NOTE PURCHASE AND WARRANT AGREEMENT
February 18, 1999
X.X. Xxxxxxx
X/x Xxx Xxxxxx Xxxxxx Xxxxxxx
Xxxxx 0000
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
THE FEMALE HEALTH COMPANY, a Wisconsin corporation (the "Company"), hereby
requests that you, X.X. Xxxxxxx (hereinafter referred to as the "Lender"),
purchase a promissory note in the principal amount of $50,000 from the Company
on the terms and conditions set forth below.
ARTICLE I
NOTE
1.1 Purchase of Note. On the date hereof the Lender will purchase a
promissory note from the Company in the principal amount of $50,000 (the
"Note") in the form of Exhibit A attached hereto for a purchase price of
$50,000. The Note is being executed by the Company and delivered to the
Lender against the delivery of funds to the Company in an amount equal to the
purchase price.
ARTICLE II
THE WARRANT
2.1 Issuance of Warrant. On the date hereof the Company shall issue to
Lender a warrant which shall entitle the Lender to purchase 10,000 of the
issued and outstanding shares of Common Stock, $.01 par value per share, of the
Company on the date of exercise at a purchase price of $1.35 per share (subject
to adjustment as provided therein) in the form attached hereto as Exhibit B
(the "Warrant").
ARTICLE III
REPRESENATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to the Lender as follows:
3.1 Organization. The Company is a corporation duly organized and
existing in active status under the laws of the State of Wisconsin, and has all
requisite power and authority, corporate or otherwise, to conduct its business
and to own its properties.
3.2 Authority. The execution, delivery and performance of this
Agreement, the Note, the Warrant and the Stock Issuance Agreement between the
Company and Lender of even date herewith (the "Stock Issuance Agreement") are
within the corporate powers of the Company, have been duly authorized by all
necessary corporate action and do not and will not (i) require any consent or
approval of the stockholders of the Company; (ii) violate any provision of the
amended and restated articles of incorporation or amended and restated by-laws
of the Company or of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Company; (iii) require the consent or approval of, or
filing or registration with, any governmental body, agency or authority except
for filing with the Securities and Exchange Commission, applicable state
securities regulatory agencies as required to register the resale of any of the
shares issued upon exercise of the Warrant or pursuant to the Stock Issuance
Agreement under the Securities Act of 1933, as amended, and the securities laws
of all applicable states; or (iv) result in a breach of or constitute a default
under, or result in the imposition of any lien, charge or encumbrance upon any
property of the Company pursuant to, any indenture or other agreement or
instrument under which the Company is a party or by which it or its properties
may be bound or affected. This Agreement constitutes, and the Note, the
Warrant and the Stock Issuance Agreement when executed and delivered hereunder
will each constitute, legal, valid and binding obligations of the Company
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or similar laws now or hereafter in effect
affecting the enforceability of creditors' rights generally and subject to
general principles of equity.
3.3 Capital Stock. The authorized capital stock of the Company consists
of 15,000,000 shares of Common Stock, $.01 par value per share and 5,000,000
shares of Class A Preferred Stock, $.01 par value per share. There are
presently outstanding 10,446,227 shares of Common Stock, and 670,000 shares of
Class A Convertible Preferred Stock Series 1. Other than (i) the Warrant and
10,000 shares of Common Stock to be issued to the Lender upon certain
contingencies set forth in a Stock Issuance Agreement between the Company and
Lender of even date, (ii) warrants to purchase 600,000, 20,000 and 20,000
shares of Common Stock issued to Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx and an
Affiliate of Dearholt, and Xxxxxxx Xxxx, respectively, pursuant to various loan
agreements with the Company, as borrower, and 250,000 shares of Common Stock to
be issued to Xxxxxxx Xxxxxxxx upon certain contingencies under stock issuance
agreements in connection with such loan agreements, (iii) warrants to purchase
90,000 and 75,000 shares of common stock issued to Xxxxxx XxXxxxx and Vector
Securities, respectively, (iv) options to purchase 1,163,228 shares of the
Company's Common Stock issued to certain employees, officers, directors,
consultants and affiliates of the Company (which number excludes 292,000
options which have been authorized but not issued), (v) warrants to purchase up
to 107,534 shares of the Company's Common Stock related to certain convertible
debentures issued by the Company, (vi) rights to purchase 670,000 shares of the
Company's Common Stock upon conversion of the Series 1 Class A Convertible
Preferred Stock issued by the Company, and (vii) warrants to purchase up to
296,000 shares of the Company's Common Stock related to the Series 1 Class A
Convertible Preferred Stock, there are no subscriptions, options, warrants,
rights or agreements (contingent or otherwise) providing for the issuance by
the Company of Common Stock or other equity securities of the Company having
rights, benefits or privileges equal or superior to that of the Common Stock.
3.4 Full Disclosure. The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and has within the previous 12 months filed with the Securities and
Exchange Commission all reports, proxy statements and other information in
respect to the Company required under the Exchange Act. No such report or
information filed with the SEC within the previous 2 years, and no information
or report furnished by the Company to the Lender in connection with the
negotiation or execution of this Agreement (all of which information or reports
so furnished are set forth in Section 5.2 hereof), contained any misstatement
of a material fact as of the date when made or omitted to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading as of the date when made.
ARTICLE IV
DEFAULTS
4.1 Defaults. The occurrence of any one or more of the following events
shall constitute an "Event of Default":
(a) The Company shall fail to pay any principal or interest due on the
Note within 5 days of its due date;
(b) Any representation or warranty made by the Company herein shall prove
to have been false in any material respect;
(c) The Company shall: (i) fail, or admit in writing its inability, to
pay its debts as they mature; or (ii) make a general assignment for the benefit
of creditors or to an agent authorized to liquidate any substantial amount of
its property; or (iii) become the subject of an "order for relief" within the
meaning of the United States Bankruptcy Code; or (iv) become the subject of a
creditor's petition for liquidation, reorganization or to effect a plan or
other arrangement with creditors which petition has not been dismissed or
stayed within 90 days of the filing thereof; or (v) apply to a court for the
appointment of a custodian or receiver for any of its assets; or (vi) have a
custodian or receiver appointed for substantially all of its assets (with or
without its consent); provided that, if the appointment is without the
Company's consent, such appointment has not been vacated or stayed within 90
days of such appointment; or (vii) otherwise become the subject of any
insolvency proceedings (and if such proceedings are commenced without the
Company's consent, such proceedings shall not have been dismissed within 90
days after commencement thereof) or propose or enter into any formal or
informal composition or arrangement with its creditors.
(d) This Agreement, the Note, the Warrant, or any other warrant described
in section 3.3(ii) hereof, shall, at any time after their respective execution
and delivery, and for any reason other than full performance thereof, cease to
be in full force and effect or be declared null and void, or the validity or
enforceability thereof or hereof shall be contested by the Company or any
shareholder of the Company, or the Company shall deny that it has any or
further liability or obligation thereunder or hereunder, as the case may be.
4.2 Acceleration of Obligations. Upon the occurrence of any Event of
Default:
(a) As to any Event of Default (other than an Event of Default under
section 4.1(c)) and at any time thereafter during which such Event of Default
is continuing, and in each case, the Lender may, by written notice to the
Company, immediately declare the unpaid principal balance of the Note, together
with all interest accrued thereon, to be immediately due and payable; and the
unpaid principal balance of and accrued interest on such Note shall thereupon
be due and payable without further notice of any kind, all of which are hereby
waived, and notwithstanding anything to the contrary herein or in the Note
contained;
(b) As to any Event of Default under section 4.1(c), the unpaid principal
balance of the Note, together with all interest accrued thereon, shall
immediately and forthwith be due and payable, all without presentment, demand,
protest, or further notice of any kind, all of which are hereby waived,
notwithstanding anything to the contrary herein or in the Note contained; and
(c) As to each Event of Default, the Lender shall have all the remedies
for default provided by applicable law.
ARTICLE V
MISCELLANEOUS
5.l Expenses: Indemnities.
(a) The Company shall pay, or reimburse the Lender for (i) all
out-of-pocket costs and expenses (including, without limitation, attorneys'
fees and expenses not to exceed $2,500) paid or incurred by the Lender in
connection with the negotiation, preparation, execution and delivery of this
Agreement, the Note, the Warrant, the Stock Issuance Agreement, and any other
document required hereunder or thereunder; (ii) all out-of-pocket costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) paid or incurred by the Lender in connection with the negotiation,
preparation, execution and delivery of any amendment, supplement, modification
or waiver of any of the documents referenced above or before and after judgment
in enforcing, protecting or preserving his rights under this Agreement, the
Note, the Warrant, the Stock Issuance Agreement, and other documents required
hereunder or thereunder; and (iii) any and all recording and filing fees and
any and all stamp, excise, intangibles and other taxes (other than income
taxes), if any, which may be payable or determined to be payable in connection
with the negotiation, preparation, execution, delivery, administration or
enforcement of this Agreement, the Note, the Warrant, the Stock Issuance
Agreement, or any other document required hereunder or thereunder or any
amendment, supplement, modification or waiver of or to any of the foregoing, or
consummation of any of the transactions contemplated hereby or thereby,
including all costs and expenses incurred in contesting the imposition of any
such tax, and any and all liability with respect to or resulting from any delay
in paying the same, whether such taxes are levied upon the Lender, the Company
or otherwise.
(b) The Company agrees to indemnify the Lender against any and all
losses, claims, damages, liabilities and expenses, (including, without
limitation, reasonable attorneys' fees and expenses) incurred by the Lender
arising out of or resulting from (i) any acquisition or attempted acquisition
of stock or assets of another person or entity by the Company or any
subsidiary, (ii) the use of any of the proceeds of the loan made hereunder by
the Company for the making or furtherance of any such acquisition or attempted
acquisition, (iii) the construction or operation of any facility owned or
operated by the Company or any subsidiary, or resulting from any pollution or
other environmental condition on the site of, or caused by, any such facility,
(iv) the negotiation, preparation, execution, delivery and enforcement of this
Agreement, the Note, the Warrant, the Stock Issuance Agreement, and any other
document required hereunder or thereunder, including without limitation any
amendment, supplement, modification or waiver of or to any of the foregoing or
the consummation or failure to consummate the transactions contemplated hereby
or thereby, or the performance by the parties of their obligations hereunder or
thereunder, (v) any claim, litigation, investigation or proceedings related to
any of the foregoing, whether or not the Lender is a party thereto; provided,
however, that such indemnity shall not apply to any such losses, claims,
damages, liabilities or related expenses arising from (A) any breach by the
Lender of his obligations under this Agreement, or in his fiduciary duties as a
director of the Company for which he would not otherwise be entitled to
indemnification as a director of the Company, (B) any commitment made by the
Lender to a person other than the Company which would be breached by the
performance of the Lender's obligations under this Agreement or (C) Lender's
gross negligence or willful misconduct; and provided further that clauses (i),
(ii) and (iii) of this paragraph shall apply only to losses, claims, damages,
liabilities and expenses arising out of or resulting from third party claims.
(c) The foregoing agreements and indemnities shall remain operative and
in full force and effect regardless of termination of this Agreement, the
consummation of or failure to consummate either the transactions contemplated
by this Agreement or any amendment, supplement, modification or waiver, the
repayment of the loan made hereunder, the invalidity or unenforceability of any
term or provision of this Agreement, the Note, the Warrant, the Stock Issuance
Agreement, or any other document required hereunder or thereunder, any
investigation made by or on behalf of the Lender, or the content or accuracy of
any representation or warranty made under this Agreement or any other document
required hereunder or thereunder.
5.2 Securities Act of 1933. (a) With respect to the Note and the Warrant
to be issued to the Lender, the Lender hereby represents, warrants and
covenants as follows:
(i) He understands that the issuance of the Note and the Warrant has not
been registered under the Securities Act of 1933, as amended (the "Act") or
applicable state securities laws (collectively, the "Laws") on the basis that
the issuance of the Note and the Warrant is exempt from such registration under
the Act and Laws based in part upon the representations made herein;
(ii) He does not presently intend to sell or otherwise dispose of the
Note or the Warrant being issued to him hereunder;
(iii) He is acquiring the Note and the Warrant for investment purposes
only and for his own account and not with a present view to sell or otherwise
distribute the same, and he will not sell or otherwise distribute the Note or
the Warrant without registration under the Act and applicable Laws or pursuant
to applicable exemptions therefrom;
(iv) He is an "accredited investor" under the Act and the rules
promulgated thereunder;
(v) He has been given access to and has carefully reviewed the Company's
Form 10-K and annual report to shareholders for the year ended September 30,
1998. He desires no additional information to evaluate the merits and risks of
the issuance of the Note and the Warrant hereunder, and he is not relying upon
any other information in connection therewith.
(vi) He has been given an opportunity to ask questions of, and
receive answers from, management of the Company concerning the issuance of the
Note and the Warrant hereunder, and has been given access to all information
which he has deemed necessary to verify the accuracy of the information
furnished to him;
(vii) He has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the
transactions contemplated by this Agreement, has carefully reviewed all
information indicated above and, by virtue of such review, understands and has
evaluated the merits and risks of his participation in such transactions and
has decided to go forward with such transactions; and
(viii) He understands that the Company is relying on the accuracy of
the statements contained herein in entering into this Agreement and the
transactions contemplated herein.
5.3 Successors. The provisions of this Agreement shall inure to the
benefit of any holder of the Note or Warrant, and shall inure to the benefit of
and be binding upon any successor to any of the parties hereto. No delay on
the part of the Lender or any holder of the Note or a Warrant in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein specified are cumulative
and are not exclusive of any rights or remedies which the Lender or the holder
of the Note or a Warrant would otherwise have.
5.4 Survival. All agreements, representations and warranties made herein
shall survive the execution of this Agreement, the making of the loan hereunder
and the execution and delivery of the Note and the Warrant.
5.5 Wisconsin Law. This Agreement and the Note and Warrant issued hereunder
shall be governed by and construed in accordance with the internal laws of the
State of Wisconsin, except to the extent superseded by federal law.
5.6 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
5.7 Notices. All communications or notices required under this Agreement
shall be deemed to have been given on the date when deposited in the United
States mail, postage prepaid, and addressed as follows (unless and until any of
such parties advises the other in writing of a change in such address): (a) if
to the Company, with the full name and address of the Company as shown on this
Agreement below; and (b) if to the Lender, with the full name and address of
the Lender as shown on this Agreement above.
5.8 Entire Agreement; No Agency. This Agreement and the other documents
referred to herein contain the entire agreement between the Lender and the
Company with respect to the subject matter hereof, superseding all previous
communications and negotiations, and no representation, undertaking, promise or
condition concerning the subject matter hereof shall be binding upon the Lender
unless clearly expressed in this Agreement or in the other documents referred
to herein. Nothing in this Agreement or in the other documents referred to
herein and no action taken pursuant hereto shall cause either the Company or
the Lender to be treated as an agent of the other, or shall be deemed to
constitute a partnership, association, joint venture or other entity.
5.9 Consent to Jurisdiction. The parties hereto hereby consent to the
jurisdiction of any state or federal court situated in Ozaukee County or
Milwaukee County, Wisconsin, and waive any objection based on lack of personal
jurisdiction, improper venue or forums non conveniens, with regard to any
actions, claims disputes or proceedings relating to this Agreement, the Note,
the Warrant or any other document delivered hereunder or in connection
herewith, or any transaction arising from or connected to any of the foregoing.
Nothing herein shall affect jurisdiction of any other state or federal court or
the parties' rights to serve process in any manner permitted by law.
5.10 Waiver of Jury Trial. The Company and the Lender hereby jointly and
severally waive any and all right to trial by jury in any action or proceeding
relating to this Agreement, the Note, the Warrant or any other document
delivered hereunder or in connection herewith, or any transaction arising from
or connected to any of the foregoing. The Company and the Lender each
represent that this waiver is knowingly, willingly and voluntarily given.
If the foregoing is satisfactory to you please sign the form of acceptance
below and return a signed counterpart hereof to the Company, whereupon this
instrument will evidence a binding agreement between the Lender and the
Company.
Very truly yours,
THE FEMALE HEALTH COMPANY
Address: Suite 3660
000 Xxxxx Xxxxxxxx Xxx.
Xxxxxxx, Xxxxxxxx 00000
By: _______________________________
President
The foregoing Agreement is hereby confirmed and accepted as of the date
thereof.
/s/ X.X. Xxxxxxx
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X.X. Xxxxxxx
