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Exhibit 10.41
FIRST AMENDMENT AND WAIVER AGREEMENT, dated as of the 20th day of January, 1999,
by and among Intracel Corporation, a Delaware corporation (the "Company"),
PerImmune Holdings, Inc., a wholly-owned subsidiary of the Company ("Holdings"),
PerImmune Inc., a wholly-owned subsidiary of Holdings ("PerImmune"), Xxxxxxx,
Inc., a wholly-owned subsidiary of the Company ("Xxxxxxx"), and the noteholders
set forth on the signature page hereto (the "Noteholders"). Capitalized terms
used but not defined herein shall have the meanings ascribed to such terms in
the Securities Purchase Agreement.
WITNESSETH:
WHEREAS, in connection with that certain Securities Purchase Agreement
dated August 25, 1998 among the Company, Holdings, PerImmune and the Noteholders
(the "Purchase Agreement"), the Company issued and sold (A) those certain 12%
Senior Secured Primary Promissory Notes dated August 25, 1998 in the original
principal amount of (i) $3,841,463 for the benefit of Northstar High Yield Fund;
(ii) $22,195,122 for the benefit of Northstar High Total Return Fund; (iii)
$7,682,927 for the benefit of Northstar High Total Return Fund II and (iv)
$1,280,488 for the benefit of Northstar Strategic Income Fund (collectively, the
"Senior Notes") and (B) those certain 12% Guaranteed Senior Secured Escrow
Promissory Notes dated August 25, 1998 of Intracel Corporation in the original
principal amount of (i) $658,537 for the benefit of Northstar High Yield Fund;
(ii) $3,804,878 for the benefit of Northstar High Total Return Fund; (iii)
$1,317,073 for the benefit of Northstar High Total Return Fund II and (iv)
$219,512 for the benefit of Northstar Strategic Income Fund (collectively, the
"Escrow Notes" and, together with the Senior Notes, the "Notes");
WHEREAS, pursuant to Section 1(e) of each of the Escrow Notes, upon
receipt of cash proceeds from the sale of debt or equity securities, under
certain circumstances, the Company will be obligated to apply up to $6 million
of such proceeds to pay accrued unpaid past due interest on all Notes and to
reduce the principal of, and accrued unpaid interest on, the Escrow Notes;
WHEREAS, pursuant to the terms of the Interest Escrow Security Agreement
dated as of August 25, 1998 among the Noteholders, the Company and Northwestern
Trust and Investors Advisory Company (the "Interest Escrow Security Agreement"),
the Company is (i) required to obtain the written consent of the Noteholders
prior to the disbursement of any funds from the Securities Account (as defined
therein) and (ii) to replenish the funds in the Securities Account if the
balance in such account is reduced below a specified level;
WHEREAS, the Company seeks (i) to amend Section 3 of the Interest Escrow
Security Agreement to reduce the amount the Company is required to maintain in
the Securities Account, (ii) to obtain the Noteholders' consent to a
disbursement from the Securities Account to pay the interest due on the Notes on
February 25, 1999, and (iii) to obtain a waiver of the Company's failure to
replenish the funds in the Securities Account to the required level prior to the
date hereof;
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WHEREAS, the Company seeks to obtain the approval of the Noteholders to
proposed amendments to the Amended and Restated Certificate of Incorporation of
the Company (i) to extend until June 30, 1999 the time period by which an
underwritten public offering must occur for automatic conversion of the
Company's Series A Preferred Stock, Series A-1 Preferred Stock and Series A-3
Preferred Stock into shares of the Company's Common Stock upon the consummation
of an underwritten public offering, (ii) to effect a two-for-three reverse stock
split of each outstanding share of the Company's Common Stock, (iii) to increase
the total authorized shares of the Company's Common Stock to fifty million
(50,000,000) shares, and (iv) to amend and restate the Company's Amended and
Restated Certificate of Incorporation, substantially in the form attached hereto
as Exhibit A (collectively, the "Proposed Charter Amendments");
WHEREAS, the Company has filed a Registration Statement on Form S-1 with
the Securities and Exchange Commission on July 9, 1998 relating to the proposed
sale of shares of its Common Stock to the public (the "Initial Public
Offering");
WHEREAS, the Company has not complied with certain covenants under the
Purchase Agreement and the Ancillary Documents which non-compliance could
constitute an Event of Default under the Notes, the Purchase Agreement, and the
Ancillary Documents and could cause the Notes to become immediately due and
payable;
WHEREAS, the representatives for the underwriters in the Initial Public
Offering, Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and NationsBanc
Xxxxxxxxxx Securities LLC (the "Representatives") have determined that (i) the
application of the proceeds from the Initial Public Offering or from any other
debt or equity financing concluded prior to the consummation of the Initial
Public Offering to the repayment of principal or interest on the Notes or to the
replenishment of the Securities Account under the Interest Escrow Security
Agreement, and (ii) any Event of Default which could cause the Notes to become
immediately due and payable, would adversely affect the marketing of the
securities to be sold by the Company in the Initial Public Offering; and
WHEREAS, the Noteholders acknowledge and agree that it would be in their
best interests for the Company to consummate the Initial Public Offering as
contemplated by the Representatives.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereby agree with each other as follows:
1. AMENDMENT TO ESCROW NOTES.
(a) In accordance with Section 10 of each of the Escrow Notes, Section
1(e) of each of the Escrow Notes is hereby amended by deleting the word "and"
immediately
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before clause (iii) in such paragraph and inserting a new clause (iv)
immediately following clause (iii) in such paragraph to read in its entirety as
follows:
"and (iv) the Company shall have no obligation to make any payments
under this Section 1(e) which result from the sale of debt or equity
securities by the Company in, or prior to the consummation of, the first
offering of its equity securities to the public pursuant to a
registration statement declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended."
(b) As soon as practicable after the date hereof, the Company and the
Noteholders agree to execute Amended and Restated Escrow Notes reflecting the
amendment set forth above and otherwise on the same terms and conditions as the
Escrow Notes (the "Amended Escrow Notes"), which Amended and Restated Escrow
Notes shall be prepared by and at the expense of the Company and shall be
delivered to the respective Noteholders in exchange for the original Escrow
Notes which shall be delivered by the Noteholders to the Company.
2. AMENDMENT TO INTEREST ESCROW SECURITY AGREEMENT. In accordance with Section
17(f) of the Interest Escrow Security Agreement, Section 3 of the Interest
Escrow Security Agreement is hereby amended in its entirety to read as
follows:
"Notice Requirements. The Company shall direct the Purchasers to, and
the Purchasers shall, deposit the Initial Deposit Amount in the
Securities Account by wire transfer in accordance with the written
instruction received from the Depositary on the Closing Date. The
Depositary agrees to send a statement not less frequently than quarterly
by the fifteenth day of each month in which the Depositary provides such
statement, a statement of the balance and activity in the Securities
Account for the period covered by such statement. The Company shall be
entitled to rely conclusively in making the foregoing determinations on
information provided to it by the Depositary."
3. CONSENTS.
(a) The Noteholders hereby consent to the disbursement of funds from the
Securities Account (as defined in the Interest Escrow Security Agreement) in an
amount sufficient to pay all accrued interest on the Notes when due on February
25, 1999, May 25, 1999 and August 25, 1999.
(b) The Noteholders hereby consent to the Proposed Charter Amendments.
(c) The Noteholders hereby consent to the issuance by the Company of any
unsecured debt securities or any equity securities prior to the consummation of
the Initial
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Public Offering and hereby waive the Company's obligation to notify the
Noteholders five (5) business days prior to the closing of any such proposed
transaction as set forth in Section 5.12(d)(viii) of the Purchase Agreement.
4. WAIVERS OF EVENTS OF DEFAULT AND COVENANTS.
The Noteholders hereby waive any Event of Default under Section 6 of the
Notes which may be deemed to have occurred as a result of the actions or
omissions of the Company set forth below. The Noteholders further agree that the
Company's non-compliance with the covenants and agreements set forth below, or
any other covenant or agreement set forth in the Purchase Agreement or any
Ancillary Documents which may be violated as a result of the actions or
omissions of the Company set forth below, shall not be deemed an Event of
Default under the Notes or a breach of the Company's obligations under the
Purchase Agreement, any of the Ancillary Documents or the Notes. The Noteholders
further agree that the provisions of Section 3(b) of the Guaranty Agreement
executed by each of Holdings, PerImmune and Xxxxxxx simultaneously with the
Purchase Agreement shall not be applicable as a result of any of the actions or
omissions of the Company set forth below.
(a) The Company's obligation to obtain and maintain the XxXxxxxx
Policies as required under Sections 5.10, 5.15 and 6.14 of the Purchase
Agreement.
(b) The Company's withdrawal of funds from the Escrow Account (as
defined in the Funded Commitment Facility Escrow Agreement) prior to the date
hereof in violation of Section 5.6(d) of the Purchase Agreement and Section 7 of
the Funded Commitment Facility Escrow Agreement.
(c) The obligation of the Company to replenish the Shortfall to the
Securities Account (in each case, as defined in the Interest Escrow Security
Agreement) as required under Section 3 of the Interest Escrow Security Agreement
prior to the amendment to such section set forth herein.
(d) The Company's obligation under Section 5.16 of the Purchase
Agreement, not to incur additional Debt as the amount of the Company's Debt
which is more than 60 days past due has increased and Holding's obligation to
pay certain amounts due to Akzo Nobel Pharma International B.V. ("Akzo") under
the Intellectual Property Agreement dated August 2, 1996 between Holdings and
Akzo is more than 60 days past due and is in dispute.
(e) The Company's obligation to deliver (i) monthly financial statements
and other information as required under Section 5.12 (a) of the Purchase
Agreement for the months of September, October, November and December of 1998
and for the month of January 1999; (ii) quarterly financial statements for the
quarter ended September 30, 1998 and December 31, 1998 as required under Section
5.12(b) of the Purchase
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Agreement; (iii) unaudited financial statements as required under Section 5.28
of the Purchase Agreement and (iv) an Officer's Certificate by November 14, 1998
as required under Section 5.12(d)(ix).
(f) The Company's obligation (i) to notify the Noteholders of the filing
of a complaint by Vector Securities International Inc. (as more fully described
in Amendment No. 2 to the Registration Statement, a copy of which has been
delivered to the Noteholders) as required by Section 5.12(d)(iii) of the
Purchase Agreement, (ii) to notify the Noteholders of the trademark opposition
proceeding filed by Jenner Technologies, Inc. against Theriak S.A. as required
by terms of the Intellectual Property Security Agreement and the Notes, and
(iii) to notify the Noteholders that the Company has become aware of, and has
forwarded a notice to, a potential infringer of the patents relating to the
OncoVAX cancer vaccine as required by terms of the Intellectual Property
Security Agreement and the Notes.
(g) The Company's obligation to name the Holders as additional insureds,
beneficiaries, assignees and loan payees under certain insurance policies as
required by Section 5.10 of the Purchase Agreement and Section 2(e) of the
Security Agreement.
5. CONFIRMATION OF INTEREST RATE.
The Noteholders hereby agree and confirm that the rate at which interest
has accrued under the Notes has remained at 12% since the issuance of the Notes
and that no increase in the interest rate has occurred as a result of the
application of either Section 2(a) or Section 6 of the Notes. The Noteholders
agree that the Company complied with the covenant set forth in Section 5.26 of
the Purchase Agreement within the sixty (60) day period set forth in such
section.
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6. NO MODIFICATIONS.
Except as waived or amended hereby, the terms and conditions of the
Notes, the Purchase Agreement and the Ancillary Documents shall continue in full
force and effect and are hereby in all respects ratified and confirmed.
7. NO KNOWN DEFAULTS; FURTHER ASSURANCES.
The Noteholders hereby represent and warrant that they have no knowledge
of any actions or omissions on the part of any party hereto, other than those
set forth herein, which could form the basis of an Event of Default under the
Notes or a breach of the obligations of any party hereto under the Purchase
Agreement or any Ancillary Document. The Company and the Noteholders agree to
execute and deliver any and all such additional documents, instruments and
notices including, without limitation, any notice evidencing the consent set
forth in Section 3 hereof, as may be necessary or desirable to confirm and carry
into effect the agreements and waivers set forth herein.
8. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
9. GOVERNING LAW.
This Agreement shall be construed, and the rights and obligations of the
parties hereunder determined, in accordance with and governed by the internal
laws of the State of New York (as permitted by Section 5-1401 of the New York
General Obligations Law (or any similar successor provision)) without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of New York to the
rights and duties of the parties.
10. SEVERABILITY.
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provisions shall be excluded from this Agreement and
the balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
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11. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which together shall be deemed to constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first written above.
INTRACEL CORPORATION
By: /s/ XXXXX XxXXXXXX
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Name: Xxxxx XxXxxxxx
Title: CEO
PERIMMUNE HOLDINGS, INC.
By: /s/ XXXXX XxXXXXXX
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Name: Xxxxx XxXxxxxx
Title: CEO
PERIMMUNE, INC.
By: /s/ XXXXX XxXXXXXX
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Name: Xxxxx XxXxxxxx
Title: CEO
XXXXXXX, INC.
By: /s/ XXXXX XxXXXXXX
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Name: Xxxxx XxXxxxxx
Title: CEO
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NOTEHOLDERS:
NORTHSTAR HIGH YIELD FUND
By: /s/ XXXXXXX XXXXXXXXX
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Name: Xxxxxxx Xxxxxxxxx
Title: Vice President
NORTHSTAR HIGH TOTAL RETURN FUND
By: /s/ XXXXXXX XXXXXXXXX
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Name: Xxxxxxx Xxxxxxxxx
Title: Vice President
NORTHSTAR HIGH TOTAL RETURN FUND II
By: /s/ XXXXXXX XXXXXXXXX
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Name: Xxxxxxx Xxxxxxxxx
Title: Vice President
NORTHSTAR STRATEGIC INCOME FUND
By: /s/ XXXXXXX XXXXXXXXX
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Name: Xxxxxxx Xxxxxxxxx
Title: Vice President
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