EXHIBIT 10.1
NOTE PURCHASE AND WARRANT AGREEMENT
March 25, 1998
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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, 1997
pursuant to which you purchased a promissory note in the principal amount of
$1,000,000 from the Company (the _1997 Note_). The Company hereby requests
that you, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (hereinafter referred to as the _Lender_),
surrender the 1997 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
NOTE
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
1997 Note, together with payment of all accrued interest on the 1997 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 1997 Note.
ARTICLE II
THE WARRANT
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 $2.25 per share (subject to
adjustment as provided therein) in the form attached hereto as Exhibit B (the
"Warrant").
ARTICLE III
REPRESENATIONS AND WARRANTIES OF COMPANY
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 and the American Stock Exchange, Inc. 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 and to register such shares on the
American Stock Exchange; 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 9,523,830 shares of Common Stock, and 680,000 and
729,927 shares of Class A Convertible Preferred Stock Series 1 and Series 2,
respectively. 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 a
Note Purchase and Warrant Agreement dated March 25, 1997, 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) warrant to purchase 150,000 shares of
common stock issued to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (iv) options to purchase 1,416,346
shares of the Company's Common Stock issued to certain employees, officers,
directors, consultants and affiliates of the Company (which number excludes
200,533 options which have been authorized but not issued), (v) warrants to
purchase up to 107,534 shares of the Company's Common Stock related to certain
convertible debentures issued by the Company, (vi) rights to purchase 1,409,927
shares of the Company's Common Stock upon conversion of the Series 1 and Series
2 Class A Convertible Preferred Stock issued by the Company, and (vii) warrants
to purchase up to 296,000 shares of the Company's Common Stock related to the
Series 1 and Series 2 Class Convertible Preferred Stock, 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
DEFAULTS
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;
(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
MISCELLANEOUS
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 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;
(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 1998, the Company's Form 10-K and annual
report to shareholders for the year ended September 30, 1997, and the Company's
Proxy Statement for the 1998 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.
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
herevith, 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 2208
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By: _______________________________
Chairman of the Board and
Chief Executive Officer
The foregoing Agreement is hereby confirmed and accepted as of
the date thereof.
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