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EXHIBIT 10.36
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") dated as of the 28th day of
February, 1997 is made and entered into on the terms and conditions hereinafter
set forth, by and between ACCUMED INTERNATIONAL, INC. ("Debtor" or the
"Company") and XXXXXX X. XXXXXX and XXXXXX X. XXXX, XX. (collectively
"Lender").
RECITALS
WHEREAS, Debtor has requested that Lender make available to Debtor a
term loan in the original principal amount of Six Million and no/100ths Dollars
($6,000,000.00) (the "Loan") on the terms and conditions hereinafter set forth,
and for the purpose(s) hereinafter set forth; and
WHEREAS, in order to induce Lender to make the Loan to Debtor, Debtor
has made certain representations to Lender; and
WHEREAS, Lender, in reliance upon the representations and inducements
of Debtor, has agreed to make the Loan upon the terms and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the agreement of Lender to make
the Loan, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Debtor and Lender hereby agree as follows:
SECTION 1
THE LOAN
1.1 Evidence of Loan Indebtedness and Repayment. Subject to the
terms and conditions hereof, the Lender shall make the Loan to Debtor by wire
transfer in immediately available funds. The Loan shall be evidenced by a
Convertible Promissory Note in the original principal amount of Six Million and
No/100ths Dollars ($6,000,000.00), substantially in the form of Exhibit A
attached hereto and incorporated herein by this reference (the "Note" or the
"Promissory Note"), executed by Debtor in favor of Lender. The Loan shall be
payable in accordance with the terms of the Note. Unless the Note has
previously been paid in full, upon an amendment to the Debtor's certificate of
incorporation, the Note shall be convertible, at the option of Lender, into
shares of the common stock, $.01 par value per share (the "Common Stock") of
Debtor as provided in the Note. The Note, this Agreement and any other
instruments and documents executed by Debtor now or hereafter evidencing or in
any way related to the indebtedness evidenced by the Note are herein
individually referred to as a "Loan Document" and collectively referred to as
the "Loan Documents."
1.2 Partial Prepayment. Debtor may prepay the indebtedness
evidenced by the Note in whole or in part at any time and from time to time
subject to a prepayment premium as specified in the Note.
1.3 Loan Origination Fee. Debtor shall pay to Lender a loan
origination fee equal to Seventy-Nine Thousand Seven Hundred Twenty- Six and
00/100 ($79,726.00), which shall be payable upon the maturity of the Note.
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1.4 Purposes of Loan and Use of Proceeds. The purpose of the
Loan shall be to provide capital to Debtor to acquire certain assets relating
to the ESP Product Line from Difco Microbiology Systems, Inc.
1.5 Further Documents. Debtor agrees, on request of Lender, at
any time and from time to time to execute or join with Lender in the execution
and filing of additional documents in the form and content reasonably required
by Lender to effectuate the terms of this Agreement.
SECTION 2
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and other
transactions to be consummated contemporaneously herewith, the Debtor hereby
represents and warrants to the Lender, as of the date hereof, as follows:
2.1 Organization and Standing; Certificate and By-Laws. The
Company is a corporation duly organized and existing under, and by virtue of,
the laws of the State of Delaware and is in good standing under such laws. The
Company has the requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted and
as proposed to be conducted. Except as disclosed on Exhibit 2.1 attached
hereto and made a part hereof, the Company is currently qualified to do
business as a foreign corporation in any jurisdiction in which such
qualification is required, except where the failure to be so qualified will not
have a material adverse effect on the Company's business as now conducted. The
Company has furnished Lender or its counsel with copies of its Certificate of
Incorporation and By-Laws, as amended. Said copies are true, correct and
complete and contain all amendments through the date hereof.
2.2 Corporate Power. The Company has all requisite legal and
corporate power and authority to execute and deliver the Loan Documents and to
carry out and perform its obligations under the terms of this Agreement.
2.3 Financial/SEC Filings.
(a) The Company has previously furnished Lender true and
complete copies of the following documents which have been filed by the Company
with the Securities and Exchange Commission ("SEC") pursuant to Sections 13(a),
14(a), (b) or (c) or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") (such documents are hereinafter collectively called the
"Accumed SEC Filings"): (i) its Annual Report on Form 10-K for the transition
period ended December 31, 1995, (ii) quarterly reports on Form 10-Q for the
quarters ended March 31, 1996, June 30, 1996 and September 30, 1996, which
reports include Consolidated Balance Sheets, Consolidated Statements of Income
and Consolidated Statements of Cash Flows of the Company at and for the
respective fiscal periods then ended and at and for the corresponding date and
fiscal periods for the prior year, (iii) all reports on Form 8-K filed by the
Company with the SEC during the period from and after January 1, 1996, (iv) the
Company's Prospectus dated October 2, 1996, included in a Form S-2 Registration
Statement (the "Prospectus"), and (v) the Company's Registration Statement on
Form S-4 dated December 1995. The Accumed SEC Filings constitute all reports
the Company was required to file under Sections 13(a), 14(a), (b) or (c) and
15(d) of the Exchange Act since January 1, 1996. At the time of filing with
the SEC, the Accumed SEC Filings
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(i) were prepared in all material respects in accordance with the applicable
requirements of the Exchange Act, and the rules and regulations thereunder,
(ii) did not contain any untrue statement of a material fact, and (iii) did not
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited and unaudited financial statements contained in the Accumed SEC Filings
are true and correct in all material respects and present fairly the
consolidated financial condition and results of operations and changes in
stockholders' equity and cash flows as of the dates and for the periods
indicated, except as may otherwise be stated in such financial statements. For
purposes of this Agreement, all financial statements of the Company shall be
deemed to include any notes to such financial statements. The financial
statements described in this Section 2.3 are hereinafter referred to as the
"Accumed Financial Statements".
(b) Since September 30, 1996, there has not been,
occurred or arisen which has not been either publicly disclosed by the Company
or disclosed in a separate schedule to Lender: (i) any material adverse change
in the consolidated financial condition or in the operations of the business of
the Company from that shown on the Accumed Financial Statements, or (ii) any
event, condition or state of facts (other than the general state of the
national economy and proposed federal legislation or regulation) of any
character which, to the best of the knowledge of the Company, materially and
adversely affects the results of operations or business or financial condition
or properties of the Company.
(c) The Company's last annual meeting of stockholders
was held in December 1995, and the next annual meeting of stockholders is
expected to be held prior to June 30, 1997.
(d) As of the date hereof, Debtor has no indebtedness
which, in accordance with generally accepted accounting principles would be
included in determining liabilities as shown on the liability side of the
balance sheet of the Debtor other than (i) trade payables incurred in the
ordinary course of business, (ii) liabilities reflected on the Accumed
Financial Statements, (iii) indebtedness not to exceed $500,000 which is
evidenced by a promissory note dated February 11, 1997 in the original
principal amount of $500,000 payable to Oncometrics Imaging Corp., a
majority-owned subsidiary of Debtor and (iv) indebtedness, the incurrence of
which or the repayment of which is not reasonably likely to have a material
adverse effect on the financial condition, operations, assets or prospects of
the Debtor or any of its Subsidiaries.
(e) Debtor owns all of its assets free and clear of
liens, claims and encumbrances (collectively, "Liens") other than (i) Liens for
taxes not yet due or liens for taxes being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Debtor in accordance with generally accepted
accounting principles, (ii) Liens on property or assets of the Debtor that were
incurred in the ordinary course of business, such as carriers', warehousemen's,
landlords' and mechanics' liens and other similar liens arising in the ordinary
course of business and that (x) do not in the aggregate materially detract from
the value of the property or assets subject thereto or materially impair the
use thereof in the operation of the business of the Debtor or (y) that are
being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property or assets
subject to such lien, (iii) Liens (other than any lien imposed by ERISA or in
connection with any environmental violation), pledges or deposits incurred or
made in connection with workmen's compensation, unemployment insurance and
other social security benefits, or securing the performance of bids, tenders,
leases, contracts (other than for the repayment of borrowed money), statutory
obligations, progress payments, surety and appeal bonds and other obligations
of like nature, in each case incurred in the ordinary course of business, (iv)
the Lien evidenced by financing statement 003581568 filed with the Illinois
Secretary of State on August 21, 1996, naming the Debtor as
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debtor and Nortech Telecommunications Inc., as secured party relating to
certain telephone equipment leased by the Debtor, and (v) a Lien in favor of
Oncometrics Imaging Corp. on substantially all of Debtor's assets securing the
indebtedness described in Section 2.3(d)(iii).
2.4 Capitalization. The authorized capital stock of the Company
consists of Thirty Million (30,000,000) shares of common stock, $.01 par value
(the "Common Stock"), of which Twenty-Two Million Sixty-Six Thousand Nine
Hundred Thirty-Eight (22,066,938) shares are issued and outstanding and Five
Million (5,000,000) shares of preferred stock, $.01 par value, of which no
shares are issued and outstanding. The outstanding shares have been duly
authorized and validly issued, and are fully paid and nonassessable. The
Company has reserved Seven Million One Hundred Sixty-Seven Thousand Five
Hundred One (7,167,501) shares of Common Stock for issuance upon the exercise
of warrants or options that have been granted prior to the date hereof or that
may hereafter be granted under the Company's stock option plans.
2.5 Amendment to Certificate of Incorporation. The Board of
Directors of the Company has approved a resolution to amend its certificate of
incorporation to increase the number of shares of authorized Common Stock of
the Company to fifty million (50,000,000). Such resolution also provides that
the Board of Directors will recommend that the shareholders approve such
amendment. The Company agrees that such resolutions will not be altered in any
respect without Lender's consent.
2.6 Stock. Unless the Note is earlier paid in full, upon the
adoption of the amendment to the Company's certificate of incorporation as set
forth in Section 2.5 above, the shares of Common Stock that may be issued upon
conversion of the Note shall have been duly and validly reserved and, when
issued in compliance with the provisions of the Note, will be validly issued,
fully paid and nonassessable, and will be free of any liens, claims, charges,
encumbrances, voting proxies or voting agreements, other than those agreed to
by Lender and those imposed by federal and applicable state securities laws.
2.7 Prior Registration Rights. Except as described under the
caption "Description of Capital Stock - Registration Rights" in the Prospectus,
the Company has not granted to any persons any demand or piggyback registration
rights to holders of any securities of the Company or to holders of any rights
to acquire securities of the Company.
2.8 Subsidiaries. Except as disclosed in the SEC Filings, the
Company has no subsidiaries or affiliated companies and does not otherwise own
or control, directly or indirectly, any equity interest in any corporation,
association or business entity.
2.9 Authorization and Enforceability. Other than shareholder
approval of the Charter Amendment (as defined in Section 3.6) which is required
prior to the effectiveness of Lender's rights to convert the Note into Common
Stock, all corporate action on the part of the Company, its directors and
shareholders necessary for the authorization, execution, delivery and
performance of the Loan Documents by the Company, and the performance of all of
the Company's obligations hereunder have been taken. This Agreement, as well
as each of the other Loan Documents, when executed and delivered by the
Company, shall constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms.
2.10 Absence of Changes. Except as disclosed in the SEC Filings or
in Exhibit 2.10 attached hereto and made a part hereof, since September 30,
1996, (a) there has been no material adverse change in the condition (financial
or otherwise), business, property, assets or liabilities of the Company other
than
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changes in the ordinary course of business, none of which, individually or in
the aggregate, has been materially adverse; (b) there has been no resignation
or termination of employment of any key officer or employee of the Company, and
the Company does not know of the impending resignation or termination of
employment of any such officer or employee that if consummated would have a
material adverse effect on its business; (c) there has been no labor dispute
involving the Company or its employees and none is pending or, to the knowledge
of the Company, threatened; (d) there has not been any change, except in the
ordinary course of business, in the contingent obligations of the Company, by
way of guaranty, endorsement, indemnity, warranty or otherwise; and (e) there
has been no other event or condition of any character pertaining to and
materially adversely affecting the assets or business of the Company.
2.11 Trademarks, Etc. To the knowledge of the Company, the
Company owns, possesses or has the right to exploit, free of any obligation to
make any payment (whether of a royalty, license fee, compensation or
otherwise), all trademarks, service marks, trade names or copyrights
(collectively, the "Marks"), all of which are the only Marks which are
necessary to the conduct of its business. Except as disclosed on Exhibit 2.11,
the Company does not have any knowledge, or reason to know, that the Company's
ownership, possession or other use or exploitation of any of the Marks
conflicts with the rights of any person or entity. The Company has used
reasonable efforts to protect the Marks. To the knowledge of the Company, no
present or former shareholder, officer, director, agent or independent
contractor of the Company owns or has any other right in or to, or has claimed
any ownership or other right in or to, any Xxxx which is necessary or desirable
in connection with the Company's business, either as now conducted or as
contemplated by management of the Company.
2.12 Taxes. The Company has filed or obtained extensions for all
required federal, state and local tax returns. Each return or report is true
and correct and all taxes, fees and other governmental charges reflected
thereon have been paid or accrued. The balance sheet as of September 30, 1996,
contained as a part of the Financial Statements (the "Current Balance Sheet")
reflects an adequate reserve for any and all taxes relating to the conduct of
the Company's business prior to the date hereof. The Company has appropriately
withheld, collected and paid over all taxes which, under applicable law, it is
required to withhold, collect and pay over.
2.13 Labor Relations, Etc.
(a) Except as disclosed in the SEC Filings, the Company
is neither a party to nor has any obligations under any agreement, collective
bargaining or otherwise, with any party regarding the rates of pay or working
conditions of any of the employees of the Company. The Company is not
obligated under any agreement to recognize or bargain with any labor
organization or union on behalf of its employees. There is not now any formal
organization activity among any of the employees of the Company, nor has the
Company been charged with, or received notice of, any threatened action with
respect to any unfair labor practice.
(b) The Company has reasonably satisfactory labor
relations with its employees.
(c) The Company has complied with all material
applicable federal and state laws and regulations concerning the
employer/employee relationship and with all of its respective agreements
relating to the employment of its employees, including without limitation
provisions thereof relating to wages, bonuses, hours of work and payment of
Social Security taxes. Except as disclosed on Exhibit 2.9 attached hereto and
made a part hereof or reserved for on the Current Balance Sheet, the Company is
not liable for
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any unpaid wages, bonuses or commissions, or any tax, penalty, assessment or
forfeiture for failure to comply with any of the foregoing.
2.14 Licenses, Permits, Compliance, Etc. The Company has all
material licenses, franchises, permits and government authorizations
(collectively, the "Permits") necessary for the conduct of the Business, none
of which will be terminated or otherwise materially adversely affected by the
consummation of the transactions contemplated by this Agreement. The Company
holds each Permit free and clear of any claims or restrictions. No event has
occurred that would allow, after the giving of notice the lapse of time or
both, the revocation or termination thereof or that would result in any other
material impairment of the rights of the holder thereof. The Company currently
complies and has complied with all laws, regulations and orders applicable to
it and to the Company's business, the violation of which would have a material
adverse effect on it or its business. The present conduct of the Company's
business does not violate any laws, regulations, ordinances, decrees,
injunctions or orders applicable to health, occupational safety, building
codes, fire codes and consumer protection, in each case, of which the Company
is aware.
2.15 Benefit Plans. Except as disclosed in the SEC Filings or in
Exhibit 2.15, the Company and each benefit program are or will be, within the
time permitted by law, in compliance with the provisions of ERISA and the
Internal Revenue Code (the "Code") applicable to it. No benefit program which
is subject to the minimum funding standards of ERISA or the Code, if any, has
incurred any accumulated funding deficiency within the meaning of ERISA or the
Code. The Company has not incurred any liability to the Pension Benefit
Guaranty Corporation in connection with any benefit program which is subject to
Title IV of ERISA. The assets of each benefit program that is subject to Title
IV of ERISA, if any, are sufficient to provide the benefits under such benefit
program for which the Pension Benefit Guaranty Corporation would guarantee the
payment if such benefit program terminated, and are also sufficient to provide
all other benefits due under the benefit program. No event which constitutes a
"reportable event" (as defined in Section 4043 of ERISA) has occurred and is
continuing with respect to any benefit program covered by ERISA.
2.16 Consents and Approvals. As of the date hereof, the Company
has obtained, in form and substance acceptable to Lender, the waiver, consent
and approval (i) of all persons or entities whose waiver, consent or approval
is required and material for the Company to consummate its obligations with
respect to the transactions contemplated by this Agreement except that
shareholder approval of the Charter Amendment (as defined in Section 3.6) is
required prior to the effectiveness of Lender's rights to convert the Note into
Common Stock; (ii) of any person or entity which is required by any material
agreement, lease, instrument, arrangement, judgment, decree, order or license
to which the Company is a party or subject as of the date hereof, and which
would prohibit such transactions, or require the waiver, consent or approval of
any person to such transactions; or (iii) under any material agreement, lease,
instrument, arrangement, judgment, decree, order or license under which,
without such waiver, consent or approval, such transactions would constitute an
occurrence of a breach or a default, result in the acceleration of any material
obligation thereunder, or give rise to a right of any party thereto to
terminate its obligations thereunder.
2.17 Compliance with Other Instruments, None Burdensome, etc.
The Company is not in violation of any term of its Certificate of Incorporation
or By-Laws, or, in any material respect, of any term or provision of any
mortgage, indebtedness, indenture, contract, agreement, instrument, judgment or
decrees, and is not in violation of any order, statute, rule or regulation
applicable to the Company where such violation would materially and adversely
affect the Company. The execution, delivery and
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performance of and compliance with this Agreement have not resulted and will
not result in any violation of, or conflict with, or constitute a default
under, the Company's Certificate or By-laws or, in any material respect, any of
its agreements or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company,
other than the liens being created hereunder; and, there is no such violation
or default which materially and adversely affects the business of the Company
or any of its properties or assets.
2.18 Litigation, etc. Except as described in the SEC Filings or
in Exhibit 2.18 attached hereto and made a part hereof, there are no actions,
claims, suits, proceedings or investigations pending against the Company or its
properties before any court, governmental agency, arbitration board or other
tribunal, norhas the Company received any written threat thereof.
2.19 Brokers or Finders. The Company has not incurred, and will
not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
2.20 Bankruptcy. Neither the Company nor any entities affiliated,
related or controlled by the Company, has filed a petition or request for
reorganization or protection or relief under the bankruptcy laws of the United
States or any state or territory thereof; made any general assignment for the
benefit of creditors; or consented to the appointment of a receiver or trustee,
including a custodian under the United States bankruptcy laws, whether such
receiver or trustee is appointed in a voluntary or involuntary proceeding which
has not been discharged prior to the date hereof.
2.21 Disclosure. This Agreement, the Exhibits hereto and the
other Loan Documents, as well as all other written materials provided by the
Company to the Lender, when taken as a whole, do not (as of the respective
dates thereof) contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were
made.
2.22 Use of Proceeds. The proceeds of the Loan will be used
solely for the benefit of the Company and will be applied for the Company's
acquisition of certain assets relating to the ESP Product Line from Difco
Microbiology Systems, Inc.
2.23 No Impending Material Adverse Event. The Company does not
have any knowledge of any impending material loss of business or of any other
condition, the occurrence of which might have a material adverse effect on the
business, financial condition or prospects of the Company.
SECTION 3
CERTAIN CONTINUING COVENANTS
As long as the Note remains unpaid, Debtor covenants and agrees as
follows:
3.1 Notice of Litigation and Disputes. The Company will promptly
notify the Lender of any material (i) suits, assessments, litigation or
governmental audits or investigations instituted against it, and (ii)
reportable event under ERISA or any environmental law arising out of any act or
omission of the Company.
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3.2 Compliance. The Company will comply in all material respects
with all applicable statutes and governmental regulations, including, but not
limited to, applicable federal and state securities laws, zoning and land use
regulations, ERISA and environmental laws, which if not complied with would
reasonably be expected to have a material adverse effect on the Company. The
Company shall pay and discharge, before any penalty attaches thereto for
non-payment thereof, all taxes, assessments and governmental charges of any
kind levied upon or assessed against Company; provided, however, that Company
shall not be required to pay any such taxes, assessments or other governmental
charges so long as it shall in good faith contest the validity thereof, and if
such contest is made, the Company sets aside sufficient amounts for the payment
of the taxes, assessments or other governmental charges so contested in a
manner satisfactory to Lender.
3.3 Continuing Existence. The Company will maintain its
corporate existence, business, assets (except for dispositions in the ordinary
course of business consistent with past practice) and foreign qualifications in
all necessary jurisdictions, except where failure to maintain such
qualifications would not reasonably be expected to have a material adverse
effect on the Company.
3.4 Related Party Contracts. Without Lender's consent, the
Company shall not engage in any material transaction with any corporation,
partnership, trust or business entity owned or controlled directly or
indirectly, by an executive officer or director of the Company or any affiliate
thereof other than transactions with the Company's subsidiaries (not otherwise
prohibited hereunder) the boards of directors of which are under common control
with the Company.
3.5 Negative Covenants. As long as the Note remains unpaid,
Debtor will not, without the prior written consent of Lender:
(a) incur any indebtedness for money borrowed other than
the debt evidenced by the Note and except as contemplated in connection with
the pending private placement of up to Eight Million Five Hundred Thousand
Dollars ($8,500,000) (but not less than Seven Million Dollars ($7,000,000)) in
convertible promissory notes a portion of the proceeds of which are to be used
to repay the indebtedness evidenced by the Note;
(b) pay a dividend or redeem or repurchase any stock of
Debtor;
(c) lend or advance any monies to any employees,
officers or directors of Debtor with the exception of advancements for the
payment of expenses of the Debtor made in the ordinary course of business;
(d) lend or contribute any funds to any subsidiaries of
Debtor;
(e) change the Debtor's main line of business, or enter
into any business unrelated to its current businesses, or make any material
change in its business;
(f) agree to sell a substantial portion of the Company's
assets, merge with any other corporation, partnership, trust or other form of
business entity, or consolidate its assets with any other corporation,
partnership, trust or other form of business entity;
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(g) dispose of any equity interest in any subsidiary or
permit any subsidiary to issue any equity to any other person;
(h) issue or agree to issue any preferred stock or other
stock with rights superior to that of the Common Stock; or
(i) issue any securities or rights to acquire securities
of the Company unless the proceeds thereof, up to the amounts due under the
Note and this Agreement, are applied in payment of Debtor's obligations under
the Note and this Agreement.
3.6 Amendment to Certificate of Incorporation. The Company
agrees to submit the amendment to the Company's certificate of incorporation
(the "Charter Amendment") increasing its authorized Common Stock to its
shareholders at a meeting to be held as soon as reasonably practicable after
the date hereof. In connection therewith, the Company agrees that it will
within thirty (30) days after the date hereof file with the Securities and
Exchange Commission a preliminary proxy statement relating to its solicitation
of proxies at such meeting and to use commercially reasonable efforts to cause
such meeting to be held within ninety (90) days after the date hereof. Such
proxy statement shall include a proposal to adopt the Charter Amendment and the
recommendation of the Company's Board of Directors that the shareholders
approve same. Upon approval of the Charter Amendment by the Company's
shareholders, the Company shall notify Lender of same and promptly cause such
Charter Amendment to be filed with the Secretary of State of Delaware.
3.7 Private Placement. The Company will use commercially
reasonable efforts to enter into an agency agreement with Commonwealth
Associates as promptly as practicable relating to the sale of convertible notes
and warrants of the Company, a portion of the proceeds from which will be used
to satisfy the Note in full. The escrow agreement under which subscriptions
will be deposited pending the closing of such private placement will provide
that, upon closing, disbursement will be made directly to Lender to the extent
necessary to satisfy the Note in full.
SECTION 4
DEFAULT
The occurrence of one or more of the following events shall, at the
option of Lender, constitute an "Event of Default" hereunder:
(a) if Debtor defaults in the payment of the Note or any
installment thereof or interest thereon or any other payment due Lender within
five (5) days after its due date except in the case of payments pursuant to
Sections 11.4 and 11.7 of this Agreement, within thirty (30) days after the
respective due dates;
(b) if any warranty or representation of Company contained
herein, in any Collateral Document or in any other Loan Document shall be
materially false or misleading when made;
(c) if Company shall (i) cease to do business as a going concern,
(ii) generally fall to meet its obligations as they mature, (iii) file a
petition or request for reorganization or protection or relief under the
bankruptcy laws of the United States or any state or territory thereof, (iv)
make any general assignment for the benefit of creditors, (v) consent to the
appointment of a receiver or trustee, including a custodian
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under the United States bankruptcy laws, whether such receiver or trustee is
appointed in a voluntary or involuntary proceeding, or (vi) permit a request or
petition for liquidation, reorganization or other relief under the bankruptcy
laws of the United States, or any state thereof, or any other type of
insolvency proceedings, to not be vacated or dismissed within sixty (60) days
of such event under the bankruptcy laws of the United States or any state or
territory thereof, whether such filing or petition is voluntary or involuntary;
(d) a default occurs herein or in the Note, any other Loan
Document, or any agreement executed pursuant thereto or in connection
therewith, or if Company fails to perform or keep any of the other covenants,
agreements or warranties contained herein or therein and fails to cure same
within ten (10) business days of notice from Lender to cure, unless a shorter
or longer time period is expressly specified for any particular covenant;
(e) in the event (i) an event of default occurs under any other
agreement pursuant to which Debtor has incurred obligations for monies owed in
principal amount in excess of One Million Dollars ($1,000,000) and such event
of default results in the right to accelerate such obligations; or (ii) an
event of default occurs under any other material agreement to which Company is
a party or by which it is bound and such event of default results in the
Company becoming obligated to pay an amount in excess of One Million Dollars
($1,000,000); or
(f) the execution, without Lender's prior written consent, of any
agreement to merge or consolidate the Debtor with any other form of business
entity, or to sell a substantial portion of the assets of the Debtor.
Upon the occurrence of any Event of Default as defined above, at
Lender's option, the entire unpaid principal balance of the Note, together with
all accrued and unpaid interest thereon and all other indebtedness secured
hereby shall immediately become due and payable, without notice or demand, and
Lender shall have all of the rights and remedies stated in this Agreement or
other documents which now or hereafter evidences the Loan evidenced by the
Note. Such rights and remedies shall be cumulative, and the exercise of any
right or remedy shall not preclude the exercise of any other right or remedy.
SECTION 5
OTHER AGREEMENTS
5.1 Escrow Agreement. Lender shall fund the Loan into an escrow
account (the "Escrow Account"), established by Lender pursuant to an Escrow
Agreement (the "Escrow Agreement") in the form attached hereto as Exhibit 5.1.
SECTION 6
DELIVERIES AT CLOSING
The following deliveries shall be made, for or on behalf of the
Company, contemporaneously with the execution of this Agreement:
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(a) all other documents required to be executed and delivered in
connection herewith, including without limitation the Promissory Note to be
delivered by the Company in favor of the Lender;
(b) any consents or approvals required pursuant to this
Agreement;
(c) payment of expenses set forth in Section 11.4 hereof to be
paid simultaneously herewith;
(d) the legal opinions of the Company's general counsel and
Sidley & Austin, outside counsel for the Company, dated as of the date hereof,
and in form and substance reasonably satisfactory to the Lender's counsel;
(e) agreements from Xxxxx X. Xxxxxxxx, Xxxxxxx Xxxx and
Commonwealth Associates to vote their shares of stock in the Company in favor
of the Charter Amendment; and
(f) such other documents as the Lender may reasonably request, in
form and substance reasonably satisfactory to the Lender's counsel.
SECTION 7
REGISTRATION RIGHTS
7.1 Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(b) "Conversion Stock" shall mean any Common Stock of
the Company issued or issuable upon the conversion of the Note into equity of
the Company.
(c) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
(d) "Holder" shall mean the Lender which holds
Registrable Securities and any other person holding Registrable Securities to
whom the rights under this Section 7 have been transferred in accordance with
Section 7.12 hereof.
(e) "Initiating Holders" shall mean Holders owning a
majority of the Conversion Stock.
(f) "Registrable Securities" means (i) Conversion Stock,
and (ii) any other securities issued or issuable with respect to the Conversion
Stock upon any stock split, stock dividend, recapitalization or similar event,
or any Common Stock otherwise issued or issuable with respect to the Conversion
Stock held by the Lender or any other Holder.
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(g) "Register", "registered" and "registration" refer to
a registration effected by preparing and filing with the Commission a
registration statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration statement.
(h) "Registration Expenses" shall mean all expenses,
except Selling Expenses as defined below, incurred by the Company in complying
with Sections 7.3 and 7.4 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company) and the reasonable
fees and disbursements of one counsel for all Holders.
(i) "Securities Act" shall mean the Securities Act of
1933, as amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
(j) "Selling Expenses" shall mean all underwriting
discounts, selling commissions and stock transfer taxes applicable to the
securities registered by the Holders and, except as set forth in the definition
of Registration Expenses, all reasonable fees and disbursements of counsel for
any Holder.
7.2 Limitations on Registration. Registration rights referred to
in this Section 7 apply only to shares of Common Stock, and shall not apply to
the Note prior to its conversion into Common Stock of the Company.
Notwithstanding the foregoing, in the event of a notice of proposed
registration pursuant to Section 7.4(a)(i) hereof, the Holder of the Note may
exercise its rights to convert the Note into Common Stock and elect to register
the Common Stock received pursuant to such conversion and the Company shall
take all steps reasonably appropriate herewith in order to insure that the
Holder's rights to exercise and register are protected.
7.3 Registration on Request.
(a) At any time after the Note shall have been converted
into Conversion Stock (such date being referred to as the "Conversion Date"),
upon the written request of Initiating Holders requesting that the Company
effect the registration under the Securities Act of all or any part of such
Initiating Holders' Registrable Securities, and specifying the intended method
or methods of disposition thereof, the Company will promptly, but in any event
within 10 days, give written notice of such requested registration to all
holders of Registrable Securities, and thereupon will use commercially
reasonable efforts to effect, as expeditiously as practicable, the registration
under the Securities Act, on an appropriate form of the Commission selected by
the Company including by means of a shelf registration pursuant to Rule 415
under the Securities Act if so requested in such request (but in the case of a
shelf registration only if the Company is then eligible to use Form S-2 or S-3
(or any successor forms)), of:
(i) the Registrable Securities which the Company
has been so requested to register by such Initiating Holder or
Holders, for disposition in accordance with the intended method or
methods of disposition stated in such request, and
(ii) all other Registrable Securities which the
Company has been requested to register by the Holders thereof by
written request delivered to the Company within 30 days after
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the giving of such written notice by the Company (which request shall
specify the intended method or methods of disposition thereof), all
to the extent necessary to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered. Subject to Section 7.3(e), the
Company may include in such registration other securities for the
account of any other person, including for the Company's account.
(b) Number of Registrations; Timing. The Company shall
not be required to effect more than one registration pursuant to this Section
7.3; provided that such registration shall permit the disposition of at least
80% of the Registrable Securities which the Company has been so requested to
register and if such registration shall not permit the disposition of at least
80% of such Registrable Securities, the Company shall be required to effect one
additional registration (for a total of two) pursuant to this Section 7.3. The
Company shall not be required to effect a registration pursuant to this Section
7.3 within the 12-month period occurring immediately subsequent to the
effectiveness (within the meaning of Section 7.3(d)) of a registration
statement filed pursuant to this Section 7.3.
(c) Registration Statement Form. Registrations under
this Section 7.3 shall be on such appropriate registration form of the
Commission (i) as shall be selected by the Company and as shall be acceptable
to the Initiating Holders and (ii) as shall permit the disposition of such
Registrable Securities in accordance with the intended method or methods of
disposition specified in the request for their registration. The Company
agrees to include in any such registration statement all information which any
holder of Registrable Securities being registered, upon advice of counsel,
shall reasonably request. The Company may, if permitted by law, effect any
registration requested under this Section 7.3 by the filing of a registration
statement on Form S-3 (or any successor or similar short form registration
statement).
(d) Effective Registration Statement. A registration
requested pursuant to this Section 7.3 shall not be deemed to have been
effected (i) unless a registration statement with respect thereto has become
effective, (ii) if the registration does not remain effective for a period of
at least 270 days (or, with respect to any registration statement filed
pursuant to Rule 415 under the Securities Act, for a period of at least three
years) or, in either case if earlier, until all the Registrable Securities
requested to be registered in connection therewith were sold, (iii) if, after
it has become effective, such registration is interfered with for a period of
more than fifteen (15) days by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason, or (iv) if the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied and no such registration occurs, other than by
reason of some act or omission by the Holders of the Registrable Securities
that were to have been registered.
(e) Priority in Requested Registrations. If a
requested registration pursuant to this Section 7.3 involves an underwritten
offering, and the managing underwriter shall advise the Company in writing
(with a copy to each Holder of Registrable Securities requesting registration)
that, in its opinion, the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering within a
price range acceptable to the Initiating Holders (such writing to state the
basis of such opinion and the approximate number of shares of securities which
may be included in such offering without such effect), the Company will include
in such registration, to the extent of the number of securities which the
Company is so advised can be sold in such offering, (i) first, Registrable
Securities requested to be registered by the Holders thereof pursuant to
Section 7.3(a), and (ii) second, all other securities of the Company proposed
to be included in such registration in accordance with the priorities, if any,
then existing among the Company and the holders of such securities.
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7.4 Incidental Registration.
(a) If the Company at any time proposes to register on
any form which may be used for the registration of Registrable Securities other
than Form S-4 or S-8 (or any successor or similar forms then in effect) any of
its securities under the Securities Act (other than pursuant to Section 7.3),
whether or not pursuant to registration rights granted to other holders of its
securities and whether or not for sale for its own account in a manner which
would permit registration of Registrable Securities for sale to the public
under the Securities Act, it will each such time give prompt written notice to
all Holders of Registrable Securities of its intention to do so and of such
Holders' rights under this Section 7.4; provided that in any event, such notice
shall be given to all such Holders at least 20 days prior to such proposed
registration. Upon the written request of any such Holder made within 15 days
after notice is deemed given of any such notice (which request shall specify
the Registrable Securities intended to be disposed of by such Holder and the
intended method or methods of disposition thereof), the Company will use
commercially reasonable efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the Holders thereof, to the extent necessary to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered. Prior to the effective date of
any registration statement filed in connection with a registration described in
this Section 7.4, immediately upon notification to the Company from the
managing underwriter, in the case of an underwritten offering, of the price at
which the Registrable Securities requested to be registered pursuant to this
Section 7.4 are to be sold, the Company shall advise each requesting Holder of
such price, and if such price is below the price which any requesting Holder
shall have indicated to be acceptable to such requesting Holder, such
requesting Holder shall then have the right to withdraw its request to have its
Registrable Securities included in such registration statement.
(b) No registration effected pursuant to this Section
7.4 shall be deemed to have been effected pursuant to Section 7.3.
(c) If the Company shall previously have received a
request for registration pursuant to Section 7.3 or pursuant to this Section
7.4, and if such previous registration shall not have been withdrawn or
abandoned, the Company will not effect any registration of any of its
securities under the Securities Act, whether or not for sale for its own
account, until a period of 120 days shall have elapsed from the effective date
of such previous registration.
(d) Notwithstanding anything to the contrary in this
Section 7.4, the Company shall have the right to discontinue any registration
under this Section 7.4 at any time prior to the effective date of such
registration, if the registration of other securities giving rise to such
registration under this Section 7.4 is discontinued; but no such
discontinuation shall preclude an immediate or subsequent request for
registration pursuant to Section 7.3 or 7.4.
(e) If a registration contemplated by this Section 7.4
involves an underwritten offering and the managing underwriter of such
underwritten offering shall advise the Company in writing (with a copy to the
Holders of Registrable Securities requesting such registration) stating that,
in its opinion the number of shares proposed to be included in such
registration of some or all of the Registrable Securities requested exceeds the
number which can be sold in such offering within a price range acceptable to
the Company and the requesting Holders (such writing to state the basis of such
opinion and the approximate number of such securities which may be included in
such offering without such effect), then the Company
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will include in such registration, to the extent of the number of securities
which the Company is so advised can be sold in such offering, (i) first,
securities that the Company proposes to issue and sell for its own account
(unless the registration giving rise to the incidental registration rights of
the Holders of Registrable Securities hereunder is as a result of the exercise
of demand registration rights by Holders of the Company's securities pursuant
to a registration rights agreement with the Company, in which case this clause
(i) shall not have effect), (ii) second, securities proposed to be offered as a
result of the exercise by Holders of demand registration rights pursuant to a
registration rights agreement, (iii) third, Registrable Securities requested to
be registered by the Holders thereof pursuant to Section 7.4, and (iv) fourth,
all other securities of the Company proposed to be included in such
registration in accordance with the priorities, if any, then existing among the
Company and the Holders of such securities.
7.5 Obligations of the Company. Whenever required tinder this
Section 7 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use commercially
reasonable efforts to cause such registration statement to become effective,
and keep such registration statement effective for not less than three years,
or until at least 80% of the Registrable Securities have been issued or sold
pursuant to such registration statement or otherwise.
(b) Prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
state securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering. Each
Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
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(g) Use commercially reasonable efforts to furnish, at
the request of any Holder, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a registration
pursuant to this Section 7, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters,
on the date that the registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders and (ii) a letter dated such
date, from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to
the underwriters, if any, and to the Holders.
7.6 Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 7
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
7.7 Expense of Registration. The Company shall bear and pay all
Registration Expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 7.3 or 7.4 for each Holder but excluding Selling Expenses
relating to Registrable Securities.
7.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 7.4 to include any of the requesting
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it (or by other persons entitled to select the underwriters).
7.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 7:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or Exchange Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act or the Exchange Act or under
any state securities or "blue sky" laws, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act or any state securities or "blue
sky" law; and the Company will pay to each such Holder, underwriter or
controlling person any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subSection 7.9(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the
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consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Requesting Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of
its officers who has signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter, any other holder selling securities in such registration statement
and any controlling person of any such underwriter or other holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, or the Exchange
Act or any state securities or "blue sky" laws, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such holder expressly for use in connection with such
registration; and each such holder will pay any legal or other expenses
reasonably incurred by any person intended to bp indemnified pursuant to this
Section 7.9(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 7.9(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the holder, which consent shall
not be unreasonably withheld; provided that in no event shall any indemnity
under this subsection 7.9(b) exceed the gross proceeds from the offering
received by such holder.
(c) Promptly after receipt by an indemnified party under
this Section 7.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 7.9,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party or parties by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party or
parties represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7.9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
7.9.
(d) If the indemnification provided for in this Section
7.9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then to the extent permitted by law, the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified
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party on the other in connection with the statements or omissions that result
in such loss, liability, claim, damage or expenses as well as any other
relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
(e) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and Holders under
this Section 7.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 7 and otherwise.
7.10 Reports under the Exchange Act. With a view to making
available to the Holders of Registrable Securities the benefits of Rule 144
promulgated under the Securities Act and any other rule of regulation of the
Commission that may at any time permit such a Holder to sell securities of the
Company to the public without registration, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Commission Rule 144, at all times;
(b) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act; and
(c) furnish to any Holder of Registrable Securities, so
long as such Holder owns any Registrable Securities, forthwith upon request (i)
a written statement by the Company that it has complied with the reporting
requirements of Commission Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any such Holder of any
rule or regulation of the Commission which permits the selling of any such
securities without registration or pursuant to such form.
7.11 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Initiating Holders, enter into any agreement with any
holder or prospective holder of any securities of the Company which would take
effect prior to the repayment of the Note and would allow such holder or
prospective holder (a) to include such securities in any registration filed
under Section 7.3 hereof, unless under the terms of such agreement, such holder
or prospective holder may include such securities in any such registration only
to the extent that the inclusion of its securities will not reduce the amount
of the Registrable Securities of the olders thereof which is included or (b) to
make a demand registration which could result in such registration statement
being declared effective prior to or within ninety (90) days of the effective
date of any registration effected pursuant to Section 7.3.
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7.12 Transfer of Registration Rights. The rights to cause the
Company to register securities granted to the Lender under Sections 7.3 and 7.4
may be assigned to a transferee or assignee of the Lender.
SECTION 8
WAIVER OF BREACH
No delay or failure on the part of Lender to exercise any right or
remedy accruing to Lender hereunder or under the Note upon any default or
breach by Company of any covenant, condition or provision hereof shall be held
to be an abandonment thereof, and no delay on the part of Lender in exercising
any of its rights or remedies shall preclude Lender from the exercise thereof
at any time during the continuance of any default or breach, nor shall any
waiver of a single default or breach be deemed a waiver of any subsequent
default or breach. All waivers under this Agreement must be in writing.
Lender may enforce any one or more remedies hereunder successively or
concurrently, at its option.
SECTION 9
APPLICABLE LAW
All acts, agreements, certificates, assignments, transfers and
transactions hereunder, and all rights of the parties hereto, shall be governed
as to validity, enforcement, interpretation, construction, effect and in all
other respects by the laws and decisions of the State of Illinois.
SECTION 10
NOTICES
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given: (i) upon
delivery if delivered by hand or by telecopy (receipt confirmed), or (ii) if
mailed, by United States certified or registered mail, prepaid, and three
business days shall have elapsed after the same shall have been mailed to the
parties, or (iii) on the date following the day sent by a reputable express air
courier service guaranteeing next day delivery, when addressed as follows:
As to Lender:
Xxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
Xxxxxx X. Xxxx, Xx.
X. X. Xxxx & Co.
000 Xxxx Xxxxxx Xxxx
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00
Xxxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Ellis, Funk, Xxxxxxxx, Xxxxxxxx & Dokson, P.C.
One Securities Centre
Suite 400
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
As to Debtor:
AccuMed International, Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Chief Executive Officer
Telecopy No.: (000) 000-0000
Confirmation No.: (000) 000-0000
With a copy to:
AccuMed International, Inc.
0000 0xx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, General Counsel
Telecopy No.: (000) 000-0000
Confirmation No.: (000) 000-0000
Any party may change its address for notices by giving the other a
notice of address change no later than ten (10) days in advance of the
effective date of the change of address.
SECTION 11
GENERAL
11.1 This Agreement together with the Note supersedes all prior
agreements and negotiations between Lender and Company relating hereto.
11.2 No amendment hereto shall be valid unless in a writing duly
executed by Lender and Debtor.
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11.3 This Agreement shall benefit and bind the successors and
assigns of the parties, but Debtor may not assign this Agreement. Lender may
freely assign the obligations of Lender hereunder and its security interest in
the Note, in whole or in part, at any time. The section titles herein are for
convenience only and do not define, limit or construe the contents of such
sections.
11.4 Simultaneously herewith, the Company will pay all reasonable
documented costs and expenses actually incurred by the Lender in connection
with the preparation and execution of the Loan Documents. In addition, the
Company will pay all taxes and recording expenses, including all intangible and
stamp taxes, if any, all fees and commissions due to brokers in connection with
this transaction at closing, and all reasonable legal fees of outside counsel
for Lender. All amounts hereunder shall be due upon demand, and shall be an
Event of Default if not paid within thirty (30) days following the date on
which notice is deemed given by Lender.
11.5 In the event that Lender employs legal counsel after default
with respect to any action or proceeding relating to the maintenance,
enforcement or defense of this Agreement, or in the relationship created hereby
or any and all rights of Lender hereunder, all reasonable, documented
attorneys' fees actually incurred by Lender arising from such services and any
reasonable expenses, costs and charges relating thereto shall constitute
additional obligations of Company secured hereby, payable on demand.
11.6 The parties shall consult and agree upon the form and
substance of any press release or other form of public disclosure regarding the
transaction described herein.
11.7 If Company fails to perform any obligation under this
Agreement, Lender may, at its option, perform such obligation or cause it to be
performed by others, and any reasonable cost or expense incurred or funds
advanced by Lender for such purposes shall be immediately paid by Company to
Lender on demand. Any such sum shall, at Lender's option, bear simple interest
after demand at the rate set forth in the Note, or such lesser rate as Lender
shall designate. All amounts hereunder shall be due upon demand, and shall be
an Event of Default if not paid within thirty (30) days following the date on
which notice is deemed given by Lender.
11.8 All rights of Lender hereunder and under the Note and Escrow
Agreement may be exercised by Xxxxxx X. Xxxxxx on behalf of both parties
comprising the Lender hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
ACCUMED INTERNATIONAL, INC.,
Debtor
By:/s/ Xxxxx X. Xxxxxxxx
------------------------------------
Title:Chief Executive Officer
---------------------------------
Attest:Xxxxxxx X. Xxxxxx
--------------------------------
Title:Corporate Vice President
and Chief Financial Officer
---------------------------------
(CORPORATE SEAL)
/s/ Xxxxxx X. Xxxxxx
---------------------------- (SEAL)
Xxxxxx X. Xxxxxx, Lender
/s/ Xxxxxx X. Xxxx, Xx.
---------------------------- (SEAL)
Xxxxxx X. Xxxx, Xx., Lender
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