive
quarterly dividends, whether in cash or in kind, on the
outstanding shares of Series A-2 Preferred Stock, the
holders of Series A-2 Preferred Stock shall have the option
at any time thereafter until such time as all dividends
accumulated in the Series A-2 Preferred Stock shall have
been paid in full to exchange all or any portion of the
shares of Series A-2 Preferred Stock outstanding into notes
(the "Notes") having substantially the same terms and
conditions as the notes, as amended, issued under the Note
and Series A-IV Warrant Purchase Agreement dated as of June
21, 1996 between the Corporation and Northstar High Total
Return Fund (except that the maturity date for any Notes
issued in an exchange pursuant hereto on or prior to
February 28, 2007 shall be February 28, 2007, and Notes
issued on and after February 28, 2007 shall be payable on
demand), in the amount of $100 principal amount of Notes
for each share of Series A-2 Preferred Stock (assuming, for
purposes of the foregoing calculations, that all accrued
Dividends have been paid in kind pursuant to the provisions
of Section 2 in full through the date notice is provided
pursuant to Section 6(b) below).
(b) Any exchange pursuant to this Section 6 shall be made upon
prior written notice pursuant to the notice provisions set
forth in the Preferred Stock Purchase Agreement dated as of
March 12, 1997 between the Corporation and the Purchasers
named therein. Upon receipt of such notice by the
Corporation, all rights of the holders with respect to such
shares exchanged shall cease, except the right to receive
the Notes in the amount set forth in Section 6(a) above.
The Corporation shall not be required to declare or pay,
and the holders of Series A-2 Preferred Stock shall not be
entitled to receive, any dividends on such Series A-2
Preferred Stock from
9
37
and after the date on which notice pursuant to this
Section 6(b) is provided.
10
38
EXHIBIT B
March 12, 1997
Northstar High Total Return Fund
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Re: PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF MARCH 12, 1997,
BETWEEN INTRACEL CORPORATION AND NORTHSTAR HIGH TOTAL RETURN FUND
Ladies and Gentlemen:
We have acted as special counsel for Intracel Corporation (the "Company")
in connection with the transaction contemplated by the Preferred Stock Purchase
Agreement, dated as of March 12, 1997 (the "Purchase Agreement") between the
Company and Northstar High Total Return Fund ("Northstar"). This opinion is
furnished to Northstar pursuant to Section 4.1 of the Purchase Agreement.
We have examined a copy of the Purchase Agreement and the Certificate of
Designation. Unless otherwise defined herein, terms defined in the Purchase
Agreement shall have the same meanings herein.
In addition, we have examined such records, documents, certificates of
public officials and of the Company, made such inquiries of officials of the
Company, and considered such questions of law as we have deemed necessary for
the purpose of rendering the opinions set forth herein.
We have assumed the genuineness of all signatures and the authenticity of
all items submitted to us as originals and the conformity with originals of all
items submitted to us as copies. In making our examination of the Purchase
Agreement, we have assumed that each party to the Purchase Agreement other than
the Company has the power and authority to execute and deliver, and to perform
and observe the provisions of, the Purchase Agreement, and has duly authorized,
executed and delivered the Purchase Agreement, and that the Purchase Agreement
constitutes the legal, valid and binding obligation of such party.
Our opinion in paragraph (a) below as to the good standing and
qualification of the Company is based solely upon certificates of public
officials in the states named in that paragraph. We have made no independent
investigation as to whether such certificates are accurate or complete, but we
have no knowledge of any such inaccuracy or incompleteness.
39
Northstar High Total Return Fund
Page Two
With respect to the opinion expressed in paragraph (e) below, we have
assumed that Northstar is acquiring the Series A-2 Preferred Stock, no par
value per share, of the Company (the "Series A-2 Preferred Stock") with no
present intention of distributing the same other than in compliance with the
requirements, if any, of all applicable state and federal securities laws.
The opinions hereinafter expressed are subject to the following further
qualifications and exceptions.
(1) The effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, including, without limitation, laws relating to fraudulent
transfers or conveyances, preferences and equitable subordination.
(2) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the
Purchase Agreement; and the effect of judicial decisions which have held that
certain provisions are unenforceable where their enforcement would violate the
implied covenant of good faith and fair dealing, or would be commercially
unreasonable.
(3) We express no opinion as to the effect on the opinions expressed
herein of (a) the compliance or non-compliance of any party to the Purchase
Agreement (other than the Company) with any laws or regulations applicable to
it, or (b) the legal or regulatory status or the nature of the business of any
such party.
(4) The enforceability of provisions of the Purchase Agreement
providing for indemnification, to the extent such indemnification is against
public policy.
(5) We express no opinion as to compliance by the Company with any
state securities law.
(6) We express no opinion as the matters discussed in Section 2.2 of
the Purchase Agreement.
Based upon and subject to the foregoing, we are of the opinion that:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts, and has
the corporate power and authority to conduct its business as presently
conducted. The Company is duly qualified in the State of Washington.
40
Northstar High Total Return Fund
Page Three
(b) The Company has the corporate power and authority to execute and
deliver the Purchase Agreement, and to perform and observe the provisions of
the Purchase Agreement and the Certificate of Designation.
(c) The Company has the corporate power and authority to issue the
Series A-2 Preferred Stock. The Series A-2 Preferred Stock has been duly
authorized and, upon delivery to Northstar against payment therefor in
accordance with the terms of the Purchase Agreement, will be validly issued,
fully paid and non-assessable.
(d) (i) The Purchase Agreement has been duly authorized, executed and
delivered by the Company. (ii) The Purchase Agreement constitutes valid and
binding obligations of the Company enforceable against the Company in
accordance with its terms.
(e) No registration with, consent or approval of, notice to, or other
action by, any federal or New York governmental entity, or any Massachusetts
governmental entity pursuant to the Business Corporation Law of the
Commonwealth of Massachusetts, is required on the part of the Company for the
execution, delivery or performance by the Company of the Purchase Agreement, or
if required, such registration has been made, such consent or approval has been
obtained, such notice has been given or such other appropriate action has been
taken. No registration with, consent or approval of, notice to, or other action
by, any federal or New York governmental entity, or any Massachusetts
governmental entity pursuant to the Business Corporation Law of the
Commonwealth of Massachusetts, is required on the part of the Company for the
issuance of the Series A-2 Preferred Stock by the Company (other than filings
pursuant to state securities laws in connection with the issuance of the Series
A-2 Preferred Stock, as to which we express no opinion), or if required, such
registration has been made, such consent or approval has been obtained, such
notice has been given or such other appropriate action has been taken.
(f) The execution, delivery and performance of the Purchase Agreement
by the Company is not in violation of its articles of organization or its
by-laws.
(g) The authorized capital stock of the Company consists of 5,000,000
shares of voting common stock, no par value per share, and 3,000,000 shares of
preferred stock, no par value per share (the "Authorized Preferred Stock"). The
Company has designated 155,000 shares of the Authorized Preferred Stock as
Series A-2 Preferred Stock. After giving effect to the transactions
contemplated by the Purchase Agreement, the Company will have 40,000 shares of
Series A-2 Preferred Stock outstanding.
41
Northstar High Total Return Fund
Page Four
(h) The offering and sale of the Preferred Stock is exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to the exemption set forth under Section 4(2) of the Securities
Act.
We express no opinion as to matters governed by any laws other than the
substantive laws of the state of New York (including its applicable
choice-of-law rules), the Business Corporation Law of the Commonwealth of
Massachusetts (with respect to the opinions set forth in paragraphs (a), (b),
(c), (d)(i), (e), (f) and (g)), and federal laws of the United States, which, in
each case, are in effect on the date hereof. We have assumed, with your
permission, that any provision in the Purchase Agreement excepting New York
choice or conflicts of law rules from the New York choice-of-law provision in
the Purchase Agreement would not be interpreted to include Section 5-1401 of the
General Obligations Law of the State of New York. We express no opinion as to
the New York choice-of-law provision in the Purchase Agreement to the extent
that Section 1-105 of the Uniform Commercial Code of the State of New York
requires the application of the law of another jurisdiction. For purposes of
this opinion, we have assumed that Section 5-1401 of the General Obligations Law
of the State of New York would be given effect in accordance with its terms.
We bring your attention to the fact that while individual members of this
firm are admitted to practice in the Commonwealth of Massachusetts, (i) we
maintain no offices in that state, (ii) we do not purport to be experts on the
laws of the Commonwealth of Massachusetts, and (iii) the individual members of
this firm who are admitted to practice law in the Commonwealth of Massachusetts
do not regularly render advice on matters involving the laws of the Commonwealth
of Massachusetts.
This opinion is solely for Northstar's benefit and may not be relied upon
by, nor may copies be delivered to, any other person without our prior written
consent.
Very truly yours,
Xxxxxxxx & Xxxxxxxx LLP
