EXHIBIT 11
NOTE PURCHASE AND WARRANT AGREEMENT
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March 25, 1999
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Insurance Processing Center
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THE FEMALE HEALTH COMPANY, a Wisconsin corporation (the "Company"), and you
entered into a Note Purchase and Warrant Agreement, dated March 25, 1998
pursuant to which you purchased a promissory note in the principal amount of
$1,000,000 from the Company (the "1998 Note"). The Company hereby requests that
you, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (hereinafter referred to as the "Lender"), surrender
the 1998 Note in exchange for a new promissory note in the principal amount of
$1,000,000 from the Company on the terms and conditions set forth below.
ARTICLE I
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NOTE
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1.1 Purchase of Note. On the date hereof the Lender will accept a
promissory note from the Company in the principal amount of $1,000,000 (the
"Note") in the form of Exhibit A attached hereto in exchange for and upon
surrender of the 1998 Note, together with payment of all accrued interest on the
1998 Note to the date hereof. The Note is being executed by the Company and
delivered to the Lender against the delivery and in full payment of the 1998
Note.
ARTICLE II
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THE WARRANT
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2.1 Issuance of Warrant. On the date hereof the Company shall issue to
Lender a warrant which shall entitle the Lender to purchase 200,000 of the
issued and outstanding shares of Common Stock, $.01 par value per share, of the
Company on the date of exercise at a purchase price of $_____ per share (subject
to adjustment as provided therein) in the form attached hereto as Exhibit B (the
"Warrant").
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF COMPANY
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The Company represents and warrants to the Lender as follows:
3.1 Organization. The Company is a corporation duly organized and existing
in active status under the laws of the State of Wisconsin, and has all requisite
power and authority, corporate or otherwise, to conduct its business and to own
its properties.
3.2 Authority. The execution, delivery and performance of this Agreement,
the Note, the Warrant and the Stock Issuance Agreement between the Company and
Lender of even date herewith (the "Stock Issuance Agreement") are within the
corporate powers of the Company, have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the stockholders of the Company; (ii) violate any provision of the amended and
restated articles of incorporation or amended and restated by-laws of the
Company
or of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Company;
(iii) require the consent or approval of, or filing or registration with, any
governmental body, agency or authority except for filing with the Securities and
Exchange Commission, applicable state securities regulatory agencies as required
to register the resale of any of the shares issued upon exercise of the Warrant
or pursuant to the Stock Issuance Agreement under the Securities Act of 1933, as
amended, and the securities laws of all applicable states; or (iv) result in a
breach of or constitute a default under, or result in the imposition of any
lien, charge or encumbrance upon any property of the Company pursuant to, any
indenture or other agreement or instrument under which the Company is a party or
by which it or its properties may be bound or affected. This Agreement
constitutes, and the Note, the Warrant and the Stock Issuance Agreement when
executed and delivered hereunder will each constitute, legal, valid and binding
obligations of the Company enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency or similar laws now
or hereafter in effect affecting the enforceability of creditors' rights
generally and subject to general principles of equity.
3.3 Capital Stock. The authorized capital stock of the Company consists of
15,000,000 shares of Common Stock, $.01 par value per share and 5,000,000 shares
of Class A Preferred Stock, $.01 par value per share. There are presently
outstanding 10,446,227 shares of Common Stock, and 670,000 shares of Class A
Convertible Preferred Stock Series 1. Other than (i) the Warrant and 200,000
shares of Common Stock to be issued to the Lender upon certain contingencies set
forth in a Stock Issuance Agreement between the Company and Lender of even date,
(ii) other warrants to purchase shares of Common Stock issued to the Lender
pursuant to Note Purchase and Warrant Agreements dated March 25, 1997, March 25,
1998, and February 12, 1999, to the Lender and ▇▇▇▇▇▇▇ ▇▇▇▇ pursuant to a Note
Purchase Agreement dated March 25, 1996, and to the Lender and an affiliate of
Lender pursuant to a Note Purchase and Warrant Agreement dated November 21,
1995, (iii) warrants to purchase 10,000 shares of Common Stock issued to ▇. ▇.
▇▇▇▇▇▇▇ and 10,000 shares of Common Stock to be issued to ▇▇. ▇▇▇▇▇▇▇ upon
certain contingencies set forth in a Stock Issuance Agreement, dated February
18, 1999, between the Company and ▇▇. ▇▇▇▇▇▇▇, and (iv) such other rights,
options and warrants to purchase shares of Common Stock as disclosed in the
Company's public filings, there are no subscriptions, options, warrants, rights
or agreements (contingent or otherwise) providing for the issuance by the
Company of Common Stock or other equity securities of the Company having rights,
benefits or privileges equal or superior to that of the Common Stock.
3.4 Full Disclosure. The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and has within the previous 12 months filed with the Securities and
Exchange Commission all reports, proxy statements and other information in
respect to the Company required under the Exchange Act. No such report or
information filed with the SEC within the previous 2 years, and no information
or report furnished by the Company to the Lender in connection with the
negotiation or execution of this Agreement (all of which information or reports
so furnished are set forth in Section 5.2 hereof), contained any misstatement of
a material fact as of the date when made or omitted to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading as of the date when made.
ARTICLE IV
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DEFAULTS
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4.1 Defaults. The occurrence of any one or more of the following events
shall constitute an "Event of Default":
(a) The Company shall fail to pay any principal or interest due on
the Note within 5 days of its due date;
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(b) Any representation or warranty made by the Company herein shall
prove to have been false in any material respect;
(c) The Company shall: (i) fail, or admit in writing its inability,
to pay its debts as they mature; or (ii) make a general assignment for the
benefit of creditors or to an agent authorized to liquidate any substantial
amount of its property; or (iii) become the subject of an "order for relief"
within the meaning of the United States Bankruptcy Code; or (iv) become the
subject of a creditor's petition for liquidation, reorganization or to effect a
plan or other arrangement with creditors which petition has not been dismissed
or stayed within 90 days of the filing thereof; or (v) apply to a court for the
appointment of a custodian or receiver for any of its assets; or (vi) have a
custodian or receiver appointed for substantially all of its assets (with or
without its consent); provided that, if the appointment is without the Company's
consent, such appointment has not been vacated or stayed within 90 days of such
appointment; or (vii) otherwise become the subject of any insolvency proceedings
(and if such proceedings are commenced without the Company's consent, such
proceedings shall not have been dismissed within 90 days after commencement
thereof) or propose or enter into any formal or informal composition or
arrangement with its creditors.
(d) This Agreement, the Note, the Warrant, or any other warrant
described in section 3.3(ii) hereof, shall, at any time after their respective
execution and delivery, and for any reason other than full performance thereof,
cease to be in full force and effect or be declared null and void, or the
validity or enforceability thereof or hereof shall be contested by the Company
or any shareholder of the Company, or the Company shall deny that it has any or
further liability or obligation thereunder or hereunder, as the case may be.
4.2 Acceleration of Obligations. Upon the occurrence of any Event of
Default:
(a) As to any Event of Default (other than an Event of Default under
section 4.1(c)) and at any time thereafter during which such Event of Default is
continuing, and in each case, the Lender may, by written notice to the Company,
immediately declare the unpaid principal balance of the Note, together with all
interest accrued thereon, to be immediately due and payable; and the unpaid
principal balance of and accrued interest on such Note shall thereupon be due
and payable without further notice of any kind, all of which are hereby waived,
and notwithstanding anything to the contrary herein or in the Note contained;
(b) As to any Event of Default under section 4.1(c), the unpaid
principal balance of the Note, together with all interest accrued thereon, shall
immediately and forthwith be due and payable, all without presentment, demand,
protest, or further notice of any kind, all of which are hereby waived,
notwithstanding anything to the contrary herein or in the Note contained; and
(c) As to each Event of Default, the Lender shall have all the
remedies for default provided by applicable law.
ARTICLE V
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MISCELLANEOUS
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5.l Expenses: Indemnities.
(a) The Company shall pay, or reimburse the Lender for (i) all out-
of-pocket costs and expenses (including, without limitation, attorneys' fees and
expenses not to exceed $2,500) paid or incurred by the Lender in connection with
the negotiation, preparation, execution and delivery of this Agreement, the
Note, the Warrant, the Stock Issuance Agreement, and any other document required
hereunder or thereunder; (ii) all out-of-pocket costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) paid or incurred by
the Lender in
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connection with the negotiation, preparation, execution and delivery of any
amendment, supplement, modification or waiver of any of the documents referenced
above or before and after judgment in enforcing, protecting or preserving his
rights under this Agreement, the Note, the Warrant, the Stock Issuance
Agreement, and other documents required hereunder or thereunder; and (iii) any
and all recording and filing fees and any and all stamp, excise, intangibles and
other taxes (other than income taxes), if any, which may be payable or
determined to be payable in connection with the negotiation, preparation,
execution, delivery, administration or enforcement of this Agreement, the Note,
the Warrant, the Stock Issuance Agreement, or any other document required
hereunder or thereunder or any amendment, supplement, modification or waiver of
or to any of the foregoing, or consummation of any of the transactions
contemplated hereby or thereby, including all costs and expenses incurred in
contesting the imposition of any such tax, and any and all liability with
respect to or resulting from any delay in paying the same, whether such taxes
are levied upon the Lender, the Company or otherwise.
(b) The Company agrees to indemnify the Lender against any and all
losses, claims, damages, liabilities and expenses, (including, without
limitation, reasonable attorneys' fees and expenses) incurred by the Lender
arising out of or resulting from (i) any acquisition or attempted acquisition of
stock or assets of another person or entity by the Company or any subsidiary,
(ii) the use of any of the proceeds of the loan made hereunder by the Company
for the making or furtherance of any such acquisition or attempted acquisition,
(iii) the construction or operation of any facility owned or operated by the
Company or any subsidiary, or resulting from any pollution or other
environmental condition on the site of, or caused by, any such facility, (iv)
the negotiation, preparation, execution, delivery and enforcement of this
Agreement, the Note, the Warrant, the Stock Issuance Agreement, and any other
document required hereunder or thereunder, including without limitation any
amendment, supplement, modification or waiver of or to any of the foregoing or
the consummation or failure to consummate the transactions contemplated hereby
or thereby, or the performance by the parties of their obligations hereunder or
thereunder, (v) any claim, litigation, investigation or proceedings related to
any of the foregoing, whether or not the Lender is a party thereto; provided,
however, that such indemnity shall not apply to any such losses, claims,
damages, liabilities or related expenses arising from (A) any breach by the
Lender of his obligations under this Agreement, or in his fiduciary duties as a
director of the Company for which he would not otherwise be entitled to
indemnification as a director of the Company, (B) any commitment made by the
Lender to a person other than the Company which would be breached by the
performance of the Lender's obligations under this Agreement or (C) Lender's
gross negligence or willful misconduct; and provided further that clauses (i),
(ii) and (iii) of this paragraph shall apply only to losses, claims, damages,
liabilities and expenses arising out of or resulting from third party claims.
(c) The foregoing agreements and indemnities shall remain operative
and in full force and effect regardless of termination of this Agreement, the
consummation of or failure to consummate either the transactions contemplated by
this Agreement or any amendment, supplement, modification or waiver, the
repayment of the loan made hereunder, the invalidity or unenforceability of any
term or provision of this Agreement, the Note, the Warrant, the Stock Issuance
Agreement, or any other document required hereunder or thereunder, any
investigation made by or on behalf of the Lender, or the content or accuracy of
any representation or warranty made under this Agreement or any other document
required hereunder or thereunder.
5.2 Securities Act of 1933. (a) With respect to the Note and the Warrant
to be issued to the Lender, the Lender hereby represents, warrants and covenants
as follows:
(i) He understands that the issuance of the Note and the Warrant has
not been registered under the Securities Act of 1933, as amended (the
"Act") or applicable state securities laws (collectively, the "Laws") on
the basis that the issuance of the Note and the Warrant is exempt from such
registration under the Act and Laws based in part upon the representations
made herein;
(ii) He does not presently intend to sell or otherwise dispose of the
Note or the Warrant being issued to him hereunder;
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(iii) He is acquiring the Note and the Warrant for investment
purposes only and for his own account and not with a present view to sell
or otherwise distribute the same, and he will not sell or otherwise
distribute the Note or the Warrant without registration under the Act and
applicable Laws or pursuant to applicable exemptions therefrom;
(iv) He is an "accredited investor" under the Act and the rules
promulgated thereunder;
(v) He has been given access to and has carefully reviewed the
Company's Form 10-Q for the first fiscal quarter of 1999, the Company's
Form 10-K and annual report to shareholders for the year ended September
30, 1998, and the Company's Proxy Statement for the 1999 annual meeting of
shareholders. He desires no additional information to evaluate the merits
and risks of the issuance of the Note and the Warrant hereunder, and he is
not relying upon any other information in connection therewith.
(vi) He has been given an opportunity to ask questions of, and receive
answers from, management of the Company concerning the issuance of the Note
and the Warrant hereunder, and has been given access to all information
which he has deemed necessary to verify the accuracy of the information
furnished to him;
(vii) He has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the
transactions contemplated by this Agreement, has carefully reviewed all
information indicated above and, by virtue of such review, understands and
has evaluated the merits and risks of his participation in such
transactions and has decided to go forward with such transactions; and
(viii) He understands that the Company is relying on the accuracy of
the statements contained herein in entering into this Agreement and the
transactions contemplated herein.
5.3 Successors. The provisions of this Agreement shall inure to the
benefit of any holder of the Note or Warrant, and shall inure to the benefit of
and be binding upon any successor to any of the parties hereto. No delay on the
part of the Lender or any holder of the Note or a Warrant in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein specified are cumulative and
are not exclusive of any rights or remedies which the Lender or the holder of
the Note or a Warrant would otherwise have.
5.4 Survival. All agreements, representations and warranties made herein
shall survive the execution of this Agreement, the making of the loan hereunder
and the execution and delivery of the Note and the Warrant.
5.5 Wisconsin Law. This Agreement and the Note and Warrant issued
hereunder shall be governed by and construed in accordance with the internal
laws of the State of Wisconsin, except to the extent superseded by federal law.
5.6 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
5.7 Notices. All communications or notices required under this Agreement
shall be deemed to have been given on the date when deposited in the United
States mail, postage prepaid, and addressed as follows (unless and until any of
such parties advises the other in writing of a change in such address): (a) if
to the Company, with the full name and address of the Company as shown on this
Agreement below; and (b) if to the Lender, with the full name and address of the
Lender as shown on this Agreement above.
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5.8 Entire Agreement; No Agency. This Agreement and the other documents
referred to herein contain the entire agreement between the Lender and the
Company with respect to the subject matter hereof, superseding all previous
communications and negotiations, and no representation, undertaking, promise or
condition concerning the subject matter hereof shall be binding upon the Lender
unless clearly expressed in this Agreement or in the other documents referred to
herein. Nothing in this Agreement or in the other documents referred to herein
and no action taken pursuant hereto shall cause either the Company or the Lender
to be treated as an agent of the other, or shall be deemed to constitute a
partnership, association, joint venture or other entity.
5.9 Consent to Jurisdiction. The parties hereto hereby consent to the
exclusive jurisdiction of any state or federal court situated in Ozaukee County
or Milwaukee County, Wisconsin, and waive any objection based on lack of
personal jurisdiction, improper venue or forums non conveniens, with regard to
any actions, claims disputes or proceedings relating to this Agreement, the
Note, the Warrant or any other document delivered hereunder or in connection
herewith, or any transaction arising from or connected to any of the foregoing.
Nothing herein shall affect the parties' rights to serve process in any manner
permitted by law.
5.10 Waiver of Jury Trial. The Company and the Lender hereby jointly and
severally waive any and all right to trial by jury in any action or proceeding
relating to this Agreement, the Note, the Warrant or any other document
delivered hereunder or in connection herewith, or any transaction arising from
or connected to any of the foregoing. The Company and the Lender each represent
that this waiver is knowingly, willingly and voluntarily given.
If the foregoing is satisfactory to you please sign the form of acceptance below
and return a signed counterpart hereof to the Company, whereupon this instrument
will evidence a binding agreement between the Lender and the Company.
Very truly yours,
THE FEMALE HEALTH COMPANY
Address: Suite 3660
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By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
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Chairman of the Board and
Chief Executive Officer
The foregoing Agreement is hereby confirmed and accepted as of the date
thereof.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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