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EXHIBIT 10.16
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NOTE AND WARRANT
PURCHASE AGREEMENT
between
INTRACEL CORPORATION,
NORTHSTAR HIGH YIELD FUND
AND
NORTHSTAR HIGH TOTAL RETURN FUND II
Dated as of April 1, 1998
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NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of
April 1, 1998, by and among Intracel Corporation, a Delaware corporation (the
"Company"), Northstar High Yield Fund and Northstar High Total Return Fund II
(each, a "Purchaser" and, together, the "Purchasers").
PREAMBLE
WHEREAS, the Company wishes to issue and sell to the Purchasers (i) the
Company's promissory notes, in the original aggregate principal amount of
$8,000,000, such promissory notes being substantially in the form attached
hereto as Exhibit A-1 and Exhibit A-2 (each, a "Note" and, collectively, the
"Notes"), and (ii) the Common Stock Warrants, substantially in the form attached
hereto as Exhibit B-1 and Exhibit B-2 (each, a "Warrant" and, collectively, the
"Warrants"), to purchase in the aggregate up to 98,132 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").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties hereto agree as follows:
ARTICLE I
THE SECURITIES
SECTION 1.1. Issuance, Sale and Delivery of the Securities. The Company
hereby agrees to issue, sell and deliver to: (a) Northstar High Yield Fund, and
Northstar High Yield Fund hereby agrees to purchase from the Company, at the
closing (the "Closing") for the purchase price of $4,000,000, a Note in the
original principal amount of $4,000,000 and a Warrant to purchase 49,066 Warrant
Shares and (b) Northstar High Total Return Fund II, and Northstar High Total
Return Fund II hereby agrees to purchase from the Company, at the Closing for
the purchase price of $4,000,000, a Note in the original principal amount of
$4,000,000 and a Warrant to purchase 49,066 Warrant Shares.
SECTION 1.2. Closing; Purchase Price; Purchase Price Allocation. The
Closing shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, 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." At the Closing, the Company
shall issue and deliver to the Purchasers the Notes in the aggregate original
principal amount of $8,000,000 and the Warrants to purchase 98,132 Warrant
Shares in the aggregate. As payment in full for the Securities, and against
delivery of the Securities on the Closing Date, the Purchasers shall transfer
the sum of $8,000,000 by wire transfer of immediately available funds to such
account or accounts as the Company may direct in writing. The Company and the
Purchasers agree that 3.57% of the aggregate consideration for the Securities
shall be allocated to the Warrants (one-half of such amount being allocated to
each of the Warrants), and that the
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balance of such aggregate consideration shall be allocated to the Notes
(one-half of such amount being allocated to each of the Notes).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company (and for purposes of this Article II, unless the context
requires otherwise, the term "the Company" shall be deemed to include all
wholly-owned subsidiaries of Intracel Corporation) represents and warrants to
the Purchasers as of the Closing Date that:
SECTION 2.1. Organization, Qualifications and Corporate Power. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, and the Company 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. The Company has the power and authority to own and hold its
properties and to carry on its business as now conducted and as proposed to be
conducted, and the Company has the power and authority to execute, deliver and
perform this Agreement and to issue, sell and deliver the Notes and the
Warrants, and to issue and deliver the Warrant Shares upon the exercise of the
Warrants.
SECTION 2.2. Authorization of Agreements, etc.
(a) The execution and delivery by the Company of this Agreement
and the performance by the Company of its obligations hereunder, the
issuance, sale and delivery of the Notes and the Warrants, and the
issuance, sale and delivery of the Warrant Shares upon the exercise of
the 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 will be made by the Company within the requisite time
period), the Amended and Restated Certificate of Incorporation of the
Company (the "Charter") or the By-laws of the Company, as amended (the
"By-laws") or any provision of any indenture, agreement or other
instrument to which either the Company is a party or by which either the
Company or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (whether with or without notice or
lapse of time or both) a default under any such indenture, agreement or
other instrument, or result in the creation or imposition of any lien,
charge, restriction, claim or encumbrance of any nature whatsoever upon
any of the properties or assets of the Company.
(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,
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restrictions, claims and encumbrances imposed by or through the Company
except as set forth in this Agreement. The Warrant Shares have been duly
authorized and reserved for issuance upon exercise of the 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 by or through the Company 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 2.3. Validity. Each of this Agreement, the Notes, and the
Warrants have been duly executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance and moratorium laws and other similar laws
of general application affecting enforcement of creditors' rights generally and
(ii) the availability of equitable remedies including specific performance may
be limited by equitable principles of general applicability (regardless of
whether enforcement is sought in a proceeding in equity or at law).
SECTION 2.4. Authorized Capital Stock. The authorized capital stock of
the Company consists of 25,000,000 shares of common stock, $.0001 par value (the
"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 are 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 603,624 shares of Series A Preferred were issued and outstanding. The
Company has authorized 850,000 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 651,171 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, 147,922
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 are 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 are outstanding.
SECTION 2.5. Financial Statements . The Company has furnished to the
Purchaser the unaudited balance sheets of the Company and PerImmune Holdings,
Inc. ("PerImmune") for the fiscal year ended December 31, 1997 (the "Balance
Sheet") and the related unaudited statements of income, stockholders' equity and
cash flows of the Company and PerImmune for the fiscal year ended December 31,
1997. All such financial statements have been prepared in
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accordance with generally accepted accounting principles consistently applied
and fairly present the financial position of the Company and PerImmune as of
December 31, 1997, and the results of their respective operations and cash flows
as of December 31, 1997. Except as set forth in Schedule 2.5 hereto, since the
date of the Balance Sheet, (i) there has been no change in the assets,
liabilities or financial condition of the Company or PerImmune from that
reflected in the Balance Sheet except for changes in the ordinary course of
business which in the aggregate have not been materially adverse and (ii) none
of the business, financial condition, operations or property of the Company or
PerImmune have been materially adversely affected by any occurrence or
development, individually or in the aggregate, whether or not insured against.
SECTION 2.6. Absence of Undisclosed Liabilities and Changes. Except as
set forth on Schedule 2.6 attached hereto, as of the date hereof, (a) the
Company had no liabilities of any nature (matured or unmatured, fixed or
contingent) which were not provided for on the Balance Sheet, except for (i)
liabilities which, individually and in the aggregate, were not material to the
financial condition of the Company or (ii) liabilities incurred in the ordinary
course of the Company's business and not required to be so provided for under
generally accepted accounting principles, and (b) all reserves established by
the Company or PerImmune and set forth on such balance sheet were adequate in
all material respects. There are no loss contingencies (as such term is used in
Statement of Financial Accounting Standards No. 5 ("Statement No. 5") issued by
the Financial Accounting Standards Board in March 1975) which are not adequately
provided for in such balance sheet as required by Statement No. 5.
SECTION 2.7. Events Subsequent to the Date of the Balance Sheet. Except
as set forth in the attached Schedule 2.7 or as contemplated by this Agreement,
since the date of the Balance Sheet the Company has not (i) issued any stock,
bond, note or other corporate security, (ii) borrowed any amount or incurred or
become subject to any liability (absolute, accrued or contingent), except
current liabilities incurred and liabilities under contracts entered into in the
ordinary course of business, (iii) discharged or satisfied any lien or
encumbrance or incurred or paid any obligation or liability (absolute, accrued
or contingent) other than current liabilities shown on the Balance Sheet and
current liabilities incurred since the date of the Balance Sheet in the ordinary
course of business, (iv) declared or made any payment or distribution to
stockholders or purchased or redeemed any share of its capital stock or other
security, (v) mortgaged, pledged or subjected to lien any of its assets,
tangible or intangible, other than liens of current real property taxes not yet
due and payable, (vi) sold, assigned or transferred any of its tangible assets
except in the ordinary course of business, or canceled any debt or claim, (vii)
sold, assigned, transferred or granted any exclusive license with respect to any
material patent, trademark, trade name, service ▇▇▇▇, copyright, trade secret or
other intangible asset other than in the ordinary course of business, (viii)
suffered any material loss of property or waived any right of substantial value,
(ix) made any change in officer compensation except in the ordinary course of
business and consistent with past practice, (x) made any material change in the
manner of business or operations of the Company, (xi) entered into any
transaction except in the ordinary course of business or as otherwise
contemplated hereby or (xii) entered into any commitment (contingent or
otherwise) to do any of the foregoing.
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SECTION 2.8. Litigation; Compliance with Law. There is no material (i)
action, suit, claim, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company, at law or in equity,
or before or by any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, (ii)
arbitration proceeding relating to the Company, pending under a collective
bargaining agreement or otherwise or (iii) governmental inquiry pending or to
the knowledge of the Company, threatened against or affecting the Company,
(including, without limitation, any inquiry as to the qualification of the
Company, to hold or receive any license or permit). The Company has not received
any opinion or memorandum or legal advice from legal counsel to the effect that
it is exposed, from a legal standpoint, to any liability or disadvantage which
may be material to its business, financial condition, operations or property.
The Company is not in default with respect to any order, writ, injunction or
decree known to or served upon the Company of any court or of any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign. There is no material action or
suit by the Company pending or threatened against others. The Company has
complied in all material respects with all laws, rules, regulations and orders
applicable to its business, operations, properties, assets, products and
services, and the Company has all necessary permits, licenses and other
authorizations required to conduct its business as conducted and as proposed to
be conducted, except where the failure to own or possess such permits, licenses
or authorizations could not, either singly or in the aggregate, have a material
adverse effect on the business, operations, properties or financial condition of
the Company.
SECTION 2.9. Title to Properties. Except in instances that, either
singly or in the aggregate, could not have a material adverse effect on the
business, operations, properties or financial condition of the Company, and
except as disclosed in Schedule 2.9 hereof, the Company has good and marketable
title to its properties and assets reflected on the Balance Sheet (other than
properties and assets disposed of in the ordinary course of business since the
date of the Balance Sheet), and all such properties and assets are free and
clear of mortgages, pledges, security interests, liens, charges, claims,
restrictions and other encumbrances, except for liens for current taxes not yet
due and payable and minor imperfections of title, if any, not material in nature
or amount and not materially detracting from the value or materially impairing
the use of the property subject thereto or impairing the operations or proposed
operations of the Company.
SECTION 2.10. Leasehold Interests. Each lease or agreement to which the
Company is a party under which it is a lessee of any property, real or personal
(a list of all such leases being attached hereto as Schedule 2.10), is a valid
and subsisting agreement without any material default of the Company, thereunder
and, to the knowledge of the Company, without any material default thereunder of
any other party thereto. No event has occurred and is continuing which, with due
notice or lapse of time or both, would constitute a default or event of default
by the Company, under any such lease or agreement or, to the knowledge of the
Company, by any other party thereto.
SECTION 2.11. Taxes. The Company has filed or will file within the time
prescribed by law (including extensions of time approved by the appropriate
taxing authority) all tax
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returns, Federal, state, county, local and foreign, required to be filed by it,
and the Company has paid all taxes shown to be due by such returns and
extensions as well as all other taxes, assessments and governmental charges
which have become due or payable, including, without limitation, all taxes which
the Company is obligated to withhold from amounts owing to employees, creditors
and third parties. All such taxes with respect to which the Company has become
obligated have been paid and adequate reserves have been established for all
taxes accrued but not yet payable. No deficiency assessment with respect to or
proposed adjustment of the Company's Federal, state, county or local taxes is
pending or, to the knowledge of the Company, threatened. There is no tax lien in
favor of any Federal, state, county or local taxing authority, outstanding
against the assets, properties or business of the Company.
SECTION 2.12. Other Agreements. Except as set forth in the attached
Schedule 2.12, the Company is not a party to or otherwise bound by any written
or oral contract or instrument or other restriction which individually or in the
aggregate could materially adversely affect the business, financial condition,
operations or property of the Company. Except as set forth in the attached
Schedule 2.12, or as a result of the transactions contemplated in this
Agreement, the Notes, or the Warrants, the Company is not 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;
(b) sales contract which entitles any customer to a rebate or
right of set-off, to return any product to the Company after acceptance
thereof or to delay the acceptance thereof, or which varies in any
material respect from the Company's standard form contracts;
(c) contract with any labor union (and, to the knowledge of the
Company, no organizational effort is being made with respect to any of
its employees);
(d) contract or other commitment with any supplier containing any
provision permitting any party other than the Company 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 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
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;
(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 has advanced
or agreed to advance money or has agreed to lease any property as lessee
or lessor;
(j) agreement or obligation (contingent or otherwise) to issue,
sell or otherwise distribute or to repurchase or otherwise acquire or
retire any share of its capital stock or any of its other equity
securities;
(k) assignment, license or other agreement with respect to any
form of intangible property or Intellectual Property (as defined in
Section 2.13) 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 without penalty upon notice
of thirty (30) days or less, but excluding any contract or group of
contracts with a customer of the Company for the sale, lease or rental
of the Company's products or services if such contract or group of
contracts was entered into by the Company in the ordinary course of
business.
Except as set forth in Schedule 2.12, there are no material defaults by the
Company or, to the Company's knowledge, by any other party to any of the
foregoing agreements.
SECTION 2.13. Patents, Trademarks, etc. Set forth in Schedule 2.13 is a
list and brief description of all patents, patent rights, patent applications,
trademarks, trademark applications, service marks, service ▇▇▇▇ 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
of which the Company is a licensor or licensee or in which the Company has any
right, and in each case a brief description of the nature of such right. Except
as set forth in Schedule 2.13, the Company owns or possesses adequate licenses
or other rights to use all patents, patent applications, trademarks, trademark
applications, service marks, service ▇▇▇▇ applications, trade names, copyrights,
manufacturing processes, formulae, trade secrets and know-how (collectively,
"Intellectual Property") necessary to the conduct of its business as conducted,
and no claim is pending or, to the knowledge of the Company, threatened to the
effect
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that the operations of the Company infringe upon or conflict with the rights of
any other person under any Intellectual Property, and to the knowledge of the
Company there is no basis for any such claim. No claim is pending or, to the
knowledge of the Company, threatened to the effect that any such Intellectual
Property owned or licensed by the Company, or which the Company otherwise has
the right to use, is invalid or unenforceable by the Company, and to the
knowledge of the Company there is no basis for any such claim. To the knowledge
of the Company, all technical information developed by and belonging to the
Company which has not been patented has been kept confidential. Except as set
forth in Schedule 2.13, the Company has not granted or assigned to any other
person or entity any right to manufacture or assemble any products or proposed
products of the Company, other than to its affiliates, and to the knowledge of
the Company no other person or entity has asserted any such right.
SECTION 2.14. Loans and Advances. Except as set forth on Schedule 2.14,
the Company does not have 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 in respect of reimbursable business
expenses anticipated to be incurred by them in connection with their performance
of services for the Company.
SECTION 2.15. Assumptions, Guaranties, etc. of Indebtedness of Other
Persons. The Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on any indebtedness of any other person
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise invest in a debtor, or otherwise to assure a creditor against loss),
except for guaranties by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business.
SECTION 2.16. Significant Customers and Suppliers. No customer which
accounted for 10% or more of the Company's sales or revenues during the periods
covered by the financial statements referred to in Section 2.5 or which has been
significant to the Company thereafter has terminated, materially reduced or
threatened to terminate or materially reduce its purchases from the Company. As
of the date of this Agreement, there is no supplier to the Company which is a
sole-source supplier.
SECTION 2.17. Governmental Approvals. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article III
hereof, no registration or filing with, or consent or approval of or other
action by, any Federal, state or other governmental agency or instrumentality is
or will be necessary for the valid execution, delivery and performance by the
Company of this Agreement, the Notes or the Warrants, or the issuance, sale and
delivery of the Warrant Shares upon exercise of the Warrants, other than filings
pursuant to state securities laws in connection with the issuance and sale of
the Notes and Warrants.
SECTION 2.18. Accuracy of Statements. Neither this Agreement nor any
Schedule, Exhibit, statement, list, document, certificate or other information
furnished by or on behalf of the Company to the Purchasers in connection with
this Agreement or any of the transactions contemplated hereby contains any
untrue statement of a material
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fact or omits to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading.
SECTION 2.19. Insurance. Schedule 2.19 lists all insurance policies
which the Company maintains with respect to its businesses, properties and
employees. Such policies are in full force and effect and the Company has
received no notice of termination from the insurance carriers. Such policies,
with respect to their amounts and types of coverage, are adequate in the
reasonable commercial judgment of the Company to insure against risks to which
the Company and its respective businesses. Since the date of the Balance Sheet,
there has been no material adverse change in the Company's relationship with its
insurers or in the premiums payable pursuant to such policies.
SECTION 2.20. Employment Relations.
(a) The Company is in material compliance with applicable
federal, state or other applicable laws, domestic or foreign, respecting
employment and employment practices, safety, terms and conditions of
employment and wages and hours.
(b) The Company does not maintain or contribute to any employee
benefit plan ("Employee Benefit Plan") within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to ERISA but which is not in substantial
compliance with ERISA, or which has incurred any material liability to
the Pension Benefit Guaranty Company ("PBGC") in connection with any
Employee Benefit Plan covering any employees of the Company or any of
its subsidiaries or ceased operations at any facility or withdrawn from
any such Plan in a manner which could subject it to material liability
under Section 462(f), 4063 or 4064 of ERISA, and knows of no facts or
circumstances which might give rise to any material liability of the
Company to the PBGC under Title IV of ERISA.
SECTION 2.21. Compensation of Key Employees. Schedule 2.21 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 2.22. Environmental Compliance. The Company is in compliance
with all applicable laws relating to environmental matters in each jurisdiction
where it is presently engaged in a material manufacturing business, except for
such failures to comply which, in the aggregate, could reasonably be expected
not to have a material adverse effect on the Company. The Company is not subject
to any liability under any such environmental laws, that, in the aggregate for
all such liabilities, could be reasonably expected to have a material adverse
effect on the Company.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers represents and warrants to the Company as of the
Closing Date that:
SECTION 3.1. Purchase of Securities.
(a) It is an "accredited investor" within the meaning of Rule 501
under the Securities Act of 1933, as amended (the "Securities Act") and
was not organized for the specific purpose of acquiring the Note or the
Warrant.
(b) It has sufficient knowledge and experience in investing in
companies in a similar stage of development to the Company so as to be
able to evaluate the risks and merits of its investment in the Company
and it is able financially to bear the risks thereof.
(c) It has had an opportunity to discuss the Company's business,
management and financial condition with the Company's management.
(d) It is acquiring the respective Note and Warrant for its own
account for the purpose of investment and not with a view to or for sale
in connection with any distribution thereof.
(e) It understands that (i) its respective Note, Warrant and,
upon exercise thereof, 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) its respective Note, Warrant and, upon exercise
thereof, Warrant Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or is exempt
from such registration, (iii) its respective Note, Warrant and, upon
exercise thereof, Warrant Shares will bear a legend to such effect and
(iv) the Company will make a notation on its transfer books to such
effect.
SECTION 3.2. Authority. It has all requisite power and authority to
execute, deliver and perform this Agreement, and to purchase its respective Note
and Warrant and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement, and the purchase of its respective
Note and Warrant and the consummation of the transactions contemplated hereby
and thereby. This Agreement on the Closing Date will constitute the legal, valid
and binding obligations of such Purchaser, enforceable in accordance with their
terms, except (i) to the extent that enforceability may be limited by
bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
(ii) that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceedings therefor may be brought.
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ARTICLE IV
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS
The obligations of each of the Purchasers to purchase and pay for the
Notes and the Warrants being purchased by it on the Closing Date, are, at its
option, subject to the satisfaction of the following conditions on or before
such Closing Date:
SECTION 4.1. 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
(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 certified Charter delivered pursuant to clause (a)(i) above; and
(iii) to 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 4.2. Fees of Purchasers. The Company shall have paid, in
accordance with Section 7.1, the reasonable legal and other fees and
disbursements of the Purchasers, as invoiced in an aggregate amount not to
exceed $15,000.00.
SECTION 4.3. Warrants. The Company shall have issued the Warrants to the
Purchasers.
SECTION 4.4. Notes. The Purchasers shall have received the Notes
executed and delivered by a duly authorized officer of the Company.
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ARTICLE V
PAYMENT FOR PURCHASE OF NOTE AND WARRANT
Simultaneously with the satisfaction of the obligations of the Company
as set forth in Article IV of this Agreement, the Purchasers shall transfer to
the Company the aggregate sum of $8,000,000, as specified in Section 1.2 of this
Agreement.
ARTICLE VI
COVENANTS
SECTION 6.1. Piggyback Registration.
(a) As used in this Article VI the following terms, unless the
context otherwise requires, have the following respective meanings:
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar Federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Registrable Stock" shall mean the Warrant Shares, but
only so long as such shares continue to be Restricted Stock. Any such
shares shall continue to be "Restricted Stock" until such time as such
shares (i) have been disposed of in accordance with a registration
statement which has become effective under the Securities Act or (ii)
have been publicly sold in compliance with Rule 144 (or any similar
provision then in force) under the Securities Act.
(b) If at any time or from time to time, the Company shall
determine to register any of its securities, for its own account or the
account of any of its shareholders, other than a registration relating
solely to employee benefit plans, or a registration relating solely to a
transaction of the type described in Rule 145(a) as promulgated under
the Exchange Act, a transaction relating solely to the sale of debt or
convertible debt instruments or a registration on any form (other than
Form ▇-▇, ▇-▇ or S-3, or their successor forms) which does not include
substantially the same information as would be required to be included
in a registration statement covering the sale of Registrable Stock, the
Company will:
(i) give to the holder of Registrable Stock written notice
thereof as soon as practicable prior to filing the registration
statement; and
(ii) include in such registration and in any underwriting
involved therein, all the Registrable Stock specified in a written
request or requests, made within fifteen (15) days after receipt of such
written notice from the Company, by the holder of Registrable Stock,
except as set forth in subsection (C) below.
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(c) If the registration is for a registered public offering
involving an underwriting, the Company shall so advise the holder of
Registrable Stock as a part of the written notice given pursuant to
subsection (B)(i). In such event, the right of the holder of Registrable
Stock to registration pursuant to this Article VI shall be conditioned
upon the holder's participation in such underwriting to the extent
provided herein. If the holder of Registrable Stock proposes to
distribute its securities through such underwriting, it shall (together
with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this
Article VI, if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten,
the managing underwriter may limit the number of Shares of Registrable
Stock to be included in the registration and underwriting, or may
exclude Registrable Stock entirely from such registration if the
registration is the first registered offering for the sale of the
Company's securities to the general public, or a registered offering
pursuant to Section 3 of the Registration Rights Agreement dated July
22, 1994 between the Company and each of the purchasers of shares of the
Series A Convertible Preferred Stock of the Company named therein,
Section 3 of the Registration Rights Agreement dated September 22, 1994
between the Company and each of the purchasers of shares of the Series
A-I Convertible Preferred Stock of the Company named therein, Section 9
of the Series A-I Warrant issued by the Company to Dublind Investments,
L.L.C. on September 22, 1995, Section 9 of the Series A-I Warrant
granted by the Company to Creditanstalt on November 21, 1995, Section 9
of the Series A-II Warrant granted by the Company to the Purchaser or
Article VI of the Note and Series A-III Warrant Purchase Agreement
between the Company and CoreStates dated as of June 11, 1996 (provided
that no shares held by officers of the Company, other than shares
subject to other registration rights granted by the Company that may be
owned by officers, are included in the registration and underwriting).
The Company shall so advise the holder of Registrable Stock and the
other holders distributing their securities through such underwriting,
and the number of shares of securities that may be included in the
registration and underwriting shall be allocated among the holder of
Registrable Stock and other holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Stock held by the
Holder and other securities held by other holders at the time of filing
the registration statement. If the Holder disapproves of the terms of
any such underwriting, if may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. Any Registrable
Stock excluded or withdrawn from such underwriting shall be withdrawn
from such registration.
(d) If requested in writing by the underwriter or underwriters
for the initial underwritten public offering of securities of the
Company, the holder of Registrable Stock shall agree not to sell
publicly any shares of Registrable Stock or any other shares of Common
Stock (other than Registrable Stock or other shares of Common Stock
being registered in such offering), without the consent of such
underwriter or underwriters, for a period of not more than 128 days
following the effective date of the registration statement relating to
such initial public offering.
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SECTION 6.2. Registration Procedures. If and whenever the Company is
required by the provisions of Section 6.1 to effect the registration of any
shares of Registrable Stock under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Stock and use its best efforts to cause
such registration statement to become and remain effective for the
period of the distribution contemplated thereby (determined as
hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period specified in paragraph (a) above and
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Stock covered by such registration
statement in accordance with the holder's intended method of disposition
as set forth in such registration statement for such period;
(c) furnish to the holder of Registrable Stock and to each
underwriter such number of copies of the registration statement and
prospectus included therein (including each preliminary prospectus) as
such persons reasonably may request in order to facilitate the public
sale or other disposition of the Registrable Stock covered by such
registration statement;
(d) use its best efforts to register or qualify the Registrable
Stock covered by such registration statement under the securities or
"blue sky" laws of such jurisdiction as the holder of Registrable Stock
or, in the case of an underwritten public offering, the managing
underwriter reasonably shall request; provided, however, that the
Company shall not for any such purpose be required to qualify generally
to transact business as a foreign corporation in any jurisdiction where
it is not so qualified or to consent to general service of process in
any such jurisdiction;
(e) use its best efforts to list the Registrable Stock covered by
such registration statement with any securities exchange on which the
Common Stock of the Company is then listed;
(f) in addition to its obligations under Section 6.2 hereof,
immediately notify the holder of Registrable Stock and each underwriter
under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration statement,
as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) if the offering is underwritten, at the request of the holder
of Registrable Stock, furnish on the date that Registrable Stock is
delivered to the underwriters for sale
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pursuant to such registration: (i) an opinion dated such date of counsel
representing the Company for the purposes of such registration,
addressed to the underwriters and to the holder of Registrable Stock,
stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the registration statement,
the related prospectus and each amendment or supplement thereof comply
as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any opinion as
to financial statements or other financial data contained therein) and
(C) to such other effects as reasonably may be requested by counsel for
the underwriters or by the Holder or its counsel and (ii) a letter dated
such date from the independent public accountants retained by the
Company, addressed to the underwriters and to the holder of Registrable
Stock, stating that they are independent public accountants within the
meaning of the Securities Act and that, in the opinion of such
accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information
as to the period ending no more than five business days prior to the
date of such letter) with respect to such registration as such
underwriters reasonably may request; and
(h) make available for inspection by the holder of Registrable
Stock, by any underwriter participating in any distribution pursuant to
such registration statement, and by any attorney, accountant or other
agent retained by the holder of Registrable Stock or underwriter, all
financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by the
holder of Registrable Stock and any underwriter, attorney, accountant or
agent in connection with such registration statement.
For purposes of this Agreement, the period of distribution, if not
otherwise described in the Registration Statement of Registrable Stock in a firm
commitment underwritten public offering, shall be deemed to extend until each
underwriter has completed the distribution of all securities purchased by it,
and the period of distribution of Registrable Stock in any other registration
shall be deemed to extend until the earlier of the sale of all Registrable Stock
covered thereby or 120 days after the effective date thereof.
In connection with each registration hereunder, the holder of
Registrable Stock will furnish to the Company in writing such information with
respect to itself and the proposed distribution by it as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.
In connection with each registration pursuant to Section 6.1 covering an
underwritten public offering, the Company and the holder of Registrable Stock
agree to enter into a written agreement with the managing underwriter selected
in the manner herein provided in such form
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and containing such provisions as are customary in the securities business for
such an arrangement between such underwriter and companies of the Company's size
and investment stature.
SECTION 6.3. Expenses. All expenses incurred by the Company in complying
with Section 6.1, including all registration and filing fees, printing expenses,
fees and disbursements of counsel and independent public accountants for the
Company, reasonable fees and expenses (including counsel fees) incurred in
connection with complying with state securities or "blue sky" laws, fees of the
National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars, costs of insurance and reasonable fees and
disbursements of one counsel for the sellers of Registrable Stock, but excluding
any Selling Expenses, are called "Registration Expenses". "Selling Expenses"
shall include only such underwriting discounts and selling commissions
applicable to the sale of any Registrable Stock which would not have been
incurred in the absence of the registration and sale of the Registrable Stock.
The Company will pay all Registration Expenses in connection with each
registration statement filed pursuant to Section 6.1; provided, however, that in
connection with a registration statement filed under Section 6.1, the Company
shall not be obligated to pay fees and expenses (including counsel fees)
incurred in connection with complying with state securities laws in any state in
which the Company is not otherwise registering for sale any of the shares the
Company proposes to sell in the offering. All Selling Expenses in connection
with each registration statement filed pursuant to Section 6.1 shall be borne by
the participating sellers in proportion to the number of shares sold by each, or
by such participating sellers as they may agree.
SECTION 6.4. Indemnification and Contribution
(a) In the event of a registration of any of the Registrable
Stock under the Securities Act pursuant to Section 6.1, the Company will
indemnify and hold harmless the holder of Registrable Stock, each
underwriter of Registrable Stock and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or
several, to which the holder of Registrable Stock, underwriter or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
any registration statement under which such Registrable Stock was
registered under the Securities Act pursuant to Section 6.1, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the holder of Registrable Stock, each
such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to
the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue
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statement or omission or alleged omission so made in conformity with
information furnished by the holder of Registrable Stock, underwriter or
controlling person in writing specifically for use in such registration
statement or prospectus.
(b) In the event of a registration of any Registrable Stock under
the Securities Act pursuant to Section 6.1, the holder of Registrable
Stock will indemnify and hold harmless the Company, each person, if any,
who controls the Company within the meaning of the Securities Act, each
officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls
any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the
Company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
under which such Registrable Stock was registered under the Securities
Act pursuant to Section 6.1, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Holder will be liable
hereunder in any such case only if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with information pertaining to
the holder of Registrable Stock, as such, furnished in writing to the
Company by the holder of Registrable Stock specifically for the use in
such registration statement or prospectus; provided, further, that the
liability of the holder of Registrable Stock shall be limited to the
proportion of any such loss, claim, damage, liability or expense which
is equal to the proportion that the public offering price of the
Registrable Stock sold by the holder of Registrable Stock under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the proceeds
received by the holder of Registrable Stock from the sale of Registrable
Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing thereof, but
the omission so to notify the indemnifying party shall not relieve it
from any liability which it may have to such indemnified party other
then under this Section 6.4 and shall only relieve it from any liability
which it may have to such indemnified party under this Section 6.4 if
and to the extent the indemnifying party is prejudiced by such omission.
In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement
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thereof, the indemnifying party shall be entitled to participate in and,
to the extent it shall wish, to assume and undertake the defense thereof
with counsel reasonably satisfactory to such indemnified party, and,
after notice from the indemnifying party to such indemnified party of
its election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under
this Section 6.4 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so
selected; provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to those
available to the indemnifying party or if the interests of the
indemnified party reasonably may be considered by the indemnified party
to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and
to assume such legal defenses and otherwise to participate in the
defense of such action, with reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred. No indemnifying party,
in defense of any such action, shall, except with the consent of each
indemnified party, consent to the entry of any judgment or enter into
any settlement (i) which does not include as an unconditional term
thereof the giving, by the claimant or plaintiff, to such indemnified
party of a release from all liability in respect to such action or (ii)
which involves any relief against the indemnified party other than the
payment of money which is to be paid in full by the indemnifying party.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i)
the holder of Registrable Stock exercising rights under this Agreement,
or any controlling person of the holder of Registrable Stock, makes a
claim for indemnification pursuant to this Section 6.4 but it is
judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section
6.4 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of the holder of
Registrable Stock or any such controlling person in circumstances for
which indemnification is provided under this Section 6.4; then, and in
each such case, the Company and such holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that the
holder of Registrable Stock is responsible for the portion represented
by the percentage that the public offering price of its Registrable
Stock offered by the registration statement bears to the public offering
price of all securities offered by such registration statement, and the
Company is responsible for the remaining portion; provided, however,
that, in any such case, (A) the holder of Registrable Stock will not be
required to contribute any amount in excess of the public offering price
of all such Registrable Stock sold by the holder of Registrable Stock
pursuant to such registration statement; and (B) no person or entity
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be
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entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
SECTION 6.5. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of Registrable Stock to the public without registration, at
all times after 90 days after any registration statement covering a public
offering of securities of the Company under the Securities Act shall have become
effective (or the Company shall otherwise have become subject to the periodic
reporting requirements of the Exchange Act), the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Registrable Stock forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents so filed by the
Company as such holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing such holder to sell any
Registrable Stock without registration.
SECTION 6.6. Termination of Piggyback Registration Rights. The
obligations of the Company to register shares of Registrable Stock under Section
6.1 shall terminate on March 31, 2003, unless such obligations terminate earlier
in accordance with the terms of the Warrant.
SECTION 6.7. Material Non-Public Information. Notwithstanding any
provision of this Agreement to the contrary, the Company's obligation to file a
registration statement, or cause such registration statement to become and
remain effective, shall be suspended for a period not to exceed 30 days (and for
periods not exceeding, in the aggregate, 60 days in any 24-month period) if
there exists at the time material non-public information relating to the Company
which, in the reasonable opinion of the Company, should not be disclosed.
SECTION 6.8. Security Interest; Further Assurances. As collateral
security for all of the obligations of the Company to the Purchasers hereunder
and under the Notes, the Company hereby pledges and assigns to the Purchasers
and grants to the Purchasers, to the maximum extent permissible subject to the
liens disclosed on Schedule 2.9 hereof, a continuing security interest in and to
all of the Company's right, title and interest in, to and under, the
"Collateral" (as such term is defined in the Junior Subordinated Security
Agreement dated as of June 21, 1996 by the Company and ▇▇▇▇▇▇▇, Inc., in favor
of Northstar High Total Return Fund then known as Northstar Advantage High Total
Return Fund) and the Company agrees, upon the written request of the Purchasers,
(a) to promptly execute and deliver (i) a security agreement or agreements, (ii)
UCC-1 financing Statements, and (iii) all such other documents and instruments,
in each case
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in form and substance reasonably satisfactory to the Purchasers; and (b) to take
all such other actions; as the Purchasers shall reasonably request in connection
with the perfection of the security interest granted hereby. The parties agree
that such security interest shall be, to the extent permissible, a first
priority interest, and otherwise shall be the highest priority not inconsistent
with the liens listed on Schedule 2.9 hereof. The Company also agrees that,
during the period between the date hereof and the date on which such security
interest has been perfected to the reasonable satisfaction of the Purchasers, it
shall not (and shall not permit any of its subsidiaries to) grant, create or
permit to exist, any mortgage, pledge, security interest, lien, charge, claim or
other encumbrance on any of the Collateral except for (i) those set forth on
Schedule 2.9 hereof and (ii) those of a nature not required to be listed on said
Schedule. Notwithstanding anything in this Section 6.8 to the contrary, nothing
herein shall be deemed to require the Company to take any action which would be
in violation of or create a default under any other agreement of the Company or
any of its subsidiaries.
ARTICLE VI
MISCELLANEOUS
SECTION 7.1. Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby whether or not such
transactions shall be consummated; provided, however, that the Company shall pay
the reasonable legal and other fees and disbursements of the Purchasers, as
invoiced, in an aggregate amount not to exceed $15,000.00.
SECTION 7.2. 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 7.3. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, sent by next
day or overnight mail or delivery or sent by telecopy (with verbal confirmation
of receipt), as follows:
(a) if to the Company, at Intracel Corporation, ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Chief Executive Officer, with a
copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; and
(b) if to the Purchasers, c/o Northstar Investment Management
Corporation, Two Pickwick Plaza, Greenwich, CT 06830, Attn.: ▇▇▇▇▇▇▇
▇▇▇▇▇▇, with a copy to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq, Reboul, MacMurray, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & Kristol, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
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or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the other.
SECTION 7.4. Governing Law. 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
internal laws of the State of New York. The parties hereto irrevocably waive, to
the fullest extent they may do so under applicable law, trial by jury. Except as
otherwise provided herein, all disputes among or between the parties hereto
arising out of, connected with, related to or incidental to the transactions
contemplated by or the relationship established between them in connection with
this Agreement, and whether arising in contract, tort, equity or otherwise, may
be resolved by state and federal courts located in the City of New York, New
York, and each party hereto consents and submits to the jurisdiction of any
state or federal court located within such county and state. Each party hereto
waives in all disputes any objection that it may have to the location of the
court considering the dispute. Each party hereto agrees that the other parties
hereto shall have the right to proceed against it in a court in any location to
enable such party to enforce a judgment or other court order entered in favor of
such party. Each party hereto waives any objection that it may have to the
location of the court in which such party has commenced a proceeding of the type
described in the immediately preceeding sentence.
SECTION 7.5. Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto, constitutes the sole and entire agreement of the parties
with respect to the subject matter hereof. All Schedules and Exhibits hereto are
hereby incorporated herein by reference.
SECTION 7.6. 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.
SECTION 7.7. Amendments. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of the
Company and the Purchasers.
SECTION 7.8. Severability. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
SECTION 7.9. Titles and Subtitles. The titles and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement.
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IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
INTRACEL CORPORATION
By:________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
NORTHSTAR HIGH YIELD FUND
By:_______________________
Name:
Title:
NORTHSTAR HIGH TOTAL RETURN FUND II
By:________________________________
Name:
Title:
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24
EXHIBIT A-1
NOTE
25
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD,
OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER SUCH ACT OR IN
COMPLIANCE WITH ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S.FEDERAL INCOME
TAX PURPOSES. FOR FURTHER INFORMATION, CONTACT: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ESQ.
INTRACEL CORPORATION
PROMISSORY NOTE
April 1, 1998 $4,000,000
FOR VALUE RECEIVED, INTRACEL CORPORATION, a Delaware corporation (the
"Company"), hereby promises to pay to the order of NORTHSTAR HIGH YIELD FUND
(the "Noteholder"), the Principal Amount (as defined below) payable pursuant to
Section 1 with interest payable pursuant to Section 2. Capitalized terms used in
this Note have the meanings provided in Section 9.
SECTION 1. Payments of Principal and Interest.
(a) Principal Amount. On April 1, 1998 (the "Closing Date"),
the Noteholder purchased this Note for Three Million Eight Hundred Fifty-Seven
Thousand Seventy Three Dollars ($3,857,073), and the principal amount of this
Note is deemed to be Four Million Dollars ($4,000,000), (the "Principal
Amount").
(b) Principal Payment Date. The Principal Amount of this Note
shall be due and payable in full on April 17, 1998 (the "Principal Payment
Date").
SECTION 2. Interest.
(a) Interest Rate. Except as otherwise expressly provided in
Section 4(b), interest shall accrue from the Closing Date at the rate of twelve
and one-half percent (12.5%) per annum on the Unpaid Principal Amount. All
computations of interest shall be made on the basis of a year of three hundred
and sixty (360) days for the actual number of days.
26
(b) Interest Payment Date. Interest shall be payable in full
on the Principal Payment Date.
SECTION 3. Covenants.
(a) The Company hereby agrees that, so long as any amount is
owing to the Noteholder, it shall and shall cause its subsidiaries to:
(i) Performance of Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever
nature, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been
provided on the books of the Company. Comply with all
Contractual Obligations and Requirements of Law except to the
extent the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(ii) Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same type as now conducted
by it and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in
the normal conduct of its business.
(iii) Maintenance of Property; Insurance. Keep all
property useful and necessary in its business in good working
order and condition and in accordance with Requirements of Law;
maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts
and against at least such risks (but including in any event
public liability, product liability and business interruption)
as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish
to the Noteholder, upon written request, full information as to
the insurance carried.
(iv) Inspection of Property; Books and Records;
Discussions. Keep proper books of records and accounts in which
full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and
transactions in relation to its business and activities; and
permit representatives of the Noteholder to visit and inspect
any of its properties and examine and make abstracts from any of
its books and records at any reasonable time and as often as may
reasonably be desired and to discuss the business, operations,
properties and financial and other condition of the Company with
officers and employees of the Company and with its independent
certified public accountants; provided that the Noteholder shall
bear its own expenses if any such inspection, examination or
discussion occurs at a time when no Default or Event of Default
shall have occurred and be continuing.
(v) Notices. Promptly give notice to the Noteholder of:
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(A) the occurrence of any Default or Event of
Default;
(B) any (1) default or event of default under
any Contractual Obligation of the Company or (2)
litigation, investigation or proceeding which may exist
at any time between the Company and any Governmental
Authority, which in either case, if not cured or if
adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse
Effect;
(C) any litigation or proceeding affecting the
Company in which the amount involved is one million
dollars ($1,000,000) or more and not covered by
insurance or in which injunctive or similar relief is
sought;
(D) the following events, as soon as possible
and in any event within thirty (30) days after the
Company knows or has reason to know thereof: (1) the
occurrence or expected occurrence of any Reportable
Event with respect to any Plan, a failure to make any
required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency
of, any Multiemployer Plan or (2) the institution of
proceedings or the taking of any other action by the
PBGC or the Company or any Commonly Controlled Entity or
any Multiemployer Plan with respect to the withdrawal
from, or the terminating, Reorganization or Insolvency
of, any Plan;
(E) any material adverse change in the business,
operations, property, condition (financial or otherwise)
or prospects of the Company;
(F) any application or registration relating to
any material patent or trademark of the Company becoming
abandoned or dedicated, or of any adverse determination
or development (including, without limitation, the
institution of, or any such determination or development
in, any proceeding in the United States Patent and
Trademark Office or any court or tribunal in any country
regarding the Company's ownership of any material patent
or trademark or its right to register the same or to
keep and maintain the same).
Each notice pursuant to this Section 3(a)(v) shall be
accompanied by a statement of a Responsible Officer
setting forth details of the occurrence referred to
therein and stating what action the Company proposes to
take with respect thereto.
(vi) Environmental Matters.
(A) Comply with, and ensure compliance by all
tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply with and
maintain, and ensure that all tenants and subtenants
obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws.
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(B) Conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal
and other actions required under Environmental Laws and
promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental
Laws.
SECTION 4. Events of Default.
(a) Definition. For purposes of this Note, an Event of Default
shall be deemed to have occurred if:
(i) the Company shall fail to pay any principal when due
in accordance with the terms hereof; or the Company shall fail
to pay any interest when due in accordance with the terms
hereof, om the date that any such principal or interest payable
hereunder is due and payable in accordance with the terms
hereof; or
(ii) any representation or warranty made or deemed made
by the Company in any certificate, document or financial or
other statement furnished by it at any time under or in
connection with this Note shall prove to have been incorrect in
any material respect on or as of the date made or deemed made;
or
(iii) the Company shall default in the observance or
performance of any other agreement contained in this Note; or
(iv) the Company shall (A) default in any payment of
principal of or interest on any Indebtedness (after giving
effect to any applicable grace period); or (B) default in the
observance or performance of any other agreement or condition
relating to any such Indebtedness or any Guarantee Obligation or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition
is to give the holder thereof the right to cause such
Indebtedness to become due prior to its stated maturity or such
Guarantee Obligation to become payable (whether by the terms of
any document evidencing such Indebtedness or Guarantee
Obligation, upon the election of any holder of Indebtedness or
beneficiary of any Guarantee Obligation or otherwise); or
(v) (A) the Company shall commence any case, proceeding
or other action (1) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (2) seeking appointment of a
receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its
assets, or the Company shall make a general assignment for the
benefit of its creditors; or (B) there shall be commenced
against the Company any case, proceeding or other action of a
nature referred to in clause (A) above which (1) results in the
entry of an order for relief or any such adjudication or
appointment or (2) remains undismissed, undischarged or unbonded
for a period of one
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29
hundred and twenty (120) days; or (C) there shall be commenced
against the Company any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its
assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed
or bonded pending appeal within one hundred and twenty (120)
days from the entry thereof; or (D) the Company shall take any
action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (A),
(B) or (C) above; or (E) the Company shall generally not, or
shall be unable to, or shall admit in writing its inability to,
pay its debts as they become due; or
(vi) one or more final judgments or decrees shall be
entered against the Company involving in the aggregate a
liability (not paid or fully covered by insurance) of one
million dollars ($1,000,000) or more.
(b) Consequences of Events of Default.
(i) If any Event of Default has occurred, the interest
rate on this Note shall be the Default Interest Rate. Any
increase of the interest rate resulting from the operation of
this clause shall terminate as of the close of business on the
date on which no Events of Default exist (subject to subsequent
increases pursuant to this clause).
(ii) If an Event of Default of the type described in
Section 4(a)(v) has occurred, the aggregate principal amount of
this Note (together with all accrued interest thereon and all
other amounts due and payable with respect thereto) shall become
immediately due and payable without any action on the part of
the Noteholder, and the Company shall immediately pay to the
Noteholder all amounts due and payable with respect to this
Note.
(iii) If any Event of Default has occurred (other than
under Section 4(a)(v)), the Noteholder may declare this Note to
be immediately due and payable and may demand immediate payment
of the Unpaid Principal Amount (together with all accrued and
unpaid interest and all other amounts due and payable with
respect thereto).
(iv) The Noteholder shall also have any other rights
which such holder may have been afforded under any contract or
agreement at any time and any other rights which such holder may
have pursuant to applicable law or in equity.
SECTION 5. Waiver of Certain Rights. The Company hereby waives
diligence, presentment, protest and demand and notice of protest and demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of the Company hereunder.
SECTION 6. Transfer of this Note. Upon surrender for registration of
transfer of this Note at the principal office of the Company, the Company shall,
at the Noteholder's expense, execute and deliver one or more new Notes of like
tenor and of like aggregate principal amount,
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30
registered in the name of such transferee or transferees. At the time this Note
is surrendered for registration of transfer, it shall be duly endorsed, or be
accompanied by a written instrument of transfer duly executed, by the Noteholder
or such holder's attorney duly authorized in writing. Any Note or Notes issued
upon transfer of this Note shall carry the rights to unpaid interest and the
accrual of interest which were carried by this Note, so that neither gain nor
loss of interest shall result from any such transfer.
SECTION 7. Assignment. The rights and obligations of the Company and the
Noteholder shall be binding upon and benefit the permitted successors, assigns
and transferees of the parties; provided that in no event shall the Company
assign its rights hereunder without the prior written consent of the Noteholder.
SECTION 8. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Note may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Noteholder. No failure or delay on the part of the Noteholder in exercising any
power or right under this Note shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right.
SECTION 9. Definitions. For purposes of this Note, the following
capitalized terms have the following meaning:
"Business Day" means any day other than a Saturday, a Sunday, or any
other day on which banking institutions in the City of New York are authorized
or required by law, regulation or executive order to remain closed.
"Closing Date" is defined in Section 1(a).
"Common Stock" means the common stock of the Company.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"Company" is defined in the preamble.
"Contractual Obligation" means as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default" means any of the events specified in Section 4, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Default Interest Rate" means a rate of interest equal to fifteen
percent (15%) per annum.
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31
"Environmental Laws" means any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" means each of the events described in Section 4;
provided, however, that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Financing Lease" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"GAAP" means generally accepted accounting principles in the United
States of America consistent with those utilized in preparing the audited
financial statements referred to in Section 3(a).
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantee Obligation" means as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (x) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (y) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such
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guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Company in good faith.
"Indebtedness" means, of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or created
for the account of such Person, (e) all obligations in respect of deferred
compensation and (f) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Insolvency" means with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Lien" means any claim, encumbrance or charges on the property of the
Company other than mechanics', workers', or similar Liens arising in the
ordinary course of business, Liens for current property taxes and assessments,
usual and customary non-monetary real property encumbrances that do not
materially interfere with the operations of the Company, and Liens securing
purchase money obligations under equipment leases which, in the aggregate, are
not material in amount and have not arisen other than in the ordinary course of
business.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Company or (b) the validity or enforceability of this Note or the rights
or remedies of Noteholder hereunder or thereunder.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Note" means this Promissory Note.
"Noteholder" means the Person defined as such in the first paragraph
hereof and its permitted successors, transferees and assigns.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" means at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly Controlled
Entity is (or, if such plan were
8
33
terminated at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Principal Amount" is defined in Section 1(a).
"Principal Payment Date" is defined in Section 1(b).
"Reorganization" means with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the 30 day notice period is waived
under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section 2615.
"Requirements of Law" means the obligations of the Company under
federal, state, local and foreign laws, rules, regulations, orders, statutes,
ordinances, codes, decrees, or requirements of any Governmental Authority
applicable to it in the conduct of its business.
"Responsible Officer" means the chief executive officer and the
president of the Company or, with respect to financial matters, the chief
financial officer of the Company.
"Subsidiary" means as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Note shall refer to a Subsidiary or Subsidiaries of
the Company.
"Unpaid Principal Amount" means, at any time, the portion of the
Principal Amount outstanding at such time.
SECTION 10. Cancellation. After all principal and accrued interest at
any time owed on this Note has been paid in full, this Note shall be surrendered
to the Company for cancellation and shall not be reissued.
SECTION 11. Payment of Expenses and Taxes. The Company hereby agrees (a)
to pay or reimburse the Noteholder for all its reasonable and documented costs
and expenses incurred in connection with the enforcement or preservation of any
rights under this Note after the occurrence of any Event of Default, including,
without limitation, the reasonable and documented fees and disbursements of
counsel to the Noteholder, (b) to pay, indemnify, and hold the Noteholder
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any
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34
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Note and (c) to pay, indemnify, and hold the Noteholder
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Note including, without
limitation, any of the foregoing relating to the violation of, noncompliance
with or liability under, any Environmental Law applicable to the operations of
the Company, or any of its properties (all the foregoing in this clause (c),
collectively, the "indemnified liabilities"), provided, however, that the
Company shall have no obligation hereunder to the Noteholder with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Noteholder, or (ii) legal proceedings commenced against the
Noteholder by any security holder or creditor of the Company arising out of and
based upon rights afforded any such security holder or creditor solely in its
capacity as such.
SECTION 12. Payments. All payments to be made to the Noteholder shall be
made in the lawful money of the United States of America in immediately
available funds.
SECTION 13. Place of Payment. Payments of principal and interest shall
be delivered to the Noteholder by wire transfer of immediately available funds
to the following account: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇▇▇/▇▇▇▇/▇▇▇▇, ▇▇▇
#▇▇▇-▇▇▇-▇▇▇, For further credit to: Northstar High Yield Fund, Regarding:
Intracel 12.5% Promissory Note due April 1998, Taxpayer ID# ▇▇-▇▇▇▇▇▇▇, or to
such other Noteholder at such other address or to the attention of such other
person or to such other account as specified by prior written notice to the
Company.
SECTION 14. Severability. Whenever possible, each provision of this Note
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Note.
SECTION 15. Descriptive Headings; Interpretation. The descriptive
headings of this Note are inserted for convenience only and do not constitute a
substantive part of this Note. The use of the word "including" in this Note
shall be by way of example rather than by limitation.
SECTION 16. Governing Law. 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
internal laws of the State of New York.
SECTION 17. Waivers. To the extent permitted by law, the Company hereby
waives personal service of any and all process upon it and consents that all
such service of process be made by certified registered mail directed to it at
its address set forth in Section 20. In addition, the Company hereby waives
trial by jury, any objections based on forum non conveniens and any objections
to venue of any action arising out of, connected with, related to or incidental
to the transactions contemplated by or the relationships established in
connection with this Note.
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SECTION 18. Jurisdiction. Except as otherwise provided in Section 19,
all disputes among or between such holder and the Company arising out of,
connected with, related to or incidental to the transactions contemplated by or
the relationship established between them in connection with this Note, and
whether arising in contract, tort, equity or otherwise, may be resolved by state
or federal courts located in the City of New York, New York, and the Company
hereby consents and submits to the jurisdiction of any state or federal court
located within such county and state. The Company waives in all disputes any
objection that it may have to the location of the court considering the dispute.
Nothing in this Section 18 shall affect the right of the Noteholder to serve
legal process in any other manner permitted by law or affect the right of such
holder to bring any action or proceeding against the Company or its property in
the courts of any other jurisdiction.
SECTION 19. Other Jurisdictions. The Company agrees that the Noteholder
shall have the right to proceed against the Company in a court in any location
to enable such holder to enforce a judgment or other court order entered in
favor of such holder. The Company waives any objection that it may have to the
location of the court in which the Noteholder has commenced a proceeding
described in this Section 19.
SECTION 20. Notices. All notices, requests, demands, waivers and other
communication required or permitted to be given under this Note shall be in
writing and shall be deemed to have been duly given if (a) delivered personally,
(b) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy (with verbal confirmation of receipt) or
telegram.
If to the Noteholder:
Northstar High Yield Fund
Two Pickwick Plaza
Greenwich, CT 06830
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
with a copy, which will
not constitute notice to
the Noteholder, to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Company:
Intracel Corporation
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy, which will
not constitute notice to
the Company, to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be specified in writing to the other parties in
accordance with this Section 20.
All such notices, requests, demands, waivers and other communications shall be
deemed to have been received (a) if by personal delivery on the date after such
delivery, (b) if by certified or registered mail, on the seventh (7th) Business
Day after the mailing thereof, (c) if by next-day or overnight mail or delivery,
on the day delivered, (d) if by telecopy or telegram, on the next day following
the day on which such telecopy or telegram was sent, provided that a copy is
also sent by certified or registered mail.
SECTION 21. Business Days. If any payment is due, or any time period for
giving notice or taking action expires, on a day which is not a Business Day,
the payment shall be due and payable on, and the time period shall automatically
be extended to, the next Business Day immediately following such day, and
interest shall continue to accrue at the required rate hereunder until any such
payment is made.
SECTION 22. Usury Laws. It is the intention of the Company and the
Noteholder to conform strictly to all applicable usury laws now or hereafter in
force, and any interest payable under this Note shall be subject to reduction to
the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. If the maturity of this Note is accelerated by
reason of an election by the holder hereof resulting from an Event of Default,
voluntary prepayment by the Company or otherwise, then earned interest may never
include more than the maximum amount permitted by law, computed from the date
hereof until payment, and any interest in excess of the maximum amount permitted
by law shall be canceled automatically and, if theretofore paid, shall
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37
at the option of the holder hereof either be rebated to the Company or credited
on the principal amount of this Note, or if this Note has been paid, then the
excess shall be rebated to the Company. The aggregate of all interest (whether
designated as interest, service charges, points or otherwise) contracted for,
chargeable, or receivable under this Note shall under no circumstances exceed
the maximum legal rate upon the unpaid principal balance of this Note remaining
unpaid from time to time. If such interest does exceed the maximum legal rate,
it shall be deemed a mistake and such excess shall be canceled automatically
and, if theretofore paid, rebated to the Company or credited on the principal
amount of this Note, or if this Note has been repaid, then such excess shall be
rebated to the Company.
* * * * *
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IN WITNESS WHEREOF, the Company has executed and delivered this Note on
_________, 1998.
INTRACEL CORPORATION
By: _____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
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EXHIBIT A-2
40
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD,
OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER SUCH ACT OR IN
COMPLIANCE WITH ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S.FEDERAL INCOME
TAX PURPOSES. FOR FURTHER INFORMATION, CONTACT: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ESQ.
INTRACEL CORPORATION
PROMISSORY NOTE
April 1, 1998 $4,000,000
FOR VALUE RECEIVED, INTRACEL CORPORATION, a Delaware corporation (the
"Company"), hereby promises to pay to the order of NORTHSTAR HIGH TOTAL RETURN
FUND II (the "Noteholder"), the Principal Amount (as defined below) payable
pursuant to Section 1 with interest payable pursuant to Section 2. Capitalized
terms used in this Note have the meanings provided in Section 9.
SECTION 1. Payments of Principal and Interest.
(a) Principal Amount. On April 1, 1998 (the "Closing Date"),
the Noteholder purchased this Note for Three Million Eight Hundred Fifty Seven
Thousand Seventy-Three Dollars ($3,857,073), and the principal amount of this
Note is deemed to be Four Million Dollars ($4,000,000), (the "Principal
Amount").
(b) Principal Payment Date. The Principal Amount of this Note
shall be due and payable in full on April 17, 1998 (the "Principal Payment
Date").
SECTION 2. Interest.
(a) Interest Rate. Except as otherwise expressly provided in
Section 4(b), interest shall accrue from the Closing Date at the rate of twelve
and one-half percent (12.5%) per annum on the Unpaid Principal Amount. All
computations of interest shall be made on the basis of a year of three hundred
and sixty (360) days for the actual number of days.
41
(b) Interest Payment Date. Interest shall be payable in full
on the Principal Payment Date.
SECTION 3. Covenants.
(a) The Company hereby agrees that, so long as any amount is
owing to the Noteholder, it shall and shall cause its subsidiaries to:
(i) Performance of Obligations. Pay, discharge or
otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever
nature, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been
provided on the books of the Company. Comply with all
Contractual Obligations and Requirements of Law except to the
extent the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(ii) Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same type as now conducted
by it and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in
the normal conduct of its business.
(iii) Maintenance of Property; Insurance. Keep all
property useful and necessary in its business in good working
order and condition and in accordance with Requirements of Law;
maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts
and against at least such risks (but including in any event
public liability, product liability and business interruption)
as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish
to the Noteholder, upon written request, full information as to
the insurance carried.
(iv) Inspection of Property; Books and Records;
Discussions. Keep proper books of records and accounts in which
full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and
transactions in relation to its business and activities; and
permit representatives of the Noteholder to visit and inspect
any of its properties and examine and make abstracts from any of
its books and records at any reasonable time and as often as may
reasonably be desired and to discuss the business, operations,
properties and financial and other condition of the Company with
officers and employees of the Company and with its independent
certified public accountants; provided that the Noteholder shall
bear its own expenses if any such inspection, examination or
discussion occurs at a time when no Default or Event of Default
shall have occurred and be continuing.
(v) Notices. Promptly give notice to the Noteholder of:
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42
(A) the occurrence of any Default or Event of
Default;
(B) any (1) default or event of default under
any Contractual Obligation of the Company or (2)
litigation, investigation or proceeding which may exist
at any time between the Company and any Governmental
Authority, which in either case, if not cured or if
adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse
Effect;
(C) any litigation or proceeding affecting the
Company in which the amount involved is one million
dollars ($1,000,000) or more and not covered by
insurance or in which injunctive or similar relief is
sought;
(D) the following events, as soon as possible
and in any event within thirty (30) days after the
Company knows or has reason to know thereof: (1) the
occurrence or expected occurrence of any Reportable
Event with respect to any Plan, a failure to make any
required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency
of, any Multiemployer Plan or (2) the institution of
proceedings or the taking of any other action by the
PBGC or the Company or any Commonly Controlled Entity or
any Multiemployer Plan with respect to the withdrawal
from, or the terminating, Reorganization or Insolvency
of, any Plan;
(E) any material adverse change in the business,
operations, property, condition (financial or otherwise)
or prospects of the Company;
(F) any application or registration relating to
any material patent or trademark of the Company becoming
abandoned or dedicated, or of any adverse determination
or development (including, without limitation, the
institution of, or any such determination or development
in, any proceeding in the United States Patent and
Trademark Office or any court or tribunal in any country
regarding the Company's ownership of any material patent
or trademark or its right to register the same or to
keep and maintain the same).
Each notice pursuant to this Section 3(a)(v) shall be
accompanied by a statement of a Responsible Officer
setting forth details of the occurrence referred to
therein and stating what action the Company proposes to
take with respect thereto.
(vi) Environmental Matters.
(A) Comply with, and ensure compliance by all
tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply with and
maintain, and ensure that all tenants and subtenants
obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws.
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43
(B) Conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal
and other actions required under Environmental Laws and
promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental
Laws.
SECTION 4. Events of Default.
(a) Definition. For purposes of this Note, an Event of Default
shall be deemed to have occurred if:
(i) the Company shall fail to pay any principal when due
in accordance with the terms hereof; or the Company shall fail
to pay any interest when due in accordance with the terms
hereof, on the date that such principal or interest payable
hereunder is due and payable in accordance with the terms
hereof; or
(ii) any representation or warranty made or deemed made
by the Company in any certificate, document or financial or
other statement furnished by it at any time under or in
connection with this Note shall prove to have been incorrect in
any material respect on or as of the date made or deemed made;
or
(iii) the Company shall default in the observance or
performance of any other agreement contained in this Note; or
(iv) the Company shall (A) default in any payment of
principal of or interest on any Indebtedness (after giving
effect to any applicable grace period); or (B) default in the
observance or performance of any other agreement or condition
relating to any such Indebtedness or any Guarantee Obligation or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition
is to give the holder thereof the right to cause such
Indebtedness to become due prior to its stated maturity or such
Guarantee Obligation to become payable (whether by the terms of
any document evidencing such Indebtedness or Guarantee
Obligation, upon the election of any holder of Indebtedness or
beneficiary of any Guarantee Obligation or otherwise); or
(v) (A) the Company shall commence any case, proceeding
or other action (1) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (2) seeking appointment of a
receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its
assets, or the Company shall make a general assignment for the
benefit of its creditors; or (B) there shall be commenced
against the Company any case, proceeding or other action of a
nature referred to in clause (A) above which (1) results in the
entry of an order for relief or any such adjudication or
appointment or (2) remains undismissed, undischarged or unbonded
for a period of one
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44
hundred and twenty (120) days; or (C) there shall be commenced
against the Company any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its
assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed
or bonded pending appeal within one hundred and twenty (120)
days from the entry thereof; or (D) the Company shall take any
action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (A),
(B) or (C) above; or (E) the Company shall generally not, or
shall be unable to, or shall admit in writing its inability to,
pay its debts as they become due; or
(vi) one or more final judgments or decrees shall be
entered against the Company involving in the aggregate a
liability (not paid or fully covered by insurance) of one
million dollars ($1,000,000) or more.
(b) Consequences of Events of Default.
(i) If any Event of Default has occurred, the interest
rate on this Note shall be the Default Interest Rate. Any
increase of the interest rate resulting from the operation of
this clause shall terminate as of the close of business on the
date on which no Events of Default exist (subject to subsequent
increases pursuant to this clause).
(ii) If an Event of Default of the type described in
Section 4(a)(v) has occurred, the aggregate principal amount of
this Note (together with all accrued interest thereon and all
other amounts due and payable with respect thereto) shall become
immediately due and payable without any action on the part of
the Noteholder, and the Company shall immediately pay to the
Noteholder all amounts due and payable with respect to this
Note.
(iii) If any Event of Default has occurred (other than
under Section 4(a)(v)), the Noteholder may declare this Note to
be immediately due and payable and may demand immediate payment
of the Unpaid Principal Amount (together with all accrued and
unpaid interest and all other amounts due and payable with
respect thereto).
(iv) The Noteholder shall also have any other rights
which such holder may have been afforded under any contract or
agreement at any time and any other rights which such holder may
have pursuant to applicable law or in equity.
SECTION 5. Waiver of Certain Rights. The Company hereby waives
diligence, presentment, protest and demand and notice of protest and demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of the Company hereunder.
SECTION 6. Transfer of this Note. Upon surrender for registration of
transfer of this Note at the principal office of the Company, the Company shall,
at the Noteholder's expense, execute and deliver one or more new Notes of like
tenor and of like aggregate principal amount,
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45
registered in the name of such transferee or transferees. At the time this Note
is surrendered for registration of transfer, it shall be duly endorsed, or be
accompanied by a written instrument of transfer duly executed, by the Noteholder
or such holder's attorney duly authorized in writing. Any Note or Notes issued
upon transfer of this Note shall carry the rights to unpaid interest and the
accrual of interest which were carried by this Note, so that neither gain nor
loss of interest shall result from any such transfer.
SECTION 7. Assignment. The rights and obligations of the Company and the
Noteholder shall be binding upon and benefit the permitted successors, assigns
and transferees of the parties; provided that in no event shall the Company
assign its rights hereunder without the prior written consent of the Noteholder.
SECTION 8. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Note may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Noteholder. No failure or delay on the part of the Noteholder in exercising any
power or right under this Note shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right.
SECTION 9. Definitions. For purposes of this Note, the following
capitalized terms have the following meaning:
"Business Day" means any day other than a Saturday, a Sunday, or any
other day on which banking institutions in the City of New York are authorized
or required by law, regulation or executive order to remain closed.
"Closing Date" is defined in Section 1(a).
"Common Stock" means the common stock of the Company.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"Company" is defined in the preamble.
"Contractual Obligation" means as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default" means any of the events specified in Section 4, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Default Interest Rate" means a rate of interest equal to fifteen
percent (15%) per annum.
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46
"Environmental Laws" means any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" means each of the events described in Section 4;
provided, however, that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Financing Lease" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"GAAP" means generally accepted accounting principles in the United
States of America consistent with those utilized in preparing the audited
financial statements referred to in Section 3(a).
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantee Obligation" means as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (x) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (y) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such
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47
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Company in good faith.
"Indebtedness" means, of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or created
for the account of such Person, (e) all obligations in respect of deferred
compensation and (f) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Insolvency" means with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Lien" means any claim, encumbrance or charges on the property of the
Company other than mechanics', workers', or similar Liens arising in the
ordinary course of business, Liens for current property taxes and assessments,
usual and customary non-monetary real property encumbrances that do not
materially interfere with the operations of the Company, and Liens securing
purchase money obligations under equipment leases which, in the aggregate, are
not material in amount and have not arisen other than in the ordinary course of
business.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Company or (b) the validity or enforceability of this Note or the rights
or remedies of Noteholder hereunder or thereunder.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Note" means this Promissory Note.
"Noteholder" means the Person defined as such in the first paragraph
hereof and its permitted successors, transferees and assigns.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" means at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly Controlled
Entity is (or, if such plan were
8
48
terminated at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Principal Amount" is defined in Section 1(a).
"Principal Payment Date" is defined in Section 1(b).
"Reorganization" means with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the 30 day notice period is waived
under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. Section 2615.
"Requirements of Law" means the obligations of the Company under
federal, state, local and foreign laws, rules, regulations, orders, statutes,
ordinances, codes, decrees or requirements of any Governmental Authority
applicable to it in the conduct of its business.
"Responsible Officer" means the chief executive officer and the
president of the Company or, with respect to financial matters, the chief
financial officer of the Company.
"Subsidiary" means as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Note shall refer to a Subsidiary or Subsidiaries of
the Company.
"Unpaid Principal Amount" means, at any time, the portion of the
Principal Amount outstanding at such time.
SECTION 10. Cancellation. After all principal and accrued interest at
any time owed on this Note has been paid in full, this Note shall be surrendered
to the Company for cancellation and shall not be reissued.
SECTION 11. Payment of Expenses and Taxes. The Company hereby agrees (a)
to pay or reimburse the Noteholder for all its reasonable and documented costs
and expenses incurred in connection with the enforcement or preservation of any
rights under this Note after the occurrence of any Event of Default, including,
without limitation, the reasonable and documented fees and disbursements of
counsel to the Noteholder, (b) to pay, indemnify, and hold the Noteholder
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any
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49
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Note and (c) to pay, indemnify, and hold the Noteholder
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Note including, without
limitation, any of the foregoing relating to the violation of, noncompliance
with or liability under, any Environmental Law applicable to the operations of
the Company, or any of its properties (all the foregoing in this clause (c),
collectively, the "indemnified liabilities"), provided, however, that the
Company shall have no obligation hereunder to the Noteholder with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Noteholder, or (ii) legal proceedings commenced against the
Noteholder by any security holder or creditor of the Company arising out of and
based upon rights afforded any such security holder or creditor solely in its
capacity as such.
SECTION 12. Payments. All payments to be made to the Noteholder shall be
made in the lawful money of the United States of America in immediately
available funds.
SECTION 13. Place of Payment. Payments of principal and interest shall
be delivered to the Noteholder by wire transfer of immediately available funds
to the following account: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇▇▇/▇▇▇▇/▇▇▇▇, ▇▇▇
#▇▇▇-▇▇▇-▇▇▇, For further credit to: Northstar HTR Fund II, Regarding: Intracel
12.5% Promissory Note due April 1998, Taxpayer ID# ▇▇-▇▇▇▇▇▇▇, or to such other
Noteholder at such other address or to the attention of such other person or to
such other account as specified by prior written notice to the Company.
SECTION 14. Severability. Whenever possible, each provision of this Note
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Note.
SECTION 15. Descriptive Headings; Interpretation. The descriptive
headings of this Note are inserted for convenience only and do not constitute a
substantive part of this Note. The use of the word "including" in this Note
shall be by way of example rather than by limitation.
SECTION 16. Governing Law. 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
internal laws of the State of New York.
SECTION 17. Waivers. To the extent permitted by law, the Company hereby
waives personal service of any and all process upon it and consents that all
such service of process be made by certified registered mail directed to it at
its address set forth in Section 20. In addition, the Company hereby waives
trial by jury, any objections based on forum non conveniens and any objections
to venue of any action arising out of, connected with, related to or incidental
to the transactions contemplated by or the relationships established in
connection with this Note.
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50
SECTION 18. Jurisdiction. Except as otherwise provided in Section 19,
all disputes among or between such holder and the Company arising out of,
connected with, related to or incidental to the transactions contemplated by or
the relationship established between them in connection with this Note, and
whether arising in contract, tort, equity or otherwise, may be resolved by state
or federal courts located in the City of New York, New York, and the Company
hereby consents and submits to the jurisdiction of any state or federal court
located within such county and state. The Company waives in all disputes any
objection that it may have to the location of the court considering the dispute.
Nothing in this Section 18 shall affect the right of the Noteholder to serve
legal process in any other manner permitted by law or affect the right of such
holder to bring any action or proceeding against the Company or its property in
the courts of any other jurisdiction.
SECTION 19. Other Jurisdictions. The Company agrees that the Noteholder
shall have the right to proceed against the Company in a court in any location
to enable such holder to enforce a judgment or other court order entered in
favor of such holder. The Company waives any objection that it may have to the
location of the court in which the Noteholder has commenced a proceeding
described in this Section 19.
SECTION 20. Notices. All notices, requests, demands, waivers and other
communication required or permitted to be given under this Note shall be in
writing and shall be deemed to have been duly given if (a) delivered personally,
(b) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy (with verbal confirmation of receipt) or
telegram.
If to the Noteholder:
Northstar High Total Return Fund II
Two Pickwick Plaza
Greenwich, CT 06830
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
with a copy, which will
not constitute notice to
the Noteholder, to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Fax Number (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Company:
Intracel Corporation
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy, which will
not constitute notice to
the Company, to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm No.: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be specified in writing to the other parties in
accordance with this Section 20.
All such notices, requests, demands, waivers and other communications shall be
deemed to have been received (a) if by personal delivery on the date after such
delivery, (b) if by certified or registered mail, on the seventh (7th) Business
Day after the mailing thereof, (c) if by next-day or overnight mail or delivery,
on the day delivered, (d) if by telecopy or telegram, on the next day following
the day on which such telecopy or telegram was sent, provided that a copy is
also sent by certified or registered mail.
SECTION 21. Business Days. If any payment is due, or any time period for
giving notice or taking action expires, on a day which is not a Business Day,
the payment shall be due and payable on, and the time period shall automatically
be extended to, the next Business Day immediately following such day, and
interest shall continue to accrue at the required rate hereunder until any such
payment is made.
SECTION 22. Usury Laws. It is the intention of the Company and the
Noteholder to conform strictly to all applicable usury laws now or hereafter in
force, and any interest payable under this Note shall be subject to reduction to
the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. If the maturity of this Note is accelerated by
reason of an election by the holder hereof resulting from an Event of Default,
voluntary prepayment by the Company or otherwise, then earned interest may never
include more than the maximum amount permitted by law, computed from the date
hereof until payment, and any interest in excess of the maximum amount permitted
by law shall be canceled automatically and, if theretofore paid, shall
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52
at the option of the holder hereof either be rebated to the Company or credited
on the principal amount of this Note, or if this Note has been paid, then the
excess shall be rebated to the Company. The aggregate of all interest (whether
designated as interest, service charges, points or otherwise) contracted for,
chargeable, or receivable under this Note shall under no circumstances exceed
the maximum legal rate upon the unpaid principal balance of this Note remaining
unpaid from time to time. If such interest does exceed the maximum legal rate,
it shall be deemed a mistake and such excess shall be canceled automatically
and, if theretofore paid, rebated to the Company or credited on the principal
amount of this Note, or if this Note has been repaid, then such excess shall be
rebated to the Company.
* * * * *
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53
IN WITNESS WHEREOF, the Company has executed and delivered this Note on
_________, 1998.
INTRACEL CORPORATION
By: __________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
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EXHIBIT B-2
WARRANT
55
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS
BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
SERIES A-V COMMON STOCK WARRANT
Void after April 17, 2003 Right to purchase 49,066
shares of Common Stock
(subject to adjustment)
of Intracel Corporation
No. A-V-2
INTRACEL CORPORATION
Common Stock Warrant
Intracel Corporation, a Delaware corporation (the "Company"), hereby
certifies that, for value received, Northstar High Total Return Fund II (the
"Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company at any time or from time to time before 5:00 P.M. New York time, on
April 17, 2003 (or such earlier date as provided in Section 7 hereof) (the
"Expiration Time"), up to Forty-Nine Thousand Sixty Six (49,066) fully paid and
nonassessable shares of the Company's Common Stock, $.0001 par value per share,
at a purchase price per share of $7.64 (the "Purchase Price"). The number and
character of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided herein.
This warrant (this "Warrant") is issued pursuant to a certain Note and
Warrant Purchase Agreement, dated as of April 1, 1998, between, among other
parties, the Company and the Holder, a copy of which is on file at the principal
office of the Company (the "Purchase Agreement").
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
"Affiliate" means, with reference to a specified person or
entity, any person or entity that directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control with the
specified person or entity. For purposes of this definition, "control"
(including, with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any person or entity, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person or entity, whether
through the ownership of voting securities or by contract or otherwise.
"Common Stock" means the Company's common stock, $.0001 par value
per share, in existence on the date of this Warrant, or any class or classes
(however designated) of
56
such Common Stock subsequently existing as a result of any recapitalization,
reorganization or other reclassification of the Company's capital stock which
affects the holders of Common Stock.
"Company" includes any corporation which shall succeed to or
assume the obligations of the Company hereunder.
"Extraordinary Transaction" means any consolidation of the
Company with or the merger of the Company into any other corporation or entity
(other than a consolidation or merger in which the Company is the continuing
entity) or the sale or transfer of all or substantially all of the assets of the
Company to another person or entity.
"Securities Act" means the Securities Act of 1933, or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Securities and Exchange Commission" or "Commission" refers to
the Securities and Exchange Commission or any other Federal agency then
administering the Securities Act.
"Warrant Shares" means the Common Stock issued or issuable upon
exercise of this Warrant.
1. Restricted Stock.
1.1 This Warrant and all rights hereunder may not be transferred
unless (i) the transferee is an Affiliate of the Holder, or (ii) the Company
gives its prior written consent to the transfer.
1.2 If, at the time of any transfer or exchange pursuant to
Section 1.1 (other than a transfer or exchange not involving a change in the
beneficial ownership of this Warrant) of this Warrant or Warrant Shares, such
Warrant or Warrant Shares shall not be registered under the Securities Act, the
Company may require, as a condition of allowing such transfer or exchange, that
the Holder or transferee of such Warrant or Warrant Shares, as the case may be,
furnish to the Company an opinion of counsel reasonably acceptable to the
Company or a "no action" or similar letter from the Securities and Exchange
Commission to the effect that such transfer or exchange may be made without
registration under the Securities Act. In the case of such transfer or exchange,
and in the case of an exercise of this Warrant if the Warrant Shares to be
issued thereupon are not registered pursuant to the Securities Act, the Company
may require a written statement that such Warrant or Warrant Shares, as the case
may be, are being acquired for investment and not with a view to the
distribution thereof (subject, however, to any requirement of law that the
disposition thereof shall at all times be within the control of such Holder or
transferee, as the case may be).
1.3 Certificates evidencing Warrant Shares shall, unless at the
time of exercise such Warrant Shares are registered under the Securities Act,
bear a legend substantially in the following form:
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57
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE."
2. Exercise of Warrant.
The Holder may exercise this Warrant in whole or in part (but not
as to fractional shares of Common Stock) by delivering this Warrant prior to the
Expiration Time, with the form of subscription at the end hereof duly executed
by the Holder, to the Company at its principal office. This Warrant and the
subscription shall be accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the amount obtained
by multiplying the number of shares of Common Stock called for on the form of
subscription by the Purchase Price, as such may be adjusted as provided herein.
In the event of the purchase of less than all of the shares of Common Stock
purchasable under this Warrant, the Company shall execute and deliver a
replacement Warrant of like tenor for the balance of the shares of Common Stock
purchasable thereunder.
3. Delivery of Stock Certificates on Exercise.
Certificates for shares of Common Stock purchased under this
Warrant shall be issued as soon as practicable after the exercise of this
Warrant in accordance with Section 2 hereof, but in no event later than 10 days
after the date of delivery to the Company of this Warrant for exercise, without
charge to the Holder, including, without limitation, any tax that may be payable
in respect thereof, and such certificates shall be issued and registered in the
name of, or, subject to Section 1.1, in such names as may be directed by, the
Holder; provided, however, that the Company shall not be required to pay any
income tax to which the Holder may be subject in connection with the issuance of
this Warrant or the shares of Common Stock upon exercise of this Warrant;
provided, further, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate in a name other than that of the Holder and the Company
shall not be required to issue or deliver such certificate unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such taxes have been paid.
4. Adjustments to Warrants.
4.1 Adjustment for Certain Dividends and Distributions. If, at
any time or from time to time, the number of shares of Common Stock outstanding
is increased (i) by a stock dividend payable in shares of Common Stock or in any
other security exchangeable for or convertible into Common Stock or (ii) by a
subdivision or split-up of shares of Common Stock, then, following the record
date fixed for the determination of holders of Common Stock entitled to receive
such stock dividend, subdivision or split-up, provision shall be made so that
the Holder of this Warrant shall receive upon exercise thereof in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities of the Company that it would
3
58
have received if (A) this Warrant had been exercised into Common Stock on the
date of such event and (B) it had thereafter retained such securities and all
rights and distributions relating to them.
4.2 Adjustment for Capital Reorganization, Reclassification,
Exchange, or Substitution. If Common Stock is changed into the same or a
different number of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise, then and in each such event, the
Holder of this Warrant shall have the right thereafter to convert his or her
Warrant Shares into the kind and amount of shares of stock and other securities
and property receivable upon such reorganization, reclassification, or other
change, by holders of the number of shares of Common Stock which were
convertible immediately prior to such reorganization, reclassification, or
change. If, at any time or from time to time, the number of shares of Common
Stock outstanding is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date for such combination, the Purchase
Price shall appropriately increase and/or the number of Warrant Shares shall be
appropriately decreased.
5. Anti-Dilution Adjustment.
(a) Adjustment for Common Stock Issue. If at any time after the
date hereof, the Company issues shares of Common Stock for a consideration per
share less than the Purchase Price per share, on the date such additional shares
are issued, the Purchase Price shall be adjusted in accordance with the
following formula:
P
-
E1 = E x O + E
------
A
where: E1 = the adjusted Purchase Price.
E = the Purchase Price immediately prior to the adjustment.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
A = the number of shares outstanding immediately after the issuance
of such additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This subsection does not apply to (i) any of the transactions
described in Sections 4.1 and 4.2 and the first paragraph of subsection (b) or
the issuance of common stock upon the
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59
exercise of such rights described therein, (ii) the issuance of shares of Common
Stock upon conversion of the Company's currently outstanding preferred stock,
preferred stock issued in lieu of cash dividends thereon as provided for under
the terms of the applicable designations or provisions of the Company's
certificate of incorporation on the date hereof, and upon the exercise of rights
under securities issued on or before the date hereof to convert, exchange or
exercise such securities into shares of Common Stock, or (iii) the issuance of
shares of Common Stock upon the exercise of rights, warrants or options granted
to employees and directors of the Company pursuant to employee benefit plans or
employee stock option plans available for grants to the Company's executives in
general.
(b) Adjustment for Convertible Securities Issue. If at any time
after the date hereof, the Company issues any securities convertible into or
exchangeable or exercisable for shares of Common Stock for a consideration per
share of Common Stock initially deliverable upon conversion, exchange or
exercise of such securities less than the Purchase Price per share on the date
of issuance of such securities, the Purchase Price shall be adjusted in
accordance with the following formula:
P
-
E1 = E x O + E
------
D
where: E1 = the adjusted Purchase Price.
E = the then current Purchase Price.
O = the number of shares outstanding immediately prior to the
issuance of such securities.
P = the sum of the aggregate consideration received for the
issuance of such securities plus the additional consideration,
if any, payable upon conversion, exchange or exercise of
such securities at the initial conversion, exchange or
exercise rate.
D = the maximum number of shares deliverable upon conversion,
exchange or exercise of such securities at the initial
conversion, exchange or exercise rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance. If
all of the Common Stock deliverable upon conversion, exchange or exercise of
such securities has not been issued when such securities are no longer
outstanding, then the Purchase Price shall promptly be readjusted to the
Purchase Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion, exchange or exercise of such
securities.
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60
This subsection does not apply to (i) any of the transactions
described in Sections 4.1 and 4.2 and the first paragraph of subsection (a) or
(ii) the issuance of shares of Common Stock upon the exercise of rights,
warrants or options granted to employees or directors of the Company pursuant to
employee benefit plans or employee stock option plans available to the Company's
executives in general.
(c) The foregoing adjustments shall be made only if the adjusted
Purchase Price shall be less than the Purchase Price.
6. Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on delivery and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a replacement Warrant of like
tenor.
7. Accelerated Expiration of Warrants. Notwithstanding anything in this
Warrant to the contrary, this Warrant and the terms and provisions hereunder
shall immediately expire without further action by the Company or the Holder (a)
10 business days after notice provided by the Company to the Holder, which
notice may be provided at any time after the date of the closing of an
underwritten public offering pursuant to an effective registration statement on
Form S-1 or successor form under the Securities Act covering the offering and
sale of Common Stock for the account of the Company (an "Initial Public
Offering"), and which notice shall specify that the closing price for the Common
Stock on the exchange on which it is traded or on NASDAQ, as applicable, has
exceeded for 20 consecutive trading days 150% of its per share price as
specified on the cover of the final prospectus for the Initial Public Offering
(giving effect, in such calculation, to any stock dividends, stock splits or
other recapitalization or similar events occurring from and after the closing
date of the Initial Public Offering); or (b) on the day prior to the effective
date of any Extraordinary Transaction.
8. Notices.
8.1 Notices for Adjustments under Section 4 and Certain Other
Events. In the event of:
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive
any other right; or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company
or the occurrence of any Extraordinary Transaction; or
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61
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
(d) any proposed issue or grant by the Company of any shares of
stock of any class or any other securities, or any right or option to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities (other than the issuance of Warrant
Shares);
then, and in each such event, the Company will mail by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company pursuant to Section 8.2 hereof, a notice specifying (i) the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, Extraordinary Transaction, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable on
such reorganization, reclassification, recapitalization, Extraordinary
Transaction, dissolution, liquidation or winding up, and (iii) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made.
All notices to be given pursuant to subsection (a) of this Section 8.1
shall be mailed at least fifteen (15) days prior to the record date of such
events described therein, and in any event at least twenty-five (25) days prior
to the actual event. All notices to be given pursuant to subsections (b) through
(d) of this Section 8.1 shall be mailed at least thirty (30) days prior to the
record date of such events described therein.
8.2 Other Notices. (a) In the event of an Initial Public
Offering, the Company will mail by first class registered or certified mail,
postage prepaid, at such address as may have been furnished to the Company
pursuant to Section 8.2(b), notice of the initial filing of the registration
statement for the Initial Public Offering. Any notice to be given pursuant to
this Section 8.2(a) shall be mailed promptly after the date of such filing.
(b) All other notices and communications shall be mailed by
first class registered or certified mail, postage prepaid, addressed as follows:
(i) if to the Holder, to the address for the Holder as
shown on the Purchase Agreement; and
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62
(ii) if to the Company, to:
Intracel Corporation
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇.
Issaquah, Washington
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
or at such address as may have been furnished to the Company in writing by the
Holder or vice versa.
8.3 Receipt of Notices. All notices under this Warrant shall be
deemed to have been given three (3) days after being properly addressed and
deposited in the U.S. mail.
9. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts (without giving effect
to its choice of law principles). The headings in this Warrant are for purposes
of reference only, and shall not limit or otherwise affect any of the terms
hereof. This Warrant is being executed as an instrument under seal. All nouns
and pronouns used herein shall be deemed to refer to the masculine, feminine or
neuter, as the identity of the person or persons to whom reference is made
herein may require.
10. Expiration. This Warrant shall expire, and be without further force
and effect, at 5:00 P.M., New York time, on April 17, 2003, or such earlier date
and time as provided in Section 7 hereof.
[see attached signature page]
8
63
Dated: INTRACEL CORPORATION
(Corporate Seal) By: _________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief
Executive Officer
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64
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
To Intracel Corporation:
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _____________ shares of Common Stock of INTRACEL
CORPORATION and herewith makes payment of $________________ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to ____________________________, whose address is
Dated: ________________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
________________________________________
(Address)
