EXHIBIT 1
---------
SECURITIES PURCHASE AGREEMENT
between
BPI PACKAGING TECHNOLOGIES, INC.,
and
DGJ, L.L.C.
Dated as of January 27, 1999
LIST OF SCHEDULES
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4.4 Governmental Approvals
4.5(b) Stock Rights, Options, Warrants, Etc.
4.5(c) Reservation of Shares
4.6 Subsidiaries
4.7(a) (i) Financial Statements
4.7(a) (ii) Pro Forma Balance Sheet
4.7(a) (iii) Projections
4.8 Material Adverse Change
4.10 Certain Developments
4.11 Intellectual Property Rights
4.13 Assets Used in Business and Not Owned By Company
4.14 Litigation and Other Proceedings
4.15 Tax Returns and Reports
4.16 Defaults
4.20 Broker's Fees
4.21 Environmental Matters
4.25 Accounts Receivable
4.26 Contracts and Commitments
4.29 Insurance
4.30 Related Agreements
7.10(h) Indebtedness Under Agreements
7.26 Conflicts of Interest
EXHIBITS
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A. Form of Note
B. Form of Common Stock Purchase Warrant
C. Form of Legal Opinion of Counsel to the Company
D. Form of Equipment Lease
E. Form of Security Agreement
F. Form of Patent and Trademark Security Agreement
G. Description of the Real Estate
H. Certificate of Designation for Series C Preferred Stock
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made as of
the 27th day of January, 1999, by and between BPI Packaging Technologies,
Inc., a Delaware corporation with its principal place of business located
at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"),
and DGJ, L.L.C., a Delaware limited liability company, with its principal
office located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Investor").
1. DEFINITIONS.
For all purposes of this Agreement the following terms shall have the
meanings set forth herein or elsewhere in the provisions hereof:
AFFILIATE. Affiliate means any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with
the Company (or any other specified Person) and shall include (a) any
Person who is an executive officer, director or beneficial holder of at
least 5% of the outstanding capital stock of the Company (or such other
specified Person), (b) any Person of which the Company (or such other
specified Person) or an Affiliate (as defined in clause (a) above) of the
Company (or such other specified Person) shall, directly or indirectly,
either beneficially own at least 5% of the outstanding equity securities or
constitute at least a 5% equity participant, and (c) in the case of a
specified Person who is an individual, Family Members of such Person;
provided, however, that an Investor shall not be an Affiliate of the
Company or any of its Subsidiaries for the purposes of this Agreement.
AGREEMENT. Agreement means this Securities Purchase Agreement.
ARTICLES. Articles shall include the articles or certificate of
incorporation, statute, constitution, joint venture or partnership
agreement, or articles or other charter of any Person other than an
individual, each as from time to time amended or modified.
ASSETS. Assets means all of the assets and properties of the
Company, whether real, personal, tangible or intangible and whether
presently existing or hereafter acquired.
CASH FLOW. Cash Flow means for any period, net income for such
period, less any nonrecurring or extraordinary items of gain, plus the
aggregate amounts deducted in determining such net income in respect of the
deferred portion of the provision for income taxes and depreciation,
amortization and similar non-cash charges.
CLOSING. See Section 2.3.
CLOSING DATE. See Section 2.3.
CODE. Code means the Internal Revenue Code of 1986, as amended.
COMMISSION. See Section 12.1.
COMMON STOCK. Common Stock means the Company's voting common stock,
par value $.01 per share.
COMPANY. Company means BPI Packaging Technologies, Inc., a Delaware
corporation.
CONSOLIDATED or CONSOLIDATED. Consolidated or consolidated means,
with reference to any term defined herein, that term as applied to the
accounts of the Company and all of its Subsidiaries.
CURRENT ASSETS. Current Assets of a Person means all assets of such
Person that would be classified as the current assets of a company
conducting a business the same as or similar to that of such Person, after
deducting adequate reserves in each case in which a reserve is proper.
CURRENT LIABILITIES. Current Liabilities means (i) all Indebtedness
of a Person that by its terms is payable on demand or matures within one
year from the date of determination (excluding any Funded Indebtedness that
is included within clause (ii) of this definition), (ii) all amounts
required to be paid or prepaid by such Person with respect to any Funded
Indebtedness within one year after such date of determination, and (iii)
all other items (including, without limitation, taxes accrued as estimated)
that would be included as current liabilities of such Person.
DEBT SERVICE. Debt Service means with respect to any calendar
quarter the total of all payments for borrowed money due in such calendar
quarter plus all payments for equipment rental due in such calendar
quarter.
DEFAULT. Default means an event or condition that with the passage
of time or giving of notice, or both, would become an (i) Event of Default
under this Agreement, the Warrant, or any of the other Financing Agreements
or (ii) event of default under any of the Related Agreements as defined
therein.
DEMAND REGISTRATION. See Section 12.2(a).
DISTRIBUTION. Distribution means (a) the declaration or payment by
the Company, any of its Subsidiaries, or any specified Person of any
dividend, either in cash or in property, on or in respect of any shares of
any class of capital stock of the Company, any Subsidiary of the Company
that is not directly or indirectly wholly owned by the Company, or any
other specified Person, other than dividends that, subject to restrictions
contained in this Agreement on issuances of capital stock of the Company,
are payable solely in shares of the capital stock of the payor; (b) the
purchase, redemption, or other retirement of any shares of any class of
capital stock of the Company, any Subsidiary of the Company that is not
wholly owned directly or indirectly by the Company, or other specified
Person, directly or indirectly or otherwise; or (c) any other
distribution on or in respect of any shares of any class of capital stock
of the Company, any Subsidiary of the Company that is not wholly owned
directly or indirectly by the Company, or other specified Person.
EBITDA. EBITDA means, for any Person for the period of
determination, such Person's net earnings for such period plus amounts
deducted in the computation thereof for: (i) interest expense, (ii)
Federal, state and local income taxes, (iii) depreciation, and (iv)
amortization of intangibles.
EQUITY. Equity means, with respect to a Person that is a
corporation, the sum of such Person's stated capital, additional paid in
capital, and retained earnings and, if such corporation is an obligor on a
Note, the outstanding principal balance of such Note.
EQUIPMENT LEASE AGREEMENT. Equipment Lease Agreement means the
agreement in substantially the form of EXHIBIT D hereto pursuant to which
the Company will lease certain equipment from the Investor.
ERISA. ERISA means the Employee Retirement Income Security Act of
1974, any successor statute of similar import, and the rules and
regulations thereunder, collectively and as from time to time amended and
in effect.
EVENTS OF DEFAULT. See Section 10.1.
EXCHANGE ACT. Exchange Act means the Securities Exchange Act of
1934, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at any time.
FACTORING AGREEMENT. Factoring Agreement means the Factoring
Agreement between the Company and the Lender.
FAMILY MEMBERS. Family Members means, as applied to any individual,
any parent, spouse, child, spouse of a child, brother or sister of such
individual, and each trust (including revocable trusts) created for the
benefit of one or more of such Persons and each custodian of property of
one or more such Persons.
FINANCIAL STATEMENTS. See Section 4.7(a).
FINANCING AGREEMENTS. Financing Agreements shall include this
Agreement, the Note, the Warrant, the Security Documents, the Loan
Agreement, the Factoring Agreement, the Equipment Lease Agreement, and any
and every other present or future agreement from time to time entered into
between the Company and Investor or any other holder of the Securities that
relates to this Agreement or is stated to be a Financing Agreement, as
from time to time amended or modified, and all statements, reports or
certificates delivered by or on behalf of the Company to the Investor or
any other holder of the Securities in connection herewith or therewith.
FISCAL YEAR. Fiscal Year means the Company's accounting year ending
on December 31 of each calendar year.
FRANKLIN INDEBTEDNESS. Franklin Indebtedness means the Indebtedness
of the Company to the Lender under the Loan Agreement and any indebtedness
under the Factoring Agreement.
FUNDED INDEBTEDNESS. Funded Indebtedness means all Indebtedness of
a Person that matures more than one year from the date of determination or
matures within one year of such date but is renewable or extendable, at the
option of such Person, to a date more than one year from such date or that
arises under a revolving credit or other similar agreement that obligates
the lender or lenders to extend credit during a period of more than one
year from such date of determination, including, without limitation, all
amounts of Funded Indebtedness required to be paid or prepaid within one
year from the date of determination.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES OR GAAP. Generally Accepted Accounting Principles,
generally accepted accounting principles or GAAP means accounting
principles that are (a) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors
and successors that, unless specified herein to the contrary, are in effect
from time to time, (b) applied with respect to any Person on a basis
consistent with prior periods, and (c) such that a certified public
accountant would, insofar as the use of accounting principles is pertinent,
be in a position to deliver an unqualified opinion as to financial
statements in which such principles have been properly applied.
HOLDER. See Section 12.1.
INDEBTEDNESS. Indebtedness means all obligations, contingent or
otherwise, that should be classified on the obligor's balance sheet as
liabilities, including without limitation all contingent liabilities, lease
obligations that are required to be capitalized, and all guarantees,
endorsements, and contingent obligations in respect of Indebtedness of
others.
INDEMNIFIED PARTY. See Section 12.8(c).
INDEMNIFYING PARTY. See Section 12.8(c).
INVESTMENTS. Investments shall include (a) any share of capital
stock, evidence of Indebtedness, or other security issued by any other
Person, (b) any loan, advance, or extension of credit to, or contribution
to the capital of, any other Person, (c) any purchase of the securities or
business or integral part of the business of any other Person, or
commitment to make such purchase, and (d) any other investment of any kind
in any other Person; provided, however, that the term "Investment" shall
not include (i) trade and customer accounts receivable for services
rendered in the ordinary course of business and payable in accordance with
customary trade terms, and all letters of credit or other instruments
securing the same, (ii) to the extent permitted hereunder, advances to
employees for reasonable travel expenses, drawing accounts and similar
expenditures, (iii) capital stock or other securities acquired in
connection with the satisfaction or enforcement of Indebtedness or claims
due or owing to the Company or as security for any such Indebtedness or
claim, or (iv) any investment of the kind described in clauses (a) through
(c) of this definition in any wholly owned Subsidiary of the Person making
such investment.
INVESTOR. Investor means DGJ, L.L.C. and its successors and assigns.
LEASES. Leases means all leases of real and personal property
entered into or assumed by the Company.
LENDER. Lender means Franklin Capital Corporation and its successors
and assigns.
LIEN. Lien means (a) any encumbrance, mortgage, pledge, lien,
charge, or other claim or security interest of any kind upon any property
or assets of any kind of a Person, or upon the income or profits therefrom,
(b) any acquisition of or agreement to have an option or other right to
acquire any property or assets upon conditional sale or other title
retention agreement, device, or arrangement (including any capitalized
lease), or (c) any sale, assignment, pledge, or other transfer for security
of any accounts, general intangibles, or chattel paper, with or without
recourse, or any agreement or option with respect to any of the foregoing.
LOAN AGREEMENT. Loan Agreement means the Revolving Credit Agreement
and the exhibits thereto and all instruments, documents and agreements
executed or delivered in connection therewith between the Company (and its
Affiliates) and the Senior Lender, including, without limitation, all
promissory notes, guarantees, security agreements, pledge agreements,
assignments, deeds of trust, mortgages, letters of credit, and other
instruments and agreements executed pursuant thereto or in connection
therewith, including all amendments, supplements, extensions, renewals,
restatements, replacements, or refinancings thereof, or other modifications
(in whole or in part, without limitations as to amount, terms, conditions,
covenants, or other provisions) thereof from time to time.
MAJORITY HOLDERS. Majority Holders means, unless otherwise
specifically provided in this Agreement, the holder or holders at the
relevant time (excluding the Company and its Subsidiaries) of, initially,
(a) in the case of the Note (or in the case of any subdivision or partial
assignment of any Note), more than 50% in outstanding principal amount of
the outstanding Note and the outstanding resulting Notes for as long as any
Note or resulting Notes are outstanding, and (b) after payment in full of
the principal of and interest on the Note, in the case of the Warrant and
Warrant Stock, more than 50% of the sum of the number of shares of Warrant
Stock then issuable upon exercise of the outstanding Warrant plus the
number of then issued and outstanding shares of Warrant Stock.
MAXIMUM RATE. See Section 3.6(b).
NOTE. Note means the Company's $3,200,000 6% senior subordinated
note issued to the Investor pursuant to Section 2.1(a) hereof in
substantially the form of EXHIBIT A hereto and any other Notes transferred
to any other holders pursuant to Section 14 hereof. The terms Note and
Notes will be used interchangeably throughout this Agreement.
PATENT AND TRADEMARK SECURITY AGREEMENT. Patent and Trademark
Security Agreement means the agreement in substantially the form of
EXHIBIT F hereto.
PERMITTED INDEBTEDNESS. See Section 7.10.
PERMITTED LIENS. See Section 7.11.
PERSON. Person means an individual, partnership, corporation,
limited liability company, association, trust, joint venture,
unincorporated organization, and any government, governmental department or
agency or political subdivision thereof.
PIGGYBACK REGISTRATION. See Section 12.3(a).
PRO FORMA BALANCE SHEET. See Section 4.7(a).
PROJECTIONS. See Section 4.7(a).
PRO RATA PORTION. Following the Closing an Investor's Pro Rata
Portion shall be the percentage determined by dividing the aggregate
outstanding principal amount of the Note held by such Investor by the
aggregate outstanding principal balance of all Notes.
PURCHASE PRICE. See Section 2.2.
REAL ESTATE. Real Estate means the real property owned by the
Company and all improvements and fixtures thereon and the all real property
leased by the Company and all leasehold improvements thereon owned or
leased by the Company, as more fully described in EXHIBIT G hereto.
REGISTERED. See Section 12.1.
REGISTRABLE SECURITIES. See Section 12.1.
REGISTRATION. See Section 12.1.
REGISTRATION EXPENSES. See Section 12.7(a).
RELATED AGREEMENTS. See Section 4.30.
RESTRICTED PAYMENT. Restricted Payment means any payment either in
cash or in property to any Affiliate of the Company in respect of any
Indebtedness owed by or other obligation of the Company to such Affiliate,
other than any payments specifically excluded from Restricted Payments by
other Sections of this Agreement.
RESTRICTED SECURITIES. See Section 14.1.
RIGHTS. See Section 4.11.
SECURITIES. Securities means the Note, the Series C Preferred Stock
and the Warrant.
SECURITIES ACT. Securities Act means the Securities Act of 1933, as
amended, 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 LAWS. See Section 7.22.
SECURITY AGREEMENT. Security Agreement means the Security Agreement
dated as of the Closing Date between the Company and the Investor in
substantially the form of EXHIBIT E hereto.
SECURITY DOCUMENTS. Security Documents means the Security Agreement
and the Patent and Trademark Security Agreement.
SERIES C PREFERRED STOCK. Series C Preferred Stock means 1,629,930
shares of Series C Preferred Stock of the Company described in EXHIBIT H
hereto to be issued to the Investor pursuant to Section 2.2 hereof.
STOCKHOLDERS MEETING. See Section 2.5.
SUBSIDIARY OR SUBSIDIARIES. Subsidiary means any Person of which the
Company or other specified Person now or hereafter shall at the time own
directly or indirectly through a Subsidiary at least a majority of the
outstanding capital stock (or other shares or forms of beneficial interest)
entitled to vote generally.
TANGIBLE NET WORTH. Tangible Net Worth means, with respect to any
Person and any period, all amounts which would be included under
stockholders' equity on a balance sheet of such Person, during such period,
MINUS the amount of any intangible items such as, but not limited to,
goodwill (including amounts, however characterized, representing the cost
of acquisition of businesses and investments in excess of underlying
tangible assets), trademarks, trade names, service marks, copyrights,
patents, licenses, unamortized debt discounts, organizational expenses,
marketing expenses and deferred research and development costs.
TRANSFER NOTICE. See Section 14.2.
UNDERWRITERS' MAXIMUM NUMBER. See Section 12.1.
UNFUNDED VESTED ACCRUED BENEFITS. Unfunded Vested Accrued Benefits
means with respect to any employee benefit plan of a Person at any time,
the amount (if any) by which the present value of all vested nonforfeitable
accrued benefits under such employee benefit plan exceeds the fair market
value of all employee benefit plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such employee
benefit plan, using the actuarial assumptions in effect under such employee
benefit plan.
WARRANT. Warrant means the Common Stock Purchase Warrant of the
Company issued to the Investor pursuant to Section 2.1(b) hereof in
substantially the form of EXHIBIT B.
WARRANT STOCK. Warrant Stock means Common Stock issued or issuable
upon exercise of any Warrant including Common Stock issued in respect of
outstanding Warrant Stock upon any recapitalization, stock dividend, stock
split, reclassification or similar event.
2. SALE AND PURCHASE OF SECURITIES; SECURITY.
2.1 SALE AND PURCHASE OF SECURITIES. Subject to all of the terms
and conditions hereof and in reliance on the representations and warranties
set forth or referred to herein, the Company agrees to issue and sell to
the Investor, and the Investor agrees to purchase from the Company, the
securities listed below:
(a) A Note in the aggregate principal amount of $3,200,000;
(b) The Common Stock Purchase Warrant, substantially in the
form of EXHIBIT B hereto, for the purchase of an aggregate of eighty
million (80,000,000) shares, with such amount subject to adjustment as
provided in the Warrant; and
(c) 1,629,930 shares of Series C Preferred Stock.
2.2 PURCHASE PRICE. The aggregate purchase price for the
Securities is $3,200,200 (the "Purchase Price"). The parties hereto agree
that the aggregate purchase price for the Note to be purchased by the
Investor is $3,200,000; the purchase price and the fair market value of the
Warrant on the Closing Date is $100 and will be treated and reported as
such by both parties for federal, state, and local tax purposes; and the
purchase price and the fair market value of the 1,629,930 shares of Series
C Preferred Stock to be purchased by the Investor is $100 and will be
treated and reported as such by both parties for federal, state and local
tax purposes. The Investor may retain up to $1,000,000 for up to thirty
(30) days for payments to be made directly to unsecured creditors of the
Company, as contemplated by Section 2.4 hereof.
2.3 CLOSING. The closing of the purchase and sale of the
Securities (the "Closing") will take place at the offices of ▇▇▇▇▇▇ & Coff,
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on January 27, 1999 or such
other place and date as the parties hereto may agree upon (the "Closing
Date"). The Note, Series C Preferred Stock and the Warrant will be issued
to the Investor or any nominee specified by an Investor on or before the
Closing Date and registered in the Investor's name or the names of such
specified nominees in the Company's records.
2.4 USE OF PROCEEDS. The Company agrees that it will use the
proceeds from the sale of the Securities hereunder solely to (i) provide
working capital for use by the Company in the ordinary course of its
business, (ii) to pay down certain accounts payable, including outstanding
judgments of trade creditors, and (iii) pay expenses of the Company in
connection with the transactions contemplated by this Agreement and the
Related Agreements. Payments of proceeds to unsecured creditors shall be
made by the Investor directly to any such unsecured creditors, and shall
not be paid by the Company directly to such unsecured creditors unless
otherwise agreed by the Investor.
2.5 RESERVATION. At or before the Closing, the Company shall take
all actions necessary to reserve for future issuance upon exercise of the
Warrant all remaining authorized but unissued shares of Common Stock. As
promptly as practicable after the Closing Date, the Company shall take such
action as may be necessary and proper to call a meeting of its stockholders
(the "Stockholders Meeting") to approve an amendment to the Company's
Certificate of Incorporation increasing the Company's authorized Common
Stock to one hundred fifty million (150,000,000) shares. Promptly after
such approval, the Company will take all actions necessary to reserve for
future issuance all shares of Common Stock issuable upon exercise of the
Warrant.
3. PRINCIPAL AND INTEREST PAYMENTS ON NOTE.
3.1 PRINCIPAL REPAYMENT. Unless the principal amount of the Note
shall earlier be prepaid or becomes payable pursuant to the terms thereof
or of any other Financing Agreement, the entire principal balance of the
Note shall become due and payable in full on the earliest of (a) February
1, 2004, (b) an Event of Default, (c) the sale of 50% or more of the
Company's assets, (d) the merger or consolidation of the Company with
another Person or Persons, (e) the purchase of 50% or more of the shares of
the Common Stock by a Person who was not a stockholder immediately after
the Closing, or (f) a primary public offering of the Company's securities
in excess of Ten Million Dollars ($10,000,000).
3.2 OPTIONAL PREPAYMENTS. The Company may prepay from time to time
after the Closing Date without penalty all or any portion (in any multiple
of $250,000) of the principal amount of the Note provided that the Company
gives the holders from time to time of such Note not less than two (2)
business days' prior written notice of the date and amount of such optional
prepayment. The principal amount of the Note designated for prepayment in
any notice of optional prepayment given pursuant to this Section 3.2 shall
become due and payable on the date fixed for prepayment in such notice,
together with all accrued and unpaid interest thereon, and any applicable
prepayment premium.
3.3 APPLICATION OF PAYMENTS OR PREPAYMENTS. Each repayment or
prepayment of less than the entire unpaid amount of all outstanding Notes
shall be applied pro rata to all outstanding Notes according to the
respective unpaid principal amounts thereof.
3.4 PRESENTATION OR SURRENDER OF NOTE. The Company may, as a
condition to making any prepayment of a Note, require the holder thereof to
present such Note at the place specified in the Note for payment of the
principal thereof, for notation thereon of the amount and date of such
prepayment, or, if such Note is prepaid in full, to surrender the same to
the Company.
3.5 NO REBORROWING. No payments or prepayments of principal on the
Note may be reborrowed under the Note.
3.6 INTEREST PAYMENTS.
(a) The unpaid principal amount of the Note outstanding from
time to time shall bear interest at a rate equal to 6% per annum (payable
monthly in arrears on the first business day of each month, commencing on
March 1, 1999, and at the maturity of the Note), provided, however, that
from the occurrence of an Event of Default and during the continuation
thereof the unpaid principal amount of the Note, and, to the extent
permitted by applicable law, overdue interest on the Note, shall bear
interest at a rate equal to 15% per annum, compounded monthly and payable
on demand. Interest shall be calculated on the basis of the actual number
of days elapsed and a 360 day year.
(b) It is not intended by the holders of the Note, and
nothing contained in this Agreement or any Note shall be deemed, to
establish or require the payment of a rate of interest in excess of the
maximum rate permitted by applicable federal, state, or other law (the
"Maximum Rate") and, to prevent such an occurrence, any agreement that may
now or hereafter be in effect between the Company and the holders of the
Note regarding the payment of fees or interest to such holders are hereby
limited by the provisions of this Section 3.6(b). If, in any month, the
effective interest rate applicable to the principal outstanding under the
Note, absent the Maximum Rate limitation contained herein, would have
exceeded the Maximum Rate, then the effective interest rate for that month
shall be the Maximum Rate, and, if in the future months, such effective
interest rate would otherwise be less than the Maximum Rate, then the
effective interest rate for such month shall be increased to the Maximum
Rate until such time as the amount of interest paid hereunder equals the
amount of interest that would have been paid if the same had not been
limited by the Maximum Rate. If, upon payment in full of the principal
outstanding under the Note, the total amount of interest paid or accrued
under the terms of this Agreement is less than the total amount of interest
which would have been paid or accrued had the interest not been limited
hereby to the Maximum Rate, then the Company shall, to the extent
permitted by such applicable federal, state, or other law, pay to the
holders of the Note an amount equal to the excess, if any, of (i) the
lesser of (A) the amount of interest which would have been charged if the
Maximum Rate had, at all times, been in effect with respect to the Note and
(B) the amount of interest that would have accrued had the effective
interest rate applicable with respect to the Note at all times not been
limited hereunder by the Maximum Rate over (ii) the amount of interest
actually paid or accrued under this Agreement. If the holders of the Note
receive, collect, or apply as interest any sum in excess of the Maximum
Rate, such excess amount shall be applied to the reduction of principal
outstanding under the Note (without regard to any minimum prepayment
amount) and if no such principal is then outstanding, such excess or part
thereof remaining, shall be paid to the Company.
4. REPRESENTATIONS AND WARRANTIES.
To induce the Investor to enter into this Agreement and the Financing
Agreements and to purchase the Securities, Company hereby represents and
warrants to the Investor that:
4.1 ORGANIZATION AND GOOD STANDING. The Company is duly organized
and existing in good standing in the State of Delaware, is qualified as a
foreign corporation to do business in the State of Massachusetts, and has
made application to qualify to do business as a foreign corporation in all
other jurisdictions in which the nature of its business or assets or other
properties makes such qualification necessary, except where the failure to
do so would not have a material adverse effect on the Company. The Company
has the corporate power to own its assets or other properties and to carry
on its business as now conducted and as proposed to be conducted.
4.2 AUTHORIZATION. The execution, delivery, and performance by the
Company of this Agreement, the other Financing Agreements, the Warrant, and
each of the Related Agreements to which the Company is a party or by which
it is bound or subject, and the issuance and sale by the Company of the
Securities and at least 30,937,500 shares of the Warrant Stock hereunder
(all shares of Warrant Stock upon approval of the proposed amendment to the
Company's Certificate of Incorporation at the Stockholders Meeting), (a)
are within the Company's corporate power and authority, (b) have been duly
authorized by all necessary corporate proceedings, and (c) do not conflict
with or result in any breach of any provision or the creation of any Lien
upon any of the property of the Company pursuant to the Articles or by-laws
of the Company or any law, regulation, order, judgment, writ, injunction,
license, permit, agreement, indenture, or instrument to which the Company
is a party or by which it is bound, the non-compliance with which would
materially adversely affect the business, properties, operations,
financial condition, or prospects of the Company.
4.3 ENFORCEABILITY. The execution and delivery by the Company of
this Agreement, the other Financing Agreements, the Warrant, and each of
the Related Agreements to which the Company is a party and the issuance and
sale of the Securities and Warrant Stock hereunder, will result in legally
binding obligations of the Company enforceable against it in accordance
with the respective terms and provisions hereof and thereof, except to the
extent (a) such enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to or affecting
generally the enforcement of creditors' rights, (b) the availability of the
remedy of specific performance or injunctive or other equitable relief is
subject to the discretion of the court before which any proceeding therefor
may be brought, (c) the enforceability of the indemnities contained in
Section 12 of this Agreement may be limited under federal and state
securities laws and (d) that issuance of not more than 49,062,500 shares of
Warrant Stock will require prior stockholders approval of an amendment to
the Company's Certificate of Incorporation increasing the Company's
authorized shares by that amount.
4.4 APPROVALS, NO VIOLATIONS. Except as set forth in SCHEDULE 4.4
hereto, the execution, delivery, and performance by the Company of this
Agreement, the other Financing Agreements, the Warrant, and each of the
Related Agreements to which the Company is a party, and the issuance and
sale of the Securities and Warrant Stock hereunder and under the Warrant,
do not require the approval or consent of, or any filing with, any
governmental authority or agency, or any other Person, including, without
limitation, any filing under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976.
4.5 CAPITALIZATION.
(a) CAPITAL STOCK. The authorized capital stock of the
Company consists solely of 60,000,000 shares of the Company's voting Common
Stock, par value $.01 per share, of which 21,495,621 shares are issued and
outstanding, and 2,000,000 shares of preferred stock, of which 223,375
shares of Series A Preferred Stock are issued and outstanding and 146,695
shares of Series B Preferred Stock are issued and outstanding. On the
Closing Date, the Company will have 21,163,496 outstanding shares of Common
Stock, and 60,000,000 shares of Common Stock reserved for issuance, 223,375
outstanding shares of Series A Preferred Stock, 146,695 outstanding shares
of Series B Preferred Stock and 1,629,930 outstanding shares of Series C
Preferred Stock. All such outstanding shares of the Company's capital
stock will be duly authorized, fully paid, and non-assessable.
(b) OPTIONS. Other than as created pursuant to this
Agreement, or as disclosed on SCHEDULE 4.5(b) hereto, the Company does not
have outstanding any agreements, rights (either preemptive or other),
subscriptions, options, warrants, calls, commitments, agreements,
conversion or other rights of any character, contingent or otherwise, to
purchase or otherwise acquire from the Company at any time, or upon the
happening of any stated event, any shares of capital stock of the Company
or any securities convertible into or exchangeable for its capital stock.
(c) RESERVATION OF SHARES. Except as described in
SCHEDULE 4.5(c), sufficient shares of authorized but unissued Common Stock
of the Company have been reserved by appropriate corporate action in
connection with the prospective exercise of the Warrant, any other
agreements, rights, or options disclosed on SCHEDULE 4.5(b), and the
issuance of either the Warrant or the shares of Warrant Stock will not
require any further corporate action by the stockholders or directors of
the Company, will not be subject to preemptive rights in any present or
future stockholders of the Company, and will not conflict with any
provision of any law, regulation, order, judgment, writ, injunction,
license, permit, agreement, indenture, or instrument to which the Company
is a party or by which it is bound, and the Common Stock that will be
issued upon exercise of any Warrant in accordance with its terms will be
duly authorized, issued, fully paid, and non-assessable.
4.6 SUBSIDIARIES. Except as set forth on SCHEDULE 4.6, the Company
does not have any Subsidiaries.
4.7 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has previously furnished the Investor with
complete and correct copies of the following:
(i) the balance sheets of the Company as of
December 31, 1997, February 28, 1997 and February 23, 1996, and the related
statements of income, retained earnings, and cash flow for the years then
ended, certified by the Company's independent certified public accountant;
the Company's unaudited balance sheet and related statements of income,
retained earnings, and cash flow for the interim periods ended
September 30, 1998, and August 29, 1997; and the Company's unaudited
balance sheet and statement of income for the month ended November 27,
1998, each attached hereto as SCHEDULE 4.7(a)(i) (collectively the
"Financial Statements");
(ii) the pro forma consolidated balance sheet of the
Company at the Closing Date, taking into account all transactions
contemplated by this Agreement and the Related Agreements, such balance
sheet being attached hereto as SCHEDULE 4.7(a)(ii) (the "Pro Forma Balance
Sheet"); and
(iii) the projections of the Company's future performance
dated as of the Closing Date and attached hereto as SCHEDULE 4.7(a)(iii)
(the "Projections").
(b) Except as specifically noted therein or in Section 7.1,
each of the Financial Statements delivered under Section 4.7(a)(i) hereof
was prepared in accordance with generally accepted accounting principles
consistently applied (except that the unaudited financial statements do not
contain footnotes, and are subject to normal and customary year end
adjustments consistent with past practice); each of the balance sheets
included in such Financial Statements fairly presents in all material
respects the financial condition of the Company as of the close of business
on the date thereof, and each of the statements of income and retained
earnings and changes in financial position included in such Financial
Statements fairly presents in all material respects the results of
operations of the Company for the Fiscal Years and periods then ended.
(c) The Pro Forma Balance Sheet and the Projections have been
prepared by management of the Company on a reasonable basis consistent with
the historical financial statements of the Company except for the pro
forma adjustments specified therein, and the Company is not aware of any
fact that casts doubt on the reasonableness or completeness thereof, or the
accuracy of the historical or actual amounts or the calculations included
therein. The Company does not and will not, upon completion of the
transactions contemplated by this Agreement, have any material liabilities,
contingent or otherwise, that are not referred to in the Pro Forma Balance
Sheet, the December 31, 1997 balance sheet included in the Financial
Statements or in the notes to the December 31, 1997 Financial Statements.
The Company will attain cash from operations for the fourth quarter of
fiscal year 1998 in an amount at least equal to the amount set forth in the
Projections.
(d) The Projections constitute a reasonable basis for the
assessment of the future performance of the Company during the periods
indicated therein, and all material assumptions used in the preparation
thereof are set forth in the notes thereto.
4.8 MATERIAL ADVERSE CHANGE. Except as described in SCHEDULE 4.8,
there has been no material adverse change in the business, properties,
prospects, or financial or legal condition of the Company since September
30, 1998. Prior to and at the Closing Date, the Company will not have
conducted any business or incurred any liabilities other than those arising
in the ordinary course of the Company's business and in connection with the
transactions contemplated by this Agreement or the Related Agreements.
4.9 INDEBTEDNESS AND LIENS. The Company does not and after giving
effect to the transactions to be consummated at the Closing will not have
any Indebtedness or Liens upon any of its properties other than Permitted
Indebtedness and Permitted Liens.
4.10 ABSENCE OF CERTAIN DEVELOPMENTS. Except as provided in this
Agreement or as disclosed on SCHEDULE 4.10, since September 30, 1998, the
Company has not (i) issued any bonds, debentures, notes, shares of capital
stock, or other corporate securities; (ii) borrowed any amount or incurred
or become subject to any liabilities (absolute or contingent) other than in
the ordinary course of business; (iii) discharged or satisfied any lien or
encumbrance or paid any obligation or liability (absolute or contingent)
other than in the ordinary course of business; (iv) purchased or redeemed
any shares of its capital stock; (v) mortgaged, pledged, or subjected to
lien, charge, or any other encumbrance, any of its assets, tangible or
intangible, except liens of current taxes not yet due and payable; (vi)
sold, assigned, or transferred any of its tangible assets except inventory
in the ordinary course of business, or canceled any debts or claims; (vii)
sold, assigned, or transferred any patents, licenses, permits, trademarks,
trade names, copyrights, trade secrets, or other intangible assets; (viii)
suffered any extraordinary loss or waived any right to any amount in excess
of $10,000, whether or not in the ordinary course of business and
consistent with past practice; (ix) entered into any transaction other than
in the ordinary course of business; (x) made any individual or series of
related capital expenditures in excess of $50,000; or (xi) made any
charitable contributions or pledges. Except as disclosed in SCHEDULE 4.10,
since September 30, 1998, the Company has not made any Distribution to any
Person.
4.11 INTELLECTUAL PROPERTY RIGHTS. Except as set forth in
SCHEDULE 4.11, the Company has and holds title to, or has valid and
enforceable licenses of or other rights to use all franchises, patents,
patent applications, patent licenses, patent rights, trademarks, trademark
rights, trademark applications, trade names, trade name rights, copyrights,
service marks, licenses, permits, authorizations, proprietary software,
and other intellectual property rights (collectively, the "Rights"), as are
necessary for the conduct of its business as currently conducted or
currently proposed to be conducted, except to the extent that the failure
to have any of the Rights would not have a material adverse effect on the
business, assets, or financial condition of the Company. All of the Rights
are in full force and effect, and the Company is in substantial compliance
with the Rights without any known conflict with the valid rights of others
that could affect or impair in a material manner the business, assets, or
financial condition of the Company.
4.12 SOLVENCY. After giving effect to the transactions contemplated
by this Agreement, the other Financing Agreements, and the Related
Agreements, the Company (i) is not insolvent, (ii) has assets having a fair
saleable value in excess of the amount required to pay its liabilities on
its existing debts as they become absolute and matured, and (iii) is not
left with unreasonably small capital with which to engage in its
anticipated business for the next twelve (12) months based on current
estimates by management. On a consolidated basis the Company has not, and
after giving effect to this Agreement, the other Financing Agreements, and
the Related Agreements (including without limitation the Loan Agreement)
will not have, incurred Indebtedness and other obligations of any kind
whatsoever beyond its anticipated ability to pay such Indebtedness and
other obligations as they mature.
4.13 TITLE TO ASSETS. The Company owns all of the assets reflected
on the Pro Forma Balance Sheet or on the December 31, 1997 balance sheet
included in the Financial Statements (except property and assets sold or
otherwise disposed of in the ordinary course of business before the Closing
Date), which include any assets used or useful in the operation of the
Company's business, other than leased real estate listed on EXHIBIT G and
leased equipment listed on SCHEDULE 4.13, and such other items as are
listed on SCHEDULE 4.13. Upon consummation of the transactions contemplated
hereby, the Company will enjoy peaceful and undisturbed possession of
leased properties with respect to which it is the lessee, all such leases
will be valid and in full force and effect, and the Company will have
performed all obligations required to be performed by them with respect to
all such leases.
4.14 LITIGATION. There is no litigation, at law or in equity, or
any proceeding or investigation before or by any court, board, or other
governmental or administrative agency or any arbitrator pending or, to the
knowledge of the Company, threatened which, individually or in the
aggregate, is reasonably likely to result in any final judgment or
liability that, after giving effect to any applicable insurance, could
result in any material adverse change in the business, assets, or
financial or legal condition of the Company or that seeks to enjoin the
consummation of, or that questions the validity of, any of the transactions
contemplated by this Agreement, the Securities, the other Financing
Agreements, or the Related Agreements, except for the matters set forth on
SCHEDULE 4.14 hereto, all of which are fully covered by insurance except
for customary deductibles and to the extent otherwise disclosed therein.
No judgment, decree, or order of any court, board, or other governmental
or administrative agency or arbitrator has been issued against or binds the
Company that has or may have any material adverse effect on the business,
assets, or financial or legal condition of the Company. During the past
five years, the Company and its Affiliates (a) have had no personal
injury-related claims, except those set forth on SCHEDULE 4.14, each of
which involves a claim for less than $100,000 and is fully covered by
insurance, subject to applicable deductibles, and (b) have had no other
product liability claims that involved payments (whether in settlement or
otherwise) in the aggregate in excess of $25,000.
4.15 TAXES. Except as set forth on SCHEDULE 4.15, the Company has
filed all tax returns and reports that are required to be filed with any
foreign, federal, state, or local governmental authority or agency and has
paid, or made adequate provision for the payment of, all assessments
received and all taxes that have or may become due under applicable
foreign, federal, state, or local governmental law or regulations with
respect to the periods in respect of which such returns and reports were
filed. The Company knows of no additional actual or proposed assessments
against it since the date of such returns and reports in an aggregate
amount above $150,000, and there will be no additional assessments for
which adequate reserves appearing on the Pro Forma Balance Sheet have not
been established. The Company has made adequate provision for all current
taxes.
4.16 DEFAULTS. Other than as described in SCHEDULE 4.16, the
Company is not in default under or in violation of any provisions of its
Articles or by-laws or any law, regulation, order, decree, judgment, writ,
injunction, license, permit, or any franchise, contract, agreement, lease,
indenture, understanding, or other instrument to which it is a party or by
which it or its property is bound, that could affect adversely the
business, assets, or financial condition of the Company.
4.17 BURDENSOME OBLIGATIONS. The Company is not a party to or bound
by any agreement, contract, deed, lease, indenture, or other instrument
that is so unusual or burdensome as in the foreseeable future to affect or
impair materially and adversely the business, assets, or financial or legal
condition of the Company, before and after giving effect to the
transactions contemplated in this Agreement, the other Financing
Agreements, and the Related Agreements.
4.18 ERISA. Each employee benefit plan complies in all material
respects with all applicable requirements of law and regulation. No
employee benefit plan established, assumed, or maintained by the Company or
to which the Company has made contributions, which is subject to Part 3 of
Subtitle B of Title I of ERISA or Section 412 of the Code, had a
contribution failure sufficient to give rise to a lien under Section 302(f)
of ERISA, an accumulated funding deficiency (as such term is defined in
Section 302 of ERISA or Section 412 of the Code), whether or not waived, as
of the last day of the most recent fiscal year of such plan heretofore
ended. No liability to the Pension Benefit Guaranty Corporation (other
than required insurance premiums, all of that have been paid) has been
incurred by the Company with respect to any such plan and there has not
been any reportable event within the meaning of Section 4043 of ERISA and
the regulations promulgated thereunder, or any other event or condition,
which presents a material risk of termination of any such plan by the
Pension Benefit Guaranty Corporation and no steps have been instituted to
terminate any plan. Neither the Company nor any other entity, which by
reason of common control is treated together with the Company as a single
employer within the meaning of Section 414 of the Code, (i) has withdrawn
from any pension plan subject to Title IV of ERISA (or instituted steps to
do so), (ii) failed to make contributions to an employee benefit plan when
due, or (iii) has any contingent liability with respect to any post
retirement benefit under a welfare plan (as defined in ERISA Section 3(i)
other than liability for continuation coverage described in Part 6 of Title
I of ERISA. Neither any such plan nor any trust created thereunder, nor
any trustee or administrator thereof, has engaged in a prohibited
transaction (as such term is defined in Section 4975 of the Code or Section
406 of ERISA) that could subject any such plan, trust, trustee, or
administrator or the Company to any tax or penalty on prohibited
transactions imposed under said Section 4975 of ERISA. No material
liability has been incurred with respect to any multiemployer plan, within
the meaning of Section 4001(a)(3) of ERISA, as a result of the complete or
partial withdrawal by the Company from such a multiemployer plan under
Section 4201 or 4204 of ERISA; nor has the Company been notified by any
such multiemployer plan that such multiemployer plan is in reorganization
or insolvency under and within the meaning of Section 4241 or 4245 of ERISA
or that such multiemployer plan intends to terminate or has been terminated
under Section 4041A of ERISA.
4.19 GOVERNMENTAL REGULATIONS. The Company is not and will not
become a "holding company", or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it a
"registered investment company", or an "affiliated person" or a "principal
underwriter" of a "registered investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
4.20 CERTAIN FEES. Except as set forth on SCHEDULE 4.20, no
broker's, finder's, or placement fee or commission is or will be payable
with respect to the offer, issue, and sale of the Securities or the
Warrant Stock, or the consummation of the transactions contemplated under
this Agreement or the Related Agreements.
4.21 ENVIRONMENTAL PROTECTION. Except as set forth on SCHEDULE 4.21
hereto, the Company has obtained all material permits, licenses, and other
authorizations and has filed all material reports and maintained all
records which are required under federal, state, and local laws relating to
pollution or protection of the environment, including laws relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of chemicals, pollutants, contaminants or hazardous
or toxic materials or wastes ("Environmental Laws"). Except as set forth on
SCHEDULE 4.21 hereto, the Company is in full compliance with all terms
and conditions of the required permits, licenses and authorizations, and is
also in full compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules
and timetables contained in those laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder. Except as set forth on
SCHEDULE 4.21 hereto, the Company is not aware of, nor has the Company
received notice of, any alleged past, present or future events,
conditions, circumstances, activities, practices, incidents, actions, or
plans which may interfere with or prevent continued compliance by the
Company with Environmental Laws, or which may give rise to any common law
or legal liability, or otherwise form the basis of any claim, action, suit,
proceeding, hearing, or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release, or threatened
release into the environment, of any chemical, pollutant, contaminant, or
hazardous or toxic material or waste either on or off the Real Estate or
which may require a material expenditure in order to maintain compliance
with Environmental Laws. There are no underground storage tanks on the
Real Estate. The Company has given copies to the Investor of all
environmental reports, audits, and other documents of which it is aware
assessing compliance with Environmental Laws of the Company or the Real
Estate.
4.22 REPRESENTATIONS AND WARRANTIES UNDER RELATED AGREEMENTS. All
material representations and warranties made by the Company in any of the
Related Agreements or in the certificates delivered in connection therewith
are true and correct in all material respects as of the date hereof with
the same force and effect as though made on and as of the date hereof, and
such representations and warranties are hereby confirmed to the Investor
and made representations and warranties of the Company hereunder to the
Investor as fully as if set forth herein. To the best of the Company's
knowledge, all representations and warranties made in the Related
Agreements by or on behalf of any party thereto other than the Company are
true and correct in all material respects.
4.23 DISCLOSURE. No representation, warranty, or statement made in
this Agreement, the other Financing Agreements, any Related Agreement, or
any agreement, instrument, certificate, statement, or document furnished by
or on behalf of the Company in connection herewith or therewith contains
any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.
4.24 LIENS.
(a) No financing statement that names the Company as a debtor
has been filed in any jurisdiction in the United States pursuant to Article
9 of the Uniform Commercial Code of any State (and the Company has not
signed any financing statement or any security agreement authorizing any
secured party thereunder to file any such financing statement in any such
jurisdiction) other than those financing statements or security agreements
with respect to liens, security interests, and other encumbrances permitted
by Section 7.11 hereof, which will not be released prior to or concurrently
with the Closing.
(b) No mortgages, chattel mortgages, assignments, statements
of assignment, security agreements, mortgages, or deeds of trust have been
filed by any Person or Persons with respect to any part of the property or
assets of the Company, except for mortgages and security agreements which
are permitted by the provisions of Section 7.11 hereof, which will not be
released prior to or concurrently with the Closing.
4.25 ACCOUNTS RECEIVABLE. Except as listed in SCHEDULE 4.25, all
accounts receivable of the Company result from bona fide sales of
merchandise or services delivered or provided by the Company, arose in the
ordinary course of the Company's business, are not subject to any setoff or
counterclaim, and do not represent any obligations of any employees,
stockholders, officers, or directors of the Company nor their Family
Members nor any Person, firm, or corporation in which they or any of them
have a financial interest. None of the accounts receivable of the Company
are payable by or on behalf of the United States Government or any agency,
department, authority, commission, instrumentality, or other subdivision
thereof.
4.26 CONTRACTS AND COMMITMENTS. Except for contracts or commitments
subject to cancellation without liability to the Company on not more than
thirty (30) days notice, and except as listed in SCHEDULE 4.26 hereto, the
Company is not obligated (for present or future obligations), under the
terms of any written or oral contract, commitment, or understanding
relating to the conduct of its business or the operation of its assets
(other than this Agreement, the other Financing Agreements, and the
Related Agreements), including, but not limited to, the following:
(i) any contracts for the employment or compensation of any
officer, director, employee, consultant, or agent relating to the present
or future position of such Person;
(ii) any contracts for the purchase of materials, furniture,
fixtures, supplies, or inventories, or for the purchase or lease of
equipment not in the ordinary course of business;
(iii) any contracts for the future performance of services;
(iv) any contracts respecting employee benefits, including
bonus, pension, profit sharing, vacation, hospitalization, insurance,
deferred compensation, retirement, stock option, stock bonus, or stock
purchase plans;
(v) any leases and subleases in which the Company is a party,
assignee or sublessee;
(vi) any contracts requiring the Company to indemnify, hold
harmless, or insure any Person against any losses, damages, liabilities, or
claims of any kind;
(vii) any contracts relating to the borrowing of money to or
from the Company, or relating to the guaranty by the Company of any
obligation for the borrowing of money; and
(viii) any contracts containing a covenant limiting the right
of the Company to compete in any line of business or with any Person,
firm, or corporation in any location or area.
All of the contracts or agreements to which the Company is a party or by
which it is bound establish valid and legal rights and responsibilities
that are binding upon and enforceable against the Company and to the
Company's knowledge, the other parties thereto, or their successors or
assigns, if any, and to the Company's knowledge, none of the other parties
thereto are in default thereunder.
4.27 COMPLIANCE WITH LAW. The Company is in compliance in all
material respects with and has not received any notices of non-compliance
with respect to, any and all federal, state, and local statutes,
ordinances, rules, or regulations, including without limitation those
relating to zoning, occupational safety and health, equal employment
opportunities, and labor relations in the jurisdictions in which it does
business, except such as have not and are not reasonably likely to have a
material adverse effect on the Company, its assets, operations or business.
The Company is not in default or material violation of, any rule,
regulation, statute, or ordinance applicable to it or any of its
operations, properties, or assets, or with respect to any license, permit,
privilege, right, certificate, order, or authority from any governmental or
quasi-governmental agency that is necessary to lawfully conduct and
continue to conduct its businesses as presently conducted, except such as
have not and are not reasonably likely to have a material adverse effect on
the Company, its assets, operations or business.
4.28 SECURITIES FILINGS. The Company has filed all required forms,
reports and documents (including all prospectuses and all registration
statements) with the Commission required to be filed by it pursuant to the
federal securities laws and the Commission's rules and regulations
promulgated thereunder, all of which have complied in all material respects
with all applicable requirements, including those of the Securities Act and
the Exchange Act and the rules and regulations promulgated thereunder.
None of such SEC filings, including the financial statements included
therein, at the time filed, contained any untrue statement of material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.29 INSURANCE. SCHEDULE 4.29 hereto sets forth all insurance
policies held by the Company, and with respect to each policy, sets forth
the name of the insurer, the kind of insurance, the period of the policy,
the amount of coverage provided, a statement of the deductible, if any, and
the premium. All of such policies are in full force and effect, the
premiums therefor, to the extent due and payable, have been paid in full,
and the Company is not in default under any of such policies. These
insurance policies, in the opinion of the Company, provide adequate
enforceable coverage for all normal and customary liability and casualty
risks of the Company in light of the experience of the Company and the
practice and usages of the industry in which the Company is engaged.
4.30 RELATED AGREEMENTS. The Company has furnished the Investor
with complete and correct copies of the agreements set forth on
SCHEDULE 4.30 and all appendices, schedules, and exhibits thereto
including, without limitation, the Loan Agreement (collectively, all such
agreements listed on SCHEDULE 4.30 being the "Related Agreements"). This
Agreement, the other Financing Agreements, the Warrant, the Security
Documents, and the Related Agreements are the only agreements relating to
the transactions contemplated hereby to which the Company is a party. The
Company is not, and after giving effect to the transactions contemplated by
this Agreement, will not be in default of any of its obligations under this
Agreement, the other Financing Agreements, the Warrant, or any Related
Agreement, and, to the best of the Company's knowledge, no other party to
any Related Agreement is in default thereunder.
4.31 TAX STATUS. The Company is taxed as a C-corporation under the
Code.
4.32 LABOR MATTERS. The Company is not a party to any collective
bargaining agreements. There is no unfair labor practice complaint pending
or, to the best of the Company's knowledge, threatened against the Company
before the National Labor Relations Board and no grievance or arbitration
proceeding arising out of or under such collective bargaining agreements so
pending or threatened. There is no strike, labor dispute, slowdown, or
stoppage pending or, to the best of the Company's knowledge, threatened
with respect to the Company, and to the best of the Company's knowledge, no
union organizing activity is taking place with respect to the Company or
its employees.
5. INVESTMENT REPRESENTATION. The Investor is an accredited investor as
defined in Regulation D, Rule 501, promulgated by the Commission. The
Investor hereby represents and warrants to the Company that it is acquiring
the Securities for investment, and not with a view to selling or otherwise
distributing the Securities, other than in a transaction that is exempt
from the registration requirements of the Securities Act or in a
transactions pursuant to Section 12 of this Agreement or in accordance with
the terms of the Securities; PROVIDED, HOWEVER, that the disposition of
each Investor's property shall at all times be and remain in such
Investor's control, subject to the provisions of Section 14 hereof.
Notwithstanding the foregoing, nothing contained in this Section 5 shall
preclude the Investor from selling one or more parts of or participation
interests in the Securities, this Agreement, and the other Financing
Agreements to other institutional investors or venture capital firms on
such terms as the Investor and the purchasers of such participation
interests may agree, PROVIDED that no such sale shall be conducted in a
manner that would constitute a public distribution under the Securities
Act, and that any such sale shall comply with the terms of the Agreement
Among Warrant holders and the Company. Further notwithstanding the
foregoing, each Investor may transfer its interest in this Agreement, the
Securities, and the other Financing Agreements at any time to any of its
Affiliates.
6. CONDITIONS TO PURCHASE.
The Investor's obligation to purchase the Securities pursuant to this
Agreement is subject to compliance by the Company with its agreements
contained herein, and to the satisfaction, on or before the Closing Date,
of the following conditions:
6.1 ARTICLES, BYLAWS, AND GOOD STANDING CERTIFICATES. The Investor
shall have received (i) a copy, certified by a duly authorized officer of
the Company to be true and complete as of the Closing Date, of the Articles
and the by-laws of the Company, (ii) a certificate, dated not more than
ten (10) days prior to the Closing Date, of the Secretary of the State of
Delaware certifying the Company's good standing in such state, and (iii) a
certificate, dated not more than ten (10) days before the Closing Date, of
the Secretary of the Commonwealth of Massachusetts certifying the Company's
qualification to do business in such state as a foreign corporation.
6.2 PROOF OF CORPORATE ACTION. The Investor shall have received
from the Company copies, certified by a duly authorized officer thereof to
be true and complete as of the Closing Date, of the records of all
corporate action taken to authorize the execution, delivery, and
performance of this Agreement, the Note, the Warrant, the other Financing
Agreements, and the other Related Agreements to which the Company is a
party.
6.3 INCUMBENCY CERTIFICATE. The Investor shall have received from
the Company an incumbency certificate, dated the Closing Date, signed by a
duly authorized officer of the Company, and giving the name and bearing a
specimen signature of each individual who shall be authorized to sign, in
the name and on behalf of the Company, this Agreement, the Note, the
Warrant, the other Financing Agreements, and each of the Related Agreements
to which the Company is or is to become a party, and to give notices and to
take other action on behalf of the Company under each of such documents.
6.4 LEGAL OPINIONS. The Investor shall have received from counsel
to the Company, a favorable opinion, substantially in the form of
EXHIBIT C hereto, covering such other matters with respect to the
transactions contemplated by this Agreement, the other Financing
Agreements, the Warrant, and the Related Agreements as the Investor may
reasonably request.
6.5 REPRESENTATIONS AND WARRANTIES; CERTIFICATES. The
representations and warranties contained or incorporated by reference
herein shall be true and correct on and as of the Closing Date with the
same force and effect as though made on and as of such Closing Date; no
event or condition shall have occurred or would result from the issuance of
any of the Securities that would be a Default or Event of Default; the
Company shall have performed and complied with all conditions and
agreements required to be performed or complied with by them prior to the
Closing; and the Investor shall have received on the Closing Date a
certificate to the effect of each of the foregoing matters signed by
▇▇▇▇ ▇. ▇▇▇▇▇▇, C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, on behalf of the
Company. Such certificate shall also confirm to the Investor that all
representations and warranties made by the Company in the Loan Agreement
and the other agreements, instruments, and documents evidencing the
Franklin Indebtedness are true and correct as of the Closing Date.
6.6 LEGALITY; GOVERNMENTAL AUTHORIZATION. The purchase of the
Securities shall not be prohibited by any law or governmental order or
regulation, and shall not subject Investor to any penalty, special tax, or
other onerous condition. All necessary consents, approvals, licenses,
permits, orders, and authorizations of, or registrations, declarations, and
filings with, any governmental or administrative agency or of or with any
other Person with respect to any of the transactions contemplated by this
Agreement, the Note, the Warrant, the Series C Preferred Stock, the
Financing Agreements, or any of the Related Agreements shall have been duly
obtained or made and shall be in full force and effect.
6.7 SECURITIES. The Investor shall have received certificates or
instruments evidencing the Note, the Series C Preferred Stock and the
Warrant, executed by the Company, and upon such receipt and satisfaction of
all of the other conditions set forth in this Section 6, the Investor shall
deliver to the Company the sum of $3,200,200, constituting the Purchase
Price for the Note, the Series C Preferred Stock and Warrant, which amount
is to be reduced by the fees contemplated by Section 6.10 hereof.
6.8 FINANCING AGREEMENTS. This Agreement, the other Financing
Agreements, and all exhibits thereto that are agreements or instruments,
and all other agreements, documents, and instruments required to be
executed or delivered hereunder shall have been executed and delivered by
each of the parties thereto. Each of the foregoing agreements, exhibits,
documents, and instruments shall be in form and substance satisfactory to
the Investor in its sole discretion.
6.9 GENERAL. All instruments and legal, governmental,
administrative, and corporate proceedings in connection with the
transactions contemplated by this Agreement, the other Financing
Agreements, the Related Agreements and the Securities shall be satisfactory
in form and substance to the Investor in its sole discretion, and the
Investor shall have received copies of all documents, agreements, and
instruments, including without limitation records of corporate or other
proceedings and opinions of counsel, that the Investor may have requested
in connection therewith.
6.10 FEES AND EXPENSES. The Investor shall have received a document
preparation fee of $250,000 and an equipment financing fee of $250,000, and
shall have been reimbursed for all of its reasonable expenses as provided
in Section 15 hereof, including reimbursement of its counsel's reasonable
fees and expenses incurred in connection with the transactions contemplated
herein and the preparation of this Agreement and its exhibits and
schedules.
6.11 RELATED AGREEMENTS. Each of the Related Agreements, including
without limitation the Loan Agreement, shall have been executed and
delivered by each of the parties thereto in a form satisfactory to Investor
in its sole discretion, and each of the Related Agreements shall be in full
force and effect and no term or condition thereof shall have been amended,
modified or waived except with Investor's prior written consent. All
covenants, agreements, and conditions contained in the Related Agreements
that are to be performed or complied with on or prior to the Closing Date
shall have been performed or satisfied in all material respects at the sole
discretion of the Investor. The Company shall have delivered to the
Investor complete copies of all agreements and instruments (including all
exhibits and schedules thereto) executed and delivered in connection with
the closing under the Loan Agreement.
6.12 DUE DILIGENCE. The Investor shall have completed its due
diligence investigation of the Company and its plans, books, records,
financial statements, assets, liabilities, contracts, commitments, and all
other information about the Company and the results of such investigation
shall have been satisfactory to the Investor in its sole discretion.
6.13 MATERIAL ADVERSE CHANGE. There shall have occurred no material
adverse change in the business, properties, or financial condition of the
Company since September 30, 1998.
6.14 APPROVALS. The terms and conditions of this Agreement, the
Securities, the other Financing Agreements, and the Related Agreements and
of the transactions contemplated by each shall have been approved by the
Investor's Board of Managers.
6.15 INSURANCE. The Company shall have delivered to the Investor
certificates of insurance and, if requested by the Investor, copies of
insurance policies covering risks, including product liability, normally
insured against by companies in businesses similar to the Company's
business, which policies shall provide such coverage in such amounts and
with such insurers as may be reasonably acceptable to the Investor.
6.16 USE OF PROCEEDS. The proceeds of the Senior Indebtedness, and
the proceeds of the purchase of the Securities hereunder shall be used for
working capital and repayment of debt, as specifically permitted in this
Agreement, and the Investor shall be satisfied that after giving effect to
such payment the Company shall have sufficient working capital to continue
to conduct its business in the ordinary course without incurring additional
Indebtedness or issuing additional equity securities.
6.17 EMPLOYMENT OR CONSULTING AGREEMENTS. Each of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. Nurse, C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇
and the Company shall have entered into employment or consulting agreements
reasonably satisfactory to the Investor.
6.18 LENDER. The Lender shall have consented in writing, on terms
and conditions satisfactory to the Investor in its sole discretion, to the
Company's execution, delivery, and performance of this Agreement and the
other Financing Agreements and Related Agreements.
6.19 AMENDMENTS. The Company and the Board of Directors shall have
taken such actions as may be necessary to amend the Company's by-laws to
permit the consummation of the transactions contemplated by this Agreement,
including, without limitation, amendments of the Company's by-laws to
increase the number of directors to seven (7).
6.20 OTHER ACTIONS. The Company and its Board of Directors shall
have taken all other actions that the Investor deems reasonably necessary
to conclude the transactions contemplated by this Agreement and its
Exhibits and the Related Agreements.
6.21 SECURITY DOCUMENTS. The Security Documents, and the
appropriate financing statements and other documents and instruments
pertaining thereto and necessary to enable Investor to perfect its security
interests thereunder, shall have been duly executed by the Company and
filed or recorded, or delivered for recording, as applicable, in all
appropriate filing offices or other locations necessary for the perfection
of such interests, and all other actions necessary for the perfection of
such security interests shall have been duly taken. The Security Documents
and this Agreement shall create first priority liens in favor of the
Investor in all of the Assets.
6.22 INTERCREDITOR AGREEMENT. The Investor shall have entered into
an Intercreditor Agreement with the Lender upon such terms as are
satisfactory to the Investor in its sole discretion.
6.23 CLOSING DATE NET WORTH; CAPITAL EXPENDITURES. The Company
shall have demonstrated to the satisfaction of the Investor before the
Closing Date that the net worth of the Company, determined, after giving
effect to the transactions contemplated by this Agreement, the Loan
Agreement, the Financing Agreements and the other Related Agreements is not
less than Four Million Five Hundred Thousand Dollars ($4,500,000). At or
before the Closing, the Company shall present the Investor with a detailed
capital expenditure budget for the fiscal year ending December 31, 1999,
and such budget must be satisfactory to the Investor in its sole
discretion.
6.24 BROKER'S FEES. The Company shall have paid all fees incurred
by the Company or the Investor in connection with this Agreement other than
the $100,000 fee of ▇▇▇▇ ▇▇▇▇▇▇, which is to be paid by the Investor, or
any of the Financing Agreements for broker's or finder's fees or
commissions or similar items, including those amounts set forth on
SCHEDULE 4.20.
6.25 SOURCE AND USES. The Company shall have provided the Investor
with a schedule illustrating the sources of funds from the transactions
contemplated by this Agreement and from the Franklin Indebtedness and the
uses of such funds.
6.26 BOARD REPRESENTATION. The Company shall have taken such
actions as may be necessary and appropriate, so that the Board of Directors
of the Company shall consist of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
6.27 SETTLEMENT WITH UNSECURED CREDITORS. The Company shall have
settled its debts to unsecured creditors in a fashion satisfactory to the
Investor in its sole discretion.
7. COVENANTS APPLICABLE TO THE COMPANY WHILE THE NOTE IS OUTSTANDING.
The Company covenants that, as long as any of the Indebtedness of the
Company with respect to the Note has not been paid in full, the Company
will comply with the following provisions:
7.1 RECORDS AND ACCOUNTS. The Company will keep true and accurate
records and books of account in which full, true, and correct entries will
be made and the Company shall maintain adequate accounts and reserves for
all taxes (including income taxes), all depreciation, depletion,
obsolescence, and amortization of its properties, all contingencies, and
all other reserves, in each case in accordance with Generally Accepted
Accounting Principles, except that the Company's interim financial
statements vary from GAAP in that they may not incorporate all of the
required disclosures, either on the face of the statements or in footnotes
thereto, that are required by GAAP, and do not include separate statements
of changes in stockholders equity and cash flow.
7.2 CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES; BUSINESS. The
Company will, and will cause each of its Subsidiaries to, preserve and keep
in full force and effect its corporate existence, rights, and franchises.
The Company will, and will cause each of its Subsidiaries to, maintain all
of its properties used or useful in the conduct of its business in good
condition, repair and working order and cause to be made all necessary
repairs, renewals, replacements, betterments, and improvements thereof, all
as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously
conducted at all times; PROVIDED, HOWEVER, that nothing in this Section 7.2
shall prevent the Company from discontinuing the operation and maintenance
of any of such properties if such discontinuance is, in the reasonable
judgment of the Company, desirable in the conduct of its business and does
not in the aggregate materially adversely affect the business of the
Company and its Subsidiaries.
7.3 INSURANCE; LIFE INSURANCE. The Company and its Subsidiaries
will maintain with financially sound and reputable insurance companies,
funds, or underwriters insurance of the kinds, covering the risks and in
the relative proportionate amounts usually carried by reasonable and
prudent companies conducting businesses similar to that of the Company and
its Subsidiaries.
7.4 TAXES. The Company will, and will cause each of its
Subsidiaries, if any, to, pay and discharge, or cause to be paid and
discharged, before the same shall become overdue, all taxes, assessments,
and other governmental charges imposed upon the Company and its
Subsidiaries and their real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies, which if unpaid might by law become a lien
or charge upon any of their properties; provided, however, that any such
tax, assessment, charge, levy, or claim need not be paid if the validity or
amount thereof shall currently be contested in good faith by appropriate
proceedings and if the Company or its Subsidiaries, as the case may be,
shall have set aside on its books adequate reserves with respect thereto;
and provided, further, that the Company and its Subsidiaries will pay or
cause to be paid all such taxes, assessments, charges, levies, or claims
forthwith upon the commencement of proceedings to foreclose any lien that
may have attached as security therefor.
7.5 INSPECTION OF PROPERTIES AND BOOKS. The Company shall permit
the Investor or any of the Investor's officers or representatives to visit
and inspect any of the properties of the Company or its Subsidiaries, to
examine the books of account of the Company and its Subsidiaries (and to
make copies thereof and extracts therefrom), and to discuss the affairs,
finances, and accounts of the Company and its Subsidiaries with, and to be
advised as to the same by, their respective officers, all at such
reasonable times and intervals as the Investor may reasonably request.
7.6 COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The
Company will, and will cause each of its Subsidiaries to, comply with (i)
all applicable material laws and regulations wherever its business is
conducted, (ii) the provisions of its Articles and by-laws, (iii) all
agreements and instruments by which it or any of its properties may be
bound, and (iv) all applicable decrees, orders, and judgments. If at any
time, any authorization, consent, approval, permit, or license from any
officer, agency, or instrumentality of any government shall become
necessary or required in order that the Company may fulfill any of its
obligations hereunder, the Company will immediately take or cause to be
taken all reasonable steps within the power of the Company to obtain such
authorization, consent, approval, permit, or license and furnish the
Investor with evidence thereof.
7.7 PLANS. The Company (i) will not, and will not allow any of its
Subsidiaries to, permit, or take any action that would result in, the
aggregate present value of the Unfunded Vested Accrued Benefits under all
employee benefit plans of the Company and its Subsidiaries to exceed
$50,000; (ii) will furnish to the Investor a copy of any actuarial
statement related to any pension plan required to be submitted under
Section 103(d) of ERISA, no later than the date on which such statement is
submitted to the Department of Labor or the Internal Revenue Service; (iii)
will furnish to the Investor forthwith, a copy of (x) any notice of pension
plan termination sent to the Pension Benefit Guaranty Corporation under
Section 4041(a) of ERISA or (y) any notice, report or demand sent or
received by a pension plan under Sections 4041, 4042, 4043, 4063, 4065,
4066 and 4068 of ERISA; (iv) will not, without the Investor's written
consent request a waiver from the funding standards or extension of the
amortization periods required by Sections 303 and 304 of ERISA or Section
412 of the Code; (v) make a complete or partial withdrawal (within the
meaning or Section 4201 of ERISA) from any multiemployer plan.
7.8 FURTHER ASSURANCES. The Company will cooperate with the
Investor and execute such further instruments and documents as the Investor
shall reasonably request to carry out to the Investor's satisfaction the
transactions contemplated by this Agreement and the other Financing
Agreements. Without limiting the foregoing sentence, the Company shall
make such amendments to its by-laws as the Investor may from time to time
request to permit the implementation of the Investor's rights under this
Agreement and any of the other Financing Agreements.
7.9 NOTICES. The Company shall promptly give the Investor copies
of all notices given pursuant to any Related Agreement that it receives
from or gives to any other party to such Related Agreement.
7.10 RESTRICTIONS ON INDEBTEDNESS. The Company will not, and will
not permit any Subsidiary to, create, incur, assume, guarantee, or be or
remain liable, contingently or otherwise, with respect to any Indebtedness
other than the following ("Permitted Indebtedness"):
(a) Indebtedness to the Investor;
(b) The Franklin Indebtedness;
(c) Current Liabilities incurred in the ordinary course of
business not incurred through the borrowing of money or the obtaining of
credit, except for credit on an open account basis customarily extended in
connection with purchases of goods and services in the ordinary course of
business;
(d) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials, and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 7.4
hereof;
(e) Indebtedness in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal so
long as execution is not levied thereunder or in respect of which the
Company shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution shall
have been obtained pending such appeal or review;
(f) Endorsements for collection, deposit, or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;
(g) Indebtedness incurred in connection with the acquisition,
after the date hereof, of any real or personal property by the Company,
provided that (i) the principal amount of such Indebtedness shall not
exceed in any case 90% of the cost, to the Company, of the real or personal
property so acquired and (ii) the aggregate annual principal payments on
all such Indebtedness shall not exceed $15,000; or
(h) Indebtedness under or in respect of agreements or
instruments other than those listed in this Section 7.10 that are existing
on the date of this Agreement listed and described on SCHEDULE 7.10(h)
hereto.
7.11 RESTRICTION ON LIENS. The Company will not, and will not
permit any Subsidiary to, create, incur, or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction, or other security interest of any kind upon any of its
property or assets of any character whether now owned or hereafter
acquired, or upon the income or profits therefrom; or transfer any of such
property or assets or the income or profits therefrom for the purpose of
subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to payment of its general creditors; or
acquire, or agree or have an option to acquire, any property or assets upon
conditional sale or other title retention or purchase money security
agreement, device or arrangement; or suffer to exist for a period of more
than 30 days after the same shall have been incurred any Indebtedness or
claim or demand against it which if unpaid might by law or upon bankruptcy
or insolvency, or otherwise, be given any priority whatsoever over its
general creditors; or sell, assign, pledge, or otherwise transfer any
accounts, contract rights, general intangibles or chattel paper, with or
without recourse; provided, however, that the Company and any Subsidiary
may create or incur or suffer to be created or incurred or to exist any of
the following ("Permitted Liens"):
(a) Liens to secure taxes, assessments and other government
charges or claims for labor, material, or supplies in respect of
obligations not overdue or not required to be made in accordance with
Section 7.4 hereof;
(b) Deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions, or other social security obligations;
(c) Liens in respect of judgments or awards, the Indebtedness
with respect to which is permitted by Section 7.10(e);
(d) Liens of carriers, warehousemen, mechanics, and
materialmen, and other like liens, in existence less than 120 days from the
date of creation thereof in respect of obligations not overdue or to the
extent payment therefor is not required in accordance with Section 7.16(a)
hereof;
(e) Purchase money security interests in or purchase money
mortgages on real or personal property acquired after the date hereof to
secure purchase money Indebtedness of the type and amount permitted by
Section 7.10(g), incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or
personal property so acquired;
(f) Liens securing obligations to the Investor; and
(g) Liens securing the Franklin Indebtedness.
7.12 DISTRIBUTIONS AND RESTRICTED PAYMENTS. The Company shall not
make any Distributions or Restricted Payments except that it may make
payments of principal and interest on the Note as provided in Section 3
hereof, and that the Company may make payments on dividends with respect to
its Series A Preferred Stock and Series B Preferred Stock if such payments
are required by the Certificates of Designation with respect thereto.
7.13 MERGER, CONSOLIDATION, OR SALE OF ASSETS. Without the consent
of the Majority Holders, the Company will not, and will not permit any
Subsidiary to, become a party to any merger or consolidation, or sell,
lease, sublease, or otherwise transfer or dispose of any of all or any
substantial part of its assets other than (i) sales of inventory and
equipment in the ordinary course of business, (ii) the merger or
consolidation of one or more of its wholly-owned Subsidiaries with and into
the Company, or (iii) the merger or consolidation of two or more
wholly-owned Subsidiaries with each other.
7.14 INVESTMENTS. The Company will not have outstanding or acquire
or commit itself to acquire or hold any Investment except:
(i) investments in direct obligation of the United States of
America or any instrumentality or agency thereof, the payment or guarantee
of which constitutes a full faith and credit obligation of the United
States of America, in either case, maturing in twelve (12) months or less
from the date of acquisition;
(ii) commercial paper maturing within 270 days from the date
of issue thereof and having, at the date of acquisition thereof and
throughout the period it is held by the Company, the highest rating by
▇▇▇▇▇'▇ Investors Services, Inc., Standard & Poors Corporation, or any
other nationally recognized credit rating agency; and
(iii) certificates of deposit maturing within one (1) year
from the date of acquisition thereof issued by a bank or trust company
having capital, surplus and undivided profits aggregating at least one
hundred million dollars ($100,000,000) and whose long term certificates of
deposit are rated AA or better by Standard & Poor's Corporation, ▇▇▇▇▇'▇
Investors Services, Inc., or any other nationally recognized credit rating
agency.
7.15 AMENDMENT OF RELATED AGREEMENTS. The Company shall not agree
to any amendment or modification of, or grant any waiver or fail to enforce
any of its rights pursuant to, any of the Related Agreements without
obtaining the prior written consent of the Majority Holders.
7.16 SATISFACTION OF OBLIGATIONS TO OTHERS.
(a) LIENS. The Company will timely pay and discharge, or
cause to be paid and discharged, before the same shall become in arrears,
all claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of its property, except such of said items
as are being in good faith appropriately contested by it and as to which
the Company has maintained adequate reserves on its books.
(b) OTHER OBLIGATIONS. In addition to those claims specified
in subsection (a) of this Section 7.16, the Company will pay all other
obligations and debts that it incurs pursuant to any contract or agreement,
whether oral or written, express or implied, as such debts and obligations
become due, except that with respect to trade payable the Company will not
be in violation of this covenant if the Company is overdue in the payment
of trade payable so long as none of such trade payable are more than 60
days overdue (except trade payables being contested in good faith).
Without limiting the generality of the foregoing, the Company will comply
with all provisions of all contracts to which it is or may become a party
or otherwise bound.
7.17 CAPITAL EXPENDITURES. The Company will not incur in any Fiscal
Year expenditures for fixed or capital assets (including amounts payable
for capitalized lease obligations other than those in existence as of the
date of this Agreement) in excess of $50,000 in the aggregate without the
prior written consent of the Majority Holders.
7.18 CHANGE OF CORPORATE NAME OR ADDRESS. The Company shall notify
the Investor at least 30 days before making any change in its corporate
name or any other name under which it conducts its business or making or
any change in the address of its chief executive offices.
7.19 RESTRICTIONS ON GUARANTEES. Neither the Company nor any of its
Subsidiaries will directly or indirectly guarantee, endorse (other than for
collection or deposit in the ordinary course of business), discount or sell
with recourse, agree (contingently or otherwise) to purchase, repurchase,
or otherwise acquire or supply or advance funds (whether by way of loan,
stock purchase, capital contribution, or otherwise) in respect of, or
become, or be or remain liable with respect to, directly or indirectly, any
indebtedness, obligation, liability, or dividend of any other Person.
7.20 [Intentionally deleted]
7.21 ADDITIONAL COVENANTS REGARDING COMMON STOCK, SERIES C PREFERRED
STOCK AND THE WARRANT.
(a) The Company shall keep reserved the total number of
shares of Warrant Stock issuable at any time (which number shall be
increased or decreased in accordance with the terms set forth in the
Warrant) upon exercise of the Warrant. The Company agrees to perform and
observe all obligations with respect to the Warrant (all the terms of which
are hereby incorporated herein by this reference).
(b) Except as otherwise provided for herein, the Company
shall not amend its Articles of Incorporation or by-laws without the prior
written consent of the Majority Holders.
7.22 SECURITIES LAWS REQUIREMENTS. The Company shall file with the
Commission and every state securities agency in which such a filing is or
may be required (and deliver a copy of each such filing to the Investor),
all reports and other documents, instruments, and exhibits required to be
filed by it under the Securities Act, the Exchange Act, the Trust Indenture
Act of 1939, any successor laws to any of the foregoing, and any state
securities law (collectively, "Securities Laws") or any other applicable
law. The Company will take such steps, execute such documents, and
reports, and supply such information and take such other actions as
Investor or its assigns shall request to permit the sale of any Note,
Common Stock, Series C Preferred Stock, Warrant, or shares of Warrant Stock
held by the Investor or its assigns pursuant to the exemptions provided by
Rules 144 or 144A promulgated under the Securities Act or any other
exemption at any time available under any of the Securities Laws.
7.23 PROHIBITED AGREEMENTS. The Company shall not enter into any
agreement having the effect of limiting or restricting its right to make
payments of principal and interest under the Note, or perform any other
obligation imposed on it by this Agreement or any other Financing
Agreement, except as provided in the Loan Agreement as in effect on the
date hereof.
7.24 COMPENSATION. Except as set forth in the employment and
consulting agreements referred to in Section 6.17 hereof, the Company shall
not pay or become obligated to pay any bonus, commission, consulting fees,
or other compensation payments to any officer or their Family Members
unless such amounts are approved in advance by the Company's Board of
Directors.
7.25 MARGIN SECURITIES. The Company will not use any proceeds from
the sale of the Note, the Series C Preferred Stock, the Warrant or the
Warrant Stock, directly or indirectly, for the purposes of purchasing or
carrying any "margin securities" within the meaning of Regulation G or T
promulgated by the Board of Governors of the Federal Reserve Board or for
the purpose of arranging for the extension of credit secured, directly or
indirectly, in whole or in part by collateral that includes any "margin
securities".
7.26 NO CONFLICTS OF INTEREST. The Company shall not make any
payments or transfer any property, through payment of dividends or
otherwise, to any officer, director, employee, stockholder of the Company
or any Affiliate or Family Member of any such person, without the prior
written consent of the Board of Directors. Except as set forth in
SCHEDULE 7.26, the Company shall conduct its business in such a manner that
no officer, director, employee, or stockholder of the Company, or any
Affiliate or Family Member of any such Person, or the Company, shall have
any direct or indirect interest (a) in any entity that does business with
the Company, (b) in any property, asset, or right that is used by the
Company in the conduct of its business, or (c) in any contractual
relationship with the Company, except for this Agreement, the Note, the
Warrant, the other Financing Agreements, the Related Agreements, and all
other agreements, documents, and instruments contemplated by the foregoing,
other than as an employee, unless the transaction with respect to which any
such Person has an interest has been approved and authorized by the
Company's Board of Directors. For the purpose of this Section 7.26, there
shall be disregarded any interest that arises solely from the ownership of
less than a five percent (5%) equity interest in a corporation whose stock
is regularly traded on any national securities exchange or in the
over-the-counter market.
7.27 SUBSIDIARIES. The Company shall not incorporate or acquire any
Subsidiary, nor shall the Company enter into any transaction with any
Subsidiary, without the prior written consent of the Board of Directors.
The Company shall not, directly or through a Subsidiary enter into any line
of business not directly related to the businesses conducted by the Company
on the date of this Agreement without receiving the prior written consent
of the Board of Directors.
7.28 CERTAIN FEES. Neither the Company nor any Subsidiary shall
enter into any consulting, brokerage, advisory, or similar agreements with
any Person, nor shall the Company or any Subsidiary pay any consulting,
brokerage, advisory, or other similar fees for services (excluding,
however, accounting and legal services) in excess of $50,000 in the
aggregate in any Fiscal Year, without having obtained the prior written
consent of the Board of Directors.
7.29 LEASES. The Company shall not enter into any operating lease
as the lessee or renew or extend any such lease of real or personal
property if the rental and other payments payable thereunder during any
year would exceed $50,000 without obtaining the prior written consent of
the Board of Directors.
7.30 EMPLOYEE LOANS. The Company shall not make any loans or
advances (other than reasonable, necessary, and properly documented travel
and expense advances generally available to employees of the Company) to
any officer or stockholder of the Company or to any Family Member of such
officer or stockholder without the prior written consent of the Majority
Holders. The Company may make loans and advances (other than the aforesaid
travel and expense advances) to employees who are not officers or
stockholders of the Company, provided that the aggregate amount of all such
advances shall not at any time exceed $5,000 without the Majority Holders'
prior written consent.
7.31 LOAN AGREEMENT COVENANTS. The Company shall at all times
comply with all of the covenants and conditions, including, without
limitation, the financial covenants, contained in the Loan Agreement or
other lending agreements that the Company enters into with any other
lender. The Company shall deliver to the Investor all the borrowing base
reports and other compliance certificates it delivers to the Lender and any
other lenders with which it has lending agreements concurrently with such
delivery.
7.32 TANGIBLE NET WORTH. The Company shall not permit Tangible Net
Worth for any calendar quarter to be less than the amount set opposite the
pertinent time period based upon its consolidated internally prepared or
audited financial statements:
Calendar Minimum
Year Tangible Net Worth
-------- ------------------
1999 $4,500,000
2000 $4,750,000
2001 $5,000,000
2002 $5,500,000
2003 $6,000,000
7.33 CASH FLOW COVERAGE. The Company shall not permit the ratio of
its Cash Flow to Debt Service for any fiscal quarter after the quarter
ended March 31, 1999 to be less than 1.75 to 1.
7.34 CURRENT RATIO. The Company shall not permit the ratio of
consolidated current assets of the Company to consolidated current
liabilities of the Company to be less than the amounts set forth below:
CALENDAR QUARTER
ENDING MINIMUM RATIO
---------------- -------------
June 30, 1999 1 to 1
September 30, 1999 1.25 to 1
December 31, 1999 1.5 to 1
and thereafter
7.35 ACCOUNTS PAYABLE. The Company shall not permit its accounts
payable that are more than 60 days past due from the originally scheduled
payment date to exceed 10% of the Company's total accounts payable.
7.36 REQUIRED REVENUE. The Company will generate monthly revenue of
not less than $1,000,000 for each month beginning February 1, 1999;
$1,250,000 for each month in the quarter beginning April 1, 1999;
$1,750,000 for each month in the quarter beginning June 1, 1999; and
$2,000,000 for each month thereafter.
8. COVENANTS APPLICABLE TO THE COMPANY WHILE THE WARRANT OR SHARES OF
WARRANT STOCK ARE OUTSTANDING.
The Company covenants that, notwithstanding the payment in full of
the Note, as long as the Warrant or any shares of Warrant Stock remain
outstanding, the Company will comply with the following provisions:
8.1 GENERAL. The Company will comply with the provisions of
Section 7.
8.2 DILUTION PROTECTION. The Company will not and will not permit
any of its Subsidiaries to (a) issue, sell, give away, transfer, pledge,
mortgage, assign, or otherwise dispose of, (b) grant any rights (either
preemptive or other) or options to subscribe for or purchase, or (c) enter
into any agreements or issue any warrants providing for the issuance of,
any of the capital stock of the Company or any of its Subsidiaries or any
stock or any securities convertible into or exchangeable for any of the
capital stock of the Company or any of its Subsidiaries except for the
Warrant and the Warrant Stock. The Company will not transfer, pledge,
mortgage, assign or otherwise dispose of any of its capital stock except
for the pledge of its stock with respect to the Franklin Indebtedness.
Except as contemplated hereby, the Company will not and will not permit any
of its Subsidiaries to authorize any additional classes or series of
capital stock nor will the Company increase the number of shares of
authorized capital stock from that set forth in Section 2.5(a) hereof.
8.3 BOARD REPRESENTATION. The Company will take such action as may
be necessary or appropriate to appoint additional members to the Company's
Board of Directors so that at least a majority of the Directors are
appointed by the Investor, or such lesser number of Directors as is
proportionate to the percentage of Common Stock beneficially owned by the
Investor. The Company shall take such actions in connection therewith as
may be necessary and appropriate, including the actions required by Rule
14f-1 under the Exchange Act, as promptly as practicable, but in no event
later than February 15, 1999.
8.4 STOCKHOLDERS' MEETING. Promptly after the Closing Date, but in
no event later than May 1, 1999, the Company will hold the Stockholders'
Meeting to approve an amendment to the Company's Certificate of
Incorporation increasing the Company's authorized Common Stock to
150,000,000 shares.
9. INFORMATION AND REPORTS; MEETINGS.
The Company hereby agrees that so long as any Securities or shares of
Warrant Stock are outstanding:
9.1 ANNUAL STATEMENTS. As soon as available and in any event
within 120 days after the close of each Fiscal Year of the Company
commencing with the Fiscal Year ending December 31, 1998, the Company will
deliver to the Investor consolidated and consolidating balance sheets and
statements of income, retained earnings, and cash flow of the Company and
its Subsidiaries audited by one of the independent certified public
accounting firms commonly known as a "Big Five" accounting firm, or another
firm reasonably satisfactory to the Investor, showing the financial
condition of the Company and its Subsidiaries as of the close of such
Fiscal Year and the results of the Company's operations during such Fiscal
Year and certified by such firm to have been prepared in accordance with
generally accepted accounting principles consistently applied.
9.2 QUARTERLY AND MONTHLY STATEMENTS. As soon as available and in
any event within 30 days after the end of:
(a) each month commencing with the month ending January 31,
1999, the Company will deliver to the Investor monthly financial statements
of the Company and its Subsidiaries as of the end of each such month and
year to date, and
(b) each quarter commencing with the quarter ending March 31,
1999, the Company will deliver to the Investor quarterly financial
statements of the Company and its Subsidiaries as of the end of such
quarter and year to date.
Such monthly or quarterly financial statements shall include consolidated
and consolidating internal, unaudited balance sheets, income statements,
statements of cash flows, and statements of backlogs and shall be verified
and attested by the Chief Financial Officer. Together with such financial
statements, the Company will deliver to the Investor a reconciliation of
the items in such financial statement against the financial statements for
the same period in the prior Fiscal Year and against budget for such period
delivered to the Investor pursuant to Section 9.3 hereof and a management
report from the Company's President highlighting significant operational
and financial events in narrative form.
9.3 PROJECTIONS. The Company will deliver to the Investor, not
less than 30 days prior to the beginning of each Fiscal Year of the
Company, a budget for such Fiscal Year and each month, including a balance
sheet, income statement, and statement of cash flows. Such budget shall be
accompanied by an annual projection including income statements, balance
sheets, and statements of cash flows covering such Fiscal Year and the
succeeding three Fiscal Years.
9.4 OFFICERS' CERTIFICATES. Together with delivery of consolidated
and consolidating financial statements of the Company and its Subsidiaries
pursuant to Sections 9.1 and 9.2 above, the Company will deliver to the
Investor a certificate of the Chief Financial Officer of the Company, (a)
that the annual statements have been prepared in accordance with generally
accepted accounting principles consistently applied and the annual and
monthly statements present fairly in all material respects the financial
position of the Company and its Subsidiaries as of the dates specified and
the results of their operations and changes in financial position with
respect to the periods specified (subject in the case of interim financial
statements only to normal year-end audit adjustments), (b) setting forth
computations demonstrating compliance with the financial covenants in the
Loan Agreement, and (c) to the effect that such officer has caused the
provisions of this Agreement, the Securities, the other Financing
Agreements, and the related Agreements to be reviewed and has no knowledge
of any Default or Event of Default hereunder or thereunder, or if such
officer has such knowledge, specifying such Default or Event of Default and
the nature thereof, and what action the Company has taken, is taking or
proposes to take with respect thereto.
9.5 NOTICE OF LITIGATION, DEFAULT. The Company will promptly give
notice to the Investor of any litigation, investigations, or any
administrative proceeding to which the Company or any of its Subsidiaries
may hereafter become a party or are subject that, after giving effect to
applicable insurance, may result in any material adverse change in the
business, assets, or financial condition of the Company or its
Subsidiaries. Forthwith upon any officer of the Company's obtaining
knowledge of any Default or Event of Default hereunder or any exhibit
hereto, any default or event of default under any other Financing
Agreement, any Related Agreement, or any agreement relating to any
Indebtedness of the Company or any of its Subsidiaries for borrowed money,
or any material adverse change in the Company's or any Subsidiary's
business, properties, assets, or condition, financial or otherwise, the
Company will furnish a notice specifying the nature and period of existence
thereof and what action the Company has taken, is taking or proposes to
take with respect thereto. Promptly after the receipt thereof, the Company
will provide the Investor with copies of any reports upon adequacies and
inadequacies in accounting controls submitted to the Company by its
independent accountants.
9.6 BOARD OF DIRECTORS AND STOCKHOLDERS.
(a) BOARD MEMBERSHIP. Except as hereinafter provided and for
as long as the Note, the Series C Preferred Stock, the Warrant, or any
shares of Warrant Stock shall be outstanding, the Company's Board of
Directors shall be composed of seven (7) members, four (4) of whom may be
designated by the Investor for as long as the Investor shall own (or have
the right to acquire upon execution of the Warrant) fifty percent (50%) or
more of the issued and outstanding shares of Common Stock.
(b) ANNUAL MEETINGS. Within 90 days after the financial
statements required by Section 9.1 hereof are furnished to the Investor and
on not less than 30 days' prior written notice to all holders of
Securities, the Company will hold an annual meeting of its stockholders at
which the principal executive, financial, and operations officers of the
Company will present a review of, and will discuss with those in
attendance, in reasonable detail, the general affairs, management,
financial condition, results of operations, and business prospects of the
Company. The Company will allow each holder of Securities to attend such
meeting.
9.7 OTHER INFORMATION. From time to time upon any Investor's
request or upon the request of any representative designated by the
Majority Holders, the Company will furnish to any authorized officer or
representative of such Person such information regarding the business,
affairs, prospects, and financial condition of the Company and its
Subsidiaries as such officer or representative may reasonably request.
Each such officer or representative shall have the right during normal
business hours upon reasonable prior notice to examine the books and
records of the Company and its Subsidiaries, to make copies, notes and
abstracts therefrom, and to make an independent examination of the books
and records of the Company and its Subsidiaries.
9.8 CONFIDENTIALITY. The Investor will hold in confidence all
proprietary or confidential information of the Company provided or made
available to the Investor pursuant to this Section 9 until such time as (i)
such information has been publicly disclosed (other than as a consequence
of any breach by the Investor of its confidentiality obligations
hereunder), or (ii) disclosure is required by judicial or administrative
order or process. Notwithstanding the foregoing sentence, the Investor may
disclose such proprietary and confidential information to its officers,
directors, employees, and professional advisors, who shall be subject to
the restrictions of this Section.
10. DEFAULTS.
10.1 EVENTS OF DEFAULT. Holders of the Securities and the shares of
Warrant Stock will be entitled to exercise the remedies provided by Section
10.2 hereof in accordance with the terms thereof if any one or more of the
following events (the "Events of Default") shall occur:
(a) the Company shall fail to make any payment of principal
or interest on the Note as the same shall become due, whether at scheduled
maturity or by acceleration or otherwise; or
(b) the Company shall (i) fail to perform or observe any
covenant, agreement or provision set forth in this Agreement or any
covenant, agreement, or provision to be performed or observed by it under
any other Financing Agreement or the Warrant, and such failure shall not be
cured to the Majority Holders' reasonable satisfaction within 30 days after
the earlier of receipt of notice from the Majority Holders or the Company's
knowledge of such default, provided that if the Company timely commenced
implementing a cure of such default and continues to pursue such cure in
good faith but cannot, in the opinion of such Majority Holders, effect the
cure within 30 days, the Company may have an additional 30 days to complete
such cure to the satisfaction of such Majority Holders; or
(c) any representation or warranty made by the Company to the
Investor in connection with this Agreement or any other Financing Agreement
or the Warrant or any amendment to any of the foregoing shall prove to have
been false in any material respect on the date as of which it was made; or
(d) there shall occur an "Event of Default" under and as
defined in the Loan Agreement, or there shall occur any other "Default" or
"Event of Default" under any of the other Financing Agreements or Related
Agreements as defined therein; or
(e) a final judgment that in the aggregate with other
outstanding final judgments against the Company or any of its Subsidiaries
exceeds $50,000 shall be rendered against such Person if, within 30 days
after entry thereof, such judgment shall not have been discharged,
dismissed, bonded, or stayed pending appeal; or
(f) the Company or any of its Subsidiaries shall
(i) commence a voluntary case under Title 11 of the
United States Code as from time to time in effect, or authorize, by
appropriate proceedings of its board of directors or other governing body,
the commencement of such a voluntary case;
(ii) have filed against it a petition commencing an
involuntary case under said Title 11 and such petition shall not have been
dismissed within 60 days;
(iii) seek relief as a debtor under any applicable law,
other than said Title 11, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the
rights of creditors, or consent to or acquiesce in such relief;
(iv) have entered against it an order by a court of
competent jurisdiction (x) finding it to be bankrupt or insolvent, (y)
ordering or approving its liquidation, reorganization or any modification
or alteration of the rights of its creditors, or (z) assuming custody of,
or appointing a receiver or other custodian for, all or a substantial part
of its property; or
(v) make an assignment for the benefit of, or enter into
a composition with, its creditors, or appoint or consent to the appointment
of a receiver or other custodian for all or a substantial part of its
property; or
(g) there shall have occurred, in the sole judgment of the
Majority Holders a material adverse change in the Company's business,
assets, liabilities, or financial or legal condition or prospects; or
(h) the Company's stockholders shall fail to approve an
amendment to the Certificate of Incorporation of the Company to authorize
sufficient shares of Common Stock to permit the full exercise of the
Warrant on or before May 1, 1999 or the Company shall have failed to file
the Certificate of Amendment with respect thereto on the date of such
meeting and reserve such additional shares for issuance upon exercise of
the Warrant.
10.2 REMEDIES. Upon the occurrence of any of the Events of Default
under Section 10.1 hereof, in each and every such case, the Majority
Holders may, without notice to the Company, (i) proceed to protect and
enforce its or their rights by suit in equity, action at law, and/or other
appropriate proceeding either for specific performance of any covenant,
provision, or condition contained or incorporated by reference in this
Agreement or in the Company's Articles or Certificate of Designations, or
in aid of the exercise of any power granted in this Agreement or in the
Company's Articles or Certificate of Designations, (ii) exercise any other
remedy or right available to the Investor under any of the Financing
Agreements or at law or equity, and/or (iii) (unless there shall have
occurred an Event of Default under Section 10.l(g) hereof, in which case
the unpaid balance of the Note shall automatically become due and payable)
may, without notice to the Company, declare all or any part of the unpaid
principal amount of the Note then outstanding to be forthwith due and
payable, and thereupon such unpaid principal amount or part thereof,
together with interest accrued thereon and all other sums, if any, payable
under this Agreement or the Note shall become so due and payable without
presentation, presentment, protest, or further demand or notice of any
kind, all of which are hereby expressly waived, and such holder or holders
may proceed to enforce payment of such amount or part thereof in accordance
with the terms of this Agreement and the Financing Agreements.
10.3 WAIVERS. In connection with the occurrence of any Events of
Default or the exercise of any remedy available to the Majority Holders in
the event of the occurrence of any Event of Default, the Company hereby
waives, to the extent not prohibited by applicable law, (a) all
presentments, demands for performance, notices of nonperformance (except to
the extent specifically required by the provisions hereof), (b) any
requirement of diligence or promptness on the part of any holder of
Securities or shares of Warrant Stock in the enforcement of its rights
under the provisions of this Agreement, the Articles of the Company, the
Certificate of Designations, or any other Financing Agreement, and (c) any
and all notices of every kind and description that maybe required to be
given by any statute or rule of law.
10.4 COURSE OF DEALING. No course of dealing between the Company on
the one hand, and the Investor or any holder of Securities or shares of
Warrant Stock on the other hand, shall operate as a waiver of any of the
Investor's or such holders' rights under this Agreement, any other
Financing Agreement, or the Securities. No delay or omission in exercising
any right under this Agreement, any other Financing Agreement, or the
Securities shall operate as a waiver of such right or any other right. A
waiver on any one occasion shall not be construed as a bar to or waiver of
any right or remedy on any other occasion.
10.5 REMEDIES NOT EXCLUSIVE. Each of the remedies hereunder that
are available to the Majority Holders are cumulative and not exclusive, and
such Majority Holders may exercise any or all such remedies at such time
and in such manner as such Majority Holders may determine in their sole
discretion.
11. SUBSEQUENT HOLDERS OF SECURITIES.
Whether or not any express assignment has been made in this
Agreement, the provisions of this Agreement, the Warrant, and the other
Financing Agreements that are for the Investor's benefit as the holder of
any Securities or shares of Warrant Stock are also for the benefit of, and
enforceable by, all subsequent holders of Securities or shares of Warrant
Stock, except any holder of Securities or shares of Warrant Stock that have
been sold pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 or Rule 144A (or similar successor
rules) under such Act, and except as otherwise expressly provided herein.
No shares of Warrant Stock that have been sold pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144 or
Rule 144A (or similar successor rules) under such Act shall be deemed to be
outstanding shares of Warrant Stock for any purposes of this Agreement.
12. REGISTRATION RIGHTS.
12.1 DEFINITIONS. As used in this Section 12:
COMMISSION means the Securities and Exchange Commission.
HOLDER means the Investor and all Persons to whom any Registrable
Securities are transferred in accordance with the provisions hereof. A
Holder shall, for all purposes of this Section 13, unless the context shall
otherwise require, be deemed to hold, at any particular time, all shares of
Warrant Stock issuable upon exercise of the Warrant held of record by such
Holder at such time.
REGISTERED and REGISTRATION refer to a registration effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering by the Commission of
effectiveness of such registration statement.
REGISTRABLE SECURITIES means, at any particular time, all shares of
Warrant Stock issuable upon exercise of the Warrant at such time or issued
and outstanding at such time (and which shall not previously have been sold
pursuant to a registration or Rule 144 or Rule 144A under the Securities
Act).
UNDERWRITERS' MAXIMUM NUMBER means for any Piggyback Registration,
Demand Registration, or other registration that is an underwritten
registration, that number of securities to which such registration should,
in the opinion of the managing underwriters of such registration in the
light of marketing factors, be limited.
12.2 DEMAND REGISTRATION.
(a) REQUEST FOR DEMAND REGISTRATION.
(i) Subject to the limitations contained in the
following paragraphs of this Section 12.2, the Holders of 51% or more of
all Registrable Securities outstanding may at any time give to the Company,
pursuant to this clause, (i) a written request for the registration by the
Company under the Securities Act of all or any part of the Registrable
Securities of such Holders (such registration being herein called a "Demand
Registration"). Within ten (10) days after the receipt by the Company of
any such written request, the Company will give written notice of such
registration request to all Holders of Registrable Securities.
(ii) Subject to the limitations contained in the
following paragraphs of this Section 12.2, after the receipt of such
written request for a Demand Registration, (A) the Company will be
obligated and required to include in such Demand Registration all
Registrable Securities with respect to which the Company shall receive from
Holders of Registrable Securities, within 30 days after the date on which
the Company shall have given to all Holders a written notice of
registration request pursuant to Section 12.2(a)(i) hereof, the written
requests of such Holders for inclusion in such Demand Registration, and (B)
the Company will use its best efforts in good faith to effect promptly the
registration of all such Registrable Securities. All written requests made
by Holders of Registrable Securities pursuant to this clause (ii) will
specify the number of shares of Registrable Securities to be registered and
will also specify the intended method of disposition thereof. Such method
of disposition shall, in any case, be an underwritten offering if an
underwritten offering is requested by Holders of 51% or more of the
Registrable Securities to be included in such Demand Registration.
(b) LIMITATIONS ON DEMAND REGISTRATION.
(i) The Holders of Registrable Securities may require
the Company to effect two (2) Demand Registrations; provided that (a) the
Company may not be required to effect any Demand Registrations pursuant to
Section 12.2(a) hereof more frequently than once during any twelve (12)
month period; and (b) the Registrable Securities requested to be registered
in any Demand Registration must equal at least 30% of the Registrable
Securities.
(ii) Any registration initiated by Holders of
Registrable Securities as a Demand Registration pursuant to Section 12.2(a)
hereof shall not count as a Demand Registration for purposes of Section
12.2(b) (i) hereof unless and until such registration shall have become
effective and all Registrable Securities specified in the Holders' written
request under Section 12(a)(i) of this Agreement shall have been actually
sold pursuant to the registration statement filed by the Company with the
Commission to effect such Demand Registration.
(iii) The Company shall not be obligated or required to
effect the Demand Registration of any Registrable Securities pursuant to
Section 12.2(a) hereof during the period commencing on the date falling 30
days prior to the Company's estimated date of filing of, and ending on the
date 180 days following the effective date of, any registration statement
pertaining to any underwritten registration initiated by the Company, for
the account of the Company, if the written request of Holders for such
Demand Registration pursuant to Section 12.2(a)(i) hereof shall have been
received by the Company after the Company shall have given to all Holders
of Registrable Securities a written notice stating that the Company is
commencing an underwritten registration initiated by the Company; provided,
however, that the Company will use its best efforts in good faith to cause
any such registration statement to be filed and to become effective as
expeditiously as shall be reasonably possible.
(c) PRIORITY ON DEMAND REGISTRATIONS. If the managing
underwriters in any Demand Registration shall give written advice to the
Company and the Holders of Registrable Securities to be included in such
registration of an Underwriters' Maximum Number, then: (i) the Company will
be obligated and required to include in such registration that number of
Registrable Securities requested by the Holders thereof to be included in
such registration which does not exceed the Underwriters' Maximum Number,
and such number of Registrable Securities shall be allocated pro rata among
the Holders of such Registrable Securities on the basis of the number of
Registrable Securities requested to be included therein by each such
Holder; (ii) if the Underwriters' Maximum Number exceeds the number of
Registrable Securities requested by the Holders thereof to be included in
such registration, then the Company will be entitled to include in such
registration that number of securities which shall have been requested by
the Company to be included in such registration for the account of the
Company and which shall not be greater than such excess; and (iii) if the
Underwriters' Maximum Number exceeds the sum of the number of Registrable
Securities that the Company shall be required to include in such Demand
Registration and the number of securities that the Company proposes to
offer and sell for its own account in such registration, then the Company
may include in such registration that number of other securities which
Persons (other than the Holders as such) shall have requested be included
in such registration and which shall not be greater than such excess.
Neither the Company nor any of its security holders (other than Holders of
Registrable Securities) shall be entitled to include any securities in any
underwritten Demand Registration unless the Company or such security
holders (as the case maybe) shall have agreed in writing to sell such
securities on the same terms and conditions as shall apply to the
Registrable Securities to be included in such Demand Registration.
(d) SELECTION OF UNDERWRITERS. If any Demand Registration is
an underwritten offering the investment bankers and managing underwriters
in such registration will be selected by the Company, subject to the
approval of Holders of 51% or more of the Registrable Securities to be
included in such registration (which approval will not be unreasonably
withheld or delayed).
12.3 PIGGYBACK REGISTRATIONS.
(a) RIGHTS TO PIGGYBACK.
(i) If (and on each occasion that) the Company proposes
to register any of its securities under the Securities Act either for the
Company's own account or for the account of any of its security holders
(each such registration not withdrawn or abandoned prior to the effective
date thereof being herein called a "Piggyback Registration"), the Company
will give written notice to all Holders of Registrable Securities of such
proposal not later than the earlier to occur of (A) the tenth day following
the receipt by the Company of notice of exercise of any registration rights
by any Persons, and (B) 30 days prior to the anticipated filing date of
such Piggyback Registration.
(ii) Subject to the provisions contained in paragraphs
(b) and (c) of this Section 12.3 and in the last sentence of this clause
(ii), (A) the Company will be obligated and required to include in each
Piggyback Registration all Registrable Securities with respect to which the
Company shall receive from Holders of Registrable Securities, within 15
days after the date on which the Company shall have given written notice of
such Piggyback Registration to all Holders of Registrable Securities
pursuant to Section 12.3(a)(i) hereof, the written requests of such Holders
for inclusion in such Piggyback Registration, and (B) the Company will use
its best efforts in good faith to effect promptly the registration of all
such Registrable Securities. The Holders of Registrable Securities shall
be permitted to withdraw all or any part of the Registrable Securities of
such Holders from any Piggyback Registration at any time prior to the
effective date of such Piggyback Registration. The Company will not be
obligated or required to include any Registrable Securities in any
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 of the Commission is applicable.
(b) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration initiated by the
Company, and the managing underwriters shall give written advice to the
Company of an Underwriters' Maximum Number, then: (i) the Company will be
obligated and required to include in such registration that number of
Registrable Securities which shall have been requested by the Holders
thereof to be included in such registration and which shall not be more
than 40% of the Underwriters' Maximum Number, and such number of
Registrable Securities shall be allocated pro rata among the Holders of
such Registrable Securities on the basis of the number of Registrable
Securities requested to be included therein by each such Holder; (ii) the
Company shall be entitled to include in such registration that number of
securities which the Company proposes to offer and sell for its own account
in such registration and which does not exceed the difference between the
Underwriters' Maximum Number and the number of Registrable Securities that
the Company shall be required to include in such registration; and (iii) if
the Underwriters' Maximum Number exceeds the sum of the number of
Registrable Securities which the Company shall be required to include in
such registration and the number of securities which the Company proposes
to offer and sell for its own account in such registration, then the
Company may include in such registration that number of other securities
which Persons shall have requested be included in such registration and
which shall not be greater than such excess.
(c) PRIORITY ON SECONDARY REGISTRATIONS. If any Piggyback
Registration is an underwritten secondary registration initiated by holders
of the Company's securities, and the managing underwriters shall give
written advice to the Company of an Underwriters' Maximum Number for such
registration, then: (i) the Company will be obligated and required to
include in such registration that number of Registrable Securities which
shall have been requested by the Holders thereof to be included in such
registration and which shall not be more than 40% of the Underwriters'
Maximum Number, and such number of Registrable Securities shall be
allocated pro rata among the Holders of such Registrable Securities on the
basis of the number of Registrable Securities requested to be included
therein by each such Holder, (ii) the holders initiating such Piggyback
Registration shall be entitled to include in such registration that number
of securities which they proposed to offer and sell for their own account
and which does not exceed the difference between the Underwriters' Maximum
Number and the number of Registrable Securities which the Company shall be
required to include in such registration; and (i) if the Underwriters'
Maximum Number exceeds the sum of the number of Registrable Securities
which the Company shall be required to include in such registration and the
number of securities to be included in such registration by holders
initiating such registration, then the Company may include in such
registration that number of securities for its own account which shall not
be greater than such excess.
(d) SELECTION OF UNDERWRITERS. In any Piggyback
Registration, the Company shall (unless the Company shall otherwise agree)
have the right to select the investment bankers and managing underwriters
in such registration.
12.4 LOCKUP AGREEMENTS.
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE
SECURITIES. Each Holder of Registrable Securities, any of whose
Registrable Securities are included in any underwritten registration of the
Company's securities, if the Company or the managing underwriters so
request in connection with such registration, will not, without the prior
written consent of the Company or such underwriters, effect any public sale
or other distribution of any equity securities of the Company, including
any sale pursuant to Rule 144, during the seven (7) days prior to, and
during the 180 day period commencing on, the effective date of such
underwritten registration, except in connection with such underwritten
registration; provided that each officer and director of the Company and
each other Person who is also an affiliate of the Company shall enter into
similar agreements.
(b) RESTRICTIONS ON PUBLIC SALE BY COMPANY. The Company
agrees not to effect any public sale or other distribution of its equity
securities, or any securities convertible into or exchangeable or
exercisable for such equity securities, during the period commencing on the
seventh day prior to, and ending on the one hundred and eightieth day
following, the effective date of any underwritten Piggyback Registration,
except in connection with any such underwritten registration and except for
any offering registered on Form S-8 (or any successor form).
12.5 REGISTRATION PROCEDURES. If (and on each occasion that) the
Company shall become obligated to effect any registration of any
Registrable Securities hereunder, the Company will use its best efforts in
good faith to effect promptly the registration of such Registrable
Securities under the Securities Act and to permit the public offering and
sale of such Registrable Securities in accordance with the intended method
of disposition thereof, and, in connection therewith, the Company, as
expeditiously as shall be reasonably possible, will:
(a) prepare and file with the Commission a registration
statement with respect to such Registrable Securities, and use its best
efforts in good faith to cause such registration statement to become and
remain effective as provided herein;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus included in
such registration statement as maybe necessary or advisable to comply in
all material respects with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement or as may be necessary to keep such registration statement
effective and current, but for no longer than nine (9) months subsequent to
the effective date of such registration;
(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto), the
prospectus included in such registration statement (including each
preliminary prospectus), and such other documents as any such seller may
reasonably request in order to facilitate the disposition of the
Registrable Securities held by such seller;
(d) enter into such customary agreements and take all such
other action in connection therewith as the Holders of 51% or more of the
Registrable Securities being registered reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities;
(e) use its best efforts in good faith to register and
qualify the Registrable Securities covered by such registration statement
under such securities or Blue Sky laws of such jurisdictions as any seller
shall reasonably request and do any and all such other acts and things as
may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities held by such seller; provided, however, that the Company shall
not be required in connection therewith to qualify to do business or file a
general consent to service of process in any such jurisdiction; and
(f) furnish to each prospective seller a signed counterpart,
addressed to the prospective sellers, of (i) an opinion of counsel for the
Company, dated the effective date of the registration statement, and (ii) a
"comfort" letter signed by the independent public accountants who have
certified the Company's financial statements included in the registration
statement, covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and (in the
case of the "comfort" letter) with respect to events subsequent to the date
of the financial statements, as are customarily covered (at the time of
such registration) in opinions of issuer's counsel and in "comfort" letters
delivered to the underwriters in underwritten public offerings of
securities.
12.6 COOPERATION BY PROSPECTIVE SELLERS.
(a) Each prospective seller of Registrable Securities will
furnish to the Company in writing such information as the Company may
reasonably require from such seller, and otherwise reasonably cooperate
with the Company in connection with any registration statement with respect
to such Registrable Securities.
(b) The failure of any prospective seller of Registrable
Securities to furnish any information or documents in accordance with any
provision contained in this Section 12 shall not affect the obligations of
the Company under this Section 12 to any remaining sellers who furnish such
information and documents unless in the reasonable opinion of counsel to
the Company or the underwriters, such failure impairs or may impair the
viability of the offering or the legality of the registration statement or
the underlying offering.
(c) The Holders of Registrable Securities included in any
registration statement will not (until further notice) effect sales thereof
after receipt of telegraphic or written notice from the Company to suspend
sales to permit the Company to correct or update such registration
statement or prospectus; but the obligations of the Company with respect to
maintaining any registration statement current and effective shall be
extended by a period of days equal to the period such suspension is in
effect.
(d) At the end of any period during which the Company is
obligated to keep any registration statement current and effective as
provided by Section 12.5 hereof (and any extensions thereof required by the
preceding paragraph (c) of this Section 12.6), the Holders of Registrable
Securities included in such registration statement shall discontinue sales
of shares pursuant to such registration statement upon receipt of notice
from the Company of its intention to remove from registration the shares
covered by such registration statement which remain unsold, and such
Holders shall notify the Company of the number of shares registered which
remain unsold promptly after receipt of such notice from the Company.
(e) No Holder shall have any right to obtain or seek an
injunction or other judicial order restraining or otherwise delaying any
registration under Section 12.2 or 12.3 hereof as a result of any
controversy or dispute that might arise with respect to the interpretation
or implementation of this Section 12.
12.7 REGISTRATION EXPENSES.
(a) All costs and expenses incurred or sustained in
connection with or arising out of each registration pursuant to Sections
12.2 and 12.3 hereof (including any registration that is not declared
effective by the Commission for any reason), including, without limitation,
all registration and filings fees, fees and expenses of compliance with
securities or Blue Sky laws (including reasonable fees and disbursements of
counsel for the underwriters in connection with the Blue Sky qualification
of Registrable Securities), printing expenses, messenger, telephone and
delivery expenses, fees, and disbursements of counsel for the Company, fees
and disbursements of all independent certified public accountants
(including the expenses relating to the preparation and delivery of any
special audit or "cold comfort" letters required by or incident to such
registration), and fees and disbursements of underwriters (excluding
discounts and commissions), the reasonable fees and expenses of any special
experts retained by the Company of its own initiative or at the request of
the managing underwriters in connection with such registration, the fees
and expenses of all (if any) other Persons retained by the Company, and the
fees and disbursement of one counsel for the selling Holders (all such
costs and expenses being herein called, collectively, the "Registration
Expenses"), will be borne and paid by the Company. The Company will, in
any case, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which similar securities of the
Company are then listed.
(b) The Company will not bear the cost of nor pay for any
stock transfer taxes imposed in respect of the transfer of any Registrable
Securities to any purchaser thereof by any Holder of Registrable Securities
in connection with any registration of Registrable Securities pursuant to
this Section 12.
(c) To the extent that Registration Expenses incident to any
registration are, under the terms of this Section 12, not required to be
paid by the Company, each Holder of Registrable Securities included in such
registration will pay all Registration Expenses which are clearly solely
attributable to the registration of such Holder's Registrable Securities so
included in such registration, and all other Registration Expenses not so
attributable to one Holder will be borne and paid by all sellers of
securities included in such registration in proportion to the number of
securities so included by each such seller.
12.8 INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company will indemnify
each Holder requesting or joining in a registration and each underwriter of
the securities so registered, the officers, directors and partners of each
such Person and each Person who controls any thereof (within the meaning of
the Securities Act) against any and all claims, losses, damages, and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of any material fact
contained in any prospectus, offering circular or other document incident
to any registration, qualification or compliance (or in any related
registration statement, notification or the like) or any omission (or
alleged omission) to state therein any material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to any action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such
Holder, underwriter, officer, director, partner and controlling Person for
any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action; provided, however, that the Company will not be liable in any such
case to the extent that any such claim, loss, damage or liability arises
out of or is based on any untrue statement or omission based upon written
information furnished to the Company in an instrument duly executed by such
Holder, underwriter, officer, director, partner or controlling Person and
stated to be specifically for use in such prospectus, offering circular or
other document.
(b) INDEMNIFICATION BY EACH HOLDER. Each Holder requesting
or joining in a registration will indemnify each underwriter of the
securities so registered, the Company and its officers and directors and
each Person, if any, who controls any thereof (within the meaning of the
Securities Act) and their respective successors in title and assigns
against any and all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of any material fact contained in any prospectus,
offering circular or other document incident to any registration,
qualification or compliance (or in any related registration statement,
notification or the like) or any omission (or alleged omission) to state
therein any material fact required to be stated therein or necessary to
make the statement therein not misleading, and such Holder will reimburse
each underwriter, the Company and each other Person indemnified pursuant to
this paragraph (b) for any legal and any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that this paragraph (b) shall apply
only if (and only to the extent that) such statement or omission was made
in reliance upon written information furnished to such underwriter or the
Company in an instrument duly executed by any such Holder and stated to be
specifically for use in such prospectus, offering circular or other
document (or related registration statement, notification or the like) or
any amendment or supplement thereto.
(c) INDEMNIFICATION PROCEEDINGS. Each party entitled to
indemnification pursuant to this Section 12.8 (the indemnified party) shall
give notice to the party required to provide indemnification pursuant to
this Section 12.8 (the indemnifying party) promptly after such indemnified
party acquires actual knowledge of any claim as to which indemnity may be
sought, and shall permit the indemnifying party (at its expense) to assume
the defense of any claim or any litigation resulting therefrom; provided
that counsel for the indemnifying party, who shall conduct the defense of
such claim or litigation, shall be acceptable to the indemnified party, and
the indemnified party may participate in such defense at such party's
expense; and provided, further, that the failure by any indemnified party
to give notice as provided in this paragraph (c) shall not relieve the
indemnifying party of its obligations under this Section 12.8 except to the
extent that the failure results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a
result of the failure to give notice. No indemnifying party, in the defense
of any such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any
settlement 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 claim or litigation. The
reimbursement required by this Section 12.8 shall be made by periodic
payments during the course of the investigation or defense, as and when
bills are received or expenses incurred.
12.9 CONTRIBUTION IN LIEU OF INDEMNIFICATION. If the indemnification
provided for in Section 12.8 hereof is unavailable to a party that would
have been an indemnified party under any such section in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each party that would have been an indemnifying
party thereunder shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in
respect thereof). The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or such
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company agrees that it would not be just and equitable if
contribution pursuant to this Section 12.9 were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 12.9.
The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this Section 12.9 shall include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
12.10 RULE 144 REQUIREMENTS. From time to time after the earlier
to occur of (a) the ninetieth day following the date on which there shall
first become effective a registration statement filed by the Company under
the Securities Act, or (b) the date on which the Company shall register a
class of securities under Section 12 of the Exchange Act, the Company will
make every effort in good faith to make publicly available and available to
the Holders of Registrable Securities, pursuant to Rule 144 of the
Commission under the Securities Act, such information as shall be necessary
to enable the Holders of Registrable Securities to make sales of
Registrable Securities pursuant to that Rule. The Company will furnish to
any Holder of Registrable Securities, upon request made by such Holder at
any time after the undertaking of the Company in the preceding sentence
shall have first become effective, a written statement signed by the
Company, addressed to such Holder, describing briefly the action the
Company has taken or proposes to take to comply with the current public
information requirements of Rule 144. The Company will, at the request of
any Holder of Registrable Securities, upon receipt from such Holder of a
certificate certifying (i) that such Holder has held such Registrable
Securities for a period of not less than three (3) consecutive years, (ii)
that such Holder has not been an affiliate (as defined in Rule 144) of the
Company for more than the preceding three (3) months, and (iii) as to such
other matters as may be appropriate in accordance with such Rule, remove
from the stock certificates representing such Registrable Securities that
portion of any restrictive legend which relates to the registration
provisions of the Securities Act.
12.11 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration pursuant to this Section 12
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled,
under the provisions hereof, to approve such arrangements, and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents as are customary for such
underwritten registrations and reasonably required by the terms of such
underwriting arrangements. Any Holder of Registrable Securities to be
included in any underwritten registration shall be entitled at any time to
withdraw such Registrable Securities from such registration prior to its
effective date in the event that such Holder shall disapprove of any of the
terms of the related underwriting agreement.
12.12 MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company will not, at any
time after the date hereof, enter into any agreement or contract (whether
written or oral) with respect to any of its securities which prevents the
Company from complying in any respect with the registration rights granted
by the Company to Holders of Registrable Securities hereunder.
(b) AMENDMENTS AND WAIVERS. The provisions of this Section
12 including the provisions of this subparagraph (b), may not be amended,
modified, or supplemented, and any waiver or consent to or any departure
from any of the provisions of this Section 12 may not be given and shall
not become or be effective, unless and until (in each case) the Company
shall have received the written consent of the Holders of 51% or more of
all Registrable Securities for any such amendment, modification,
supplement, waiver or consent.
(c) REGISTRABLE SECURITIES HELD BY THE COMPANY. Whenever the
consent or approval of Holders of Registrable Securities is required
pursuant to this Section 12, Registrable Securities held by the Company
shall not be counted in determining whether such consent or approval was
duly and properly given by such Holders.
(d) TERM. The agreements of the Company contained in this
Section 12 shall continue in full force and effect so long as any Holder
holds any Registrable Securities.
13. REGISTRATION AND TRANSFER OF SECURITIES.
13.1 EXCHANGE OF WARRANT. On surrender for exchange of any Warrant,
properly endorsed, to the Company, the Company at its expense will issue
and deliver to or on the order of the holder thereof a new warrant or
warrants of like tenor, in the name of such holder or, upon payment by such
holder of any applicable transfer taxes, as such holder may direct, calling
in the aggregate on the face or faces thereof for the number of shares of
Common Stock called for on the face or faces of the Warrant so surrendered.
Such new Warrant shall be exercisable for Common Stock. The Company will
pay shipping and insurance charges, from and to each holder's principal
office, upon any transfer, exchange or conversion provided for in this
Section 13.1.
13.2 TRANSFER, EXCHANGE AND CONVERSION OF COMMON STOCK AND SERIES C
PREFERRED STOCK. The Company shall keep at its principal office a register
in which shall be entered the names and addresses of the holders of the
Common Stock and Series C Preferred Stock and the particulars of the
respective Common Stock and Series C Preferred Stock held by them and of
all transfers or conversions of Common Stock and Series C Preferred Stock.
Upon surrender at such office of any certificate representing shares of
Common Stock or Series C Preferred Stock for registration of exchange or
(subject to compliance with the applicable provisions of this Agreement)
transfer or conversion, the Company shall issue, at its expense, one or
more new certificates, in such denomination or denominations as may be
requested, for shares of Common Stock or Series C Preferred Stock, as may
be requested, and registered as such holder may request. Any certificate
representing shares of Common Stock or Series C Preferred Stock surrendered
for registration of transfer shall be duly endorsed, or accompanied by a
written instrument of transfer duly executed by the holder of such
certificate or his attorney duly authorized in writing. The Company will
pay shipping and insurance charges, from and to each holder's principal
office, upon any transfer, exchange or conversion provided for in this
Section 13.2.
13.3 REGISTRATION, TRANSFER AND EXCHANGE OF NOTES.
(a) The Company shall keep at its principal office a register
in which shall be entered the names and addresses of the registered holders
of Notes issued by it and particulars of the respective Notes held by them
and of all transfers of such Notes. References to the "holder" or "holder
of record" of any Note shall mean the payee thereof unless the payee shall
have presented such Note to the Company for transfer and the transferee
shall have been entered in said register as a subsequent holder, in which
case the terms shall mean such subsequent holder. The ownership of any of
the Notes shall be proven by such register.
(b) The holder of any of the Notes may at any time and from
time to time prior to maturity or prepayment thereof in full surrender any
Note held by it for exchange or transfer at said office of the Company.
Within a reasonable time thereafter and without expense (other than
transfer taxes, if any) to such holder, the Company shall issue, at its
expense, in exchange therefor another Note or Notes, dated the date to
which interest has been paid on the surrendered Note, for the same
aggregate principal amount as the unpaid principal amount of the Note or
Notes so surrendered, having the same maturity and rate of interest,
containing the same provisions and subject to the same terms and conditions
as the Note or Note so surrendered. Each such new Note shall be in the
denominations and registered in the name of such person or persons as the
holder of such surrendered Note or Notes may designate in writing, and such
exchange shall be made in a manner such that no additional or lesser amount
of principal or interest shall result. The Company will pay shipping and
insurance charges, from and to each holder's principal office, involved in
the exchange or transfer of any Note.
(c) Each Note issued hereunder, whether originally or in
substitution for, or upon transfer or exchange of, any Note shall be
registered on the date of execution thereof by the Company. The registered
holder of record shall be deemed to be the owner of the Note for all
purposes of this Agreement. All notices given hereunder to the holder of
record shall be deemed validly given if given in the manner specified in
Section 16 hereof.
13.4 REPLACEMENT OF SECURITIES. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation
of any Note or certificate evidencing Common Stock, Series C Preferred
Stock or the Warrant, and, in the case of any such loss, theft, or
destruction, upon delivery of an indemnity bond in such reasonable amount
as the Company may determine (or, in the case of any Security or share of
Warrant Stock held by the Investor or another institutional holder, upon
delivery of an unsecured indemnity agreement from the Investor or such
other holder reasonably satisfactory to the Company), or, in the case of
any such mutilation, upon the surrender of such Security or stock
certificate for cancellation to the Company at its principal office, the
Company, at its own expense, will execute and deliver, in lieu thereof, a
new Note, certificate or Warrant of like tenor, dated in the case of any
Note so that there will be no loss of interest accrual. Any Security in
lieu of which any such new security has been so executed and delivered by
the Company shall not be deemed to be outstanding for any purpose of this
Agreement.
14. RESTRICTIONS ON TRANSFER.
14.1 GENERAL RESTRICTION. Subject to Section 5 of this Agreement,
the Note, the Series C Preferred Stock, the Warrant and the Warrant Stock,
and all securities issued in exchange therefor or upon conversion or
exercise thereof (the "Restricted Securities"), shall be transferable only
upon satisfaction of the conditions set forth in this Section 14.
14.2 NOTICE OF TRANSFER. Prior to any transfer of any Restricted
Securities, the holder thereof shall be required to give written notice to
the Company describing in reasonable detail the manner and terms of the
proposed transfer and the proposed transferee (the "Transfer Notice"),
accompanied by (a) an opinion of counsel reasonably acceptable to the
Company, that such transfer may be effected without registration of such
Restricted Securities under the Securities Act, and (b) the written
agreement of the proposed transferee to be bound by all of the provisions
of Section 13.
14.3 RESTRICTIVE LEGENDS. Except as otherwise permitted by this
Section 14, each Note shall bear the legend substantially similar to the
legend set forth on the Note attached as Exhibit A hereto and each
certificate evidencing Series C Preferred Stock, the Warrant and each
certificate evidencing Warrant Stock shall bear the legend substantially
similar to that set forth on the Warrant attached as EXHIBIT B hereto.
14.4 TERMINATION OF RESTRICTIONS. The restrictions imposed by this
Section 14 upon the transferability of Restricted Securities shall
terminate as to any particular Restricted Securities when such Restricted
Securities shall have been effectively registered under the Securities Act
or sold pursuant to Rule 144 or Rule 144A under the Securities Act.
Whenever any of such restrictions shall terminate as to any Restricted
Securities, the holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new Warrant or Note or certificates
evidencing Series C Preferred Stock or Warrant Stock without such legends.
15. EXPENSES; INDEMNITY.
(a) If the transactions contemplated by this Agreement shall be
consummated, the Company hereby agrees to pay on demand all reasonable
out-of-pocket expenses incurred by the Investor in connection with such
transactions hereunder, and in connection with any amendments or waivers
(whether or not the same become effective) hereof or thereof and all
out-of-pocket expenses incurred by any holder of any Security issued
hereunder in connection with the enforcement of any rights hereunder, under
any other Financing Agreement, under the Articles of the Company, or with
respect to any Security, including without limitation (i) the cost and
expenses (including the Investor's reasonable attorney's fees and expenses)
of negotiating, preparing, and duplicating this Agreement, each Financing
Agreement, the Related Agreements and the Securities; (ii) the cost of
delivering to each Investor's principal office, the Securities sold to the
Investor hereunder and any Securities delivered to the Investor in exchange
therefor or upon any exercise, conversion or substitution thereof; (iii)
each Investor's reasonable expenses related to the business of the Company,
including reasonable travel, food, and lodging expenses incurred to attend
meetings related to the business of the Company and meetings of the
Company's Board of Directors or expenses to exercise inspection rights
provided in this Agreement; (iv) all taxes (other than taxes determined
with respect to income), including any recording fees and filings fees and
documentary stamp and similar taxes at any time payable in respect of this
Agreement, any other Financing Agreement, the Related Agreements or the
issuance of any of the Securities; and (v) the reasonable fees and
disbursements of counsel for any holder of Restricted Securities in
connection with all opinions rendered by such counsel pursuant to Section
14 hereof.
(b) The Company hereby further jointly and severally agrees to
indemnify, exonerate and hold the Investor and each of the Investor's
stockholders, partners, officers, directors, members, managers, employees
and agents free and harmless from and against any and all actions, causes
of action, suits, losses, liabilities, damages and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, incurred
in any capacity by any of the indemnitees as a result of or relating to (a)
any transaction financed or to be financed in whole or in part directly or
indirectly with proceeds from the sale of any of the Securities, or (b) the
execution, delivery, performance, or enforcement of this Agreement
(including, without limitation, any failure by the Company to comply with
any of its covenants hereunder), or any instrument contemplated hereby or
thereby, except for any such indemnified liabilities arising from any
indemnitee's gross negligence or willful misconduct.
(c) The Company hereby indemnifies the Investor against and agrees
that it will hold the Investor harmless from any claim, demand, or
liability for any broker's, finder's or placement fees or incentive fees
alleged to have been incurred by it in connection with the transactions
contemplated by this Agreement, the other Financing Agreements, or the
Related Agreements.
(d) Except to the extent otherwise expressly provided herein, the
Company shall pay on demand interest at a rate of 10% per annum (which, to
avoid double counting, shall not apply to the extent the Company is
obligated to pay any other default interest under this Agreement or any
Financing Agreement) on all overdue amounts payable under this Agreement
until such amounts shall be paid in full.
(e) The obligations of the Company under this Section 15 shall
survive payment or transfer of the Securities or shares of Warrant Stock.
16. NOTICES.
Any notice of other communication in connection with this Agreement,
any other Financing Agreement or the Securities shall be deemed to be
delivered if in writing (or in the form of a telex or telecopy) addressed
as provided below and if either (a) actually delivered, telexed, or
telecopied to said address or (b) in the case of a letter, three business
days shall have elapsed after the same shall have been deposited in the
United States mails, postage prepaid and registered or certified:
If to the Company, to it to the attention of the Chief Executive
Officer, or at such other address as such Person shall have specified by
notice actually received by the addressor; or
If to the Investor, then to each Investor's address set forth on page
1 hereof, to the attention of its President or Manager, or at such other
address as the Investor shall have specified by notice actually received by
the addressor; or
If to any other holder of record of any Security, to it at its
address set forth in the applicable register referred to in Section 13
hereof.
17. SURVIVAL AND TERMINATION OF COVENANTS.
All covenants, agreements, representations and warranties made herein
or in any other document referred to herein or delivered to the Investor
pursuant hereto shall be deemed to have been relied on by the Investor,
notwithstanding any investigation made by the Investor or on the Investor's
behalf, and shall survive the execution and delivery to the Investor hereof
and of the Securities and shares of Warrant Stock.
18. AMENDMENTS AND WAIVERS.
Any term of this Agreement, the Securities, the other Financing
Agreements or any of the Related Agreements may be amended and the
observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) only
with the written consent of the Company and the Majority Holders with
respect to any provision of this Agreement which by its terms operates for
the benefit of such holders; provided, however, that (a) without the prior
written consent of each holder of a Warrant and Warrant Stock with respect
to whom such amendment or waiver is made, no such amendment or waiver shall
extend the scheduled date of any required repurchase of such respective
Securities held by such holder or reduce the repurchase price payable
thereon, (b) without the prior written consent of each holder of Notes with
respect to whom such amendment or waiver is made, no such amendment or
waiver shall extend the fixed maturity or reduce the principal amount of,
or reduce the rate or extend the time of payment of interest on, or reduce
the amount or extend the time of payment of any principal or premium
payable on any prepayment of, any Note with respect to whom such amendment
or waiver is made, (c) without the written consent of the aforesaid
percentage of Securities, reduce the aforesaid percentage of Securities the
holders of which are required to consent to any such amendment or waiver,
or (d) without the written consent of the percentage of the holders of each
Security required to exercise the remedies provided in Section 10.2 hereof,
increase such required percentage. Any amendment or waiver effected in
accordance with this Section 18 shall be binding upon the Company and each
holder of any Security sold pursuant to this Agreement.
19. MISCELLANEOUS.
(a) ACCOUNTING PRINCIPLES. Where the character or amount of any
asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required
to be made for the purposes of this Agreement, the same shall be done in
accordance with GAAP. As long as the Company shall have any Subsidiary,
the Company's financial statements and other financial requirements under
this Agreement shall be reported on a consolidated basis.
(b) INTEGRATION. This Agreement, the Financing Agreements and the
Related Agreements set forth the entire understanding of the parties hereto
with respect to the transactions contemplated hereby and supersede any
prior written or oral understandings with respect thereto.
(c) SEVERABILITY. The invalidity or unenforceability of any term
or provision hereof shall not affect the validity or enforceability of any
other term or provision hereof.
(d) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not alter or otherwise affect the meaning
hereof.
(e) COUNTERPARTS; FACSIMILE SIGNATURE. This Agreement may be
executed in any number of counterparts which together shall constitute one
instrument. Signatures to this Agreement or any of the other Financing
Agreements or Related Agreements may be given by facsimile or other
electronic transmission, and such signatures shall be fully binding on the
party sending the same.
(f) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic substantive laws of the State of
Illinois without giving effect to any choice or conflict of law provision
or rule that would cause the application of the domestic substantive laws
of any other State.
(g) BINDING EFFECT. This Agreement, the other Financing Agreements
and the Related Agreements shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
(h) PUBLICITY. Following its purchase of the Securities the
Investor, at its sole expense, may place in such publications as it may
select such "tombstone" or other informational announcements,
advertisements, or articles as it may deem appropriate describing the
transactions concluded hereunder.
(i) SURVIVAL. All representations and warranties contained in this
Agreement, any other Financing Agreement, and the Related Agreements shall
survive the Closing.
(j) SUBORDINATION. The Investor agrees that it will subordinate
its rights under the Note to any subsequent financing on terms reasonably
satisfactory to the Investor.
20. WAIVER OF JURY TRIAL.
TO THE FULLEST EXTENT PERMITTED BY LAW, AS SEPARATELY BARGAINED-FOR
CONSIDERATION TO THE INVESTOR, THE COMPANY HEREBY WAIVES RIGHT TO TRIAL BY
JURY (WHICH THE INVESTOR ALSO WAIVE) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATING TO ANY OF THIS
AGREEMENT, THE FINANCING AGREEMENTS, THE RELATED AGREEMENTS, THE SECURITIES
OR THE INVESTOR'S CONDUCT IN RESPECT OF ANY OF THE FOREGOING. THE COMPANY
AND THE INVESTOR HEREBY EXPRESSLY ACKNOWLEDGE THE INCLUSION OF THIS JURY
TRIAL WAIVER THROUGH THE INITIALS OF THEIR DULY AUTHORIZED REPRESENTATIVES:
21. RIGHTS OFFERING.
On or before the date nine months after the Closing, the Company
shall use reasonable efforts to register a rights offering with the
Commission and to offer rights to stockholders other than Affiliates of the
Company and the Investor to purchase up to 15 million (15,000,000) shares
of Common Stock at a price of $.04 per share, pro rata according to their
ownership of Common Stock. The Investor agrees that it will cooperate with
the Company in such rights offering and not take any action intended to
prevent the consummation thereof.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly
executed as of the day and year specified at the beginning hereof.
BPI PACKAGING TECHNOLOGIES, INC.
By: /s/ C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: Chairman and CEO
------------------------------
DGJ, L.L.C.
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: President
------------------------------
EXHIBIT A
---------
PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND SHALL NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT. FURTHERMORE,
THIS NOTE CAN BE SOLD OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THE SECURITIES PURCHASE AGREEMENT (AS HEREINAFTER
DEFINED), A COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION
AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE
TO THE HOLDER OF THIS NOTE UPON WRITTEN REQUEST.
No. N-1
SECURED NOTE DUE January 27, 2004
$3,200,000 January 27, 1999
BPI Packaging Technologies, Inc., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to the order of DGJ, L.L.C.
("Investor"), or registered assigns the principal amount of Three Million
Two Hundred Thousand Dollars ($3,200,000) or registered dollars on
February 1, 2004, or the earlier occurrence of one of the events set forth
in Sections 3.1 (b) through (f) of the Securities Purchase Agreement dated
as of the date hereof, between the Company and the Investor (the
"Securities Purchase Agreement"), (or earlier whether by acceleration or
otherwise). The Company also agrees to pay interest on the unpaid
principal amount hereof from the date hereof until such principal amount
shall have become due and payable (whether at maturity or otherwise) at the
rate of 6% per annum (computed on the basis of actual number of days
elapsed and a 360-day year). Interest shall be payable monthly in arrears
on the first business day of each month, commencing March 1, 1999, and at
maturity. The Company also agrees to pay, on demand, interest at the rate
of 15% per annum on any overdue principal and, to the extent permitted by
applicable law, any overdue interest, until the obligation of the Company
with respect to the payment thereof shall be discharged. In the event that
all or any portion of the principal amount of the Note is repaid prior to
maturity, regardless of whether such repayment is a voluntary prepayment or
results from the exercise of the Investor's remedies pursuant to the
Securities Purchase Agreement, such prepayment shall not include a
prepayment premium.
All payments of principal and interest hereof shall be made in lawful money
of the United States of America upon presentation hereof to the account of
the holder hereof at the principal office of Investor at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place
as the holder hereof shall have designated to the Company in writing.
This Note is the Note of the Company for $3,200,000 in original authorized
principal amount issued pursuant to the Securities Purchase Agreement. The
holder of this Note is entitled to enforce the provisions of such
Securities Purchase Agreement and Exhibits thereto and to enjoy the
benefits thereof. This Note is secured pursuant to a Security Agreement
dated as of the date hereof, executed and delivered by the Company pursuant
to the Securities Purchase Agreement.
The Company may at its election prepay this Note, in whole or in part, and
the maturity hereof may be accelerated by the holder of this Note or by
holders of a percentage of the Notes outstanding following an Event of
Default, all as provided in such Securities Purchase Agreement, to which
reference is made for the terms and conditions of such provisions as to
prepayment and acceleration.
Transfer of this Note is registrable on the note register of the Company
upon presentation at the principal office of the Company accompanied by a
written instrument of transfer in form satisfactory to the Company duly
executed by, or on behalf of, the holder hereof. This Note may also be
exchanged at such office for one or more Notes in any authorized
denominations (multiples of $50,000.00), as requested by the holder, of a
like aggregate unpaid principal amount.
Prior to due presentment for registration of transfer, the Company and any
agent of the Company may treat the person in whose name this Note is
registered as the owner hereof for the purpose of receiving payment of
principal and interest as herein provided and for all other purposes.
The obligations of the Company under this Note are subject to the terms of
a certain Intercreditor Agreement dated January 27, 1999 between the
Lender, the Investor and Franklin Capital Corporation.
This Note shall be deemed to take effect as a sealed instrument under the
laws of the State of Illinois and for all purposes shall be construed in
accordance with such laws.
BPI PACKAGING TECHNOLOGIES, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
EXHIBIT B
---------
Right to Purchase Shares of Common Stock
of
BPI PACKAGING TECHNOLOGIES, INC.
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND SHALL NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR APPLICABLE STATE
SECURITIES LAWS. FURTHERMORE, THIS WARRANT SHALL NOT BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN SECTION 14
OF THE AGREEMENT REFERRED TO HEREINAFTER, A COMPLETE AND CORRECT COPY OF
WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF BPI PACKAGING
TECHNOLOGIES, INC., AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF
THIS WARRANT UPON WRITTEN REQUEST.
No. W - 1999-1
__________________________________
Common Stock Purchase Warrant
BPI Packaging Technologies, Inc., a Delaware corporation (the "Company")
hereby certifies that, for value received, DGJ, L.L.C. (the "Investor") or
its successors or assigns, is entitled, subject to the terms set forth
below, to purchase from the Company at any time or from time to time after
the date hereof eighty million (80,000,000) fully paid and non-assessable
shares of Common Stock (as defined in Section 13 hereof), at an initial
purchase price per share of $.04 (such price per share as adjusted from
time to time as provided herein is referred to herein as the "Exercise
Price"). The number and character of such shares of Common Stock and the
Exercise Price are subject to adjustment as provided herein. For purposes
of determining the number of shares of Common Stock issuable to the
Investor, all computations hereunder shall be made on a fully diluted basis
after giving effect to the exercise of all outstanding warrants, options,
rights, agreements, or other commitments or obligations of any kind of the
Company to issue shares of Common Stock that exist, whether or not then
exercisable, on any date the Investor exercises this Warrant.
This Warrant is issued pursuant to the Securities Purchase Agreement
(the "Agreement"), dated as of January 27, 1999, between the Company and
the Investor, a copy of which is on file at the principal office of the
Company. The holder of this Warrant shall be entitled to all of the
benefits of the Agreement as provided therein.
1. DEFINITIONS.
Terms defined in the Agreement and not otherwise defined herein are
used herein with the meanings so defined. Certain terms are used in this
Warrant as specifically defined in Section 13 hereof.
2. EXERCISE OF WARRANT.
2.1 EXERCISE. This Warrant may be exercised as provided by the
Agreement by the holder at any time from and after the date hereof, by
surrender of this Warrant, with the form of subscription at the end hereof
duly executed by such holder, to the Company at its principal office,
accompanied by payment, 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 for which this Warrant is then exercisable by the
Exercise Price then in effect. If the Warrant is not exercised in full,
the Company, at its expense, will forthwith issue and deliver to or upon
the order of the holder hereof (the "Warrantholder") a new Warrant or
Warrants of like tenor, in the name of the holder hereof or as such holder
(upon payment by such holder of any applicable transfer taxes) may request,
calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock equal (without giving effect to any adjustment
therein) to the number of such shares called for on the face of this
Warrant minus the number of such shares (without giving effect to any
adjustment therein) for which this Warrant shall have been exercised.
2.2 NET ISSUE EXERCISE. In lieu of exercising this Warrant
pursuant to Section 2.1, this Warrant may be exercised by the Warrantholder
by the surrender of this Warrant to the Company, with a duly executed
Exercise Form marked to reflect Net Issue Exercise and specifying the
number of Warrant Shares to be purchased, during normal business hours on
any business day during the exercise period. The Company agrees that such
Warrant Shares shall be deemed to be issued to the Warrantholder as the
record holder of such Warrant Shares as of the close of business on the
date on which this Warrant shall have been surrendered as aforesaid. Upon
such exercise, the Warrantholder shall be entitled to receive shares equal
to the value of this Warrant (or the portion thereof being cancelled) by
surrender of this Warrant to the Company together with notice of such
election, in which event the Company shall issue to Warrantholder a number
of shares of the Company's Common Stock computed as of the date of
surrender of this Warrant to the company using the following formula:
X = Y(A-B)
----------
A
Where:
X = the number of shares of Common Stock to be issued to
Warrantholder under this Section 2.2;
Y = the number of shares of Common Stock otherwise
purchasable under this Warrant (at the date of such calculation) or, if
only a portion of this Warrant is being exercised, the number of Warrant
Shares being exercised;
A = the Current Market Price of one share of the
Company's Common Stock (at the date of such calculation); and
B = the Exercise Price (as adjusted to the date of such
calculation).
Current Market Price. For purposes of this Section 2.2,
Current Market Price of one share of the Company's Common Stock shall mean,
as of any date:
the average of the daily closing prices per share
of the Company's Common Stock on the principal national securities exchange
or on The Nasdaq Stock Market's ("Nasdaq") National Market, on which the
Common Stock is listed or admitted to trading, for the five (5) trading
days ending on the second trading day before such date, or
if not listed or traded on any such exchange or
market, the average of the last reported sale price per share on the Nasdaq
SmallCap Market for the five (5) trading days ending on the second trading
day before such date, or
if not listed or traded on any such exchange or
Nasdaq, the average of the bid and asked prices per share as reported in
the "pink sheets" published by the National Quotation Bureau, Inc. for the
five (5) trading days ending on the second trading day before such date, or
if such quotations are not available, the fair
market value per share of the Company's Common Stock on the date such
notice was received by the Company as reasonably determined by the Board of
Directors of the Company.
2.3 STOCK RECEIVABLE UPON EXERCISE. The shares of Common Stock
receivable upon exercise of this Warrant shall be shares of the Company's
voting Common Stock, par value $.01 per share.
2.4 TERMINATION OF THE WARRANT. Unless previously exercised, this
Warrant shall terminate on January 27, 2009.
2.5. WARRANT AGENT. If a bank or trust company shall have been
appointed as trustee for the holder of the Warrant pursuant to Section 6.2
hereof, such bank or trust company shall have all the powers and duties of
a warrant agent appointed pursuant to Section 14 hereof and shall accept,
in its own name for the account of the Company or such successor entity as
may be entitled thereto, all amounts otherwise payable to the Company or
such successor, as the case may be, on exercise of this Warrant pursuant to
this Section 2.
3. REGISTRATION RIGHTS.
3.1 REGISTRATION RIGHTS. The holder of this Warrant has the right
to cause the Company to register shares of Warrant Stock, and any shares
issued upon exercise hereof, under the Securities Act and any blue sky or
securities laws of an jurisdictions within the United States at the time
and in the manner specified in the Agreement.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE.
As soon as practicable after the exercise of this Warrant in full or
in part, and in any event within ten (10) days thereafter, the Company at
its expense (including the payment by it of any applicable issue taxes)
will cause to be issued in the name of and delivered to the holder hereof,
or as such holder (upon payment by such holder of any applicable transfer
taxes) may direct, a certificate or certificates for the number of fully
paid and non-assessable shares of Common Stock (or Other Securities) to
which such holder shall be entitled on such exercise, together with any
other stock or other securities and property (including cash, where
applicable) to which such holder is entitled upon such exercise.
4.1 FRACTIONAL SHARES. In the event that the exercise of this
Warrant, in full or in part, results in the issuance of any fractional
share of Common Stock, then in such event the holder of this Warrant shall
be entitled to cash equal to the fair market value of such fractional share
as determined in good faith by the Company's Board of Directors.
5. ADJUSTMENT FOR DIVIDENDS, DISTRIBUTIONS, RECLASSIFICATIONS AND
FOR CERTAIN SALES.
5.1 DIVIDENDS, DISTRIBUTIONS AND RECLASSIFICATIONS. In case at any
time or from time to time, the holders of Common Stock shall have received,
or (on or after the record date fixed for the determination of stockholders
eligible to receive) shall have become entitled to receive, without payment
therefor:
(a) other or additional stock or other securities or property (other
than cash) by way of dividend; or
(b) other or additional (or less) stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares, or similar corporate
restructuring; other than additional shares of Common Stock issued as a
stock dividend or in a stock-split (adjustments in respect of which are
provided for in Section 7 hereof), then and in each such case the holder of
this Warrant, on the exercise hereof as provided in Section 2 hereof, shall
be entitled to receive the amount of stock and other securities and
property (including cash in the case referred to in subsection (b) of this
Section 5) that such holder would have received prior to or would have held
on the date of such exercise if on the date hereof he had been the holder
of record of the number of shares of Common Stock called for on the face of
this Warrant and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and all such
other or additional stock and other securities and property (including cash
in the case referred to in subsection (b) of this Section 5) receivable by
such holder as aforesaid during such period, giving effect to all further
adjustments called for during such period by Sections 6 and 7 hereof.
5.2 ADJUSTMENT FOR ISSUE OR SALE AT LESS THAN EXERCISE PRICE.
Other than as set forth in Section 5.1, if at any time the Company shall
issue or sell shares of its Common Stock for a consideration per share less
than the Exercise Price then in effect, then and in each such case the
holder of this Warrant shall be entitled to receive, in lieu of the shares
of Common Stock theretofore receivable upon the exercise of this Warrant, a
number of shares of Common Stock determined by (a) dividing the Exercise
Price per share at the time in effect by a Pro Forma Adjusted Purchase
Price per share to be computed as provided below, and (b) multiplying the
resulting quotient by the number of shares of Common Stock then issuable
upon exercise of this Warrant. Such Pro Forma Adjusted Purchase Price
shall be computed by dividing
(i) the sum of (x) the result obtained by multiplying the
number of shares of Common Stock of the Company outstanding immediately
prior to such issue or sale by the Exercise Price per share at the time in
effect, and (y) the consideration, if any, received by the Company upon
such issue or sale, by
(ii) the number of shares of Common Stock of the Company
outstanding immediately after such issue or sale.
6. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER.
6.1 CERTAIN ADJUSTMENTS. In case at any time or from time to time,
the Company shall (i) effect a capital reorganization, reclassification, or
recapitalization, (ii) consolidate with or merge into any other Person, or
(iii) transfer all or substantially all of its properties or assets to any
other Person under any plan or arrangement contemplating the dissolution of
the Company, then in each such case, the holder of this Warrant, on the
exercise hereof as provided in Section 2 hereof and payment of the Exercise
Price, at any time after the consummation of such reorganization,
recapitalization, consolidation, or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock
(or Other Securities) issuable on such exercise prior to such consummation
or effective date, the stock and other securities and property (including
cash) to which such holder would have been entitled upon such consummation
or in connection with such dissolution, as the case may be, if such holder
had so exercised this Warrant immediately prior thereto, all subject to
further adjustment thereafter as provided in Sections 5 and 7 hereof.
6.2 APPOINTMENT OF TRUSTEE FOR WARRANT HOLDERS UPON DISSOLUTION.
In the event of any dissolution of the Company following the transfer of
all or substantially all of its properties or assets, the Company, prior to
such dissolution, shall, at its expense, deliver or cause to be delivered
the stock and other securities and property (including cash, where
applicable) receivable by the holders of the Warrant after the effective
date of such dissolution pursuant to this Section 6 to a bank or trust
company having an office in Boston, Massachusetts, as trustee for the
holder or holders of the Warrant.
6.3 CONTINUATION OF TERMS. Upon any reorganization, consolidation,
merger, or transfer (and any dissolution following any transfer) referred
to in this Section 6, this Warrant shall continue in full force and effect
and the terms hereof shall be applicable to the shares of stock and other
securities and property receivable on the exercise of this Warrant after
the consummation of such reorganization, consolidation, or merger or the
effective date of dissolution following any such transfer, as the case may
be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the Person
acquiring all or substantially all of the properties or assets of the
Company, whether or not such Person shall have expressly assumed the terms
of this Warrant as provided herein.
7. ADJUSTMENTS FOR ISSUANCE OF COMMON STOCK AND AMOUNT OF
OUTSTANDING COMMON STOCK.
7.1 GENERAL. If at any time there shall occur any stock split,
stock dividend, reverse stock split, or other subdivision of the Company's
Common Stock ("Stock Event"), then the number of shares of Common Stock to
be received by the holder of this Warrant shall be appropriately adjusted
such that the proportion of the number of shares issuable hereunder to the
total number of shares of the Company (on a fully diluted basis) prior to
such Stock Event is equal to the proportion of the number of shares
issuable hereunder after such Stock Event to the total number of shares of
the Company (on a fully diluted basis) after such Stock Event. No
adjustment to the Exercise Price shall be made in connection with any
adjustment of the number of shares of Common Stock receivable upon exercise
of this Warrant, except that the Exercise Price shall be proportionately
decreased upon the occurrence of any stock split or other subdivision of
the Common Stock. The Rights Offering contemplated by Section 21 of the
Agreement shall not trigger the adjustments hereunder.
7.2 OTHER ISSUANCES OF COMMON STOCK. Unless the holder of this
Warrant shall otherwise agree, if at any time there shall be any increase
in the number of shares of Common Stock outstanding or which the Company is
obligated to issue, or covered by any option, warrant, or convertible
security which is outstanding or which the Company is obligated to issue,
then the number of shares of Common Stock to be received by the holder of
this Warrant shall be adjusted to that number determined by multiplying the
number of shares of Common Stock purchasable hereunder prior thereto by a
fraction (i) the numerator of which shall be the number of shares of Common
Stock outstanding or which the Company is obligated to issue, or covered by
options, warrants, or convertible securities which the Company is obligated
to issue, immediately after such increase, and (ii) the denominator of
which shall be the number of shares of Common Stock outstanding or which
the Company is obligated to issue, or covered by options, warrants, or
convertible securities which are outstanding or which the Company is
obligated to issue, immediately prior to such increase. Thereupon, the
Exercise Price shall be correspondingly reduced so that the aggregate
Exercise Price shall be correspondingly reduced so that the aggregate
Exercise Price for all shares of Common Stock covered hereby shall remain
unchanged. The provisions of this Section 7.2 shall not apply to any
issuance of additional Common Stock for which an adjustment is provided
under Section 7.1 hereof.
7.3 OTHER SECURITIES. In case any Other Securities shall have been
issued, or shall then be subject to issue upon the conversion or exchange
of any stock (or Other Securities as defined in Section 13 hereof) of the
Company (or any other issuer of Other Securities or any other entity
referred to in Section 6 hereof) or to subscription, purchase, or other
acquisition pursuant to any rights or options granted by the Company (or
such other issuer or entity), the holder hereof shall be entitled to
receive upon exercise hereof such amount of Other Securities (in lieu of or
in addition to Common Stock) as is determined in accordance with the terms
hereof, treating all references to Common Stock herein as references to
Other Securities to the extent applicable, and the computations,
adjustments, and readjustments provided for in this Section 7 with respect
to the number of shares of Common Stock issuable upon exercise of this
Warrant shall be made as nearly as possible in the manner so provided and
applied to determine the amount of Other Securities from time to time
receivable on the exercise of the Warrant, so as to provide the holder of
the Warrant with the benefits intended by this Section 7 and the other
provisions of this Warrant.
8. PREEMPTIVE RIGHTS.
In the event the Company hereafter issues additional Common Stock, or
securities convertible into Common Stock, grants any rights or options to
subscribe for or purchase any such securities, or enters into any
agreements or issues any warrants providing for the issuance of any such
securities, then each Warrant holder shall have the preemptive right to
subscribe for and to purchase, at the same price such securities, rights,
options or warrants shall be issued or granted to any other Person, an
amount of such securities, rights, option, agreement or warrants equal to
that amount sufficient to preserve the percentage interest in the Company
beneficially owned by the Warrant holder. Such right may be exercised for
not more than thirty (30) days after notice of such right is received by
the Warrant holder. The Investor's rights under this Section 8 shall
terminate at such time as the Investor beneficially owns Common Stock
representing an amount less than thirty percent (30%) of the shares of
Common Stock issuable upon exercise of this Warrant.
9. NO DILUTION OR IMPAIRMENT.
The Company will not, by amendment of its Articles or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of the Warrant, but
will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or
appropriate to protect the rights of the holder of the Warrant against
dilution or other impairment. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any shares of
stock receivable on the exercise of the Warrant above the amount payable
therefor on such exercise, (ii) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable shares of stock on the exercise of the
Warrant from time to time outstanding, (iii) will comply in all respects
with the provisions of Sections 7 or 9 (as the case may be) and Section 9
of the Agreement except to the extent such compliance may be waived by the
Holder, and (iv) will not transfer all or substantially all of its
properties and assets to any other entity (corporate or otherwise), or
consolidate with or merge into any other entity or permit any such entity
to consolidate with or merge into the Company (if the Company is not the
surviving entity), unless such other entity shall expressly assume in
writing and will be bound by all the terms of this Warrant and the
Agreement.
10. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS.
In each case of any event that may require any adjustment or
readjustment in the shares of Common Stock issuable on the exercise of this
Warrant, the Company at its expense will promptly cause independent
certified public accountants selected by the Board of Directors to compute
such adjustment or readjustment, if any, in accordance with the terms of
this Warrant and prepare a certificate setting forth such adjustment or
readjustment, or stating the reasons why no adjustment or readjustment is
being made, and showing, in detail, the facts upon which any such
adjustment or readjustment is based, including a statement of (i) the
number of shares of the Company's Common Stock then outstanding on a fully
diluted basis, and (ii) the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such
adjustment or readjustment and as adjusted and readjusted (if required by
Section 7) on account thereof. The Company will promptly mail a copy of
each such certificate to each holder of a Warrant, and will, on the written
request at any time of any holder of a Warrant, furnish to such holder a
like certificate setting forth the calculations used to determine such
adjustment or readjustment.
11. NOTICES OF RECORD DATE.
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
any transfer of all or substantially all the assets of the Company to or
any consolidation or merger of the Company with or into any other Person;
or
(c) any voluntary or involuntary dissolution, winding-up of
the Company, or liquidation; 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 issue of Common Stock on the
exercise of this Warrant),
then, and in each such event, the Company will mail or cause to be mailed
to the holder of this Warrant 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, transfer, consolidation, merger,
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 (or
Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for securities or other property deliverable on
such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, 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. Such notice shall
be mailed at least thirty (30) days prior to the date specified in such
notice on which any such action is to be taken.
12. RESERVATION OF STOCK ISSUANCE ON EXERCISE OF WARRANT.
The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of the Warrant, a number of shares of
its Common Stock equal to the total number of shares of Common Stock from
time to time issuable upon exercise of the Warrant, and, from time to time,
will take all steps necessary to amend its Articles to provide sufficient
reserves of shares of Common Stock issuable upon exercise of the Warrant.
13. DEFINITIONS.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
13.1 The term "Company" shall include BPI Packaging Technologies,
Inc., and any corporation that succeeds to or assumes the obligations of
the Company hereunder.
13.2 The term "Common Stock" means (i) the Company's voting Common
Stock, par value $.01 per share, (ii) any other capital stock of any class
or classes (however designated) of the Company, the holders of which shall
have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends after
the payment of dividends and distributions on any shares entitled to
preference, and (iii) any other securities into which or for which any of
the securities described in clauses (i) or (ii) above have been converted
or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets, or otherwise.
13.3 The term "Other Securities" refers to any capital stock (other
than Common Stock) and other securities of the Company or any other entity
(corporate or otherwise) (i) which the holder of this Warrant at any time
shall be entitled to receive, or shall have received, on the exercise of
this Warrant, in lieu of or in addition to Common Stock, or (ii) which at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities, in each case pursuant to
Section 5 or 6 hereof.
14. WARRANT AGENT.
The Company may, by written notice to the holder of this Warrant,
appoint an agent having an office in Boston, Massachusetts, for the purpose
of issuing common Stock on the exercise of this Warrant pursuant to Section
2 hereof, and exchanging or replacing this Warrant pursuant to the
Agreement, or any of the foregoing, and thereafter any such issuance,
exchange or replacement, as the case may be, shall be made at such office
by such agent.
15. REMEDIES.
The Company stipulates that the remedies at law of the holder of this
Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically
enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the
terms hereof or otherwise.
16. NOTICES.
All notices and other communications from the Company to the holder
of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the
Company in writing by such holder or, until any such holder furnishes to
the Company an address, then to, and at the address of, the last holder of
this Warrant who has so furnished an address to the Company.
17. MISCELLANEOUS.
In case any provision of this Warrant shall be invalid, illegal or
unenforceable, or partially invalid, illegal or unenforceable, the
provision shall be enforced to the extent, if any, that it may legally be
enforced and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby. This
Warrant and any term hereof may be changed, waived, discharged or
terminated only by a statement in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
This Warrant shall be governed by and construed in accordance with the
domestic substantive laws (and not the conflict of law rules) of the State
of Delaware. 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 shall take effect as an instrument under seal.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its duly authorized officer and its corporate seal to be
impressed hereon and attested by its Secretary.
ATTEST: BPI PACKAGING TECHNOLOGIES, INC.
___________________________
Secretary By:____________________________
Name:
Title:
[CORPORATE SEAL]
Dated as of January 27, 1999
FORM OF SUBSCRIPTION TO PURCHASE
--------------------------------
(To Be Executed by the Holder if the Holder Desires to Exercise
Warrants Evidenced by the Foregoing Warrant)
To: BPI PACKAGING TECHNOLOGIES, INC.
The undersigned hereby irrevocably elects to exercise _____ Warrants
evidenced by the foregoing Warrant for, and to purchase thereunder, ____
shares of Common Stock issuable upon exercise of said Warrants and delivery
of $_____________ in cash, and any applicable taxes payable by the
undersigned pursuant to such warrant.
The undersigned requests that certificates for such shares be issued
in the name of
__________________________________
__________________________________
__________________________________
(Please print name and address)
If said number of Warrants shall not be all the Warrants evidenced by
the foregoing Warrant Certificate, the undersigned requests that a new
Warrant Certificate evidencing the Warrants not so exercised be issued in
the name of and delivered to
__________________________________
__________________________________
__________________________________
(Please print name and address)
Dated: ______________, ____ Name of Holder
(Print)
By: _____________________________
Name:
Title:
FORM OF ASSIGNMENT
------------------
FOR VALUE RECEIVED, ________________________________ hereby sells,
assigns and transfers to each assignee set forth below all of the rights of
the undersigned in and to the number of Warrants (as defined in and
evidenced by the foregoing Warrant) set opposite the name of such assignee
below and in and to the foregoing Warrant with respect to said Warrants and
the shares of Common Stock issuable upon exercise of said Warrants:
Number
Name of Assignee Address of Warrants
---------------- ------- -----------
---------------- ------- -----------
---------------- ------- -----------
---------------- ------- -----------
---------------- ------- -----------
If the total of said Warrants shall not be all the Warrants evidenced
by the foregoing Warrant, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so assigned be issued in the name
of and delivered to the undersigned.
Name of Holder
(Print): ________________________
Dated: ____________, ____ By: _______________________________
Name:
Title:
EXHIBIT C
---------
[LETTERHEAD OF ▇▇▇▇▇ ▇▇▇▇▇, ET AL]
January ____, 1999
DGJ, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: BPI Packaging Technologies, Inc.
Gentlemen:
We have acted as counsel to BPI Packaging Technologies, Inc., a Delaware
corporation and its subsidiaries (the "Company") in connection with the
Securities Purchase Agreement dated as of January ___, 1999 (the
"Agreement") by and between the Company and DGJ, L.L.C. (the "Investor").
This opinion is delivered to you pursuant to Section 6.4 of the
Agreement. Capitalized terms used herein and not otherwise defined shall
have the meanings given them in the Agreement.
In connection with this opinion, we have (i) investigated such
questions of law, (ii) examined such documents and records of the Company,
certificates of public officials and other documents, and (iii) received
such information from officers or representatives of the Company as we
have deemed necessary or appropriate for the purposes of this opinion.
We have examined, among others, the following documents and
instruments (the "Documents"):
(a) An executed copy of the Agreement;
(b) The executed Warrant;
(c) An executed copy of the Loan Agreement and executed copies of
each exhibit thereto requiring execution;
(d) The executed Note;
(e) An executed copy of the Security Agreement;
(f) An executed copy of the Equipment Lease Agreement;
(g) An executed copy of the Patent and Trademark Security
Agreement;
(h) Executed copies of all other Financing Agreements and Related
Agreements;
(i) The Company's Articles of Incorporation and by-laws; and
(j) Such other agreement, documents, and instruments as we have
deemed appropriate.
Based upon the foregoing, and subject to the qualifications and
assumptions set forth herein, we are of the opinion that:
1. The Company is a duly incorporated and validly existing
corporation in good standing under the laws of the State of Delaware. The
Company is qualified as a foreign corporation to do business in the
Commonwealth of Massachusetts and is qualified or has applied to qualify
as a foreign corporation in all other jurisdictions in which it conducts
its business.
2. The execution, delivery, and performance by the Company of
the Documents are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene (a)
the Company's Articles or by-laws, (b) any law, rule or regulation
applicable to the Company, or (c) any contractual or legal restriction
affecting the Company. The Documents have been duly executed and delivered
on behalf of the Company.
3. No authorization, approval, or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for (a) the due execution, delivery, and performance by the
Company of the Documents, (b) the exercise by the Investor of its rights
and remedies under the Agreement, or the Financing Agreements, except for
any UCC financing statement filings and any required filings with the
Commission or state securities regulatory authorities in connection with
the exercise of the Investor's registration rights under Section 12 of the
Agreement. The Company has obtained all other consents, if any, necessary
for the execution, delivery, and performance of the Documents.
4. We have no knowledge, after due inquiry, of any actual or
threatened proceedings before any court, governmental entity or agency, or
arbitrator that may materially and adversely affect the financial
condition or business operations of the Company or its properties.
5. The Agreement, each of the Financing Agreements, the Loan
Agreement, and each of the other Related Agreements, are the legal, valid,
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except in each case as the
enforceability thereof may be (a) limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforceability of
creditors' rights generally, and (b) subject to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
6. The Warrant has been duly and validly issued in the name of the
Investor.
7. Except as set forth in the Agreement, the shares of Common
Stock issuable upon exercise of the Warrant have been duly authorized and
reserved for issuance, and upon issuance, in compliance with the terms of
the Warrant, such shares will be validly issued, fully paid, and
nonassessable.
8. The authorized capital stock of the Company is as described in
Schedule 4.5(a) of the Agreement, and the record ownership thereof is as
set forth in Section 4.5(a) of the Agreement. All outstanding shares of
the Company's capital stock have been duly and validly issued and are fully
paid and nonassessable. Other than the Warrant and __________, to the best
of our knowledge after due inquiry there are no outstanding options,
warrants, or conversion, preemptive, subscription, or other rights to
purchase or acquire any shares of the capital stock of the Company or any
of its Subsidiaries. All of the issued and outstanding shares of the
capital stock of the Company are free and clear of any pledges or other
encumbrances or any restrictions on transfer other than those imposed by
the Agreement, the exhibits to each, and applicable state and federal
securities laws and regulations.
9. It is not necessary in connection with the offer, sale, and
delivery of the Note, the Warrant, and the Warrant Stock to register any of
the foregoing instruments or securities under the Securities Act, as now in
effect, or to register or qualify under any state securities laws. No
registration of any class of debt or equity securities of the Company is or
will be required under the Exchange Act, as now in effect, after the
consummation of the transactions contemplated by the Agreement.
We have assumed the Investor's due execution and delivery, pursuant
to due authorization, of the Agreement and the Financing Agreements to
which it is a signatory.
We have also assumed that the signatures on all documents reviewed by
us are genuine (except signatures by, or purported to be by, officers or
other representatives of the Company) and that any copies of such documents
conform to the originals thereof.
We do not express any opinion herein concerning any law other than
Federal law and the laws of the State of Delaware and, with respect to
paragraph 1 above, the Commonwealth of Massachusetts.
This opinion is furnished for the benefit of and may be relied upon
by the Investor and by any Person claiming an interest in the Securities
by, through or under the Investor. This opinion may not be relied upon by
any other entity or Person without, in each instance, obtaining our prior
written consent.
▇▇▇▇▇ ▇▇▇▇▇ et al.
_________________________________
EXHIBIT D
---------
Lease Number: ___________
EQUIPMENT LEASE
---------------
THIS EQUIPMENT LEASE (the "Lease") is entered into as of the 27th day
of January, 1999, between DGJ, L.L.C., a Delaware limited liability
company, with its principal place of business located at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessor") and BPI
Packaging Technologies, Inc., a Delaware corporation, with its principal
place of business located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lessee").
W I T N E S S E T H:
-------------------
WHEREAS, Lessor and Lessee desire to enter into an agreement for the
leasing of certain equipment described herein on the terms and subject to
the conditions contained herein;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. LEASE. Lessor shall lease to Lessee, and Lessee hereby accepts
and leases from Lessor, the personal property described on Schedule A
attached hereto and made a part hereof (hereinafter, together with all
replacement parts, repairs, additions and accessories incorporated therein
and/or affixed thereto, the "Equipment") on the terms and subject to the
conditions hereinafter set forth. All prior leases relating to the
Equipment between Lessee and other Lessors are hereby terminated.
2. TERM. The initial term of this Lease shall commence on the date
hereof and terminate on the first annual (1st) anniversary of the date
hereof, unless terminated sooner as hereinafter set forth. Thereafter, the
term of this Lease shall be automatically renewed for successive one (1)
year periods, unless either party gives written notice of its intention not
to renew to the other party, not less than thirty (30) days prior to the
expiration of any such one (1) year term.
3. RENT. The rent for the Equipment shall be One Hundred Two
Thousand and No/100 Dollars ($102,000.00) per month and One Million Two
Hundred Twenty-Four Thousand ($1,224,000.00) per year payable monthly in
advance. The first payment of rent shall be due on the first day of the
month after the effective date of this Lease and shall be a pro rata
portion of the monthly rent. Thereafter, rent shall be paid on the first
(1st) day of each successive month during any term hereof, or any extension
or renewal thereof. Lessee shall pay Lessor said rent at the office of
Lessor set forth in the preamble of this Lease, or at such other place as
Lessor may from time to time designate in writing.
4. CONDITION OF EQUIPMENT, DELIVERY, INSTALLATION, AND TECHNICAL
ASSISTANCE.
(a) CONDITION OF EQUIPMENT. The Lessee acknowledges that the
Equipment being leased hereunder is being leased "as is, where is," and
Lessee agrees to accept and lease such Equipment at its own risk. LESSOR
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER MATTER
CONCERNING THE EQUIPMENT.
(b) DELIVERY OF EQUIPMENT. To the extent the Equipment is not
otherwise located at the Lessee's premises at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ (the "Premises"), Lessor shall, at Lessee's expense, pack the
Equipment and deliver the Equipment to Lessee at the Lessee's premises.
Lessee shall, at its expense, be responsible for unpacking, installing, and
connecting the Equipment at the Lessee's premises.
(c) LOSSES. Lessor shall not be liable for any losses or damages of
any kind (whether incidental, consequential or otherwise) suffered by
Lessee or by any other person or entity, including, without limitation,
damages resulting from business interruption and injury to persons or
property, resulting from non-delivery or late delivery, installation,
failure or faulty operation, condition, suitability or use of the
Equipment.
5. MAINTENANCE OF THE EQUIPMENT. During the term of this Lease and
any extension or renewal thereof, Lessee shall, at its expense, maintain
the Equipment in good condition and repair and in safe working order,
ordinary wear and tear resulting from proper use thereof excepted. Lessee
shall be responsible for all costs associated with the repair and main-
tenance of the Equipment. There shall be no abatement of rent during any
time the Equipment is under repair or is not operating. Not in limitation
of the foregoing, Lessee shall be solely responsible for the following:
(i) the addition of safety devices and guards to, or the repair or
replacement of missing, outdated or deficient safety devices and guards on,
the Equipment, or otherwise ensuring the compliance and condition of the
Equipment or the Premises, as may be necessary to meet any and all
applicable governmental safety standards, in effect on the date hereof and
at all times hereafter, including without limitation, all safety standards
under OSHA regulations; (ii) the compliance with all governmental
regulations with respect to the affixation of prominently displaced legible
warning labels on the Equipment; and (iii) ensuring that all persons using
or affected by the Equipment are properly trained and supervised and are
provided with adequate safety equipment.
6. USE OF EQUIPMENT, LOCATION AND ACCESS.
(a) USE AND LOCATION. The Equipment shall be used exclusively for
the manufacture of products sold by Lessee. Lessee shall maintain and
operate the Equipment exclusively at the Premises and shall not remove the
Equipment therefrom without the prior written consent of Lessor.
(b) ACCESS. Lessee shall provide Lessor access, during normal
business hours, to the Equipment, to any meters attached to or provided
with the Equipment, and to all maintenance and other records concerning the
Equipment, including, without limitation, all records concerning the
compliance with governmental safety standards.
7. EXPENSES, TAXES, INSURANCE, AND RISK OF LOSS.
(a) EXPENSES AND TAXES. Except as otherwise herein specifically
provided, Lessee shall pay all costs and expenses of every character
related to the purchase, sale, ownership, delivery, leasing, possession,
use, operation or sale of the Equipment, including, without limitation, all
license and registration fees, repairs, maintenance, taxes, assessments,
governmental and other charges imposed upon the Equipment. Such amounts
shall be paid as additional rent hereunder.
(b) INSURANCE. Lessee, at its sole cost and expense, will procure
and maintain: (i) insurance against any risk of loss or theft of or
damage from any and every cause to the Equipment, for the full replacement
value thereof; (ii) public liability and property damage insurance; and
(iii) personal injury and products liability insurance, in forms and
amounts reasonably satisfactory to Lessor. Such policy or policies shall
not be subject to cancellation or modification with less than thirty (30)
days notice to Lessor. Lessee shall provide Lessor with a certificate of
insurance, naming Lessor as an additional insured as its interest may
appear, within ten (10) days of the commencement of this Lease and any and
all certificates of renewal not less than thirty (30) days prior to the
renewal of any such policy or policies. Lessee shall be responsible for
procuring such other or additional insurance as it may deem desirable or
appropriate to protect its interests or obligations hereunder.
(c) RISK OF LOSS. Until the Equipment is returned to Lessor upon
the termination of this Lease, Lessee hereby assumes and shall bear the
entire risk of loss, damage to, theft of, or destruction of the Equipment
for any cause whatsoever ("Loss or Damage") whether or not such Loss or
Damage is covered by insurance. Such risk of loss shall pass to Lessee
upon Lessor's commencement of delivery of the Equipment to Lessee or upon
the effective date hereof, if no such delivery is required. No such Loss
or Damage shall relieve Lessee of any of its obligations under this Lease.
Lessee shall immediately notify Lessor of any accident or event of loss
involving the Equipment.
8. INDEMNIFICATION AND WAIVER.
(a) INDEMNITY. Lessee for itself and for its successors, assigns,
stockholders, officers, directors, employees, and representatives, hereby
indemnifies and agrees to defend and hold Lessor and its successors,
assigns, members, stockholders, officers, directors, employees, and
representatives, harmless from and against any and all claims (including,
without limitation, claims of personal injury or property damage), actions,
liabilities, losses and costs (including, without limitation, reasonable
attorneys' fees and expenses), arising out of, resulting from or in any way
attributable to the use or operation of the Equipment, while in Lessee's
possession, or any devices, materials or things to which the products
manufactured with the Equipment are made a part, notwithstanding the
subsequent transfer of such products, devices, materials or things to any
third party, regardless of whether Lessor or others may be wholly,
concurrently, partially, jointly or solely negligent or otherwise at fault.
This subparagraph shall survive the termination of this Lease.
(b) WAIVER. Lessee, for itself and its insurance carriers, forever
waives any workers compensation lien, if any, and subrogation rights
against Lessor, its successors, assigns, stockholders, officers, directors,
employees, or representatives, for any personal injuries arising out of,
resulting from or in any way attributable to the use or operation of the
Equipment, occurring on or after the date the Equipment is or was first
delivered to or put in service by Lessee. Further, Lessee, for itself and
its insurance carriers, covenants and agrees not to threaten or bring
action or suit against Lessor, its successors, assigns, members,
stockholders, officers, directors, employees, or representatives, for any
losses, liabilities, damages, costs or expenses, including, without
limitation, reasonable attorneys' fees and expenses that Lessee may incur
on or after the date hereof arising out of, resulting from or in any way
attributable to the use or operation of the Equipment. This subparagraph
shall survive the termination of this Lease.
9. SURRENDER AND RETURN OF EQUIPMENT; STORAGE. Upon the expiration
or the earlier termination of this Lease as provided herein, Lessee shall
make available the Equipment, in good condition and repair and in working
order, by disconnecting the Equipment and providing Lessor or Lessor's
authorized representatives, access to Lessee's facilities at such time or
times as requested by Lessor to enable Lessor to package and remove the
Equipment from Lessee's facility. Upon Lessor's request, subsequent to the
termination or expiration hereof, Lessee shall store the Equipment upon its
Premises for so long as may be requested by Lessor, at no charge to Lessor.
10. DEFAULT. It shall be an event of default hereunder if: (i)
Lessee fails to pay any rent or other charges due hereunder when due and
such failure shall continue for five (5) days; (ii) Lessee fails to perform
any other covenant herein and such failure shall continue for ten (10) days
after written notice thereof by Lessor to Lessee; (iii) Lessee shall cease
to do business as a going concern; (iv) a petition is filed by or against
Lessee under the United States Bankruptcy Code or any amendment thereto
(including a petition for reorganization or an arrangement), which if
involuntary is not discharged within ninety (90) days; (v) Lessee makes a
general assignment for the benefit of its creditors; (vi) Lessee sells,
transfers or disposes of all or substantially all of its assets or
property; (vii) Lessee attempts to remove, sell, transfer, encumber, sublet
or part with possession of the Equipment; or (viii) upon any Event of
Default under that certain Securities Purchase Agreement dated as of the
date hereof between Lessor and Lessee or any Related Document (as defined
therein). In the event of the occurrence of a default: (1) all sums to
become due hereunder for the then-remaining term of this Lease shall, at
Lessor's option, become due and payable forthwith; or (2) the Equipment
shall upon Lessor's demand be surrendered in accordance with Paragraph 9 or
Lessor and/or its agents may, without notice or liability or legal process,
enter into any premises under the control of Lessee, or any agent of
Lessee, where the Equipment may be or where Lessor believes the Equipment
to be, and repossesses all or any part of the Equipment, discontinue and
separate all thereof from any other property and using all force necessary
or permitted by applicable law to do so. Lessee hereby expressly waives
all further rights to possession of the Equipment and all claims for
injuries suffered through or caused by such repossession. Should any legal
proceedings be instituted by Lessor to recover any moneys due or to become
due hereunder and/or for possession of any or all of the Equipment, Lessee
shall pay all expenses incurred by Lessor in exercising or attempting to
exercise its rights, powers and remedies herein conferred or now or
hereafter existing, at law or in equity, or in collecting or attempting to
collect moneys due or to become due under the Lease, including, without
limitation, reasonable attorneys' fees and expenses.
To the extent permitted by applicable law, Lessee waives any and all
rights and remedies conferred upon a lessee by Sections 2A-401 and 2A-402,
and Sections 2A-508 through 2A-522 of the Illinois Uniform Commercial Code,
including, but not limited to, Lessee's rights to: (a) cancel, terminate,
repudiate or rescind this Lease; (b) suspend performance of any of its
obligations; (c) reject the Equipment or revoke acceptance of the Equipment
after Lessee shall have executed and delivered to Lessor the Delivery and
Acceptance Certificate for the Equipment; (d) recover damages or rent or
the Equipment from Lessor for any breach of warranty or for any other
reason, or deduct any damages from any rent or other sums due Lessor; (e)
claim a security interest in the Equipment in Lessee's possession or
control for any reason; (f) sell or otherwise dispose of the Equipment, or
claim any expenses in connection therewith; (g) deduct from rental payments
or any other sums due hereunder all or any part of any claimed damages
resulting from Lessor's default under this Lease; (h) accept partial
delivery of the Equipment; (i) "cover" by making any purchase or lease of
other equipment in substitution for the equipment due from Lessor
hereunder; (j) recover from the Lessor or any Assignee any general,
special, incidental or consequential damages, for any reason whatsoever;
and (k) specific performance, replevin or the like for any of the
Equipment.
To the extent permitted by applicable law, Lessee hereby waives any
rights now or hereafter conferred by statute or otherwise which may require
Lessor to sell, lease or otherwise use the Equipment in mitigation of
Lessor's damages, as set forth in this Section or which may otherwise limit
or modify any of Lessor's rights or remedies under this Section.
11. OWNERSHIP, PERSONAL PROPERTY, AND FURTHER ASSURANCES. The
Equipment is, and shall at all times during the term hereof remain, the
sole and exclusive property of Lessor. Lessee shall have no right, title
or interest to the Equipment except as expressly set forth in this Lease.
Lessee shall not part with possession or control of the Equipment or sell,
pledge, mortgage, otherwise encumber, or allow any financing statements to
be filed against the Equipment or any part thereof or any interest under
this Lease. The Equipment shall remain personal property regardless of
whether it becomes affixed or attached to real property. Lessee shall
execute and deliver to Lessor, upon Lessor's request, such instruments and
assurances as Lessor deems necessary or advisable for the confirmation or
recordation of this Lease and Lessor's rights in the Equipment. Where so
provided by law, Lessor may execute and file an appropriate Financing
Statement on Lessee's behalf. After payment in full of all amounts due
hereunder or upon the termination of this Lease and the return of the
Equipment to Lessor, Lessor agrees to execute a release of any Financing
Statement filed against the Equipment and Lessee. If Lessor has put a
label or any other identifying ▇▇▇▇ on the Equipment, Lessee shall not
remove the same, without the prior written consent of Lessor.
12. ASSIGNMENT. Lessee shall not assign or pledge this Lease or any
interest therein, or sublet or lend the Equipment, without the prior
written consent of Lessor. Lessor may assign this Lease without notice and
the assignee shall succeed to the rights of Lessor. Lessee is precluded
from asserting against any such assignee of Lessor any defense, set-off,
counterclaim or action which Lessee may have against Lessor. Upon
notification of such assignment, all payments required hereunder shall be
made in accordance with Lessor's directions.
13. GENERAL PROVISIONS.
(a) ENTIRE AGREEMENT; SEVERABILITY. This Lease constitutes the
entire understanding between the parties hereto with respect to the subject
matter hereof and supersedes all discussions, negotiations and agreements
among the parties, whether written or oral, prior to or contemporaneous
with the date hereof. If any provision of this Lease is found invalid,
unenforceable or in violation of any law by a court of competent
jurisdiction, such provision shall be modified only to the extent necessary
to enable such provision to be valid and enforceable, without affecting the
remaining portions of this Lease, which shall remain in full force and
effect. No representation, inducement, agreement, promise or understanding
altering, modifying, taking from or adding to the terms and conditions
hereof shall have any force or effect unless the same is in writing and
validly executed by the parties hereto.
(b) GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the State of Illinois. The parties hereto
consent and submit to the jurisdiction of any local, state or federal court
located in ▇▇▇▇ County, Illinois for purposes of resolving any disputes
arising hereunder and said courts shall have the exclusive jurisdiction to
adjudicate the rights and obligations of the parties arising out of or
relating in any manner to this Lease. In the event that it becomes
necessary to bring legal action to enforce any of the provisions of this
Lease, the prevailing party shall, in addition to any other rights at law
or in equity, be entitled to recover its expenses of such action,
including, without limitation, attorneys' fees and expenses, from the
nonprevailing party.
(c) WAIVER. Except to the extent specifically set forth herein, no
waiver, forbearance or failure by any party of its right to enforce any
provision of this Lease shall constitute a waiver or estoppel of such
party's right to enforce any other provision of this Lease or such party's
right to enforce such provision in the future.
(d) NOTICES. Any notice or other communication required or
permitted under this Lease shall be valid and effective only if given by
written instrument that is personally delivered or sent by telegraph,
telecopier, or registered or certified mail, postage prepaid, addressed in
accordance with the addresses set forth in the preamble of this Lease. Any
party may change the address at which it is to be given notice by giving
notice to the other party as provided in this subparagraph 13(d).
(e) SUCCESSORS AND ASSIGNS. This Lease shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
(f) HEADINGS. The paragraph headings in this Lease are for
reference purposes only and are not intended to limit or restrict, expand
or otherwise affect the meaning or interpretation of the provisions of this
Lease.
(g) COUNTERPARTS. This Lease may be executed in one or more coun-
terparts which, when taken together, shall constitute one and the same
Agreement. Any party may execute and deliver this Lease by executing and
delivering any such counterpart.
IN WITNESS WHEREOF, the parties have duly executed this Equipment
Lease as of the date first above written.
BPI Packaging Technologies, Inc.
By: _____________________________
Title:___________________________
DGJ, L.L.C.
By:___________________________
Title:__________________________
SCHEDULE A
----------
LEASED EQUIPMENT
----------------
[Insert detailed description
of assets including serial numbers]
___________________________
___________________________
___________________________
EXHIBIT E
---------
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of January 27, 1999 between BPI
PACKAGING TECHNOLOGIES, INC., a Delaware corporation having its chief
executive office and principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and DGJ, L.L.C., a
Delaware limited liability company with its principal place of business at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively,
the "Secured Party").
1. GRANT OF SECURITY INTEREST, ETC.
The Company hereby grants to the Secured Party a continuing security
interest in and lien on the properties, assets, and rights of the Company
set forth on Exhibit A attached hereto and incorporated herein by this
reference, wherever located and whether now owned or hereafter acquired or
arising, and all proceeds and products thereof (all such properties,
assets, rights, proceeds and products hereinafter sometimes called,
collectively, the "Collateral").
2. OBLIGATIONS SECURED.
The Collateral hereunder constitutes and will constitute continuing
security for all the obligations of the Company to the Secured Party and
its successors and assigns, now existing or hereafter arising, direct or
indirect, absolute or contingent, due or to become due, matured or
unmatured, liquidated or unliquidated, arising by contract, operation of
law or otherwise, including, without limitation, all obligations to make
payments now existing or hereafter arising under the Securities Purchase
Agreement, dated as of January 27, 1999, between the Company and the
Secured Party (the "Securities Purchase Agreement"), the notes executed and
delivered by the Company to the Secured Party in the principal amount of
$3,200,000 in connection therewith (the "Note"), in each case as such
instrument is originally executed on the date hereof or as modified,
amended, supplemented or extended, and all obligations of the Company to
the Secured Party, arising out of any extension, refinancing or refunding
of any of the foregoing obligations (all of the foregoing hereinafter
collectively referred to as the "Obligations").
3. PRO-RATA SECURITY, APPLICATION OF PROCEEDS OF COLLATERAL.
All amounts owing with respect to the Obligations shall be secured
pro rata by the Collateral without distinction as to whether some
Obligations are then due and payable and other Obligations are not then
due and payable. Upon any realization upon the Collateral by the Secured
Party, whether by receipt of insurance proceeds pursuant to Section 7 or
otherwise, the Company and the Secured Party agree that the proceeds
thereof shall be applied (a) first, to the payment of expenses incurred
with respect to maintenance and protection of the Collateral pursuant to
Section 4 and of expenses incurred pursuant to Section 11 with respect to
the sale of or realization upon, any of the Collateral or the perfection,
enforcement or protection of the rights of the Secured Party (including
reasonable attorneys' fees and expenses of every kind, including, without
limitation, reasonable allocated costs of staff counsel) and (b) second, to
all amounts of interest, expenses, and fees outstanding which constitute
the Obligations. Proceeds applied to the payment of the Obligations shall
be applied first to interest, expenses, and fees due with respect to the
Obligations and then to the principal amounts of the Obligations. The
Company and the Secured Party agree that all amounts received with respect
to any of the Obligations, whether by realization on the Collateral or
otherwise, shall be applied to the payment of the Obligations in accordance
with the provisions of this Section 3.
4. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
(a) REAL PROPERTY. The Company represents to the Secured Party
that the real property listed on SCHEDULE 4(a) hereto constitutes all of
the real property that the Company owns or leases. The Company agrees to
notify the Secured Party of any other real property that the Company may
hereafter acquire or lease. The Company agrees that it will execute and
deliver to the Secured Party mortgages and other instruments and file the
same in the appropriate recording offices at such times as any mortgageable
right, title, or interest is acquired in the future by the Company in any
other real property. All such mortgages and other instruments shall secure
all of the Obligations pro rata and shall be on terms and conditions
satisfactory to the Secured Party as evidenced by its written consent
thereto.
(b) CERTIFICATES OF TITLE; LOCATION OF COLLATERAL. The Company
represents and warrants to the Secured Party that Collateral for which
certificates of title are required will be titled in the jurisdictions
listed in SCHEDULE 4(b) attached hereto. Collateral for which no
certificate of title is required but for which registration under motor
vehicle laws is required will be registered in the jurisdictions listed in
SCHEDULE 4(b). Collateral for which no registration or certificate of
title is required will be located at the offices of the Company listed on
SCHEDULE 4(b). The Company will not permit any Collateral to be removed
from the locations specified on SCHEDULE 4(b) (except for temporary periods
in the normal and customary use thereof) without the prior written consent
of the Secured Party.
(c) LOCATION OF CHIEF EXECUTIVE OFFICE. The Company represents
to the Secured Party that the location of the Company's chief executive
office and the location where the books and records of the Company are kept
is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Company
agrees that it will not change the location of its chief executive office
or the location where its books and records are kept and will advise the
Secured Party as to any change in the location (except for temporary
changes in the normal and customary use thereof) of any property comprising
a part of the Collateral.
(d) OWNERSHIP OF COLLATERAL.
(i) The Company represents that it is the owner of the
Collateral free from any adverse lien, security interest or encumbrance,
except as permitted by the Securities Purchase Agreement.
(ii) Except for the security interests herein granted and except
as permitted in the Securities Purchase Agreement as originally executed,
the Company shall be the owner of the collateral free of any lien,
security interest, or encumbrance and the Company shall defend the same
against all claims and demands of all persons at any time claiming the same
or any interest therein adverse to the Secured Party. Except as otherwise
permitted in the Securities Purchase Agreement, the Company shall not
pledge, mortgage, or create or suffer to exist a security interest in the
Collateral in favor of any person other than the Secured Party.
(e) SALES OR DISPOSITION OF COLLATERAL. Except as permitted by
the Securities Purchase Agreement as originally executed, and except for
sales from inventories of finished goods in the ordinary course of the
Company's business, the Company will not sell or offer to sell or otherwise
transfer the Collateral or any interest therein.
(f) INSURANCE. The Company shall have and maintain at all
times with respect to the Collateral such insurance as is required by the
Securities Purchase Agreement, such insurance to be payable to the Secured
Party and to the Company as their interests may appear. All policies of
insurance shall provide for ten (10) days' written minimum cancellation
notice to the Secured Party. In the event of failure to provide and
maintain insurance as herein provided, the Secured Party may, at its
option, provide such insurance, and the Company hereby promises to pay to
the Secured Party on demand the amount of any disbursements made by the
Secured Party for such purpose. The Company shall furnish to the Secured
Party certificates or other evidence satisfactory to the Secured Party of
compliance with the foregoing insurance provisions. The Secured Party may
act as attorney for the Company in obtaining, adjusting, settling, and
canceling such insurance and endorsing any drafts. Any amounts collected
or received under any such policies shall be applied by the Secured Party
to the Obligations in accordance with the provisions of Section 3, or at
the option of the Secured Party, the same may be released to the Company,
but such application or release shall not cure or waive any default
hereunder and no amount so released shall be deemed a payment on any
Obligation secured hereby.
(g) MAINTENANCE OF COLLATERAL. The Company will keep the
Collateral in good order and repair and will not use the same in violation
of law or any policy of insurance thereon. The Secured Party may inspect
the Collateral at any reasonable time, wherever located. Except as
otherwise provided in Section 7.4 of the Securities Purchase Agreement, the
Company will pay promptly when due all taxes and assessments upon the
Collateral or for its use or operation or upon this agreement. In its
discretion, the Secured Party may discharge taxes and other encumbrances at
any time levied or placed on the Collateral which remain unpaid in
violation of the Securities Purchase Agreement as originally executed, make
repairs thereof and pay any necessary filing fees. The Company agrees to
reimburse the Secured Party on demand for any and all expenditures so made,
and until paid the amount thereof shall be a debt secured by the
Collateral. The Secured Party shall have no obligation to the Company to
make any such expenditures, nor shall the making thereof relieve the
Company of any default.
(h) FURTHER ASSURANCE BY THE COMPANY. The Company agrees to
execute and deliver to the Secured Party from time to time at its request
all documents and instruments, including financial statements, and to
take all action as the Secured Party may reasonably deem necessary or
proper to perfect or otherwise protect the security interest and lien
created hereby.
5. CONCERNING FINANCING STATEMENTS.
The Company shall do, make, execute, and deliver all such additional
and further acts, things, deeds, assurances and instruments the Secured
Party may reasonably require more completely to vest in and assure to the
Secured Party its rights under or in any of the Collateral, including
without limitation execution and delivery of financing statements which the
Secured Party deems appropriate to perfect and continue the security
interests hereby granted; and the Company irrevocably authorizes the
Secured Party or its designee, at the Company's expense, to file such
financing statements with respect hereto, with or without the Company's
signature, as the Secured Party may deem appropriate, and appoint the
Secured Party as the Company's attorney-in-fact to execute such financing
statements. The Company expressly agrees to deliver to the Secured Party
any and all certificates of title, together with fully completed
applications for title, issued under any motor vehicle registration or like
law with respect to any Collateral.
6. SECURITIES AS COLLATERAL.
The Secured Party may at any time, at its option, transfer to itself
or any nominee any securities constituting Collateral, receive any income
thereon and hold such income as additional Collateral or apply it to the
Obligations. Whether or not the Obligations are due, the Secured Party may
demand, ▇▇▇ for, collect, or make any settlement or compromise it deems
desirable with respect to the Collateral. Regardless of the adequacy of
the Collateral or any other security for the Obligations, any deposits or
other sums credited by or due from the Secured Party to the Company may at
any time be applied to or set off against any of the Obligations. The
Secured Party and all present and future holders of and participants in the
Obligations hereby agree that the amount of any such setoff shall be
applied as provided in Section 3 hereof.
7. REMEDIES.
Upon the occurrence of any Default or Event of Default as defined in
the Securities Purchase Agreement (whether or not any acceleration of the
maturity of the amount due in respect of any of the Obligations shall have
occurred), to the fullest extent permitted by applicable law:
(a) The Secured Party shall have, in addition to all other
rights and remedies given it by any instrument or other agreement
evidencing, or executed and delivered in connection with, any of the
Obligations and otherwise allowed by law, the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in any
jurisdiction in which the Collateral may be located, and without limiting
the generality of the foregoing, the Secured Party may, without (to the
fullest extent permitted by law) demand of performance or advertisement or
notice of intention to sell or of time or place of sale or of redemption or
other notice or demand whatsoever, (except that the Secured Party shall
give to the Company at least five (5) days' notice of the time and place of
any proposed sale or other disposition), all of which are hereby expressly
waived to the fullest extent permitted by law, sell at public or private
sale or otherwise realize upon, at the location designated by the Secured
Party, the whole or from time to time any part of the Collateral in or upon
which the Secured Party shall have a security interest or lien hereunder,
or any interest which the Company may have therein, and after deducting
from the proceeds of sale or other disposition of the Collateral all
expenses (including all reasonable expenses for legal services) as provided
in Section 11, shall apply the residue of such proceeds toward the payment
of the Obligations in accordance with Section 3 of this Agreement, the
Company remaining liable for any deficiency remaining unpaid after such
application. If notice of any sale or other disposition is required by law
to be given to the Company, the Company hereby agrees that a notice given
as provided herein shall be reasonable notice of such sale or other
disposition. The Company also agrees to assemble the Collateral at such
place or places as the Secured Party reasonably designates by written
notice. At such sale or other disposition the Secured Party may itself,
and any other person or entity owed any Obligation may itself, purchase the
whole or any part of the Collateral sold, free from any right of redemption
on the part of the Company, which right is hereby waived and released to
the fullest extent permitted by law.
(b) Furthermore, without limiting the generality of any of the
rights and remedies conferred upon the Secured Party under Section 7(a)
hereof, the Secured Party to the fullest extent permitted by law, may enter
upon the premises of the Company, exclude the Company therefrom and take
immediate possession of the Collateral, either personally or by means of a
receiver appointed by a court therefor, using all necessary force to do so,
and may, at its option, use, operate, manage and control the Collateral in
any lawful manner and may collect and receive all rents, income, revenue,
earnings, issues and profits therefrom, and may maintain, repair,
renovate, alter, or remove the Collateral as the Secured Party may
determine in its discretion, and any such moneys so collected or received
by the Secured Party shall be applied to, or may be accumulated for
application upon, the Obligations in accordance with this Agreement.
The Secured Party agrees that it will give notice to the Company of any
enforcement action taken by it pursuant to this Section 7 promptly after
commencing such action.
8. MARSHALLING.
The Secured Party shall not be required to marshal any present or
future security for (including but not limited to this Agreement and the
Collateral subject to the security interest created hereby), or guaranties
of, the Obligations or any of them, or to resort to such security or
guaranties in any particular order; and all of its rights hereunder and in
respect of such securities and guaranties shall be cumulative and in
addition to all other rights, however existing or arising. To the extent
that it lawfully may, the Company hereby agrees that it will not invoke any
law relating to the marshalling of collateral which might cause delay in or
impede the enforcement of the Secured Party's rights under this Agreement
or under which any of the Obligations is outstanding or by which any of the
Obligations is secured or guaranteed, and to the extent that it lawfully
may the Company hereby irrevocably waives the benefits of all such laws.
9. COMPANY'S OBLIGATIONS NOT AFFECTED.
To the extent permitted by law, the obligations of the Company under
this Security Agreement shall remain in full force and effect without
regard to, and shall not be impaired by (a) any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or the
like of the Company, to the extent permitted by law; (b) any exercise or
nonexercise, or any waiver, by the Secured Party of any right, remedy,
power or privilege under or in respect of any of the Obligations or any
security therefor (including this Agreement); (c) any amendment to or
modification of this Agreement or any instrument evidencing any of the
Obligations or pursuant to which any of them were issued; (d) any amendment
to or modification of any instrument or agreement (other than this
Agreement) securing any of the Obligations; or (e) the taking of additional
security for or any guaranty of any of the Obligations or the release or
discharge or termination of any security or guaranty for any of the
Obligations; and whether or not the Company shall have notice or knowledge
of any of the foregoing.
10. NO WAIVER.
No failure on the part of the Secured Party to exercise, and no
delay in exercising, any right, remedy or power hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise by the Secured
Party of any right, remedy or power hereunder preclude any other or future
exercise of any other right, remedy or power. Each and every right,
remedy and power hereby granted to the Secured Party or the future holders
of any of the Obligations or allowed to any of them by law or other
agreement, including without limitation the Securities Purchase Agreement,
the Note, or any other document evidencing security therefor, shall be
cumulative and not exclusive of any other and, subject to the provisions of
this Agreement, may be exercised by the Secured Party or the future holders
of any of the Obligations from time to time.
11. EXPENSES.
The Company agrees to pay, on demand, all reasonable costs and
expenses (including reasonable attorneys' fees and expenses for legal
services of every kind, including, without limitation, reasonable allocated
costs of staff counsel) of the Secured Party incidental to the sale of, or
realization upon, any of the Collateral or in any way relating to the
perfection, enforcement or protection of the rights of the Secured Party
hereunder. The Secured Party may at any time apply to the payment of all
such costs and expenses all moneys of the Company or other proceeds arising
from its possession or disposition of all or any portion of the Collateral.
12. CONSENTS, AMENDMENTS, WAIVERS.
Any term of this Agreement may be amended and the performance or
observance by the Company of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a written instrument signed by the Company and the
Secured Party.
13. GOVERNING LAW.
Except as otherwise required by the laws of any jurisdiction in
which any Collateral is located, this Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
14. PARTIES IN INTEREST.
All terms of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto, including without limitation any future holder of the
Note and any institutional lender who becomes a participant in or holder of
any of the Obligations, by amendment to the Securities Purchase Agreement
or otherwise, provided that the Company may not assign or transfer its
rights hereunder without the prior written consent of the Secured Party and
the Secured Party may not assign or transfer its rights hereunder unless
the assignee confirms in writing its agreement to be bound by the
provisions of this Agreement.
15. TERMINATION.
Upon payment in full of the principal balance of the Note and all
accrued unpaid interest thereon in accordance with its terms, this
Agreement shall terminate and the Company shall be entitled to the return,
at the Company's expense, of such Collateral in the possession or control
of the Secured Party as has not theretofore been disposed of pursuant to
the provisions hereof.
16. NOTICES.
Except as otherwise expressly provided herein, all notices and other
communications made or required to be given pursuant to this Agreement
shall be in writing and mailed by first-class mail, postage prepaid, or
sent by telegraph or telex and confirmed by letter, addressed as follows:
Notices in writing to the Purchaser, other than notices of routine requests
and like administrative matters, shall be directed as follows:
(a) if to the Company at:
BPI Packaging Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone Number: 508/▇▇▇-▇▇▇▇
Facsimile Number: 508/822-6872
or at such other addresses for notice as the Company shall last have
furnished in writing to the Secured Party;
(b) if to the Secured Party at:
DGJ, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such address for notice as the Secured Party shall last have
furnished in writing to the person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand to a responsible
officer of the party to which it is directed, at time of the receipt
thereof by such officer, (ii) if sent by registered or certified
first-class mail, postage pre-paid, three business days after the posting
thereof, and (iii) if sent by telex or cable, at the time of dispatch
thereof, if in normal business hours in the state where received or
otherwise at the opening of business on the following business day.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed as an instrument under seal by their authorized
representatives as of the date first written above.
BPI PACKAGING TECHNOLOGIES, INC.
By:__________________________________
Title: ________________________
DGJ, L.L.C.
By: ________________________________
Title: ________________________
SCHEDULE 4(A) TO SECURITY AGREEMENT
-----------------------------------
Real Property
NONE
SCHEDULE 4(B) TO SECURITY AGREEMENT
-----------------------------------
Location of Collateral
EXHIBIT A TO SECURITY AGREEMENT
-------------------------------
Description of Collateral
All assets of any kind or type, now existing or hereafter arising, whether
now owned or whereafter acquired, and wherever located, including but not
limited to, all inventory, accounts, claims for money, instruments,
documents, chattel paper, goods, equipment and general intangibles,
fixtures, investment property and any and all additions, accessions,
replacements and substitutions to or for any of the above and all proceeds
and products of the above, and including the following:
(a) all inventory of the Company;
(b) all accounts of the Company;
(c) all claims for moneys and contract rights of the Company
that are due or are to become due;
(d) all instruments, negotiable or other documents (including,
without limitation, documents of title), policies and certificates of
insurance, money, chattel paper, deposits, warehouse receipts and things in
action of the Company;
(e) all goods, equipment and machinery of the Company
(including, without limitation, motor vehicles and aircraft), together with
any and all attachments, parts, repairs and accessories now or hereafter
affixed thereto or used in connection therewith, and any warranty claims or
settlements or resolutions for defective items;
(f) all general intangibles of the Company, including, without
limitation, licenses, trademarks, corporate and trade names, copyrights,
goodwill, patents and patent applications; and
(g) any and all additions, accessions, replacements and
substitutions to or for any of the foregoing and any and all proceeds and
products of any of the foregoing.
EXHIBIT F
---------
PATENT AND TRADEMARK SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of January 27, 1999 between BPI
PACKAGING TECHNOLOGIES, INC., a Delaware corporation having its chief
executive office and principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Grantor"), and DGJ, L.L.C., a
Delaware limited liability company, with its principal place of business at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively,
the "Secured Party"). Capitalized terms not otherwise defined herein have
the meanings set forth in that certain Securities Purchase Agreement, dated
as of January 27, 1999 between Grantor and Secured Party (as amended,
modified, supplemented or restated from time to time, the "Securities
Purchase Agreement").
R E C I T A L S:
----------------------
WHEREAS, pursuant to the Securities Purchase Agreement, Grantor is
granting a security interest to the Secured Party in certain collateral,
including, without limitation, the patents identified on Schedule A hereto
(the "Subject Patents") and trademarks identified on Schedule A hereto (the
"Subject Trademarks").
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged, Grantor and the Secured Party hereby agree as fol-
lows:
1. GRANT OF SECURITY INTEREST. As security for the prompt and com-
plete payment and performance in full of the Obligations, as such term is
defined in the Security Agreement, by and among the Grantor and the Secured
Party, dated of even date herewith, Grantor hereby assigns, pledges, and
transfers to the Secured Party, and grants to the Secured Party, for the
benefit of the Secured Party, a security interest in and continuing lien
upon all of Grantor's right, title, and interest in the Subject Patents and
the Subject Trademarks, together with the following ("Proceeds"): all
royalties, income, payments, claims, damages, and proceeds of suit,
including any claim of Grantor against third parties for any (i) past,
present or future infringement or dilution of any Subject Patent or any
Subject Trademark or (ii) injury to the goodwill associated with any
Subject Trademark or Subject Trademark registration) whether now owned or
existing or hereafter acquired or arising, and wherever located.
2. REPRESENTATIONS AND WARRANTIES. Grantor hereby represents and
warrants to the Secured Party:
(a) Schedule A hereto contains a true, accurate and complete list
of all of Grantor's patent registrations issued by, and patent applications
filed with, the United States Patent and Trademark Office which are, in
each case, material to Grantor's business.
(b) Schedule B hereto contains a true, accurate and complete list
of all of Grantor's trademark and service ▇▇▇▇ registrations issued by, and
trademark and service ▇▇▇▇ applications filed with, the United States
Patent and Trademark Office which are, in each case, material to Grantor's
business.
3. COVENANTS. Grantor covenants and agrees as follows:
(a) It will notify the Secured Party no later than ninety (90) days
after it (i) acquires any United States patent or files any application
therefor which is not included on Schedule A hereto or (ii) acquires any
United States registered trademark or service ▇▇▇▇ or files any application
therefor which is not included on Schedule A hereto. If the Secured Party
so requests, Grantor will deliver to the Secured Party an Amendment to
Schedule A describing such letter patent, trademark, service ▇▇▇▇ or
application and file this Agreement, together with such Amendment to such
Schedule, with the United States Patent and Trademark Office.
(b) Upon the written request of Secured Party, and at the sole
expense of the Grantor, Grantor shall promptly and duly execute and deliver
any and all additional documents, including, without limitation, UCC-1
financing statements, and take such further action as Secured Party may
reasonably deem desirable to obtain the full benefit of this Agreement.
4. INCORPORATION OF SECURITIES PURCHASE AGREEMENT.
Grantor hereby acknowledges and affirms that the rights and remedies
of the Secured Party with respect to the lien on and security interest in
the Subject Patents and the Subject Trademarks made and granted hereby are
more fully set forth in the Securities Purchase Agreement, the terms and
provisions of which are incorporated herein by this reference as if fully
set forth herein.
5. MISCELLANEOUS.
(a) This Agreement may not be changed, waived, or terminated except
in accordance with the amendment provisions of the Securities Purchase
Agreement.
(b) This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officer as of the date
first written above.
BPI PACKAGING TECHNOLOGIES, INC.
By: ______________________________
Title: _____________________
DGJ, L.L.C.
By: ______________________________
Title: _____________________
STATE OF ILLINOIS )
) ss.
COUNTY OF ▇▇▇▇ )
On the 27th day of January, 1999, before me personally came
_______________, personally known to me to be the person described in and
who executed the foregoing instrument as ________________________ of BPI
PACKAGING TECHNOLOGIES, INC., the corporation described in and which
executed the foregoing instrument; that the said instrument was signed on
behalf of said corporation by order of its Board of Directors; that he
signed his name thereto by like order; and that he acknowledged said
instrument to be the free act and deed of said corporation.
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Notary Public
Seal
PATENT AND TRADEMARK SECURITY AGREEMENT
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SCHEDULE A
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GRANTOR: BPI PACKAGING TECHNOLOGIES, INC..
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I. U.S. PATENTS
Date
Title Inventor Patent Issued
II. U.S. PATENT APPLICATIONS
Date
Title Inventor Patent Filed
PATENT AND TRADEMARK SECURITY AGREEMENT
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SCHEDULE B
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GRANTOR: BPI PACKAGING TECHNOLOGIES, INC..
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I. U.S. REGISTERED TRADEMARKS AND SERVICE MARKS
Date
▇▇▇▇ Class(es) Reg # Issued
II. U.S. TRADEMARK AND SERVICE ▇▇▇▇ APPLICATIONS
Date
▇▇▇▇ Class(es) Filing # Filed