EXHIBIT 4.1
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SERACARE, INC.
$16,000,000
12% Senior Subordinated Debentures due 2005
and
Warrants to Purchase Shares of Common Stock
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SECURITIES PURCHASE AGREEMENT
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Dated as of February 13, 1998
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TABLE OF CONTENTS
Page No.
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1. AUTHORIZATION OF ISSUE OF SECURITIES. . . . . . . . . . . . . . . . . . .1
1A. Senior Subordinated Debentures. . . . . . . . . . . . . . . . . . .1
1B. Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2. PURCHASE AND SALE OF SECURITIES . . . . . . . . . . . . . . . . . . . . .2
2A. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . .2
2B. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . .3
3A. Opinion of Counsel to the Company . . . . . . . . . . . . . . . . .3
3B. Representations and Warranties. . . . . . . . . . . . . . . . . . .3
3C. Articles of Incorporation and By-laws . . . . . . . . . . . . . . .4
3D. Purchase Permitted by Applicable Laws . . . . . . . . . . . . . . .4
3E. Securityholders Agreement . . . . . . . . . . . . . . . . . . . . .4
3F. Registration Rights Agreement . . . . . . . . . . . . . . . . . . .4
3G. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3H. Compliance with Securities Laws . . . . . . . . . . . . . . . . . .5
3I. No Adverse, Action or Decision. . . . . . . . . . . . . . . . . . .5
3J. Approval and Consents . . . . . . . . . . . . . . . . . . . . . . .5
3K. Material Changes. . . . . . . . . . . . . . . . . . . . . . . . . .5
3L. Board Nominees. . . . . . . . . . . . . . . . . . . . . . . . . . .5
3M. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . .5
3N. Investor Due Diligence. . . . . . . . . . . . . . . . . . . . . . .6
4. PAYMENTS AND PREPAYMENTS OF THE SENIOR SUBORDINATED NOTES . . . . . . . .6
4A. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
4B. Mandatory Payments and Prepayments of the Senior Subordinated
Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4C. Prepayments of the Senior Subordinated Debentures upon a Change
of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4D. Optional Prepayments of the Senior Subordinated Debentures. . . . .5
4E. Notice of Prepayments . . . . . . . . . . . . . . . . . . . . . . .7
4F. Mandatory Payments and Partial Prepayments Pro Rata . . . . . . . .8
4G. Default Debentures. . . . . . . . . . . . . . . . . . . . . . . . .8
4H. Prepayments of Default Debentures . . . . . . . . . . . . . . . . .8
(i)
5. OPTIONAL REPURCHASE OF THE WARRANTS . . . . . . . . . . . . . . . . . . .9
5A. Option of Holders to Put Warrants upon a Change of Control . . . .9
5B. Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . .9
5C. Exercise of the Option. . . . . . . . . . . . . . . . . . . . . . .10
5D. Optional Redemption of the Warrants . . . . . . . . . . . . . . . .11
5E. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . .11
6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . .11
6A. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . .12
6B. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . .15
6C. Books and Records; Inspection of Property . . . . . . . . . . . . .15
6D. Covenant to Secure Senior Subordinated Debentures Equally . . . . .15
6E. INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . .15
6F. Stock to be Reserved. . . . . . . . . . . . . . . . . . . . . . . .15
6G. Compliance With Laws, etc. . . . . . . . . . . . . . . . . . . . .16
6H. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
6I. Corporate Existence; Maintenance of Properties. . . . . . . . . . .17
6J. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
6K. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . .18
6L. Filing of Reports Under the Exchange Act. . . . . . . . . . . . . .18
6M. Securities Act Registration Statements. . . . . . . . . . . . . . .18
6N. Notices of Certain Events . . . . . . . . . . . . . . . . . . . . .20
6O. Board Nominees. . . . . . . . . . . . . . . . . . . . . . . . . . .20
6P. Listing of Common Stock . . . . . . . . . . . . . . . . . . . . . .21
6Q. Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . .21
6R. Guarantee By Subsidiary . . . . . . . . . . . . . . . . . . . . . .23
6S. Issuance of Warrants with Interest Debentures. . . . . . . . . . .23
7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
7A. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . .24
7B. Restrictions on Indebtedness and Repayment of Indebtedness. . . . .24
7C. Restrictions on Liens . . . . . . . . . . . . . . . . . . . . . . .25
7D. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . .26
7E. Loans, Advances and Investments . . . . . . . . . . . . . . . . . .26
7F. Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
7G. Transactions With Affiliates. . . . . . . . . . . . . . . . . . . .28
7H. Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
7I. Disposition of Substantial Assets . . . . . . . . . . . . . . . . .28
7J. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . .29
7K. No Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . .29
(ii)
7L. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . .29
7M. Offering of Securities. . . . . . . . . . . . . . . . . . . . . . .29
7N. Issuance of Securities. . . . . . . . . . . . . . . . . . . . . . .29
7O. Issuance of Securities. . . . . . . . . . . . . . . . . . . . . . .30
8. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
8A. Subordinated Debt Subordinate to Senior Debt. . . . . . . . . . . .30
8B. Suspension of Right to Receive Payments of Subordinated Debt. . . .30
8B(1). Failure to Pay Principal of or Interest on Senior Debt . .31
8B(2). Bankruptcy or Insolvency. . . . . . . . . . . . . . . . . .32
8C. Rights of Holders of Senior Debt Not to Be Impaired . . . . . . . .32
8D. Company's Obligation Unconditional. . . . . . . . . . . . . . . . .33
8E. Payments Held in Trust. . . . . . . . . . . . . . . . . . . . . . .33
8F. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
8G. Reliance by Holders on Final Order or Decree. . . . . . . . . . . .34
8H. Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
8I. Senior Debt Not Affected. . . . . . . . . . . . . . . . . . . . . .35
8J. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . .35
9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
9A. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
9B. Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . .39
10. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . . . . . .40
10A. Organization, Qualification and Authority. . . . . . . . . . . . .40
10B. Financial Statements . . . . . . . . . . . . . . . . . . . . . . .41
10C. Capital Stock and Related Matters. . . . . . . . . . . . . . . . .41
10D. Actions Pending. . . . . . . . . . . . . . . . . . . . . . . . . .42
10E. Outstanding Debt; Defaults . . . . . . . . . . . . . . . . . . . .42
10F. Title to Properties. . . . . . . . . . . . . . . . . . . . . . . .43
10G. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
10H. Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . .43
10I. Offering of Securities . . . . . . . . . . . . . . . . . . . . . .44
10J. Broker's or Finder's Commissions . . . . . . . . . . . . . . . . .44
10K. Regulation G, etc. . . . . . . . . . . . . . . . . . . . . . . . .45
10L. Environmental Matters. . . . . . . . . . . . . . . . . . . . . . .45
10M. Possession of Franchises, Licenses, etc. . . . . . . . . . . . . .46
10N. Patents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . .46
10N. Possession of Franchises, Licenses, etc. . . . . . . . . . . . . .46
10O. Holding Company and Investment Company Status. . . . . . . . . . .47
10P. Governmental Consents. . . . . . . . . . . . . . . . . . . . . . .47
(iii)
10Q. Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . .47
10R. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
10S. Related Party Transactions . . . . . . . . . . . . . . . . . . . .48
10T. Registration Rights. . . . . . . . . . . . . . . . . . . . . . . .48
10U. Absence of Foreign or Enemy Status . . . . . . . . . . . . . . . .48
10V. Agreements with Affiliates . . . . . . . . . . . . . . . . . . . .48
10W. Consummation of Related Transactions . . . . . . . . . . . . . . .48
10X. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . .49
11. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR . . . . . . . . . . . . .49
12. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
13. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
13A. Home Office Payment. . . . . . . . . . . . . . . . . . . . . . . .63
13B. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . .63
13C. Consent to Amendments. . . . . . . . . . . . . . . . . . . . . . .64
13D. Form, Registration, Transfer and Exchange of Senior
Subordinated Debentures; Lost Senior Subordinated Debenture. . . .65
13E. Provisions Applicable if any of the Securities are Sold. . . . . .66
13F. Restrictive Legends. . . . . . . . . . . . . . . . . . . . . . . .66
13G. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . .67
13H. Survival of Representations and Warranties . . . . . . . . . . . .67
13I. Successors and Assign. . . . . . . . . . . . . . . . . . . . . . .67
13J. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
13K. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . .68
13L. GOVERNING LAW; CONSENT TO JURISDICTION . . . . . . . . . . . . . .68
13M. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
13N. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . .69
13O. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .69
13P. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
13Q. Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . .70
13R. WAIVER OF TRIAL BY JURY. . . . . . . . . . . . . . . . . . . . . .70
13S. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . .70
EXHIBITS
Exhibit A Form of Senior Subordinated Debenture
Exhibit B Form of Guarantee
Exhibit C Form of Warrant
(iv)
Exhibit D Form of Opinion of Counsel to the Company
Exhibit E Form of Registration Rights Agreement
Exhibit F Form of Securityholders Agreement
Exhibit G Projected Pre-Tax Earnings for Fiscal Years 1999 and 2000
(v)
SERACARE, INC.
SECURITIES PURCHASE AGREEMENT
Dated as of
February 13, 1998
To the Investors named on the signature pages hereto:
The undersigned, SeraCare, Inc., a Delaware corporation (the
"COMPANY"), each Subsidiary of the Company that becomes a "Subsidiary
Guarantor" after the date hereof (individually, a "GUARANTOR" and,
collectively, the "GUARANTORS"), and each of the investors named on the
signature pages hereto (the "INVESTORS"), hereby agree as follows:
2. AUTHORIZATION OF ISSUE OF SECURITIES.
1A. SENIOR SUBORDINATED DEBENTURES. The Company will authorize the
issuance, sale and delivery to the Investors of its senior subordinated
debentures ("SENIOR SUBORDINATED DEBENTURES" and individually called a "SENIOR
SUBORDINATED DEBENTURE") in the aggregate principal amount of $16,000,000, to
be dated the date of issue thereof, to mature (subject to Section 4 hereof) on
the seventh anniversary of such date of issue and to bear interest on the
unpaid principal thereof from the date thereof at the rate of 12% per annum
until the principal thereof shall become due and payable. Such Senior
Subordinated Debentures shall be substantially in the form of Exhibit A
attached hereto. Interest will be payable quarterly in arrears in cash on the
last Business Day of March, June, September and December, in each year,
commencing on March 31, 1998; PROVIDED, HOWEVER, that the Company may, at its
option, issue interest debentures ("INTEREST DEBENTURES" and individually
called an "INTEREST DEBENTURE") in lieu of a cash payment of any or all
interest due during any such period; PROVIDED FURTHER that such option to issue
Interest Debentures in lieu of a cash payment may be exercised with respect to
no more than two quarterly payments in the aggregate and that such option
cannot be exercised for consecutive payments. Such Interest Debentures shall
be substantially in the form of Exhibit A attached hereto. For purposes of
this Agreement, all references to the Senior Subordinated Debentures shall be
deemed to include any and all Interest Debentures. The Senior Subordinated
Debentures will be unconditionally guaranteed, on a subordinated basis, by each
Person that is or
becomes a Subsidiary of the Company at any time on or after the date hereof,
pursuant to a guarantee substantially in the form of Exhibit B attached
hereto (the "GUARANTEE"). The Senior Subordinated Debentures shall bear a
legend on their face, indicating that the Senior Subordinated Debentures have
been issued with original issue discount and the name and address of the
Company's representative who, upon the request of a holder, can supply
information about such original issue discount.
1B. WARRANTS. The Company will also authorize the issuance,
sale and delivery to the Investors of warrants to purchase an aggregate of
2,100,572 shares of its Common Stock representing an aggregate of 16% of the
Fully Diluted Outstanding Shares (the "WARRANTS" and individually called a
"WARRANT"), such Warrants to be substantially in the form of Exhibit C
attached hereto. The number of shares of Common Stock subject to the
Warrants shall be subject to adjustment from time to time as provided in
Section 4 of the Warrants. The Senior Subordinated Debentures and the
Warrants shall be referred to herein as the "SECURITIES".
3. PURCHASE AND SALE OF SECURITIES.
2A. PURCHASE AND SALE. The Company hereby agrees to sell to the
Investors and, subject to the terms and conditions herein set forth, the
Investors severally agree to purchase from the Company, the Securities set
forth opposite the name of each of the Investors on the signature pages hereof.
The parties hereby agree that the aggregate purchase price for the Securities
(exclusive of any exercise prices) is $16,000,000.
2B. CLOSING. The purchase and delivery of the Securities to be
purchased by the Investors shall take place at a closing (the "CLOSING") at the
offices of O'Melveny & Xxxxx LLP, 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, at 11:00 a.m., local time, on February 13, 1998 (or at such
other time and place or on such other Business Day thereafter as the parties
hereto shall agree) (herein called the "CLOSING DATE"). On the Closing Date,
the Company will deliver the Securities to be purchased by the Investors
payable to or registered in the names of the Investors and/or the Investors'
nominees or other designees specified on the signature pages hereof in the
amounts set forth opposite the name of the Investors on the signature pages
hereof, against receipt of the purchase price therefor by wire transfer to the
account of: SeraCare, Inc., Union Bank of
2
California, 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx Xxxxxx, XX 00000 Account No.
1311040388, ABA Routing No. 000000000, Notification: Seracare, Inc. If at
the Closing, the Company shall, in breach of this Agreement, fail to tender
to the Investors any of the Securities to be purchased by it or if any of the
conditions specified in Section 3 hereof shall not have been satisfied or
waived by the Investors, the Investors shall, at their election, be relieved
of all further obligations under this Agreement without thereby waiving any
other rights it may have by reason of such failure or such non-fulfillment.
Notwithstanding anything to the contrary herein, the obligation of the
Company to deliver any Securities to any Investor at the Closing shall be
conditioned on (i) its concurrent receipt of the purchase price for all of
the Securities from the Investors, (ii) the accuracy of the Investors'
representations set forth in Section 11 hereof, (iii) the execution and
delivery by the Investors of the Securityholders Agreement and (iv) the
satisfaction of the conditions set forth in Section 3D, 3H, 3J and 3K hereof.
4. CONDITIONS OF CLOSING. THE INVESTORS' OBLIGATION TO PURCHASE AND PAY
FOR THE SECURITIES TO BE PURCHASED BY THEM HEREUNDER IS SUBJECT TO THE
SATISFACTION, ON OR BEFORE THE CLOSING DATE, OF THE FOLLOWING CONDITIONS:
3A. OPINION OF COUNSEL TO THE COMPANY. The Investors shall have
received from O'Melveny & Xxxxx LLP, counsel to the Company, a legal opinion
addressed to the Investors and dated the Closing Date, substantially in the
form of Exhibit D attached hereto.
3B. REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties contained in Section 10 hereof and those otherwise made in
writing by the Company or any Guarantor and contained in any certificate or
other written instrument delivered to the Investors pursuant to this
Agreement shall be true and correct in all material respects on and as of the
Closing Date, without giving effect to any qualification as to materiality
contained therein and except to the extent of changes caused by the
transactions herein contemplated; all of the covenants and obligations of the
Company hereunder to be performed or observed on or prior to the Closing
shall have been duly performed or observed; there shall exist on the Closing
Date and after giving effect to the transactions contemplated hereby no
Default or Event of Default; and the Company and any Guarantor
3
shall have delivered to the Investors an Officer's Certificate, dated the
Closing Date, to the foregoing effects.
3C. ARTICLES OF INCORPORATION AND BY-LAWS. The Investors shall
have received certificates, dated the Closing Date, of the Secretary of the
Company and any Guarantor attaching (i) true and complete copies of the
Articles or Certificate of Incorporation of the Company and any Guarantor as
filed with the appropriate state officials of its jurisdiction of
incorporation with all amendments thereto, (ii) true and complete copies of
the By-laws of the Company and any Guarantor in effect as of such date, (iii)
certificates of good standing of the appropriate officials of the
jurisdiction of incorporation of the Company and any Guarantor and of each
state in which each of the Company and any Guarantor is qualified to do
business as a foreign corporation, (iv) resolutions of the Board of Directors
of the Company authorizing (a) the execution, delivery and performance of the
Related Documents, (b) the issuance and delivery of the Securities, (c) the
issuance and delivery of the Warrants and the reservation for issuance of a
sufficient number of shares of Common Stock into which the Warrants may be
exercised to permit such exercise, (d) resolutions of the Board of Directors
of any Guarantor authorizing the execution, delivery and performance of the
Related Documents to which it is a party, and (e) certificates as to the
incumbency of the officers of the Company and any Guarantor executing this
Agreement or any other Related Document.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Securities shall not be prohibited by any applicable law or
governmental regulation.
3E. SECURITYHOLDERS AGREEMENT. The Investors shall have received a
fully executed counterpart of the Securityholders Agreement and such
Securityholders Agreement shall be in full force and effect.
3F. REGISTRATION RIGHTS AGREEMENT. The Investors shall have
received a fully executed counterpart of the Registration Rights Agreement and
such Registration Rights Agreement shall be in full force and effect.
3G. GUARANTEE. The Investors shall have received a fully executed
counterpart of the Guarantee from each Subsidiary
4
as of the Closing Date and such Guarantee shall be in full force and effect.
3H. COMPLIANCE WITH SECURITIES LAWS. The offering and sale of the
Securities under this Agreement shall have complied with all applicable
requirements of federal and state securities laws.
3I. NO ADVERSE, ACTION OR DECISION. There shall be no action,
suit, investigation or proceeding, pending or threatened against or affecting
the Company or any Guarantor or any of their respective properties or rights,
or any of their respective affiliates, associates, officers or directors,
before any court, arbitrator or administrative or governmental body which
seeks to restrain, enjoin, prevent the consummation of or otherwise
materially adversely affect the transactions contemplated by any of the
Related Documents.
3J. APPROVAL AND CONSENTS. The Company and any Guarantor shall
have duly received all authorizations, consents, approvals, licenses, permits
and certificates by or of all federal, state and local governmental
authorities and all other persons identified on Schedule 10H necessary for
the issuance of the Securities and the consummation of the transactions
contemplated hereby and by the Related Documents, and all thereof shall be in
full force and effect at the time of the Closing.
3K. MATERIAL CHANGES. Since November 30, 1997 there shall not have
been any changes or developments in the business of the Company, nor shall
there have been any material contingencies or other liabilities, in each case
which have not been disclosed to the Investors and which have or could
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.
3L. BOARD NOMINEES. The Board of Directors of the Company shall be
constituted as contemplated by Section 3.1 of the Securityholders Agreement and
the nominee designated by the Investors shall have been appointed to the Board
of Directors effective upon the Closing.
3M. USE OF PROCEEDS. The Investors shall have received evidence in
form and substance reasonably satisfactory to it with respect to the use of
proceeds by the Company in accordance with Section 6B, including consummation
of the Acquisitions.
5
3N. INVESTORS DUE DILIGENCE. The Investors shall have completed
their due diligence of the Company.
5. PAYMENTS AND PREPAYMENTS OF THE SENIOR SUBORDINATED DEBENTURES .
4A. GENERAL. The Senior Subordinated Debentures shall be
subject to mandatory payments as specified in Sections 4B and 4C and to the
optional prepayments under the circumstances set forth in Section 4D.
4B. MANDATORY PAYMENTS AND PREPAYMENTS OF THE SENIOR
SUBORDINATED DEBENTURES. (a) On the fifth anniversary of the Closing Date,
one-third of the principal amount of the Senior Subordinated Debentures then
outstanding, together with all accrued and unpaid interest thereon to and
including such date, shall become immediately due and payable and shall be
paid by the Company to the holders of the Senior Subordinated Debentures in
accordance with Section 4F hereof. On the sixth anniversary of the Closing
Date, one-half of the principal amount of the Senior Subordinated Debentures
then outstanding, together with all accrued and unpaid interest thereon to
and including such date, shall become immediately due and payable by the
Company and shall be paid by the Company to the holders of the Senior
Subordinated Debentures in accordance with Section 4F hereof. On the seventh
anniversary of the Closing Date, the principal amount of all Senior
Subordinated Debentures then outstanding, together with all accrued and
unpaid interest thereon to and including such date, shall become immediately
due and payable and shall be paid by the Company to the holders of the Senior
Subordinated Debentures.
(b) Three (3) Business Days after the Company's closing of a
Qualifying Public Offering, the principal amount of the Senior Subordinated
Debentures then outstanding, together with all accrued and unpaid interest
thereon to and including such date, shall become due and payable and shall be
paid by the Company to the holders of the Senior Subordinated Debentures. No
later than 30 days prior to date of the filing with the Commission of a
registration statement relating to any Public Offering by the Company of its
equity securities (or, if such time period is not practicable, as soon as
possible after the Company's determination that it will be making a Public
Offering), the Company shall provide written notice to the holders of Senior
Subordinated Debentures that a Public Offering will be made and will set
forth, to the best of its knowledge on the date of such notice, estimates of
the proceeds to the Company from such Public Offering.
6
4C. PREPAYMENTS OF THE SENIOR SUBORDINATED DEBENTURES UPON A
CHANGE OF CONTROL. Upon a Change of Control, the principal amount of the
Senior Subordinated Debentures outstanding, together with all accrued and
unpaid interest thereon to the Repayment Date (as defined below), shall
become due and payable on the Repayment Date and shall be paid by the Company
to the holders of the Senior Subordinated Debentures. Upon the occurrence of
a Change of Control Event, the notice furnished to each holder of Senior
Subordinated Debentures under clause (iv) of Section 6N (the "CHANGE OF
CONTROL NOTICE") shall (i) refer specifically to this Section 4C, (ii) state
that the Company will prepay the principal amount of all of the Senior
Subordinated Debentures outstanding held by each holder of Senior
Subordinated Debentures, together with all accrued and unpaid interest to the
date of prepayment and (iii) indicate that the Company will prepay the Senior
Subordinated Debentures as provided in clause (ii) above simultaneously with
such Change of Control or, in the event that the Company does not have
advance notice of a Change of Control, as promptly as practicable after such
Change of Control but in any event no later than fifteen (15) days after such
Change of Control, (the "REPAYMENT DATE"). If a proposed Change of Control
shall not occur, (i) the Company shall have no obligation under this Section
4C to prepay any Senior Subordinated Debentures notwithstanding the fact that
the notice required pursuant to Section 6N had previously been delivered in
connection with such proposed Change of Control and (ii) the obligations of
the Company under this Section 4C shall not be affected with respect to any
subsequent Change of Control.
4D. OPTIONAL PREPAYMENTS OF THE SENIOR SUBORDINATED DEBENTURES.
The Senior Subordinated Debentures shall be subject to prepayment, in whole
or in part, at the option of the Company at any time and from time to time at
a price equal to (x) the outstanding principal amount of the Senior
Subordinated Debentures to be prepaid PLUS (y) all accrued and unpaid
interest thereon up to and including the date of prepayment.
4E. NOTICE OF PREPAYMENTS. In the event of prepayment pursuant
to Section 4D, written notice of such prepayment shall be given by the
Company by first-class, certified mail, return receipt requested, postage
prepaid to the holders of the Senior Subordinated Debentures at their
respective addresses as the same appear on the records of the Company, not
less than 30 days prior to the prepayment date, specifying the prepayment
date, the principal amount of the Senior Subordinated Debentures to be
7
prepaid on such date and that such prepayment is to be made pursuant to
Section 4D. Notice of prepayment having been given as aforesaid, the
principal amount of the Senior Subordinated Debentures specified in such
notice, together with interest thereon to the prepayment date, shall become
due and payable on such prepayment date.
4F. MANDATORY PAYMENTS AND PARTIAL PREPAYMENTS PRO RATA. If
there is more than one holder of the Senior Subordinated Debentures, the
aggregate principal amount of each partial prepayment of the Senior
Subordinated Debentures shall be allocated among the holders of the Senior
Subordinated Debentures at the time outstanding in proportion to the unpaid
principal amounts of the Senior Subordinated Debentures respectively held by
each such holder. For purposes of allocation pursuant to this Section 4F
only, each Senior Subordinated Debenture (to the extent possible) shall be
rounded to the nearest $1,000.
4G. DEFAULT DEBENTURES. If at any time the Company fails, for
any reason, to pay interest on the Senior Subordinated Debentures in full in
cash then at any time after thirty days following the date such interest was
due (as set forth in paragraph 1A), a majority of the holders of Securities
may, at their option, by written instrument filed with the Company, rescind
and annul any declaration of acceleration made pursuant to paragraph 9A and
direct the Company to issue default debentures ("DEFAULT DEBENTURES" and
individually called a "DEFAULT DEBENTURE") with a principal amount thereunder
equal to the dollar amount of such interest that was due and at the interest
rate per annum equal to the lower of (a) 14% and (b) the maximum rate, if
any, permitted by applicable law, compounded quarterly, together with
additional Warrants to purchase shares of Common Stock to the extent provided
in paragraph 6S hereof, in lieu of such cash deficiency. Upon issuance of a
Default Debenture, neither the Company nor any of the Guarantors shall have
any obligation to pay the interest which was due but not paid and on which
such Default Debenture is based. Such Default Debentures shall be
substantially in the form of Exhibit A attached hereto. For purposes of this
Agreement, except as otherwise provided in this Agreement, all references to
the Senior Subordinated Debentures shall be deemed to include any and all
Default Debentures.
4H. PREPAYMENTS OF DEFAULT DEBENTURES. Without limiting any of
the Company's obligations contained in this
8
Agreement (including, without limitation, pursuant to paragraphs 4B, 4C and
4D hereof), prior to making any cash payment on or with respect to the Senior
Subordinated Debentures other than the Default Debentures (whether as payment
of interest and/or principal) the Company shall prepay in full all then
outstanding Default Debentures (including all accrued and unpaid interest
thereon up to and including the date of such prepayment).
6. OPTIONAL PUT AND REPURCHASE OF THE WARRANTS.
5A. OPTION OF HOLDERS TO PUT WARRANTS UPON A CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, any holder of Warrants shall have
the right upon written notice as hereinafter provided in Section 5C to
require the Company to purchase at the Option Closing (as hereinafter
defined), and the Company agrees to so purchase out of funds legally
available therefor, all or any part of the Warrants. The purchase price for
the Warrants shall be paid by certified check at the Option Closing or by
wire transfer of immediately available funds denominated in U.S. dollars to
one or more accounts designated by the holders of the Warrants to the Company
at least two days prior to the Option Closing in an amount equal to the Fair
Market Value (as calculated in accordance with Section 5B below) at the time
of the Change of Control Notice of the Common Stock into which the Warrants
are exercisable, LESS the exercise price of such Warrants.
5B. FAIR MARKET VALUE. The term "Fair Market Value" means the
value (which shall not take into effect any minority discounts) of the Common
Stock as determined by the price per share of such Common Stock which the
Company could obtain from a willing buyer (not a current employee, officer,
consultant or director or any Affiliate of any such Person) for such shares
sold by the Company, as determined in good faith by the Board of Directors of
the Company; PROVIDED, HOWEVER that if (i) the Investors' nominee on the
Board of Directors of the Company has not affirmatively voted in favor of
such determination made by the Board of Directors of the Company, or (ii)
there is no such nominee, the Investors may refer the questions of valuation
(which shall not take into effect any minority discounts) for final
settlement to a nationally recognized investment banking firm designated by
the Investors and reasonably acceptable to the Company; and PROVIDED,
FURTHER, that if the parties cannot agree on such a firm, each party shall
choose a nationally recognized investment banking firm, which shall choose a
third firm, which
9
shall be nationally recognized, and that third firm shall determine the Fair
Market Value, which determination shall be final and binding. The cost
relating to retaining any investment banking firm(s) pursuant to this Section
5B shall be borne by the Company.
5C. EXERCISE OF THE OPTION. Upon the occurrence of a Change of
Control Event, the Change of Control Notice furnished to each holder of
Warrants shall (i) refer specifically to this Section 5C, (ii) state that the
Company may be required to purchase all the Warrants, (iii) contain the
Company's calculation of the purchase price for the Warrants to be purchased
(including a detail of the Fair Market Value of the Common Stock at the time
of the Change of Control Notice) (iv) indicate that the Company will purchase
the Warrants as provided in clause (ii) above at the Option Closing upon
written notice of the exercise of an option by a holder of Warrants, (v)
indicate that a closing (the "OPTION CLOSING") for such purchase and sale
shall take place on a date specified in the notice, which date shall be a
date occurring not earlier that 60 days nor more than 90 days after the date
on which the notice is delivered, (vi) indicate where the Option Closing
shall take place and (vii) be delivered by certified mail return receipt
requested. A holder of Warrants shall furnish written notice to the Company
of the exercise of an option pursuant to this Section 5C within at least 30
days prior to the Option Closing. At the Option Closing, the Company shall
pay the purchase price for the securities being purchased determined as
described above against delivery of the securities being purchased. No
waiver by a holder of a Warrant of its right under this Section 5C to require
the purchase of any or all of the Warrants held by such holder in respect of
a Change of Control shall affect the rights of such holder under this Section
5C in respect of any subsequent Change of Control. If a proposed Change of
Control shall not occur, (i) the holders of Warrants shall rescind their
exercise of any Option and shall have no right to require the Company to
purchase the Warrants with respect to such proposed Change of Control, (ii)
the Company shall have no obligation under this Section 5C to purchase
Warrants notwithstanding the fact that the notice required pursuant to
Section 6N had previously been delivered in connection with such proposed
Change of Control, and (iii) the obligations of the Company under this
Section 5C shall not be affected with respect to any subsequent Change of
Control.
10
5D. OPTIONAL REDEMPTION OF THE WARRANTS. (a) Subject to the
rights of holders of the Warrants to exercise such Warrants and the rights of
holders of the Warrants to put such Warrants pursuant to Section 5A hereof,
the Warrants shall be subject to redemption at the Company's option, in whole
but not in part, at any time on or after a Qualifying Public Offering of
Common Stock; PROVIDED, HOWEVER, that the Company shall not have the right to
redeem the Warrants in any event pursuant to this Section 5D as long as any
Senior Subordinated Debentures are outstanding.
(b) The redemption price for the Warrants shall be payable
immediately upon redemption, by certified bank cashier's check, and shall be
$1.00 per Warrant
5E. NOTICE OF REDEMPTION. The Company shall give each holder of
the Warrants written notice of the redemption pursuant to Section 5D not less
than 60 days prior to the redemption date, specifying such redemption date,
that all of the outstanding Warrants are to be redeemed on such date and that
such redemption is to be made pursuant to Section 5D. Notice of redemption
having been given as aforesaid, the redemption amount due in respect of all
of the Warrants and as calculated in Section 5D(b), shall become due and
payable on such redemption date unless the holder of such Warrants (i) shall
have put such warrants, in whole or in part, pursuant to Section 5A or (ii)
unless the filing by the Company of a registration statement under the
Securities Act relating to the Common Stock obtainable upon exercise of the
Warrants shall have been requested by a holder thereof (either before or
after receipt of such notice) pursuant to the Registration Rights Agreement,
in which case the redemption shall be effected 30 days after the declaration
of effectiveness of such registration statement by the Commission. Should
the Warrants not be redeemed on such redemption date due to the Company's
failure to perform its obligations under this Section 5E, such redemption may
be effected only after compliance with the provisions of this Section 5 from
and after such redemption date.
7. AFFIRMATIVE COVENANTS. THE PROVISIONS OF THIS SECTION 6 ARE FOR THE
BENEFIT OF THE INVESTORS SO LONG AS THEY HOLD ANY OF THE SECURITIES AND, TO THE
EXTENT SET FORTH HEREIN, FOR THE BENEFIT OF EACH OTHER HOLDER OF THE
SECURITIES; PROVIDED, HOWEVER, THAT, UNLESS OTHERWISE PROVIDED HEREIN, UPON THE
LATER TO OCCUR OF (X) THE CONSUMMATION OF A QUALIFYING PUBLIC
11
OFFERING AND (Y) REPAYMENT IN FULL OF ANY AND ALL AMOUNTS (INCLUDING, WITHOUT
LIMITATION, PRINCIPAL AND INTEREST) DUE UNDER THE SENIOR SUBORDINATED
DEBENTURES OUTSTANDING, THE COMPANY SHALL NO LONGER BE BOUND BY THE COVENANTS
SET FORTH IN SECTIONS 6A (OTHER THAN 6A(III), (V) AND (VI)), 6B, 6C, 6D, 6E,
6G, 6H, 6I, 6J, 6N, 6Q AND 6R.
6A. FINANCIAL STATEMENTS. The Company will deliver to the
holders of Securities:
(i) as soon as practicable and in any event within 45 days after
the end of each month in each fiscal year commencing with the month of
February, 1998, unaudited management reports of the Company setting
forth the financial, operational and other performance data of the
Company in reasonable detail and reasonably satisfactory to the
Investors, which shall include at least a consolidated statement of
operations and a consolidated balance sheet for or as at the end of such
month, in each case setting forth, in comparative form, comparable
information from the same month in the preceding fiscal year and
management's budget, all as such reports are then prepared by the
management of the Company in the conduct of its business;
(ii) as soon as practicable and in any event within 45 days after
the end of each quarterly period in each fiscal year (except for the
fourth quarter), statements of income and cash flow of the Company for
such quarterly period and for the period from the beginning of the
current fiscal year to the end of such quarterly period and a balance
sheet of the Company as at the end of the most recent year and at the
end of such quarterly period, setting forth in each case in comparative
form figures for the corresponding period in the preceding fiscal year,
all in reasonable detail and reasonably satisfactory in scope to the
holders of Securities, and prepared in accordance with GAAP (except for
footnote disclosure) on a basis consistent with past practice and
certified by the chief financial officer or chief executive officer of
the Company as fairly presenting the financial condition of the Company,
subject to the changes resulting from audit and year-end adjustments;
(iii) as soon as practicable and in any event within 120 days
after the end of each fiscal year, statements of income, changes in
stockholders' equity and cash flow of the
12
Company for such year, and a balance sheet of the Company as at
the end of such year, setting forth in each case in comparative form
corresponding figures from the preceding annual audit, all in reasonable
detail and reasonably satisfactory in scope to the holders of
Securities, and in each case audited by BDO Xxxxxxx LLP or such other
independent public accountants of recognized national standing selected
by the Company and reasonably satisfactory to the holder of Securities,
whose report in each case shall state that such financial statements
present fairly the results of operations and cash flows of the Company,
in accordance with GAAP on a basis consistent with prior years and that
the examination by such accountants has been made in accordance with
generally accepted auditing standards then in effect in the United
States;
(iv) as soon as practicable and in any event by the end of each
fiscal year beginning with fiscal year 1999, a budget for the Company,
as approved by the Board of Directors of the Company, for the following
fiscal year setting forth in comparative form corresponding figures from
the preceding fiscal year, in reasonable detail and certified as to its
good-faith preparation by the chief financial officer or chief executive
officer of the Company;
(v) promptly upon transmission thereof, copies of all financial
statements, information circulars, proxy statements and reports as the
Company shall send to its stockholders and that are material to the
business of the Company, and copies of all registration statements and
prospectuses and all reports which it files with the Commission (or any
governmental body or agency succeeding to the functions of the
Commission) or with any securities exchange on which any of its
securities are listed or with NASDAQ, and copies of all press releases
and other statements made available generally by the Company to the
public concerning material developments in the business of the Company;
(vi) promptly upon receipt thereof, a copy of each other report
submitted to the Company by independent accountants in connection with
any annual, interim or special audit made by them of the books of the
Company; and
13
(vii) with reasonable promptness, such other financial and/or
operating data as the holders of Securities may reasonably request.
Together with each delivery of the financial statements required by clauses
(ii) and (iii) above, the Company will deliver to each holder of Securities
an Officer's Certificate (a) demonstrating (with computations in reasonable
detail) compliance by the Company with the provisions of Section 7A, (b)
stating that the Company is in compliance with the provisions of Sections 7B,
7C, 7D and 7E and (c) stating that there exists no Default or Event of
Default or, if any Default or Event of Default exists, specifying the nature
thereof, the period of existence thereof and what action the Company proposes
to take with respect thereto. Together with each delivery of financial
statements required by clause (iii) above, the Company will deliver to each
holder of Securities a certificate of the accountants referred to in such
clause (iii) stating that, in making the audit necessary to the certification
of such financial statements, they have obtained no knowledge of any Default
or Event of Default or, if, to their knowledge any such Default or Event of
Default exists, specifying the nature and period of existence thereof;
PROVIDED, HOWEVER, that such accountants shall not be liable to anyone by
reason of their failure to obtain knowledge of any such Default or Event of
Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards then in effect in the
United States. Each holder of Securities is hereby authorized to deliver a
copy of any financial statement or certificate delivered pursuant to this
Section 6A to any regulatory body having jurisdiction over such holder that
requests or requires delivery of such information.
Each holder of Securities hereby acknowledges that it is aware, and
that it will advise its representatives who are provided with the information
furnished pursuant to this Section 6A and Section 6C that certain information
furnished by the Company pursuant to this Section 6A and Section 6C may
constitute material nonpublic information and that the United States
securities laws prohibit any person in possession of material nonpublic
information concerning an issuer from purchasing or selling securities of
such issuer or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person is
likely to purchase or sell such securities.
14
6B. USE OF PROCEEDS. The proceeds of the sale of the Securities
(net of all expenses associated with the issuance thereof) shall be used for
(i) the acquisitions of Consolidated Technologies, Inc., Cone Biotech, Inc. and
The Western States Group, Inc. (the "ACQUISITIONS"), (ii) general corporate
purposes, (iii) refinancing of certain indebtedness in an amount not to exceed
$500,000 and (iv) repayment of certain indebtedness of the Company, Binary
Associates, Inc. and Avre, Inc. to Xxxxxxxx Financial Corporation in an amount
not to exceed $250,000.
6C. BOOKS AND RECORDS; INSPECTION OF PROPERTY. The Company will
keep, and will cause each of its Subsidiaries to keep, proper books of record
and account in which full, true and correct entries in conformity in all
material respects with GAAP shall be made of all material dealings and
transactions in relation to its business and activities. The Company will,
upon reasonable advance notice, permit any Person representing the holders of
Securities and designated in writing by such holder, at such holder's expense,
to visit and inspect any of the properties of the Company or any of its
Subsidiaries during normal business hours in a manner which does not unduly
interrupt the normal course of business, to examine the corporate, financial
and operating records of the Company or any of its Subsidiaries and make copies
thereof or extracts therefrom and to discuss the affairs, finances and accounts
of any of such corporations with the directors, officers and independent
accountants of the Company and its Subsidiaries, all at such reasonable times
and only to the extent such holders may reasonably request.
6D. COVENANT TO SECURE SENIOR SUBORDINATED DEBENTURES EQUALLY. If
the Company or any Guarantor shall create or assume any Lien upon any of its
property or assets, whether now owned or hereafter acquired, other than Liens
permitted by the provisions of Section 7C hereof, it will make or cause to be
made effective provisions whereby the Senior Subordinated Debentures will be
secured by such Lien senior to any and all other Indebtedness (other than
Senior Debt) thereby secured as long as any such other Indebtedness shall be so
secured.
6E. [INTENTIONALLY OMITTED]
6F. STOCK TO BE RESERVED. The Company covenants that all shares of
Common Stock that may be issued upon the exercise
15
of the Warrants will, upon issuance and following the Company's receipt of the
exercise price, be validly issued, fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issuance thereof. The Company
further covenants that during the period within which the Warrants may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock to permit the exercise of all of
the outstanding Warrants.
6G. COMPLIANCE WITH LAWS, ETC. The Company will, and will cause
each of its Subsidiaries to, comply with the requirements of all applicable
laws, rules, regulations and orders of any Governmental Authority, and obtain
and maintain in good standing all licenses, permits and approvals from any and
all governments, governmental commissions, boards or agencies of jurisdictions
in which they carry on business required in respect of the operations of the
Company and its Subsidiaries, except for those with which the failure to comply
or maintain would not have a Material Adverse Effect.
6H. ERISA. (a) As of the date hereof, neither the Company nor any
of its Subsidiaries has any Pension Plans.
(b) If, at any time after the Closing Date, the Company or any of
its Subsidiaries should adopt a Pension Plan, promptly (and in any event within
30 days) after the Company or any Subsidiary knows or has reason to know that a
Reportable Event with respect to such Pension Plan has occurred, that Pension
Plan is or may be terminated, reorganized, partitioned or declared insolvent
under Title IV of ERISA or that the Company or any of its Subsidiaries will or
may incur any liability under Section 4062, 4063, 4064, 4201 or 4204 of ERISA
or promptly upon becoming aware of the occurrence of any (i) event requiring
the Company or any of its Subsidiaries to provide security to a Pension Plan
under Section 401(a)(29) of the Code, (ii) "prohibited transaction", as such
term is defined in Section 4975 of the Code or in Section 406 of ERISA, in
connection with any employee benefit plan maintained or contributed to by the
Company or any of its Subsidiaries or any trust created thereunder for which a
statutory or administrative exemption is not available, (iii) notice of intent
to terminate a Pension Plan or Pension Plans having been filed under Title IV
of ERISA by the Company or any of its Subsidiaries or any ERISA Affiliate, any
Pension Plan administrator or any combination of the foregoing,
(iv) institution of proceedings by the PBGC to terminate or to cause a trustee
to be appointed to administer any Pension Plan, (v) partial or complete
withdrawal by the Company or any of its Subsidiaries or any ERISA Affiliate
from any Multiemployer Pension Plan, (vi) institution of proceedings by a
fiduciary of any Multiemployer Pension Plan against the Company or any of its
Subsidiaries to enforce Section 515 of ERISA and such proceeding shall not have
been dismissed within 30 days thereafter, (vii) failure of the Company or any
of its Subsidiaries or any ERISA Affiliate to make a required installment under
Section 412(m) of the Code or any other payment required under Section 412 of
the Code or to
16
pay any amount which it shall have become liable to pay to the PBGC or to a
Pension Plan under Title IV of ERISA on or before the due date, (viii)
application by the Company or any of its Subsidiaries or any ERISA Affiliate
for a waiver of the minimum funding standard under Section 412 of the Code or
Section 302 of ERISA, or (ix) "reorganization" (as defined in Section 418 of
the Code or Title IV of ERISA) of any Multiemployer Pension Plan, the Company
will deliver to each holder of Securities, a certificate of the chief financial
officer of the Company setting forth information as to such occurrence and what
action, if any, the Company is required or proposes to take with respect
thereto. The Company shall also deliver to each holder of Securities any
notices concerning such occurrences which are (a) required to be filed by the
Company or the plan administrator of any such Pension Plan controlled by the
Company with the PBGC, or (b) received by the Company or any of its
Subsidiaries from any plan administrator of a Multiemployer Pension Plan not
under their control. The Company shall furnish to each holder of Securities a
copy of each annual report (Form 5500 Series, excluding Schedule SSA) of any
Pension Plan received or prepared by it or any of its Subsidiaries. Each annual
report and any notice required to be delivered hereunder shall be delivered no
later than 30 days after the later of the date such report or notice is filed
with the Internal Revenue Service or the PBGC or the date such report or notice
is received by the Company or any of its Subsidiaries, as the case may be.
6I. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Company (i)
will do or cause to be done all things reasonably necessary to preserve and
keep in full force and effect its corporate existence, rights and franchises
and the corporate existence, rights and franchises of its Subsidiaries (except
as specifically permitted by Sections 7H and 7I hereof), (ii) will cause its
material properties and the material properties of its Subsidiaries to be
maintained and kept in reasonable condition, repair and working order (ordinary
wear and tear excepted) and will cause to be made all necessary repairs and
replacements, thereto, and (iii) will, and will cause each of its Subsidiaries
to, qualify and remain qualified to conduct business in each jurisdiction where
the nature of the business of or ownership of property by the Company or such
Subsidiary may require such qualification except where the failure to so
qualify does not cause a Material Adverse Effect.
6J. INSURANCE. The Company will maintain and will cause each of its
Subsidiaries to maintain with financially sound and reputable insurance
companies, funds or underwriters, insurance for itself and its Subsidiaries of
the kinds, covering the risks and in the relative proportionate amounts usually
carried by companies conducting business activities similar to those of the
Company and its Subsidiaries. From and after a Public Offering of its equity
securities, the Company will use its best efforts to obtain and maintain
directors and officers liability insurance similar to the insurance usually
carried by
17
companies conducting business activities similar to those of the Company and
its Subsidiaries.
6K. FURTHER ASSURANCES. The Company and each Guarantor, on the one
hand, shall cooperate with the holders of Securities, on the other hand, and
the holders of Securities, on the one hand, shall cooperate with the Company
and each Guarantor, on the other hand, and execute such further instruments and
documents as the other parties shall reasonably request to carry out to the
satisfaction of such parties to the transactions contemplated by this
Agreement.
6L. FILING OF REPORTS UNDER THE EXCHANGE ACT. The Company shall,
and shall cause each of its Subsidiaries to, give prompt notice to the holders
of Securities of the filing of any registration statement (an "EXCHANGE ACT
REGISTRATION STATEMENT") pursuant to the Exchange Act relating to any class of
securities of the Company or such Subsidiaries and the effectiveness of such
Exchange Act Registration Statement and, with respect to equity securities, the
number of shares of such class of equity security outstanding as reported in
such Exchange Act Registration Statement. If and for so long as the Company or
any of its Subsidiaries has a class of equity securities required to be
registered under the Exchange Act, the Company and the applicable Subsidiaries
shall (i) comply in all material respects with the reporting requirements of
the Exchange Act, and (ii) comply in all material respects with all other
public information reporting requirements of the Commission that are a
condition to the availability of an exemption from the Securities Act (under
Rule 144 thereof, as amended from time to time, or successor rule thereto or
otherwise) for the sale of shares of Common Stock by any Investors. The
Company shall, and shall cause each of its Subsidiaries to, cooperate with the
holders of Securities in supplying such information as may be reasonably
necessary for such holders of Securities to complete and file any information
reporting forms presently or hereafter required by the Commission as a
condition to the availability of an exemption from the Securities Act (under
Rule 144 thereunder or otherwise) for the sale of shares of Common Stock by the
holders of Securities.
6M. SECURITIES ACT REGISTRATION STATEMENTS. The Company covenants
that it shall not, and shall cause each of its Subsidiaries not to, file any
registration statement under the Securities Act covering any securities unless
it has first given to each of the holders of Securities 20 days written notice
18
thereof. The Company further covenants that at any time that any of the
holders of Securities may reasonably be deemed to be a "controlling person" of
the Company or any of its Subsidiaries under the Securities Act, such holders
of Securities shall have the right to participate in the preparation of such
registration statement (regardless of whether or not the holders of Securities
will be a selling security holder in connection with such registration
statement) and to request the insertion therein of material furnished to the
Company in writing which in such Investors' reasonable judgment should be
included. In connection with any registration statement referred to in this
Section 6M, the Company will indemnify each holder of Securities, their
respective partners, officers and directors and each person, if any, who
controls such holders of Securities within the meaning of Section 15 of the
Securities Act (collectively, the "INVESTOR PARTIES"), against all losses,
claims, damages, liabilities and expenses caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus or any preliminary prospectus or any amendment thereof
or supplement thereto or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any untrue statement or alleged
untrue statement or omission or alleged omission contained in written
information furnished to the Company by such Investor Parties expressly for use
in such registration statement. If, in connection with any such registration
statement, such Investor Parties shall furnish written information to the
Company expressly for use in the registration statement, such Investor Parties
will indemnify the Company, its directors, each of its officers who signs such
registration statement and each person, if any, who controls the Company within
the meaning of the Securities Act against all losses, claims, damages,
liabilities and expenses caused by any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission of a material
fact required to be stated in the registration statement or prospectus or any
preliminary prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or alleged untrue statement or such omission or
alleged omission is contained in information so furnished in writing by such
holders of Securities for use therein. The provisions of this Section 6M
19
are in addition to, and not in limitation of, the provisions of the
Registration Rights Agreement.
6N. NOTICES OF CERTAIN EVENTS. The Company shall promptly give
notice to each holder of Securities (i) of the occurrence of any Default or
Event of Default, (ii) of any default or event of default under any contractual
obligation of the Company or any Guarantor if such default or event of default,
individually or in the aggregate, relates to a contractual obligation equal to
or in excess of $100,000, (iii) of any pending or, to the knowledge of the
Company, threatened litigation, investigation or proceeding to which the
Company or any Subsidiary is a party or, to the knowledge of the Company, is
threatened to be a party which, if such pending or threatened litigation,
investigation or proceeding were adversely determined, would create a liability
of the Company or any Subsidiary equal to or in excess of $100,000 that is not
fully covered by insurance held by the Company or its Subsidiaries, or (iv) of
a Change of Control Event. Any notice delivered pursuant to this Section 6N
shall be accompanied by an Officer's Certificate specifying the details of the
occurrence referred to therein and stating what action the Company or the
Guarantor proposes to take with respect thereto. In addition to the foregoing,
in the case contemplated by clause (iv) of the first sentence of this Section
6N, the Company will also comply with the provisions of Sections 4C, 5B and 5C
hereof.
6O. BOARD NOMINEES. As long as (x) any Senior Subordinated
Debentures are outstanding, (y) the Investors hold any combination of (i)
Warrants exercisable into or (ii) shares obtained upon exercise of Warrants
representing at least 25% of the shares of Common Stock issuable upon exercise
of the Warrants as of the date hereof (or, if an adjustment pursuant to Section
4 of the Warrants shall occur, then at least 25% of the shares of Common Stock
issuable upon exercise of the Warrants, after giving effect to any such
adjustment) or (z) holders of Securities hold Warrants as of the date hereof
exercisable into at least 25% of the shares of Common Stock issuable upon
exercise of the Warrants as of the date hereof (or, if an adjustment pursuant
to Section 4 of the Warrants shall occur, then at least 25% of the shares of
Common Stock issuable upon exercise of the Warrants, after giving effect to any
such adjustment), the holders of a majority of the then-outstanding Securities
will have the right to designate one member to the Board of Directors of the
Company. Any director designated by such holders of Securities shall receive
(A) all
20
materials distributed to the Board of Directors of the Company whether provided
to directors in advance of, during or after, any meeting of the Board of
Directors, regardless of whether such director shall be in attendance at any
such meeting, (B) the same compensation and indemnification benefits other
outside members of the Board of Directors of the Company shall receive in his
or her capacity as a director and (C) reimbursement of the reasonable
out-of-pocket expenses of such director incurred in attending the meetings of
the Board of Directors of the Company.
6P. LISTING OF COMMON STOCK. The Company covenants and agrees for
the benefit of the holders of Securities that it will, at its expense, use its
best efforts to cause the shares of Common Stock issuable from time to time
upon exercise of the Warrants to be approved for listing on any exchange or
quotation or market system on which the Common Stock may otherwise be listed,
subject to notice of issuance, and will provide prompt notice to each such
exchange of the issuance thereof from time to time.
6Q. ENVIRONMENTAL LAWS. (i) The Company will, and will cause each
of its Subsidiaries to, comply with and use its reasonable best efforts to
ensure compliance by all tenants and subtenants and with respect to all of its
assets with, all licenses, permits and other authorizations required under and
all other requirements of all applicable laws, regulations, orders, notices and
other requirements of Governmental Authorities or governmental requirements
relating to public health and safety, pollution or to the protection of the
indoor or outdoor environment (the "ENVIRONMENTAL LAWS") and obtain and comply
with and maintain, and use its reasonable best efforts to ensure that all
tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, registrations or permits required by Environmental Laws,
except to the extent that failure to so comply or to obtain and comply with and
maintain such licenses, approvals, registrations and permits does not have, and
could not reasonably be expected to result in, a Material Adverse Effect.
(ii) The Company will, and will cause each of its Subsidiaries
to, 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 and
21
all governmental requirements with respect to Environmental Laws, except to
the extent that the same are being contested in good faith by appropriate
proceedings or the pendency of such proceedings would not have a Material
Adverse Effect.
(iii) The Company will, and will cause each of its Subsidiaries
to, notify the holders of the Securities of any of the following that is
reasonably likely to have a Material Adverse Effect:
any claim with respect to any Environmental Law that the Company
or any of its Subsidiaries receives, including one to take or pay for any
remedial, removal, response or cleanup or other action with respect to any
hazardous substance, hazardous waste, contaminant, pollutant, regulated waste,
special waste or medical waste or toxic substance or similar terms (as such
terms are defined in any applicable Environmental Law) (collectively,
"HAZARDOUS SUBSTANCES") contained on or generated from any property owned or
leased by the Company;
(b) any written notice of any alleged violation of any Environmental
Law; and
(c) any commencement of or receipt of written intent to commence any
judicial or administrative proceeding or investigation alleging a violation or
potential violation of any requirement of any Environmental Law by the Company
or any of its Subsidiaries.
22
(iv) Without limiting the generality of Section 13B, the
Company will indemnify the Investors and each holder from time to time of
the Securities and each of their respective directors, officers,
employees, agents, partners and Affiliates (each such person being called
an "INDEMNITEE" and collectively, the "INDEMNITEES") against, and hold
each Indemnitee harmless from, any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses (including, without
limitation, reasonable counsel fees, charges and disbursements, including,
without limitation, attorneys' and consultants' fees, investigation and
laboratory fees, Response Costs (as such term is defined in CERCLA), court
costs and litigation expenses) of whatever kind or nature arising out of,
or in any way relating to, the violation of, noncompliance with or
liability under any Environmental Laws applicable to the operations of the
Company, any orders, requirements or demands of Governmental Authorities
and/or governmental requirements related thereto, except to the extent
that any of the foregoing are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Indemnitee seeking indemnification
therefor. The obligation of the Company under this Section 6Q shall
survive the payment of the Senior Subordinated Debentures and the exercise
of the Warrants.
(v) Neither the Company's nor any of its Subsidiaries' plants
and facilities will use, manage, treat, store or dispose of any Hazardous
Substances in violation of any Environmental Laws, except to the extent
such violation will not cause a Material Adverse Effect.
6R. GUARANTEE BY GUARANTOR. The Company covenants that it will
cause any Subsidiary to execute and deliver to the holders of Securities such
appropriate documents, including this Agreement and the Guarantee, upon
becoming a Subsidiary of the Company to become a Guarantor under this
Agreement and the Guarantee.
6S. ISSUANCE OF WARRANTS WITH INTEREST DEBENTURES. The Company
agrees to issue, together with any Interest Debentures and Default
Debentures, additional Warrants to purchase that number of shares of Common
Stock equal to 131 shares per $1,000 principal amount of Interest Debentures
(as
23
adjusted for stock splits, recombinations, dividends and other similar
events). All such shares shall be registered in the name of the recipient of
the Interest Debentures or Default Debentures, as the case may be, or its
designee and will, upon issuance, be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof.
8. NEGATIVE COVENANTS. THE PROVISIONS OF THIS SECTION 7 ARE FOR THE BENEFIT
OF THE INVESTORS SO LONG AS IT HOLDS ANY OF THE SECURITIES AND FOR THE
BENEFIT OF ANY OTHER HOLDER OF SECURITIES; PROVIDED, HOWEVER, THAT UPON
REPAYMENT IN FULL OF ANY AND ALL AMOUNTS (INCLUDING, WITHOUT LIMITATION,
PRINCIPAL AND INTEREST) DUE UNDER THE SENIOR SUBORDINATED DEBENTURES, THE
COMPANY SHALL NO LONGER BE BOUND BY THE COVENANTS CONTAINED IN SECTIONS 7A
THROUGH 7F AND 7H THROUGH 7O.
7A. FINANCIAL COVENANTS.
The Company and its Subsidiaries, on a consolidated basis, shall
maintain the following covenants:
(i) FUNDED DEBT RATIO. As of the date hereof, the Company shall
have and thereafter maintain, for each quarterly period, a ratio of (i)
Funded Debt to (ii) EBITDA of at least 2.50:1.00.
(ii) FIXED CHARGE COVERAGE RATIO. As of the date hereof, the
Company shall have and thereafter maintain, for each quarterly period, a
Fixed Charge Coverage Ratio of at least 2.20:1.00.
(iii) CERTIFICATE OF COMPLIANCE. The Company, as of the date
hereof, and within forty-five (45) days after the end of each fiscal
quarter will provide to the holders of Securities a Certificate of
Compliance in the same form as provided to the Bank, signed by a
financial officer of the Company (i) calculating or stating the
financial covenants set out in this Section 7A, (ii) certifying that no
Events of Default have occurred, and (iii) that the Company is in
compliance with the covenants set out in this section.
7B. RESTRICTIONS ON INDEBTEDNESS AND REPAYMENT OF INDEBTEDNESS. So
long as any of the Senior Subordinated
24
Debentures remain outstanding, the Company covenants that it will not incur,
create, assume or suffer to exist any Indebtedness or permit any of its
Subsidiaries to do any of the foregoing, other than the following:
(i) Senior Debt from time to time in an amount not to exceed the
product obtained by multiplying the amount of the Company's consolidated
EBITDA for the preceding twelve calendar months by two;
(ii) Indebtedness represented by the Senior Subordinated
Debentures and this Agreement;
(iii) Indebtedness of the Company which by its terms is
subordinated (to the same extent as the Senior Subordinated Debentures
are subordinated to any Senior Debt) to the Senior Subordinated
Debentures;
(iv) Indebtedness secured by Xxxxx permitted pursuant to Section
7C; and
(v) Indebtedness which is non-recourse to the Company or any
Guarantor, incurred in connection with the acquisition of (A) assets of
another Person by the Company or a Guarantor or (B) stock by the
Company, but only if such Person becomes a wholly-owned Subsidiary of
the Company, after the date hereof and secured solely by the stock or
assets so acquired.
In addition, the Company covenants that it will not, and will not
permit any of its Subsidiaries to, prepay any Indebtedness junior to the
Senior Subordinated Debentures.
7C. RESTRICTIONS ON LIENS. The Company covenants that it will not,
and will not permit any of its Subsidiaries to, create, assume or suffer to
exist any Lien upon any of its property or assets, whether now owned or
hereafter acquired, except:
(i) Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings and for which adequate reserves
have been established in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other
25
similar Persons and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in
good faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(iii) Liens made to secure Senior Debt;
(iv) Liens incurred through Purchase Money Security Interests in
amounts which, at the time incurred, do not exceed the fair market value
of the asset securing such Liens;
(v) Liens securing Indebtedness permitted under Section 7B(v)
above; provided, however, that in accordance with Section 6D hereof, the
Senior Subordinated Debentures will be secured by a Senior Lien on the
assets or stock so acquired by the Company to the extent of any
investment made therein by the Company; and
(vi) Liens or deposits made to secure payment of workers'
compensation, or in connection with the participation in any fund in
connection with workers' compensation, unemployment insurance, pensions
or other social security programs.
7D. RESTRICTED PAYMENTS. Other than in respect of the Company's
presently outstanding Series A Warrants, Series A Preferred Stock and Series
B Preferred Stock or as otherwise permitted or contemplated in this
Agreement, the Company covenants that it will not make, and will not permit
any Subsidiary to make, any Restricted Payments. Notwithstanding the
foregoing, the Company shall not be permitted to make any payments with
respect to such Series A Warrants or Series A Preferred Stock if any Default
or Event of Default shall have occurred and then be continuing.
7E. LOANS, ADVANCES AND INVESTMENTS. The Company covenants that it
will not, and will not permit any Subsidiary to, make or permit to remain
outstanding any loan or advance to, or guarantee, endorse or otherwise be or
become contingently liable, directly or indirectly, in connection with the
obligations, stock or dividends of, or own, purchase or acquire any stock,
obligations or securities of, or make any Investment in, any Person except
that the Company or any of its Subsidiaries may:
26
(i) own, purchase or acquire Permitted Investments;
(ii) endorse negotiable instruments for collection in the ordinary
course of business, make or permit to remain outstanding travel, moving
and other like advances to officers, employees and consultants in the
ordinary course of business or make or permit to remain outstanding
lease, utility and other similar deposits in the ordinary course of
business;
(iii) make an Investment in a Person not otherwise permitted
pursuant to this Section 7E, provided the amount of such Investment
(including the amount of any guarantee, endorsement or other liability
with respect thereto) shall not exceed $25,000 individually or $50,000
in the aggregate;
(iv) make an Investment in a Person that becomes a wholly-owned
Subsidiary as a result of such Investment or in assets of a Person that
become assets of the Company or any wholly-owned Subsidiary; provided
that: (a) such Investments relate to the acquisition of companies
engaged in the business of whole blood or plasma collection, processing
and marketing, selling of blood and blood byproducts and any related
business or activities; (b) the Company shall deliver to the holders of
Securities pro forma financial statements reflecting the Investment and
related calculations demonstrating compliance with all covenants
contained herein, relating to financial and accounting matters, together
with a description in reasonable detail of the nature and reasons for
the proposed transaction; (c) immediately after giving effect to such
transaction, no Default or Event of Default shall exist and be
continuing; and (d) such Investments do not exceed $10,000,000 in
purchase price for the Company in any one fiscal year (provided that the
purchase price paid and to be paid by the Company in connection with the
Acquisitions shall not be counted towards the $10,000,000 limit in any
fiscal year), and
(v) make or permit to remain outstanding loans or advances to any
wholly owned subsidiary (hereafter created).
7F. LEASES. The Company covenants that it will not enter into, or
permit any of its Subsidiaries to enter into, any leases of real or personal
property (except in the normal course
27
of business) as lessee or sublessee, with initial terms (excluding options to
renew or extend any term, whether or not exercised) of more than 12 years.
7G. TRANSACTIONS WITH AFFILIATES. The Company covenants that it
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into or permit to exist any transactions (including,
without limitation, the purchase, sale, lease or exchange of any property or
the rendering of any service), with any holder of 5% or more of any class of
equity securities of the Company or with any Affiliate of the Company or of
any such holder on terms that are less favorable to such Subsidiary or the
Company than those that would be obtainable at the time in an arms-length
transaction from any Person who is not such a holder or Affiliate.
7H. MERGER. The Company covenants that it will not, and will not
permit any of its Subsidiaries to, enter into any merger or consolidation
(which does not constitute a Change of Control) or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution) except that the
Company may enter into a merger in connection with an investment permitted by
Section 7E, and except that any Subsidiary may be merged, consolidated,
dissolved or liquidated into the Company.
7I. DISPOSITION OF SUBSTANTIAL ASSETS. The Company covenants that
it will not, and will not permit any of its Subsidiaries to, sell, dispose of
or otherwise convey (by merger, consolidation, sale of stock or otherwise)
(collectively, a "TRANSFER"), in any single or related series of sales,
dispositions or conveyances, any assets of the Company except: (i) if such
Transfer is made in the ordinary course of business consistent with past
practice; (ii) if the net proceeds of such Transfer are applied to the
repayment or prepayment of the Senior Debt or the Senior Subordinated
Debentures pursuant to Section 4D; (iii) if the net proceeds of such Transfer
are reinvested in the business of the Company or are otherwise invested
pursuant to Section 7E(iv); or (iv) if in the aggregate all of the Transfers
made since the Closing Date and not otherwise permitted by clause (i), (ii)
or (iii) above amounts to less than $200,000. Notwithstanding this Section
7I, no assets of the Company or its Subsidiaries shall be sold, disposed of
or otherwise conveyed (i) at less than fair market value (determined in good
faith by the Board of Directors of the Company) nor (ii) if any Default or
28
Event of Default shall have occurred and then be continuing or shall result
from such sale or disposition.
7J. CONDUCT OF BUSINESS. The Company covenants that it will not,
and will not permit any of its Subsidiaries to, engage in any material
respect in any business other than the business engaged in by the Company and
its Subsidiaries on the date hereof and any other business or activity
relating to the collection, processing and marketing of blood, plasma and
related products and byproducts.
7K. NO AMENDMENTS. The Company covenants that it will not, and
will not permit any of its Subsidiaries to, amend (i) its Articles of
Incorporation or By-laws in a manner which impairs the rights, privileges or
preferences of the Securities, (ii) the Related Documents in any manner that
impairs any right or privilege of the holders of the Senior Subordinated
Debentures (including, without limitation, enlarging the rights or privileges
of any other Persons at the expense of the holders of the Senior Subordinated
Debentures), or (iii) any Senior Debt Agreement in any manner that impairs
any right of the Senior Subordinated Debentures, including without
limitation, the right to payments of principal and interest when due in
accordance with Section 4B.
7L. REGISTRATION RIGHTS. The Company covenants that it will not
hereafter enter into any agreement with respect to its securities any
provision of which conflicts with or is as favorable as the rights granted to
the holders of Securities in the Registration Rights Agreement.
7M. OFFERING OF SECURITIES. The Company will not take any action
which would subject the issuance or sale of any of the Securities to the
provisions of Section 5 of the Securities Act or violate the provisions of
any securities or Blue Sky Law of any applicable jurisdiction.
7N. ISSUANCE OF SECURITIES. So long as the Debentures are
outstanding: (a) The Company covenants that it will not issue, sell or
otherwise dispose of or part with any shares of capital stock, Indebtedness
or other securities of the Company which, in each case, by their terms are
senior to the Senior Subordinated Debentures, other than, subject to Section
7B(i), Senior Debt, and (b) except to the extent provided in Section 7B(v),
the Company covenants that it will not issue, sell or
29
otherwise dispose of or part with any shares of capital stock, Indebtedness
or other Securities of the Company, which by their terms are PARI PASSU to
the Senior Subordinated Debentures.
7O. SALE OF STOCK AND DEBT OF SUBSIDIARIES. So long as the
Debentures are outstanding, the Company covenants that it will not, and will
not permit any of its Subsidiaries to, sell or otherwise dispose of, or part
with control of, any shares of stock or Indebtedness of any Subsidiary,
except to the Company or another wholly-owned Subsidiary and except to the
extent provided in Section 7B(v).
9. SUBORDINATION.
8A. SUBORDINATED DEBT SUBORDINATE TO SENIOR DEBT. The Senior
Subordinated Debentures and the Guarantee shall be junior and subordinate to
all Senior Debt to the extent and in the manner provided in this Section 8
and each holder of a Senior Subordinated Debenture and the Guarantee, by its
acceptance thereof, agrees to be bound by the provisions of this Section 8.
The Company and each holder of Subordinated Debt agree that the payment of
the principal of, and interest on, and all other amounts owing in respect of
the Subordinated Debt is and shall be expressly subordinated, to the extent
and in the manner hereinafter set forth, to the prior payment in full of all
Senior Debt. The Senior Subordinated Debentures shall not be junior or
subordinate to any Indebtedness of the Company other than the Senior Debt.
For purposes hereof, all Indebtedness evidenced by the Senior Subordinated
Debentures, including any refinancing, extension or modification thereof, and
the Company's obligation to pay the redemption price in respect any and all
other obligations of the Company owing to any of the holders of Subordinated
Debt howsoever created or arising shall constitute "SUBORDINATED DEBT".
The Senior Creditor is the holder of the Senior Debt, a third party
beneficiary of Section 8 of this Agreement, and is entitled to rely on the
terms and provisions hereof, limited however, to the provisions of this
Section 8, and to enforce the terms and provisions of this Section 8 in
respect of the Senior Debt and the Subordinated Debt against the Company and
the holders of any of the Subordinated Debt.
8B. SUSPENSION OF RIGHT TO RECEIVE PAYMENTS OF SUBORDINATED DEBT.
30
8B(1). FAILURE TO PAY PRINCIPAL OF OR INTEREST ON SENIOR DEBT.
(a) Upon (i) the maturity of Senior Debt by lapse of time, acceleration or
otherwise, (ii) any failure by the Company to make any payment of principal
or interest when due with respect to Senior Debt or (iii) any default in the
payment by the Company of any interest or other amounts due with respect to
Subordinated Debt, all principal of the Senior Debt and all interest thereon
and other amounts due in connection therewith, shall first be paid in full,
or such payment duly provided for in cash or in a manner satisfactory to the
holders of such Senior Debt, before any payment or distribution of any kind
or character, whether in cash, property or securities, shall be paid or
delivered with respect to Subordinated Debt. Any payment or distribution of
any kind or character, whether in cash, property or securities, which may be
payable or deliverable with respect to the Subordinated Debt shall be paid or
delivered directly to the holders of Senior Debt, ratably, for application in
payment thereof, unless and until all Senior Debt shall have been paid in
full and in cash.
(b) Upon the occurrence of any event of default under any Senior
Debt which would, with the giving of notice or the passage of time, or both,
permit the holders of such Senior Debt to accelerate the maturity thereof
upon written notice thereof given to the Company and to the Investors by the
holder of such Senior Debt or their representatives (a "DEFAULT NOTICE"),
then, unless and until such event of default with respect to Senior Debt
shall have been cured or waived in writing by the holders of such Senior
Debt, no payment shall be made by the Company with respect to the principal
of or interest or other amounts due with respect to Subordinated Debt;
PROVIDED, HOWEVER, this section shall not prevent the making of any payment
for longer than 180 days after the giving of a Default Notice unless a
default shall be declared by the holder of the Senior Debt, in which event no
payment of Subordinated Debt shall be made by the Company with respect to the
principal of or interest or other amounts due, in which event the provisions
of Section 8B(1)(a) shall control. Amounts of the Subordinated Debt which
become due during any period during which Senior Debt in respect of which a
Default Notice has been given will be deferred and payable only after all
Senior Debt shall have been paid in full.
(c) Upon the occurrence of (i) any default as set out in
Section 8B(1)(a), or (ii) the giving of any Default Notice as set out in
Section 8B(1)(b), the Company shall not make any payments, and the holders of
the Subordinated Debt shall not receive, ask, demand, sue for any payment or
take any action to enforce, take or receive, directly or indirectly, in cash
or other property, by sale, setoff or in any other manner whatsoever, or
otherwise exercise remedies against the Company with respect to the principal
of, interest on, premium on, or otherwise owing in respect of, the
Subordinated Debt or this Agreement, unless and until such default with
respect to Senior Debt has been cured or waived in writing by the holder of
the Senior Debt or this Agreement.
31
8B(2). BANKRUPTCY OR INSOLVENCY. In the event of (a) any
insolvency, bankruptcy, liquidation, reorganization or other similar
proceedings, or any receivership proceedings in connection therewith,
relative to the Company (b) any proceedings for voluntary liquidation,
dissolution or other winding-up of the Company, whether or not involving
insolvency or bankruptcy proceedings (collectively, the foregoing being
"PROCEEDINGS", or individually, a "PROCEEDING"), then all Senior Debt,
including the principal thereof, premium, if any, and interest, including
post-petition interest due thereon, shall first be paid in full, or such
payment shall have been duly provided for, before any further payment is made
with respect to Subordinated Debt. In any Proceedings, any payment or
distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable with respect to Subordinated
Debt shall be paid or delivered directly to the holders of Senior Debt,
ratably, for application in payment thereof, unless and until all Senior Debt
shall have been paid in full. In any Proceeding, the holders of Subordinated
Debt shall not have any right to setoff against the Subordinated Debt any
Indebtedness owed by any of the holders of Subordinated Debt to the Company
(including, without limitation, any right of setoff under Section553 of the
Bankruptcy Code). Anything in this Section 8 to the contrary
notwithstanding, no payment or delivery shall be made to holders of Senior
Debt of securities that are issued and delivered to holders of Subordinated
Debt pursuant to liquidation or dissolution of the Company or in a
Proceeding, or upon any merger, consolidation, sale, lease, transfer or other
disposal not prohibited by the provisions of this Agreement, by the Company,
as reorganized, or by the corporation succeeding to the Company or acquiring
its property and assets, if (i) such securities are subordinate and junior at
least to the extent provided in this Section 8 to the payment of all Senior
Debt then outstanding and to the payment of any securities that are issued in
exchange or substitution for any Senior Debt then outstanding and (ii) such
securities mature no earlier than six (6) months after the scheduled maturity
of the Indebtedness under the Bank Debt Agreement.
8C. RIGHTS OF HOLDERS OF SENIOR DEBT NOT TO BE IMPAIRED. No
right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time be in any way prejudiced
or impaired by any act or failure to act by any such holder, or by any
noncompliance by the Company with the terms and provisions and covenants
herein contained,
32
regardless of any knowledge thereof any such holder may have or otherwise be
charged with. The provisions of this Section 8 are intended to be for the
benefit of, and shall be enforceable directly by, any one or more of the
holders from time to time of the Senior Debt. Each of the holders of the
Subordinated Debt waives notice of or proof of reliance on this Agreement and
(except as set out in Section 8B(1)(b)) protest, demand for payment and
notice of default by the holders of Senior Debt.
8D. COMPANY'S OBLIGATION UNCONDITIONAL. The provisions of this
Section 8 are solely for the purpose of defining the relative rights of the
holders of Senior Debt, on the one hand, and the holders of Subordinated
Debt, on the other hand, against the Company and its property. Nothing
herein shall impair, as between the Company and the holders of Subordinated
Debt, the obligation of the Company, which is unconditional and absolute, to
pay to the holders thereof the full amount of Subordinated Debt in accordance
with the terms thereof and the provisions hereof and, except as expressly
provided in Section 8B, nothing herein shall prevent the holder of any
Subordinated Debt from exercising all remedies otherwise permitted by
applicable law or hereunder upon Default hereunder or under any Subordinated
Debt (including, without limitation, the right to demand and sue for payment
and performance hereof of the Subordinated Debt and to accelerate the
maturity hereof as provided in Section 9 hereof), subject to the rights under
this Section 8 of holders of Senior Debt to receive cash, property or
securities otherwise payable or deliverable to the holders of Subordinated
Debt. The failure to make any payment with respect to Subordinated Debt by
reason of any provision of this Section 8 shall not be construed as
preventing the occurrence of an Event of Default under Section 9.
8E. PAYMENTS HELD IN TRUST. If the holder of any Subordinated
Debt shall receive any payment or delivery of cash, property or securities in
respect of such Subordinated Debt which such holder is not entitled to
receive under the provisions of this Section 8, such holder will hold any
amount so received in trust for the holders of Senior Debt and will forthwith
turn over to the holders of Senior Debt such payment or delivery in the form
received to be applied in payment or prepayment of Senior Debt; PROVIDED,
HOWEVER, that no holder of Subordinated Debt shall be obligated to determine
whether a payment received by it was appropriately made by the Company.
33
8F. SUBROGATION. Upon the payment in full of all Senior Debt
and termination of any Senior Debt Agreement, the holders of Subordinated
Debt shall be subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of assets of the Company applicable to
Senior Debt, until all Subordinated Debt shall have been paid in full. For
the purpose of subrogation, no payments to the holders of Senior Debt of any
cash, property or securities that the holders of Subordinated Debt would be
entitled to receive and retain but for the provisions of this Section 8, and
no payment over pursuant to the provisions of this Section 8 to holders of
Senior Debt by holders of Subordinated Debt, shall, as between the Company
and its creditors (other than the holders of Senior Debt), on the one hand,
and the holders of Subordinated Debt, on the other, be deemed to be a payment
by the Company with respect to the Senior Debt.
8G. RELIANCE BY HOLDERS ON FINAL ORDER OR DECREE. In the event
that delivery of any securities to any holders of Subordinated Debt is
authorized by a final non-appealable order or decree giving effect to the
subordination of the Indebtedness represented by Subordinated Debt to Senior
Debt, and made by a court of competent jurisdiction in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceedings under any applicable law, securities
deliverable with respect to the Indebtedness represented by Subordinated Debt
may be made by the Company, as reorganized, or by the corporation succeeding
to the Company or acquiring its properties and assets, to the holders of
Subordinated Debt, if (i) such securities are subordinate and junior at least
to the extent provided in this Section 8 to the payment of all Senior Debt
then outstanding and to the payment of any securities that are issued in
exchange or substitution for any Senior Debt then outstanding and (ii) such
securities mature no earlier than the scheduled maturity of the Indebtedness
under the Bank Debt Agreement.
8H. LEGEND. The Senior Subordinated Debentures shall be
conspicuously legended indicating that their payment is subordinated to
Senior Debt pursuant to the terms of this Agreement with the following legend
(or substantially equivalent legend):
"THE INDEBTEDNESS EVIDENCED BY THIS SENIOR SUBORDINATED DEBENTURE IS
SUBORDINATED TO THE SENIOR DEBT, AS DEFINED IN SECTION 8 OF
34
THAT CERTAIN SECURITIES PURCHASE AGREEMENT DATED FEBRUARY 13, 1998, WHICH
SENIOR DEBT IS HELD BY __________________________, PURSUANT TO, AND TO THE
EXTENT PROVIDED IN SECTION 8 OF THE SECURITIES PURCHASE AGREEMENT (AS
AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME PURSUANT TO THE
TERMS THEREOF), AMONG SERACARE, INC. AND THE INVESTORS NAMED ON THE SIGNATURE
PAGES THEREOF."
8I. SENIOR DEBT NOT AFFECTED. All rights and interests of the
Senior Creditor hereunder, and all agreements and obligations of the Company,
the Guarantor and the holders of Subordinated Debt under this Agreement,
shall remain in full force and effect irrespective of, (i) any lack of
validity or enforceability of all or any portion of this Agreement, (ii) any
change in the amount of interest rate accruing on, time, manner or place of
payment of, or in any other term of, all or any of the Senior Debt, or any
other amendment or waiver of any consent to departure from any of loan
documents, including, without limitation, changes in the terms of
disbursement of the loan proceeds under the Bank Debt Agreement or repayment
thereof, modifications, extensions or renewals of payment dates, changes in
interest rate or the advancement of additional funds by the Senior Creditor
in the Senior Creditor's discretion, (iii) any exchange, release or
non-perfection of any collateral or any release or amendment or waiver of or
consent to departure from any guaranty for all or any of the Senior Debt, or
(iv) any other circumstance in respect of this Agreement which might
otherwise constitute a defense available to, or a discharge of, the Company
in respect of the Senior Debt or the holders of Subordinated Debt.
8J. REINSTATEMENT. The provisions of this Section 8 shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Senior Debt is rescinded or must otherwise be
returned by the Senior Creditor upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had
not been made.
10. EVENTS OF DEFAULT.
9A. GENERAL. So long as any Senior Subordinated Debentures
remain outstanding, if any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
35
(i) the Company or any Guarantor defaults in the payment of any
principal of or interest on any Senior Subordinated Debentures when the
same shall become due, either by the terms thereof or otherwise as
herein provided (including without limitation the Guarantee) and, in the
case of interest payments, such default shall continue for a period of
three (3) Business Days after such date;
(ii) the Company or any Guarantor defaults in the payment when due,
either by the terms thereof or otherwise as herein provided (including
without limitation the Guarantee), of any other amounts on any Senior
Subordinated Debentures and such default shall continue unremedied for
five or more Business Days;
(iii) the Company or any Guarantor (x) defaults in any payment of
principal of or interest on any Indebtedness in an amount exceeding
$250,000 and such default shall continue beyond any applicable grace
period or (y) fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such obligation is
created (or if any other event thereunder or under any such agreement
shall occur and be continuing), and in the case of (y) above, the effect
of such default, failure or other event is to cause, or, with respect to
any Indebtedness, to permit the holder or holders of such obligation (or
a trustee on behalf of such holder or holders) to cause an obligation of
more than $250,000 to become due prior to any stated maturity;
(iv) any representation or warranty made by the Company or any
Guarantor herein or in any certificate or instrument furnished to the
holders of Securities in connection with or pursuant to this Agreement
or any other Related Agreement shall be false in any material respect on
the date as of which made and, if susceptible to cure, such inaccuracy
shall not have been remedied within 30 days after it first becomes known
to any officer of the Company;
(v) the Company or any Guarantor defaults in the performance or
observance of any of the agreements contained in Section 6 or 7 or in
the performance or observance of any other material agreement, term or
condition contained herein or in the Related Documents and any such
default shall not
36
have been remedied within 30 days after such default shall first become
known to any officer of the Company;
(vi) the Company or any Guarantor makes an assignment for the
benefit of creditors generally or is not paying its debts as such debts
become due;
(vii) any decree or order for relief in respect of the Company or
any Guarantor is entered under any Bankruptcy Law of any jurisdiction;
(viii) the Company or any Guarantor petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession
by, a trustee, receiver, custodian, liquidator or similar official of
the Company or any Guarantor, of any substantial part of the assets of
the Company or any Guarantor, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a
Subsidiary) relating to the Company or any Guarantor under the
Bankruptcy Law of any other jurisdiction, and such is not dismissed for
90 days;
(ix) any such petition or application of the type specified by
clause (viii) above is filed, or any such proceedings are commenced,
against the Company or any Guarantor and the Company or any Guarantor by
any act indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any such
trustee, receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings, and such order, judgment
or decree remains unstayed and in effect for more than 60 days;
(x) any order, judgment or decree is entered in any proceedings
against the Company or any Guarantor decreeing the dissolution of the
Company or any Guarantor and such order, judgment or decree remains
unstayed and in effect for more than 60 days;
(xi) any order, judgment or decree is entered in any proceedings
against the Company or any Guarantor decreeing a split-up of the Company
or any Guarantor which requires the divestiture of substantial assets of
the Company, and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
37
(xii) a final judgment in an amount in excess of $250,000 is
rendered against the Company or any Guarantor and, within 45 days after
entry thereof, such judgment is not discharged or execution thereof
stayed pending appeal, or within 60 days after expiration of any such
stay, such judgment is not discharged.
(xiii) (a) the Company or any Guarantor or any ERISA Affiliate
fails to meet its obligations under the minimum funding standard
provided for in Section 412 of the Code for any plan year or in the case
of a single employer-plan a waiver of such standard is sought or granted
under Section 412(d) of the Code, or (b) any Pension Plan subject to
Title IV of ERISA is, has been or is likely to be terminated or the
subject of termination proceedings under ERISA (except for a "standard
termination" under Section 4041 of ERISA), or (c) the Company or any
Guarantor or an ERISA Affiliate has incurred or is likely to incur a
liability under Section 4062, 4063, 4064, 4201 or 4204 of ERISA, and
there results from any such event or events listed in (a)-(c) above a
liability or a material risk of incurring a liability to the PBGC, any
Multiemployer Pension Plan or any Pension Plan which, if incurred, would
have a Material Adverse Effect, or the Company or any Guarantor engaged
in a prohibited transaction that would result in a liability, penalty or
tax under ERISA or Section 4975 of the Code, as the case may be, which
would have a Material Adverse Effect.
then (a) upon the occurrence of any Event of Default described in (1) the
foregoing clause (v), solely as such clause relates to a breach of clause
(i), (ii) or (iii) or the Officer's Certificate delivery requirements of
paragraph 6A, or (2) any of the foregoing, clauses (vi), (vii), (viii), (ix)
or (x), the unpaid principal amount of and accrued interest on the Senior
Subordinated Debentures outstanding shall automatically become immediately
due and payable, without presentment, demand, protest or other requirements
of any kind, all of which are hereby expressly waived by the Company, and (b)
upon the occurrence and during the continuation of any other Event of
Default, the holders of a majority of the aggregate unpaid principal amount
of the Senior Subordinated Debentures may, at their option and in addition to
any right, power or remedy permitted by law or equity, by notice in writing
to the Company, declare all of the Senior Subordinated Debentures to be, and
all of the Senior
38
Subordinated Debentures shall thereupon be and become, forthwith due and payable
together with interest accrued thereon.
At any time after any declaration of acceleration is made as provided
above, the holders of at least a majority of the aggregate unpaid principal
amount of the Senior Subordinated Debentures may, by written instrument filed
with the Company, rescind and annul such declaration and the consequences
thereof, PROVIDED, HOWEVER, that at the time any such declaration is annulled
and rescinded:
(i) no judgment or decree shall have been entered for the payment of
any monies due pursuant to the Senior Subordinated Debentures and the other
Related Documents;
(ii) all arrears of interest upon all the Senior Subordinated
Debentures and all other sums payable under the Senior Subordinated
Debentures and the other Related Documents (except any principal,
interest or premium on the Senior Subordinated Debentures which has
become due and payable solely by reason of such declaration under this
Section 9A) shall have been duly paid or waived;
(iii) the Company shall not have paid any amounts to holders of
Securities which have become due solely by reason of such declaration,
other than on a pro rata basis; and
(iv) each and every other Event of Default shall have been waived
or otherwise made good or cured;
and PROVIDED, FURTHER, that no such rescission and annulment shall extend to or
after any subsequent Default or Event of Default or impair any right consequent
thereon.
9B. OTHER REMEDIES. If any Event of Default shall occur and be
continuing, the holder of any Security may proceed to protect and enforce its
rights under this Agreement and such Security by exercising such remedies as
are available to such holder in respect thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific performance
of any covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the Investors or any other holder of any Security is intended to
be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other
39
remedy conferred herein or now or hereafter existing at law or in equity or
by statute or otherwise.
11. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTORS.
THE COMPANY AND EACH GUARANTOR REPRESENT AND WARRANT TO THE HOLDERS OF
SECURITIES THAT:
10A. ORGANIZATION, QUALIFICATION AND AUTHORITY. The Company and
each of its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
and, except as disclosed in Schedule 10A, is duly qualified to do business as
a foreign corporation and in good standing in each jurisdiction in which the
character of its properties or the nature of its business makes such
qualification necessary, except where the failure to so qualify would not
have a Material Adverse Effect. The Company and each of its Subsidiaries has
the corporate power to own its properties and to carry on its business as now
being conducted. The Company has all requisite corporate power and authority
to enter into each of the Related Documents and the Acquisition Documents to
issue and sell the Securities hereunder, and to issue the shares of Common
Stock upon exercise of the Warrants, and has the requisite corporate power
and authority to carry out the transactions contemplated hereby and thereby
to be performed by it, and the execution, delivery and performance hereof and
thereof have been duly authorized by all necessary corporate action. Each
Guarantor has all requisite corporate power and authority to enter into each
of the Related Documents to which it is a party and has the requisite
corporate power and authority to carry out the transactions contemplated
hereby and thereby to be performed by it, and the execution, delivery and
performance hereof and thereof have been duly authorized by all necessary
corporate action. This Agreement constitutes, and each other agreement
(including the Related Documents and the Acquisition Documents) or instrument
(including the Securities) executed and delivered by the Company and each
Guarantor pursuant hereto or thereto or in connection herewith or therewith
will constitute, legal, valid and binding obligations of the Company and each
Guarantor enforceable against the Company and each Guarantor in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws or by the application of principles of equity.
40
10B. FINANCIAL STATEMENTS. The Company has furnished the
Investors with (a) a consolidated audited balance sheet of the Company and
its Subsidiaries as of February 28, 1997, together with the related
statements of income, changes in stockholders' equity and cash flow for the
period then ended and (b) an unaudited balance sheet of the Company and its
Subsidiaries as of November 30, 1997, together with an unaudited statement of
income for the nine-month period then ended (collectively, the "INTERIM
FINANCIALS"). Except as disclosed on Schedule 10B, such financial statements
(including any related schedules and notes) have been prepared in accordance
with GAAP consistently applied throughout the period or periods in question
and show all material liabilities, direct or contingent, as of the dates
specified, required to be shown in accordance with GAAP consistently applied
throughout the period or periods in question and fairly present, in all
material respects, the consolidated financial condition of the Company and
its Subsidiaries as of the dates indicated therein, except for normal audit
adjustments in the case of the Interim Financials. Except as disclosed on
Schedule 10B, there has been no material adverse change in the business,
financial condition, assets, or results of operations of the Company and its
Subsidiaries on a consolidated basis since November 30, 1997.
10C. CAPITAL STOCK AND RELATED MATTERS. As of the Closing Date,
and after giving effect to the transactions contemplated hereby and pursuant
to the Related Documents, (i) the authorized capital stock of the Company
will consist of a total of 50,000,000 shares as follows: (a) 2,100,572
shares of Common Stock, par value $.001 per share, of which 6,741,413 shares
are issued and outstanding, 2,042,986 shares of which are reserved for
issuance upon the exercise of the Warrants, and 6,387,160 shares of which are
reserved for issuance to holders of Warrants and options; (b) 25,000,000
shares of Preferred Stock, par value $.001 per share, of which 3,600 shares
have been designated Series A Preferred Stock (2,000 shares of which are
issued and outstanding and of which 15,000 shares have been designated Series
B Preferred Stock (15,000 shares of which are issued and outstanding); (ii)
all issued and outstanding shares shall have been duly and validly issued,
fully paid and non-assessable; (iii) no shares of capital stock of the
Company will be owned or held by or for the account of the Company or any of
its Subsidiaries; (iv) except as set forth on Schedule 10C, neither the
Company nor any of the Guarantors will have outstanding any securities
convertible into or exchangeable for
41
any shares of capital stock or any rights (either preemptive or other) to
subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any other character relating to the issuance
of, any capital stock, or any stock or securities convertible into or
exchangeable for any capital stock; (v) except as set forth on Schedule 10C,
neither the Company nor any of the Guarantors will be subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or warrants or options to purchase
shares of its capital stock; (vi) except as set forth on Schedule 10C,
neither the Company nor any of the Guarantors is a party to any agreement
(other than this Agreement, the Securityholders Agreement and the
Registration Rights Agreement) restricting the transfer of any shares of its
capital stock; and (vii) except as set forth on Schedule 10C and except for
the Common Stock of the Company, neither the Company nor any of the
Guarantors will have filed or be required to file, pursuant to Section 12 of
the Exchange Act, a registration statement relating to any class of debt or
equity securities as of the date hereof.
10D. ACTIONS PENDING. Except as set forth on Schedule 10D, there
is no action, suit, investigation or proceeding pending or, to the knowledge
of the Company, threatened against the Company or any Subsidiary or any of
their properties or rights, by or before any court, arbitrator or
administrative or governmental body, which if adversely decided, could
reasonably be expected to have a Material Adverse Effect.
10E. OUTSTANDING DEBT; DEFAULTS. Neither the Company nor any
Subsidiary thereof (i) has any outstanding Indebtedness, except as permitted
by Section 7B, or as disclosed on Schedule 10E and there exist no material
defaults under the provisions of any instrument evidencing such Indebtedness
or of any agreement relating thereto, (ii) is in default under its Articles
of Incorporation (as amended to date) or By-laws, (iii) is in violation of or
in default under or with respect to any indenture, mortgage, lease or any
other contract or agreement to which it is a party or by which it or any of
its property is bound or affected in any respect which could reasonably be
expected to have a Material Adverse Effect, (iv) has any material debts,
liabilities, obligations (whether absolute, accrued, contingent or otherwise)
other than (A) liabilities appearing on the financial statements, (B)
liabilities incurred in the
42
ordinary course of business and (C) liabilities under contracts to which the
Company is a party and which are listed on Schedule 10E hereto or which have
an obligation thereunder of less than $10,000 and which were entered into in
the ordinary course of business or (D) liabilities described on the other
schedules hereto or (v) is in default with respect to any order, writ,
injunction or decree of any court or any Federal, state, municipal or other
domestic or foreign governmental department, commission, board, bureau,
agency or instrumentality, and to the Company's knowledge there exists no
condition, event or act which constitutes, or which after notice, lapse of
time, or both, would constitute, such a violation or default under any of the
foregoing.
10F. TITLE TO PROPERTIES. Except as set forth on Schedule 10F,
each of the Company and its Subsidiaries has (i) good and marketable legal
title to its real property (other than real properties which it leases from
others), subject to no Lien of any kind except Liens permitted by Section 7C
and such as do not otherwise impair the value of such property or interfere
with the Company's use thereof, and (ii) good title to all of its other
properties and assets (other than properties and assets which it leases from
others), subject to no Lien of any kind except Liens permitted by Section 7C.
Each of the Company and its Subsidiaries enjoys peaceful and undisturbed
possession under all leases necessary in any material respect for the
operation of its properties and assets and all such leases are valid and
subsisting and in full force and effect.
10G. TAXES. Except as set forth on Schedule 10G, each of the
Company and its Subsidiaries has filed or is in the process of filing all
Federal, state and other income tax returns which are required to be filed,
and has paid or will pay all taxes as shown on said returns and on all
assessments received by it to the extent that such taxes have become due, or
except such as any of the foregoing are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP; and no tax lien has been filed and no claim is being
asserted with respect to any tax or other similar charge.
10H. CONFLICTING AGREEMENTS. Neither the execution or delivery of
the Related Documents or the Acquisition Documents, nor the offering, issuance
and sale of the Securities or the shares of Common Stock issuable upon the
exercise of the
43
Warrants, nor fulfillment of or compliance with the terms and provisions
hereof and thereof, will conflict with, or result in a material breach of the
terms, conditions or provisions of, or constitute a material default under,
or result in any material violation of, or result in the creation of any
material Lien upon any of the properties or assets of the Company or any of
its Subsidiaries pursuant to (i) the Articles of Incorporation or By-laws of
the Company or any of its Subsidiaries, or (ii) except as disclosed on
Schedule 10H, any award of any arbitrator or any agreement (including any
agreement with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which the Company or any of its Subsidiaries is
subject. Except as set forth on Schedule 10H, neither the Company nor any of
its Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing Indebtedness of the Company or any of
its Subsidiaries, any agreement relating thereto or any other contract or
agreement (including its Articles of Incorporation and By-laws) which limits
the amount of, or otherwise imposes restrictions on the incurring of,
Indebtedness of the type to be evidenced by the Senior Subordinated
Debentures, or contains dividend or redemption limitations on any capital
stock of the Company or any of its Subsidiaries, except for the Related
Documents.
10I. OFFERING OF SECURITIES. Assuming the accuracy of the
Investor representations in Section 11, (a) the offer, sale and issuance of
the Securities pursuant to this Agreement and the issuance of the Common
Stock upon exercise of the Warrants, do not require registration of such
securities under the Securities Act or registration or qualification under
any applicable state "blue sky" or securities laws (or if so required, has
been so registered or qualified), and (b) neither the Company nor any of its
Subsidiaries has taken any action which would subject the issuance or sale of
any of the Securities or the Common Stock to the provisions of Section 5 of
the Securities Act or violate the provisions of any securities or Blue Sky
law of any applicable jurisdiction.
10J. BROKER'S OR FINDER'S COMMISSIONS. Except for Sutro & Co.,
which shall receive $640,000, no broker's or finder's fee or commission will
be payable by the Company or any of its Subsidiaries with respect to the
issuance and sale of the Securities or the transactions contemplated hereby
or under the Related Documents. The fee of $640,000 will be paid by the
Company.
44
10K. REGULATION G, ETC. Neither the Company nor any of its
Subsidiaries owns or has any present intention of acquiring, any "margin
stock" as defined in Regulation G (12 CFR Part 207) of the Board of Governors
of the Federal Reserve System (herein called a "MARGIN STOCK"). None of the
proceeds resulting from the sale of the Securities will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of
Regulation G. Neither the Company nor any of its Subsidiaries nor any agent
acting on their behalf has taken or will take any action which might cause
this Agreement or the Securities to violate Regulation G, Regulation T,
Regulation X or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now
or as the same may hereafter be in effect.
10L. ENVIRONMENTAL MATTERS. Except as shown on Schedule 10L, the
Company and each of its Subsidiaries is in compliance with all applicable
Environmental Laws and has obtained and is and will be in compliance with all
licenses, permits, registrations (or any extensions thereof) and other
authorizations required under all Environmental Laws, with the exceptions of
instances that, in the aggregate, could not reasonably be expected to result
in any Material Adverse Effect.
(i) Except as shown on Schedule 10L, neither the Company nor any
of its Subsidiaries has received written notice of any failure to comply
with, nor has any such notice been issued that has not been fully
satisfied so as to bring the subject property into full compliance with,
all Environmental Laws.
(ii) Except as shown on Schedule 10L, and to the Company's
knowledge, neither the Company nor any of its Subsidiaries is in
material noncompliance with, material breach of or material default
under any applicable writ, order, judgment, injunction or decree where
such noncompliance, breach or default would materially and adversely
affect the ability of the Company or any of its Subsidiaries to operate
any real property owned or leased by them as currently operated in
connection with the Company's or any Subsidiary's business or otherwise
result in any
45
Material Adverse Effect, and no event has occurred and is continuing
that, with the passage of time or the giving of notice or both, would
constitute such noncompliance, breach or default thereunder.
(iii) Except as shown on Schedule 10L, no Hazardous Substance has
been Released (as such term is defined in CERCLA) (and no written
notification of such Release has been filed) at, on or under any
property owned or leased by the Company or any of its Subsidiaries,
during the period of the Company's or any Subsidiary's ownership or
lease of such property, or, to the knowledge of the Company, at any time
previous to such ownership or lease, under conditions that require
remedial action or would otherwise give rise to liability under
applicable Environmental Laws; the Company and each of its Subsidiaries
has contracted for the transportation of all Hazardous Substances solely
with nationally recognized and licensed waste disposal services that, to
the Company's knowledge, after due inquiry, transports such Hazardous
Substances in compliance with applicable laws and no property now or
previously owned by the Company or any of its Subsidiaries has, directly
or indirectly, transported or arranged for the transportation of any
Hazardous Substances except in the manner set forth herein. Neither the
Company nor any of its Subsidiaries is aware of any event, condition or
circumstance involving environmental pollution or contamination, or
employee safety or health relating to the uses or handling of, or
exposure to, Hazardous Substances, that could result in a Material
Adverse Effect.
10M. POSSESSION OF FRANCHISES, LICENSES, ETC. Except as
disclosed on Schedule 10M, the Company and each of its Subsidiaries possesses
all franchises, certificates, licenses, permits and other authorizations from
governmental or regulatory authorities, that are necessary for the ownership,
maintenance and operation of its properties and assets, except where the
failure to possess such could not reasonably be expected to have a Material
Adverse Effect, and the Company and each of its Subsidiaries is not in
violation of any thereof in any material respect.
10N. PATENTS, ETC. Except as disclosed on Schedule 10N, the Company
and each of its Subsidiaries owns or has the right to use all patents,
trademarks, service marks, trade names,
46
copyrights, industrial designs, licenses and other rights which are necessary
for the operation of its business substantially as presently conducted,
except where any failure could not reasonably be expected to have a Material
Adverse Effect. To the Company's knowledge, no product, process, method,
substance, part or other material presently sold by or employed by the
Company or any of its Subsidiaries in connection with its business infringes
any patent, trademark, service mark, trade name, copyright, industrial
design, license or other right owned by any other Person. No claim or
litigation is pending or, to the Company's knowledge, threatened against or
affecting the Company or any of its Subsidiaries contesting their right to
sell or use any such product, process, method, substance, part or other
material which would prevent, inhibit or render obsolete the production or
sale of any products of the Company or any of its Subsidiaries or otherwise
have a Material Adverse Effect.
10O. INVESTMENT COMPANY STATUS. Neither the Company nor any
Guarantor is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, or an "investment adviser" within the meaning of the
Investment Advisers Act of 1940, as amended.
10P. GOVERNMENTAL CONSENTS. No consent, approval or other action
by or any notice to or filing with any court or administrative or
governmental body is required in connection with the execution, delivery and
performance of this Agreement, the other Related Documents, the offer, issue,
sale or delivery of the Securities being purchased hereunder, the issuance of
the shares of Common Stock upon exercise of the Warrants or fulfillment of or
compliance with the terms and provisions hereof or the Securities being
purchased hereunder, except for such filings or consents all of which have
been heretofore made or obtained.
10Q. INSURANCE COVERAGE. The business and properties of the
Company and each of its Subsidiaries are insured for the benefit of the
Company and each of its Subsidiaries in amounts deemed adequate by the
Company's management against risks usually insured against by Persons
operating businesses similar to those of the Company and each of its
Subsidiaries in the localities where such properties are located.
47
10R. DISCLOSURE. This Agreement and the other Related Documents,
and the other certificates and written instruments furnished to the Investors
by or on behalf of the Company or the Guarantors pursuant hereto, do not
contain any untrue statement of a material fact or omit to state a material
fact or omit to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
10S. RELATED PARTY TRANSACTIONS. Except as described on Schedule
10S, no current director or officer (nor anyone who was a director or officer
of the Company in the last fiscal year) and, to the Company's knowledge, no
current stockholder of the Company, nor any "Associate" (as defined in Rule
405 promulgated under the Securities Act) of any such Person, is presently,
directly or indirectly through his affiliation with any other Person, a party
to any transaction with the Company or Subsidiary providing for the
furnishing of services by or to, or rental of real or personal property from
or to, or otherwise requiring cash payments to or by any such Person. Except
as described on Schedule 10S, in addition, there is no current relationship
or transaction, or presently contemplated relationship or transaction,
involving the Company or Subsidiary which is required to be disclosed under
Item 404 of Regulation S-K promulgated under the Securities Act.
10T. REGISTRATION RIGHTS. Except as contemplated by the
Registration Rights Agreement or as specified on Schedule 10T, no Person has
the right to cause the Company or any of its Subsidiaries to effect the
registration under the Securities Act of any shares of Common Stock or any
other securities (including debt securities) of the Company or any of its
Subsidiaries.
10U. INTENTIONALLY OMITTED.
10V. AGREEMENTS WITH AFFILIATES. Except as set forth on Schedule
10V, neither the Company nor any Guarantor is a party to any contract or
agreement with, or any other commitment to, an Affiliate of the Company or
the Guarantor.
10W. CONSUMMATION OF RELATED TRANSACTIONS. The Company has
provided the Investors with a fully executed copy of each of the documents
related to the Acquisitions and the transactions contemplated by each such
document or agreement has been consummated without any material modification
or waiver of any term thereof.
48
10X. CONDUCT OF BUSINESS. To the Company's knowledge after
reasonable investigation (i) all documents that the Company is presently
required to maintain, store or handle in connection with conducting its
business are maintained, stored or handled substantially in the manner agreed
to between the Company and its respective clients or substantially in
conformity with standards regarding such matters that prevail in the
Company's industry, and (ii) the Company performs all aspects and operations
of its business at or above the prevailing standards for the Company's
industry.
12. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each of the Investors represents and warrants to the Company and each of the
Guarantors that it is acquiring the Securities to be purchased by it
hereunder for its own account for the purpose of investment and not with a
view to or for sale in connection with any distribution thereof in violation
of the Securities Act; provided, however, that nothing herein contained shall
prevent the Investors from selling or transferring any Securities in any
transaction that, in the opinion of their counsel, which shall be reasonably
acceptable to the Company (Xxxxxxx Xxxx & Xxxxxxxxx and other counsel of
national or regional standing being deemed for the purposes herein to be
acceptable to the Company), is exempt from the registration provisions of the
Securities Act and applicable state securities laws. In addition, each
Investor represents and warrants that it has full power and authority to
enter into and perform its obligations under this Agreement and that this
Agreement has been duly authorized, executed and delivered by a Person
authorized to do so. In addition, each Investor represents and warrants that
it is an "accredited investor" as defined in Rule 501 of the General Rules
and Regulations under the Securities Act.
Each of the Investors further represents and warrants to the
Company and each of the Guarantors as follows:
(a) The execution and delivery of this Agreement by such Investor
does not, and the performance of this Agreement by such Investor will not,
(a) require any consent, approval, authorization, declaration, order or
permit of, or filing, registration or qualification with or notice to, any
governmental authority or regulatory authority, except as may be required
under federal or state securities laws, (b) conflict with or violate the
charter or conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to such Investor, or (c) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
such Investor, or any contract, instrument or agreement to which such
Investor is a party or by which any of its property is bound;
49
(b) such Investor understands that there is not a public market
for the Securities, and that the Securities have not been and will not
be registered under the Securities Act by reason of a specific exemption
from the registration provision, the availability of which depends upon,
among other things, the bona fide nature of the investment intent and
the accuracy of such Investor's representations and warranties set forth
in this Section 11; and
(c) Such Investor is domiciled in the state indicted on the
signature page to this Agreement signed by or on behalf of such Investor.
13. DEFINITIONS. For the purpose of this Agreement, and in addition to
terms defined elsewhere in this Agreement, the following terms shall have the
following meanings. In addition, all terms of an accounting character not
specifically defined herein shall have the meanings assigned thereto by
accounting principles generally accepted in the United States of America.
"ACCEPTABLE CONTROLLING PERSON" shall mean, individually or
collectively, Xxxxx X. Xxxxx, Xxxx X. Xxxx, and Xxxxx X. Xxxxxxx, but in any
event such individuals shall only be Acceptable Controlling Persons for so
long as such individuals are executive officers or members of the Board of
Directors of the Company, as the case may be.
"ACQUISITIONS" shall have the meaning set forth in Section 6B.
"ACQUISITION DOCUMENTS" shall mean the principal transaction
documents in connection with the Acquisitions.
"AFFILIATE" shall mean, with respect to any Person, a Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract
or otherwise. The Investors shall not be deemed to be an Affiliate of the
Company solely by reason of their investment in the Securities.
"BANK DEBT" shall mean Indebtedness incurred pursuant to the Bank
Debt Agreement or any renewals, extensions, amendments or modifications
thereof.
"BANK DEBT AGREEMENT" shall mean the loan agreement and all
ancillary documents proposed to be entered into by and among
50
the Company and the lender of the Senior Debt, as the same may be amended
from time to time in accordance with its terms.
"BANKRUPTCY LAW" shall mean any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law, whether now or hereafter in effect.
"BUSINESS DAY" shall mean any day which is not a Saturday, Sunday or
day on which banks are authorized by law to close in the State of New York.
"CAPITAL LEASE" shall mean any lease of any Property (whether real,
personal, or mixed) that, in conformity with GAAP, is accounted for as a
capital lease on the balance sheet of the lessee.
"CAPITALIZED LEASE OBLIGATIONS" of any Person means all obligations
of such Person, as lessee, under leases which are, in accordance with GAAP,
recorded as Capital Leases.
"CASH INTEREST EXPENSE" shall mean, for any period, total Interest
Expense to the extent paid in cash (including the interest component of
Capitalized Lease Obligations) of the Company for such period all as determined
in conformity with GAAP.
"CASH TAX EXPENSE" shall mean, for any period, total Tax Expense paid
in cash of the Company for such period all as determined in conformity with
GAAP.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections
9601 ET SEQ.), and any regulations promulgated thereunder.
"CERTIFICATE OF COMPLIANCE" shall have the meaning set forth in
Section 7A(iii).
"CHANGE OF CONTROL" shall mean the occurrence of any of the
following:
(a) the acquisition or holding by
(i) any person (as such term is used in Section 13(d) and
Section 14(d)(2) of the Exchange
51
Act as in effect on the Closing Date) other than an Acceptable
Controlling Person or the holders of Securities, or
(ii) related Persons constituting a group (as such term is
used in Rule 13d-5 under the Exchange Act as in effect on the
Closing Date) other than Acceptable Controlling Persons or the
holders of Securities constituting such a group,
of legal and/or beneficial ownership of more than 40% of the Common
Stock or any securities convertible into more than 40% of the Common
Stock of the Company or any Guarantor outstanding at such time
(excluding for such purpose persons who own shares through any
employee benefit plan of the Company in connection therewith);
(b) all or substantially all of the assets of the Company are
sold or otherwise transferred, in a single transaction or in a series
of related transactions, to any other Person;
(c) any merger, consolidation, stock sale or other similar
transaction of, or in respect of, the Company which results in the
failure by the owners of Common Stock on the Closing Date to,
directly or indirectly in the aggregate, maintain beneficial
ownership (as defined for Commission reporting purposes) and voting
control of at least fifty percent (50%) of the outstanding Common
Stock of the surviving entity in such merger, consolidation or
similar transaction;
(d) any liquidation or dissolution of the Company; or
(e) the first day on which a majority of the members of the
Board of Directors of the Company are not individuals who on the
Closing Date constitute the Board of Directors (together with any new
directors whose election by the Board of Directors or whose
nomination for election by the Company's stockholders was approved by
a vote of at least two-thirds of the members of the Board of
Directors then in office who either were members of the Board of
Directors on the
52
Closing Date or whose election or nomination was previously so
approved).
Any transaction permitted under the provisions of Section 7H hereof
shall not constitute a "Change of Control."
"CHANGE OF CONTROL EVENT" shall mean the earlier of the occurrence of
(a) a Change of Control, (b) the Company acquiring knowledge of a pending
Change of Control or (c) any action taken by the Board of Directors of the
Company to authorize any liquidation or dissolution of the Company.
"CHANGE OF CONTROL NOTICE" shall have the meaning set forth in
Section 4C.
"CLOSING" shall have the meaning specified in Section 2B.
"CLOSING DATE" shall have the meaning specified in Section 2B.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMISSION" shall mean the United States Securities and Exchange
Commission.
"COMMON STOCK" shall mean the shares of Common Stock, par value $.001
per share, of the Company.
"COMPANY" shall have the meaning specified in the preamble.
"DEFAULT" shall mean any of the events specified in Section 9 hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any of these conditions, event or act has been satisfied.
"DEFAULT NOTICE" shall have the meaning specified in Section 8B(i).
"EBDITA" shall mean, for any period, the sum of net earnings of the
Company and its Subsidiaries on a consolidated basis PLUS each of the
following, to the extent actually deducted in arriving at such net earnings:
(a) depreciation and amortization, (b) Interest Expense and (c) Income Tax
Expense.
53
"ENVIRONMENTAL LAWS" shall have the meaning specified in Section 6Q
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA AFFILIATE" shall mean each trade or business (whether or not
incorporated) which together with the Company would be deemed to be a "single
employer" within the meaning of Section 4001 of ERISA.
"EVENT OF DEFAULT" shall mean any of the events specified in Section
9, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act.
"EXCHANGE ACT" shall mean the United States Securities Exchange Act
of 1934, as amended.
"EXCHANGE ACT REGISTRATION STATEMENT" shall have the meaning
specified in Section 6L.
"FAIR MARKET VALUE" shall have the meaning specified in Section 5B.
"FINANCING AGREEMENTS" shall mean all agreements, instruments and
documents, including, without limitation, any other agreement evidencing Senior
Debt and all security agreements, loan agreements, promissory notes, letter of
credit applications, guarantees, mortgages, deeds of trust, subordination
agreements, pledges, powers of attorney, consents, assignments, leases,
financing statements, intercreditor agreements, and all other written matter
whether heretofore, now, or hereafter executed by or on behalf of the Company
and delivered to any bank and between the Company and any bank, lender or other
Person extending credit to the Company or any Guarantor.
"FIXED CHARGE COVERAGE RATIO" shall mean, for any period, the
quotient obtained by dividing (a) EBDITA less Cash Tax Expense by (b) Fixed
Charges.
"FIXED CHARGES" shall mean, without duplication, for any period,
(a) the amounts for such period of Cash Interest
54
Expense, PLUS (b) the amounts of scheduled principal payments on Funded Debt,
PLUS (c) Capital Expenditures made in such period, PLUS (d) cash dividends
paid during such period, PLUS (e) to the extent not otherwise included in the
foregoing, cash payments of principal and interest made on any Indebtedness
other than the Senior Debt.
"FULLY DILUTED OUTSTANDING SHARES" shall mean, when used with
reference to Common Stock on any date of determination, all shares of Common
Stock Outstanding at such date and all shares of Common Stock of the Company
issuable in respect of the Warrants issued pursuant to this Agreement and any
other warrants, options or convertible securities.
"FUNDED DEBT" shall mean all Indebtedness of a Person which matures
more than one year from the date of creation or matures within one year from
such date but is renewable or extendible, at the option of such Person, by its
terms or by the terms of any instrument or agreement relating thereto, to a
date more than one year from such date or arises under a revolving credit or
similar agreement which obligates the Bank to extend credit during a period of
more than one year from such date, and includes, without limitation, all
amounts of any Funded Debt required to be paid or prepaid within one year from
the date of determination of the existence of any such Funded Debt. The term
"Funded Debt" also includes the present value (discounted at the implicit rate,
if known, or ten percent (10%) per annum otherwise) of all obligations in
respect of Capitalized Lease Obligations of the Company.
"GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, or in such other
statements by such other entity as may be in general use by significant
segments of the accounting profession, which are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" shall mean any governmental agency,
authority, instrumentality or regulatory body, other than a court or other
tribunal, in each case whether federal, state, local or foreign.
55
"GOVERNMENTAL REQUIREMENT" shall mean any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
having the force of law, including, without limitation, Environmental Laws,
energy regulations and occupational, safety and health standards or controls,
of any Governmental Authority.
"GUARANTY" shall mean, with respect to any Person, any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing any
Indebtedness of another Person, including, without limitation, by means of an
agreement to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or to maintain financial covenants, or to assure
the payment of such Indebtedness by an agreement to make payments in respect of
goods or services regardless of whether delivered or otherwise, PROVIDED THAT
the term "Guaranty" shall not include endorsements for deposit or collection in
the ordinary course of business; and such term when used as a verb shall have a
correlative meaning.
"HAZARDOUS SUBSTANCES" shall have the meaning specified in Section
6Q.
"INDEBTEDNESS" shall mean (without duplication), for any person, (a)
indebtedness of such Person for borrowed money or arising out of any extension
of credit to or for the account of such Person (including, without limitation,
extensions of credit in the form of reimbursement or payment obligations of
such Person relating to letters of credit issued for the account of such
Person) or for the deferred purchase price of property or services, except
indebtedness which is owing to trade creditors in the ordinary course of
business and which is due within ninety (90) days after the original invoice
date; (b) indebtedness of the kind described in clause (a) of this definition
which is secured by (or for which the holder of such Indebtedness has any
existing right, contingent or otherwise, to be secured by) any Lien upon or in
Property (including, without limitation, accounts and contract rights) owned by
such Person, whether or not such Person has assumed or become liable for the
payment of such indebtedness or obligations; (c) Capitalized Lease Obligations
of such Person; and (d) obligations under direct or indirect Guaranties in
respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or
56
obligations of others of the kinds referred in clauses (a) through (c) above,
including without limitation, (i) any endorsement not for collection in the
ordinary course of business or discount with recourse or undertaking
substantially equivalent to or having economic effect similar to a guaranty
in respect of any such Indebtedness; (ii) any agreement (1) to purchase, or
to advance or supply funds for the payment or purchase of, any such
Indebtedness, (2) to purchase, sell, or lease property, products, materials,
supplies, transportation, or services, in order to enable such Person to pay
any such Indebtedness or to assure the owner thereof against loss regardless
of the delivery or non-delivery of the property, products, materials,
supplies, transportation, or services or (3) to make any loan, advance, or
capital contribution to, or other investment in, or to otherwise provide
funds to or for, such other Person in order to enable such Person to satisfy
any obligation (including any liability for a dividend, stock liquidation
payment or expense) or to assure a minimum equity, working capital, or other
balance sheet condition in respect of any such obligation; and (iii)
obligations under surety, appeal, or custom bonds; and (e) liabilities in
respect of unfunded vested benefits under plans covered by Title IV of ERISA.
"INDEMNITEE" shall have the meaning specified in Section 6Q.
"INTEREST DEBENTURES" shall have the meaning set forth in Section 1A.
"INTEREST EXPENSE" shall mean, for any period, total interest
expense, whether paid or accrued (including the interest component of Capital
Leases), of the Company for such period, all as determined in conformity with
GAAP.
"INTERIM FINANCIALS" shall have the meaning set forth in Section 10B.
"INVESTMENT" shall mean any stock, partnership or joint venture
interest or other security, any loan, Guaranty, advance, contribution to
capital, any acquisitions of real or personal property (other than real and
personal property acquired in the ordinary course of business), and any
purchase or commitment or option to purchase stock or other securities of or
any interest in another Person or any integral part of any business or the
57
assets comprising such business or part thereof whether existing on the date of
this Agreement or hereafter made.
"INVESTOR PARTIES" shall have the meaning set forth in Section 6M.
"INVESTORS" shall have the meaning set forth in the preamble.
"LIABILITIES" shall mean any and all liabilities, obligations and
Indebtedness of the Company to any bank of any and every kind and nature,
whether heretofore, now or hereafter owing, arising, due or payable and
howsoever evidenced, created, incurred, acquired or owing, whether primary,
secondary, direct, contingent, fixed or otherwise and whether arising or
existing under the Bank Debt Agreement or any of the other Financing
Agreements.
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including, without limitation, any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of or
agreement to file any financing statement under the Uniform Commercial Code of
any jurisdiction.
"MARGIN STOCK" shall have the meaning set forth in Section 10K.
"MATERIAL ADVERSE EFFECT" shall mean (i) a material adverse effect on
the business or financial condition, assets, properties, rights or results of
operations of the Company and its Subsidiaries taken as a whole, or (ii) any
effect which could materially adversely affect the ability of the Company to
perform any of its material obligations under any of the Related Documents.
"MULTIEMPLOYER PENSION PLAN" shall mean any multiemployer plan, as
defined in Section 4001 of ERISA and subject to Title IV of ERISA, which the
Company or any ERISA Affiliate has an obligation to make contributions (or has
had an obligation to make contributions during the five calendar years
preceding the Closing) for the employees of the Company or any ERISA
Affiliates.
58
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations system.
"OFFICER'S CERTIFICATE" of a Person shall mean a certificate of the
President, one of the Vice Presidents or the Treasurer or Controller of such
Person.
"OPTION CLOSING" shall have the meaning set forth in Section 5C.
"OUTSTANDING" shall mean, when used with reference to Common Stock,
at any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock.
"PENSION PLAN" shall mean any single-employer plan, as defined in
Section 4001 of ERISA and subject to Title IV of ERISA, which is maintained or
contributed to (or previously maintained or contributed to during the five
calendar years preceding the Closing) for employees of the Company or any ERISA
Affiliates.
"PERMITTED ACQUISITIONS" shall mean acquisitions of businesses
engaged in whole blood or plasma collection, processing and marketing and
selling of blood or plasma and plasma byproducts, and any related business or
activities in accordance with Section 7E.
"PERMITTED INVESTMENTS" shall mean (i) direct obligations of the
United States, or obligations guaranteed as to principal and interest by the
United States government, (ii) bankers' acceptances and certificates of deposit
issued by any bank or any other bank or trust company or, in the case of any
subsidiary bank of a bank holding company, a bank holding company, having
capital, surplus and undivided profits of at least $500,000,000, the short-term
deposits of which are given an A1 or P1 rating by Standard & Poor's Rating
Group or Xxxxx'x Investors Service, Inc., as applicable, (iii) obligations of
any bank or trust company or bank holding company described in clause (ii)
above, in respect of the repurchase of obligations of the type described in
clause (i) hereof, provided that such repurchase obligations shall be fully
secured by obligations of the type described in said clause (i) and the
possession of such obligations shall be transferred to, and segregated from
other obligations owned by, and any such bank's trust company or bank holding
company, (iv) commercial paper given a rating of A1 or P1 by Standard & Poor's
Ratings Group or Xxxxx'x Investors Service,
59
Inc., as applicable and (v) money market funds organized under the laws of
the United States or any state thereof that invest substantially all of their
assets in any of the types of investments described in clauses (i), (ii),
(iii) or (iv); PROVIDED, HOWEVER, that no such investment shall have a
maturity longer than 270 days from the date of acquisition by the Company.
"PERSON" shall mean and include an individual, partnership,
corporation (including a business trust), a limited liability company, joint
stock company, trust, unincorporated association, joint venture, or other
entity, or a government, or any political subdivision or agency of any of the
foregoing.
"PROCEEDINGS" shall have the meaning set forth in Section 8B(2).
"PROPERTY" shall mean any interest or right in any kind of property
or asset, whether real, personal or mixed, owned or leased, tangible or
intangible, and whether now held or hereafter acquired.
"PUBLIC OFFERING" shall mean the closing of a public offering of
securities by the Company pursuant to a registration statement declared
effective under the Securities Act, except that a Public Offering shall not
include an offering made in connection with a business acquisition or an
employee benefit plan.
"PURCHASE MONEY DEBT" shall mean debt of the Company and any
Subsidiary incurred to finance an acquisition of assets which is secured by a
Purchase Money Security Interest.
"PURCHASE MONEY SECURITY INTEREST" shall mean a purchase money
security interest within the meaning of Section 9-107 of the New York Uniform
Commercial Code, as in effect on the date hereof.
"QUALIFYING PUBLIC OFFERING" shall mean the sale by the Company in an
underwritten offering registered under the Securities Act of any equity
securities of the Company (or its successor) which results in aggregate gross
proceeds from such sales (before underwriters' discounts and selling
commissions) to the Company greater than or equal to $25,000,000.
60
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement between the Company and the Investors in the form of Exhibit E
attached hereto.
"RELATED DOCUMENTS" shall mean this Agreement, the Senior
Subordinated Debentures, the Securityholders Agreement, the Registration Rights
Agreement, and the Guaranty.
"REPAYMENT DATE" shall have the meaning set forth in Section 4C.
"REPORTABLE EVENT" means: a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
Pension Benefit Guaranty Corporation has been waived by regulation).
"RESTRICTED PAYMENT" by any Person shall mean (i) any dividend or
other distribution on any shares of the capital stock (other than dividends or
distributions payable solely in shares of such capital stock) of such Person,
and (ii) any payment on account of the purchase, redemption, retirement or
acquisition of (a) any shares of the capital stock of such Person or (b) any
option, warrant, convertible or exchangeable security (except the Warrants) or
other right to acquire shares of the capital stock of such Person.
"SECURITIES" shall have the meaning specified in Section 1B.
"SECURITIES ACT" shall mean the United States Securities Act of 1933,
as amended.
"SECURITYHOLDERS AGREEMENT" shall mean the Securityholders Agreement
between the Company, certain shareholders thereof and the Investors in the form
of Exhibit F hereto.
"SENIOR DEBT" shall mean all obligations (whether now outstanding or
hereafter incurred) for the payment of which the Company is responsible or
liable as obligor, guarantor or otherwise in respect of the principal, premium
(if any), and unpaid interest on and all other amounts due with respect to (i)
the Bank Debt and (ii) all renewals and extensions of any such Indebtedness or
obligations; PROVIDED, HOWEVER, that the following shall not constitute Senior
Debt: (a) Indebtedness
61
evidenced by the Senior Subordinated Debentures or any extension or refunding
thereof, or (b) Indebtedness which purports to be senior to subordinated
debt, including the Senior Subordinated Debentures, but subordinate to the
Indebtedness described in the first sentence hereof; and FURTHER PROVIDED
that notwithstanding anything else contained in this definition (i) Senior
Debt may not exceed the amount set forth in Section 7B(i) of this Agreement;
and (ii) shall be incurred only for (A) Permitted Acquisitions or (B) working
capital purposes.
"SENIOR DEBT AGREEMENT" shall mean any agreement evidencing Senior
Debt.
"SENIOR FUNDED DEBT" shall mean Senior Debt which is Funded Debt.
"SENIOR SUBORDINATED DEBENTURES" shall have the meaning specified in
Section 1A.
"SUBORDINATED DEBT" shall have the meaning specified in Section 8A.
"SUBSIDIARY" shall mean a corporation or other entity of which shares
or similar stock having ordinary voting power to elect a majority of the board
of directors or other managers of such corporation or entity are at the time
owned, directly or indirectly, through one or more intermediaries, by such
Person. Except as otherwise expressly indicated herein, references to
Subsidiaries shall mean any Subsidiaries of the Company.
"TAX EXPENSE" shall mean, for any period, total federal and state
income taxes, before adjustment for extraordinary items, as shown in the
financial statements of the Company for such period, all as determined in
conformity with GAAP.
"UCC" shall mean the Uniform Commercial Code as adopted in the State
of New York.
"WHOLLY OWNED" shall mean with respect to any designated Person that
all of the shares or similar stock having ordinary voting power to elect the
board of directors and Indebtedness in respect of borrowing of such Person is
owned by the specified Person or by one or more wholly owned subsidiaries of
such specified Person, or both.
62
14. MISCELLANEOUS.
13A. HOME OFFICE PAYMENT. The Company agrees that it will make
payments of principal of and interest on the Senior Subordinated Debentures
not later than 3:00 p.m., New York time, on the date such payments are due,
by transfer of immediately available funds for credit to the holders of the
Senior Subordinated Debentures as shown on the register maintained by the
Company as of the third Business Day immediately preceding the date of
payment. Such payments shall be made to each such holder's account in the
United States as specified on the attachments to the signature pages hereto
or to such other U.S. account as may be designated to the Company in writing.
13B. INDEMNIFICATION. The Company and each of the Guarantors
jointly and severally agree, whether or not the transactions hereby
contemplated shall be consummated, to pay, and save the Indemnitees harmless
against liability for the payment of, all reasonable out-of-pocket expenses
arising in connection with the transactions and other agreements and
instruments contemplated by this Agreement, including reasonable fees,
expenses and disbursements of Xxxxxxx Xxxx & Xxxxxxxxx incurred in connection
with the preparation and negotiation of this Agreement, any other agreement
or instrument to be executed and delivered in connection with this Agreement,
any subsequent modification hereof or thereof or consent hereunder or
thereunder (regardless of whether any such modifications or consent becomes
effective) or the execution, delivery or acquisition of any Senior
Subordinated Debenture, capital stock or Warrant issued under or pursuant to
this Agreement, printing, reproduction and similar costs, and the reasonable
costs and expenses, including reasonable attorneys' fees, incurred by any
Indemnitees in enforcing any of its rights hereunder or thereunder, including
without limitation reasonable costs and expenses incurred in any bankruptcy
case (including reasonable fees and expenses of the Indemnitees' counsel in
connection with such bankruptcy case), provided, however, that in no event
shall the Company be required to pay for more than one legal counsel for all
of the Indemnitees. The fees of Xxxxxxx Xxxx & Xxxxxxxxx incurred in
connection with the preparation and negotiation of this Agreement shall be
paid at the Closing. The Company and the Guarantors jointly and severally
agree to indemnify the Indemnitees and hold them harmless from and against
any and all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable fees and disbursements of the
63
Indemnitees' counsel in connection with any investigative, administrative or
judicial proceeding or inquiry, whether or not the Indemnitees be designated
a party thereto) which may be incurred by the Indemnitees relating to or
arising out of this Agreement or the Securities or any actual or proposed use
of the proceeds of the sale of Securities hereunder, provided that no
Indemnitee shall have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as finally determined by a court of
competent jurisdiction. The obligations of the Company and the Guarantor
under this Section 13B shall survive the transfer of any Security or shares
of Common Stock issuable upon exercise of the Warrants and the payment of any
Senior Subordinated Debenture. The indemnification required by this Section
13B shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liabilities are incurred.
13C. CONSENT TO AMENDMENTS. This Agreement may be amended and the
Company and each of the Guarantors may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, or take action
which by the express terms of this Agreement requires the consent of the
holders of Securities only if the Company and each of the Guarantors shall
have obtained the prior written consent to such amendment, action or omission
to act after the Closing Date of the holders of a majority of the aggregate
unpaid principal amount of the Senior Subordinated Debentures at the time
outstanding. Each holder of any Security at the time or thereafter
outstanding shall be bound by any consent authorized by this Section 13C,
whether or not such Security shall have been marked to indicate such consent,
but any Security issued thereafter shall contain a reference or bear a
notation referring to any such consent; PROVIDED, HOWEVER, that
notwithstanding anything in this Section 13C to the contrary, without the
prior written consent of the holder or holders of all Senior Subordinated
Debentures at the time outstanding and affected thereby, no consent,
amendment or waiver to or under this Agreement shall extend or reduce the
maturity of any Senior Subordinated Debenture, or change the principal of, or
the rate or time of payment of interest payable with respect to any Senior
Subordinated Debentures, or affect the time, amount or allocation of any
required or optional prepayments, or reduce the proportion of the principal
amount of the Senior Subordinated Debentures required with respect to any
consent, amendment or waiver, or
64
affect the provisions of Section 8 or amend the provisions of this Section
13C. The Company shall promptly send copies of any amendment, waiver or
consent (and any request for any such amendment, waiver or consent) relating
to this Agreement or the Securities to each holder of Senior Subordinated
Debentures and shall consult with such holders in connection with each such
amendment, consent and waiver. No course of dealing between the Company, any
of the Guarantors or any Subsidiary and the holder of any Security nor any
delay in exercising any rights hereunder or under any Security shall operate
as a waiver of any rights of any holder of such Security. As used herein and
in the Securities, the term "this Agreement" and references thereto shall
mean this Agreement as it may, from time to time, be amended or supplemented.
Any amendments to this Agreement shall also require the consent of the
Company and each of the Guarantors proposed to be affected thereby.
13D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF SENIOR
SUBORDINATED DEBENTURES; LOST SENIOR SUBORDINATED DEBENTURE. The Senior
Subordinated Debentures are issuable as registered notes transferable by
endorsement and delivery, each without coupons in denominations of $1,000 and
any larger integral multiple of $1,000. The Company shall keep at its
principal office a register in which the Company shall provide for the
registration of the Senior Subordinated Debentures. Upon surrender for
registration of transfer of any registered Senior Subordinated Debenture at
such office, the Company shall, at its expense, execute and deliver one or
more replacing Senior Subordinated Debentures of like tenor and of a like
aggregate principal amount which replacing Senior Subordinated Debentures
shall be registered as Senior Subordinated Debentures. At the option of the
holder of any Senior Subordinated Debenture, such Senior Subordinated
Debentures, may be exchanged, for other Senior Subordinated Debentures of any
authorized denominations, of a like tenor and of a like aggregate principal
amount, upon surrender of the Senior Subordinated Xxxxxxxxx to be exchanged
at the office of the Company. Whenever any Senior Subordinated Debentures are
so surrendered for exchange, the Company shall execute and deliver, at its
expense, the Senior Subordinated Debentures which the holder thereof making
the exchange is entitled to receive. Every Senior Subordinated Xxxxxxxxx
presented or surrendered for registration of transfer shall be duly endorsed,
or be accompanied by a written instrument of transfer duly executed, by the
holder of such Senior Subordinated Xxxxxxxxx, or his attorney duly authorized
in writing. Any
65
Senior Subordinated Debentures issued in exchange for or upon transfer shall
carry the rights to unpaid interest and interest to accrue which were carried
by the Senior Subordinated Debentures so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the Investors or other
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Senior Subordinated Debenture held by the
Investors and, in the case of any such loss, theft or destruction, upon
receipt of its unsecured indemnity agreement, or other indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Senior Subordinated Debenture, the Company
will make and deliver a replacement Senior Subordinated Debenture of like
tenor, in lieu of such lost, stolen, destroyed or mutilated Senior
Subordinated Debenture.
13E. PROVISIONS APPLICABLE IF ANY OF THE SECURITIES ARE SOLD. The
parties acknowledge that, subject to compliance with applicable securities
laws, the Investors shall be free to transfer the Securities without
restriction. In the event that the Investors should sell or otherwise
transfer any of the Securities or any part thereof to any Person other than
the Company, if any Security shall have been transferred to another holder
and such holder shall have designated in writing the address to which
communications and/or payments with respect to Security shall be mailed, all
payments, notices, certificates, requests, statements and other documents
required to be delivered to the Investors by any provision hereof by reason
of the holding of the transferred Security shall also be delivered to such
holder at such address.
13F. RESTRICTIVE LEGENDS. Each Senior Subordinated Debenture shall
bear the following (or substantially equivalent) legend on the face or
reverse side thereof:
"The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, or applicable
state securities laws, and the securities may not be sold,
transferred or otherwise disposed of in the absence of such
registration or an exemption therefrom under said Act and such
laws and the respective rules and regulations thereunder. The
securities represented hereby are also subject to certain
66
agreements contained in a Securities Purchase Agreement dated
February 13, 1998 among the Company and certain parties thereto,
a Registration Rights Agreement dated February 13, 1998 among
the Company and certain parties thereto, and a Securityholders
Agreement dated February 13, 1998 among the Company and certain
parties thereto.
In addition, the shares of Common Stock issuable upon exercise of the
Warrants shall bear at the time of issuance a legend in substantially the
form set forth above and any legend required by the state securities or "Blue
Sky" laws of any state in which a registered holder thereof is resident,
unless such shares have been registered under the Securities Act.
13G. PERSONS DEEMED OWNERS. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name any
Security is registered as the owner and holder of such Security for the
purpose of receiving payment of principal of and interest on such Security
and for all other purposes whatsoever, whether or not such Security shall be
overdue, and the Company shall not be affected by notice to the contrary.
13H. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made in writing by or on
behalf of any party to this Agreement in connection herewith shall survive
the execution and delivery of this Agreement, regardless of any investigation
made by the Investors or on their behalf.
13I. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
all covenants and agreements in this Agreement contained by or on behalf 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.
13J. NOTICES. All communications provided for hereunder shall be
sent by first class mail, overnight courier or by fax with hard copy by first
class mail or overnight courier and, if to the Investors, addressed to the
holders of Securities in the manner (except as otherwise provided in Section
13A with respect to payments of principal of (and premium, if any) and
interest on the Senior Subordinated Debentures) in which its address appears
on the signature page hereof, with a copy to
67
Xxxxxxx X. Xxxxx, Xx., Esq., at Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp
Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, telecopy number
(000) 000-0000, if to the Company or any Guarantor, addressed to it at 0000
Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, telecopy no.
(000) 000-0000, Attention: Chief Executive Officer, with a copy to O'Melveny
& Xxxxx LLP, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000, telecopy
(000) 000-0000, attention: Xxxxx Xxxxxxx, Esq., or to such other address with
respect to any party as such party shall notify the other in writing, and
(unless otherwise specified herein) shall be deemed received 24 hours after
it is sent if sent via facsimile (with receipt confirmed) or overnight
courier; PROVIDED, HOWEVER, that any such communication to the Company or the
Guarantor may also, at the option of the Investors, be either delivered to
the Company or the Guarantor at their address set forth above or to any
executive officer of the Company or the Guarantor, as applicable .
13K. DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections and Sections of this Agreement are inserted for convenience only and
do not constitute a part of this Agreement.
13L. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS
BEING DELIVERED AND IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE
PARTIES SHALL BE GOVERNED BY, THE LAW OF SUCH STATE WITHOUT GIVING EFFECT TO
THE CHOICE OF LAW OR CONFLICTS OF LAW PRINCIPLES THEREOF. THIS AGREEMENT IS
EFFECTIVE ONLY WHEN DELIVERED AND ENTERED INTO BY THE INVESTORS IN NEW YORK.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE COMPANY AT ITS ADDRESS SET FORTH IN SECTION 13J. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE INVESTORS OR ANY HOLDER OF A SECURITY TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
68
13M. REMEDIES. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by the
Company, any Guarantor or any holder of Securities, the Company, any
Guarantor or any holder of Securities (or any of them), as applicable, may
proceed to protect and enforce its or their rights either by suit in equity
and/or by action at law, including, but not limited to, an action for damages
as a result of any such breach and/or an action for specific performance of
any such covenant or agreement contained in this Agreement. Without
limitation of the foregoing, each of the Company and any Guarantor agrees
that failure to comply with any of the covenants including, without
limitation, those included in Sections 6A, 6B, 6C, 6F, 6L, 6M, 6N, 6O and 6Q
and those in respect of the Senior Subordinated Debentures will cause
irreparable harm and that specific performance shall be available in the
event of any breach thereof. The Company, any Guarantor or the Investors
acting pursuant to this Section 13M, shall be indemnified against all
liability, loss or damage, together with all reasonable costs and expenses
related thereto (including reasonable legal and accounting fees and expenses)
in accordance with Section 13B.
13N. ENTIRE AGREEMENT. This Agreement, the other Related
Documents and the other writings referred to herein or delivered pursuant
hereto contain the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous
arrangements or understandings with respect thereto. This Agreement shall
not constitute a valid and binding agreement, enforceable in accordance with
its terms, until it has been executed and delivered by duly authorized
representatives of each party hereto. No discussions regarding or exchange
of drafts or comments in connection with the transactions contemplated herein
shall constitute an agreement among the parties.
13O. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
13P. AMENDMENTS. This Agreement may not be changed orally, but
(subject to the provisions of Section 13C) only by an
69
agreement in writing signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
13Q. PAYMENT DATE. Notwithstanding any provision of this
Agreement to the contrary, any payment on account of principal of or interest
on any Senior Subordinated Debenture which is due on a date which is not a
Business Day shall be paid on the next succeeding Business Day, and the
amount of interest included in any such payment shall be computed to the date
on which such payment is actually made.
13R. WAIVER OF TRIAL BY JURY. THE COMPANY AND EACH OF THE
GUARANTORS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE
EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT OR ANY OTHER
AGREEMENT OR DOCUMENT REFERRED TO HEREIN AND AGREES THAT ANY SUCH DISPUTE
SHALL, AT THE OPTION OF THE INVESTORS, BE TRIED BEFORE A JUDGE SITTING
WITHOUT A JURY.
13S. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
70
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
SERACARE, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx, Chairman of the
Board, President and Chief
Executive Officer
INVESTOR:
The foregoing Agreement is
hereby accepted as of the
date first above written.
DECLARATION OF TRUST
FOR DEFINED BENEFIT PLANS
OF ZENECA HOLDINGS INC.
c/o Pecks Management Partners Ltd.
Xxx Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
By: Pecks Management Partners Ltd.,
Its Investment Adviser
By: /s/ Xxxxxx X. Xxxxxx
------------------------- Principal Amount of Senior
Xxxxxx X. Xxxxxx Subordinated Debentures: $1,865,000
Managing Director
Tax ID Number: 000-000000
Nominee: FUELSHIP & COMPANY
Bank: State Street Bank & Trust Company
Xxx Xxxxxxxxxx Xxxxx-
Xxxxxxx Xxxxxxx Xxxxxxxx, 0X
Xxxxx Xxxxxx, XX 00000
ABA Routing Number: 0110-00028 for Master Trust/
(Wiring Dividend Payments) State Street Bank & Trust Company
Boston, MA 02101
BNF Zeneca Holdings
Acct. JG10
DDA: 34758508
Physical Delivery State Street Bank & Trust Company
Via Federal Express: 000 Xxxxxxxx Xxxxxx
Incoming Securities, Concourse Level
Boston, MA 02101
Attn: Xxxxx Xxx
Account: Zeneca Holdings
Account #JG10
The foregoing Agreement is
hereby accepted as of the
date first above written.
DECLARATION OF TRUST
FOR DEFINED BENEFIT PLANS
OF ICI AMERICAN HOLDINGS INC.
c/o Pecks Management Partners Ltd.
Xxx Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
By: Pecks Management Partners Ltd.,
Its Investment Adviser
By: /s/ Xxxxxx X. Xxxxxx Principal Amount of Senior
-------------------------
Xxxxxx X. Xxxxxx Subordinated Notes: $2,775,000
Managing Director
Tax ID Number: 000-000-000
Nominee: NORTHMAN & CO.
Bank: State Street Bank & Trust Company
Xxx Xxxxxxxxxx Xxxxx-
Xxxxxxx Xxxxxxx Xxxxxxxx, 0X
Xxxxx Xxxxxx, XX 00000
ABA Routing Number: 0110-00028 for Master Trust/
State Street Bank & Trust Company
Boston, MA 02101
BNF: ICI Americas
Account: I510
DDA: 34758649
Physical Delivery State Street Bank & Trust Company
Via Federal Express: 000 Xxxxxxxx Xxxxxx
Incoming Securities, Concourse Level
Boston, MA 02101
Attn: Xxxxx Xxx
Account Name: ICI Americas
Acct # I510
The foregoing Agreement is
hereby accepted as of the
date first above written.
DELAWARE STATE EMPLOYEES'
RETIREMENT FUND
c/o Pecks Management Partners Ltd.
Xxx Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
By: Pecks Management Partners Ltd.,
Its Investment Adviser
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx Principal Amount of Senior
Managing Director Subordinated Notes: $10,080,000
Tax ID Number: 516-00-0279
Nominee: NAP & COMPANY
Bank: Mercantile Safe Deposit & Trust Company
0 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxx
ABA Routing Number: 052-000618 for State of
Delaware Account
Account #214380-8
Physical Delivery Mercantile Safe Deposit & Trust Company
0 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE X.X. XXXXXXXXX FAMILY
FOUNDATION
c/o Pecks Management Partners Ltd.
Xxx Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
By: Pecks Management Partners Ltd.,
Its Investment Adviser
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx Principal Amount of Senior
Managing Director Subordinated Notes: $1,280,000
Tax ID Number: 000-0000-00
Nominee: HARE & CO
Bank: Royal Trust Corporation of Canada
Royal Trust Tower, 10th Floor
000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X0X0
ABA Routing Number: 000000000
Bank of New York
BK of NY/CUST
Account: Royal Trust, #298324
Physical Delivery The Bank of New York
Via Federal Express 0 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Special Processing Department
Re: Account #298324
LIST OF OMITTED SCHEDULES
TO SECURITY PURCHASE AGREEMENT*
Schedule 10A ORGANIZATION, QUALIFICATION AND AUTHORITY
Schedule 10B FINANCIAL STATEMENTS NOT PREPARED IN ACCORDANCE WITH GAAP;
MATERIAL ADVERSE CHANGES
Schedule 10C CAPITAL STOCK AND RELATED MATTERS
Schedule 10D ACTIONS PENDING OR THREATENED
Schedule 10E OUTSTANDING DEBT; DEFAULTS
Schedule 10F TITLE TO PROPERTIES
Schedule 10G TAXES
Schedule 10H CONFLICTING AGREEMENTS
Schedule 10L ENVIRONMENTAL MATTERS
Schedule 10M POSSESSION OF FRANCHISES, LICENSES, ETC.
Schedule 10N PATENTS, ETC.
Schedule 10S RELATED PARTY TRANSACTIONS
Schedule 10T REGISTRATION RIGHTS
Schedule 10V AGREEMENTS WITH AFFILIATES
------------------------------
* Registrant agrees to furnish supplementally a copy of any of the
omitted Schedules and Exhibits listed above to the Commission upon
request.
