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EXHIBIT 10.29
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SECURITIES
PURCHASE AGREEMENT
among
INTRACEL CORPORATION,
XXXXXXX INC.,
PERIMMUNE HOLDINGS, INC.,
PERIMMUNE, INC.
and
NORTHSTAR HIGH YIELD FUND
NORTHSTAR HIGH TOTAL RETURN FUND
NORTHSTAR HIGH TOTAL RETURN FUND II
NORTHSTAR STRATEGIC INCOME FUND
Dated as of August 25, 1998
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...............................2
Section 1.1 Definitions...........................................................................2
Section 1.2 Accounting Terms and Determinations..................................................13
ARTICLE II THE SECURITIES.......................................................................13
Section 2.1 Issuance, Sale and Delivery of the Securities........................................13
Section 2.2 Closing; Purchase Price; Purchase Price Allocation...................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SUBSIDIARIES...................15
Section 3.1 Organization, Qualifications and Corporate Power.....................................15
Section 3.2 Authorization of Agreements, etc.....................................................15
Section 3.3 Validity.............................................................................16
Section 3.4 Authorized Capital Stock.............................................................16
Section 3.5 Financial Statements.................................................................17
Section 3.6 Absence of Undisclosed Liabilities and Charges.......................................18
Section 3.7 Events Subsequent to the Date of the Balance Sheet...................................18
Section 3.8 Litigation; Compliance with Law......................................................18
Section 3.9 Title to Properties..................................................................19
Section 3.10 Leasehold Interests..................................................................19
Section 3.11 Taxes................................................................................19
Section 3.12 Other Agreements.....................................................................20
Section 3.13 Patents, Trademarks, etc.............................................................22
Section 3.14 Loans and Advances...................................................................22
Section 3.15 Assumptions, Guaranties, etc. of Debt of Other Persons...............................22
Section 3.16 Significant Customers and Suppliers..................................................23
Section 3.17 Governmental Approvals...............................................................23
Section 3.18 Insurance............................................................................23
Section 3.19 Employment Relations.................................................................23
Section 3.20 Compensation of Key Employees........................................................24
Section 3.21 Environmental Compliance.............................................................24
Section 3.22 Projections..........................................................................24
Section 3.23 Disclosure; Accuracy of Statements...................................................24
Section 3.24 Matters Relating to OncoVAX Products.................................................24
Section 3.25 Subsidiaries.........................................................................24
Section 3.26 Use of Proceeds......................................................................25
Section 3.27 Location of Collateral...............................................................25
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.....................................25
Section 4.1 Purchase of Securities...............................................................25
Section 4.2 Authority............................................................................26
Section 4.3 Projections..........................................................................26
Section 4.4 Risk Factors.........................................................................26
ARTICLE V COVENANTS............................................................................26
Section 5.1 Payment of Principal, Premium and Interest...........................................26
Section 5.2 Money for Note Payments to be Held in Trust..........................................26
Section 5.3 Existence............................................................................26
Section 5.4 Maintenance of Assets................................................................27
Section 5.5 Payment of Taxes and Other Claims; Comply with Material Obligations..................27
Section 5.6 Financial Covenants..................................................................27
Section 5.7 Limitation on Restricted Payments....................................................29
Section 5.8 Limitation on Certain Restrictions Affecting any Subsidiary..........................29
Section 5.9 Limitation on Liens..................................................................30
Section 5.10 Maintenance of Insurance.............................................................30
Section 5.11 Waiver of Stay, Extension and Usury Laws.............................................31
Section 5.12 Financial Statements; Other Information..............................................32
Section 5.13 Inspection and Delivery of Property; Books and Records; Discussions..................35
Section 5.14 Further Security Interest............................................................35
Section 5.15 Further Assurances...................................................................36
Section 5.16 Limitation on Debt...................................................................37
Section 5.17 Limitation on Mergers; Etc...........................................................38
Section 5.18 Limitation on Sales of Property......................................................39
Section 5.19 Limitation on Transactions with Affiliates...........................................39
Section 5.20 Limitation on Credit Extensions......................................................39
Section 5.21 Limitation on Certain Amendments.....................................................40
Section 5.22 Limitation on Investments............................................................40
Section 5.23 Use of Proceeds......................................................................40
Section 5.24 Assumption of Company Debt by Subsidiaries...........................................41
Section 5.25 Covenants with respect to OncoVAX Cancer Vaccine.....................................41
Section 5.26 Covenant with respect to Transfer of Certain Patents................................41
Section 5.27 Foreign Currency Liabilities.........................................................42
Section 5.28 Unaudited Financial Statements.......................................................42
Section 5.29 Consent of Transamerica Business Credit Corporation..................................42
Section 5.30 Interest Escrow Security Agreement...................................................42
Section 5.31 Waiver of Certain Covenants..........................................................42
ARTICLE VI CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS......................................42
Section 6.1 Supporting Documents.................................................................42
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Section 6.2 Fees of Purchasers...................................................................43
Section 6.3 Warrants.............................................................................43
Section 6.4 Amended and Restated Warrants........................................................43
Section 6.5 Interest Escrow Security Agreement...................................................43
Section 6.6 Notes................................................................................43
Section 6.7 Security Agreements..................................................................43
Section 6.8 Pledge Agreement.....................................................................43
Section 6.9 Guarantees...........................................................................43
Section 6.10 Pledged Stock........................................................................44
Section 6.11 Escrow Agreement.....................................................................44
Section 6.12 Financing Statements.................................................................44
Section 6.13 First Union Agreement................................................................44
Section 6.14 Principal Executive Officer..........................................................44
Section 6.15 Agreement with Akzo..................................................................44
Section 6.16 Financial Statements.................................................................45
Section 6.17 Letter of Instructions...............................................................45
Section 6.18 Other Actions........................................................................45
Section 6.19 No Adverse Actions...................................................................45
Section 6.20 Opinion of Counsel...................................................................45
ARTICLE VII PAYMENT FOR PURCHASE OF SECURITIES...................................................45
ARTICLE VIII MISCELLANEOUS........................................................................45
Section 8.1 Expenses.............................................................................45
Section 8.2 Brokerage............................................................................46
Section 8.3 Notices..............................................................................46
Section 8.4 Governing Law; Submission to Jurisdiction............................................46
Section 8.5 Entire Agreement.....................................................................47
Section 8.6 Counterparts.........................................................................48
Section 8.7 Amendments...........................................................................48
Section 8.8 Disclosure to Other Persons..........................................................48
Section 8.9 Limitation on Interest...............................................................49
Section 8.10 Severability.........................................................................49
Section 8.11 Titles and Subtitles.................................................................49
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EXHIBITS
Exhibit A-1 and A-2 Form of Primary Note and Escrow Note, respectively
Exhibit B-1 Form of Series A-VI Warrant
Exhibit B-2 through B-6 Form of Amended and Restated Warrants
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Interest Escrow Security Agreement
Exhibit E Form of Security Agreement
Exhibit F Form of Intellectual Property Security Agreement
Exhibit G Form of Pledge Agreement
Exhibits H-1 through H-3 Form of Subsidiary Guaranty
Exhibit I Form of Agreement with CoreStates Enterprises Fund
Exhibit J Form of Akzo Agreement
Exhibit K Form of Counsel Opinion
Exhibit L Funded Commitment Facility Escrow Agreement
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SCHEDULES
Schedule 2.1 Issuance of Newly Issued Securities to Purchasers and Stipulated
Contribution Value of Existing Securities
Schedule 2.2 Cash Position of Purchase Price Paid by Purchasers
Schedule 3.4 Subscriptions, Warrants, Options, Convertible Securities and
Commitments Therefor
Schedule 3.5 Material Adverse Changes Since Most Recent Financial Statements
Schedule 3.6 Liabilities and Charges
Schedule 3.7 Events Subsequent to the Date of the Balance Sheet
Schedule 3.9 Title to Properties
Schedule 3.10 Leasehold Interests
Schedule 3.11 Taxes
Schedule 3.12 Other Agreements
Schedule 3.13 Intellectual Property
Schedule 3.14 Loans and Advances
Schedule 3.15 Assumptions or Guaranties of Indebtedness of other Persons
Schedule 3.16 Significant Customers and Suppliers
Schedule 3.18 Insurance
Schedule 3.19(b) Employee Benefit Plans
Schedule 3.20 Compensation of Key Employees
Schedule 3.25 Subsidiaries
Schedule 5.16 Debt Outstanding as of June 30, 1998
Schedule 5.26 Patents to be Acquired
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SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August
25, 1998, by and among Intracel Corporation, a Delaware corporation (the
"Company"), its wholly-owned subsidiaries (Xxxxxxx, Inc. ("Xxxxxxx"), PerImmune
Holdings, Inc. ("Holdings") and PerImmune, Inc. ("PerImmune" and, together with
Xxxxxxx and Holdings, the "Subsidiaries")) and each of the parties listed on
Schedule 2.1 hereto (each a "Purchaser" and, collectively, the "Purchasers").
PREAMBLE
WHEREAS, the Company wishes to issue and sell to the Purchasers (i)
the Company's 12% Guaranteed Senior Secured Primary Notes, substantially in the
form attached hereto as Exhibit A-1, in the aggregate original principal amount
of $35,000,000 (the "Guaranteed Senior Secured Primary Notes"), (ii) the
Company's 12% Guaranteed Senior Secured Escrow Notes, substantially in the form
attached hereto as Exhibit A-2, in the aggregate original principal amount of
$6,000,000 (the "Guaranteed Senior Secured Escrow Notes" and, together with the
Guaranteed Senior Secured Primary Notes, the "Notes"), (iii) the Series A-VI
Common Stock Warrants, substantially in the form attached hereto as Exhibit B-1
(the "Warrants"), to purchase up to 1,625,000 shares of common stock, $.0001 par
value per share (the "Warrant Shares"), of the Company (the Notes and the
Warrants shall collectively be referred to as the "Securities"); and
WHEREAS, the Company has agreed to amend and restate (i) certain
provisions of the warrants previously granted to certain of the Purchasers (the
"Existing Warrants") and (ii) certain provisions of that portion of a warrant
(the "CoreStates Warrant") previously granted to CoreStates Enterprise Fund, a
division of CoreStates Bank, N.A. ("CoreStates") which is to be assigned and
transferred to the Purchasers pursuant to the CoreStates Agreement, as
hereinafter defined, and will deliver amended and restated warrants in the forms
attached hereto as Exhibits B-2 through B-6 to effect such amendments (the
"Amended and Restated Warrants"); and
WHEREAS, the Company is to enter into an agreement substantially in
the form attached hereto as Exhibit C (the "Registration Rights Agreement"), to
register (i) the Warrant Shares; (ii) the shares issuable upon exercise of the
Existing Warrants (the "Existing Warrant Shares"); (iii) the shares issuable
upon exercise of the CoreStates Warrant (the "CoreStates Warrant Shares"); and
(iv) 381,296 shares of Common Stock owned by the Purchasers and their Affiliates
as of the date hereof and 522,550 shares of Common Stock issuable to the
Purchasers upon conversion of Series A-I Preferred Stock of the Company owned by
the Purchasers as of the date hereof (collectively, the "Existing Shares") (the
Warrant Shares, Existing Warrant Shares, CoreStates Warrant Shares and Existing
Shares are collectively referred to herein as the "Registrable Securities"); and
WHEREAS, each Purchaser is to purchase the Securities set forth
opposite such Purchaser's name in Sections 1 and 2 of Schedule 2.1 hereto, on
the terms and subject to the conditions set forth in this Agreement; and
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WHEREAS, the Company has issued to certain of the Purchasers,
severally, (i) a Secured Promissory Note on December 28, 1995 (the "1995 Note")
in the original principal amount of $4,700,000, (ii) $8,000,000 aggregate
original principal amount of Secured Promissory Notes issued on April 1, 1998
(the "April 1998 Notes"), and (iii) an aggregate of 47,030 shares of Series A-2
Preferred Stock (the "Series A-2 Preferred Stock"), $.0001 par value per share
(the 1995 Note, the April 1998 Notes and the Series A-2 Preferred Stock together
with the Existing Warrants are collectively referred to herein as the "Existing
Securities"), all of which are to be contributed to the Company in partial
payment of the purchase price of the Securities; and
WHEREAS, to induce the Purchasers to purchase the Securities, the
Company is to enter into the interest escrow security agreement in substantially
the form attached hereto as Exhibit D (the "Interest Escrow Security Agreement")
relating to the payment of certain interest due on the Notes; and
WHEREAS, to induce the Purchasers to purchase the Securities, the
Company and the Subsidiaries are entering into various agreements that will
create perfected security interests in favor of the Purchasers of the Notes (the
"Security Agreement," the "Intellectual Property Security Agreement," and the
"Pledge Agreement," substantially in the forms attached hereto as Exhibits E, F,
and G, respectively), and the Subsidiaries are to guaranty the Company's
obligations (each, a "Subsidiary Guaranty Agreement" substantially in the form
attached hereto as Exhibits H-1 through H-3) under this Agreement, the Notes and
the Ancillary Agreements (as defined herein) (together with the Warrants, the
Notes, the Interest Escrow Security Agreement, the Registration Rights
Agreement, the Amended and Restated Warrants, the Funded Commitment Facility
Escrow Agreement (substantially in the form attached hereto as Exhibit L), the
Agreement with CoreStates Enterprise Fund substantially in the form attached
hereto as Exhibit I (the "CoreStates Agreement"), the agreement by and among
Akzo Nobel Pharma International, B.V., Organon Teknika Corporation, PerImmune
Holdings, Inc., PerImmune Inc. and the Company, substantially in the form
attached hereto as Exhibit J (the "Akzo Agreement"), the "Ancillary
Agreements"); and
WHEREAS, the Company has agreed to utilize the proceeds from the sale
of the Notes in accordance with the provisions of Section 5.23;
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants and agreements, and other consideration
contained and exchanged in this Agreement, and other consideration provided by
the parties hereto, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1 Definitions. For all purposes of this Agreement and the
Ancillary Agreements, except as otherwise expressly provided or unless the
context otherwise requires:
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(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular.
(b) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP; and
(c) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Accountant" has the meaning specified in Section 5.12(c).
"Adjusted Debt" shall mean, at any time, the consolidated Debt of the
Company and its Subsidiaries minus the amount of consolidated cash and cash
equivalents owned by the Company and its Subsidiaries that is not (i) at such
time restricted or reserved for purposes other than the repayment or defeasance
of Debt and (ii) within the ninety (90) days following such date, needed to pay
the difference between (a) operating expenses and (b) operating revenues, to the
extent that such operating expenses are not then included in the calculation of
Debt.
"Adjusted Debt to EBITDA Ratio" shall mean the Adjusted Debt of a
Person as of the end of such Person's fiscal quarter divided by the product of
(i) such Person's EBITDA for the quarterly period ending on such date times (ii)
four (4).
"Affiliate" of any specified Person means (i) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person, (ii) any spouse, child or parent of
any Person described in clause (i) of this paragraph or any other relative of
any Person described in clause (i) who has the same principal residence as such
Person, and (iii) any trust for the sole benefit of any one or more Persons
described in clause (ii) of this paragraph. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Ancillary Agreements" has the meaning specified in the Preamble, as
each of the same may be amended or supplemented from time to time in accordance
with the terms thereof.
"Approved XxXxxxxx Successor" means the person elected by the Board
of Directors, to be Xx. XxXxxxxx'x successor as Chief Executive Officer of the
Company, and who shall have been approved by the Required Holders (as such term
is defined in the Notes) within 180 days of such person's election.
"Assets" shall mean with respect to any Person, all property owned by
such person whether tangible, intangible, real, personal or fixtures.
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"Asset Sale Excess Proceeds" shall mean, with respect to all sales
and other dispositions of assets during any fiscal year of the Company, the
excess of (i) the aggregate Net Cash Proceeds of all such sales or other
dispositions over (ii) $250,000.
"Balance Sheet" has the meaning specified in Section 3.5.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board, empowered to act on its
behalf.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
authorized or obligated by law or executive order to close.
"By-laws" means the by-laws of the Company, as amended to the date
hereof.
"Capital Lease Obligation" of any Person means the obligations to pay
rent or other amounts under a lease of (or other arrangement conveying the right
to use) real or personal property of such Person which are required to be
classified and accounted for as a capital lease on the face of a Balance Sheet
of such Person, and, for the purposes of this Agreement and the Ancillary
Agreements, the amount of such obligations shall be the capitalized amount
thereof, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations, rights or equivalents (however designated) of corporate stock of
such Person.
"Certificate of Incorporation" means the Amended and Restated
Certificate of Incorporation of the Company filed with the Secretary of State of
the State of Delaware, as amended to the date hereof.
"Closing" has the meaning specified in Section 2.1.
"Closing Date" has the meaning specified in Section 2.2.
"Common Stock" has the meaning specified in Section 3.4.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Agreement and the Ancillary
Agreements and thereafter "Company" shall mean such successor Person.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
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"CoreStates Debt" means all obligations under that certain Secured
Promissory Note of the Company (together with all "payment-in-kind" notes issued
pursuant thereto) dated as of June 11, 1996 issued to CoreStates Enterprise
Fund, a division of CoreStates Bank, N.A.
"CoreStates Warrants" means that portion of the Series A-III Common
Stock Warrant originally issued by the Company to CoreStates Enterprise Fund, a
division of CoreStates Bank, N.A. representing the right to purchase 238,610
shares of Common Stock.
"CoreStates Warrant Shares" has the meaning specified in the
Preamble.
"Debt" means (without duplication) with respect to any Person, (i)
every obligation of such Person for money borrowed, (ii) every obligation of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) every obligation of such Person issued or assumed as the deferred purchase
price of property, every conditional sale obligation and every obligation under
any title retention agreement (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not overdue by
more than 90 days or which are being contested in good faith) in each case if on
terms permitting any portion of the purchase price to be paid beyond 90 days
from the date of purchase, (iv) every Capital Lease Obligation of such Person,
(v) every obligation of such Person with respect to any Sale and Leaseback
Transaction to which such Person is a party, (vi) the maximum fixed repurchase
price of any Redeemable Stock, (vii) every obligation of such Person issued or
contracted for as payment in consideration of (A) the purchase by such Person or
an Affiliate of such Person of the Capital Stock or all or substantially all of
the Assets of another Person or (B) a merger or consolidation to which such
Person or an Affiliate of such Person was a party, (viii) every Guaranty of
every obligation of the type referred to in clauses (i) through (vii) of other
Persons and all dividends of other Persons for the payment of which, in either
case, such Person is responsible or liable, directly or indirectly, as obligor,
guarantor or, otherwise (whether or not such items would appear on the Balance
Sheet of such Person) and (ix) every obligation of the type referred to in
clauses (i) through (viii) of other Persons secured by any Lien on any Asset of
such Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of such
Assets or the amount of the obligation so secured. For purposes of this
definition, "obligation" of any Person means any obligation of such Person
(whether contingent or otherwise or whether recourse to all or a portion of such
Person's property or assets) to pay principal, interest, penalties,
reimbursement or indemnity amounts, fees or other amounts.
"Default" has the meaning specified in Section 6(a) of the Notes.
"Determination Date" has the meaning specified in paragraph (i) of
the definition of the term "Fair Market Value".
"Domestic Subsidiary" means any Subsidiary that is not a Foreign
Subsidiary.
"EBITDA" shall mean, with reference to any period, the consolidated
operating income of the Company and its Subsidiaries, plus the amount of all
depreciation and amortization
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deducted in determining the amount of such operating income, all as determined
on a consolidated basis in accordance with GAAP.
"Eligible Institution" means a commercial banking institution in the
United States of America that has combined capital and surplus of not less than
500 million in U.S. dollars whose debt is rated "A" or higher or the equivalent
rating according to Standard & Poor's Corporation ("S&P") or Xxxxx'x Investors
Services, Inc. ("Moody's") at the time as of which any investment or rollover
thereof is made.
"Employee Benefit Plan" has the meaning specified in Section 3.19(b).
"EMEA" means the European Medicines Evaluation Agency.
"ERISA" has the meaning specified in Section 3.19(b).
"Event of Default" has the meaning specified in Section 6(a) of the
Notes.
"Existing Securities" has the meaning specified in the Preamble.
"Existing Warrant Shares" has the meaning specified in the Preamble.
"Fair Market Value" means:
(i) in the case of any equity security of the
Company, as of a specific date of determination (the "Determination
Date"):
(A) if the Determination Date is the
date on which any class of equity security of the Company
is first sold to the public pursuant to a Public Offering,
then the initial public offering price (before deducting
commissions, discounts or expenses) at which such security
is sold in such Public Offering;
(B) if the Determination Date is a
date after the date on which any class of equity
securities of the Company are first sold to the public
pursuant to a Public Offering, then the price per security
thereof, equal to the average of the last sale of such
security on each of the ten (10) trading days (or such
lesser number of days as shares shall have been listed or
traded) prior to the Determination Date on the principal
exchange on which such security may at the time be listed;
or, if there shall have been no sales on such exchange on
any such trading day, the average of the closing bid and
asked price on such exchange on such trading day; or, if
there is no such bid and asked price on any such bid
trading day, on the next preceding date when such bid and
asked price occurred; or, if no such equity security shall
so be listed the average of the closing sales price as
reported by NASDAQ at the end of each of the ten (10)
trading days (or such lesser number of days as shares
shall have been traded) prior to the Determination Date in
the over-the-counter market; and
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(C) if the Determination Date is prior
to the date on which any class of equity securities is
first sold to the public pursuant to a Public Offering (or
the value of such equity securities is not otherwise
determinable under clause (B) above), an amount as
reasonably determined jointly by the Board of Directors of
the Company and the holders representing a majority in
interest of the securities of which the Fair Market Value
is to be determined; provided, however, that if such
parties are unable to reach agreement within a reasonable
time, the Fair Market Value shall be determined, at the
expense of the Company, in good faith by an investment
banking firm that is nationally recognized in the United
States selected jointly by the Board of Directors of the
Company and the holders of a majority in interest of such
securities or, if that selection cannot be made within
fifteen (15) days, by an independent investment banking
firm selected by the American Arbitration Association in
accordance with its rules; it being the intention of the
parties that the value of an equity security of the
Company shall constitute a pro rata portion of the
Company's equity on a fully diluted basis, valuing the
Company as a going concern and without discount in respect
of a minority interest;
(ii) in the case of any equity securities of a
Person other than the Company, an amount determined jointly by the
Board of Directors of the Company and the Purchasers using the rules,
to the extent applicable, set forth in paragraph (i) of this
definition, and subject to the dispute resolution provisions
contained in subsection (C) of said section (i);
(iii) in the case of any Assets, (the fair market
value of which exceeds or could reasonably be expected to exceed
$2,000,000 until the Company has consummated a Qualified Equity
Transaction, as defined in the Interest Escrow Security Agreement
and, thereafter, $5,000,000), an amount as reasonably determined in
good faith by the Company's Board of Directors, at the expense of the
Company, based upon a review of relevant factors and a written
appraisal by an appraiser that (A) had at the time of such appraisal,
and based its appraisal upon, a knowledge of the then-prevailing
methods of valuing such Assets and the then-current valuations of
assets similar to such Assets and (B) is selected by the Company and
approved by the Required Holders, such approval not to be
unreasonably withheld; and
(iv) in case of any other Assets, an amount as
reasonably determined in good faith by the Company's Board of
Directors upon a review of relevant factors.
"FDA" means the United States Food and Drug Administration.
"Foreign Subsidiary" means any Subsidiary or New Subsidiary (i) more
than 80% of the sales, earnings or Assets (determined with respect to such
Foreign Subsidiary on a consolidated basis) of which are or will be located or
derived from operations outside of the United States of America or (ii) which is
or will be a "controlled foreign corporation" within the meaning of Section 952
of the Internal Revenue Code.
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"Fully Diluted Shares" means, as of the date hereof: (i) that number
of shares of the Company's Common Stock outstanding; plus (ii) that number of
shares of Common Stock into which all other securities of the Company are
convertible, exchangeable or exercisable (including, but not limited to
convertible preferred stock, options, warrants and convertible indebtedness).
For purposes of this Agreement, the parties agree that the number of Fully
Diluted Shares is as of the date hereof 21,666,667, which number was based on
the information set forth in Schedule 3.4 provided, however, that, the parties
hereto acknowledge that this number has not been calculated in accordance with
GAAP.
"Funded Debt" shall mean, with respect to any Person, all Debt
Incurred for borrowed money of such Person which by its terms or by the terms of
any instrument or agreement relating thereto matures, or which is otherwise
payable or unpaid, more than one year from, or is directly or indirectly
renewable or extendible at the option of the debtor to a date more than one year
(including an option of the debtor under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of more than one
year) from, the date of the creation thereof.
"GAAP" means generally accepted accounting principles in effect in
the United States at the time of application thereof, including those set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a majority of the
accounting profession, which are in effect from time to time.
"Guaranty" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Debt of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or to purchase
(or to advance or supply funds for the purchase of) any security for the payment
of such Debt, (ii) to purchase property, securities or services for the purpose
of assuring the holder of such Debt of the payment of such Debt, or (iii) to
maintain working capital, equity capital or other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to pay
such Debt; provided, however, that the Guaranty by any Person shall not include
endorsements by such Person for collection or deposit, in either case in the
ordinary course of business.
"Guaranty Obligation" has the meaning specified in Section 11 of the
Notes.
"Holder" means a Purchaser of the Note or any Person to whom the Note
is sold, assigned, conveyed or otherwise transferred.
"Incur" means, with respect to any Debt, Lien or Guaranty of any
Person, to create, issue, assume, guarantee, incur or otherwise become liable in
respect of such Debt, Lien or Guaranty, as the case may be (and "Incurrence",
"Incurred" and "Incurring" shall have meanings correlative to the foregoing),
and "Incur" means, with respect to any Lien to create, incur, assume or suffer
to exist such Lien on any Asset.
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"Intellectual Property" has the meaning specified in Section 3.13.
"Interest Escrow Security Agreement" has the meaning specified in the
Preamble, as it may be amended or supplemented from time to time in accordance
with the terms thereof.
"Interest Expense" shall mean, with respect to any Person, for any
period, the sum, for such Person in accordance with GAAP, of (i) all interest
that is paid, accrued or amortized as an expense during such period (including,
without limitation, imputed interest under Capitalized Lease Obligations), plus
without duplication (ii) all amounts paid, accrued or amortized as an expense
during such period in respect of interest rate protection agreements, minus
(iii) all amounts received or accrued as income during such period in respect of
interest rate protection agreements.
"Investments" means all investments in other Persons in the form of
loans or capital contributions, purchases or other acquisitions for
consideration or evidences of indebtedness, or Capital Stock or other securities
and all other items which are or would be classified as investments on a Balance
Sheet prepared in accordance with GAAP.
"Laws" shall mean, with respect to any Person, all federal, state,
local and foreign laws, ordinances, rules, regulations (including, without
limitation, rules and regulations of the FDA and the EMEA), codes, orders or
zoning requirements and all judicial decisions and other interpretations thereof
applicable to such Person.
"Lien" means with respect to any Assets, any mortgage or deed of
trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to Assets (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"XxXxxxxx Policy" has the meaning specified in Section 5.10.
"Net Cash Proceeds" shall mean the cash proceeds of any sale or other
disposition of Assets (including cash proceeds subsequently received (as and
when received) in respect of non-cash consideration initially received, all
insurance settlements and condemnation awards and all reserves referred to in
clause (ii) below, as and when such reserves are no longer required), minus (i)
transaction expenses (including broker's fees or commissions, legal fees,
accounting fees, investment banking fees and other professional fees, transfer
and similar taxes and the Company's good faith estimate of income taxes payable
and the actual amount of taxes paid in connection with the receipt of such cash
proceeds), (ii) amounts provided as a reserve, in accordance with GAAP,
including pursuant to any escrow arrangement, against any liabilities under any
indemnification obligations associated with such sale or disposition, (iii) the
principal amount, premium or penalty, if any, interest and other amounts on any
Debt which is secured by the Assets sold and is defeased or repaid with such
proceeds and (iv) subject to any provisions of any Security Documents between a
Subsidiary and Purchasers, such distributions required to be
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made to holders of interests in Subsidiaries that are not wholly owned by the
Company or any of its Subsidiaries, in each case made pro rata in accordance
with their interests in such Subsidiaries, provided, however, that with respect
to the cash proceeds of any such sale or other disposition, if the Company shall
have delivered an Officer's Certificate to Purchasers, at the time of the
receipt thereof certifying in good faith that the Company has established a cash
reserve for the reinvestment of such proceeds in productive Assets of a kind
then used or useable in the business of the Company within nine months of
receipt of such proceeds, such proceeds shall not constitute Net Cash Proceeds
except to the extent not so used prior to the end of such nine-month period, at
which time such proceeds shall be deemed to be Asset Sale Excess Proceeds.
"New Subsidiary" has the meaning specified in Section 5.14.
"Notes" has the meaning specified in the Preamble.
"Officer's Certificate" shall mean a certificate signed in the name
of the Company by a Responsible Officer of the Company, provided, however, that
if such certificate relates to any Financial Statements, the financial condition
or other financial information of the Company, such Responsible Officer shall be
a senior executive officer responsible for managing the financial affairs of the
Company or, in such officer's absence, the Chief Executive Officer, President or
Chairman of the Company.
"Outstanding", when used with respect to Notes, means, as of any date
of determination, all Notes theretofore issued and delivered under this
Agreement and the Ancillary Agreements, except:
(i) Notes theretofore cancelled by the Company
or delivered to the Company for cancellation;
(ii) Notes for which payment in full has been
made by the Company pursuant to the terms of the Notes; and
(iii) Notes which have been exchanged for other
securities;
provided, however, that in determining whether the Purchasers of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor under the Notes or any Affiliate of the Company
(other than any Purchaser) or of such other obligor shall be disregarded and
deemed not to be Outstanding.
"PBGC" has the meaning specified in Section 3.19(b).
"Permitted Investments" shall mean:
(i) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by,
the United States of America (or by any agency
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thereof to the extent such obligations are backed by the full faith
and credit of the United States of America), in each case maturing
within 180 days from the date of acquisition thereof.
(ii) investments in commercial paper maturing
within 90 days from the date of acquisition thereof and having, at
such date of acquisition, the highest rating obtainable from S&P or
from Xxxxx'x.
(iii) investments in certificates of deposit,
banker's acceptances and time deposits maturing within 90 days from
the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by any
Eligible Institution.
(iv) shares of funds registered under the
Investment Company Act of 1940, as amended, that have Assets of at
least $100,000,000 and invest substantially all their Assets in
obligations described in clauses (i) through (iii) above;
provided that any investment which, when made, constituted a Permitted
Investment may continue to be held (but not reinvested) notwithstanding that
such investment may thereafter cease to constitute a Permitted Investment.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Preferred Stock" has the meaning specified in Section 3.4.
"Public Offering" means the consummation by the Company of the first
offering of its equity securities to the public pursuant to a registration
statement declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act").
"Purchaser" means the Person listed as "Purchaser" on Schedule 2.1
hereto.
"Receivables Facility" means a revolving line of credit that is
secured by trade receivables of the Company and amounts outstanding under which
shall not exceed 80% of the face amount of trade receivables of the Company that
are not more than 60 days past due.
"Redeemable Stock" means any equity security that by its terms or
otherwise is or may be required to be redeemed prior to the Stated Maturity of
the Notes, or is redeemable at the option of the Purchaser thereof at any time
prior to the Stated Maturity of the Notes.
"Registrable Securities" has the meaning specified in the Preamble.
"Reportable Event" has the meaning specified in Section 5.12(d)(iii).
"Responsible Officer" shall mean the duly elected Secretary, Chief
Financial Officer, Chief Operating Officer, Chief Executive Officer, President
or Chairman of the Company.
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"Restricted Payment" has the meaning specified in Section 5.7.
"Required Holders" means that number of Holders of Notes constituting
not less than 70% of the total amount due under the Outstanding Notes.
"Sale and Leaseback Transaction" means an arrangement by a Person
with any other Person, providing for the leasing from such other Person, on
terms creating a Capital Lease obligation by such Person or any Subsidiary of
such Person of any Asset of such Person or any Subsidiary of such Person which
has been or is being sold or transferred by such Person or such Subsidiary to
such other Person from whom funds have been or are to be advanced by such lender
or investor on the security of such Asset.
"Securities" has the meaning specified in the Preamble.
"Security Documents" means the Security Agreement, the Intellectual
Property Security Agreement, the Pledge Agreement, the Interest Escrow Security
Agreement, the Funded Commitment Facility Escrow Agreement and the Subsidiary
Guaranty.
"Series A Preferred" has the meaning specified in Section 3.4.
"Series A-1 Preferred" has the meaning specified in Section 3.4.
"Series A-2 Preferred" has the meaning specified in Section 3.4.
"Series A-3 Preferred" has the meaning specified in Section 3.4.
"Series B-1 Preferred" has the meaning specified in Section 3.4.
"Series B-2 Preferred" has the meaning specified in Section 3.4.
"Stated Maturity", when used with respect to any Note or any
installment of interest thereon, means August 25, 2003.
"Statement No. 5" has the meaning specified in Section 3.6(b).
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries of the Company, or by the Company and one or more
other Subsidiaries of the Company. For the purposes of this definition, "voting
stock" means stock which ordinarily has voting power for the election of
directors, whether at all times or only so long as no senior class of stock has
such voting power by reason of any contingency. Unless otherwise specified, the
term "Subsidiary" also includes Foreign Subsidiary and New Subsidiary.
"Warrants" has the meaning specified in the Preamble.
"Warrant Shares" has the meaning specified in the Preamble.
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Section 1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, any
computation required or permitted hereunder shall be made, and all unaudited
financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared, in accordance with GAAP,
applied on a basis consistent with the Audited Financial Statements of the
Company delivered pursuant to Section 6.16.
ARTICLE II
THE SECURITIES
Section 2.1 Issuance, Sale and Delivery of the Securities. The
Company hereby agrees to issue, sell and deliver to each Purchaser, and each
Purchaser hereby agrees to purchase from the Company, at the closing (the
"Closing"), a Guaranteed Senior Secured Primary Note and a Guaranteed Senior
Secured Escrow Note, in each case, in the original principal amount set forth
opposite its name in Section 1 on Schedule 2.1 hereto and a Warrant to purchase
such number of Warrant Shares as set forth opposite its name in Section 2 on
Schedule 2.1 hereto. The Guaranteed Senior Secured Primary Note, the Guaranteed
Senior Secured Escrow Note and the Warrants are referred to collectively
hereinafter as the "Newly Issued Securities." In addition, the Company hereby
agrees to deliver, at the Closing, the Amended and Restated Series A-II, Series
A-III and Series A-V Warrants to the Purchasers as set forth in Section 3 on
Schedule 2.1 hereto.
Section 2.2 Closing; Purchase Price; Purchase Price Allocation.
(a) 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 the date hereof, 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."
(b) At the Closing, the Company shall issue and deliver to
each Purchaser a Guaranteed Senior Secured Primary Note and a Guaranteed Senior
Secured Escrow Note, in each case, in the original principal amount set forth
opposite its name in Section 1 on Schedule 2.1 hereto and a Warrant to purchase
such number of Warrant Shares as set forth opposite its name in Section 2 on
Schedule 2.1 hereto.
(c) At the Closing, and upon receipt of the Newly Issued
Securities, the Purchasers shall deliver to the Company, marked as cancelled,
the Existing Securities set forth opposite its name in Section 4 on Schedule 2.1
hereto as follows:
(i) the senior secured promissory note in the
original principal amount of $4,700,000 issued by the Company to
Northstar High Total Return Fund ("Northstar
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Return") on December 27, 1995 (the "Northstar Return Note"), due and
payable on December 31, 2000;
(ii) the senior secured promissory note in the
original principal amount of $4,000,000 issued by the Company to
Northstar High Total Return Fund II ("Northstar Return II"), on April
1, 1998 (the "Northstar Return II Note"), due and payable on April
17, 1998, as amended on June 10, 1998 to extend the maturity date to
July 10, 1998 and increase the principal amount to $5,000,000, as
further amended on July 10, 1998 to extend the maturity date to July
31, 1998 and increase the principal amount to $6,000,000, and as
further amended on July 31, 1998 to extend the maturity date to
August 24, 1998;
(iii) the senior secured promissory note in the
original principal amount of $4,000,000 issued by the Company to
Northstar High Yield Fund ("Northstar High Yield"), on April 1, 1998
(the "Northstar High Yield Note"), due and payable on April 17, 1998,
as amended on June 10, 1998 to extend the maturity date to July 10,
1998, as further amended on July 10, 1998 to extend the maturity date
to July 31, 1998, and as further amended on July 31, 1998 to extend
the maturity date to August 24, 1998;
(iv) The Series A-V Warrant to purchase 49,066
shares of the Company Common Stock, for an exercise price per share
of $7.64, issued to Northstar Return II on April 1, 1998 (the
"Northstar Return II Warrant");
(v) The Series A-V Warrant to purchase 49,066
shares of the Company Common Stock for an exercise price per share of
$7.64, issued to Northstar High Yield on April 1, 1998 (the "North
Star High Yield warrant");
(vi) The Series A-II Warrant to purchase
initially, 94,010 shares of the Company Common Stock for an exercise
price per share of $14.00 (subject to a two for one split of the
Company Common Stock on December 31, 1997), issued to Northstar
Return on December 27, 1995 (the "Northstar Return Warrant"); and
(vii) The Series A-2 Preferred Stock certificate
evidencing the right to purchase 40,000 shares initially (subject to
the issuance of additional dividend shares) of Series A-2 Preferred
Stock issued by the Company to Northstar Return in March 1997.
(d) At the Closing, the Company shall deliver to the
Purchasers a calculation setting forth in reasonable detail, the stipulated
contribution value of the Northstar Return Note, the Northstar Return II Note,
the Northstar High Yield Note and the Series A-2 Preferred Stock, as set forth
in Section 2.2(c), the aggregate amount of which shall constitute the Company's
allocation of that portion of the Purchase Price payable by the exchange of the
Existing Securities for the Newly Issued Securities. Set forth in Schedule 2.2
is the Company's calculation of the cash portion of the purchase price paid by
such Purchaser.
(e) At the Closing, as payment in full for the Newly Issued
Securities and against delivery of such Newly Issued Securities, each Purchaser
shall deliver, on the Closing
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Date, the Existing Securities as listed opposite its name in Section 4 on
Schedule 2.1 hereto, for cancellation by the Company, and shall transfer the sum
of $18,839,432 by wire transfer of immediately available funds to such account
or accounts as the Company may direct in accordance with its letter of
instruction. The Company and each Purchaser agree that $4,553,050 of the
aggregate consideration for the Guaranteed Senior Secured Primary Notes and the
Warrants shall for all purposes be allocated to the Warrants, and that the
balance of such aggregate consideration shall be allocated to the Guaranteed
Senior Secured Primary Notes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SUBSIDIARIES
The Company represents and warrants, and each Subsidiary represents
and warrants as to itself, to the Purchasers as of the Closing Date that:
Section 3.1 Organization, Qualifications and Corporate Power. The
Company and each Subsidiary is a corporation duly organized, validly existing,
and in good standing under the Laws of the jurisdiction of its respective
incorporation, and the Company and each Subsidiary 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 such Subsidiary, as applicable. The Company and each Subsidiary
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 and
each Subsidiary has the power and authority to execute, deliver and perform this
Agreement and the Ancillary Agreements to which it is a party, and the Company
has the power and authority to issue, sell and deliver the Notes, the Warrants
and the Amended and Restated Series A-II Warrants, Series A-III Warrants and
Series A-V Warrants and to issue and deliver the Warrant Shares upon the
exercise of the Warrants and the Amended and Restated Series A-II Warrants,
Series A-III Warrants and Series A-V Warrants.
Section 3.2 Authorization of Agreements, etc.
(a) The execution and delivery by the Company and each
Subsidiary of this Agreement and the Ancillary Agreements to which it is a party
and the performance by the Company and each Subsidiary of its respective
obligations hereunder and thereunder, and with respect to the Company, the
issuance, sale and delivery of the Notes and the Warrants, and the Amended and
Restated Series A-II Warrants, Series A-III Warrants and Series A-V Warrants and
the issuance, sale and delivery of the Warrant Shares upon the exercise of the
Warrants, and the Amended and Restated Series A-II Warrants, Series A-III
Warrants and Series A-V Warrants 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
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the Company hereby agrees will be made within the requisite time period), the
Amended and Restated Certificate of Incorporation of the Company (as amended to
date, the "Certificate of Incorporation") or the Certificate of Incorporation of
the respective Subsidiary or the by-laws of the Company, as amended (the
"By-laws") or the by-laws of the respective Subsidiary, or any provision of any
indenture, agreement or other instrument to which the Company or such Subsidiary
is a party or by which either the Company or such Subsidiary or any of its
respective Assets is bound, or conflict with, result in a breach of, give rise
to a right of termination under 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
Assets of the Company or such Subsidiary.
(b) The Warrants have 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 under or through the Company or any of its Subsidiaries
except as set forth in this Agreement. The Warrant Shares have been duly
authorized and reserved for issuance upon exercise of the Warrants, 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
under or through the Company or any of its Subsidiaries except as set forth in
this Agreement. Neither the issuance, sale or delivery of the Warrants, 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.
Section 3.3 Validity. This Agreement and each of the Ancillary
Agreements have been duly executed and delivered by the Company and the
Subsidiaries party thereto, as the case may be, and each of the Notes, the
Warrants and the Amended and Restated Series A-II Warrants, Series A-III
Warrants and Series A-V Warrants has been duly executed and delivered by the
Company, and each of the foregoing constitutes the legal, valid and binding
obligation of the Company or the respective Subsidiary, as applicable,
enforceable in accordance with its terms, subject to (a) applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and moratorium Laws and other
similar Laws of general application affecting enforcement of creditors' rights
generally and (b) 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 3.4 Authorized Capital Stock. The authorized Capital Stock of
the Company consists of 25,000,000 shares of common stock, $.0001 par value
("Common Stock"), and 5,000,000 shares of preferred stock ("Preferred Stock").
As of March 30, 1998, 10,917,256 shares of Common Stock were issued and
outstanding, all of which were validly issued and outstanding, fully paid and
nonassessable with no personal liability attaching to the ownership thereof. The
Company has authorized 730,000 shares of Series A Convertible Preferred Stock,
$.0001 par value per share (the "Series A Preferred"). As of March 30, 1998, a
total of 615,697 shares of Series A Preferred were issued and outstanding. The
Company has authorized 850,000
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shares of Series A-1 Convertible Preferred Stock, $.0001 par value per share
(the "Series A-1 Preferred"). As of March 30, 1998, a total of 664,196 shares of
Series A-1 Preferred were issued and outstanding. The Company has authorized
155,000 shares of Series A-2 Preferred Stock, $.0001 par value per share (the
"Series A-2 Preferred"). As of March 30, 1998, a total of 45,482 shares of
Series A-2 were issued and outstanding. The Company has authorized 200,000
shares of Series A-3 Convertible Preferred Stock, $.0001 par value per share
(the "Series A-3 Preferred"). As of March 30, 1998, 150,881 shares of Series A-3
Preferred were issued and outstanding. The Company has authorized 100 shares of
Series B-1 Convertible Preferred Stock, $.0001 par value per share (the "Series
B-1 Preferred"). As of March 30, 1998, 100 shares of Series B-1 Preferred were
outstanding. The Company has authorized 120 shares of Series B-2 Convertible
Preferred Stock, $.0001 par value per share (the "Series B-2 Preferred"). As of
March 30, 1998, 120 shares of Series B-2 Preferred were outstanding. The
Warrants will be exercisable immediately upon issuance into an aggregate of
1,625,000 shares of Common Stock, representing 7.5% of the number of Fully
Diluted Shares. As of the date hereof and except as otherwise provided in this
Agreement or the Ancillary Agreements, the outstanding shares of Capital Stock
of the Company are not subject to, nor were they issued in violation of, any
preemptive rights of shareholders or any right of first refusal or other similar
right in favor of any shareholder. As of the date hereof and except as otherwise
provided in this Agreement or the Ancillary Agreements or Schedule 3.4 attached
hereto (i) there has been no material change (defined as more than a five
percent (5%) increase or decrease) in the number of shares of outstanding Common
Stock or outstanding Preferred Stock of the Company since Xxxxx 00, 0000, (xx)
no subscription, warrant, option, convertible security or other right
(contingent or otherwise) to purchase capital stock of the Company is authorized
or outstanding, (iii) there is no commitment to issue any shares, warrants,
options or other such rights or to distribute to holders of any capital stock of
the Company, in respect thereof, any evidences of indebtedness or Assets, and
(iv) the Company has no obligation (contingent or otherwise) to purchase, redeem
or otherwise acquire any capital stock or pay any dividend or make any other
distribution in respect thereof.
Section 3.5 Financial Statements. The Company has furnished to the
Purchasers the audited balance sheet of each of the Company and Holdings for the
fiscal year ended December 31, 1997 and the related audited statements of
income, stockholders' equity and cash flows of each of the Company and Holdings
for the fiscal year ended December 31, 1997 (the "Audited Financial
Statements"). The Company has furnished to the Purchasers the unaudited balance
sheet of the Company for the quarter ended March 31, 1998 (the "Balance Sheet")
and the related unaudited statements of income, stockholders' equity and cash
flows of the Company for the quarter ended March 31, 1998 certified by a
Responsible Officer of the Company (the "Most Recent Financial Statements"). All
such financial statements have been prepared in accordance with GAAP and fairly
present the financial position of the Company and Holdings as of December 31,
1997 and of the Company as of March 31, 1998, respectively, and the results of
the Company's and Holdings' operations and cash flows as of December 31, 1997
and of the Company's operations and cash flows as of March 31, 1998,
respectively. Except as set forth in Schedule 3.5 hereto, since the date of the
Most Recent Financial Statements, (a) 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
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have not been materially adverse and (b) none of the business, financial
condition, operations or Assets of the Company have been materially adversely
affected by any occurrence or development, individually or in the aggregate,
whether or not insured against.
Section 3.6 Absence of Undisclosed Liabilities and Charges. Except as
set forth on Schedule 3.6 attached hereto, as of the date hereof, (a) neither
the Company nor any Subsidiary had any liabilities of any nature (matured or
unmatured, fixed or contingent) which were not provided for on the Balance
Sheet, except for (i) liabilities which, individually and in the aggregate, were
not material to the financial condition of the Company or such Subsidiary or
(ii) liabilities incurred in the ordinary course of the Company's or such
Subsidiary 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 the 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
on the Balance Sheet as required by Statement No. 5.
Section 3.7 Events Subsequent to the Date of the Balance Sheet.
Except as set forth in the attached Schedule 3.7 or as contemplated by this
Agreement, since the date of the Balance Sheet, neither the Company nor any
Subsidiary has (a) issued any stock, bond or other corporate security, (b)
borrowed any amount or incurred or became subject to any liability (absolute,
accrued or contingent), except current liabilities incurred and liabilities
under contracts entered into in the ordinary course of business, (c) 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, (d) declared or made any
payment or distribution to stockholders or purchased or redeemed any share of
its Capital Stock or other security, (e) mortgaged, pledged or subjected to Lien
any of its Assets, other than liens of current real property taxes not yet due
and payable, (f) sold, assigned or transferred any of its tangible Assets except
in the ordinary course of business, or canceled any Debt or claim, (g) 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, (h)
suffered any material loss of property or waived any right of substantial value,
(i) made any change in officer compensation except in the ordinary course of
business and consistent with past practice, (j) made any material change in the
manner of business or operations of the Company or any Subsidiary, (k) entered
into any transaction except in the ordinary course of business or as otherwise
contemplated hereby or (l) entered into any commitment (contingent or otherwise)
to do any of the foregoing.
Section 3.8 Litigation; Compliance with Law. There is no material (a)
action, suit, claim, proceeding or investigation pending or, to the knowledge of
the Company or the respective Subsidiary, threatened against or affecting the
Company or the respective Subsidiary, 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, (b) arbitration
proceeding relating to the Company or the respective Subsidiary, pending under a
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collective bargaining agreement or otherwise or (c) governmental inquiry pending
or to the knowledge of the Company or the respective Subsidiary, threatened
against or affecting the Company or the respective Subsidiary, (including,
without limitation, any inquiry as to the qualification of the Company or the
respective Subsidiary, to hold or receive any license or permit). Neither the
Company nor the respective Subsidiary has 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 Assets. Neither the Company nor the
respective Subsidiary is in default with respect to any order, writ, injunction
or decree known to or served upon the Company or the respective Subsidiary 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 or the respective Subsidiary
pending or threatened against others. The Company and each Subsidiary has
complied in all material respects with all Laws, applicable to its respective
business, operations, Assets, products and services, and the Company or the
respective Subsidiary 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, Assets or financial condition of the
Company or the respective Subsidiary.
Section 3.9 Title to Properties. Except as disclosed in Schedule 3.9
hereof, the Company has good and marketable title to its Assets reflected on the
Balance Sheet (other than Assets disposed of in the ordinary course of business
since the date of the Balance Sheet), and all such 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
Asset subject thereto or impairing the operations or proposed operations of the
Company.
Section 3.10 Leasehold Interests. Each lease or agreement to which
the Company or any Subsidiary is a party under which it is a lessee of any
Asset, real or personal (a list of all such leases being attached hereto as
Schedule 3.10), is a valid and subsisting agreement without any material Default
of the Company or the respective Subsidiary thereunder and, to the knowledge of
the Company or the respective Subsidiary, 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 the respective Subsidiary, under any such
lease or agreement or, to the knowledge of the Company or the respective
Subsidiary, by any other party thereto.
Section 3.11 Taxes. Except as set forth on Schedule 3.11, the Company
and each Subsidiary 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 or the respective Subsidiary 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
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Company or the respective Subsidiary is obligated to withhold from amounts owing
to employees, creditors and third parties. All such taxes with respect to which
the Company or the respective Subsidiary 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 or the respective Subsidiary's federal, state, county or local taxes
is pending or, to the knowledge of the Company or the respective Subsidiary,
threatened. There is no tax Lien in favor of any federal, state, county or local
taxing authority, outstanding against the Assets, or business of the Company or
the respective Subsidiary.
Section 3.12 Other Agreements. Except as set forth in the attached
Schedule 3.12, neither the Company nor any Subsidiary 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 Assets of the Company or the respective
Subsidiary. Except as set forth in the attached Schedule 3.12, or as a result of
the transactions contemplated in this Agreement, or the Ancillary Agreements,
neither the Company nor any Subsidiary 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 the
respective Subsidiary;
(b) sales contract which entitles any customer to a rebate
or right of set-off, to return any product to the Company or the respective
Subsidiary after acceptance thereof or to delay the acceptance thereof, or which
varies in any material respect from the Company's or the respective Subsidiary's
standard form contracts;
(c) contract with any labor union (and, to the knowledge of
the Company or the respective Subsidiary, no organizational effort is being made
with respect to any of its employees);
(d) contract or other commitment with any supplier
containing any provision permitting any party other than the Company or the
respective Subsidiary 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 the respective Subsidiary 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 consulting basis which is not terminable on
notice without cost or other liability to the Company or the respective
Subsidiary except normal severance arrangements and accrued vacation pay;
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(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 the respective Subsidiary;
(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 the
respective Subsidiary has advanced or agreed to advance money or has agreed to
lease any Asset 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 Assets or Intellectual Property (as defined in Section
3.13) 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 $500,000 or continuing over a period of more than
one (1) 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 the respective Subsidiary 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 the respective Subsidiary for the
sale, lease or rental of the Company's or the respective Subsidiary's products
or services if such contract or group of contracts was entered into by the
Company or the respective Subsidiary in the ordinary course of business.
Each of the contracts listed on Schedule 3.12 hereof is valid and enforceable.
The Company or its respective Subsidiaries are not in Default nor has an Event
of Default, or event that with the lapse of time or the giving of notice, or
both, would constitute an Event of Default occurred or would result therefore
(and, to the knowledge of the Company or the respective Subsidiaries, no other
party thereto is in Default) under the material terms and conditions of any
contract listed on Schedule 3.12 including, but not limited to (i) the
Promissory Note dated August 2, 1996 by PerImmune to Organon Teknika Corporation
("Organon"), (ii) the Intellectual Property Security Agreement dated as of
August 8, 1996, by and among Holdings, PerImmune, Akzo Nobel Pharmaceutical
International, B.V. ("Akzo") and Organon, and (iii) the Intellectual Property
Agreement dated August 2, 1996, by and among Holdings and Akzo, all as amended
by Amendment No. 1 dated July 31, 1998 by Organon, Holdings and PerImmune.
Section 3.13 Patents, Trademarks, etc. Set forth in Schedule 3.13 is
a list and brief description of all patents, patent rights, patent applications,
trademarks, trademark applications,
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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 any Subsidiary,
or of which the Company or any Subsidiary is a licensor or licensee or in which
the Company or any Subsidiary has any right, and in each case a brief
description of the nature of such right. Except as set forth in Schedule 3.13,
the Company or the respective Subsidiary 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, formulas, trade secrets and know-how (collectively,
"Intellectual Property") necessary to the conduct of its respective business as
conducted, and no claim is pending or, to the best knowledge of the Company or
the respective Subsidiary, threatened to the effect that the operations of the
Company or the respective Subsidiary infringe upon or conflict with the rights
of any other Person with respect to any Intellectual Property, and to the best
knowledge of the Company or the respective Subsidiary there is no basis for any
such claim. No claim is pending or, to the best knowledge of the Company or the
respective Subsidiary, threatened to the effect that any such Intellectual
Property owned or licensed by the Company or the respective Subsidiary, or which
the Company or the respective Subsidiary otherwise has the right to use, is
invalid or unenforceable by the Company or the respective Subsidiary in any
jurisdiction where it currently does or intends to exploit such Intellectual
Property and to the best knowledge of the Company there is no basis for any such
claim. To the best knowledge of the Company or the respective Subsidiary, all
technical information developed by and belonging to the Company or the
respective Subsidiary which has not been patented has been kept confidential.
Except as set forth in Schedule 3.13, neither the Company nor the respective
Subsidiary has granted or assigned to any other Person any right to manufacture
or assemble any products or proposed products of the Company or the respective
Subsidiary, other than to its affiliates, and to the knowledge of the Company or
the respective Subsidiary no other person or entity has asserted any such right.
Section 3.14 Loans and Advances. Except as set forth on Schedule
3.14, neither the Company nor any Subsidiary 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 the respective
Subsidiary in respect of reimbursable business expenses anticipated to be
incurred by them in connection with their performance of services for the
Company or the respective Subsidiary.
Section 3.15 Assumptions, Guaranties, etc. of Debt of Other Persons.
Except as set forth on Schedule 3.15, neither the Company nor any Subsidiary 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 and guaranties by the Subsidiaries of the Obligations of the
Company or another Subsidiary.
Section 3.16 Significant Customers and Suppliers. Except as set forth
on Schedule 3.16, (a) no customer which accounted for 5% or more of the
Company's or any
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Subsidiary's sales or revenues during the periods covered by the financial
statements referred to in Section 3.5 or which has been comparably significant
to the Company or the respective Subsidiary thereafter has terminated,
materially reduced or threatened to terminate or materially reduce its purchases
from the Company and (b) as of the date of this Agreement, there is no supplier
that accounts for more than 5% of the Company's or its Subsidiaries' cost of
goods sold during the periods covered by the Financial Statements in Section
3.5.
Section 3.17 Governmental Approvals. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article IV 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 or
any Subsidiary of this Agreement, or for the valid execution delivery and
performance by the Company of the Notes or the Warrants, or the Amended and
Restated Series A-II, Series A-III and Series A-V Warrants or the issuance, sale
and delivery of the Warrant Shares upon exercise of the Warrants, or the Amended
and Restated Series A-II, Series A-III and Series A-V Warrants other than
filings pursuant to state securities laws in connection with the issuance and
sale of the Warrants.
Section 3.18 Insurance. Schedule 3.18 lists all insurance policies
which the Company or any Subsidiary maintains with respect to its businesses,
Assets and employees. Such policies are in full force and effect and neither the
Company nor the respective Subsidiary has received a 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
or the respective Subsidiary to insure against risks to which the Company or the
respective Subsidiary and its respective businesses are subject. Since the date
of the Balance Sheet, there has been no material adverse change in the Company's
or any Subsidiary's relationship with its insurers or in the premiums payable
pursuant to such policies.
Section 3.19 Employment Relations.
(a) The Company and each Subsidiary is in material
compliance with applicable Laws, respecting employment and employment practices,
safety, terms and conditions of employment and wages and hours.
(b) Except as set forth in Schedule 3.19(b), neither the
Company nor any Subsidiary maintains or contributes 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 the respective Subsidiary 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 or
any Subsidiary to the PBGC under Title IV of ERISA.
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Section 3.20 Compensation of Key Employees. Schedule 3.20 sets forth
the aggregate compensation (salaries, wages and bonuses) paid by the Company to
its four most highly compensated employees for the 1997 fiscal year and the
amount of such compensation scheduled to be paid to such employees for the 1998
fiscal year.
Section 3.21 Environmental Compliance. The Company and each
Subsidiary 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 or the respective Subsidiary. Neither the Company nor any Subsidiary
is subject to any liability under any such environmental Laws, that, in the
aggregate for all such liabilities, could be reasonably expected to have a
material adverse effect on the Company or the respective Subsidiary.
Section 3.22 Projections. The projections delivered to the Purchasers
by the Company on August 25, 1998, were prepared by the Company based upon its
experience in the industry and based upon assumptions of fact and opinion which
the Company believes to have been reasonable and accurate both at the time such
projections were delivered and as of the date hereof.
Section 3.23 Disclosure; Accuracy of Statements. Neither this
Agreement nor any Schedule, Exhibit, Ancillary Agreement, statement, list,
certificate or other document including the Registration Statement on Form S-1
filed by the Company on July 9, 1998 (the "Registration Statement") furnished to
the Purchasers by or on behalf of the Company in connection herewith contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein not
misleading in light of the circumstances under which they were made. There is no
fact peculiar to the Company which materially adversely affects or in the future
may (so far as the Company can now foresee) materially adversely affect the
business operations, Assets, or the financial condition of the Company that has
not been set forth in this Agreement or the Ancillary Agreements, or other
documents (including the Registration Statement) furnished by the Company prior
to the date hereof in connection with the transactions contemplated hereby.
Section 3.24 Matters Relating to OncoVAX Products. The Company's
Registration Statement contains an accurate description of the Company's OncoVAX
cancer vaccine product as of the date of the Registration Statement and does not
omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which they
were made, and, to the best of the Company's knowledge, there have been no
material adverse events respecting such product from the date of the filing of
the Registration Statement through the date hereof.
Section 3.25 Subsidiaries. Schedule 3.25 hereto lists all the
Subsidiaries of the Company, all of which are wholly-owned by the Company.
Section 3.26 Use of Proceeds. The Company acknowledges that the
receipt of the proceeds from its sale of the Guaranteed Senior Secured Primary
Notes and the Guaranteed
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Senior Secured Escrow Notes constitutes a financial benefit to the Company and
each of its wholly-owned subsidiaries, PerImmune Holdings, Inc., ("Holdings"),
PerImmune, Inc. ("PerImmune") and Xxxxxxx, Inc. ("Xxxxxxx"), as described in
Section 5.23.
Section 3.27 Location of Collateral.
The Company has no material amount of Collateral, as that term is defined in the
Security Agreement and the Intellectual Property Security Agreement located, in
the State of Massachusetts valued, in the aggregate at more than $5,000.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser represents and warrants to the Company, as to itself,
as of the Closing Date that:
Section 4.1 Purchase of Securities.
(a) It is an "accredited investor" within the meaning of
Rule 501 under the Securities Act and was not organized for the specific purpose
of acquiring the Notes or the Warrants.
(b) It has sufficient knowledge and experience in investing
in companies in a similar stage of development to the Company and the
Subsidiaries so as to be able to evaluate the risks and merits of its investment
in the Company and the Subsidiaries and it is able financially to bear the risks
thereof.
(c) It has had an opportunity to discuss the Company's and
the Subsidiaries' business, management and financial condition with the
Company's and the Subsidiaries' management.
(d) It is acquiring the Notes and the Warrants 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 Notes, the Warrants 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, (ii) the Notes, the Warrants 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 Notes, the Warrants 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 4.2 Authority. It has all requisite power and authority to
execute, deliver and perform this Agreement, and has taken all necessary action
to authorize the execution, delivery
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and performance of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement on the Closing Date will constitute the
legal, valid and binding obligations of the Purchaser, enforceable in accordance
with their terms, except (a) 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
(b) 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.
Section 4.3 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, as of the date hereof, reasonable. It
understands that the Company cannot and does not assure or guarantee the
attainment of such projections or other estimates.
Section 4.4 Risk Factors. It understands that the Notes and the
Warrants are subject to certain risk factors and has fully and independently
evaluated to its satisfaction each risk factor prior to making a decision to
invest in the Notes and Warrants (and, upon exercise of the Warrants, the
Warrant Shares).
ARTICLE V
COVENANTS
Section 5.1 Payment of Principal, Premium and Interest. The Company
will duly and punctually pay the principal of (and premium, if any) and interest
on the Notes in accordance with the terms of the Notes and this Agreement.
Section 5.2 Money for Note Payments to be Held in Trust. The Company
will, on or before each due date of the principal of (and premium, if any) or
interest on any of the Notes, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided.
Section 5.3 Existence. Neither the Company nor any of its
Subsidiaries shall engage in any business which is materially different from the
business now conducted by the Company and its Subsidiaries as of the date hereof
and as described in the Registration Statement. The Company shall preserve and
keep in full force and effect the respective existence, rights (charter and
statutory) and franchises; provided, however, that the Company shall not be
required to preserve any such right or franchise of the Company or any
Subsidiary if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company or
such Subsidiary and that the loss thereof is not disadvantageous in any
material respect to the Purchasers. The Company will satisfy all material
contractual obligations to which the Company or any of its Subsidiaries is a
party or by which it or any of its or their Assets are bound and comply in all
material respects with all requirements of law applicable or
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binding upon the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries or any of its or their respective Assets are subject.
Section 5.4 Maintenance of Assets. The Company will cause all Assets,
licenses, rights and franchises and those of its Subsidiaries used or useful in
the conduct of its business or the business of any Subsidiary to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, or in the case of licenses,
rights and franchises, cause to be preserved, renewed and maintained in full
force and effect, all as required by Law and all as in the judgment of the
Company may be necessary so that the business carried on in connection therewith
may be properly and advantageously conducted at all times; provided, however,
that nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such Assets if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Purchasers.
Section 5.5 Payment of Taxes and Other Claims; Comply with Material
Obligations. The Company will pay or discharge or cause to be paid or discharge,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or Assets of the Company or any Subsidiary, (b) all
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a Lien upon the Assets of the Company or any Subsidiary and (c) all
obligations of whatever nature material to the Company and its Subsidiaries,
taken as a whole, 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. The Company will comply with, and cause
each Subsidiary of the Company to comply with, all material obligations under
leases, contracts and other agreements, and all applicable Laws, (including,
without limitation, any of same (hereinafter "Environmental Laws") regulating,
relating to or imposing liability or standards of conduct concerning pollution
or the protection of the environment, as may now or hereafter be in effect),
except to the extent the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a material adverse effect on the
business operations, Assets or financial condition of the Company and its
Subsidiaries, taken as a whole.
Section 5.6 Financial Covenants. The Company shall comply with the
following financial covenants:
(a) Adjusted Debt to EBITDA Ratio. The Company shall not
permit the Adjusted Debt to annualized EBITDA Ratio as of the last day of each
March, June, September and December during each period specified below to be
greater than the ratio set forth opposite such period:
Date Ratio
---- -----
On or after 1/l/2001 but before 1/l/2001 9:1
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On or after 1/l/2001 but before 1/l/2002 4:5
After 1/l/2002 2:1
If the Adjusted Debt to EBITDA Ratio as of a measuring date is
greater than the ratio set forth above for such date, the Company may, on or
prior to forty-five (45) days after such measuring date (or, if earlier, the
date on which such Financial Statements are required to be delivered pursuant to
Section 5.12) including the Balance Sheet as of such date, cure such Default
either by increasing the consolidated amount of cash and cash equivalents owned
by the Company and its Subsidiaries or by making payments to reduce the
consolidated Debt of the Company and its Subsidiaries, and the Adjusted Debt to
EBITDA Ratio shall be recalculated as of such original measuring date, but
giving retroactive effect to such additional cash or cash equivalents or such
reduction in consolidated Debt of the Company and its Subsidiaries.
(b) Minimum Tangible Net Worth Levels. The Company shall
maintain minimum Tangible Net Worth for each quarter as follows;
Minimum Tangible Net
Date Worth Amount
---- --------------------
On or after 1/l/2000 but before 1/l/2001 $20,000,000
After 1/l/2001 $30,000,000
provided that the Company may include 75% of GAAP book value of its patents and
25% of GAAP book value of its tradenames and trademarks in such calculations.
(c) EBITDA to Interest Expense Ratio. The Company shall not
permit the ratio of EBITDA to Interest Expense as of the last day of each March,
June, September and December during each period specified below to be greater
than the ratio set forth opposite such period:
Date Ratio
---- -----
On or after 1/1/2000 but before 1/l/2001 2:1
On or after 1/l/2001 but before 1/l/2002 4:1
(d) Investment of Proceeds of Guaranteed Senior Secured
Escrow Notes. The proceeds of the issuance of the Guaranteed Senior Secured
Escrow Notes shall be deposited into the Company's account number
20-10-340-0000000 in accordance with the terms of the Funded Commitment Facility
Escrow Agreement. Unless otherwise utilized by the Company in its operations,
such proceeds shall be invested as set forth in the Funded Commitment Facility
Escrow Agreement. If a Default, an Event of Default or any event that with the
lapse of time or the giving of notice, or both, would constitute an Event of
Default shall occur and be continuing, or would result therefrom, the Company
shall not withdraw any funds from the Escrow Account (as defined in the Funded
Commitment Facility Escrow Agreement), which funds shall be held
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thereafter in constructive trust by the Company, as trustee for the benefit of
the Holders who shall be entitled to disbursement of such funds in accordance
with Section 6(b)(v) of the Notes.
Section 5.7 Limitation on Restricted Payments. The Company (a) shall
not declare or pay any dividend or make any distribution in respect of any class
of its Capital Stock or to the holders of any class of its Capital Stock (other
than dividends or distributions payable solely in shares of its Capital Stock or
in options, warrants or other rights to acquire its Capital Stock), (b) shall
not, and will not permit any Subsidiary to, purchase, redeem or otherwise
acquire or retire for value (i) any Capital Stock of the Company or (ii) any
options, warrants or rights to purchase or acquire shares of Capital Stock, (c)
shall not make, or permit any Subsidiary to make, any loan, advance, capital
contribution to or investment in, or payment on a guarantee of any obligation
of, any Person, other than a wholly-owned Subsidiary, (d) shall not, and shall
not permit any Subsidiary to redeem, release, repurchase, retire or otherwise
acquire or retire for value prior to any scheduled maturity, repayment or
sinking fund payment, Debt of the Company which is subordinate in right of
payment to the Notes, and (e) shall not, and shall not permit any Subsidiary to
make any Investments other than Permitted Investments (the transactions
described in clauses (a) through (e) being referred to herein as "Restricted
Payments").
Notwithstanding the foregoing provision, if, at the time thereof no
Default, Event of Default or an event that with the lapse of time or the giving
of notice, or both, would constitute an Event of Default shall have occurred and
is continuing, or would result therefrom the Company may make the following
Restricted Payments:
(a) the redemption or purchase of Capital Stock of the
Company held by an employee or former employee of the Company or its
Subsidiaries who has forfeited the right to own such Capital Stock in accordance
with the terms of an agreement between the Company and such employee entered
into at the time of issuance of such Capital Stock (including pursuant to an
option), in an amount not to exceed $500,000 per employee or $1,000,000 for all
employees, in the aggregate, per annum; or
(b) an investment by the Company or any Subsidiary in any
Foreign Subsidiaries; or
(c) an investment by the Company or any Subsidiary in any
Subsidiary.
Nothing in this Section 5.7 shall be construed to prohibit a merger of the
Company or any Subsidiary in accordance with Section 5.17.
Section 5.8 Limitation on Certain Restrictions Affecting any
Subsidiary. The Company will not, and will not permit any Subsidiary to, create
or otherwise suffer to become effective or exist any consensual encumbrance or
restriction on the ability of any Subsidiary to (a) pay dividends, directly or
indirectly, or make any other distributions on its Capital Stock or pay any Debt
or any other obligation owed to the Company or any Subsidiary, (b) make loans or
advances to the Company or any Subsidiary, or (c) transfer any of its Assets to
the Company or any Subsidiary, provided, however, that this Section shall not
restrict or prohibit any restriction
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existing under this Agreement or under agreements in effect at the date of
execution of this Agreement.
Section 5.9 Limitation on Liens. The Company will not, and will not
permit any Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist any Lien upon any of its Assets or revenues, whether now owned
or hereafter acquired except for:
(a) Liens on Assets existing at the time of acquisition
thereof, provided the principal amount of the Debt secured by such Lien does not
exceed 100% of the Fair Market Value of the Assets acquired at the time it was
acquired;
(b) Liens on Assets of a corporation existing at the time
such corporation becomes a Subsidiary or is merged into or consolidated with the
Company or any Subsidiary, provided such Liens were not created within 180 days
prior thereto;
(c) Liens on Assets of the Company or any Subsidiary
resulting from Debt secured by the bond issued or to be issued by the Washington
Economic Development Finance Authority in the aggregate principal amount of
$1,500,000;
(d) Liens to secure Debt Incurred for the purpose of
financing all or any part of the purchase price or the cost of construction or
improvement of the Assets subject to such Liens, so long as such Liens are
incurred prior to or within 180 days after such Assets is acquired or such
construction or improvement is completed;
(e) any extension, renewal or refinancing (or successive
extensions, renewals or refinancings), in whole or in part, of any Lien referred
to in the foregoing clauses (a) through (d) and Liens existing as of the date of
this Agreement, so long as in each case such extension, renewal or refinancing
does not extend to any other Assets and the Debt so secured is not increased;
(f) any Lien securing Debt owing by the Company to one or
more wholly owned Subsidiaries, but only if such Debt cannot be transferred by
such Subsidiaries;
(g) any Lien securing the Receivable Facility; and
(h) Liens created by the Security Documents.
Section 5.10 Maintenance of Insurance. The Company will at all times
obtain and maintain (or cause to be obtained and maintained) for itself and each
of its Subsidiaries insurance policies for all of their Assets which are of an
insurable nature insured against loss or damage with insurers believed by the
Company to be responsible (but in no event, with insurers having a claims paying
ability of less than "A" or better by S&P's or Xxxxx'x), ("Insurance Carriers")
to the extent that Assets of similar character is usually so insured by
corporations similarly situated and owning like properties in accordance with
good business practice, provided, however, that the Company shall maintain at
least (a) business interruption insurance covering all locations, and (b) "all
risk" and general public liability insurance against loss, damage or claims of
the kind
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that, in the reasonable good faith opinion of the Company, is adequate
and appropriate for the conduct of the business of the Company and, its
Subsidiaries, all of which insurance shall be in such amounts, with such
deductibles and amounts of self-insurance and by such methods as shall be
customary for entities similarly situated in its industry. Where applicable,
each such insurance policy shall name the Holders of the Notes as additional
insureds, beneficiaries, assignees and loan payees. The Company will, and will
cause its Subsidiaries to, use the proceeds from any such insurance policy to
repair, replace or otherwise restore the Assets to which such proceeds relate.
The Company may elect not to make such repair, replacement or restoration if the
Board of Directors, in its reasonable discretion, determines that such repair,
replacement or restoration is not in the best interests of the Company. Within
sixty (60) days of the date hereof, the Company shall obtain and the Company
shall thereafter, maintain one or more life insurance policies (the "XxXxxxxx
Policies") on the life of Xxxxx XxXxxxxx from one or more Insurance Carriers
selected by the Company in an aggregate face amount of at least $5,000,000. Each
XxXxxxxx Policy shall provide that such insurance cannot be terminated unless
thirty (30) days' advance notice has been provided to the Purchasers of the
Notes, during which time such Purchasers shall have the right to pay any premium
due, and shall be promptly reimbursed by the Company for any amounts so paid.
Each XxXxxxxx Policy shall be for a minimum of a five year term, and premiums in
respect of the first three years of the term shall have been prepaid as of the
date on which the first premium is due. The Purchasers shall be named as a
co-owners and beneficiaries of the XxXxxxxx Policies, and the Company shall
assign, in form and substance satisfactory to the Purchasers their ownership
interest to the Purchasers with the consent and acknowledgment of the Insurance
Carrier thereof, free and clear of any Lien or encumbrance (other than any Lien
or encumbrance created pursuant to the Security Documents), to be applied as
follows: (i) first for the benefit of the Purchasers of Notes, to the extent of
the aggregate outstanding principal balance of the Outstanding Notes plus
accrued but unpaid interest thereon, and any other amounts due under any of the
Ancillary Agreements and then (ii) for the benefit of the Company. Upon the
indefeasible payment in full of the Notes, the Purchasers shall re-assign each
XxXxxxxx Policy to the Company.
Section 5.11 Waiver of Stay, Extension and Usury Laws. The Company
and Subsidiaries covenant (to the extent that they may lawfully do so) that they
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury Law or other Law
which would prohibit or forgive the Company or such Subsidiary from paying all
or any portion of the principal and/or interest on the Notes wherever such Law
is or may be enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of this Agreement and the Notes; and the
Company and each of the Subsidiaries (to the extent that they may lawfully do
so) hereby expressly waive all benefit or advantage of any such Law, and
covenant that they will not, by resort to any such Law, hinder, delay or impede
the execution of any power herein granted to the Holders, but will suffer and
permit the execution of every such power as though no such law had been enacted.
Section 5.12 Financial Statements; Other Information. The Company
will deliver in duplicate to Northstar Return, which agrees to accept, on behalf
of each Purchaser:
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(a) if the Company is not subject to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as soon as practicable and in any event within 30 days after
the end of each month commencing with the month of September 1998, internally
prepared consolidated statements of income, stockholders' equity, and cash flows
of the Company and its Subsidiaries for such month, and a consolidated Balance
Sheet of the Company any and its Subsidiaries as at the end of such month,
together with a summary of significant facts and developments occurring within
such month of which it is aware affecting its and/or their operations, financial
condition or prospects;
(b) as soon as practicable and in any event within 45 days
after the end of each of the first three quarterly periods in each fiscal year
if the Company is subject to the requirements of Section 13 or 15(d) of the
Exchange Act, and, if the Company is not subject to such requirements, after the
end of each quarterly period in each fiscal year, internally prepared
consolidated statements of income, stockholders' equity, and cash flows of the
Company and its Subsidiaries for the quarterly period and for the period from
the beginning of the current fiscal year to the end of such quarterly period,
and a consolidated Balance Sheet of the Company and its Subsidiaries as at the
end of such quarterly period, setting forth in each case in comparative form
figures for the corresponding periods in the preceding fiscal year, all in
reasonable detail and satisfactory in form to the Purchasers, certified by a
Responsible Officer as having been prepared in accordance with GAAP and as
fairly presenting the consolidated financial condition and consolidated results
of operations of the Company and its Subsidiaries (subject to normal year-end
audit adjustments and the absence of footnotes); provided, however, that
delivery within the aforesaid 45-day period, pursuant to subsection (d)(i)
below, of copies of the Quarterly Report on Form 10-Q of the Company for such
quarterly period filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this subsection (b) with respect to the
consolidated financial statements;
(c) as soon as practicable and in any event within 90 days
after the end of each fiscal year, consolidating and consolidated statements of
income and cash flows and a consolidated statement of stockholders' equity of
the Company and its Subsidiaries for such year, and a consolidating and
consolidated Balance Sheet of the Company and its Subsidiaries as at the end of
such year, setting forth in each case in comparative form the corresponding
consolidated figures from the preceding annual audit, all in reasonable detail
and satisfactory in form to the Purchasers and, as to the consolidated
statements, a report by independent public accountants of recognized national
standing (an "Accountant") selected by the Company whose report shall be without
limitation as to the scope of the audit, and satisfactory in substance to the
Purchasers along with an opinion of such Accountant to the effect that such
consolidated financial statements present fairly in all material respects the
financial condition and results of operations of the Company and its
Subsidiaries on a consolidated basis in accordance with GAAP without any
going-concern or other qualification expressed in such opinion; provided,
however, that delivery within the aforesaid 90-day period, pursuant to
subsection (d)(i) below, of copies of the Annual Report Form 10-K of the Company
for such fiscal year filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this clause (c) with respect to
consolidated financial statements.
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(d) The Company will also deliver:
(i) from and after the date the Company becomes
subject to the requirements of Section 13 or 15(d) of the Exchange
Act, promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as it shall send to
its stockholders and copies of all registration statements (without
exhibits) and all reports which it files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to
the functions of the Securities and Exchange Commission);
(ii) promptly upon receipt thereof, a copy of
each other report submitted to the Company or any Subsidiary by its
Accountant in connection with any annual, interim or special audit
made by such Accountant of the books of the Company or any
Subsidiary;
(iii) as soon as practicable and in any event
within 10 days after obtaining knowledge of (A) any Person giving any
written notice to the Company or any of its Subsidiaries with respect
to a claimed Default, or event or condition which would result in the
acceleration of Debt in an amount in excess of $1,000,000, (B) the
institution of any litigation or other proceeding involving claims
against the Company or any of its Subsidiaries equal to or greater
than $1,000,000 or any adverse determination in any proceeding
against the Company equal or greater than $1,000,000 with respect to
a single cause of action, (C) any of the events set forth in Section
4043(b) of ERISA (a "Reportable Event"), or (D) any regulatory
proceeding directly involving the Company or any Subsidiary which, in
the opinion of the Company, would, if adversely determined, have a
material adverse effect on the Company and its Subsidiaries taken as
a whole, an officer's certificate specifying the nature and period of
existence of any such condition or event, specifying the notice given
or action taken by such Person and the nature of any such claimed
Default, event or condition, and specifying the details of such
proceeding, litigation or dispute and what action the Company or any
of its Subsidiaries has taken, is taking or proposes to take with
respect thereto; provided, however, that, with respect to any event
set forth in (A) and (B) above, if the amount involves does not
exceed $3,500,000 the Company shall have 30 days to notify the
Holders after obtaining knowledge thereof;
(iv) promptly after the occurrence thereof (A) a
summary of any material dispute between the Company and its
Accountant and (B) a decision by the Company to change its
Accountant;
(v) with reasonable promptness after request from
any Holder, such information respecting the condition or operations,
financial or otherwise, of the Company or any of its Subsidiaries as
such Purchaser may reasonably request;
(vi) promptly after the filing or receiving
thereof, copies of all reports and notices which the Company or any
Subsidiary files under ERISA with the Internal
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Revenue Service or the PBGC or the U.S. Department of Labor or which
the Company or any Subsidiary received from such corporation;
(vii) within forty-five (45) days after each of
March 31, June 30 and September 30, 2000, a certificate of a
Responsible Officer certifying whether the Company is in compliance
with Section 1(f) of the Note and setting forth in reasonable detail
the information required for the calculations thereof;
(viii) within five (5) business days prior to the
closing of any proposed sale (public or private) by the Company of
its debt or equity securities, a report from a Responsible Officer
setting forth in reasonable detail the amount of securities proposed
for sale; the proceeds expected to be received by the Company
therefrom; and the proposed date for receipt of the funds by the
Company;
(ix) within 45 days after the end of each
quarterly period in each fiscal year, the Company will deliver to the
Purchasers an Officer's Certificate certified by a Responsible
Officer (with such financial information with computations in
reasonable detail) to demonstrate compliance by the Company and its
Subsidiaries with the financial covenants set forth in Section 5.6
and any computations required by the Notes and stating that there
exists no Event of Default or Default, or an event that with the
lapse of time or the giving of notice, or both, could constitute an
Event of Default or, if any Event of Default or Default or an event
that with the lapse of time or the giving of notice, or both, could
constitute an Event of Default exists, specifying the nature and
period of existence thereof and what action the Company proposes to
take with respect thereto;
(x) promptly after the occurrence of a Change of
Control or the cessation of employment for any reason of Xxxxx X.
XxXxxxxx as the Company' Chief Executive Officer for a period of
thirty (30) days (the "XxXxxxxx Termination"), a summary of the
event(s) constituting the Change of Control or XxXxxxxx Termination
and the date of such occurrence;
(xi) The Company will, upon the request of the
Holder of any Note, provide such Holder, and any qualified
institutional buyer or accredited investor designated by such Holder,
such financial and other information as such Holder may reasonably
determine to be necessary in order to permit compliance with the
information requirements of Rule 144A under the Securities Act in
connection with the resale of Notes, except at such times as the
Company is subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act. For the purpose of this paragraph
5.12(d)(xi), the term "qualified institutional buyer" and "accredited
investor" shall have the meanings specified in Rule 144A and Rule 501
of Regulation D, respectively, under the Securities Act; and
(xii) Along with the quarterly Financial
Statements delivered pursuant to Section 5.12(b) hereof when they are
due (A) a report analyzing changes in the Company's gross revenues
and in its net revenues in such fiscal quarter compared to the
comparable quarter in the prior fiscal year, and (B) when and to the
extent practicable, a
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report of the number of people treated and the quantity of doses of
all therapeutic products sold in such fiscal quarter, provided
however, that the gross revenue and net revenue data required
hereunder need not be compared to the prior fiscal year for the first
four quarterly reports under this clause, and provided, further, that
the obligation to provide information pursuant to (B) above, shall
not commence until the earlier to occur of (I) January 1, 2000, (II)
FDA approval for commercial use by the Company of OncoVAX cancer
vaccine or HumaSPECT or HumaRAD (as those products are described in
the Registration Statement), or (III) the approval of a Marketing
Authorization Application (as defined in the Registration Statement)
or a reimbursement agreement for the commercial use by the Company of
OncoVAX cancer vaccine or HumaSPECT or HumaRAD (as those products are
described in the Registration Statement) by a member country of the
European Union or the United Kingdom.
Section 5.13 Inspection and Delivery of Property; Books and Records;
Discussions. The Company hereby agrees that, so long as any Obligations under
this Agreement or any Ancillary Agreements are Outstanding, the Company shall
provide, and shall cause each of its Subsidiaries to provide, within ten (10)
days after request therefore, in writing, such business, financial and other
information as the Holders may from time to time reasonably request. The Company
also agrees that it shall 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 Holders to visit and inspect
any of its properties and examine and make abstracts from any of its books and
corporate, financial and other records at any reasonable time and as often as
may reasonably be desired and to discuss the business, operations, Assets and
financial and other condition of the Company with officers and employees of the
Company and with its Accountants; provided that the Holders shall bear their 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.
Section 5.14 Further Security Interest. In the event that the Company
or any Subsidiary of the Company at any time or from time to time after the date
hereof shall form or acquire any Subsidiary (a "New Subsidiary") as may be
permitted hereby, (a) the Company or, as the case may be, such Subsidiary, as
beneficial owner of the capital stock of the New Subsidiary, shall promptly
execute and deliver to the Holders of the Notes a supplemental agreement
pursuant to which the Company or such Subsidiary will pledge shares of Capital
Stock or other equity interests to the Holders of the Notes, pursuant to which
supplemental agreement 100% of the issued and outstanding shares of Capital
Stock or other equity interests in or of the New Subsidiary held beneficially by
the Company or such Subsidiary, as the case may be, shall be pledged under and
in accordance with such supplemental agreement, (b) the Company or such
Subsidiary, as the case may be, shall promptly take all actions necessary and
appropriate to perfect the Liens of such pledge (including without limitation,
the delivery of stock or other certificates evidencing the shares of Capital
Stock or other equity interest so pledged (if, any), accompanied by duly
executed and undated stock powers in blank) and (c) the Company and
such Subsidiary shall promptly deliver to the Holders of the Notes such legal
opinions respecting
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such supplemental agreement, and the pledge granted thereby, as the Holders of
the Notes shall reasonably request.
The Company or, as the case may be, any of its Subsidiaries as the
record or beneficial owners of the Capital Stock of any New Subsidiary shall
promptly cause such New Subsidiary to become a party to the Security Documents
and such New Subsidiary shall promptly take all actions necessary and
appropriate to perfect the Liens of such Security Interests as are granted by
such Security Documents which such New Subsidiary shall have entered into as
aforesaid (including, without limitation, the delivery to the Holders of the
Notes of financing statements, executed by such New Subsidiary), and otherwise
in form and substance appropriate for filing in all appropriate jurisdictions)
and such New Subsidiary shall promptly deliver to the Holders of the Notes such
legal opinions in form and substance respecting such Security Documents and the
Security Interests granted thereby as the Holders of the Notes shall reasonably
request. The Company, or as the case may be, any of its Subsidiaries as the
record or beneficial owners of the capital stock of any New Subsidiary shall
promptly cause such New Subsidiary to become a party to a Guaranty Agreement
substantially in the form of Exhibits H-1 through H-3 attached hereto and such
New Subsidiary shall promptly take all actions necessary and appropriate to
guaranty the obligations of the Company and its Subsidiaries hereunder.
Section 5.15 Further Assurances.
(a) The Company, at its own cost and expense, will cause to
be promptly duly taken, executed, acknowledged and delivered all such further
acts, documents and issuances as the Holders of the Notes may from time to time
reasonably request in order to more effectively carry out the intent and
purposes of this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby. In furtherance, but not in limitation of the
foregoing, the Company agrees to deliver and to cause its Subsidiaries to
deliver all further instruments and documents that may be necessary or desirable
in order to grant, confirm, protect and perfect first and prior Liens in any
real or personal property which is at such time Collateral or which was intended
to be Collateral pursuant to the Security Documents.
(b) The Company further agrees to take all actions
requested by the Holders of the Notes to name the Holders of the Notes as the
beneficiaries of the XxXxxxxx Policy delivered on the Closing Date, or as
co-owners, assignees or additional insureds, as applicable.
(c) The Company further agrees, at its own cost and
expense, to take all actions necessary to (i) file for patent protection in any
and all jurisdictions in which the Company intends to operate its business with
respect to patents reasonably expected to generate, directly, or indirectly
(through product sales or licensing of products related to such patents), more
than 10% of the Company's annual revenues in such jurisdiction (the "Material
Patents"); (ii) cause the Holders' Security Interests in the Company's existing
or future Material Patents to be perfected, protected and maintained as a first
priority security interest (except with respect to certain Collateral in which
Akzo Nobel Pharma International, B.V., as Collateral Agent under the
Intellectual Property Security Agreement dated August 8, 1996 (the "Collateral
Agent") has a first priority security interest (the "Akzo Security Interest
Collateral") and with respect to the
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Akzo Security Interest Collateral, a second priority perfected security
interest until such time as payment in full of the Debt underlying the Akzo
Security Interest Collateral has been made and at such time, a first priority
perfected security interest in the Akzo Security Interest Collateral) to the
fullest extent permitted by the laws of the jurisdiction in which the Company is
operating its business utilizing Material Patents; and (iii) to comply with the
obligations of Section 5.26 to assure that the patents and patent applications
set forth on Schedule 5.26 have been assigned and transferred into the name of
Holdings in the United States, the Netherlands, Belgium and the United Kingdom
and to cause the Holders' Security Interests in such patents to be perfected,
protected and maintained in such jurisdictions as a second priority Security
Interest (until such time as the Debt underlying the Akzo Security Interest
Collateral shall have been repaid and in such case, as a first priority
perfected security interest).
(d) The Company further agrees to make prompt payment of
all fees, costs and expenses of the Holders and their counsel arising out of the
transactions contemplated hereby which have not been paid in full at the
Closing.
Section 5.16 Limitation on Debt. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Debt, except:
(a) Debt of the Company in respect of the Notes.
(b) Debt of the Company to any Subsidiary of the Company
that has executed and delivered Security Documents and of any such Subsidiary to
the Company or any other such Subsidiary.
(c) Debt outstanding as of June 30, 1998 as set forth on
Schedule 5.16 hereto and any amendments or modifications thereof (but excluding
any increase in the principal amount or interest on such Debt).
(d) Debt of the Company or any of its Subsidiaries that was
incurred by such Person on customary commercial trade terms to vendors,
suppliers or other Persons providing services for use by such Person in the
ordinary course of its business, unless and until such Debt is outstanding more
than 60 days past the original due date therefor.
(e) Debt of the Company or any of its Subsidiaries for any
deposit received by the Company or such Subsidiary from any customer or client
for services to be performed or goods sold by the Company or such Subsidiary,
unless the Company or such Subsidiary for any reason becomes obligated to refund
such deposit and the reimbursement obligation has been outstanding for more than
60 days from the date such reimbursement obligation occurred.
(f) So long as (i) no Default or Event of Default or event
that with the lapse of time or the giving of notice, or both, would constitute
an Event of Default, then exists or is continuing or would result therefrom and
(ii) no Default or Event of Default or event that with the lapse of time or the
giving of notice, or both, would constitute an Event of Default, would
exist after giving pro forma effect to the Debt to be incurred (including,
without limitation, Defaults or Events of Default or under Section 5.6).
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(A) Debt outstanding under the Company's
Receivables Facility;
(B) Unsecured Debt of the Company and its
Subsidiaries which, by its terms, is made expressly
subordinate to the Debt of the Company under the Notes,
provided that the Company may incur unsecured Debt which
is subordinate to the Debt of the Notes without regard to
any Default, Event of Default or event that with the lapse
of time or the giving of notice, or both, would constitute
an Event of Default, under Section 5.6, in an amount equal
to the difference between $11,000,000 and the amount of
the Notes that have been prepaid before the date on which
such unsecured Debt is incurred under this provision;
(C) Debt of the Company and its Subsidiaries
incurred to finance the acquisition of tangible Assets
(whether pursuant to a loan, a lease financing or
otherwise) after the date hereof provided that such Debt
shall be limited to 100% of the cost of such Assets at the
time such Assets were acquired.
(D) Debt of a corporation, limited liability
company, partnership or other entity which becomes a
Subsidiary of the Company after the date hereof as
permitted hereunder, provided that such Debt existed at
the time at the same time such entity became a Subsidiary
and was not created within 180 days prior thereto or
otherwise in anticipation thereof; and
(E) Debt of the Company with respect to letters
of credit or applications or reimbursements therefor to
support payment or performance obligations of the Company.
Section 5.17 Limitation on Mergers; Etc. The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter into
any merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of, all or substantially all of its
business or Assets, or make any material change in its present method of
conducting business, except so long as no Default, Event of Default or event
that with the lapse of time or the giving of notice, or both, would constitute
an Event of Default, has occurred and is continuing or would result therefrom:
(a) any wholly-owned Subsidiary may be merged or
consolidated with or into the Company (provided that the Company shall be
continuing or surviving corporation) or with or into any one or more
wholly-owned Subsidiaries (provided that a wholly-owned Subsidiary or
Subsidiaries shall be the continuing or surviving corporation);
(b) any wholly-owned Subsidiary may sell, lease, transfer
or otherwise dispose of any or all of its Assets (upon voluntary liquidation or
otherwise) to the Company or any other wholly-owned Subsidiary; and
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(c) the Company or any Subsidiary may be merged or
consolidated with one or more entities provided that (i) the Company or any such
Subsidiary shall be the continuing or surviving corporation, (ii) the Required
Holders shall have consented to such merger or consolidation and (iii)
immediately after giving effect thereto, no Default or Event of Default or event
that with the lapse of time or them giving notice, would constitute an Event of
Default shall have occurred and be continuing or would result therefrom.
Section 5.18 Limitation on Sales of Property. The Company shall not,
and shall not permit any Subsidiaries to, directly or indirectly, convey, sell,
lease, assign, transfer or otherwise dispose of any of its Assets or business
(including, without limitation receivables and leasehold interests) or any
product line, whether owned or hereafter acquired, or, in the case of any
Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any
Person other than the Company or any wholly-owned Subsidiary, except:
(a) the sale, lease or other disposition of any product,
inventory or equipment in the ordinary course of business in bona fide
commercial transactions;
(b) as permitted by Section 5.16(a), (b) or (f) (A); or
(c) a sale or other disposition where the consideration
received is at least equal to the Fair Market Value of such Assets; provided
that the Asset Sale Excess Proceeds must be used to prepay the Notes.
Section 5.19 Limitation on Transactions with Affiliates. The Company
shall not, and shall not permit any of its Subsidiaries, directly or indirectly,
to enter into any transaction (including, without limitation, any purchase,
sale, lease or exchange of Assets or the rendering of any service) with any
Affiliate that is not a wholly-owned Subsidiary, unless such transaction (a) is
otherwise permitted hereunder, (b) is in the ordinary course of the Company or
such Subsidiary's business, and (c) is on terms no less favorable to the Company
or such Subsidiary, as the case may be, than it would obtain in an arm's-length
transaction; provided, that the Company may pay customary directors' fees and
reimburse reasonable out-of-pocket expenses directly related to meetings of the
Board of Directors.
Section 5.20 Limitation on Credit Extensions. The Company shall not,
and shall not permit any of its Subsidiaries to, extend credit, make advances or
make loans other than (a) normal and prudent extensions of credit to customers
buying goods and services in the ordinary course or business, which extensions
shall not be for longer periods than those extended by similar businesses
operated in a normal and prudent manner, (b) loans or other advances, however,
characterized, to the Company or to any of its wholly-owned Subsidiaries to the
extent otherwise permitted hereunder, and (c) loans to employees in the
furtherance of the Company's business as shall not exceed at any one time
outstanding $500,000 in the aggregate.
Section 5.21 Limitation on Certain Amendments. The Company shall not
amend or otherwise modify or waive any provision of its Certificate of
Incorporation without the prior written consent of the Required Holders, which
consent shall not unreasonably withheld.
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Section 5.22 Limitation on Investments. The Company shall not, and
shall not permit any of its Subsidiaries to, purchase, hold or acquire
beneficially any stock, bond, notes, debentures or other securities or any
Assets constituting a business unit of, or make any other investment in, any
Person, except (a) as expressly permitted by Section 5.20 hereof, (b)
investments in Capital Stock of any of the wholly owned Subsidiaries of the
Company that have executed and delivered Security Documents, (c) investments in
joint ventures, partnerships and other entities in the biopharmaceutical
business that have, for all such investments taken together, an aggregate cost
basis not greater than $1,000,000, so long as no Default or Event of Default or
event that with the lapse of time or the giving of notice, or both, would
constitute an Event of Default exists at the time of and after giving effect to
any such investment, (d) investments in any entity for which the only
consideration paid therefor by the Company or any of its Subsidiaries is the
Common Stock of the Company or such Subsidiary, valued at its Fair Market Value
and (e) Permitted Investments.
Section 5.23 Use of Proceeds. The Company and its Subsidiaries will
utilize the proceeds from the sale of the Guaranteed Senior Secured Primary
Notes and the Guaranteed Senior Secured Escrow Notes as follows:
(a) $7,171,131 will be applied at the Closing to repay the
1995 Note owed by the Company to Northstar High Total Return Fund;
(b) $10,113,014 will be applied at the Closing to repay the
April 1998 Notes owed by the Company to Northstar High Total Return Fund II and
Northstar High Yield Fund;
(c) $4,876,423 will be applied at the Closing to the
redemption of the Company's Series A-II Preferred Stock held by Northstar High
Total Return Fund;
(d) $5,097,568.91 will be applied at the Closing to
discharge in full the Company's Debt to CoreStates Enterprise Fund, a division
of CoreStates Bank, N.A. ("CoreStates");
(e) $500,000 will be applied at the Closing to the payment
by Holdings of amounts owed by it to Organon pursuant to the Intellectual
Property Agreement dated August 2, 1996 by and among Holdings, and Akzo Nobel
Pharma International, B.V. ("Akzo"); and
(f) $2,165,365.09 will be advanced by the Company to its
Subsidiaries, Holdings, PerImmune and Xxxxxxx for capital (including, without
limitation, working capital) required by such Subsidiaries.
The Company agrees that the funds utilized to make payments pursuant to Section
5.23(a) through and including (f) will be disbursed directly to the
corresponding payees from the Purchasers at the Closing.
Section 5.24 Assumption of Company Debt by Subsidiaries. Upon the
request of any Holder after the Closing Date, the Company shall cause each of
its Subsidiaries, Holdings, PerImmune and Xxxxxxx, and any New Subsidiaries to
execute Notes (the "Subsidiary Notes"), on
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terms and conditions identical to the Guaranteed Senior Secured Primary Notes
and the Guaranteed Senior Secured Escrow Notes, evidencing the aggregate
principal amount of Outstanding Notes held by such Holder pursuant to this
Purchase Agreement, provided that in the event there shall be any amounts owed
to the Collateral Agent at the time of such request, the Company shall use its
best efforts to obtain, within twenty (20) business days after delivery of the
request, the consent of the Collateral Agent to the execution and delivery of
the Subsidiary Notes. The Company shall not be required to deliver the
Subsidiary Notes pursuant to this provision if the Collateral Agent refuses to
consent thereto provided that the Company has used its best efforts to obtain
the Collateral Agent's consent. If there shall be no amounts owing to the
Collateral Agent at the time of the request for Subsidiary Notes, the Company
shall deliver the Subsidiary Notes to the requesting Holder within seven (7)
business days after delivery of the request by such Holder to the Company.
Section 5.25 Covenants with respect to OncoVAX Cancer Vaccine. The
Company will use its commercially reasonable best efforts (a) to file its
Biological License Application with respect to the OncoVAX cancer vaccine not
later than December 31, 1998, (b) to obtain FDA approval expeditiously of the
Company's therapeutic products currently utilized in its clinical trials and to
initiate Phase III clinical trials for OncoVAX in combination with chemotherapy
for Stage III colon cancer and (c) to obtain not later than December 31, 1998,
regulatory and/or reimbursement approvals required for the commercial use of its
OncoVAX cancer vaccine in the Netherlands.
Section 5.26 Covenant with respect to Transfer of Certain Patents.
The Company at its own cost and expense, within 60 days after the date hereof,
will take all actions necessary to record the assignment and transfer of patents
and patent applications listed on Schedule 5.26 hereto into the name of Holdings
with the appropriate authorities in the United States, Netherlands, Belgium, and
the United Kingdom and to cause the Holders' Security Interests in such patents
to be perfected, protected and maintained in such jurisdictions as a second
priority perfected security interest until such time as the Debt underlying the
Akzo Security Interest has been repaid in full, and in such case, a first
priority perfected security interest in the Akzo Security Interest Collateral.
In the event that the Company shall fail to have caused the Holders'
Security Interests in such patents to be perfected, protected and maintained in
such jurisdictions as a second priority perfected security interest (or, in the
event that the Debt underlying the Akzo Security Interest Collateral shall have
been repaid in full, and in such case, a first priority perfected security
interest in the Akzo Security Interest Collateral) within 60 days after the date
hereof, the rate of interest payable with respect to the principal amount of
Outstanding Notes shall be increased to 15% per annum in accordance with Section
2(c) of the Guaranteed Senior Secured Primary Note and Section 2(c) of the
Guaranteed Senior Secured Escrow Note until such time as the Company has
fulfilled its obligations under this Section 5.26; provided however, that
failure of the Company to fulfill its obligations under this Section 5.26 within
180 days after the date hereof shall be deemed an "Event of Default" in
accordance with Section 6(a)(iv) of the Guaranteed Senior Secured Primary Note
and Section 6(a)(iv) of the Senior Secured Escrow Note.
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Section 5.27 Foreign Currency Liabilities. The Company will manage
its foreign currencies, Assets, liabilities and expenses in a manner that will
protect and promote its ability to pay its U.S. Dollar liabilities and related
costs and expenses.
Section 5.28 Unaudited Financial Statements. The Company shall
furnish to the Purchasers, on or prior to September 15, 1998, the unaudited
balance sheet of the Company for the quarter and six months ended June 30, 1998
and the related unaudited statements of income, stockholders' equity and cash
flows of the Company for the quarter ended June 30, 1998, each certified by a
Responsible Officer of the Company. Such financial statements shall be prepared
in accordance with GAAP and shall fairly present the financial position of the
Company as of June 30, 1998.
Section 5.29 Consent of Transamerica Business Credit Corporation. The
Company shall use its best efforts to obtain the consent of the Transamerica
Business Credit Corporation to the grant of a second lien on the Excluded
Equipment.
Section 5.30 Interest Escrow Security Agreement. The Company will
provide information reasonably requested by the Holders respecting the
Depositary appointed under the Interest Escrow Security Agreement and will
change the Depositary, if requested by the Holders.
Section 5.31 Waiver of Certain Covenants. The Company may omit in any
particular instance to comply with any covenant or condition set forth in
Sections 5.1 to 5.30, inclusive, if before the time for such compliance the
Required Holders shall, by act of such Required Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent and for the time so expressly waived, and, until
such waiver shall become effective, the obligations of the Company in respect of
any such covenant or condition shall remain in full force and effect.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS
The obligations of each Purchaser to purchase and pay for the Newly
Issued Securities being purchased by it on the Closing Date are subject, at the
option of such Purchaser, to the satisfaction of the following conditions on or
before such Closing Date:
Section 6.1 Supporting Documents. At the Closing, the Purchasers
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 State of Delaware and (ii) a certificate 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
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(b) a certificate of the Secretary or an Assistant
Secretary 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, the
issuance, sale, delivery, and performance of the Notes and the Warrants, and the
reservation, issuance and delivery of the Warrant Shares upon the exercise of
the Warrants, 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) the incumbency and specimen signature of each officer
of the Company executing this Agreement, the Notes, and the Warrants 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);
Section 6.2 Fees of Purchasers. The Company shall have paid, in
accordance with Article VII, the reasonable legal and other fees and
disbursements of the Purchasers, as invoiced.
Section 6.3 Warrants. The Company shall have issued and duly executed
the Warrants to the Purchasers and shall have executed a registration rights
agreement, substantially in the form set forth as Exhibit B-1 hereto.
Section 6.4 Amended and Restated Warrants. The Company shall have
duly executed and delivered the Amended and Restated Warrants, substantially in
the form of Exhibits B-2 through B-6 hereto.
Section 6.5 Interest Escrow Security Agreement. The Company shall
have duly executed the Interest Escrow Security Agreement, substantially in the
form set forth as Exhibit D hereto.
Section 6.6 Notes. Each Purchaser shall have received the Guaranteed
Senior Secured Primary Note and the Guaranteed Senior Secured Escrow Note it is
purchasing duly executed and delivered by a duly authorized officer of the
Company.
Section 6.7 Security Agreements. The Company and its Subsidiaries and
the Holders shall have duly executed and delivered the Global Security Agreement
in substantially the form of Exhibit E hereto and the Intellectual Property
Security Agreement in substantially the form of Exhibit F hereto.
Section 6.8 Pledge Agreement. The Company and its Subsidiaries shall
have duly executed and delivered a pledge agreement in substantially the form of
Exhibit G hereto.
Section 6.9 Guarantees. Each of the Subsidiaries shall have duly
executed and delivered their respective guaranty in substantially the form of
Exhibits H-1 through H-3 hereof.
Section 6.10 Pledged Stock. The Company shall have delivered to the
Holders certificates representing all issued and outstanding shares of Capital
Stock of each of the existing
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Subsidiaries, together with stock powers duly executed in blank, to be held
pursuant to the terms of the Pledge Agreement.
Section 6.11 Escrow Agreement. The Company shall have duly executed
the Funded Commitment Facility Escrow Agreement, substantially in the form of
Exhibit L annexed hereto.
Section 6.12 Financing Statements. The Company and each Subsidiary
shall have duly executed such financing statements (Form UCC-1) as shall be
requested by the Holders to perfect the security interest provided by the Global
Security Agreement and shall have taken all action reasonably requested by
Purchasers to perfect and protect the security interests created by such Form
UCC-1s.
Section 6.13 First Union Agreement. The Company shall have executed
an agreement with First Union National Bank (as successor-in-interest to
CoreStates), as amended through the date hereof containing, among other things,
a waiver of any defaults under the agreements between the Company and
Corestates, substantially in the form of Exhibit I hereto and shall have caused
CoreStates to deliver (a) an assignment of the CoreStates Warrants to the
Purchasers and (b) such UCC-3 termination notices and other releases in form and
substance satisfactory to the Purchasers terminating CoreStates' interest in the
Company's Assets.
Section 6.14 Principal Executive Officer. Xxxxx XxXxxxxx Successor
shall be the principal executive of the Company in charge of the Company's
management and policies. The Company shall obtain a "XxXxxxxx Policy" in
accordance with Section 5.10, with premiums prepaid for a period of not less
than three years from the Closing Date and shall execute and deliver an
Assignment of Life Insurance as Collateral in a form reasonably acceptable to
the Purchasers within sixty (60) days of the date hereof.
Section 6.15 Agreement with Akzo. The Company shall have duly
executed an agreement with Akzo, Organon, Holdings and PerImmune substantially
in the form of Exhibit J attached hereto amending certain terms of the
Intellectual Property Security Agreement by and among PerImmune, Organon, and
Akzo as Collateral Agent pursuant to which the Collateral Agent consents to the
granting of a second priority security interest to the Purchasers on all assets
of PerImmune in which the Collateral Agent maintains a first priority security
interest. The Company shall have delivered to the Purchasers, a confirmation
signed by the Collateral Agent that it has received the guaranty duly executed
by the Company on August 21, 1998 and that the provisions of Amendment No. 1
executed by and among Holdings, PerImmune, Akzo and Organon dated July 31, 1998
to the Akzo Agreement are of full legal force and effect as of the date hereof.
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Section 6.16 Financial Statements. The Company shall have delivered
its (a) audited consolidated financial statements as of and for the year ended
December 31, 1997, together with the notes thereto, the auditor's unqualified
report thereon and any accompanying management letter and (b) unaudited
consolidated financial statements as of and for the three months ended March 31,
1998, together with the notes thereto.
Section 6.17 Letter of Instructions. Purchasers shall have received
irrevocable instructions from the Company to direct funds to accounts maintained
pursuant to the Interest Escrow Security Agreement and the Funded Commitment
Facility Agreement.
Section 6.18 Other Actions. The Company and each Subsidiary shall
have taken all other action reasonably requested by the Purchasers desirable to
perfect and protect the security interests created by the Security Documents.
Section 6.19 No Adverse Actions. There shall be no action, suit,
complaint, investigation or proceeding pending or, to the knowledge of the
Company, threatened against the Company, or any properties or rights of the
Company, by or before any court, arbitrator or administrative or governmental
body which could reasonably be expected to result in any material adverse change
in the business, financial condition or operations of the Company taken as a
whole. There shall be no action, suit, investigation or proceeding pending or
threatened against the Company which purports to affect the validity or
enforceability of this Agreement or the Ancillary Agreements.
Section 6.20 Opinion of Counsel. The Purchasers shall have received
from Xxxxxxxx & Xxxxxxxx LLP, counsel for the Company, opinions dated the
Closing Date, in the form attached hereto as Exhibit K-1 and Exhibit K-2.
ARTICLE VII
PAYMENT FOR PURCHASE OF SECURITIES
Contemporaneously with the satisfaction of the obligations of the
Company as set forth in Article VI, each Purchaser shall transfer to the Company
such sum, and deliver the Existing Securities, as set forth opposite its name in
Column 2 and Column 3, respectively, of Schedule 2.1 hereto, as specified in
Section 2.2 of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Expenses. The Company will pay its own expenses and the
Purchasers' expenses in connection with the transactions contemplated hereby
whether or not such transactions shall be consummated and the Company shall pay
for all out-of-pocket costs of the Purchasers, including, without limitation (a)
legal fees incurred by Purchasers in connection with
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due diligence, documentation and closing of this transaction, and (b) the costs
of appraisals, financial reports and other documents requested by Purchasers in
connection with this transaction.
Section 8.2 Brokerage. Each party hereto will indemnify and hold
harmless any other party hereto 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 8.3 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, or
nationwide overnight delivery service (with charges prepaid) as follows:
(a) if to the Company or any Subsidiary, at Intracel
Corporation, 0000 XX Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx Xxxxxxxxxx 00000, Attn:
Chief Executive Officer, 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 Purchasers, at their respective addresses set
forth on Schedule 2.1 hereto with a copy to Xxxxx Xxxxxxxxx, Esq., Reboul,
MacMurry, Xxxxxx, Xxxxxxx & Kristol, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
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. Any notice given hereunder
shall be deemed given and delivered when delivered in person, or three days
after mailing by mail or one day after delivery to an overnight express service
for next day delivery, as the case may be.
Section 8.4 Governing Law; Submission to Jurisdiction. This Agreement
shall be construed in accordance with, and governed by, the internal laws of the
State of New York as permitted by Section 5-401 of the New York General
Obligations Law (or any similar successor provision) without giving effect to
any choice of law rule that would cause the application of the Laws of any
jurisdiction other than the State of New York. The Company and each existing
Subsidiary of the Company hereby irrevocably and unconditionally:
(a) submit itself and its Subsidiaries and their respective
Assets in any legal action or proceeding relating to this Agreement and the
Ancillary Agreements to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts of any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
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(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to it at its
address set forth in or determined pursuant to Section 8.3 or at such other
address of which the Purchasers shall have been notified pursuant thereto; and
(d) waives, to the maximum extent not prohibited by Law,
any right it may have to claim or recover in any legal action or proceeding
referred to in this Section 8.4 any punitive or exemplary damages and any
damages which are not proximately caused by or the reasonably foreseeable result
of the breach which is the subject of such action or proceeding.
The Company hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Ancillary Agreements;
(b) the Purchasers do not have any fiduciary relationship
with or duty to the Company arising out of or in connection with this Agreement,
or the Ancillary Agreements; and
(c) no joint venture or partnership exists between the
Purchasers, on the one hand, and the Company, on the other hand, and the
relationship of the Company and the Purchasers is that of, inter alia, debtor
and creditor.
THE COMPANY, EACH SUBSIDIARY OF THE COMPANY AND THE PURCHASERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY, ANY OBJECTION BASED ON
FORUM NON CONVENIENS OR VENUE IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, THE ANCILLARY AGREEMENTS AND FOR ANY COUNTERCLAIM THEREIN.
THIS AGREEMENT AND THE ANCILLARY AGREEMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
THE COMPANY WILL CAUSE EACH NEW SUBSIDIARY TO TAKE SUCH ACTION AS IS
REQUIRED TO CONSENT TO, AND BE BOUND BY, THE PROVISIONS OF THIS SECTION 8.4 IN
ITS ENTIRETY.
Section 8.5 Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto and the Ancillary Agreements, 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.
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Section 8.6 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. This Agreement shall not
be effective unto duly executed by each and every party hereto.
Section 8.7 Amendments. This Agreement may not be amended or modified
and no provisions hereof may be waived, without the written consent of the
Company, each Subsidiary and each Purchaser. However, this Agreement 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, if the Company shall
obtain the written consent to such amendment, action or omission to act, of the
Required Holders, except that, without the prior written consent of one hundred
percent (100%) of the Purchasers, no amendment to this Agreement shall change
the maturity of any Note, or change the principal of, or the rate or time of
payment of interest on any Note, or affect the time, amount or allocation of any
prepayments, change the proportion of the principal amount of the Notes required
with respect to any consent, amendment, waiver or declaration, amend, modify or
waive any provision of this Section 8.7, change the percentage specified in the
definition of Required Holders or consent to the assignment or transfer by the
Company or any of its Subsidiaries of their respective rights and obligations
under this Agreement or the Ancillary Agreements. Each Purchaser of the Notes
shall be bound by any consent authorized by this Section 8.7 whether or not such
Note shall have been marked to indicate such consent, but any Notes issued
thereafter may bear notation referring to any such consent. Any amendment or
waiver of any provision of any Note shall be effective only for the purposes and
period of time expressly set forth therein and shall not entitle the Company to
any other waiver or amendment in similar or other circumstances. No course of
dealing between the Company and any Purchaser of any Note, nor any failure to
exercise or any delay in exercising on the part of the holder of any Note any
right, remedy, power or privilege under any Note shall or operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege under any Note preclude any other right, remedy, power or privilege.
The rights, remedies, powers and privileges under the Notes are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by Law. As
used herein and in the Notes, the term "this Agreement and the Ancillary
Agreements" and references thereto shall mean this Agreement and the Ancillary
Agreements as they may from time to time be amended or supplemented.
Section 8.8 Disclosure to Other Persons. The Company hereby
authorizes any of the Purchasers of the Notes to deliver copies of any financial
statements and other documents delivered to such Purchaser, and disclose any
other information disclosed to such Purchaser, by or on behalf of the Company or
any Subsidiary in connection with or pursuant to this Agreement or the Ancillary
Agreements to (a) such Purchaser's directors, officers, employees, agents and
professional consultants, (b) any other Purchaser of any Note, (c) any Person to
which such Purchaser offers to sell such Note or any part thereof, (d) any
Person to which such Purchaser sells or offers to sell a participation in all or
any part of such Note, (e) any Person from which such Purchaser offers to
purchase any security of the Company, (f) any federal or state regulatory
authority having jurisdiction over such Purchaser, or (g) any other Person to
which such delivery or disclosure may be necessary or appropriate (i) in
compliance with any Law applicable to such Purchaser, (ii) in response to any
subpoena or other legal process or informal investigative
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demand or (iii) in connection with any litigation to which such Purchaser is a
party. Notwithstanding the foregoing, except as provided in clauses (f) and (g)
above, the Purchasers agree that they shall not disclose any information learned
or received by them in connection with the negotiation, execution, delivery and
performance of this Agreement or the Ancillary Agreements to any Person that
directly competes or may reasonably be expected to directly compete with any
business of the Company.
Section 8.9 Limitation on Interest. The Company and each Purchaser
intends to comply with applicable usury Laws from time to time in effect. At no
time shall the interest rate payable on the Notes exceed the maximum rate of
interest, if any, that at any time or from time to time may be contracted for,
taken, charged or received on the Notes or on any amount which may be owing to
the Purchasers of the Notes under the Laws applicable to such Purchasers of
Notes and this transaction. In the event that the interest rate payable on the
Notes shall exceed the maximum rate of interest allowable under applicable usury
Laws, then the rate of interest shall automatically be reduced to the maximum
rate permitted by Law.
Section 8.10 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 8.11 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, the Subsidiaries and the Purchasers
have executed this Agreement as of the day and year first above written.
INTRACEL CORPORATION
By: /s/ XXXXX X. XxXXXXXX
--------------------------------------
Name: Xxxxx X. XxXxxxxx
Title: President and Chief
Executive Officer
XXXXXXX, INC.
By: /s/ XXXXX X. XxXXXXXX
--------------------------------------
Name: Xxxxx X. XxXxxxxx
Title: President and Chief
Executive Officer
PERIMMUNE HOLDINGS, INC.
By: /s/ XXXXX X. XxXXXXXX
--------------------------------------
Name: Xxxxx X. XxXxxxxx
Title: President and Chief
Executive Officer
PERIMMUNE, INC.
By: /s/ XXXXX X. XxXXXXXX
--------------------------------------
Name: Xxxxx X. XxXxxxxx
Title: President and Chief
Executive Officer
NORTHSTAR HIGH YIELD FUND
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
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NORTHSTAR HIGH TOTAL RETURN FUND
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
NORTHSTAR HIGH TOTAL RETURN FUND II
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
NORTHSTAR STRATEGIC INCOME FUND
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
51
