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EXHIBIT 10.14
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NOTE AND SERIES A- WARRANT
PURCHASE AGREEMENT
between
INTRACEL CORPORATION
and
NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND
Dated as of June 21, 1996
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TABLE OF CONTENTS
Section Page
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ARTICLE I
THE SECURITIES
1.1. Issuance, Sale and Delivery of the Securities.......................................1
1.2. Closing; Purchase Price; Purchase Price Allocation..................................1
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Organization, Qualifications and Corporate Power....................................2
2.2. Authorization of Agreements, etc....................................................2
2.3. Validity............................................................................3
2.4. Authorized Capital Stock............................................................3
2.5. Financial Statements................................................................4
2.5A. Absence of Undisclosed Liabilities and Changes......................................5
2.6. Events Subsequent to the Date of the Balance Sheet..................................5
2.7. Litigation; Compliance with Law.....................................................6
2.8. Title to Properties.................................................................6
2.9. Leasehold Interests.................................................................6
2.10. Taxes...............................................................................7
2.11. Other Agreements....................................................................7
2.12. Patents, Trademarks, etc............................................................8
2.13. Loans and Advances..................................................................9
2.14. Assumptions, Guaranties, etc. of Indebtedness of Other Persons......................9
2.15. Significant Customers and Suppliers.................................................9
2.16. Governmental Approvals..............................................................9
2.17. Accuracy of Statements.............................................................10
2.18. Insurance..........................................................................10
2.19. Employment Relations...............................................................10
2.20. Compensation of Key Employees......................................................10
2.21. Environmental Compliance...........................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
3.1. Purchase of Securities.............................................................11
3.2. Authority..........................................................................11
3.3. Projections........................................................................12
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Section Page
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ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
4.1. Opinion of Company's Counsel.......................................................12
4.2. Representations and Warranties to be True and Correct..............................12
4.3. Performance........................................................................12
4.4. All Proceedings to be Satisfactory.................................................12
4.5. Supporting Documents...............................................................12
4.6. Fees of Purchaser..................................................................13
4.7. Warrant............................................................................14
4.8. Note and Other Loan Documents......................................................14
ARTICLE V
COVENANTS OF THE COMPANY
5.1. Reserve for Warrant Shares.........................................................14
5.2. Corporate Existence................................................................14
5.3. Restrictive Agreements Prohibited..................................................14
5.4. Compliance with Laws...............................................................15
5.5 Senior Indebtedness................................................................15
ARTICLE VI
REGISTRATION RIGHTS
6.1. Piggyback Registration.............................................................15
6.2. Registration Procedures............................................................17
6.3. Expenses...........................................................................19
6.4. Indemnification and Contribution...................................................19
6.5. Rule 144 Reporting.................................................................22
6.6. Termination of Piggyback Registration Rights.......................................22
6.7. Material Non-Public Information....................................................22
ARTICLE VII
MISCELLANEOUS
7.1. Expenses...........................................................................23
7.2. Survival of Agreements.............................................................23
7.3. Brokerage..........................................................................23
7.4. Parties in Interest................................................................23
7.5. Notices............................................................................23
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Section Page
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7.6. Governing Law......................................................................24
7.7. Entire Agreement...................................................................24
7.8. Counterparts.......................................................................24
7.9. Amendments.........................................................................24
7.10. Severability.......................................................................24
7.11. Titles and Subtitles...............................................................24
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SCHEDULES
EXHIBITS
Exhibit A - Note
Exhibit B - Warrant
Exhibit C - Opinion of Counsel for the Company
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NOTE AND SERIES A- WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of
June 21, 1996, between Intracel Corporation, a Massachusetts corporation (the
"Company") and Northstar Advantage High Total Return Fund, a Massachusetts
business trust (the "Purchaser").
PREAMBLE:
WHEREAS, the Company wishes to issue and sell to the Purchaser (i) the Company's
secured promissory note, in the principal amount of $2,000,000, substantially in
the form attached hereto as Exhibit A (the "Note"), and (ii) the Series A-
Common Stock Warrant, substantially in the form attached hereto as Exhibit B
(the "Warrant") to purchase up to 79,537 shares of common stock, no par value
per share (the "Warrant Shares"), of the Company (the Note and the Warrant shall
collectively be referred to as the "Securities"); and
WHEREAS, the Purchaser wishes to purchase the Securities on the terms
and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties hereto agree as follows:
ARTICLE I
THE SECURITIES
SECTION 1.1. Issuance, Sale and Delivery of the Securities. The Company
agrees to issue, sell and deliver to the Purchaser, and the Purchaser hereby
agrees to purchase from the Company, at the closing (the "Closing"), the (i)
Note and (ii) the Warrant.
SECTION 1.2. Closing; Purchase Price; Purchase Price Allocation. The
Closing shall take place at the offices of Xxxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, at 10:00 a.m., New York time on June 21,
1996, or at such other place, date and time as may be otherwise mutually agreed
in writing by the parties hereto. The date on which the Closing actually occurs
is referred to herein as the "Closing Date." At the Closing, the Company shall
issue and deliver to the Purchaser the Note, in substantially the form attached
hereto as Exhibit A, and the Warrant, in substantially the form attached hereto
as Exhibit B. As payment in full for the Securities, and against delivery of the
Securities on the Closing Date, the Purchaser shall transfer the sum of
$1,960,000 by wire transfer of immediately available funds to such account or
accounts as the Company may direct. The Company and the Purchaser agree that
$100,000 of the aggregate consideration for the Securities shall be allocated to
the Warrants, and that the balance of such aggregate consideration shall be
allocated to the Note.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as of the Closing
Date that:
SECTION 2.1. Organization, Qualifications and Corporate Power. The
Company is a corporation duly organized (originally under the name of Boston
Biological Technologies, Inc.), validly existing and in good standing under the
laws of the Commonwealth of Massachusetts, Xxxxxxx, Inc. (the Company's
wholly-owned subsidiary) ("Xxxxxxx") is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and each
of the Company and Xxxxxxx is duly licensed or qualified to transact business as
a foreign corporation and is in good standing in each jurisdiction in which the
nature of the business transacted by it or the character of the properties owned
or leased by it requires such licensing or qualification, except where the
failure so to qualify will not have a material adverse effect on the business,
operations, property or financial condition of the Company or Xxxxxxx,
respectively. Each of the Company and Xxxxxxx has the power and authority to own
and hold its properties and to carry on its business as now conducted and as
proposed to be conducted, and the Company has the power and authority to
execute, deliver and perform this Agreement and the "Other Loan Documents" (as
defined in Section 4.8) (and, with respect to Xxxxxxx, the Security Agreement
and the Xxxxxxx Guaranty), to issue, sell and deliver the Note and the Warrant,
and to issue and deliver the Warrant Shares upon the exercise of the Warrant.
The Company has no subsidiaries, other than Xxxxxxx and the Company's ownership
of forty-five percent of the membership interests of German-American Institute
for AIDS Research GmbH, a limited liability company formed under the laws of
Germany.
SECTION 2.2. Authorization of Agreements, etc. (a) The execution and
delivery by the Company of this Agreement and the Other Loan Documents (and,
with respect to Xxxxxxx, the Security Agreement and the Xxxxxxx Guaranty), the
performance by the Company of its obligations hereunder and thereunder (and,
with respect to Xxxxxxx, the Security Agreement and the Xxxxxxx Guaranty), the
issuance, sale and delivery of the Note and the Warrant, and the issuance, sale
and delivery of the Warrant Shares upon the exercise of the Warrant, have been
duly authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government (except
that the issuance of the Warrant Shares may require filings under one or more
state securities laws, all of which filings will be made by the Company within
the requisite time period), the Articles of Organization of the Company, as
amended (the "Charter") or the By-laws of the Company, as amended (the
"By-laws") (or, with respect to Xxxxxxx, its Certificate of Incorporation or
By-laws), or any provision of any indenture, agreement or other instrument to
which either the Company or Xxxxxxx is a party or by which either the Company or
Xxxxxxx or any of its properties or assets is bound, or conflict with, result in
a breach of or constitute (whether with or without notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever upon any of the properties or assets of the
Company or Xxxxxxx.
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(b) The Warrant has been authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership
thereof and will be free and clear of all liens, charges, restrictions,
claims and encumbrances imposed by or through the Company except as set
forth in this Agreement. The Warrant Shares have been duly authorized
and reserved for issuance upon exercise of the Warrant, and, when so
issued, will be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership
thereof and will be free and clear of all liens, charges, restrictions,
claims and encumbrances imposed by or through the Company except as set
forth in this Agreement. Neither the issuance, sale or delivery of the
Warrant, nor the issuance or delivery of the Warrant Shares is subject
to any preemptive right of stockholders of the Company or to any right
of first refusal or other right in favor of any person, except as set
forth in Article VI of this Agreement.
SECTION 2.3. Validity. Each of this Agreement, the Note, the Other Loan
Documents, and the Warrant has been (or at the Closing, shall be) duly executed
and delivered by the Company and, where applicable, Xxxxxxx, and constitute the
legal, valid and binding obligation of the Company, and, where applicable,
Xxxxxxx, enforceable in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance and moratorium
laws and other similar laws of general application affecting enforcement of
creditors' rights generally and (ii) the availability of equitable remedies
including specific performance may be limited by equitable principles of general
applicability (regardless of whether enforcement is sought in a proceeding in
equity or at law).
SECTION 2.4. Authorized Capital Stock. The authorized capital stock of
(a) the Company consists of (i) 3,000,000 shares of preferred stock, no par
value per share (the "Preferred Stock"), of which 730,000 shares have been
designated "Series A Preferred" and 850,000 shares designated "Series A-I
Preferred" and (ii) 5,000,000 shares of common stock (the "Common Stock") and
(b) Xxxxxxx consists of 1,000 shares of common stock, par value $.01 per share.
Immediately prior to the Closing, all of the capital stock of Xxxxxxx which is
issued and outstanding will be owned by the Company, 1,983,450 shares of Common
Stock will be issued and outstanding all of which will be validly issued and
outstanding, fully paid and nonassessable with no personal liability attaching
to the ownership thereof, 525,492 shares of Series A Preferred Stock will be
issued and outstanding pursuant to the Convertible Stock Purchase Agreement,
dated July 22, 1994, by and among the Company and the Purchasers set forth on
"Schedule I" thereto (the "1994 Stock Purchase Agreement"), 566,874 shares of
Series A-I Preferred will be issued and outstanding pursuant to the Convertible
Stock Purchase Agreement, dated September 22, 1995, by and among the Company and
the purchasers set forth on "Schedule I" thereto (the "1995 Stock Purchase
Agreement") and 128,775 shares of Series A-I Preferred will be issued and
outstanding pursuant to a Convertible Preferred Stock Purchase Agreement, dated
November 16, 1995, between the Company and Northstar American Corporation. No
other shares of capital stock of the Company or Xxxxxxx have been issued or
reserved for issuance, except 385,000 shares of Common Stock reserved for
issuance in the event options granted pursuant to the 1989 and 1990-1991 Stock
Option Plans of the Company are exercised, 730,000 shares of Common Stock
reserved for issuance in the event of the conversion
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of the shares of Series A Preferred Stock and 52,000 shares of Common Stock
reserved for issuance in the event of the exercise of the Series A Warrant, both
having been granted pursuant to the 1994 Stock Purchase Agreement, 850,000
shares of Common Stock reserved for issuance in the event of the conversion of
the shares of Series A-I Preferred Stock granted pursuant to the 1995 Stock
Purchase Agreement, 86,462 shares of Common Stock reserved for issuance in the
event of the exercise of warrants granted pursuant to the Warrant Agreement,
dated September 22, 1995, between the Company and Dublind Investments, L.L.C.,
91,177 shares of Common Stock reserved for issuance in the event of the exercise
of the warrants granted pursuant to the Warrant Agreement, dated November 16,
1995, between the Company and Creditanstalt Bankverein ("Creditanstalt"), 94,010
shares of Common Stock reserved for issuance in the event of exercise of the
warrants granted pursuant to the Series A-II Warrant and Note Purchase
Agreement, dated December 27, 1995, between the Company and Purchaser, 159,073
shares of Common Stock reserved for issuance in the event of exercise of the
warrants granted pursuant to the Note and Series A-III Warrant Purchase
Agreement, dated June 11, 1996 between the Company and CoreStates Enterprise
Fund, a division of CoreStates Bank, N.A. ("CoreStates") and 79,537 shares of
Common Stock reserved for issuance in the event of the exercise of the Warrant
granted pursuant to this Agreement. The designations, powers, preferences,
rights, qualifications, limitations and restrictions in respect of the Series A
Preferred Stock and the Series A-I Preferred Stock are as set forth in both of
the Certificates of Vote of Directors Establishing a Series of a Class of Stock,
and all such designations, powers, preferences, rights, qualifications,
limitations and restrictions are valid, binding and enforceable and in
accordance with all applicable laws. Except as provided for in the Charter, the
Company has no obligation (contingent or other) to purchase, redeem or otherwise
acquire any of its equity securities or any interest therein or to pay any
dividend or make any other distribution in respect thereof. This Section 2.4
sets forth the aggregate number of outstanding warrants, options, agreements,
convertible securities or other commitments pursuant to which the Company is or
may become obligated to issue any shares of its capital stock or other
securities of the Company. Except as set forth above in this Section 2.4, there
are no preemptive or similar rights to purchase or otherwise acquire shares of
capital stock of the Company pursuant to any provisions of law, the Charter or
By-laws of the Company, in each case as amended to the date hereof, or any
agreement to which the Company is a party or otherwise. Except as set forth
above in this Section 2.4, or as contemplated herein, immediately upon
consummation at the Closing of the transactions contemplated hereby there will
be no agreement, restriction or encumbrance (such as a right of first refusal,
right of first offer, proxy, voting agreement, voting trust, bring-along or
come-along rights) with respect to the sale or voting of any shares of capital
stock of the Company (whether outstanding or issuable upon conversion or
exercise of outstanding securities) of which the Company has knowledge.
SECTION 2.5. Financial Statements . The Company has furnished to the
Purchaser the audited balance sheet of the Company for the year ended June 30,
1995 (the "Balance Sheet") and the related audited statements of income,
stockholders' equity and cash flows of the Company for the year ended June 30,
1995 and the balance sheet of the Company as of March 31, 1996 and the related
statements of income, stockholders' equity and cash flows of the Company as of
March 31, 1996. All such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present
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the financial position of the Company as of June 30, 1995 and March 31, 1996
respectively, and the results of its operations and cash flows as of June 30,
1995 and March 31, 1996 respectively. Since the date of the Balance Sheet, (i)
there has been no change in the assets, liabilities or financial condition of
the Company from that reflected in the Balance Sheet except for changes in the
ordinary course of business which in the aggregate have not been materially
adverse and (ii) none of the business, financial condition, operations or
property of the Company have been materially adversely affected by any
occurrence or development, individually or in the aggregate, whether or not
insured against.
SECTION 2.5A. Absence of Undisclosed Liabilities and Changes. Except as
set forth on Schedule 2.5A attached hereto, as of the date hereof, (a) the
Company had no liabilities of any nature (matured or unmatured, fixed or
contingent) which were not provided for on the balance sheet of the Company as
of such date, except for (i) liabilities which, individually and in the
aggregate, were not material to the financial condition of the Company or (ii)
liabilities incurred in the ordinary course of the Company's business and not
required to be so provided for under generally accepted accounting principles ,
and (b) all reserves established by the Company and set forth on such balance
sheet were adequate in all material respects. There are no loss contingencies
(as such term is used in Statement of Financial Accounting Standards No. 5
("Statement No. 5") issued by the Financial Accounting Standards Board in March
1975) which are not adequately provided for in such balance sheet as required by
Statement No. 5.
SECTION 2.6. Events Subsequent to the Date of the Balance Sheet. Except
as set forth in the attached Schedule 2.6 or as contemplated by this Agreement,
since the date of the Balance Sheet neither the Company nor Xxxxxxx has (i)
issued any stock, bond or other corporate security, (ii) borrowed any amount or
incurred or become subject to any liability (absolute, accrued or contingent),
except current liabilities incurred and liabilities under contracts entered into
in the ordinary course of business, (iii) discharged or satisfied any lien or
encumbrance or incurred or paid any obligation or liability (absolute, accrued
or contingent) other than current liabilities shown on the Balance Sheet and
current liabilities incurred since the date of the Balance Sheet in the ordinary
course of business, (iv) declared or made any payment or distribution to
stockholders or purchased or redeemed any share of its capital stock or other
security, (v) mortgaged, pledged or subjected to lien any of its assets,
tangible or intangible, other than liens of current real property taxes not yet
due and payable, (vi) sold, assigned or transferred any of its tangible assets
except in the ordinary course of business, or canceled any debt or claim, (vii)
sold, assigned, transferred or granted any exclusive license with respect to any
material patent, trademark, trade name, service xxxx, copyright, trade secret or
other intangible asset other than in the ordinary course of business, (viii)
suffered any material loss of property or waived any right of substantial value,
(ix) made any change in officer compensation except in the ordinary course of
business and consistent with past practice, (x) made any material change in the
manner of business or operations of the Company or Xxxxxxx, respectively, (xi)
entered into any transaction except in the ordinary course of business or as
otherwise contemplated hereby or (xii) entered into any commitment (contingent
or otherwise) to do any of the foregoing.
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SECTION 2.7. Litigation; Compliance with Law. There is no material (i)
action, suit, claim, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or Xxxxxxx,
respectively, at law or in equity, or before or by any Federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding relating to
the Company or Xxxxxxx, respectively, pending under a collective bargaining
agreement or otherwise or (iii) governmental inquiry pending or to the knowledge
of the Company, threatened against or affecting the Company or Xxxxxxx,
respectively, (including, without limitation, any inquiry as to the
qualification of the Company or Xxxxxxx, respectively, to hold or receive any
license or permit). The Company has not received any opinion or memorandum or
legal advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which may be material to its
business, financial condition, operations or property. The Company is not in
default with respect to any order, writ, injunction or decree known to or served
upon the Company of any court or of any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign. There is no material action or suit by the Company pending
or threatened against others. Each of the Company and Xxxxxxx has complied in
all material respects with all laws, rules, regulations and orders applicable to
its business, operations, properties, assets, products and services, and each of
the Company and Xxxxxxx has all necessary permits, licenses and other
authorizations required to conduct its business as conducted and as proposed to
be conducted, except where the failure to own or possess such permits, licenses
or authorizations could not, either singly or in the aggregate, have a material
adverse effect on the business, operations, properties or financial condition of
the Company.
SECTION 2.8. Title to Properties. Except in instances that, either
singly or in the aggregate, could not have a material adverse effect on the
business, operations, properties or financial condition of the Company, and
except as disclosed in Schedule 2.8 hereof, each of the Company and Xxxxxxx has
good and marketable title to its properties and assets reflected on the Balance
Sheet (other than properties and assets disposed of in the ordinary course of
business since the date of the Balance Sheet), and all such properties and
assets are free and clear of mortgages, pledges, security interests, liens,
charges, claims, restrictions and other encumbrances, except for liens for
current taxes not yet due and payable and minor imperfections of title, if any,
not material in nature or amount and not materially detracting from the value or
materially impairing the use of the property subject thereto or impairing the
operations or proposed operations of the Company or Xxxxxxx, respectively.
SECTION 2.9. Leasehold Interests. Each lease or agreement to which the
Company or Xxxxxxx, respectively, is a party under which it is a lessee of any
property, real or personal (a list of all such leases being attached hereto as
Schedule 2.9), is a valid and subsisting agreement without any material default
of the Company or Xxxxxxx, respectively, thereunder and, to the knowledge of the
Company, without any material default thereunder of any other party thereto. No
event has occurred and is continuing which, with due notice or lapse of time or
both, would constitute a default or event of default by the Company or Xxxxxxx,
respectively, under any such lease or agreement or, to the knowledge of the
Company, by any other party thereto.
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SECTION 2.10. Taxes. The Company has filed or will file within the time
prescribed by law (including extensions of time approved by the appropriate
taxing authority) all tax returns, Federal, state, county and local, required to
be filed by it, and the Company has paid all taxes shown to be due by such
returns and extensions as well as all other taxes, assessments and governmental
charges which have become due or payable, including, without limitation, all
taxes which the Company is obligated to withhold from amounts owing to
employees, creditors and third parties. All such taxes with respect to which the
Company has become obligated have been paid and adequate reserves have been
established for all taxes accrued but not yet payable. No deficiency assessment
with respect to or proposed adjustment of the Company's Federal, state, county
or local taxes is pending or, to the knowledge of the Company, threatened. There
is no tax lien in favor of any Federal, state, county or local taxing authority,
outstanding against the assets, properties or business of the Company. Neither
the Company nor any of its stockholders has ever filed a consent pursuant to
Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
relating to collapsible corporations.
SECTION 2.11. Other Agreements. Except as set forth in the attached
Schedule 2.11, neither the Company nor Xxxxxxx is a party to or otherwise bound
by any written or oral contract or instrument or other restriction which
individually or in the aggregate could materially adversely affect the business,
financial condition, operations or property of the Company. Except as set forth
in the attached Schedule 2.11, or as a result of the transactions contemplated
in this Agreement, the Note, the Other Loan Documents, or the Warrant, neither
the Company nor Xxxxxxx is a party to or otherwise bound by any written or oral:
(a) distributor, dealer, manufacturer's representative or sales
agency contract or agreement which is not terminable on less than ninety
(90) days' notice without cost or other liability to the Company or
Xxxxxxx;
(b) sales contract which entitles any customer to a rebate or
right of set-off, to return any product to the Company or Xxxxxxx after
acceptance thereof or to delay the acceptance thereof, or which varies
in any material respect from the Company's or Xxxxxxx' standard form
contracts;
(c) contract with any labor union (and, to the knowledge of the
Company, no organizational effort is being made with respect to any of
its or Xxxxxxx' employees);
(d) contract or other commitment with any supplier containing any
provision permitting any party other than the Company or Xxxxxxx to
renegotiate the price or other terms, or containing any pay-back or
other similar provision, upon the occurrence of a failure by the Company
or Xxxxxxx to meet its obligations under the contract when due or the
occurrence of any other event;
(e) contract for the future purchase of fixed assets or for the
future purchase of materials, supplies or equipment in excess of its
normal operating requirements;
(f) contract for the employment of any officer, employee or other
person (whether of a legally binding nature or in the nature of informal
understandings), on a full-time or
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consulting basis which is not terminable on notice without cost or other
liability to the Company or Xxxxxxx, except normal severance
arrangements and accrued vacation pay;
(g) agreement or indenture relating to the borrowing of money or
to the mortgaging or pledging of, or otherwise placing a lien or
security interest on, any asset of the Company or Xxxxxxx;
(h) guaranty of any obligation for borrowed money or otherwise;
(i) agreement, or group of related agreements with the same party
or any group of affiliated parties, under which the Company or Xxxxxxx
has advanced or agreed to advance money or has agreed to lease any
property as lessee or lessor;
(j) agreement or obligation (contingent or otherwise) to issue,
sell or otherwise distribute or to repurchase or otherwise acquire or
retire any share of its capital stock or any of its other equity
securities;
(k) assignment, license or other agreement with respect to any
form of intangible property or Intellectual Property (as defined in
Section 2.12) or the development or use thereof;
(l) agreement under which it has granted any person any
registration rights;
(m) agreement under which it has limited or restricted its right
to compete with any person in any respect; or
(n) other contract or group of related contracts with the same
party involving more than $50,000 or continuing over a period of more
than one year from the date or dates thereof (including renewals or
extensions optional with another party), which contract or group of
contracts is not terminable by the Company or Xxxxxxx without penalty
upon notice of thirty (30) days or less, but excluding any contract or
group of contracts with a customer of the Company or Xxxxxxx for the
sale, lease or rental of the Company's or Xxxxxxx' respective products
or services if such contract or group of contracts was entered into by
the Company or Xxxxxxx, respectively, in the ordinary course of
business.
SECTION 2.12. Patents, Trademarks, etc. Set forth in Schedule 2.12 is a
list and brief description of all patents, patent rights, patent applications,
trademarks, trademark applications, service marks, service xxxx applications,
trade names and copyrights, and all applications for such which are in the
process of being prepared, owned by or registered in the name of the Company or
Xxxxxxx, or of which the Company or Xxxxxxx is a licensor or licensee or in
which the Company or Xxxxxxx has any right, and in each case a brief description
of the nature of such right. Except as set forth in Schedule 2.12, each of the
Company and Xxxxxxx owns or possesses adequate licenses or other rights to use
all patents, patent applications, trademarks, trademark applications, service
marks, service xxxx applications, trade names, copyrights, manufacturing
processes, formulae, trade secrets and know-how (collectively, "Intellectual
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Property") necessary to the conduct of its business as conducted, and no claim
is pending or, to the knowledge of the Company, threatened to the effect that
the operations of the Company or Xxxxxxx infringe upon or conflict with the
rights of any other person under any Intellectual Property, and to the knowledge
of the Company there is no basis for any such claim. No claim is pending or, to
the knowledge of the Company, threatened to the effect that any such
Intellectual Property owned or licensed by the Company or Xxxxxxx, or which the
Company or Xxxxxxx otherwise has the right to use, is invalid or unenforceable
by the Company or Xxxxxxx, as applicable, and to the knowledge of the Company
there is no basis for any such claim. To the knowledge of the Company, all
technical information developed by and belonging to the Company or Xxxxxxx, as
applicable, which has not been patented has been kept confidential. The Company
has not granted or assigned to any other person or entity any right to
manufacture or assemble any products or proposed products of the Company, other
than to its affiliates, and to the knowledge of the Company no other person or
entity has asserted any such right.
SECTION 2.13. Loans and Advances. Except as set forth on Schedule 2.13,
neither the Company nor Xxxxxxx has any outstanding loans or advances to any
person and is not obligated to make any such loans or advances, except, in each
case, for advances to employees of the Company or Xxxxxxx in respect of
reimbursable business expenses anticipated to be incurred by them in connection
with their performance of services for the Company or Xxxxxxx.
SECTION 2.14. Assumptions, Guaranties, etc. of Indebtedness of Other
Persons. Neither the Company nor Xxxxxxx has assumed, guaranteed, endorsed or
otherwise become directly or contingently liable on any indebtedness of any
other person (including, without limitation, liability by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in a debtor, or otherwise to assure a creditor
against loss), except for guaranties by endorsement of negotiable instruments
for deposit or collection in the ordinary course of business.
SECTION 2.15. Significant Customers and Suppliers. No customer which
accounted for 10% or more of the Company's sales or revenues during the periods
covered by the financial statements referred to in Section 2.5 or which has been
significant to the Company thereafter has terminated, materially reduced or
threatened to terminate or materially reduce its purchases from the Company. As
of the date of this Agreement, there is no supplier to the Company which is a
sole-source supplier.
SECTION 2.16. Governmental Approvals. Subject to the accuracy of the
representations and warranties of the Purchaser set forth in Article III hereof,
no registration or filing with, or consent or approval of or other action by,
any Federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and performance by the Company of
this Agreement, the Note, the Other Loan Documents or the Warrant (and, with
respect to Xxxxxxx, the Security Agreement or Xxxxxxx Guaranty), or the
issuance, sale and delivery of the Warrant Shares upon exercise of the Warrant,
other than (i) filings pursuant to state securities laws in connection with the
issuance and sale of the Warrant and (ii) with respect to the registration
rights provisions contained in Article VI of this Agreement, the registration of
the shares covered thereby with the Securities and Exchange
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Commission or any successor regulatory entity (the "Commission") and filings
pursuant to state securities laws.
SECTION 2.17. Accuracy of Statements. Neither this Agreement nor any
Schedule, Exhibit, statement, list, document, certificate or other information
furnished by or on behalf of the Company to the Purchaser in connection with
this Agreement or any of the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.
SECTION 2.18. Insurance. Schedule 2.18 lists all insurance policies
which the Company maintains with respect to its businesses, properties and
employees. Such policies are in full force and effect and the Company has
received no notice of termination from the insurance carriers. Such policies,
with respect to their amounts and types of coverage, are adequate in the
reasonable commercial judgment of the Company to insure against risks to which
the Company and its respective businesses. Since the date of the Balance Sheet,
there has been no material adverse change in the Company's relationship with its
insurers or in the premiums payable pursuant to such policies.
SECTION 2.19. Employment Relations. (a) The Company is in material
compliance with applicable federal, state or other applicable laws, domestic or
foreign, respecting employment and employment practices, safety, terms and
conditions of employment and wages and hours.
(b) The Company does not maintain or contribute to any employee
benefit plan ("Employee Benefit Plan") within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to ERISA but which is not in substantial
compliance with ERISA, or which has incurred any material liability to
the Pension Benefit Guaranty Company ("PBGC") in connection with any
Employee Benefit Plan covering any employees of the Company or any of
its subsidiaries or ceased operations at any facility or withdrawn from
any such Plan in a manner which could subject it to material liability
under Section 462(f), 4063 or 4064 of ERISA, and knows of no facts or
circumstances which might give rise to any material liability of the
Company to the PBGC under Title IV of ERISA.
SECTION 2.20. Compensation of Key Employees. Schedule 2.20 sets forth
the aggregate compensation (salaries, wages and bonuses) paid by the Company to
its four most highly compensated employees for the 1995 fiscal year and the
amount of such compensation scheduled to be paid to such employees for the 1996
fiscal year.
SECTION 2.21. Environmental Compliance. The Company is in compliance
with all applicable laws relating to environmental matters in each jurisdiction
where it is presently engaged in a material manufacturing business, except for
such failures to comply which, in the aggregate, could reasonably be expected
not to have a material adverse effect on the Company. The Company is not subject
to any liability under any such environmental laws, that, in the
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aggregate for all such liabilities, could be reasonably expected to have a
material adverse effect on the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company as of the Closing
Date that:
SECTION 3.1. Purchase of Securities. (a) It is an "accredited investor"
within the meaning of Rule 501 under the Securities Act of 1933, as amended (the
"Securities Act") and was not organized for the specific purpose of acquiring
the Note or the Warrant.
(b) It has sufficient knowledge and experience in investing in
companies in a similar stage of development to the Company so as to be
able to evaluate the risks and merits of its investment in the Company
and it is able financially to bear the risks thereof.
(c) It has had an opportunity to discuss the Company's business,
management and financial condition with the Company's management.
(d) It is acquiring the Note and the Warrant for its own account
for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof.
(e) It understands that (i) the Note, the Warrant and, upon
exercise thereof, the Warrant Shares have not been registered under the
Securities Act by reason of their issuance in a transaction exempt from
the registration requirements of the Securities Act pursuant to Section
4(2) thereof or Rule 505 or 506 promulgated under the Securities Act,
(ii) the Note, the Warrant and, upon exercise thereof, the Warrant
Shares must be held indefinitely unless a subsequent disposition thereof
is registered under the Securities Act or is exempt from such
registration, (iii) the Note, the Warrant and, upon exercise thereof,
the Warrant Shares will bear a legend to such effect and (iv) the
Company will make a notation on its transfer books to such effect.
SECTION 3.2. Authority. It has all requisite power and authority to
execute, deliver and perform this Agreement, the Note, the Other Loan Documents,
and the Warrant and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement, the Note, the Other Loan Documents,
and the Warrant and the consummation of the transactions contemplated hereby and
thereby. This Agreement, the Note, the Other Loan Documents, and the Warrant on
the Closing Date will constitute the legal, valid and binding obligations of the
Purchaser, enforceable in accordance with their terms, except (i) to the extent
that enforceability may be limited by bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (ii) that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceedings therefor may be brought.
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SECTION 3.3. Projections. It understands that any and all financial
projections and other estimates delivered to it were based on the Company's
experience in the industry and on assumptions of fact and opinion which the
Company believes to have been, and to be, reasonable. It understands that the
Company cannot and does not assure or guarantee the attainment of such
projections or other estimates.
ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser to purchase and pay for the Note and
the Warrant, both being purchased by it on the Closing Date, are, at its option,
subject to the satisfaction of the following conditions on or before such
Closing Date:
SECTION 4.1. Opinion of Company's Counsel. The Purchaser shall have
received from Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company, an opinion dated
the Closing Date, in the form attached hereto as Exhibit C.
SECTION 4.2. Representations and Warranties to be True and Correct. The
representations and warranties contained in Article II hereof shall be true,
complete and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date,
and the President of the Company shall have certified to such effect to the
Purchaser in writing.
SECTION 4.3. Performance. The Company shall have performed and complied
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the President of the Company shall
have certified to the Purchaser in writing to such effect and to the further
effect that all of the conditions set forth in this Article IV have been
satisfied.
SECTION 4.4. All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by the Company in connection with the transaction
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Purchaser and its counsel, and the Purchaser and its
counsel shall have received all such counterpart originals or certified or other
copies of such documents as they may reasonably request.
SECTION 4.5. Supporting Documents. At the Closing, the Purchaser shall
have received copies of the following documents:
(a) (i) the Charter, certified as of a recent date by the
Secretary of State of the Commonwealth of Massachusetts and (ii)
a certificate (A) of said Secretary dated as of a recent date as
to the due incorporation and subsistence of the Company, and
listing all documents of the Company on file with said Secretary
and (B) from the Secretary of State of the State of Delaware
dated as of a recent
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date as to the due incorporation and subsistence of Xxxxxxx, and
listing all documents of Xxxxxxx on file with said Secretary;
(b) a certificate of the Clerk or an Assistant Clerk of
the Company dated the Closing Date and certifying: (i) that
attached thereto is a true and complete copy of all resolutions
adopted by the Board of Directors (the "Company Board") or the
stockholders of the Company authorizing the execution, delivery
and performance of this Agreement and the Other Loan Documents,
the issuance, sale, delivery, and performance of the Note and the
Warrant, and the reservation, issuance and delivery of the
Warrant Shares upon the exercise of the Warrant, and that all
such resolutions are in full force and effect and are all the
resolutions adopted in connection with the transactions
contemplated by this Agreement; (ii) that the Charter has not
been amended since the date of the last amendment referred to in
the certificate delivered pursuant to clause (a)(ii) above; and
(iii) to the incumbency and specimen signature of each officer of
the Company executing this Agreement, the Note, the Other Loan
Documents, and the Warrant and any certificate or instrument
furnished pursuant hereto, and a certification by another officer
of the Company as to the incumbency and signature of the officer
signing the certificate referred to in this clause (b);
(c) the Purchaser shall have received an undated stock
power for each certificate representing shares of stock pledged
pursuant to the Junior Subordinated Pledge Agreement, dated as of
the Closing Date, between the Company and the Purchaser (the
"Subordinated Pledge Agreement"),executed in blank by a duly
authorized officer of the pledge thereof;
(d) the Purchaser shall have received evidence in form and
substance satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation,
the filing of duly executed financing statements on Form UCC-1,
necessary or, in the opinion of the Purchaser, desirable to
perfect the security interests created by the Other Loan
Documents and required by the Other Loan Documents have been
completed;
(e) a certificate from the Secretary or Assistant
Secretary of Xxxxxxx to the effect of the certificate deliverable
by the Company pursuant to clause (b) above; and
(f) such additional supporting documents and other
information with respect to the operations of the Company as the
Purchaser or its counsel may reasonably request.
SECTION 4.6. Fees of Purchaser. The Company shall have paid, in
accordance with Section 8.1, the reasonable legal and other fees and
disbursements of the Purchaser, as invoiced.
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SECTION 4.7. Warrant. The Company shall have issued the Warrant to the
Purchaser.
SECTION 4.8. Note and Other Loan Documents. The Purchaser shall have
received (i) the Note executed and delivered by a duly authorized officer of the
Company, and (ii) each of the following documents, each executed and delivered
by a duly authorized officer or representative of each of the parties thereof
and each dated as of the Closing Date: (A) the Junior Subordinated Security
Agreement between the Company, Xxxxxxx and the Purchaser (the "Security
Agreement"); (B) the Intercreditor and Subordination Agreement between the
Company, the Purchaser, CoreStates and Creditanstalt; (C) the Subordinated
Pledge Agreement; (D) the Junior Subordinated Subsidiary Guaranty (the "Xxxxxxx
Guaranty"); (E) the Agreement (Intracel Trademark) between the Company and the
Purchaser; (F) the Agreement (Intracel Patent) between the Company and the
Purchaser; (G) the Agreement (Xxxxxxx Patent) between Xxxxxxx and the Purchaser;
and (H) the Agreement (Xxxxxxx Trademark) between Xxxxxxx and the Purchaser
(collectively, the "Other Loan Documents").
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees with the Purchaser that until the
Warrant is exercised in full or until the Warrant expires, whichever event
occurs first (other than the covenant in Section 5.5, which shall only survive
until the Note is repaid in full):
SECTION 5.1. Reserve for Warrant Shares. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the exercise of the Warrant for Warrant
Shares, such number of its duly authorized shares of Common Stock as shall be
sufficient to effect the exercise of the Warrant. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the exercise of the Warrant, or otherwise to comply with the terms of this
Agreement, the Company will forthwith take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes. The Company will
obtain any authorization, consent, approval or other action by or make any
filing with any court or administrative body that may be required under
applicable state securities laws in connection with the issuance of shares of
Common Stock upon the exercise of the Warrant.
SECTION 5.2. Corporate Existence. The Company shall maintain its
corporate existence, rights and franchises in full force and effect.
SECTION 5.3. Restrictive Agreements Prohibited. The Company shall not
become a party to any agreement which by the terms thereof or as a result of the
performance thereof restricts the Company's performance of this Agreement, the
Note, the Other Loan Documents or the Warrant.
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SECTION 5.4. Compliance with Laws. The Company shall comply with all
applicable laws, rules, regulations and orders, noncompliance with which could
materially adversely affect its business or condition, financial or otherwise.
SECTION 5.5. Senior Indebtedness. The Company shall not incur any
indebtedness which is senior or pari passu in right of payment to the Note,
without first obtaining the consent of the Purchaser (which shall not be
unreasonably withheld) except for: (a) indebtedness existing on the Closing
Date; (b) any debt acquired or assumed in connection with an acquisition,
provided that such indebtedness is secured only by the assets so acquired; and
(c) any refinancings of indebtedness of the type described in (a) and (b) above,
provided that such refinancings do not result in an increase in the principal
amount of such loan, with respect to Creditanstalt, in excess of the original
principal amount of such indebtedness (and such amount in excess of the then
outstanding principal amount thereunder shall be amortized from and after July
1, 2001) and, with respect to CoreStates, in excess of the then outstanding
principal amount thereunder.
ARTICLE VI
REGISTRATION RIGHTS
SECTION 6.1. Piggyback Registration.
(a) If at any time or from time to time, the Company shall
determine to register any of its securities, for its own account or the
account of any of its shareholders, other than a registration relating
solely to employee benefit plans, or a registration relating solely to a
transaction of the type described in Rule 145(a) as promulgated under
the Exchange Act, a transaction relating solely to the sale of debt or
convertible debt instruments or a registration on any form (other than
Form X-0, X-0 or S-3, or their successor forms) which does not include
substantially the same information as would be required to be included
in a registration statement covering the sale of Registrable Stock, the
Company will:
(i) give to the holder of Registrable Stock written notice
thereof as soon as practicable prior to filing the registration
statement; and
(ii) include in such registration and in any underwriting
involved therein, all the Registrable Stock specified in a
written request or requests, made within fifteen (15) days after
receipt of such written notice from the Company, by the holder of
Registrable Stock, except as set forth in subsection (b) below.
(b) If the registration is for a registered public offering
involving an underwriting, the Company shall so advise the holder of
Registrable Stock as a part of the written notice given pursuant to
subsection (a)(i). In such event, the right of the holder of Registrable
Stock to registration pursuant to this Article VI shall be conditioned
upon the holder's participation in such underwriting to the extent
provided herein. If the holder of
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Registrable Stock proposes to distribute its securities through such
underwriting, it shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Article VI, if the managing
underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may
limit the number of Shares of Registrable Stock to be included in the
registration and underwriting, or may exclude Registrable Stock entirely
from such registration if the registration is the first registered
offering for the sale of the Company's securities to the general public,
or a registered offering pursuant to Section 3 of the Registration
Rights Agreement dated July 22, 1994 between the Company and each of the
purchasers of shares of the Series A Convertible Preferred Stock of the
Company named therein, Section 3 of the Registration Rights Agreement
dated September 22, 1994 between the Company and each of the purchasers
of shares of the Series A-I Convertible Preferred Stock of the Company
named therein, Section 9 of the Series A-I Warrant issued by the Company
to Dublind Investments, L.L.C. on September 22, 1995, Section 9 of the
Series A-I Warrant granted by the Company to Creditanstalt on November
21, 1995, Section 9 of the Series A-II Warrant granted by the Company to
the Purchaser or Article VI of the Note and Series A-III Warrant
Purchase Agreement between the Company and CoreStates dated as of June
11, 1996 (provided that no shares held by officers of the Company, other
than shares subject to other registration rights granted by the Company
that may be owned by officers, are included in the registration and
underwriting). The Company shall so advise the holder of Registrable
Stock and the other holders distributing their securities through such
underwriting, and the number of shares of securities that may be
included in the registration and underwriting shall be allocated among
the holder of Registrable Stock and other holders in proportion, as
nearly as practicable, to the respective amounts of Registrable Stock
held by the Holder and other securities held by other holders at the
time of filing the registration statement. If the Holder disapproves of
the terms of any such underwriting, if may elect to withdraw therefrom
by written notice to the Company and the managing underwriter. Any
Registrable Stock excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
(c) As used in this Article VI the following terms, unless the
context otherwise requires, have the following respective meanings:
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar Federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Registrable Stock" shall mean the Warrant Shares, but
only so long as such shares continue to be Restricted Stock. Any such
shares shall continue to be Restricted Stock until such time as such
shares (i) have been disposed of in accordance with a registration
statement which has become effective under the Securities Act or
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(ii) have been publicly sold in compliance with Rule 144 (or any similar
provision then in force) under the Securities Act.
(d) If requested in writing by the underwriter or underwriters
for the initial underwritten public offering of securities of the
Company, the holder of Registrable Stock shall agree not to sell
publicly any shares of Registrable Stock or any other shares of Common
Stock (other than Registrable Stock or other shares of Common Stock
being registered in such offering), without the consent of such
underwriter or underwriters, for a period of not more than 120 days
following the effective date of the registration statement relating to
such initial public offering.
SECTION 6.2. Registration Procedures. If and whenever the Company is
required by the provisions of Section 6.1 to effect the registration of any
shares of Registrable Stock under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Stock and use its best efforts to cause
such registration statement to become and remain effective for the
period of the distribution contemplated thereby (determined as
hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period specified in paragraph (a) above and
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Stock covered by such registration
statement in accordance with the holder's intended method of disposition
as set forth in such registration statement for such period;
(c) furnish to the holder of Registrable Stock and to each
underwriter such number of copies of the registration statement and
prospectus included therein (including each preliminary prospectus) as
such persons reasonably may request in order to facilitate the public
sale or other disposition of the Registrable Stock covered by such
registration statement;
(d) use its best efforts to register or qualify the Registrable
Stock covered by such registration statement under the securities or
"blue sky" laws of such jurisdiction as the holder of Registrable Stock
or, in the case of an underwritten public offering, the managing
underwriter reasonably shall request; provided, however, that the
Company shall not for any such purpose be required to qualify generally
to transact business as a foreign corporation in any jurisdiction where
it is not so qualified or to consent to general service of process in
any such jurisdiction;
(e) use its best efforts to list the Registrable Stock covered by
such registration statement with any securities exchange on which the
Common Stock of the Company is then listed;
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(f) in addition to its obligations under Section 6.2 hereof,
immediately notify the holder of Registrable Stock and each underwriter
under 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 of which the Company has knowledge as a
result of which the prospectus contained 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 not misleading in light of the
circumstances then existing;
(g) if the offering is underwritten, at the request of the holder
of Registrable Stock, furnish on the date that Registrable Stock is
delivered to the underwriters for sale pursuant to such registration:
(i) an opinion dated such date of counsel representing the Company for
the purposes of such registration, addressed to the underwriters and to
the holder of Registrable Stock, stating that such registration
statement has become effective under the Securities Act and that (A) to
the best knowledge of such counsel, no stop order suspending the
effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the
Securities Act, (B) the registration statement, the related prospectus
and each amendment or supplement thereof comply as to form in all
material respects with the requirements of the Securities Act (except
that such counsel need not express any opinion as to financial
statements or other financial data contained therein) and (C) to such
other effects as reasonably may be requested by counsel for the
underwriters or by the Holder or its counsel and (ii) a letter dated
such date from the independent public accountants retained by the
Company, addressed to the underwriters and to the holder of Registrable
Stock, stating that they are independent public accountants within the
meaning of the Securities Act and that, in the opinion of such
accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information
as to the period ending no more than five business days prior to the
date of such letter) with respect to such registration as such
underwriters reasonably may request; and
(h) make available for inspection by the holder of Registrable
Stock, by any underwriter participating in any distribution pursuant to
such registration statement, and by any attorney, accountant or other
agent retained by the holder of Registrable Stock or underwriter, all
financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by the
holder of Registrable Stock and any underwriter, attorney, accountant or
agent in connection with such registration statement.
For purposes of this Agreement, the period of distribution, if not
otherwise described in the Registration Statement of Registrable Stock in a firm
commitment underwritten public offering, shall be deemed to extend until each
underwriter has completed the distribution of all securities purchased by it,
and the period of distribution of Registrable Stock in any other
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registration shall be deemed to extend until the earlier of the sale of all
Registrable Stock covered thereby or 120 days after the effective date thereof.
In connection with each registration hereunder, the holder of
Registrable Stock will furnish to the Company in writing such information with
respect to itself and the proposed distribution by it as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.
In connection with each registration pursuant to Section 6.1 covering an
underwritten public offering, the Company and the holder of Registrable Stock
agree to enter into a written agreement with the managing underwriter selected
in the manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
SECTION 6.3. Expenses. All expenses incurred by the Company in complying
with Section 6.1, including all registration and filing fees, printing expenses,
fees and disbursements of counsel and independent public accountants for the
Company, reasonable fees and expenses (including counsel fees) incurred in
connection with complying with state securities or "blue sky" laws, fees of the
National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars, costs of insurance and reasonable fees and
disbursements of one counsel for the sellers of Registrable Stock, but excluding
any Selling Expenses, are called "Registration Expenses". "Selling Expenses"
shall include only such underwriting discounts and selling commissions
applicable to the sale of any Registrable Stock which would not have been
incurred in the absence of the registration and sale of the Registrable Stock.
The Company will pay all Registration Expenses in connection with each
registration statement filed pursuant to Section 6.1; provided, however, that in
connection with a registration statement filed under Section 6.1, the Company
shall not be obligated to pay fees and expenses (including counsel fees)
incurred in connection with complying with state securities laws in any state in
which the Company is not otherwise registering for sale any of the shares the
Company proposes to sell in the offering. All Selling Expenses in connection
with each registration statement filed pursuant to Section 6.1 shall be borne by
the participating sellers in proportion to the number of shares sold by each, or
by such participating sellers as they may agree.
SECTION 6.4. Indemnification and Contribution
(a) In the event of a registration of any of the Registrable
Stock under the Securities Act pursuant to Section 6.1, the Company will
indemnify and hold harmless the holder of Registrable Stock, each
underwriter of Registrable Stock and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or
several, to which the holder of Registrable Stock, underwriter or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
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statement or alleged untrue statement of any material fact contained in
any registration statement under which such Registrable Stock was
registered under the Securities Act pursuant to Section 6.1, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the holder of Registrable Stock, each
such underwriter and each such controlling person for 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 Company will not be liable in any such case if and to
the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information
furnished by the holder of Registrable Stock, underwriter or controlling
person in writing specifically for use in such registration statement or
prospectus.
(b) In the event of a registration of any Registrable Stock under
the Securities Act pursuant to Section 6.1, the holder of Registrable
Stock will indemnify and hold harmless the Company, each person, if any,
who controls the Company within the meaning of the Securities Act, each
officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls
any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the
Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
under which such Registrable Stock was registered under the Securities
Act pursuant to Section 6.1, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon 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, and will reimburse the
Company and each such officer, director, underwriter and controlling
person for 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 Holder will be liable
hereunder in any such case only if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with information pertaining to
the holder of Registrable Stock, as such, furnished in writing to the
Company by the holder of Registrable Stock specifically for the use in
such registration statement or prospectus; provided, further, that the
liability of the holder of Registrable Stock shall be limited to the
proportion of any such loss, claim, damage, liability or expense which
is equal to the proportion that the public offering price of the
Registrable Stock sold by the holder of Registrable Stock under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the proceeds
received by the holder of
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Registrable Stock from the sale of Registrable Stock covered by such
registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing thereof, but
the omission so to notify the indemnifying party shall not relieve it
from any liability which it may have to such indemnified party other
then under this Section 6.4 and shall only relieve it from any liability
which it may have to such indemnified party under this Section 6.4 if
and to the extent the indemnifying party is prejudiced by such omission.
In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with
counsel reasonably satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under
this Section 6.4 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so
selected; provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the
indemnified party reasonably may be considered by the indemnified party
to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and
to assume such legal defenses and otherwise to participate in the
defense of such action, with reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred. No indemnifying party,
in defense of any such action, shall, except with the consent of each
indemnified party, consent to the entry of any judgment or enter into
any settlement (i) which does not include as an unconditional term
thereof the giving, by the claimant or plaintiff, to such indemnified
party of a release from all liability in respect to such action or (ii)
which involves any relief against the indemnified party other than the
payment of money which is to be paid in full by the indemnifying party.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i)
the holder of Registrable Stock exercising rights under this Agreement,
or any controlling person of the holder of Registrable Stock, makes a
claim for indemnification pursuant to this Section 6.4 but it is
judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section
6.4 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of the holder of
Registrable Stock or any such controlling person in circumstances for
which indemnification is provided under this
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Section 6.4; then, and in each such case, the Company and such holder
will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in such
proportion so that the holder of Registrable Stock is responsible for
the portion represented by the percentage that the public offering price
of its Registrable Stock offered by the registration statement bears to
the public offering price of all securities offered by such registration
statement, and the Company is responsible for the remaining portion;
provided, however, that, in any such case, (A) the holder of Registrable
Stock will not be required to contribute any amount in excess of the
public offering price of all such Registrable Stock sold by the holder
of Registrable Stock pursuant to such registration statement; and (B) no
person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
SECTION 6.5. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of Registrable Stock to the public without registration, at
all times after 90 days after any registration statement covering a public
offering of securities of the Company under the Securities Act shall have become
effective (or the Company shall otherwise have become subject to the periodic
reporting requirements of the Exchange Act), the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to 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 each holder of Registrable Stock forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents so filed by the
Company as such holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing such holder to sell any
Registrable Stock without registration.
SECTION 6.6. Termination of Piggyback Registration Rights. The
obligations of the Company to register shares of Registrable Stock under Section
6.1 shall terminate on April 1, 2005, unless such obligations terminate earlier
in accordance with the terms of the Warrant.
SECTION 6.7. Material Non-Public Information. Notwithstanding any
provision of this Agreement to the contrary, the Company's obligation to file a
registration statement, or cause such registration statement to become and
remain effective, shall be suspended for a period not to exceed 30 days (and for
periods not exceeding, in the aggregate, 60 days in any 24-month period) if
there exists at the time material non-public information relating to the Company
which, in the reasonable opinion of the Company, should not be disclosed.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby whether or not such
transactions shall be consummated; provided, however, that the Company shall pay
the reasonable legal and other fees and disbursements of the Purchaser, as
invoiced.
SECTION 7.2. Survival of Agreements. Unless otherwise expressly stated
herein, in the Warrant or in any certificate or instrument delivered pursuant to
or in connection therewith, all covenants and agreements made herein, in the
Warrant, or any certificate or instrument delivered to the Purchaser pursuant to
or in connection with this Agreement or the Warrant shall survive the execution
and delivery of this Agreement, the Warrant and the issuance and delivery of the
Warrant Shares from the date of this Agreement until the Warrant is exercised in
full or until the Warrant expires, whichever event occurs first; provided,
however, that the representations and warranties contained in the Note or the
Other Loan Documents shall survive until all amounts due under the Note shall be
paid in full. All statements contained in any certificate or other instrument
delivered by the Company hereunder or thereunder or in connection herewith or
therewith shall be deemed to constitute representations and warranties made by
the Company.
SECTION 7.3. Brokerage. Each party hereto will indemnify and hold
harmless the other against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.
SECTION 7.4. Parties in Interest. All representations, covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. Without limiting the
generality of the foregoing, all representations, covenants and agreements
benefiting the Purchaser shall inure to the benefit of any and all subsequent
holders from time to time of the Note, the Warrant or the Warrant Shares.
SECTION 7.5. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person or
mailed by certified or registered mail, return receipt requested, as follows:
(a) if to the Company, at Intracel Corporation, 000
Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, Attention: President, with a
copy to Xxxxxx X. Xxxxxxxx, Esq., Xxxxxxxx & Xxxxxxxx LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000; and
(b) if to the Purchaser, at the address set forth beneath
the Purchaser's name on the signature page to this Agreement,
with a copy to
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Xxxxx X. Xxxxxxxxx, Esq., Reboul, MacMurray, Xxxxxx, Xxxxxxx &
Kristol, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000.
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the other.
SECTION 7.6. Governing Law. This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the State of New York,
regardless of the jurisdiction of creation or domicile of the Company or its
successors or of the Purchaser (without giving effect to its choice of law
principles).
SECTION 7.7. Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto, constitutes the sole and entire agreement of the parties
with respect to the subject matter hereof. All Schedules and Exhibits hereto are
hereby incorporated herein by reference.
SECTION 7.8. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 7.9. Amendments. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of the
Company and the Purchaser.
SECTION 7.10. Severability. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
SECTION 7.11. Titles and Subtitles. The titles and subtitles used in
this Agreement are for convenience only and are not to be considered in
construing or interpreting any term or provision of this Agreement.
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IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the day and year first above written.
INTRACEL CORPORATION
[Corporate Seal] By:_______________________
Name:
Title:
Attest:
__________________________
Name:
Title:
NORTHSTAR ADVANTAGE
HIGH TOTAL RETURN FUND
By:______________________________
Name:
Title:
Address: x/x Xxxxxx Xxx Xxxx
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
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EXHIBIT A
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY
NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED
UNDER SUCH ACT OR IN COMPLIANCE WITH ANY EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL
INCOME TAX PURPOSES. FOR FURTHER INFORMATION CONTACT:
XXXXXXXX & XXXXXXXX LLP
0000 XXXXXX XX XXX XXXXXXXX
XXX XXXX, XXX XXXX 00000
ATTN: XXXXXX X. XXXXXXXX
THIS PROMISSORY NOTE IS SUBJECT TO THE TERMS OF AN INTERCREDITOR AND
SUBORDINATION AGREEMENT DATED AS OF JUNE 21, 1996 IN FAVOR OF
CREDITANSTALT BANKVEREIN, CORESTATES ENTERPRISE FUND, A DIVISION OF
CORESTATES BANK, N.A. AND NORTHSTAR ADVANTAGE HIGH TOTAL RETURN FUND,
WHICH AGREEMENT IS INCORPORATED HEREIN BY REFERENCE.
INTRACEL CORPORATION
SECURED PROMISSORY NOTE
June 21, 1996
FOR VALUE RECEIVED, INTRACEL CORPORATION, a Massachusetts corporation
(the "Company"), hereby promises to pay to the order of Northstar Advantage High
Total Return Fund, a Massachusetts business trust ("Northstar"), the Principal
Amount (as defined below) in eight equal quarterly installments payable pursuant
to Section 1 with interest payable pursuant to Section 2. Capitalized terms used
in this Note have the meanings provided in Section 11.
SECTION 1. Purchase of Note; Payments of Principal and Interest. (a)
Purchase of Note. On June 21, 1996 (the "Closing Date"), Northstar agrees to
purchase this Note for $1,860,000 and the principal amount of this Note shall be
deemed to be $2,000,000 (the "Principal Amount").
(b) Principal Payment Date. The Principal Amount of this Note
shall be due and payable in full on June 30, 2001 (the "Principal Payment
Date").
(c) Optional Prepayment; Prepayment Premium. The Company shall
have the right at any time upon 90 days' written notice to the Noteholder, to
prepay voluntarily the entire
32
Unpaid Principal Amount without premium or penalty, except that any such
prepayment shall be accompanied by the payment of the difference between the
amount of interest actually paid by the Company under the terms hereof
(including through the issuance of PIK Notes and additional Notes under Section
15(b) hereof) and the amount of interest which would have been due hereunder if
such interest were calculated at a compounded rate of interest equal to 17.6%
per annum (a "Prepayment Fee") through the date of such prepayment. In the event
the Company elects to prepay this Note pursuant to this clause (c), it shall
also simultaneously prepay all PIK Notes which are then outstanding.
(d) Mandatory Prepayments. (i) In the event of a Change in
Control or redemption by the Company of shares of Preferred Stock in an amount
in excess of five percent (5%) of the number of shares of Preferred Stock
outstanding on the date hereof, the Unpaid Principal Amount and all accrued
interest thereon shall be prepaid in full.
(ii) Upon repayment in full of all obligations due under the
Credit Agreement and fulfillment by the Company of all its obligations
under Section 1(d)(ii) of the Secured Promissory Note (which shall be
deemed to include the repayment in full of all obligations due under the
Secured Promissory Note) (the "Senior Payoff Date"), the parties hereto
agree as follows. The holder of the Original Northstar Note, if such at
such time has not been repaid in full, shall be given the right to
receive payments with respect to all amounts due thereunder on the terms
set forth in Section 2.8 of the Credit Agreement (the "Sweep Payments"),
which payments shall permit the reduction of the set aside established
under Section 1(d) of the Secured Promissory Note on a dollar for dollar
basis. Such holder shall have the right to decline to receive the Sweep
Payments, in which case Northstar shall receive the Sweep Payments,
which shall first be applied against any unpaid interest which is due
and payable hereunder and thereafter to the Unpaid Principal Amounts. In
the event that, on the Senior Payoff Date, all obligations due under the
Original Northstar Note have been repaid in full, Northstar shall be
entitled to receive the Sweep Payments hereunder, which shall be applied
as set forth in the immediately preceding sentence.
(iii) No prepayment fee or penalty shall be payable in respect
of any mandatory prepayment pursuant to this subsection (d), other than
those events listed in clauses (i) through (v) of the definition of
"Change in Control", for which a prepayment fee shall be payable and
shall be calculated as if such prepayment were optional and shall be
equal to the Prepayment Fee that would be payable in connection with
such a prepayment under clause (c).
SECTION 2. Interest. (a) Interest Rate. Except as otherwise expressly
provided in Sections 1(c) and 6(b), interest shall accrue from the Closing Date
at the Applicable Interest Rate on the Unpaid Principal Amount, or (if less) at
the highest rate then permitted under applicable law. All computations of
interest shall be made on the basis of a year of three hundred and sixty (360)
days for the actual number of days.
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(b) Interest Payment Dates. Interest shall be payable
quarterly in arrears on each Interest Payment Date, beginning with the Interest
Payment Date occurring on December 31, 1996.
(c) Payments In Cash or in Kind. Interest payments may be made by
the Company in cash; provided, however, that notwithstanding the foregoing, if
either (i) the ratio of Consolidated EBITDA to Consolidated Interest Expense is
less than or equal to 2.0 to 1.0 or (ii) the sum of the Company's cash and cash
equivalent investments and amounts available under any revolving credit facility
of the Company's is less than or equal to $3,500,000 (for each of (i) and (ii),
as reported in the then most recent annual financial statements delivered
pursuant to Section 4(a)(i)), such payment may be made by the Company in kind.
Payments in kind may be made through the issuance of one or more additional
Notes in the form of this Note (each, a "PIK Note"), on the relevant Interest
Payment Date and dated as of such date, in an aggregate principal amount equal
to the amount of interest that would be payable with respect to this Note if
such interest were paid in cash. Anything contained herein to the contrary
notwithstanding, all payments of interest that shall become due and payable on
the final Interest Payment Date shall be payable in cash in the manner set forth
herein.
(d) Application of Payments. Payments received by the Noteholder
from the Company on this Note shall be applied first to the payment of interest
which is due and payable, to the extent not paid by one or more PIK Notes, and,
thereafter, to the Unpaid Principal Amount.
(e) Applicable Interest Rate. For the period commencing on the
Closing Date until the second year anniversary of the Closing Date, the
"Applicable Interest Rate" shall be a fixed rate of interest equal to twelve
percent (12%) per annum and, thereafter, a fixed rate of interest equal to
thirteen percent (13%) per annum.
SECTION 3. Collateral Security. This Note and any PIK Note issued are
secured by and entitled to the benefits of the Security Documents on a pari
passu basis.
SECTION 4. Covenants. (a) The Company hereby agrees that, so long as any
amount is owing to the Noteholder (and, with respect to clause (i) below, until
the earlier to occur of (i) the Consummation of an IPO (as hereinafter defined),
and (ii) the date on which the Noteholder owns beneficially less than 50% of the
Common Stock of the Company, no par value per share ("Common Stock"), issuable
pursuant to that certain Series A-IV Common Stock Warrant issued by the Company
to the Noteholder in connection with the delivery of this Note), the Company
shall and (except in the case of delivery of financial information, reports and
notices) shall cause each of its Subsidiaries to:
(i) Financial Statements. Furnish to the Noteholder:
(A) as soon as available, but in any event within
90 days after the end of each fiscal year of the Company, a copy
of the consolidated balance sheet of the Company and its
consolidated Subsidiaries as at the end of such year and the
related consolidated statements of income and stockholders'
equity and of
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cash flows for such year, setting forth in each case comparisons
to the figures for the previous year, reported on without a
"going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Ernst &
Young or other independent certified public accountants of
nationally recognized standing; and
(B) as soon as available, but in any event not
later than 30 days after the end of each month of each fiscal
year of the Company, the unaudited consolidated balance sheet of
the Company and its consolidated Subsidiaries as at the end of
such month and the related unaudited consolidated statements of
income and stockholders' equity and of cash flows of the Company
and its consolidated Subsidiaries for such month and the portion
of the fiscal year through the end of such month, setting forth
in each case comparisons to the figures for the previous year
certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in all
material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such
accountants or officer, as the case may be, and disclosed therein) and
shall be accompanied by a management discussion and analysis in respect
of the fiscal periods reported on therein.
(ii) Certificates; Other Information. Furnish to the Noteholder:
(A) concurrently with the delivery of the financial
statements referred to in Section 4(a)(i)(A), a certificate of
the independent certified public accountants reporting on such
financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;
(B) concurrently with the delivery of the financial
statements referred to in Section 4(a)(i)(A) and 4(a)(i)(B), a
certificate of a Responsible Officer stating that, to the best of
such officer's knowledge, the Company during such period and as
of the date of such certificate has observed or performed all of
its covenants and other agreements, and satisfied every
condition, contained in this Note to be observed, performed or
satisfied by it, and that such officer has obtained no knowledge
of any Default or Event of Default during such period or on or
prior to the date of such certificate except as specified in such
certificate;
(C) not later than 30 days prior to the end of each
fiscal year of the Company, a copy of the projections by the
Company of the operating budget and cash flow budget of the
Company and its Subsidiaries for the succeeding fiscal year, such
projections to be accompanied by a certificate of a Responsible
Officer to the effect that such projections have been prepared on
the basis of
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35
sound financial planning practice and that such officer has no
reason to believe they are incorrect or misleading in any
material respect;
(D) within 5 days after the same are sent, copies
of all financial statements and reports which the Company sends
to its stockholders, and within 5 days after the same are filed,
copies of all financial statements and reports which the Company
may make to, or file with, the Securities and Exchange Commission
or any successor or analogous Governmental Authority;
(E) promptly upon receipt thereof, any additional
reports, management letters or other detailed information
concerning significant aspects of the Company's operations or
financial affairs given to the Company by its independent
certified public accountants (and not otherwise contained in
other materials provided hereunder);
(F) during the month of October in each calendar
year, a report of a reputable insurance broker with respect to
insurance and such supplemental reports with respect thereto as
the Noteholder may reasonably request from time to time;
(G) promptly, and in any case within five Business
Days, written notice of the commencement of all actions, suits
and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Company or any of its Subsidiaries, and of
any material adverse development in connection with any of the
foregoing, in each case described in reasonable detail (including
a description of the parties, the venue and the nature of the
claim); and
(H) promptly, such additional financial and other
information as the Noteholder may from time to time reasonably
request.
(iii) Performance of Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature,
except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with
GAAP with respect thereto have been provided on the books of the Company
or its Subsidiaries, as the case may be. Comply with all Contractual
Obligations and Requirements of Law except to the extent the failure to
comply therewith could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(iv) Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now conducted
by it and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal
conduct of its business.
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(v) Maintenance of Property; Insurance. Keep all property
useful and necessary in its business in good working order and
condition; maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the
same or a similar business; and furnish to the Noteholder, upon written
request, full information as to the insurance carried.
(vi) Inspection of Property; Books and Records;
Discussions. Keep proper books of records and accounts in which full,
true and correct entries in conformity with GAAP and all Requirements of
Law shall be made of all dealings and transactions in relation to its
business and activities; and permit representatives of the Noteholder to
visit and inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time and as often as
may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of the Company and its
Subsidiaries with officers and employees of the Company and its
Subsidiaries and with its independent certified public accountants;
provided that the Noteholder shall bear its own expenses if any such
inspection, examination or discussion occurs at a time when no Default
or Event of Default shall have occurred and be continuing.
(vii) Notices. Promptly give notice to the Noteholder of:
(A) the occurrence of any Default or Event of
Default;
(B) any (1) default or event of default under any
Contractual Obligation of the Company or any of its Subsidiaries
or (2) litigation, investigation or proceeding which may exist at
any time between the Company or any of its Subsidiaries and any
Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(C) any litigation or proceeding affecting the
Company or any of its Subsidiaries in which the amount involved
is $250,000 or more and not covered by insurance or in which
injunctive or similar relief is sought;
(D) the following events, as soon as possible and
in any event within 30 days after the Company knows or has reason
to know thereof: (1) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, a failure to make any
required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer
Plan or (2) the institution of proceedings or the taking of any
other action by the PBGC or the Company or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency
of, any Plan;
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(E) any material adverse change in the business,
operations, property, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole;
(F) any Lien (other than security interests created
by the Security Agreement or Liens permitted hereunder or
thereunder) on any of the Collateral (as defined in the Security
Agreement) which would adversely affect the ability of the
Noteholder to exercise any of its remedies under the Security
Agreement;
(G) the occurrence of any event which would
reasonably be expected to have a material adverse effect on the
aggregate value of the Collateral or on the security interests
created by the Security Agreement; and
(H) any application or registration relating to any
material patent or trademark of the Company or any of its
Subsidiaries becoming abandoned or dedicated, or of any adverse
determination or development (including, without limitation, the
institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or
any court or tribunal in any country regarding a Grantor's (as
defined in the Security Agreement) ownership of any material
patent or trademark or its right to register the same or to keep
and maintain the same.
Each notice pursuant to this Section 4(a)(vii) shall be
accompanied by a statement of a Responsible Officer setting forth
details of the occurrence referred to therein and stating what
action the Company proposes to take with respect thereto.
(viii) Environmental Matters. (A) Comply with, and ensure
compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply with and maintain, and ensure
that all tenants and subtenants obtain and comply with and maintain, any
and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws.
(B) Conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and
other actions required under Environmental Laws and promptly
comply with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws.
(ix) Additional Collateral; Subsidiaries. In each case,
subject to the terms of, and to the extent, and only to the extent,
permitted by, the Intercreditor Agreement:
(A) With respect to any assets of the type covered
by the Security Agreement acquired after the Closing Date by the
Company or any of its U.S. Subsidiaries, and, upon the occurrence
and during the continuance of an Event of Default and at the
request of the Noteholder, with respect to any other assets or
property of the Company or any of its U.S. Subsidiaries, as to
which the
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Noteholder does not have a perfected Lien, (1) execute and
deliver to the Noteholder such amendments to the Security
Agreement or such other documents as the Noteholder reasonably
requests in order to grant to the Noteholder a security interest
in such assets, (2) take all actions reasonably requested by the
Noteholder to grant to the Noteholder a perfected security
interest in such assets, including, without limitation, the
filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Security Agreement or by
law or as may be requested by the Noteholder and (3) if
requested by the Noteholder deliver to the Noteholder legal
opinions relating to the matters described in the preceding
clauses (1) and (2), which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the
Noteholder.
(B) With respect to any Subsidiary (other than a
Foreign Subsidiary) of the Company created or acquired after the
Closing Date by the Company, (1) have such Subsidiary become a
party to the Security Agreement and grant to the Noteholder a
perfected security interest in the Capital Stock and assets of
such Subsidiary, (2) deliver to the Noteholder or its agent the
certificates representing such Capital Stock, if any, together
with undated stock powers, executed in blank, in form and
substance satisfactory to the Noteholder, in respect to all
obligations of the Company hereunder, (3) execute and deliver
such amendments to this Note requested by the Noteholder to
reflect the existence of such Subsidiary, including, without
limitation, amendments to include such Subsidiary in the
covenants, representations and warranties and agreements
contained herein and (4) if requested by the Noteholder, deliver
to the Noteholder legal opinions relating to the matters
described in the preceding clauses (1), (2) and (3), which
opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Noteholder.
(C) With respect to any Foreign Subsidiary,
promptly upon the request of the Noteholder, (1) execute and
deliver to the Noteholder such amendments to this Note or the
Security Agreement or such other documents as the Noteholder
reasonably requests in order to grant to the Noteholder a
perfected security interest in the Capital Stock of such
Subsidiary which is owned by the Company or any of its
Subsidiaries (provided that in no event shall any Capital Stock
of any such Subsidiary be required to be so pledged to the extent
that such pledge would result in adverse tax consequences to the
Company or any such Subsidiary), (2) deliver to the Noteholder or
its agent the certificates representing such Capital Stock, if
any, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the Company or such
Subsidiary, as the case may be, and take all such other action
under local laws as may be necessary or desirable to perfect the
Lien on such Capital Stock, and (3) if requested by the
Noteholder, deliver to the Noteholder legal opinions relating to
the matters described in the preceding clauses (1) and (2), which
opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Noteholder.
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39
(b) Transfer of Covenants. The Company hereby agrees that,
effective as of the date (the "Termination Date") on which all amounts
outstanding under the Secured Promissory Note, dated June 11, 1996 (as amended
and otherwise modified from time to time, the "Secured Promissory Note"),
between the Company and CoreStates, shall have been paid in full and all
commitments to make financial accommodations under the Secured Promissory Note
shall have been fully terminated, each of the covenants contained in Section
4(b) of the Secured Promissory Note as in effect on the Termination Date
(without giving effect to any amendment or other modification of such covenants
made in anticipation of the Termination Date) shall be incorporated herein by
reference and shall run to the benefit of the Noteholder.
(c) Purchase Agreement Covenant Regarding Senior Indebtedness.
Reference is hereby made to the covenant of the Company regarding senior
indebtedness set forth in Section 5.5 of the Purchase Agreement.
SECTION 5. Intercreditor Agreement. The Noteholder hereby acknowledges
and agrees that the exercise of remedies pursuant to Section 6 is, and shall at
all times be, subject to the limitations on the Noteholder's remedies set forth
in the Intercreditor Agreement.
SECTION 6. Events of Default. (a) Definition. For purposes of this Note,
an Event of Default shall be deemed to have occurred if
(i) the Company shall fail to pay any principal when due
in accordance with the terms hereof; or the Company shall fail to pay
any interest when due in accordance with the terms hereof or any PIK
Note, within 5 days after any such principal, interest or other amount
payable hereunder is due and payable in accordance with the terms
hereof; or
(ii) any representation or warranty made or deemed made by
the Company in Section 13 or in any Related Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Note or any
Related Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(iii) the Company shall default in the observance or
performance of any agreement contained in Section 4(a)(ix) or any
Related Document; or
(iv) the Company shall default in the observance or
performance of any other agreement contained in this Note (other than as
provided in Section 6(a)(i) through (iii)), and such default shall
continue unremedied for a period of 30 days; or
(v) the Company or any of its Subsidiaries shall (A)
default in any payment of principal of or interest on any Indebtedness
(including, without limitation, any indebtedness under the Credit
Agreement or the Secured Promissory Note) (after giving effect to any
applicable grace period); or (B) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or any Guarantee Obligation or contained in any instrument
or agreement evidencing, securing
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or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to give the
holder thereof the right to cause such Indebtedness to become due prior
to its stated maturity or such Guarantee Obligation to become payable
(whether by the terms of any document evidencing such Indebtedness or
Guarantee Obligation, upon the election of any holder of Indebtedness or
beneficiary of any Guarantee Obligation or otherwise); or
(vi) (A) the Company or any of its Subsidiaries shall
commence any case, proceeding or other action (1) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (2)
seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its
assets, or the Company or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors; or (B) there shall be
commenced against the Company or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (A) above
which (1) results in the entry of an order for relief or any such
adjudication or appointment or (2) remains undismissed, undischarged or
unbonded for a period of 60 days; or (C) there shall be commenced
against the Company or any of its Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (D) the Company or any
of its Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (A), (B) or (C) above; or (E) the Company or
any of its Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become
due; or
(vii) (A) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
code) involving any Plan, (B) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Company or any Commonly Controlled
Entity, (C) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the
Noteholder, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (D) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (E) the Company or any
Commonly Controlled Entity shall, or in the reasonable opinion of
Noteholder is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (F) any other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (A) through (E) above,
such
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event or condition, together with all other such events or conditions,
if any, could reasonably be expected to have a Material Adverse Effect;
or
(viii) one or more final judgments or decrees shall be
entered against the Company or any of its Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance) of
$100,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days from
the entry thereof; or
(ix) (A) any of the Security Documents shall cease, for
any reason, to be in full force and effect, or the Company or any
Subsidiary shall so assert or (B) the Lien created by any of the
Security Documents shall cease to be enforceable and of the same effect
and priority purported to be created thereby;
(x) Senior Managers of the Company shall cease to own, of
record or beneficially, the issued and outstanding shares of Capital
Stock of the Company having at least 25% of the ordinary voting power
for the election of directors of the Company; or
(xi) Interest Events shall have occurred on three
consecutive Interest Payment Dates and none of such Interest Events
shall have been Cured, or Interest Events shall have occurred on a total
of five Interest Payment Dates and none of such Interest Events shall
have been Cured.
(b) Consequences of Events of Default.
(i) If any Event of Default has occurred, the interest
rate on this Note shall be the Default Interest Rate. Any increase of
the interest rate resulting from the operation of this clause shall
terminate as of the close of business on the date on which no Events of
Default exist (subject to subsequent increases pursuant to this clause).
(ii) If an Event of Default of the type described in
Section 6(a)(vi) has occurred, the aggregate principal amount of this
Note (together with all accrued interest thereon and all other amounts
due and payable with respect thereto) shall become immediately due and
payable without any action on the part of the Noteholder, and the
Company shall immediately pay to the Noteholder all amounts due and
payable with respect to this Note.
(iii) If any Event of Default has occurred (other than
under Section 6(a)(vi)), the Noteholder may declare this Note to be
immediately due and payable and may demand immediate payment of the
Unpaid Principal Amount (together with all accrued and unpaid interest
and all other amounts due and payable with respect thereto).
(iv) The Noteholder shall also have any other rights which
such holder may have been afforded under any contract or agreement
(including, without limitation,
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42
the Security Documents) at any time and any other rights which such
holder may have pursuant to applicable law.
(c) Cure of Event of Default Relating to Interest Events. An
Event of Default pursuant to Section 6(a)(xi) may be cured at any time (provided
that no other Event of Default has occurred and is continuing) by Curing any
single Interest Event which was taken into account in declaring such Event of
Default.
SECTION 7. Waiver of Certain Rights. The Company hereby waives
diligence, presentment, protest and demand and notice of protest and demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of the Company hereunder.
SECTION 8. Transfer of this Note. Upon surrender for registration of
transfer of this Note at the principal office of the Company, the Company shall,
at the Noteholder's expense, execute and deliver one or more new Notes of like
tenor and of like aggregate principal amount, registered in the name of such
transferee or transferees. At the time this Note is surrendered for registration
of transfer, it shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the Noteholder or such holder's
attorney duly authorized in writing. Any Note or Notes issued upon transfer of
this Note shall carry the rights to unpaid interest and the accrual of interest
which were carried by this Note, so that neither gain nor loss of interest shall
result from any such transfer.
SECTION 9. Assignment. The rights and obligations of the Company and the
Noteholder shall be binding upon and benefit the permitted successors, assigns
and transferee of the parties; provided that in no event shall the Company
assign its rights hereunder without the prior written consent of the Noteholder.
SECTION 10. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Note may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Noteholder. No failure or delay on the part of the Noteholder in exercising any
power or right under this Note or any other Related Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power or
right preclude any other or further exercise thereof or the exercise of any
other power or right.
SECTION 11. Definitions. For purposes of this Note, the following
capitalized terms have the following meaning:
"Applicable Interest Rate" is defined in Section 2(e).
"Business Day" means any day other than a Saturday, a Sunday, or any
other day on which banking institutions in the City of New York are authorized
or required by law, regulation or executive order to remain closed.
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43
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"Change of Control" means when:
(i) any "person," as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, becomes a
beneficial owner, as such term is used in Rule 13d-3 promulgated under
such Act, of securities of the Company representing 50% or more of the
combined voting power of the outstanding securities of the Company,
having the right to vote in the election of directors (any such owner
being herein referred to as an "Acquiring Person");
(ii) a majority of the Board of Directors of the Company
(the "Company Board") at any time consists of individuals elected to
membership at a Company Board meeting or a Company shareholders' meeting
other than individuals nominated or approved by the Company Board;
(iii) all or substantially all the business of the Company
is disposed of pursuant to a merger, consolidation or other transaction
(other than a merger, consolidation or other transaction with a company
of which 40% or more of the combined voting power of the outstanding
securities having a right to vote at the election of directors is owned,
directly or indirectly, by the Company both before and immediately after
the merger, consolidation or other transaction) in which the Company is
not the surviving corporation or the Company is materially or completely
liquidated;
(iv) the Company combines with another company and is the
surviving corporation (other than a merger, consolidation or other
transaction with a company of which 50% or more of the combined voting
power of the outstanding securities having a right to vote at the
election of directors is owned, directly or indirectly, by the Company
both before and immediately after the merger, consolidation or other
transaction) but, immediately, after the combination, the shareholders
of the Company hold, directly or indirectly, less than 50% of the total
outstanding securities of the combined company having the right to vote
in the election of directors;
(v) the Company consummates a sale of its assets which
represent in value more than 25% of the total assets of the Company at
the time of such sale; or
(vi) the Company consummates an underwriting for its
Common Stock pursuant to an offering registered under the Securities Act
of 1933, as amended, at a per share price of at least $18.00 (as
currently configured) in which the aggregate proceeds (net of offering
expenses and underwriters' discounts or commissions) received by the
Company equals or exceeds $10,000,000 (an "IPO").
"Closing Date" is defined in Section 1(a).
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44
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"Company" is defined in the preamble.
"Consolidated EBITDA" means, for any period, Consolidated Net Income of
the Company and its Subsidiaries for such period plus, without duplication and
to the extent reflected as a charge in the statement of such Consolidated Net
Income, the sum of (a) income tax expense, (b) Consolidated Interest Expense,
(c) depreciation and amortization expense and (d) any extraordinary, non
recurring or unusual losses (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income, losses on the
sales of assets outside of the ordinary course of business), minus, without
duplication and to the extent reflected as income in the statement of such
Consolidated Net Income, any extraordinary, non recurring or unusual gains
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income, gains on the sales of assets outside
of the ordinary course of business).
"Consolidated Interest Expense" means, for any period, the amount of
interest expense, both expensed and capitalized, of the Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, for
such period on the aggregate principal amount of Indebtedness of the Company and
its Subsidiaries.
"Consolidated Net Income" means, for any period, net after tax income of
the Company and its Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.
"Contractual Obligation" means as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CoreStates" means CoreStates Enterprise Fund, a Division of CoreStates
Bank, N.A.
"Credit Agreement" means the Credit Agreement, dated as of November 16,
1995, among the Company, the Lenders parties thereto, and Creditanstalt
Bankverein, as Agent for the Lenders, as amended and otherwise modified from
time to time.
"Credit Agreement Security Documents" means, collectively, the Global
Security Agreement (as defined in the Credit Agreement) and each other security
agreement relating to the Credit Agreement.
"Cured" means, with respect to any Interest Event, paid in full in cash
or in kind if in accordance with Section 2(c).
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45
"Default" means any of the events specified in Section 6, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Default Interest Rate" means a rate of interest equal to 15% per annum.
"Environmental Laws" means any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" means each of the events described in Section 6;
provided, however, that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Financing Lease" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"GAAP" means generally accepted accounting principles in the United
States of America consistent with those utilized in preparing the audited
financial statements referred to in Section 4(a).
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantee Obligation" means as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business.
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The amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (x) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee Obligation
is made and (y) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Company in good faith.
"Indebtedness" means, of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or created
for the account of such Person, (e) all obligations in respect of deferred
compensation and (f) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Insolvency" means with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Intercreditor Agreement" means the Intercreditor and Subordination
Agreement, dated as of the date hereof, among Creditanstalt Bankverein,
Northstar and CoreStates, as amended or otherwise modified from time to time.
"Interest Event" means the event of an interest payment not being made
in full in cash, or in kind if in accordance with Section 2(c), for any reason
(including, without limitation, if giving effect to the payment of interest in
cash there would be a Default under (and as defined in) the Credit Agreement or
the Secured Promissory Note).
"Interest Payment Date" means each of June 30, September 30, December 31
and March 31 of each year from the Closing Date through the Principal Payment
Date.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing).
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Company and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Note or any of the other Related Documents or the rights
or remedies of Noteholder hereunder or thereunder.
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"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Northstar" is defined in the preamble.
"Note" means this Secured Promissory Note issued by the Company to
Northstar.
"Noteholder" means Northstar and its permitted successors, transferees
and assigns.
"Original Northstar Note" means that certain Secured Promissory Note
dated December 27, 1995 (as amended and otherwise modified from time to time)
between the Company and Northstar.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"PIK Note" is defined in Section 2(c).
"Plan" means at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" means that certain Junior Subordinated Pledge
Agreement, dated the date hereof, between the Company and Northstar.
"Preferred Stock" means all series and classes of the Company's
Preferred Stock, no par value.
"Prime Rate" shall mean the rate of interest that is publicly announced
from time to time by Citibank, N.A., New York, New York as its "base" lending
rate, such rate to change automatically and without notice to the Company when
and as such prime lending rate changes.
"Principal Amount" is defined in Section 1(a).
"Principal Payment Date" is defined in Section 1(b).
"Purchase Agreement" means that certain Note and Series A-IV Common
Stock and Warrant Purchase Agreement, dated the date hereof, between the Company
and Northstar.
"Related Documents" means the Purchase Agreement, this Note, the
Security Documents and the Intercreditor Agreement.
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48
"Reorganization" means with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the 30 day notice period is waived
under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section 2615.
"Requirements of Law" means the obligations of the Company under
federal, state and local laws applicable to it in the conduct of its business.
"Responsible Officer" means the chief executive officer and the
president of the Company or, with respect to financial matters, the chief
financial officer of the Company.
"Secured Promissory Note" is defined in Section 4(b).
"Security Agreement" means that certain Junior Subordinated Security
Agreement, dated the date hereof, between the Company and Northstar.
"Security Documents" means the Other Loan Documents (as such term is
defined in the Purchase Agreement) other than the Intercreditor Agreement.
"Solvent" shall mean with respect to any Person on a particular date,
the condition that on such date, (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value, on a going concern basis, of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's property would
constitute an unreasonably small amount of capital.
"Subsidiary" means as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Note shall refer to a Subsidiary or Subsidiaries of
the Company.
"Termination Date" is defined in Section 4(b).
"Uncured" means, with respect to any Interest Event, not paid in full in
cash, or in kind if in accordance with Section 2(c).
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"Uniform Commercial Code" means the Uniform Commercial Code as is then
in effect under the laws of the respective state of reference.
"Unpaid Principal Amount" means, at any time, the portion of the
Principal Amount outstanding at such time.
"U.S. Subsidiaries" means Subsidiaries organized under laws of the U.S.
or any state thereof.
SECTION 12. Cancellation. After all principal and accrued interest at
any time owed on this Note has been paid in full, this Note shall be surrendered
to the Company for cancellation and shall not be reissued.
SECTION 13. Representations of the Company. (a) The representations and
warranties of the Company to Northstar set forth in the Purchase Agreement shall
be deemed, mutatis mutandis, to be representations of the Company made to
Northstar for purposes of this Note on the date hereof to the same extent and
with the same effect as if such representations and warranties were set forth in
full herein.
(b) The Company is, and after giving effect to the incurrence of
all indebtedness and obligations being incurred in connection herewith will be
and will continue to be, Solvent.
SECTION 14. Payment of Expenses and Taxes. The Company hereby agrees (a)
to pay or reimburse the Noteholder for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this Note
and the other Related Documents after the occurrence of any Event of Default,
including, without limitation, the fees and disbursements of counsel to the
Noteholder, (b) to pay, indemnify, and hold the Noteholder harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Note and the other Related
Documents and (c) to pay, indemnify, and hold the Noteholder harmless from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Note and the other Related Documents
including, without limitation, any of the foregoing relating to the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of the Company, any of its Subsidiaries or any of their
properties (all the foregoing in this clause (c), collectively, the "indemnified
liabilities"), provided that the Company shall have no obligation hereunder to
the Noteholder with respect to indemnified liabilities arising from (i) the
gross negligence or willful misconduct of the Noteholder, or (ii) legal
proceedings commenced against the Noteholder by any security holder or creditor
of the Company arising out of and based upon rights afforded any such security
holder or creditor solely in its capacity as such.
19
50
SECTION 15. Payments. (a) Generally. Except for payments made in
accordance with Section 2(c), all payments to be made to the Noteholder shall be
made in the lawful money of the United States of America in immediately
available funds.
(b) Upon the later to occur of (i) April 1, 2001 and (ii) the
date on which all obligations under the Secured Promissory Note are satisfied in
full, the Noteholder shall be entitled to receive from the Company, within
fifteen (15) days from the occurrence thereof, the Make Whole Amount. For
purposes of the foregoing sentence, the "Make Whole Amount" shall be deemed to
be the issuance of additional Notes by the Company in the form of this Note and
in an amount which, when aggregated with the interest payments made to such date
by the Company (including the principal amount of all PIK Notes issued) and the
aggregate Dollar Value of the Company's unexercised warrants issued under the
Purchase Agreement ("Warrants") and shares of Common Stock issued pursuant to
the exercise thereof ("Warrant Shares"), would represent a twenty percent (20%)
compounded rate of return per annum for the Noteholder. For the purpose of the
foregoing sentence, "Dollar Value", (x) with respect to unexercised Warrants,
shall equal the product of the number of shares of Common Stock into which such
Warrants are exercisable and the difference between the then applicable exercise
price of such Warrants and the most recently reported price for one share of
Common Stock on any national securities exchange or quotation service (or, if
the Common Stock is not then so listed or quoted, the value of one share of
Common Stock as determined by the Independent Appraiser (as hereinafter
defined)) (such number, the "Per Share Value") and, (y) with respect to Warrant
Shares, the product of the number of Warrant Shares and the difference between
the Per Share Value and the exercise price actually paid in connection with the
exercise of the respective Warrants. In the event any calculation of "Dollar
Value" would, with respect to either Warrants or Warrant Shares, result in a
negative number, the "Dollar Value" with respect thereto shall be deemed to
equal zero. For purposes of the foregoing, the term "Independent Appraiser"
shall mean an appraiser mutually selected by the Company and the Noteholder or,
in the event of a disagreement as to such selection, an appraiser currently
receiving no fee income from either the Company or the Noteholder selected by
the mutual agreement of two other appraisers, one of which shall be selected by
the Company and the other by the Noteholder.
SECTION 16. Place of Cash Payment. Cash payments of principal and
interest shall be delivered to Northstar by wire transfer of immediately
available funds to such address and account as Northstar may specify in writing
to the Company, or to such other Noteholder at such other address or to the
attention of such other person or to such other account as specified by prior
written notice to the Company.
SECTION 17. Severability. Whenever possible, each provision of this Note
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Note.
20
51
SECTION 18. Descriptive Headings; Interpretation. The descriptive
headings of this Note are inserted for convenience only and do not constitute a
substantive part of this Note. The use of the word "including" in this Note
shall be by way of example rather than by limitation.
SECTION 19. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS NOTE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF NEW YORK, EXCEPT THAT THE FILING, PERFECTION, EFFECT OF PERFECTION AND
ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER JURISDICTIONS SHALL BE
GOVERNED BY THE LAWS OF THE APPLICABLE JURISDICTIONS IN ACCORDANCE WITH THE UCC.
SECTION 20. WAIVERS. TO THE EXTENT PERMITTED BY LAW, THE COMPANY HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED REGISTERED MAIL DIRECTED TO IT AT
ITS ADDRESS SET FORTH IN SECTION 23. IN ADDITION, THE COMPANY HEREBY WAIVES
TRIAL BY JURY, ANY OBJECTIONS BASED ON FORUM NON CONVENIENS AND ANY OBJECTIONS
TO VENUE OF ANY ACTION ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL
TO THE TRANSACTIONS CONTEMPLATED BY OR THE RELATIONSHIPS ESTABLISHED IN
CONNECTION WITH THIS NOTE.
SECTION 21. JURISDICTION. EXCEPT AS OTHERWISE PROVIDED IN SECTION 22,
ALL DISPUTES AMONG OR BETWEEN SUCH HOLDER AND THE COMPANY ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED BY OR
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, MAY BE RESOLVED BY STATE
OR FEDERAL COURTS LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK, AND THE COMPANY
HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN SUCH COUNTY AND STATE; PROVIDED, HOWEVER, THAT ANY APPEALS FROM
THOSE COURTS MAY BE HEARD BY A COURT LOCATED OUTSIDE THE SOUTHERN DISTRICT OF
NEW YORK. THE COMPANY WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO
THE LOCATION OF THE COURT CONSIDERING THE DISPUTE. NOTHING IN THIS SECTION 21
SHALL AFFECT THE RIGHT OF THE NOTEHOLDER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF SUCH HOLDER TO BRING ANY ACTION
OR PROCEEDING AGAINST THE COMPANY OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
SECTION 22. OTHER JURISDICTIONS. THE COMPANY AGREES THAT THE NOTEHOLDER
SHALL HAVE THE RIGHT TO PROCEED AGAINST THE COMPANY IN A COURT IN ANY LOCATION
TO ENABLE SUCH HOLDER TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH HOLDER. THE COMPANY WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE NOTEHOLDER HAS COMMENCED A PROCEEDING
DESCRIBED IN THIS SECTION 22.
SECTION 23. Notices. All notices, requests, demands, waivers and other
communication required or permitted to be given under this Note shall be in
writing and shall be deemed to have been duly given if (a) delivered personally,
(b) mailed by first-class, registered or
21
52
certified mail, return receipt requested, postage prepaid, or (c) sent by
next-day or overnight mail or delivery or (d) sent by telecopy (with verbal
confirmation of receipt) or telegram.
If to Northstar:
Northstar Advantage High Total Return Fund
c/o Xxxxxx Xxx Dial
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Fax Number: (000) 000-0000
Confirm Number: (000) 000-0000
with a copy, which will
not constitute notice to
the Noteholder, to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxxxx
Fax Number: (000) 000-0000
Confirm Number: (000) 000-0000
If to the Company:
Intracel Corporation
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. XxXxxxxx
Fax Number: (000) 000-0000
Confirm Number: (000) 000-0000
with a copy, which will
not constitute notice to
the Company, to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Fax No: (000) 000-0000
Confirm No.: (000) 000-0000
22
53
or at such other address as may be specified in writing to the other parties in
accordance with this Section 23.
All such notices, requests, demands, waivers and other communications shall be
deemed to have been received (a) if by personal delivery on the date after such
delivery, (b) if by certified or registered mail, on the seventh Business Day
after the mailing thereof, (c) if by next-day or overnight mail or delivery, on
the day delivered, (d) if by telecopy or telegram, on the next day following the
day on which such telecopy or telegram was sent, provided that a copy is also
sent by certified or registered mail.
SECTION 24. Business Days. If any payment is due, or any time period for
giving notice or taking action expires, on a day which is a Saturday, Sunday or
legal holiday in the State of New York, the payment shall be due and payable on,
and the time period shall automatically be extended to, the next Business Day
immediately following such Saturday, Sunday or legal holiday, and interest shall
continue to accrue at the required rate hereunder until any such payment is
made.
SECTION 25. Usury Laws. It is the intention of the Company and the
Noteholder to conform strictly to all applicable usury laws now or hereafter in
force, and any interest payable under this Note shall be subject to reduction to
the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. If the maturity of this Note is accelerated by
reason of an election by the holder hereof resulting from an Event of Default,
voluntary prepayment by the Company or otherwise, then earned interest may never
include more than the maximum amount permitted by law, computed from the date
hereof until payment, and any interest in excess of the maximum amount permitted
by law shall be canceled automatically and, if theretofore paid, shall at the
option of the holder hereof either be rebated to the Company or credited on the
principal amount of this Note, or if this Note has been paid, then the excess
shall be rebated to the Company. The aggregate of all interest (whether
designated as interest, service charges, points or otherwise) contracted for,
chargeable, or receivable under this Note shall under no circumstances exceed
the maximum legal rate upon the unpaid principal balance of this Note remaining
unpaid from time to time. If such interest does exceed the maximum legal rate,
it shall be deemed a mistake and such excess shall be canceled automatically
and, if theretofore paid, rebated to the Company or credited on the principal
amount of this Note, or if this Note has been repaid, then such excess shall be
rebated to the Company.
* * * * *
23
54
IN WITNESS WHEREOF, the Company has executed and delivered this Note on
June 21, 1996.
INTRACEL CORPORATION
By: /s/ XXXXX X. XxXXXXXX
-------------------------------------
Name: Xxxxx X. XxXxxxxx
Title: PRESIDENT/CEO
ACCEPTED AND AGREED TO:
NORTHSTAR ADVANTAGE
HIGH TOTAL RETURN FUND
By: /s/ XXXXXX XXX DIAL
--------------------------------
Name: Xxxxxx Xxx Dial
Title: Vice President
55
EXHIBIT B
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
SERIES A-IV COMMON STOCK WARRANT
Void after April 1, 2003 Right to purchase 79,537
shares of Common Stock
(subject to adjustment)
of Intracel Corporation
No. AIV-1
INTRACEL CORPORATION
Common Stock Warrant
Intracel Corporation, a Massachusetts corporation (the "Company"),
hereby certifies that, for value received, NORTHSTAR ADVANTAGE HIGH TOTAL RETURN
FUND (the "Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time before 5:00 P.M. New
York time, on April 1, 2003 (or such earlier date as provided in Section 7
hereof) (the "Expiration Time"), up to seventy-nine thousand five hundred
thirty-seven (79,537) fully paid and nonassessable shares of the Company's
Common Stock, no par value per share, at a purchase price per share of $14.00
(the "Purchase Price"). The number and character of such shares of Common Stock
and the Purchase Price are subject to adjustment as provided herein.
This warrant (this "Warrant") is issued pursuant to a certain Note and
Warrant Purchase Agreement, dated as of June 21, 1996, between the Company and
the Holder, a copy of which is on file at the principal office of the Company
(the "Purchase Agreement").
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
"Affiliate" means, with reference to a specified person or
entity, any person or entity that directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control with the
specified person or entity. For purposes of this definition, "control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any person or entity, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person or entity, whether
through the ownership of voting securities or by contract or otherwise.
"Common Stock" means the Company's common stock, no par value per
share, in existence on June 21, 1996, or any class or classes (however
designated) of such Common Stock
56
subsequently existing as a result of any recapitalization, reorganization or
other reclassification of the Company's capital stock which affects the holders
of Common Stock.
"Company" includes any corporation which shall succeed to or
assume the obligations of the Company hereunder.
"Extraordinary Transaction" means any consolidation of the
Company with or the merger of the Company into any other corporation or entity
(other than a consolidation or merger in which the Company is the continuing
entity) or the sale or transfer of all or substantially all of the assets of the
Company to another person or entity.
"Securities Act" means the Securities Act of 1933, 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.
"Securities and Exchange Commission" or "Commission" refers to
the Securities and Exchange Commission or any other Federal agency then
administering the Securities Act.
"Warrant Shares" means the Common Stock issued or issuable upon
exercise of this Warrant.
1. Restricted Stock.
1.1 This Warrant and all rights hereunder may not be transferred
unless (i) the transferee is an Affiliate of the Holder, or (ii) the Company
gives its prior written consent to the transfer.
1.2 If, at the time of any transfer or exchange pursuant to
Section 1.1 (other than a transfer or exchange not involving a change in the
beneficial ownership of this Warrant) of this Warrant or Warrant Shares, such
Warrant or Warrant Shares shall not be registered under the Securities Act, the
Company may require, as a condition of allowing such transfer or exchange, that
the Holder or transferee of such Warrant or Warrant Shares, as the case may be,
furnish to the Company an opinion of counsel reasonably acceptable to the
Company or a "no action" or similar letter from the Securities and Exchange
Commission to the effect that such transfer or exchange may be made without
registration under the Securities Act. In the case of such transfer or exchange,
and in the case of an exercise of this Warrant if the Warrant Shares to be
issued thereupon are not registered pursuant to the Securities Act, the Company
may require a written statement that such Warrant or Warrant Shares, as the case
may be, are being acquired for investment and not with a view to the
distribution thereof (subject, however, to any requirement of law that the
disposition thereof shall at all times be within the control of such Holder or
transferee, as the case may be).
1.3 Certificates evidencing Warrant Shares shall, unless at the
time of exercise such Warrant Shares are registered under the Securities Act,
bear a legend substantially in the following form:
2
57
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE."
2. Exercise of Warrant.
The Holder may exercise this Warrant in whole or in part (but not
as to fractional shares of Common Stock) by delivering this Warrant prior to the
Expiration Time, with the form of subscription at the end hereof duly executed
by the Holder, to the Company at its principal office. This Warrant and the
subscription shall be accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the amount obtained
by multiplying the number of shares of Common Stock called for on the form of
subscription by the Purchase Price, as such may be adjusted as provided herein.
In the event of the purchase of less than all of the shares of Common Stock
purchasable under this Warrant, the Company shall execute and deliver a
replacement Warrant of like tenor for the balance of the shares of Common Stock
purchasable thereunder.
3. Delivery of Stock Certificates on Exercise.
Certificates for shares of Common Stock purchased under this
Warrant shall be issued as soon as practicable after the exercise of this
Warrant in accordance with Section 2 hereof, but in no event later than 10 days
after the date of delivery to the Company of this Warrant for exercise, without
charge to the Holder, including, without limitation, any tax that may be payable
in respect thereof, and such certificates shall be issued and registered in the
name of, or, subject to Section 1.1, in such names as may be directed by, the
Holder; provided, however, that the Company shall not be required to pay any
income tax to which the Holder may be subject in connection with the issuance of
this Warrant or the shares of Common Stock upon exercise of this Warrant;
provided, further, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate in a name other than that of the Holder and the Company
shall not be required to issue or deliver such certificate unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such taxes have been paid.
4. Adjustments to Warrants.
4.1 Adjustment for Certain Dividends and Distributions. If, at
any time or from time to time, the number of shares of Common Stock outstanding
is increased (i) by a stock dividend payable in shares of Common Stock or in any
other security exchangeable for or convertible into Common Stock or (ii) by a
subdivision or split-up of shares of Common Stock, then, following the record
date fixed for the determination of holders of Common Stock entitled to receive
such stock dividend, subdivision or split-up, provision shall be made so that
the Holder of this Warrant shall receive upon exercise thereof in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities of the Company that it would
3
58
have received if (A) this Warrant had been exercised into Common Stock on the
date of such event and (B) it had thereafter retained such securities and all
rights and distributions relating to them.
4.2 Adjustment for Capital Reorganization, Reclassification,
Exchange, or Substitution. If Common Stock is changed into the same or a
different number of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise, then and in each such event, the
Holder of this Warrant shall have the right thereafter to convert his or her
Warrant Shares into the kind and amount of shares of stock and other securities
and property receivable upon such reorganization, reclassification, or other
change, by holders of the number of shares of Common Stock which were
convertible immediately prior to such reorganization, reclassification, or
change. If, at any time or from time to time, the number of shares of Common
Stock outstanding is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date for such combination, the Purchase
Price shall appropriately increase and/or the number of Warrant Shares shall be
appropriately decreased.
5. Anti-Dilution Adjustment.
(a) Adjustment for Common Stock Issue. If at any time after the
date hereof, the Company issues shares of Common Stock for a consideration per
share less than the Purchase Price per share, on the date such additional shares
are issued, the Purchase Price shall be adjusted in accordance with the
following formula:
p
-
E(1) = E x O + E
------
A
where: E(1) = the adjusted Purchase Price.
E = the Purchase Price immediately prior to the
adjustment.
O = the number of shares outstanding immediately
prior to the issuance of such additional shares.
P = the aggregate consideration received for the
issuance of such additional shares.
A = the number of shares outstanding immediately
after the issuance of such additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This subsection does not apply to (i) any of the transactions
described in Sections 4.1 and 4.2 and the first paragraph of subsection (b) or
the issuance of common stock upon the
4
59
exercise of such rights described therein, (ii) the issuance of shares of Common
Stock upon conversion of the Company's currently outstanding preferred stock,
preferred stock issued in lieu of cash dividends thereon, and upon the exercise
of rights under securities issued on or before the date hereof to convert,
exchange or exercise such securities into shares of Common Stock, or (iii) the
issuance of shares of Common Stock upon the exercise of rights, warrants or
options granted to employees and directors of the Company pursuant to employee
benefit plans or employee stock option plans available for grants to the
Company's executives in general, provided that the aggregate number of shares
issuable upon exercise of such rights, warrants and options (including all
shares previously issued upon exercise thereof) do not exceed ten percent (10%)
of the Company's then issued and outstanding Common Stock.
(b) Adjustment for Convertible Securities Issue. If at any time
after the date hereof, the Company issues any securities convertible into or
exchangeable or exercisable for shares of Common Stock for a consideration per
share of Common Stock initially deliverable upon conversion, exchange or
exercise of such securities less than the Purchase Price per share on the date
of issuance of such securities, the Purchase Price shall be adjusted in
accordance with the following formula:
P
-
E(1) = E x O + E
-----
A
where: E(1) = the adjusted Purchase Price.
E = the then current Purchase Price.
O = the number of shares outstanding immediately
prior to the issuance of such securities.
P = the sum of the aggregate consideration received
for the issuance of such securities plus the
additional consideration, if any, payable upon
conversion, exchange or exercise of such
securities at the initial conversion, exchange
or exercise rate.
D = the maximum number of shares deliverable upon
conversion, exchange or exercise of such
securities at the initial conversion, exchange
or exercise rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance. If
all of the Common Stock deliverable upon conversion, exchange or exercise of
such securities has not been issued when such securities are no longer
outstanding, then the Purchase Price shall promptly be readjusted to the
Purchase Price which would then be in effect had the adjustment upon the
issuance of such
5
60
securities been made on the basis of the actual number of shares of Common Stock
issued upon conversion, exchange or exercise of such securities.
This subsection does not apply to (i) any of the transactions
described in Sections 4.1 and 4.2 and the first paragraph of subsection (a) or
(ii) the issuance of shares of Common Stock upon the exercise of rights,
warrants or options granted to employees or directors of the Company pursuant to
employee benefit plans or employee stock option plans available to the Company's
executives in general, provided that the aggregate number of shares issuable
upon exercise of such rights, warrants and options (including all shares
previously issued upon exercise thereof) do not exceed ten percent (10%) of the
Company's then issued and outstanding Common Stock.
(c) The foregoing adjustments shall be made only if the
adjusted Purchase Price shall be less than the Purchase Price.
6. Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on delivery and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a replacement Warrant of like
tenor.
7. Accelerated Expiration of Warrants. Notwithstanding anything in this
Warrant to the contrary, this Warrant and the terms and provisions hereunder
shall immediately expire without further action by the Company or the Holder (a)
upon the closing of an underwritten public offering pursuant to an effective
registration statement on Form S-1 or successor form under the Securities Act
covering the offering and sale of Common Stock for the account of the Company at
a per share price of at least $18.00 (as currently configured) in which the
aggregate proceeds (net of offering expenses and underwriters' discounts or
commissions) received by the Company equals or exceeds $10,000,000 (an "Initial
Public Offering") (provided that the Company shall have given notice of the
initial filing of such registration statement promptly after the date of such
filing); or (b) on the day prior to the effective date of any Extraordinary
Transaction.
8. Notices.
8.1 Notices for Adjustments under Section 4 and Certain Other
Events. In the event of:
(a) any taking by the Company of a record of the holders
of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to receive
any other right; or
6
61
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company
or the occurrence of any Extraordinary Transaction; or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(d) any proposed issue or grant by the Company of any
shares of stock of any class or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities (other than the issuance of
Warrant Shares);
then, and in each such event, the Company will mail by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company pursuant to Section 8.2 hereof, a notice specifying (i) the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, Extraordinary Transaction, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable on
such reorganization, reclassification, recapitalization, Extraordinary
Transaction, dissolution, liquidation or winding up, and (iii) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made.
All notices to be given pursuant to subsection (a) of this Section 8.1
shall be mailed at least fifteen (15) days prior to the record date of such
events described therein. All notices to be given pursuant to subsections (b)
through (d) of this Section 8.1 shall be mailed at least thirty (30) days prior
to the record date of such events described therein.
8.2 Other Notices. (a) In the event of an Initial Public
Offering, the Company will mail by first class registered or certified mail,
postage prepaid, at such address as may have been furnished to the Company
pursuant to Section 8.2(b), notice of the initial filing of the registration
statement for the Initial Public Offering. Any notice to be given pursuant to
this Section 8.2(a) shall be mailed promptly after the date of such filing.
(b) All other notices and communications shall be mailed
by first class registered or certified mail, postage prepaid, addressed as
follows:
(i) if to the Holder, to the address for the Holder
as shown on the signature page hereof, with a copy
to:
Xxxxx Xxxxxxxxx, Esq.
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
7
62
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
or
(ii) if to the Company, to:
Intracel Corporation
000 Xxxxxxx Xxxxxx
Xxxxxxxx,XX 00000
Attention: President
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
or at such address as may have been furnished to the Company in writing by the
Holder or vice versa.
8.3 Receipt of Notices. All notices under this Warrant shall be
deemed to have been given three (3) days after being properly addressed and
deposited in the U.S. mail.
9. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware (without giving effect to its
choice of law principles). The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
This Warrant is being executed as an instrument under seal. All nouns and
pronouns used herein shall be deemed to refer to the masculine, feminine or
neuter, as the identity of the person or persons to whom reference is made
herein may require.
8
63
10. Expiration. This Warrant shall expire, and be without further force
and effect, at 5:00 P.M., New York time, on April 1, 2003, or such earlier date
and time as provided in Section 7 hereof.
Dated: June 21, 1996 INTRACEL CORPORATION
(Corporate Seal) By: /s/ XXXXX X. XxXXXXXX
------------------------------------
Its President
Attest: /s/ [SIG]
-----------------------------
Clerk
HOLDER:
NORTHSTAR ADVANTAGE
HIGH TOTAL RETURN FUND
By: /s/ XXXXXX XXX DIAL
-------------------------------
Its Vice President
Address: c/o Xxxxxx Xxx Dial
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
64
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
To Intracel Corporation:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _____________ shares of Common Stock of INTRACEL
CORPORATION and herewith makes payment of $________________ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to ____________________________, whose address is
Dated:
-----------------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the
Warrant)
-----------------------------------------------
(Address)
65
EXHIBIT C
[XXXXXXXX & XXXXXXXX LLP LETTERHEAD]
June 21, 1996
Northstar Advantage High Total Return Fund
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Re: Note and Series A-IV Warrant Purchase Agreement, dated as of June
21, 1996, between Intracel Corporation and Northstar Advantage High
Total Return Fund
Ladies and Gentlemen:
We have acted as special counsel for Intracel Corporation (the
"Company") in connection with the transactions contemplated by the Note and
Series A-IV Warrant Purchase Agreement, dated as of June 21, 1996 (the "Purchase
Agreement") between the Company and Northstar Advantage High Total Return Fund
(the "Lender"). This opinion is furnished to the Lender pursuant to Section 4.1
of the Purchase Agreement.
We have examined originals or copies of the following documents (the
"Documents"):
(i) the Purchase Agreement;
(ii) the Series A-IV Common Stock Warrant, dated June 21, 1996,
between the Company and the Lender (the "Warrant");
(iii) the Secured Promissory Note, dated June 21, 1996, in the
principal amount of $2,000,000, by the Company, in favor of the
Lender, and acknowledged by the Lender (the "Note");
(iv) the Junior Subordinated Pledge Agreement, dated as of June 21,
1996, between the Company and the Lender (the "Pledge
Agreement");
(v) the Junior Subordinated Security Agreement, dated as of June 21,
1996, between the Company, Xxxxxxx, Inc., a wholly-owned
subsidiary of the
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June 21, 1996
Page Two
Company ("Xxxxxxx") and the Lender (the "Security Agreement,"
and collectively with the Pledge Agreement, the "Security
Documents"); and
(vi) the Junior Subordinated Subsidiary Guaranty, dated as of June 21,
1996, by Xxxxxxx in favor of the Lender (the "Guaranty").
We have also examined originals or copies of the following: (a) the
articles of organization (with respect to the Company), the certificate of
incorporation (with respect to Xxxxxxx), and the by-laws, each as amended to
date, of each of the Company and Xxxxxxx; (b) the corporate proceedings of each
of the Company and Xxxxxxx; and (c) copies of UCC-1 financing statements naming
either the Company or Xxxxxxx as debtor and the Lender as secured party, and
which were filed in connection with the Series A-II Warrant and Note Purchase
Agreement, dated December 27, 1996, between the Company and the Lender, and the
transactions contemplated thereunder (collectively, the "Financing Statements").
For purposes of this opinion, "Obligors" means the Company and Xxxxxxx.
Unless otherwise defined herein, terms defined in the Purchase Agreement shall
have the same meanings herein.
In addition, we have examined such records, documents, certificates of
public officials and of the Company and Xxxxxxx, made such inquiries of
officials of the Company and Xxxxxxx, and considered such questions of law as we
have deemed necessary for the purpose of rendering the opinions set forth
herein.
In particular, our opinion in paragraph (a) below as to the good
standing of the Company is based solely upon a certificate of the Secretary of
the Commonwealth of the Commonwealth of Massachusetts, which certificate is
dated June 14, 1996. Our opinion in paragraph (a) below as to the good standing
(State of Delaware), and qualification and good standing (State of Washington)
of Xxxxxxx is based solely upon certificates of public officials in the States
of Delaware and Washington, which certificates are dated June 13, 1996
(Delaware) and June 14, 1996 (Washington). In rendering our opinion expressed in
paragraph (i) below, we have relied upon the representations and warranties of
the Lender contained in Article III of the Purchase Agreement, and have assumed
such representations and warranties to be true and correct in all material
respects. With respect to our opinions expressed in paragraphs (i) and (j)
below, we have relied on the Officer's Certificate of Xxxxx X. XxXxxxxx, the
President of the Company, attached hereto as Exhibit A, and the Officer's
Certificate of Xxxxx X. XxXxxxxx, the President of Xxxxxxx, attached hereto as
Exhibit B. We have made no independent investigation as to whether any of the
certificates referred to in this paragraph are accurate or complete.
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Northstar Advantage High Total Return Fund
June 21, 1996
Page Three
Our opinion in paragraph (e) below is based upon our review of those
statutes, rules, regulations and judicial decisions which are normally
applicable to or normally relevant in connection with transactions similar to
those contemplated by the Documents.
We have assumed (i) the genuineness of all signatures and the
authenticity of all items submitted to us as originals and the conformity with
originals of all items submitted to us as copies, and (ii) that each party
(other than the Company and Xxxxxxx) to one or more of the Documents has the
power and authority to execute and deliver, and to perform and observe the
provisions of, the Documents to which it is a party, and has duly authorized,
executed and delivered such Documents, and that such Documents constitute valid
and binding obligations of such party.
With respect to the opinion expressed in paragraph (d) below, we have
assumed that, at all times material to our opinion, the Company and Xxxxxxx have
"rights" in the personal property and fixtures described in the Security
Documents (collectively, the "Personal Property") within the meaning of Section
9-203(1)(c) of the New York Uniform Commercial Code ("NYUCC").
With respect to the opinion expressed in paragraph (e) below, we have
assumed that the Lender is acquiring the Warrant and the Note with no present
intention of distributing the same other than in compliance with the
requirements, if any, of all applicable state and federal securities laws.
We express no opinion as to (i) the enforceability of a security
interest in any property excluded from the NYUCC by Section 9-104 thereof, (ii)
the perfection or priority of the liens created by the Security Documents, or
the effect of the absence of such perfection or priority, (iii) the state of
title to the Personal Property, (iv) the accuracy or legal sufficiency of the
description of the Personal Property contained in the Security Documents or the
Financing Statements, (v) the effect of any regulation, law, covenant or
agreement relating to zoning, building codes, construction, use, occupancy,
subdivision or environmental control requirements as applied to the Personal
Property or (vi) whether the Financing Statements were duly filed.
The opinions hereinafter expressed are subject to the following further
qualifications:
(1) The effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, including, without limitation, laws relating to fraudulent
transfers or conveyances, preferences and equitable subordination. Without
limiting the generality of the foregoing qualification, we advise you that, if
the Guaranty has not been given for fair or reasonably
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June 21, 1996
Page Four
equivalent consideration, and Xxxxxxx is, or by executing the Guaranty may
become, insolvent, or will be rendered insolvent by the transactions
contemplated by the Documents, or, after giving effect to such transactions,
will be left with unreasonably small capital with which to engage in its
anticipated business, or will have intended to incur, or will have believed it
has incurred, debts beyond its ability to pay as such debts mature, then the
Guaranty may be voidable by creditors of Xxxxxxx or by a trustee or receiver of
Xxxxxxx in bankruptcy or similar proceedings pursuant to bankruptcy, fraudulent
conveyance or similar laws.
(2) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the
Documents and the effect of judicial decisions which have held that certain
provisions are unenforceable where their enforcement would violate the implied
covenant of good faith and fair dealing, or would be commercially unreasonable,
or where a default under the Documents is not material.
(3) The effect of statutes or judicial decisions rendering ineffective
or limiting certain remedial provisions contained in the Documents. However, in
our opinion, such statutes and judicial decisions do not operate to prevent the
Lender from accelerating the maturity of the Company's or Xxxxxxx' obligations
under the Documents in accordance with the terms thereof upon a material breach
by the Company or Xxxxxxx of a material covenant contained in one or more of the
Documents or the occurrence of any other material Event of Default (as defined
in the Note), or from exercising its remedy of foreclosure following such
acceleration, provided the rules and restrictions set forth in such statutes and
judicial decisions with respect to foreclosure are observed by the Lender.
(4) The enforceability of provisions of the Documents providing for
indemnification or contribution, to the extent such indemnification or
contribution is against public policy.
(5) The circumstances under which rights of setoff may be exercised.
(6) We express no opinion as to the effect on the opinions expressed
herein of (a) the compliance or non-compliance of any party to the Documents
(other than the Company and Xxxxxxx) with any laws or regulations applicable to
it, or (b) the legal or regulatory status or the nature of the business of any
such party.
(7) We express no opinion as to compliance by either Obligor with any
state securities law.
Based upon and subject to the foregoing, we are of the opinion that:
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Northstar Advantage High Total Return Fund
June 21, 1996
Page Five
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Massachusetts, and has the
corporate power and authority to conduct its business as presently conducted.
Xxxxxxx is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, is duly qualified and in good standing
in the State of Washington, and has the corporate power and authority to conduct
its business as presently conducted.
(b) Each Obligor has the corporate power and authority to execute and
deliver, and to perform and observe the provisions of, the Documents (other than
the Warrant) to which it is a party. Each of the Documents (other than the
Warrant) to which either Obligor is a party has been duly authorized, executed
and delivered by such Obligor.
(c) The Company has the corporate power and authority to issue the
Warrant and to perform and observe the provisions of the Warrant. The Warrant
has been duly authorized and executed, and, upon delivery to the Lender against
payment therefor in accordance with the terms of the Purchase Agreement, will be
validly issued.
(d) Each of the Documents to which either Obligor is a party constitutes
valid and binding obligations of such Obligor enforceable against such Obligor
in accordance with its respective terms.
(e) No registration with, consent or approval of, notice to, or other
action by, any federal or New York governmental entity, any Delaware
governmental entity pursuant to the General Corporation Law of the State of
Delaware, or any Massachusetts governmental entity pursuant to the Business
Corporation Law of the Commonwealth of Massachusetts, is required on the part of
either Obligor for the execution, delivery or performance by such Obligor of the
Documents to which it is a party, or if required, such registration has been
made, such consent or approval has been obtained, such notice has been given or
such other appropriate action has been taken. No registration with, consent or
approval of, notice to, or other action by, any federal or New York governmental
entity, any Delaware governmental entity pursuant to the General Corporation Law
of the State of Delaware, or any Massachusetts governmental entity pursuant to
the Business Corporation Law of the Commonwealth of Massachusetts, is required
on the part of the Company for the issuance of the Warrant by the Company (other
than filings pursuant to state securities laws in connection with the issuance
of the Warrant as to which we express no opinion), or if required, such
registration has been made, such consent or approval has been obtained, such
notice has been given or such other appropriate action has been taken.
(f) The execution, delivery and performance by each Obligor of each of
the Documents to which it is a party is not in violation of its articles of
organization (with respect to the Company), its certificate of incorporation
(with respect to Xxxxxxx) or its by-
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Page Six
laws. Repayment of the Note by the Company in accordance with the terms of the
Note will not violate (i) any federal or New York statute or regulation
applicable to the Company, (ii) the Business Corporation Law of the Commonwealth
of Massachusetts, or (iii) the General Corporation Law of the State of Delaware.
(g) The authorized capital stock of the Company consists of 5,000,000
shares of voting common stock, no par value per share (the "Common Stock"), and
3,000,000 shares of preferred stock, no par value per share.
(h) The shares of Common Stock which have been reserved for issuance
upon exercise of the Warrant have been duly authorized for issuance and validly
and effectively reserved by all necessary corporate action of the Company and,
when duly executed and delivered in accordance with the Warrant and against
payment therefor in accordance with the Warrant, will be validly issued and
outstanding, fully paid and nonassessable.
(i) The offering and sale of the Warrant and, assuming that the Warrant
is fully exercised upon receipt thereof, the Common Stock issuable upon the
exercise of the Warrant are exempt from registration under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to the exemption set forth
under Section 4(2) of the Securities Act.
(j) No Obligor is an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
We express no opinion as to matters governed by any laws other than the
substantive laws of the State of New York (including its applicable
choice-of-law rules), the Business Corporation Law of the Commonwealth of
Massachusetts, the General Corporation Law of the State of Delaware, and the
federal laws of the United States of America, which, in each case, are in effect
on the date hereof. Further, we express no opinion as to the enforceability of
the choice-of-law provision contained in the Warrant. We have assumed, with your
permission, that any provision in the Documents excepting New York choice or
conflicts of law rules from any New York choice-of-law provision would not be
interpreted to include Sections 5-1401 and 5-1402 of the General Obligations Law
of the State of New York. We express no opinion as to any New York choice-of-law
provision in the Documents to the extent that Section 1-105 of the NYUCC
requires the application of the law of another jurisdiction. For purposes of
this opinion, we have assumed that Sections 5-1401 and 5-1402 of the General
Obligations Law of the State of New York would be given effect in accordance
with their terms.
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Page Seven
We bring your attention to the fact that while individual members of
this firm are admitted to practice in the Commonwealth of Massachusetts, (i) we
maintain no offices in that state, (ii) we do not purport to be experts on the
laws of the Commonwealth of Massachusetts, and (iii) the individual members of
this firm who are admitted to practice law in the Commonwealth of Massachusetts
do not regularly render advice on matters involving the laws of the Commonwealth
of Massachusetts.
We note that the Warrant contains a provision to the effect that the
laws of the Commonwealth of Massachusetts are intended to govern. For purposes
of this opinion, we have assumed, without any independent investigation and with
your consent, that the laws of the Commonwealth of Massachusetts (other than the
Business Corporation Law of the Commonwealth of Massachusetts) are identical in
all relevant respects to the laws of the State of New York.
Our opinion as to the enforceability of any provision of the Documents
requiring the either Obligor to submit to the jurisdiction of a New York state
court is based solely on the statutes and regulations in effect in the State of
New York on the date hereof (including Section 5-1402 of the General Obligations
Law of the State of New York and Section 327 of the Civil Practice Law and Rules
of the State of New York). We express no opinion as to the enforceability of any
provision of the Documents requiring either Obligor to submit to the
jurisdiction of any federal court sitting in New York. We further express no
opinion as to the enforceability of any provision of the Documents which purport
to establish a particular court (other than a New York state court) as the forum
for the adjudication of any controversy relating to the Documents.
This opinion is solely for the Lender's benefit and may not be relied
upon by, nor may copies be delivered to, any other person without our prior
written consent.
Very truly yours,
/s/ XXXXXXXX & XXXXXXXX LLP
---------------------------
Xxxxxxxx & Xxxxxxxx LLP
