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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended Commission File No.
DECEMBER 31, 1999 001-08568
IGI, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 01-0355758
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
WHEAT ROAD AND LINCOLN AVENUE, BUENA, NJ 08310
(Address of principal executive offices) (Zip Code)
(856)-697-1441
Registrant's telephone number, including area code
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Common Stock ($.01 par value)
Registered on the American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The aggregate market value of the Registrant's Common Stock, par value $.01 per
share, held by non-affiliates of the Registrant at March 27, 2000, as computed
by reference to the last trading price of such stock, was approximately
$15,900,000.
The number of shares of the Registrant's Common Stock, par value $.01 per share,
outstanding at March 27, 2000 was 10,163,126 shares.
Documents Incorporated by Reference: Portions of the Registrant's definitive
proxy statement to be filed with the Commission on or before April 29, 2000 are
incorporated herein by reference in Part III.
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PART I
ITEM 1. BUSINESS
IGI, Inc. ("IGI" or the "Company") was incorporated in Delaware in 1977.
Its executive offices are at Wheat Road and Lincoln Avenue, Buena, New Jersey.
The Company is a diversified company engaged in three business segments:
- Consumer Products Business - production and marketing of cosmetics
and skin care products,
- Companion Pet Products Business - production and marketing of
companion pet products such as pharmaceuticals, nutritional
supplements and grooming aids, and
- Poultry Vaccines Business - production and marketing of poultry
vaccines and other related products.
In December 1995, IGI distributed its ownership of its majority-owned
subsidiary, Novavax, Inc. ("Novavax"), in the form of a tax-free stock dividend,
to IGI stockholders. Novavax had conducted the biotechnology business segment of
IGI, which is reported as a discontinued operation in the five year summary of
selected financial data. In connection with the distribution, the Company paid
Novavax $5,000,000 in return for a fully paid-up, ten-year license (the "IGI
License Agreement") entitling it to the exclusive use of the Novasome(R) lipid
vesicle encapsulation and certain other technologies ("Microencapsulation
Technologies" or collectively the "Technologies") in the fields of (i) animal
pharmaceuticals, biologicals and other animal health products; (ii) foods, food
applications, nutrients and flavorings; (iii) cosmetics, consumer products and
dermatological over-the-counter and prescription products (excluding certain
topically delivered hormones); (iv) fragrances; and (v) chemicals, including
herbicides, insecticides, pesticides, paints and coatings, photographic
chemicals and other specialty chemicals, and the processes for making the same
(collectively, the "IGI Field"). IGI has the option, exercisable within the last
year of the ten-year term, to extend the exclusive license for an additional
ten-year period for $1,000,000. Novavax has retained the right to use the
Technologies for applications outside the IGI Field, mainly human vaccines and
pharmaceuticals.
BUSINESS SEGMENTS
The following table sets forth the revenue and operating profit of each of
the Company's three business segments for the periods indicated:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUE
Consumer Products $ 6,938 $ 5,839 $ 5,255
Companion Pet Products 13,595 12,513 12,444
Poultry Vaccines 14,061 14,843 16,644
-------- -------- --------
$ 34,594 $ 33,195 $ 34,343
======== ======== ========
OPERATING PROFIT (LOSS)*
Consumer Products $ 3,913 $ 3,688 $ 1,473
Companion Pet Products 3,850 2,844 2,577
Poultry Vaccines (1,041) (517) 1,202
</TABLE>
* Excludes corporate expenses of $5,216,000, $6,925,000, and $5,032,000, for
1999, 1998 and 1997, respectively. (See Note 17 of the Consolidated Financial
Statements.)
CONSUMER PRODUCTS BUSINESS
IGI's Consumer Products business is primarily focused on the continued
commercialization of the Microencapsulation Technologies for skin care
applications. These efforts have been directed toward the development of high
quality skin care products that the Company markets through collaborative
arrangements with major cosmetic and consumer products companies. IGI plans to
continue to work with cosmetics, food, personal care products, and OTC
pharmaceutical companies for commercial applications of the Microencapsulation
Technologies. Because of their ability to encapsulate skin protective agents,
oils, moisturizers, shampoos, conditioners, skin cleansers and fragrances and to
provide both a controlled and a sustained release of the encapsulated materials,
Novasome(R) lipid vesicles are well-suited to cosmetics and consumer product
applications. For example, Novasome(R) lipid vesicles may be used to deliver
moisturizers and other active ingredients to the deeper layers of the skin or
hair follicles for a prolonged period; to deliver or preserve ingredients which
impart favorable cosmetic characteristics described in the cosmetics industry as
"feel," "substantivity," "texture" or "fragrance"; to deliver normally
incompatible ingredients in the same preparation, with one ingredient being
shielded or protected from the other by encapsulation within the Novasome(R)
vesicle; and to deliver pharmaceutical agents.
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The Company produces Novasome(R) vesicles for various skin care products,
including those marketed by Estee Lauder such as "All You Need", "Re-Nutriv",
"Virtual Skin", "100% Time Release Moisturizer", "Resilience" and others. Sales
to Estee Lauder accounted for $4,237,000 or 13% of 1999 sales, $3,494,000 or 11%
of 1998 sales, and $2,408,000 or 7% of 1997 sales. The Company also markets a
skin care product line to physicians through a distributor under the Company's
WellSkin(TM) brand.
Principal competitors to the Company's WellSkin(TM) product line include
NeoStrata, Inc. and MD Formulations, a division of Allergen. The Company's
Microencapsulation Technologies indirectly compete as a delivery system with,
among others, Collaborative Labs, The Liposome Company, Lipo Chemicals and
Advanced Polymer Systems.
In 1996, the Company entered into a license and supply agreement with
Glaxo Wellcome, Inc. ("Glaxo"). The agreement granted Glaxo exclusive rights to
market the WellSkin(TM) product line in the United States to physicians. Under
the terms of the agreement, IGI manufactured these products for Glaxo. This
agreement provided for Glaxo to pay royalties to IGI based on sales and pay a
$1,000,000 advance royalty to IGI in 1997 of which $300,000 was non-refundable.
The advance royalty was recorded as deferred income. In December 1998, the
license and supply agreement with Glaxo was terminated. The termination
agreement provided that IGI would purchase all of Glaxo's inventory and
marketing materials related to the WellSkin(TM) line in exchange for a $200,000
promissory note, due and payable in December 1999 and bearing interest at a rate
of 11%. The Company also issued a promissory note to Glaxo for $608,000,
representing the unearned portion of the advance royalty in exchange for Glaxo
transferring all rights to the WellSkin(TM) trademark to IGI. This note bears
interest at a rate of 11%, and to date the Company has paid $200,000 and is to
pay $200,000 and $208,000 in June 2000 and December 2000, respectively. In
connection with the Agreement termination, but unrelated to the advance royalty,
IGI reduced cost of sales by $404,000 in 1998 for amounts owed to Glaxo that
were forgiven. Glaxo royalties recognized as income were $0, $326,000 and
$150,000 in 1999, 1998 and 1997, respectively.
In December 1998, the Company entered into a ten-year supply and sales
agreement with Genesis Pharmaceutical, Inc. ("Genesis") for the marketing and
distribution of the Company's WellSkin(TM) line of skin care products. The
agreement provided that Genesis will pay the Company a $1,000,000 trademark and
technology transfer fee, in four equal annual payments, which will be recognized
as revenue over the life of the agreement. In addition, Genesis will pay the
Company a royalty on its net sales with certain guaranteed minimum royalty
amounts. Genesis also purchased WellSkin(TM) inventory and marketing materials
for $200,000, which were previously purchased by the Company from Glaxo.
In March 1997, IGI granted Kimberly Clark ("Kimberly") the worldwide
rights to use certain patents and technologies in the industrial hand care and
cleaning products field. Upon signing of the agreement, Kimberly paid IGI a
$100,000 license fee that was recognized as revenue by the Company. The
agreement requires Kimberly to make royalty payments based on quantities of
material produced. The Company is also guaranteed minimum royalties over the
term of the agreement. In both 1999 and 1998, the Company recognized $133,000 as
revenue as a result of the agreement. In July 1999, the Company signed a new
exclusive license agreement with Kimberly which replaced the agreement dated
March 1997. The July 1999 agreement granted Kimberly an exclusive license
pertaining to patents and improvements within the fields of industrial hand care
and cleansing products for non-retail markets. The new agreement will be in
effect from July 29, 1999 through July 30, 2000. Under the new agreement,
Kimberly paid the Company consideration of $120,000, which is being recognized
over the term of the agreement. The Company recognized $60,000 of this income
during 1999.
The Company entered into a license agreement with Johnson & Johnson
Consumer Products, Inc. ("J&J") in 1995. The agreement provided J&J with a
license to produce and sell Novasome(R) microencapsulated retinoid products and
provides for the payment of royalties on net sales of such products. J&J began
selling such products and making royalty payments in the first quarter of 1998.
The Company recognized $1,210,000 and $433,000 of royalty income related to this
agreement for the years ended December 31, 1999 and 1998, respectively.
In April 1998, the Company entered into a research and development
agreement with National Starch and Chemical Company ("National Starch") to
evaluate Novasome(R) technology. The agreement provided for a minimum of at
least six, or up to as many as nine monthly payments commencing in June 1998
plus $100,000 for the purchase of a patented Novamix(R) machine. The Company
recognized $60,000 and $210,000 of income in 1999 and 1998, respectively,
related to the National Starch agreement. The agreement ended in June of 1999.
In August 1998, the Company granted Johnson & Johnson Medical ("JJM"), a
division of Ethicon, Inc., worldwide rights for the use of the Novasome(R)
technology for certain products and distribution channels. The agreement
provides for an up-front license fee of $150,000, and future royalty payments
based on JJM's sales of licensed products. The Company is guaranteed minimum
royalties over the ten-year term of the agreement. In 1999, the Company
recognized $126,000 of royalty income.
The Company entered into an exclusive Supply Agreement (the "Supply
Agreement") dated September 30, 1997 with IMX Corporation ("IMX"). Under the IMX
agreement, the Company agreed to manufacture and supply 100% of IMX's
requirements for certain products at prices stipulated in the exclusive Supply
Agreement, subject to renegotiation subsequent to 1998. The Company is currently
involved in discussions with IMX concerning possible modifications to the Supply
Agreement as the Company has determined that it will not supply the products
stipulated by the Supply Agreement but may supply certain other products based
on negotiations with IMX. Under the Supply Agreement the Company received
271,714 shares of restricted Common Stock of IMX. These shares are restricted
both by governmental and contractual requirements and the Company is unsure if
or when it will be able to
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sell these shares. Through December 31, 1999, the Company had not yet recognized
income related to this agreement. See Note 2 "Investments" of the Consolidated
Financial Statements.
The Company recognized a total of $1,869,000, $1,200,000 and $150,000 in
1999, 1998 and 1997, respectively, of licensing and royalty income which is
included in the Consumer Products segment revenues. Revenues from the Company's
Consumer Products segment were principally based on formulations using the
Novasome(R) Microencapsulation Technology. Total Consumer Product revenues were
approximately 20% of the Company's total revenues in 1999, 17% in 1998 and 15%
in 1997.
COMPANION PET PRODUCTS BUSINESS
The Company sells its Companion Pet Products to the veterinarian market
under the EVSCO Pharmaceuticals trade name and to the over-the-counter ("OTC")
pet products market under the Tomlyn and Luv'Em labels.
The EVSCO line of veterinary products is used by veterinarians in caring
for dogs and cats, and includes pharmaceuticals such as antibiotics,
anti-inflammatories and cardiac drugs, as well as nutritional supplements,
vitamins, insecticides and diagnostics. Product forms include gels, tablets,
creams, liquids, ointments, powders, emulsions, shampoos and diagnostic kits.
EVSCO also produces professional grooming aids for dogs and cats.
EVSCO products are manufactured at the Company's facility in Buena, New
Jersey and are sold through distributors to veterinarians. The facility operates
in accordance with Good Manufacturing Practices ("GMP") of the federal Food and
Drug Administration ("FDA") (See "Government Regulation"). Principal competitors
of the EVSCO product line include DVM, Allerderm, Schering Plough Animal Health
and Pfizer Animal Health. The Company competes on the basis of price, marketing,
customer service and product qualities.
The Tomlyn product line includes pet grooming, nutritional and therapeutic
products, such as shampoos, grooming aids, vitamin and mineral supplements,
insecticides and OTC medications. The products are manufactured at the Company's
facility in Buena, New Jersey, and are sold directly to pet superstores and
through distributors to independent merchandising chains, shops and kennels.
Principal competitors of the Tomlyn product line include Four Paws Products, Bio
Groom Products, Lambert Kay, a division of Carter-Wallace, Eight In One Pet
Products, Inc., and Cardinal Labs, Inc.
Most of the Company's veterinary products are sold through distributors.
Sales of veterinary products accounted for approximately 39% of the Company's
revenues in 1999, 38% in 1998 and 36% in 1997.
POULTRY VACCINES BUSINESS
The Company produces and markets poultry vaccines manufactured by the
chick embryo, tissue culture and bacteriologic methods. The Company produces
vaccines for the prevention of various chicken and turkey diseases and has more
than 60 vaccine licenses granted by the United States Department of Agriculture
("USDA"). The Company also produces and sells nutritional, anti-infective and
sanitation products used primarily by poultry producers. The Company sells these
products in the United States and over 58 other countries under the Vineland
Laboratories trade name.
The Company manufactures poultry vaccines at its USDA licensed facility in
Vineland, New Jersey and sells them, primarily through its own sales force,
directly to large poultry producers and distributors in the United States and,
through its export sales staff, to local distributors in other countries. The
sales force is supplemented and supported by technical and customer service
personnel. The Company's vaccine production in the United States is regulated by
the USDA. Sales of poultry vaccines and related products accounted for
approximately 41% of the Company's revenues in 1999, 45% in 1998 and 49% in
1997. For information relating to the adverse effect of the stop shipment order
by the USDA on the Company's poultry vaccine business, as well as other
governmental actions, see "Government Regulation" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
The Company's principal competitors in the poultry vaccine market are
Intervet America, Fort Dodge, Merial/Select and Schering Plough Animal Health.
The Company believes that it is one of the largest domestic poultry vaccine
producers. The Company competes on the basis of product performance, price,
customer service and availability.
OTHER APPLICATIONS
The versatility of the Novasome(R) lipid vesicles combined with the
Company's commercial production capabilities allows the Company to target large,
diverse markets including potential applications in the fuels industry. The
Company is seeking collaboration with others to develop its product for this
industry. The efforts for the development of fuel enhancement products require
extensive testing, evaluation and trials; therefore no assurance can be given
that commercialization of IGI's fuel additive and enhancing products will be
successful.
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INTERNATIONAL SALES AND OPERATIONS
A staff of seven persons based in Buena, New Jersey and eight individuals
based overseas handle sales of Company products outside the United States. The
Company's sales personnel and veterinarians travel abroad extensively to develop
business and support customers through local distributors. Exports consist
primarily of poultry vaccines, although the Company also exports some veterinary
pharmaceuticals and petcare products. Exports of vaccines require product
registration (i.e., licenses) by foreign authorities. The Company has
approximately 900 product registrations in over 50 countries outside the United
States and has over 800 registrations pending. The Company is seeking to expand
its international market presence. It entered the Chinese market in 1997 and
commenced product sales in Japan in 1998. The Company has obtained registrations
for six products in Brazil and commenced sales in that country in the fourth
quarter of 1999.
Mexico, Indonesia, Thailand and certain Latin American and Far Eastern
countries are important markets for the Company's poultry vaccines and other
products. These countries have experienced periods of varying degrees of
political unrest and economic and currency instability. Because of the volume of
business transacted by the Company in these areas, continuation or recurrence of
such unrest or instability could adversely affect the business of its customers,
which could adversely impact the Company's future operating results. In order to
minimize risk, the Company maintains credit insurance for the majority of its
international accounts receivable, and all sales are denominated in U.S. dollars
to minimize currency fluctuation risk. (See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources.")
Sales to international customers represented 33% of the Company's revenues
in 1999, 32% in 1998 and 35% in 1997. (See Note 14, "Export Sales" of the
Consolidated Financial Statements.)
MANUFACTURING
The Company's manufacturing operations include production and testing of
vaccines, cosmetics, dermatologics, emulsions, shampoos, gels, ointments, pills
and powders. These operations also include the packaging, bottling and labeling
of finished products and packing and shipment for distribution. On March 1,
2000, 128 employees were engaged in manufacturing operations. The raw materials
included in these products are available from several suppliers. The Company
produces quantities of Novasome(R) lipid vesicles adequate to meet its current
and foreseeable needs.
RESEARCH AND DEVELOPMENT
The Company's poultry vaccine development efforts are directed towards: 1)
developing more efficient single and multiple-component vaccines, 2) developing
vaccines to combat new diseases, and 3) incorporating Novasome(R) lipid vesicle
adjuvant into vaccines. The Company is concentrating its veterinary
pharmaceutical development efforts on the use of Novasome(R) microencapsulation
for various veterinary pharmaceutical and over-the-counter pet care products.
The Company's consumer products development efforts are directed towards
Novasome(R) encapsulation to improve performance and efficacy of fuels,
pesticides, specialty and other chemicals, biocides, cosmetics, consumer
products, flavors and dermatologic products.
In addition to its internal product development research efforts, which
involve nine employees, the Company encourages the development of products in
areas related to its present lines by making specific grants to universities,
none of which had a material financial effect on the Company in 1999, 1998 or
1997. Total product development and research expenses were $1,418,000,
$1,425,000 and $1,675,000 in 1999, 1998 and 1997, respectively.
PATENTS AND TRADEMARKS
All of the names of the Company's major products are registered in the
United States and all significant markets in which the Company sells its
products. The Company maintains various trademarks in various countries covering
certain of its products. Under the terms of the 1995 IGI License Agreement, the
Company has an exclusive ten-year license to use the Technologies licensed from
Novavax in the IGI Field. Novavax holds 44 U.S. patents and a number of foreign
patents covering the Technologies licensed to IGI.
GOVERNMENT REGULATION AND REGULATORY PROCEEDINGS
U.S. Regulatory Proceedings
From mid-1997 through most of 1998, the Company was subject to intense
governmental and regulatory scrutiny relating to the Company's shipment of some
of its poultry vaccine products without complying with certain applicable
regulatory and record keeping requirements. As a result of actions taken by the
USDA, the Company was ordered in June 1997 to stop shipment of certain of its
poultry vaccine products. In July 1997, the Company was advised that the USDA's
Office of Inspector General ("OIG") had commenced an investigation into possible
violations by the Company of the Virus Serum Toxin Act of 1914 and alleged false
statements made by the Company to the USDA's Animal and Plant Health Inspection
Service ("APHIS").
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Company Actions
Based on these events, the Company:
- engaged independent counsel to conduct an investigation of the
claimed violations;
- took corrective action to allow the Company to resume shipment of
its affected product lines;
- terminated the President and Chief Operating Officer of the Company
for willful misconduct and commenced a lawsuit against him in the
New Jersey Superior Court;
- obtained the resignation of a number of employees, including three
Vice Presidents;
- voluntarily disclosed information uncovered by its internal
investigation to the U.S. Attorney for the District of New Jersey,
including information that related to sales of poultry vaccines
which may have violated U.S. customs laws and regulations; and
- cooperated with the Securities and Exchange Commission ("SEC") in
its inquiry, initiated in April 1998, regarding the foregoing
matters.
The USDA's stop shipment order and the investigations by Federal
regulatory authorities disrupted the business of the Company during 1997, 1998
and the first quarter of 1999, and had a material adverse effect on its business
operations and its liquidity. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Settlement of U.S. Regulatory Proceedings
In March 1999, the Company reached settlement with the Departments of
Justice, Treasury and Agriculture regarding their pending investigations and
proceedings. The terms of the settlement agreement provided that the Company
enter a plea of guilty to a misdemeanor and pay a fine of $15,000 and
restitution in the amount of $10,000. In addition, the Company was assessed a
penalty of $225,000 and began making monthly payments to the Treasury Department
which will continue through the period ending October 31, 2001. The expense of
settling with these agencies was reflected in the 1998 results of operations.
The settlement does not affect the informal inquiry being conducted by the SEC,
nor does it affect possible governmental action against former employees of the
Company.
Other Pending Matters
In April 1998, the SEC advised the Company that it was conducting an
informal inquiry and requested information and documents from the Company, which
the Company has voluntarily provided to the SEC. At December 31, 1999, the
informal inquiry remained open; however, management does not expect that this
inquiry will have a material adverse effect on the financial position, cash
flows or operations of the Company.
On April 14, 1999, a lawsuit was filed in the U.S. District Court for the
Southern District of New York by Cohanzick Partners, LP, against IGI, Inc. and
certain of its present and former directors, officers and employees. The suit
which seeks approximately $420,000 in actual damages together with fees, costs
and interest, alleges violations of the securities laws, fraud, and negligent
misrepresentation concerning certain disclosures made and other actions taken by
the Company in 1996 and 1997. The Company believes that the plaintiff's
allegations are factually incorrect and legally inadequate and will defend the
lawsuit vigorously. The Company believes that an unfavorable outcome in the suit
would not have a material adverse impact upon the Company's financial condition,
although it could negatively affect the results of operations for the period in
which the matter is resolved.
The Company is not aware of any other legal proceedings which could have a
material effect upon the Company.
Government Regulations
The production and marketing of the Company's products and its research
and development activities are subject to regulation for safety, efficacy and
quality by numerous governmental authorities in the United States and other
countries. The Company's development, manufacturing and marketing of poultry
biologics are subject to regulation in the United States for safety and efficacy
by the USDA, including the Center for Veterinary Biologics ("CVB"), in
accordance with the Virus Serum Toxin Act of 1914. The development,
manufacturing and marketing of animal and human pharmaceuticals are subject to
regulation in the United States for safety and efficacy by the FDA in accordance
with the Food, Drug and Cosmetic Act.
Although the Company has now resolved these matters, from June 4, 1997
through March 27, 1998, the Company was subject to an order by the CVB to stop
distribution and sale of certain serials and subserials of designated poultry
vaccines produced by the Company's Vineland Laboratories Division. In July 1997,
the OIG advised the Company of its commencement of an investigation into alleged
violations of the Virus Serum Toxin Act and alleged false statements made by
certain now former Company personnel. In April
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1998, the Company voluntarily disclosed to the U.S. Attorney for the District of
New Jersey, as well as to the USDA and the OIG, information resulting from the
Company's internal investigation of alleged violations by certain former
officers and employees of USDA rules and regulations and of the Virus Serum
Toxin Act. (See "Legal Proceedings - Settlement of U.S. Regulatory
Proceedings.")
On March 6, 1998, the FDA concluded an inspection of the Company's EVSCO
facility in Buena, New Jersey. This resulted in the issuance of a form FDA-483
listing several "inspection observations". The FDA reemphasized its observations
on May 14, 1998 with a "Warning Letter". The Company responded in a timely
fashion to the Form-483 and to the Warning Letter, and has been advised by the
FDA compliance branch that the Company's corrective action plan appears to
address its concerns.
In the United States, pharmaceuticals are subject to rigorous FDA
regulation including pre-clinical and clinical testing. The process of
completing clinical trials and obtaining FDA approvals for a new drug is likely
to take a number of years, requires the expenditure of substantial resources and
is often subject to unanticipated delays. There can be no assurance that any
product will receive such approval on a timely basis, if at all.
In addition to product approval, the Company may be required to obtain a
satisfactory inspection by the FDA covering the manufacturing facilities before
a product can be marketed in the United States. The FDA will review the
manufacturing procedures and inspect the facilities and equipment for compliance
with applicable rules and regulations. Any material change by the Company in the
manufacturing process, equipment or location would necessitate additional review
and approval.
Whether or not FDA approval has been obtained, approval of a
pharmaceutical product by comparable governmental authorities in foreign
countries must be obtained prior to the commencement of clinical trials and
subsequent marketing of such product in such countries. The approval procedure
varies from country to country, and the time required may be longer or shorter
than that for FDA approval. Although there are some procedures for unified
filing for certain European countries, in general each country has its own
procedures and requirements.
In addition to regulations enforced by the USDA and the FDA, the Company
also is subject to regulation under the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other present and potential future federal,
state or local regulations. The Company's product development and research
involves the controlled use of hazardous materials, chemicals, viruses and
bacteria. Although the Company believes that its safety procedures for handling
and disposing of such materials comply with the standards prescribed by state
and federal regulations, the risk of accidental contamination or injury from
these materials cannot be completely eliminated. In the event of such an
accident, the Company could be held liable for any damages that result and any
such liability could exceed the resources of the Company.
EMPLOYEES
At March 1, 2000, the Company had 234 full-time employees, of whom 63 were
in marketing, sales, distribution and customer support, 128 in manufacturing, 11
in research and development, and 32 in executive, finance and administration.
The Company has no collective bargaining agreement with its employees, and
believes that its employee relations are good.
ITEM 2. PROPERTIES
The Company owns land and buildings used for offices, laboratories and
production facilities in four locations in New Jersey. The Company also owns a
warehouse and sales office space in Gainesville, Georgia. In addition, the
Company leases warehouses and poultry test facilities in New Jersey, California,
Mississippi, and Arkansas.
The Company's poultry vaccine production facilities are located in
Vineland, New Jersey, where the Company owns several buildings situated on
approximately 16 acres of land. These buildings, containing 90,000 square feet
of usable floor space, house offices and facilities used for the production of
poultry vaccines. They were constructed and expanded from time to time between
1935 and 1992.
In Buena, New Jersey, the Company owns a facility used for the production
of veterinary pharmaceuticals. The facility was built in 1971 and expanded in
1975. The facility presently contains 41,200 square feet of usable floor space
and is situated on eight acres of land. Also located in Buena are the Company's
executive and administrative offices and a 25,000 square foot facility built in
1995 which is used for production, product development, marketing, and
warehousing facility for cosmetic, dermatologic and personal care products. This
facility also houses IGI's marketing operations.
Each of the properties owned by the Company is subject to a mortgage held
by Fleet Capital Corporation and American Capital Strategies, Ltd. Except as
described above, the Company believes that its current production and office
facilities are adequate for its present and foreseeable future needs.
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ITEM 3. LEGAL PROCEEDINGS
U.S. REGULATORY PROCEEDINGS AND PENDING LITIGATION
The Company has substantially resolved the legal and regulatory issues
which arose in 1997 and 1998. For most of 1997 and 1998 the Company was subject
to intensive government regulatory scrutiny by the U.S. Departments of Justice,
Treasury and Agriculture. In June 1997, the Company was advised by APHIS of the
USDA that the Company had shipped quantities of some of its poultry vaccine
products without complying with certain regulatory and record keeping
requirements. The USDA subsequently issued an order that the Company stop
shipment of certain of its products. Shortly thereafter, in July 1997, the
Company was advised that USDA's OIG had commenced an investigation into possible
violations of the Virus Serum Toxin Act of 1914 and alleged false statements
made to APHIS.
Based upon these events, the Board of Directors caused an immediate and
thorough investigation of the facts and circumstances of the alleged violations
to be undertaken by independent counsel. The Company also took steps to obtain
the approval of APHIS for resumption of shipments, including the submission of
an amended and modified regulatory compliance program, improved testing
procedures, and other safeguards. Based upon these actions, APHIS began lifting
the stop shipment order within a month of its issuance and released all
remaining products from the order on March 27, 1998.
The Company continues to refine and strengthen its regulatory programs
with the adoption of a series of compliance and enforcement policies, the
addition of new managers of Production and Quality Control. At the instruction
of the Board of Directors, the Company's General Counsel has established and
oversees a comprehensive employee training program, has designated a "Regulatory
Compliance Officer" and has established a fraud detection program as well as an
employee "hotline". The Company has continued to cooperate with the USDA in all
aspects of its investigation and regulatory activities.
In March 1999, the Company reached settlement with the Departments of
Justice, Treasury and Agriculture regarding their pending investigations and
proceedings. The terms of the settlement agreement provided that the Company
enter a plea of guilty to a misdemeanor and pay a fine of $15,000 and
restitution in the amount of $10,000. In addition, the Company was assessed a
penalty of $225,000 and began making monthly payments to the Treasury Department
which will continue through October 31, 2001. The expense of settling with these
agencies was reflected in the 1998 results of operations. The settlement does
not affect the informal inquiry being conducted by the SEC, nor does it affect
possible governmental action against former employees of the Company.
In April 1998, the SEC advised the Company that it was conducting an
informal inquiry and requested information and documents from the Company, which
the Company voluntarily provided to the SEC. At December 31, 1999, the informal
inquiry remained open; however, management does not expect that this inquiry
will have a material adverse effect on the financial position, cash flows, or
operations of the Company.
On April 14, 1999, a lawsuit was filed in the U.S. District Court for the
Southern District of New York by Cohanzick Partners, LP, against IGI, Inc., and
certain of its present and former directors, officers and employees. The suit,
which seeks approximately $420,000 in actual damages together with fees, costs
and interest, alleges violations of the securities laws, fraud, and negligent
misrepresentation concerning certain disclosures made and other actions taken by
the Company in 1996 and 1997. The Company believes that the plaintiff's
allegations are factually incorrect and legally inadequate and will defend the
lawsuit vigorously. The Company believes that an unfavorable outcome in the suit
would not have a material adverse impact upon the Company's financial condition,
although it could negatively affect the results of operations for the period in
which the matter is resolved.
The Company is not aware of any other legal proceedings which could have a
material effect upon the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's stockholders during
the last quarter of 1999.
8
<PAGE> 9
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth (i) the name and age of each executive
officer of the Company as of March 15, 2000, (ii) the position with the Company
held by each such executive officer and (iii) the principal occupation held by
each executive officer for at least the past five years.
<TABLE>
<CAPTION>
OFFICER PRINCIPAL OCCUPATION AND OTHER BUSINESS
NAME AGE SINCE EXPERIENCE DURING PAST FIVE YEARS
- ---- --- ----- ---------------------------------
<S> <C> <C> <C>
Edward B. Hager 68 1977 Chairman of the Board of Directors and
Chairman of the Executive Committee
since 1977; Chief Executive Officer of
IGI from 1977 through February
2000;Chairman of the Board of Directors
and Chief Executive Officer of Novavax,
Inc. from 1987 to June 1996; Chairman
of the Board of Directors of Novavax,
Inc. from February 1997 to March 1998.
Paul Woitach 41 1998 Chief Executive Officer of IGI since
February 2000; President and Chief
Operating Officer of IGI, Inc. since
May 1998; General Manager, Laboratory
Division of Mettler Toledo North
America (weighing and measurement
systems) from 1997 to 1998; Vice
President, Marketing and Sales,
Balances and Instrument Division of
Mettler Toledo International from 1996
to 1997; Vice President and Executive
Director from 1995 to 1996; and
Director of Marketing Channels from
1993 to 1995 of the Health Imaging
Division of Eastman Kodak Company
(diagnostic imaging).
Robert E. McDaniel 49 1998 Executive Vice President and General
Counsel of IGI, Inc. since April 1999;
Senior Vice President and General
Counsel of IGI, Inc. since May 1998;
General Counsel of Presstek, Inc.
(laser graphic arts company) from April
1997 to May 1998; and Commercial
Litigation Partner, Law Firm of Devine,
Millimet and Branch from April 1991 to
April 1997.
Manfred Hanuschek 39 1999 Senior Vice President and Chief
Financial Officer of IGI, Inc. since
July 1999; Chief Financial Officer of
Fresh Air Solutions LP and its
predecessor entity ICC Technologies,
Inc. (both entities high technology
manufacturers of desiccant cooling
systems) from 1994 to 1998; Served in
various capacities with Coopers &
Lybrand LLP from 1983 to 1994,
including last held position as Senior
Audit Manager.
Rajiv Mathur 45 1999 Senior Vice President and Assistant
Secretary of IGI, Inc. since March
1999; Vice President of Research and
Development of IGI, Inc. since 1989.
</TABLE>
Officers are elected on an annual basis. Four of the above named officers
have employment agreements with the Company.
9
<PAGE> 10
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company has never paid cash dividends on its Common Stock. The payment
of dividends is prohibited under the Company's loan agreements without prior
consent of the lenders. (See "Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital
Resources.").
The principal market for the Company's Common Stock ($.01 par value) (the
"Common Stock") is the American Stock Exchange ("AMEX") (symbol: "IG"). The
following table shows the range of high and low sale prices on the AMEX for the
periods indicated:
<TABLE>
<CAPTION>
HIGH LOW
<S> <C> <C>
1998
First quarter $4 3/16 $2 3/4
Second quarter $ (A) $ (A)
Third quarter $3 $1 5/16
Fourth quarter $3 1/4 $1 1/2
1999
First quarter $2 1/4 $1 5/8
Second quarter $2 $1 1/4
Third quarter $1 15/16 $1 1/4
Fourth quarter $2 $1 1/16
</TABLE>
(A) The Company was unable to file its 1997 Annual Report on Form 10-K until
August 24, 1998 as a result of a special investigation initiated by the
Board of Directors which resulted in the restatement of financial results
for each of the two years in the period ended December 31, 1996 and the
first three quarters of year ended December 31, 1997. Accordingly, the
American Stock Exchange halted trading of the Company's Common Stock on
March 31, 1998 until such time as this and other required filings were
made. Trading resumed on September 8, 1998. Therefore, there are no
trading prices reflected for the second quarter and most of the third
quarter of 1998.
The approximate number of holders of record of the Company's Common Stock
at March 27, 2000 was 814 (not including stockholders for whom shares are held
in a "nominee" or "street" name).
In connection with the refinancing of the Company debt with its bank
lenders as of October 29, 1999, the Company issued to a new lender, American
Capital Strategies ("ACS") warrants to purchase an aggregate of 1,907,543 shares
of the Company's Common Stock at an exercise price of $.01 per share. The
issuance of the warrants is exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended as a transaction not involving a public
offering. The shares issuable upon the exercise of the warrants are subject to
registration rights in favor of the lenders, pursuant to the terms of the
Extension Agreement. No underwriters were involved with this private placement.
These warrants contain a right ("the put") to require the Company to repurchase
the warrants or the Common Stock acquired upon exercise of such warrants at
their then fair market value under certain circumstances, including the earliest
to occur of the following: a) October 29, 2004; b) the date of payment in full
of the Senior Debt and Subordinated Debt and all senior indebtedness of the
Company; or c) the sale of the Company or 30% or more of its assets. (See Item
7,"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources.")
On April 12, 2000 American Capital Strategies, Ltd. amended its loan
agreement whereby the put provision was replaced by a "make-whole" feature. The
"make-whole" feature requires the Company to compensate American Capital
Strategies, Ltd., in either Common Stock or cash, at the option of the Company,
in the event that American Capital Strategies, Ltd. ultimately realizes proceeds
from the sale of its Common Stock obtained upon exercise of its warrants that
are less than the fair value of the Common Stock upon exercise of such warrants
multiplied by the number of shares obtained upon exercise. Fair value of the
Common Stock upon exercise is defined as the 30 day average value prior to
notice of exercise. American Capital Strategies, Ltd. must exercise reasonable
effort to sell or place its shares in the marketplace over a 180 day period
before it can invoke the make-whole provision. As a result of the amendment, the
liability recognized related to the warrants will be reclassified as a component
of equity without a future mark-to-market adjustment effective April 12, 2000.
10
<PAGE> 11
ITEM 6. SELECTED FINANCIAL DATA
Five-Year Summary of Selected Financial Data (in thousands, except per share
information)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATING RESULTS
Revenues $ 34,594 $ 33,195 $ 34,343 $ 34,947 $ 31,232
Operating profit (loss) 1,506 (910) 220 1,332 3,112
(Loss) income from continuing operations (1,971) (3,029) (1,208) (481) 1,428
Loss from discontinued operations * -- -- -- -- (4,034)
Extraordinary gain from early extinguishment of debt, net of tax 387 -- -- -- --
Net loss (1,584) (3,029) (1,208) (481) (2,606)
(Loss) income per share-basic:
From continuing operations $ (.21) $ (.32) $ (.13) $ (.05) $ .16
From discontinued operations -- -- -- -- (.44)
Extraordinary gain, net of tax .04 -- -- -- --
Net loss (.17) (.32) (.13) (.05) (.28)
(Loss) income per share-diluted:
From continuing operations $ (.21) $ (.32) $ (.13) $ (.05) $ .15
From discontinued operations -- -- -- -- (.41)
Extraordinary gain, net of tax .04 -- -- -- --
Net loss (.17) (.32) (.13) (.05) (.26)
</TABLE>
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital (deficit) $ 3,567 $ (8,107) $ (5,472) $ 2,499 $ 3,831
Total assets 33,862 32,056 33,750 33,845 31,956
Short-term debt and notes payable 6,583 19,318 18,857 13,085 10,463
Long-term debt and notes payable
(excluding current maturities) 13,533 408 36 6,893 9,624
Stockholders' equity 5,533 5,923 8,034 9,019 8,173
Average number of common and
common equivalent shares:
Basic and diluted 9,605 9,470 9,458 9,323 9,173
</TABLE>
* In March 1994, IGI's Board of Directors voted to dispose of its
Biotechnology Business segment through the combination of certain
majority-owned subsidiaries and the subsequent tax-free distribution of
its ownership of the combined entity to IGI's shareholders. The
distribution of this segment occurred on December 12, 1995. The
Consolidated Financial Statements of IGI present this segment as a
discontinued operation.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This "Management's Discussion and Analysis" section and other sections of
this Annual Report on Form 10-K contain forward looking statements that are
based on current expectations, estimates, forecasts and projections about the
industry and markets in which the Company operates, management's beliefs and
assumptions made by management. In addition, other written or oral statements
which constitute forward-looking statements may be made by or on behalf of the
Company. Words such as "expects," "anticipates," "intends," plans," "believes,"
"seeks," "estimates," variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements are not
guarantees of future performance, and involve certain risks, uncertainties and
assumptions which are difficult to predict. (See "Factors Which May Affect
Future Results" below.) Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward-looking
statements. The Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
11
<PAGE> 12
RESULTS OF OPERATIONS
From mid-1997 through most of 1998, the Company was subject to intense
governmental and regulatory scrutiny and was also confronted with a number of
material operational issues. (See Item 3. "Legal Proceedings"). These matters
had a materially adverse effect on the Company's financial condition and results
of operations in 1997 and 1998 and the first quarter of 1999 and resulted in the
departure of most of the Company's senior management from 1997.
1999 Compared to 1998
The Company had a net loss of $1,584,000, or $.17 per share, in 1999, as
compared to a net loss of $3,029,000, or $.32 per share, in 1998. The reduction
in net loss was primarily attributable to increased revenues and improved
margins complemented by lower operating expenses.
Total revenues for 1999 were $34,594,000, which represents an increase of
$1,399,000, or 4%, from revenues of $33,195,000 in 1998. The increased revenues
were generated by increased Consumer Products and Companion Pet Products
revenues, offset by a decline in Poultry Vaccines revenue.
Total Consumer Products revenues for 1999 increased 19% to $6,938,000,
compared to 1998 revenues of $5,839,000. This increase was primarily
attributable to increased licensing and royalty income and increased product
sales. Licensing and royalty income of $1,869,000 in 1999 increased by $669,000
compared to 1998, primarily as a result of increased licensing revenues from
Johnson & Johnson. Consumer product sales of $5,069,000 in 1999 increased by
$430,000 compared to 1998, primarily as a result of increased sales to Estee
Lauder.
Companion Pet Products revenues for 1999 amounted to $13,595,000, an
increase of $1,082,000, or 9%, compared to 1998. This increase was primarily
attributable to increased product sales associated with the EVSCO line of
veterinary products.
Poultry Vaccines revenues for 1999 amounted to $14,061,000, a decrease of
$782,000, or 5%, compared to 1998. Limited production capacity, old equipment,
and increased potency requirements have limited Vineland's ability to produce as
much quality vaccine as it can sell.
Cost of sales increased by $285,000, or 2%, primarily due to the higher
sales volume. As a percentage of total revenues, cost of sales decreased from
52.2% in 1998 to 50.9% in 1999. The resulting increase in gross profit in 1999
to 49.1% from 47.8% in 1998 was primarily attributable to efficiencies gained
through higher product sales, licensing revenues and production volumes
generated from Companion Pet Products and Consumer Products, which were offset
by lower margins associated with lower Poultry Vaccines revenues.
Consumer Products cost of sales for 1999 increased 30% to $1,893,000,
compared to 1998 cost of sales of $1,459,000. As a percentage of total revenues,
cost of sales increased from 25.0% in 1998 to 27.3% in 1999.
Companion Pet Products cost of sales for 1999 increased $55,000 to
$6,427,000, compared to 1998 cost of sales of $6,372,000. As a percentage of
total revenues, cost of sales decreased from 50.9% in 1998 to 47.3% in 1999.
Poultry Vaccines cost of sales for 1999 decreased 2% to $9,286,000,
compared to 1998 cost of sales of $9,490,000. As a percentage of total revenues,
cost of sales increased from 63.9% in 1998 to 66.0% in 1999.
Selling, general and administrative expenses decreased by $1,295,000, or
8%, from $15,359,000 in 1998 to $14,064,000 in 1999. These expenses were 41% of
revenues in 1999 compared with 46% of revenues in 1998. Much of the decrease was
primarily attributable to decreased legal, consulting and professional fees in
1999 due to resolution of many of the regulatory actions faced by the Company in
the prior year. Product development and research expenses decreased by $7,000,
or 0.5%, in 1999 as compared with 1998.
Interest expense increased $666,000, or 19%, from $3,443,000 in 1998 to
$4,109,000 in 1999. The increase was primarily due to the valuation of the put
warrants issued in conjunction with the American Capital Strategies, Ltd.
subordinated notes. These warrants are marked-to-market on a monthly basis; the
1999 charge of $854,000 since inception is a result of the increase in the
market price of the Company's stock.
Extraordinary gain on the early extinguishment of debt of $387,000 related
to the elimination of accrued interest which was forgiven by the former bank
lenders of $611,000, offset by income tax expense of $224,000. ( See "Liquidity
and Capital Resources").
The effective tax rates for 1999 and 1998 were 19% and 30%, respectively.
The change in the effective tax rate is primarily due to the $854,000 of
non-deductible interest expense relating to the mark-to-market feature of the
warrants issued to American Capital Strategies, Ltd. The valuation allowance
decreased from 1998 as a result of certain fully reserved state tax net
operating loss carryforwards expiring in 1999.
12
<PAGE> 13
1998 Compared to 1997
The Company had a net loss of $3,029,000, or $.32 per share, in 1998, as
compared to a net loss of $1,208,000, or $.13 per share, in 1997. The major
contributing factors to the increased loss were: increased legal, consulting and
professional fees; increased expenses associated with investigating and
addressing regulatory problems; the costs and expenses associated with
termination of certain employees; the hiring of new management; and increased
bank fees and interest charges associated with the extension of the Company's
credit line. The Company incurred approximately $2.6 million of legal,
consulting and professional fees in 1998 and $1.1 million in 1997. Comparable
expenditures for 1994 to 1996 averaged about $0.5 million. The increase in 1998
was principally attributable to the regulatory actions and investigations which
began in 1997 and resulted in the March 1999 settlement with the U.S.
Departments of Justice, Treasury and Agriculture. Another major contributing
factor was a decrease in sales of poultry vaccines in 1998 as compared with
1997, primarily as a result of the USDA regulatory action.
Total revenues for 1998 were $33,195,000, which represents a decrease of
$1,148,000, or 3%, from revenues of $34,343,000 in 1997. Sales of poultry
vaccines decreased by $1,809,000, or 11%, in 1998 as compared with 1997. Poultry
vaccine sales were adversely affected by the USDA regulatory action which
remained in partial effect until March 27, 1998. The Company also experienced
lower production volumes of poultry vaccines while it made changes to improve
its Vineland Laboratories operations. Sales of Companion Pet Products increased
by $69,000, or 1%.
Total Consumer Products revenues for 1998 increased by $584,000, or 11%,
from 1997 revenues. This increase reflected a $1,028,000 increase in revenue
from the Company's cosmetics and personal care products partially offset by a
decrease in revenues of $444,000 from the Company's dermatological products. The
cosmetics and personal care products revenues increased in 1998 due to increased
product sales to Estee Lauder and increased licensing and royalty income,
primarily from the Company's relationships with Johnson & Johnson. In August
1998, the Company executed its second license agreement with a Johnson & Johnson
division, licensing the Novasome(R) microencapsulation technology for use in
certain products and distribution channels to Johnson & Johnson Medical, a
Division of Ethicon, Inc.
The decrease in revenues from dermatological products was due in large
part to the decline in sales to Glaxo. In October 1998, Glaxo notified the
Company that it intended to exit the physician-dispensed skin care market, which
resulted in a loss of sales to Glaxo and the termination of the royalty
agreement. As a result of the termination, the Company acquired the WellSkin(TM)
trade name from Glaxo along with Glaxo's remaining inventory of products and
marketing materials. This termination resulted in the Company owing $808,000 to
Glaxo which is payable at specified intervals through 2000. In December 1998,
the Company entered into an agreement with Genesis Pharmaceutical, Inc.,
("Genesis") granting them the exclusive right to market and distribute the
Company's WellSkin(TM) line of skin care products. Genesis also purchased the
entire inventory and marketing materials received from Glaxo. The Company has a
receivable from Genesis for approximately $112,000 at December 31, 1998. The
Company recognized revenue of $6,000 in 1998 from Genesis.
During 1998, the Company recognized $1,200,000 of licensing revenue as
compared to $150,000 in 1997. This revenue consisted of $326,000 from Glaxo;
$6,000 from Genesis; $92,000 from Johnson & Johnson Medical; $433,000 from
Johnson & Johnson Consumer; $210,000 from National Starch; and $133,000 from
Kimberly Clark. During 1997, the licensing revenue consisted of amounts relating
to the agreement with Glaxo.
Cost of sales decreased by $332,000, or 2%, primarily due to the lower
sales volume. However, as a percentage of sales, cost of sales increased from
51% in 1997 to 52% in 1998. This increase primarily resulted from costs relating
to the Company's reassessment of product manufacturing processes and formulas
incurred in 1998 to increase future production efficiency and capacity in the
Company's Vineland Laboratories division.
Selling, general and administrative expenses increased by $564,000, or 4%,
from $14,795,000 in 1997 to $15,359,000 in 1998. These expenses were 46% of
revenues in 1998 compared with 43% of revenues in 1997. Much of the increase was
attributable to increased legal, consulting and professional fees in 1998. Total
professional fees in 1998 were approximately $2.6 million, of which $2.1 million
was incurred primarily in response to the regulatory actions and investigations
which began in 1997 and resulted in the March 1999 settlement with the U.S.
Departments of Justice, Treasury and Agriculture.
Product development and research expenses decreased by $250,000, or 15%,
in 1998 as compared with 1997, as the Company curtailed certain development
projects primarily relating to the Consumer Products business.
Interest expense increased $1,590,000, or 86%, from $1,853,000 in 1997 to
$3,443,000 in 1998. The increase was due to a charge to earnings of $645,000 for
warrants issued to the Company's bank lenders in connection with the execution
of an extension agreement with its bank lender, higher borrowings at increased
interest rates in 1998, and fees paid to the bank lenders related to the
extension and forbearance agreements.
13
<PAGE> 14
The effective tax rates for 1998 and 1997 were 30% and 27%, respectively.
Changes in the effective rates primarily reflect the level of federal and state
tax credits offset by changes in the valuation allowance. The valuation
allowance increased from 1997 primarily based on management's expectations
regarding the realizability of certain state deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
On October 29, 1999, the Company entered into a $22 million senior bank
credit agreement ("Senior Debt Agreement") with Fleet Capital Corporation and a
$7 million subordinated debt agreement ("Subordinated Debt Agreement") with
American Capital Strategies, Ltd.
These agreements enabled the Company to retire approximately $18.6 million
of outstanding debt with its former bank lenders, Fleet Bank, NH, and Mellon
Bank, N.A. In connection with the repayment of the loans, the Company's former
bank lenders agreed to return to the Company, for cancellation, warrants held by
them for the purchase of 810,000 shares of the Company's Common Stock at
exercise prices ranging from $2.00 to $3.50. Also, approximately $611,000 of
accrued interest was waived by the former bank group and is classified as an
extraordinary gain from the early extinguishment of debt in the 1999
Consolidated Statements of Operations. There are two sets of warrants remaining
with the former lenders. There are unconditional warrants to purchase 150,000
shares which remain exercisable by Fleet Bank, NH at $2.00 per share and
unconditional warrants to purchase 120,000 shares which remain exercisable by
Mellon Bank, N.A. at $2.00 per share.
The Senior Debt Agreement provides for a revolving line of credit facility
of up to $12 million based upon qualifying accounts receivable and inventory, a
$7 million term loan and a $3 million capital expenditures credit facility. The
borrowings under the revolving line of credit bear interest at the prime rate
plus 1.0% or the London Interbank offered rate plus 3.25%. The borrowings under
the term loan and capital expenditure credit facility bear interest at the prime
rate plus 1.5% or the London Interbank offered rate plus 3.75%. As of December
31, 1999, borrowings under the revolving line of credit, term loan and capital
expenditures credit facility were $5,708,000, $7,000,000 and $0, respectively.
Provisions under the revolving line of credit require the Company to maintain a
lockbox with the lender, allowing Fleet Capital to sweep cash receipts from
vendors and pay down the line of credit. Drawdowns on the line of credit are
made when needed to fund operations. Quarterly repayments of the term loan begin
on August 1, 2000 in the amount of $233,000. Repayment of the capital
expenditures credit facility are to be made quarterly over a five year period
after any initial drawdown.
Borrowings under the Subordinated Debt Agreement bear interest at the rate
of 12.5% ("cash portion of interest on subordinated debt") plus an additional
interest component at the rate of 2% which is payable at the Company's election
in cash or Company Common Stock. As of December 31, 1999, borrowings under the
subordinated notes were $7,000,000, offset by an unamortized debt discount of
$2,775,000. The Subordinated Debt Agreement matures in October 2006. In
connection with the Subordinated Debt Agreement the Company issued to the lender
warrants to purchase 1,907,543 shares of IGI Common Stock at an exercise price
of $.01 per share. The debt discount was recorded at issuance, representing the
difference between the $7,000,000 proceeds received by the Company and the total
obligation, which included principal of $7,000,000 and an initial warrant
liability of $2,842,000. (See Note 9 "Detachable Stock Warrants" in the
Consolidated Financial Statements.)
These agreements contain financial and other covenants and restrictions.
The Company was not in compliance under certain covenants under the agreements
related to the the fixed charges coverage ratio, maximum debt to equity ratio
and accounts payable ratio as of December 31, 1999; however, the lenders
involved have amended, as of April 12, 2000, the related agreements to waive the
defaults as of December 31, 1999. American Capital Strategies, Ltd. has the
right to designate for election to the Company's Board of Directors that number
of directors that bears the same ratio to the total number of directors as the
number of shares of Company Common Stock owned by it plus the number of shares
issuable upon exercise of its warrants bear to the total number of outstanding
shares of Company Common Stock on a fully-diluted basis, provided that so long
as it owns any Common Stock, or warrants or any of its loans are outstanding, it
shall have the right to designate at least one director or observer on the Board
of Directors. At December 31, 1999, American Capital Strategies, Ltd. had one
observer on the Company's Board of Directors.
Approximately $24.5 million was immediately available to the Company under
the Senior Debt and Subordinated Debt Agreements; borrowings under these new
agreements amounted to $19.7 million as of December 31, 1999. The new agreements
enabled the Company to retire approximately $18.6 million outstanding with the
previous bank lenders, cover associated closing costs and provide a borrowing
facility for working capital and capital expenditures. As of December 31, 1999
the Company had $4.5 million available borrowings under these agreements, $3.0
million of which was related to the capital expenditure credit facility. To
secure all of its obligations under these agreements, the Company has granted
the lenders a security interest in all of the assets and properties of the
Company and its subsidiaries.
Despite its new financing arrangements, the Company remains highly
leveraged; furthermore, availability for borrowings under the revolving line of
credit facility is dependent on the level of its qualifying accounts receivable
and inventory. The Company expects to maintain compliance with the covenants
contained in its loan agreements through the year 2000.
The Company is currently generating losses that may extend through the
year 2000, which could unfavorably impact future financial covenants and the
Company's availability for borrowing under the revolving line of credit
facility, which is dependent on the level of its qualifying accounts and
inventory. Although the Company believes it will be in compliance with covenants
and will have
14
<PAGE> 15
availability for borrowing under the revolving line of credit, there can be no
assurance of such continued compliance and availability. The Company believes it
will be able to meet its debt obligations. If the Company were not able to meet
its debt obligations it would consider altering its business plan, including, if
necessary, a sale of selected Company operating and non operating assets. Any
significant sale of assets would require lender approval. Any sale of operating
assets would involve a curtailment of certain of the Company's business
operations and a modification of its business strategy.
The Company's operating activities provided $391,000 of cash during 1999,
which included net income and non-cash charges to operations for depreciation,
amortization, loss reserves, and stock and warrant compensation expense.
Additionally, increases in inventory, accounts payable and accrued expenses,
offset by decreases in accounts receivable, other assets and notes payable, had
the effect of decreasing operating cash flow as compared to 1998. Working
capital as of December 31, 1999 amounted to $3,567,000 as compared to negative
$8,107,000 as of December 31, 1998. The increase in working capital of
$11,674,000 was primarily the result of refinancing in October 1999 and the
improvement in operations for the year ended December 31, 1999. The accounts
receivable turnover ratio for 1999 was 4.89 compared to 4.34 for 1998. This
increase was primarily as a result of increased collection efforts. The
inventory turnover ratio for 1999 was 1.91 compared to 1.84 for 1998. The
Company believes its reserves for inventory and accounts receivables are
adequate.
Certain geographic markets in which the Company does business have
recently experienced political, economic and currency instability. In order to
minimize risk, the Company maintains credit insurance for the majority of its
international accounts receivable, and all sales are denominated in U.S. dollars
to minimize currency fluctuation risk. Because of the volume of business
transacted by the Company internationally, continuation or recurrence of such
unrest or instability could adversely affect the business of its customers in
those countries and the Company's ability to collect its receivables from such
customers, which, in either case, could materially adversely affect the
Company's future operating results.
The Company used $1,007,000 in 1999 for investing activities compared to
$633,000 in 1998. The increase was primarily due to an increase in capital
expenditures for the Company's manufacturing operations.
FACTORS WHICH MAY AFFECT FUTURE RESULTS
The industry segments in which the Company competes are subject to intense
competitive pressures. The following sets forth some of the risks which the
Company faces.
HIGHLY LEVERAGED AND DEBT COVENANT COMPLIANCE
The Company remains highly leveraged and subject to restrictive covenants
and restraints which are contained in its Senior Debt and Subordinated Debt
Agreements. The debt agreements contain various affirmative and negative
covenants, such as minimum tangible net worth and minimum fixed charge coverage
ratios. Furthermore, the Company's available borrowings under the revolving line
of credit facility are dependent on the level of qualifying accounts receivable
and inventory. The Company expects to remain in compliance with these covenants
in the future; however, there can be no assurance that the Company will be
successful in doing so. If the Company is not successful in meeting its
financial covenants, it could result in a default under its loan agreements and
any such default, if not resolved, could lead to curtailment of certain of its
business operations, sale of certain assets or the commencement of insolvency
proceedings by its creditors.
INTENSE COMPETITION IN CONSUMER PRODUCTS BUSINESS
The Company's Consumer Products business competes with large,
well-financed cosmetics and consumer products companies with development and
marketing groups that are experienced in the industry and possess far greater
resources than those available to the Company. There is no assurance that the
Company's consumer products can compete successfully against its competitors or
that it can develop and market new products that will be favorably received in
the marketplace. In addition, certain of the Company's customers that use the
Company's Novasome(R) lipid vesicles in their products may decide to reduce
their purchases from the Company or shift their business to other suppliers.
COMPETITION IN POULTRY VACCINE BUSINESS
The Company is encountering increased price competition from international
producers of poultry vaccines.
FOREIGN REGULATORY AND ECONOMIC CONSIDERATIONS
The Company's business may be adversely affected by foreign import
restrictions and additional regulatory requirements. Also, unstable or adverse
economic conditions and fiscal and monetary policies in certain Latin American
and Far Eastern countries, increasingly important markets for the Company's
animal health products, particularly poultry vaccines, could adversely affect
the Company's future business in these countries.
15
<PAGE> 16
RAPIDLY CHANGING MARKETPLACE FOR PET PRODUCTS
The emergence of pet superstores, the consolidation of distribution
channels into fewer, more powerful companies and the diminishing traditional
role of veterinarians in the distribution of pet products could adversely affect
the Company's ability to expand its animal health business or to operate at
acceptable gross margin levels.
EFFECT OF RAPIDLY CHANGING TECHNOLOGIES
The Company expects to license its technologies to third parties which
would manufacture and market products incorporating the technologies. However,
if its competitors develop new and improved technologies that are superior to
the Company's technologies, its technologies could be less acceptable in the
marketplace and therefore the Company's planned technology licensing could be
materially adversely affected.
REGULATORY CONSIDERATIONS
The Company's poultry vaccines and pet pharmaceutical products are
regulated by the USDA and the FDA, respectively, which subject the Company to
review, oversight and periodic inspections. Any new products are subject to
expensive and sometimes protracted USDA and FDA regulatory approval, which
ultimately may not be granted. Also, certain of the Company's products may not
be approved for sales overseas on a timely basis, thereby limiting the Company's
ability to expand its foreign sales.
INCOME TAXES
The Company has net deferred tax assets in the amount of $5,850,000 at
December 31, 1999. The largest deferred tax asset relates to the $3,672,000 of
net operating loss carryforwards. After considering the $955,000 valuation
allowance at December 31, 1999, management believes the Company's remaining net
deferred tax assets are more likely than not to be realized through the reversal
of existing taxable temporary differences, the sale of certain state net
operating losses, and the generation of sufficient future taxable operating
income to ensure utilization of remaining deductible temporary differences, net
operating losses and tax credits. The minimum level of future taxable income
necessary to realize the Company's net deferred tax assets at December 31, 1999,
is approximately $20 million. There can be no assurance, however, that the
Company will be able to achieve the minimum levels of taxable income necessary
to realize its net deferred tax assets. Federal net operating loss carryforwards
expire through 2019. Significant components expire in 2007 (36%), 2018 (40%) and
2019 (20%). Also federal research credits expire in varying amounts through the
year 2019.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
RISKS RELATED TO OUR BUSINESS
At December 31, 1999, variable rate debt of $19,708,000 with a
weighted average interest rate of 11.4% was outstanding.
In connection with the Subordinated Debt Agreement, the Company
issued warrants to purchase 1,907,543 shares of IGI Common Stock at an exercise
price of $.01 per share. These warrants contain a right ("the put") to require
the Company to repurchase the warrants or the Common Stock acquired upon
exercise of such warrants at their then fair market value under certain
circumstances, including the earliest to occur of the following: a) October 29,
2004; b) the date of payment in full of the Senior Debt and Subordinated Debt
and all senior indebtedness of the Company; or c) the sale of the Company or 30%
or more of its assets. The repurchase is to be settled in cash or Common Stock,
at the option of the lender. The warrants are recorded as a liability which is
marked-to-market, with changes in the market value being recognized as a
component of interest expense in the period of change. At December 31, 1999, the
Company had recorded a liability of $3,696,000 for these warrants. If the market
value of the Company's Common Stock were to increase by 10%, the charge to
earnings would be $369,586.
On April 12, 2000 American Capital Strategies, Ltd. amended its loan
agreement whereby the put provision was replaced by a "make-whole" feature. The
"make-whole" feature requires the Company to compensate American Capital
Strategies, Ltd., in either Common Stock or cash, at the option of the Company,
in the event that American Capital Strategies, Ltd. ultimately realizes proceeds
from the sale of its Common Stock obtained upon exercise of its warrants that
are less than the fair value of the Common Stock upon exercise of such warrants
multiplied by the number of shares obtained upon exercise. Fair value of the
Common Stock upon exercise is defined as the 30 day average value prior to
notice of exercise. American Capital Strategies, Ltd. must exercise reasonable
effort to sell or place its shares in the marketplace over a 180 day period
before it can invoke the make-whole provision. As a result of the amendment, the
liability recognized related to the warrants will be reclassified as a component
of equity without a future mark-to-market adjustment effective April 12, 2000.
16
<PAGE> 17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and notes thereto listed in the accompanying
index to financial statements (Item 14) are filed as part of this Annual Report
and incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A portion of the information required by this item is contained in part
under the caption "Executive Officers of the Registrant" in Part I hereof, and
the remainder is contained in the Company's Proxy Statement for the Company's
2000 Annual Meeting of Stockholders. Section 16(a) (the "2000 Proxy Statement")
under the captions "PROPOSAL 1 - ELECTION OF DIRECTORS" - Nominees for Election
as Directors and "Beneficial Ownership Reporting Compliance" which are
incorporated herein by this reference. Officers are elected on an annual basis
and serve at the discretion of the Board of Directors. The Company expects to
file the 2000 Proxy Statement no later than April 29, 2000.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is contained under the captions
"EXECUTIVE COMPENSATION," "Compensation Committee Interlocks and Insider
Participation," and "Director Compensation and Stock Options" in the Company's
2000 Proxy Statement and is incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is contained in the Company's 2000
Proxy Statement under the caption "Beneficial Ownership of Common Stock" and is
incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is contained under the caption
"Certain Relationships and Related Transactions" appearing in the Company's 2000
Proxy Statement and is incorporated herein by this reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements:
Reports of Independent Accountants
Consolidated Balance Sheets, December 31, 1999 and 1998
Consolidated Statements of Operations for the years ended December
31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the years ended December
31, 1999, 1998 and 1997
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules:
Schedule II. Valuation and Qualifying Accounts and Reserves
Schedules other than those listed above are omitted for the reason
that they are either not applicable or not required or because the
information required is contained in the financial statements or
notes thereto.
Condensed financial information of the Registrant is omitted since
there are no substantial amounts of "restricted net assets"
applicable to the Company's consolidated subsidiaries.
(3) Exhibits Required to be Filed by Item 601 of Regulation S-K.
17
<PAGE> 18
The exhibits listed in the Exhibit Index immediately preceding such
exhibits are filed as part of this Annual Report on Form 10-K unless
incorporated by reference as indicated.
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: April 12, 2000 IGI, Inc.
By: /s/ Paul Woitach
----------------
PAUL WOITACH
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacity and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ Edward B. Hager Chairman of the Board April 12, 2000
- --------------------------
EDWARD B. HAGER
/s/ Paul Woitach President and Chief Executive Officer April 12, 2000
- -------------------------- (Principal executive officer)
PAUL WOITACH
/s/ Robert E. McDaniel Executive Vice President April 12, 2000
- --------------------------
ROBERT E. MCDANIEL
/s/ Manfred Hanuschek Senior Vice President April 12, 2000
- -------------------------- Chief Financial Officer
MANFRED HANUSCHEK (Principal financial officer)
/s/ Charles R. Carroll Controller, Treasurer and Chief Accounting April 12, 2000
- -------------------------- Officer
CHARLES R. CARROLL (Principal accounting officer)
/s/ Stephen J. Morris Director April 12, 2000
- --------------------------
STEPHEN J. MORRIS
/s/ Terrence D. Daniels Director April 12, 2000
- --------------------------
TERRENCE D. DANIELS
/s/ Jane E. Hager Director April 12, 2000
- --------------------------
JANE E. HAGER
/s/ Constantine L. Hampers Director April 12, 2000
- --------------------------
CONSTANTINE L. HAMPERS
/s/ Terrence O'Donnell Director April 12, 2000
- --------------------------
TERRENCE O'DONNELL
/s/ Paul D. Paganucci Director April 12, 2000
- --------------------------
PAUL D. PAGANUCCI
</TABLE>
18
<PAGE> 19
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of IGI, Inc.:
In our opinion, the accompanying consolidated financial statements listed in the
index appearing under Item 14(a)(1) of this Form 10-K present fairly, in all
material respects, the financial position of IGI, Inc. and its subsidiaries at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
In addition, in our opinion, the financial statement schedule listed in the
index appearing under Item 14(a)(2) of this Form 10-K presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
April 12, 2000
19
<PAGE> 20
IGI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 416 $ 1,068
Accounts receivable, less allowance for doubtful accounts
of $354 and $516 in 1999 and 1998, respectively 6,061 6,462
Licensing and royalty income receivable 432 440
Inventories 8,762 7,406
Current deferred taxes 1,096 1,275
Prepaid expenses and other current assets 348 433
-------- --------
Total current assets 17,115 17,084
-------- --------
Investments 144 535
Property, plant and equipment, net 9,781 9,479
Deferred income taxes 4,754 4,188
Deferred financing costs 1,678 75
Other assets 390 695
-------- --------
Total assets $ 33,862 $ 32,056
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facility $ 5,708 $ 6,657
Current portion of long-term debt 467 --
Credit line -- 12,000
Current portion of notes payable 408 661
Accounts payable 4,268 3,235
Accrued payroll 253 196
Due to stockholder 115 380
Accrued interest 164 432
Other accrued expenses 2,150 1,614
Income taxes payable 15 16
-------- --------
Total current liabilities 13,548 25,191
-------- --------
Long-term debt, net of discount and current portion 10,758 --
Notes payable -- 408
Deferred income 327 534
Detachable stock warrants 3,696 --
-------- --------
Total liabilities 28,329 26,133
-------- --------
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized,
none outstanding -- --
Common stock, $.01 par value; 50,000,000 and 30,000,000
shares authorized in 1999 and 1998, respectively; 10,133,183
and 9,648,931 shares issued in 1999 and 1998, respectively 102 97
Additional paid-in capital 20,628 19,961
Accumulated deficit (13,556) (11,972)
Less treasury stock, 105,510 and 136,014 shares at cost, in 1999
and 1998, respectively (1,641) (2,163)
-------- --------
Total Stockholders' Equity 5,533 5,923
-------- --------
Total liabilities and stockholders' equity $ 33,862 $ 32,056
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE> 21
IGI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Sales, net $ 32,725 $ 31,995 $ 34,193
Licensing and royalty income 1,869 1,200 150
----------- ----------- -----------
Total revenues 34,594 33,195 34,343
Cost and Expenses:
Cost of sales 17,606 17,321 17,653
Selling, general and administrative expenses 14,064 15,359 14,795
Product development and research expenses 1,418 1,425 1,675
----------- ----------- -----------
Operating profit (loss) 1,506 (910) 220
Interest expense, net (4,109) (3,443) (1,853)
Other income (expense), net 31 33 (11)
----------- ----------- -----------
Loss before benefit for income taxes and
extraordinary gain (2,572) (4,320) (1,644)
Benefit for income taxes (601) (1,291) (436)
----------- ----------- -----------
Loss before extraordinary item (1,971) (3,029) (1,208)
Extraordinary gain on early extinguishment of debt,
net of income tax expense of $224 387 -- --
----------- ----------- -----------
Net loss $ (1,584) $ (3,029) $ (1,208)
=========== =========== ===========
Loss per share:
Basic and diluted:
Loss before extraordinary gain $ (.21) $ (.32) $ (.13)
Extraordinary gain, net of tax .04 -- --
----------- ----------- -----------
Net loss $ (.17) $ (.32) $ (.13)
=========== =========== ===========
Average number of common shares:
Basic and diluted 9,604,768 9,470,413 9,457,938
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
21
<PAGE> 22
IGI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,584) $ (3,029) $ (1,208)
Reconciliation of net loss to net cash provided from operating
activities:
Depreciation and amortization 1,027 992 1,037
Amortization of deferred financing costs and debt discount 123 -- --
Extraordinary gain on early extinguishment of debt, net of tax (387) -- --
Gain on sale of assets (30) (62) --
Write off of other assets 140 558 --
Provision for loss on accounts and notes receivable
and inventories 1,116 1,482 1,610
Recognition of deferred revenue (203) (242) (150)
Issuance of stock to 401(k) plan 82 -- 40
Benefit for deferred income taxes (611) (1,321) (447)
Interest expense relating to put feature of warrants 854 -- --
Warrants issued to lenders under prior extension agreements 223 645 --
Stock option compensation expense:
Non-employee stock options 49 149 47
Directors' stock issuance 116 94 --
Other, net -- 17 (50)
Changes in operating assets and liabilities:
Accounts receivable 158 239 721
Inventories (2,244) 374 (1,735)
Receivable due under royalty agreement 8 (328) 1,000
Prepaid and other current assets 238 333 398
Accounts payable and accrued expenses 1,856 929 1,123
Deferred revenue 275 59 --
Short-term notes payable, operating (814) -- --
Income taxes payable (1) (73) 51
-------- -------- --------
Net cash provided from operating activities 391 816 2,437
-------- -------- --------
Cash flows from investing activities:
Capital expenditures (1,064) (607) (636)
Proceeds from sale of assets 40 165 --
(Increase) decrease in other assets 17 (191) 68
-------- -------- --------
Net cash used in investing activities (1,007) (633) (568)
-------- -------- --------
Cash flows from financing activities:
Borrowings under term loan 7,000 -- 2,358
Borrowings under subordinated note agreements, net of discount 4,158 -- --
Cash proceeds from issuance of warrants to lenders 2,842 -- --
Borrowings under revolving credit agreement 11,584 -- --
Repayment of revolving credit agreement (5,876) -- --
Repayments of debt (18,657) (236) (3,443)
Payments of deferred financing costs (1,659) (75) --
Proceeds from exercise of common stock options -- -- 95
Change in book overdraft 572 -- --
-------- -------- --------
Net cash used in financing activities (36) (311) (990)
-------- -------- --------
Net (decrease) increase in cash and cash equivalents (652) (128) 879
Cash and cash equivalents at beginning of year 1,068 1,196 317
-------- -------- --------
Cash and cash equivalents at end of year $ 416 $ 1,068 $ 1,196
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
See Note 4 for Supplemental Cash Flow information.
22
<PAGE> 23
IGI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------ STOCK PAID-IN
SHARES AMOUNT SUBSCRIBED CAPITAL
------ ------ ---------- -------
<S> <C> <C> <C> <C>
Balance January 1, 1997 9,572,681 $ 96 $ 175 $19,115
Settlement of litigation (175) (118)
Exercise of stock options, including tax benefits of $7 30,000 122
Issuance of stock to 401(k) plan (92)
Value of stock options issued to non-employees 47
Interest earned on stockholders' notes
Reserve on stockholders' notes receivable
Net loss
---------- ---- ----- -------
Balance, December 31, 1997 9,602,681 96 -- 19,074
Issuance of stock pursuant to Directors' Stock Plan 46,250 1 93
Value of stock options issued to non-employees 149
Value of warrants issued under extension agreement 645
Interest earned on stockholders' notes
Reserve on stockholders' notes receivable
Net loss
---------- ---- ----- -------
Balance, December 31, 1998 9,648,931 97 -- 19,961
Issuance of stock pursuant to Directors' Stock Plan 66,509 1 115
Partial settlement of amounts due to stockholder in lieu of cash 417,744 4 720
Value of stock options issued to non-employees 49
Value of warrants issued under second extension agreement 223
Issuance of stock to 401(k) Plan (440)
Net loss
---------- ---- ----- -------
Balance, December 31, 1999 10,133,184 $102 $ -- $20,628
========== ==== ===== =======
</TABLE>
<TABLE>
<CAPTION>
STOCKHOLDERS' ACCUMU- TOTAL
NOTES LATED TREASURY STOCKHOLDERS'
RECEIVABLE DEFICIT STOCK EQUITY
---------- ------- ----- ------
<S> <C> <C> <C> <C>
Balance January 1, 1997 $(114) $ (7,735) $(2,518) $ 9,019
Settlement of litigation 243 (50)
Exercise of stock options, including tax benefits of $7 (20) 102
Issuance of stock to 401(k) plan 132 40
Value of stock options issued to non-employees 47
Interest earned on stockholders' notes (10) (10)
Reserve on stockholders' notes receivable 94 94
Net loss (1,208) (1,208)
----- -------- ------- -------
Balance, December 31, 1997 (30) (8,943) (2,163) 8,034
Issuance of stock pursuant to Directors' Stock Plan 94
Value of stock options issued to non-employees 149
Value of warrants issued under extension agreement 645
Interest earned on stockholders' notes (3) (3)
Reserve on stockholders' notes receivable 33 33
Net loss (3,029) (3,029)
----- -------- ------- -------
Balance, December 31, 1998 -- (11,972) (2,163) 5,923
Issuance of stock pursuant to Directors' Stock Plan 116
Partial settlement of amounts due to stockholder in lieu of cash 724
Value of stock options issued to non-employees 49
Value of warrants issued under second extension agreement 223
Issuance of stock to 401(k) Plan 522 82
Net loss (1,584) (1,584)
----- -------- ------- -------
Balance, December 31, 1999 $ -- $(13,556) $(1,641) $ 5,533
===== ======== ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
23
<PAGE> 24
IGI, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of the Business
IGI, Inc. ("IGI" or the "Company") is a diversified company engaged
in three business segments:
- Consumer Products Business - production and marketing of
cosmetics and skin care products,
- Companion Pet Products Business - production and marketing of
companion pet products such as veterinary pharmaceuticals,
nutritional supplements and grooming aids; and
- Poultry Vaccines Business - production and marketing of
poultry vaccines and related products.
Principles of Consolidation
The consolidated financial statements include the accounts of IGI, Inc.
and its wholly owned and majority-owned subsidiaries. All intercompany accounts
and transactions have been eliminated. Investment in an affiliated company with
a 20% ownership interest is accounted for under the cost method.
Cash Equivalents
Cash equivalents consist of short-term investments which, at the date of
purchase, have maturities of 90 days or less. Book overdraft balances of
$572,000 have been reclassified to accounts payable in the Consolidated Balance
Sheets at December 31, 1999.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk are cash, cash equivalents, accounts receivable,
notes receivable and certain restricted investments. The Company limits credit
risk associated with cash and cash equivalents by placing its cash and cash
equivalents with two high credit quality financial institutions. Accounts
receivable includes customers in several key geographic areas. Of these, Mexico,
Indonesia, Thailand and certain other Latin American and Far Eastern countries
are important markets for the Company's poultry vaccines and other products.
These countries have from time to time experienced varying degrees of political
unrest and currency instability. Because of the volume of business transacted by
the Company in these areas, continuation or recurrence of such unrest or
instability could adversely affect the businesses of its customers in these
areas or the Company's ability to collect its receivables from such customers,
which in either case could adversely impact the Company's future operating
results. In order to minimize risk, the Company maintains credit insurance for
the majority of its international accounts receivable and all sales are
denominated U.S. dollars to minimize currency fluctuation risk.
Inventories
Inventories are valued at the lower of cost, using the first-in, first-out
("FIFO") method, or market.
Property, Plant and Equipment
Depreciation of property, plant and equipment is provided for under the
straight-line method over the assets' estimated useful lives as follows:
<TABLE>
<CAPTION>
USEFUL LIVES
------------
<S> <C>
Buildings and improvements 10 - 30 years
Machinery and equipment 3 - 10 years
</TABLE>
Repair and maintenance costs are charged to operations as incurred while
major improvements are capitalized. When assets are retired or disposed, the
cost and accumulated depreciation thereon are removed from the accounts and any
gains or losses are included in operating results.
24
<PAGE> 25
Other Assets
Other assets include cost in excess of net assets of businesses acquired
of $325,000, which is being amortized on a straight-line basis over 40 years.
Deferred financing costs include fees paid to the lenders and external legal
counsel to assist the Company in obtaining new financing. These costs are being
amortized over the term of the related debt.
In accordance with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of," the Company reviews its long-lived
assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of the asset may not be recoverable through future cash
flows. If it is determined that an impairment has occurred based on expected
future cash flows, the loss is then recognized in the income statement.
Income Taxes
The Company records income taxes under the asset and liability method of
accounting for income taxes. Under the asset and liability method, deferred
income taxes are recognized for the tax consequences of "temporary differences"
by applying enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts and the tax bases
of existing assets and liabilities. The effect on deferred taxes of a change in
tax rates is recognized in income in the period that includes the enactment
date. A valuation allowance is recorded based on a determination of the ultimate
realizability of future deferred tax assets.
Stock-Based Compensation
Compensation costs attributable to stock option and similar plans are
recognized based on any difference between the quoted market price of the stock
on the date of grant over the amount the employee is required to pay to acquire
the stock (the intrinsic value method). Such amount, if any, is accrued over the
related vesting period, as appropriate. Since the Company uses the intrinsic
value method, it makes pro forma disclosures of net income and earnings per
share as if the fair-value based method of accounting had been applied.
Financial Instruments
The Company's financial instruments include cash and cash equivalents,
accounts receivable, notes receivable, restricted Common Stock, notes payable
and short-term debt. The carrying value of these instruments approximates the
fair value.
Revenue Recognition
Sales, net of appropriate cash discounts, product returns and sales
reserves, are recorded upon shipment of products. Revenues earned under research
contracts or licensing and supply agreements are either recognized when the
related contract provisions are met, or, if under such contracts or agreements
the Company has continuing obligations, the revenue is initially deferred and
then recognized over the life of the agreement.
Product Development and Research
The Company's research and development costs are expensed as incurred.
Net Loss per Common Share
Basic net loss per share of Common Stock was computed based on the
weighted average number of shares of Common Stock outstanding during the period.
Diluted net loss per share of Common Stock is computed using the weighted
average number of shares of Common Stock and potential dilutive stock
outstanding during the period. Potential dilutive Common Stock includes shares
issuable upon the exercise of Common Stock options and warrants. The effect of
the Company's potential dilutive Common Stock was anti-dilutive for the years
ended December 31, 1999, 1998, and 1997; as a result, basic and diluted weighted
average number of Common Shares outstanding and net loss per common share is the
same.
Comprehensive Income
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income,"
which establishes standards for the reporting and display of comprehensive
income and its components. Comprehensive income is defined to include all
changes in stockholders' equity during a period except those resulting from
investments by owners and distributions to owners. Since inception, the Company
has not had transactions that are required to be reported in other comprehensive
income. Comprehensive income (loss) for each period presented is equal to the
net loss for each period as presented in the Consolidated Statements of
Operations.
25
<PAGE> 26
Business Segments
In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 superseded SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise," replacing the
"industry segment" approach with the "management" approach. The management
approach indicates the internal organization that is used by management for
making operating decisions and assessing performance as the source of the
Company's reportable segments. SFAS No. 131 also requires disclosures about
products and services, geographic areas and major customers. The adoption of
SFAS No. 131 did not affect results of operations or financial position but did
affect the disclosure of segment information included in Note 17, "Business
Segments."
Reclassification
Certain previously reported amounts have been reclassified to conform with
the current period presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates include allowances for excess and
obsolete inventories, allowances for doubtful accounts and other assets, and
provisions for income taxes and related deferred tax asset valuation allowances.
Actual results could differ from those estimates.
2. INVESTMENTS
The Company has a 20% investment in Indovax, Ltd., an Indian poultry vaccine
company, which investment, because of the lack of significant influence, is
accounted for using the cost method. Dividends received from Indovax were $0 in
1999, $22,000 in 1998 and $23,000 in 1997. Other investments include 271,714
shares of restricted Common Stock of IMX Corporation ("IMX"), a publicly-traded
company, valued at $0.31 and $1.75 per share as of December 31, 1999 and 1998,
respectively, received pursuant to an exclusive Supply Agreement (the "Supply
Agreement") dated September 30, 1997 between the Company and IMX. These shares
are restricted both by governmental and contractual requirements and the Company
is unsure if or when it will be able to sell these shares. Through December 31,
1999, the Company had not yet recognized income related to this agreement. The
total investment in IMX stock was $84,000 at December 31, 1999 and $475,000 at
December 31, 1998, with corresponding amounts reflected as deferred income in
the accompanying Consolidated Balance Sheets.
Under the IMX agreement, the Company agreed to manufacture and supply 100%
of IMX's requirements for certain products at prices stipulated in the exclusive
Supply Agreement, subject to renegotiation subsequent to 1998. The Company is
currently involved in discussions with IMX concerning possible modifications to
the Supply Agreement as the Company has determined that it will not supply the
products stipulated by the Supply Agreement but may supply certain other
products based on negotiations with IMX.
3. SUPPLY AND LICENSING AGREEMENTS
In 1996, the Company entered into a license and supply agreement with Glaxo
Wellcome, Inc. ("Glaxo"). The agreement granted Glaxo exclusive rights to market
the WellSkin(TM) product line in the United States to physicians. Under the
terms of the agreement, IGI manufactured these products for Glaxo. This
agreement provided for Glaxo to pay royalties to IGI based on sales, and to pay
a $1,000,000 advance royalty to IGI in 1997 of which $300,000 was
non-refundable. The advance royalty was recorded as deferred income. In December
1998, the license and supply agreement with Glaxo was terminated. The
termination provided that IGI would purchase all of Glaxo's inventory and
marketing materials related to the WellSkin(TM) line in exchange for a $200,000
promissory note, due and payable in December 1999 bearing interest at a rate of
11%. The Company also issued a promissory note to Glaxo for $608,000,
representing the unearned portion of the advance royalty in exchange for Glaxo
transferring all rights to the WellSkin(TM) trademark to IGI. This note bears
interest at a rate of 11% and to date the Company has paid $200,000 and is to
pay $200,000 and $208,000 in June 2000 and December 2000, respectively. In
connection with the termination agreement, IGI reduced cost of sales by $404,000
in 1998 for amounts owed to Glaxo that were forgiven. In 1999, 1998 and 1997,
IGI recognized $0, $326,000 and $150,000, respectively, of royalty income under
the Glaxo Agreement.
In December 1998, the Company entered into a ten-year supply and sales
agreement with Genesis Pharmaceutical, Inc. ("Genesis") for the marketing and
distribution of the Company's WellSkin(TM) line of skin care products. The
agreement provided that Genesis would pay the Company a $1,000,000 trademark and
technology transfer fee, in four equal annual payments, which is being
recognized as revenue over the life of the agreement. In addition, Genesis will
pay the Company a royalty on its net sales with certain guaranteed minimum
royalty amounts. Genesis also purchased WellSkin(TM) inventory and marketing
materials previously purchased by the Company from Glaxo for $200,000.
In March 1997, IGI granted Kimberly Clark ("Kimberly") the worldwide rights
to use certain patents and technologies in the industrial hand care and cleaning
products field. Upon signing the agreement, Kimberly paid IGI a $100,000 license
fee that was recognized as revenue by the Company. The agreement requires
Kimberly to make royalty payments based on quantities of material
26
<PAGE> 27
produced. The Company was also guaranteed minimum royalties over the term of the
agreement. In both 1999 and 1998, the Company recognized $133,000 as income as a
result of the agreement. In July 1999, the Company signed a new exclusive
license agreement with Kimberly which terminated the agreement dated March 1997.
The July 1999 agreement granted Kimberly an exclusive license pertaining to the
patents and improvements within the field of industrial hand care and cleansing
products for non-retail markets. The new agreement will be in effect from July
29, 1999 through July 30, 2000. Under the new agreement, Kimberly paid the
Company consideration of $120,000 which is being recognized over the term of the
agreement.
The Company entered into a ten-year license agreement with Johnson & Johnson
Consumer Products, Inc. ("J&J") in 1995. The agreement provided J&J with a
license to produce and sell Novasome(R) microencapsulated retinoid products for
royalties to the Company on net sales of such products. J&J began selling such
products and making royalty payments in the first quarter of 1998. The Company
recognized $1,210,000 and $433,000 of income related to this agreement for the
years ended December 31, 1999 and 1998, respectively.
In April 1998, the Company entered into a research and development agreement
with National Starch and Chemical Company ("National Starch") to evaluate
Novasome(R) technology. The agreement provided for a minimum of at least six, or
up to as many as nine, monthly payments commencing in June 1998 plus $100,000
for the purchase of a patented Novamix(R) machine. The Company recognized
$60,000 and $210,000 in licensing income in 1999 and 1998, respectively, related
to the National Starch agreement. The agreement ended in June of 1999.
In August 1998, the Company granted Johnson & Johnson Medical ("JJM"), a
Division of Ethicon, Inc., worldwide rights for use of the Novasome(R)
technology for certain products and distribution channels. The agreement
provided for an up-front license fee of $150,000, which was recognized as
revenue by the Company in 1998, and future royalty payments based on JJM's sales
of licensed products. The Company is guaranteed minimum royalties over the
ten-year term of the agreement. In 1999, the Company recognized $126,000 of
royalty income.
See also Note 2 "Investments" for a description of the IMX Supply Agreement.
4. SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for income taxes and interest during the years ended December
31, 1999, 1998, and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ -------
(in thousands)
<S> <C> <C> <C>
Income taxes paid (refunded), net $ (1) $ 0 $ (33)
Interest 2,153 2,163 1,853
</TABLE>
In addition, during the years ended December 31, 1999, 1998, and 1997, the
Company had the following non-cash financing and investing activities:
<TABLE>
<CAPTION>
1999 1998 1997
---- ----- ---
(in thousands)
<S> <C> <C> <C>
Accrual for additions to other assets $ -- $ 40 $--
Tax benefits of exercise of common stock options -- -- --
7
Treasury stock repurchased -- -- 20
Note payable to Glaxo (See Notes 3 and 7) -- 808 --
Note receivable from Genesis (See Note 3) -- (112) --
Partial settlement of amounts due to stockholder in
Company Common Stock (See Note 15) 725 -- --
</TABLE>
See Note 2 "Investments" for discussion regarding IMX investment.
5. INVENTORIES
Inventories as of December 31, 1999 and 1998 consisted of:
<TABLE>
<CAPTION>
1999 1998
------ ------
(in thousands)
<S> <C> <C>
Finished goods $2,445 $2,785
Raw materials 2,464 2,210
Work-in-process 3,853 2,411
------ ------
$8,762 $7,406
====== ======
</TABLE>
27
<PAGE> 28
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost, as of December 31, 1999 and 1998
consisted of:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(in thousands)
<S> <C> <C>
Land $ 625 $ 625
Buildings 9,796 9,748
Machinery and equipment 10,598 9,986
Construction in progress 329 --
-------- --------
21,348 20,359
Less accumulated depreciation (11,567) (10,880)
-------- --------
Property, plant and equipment, net $ 9,781 $ 9,749
======== ========
</TABLE>
The Company recorded depreciation expense of $864,000, $861,000 and
$925,000 in 1999, 1998 and 1997, respectively.
7. NOTES PAYABLE
Notes payable at December 31, 1999 and 1998 consisted of:
<TABLE>
<CAPTION>
1999 1998
------- -------
(in thousands)
<S> <C> <C>
Glaxo (See Note 3) $ 408 $ 808
Other -- 261
------- -------
408 1,069
Less current portion (408) (661)
------- -------
$ -- $ 408
======= =======
</TABLE>
The Company's licensing and supply agreement with Glaxo was terminated in
December 1998, resulting in the issuance of a $200,000 promissory note which
bore interest at a rate of 11% and was paid in December 1999. The Company also
issued a promissory note to Glaxo for $608,000 bearing interest at 11%, which
represents the unearned portion of the advance royalty. Principal and interest
amounts are payable semi-annually; the Company made the first payment of
$200,000 in December 1999 and will make payments of $200,000 and $208,000 in
June 2000 and December 2000, respectively.
8. DEBT
Debt as of December 31, 1999 and 1998 consisted of:
<TABLE>
<CAPTION>
1999 1998
-------- --------
(in thousands)
<S> <C> <C>
Revolving credit facility $ 5,708 $ 6,657
Credit line -- 12,000
Term loan under Senior Debt Agreement 7,000 --
Notes under Subordinated Debt Agreement 7,000 --
-------- --------
19,708 18,657
Less unamortized debt discount under Subordinated Debt Agreement
(See Note 9) (2,775) --
-------- --------
16,933 18,657
Less revolving credit facility and current portion of long-term debt (6,175) (18,657)
-------- --------
$ 10,758 $ --
======== ========
</TABLE>
Aggregate annual principal payments due on debt for the years subsequent
to December 31, 1999 are as follows:
<TABLE>
<CAPTION>
YEAR (in thousands)
---- ------------
<S> <C>
2000 $ 6,175
2001 933
2002 933
2003 933
2004 and thereafter 10,734
-------
$19,708
=======
</TABLE>
28
<PAGE> 29
On October 29, 1999, the Company entered into a $22 million senior bank
credit agreement ("Senior Debt Agreement") with Fleet Capital Corporation and a
$7 million subordinated debt agreement ("Subordinated Debt Agreement") with
American Capital Strategies, Ltd.
These agreements enabled the Company to retire approximately $18.6 million
of outstanding debt with its former bank lenders, Fleet Bank, NH, and Mellon
Bank, N.A. In connection with the repayment of their loans, the Company's former
bank lenders agreed to return to the Company, for cancellation, warrants held by
them for the purchase of 810,000 shares of the Company's Common Stock at
exercise prices ranging from $2.00 to $3.50. Also, approximately $611,000 of
accrued interest was waived by the former bank group and is classified as an
extraordinary gain from the early extinguishment of debt in the 1999
Consolidated Statements of Operations.
The Senior Debt Agreement provides for a revolving line of credit facility
of up to $12 million based upon qualifying accounts receivable and inventory, a
$7 million term loan and a $3 million capital expenditures credit facility. The
borrowings under the revolving line of credit bear interest at the prime rate
plus 1.0% or the London Interbank offered rate plus 3.25%. The borrowings under
the term loan and capital expenditure credit facility bear interest at the prime
rate plus 1.5% or the London Interbank offered rate plus 3.75%. As of December
31, 1999, borrowings under the revolving line of credit, term loan and capital
expenditures credit facility were $5,708,000, $7,000,000 and $0, respectively.
Provisions under the revolving line of credit require the Company to maintain a
lockbox with the lender, allowing Fleet Capital to sweep cash receipts from
vendors and pay down the line of credit. Drawdowns on the line of credit are
made when needed to fund operations. Quarterly repayments of the term loan begin
on August 1, 2000 in the amount of $233,000. Repayments of the capital
expenditures credit facility are to be made quarterly over a five year period
after any initial drawdown.
Borrowings under the Subordinated Debt Agreement bear interest, payable
monthly, at the rate of 12.5%, ("cash portion of interest on subordinated
debt"), plus an additional interest component at the rate of 2%, ("Additional
interest component") which is payable at the Company's election in cash or in
Company Common Stock. As of December 31, 1999, borrowings under the subordinated
notes were $7,000,000, offset by an unamortized debt discount of $2,775,000. The
Subordinated Debt Agreement matures in October 2006. In connection with the
Subordinated Debt Agreement, the Company issued to the lender warrants to
purchase 1,907,543 shares of IGI Common Stock at an exercise price of $.01 per
share. (See Note 9, "Detachable Stock Warrants".)
American Capital Strategies, Ltd. has the right to designate for election
to the Company's Board of Directors that number of directors that bears the same
ratio to the total number of directors as the number of shares of Company Common
Stock owned by it plus the number of shares issuable upon exercise of its
warrants bear to the total number of outstanding shares of Company Common Stock
on a fully-diluted basis, provided that so long as it owns any Common Stock, or
warrants or any of its loans are outstanding, it shall have the right to
designate at least one director or observer on the Board of Directors. At
December 31, 1999 American Capital Strategies, Ltd. had one observer on the
Company's Board of Directors.
Borrowings under these new agreements amounted to $19.7 million at
December 31, 1999. The new agreements enabled the Company to retire
approximately $18.6 million outstanding with the previous bank lenders, cover
associated closing costs and provide a borrowing facility for working capital
and capital expenditures. To secure all of its obligations under these
agreements, the Company has granted the lenders a security interest in all of
the assets and properties of the Company and its subsidiaries.
These agreements contain financial and other covenants and restrictions.
The Company was not in compliance under certain covenants under the agreements
related to the fixed charges coverage ratio, maximum debt to equity ratio and
accounts payable ratio as of December 31, 1999; however, the lenders involved
have amended, as of April 12, 2000, the related agreements to waive the defaults
as of December 31, 1999.
In connection with the amendment to the Subordinated Debt Agreement,
American Capital Strategies, Ltd. agreed to defer the payment of its cash
portion of interest on subordinated debt from the period April 2000 to July 2000
until July 31, 2000. Interest payment of its cash portion of interest on
subordinated debt will be payable at the end of each subsequent three month
period thereafter. Furthermore, the existing Additional interest component at
the rate of 2% was increased to 2.25%, which is payable at the Company's
election in cash or in Company Common Stock. The increase of .25% in the
Additional interest component is in effect through March 2001 at which time the
Additional interest component rate is adjusted back down to 2%.
Despite its new financing arrangements, the Company remains highly
leveraged; furthermore, availability for borrowings under the revolving line of
credit facility is dependent on the level of its qualifying accounts receivable
and inventory. The Company expects to maintain compliance with the covenants
contained it its loan agreements through the year 2000.
9. DETACHABLE STOCK WARRANTS
<TABLE>
<CAPTION>
1999 1998
------ --------
(in thousands)
<S> <C> <C>
Initial valuation $2,842 $ --
Mark-to-market adjustment 854 --
------ --------
$3,696 $ --
====== ========
</TABLE>
29
<PAGE> 30
In connection with the October 29, 1999 refinancing, specifically the $7
million subordinated debt agreement, the Company issued warrants to purchase
1,907,543 shares of IGI Common Stock at an exercise price of $.01 per share to
American Capital Strategies, Ltd.
These warrants contain a right ("the put") to require the Company to
repurchase the warrants or the Common Stock acquired upon exercise of such
warrants at their then fair market value under certain circumstances, including
the earliest to occur of the following: a) October 29, 2004; b) the date of
payment in full of the Senior Debt and Subordinated Debt and all senior
indebtedness of the Company; or c) the sale of the Company or 30% or more of its
assets. The repurchase is to be settled in cash or Common Stock, at the option
of American Capital Strategies, Ltd. Due to the put feature and the potential
cash settlement which is outside of the Company's control, the warrants are
recorded as a liability which is marked-to-market, with changes in the market
value being recognized as a component of interest expense in the period of
change.
The warrants issued to American Capital Strategies, Ltd. were valued at
issuance date utilizing the Black-Scholes model and initially recorded as a
liability of $2,842,000. A corresponding debt discount was recorded at issuance,
representing the difference between the $7,000,000 proceeds received by the
Company and the total obligation, which includes principal of $7,000,000 and the
initial warrant liability of $2,842,000. The debt discount is being amortized to
interest expense over the term of the Subordinated Debt Agreement. In 1999, the
Company recognized $854,000 of non-deductible interest expense associated with
the mark-to-market adjustment of the warrants. The underlying liability for the
put is marked-to-market with changes to market value being recognized as a
component of interest expense.
On April 12, 2000, American Capital Strategies, Ltd. amended its loan
agreement whereby the put provision was replaced by a "make-whole" feature. The
"make-whole" feature requires the Company to compensate American Capital
Strategies, Ltd., in either Common Stock or cash, at the option of the Company,
in the event that American Capital Strategies, Ltd. ultimately realizes proceeds
from the sale of its Common Stock obtained upon exercise of its warrants that
are less than the fair value of the Common Stock upon exercise of such warrants
multiplied by the number of shares obtained upon exercise. Fair value of the
Common Stock upon exercise is defined as the 30 day average value prior to
notice of exercise. American Capital Strategies, Ltd. must exercise reasonable
effort to sell or place its shares in the marketplace over a 180 day period
before it can invoke the make-whole provision. As a result of the amendment, the
liability recognized related to the warrants will be reclassified as a component
of equity without a future mark-to-market adjustment effective April 12, 2000.
10. STOCK OPTIONS
Under the 1988 Non-Qualified Stock Option Plan, options have been granted
to consultants, scientific advisors and employees to purchase a maximum of
250,000 shares of Common Stock. Options outstanding under this plan at December
31, 1999 are generally exercisable in cumulative increments over four years
commencing one year from the date of grant. The 1988 Non-Qualified Stock Option
Plan formalized the granting of individual non-qualified stock options which had
been granted to officers and directors at prices equal to the fair market value
of the Company's stock on the date the options were granted. Exercise of the
majority of these options may be made at any time during a ten year period
commencing on the date of grant.
Under the 1989 and 1991 Stock Option Plans, options have been granted to
key employees, directors and consultants to purchase a maximum of 500,000 and
2,600,000 shares of Common Stock, respectively. Options, having a maximum term
of 10 years, have been granted at 100% of the fair market value of the Company's
stock at the time of grant. Both incentive stock options and non-qualified stock
options have been granted under the 1989 Plan and the 1991 Plan. Incentive stock
options are generally exercisable in cumulative increments over four years
commencing one year from the date of grant. Non-qualified options are generally
exercisable in full beginning six months after the date of grant.
In October 1998, the Company adopted the 1998 Directors Stock Plan. Under
this plan, 200,000 shares of the Company's Common Stock are reserved for
issuance to non-employee directors, in lieu of payment of directors' fees in
cash. In 1999 and 1998, 67,000 and 46,000 shares of Common Stock were issued as
consideration for directors' fees, respectively. The Company recognized $116,000
and $94,000 of expense related to these shares during the years ended December
31, 1999, and 1998, respectively.
Effective November 23, 1998, the Company's Board of Directors approved the
repricing of all outstanding options issued to then current employees and
consultants to $2.44 per share, 115% of the market value of the Company's Common
Stock on that date. The Board also approved the repricing of 225,000 options
held by the Chief Executive Officer to $2.66 per share, 125% of the market value
of the Company's Common Stock on that date. As a result, 331,465 and 225,000
outstanding options at November 23, 1998 were effectively rescinded and reissued
at exercise prices of $2.44 and $2.66, respectively. This resulted in a non-cash
expense related to non-employees of $84,000 being reflected in 1998 operating
results. All other conditions, such as term of option and vesting schedules,
remained unchanged.
In December 1998, the Company's Board of Directors adopted the 1999
Employee Stock Purchase Plan ("Plan"). An aggregate of 300,000 shares of Common
Stock may be issued pursuant to this plan. All the Company and its subsidiaries'
employees, including an officer or director who is also an employee, are
eligible to participate in the Plan. Shares under this plan are available for
purchase at 85% of the fair market value of the Company's stock on the first or
last day of the offering, whichever is lower. The Plan is
30
<PAGE> 31
implemented through offerings; the first offering commenced August 26, 1999 and
terminated December 31, 1999. The Company issued 27,000 shares pursuant to this
initial offering. Each offering thereafter will begin on the first day of each
year and end on the last day of each year.
In March 1999, the Company's Board of Directors approved the 1999 Stock
Incentive Plan ("1999 Plan"). The 1999 Plan replaces all presently authorized
stock option plans, and no additional options may be granted under those plans.
Under the 1999 Plan, options may be granted to all of the Company's employees,
officers, directors, consultants and advisors to purchase a maximum of 1,200,000
shares of Common Stock. A total of 872,000 options, having a maximum term of 10
years, have been granted at 100% of the fair market value of the Company's stock
at the time of grant. Options outstanding under this plan at December 31, 1999
are generally exercisable in cumulative increments over four years commencing
one year from date of grant.
In September 1999, the Company's Board of Directors approved the 1999
Director Stock Option Plan. The 1999 Director Stock Option Plan provides,
through 2002, for the grant of stock options to non-employee directors of the
Company at an exercise price equal to the fair market value per share on the
date of the grant. In September 1999, a total of 300,000 options were granted to
non-employee directors. The options granted under the 1999 Director Stock Option
plan vest in full twelve months after their respective grant dates and have a
maximum term of ten years.
31
<PAGE> 32
Stock option transactions in each of the past three years under the
aforementioned plans in total were:
<TABLE>
<CAPTION>
1989, 1991 AND 1999 PLANS 1988 NON-QUALIFIED PLAN
------------------------------------------------ -------------------------------------------
WEIGHTED WEIGHTED
SHARES PRICE PER SHARE AVERAGE PRICE SHARES PRICE PER SHARE AVERAGE PRICE
----------- --------------- ------------- ------ --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 1, 1997 shares
Under option 2,209,015 $3.65 - $9.88 $6.89 286,500 $3.97 - $6.80 $4.92
Granted 111,500 $3.75 - $5.69 $4.17 -- -- --
Exercised (10,000) $3.65 $3.65 (20,000) $3.97 $3.97
Cancelled (176,050) $3.97 - $9.88 $7.21 (100,000) $5.67 $5.33
---------- ---------
December 31, 1997 shares
Under option 2,134,465 $3.75 - $9.88 $6.74 166,500 $4.70 - $6.80 $4.78
Granted 491,450 $1.94 - $3.81 $2.56 -- -- --
Exercised -- -- -- -- -- --
Cancelled (652,250) $2.00 - $9.88 $6.52 (166,500) $2.66 - $6.80 $4.78
Rescinded (506,465) $4.70 - $9.88 $6.75 (50,000) $4.70 $4.70
Reissued 506,465 $2.44 - $2.66 $2.52 50,000 $2.66 $2.66
---------- ---------
December 31, 1998 shares
Under option 1,973,665 $1.94 - $9.88 $4.68 --
=========
Granted 1,447,000 $1.56 - $2.00 $1.62
Exercised -- --
Cancelled (173,465) $2.00 - $8.58 $3.67
---------
December 31, 1999 shares
Under option 3,247,200 $1.56 - $9.88 $3.37
=========
Shares subject to outstanding
options exercisable at:
December 31, 1997 1,854,715 $6.89 166,500 $4.78
========= ===== ======= =====
December 31, 1998 1,599,840 $5.18 -- $ --
========= ===== ======= =====
December 31, 1999 1,909,866 $4.52 -- $ --
========= ===== ======= =====
</TABLE>
The Company uses the intrinsic method to account for stock options. The
Company has recorded compensation expense of $49,000, $108,000 and $46,000 in
1999, 1998 and 1997, respectively, for options granted to consultants, including
the effects of the 1998 repricing.
If compensation cost for all grants under the Company's stock option plans
had been determined based on the fair value at the grant date consistent with
the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company's net loss and loss per share would have been increased to the pro forma
loss amounts indicated below:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(in thousands, except per share information)
<S> <C> <C> <C>
Net loss - as reported $ (1,584) $ (3,029) $ (1,208)
Net loss - pro forma (1,943) (3,618) (1,403)
Loss per share - as reported
Basic and diluted $ (.17) $ (.32) $ (.13)
Loss per share - pro forma
Basic and diluted $ (.21) $ (.38) $ (.15)
</TABLE>
The pro forma information has been determined as if the Company had
accounted for its employee stock options under the fair value method. The fair
value for these options was estimated at the grant date using the Black-Scholes
option-pricing model with the following assumptions for 1999, 1998 and 1997:
<TABLE>
<CAPTION>
ASSUMPTIONS 1999 1998 1997
----------- ---- ---- ----
<S> <C> <C> <C>
Dividend yield 0% 0% 0%
Risk free interest rate 4.93% - 6.36% 4.47% - 5.89% 5.84% - 6.63%
Estimated volatility factor 59.52% - 63.73% 39.51% - 47.87% 40.02% - 43.68%
Expected life 6 - 9 years 6 - 9 years 6 - 9 years
</TABLE>
32
<PAGE> 33
The following table summarizes information concerning outstanding and
exercisable options as of December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------- -----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
RANGE OF NUMBER OF REMAINING EXERCISE NUMBER OF EXERCISE
EXERCISE PRICE OPTIONS LIFE (YEARS) PRICE OPTIONS PRICE
- -------------- ------- ------------ ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$1.00 to $ 2.00 1,670,250 9.30 $1.64 416,938 $1.63
$2.01 to $ 3.00 506,450 4.75 $2.55 445,303 $2.53
$3.01 to $ 4.00 215,500 8.24 $3.41 192,625 $3.39
$4.01 to $ 5.00 20,000 1.00 $4.62 20,000 $4.62
$5.01 to $ 6.00 200,000 6.10 $5.76 200,000 $5.76
$6.01 to $ 7.00 290,000 5.15 $6.66 290,000 $6.66
$7.01 to $ 8.00 140,000 3.47 $7.47 140,000 $7.47
$8.01 to $ 9.00 150,000 5.29 $8.47 150,000 $8.47
$9.01 to $10.00 55,000 1.96 $9.66 55,000 $9.66
---------- ---------
$1.56 to $ 9.88 3,247,200 8.13 $2.65 1,909,866 $2.94
========= =========
</TABLE>
11. INCOME TAXES
The benefit for income taxes attributable to earnings before income taxes
and extraordinary gain included in the Consolidated Statements of Operations for
the years ended December 31, 1999, 1998 and 1997, was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----- ------- -----
(in thousands)
<S> <C> <C> <C>
Current tax expense:
Federal $ -- $ 14 $ --
State and local 9 16 11
----- ------- -----
Total current tax expense 9 30 11
----- ------- -----
Deferred tax expense (benefit)
Federal (505) (1,161) (637)
State and local (105) (160) 190
----- ------- -----
Total deferred tax benefit (610) (1,321) (447)
----- ------- -----
Total benefit for income taxes $(601) $(1,291) $(436)
===== ======= =====
</TABLE>
The charge for income taxes related to the extraordinary gain of $611,000
for the year ended December 31, 1999 consisted of $200,000 of deferred federal
income taxes and $24,000 of deferred state income taxes.
The benefit for income taxes differed from the amount of income taxes
determined by applying the applicable Federal tax rate (34%) to pretax loss
before extraordinary items as a result of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -----
(in thousands)
<S> <C> <C> <C>
Statutory benefit $ (874) $(1,469) $(559)
Non-deductible interest expense relating to mark-to-market of put 290 -- --
warrants (See Note 9)
Other non-deductible expenses 72 111 51
State income taxes, net of federal benefit 30 (240) (164)
Research and development tax credits (19) (33) (65)
(Decrease) Increase in valuation allowance (106) 393 299
Other, net 6 53 2
------- ------- -----
$ (601) $(1,291) $(436)
======= ======= =====
</TABLE>
33
<PAGE> 34
Deferred tax assets included in the Consolidated Balance Sheets as of
December 31, 1999 and 1998, consisted of the following:
<TABLE>
<CAPTION>
1999 1998
------- -------
(in thousands)
<S> <C> <C>
Property, plant and equipment $ (384) $ (498)
Prepaid license agreement 1,168 1,389
Deferred royalty payments 127 212
Tax operating loss carryforwards 3,672 3,046
Tax credit carryforwards 684 651
Reserves on inventory 407 510
Inventory 412 537
Non-employee stock options 156 217
Other future deductible temporary differences 606 525
Other future taxable temporary differences (43) (65)
------- -------
6,805 6,524
Less: valuation allowance (955) (1,061)
------- -------
Deferred taxes, net $ 5,850 $ 5,463
======= =======
</TABLE>
The Company evaluates the recoverability of its deferred tax assets based
on its history of operating earnings, its plans to sell the benefit of certain
state net operating losses, its expectations for the future, and the expiration
dates of the net operating loss carryforwards. As a result, the Company has
concluded it is not likely it will be able to fully realize certain of these
deferred tax assets. The Company establishes full valuation allowances for net
operating losses related to a specific subsidiary and for all net operating
losses expiring before 2002 in the states where the Company does not plan on
selling the benefit of the net operating losses. Where the Company intends to
sell the benefit of the state net operating losses, a valuation allowance is
established so that the net deferred tax asset is reflected at its net
realizable value.
Operating loss and tax credit carryforwards for tax reporting purposes as
of December 31, 1999 were as follows:
<TABLE>
<CAPTION>
(in thousands)
-------------
Federal:
<S> <C>
Operating losses (expiring through 2019) $9,432
Research tax credits (expiring through 2019) 567
Alternative minimum tax credits (available without expiration) 28
State:
Net operating losses - New Jersey (expiring through 2006) 7,412
Net operating losses - other states (expiring through 2019) 2,285
Research tax credits - New Jersey (expiring through 2006) 90
</TABLE>
Federal net operating loss carryforwards that expire through 2019 have
significant components expiring in 2007 (36%), 2018 (40%) and 2019 (20%).
12. COMMITMENTS AND CONTINGENCIES
The Company leases manufacturing and warehousing space, machinery and
equipment and automobiles under non-cancelable operating lease agreements
expiring at various dates in the future. Rental expense aggregated approximately
$362,000 in 1999, $371,000 in 1998, and $348,000 in 1997. Future minimum rental
commitments under non-cancelable operating leases as of December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
YEAR (IN THOUSANDS)
--------------
<S> <C>
2000 $57
2001 50
2002 32
2003 20
2004 5
</TABLE>
34
<PAGE> 35
13. U.S. REGULATORY PROCEEDINGS
The Company has substantially resolved the legal and regulatory issues
which arose in 1997 and 1998. For most of 1997 and 1998, the Company was subject
to intensive government regulatory scrutiny by the U.S. Departments of Justice,
Treasury and Agriculture. In June 1997, the Company was advised by the Animal
and Plant Health Inspection Service ("APHIS") of the United States Department of
Agriculture ("USDA") that the Company had shipped quantities of some of its
poultry vaccine products without complying with certain regulatory and record
keeping requirements. The USDA subsequently issued an order that the Company
stop shipment of certain products. Shortly thereafter, in July 1997, the Company
was advised that USDA's Office of Inspector General ("OIG") had commenced an
investigation into possible violations of the Virus Serum Toxin Act of 1914 and
alleged false statements made to APHIS.
Based upon these events the Board of Directors caused an immediate and
thorough investigation of the facts and circumstances of the alleged violations
to be undertaken by independent counsel. The Company also took steps to obtain
the approval of APHIS for resumption of shipments, including the submission of
an amended and modified regulatory compliance program, improved testing
procedures, and other safeguards. Based upon these actions, APHIS began lifting
the stop shipment order within a month of its issuance and released all
remaining products on March 27, 1998.
On March 24, 1999, the Company reached settlement with the Departments of
Justice, Treasury and Agriculture regarding their pending investigations and
proceedings. The terms of the settlement agreement provided that the Company
enter a plea of guilty to a misdemeanor and pay a fine of $15,000 and
restitution in the amount of $10,000. In addition, the Company was assessed a
penalty of $225,000 and began making monthly payments to the Treasury Department
which will continue through the period ending October 31, 2001. The expense of
settling with these agencies was reflected in the 1998 results of operations.
The settlement does not affect the informal inquiry being conducted by the SEC,
nor does it affect possible governmental action against former employees of the
Company.
In April 1998, the U.S. Securities and Exchange Commission ("SEC") advised
the Company that it was conducting an informal inquiry and requested information
and documents from the Company, which the Company voluntarily provided to the
SEC. At December 31, 1999, the informal inquiry remained open; however,
management does not expect that the inquiry will have a material adverse effect
on the financial position, cash flows or operations of the Company.
Other Pending Matters
On April 14, 1999, a lawsuit was filed in the U.S. District Court for the
Southern District of New York by Cohanzick Partners, LP, against IGI, Inc. and
certain of its present and former directors, officers and employees. The suit,
which seeks approximately $420,000 in actual damages together with fees, costs
and interests, alleges violations of the securities laws, fraud, and negligent
misrepresentation concerning certain disclosures made and other actions taken by
the Company in 1996 and 1997.
The Company believes that the plaintiff's allegations are factually
incorrect and legally inadequate and will defend the lawsuit vigorously. The
Company believes that an unfavorable outcome in the suit would not have a
material adverse impact upon the Company's financial condition, although it
could negatively affect the results of operations for the period in which the
matter is resolved.
14. EXPORT SALES
Export revenues by the Company's domestic operations accounted for
approximately 33% of the Company's total revenues in 1999, 32% in 1998, and 35%
in 1997. The following table shows the geographical distribution of the
Company's total revenues:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
(in thousands)
<S> <C> <C> <C>
Latin America $ 3,038 $ 4,445 $ 4,593
Asia/Pacific 5,250 3,787 4,659
Europe 1,335 1,151 1,263
Africa/Middle East 1,681 1,380 1,362
------- ------- -------
11,304 10,763 11,877
United States/Canada 23,290 22,432 22,466
------- ------- -------
Total revenues $34,594 $33,195 $34,343
======= ======= =======
</TABLE>
Export sales net accounts receivable balances at December 31, 1999 and
1998 approximated $4,044,000 and $4,002,000, respectively.
35
<PAGE> 36
15. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company's former Chief Executive Officer had chosen to defer his
salary earned in 1999 and 1998 until the Company's cash flow stabilized.
Compensation earned which was to be deferred under this plan would have been
$460,000 and $380,000 for 1999 and 1998, respectively.
In September 1999, the Company's Board of Directors agreed to settle the
Company's obligation in shares of Company Common Stock. The total settlement to
date of $725,000 in the form of 417,744 shares reflects compensation earned from
January 1998 through September 1999. The breakdown of the dollar amounts and
resulting number of shares is as follows: $610,000 representing the period from
January 1998 through June 1999 was settled using the September 15 grant price of
$1 3/4, resulting in the issuance of 348,571 shares, and $115,000 representing
the period from July 1999 through September 1999 was settled using the average
trading price for the five days prior to the end of the third quarter, resulting
in the issuance of 69,173 shares.
Accrued compensation of $115,000 in the Consolidated Balance Sheets as of
December 31, 1999 represents compensation earned during the period October 1999
through December 1999. This amount will be settled in Company Common Stock in
the first quarter of 2000.
16. EMPLOYEE BENEFITS
The Company has a 401(k) contribution plan, pursuant to which employees,
who have completed six months of employment with the Company or its subsidiaries
as of specified dates, may elect to contribute to the plan, in whole
percentages, up to 18% of compensation, subject to a minimum contribution by
participants of 2% of compensation and a maximum contribution of $10,000 for
1999. The Company contribution is in the form of Company Common Stock, which is
vested immediately. The Company matches 25% of the first 5% of compensation
contributed by participants and contributes, on behalf of each participant, $4
per week of employment during the year. The Company has recorded charges to
expense related to this plan of approximately $77,000, $82,000, and $113,000 for
the years 1999, 1998 and 1997, respectively.
17. BUSINESS SEGMENTS
The Company has three reportable segments: Consumer Products, Companion
Pet Products and Poultry Vaccines. Products from each of the segments serve
different markets, use different channels of distribution, and, for two of the
segments, have different forms of government oversight.
Consumer Products Business
IGI's Consumer Products business is primarily focused on the continued
commercial use of the Novasome(R) microencapsulation technologies for skin care
applications. These efforts have been directed toward the development of high
quality skin care products marketed by the Company or through collaborative
arrangements with cosmetic and consumer products companies. Revenues from the
Company's Consumer Products business were principally based on formulations
using the Novasome(R) encapsulation technology. Sales to Estee Lauder accounted
for $4,237,000 or 13% of 1999 sales, $3,494,000 or 11% for 1998, and $2,408,000
or 7% in 1997.
Companion Pet Products
The Company sells its Companion Pet Products to the veterinarian market
under the EVSCO Pharmaceuticals trade name and to over-the-counter ("OTC") pet
products market under the Tomlyn and Luv'Em labels.
The EVSCO line of veterinary products is used by veterinarians in caring
for dogs and cats, and includes pharmaceuticals such as antibiotics,
anti-inflammatories and cardiac drugs, as well as nutritional supplements,
vitamins, insecticides and diagnostics. Product forms include gel, tablets,
creams, liquids, ointments, powders, emulsions and shampoos. EVSCO also produces
professional grooming aids for dogs and cats.
EVSCO products are manufactured at the Company's facility in Buena, New
Jersey and are sold through distributors to veterinarians. The facility operates
in accordance with Good Manufacturing Practices ("GMP") of the federal Food and
Drug Administration ("FDA").
The Tomlyn product line includes pet grooming, nutritional and therapeutic
products, such as shampoos, grooming aids, vitamin and mineral supplements,
insecticides and OTC medications. The products are manufactured at the Company's
facility in Buena, New Jersey, and are sold directly to pet superstores and
through distributors to independent merchandising chains, shops and kennels.
Most of the Company's veterinary products are sold through distributors.
Poultry Vaccines
The Company produces and markets poultry vaccines manufactured by the
chick embryo, tissue culture and bacteriologic methods. The Company produces
vaccines for the prevention of various chicken and turkey diseases and has more
than 60 vaccine
36
<PAGE> 37
licenses granted by the USDA. The Company also produces and
sells nutritional, anti-infective and sanitation products used primarily by
poultry producers. The Company sells these products in the United States and,
through its export sales staff, to local distributors in other countries. The
sales force is supplemented and supported by technical and customer service
personnel. The USDA regulates the Company's vaccine production in the United
States.
Summary Segment Data
Summary data related to the Company's reportable segments for the three
years ended December 31, 1999 appears below:
<TABLE>
<CAPTION>
CONSUMER COMPANION PET POULTRY
PRODUCTS PRODUCTS VACCINES CORPORATE* CONSOLIDATED
-------- ------------- -------- ---------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
1999
Revenues $6,938 $13,595 $ 14,061 $ -- $ 34,594
Operating profit 3,913 3,850 (1,041) (5,216) 1,506
Depreciation and amortization 188 254 557 28 1,027
Identifiable assets 3,885 6,994 13,178 9,805 33,862
Capital expenditures 57 207 800 -- 1,064
1998
Revenues $5,839 $12,513 $ 14,843 $ -- $ 33,195
Operating profit (loss) 3,688 2,844 (517) (6,925) (910)
Depreciation and amortization 199 206 560 27 992
Identifiable assets 4,886 5,660 13,190 8,320 32,056
Capital expenditures 9 186 412 -- 607
1997
Revenues $5,255 $12,444 $ 16,644 $ -- $ 34,343
Operating profit (loss) 1,473 2,577 1,202 (5,032) 220
Depreciation and amortization 161 225 625 26 1,037
Identifiable assets 4,466 6,386 15,434 7,464 33,750
Capital expenditures 4 96 536 -- 636
</TABLE>
* Note:
(A) Unallocated corporate expenses are principally general and administrative
expenses.
(B) Corporate assets represent fixed assets, deferred tax assets, cash and cash
equivalents and deferred financing costs.
(C) Transactions between reportable segments are not material.
37
<PAGE> 38
IGI, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
------ ------ ------ ------
ADDITIONS
----------------------------
BALANCE (1) CHARGED BALANCE
AT BEGINNING TO COSTS (2) CHARGED TO AT END
DESCRIPTION OF PERIOD AND EXPENSES OTHER ACCOUNTS DEDUCTIONS OF PERIOD
----------- ------------ ------------ -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
December 31, 1997:
Allowance for doubtful accounts $ 238 $ 793 $ -- $ 128(A) $ 903
Inventory valuation allowance 617 603 -- 107(B) 1,113
Other asset valuation allowance 186 -- -- 186(A) --
Valuation allowance on net
deferred tax assets 369 299 -- -- 668
December 31, 1998:
Allowance for doubtful accounts $ 903 $ 150 $ -- $ 537(A) $ 516
Inventory valuation allowance 1,113 1,332 -- 1,089(B) 1,356
Valuation allowance on net
deferred tax assets 668 382 11 -- 1,061
December 31, 1999:
Allowance for doubtful accounts $ 516 $ 243 $ -- $ 320(A) $ 354
Inventory valuation allowance 1,356 873 -- 1,361(B) 868
Valuation allowance on net
deferred tax assets 1,061 -- -- 105(C) 955
</TABLE>
(A) Relates to write-off of uncollectible accounts and recoveries of previously
reserved amounts.
(B) Disposition of obsolete inventories.
(C) Relates to reduction in the valuation allowance as a result of the
expiration of certain state net operating losses in 1999, for which full
valuation allowances had previously been provided.
<PAGE> 39
IGI, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibits marked with a single asterisk are filed herewith, and exhibits
marked with a double asterisk reference management contract, compensatory plan
or arrangement, filed in response to Item 14(a)(3) of the instructions to Form
10-K. The other exhibits listed have previously been filed with the Commission
and are incorporated herein by reference.
(3)(a) Certificate of Incorporation of IGI, Inc., as amended.
[Incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8, File No. 33-63700, filed June
2, 1993.]
(b) By-laws of IGI, Inc., as amended. [Incorporated by reference to
Exhibit 2(b) to the Company's Registration Statement on Form S-18,
File No. 002-72262-B, filed May 12, 1981.]
(4) Specimen stock certificate for shares of Common Stock, par value
$.01 per share. [Incorporated by reference to Exhibit (4) to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989, File No. 001-08568, filed April 2, 1990 (the
"1989 Form 10-K".)]
**(10.1) IGI, Inc. 1983 Incentive Stock Option Plan. [Incorporated by
reference to Exhibit A to the Company's Proxy Statement for the
Annual Meeting of Stockholders held May 11, 1983, File No.
000-10063, filed April 11, 1983.]
**(10.2) IGI, Inc. 1989 Stock Option Plan. [Incorporated by reference to the
Company's Proxy Statement for the Annual Meeting of Stockholders
held May 11, 1989, File No. 001-08568, filed April 12, 1989.]
**(10.3) Employment Agreement by and between the Company and Edward B. Hager
dated as of January 1, 1990. [Incorporated by reference to Exhibit
(10)(c) to the 1989 Form 10-K.]
**(10.4) Extension of Employment Agreement by and between the Company and
Edward B. Hager dated as of March 11, 1993. [Incorporated by
reference to Exhibit (10)(d) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1992, File No.
001-08568, filed March 31, 1993 (the "1992 Form 10-K".)]
**(10.5) Extension of Employment Agreement by and between the Company and
Edward B. Hager dated as of March 14, 1995. [Incorporated by
reference to Exhibit (10)(e) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994, File No.
001-08568, filed March 31, 1995.]
**(10.6) Amendment to Employment Agreement by and between the Company and
Edward B. Hager dated as of October 1, 1997. [Incorporated by
reference to Exhibit 10(a) to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997, File No.
001-08568, filed November 13, 1997.]
**(10.7) IGI, Inc. Non-Qualified Stock Option Plan. [Incorporated by
reference to Exhibit (3)(k) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1991, File No.
001-08568, filed March 30, 1992 (the "1991 Form 10-K".)]
**(10.8) IGI, Inc. 1991 Stock Option Plan, [Incorporated by reference to the
Company's Proxy Statement for the Annual Meeting held May 9, 1991,
File No. 001-08568, filed April 5, 1991.]
**(10.9) Amendment No. 1 to IGI, Inc. 1991 Stock Option Plan as approved by
Board of Directors on March 11, 1993. [Incorporated by reference to
Exhibit 10(p) to the 1992 Form 10-K.]
**(10.10) Amendment No. 2 to IGI, Inc. 1991 Stock Option Plan as approved by
Board of Directors on March 22, 1995. [Incorporated by reference to
the Appendix to the Company's Proxy Statement for the Annual
Meeting of Stockholders held May 9, 1995, filed April 14, 1995.]
**(10.11) Amendment No. 3 to IGI, Inc. 1991 Stock Option Plan as approved by
Board of Directors on March 19, 1997. [Incorporated by reference to
Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, File No. 001-08568, filed August 14,
1997.]
**(10.12) Amendment No. 4 to IGI, Inc. 1991 Stock Option Plan as approved by
Board of Directors on March 17, 1998. [Incorporated by reference to
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, File No. 001-08568, filed November 6, 1998.]
(10.13) Form of Registration Rights Agreement signed by all purchasers of
Common Stock in connection with private placement on January 2,
1992. [Incorporated by reference to Exhibit (3)(m) to the 1991 Form
10-K.]
<PAGE> 40
(10.14) License Agreement by and between Micro-Pak, Inc. and IGEN, Inc.
[Incorporated by reference to Exhibit (10)(v) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1995, File No. 001-08568, filed March 29, 1996.]
(10.15) Registration Rights Agreement between IGI, Inc. and SmithKline
Beecham p.l.c. dated as of August 2, 1993. [Incorporated by
reference to Exhibit (10)(s) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1993, File No.
001-08568, filed March 29, 1994.]
(10.16) Supply Agreement, dated as of January 27, 1997, between IGI, Inc.
and Glaxo Wellcome Inc. [Incorporated by reference to Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q/A, Amendment No. 1,
for the quarter ended March 31, 1997, File No. 001-08568, filed
June 16, 1997.]
**(10.17) IGI, Inc. 1998 Director Stock Option Plan as approved by the Board
of Directors on October 19, 1998. [Incorporated by reference to
Exhibit (10.38) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, File No. 001-08568, filed
April 12, 1999. (the "1998 Form 10-K".)]
(10.18) Common Stock Purchase Warrant No. 5 to purchase 150,000 shares of
IGI, Inc. Common Stock issued to Fleet Bank, NH on March 11, 1999.
[Incorporated by reference to Exhibit (10.40) to the 1998 Form
10-K.]
(10.19) Common Stock Purchase Warrant No. 7 to purchase 120,000 shares of
IGI, Inc. Common Stock issued to Mellon Bank, N.A. on March 11,
1999. [Incorporated by reference to Exhibit (10.42) to the 1998
Form 10-K.]
**(10.20) Employment Agreement, dated May 1, 1998, between IGI, Inc. and Paul
Woitach. [Incorporated by reference to Exhibit (10.44) to the 1998
Form 10-K.]
*(10.21) Loan and Security Agreement by and among Fleet Capital Corporation
and IGI, Inc., together with its subsidiaries, dated October 29,
1999.
*(10.22) Revolving Credit Note issued by IGI, Inc., together with its
subsidiaries, to Fleet Capital Corporation, dated October 29, 1999.
*(10.23) Term Loan A Note issued by IGI, Inc., together with its
subsidiaries, to Fleet Capital Corporation, dated October 29, 1999.
*(10.24) Term Loan B Note issued by IGI, Inc., together with its
subsidiaries, to Fleet Capital Corporation, dated October 29, 1999.
*(10.25) Capital Expenditure Loan Note issued by IGI, Inc., together with
its subsidiaries, to Fleet Capital Corporation, dated October 29,
1999.
*(10.26) Trademark Security Agreement issued by IGI, Inc. in favor of Fleet
Capital Corporation, dated October 29, 1999.
*(10.27) Trademark Security Agreement issued by IGEN, Inc. in favor of Fleet
Capital Corporation, dated October 29, 1999.
*(10.28) Trademark Security Agreement issued by ImmunoGenetics, Inc. in
favor of Fleet Capital Corporation, dated October 29, 1999.
*(10.29) Patent Security Agreement issued by IGI, Inc. in favor of Fleet
Capital Corporation, dated October 29, 1999.
*(10.30) Patent Security Agreement issued by IGEN, Inc. in favor of Fleet
Capital Corporation, dated October 29, 1999.
*(10.31) Pledge Agreement by and between Fleet Capital Corporation and IGEN,
Inc., dated October 29, 1999.
*(10.32) Open-Ended Mortgage, Security Agreement and Assignment of Leases
and Rents (Atlantic County, New Jersey) issued by IGI, Inc. to
Fleet Capital Corporation, dated October 29, 1999.
*(10.33) Open-Ended Mortgage, Security Agreement and Assignment of Leases
and Rents (Cumberland County, New Jersey) issued by IGI, Inc. to
Fleet Capital Corporation, dated October 29, 1999.
*(10.34) Subordination Agreement by and between Fleet Capital Corporation
and American Capital Strategies, Ltd., dated October 29, 1999.
*(10.35) Note and Equity Purchase Agreement by and among American Capital
Strategies, Ltd. and IGI, Inc., together with its subsidiaries,
dated as of October 29, 1999.
*(10.36) Series A Senior Secured Subordinated Note issued by IGI, Inc.,
together with its subsidiaries, to American Capital Strategies,
Ltd., dated as of October 29, 1999.
*(10.37) Series B Senior Secured Subordinated Note issued by IGI, Inc.,
together with its subsidiaries, to American Capital Strategies,
Ltd., dated as of October 29, 1999.
*(10.38) Warrant to purchase 1,907,543 shares of IGI, Inc. Common Stock,
issued to American Capital Strategies, Ltd. on October 29, 1999.
*(10.39) Security Agreement issued by IGI, Inc., together with its
subsidiaries, in favor of American Capital Strategies, Ltd., dated
as of October 29, 1999.
*(10.40) Trademark Security Agreement issued by IGI, Inc. in favor of
American Capital Strategies, Ltd., dated as of October 29, 1999.
*(10.41) Trademark Security Agreement issued by ImmunoGenetics, Inc. in
favor of American Capital Strategies, Ltd., dated as of October 29,
1999.
<PAGE> 41
*(10.42) Trademark Security Agreement issued by Blood Cells, Inc. in favor
of American Capital Strategies, Ltd., dated as of October 29, 1999.
*(10.43) Trademark Security Agreement issued by IGEN, Inc. in favor of
American Capital Strategies, Ltd., dated as of October 29, 1999.
*(10.44) Patent Security Agreement issued by IGI, Inc. in favor of American
Capital Strategies, Ltd., dated as of October 29, 1999.
*(10.45) Patent Security Agreement issued by ImmunoGenetics, Inc. in favor
of American Capital Strategies, Ltd., dated as of October 29, 1999.
*(10.46) Patent Security Agreement issued by Blood Cells, Inc. in favor of
American Capital Strategies, Ltd., dated as of October 29, 1999.
*(10.47) Patent Security Agreement issued by IGEN, Inc. in favor of American
Capital Strategies, Ltd., dated as of October 29, 1999.
*(10.48) Georgia Leasehold Deed to Secure Debt issued by IGI, Inc. in favor
of American Capital Strategies, dated as of October 29, 1999.
*(10.49) Open-Ended Mortgage, Security Agreement and Assignment of Leases
and Rents (Cumberland County, New Jersey) issued by IGI, Inc. in
favor of American Capital Strategies, Ltd., dated as of October 29,
1999.
*(10.50) Open-Ended Mortgage, Security Agreement and Assignment of Leases
and Rents (Atlantic County, New Jersey) issued by IGI, Inc. in
favor of American Capital Strategies, Ltd., dated as of October 29,
1999.
*(10.51) Pledge and Security Agreement issued by IGI, Inc. and
ImmunoGenetics, Inc. in favor of American Capital Strategies, Ltd.,
dated as of October 29, 1999.
* **(10.52) Employment Agreement between IGI, Inc. and Manfred Hanuschek dated
as of July 26, 1999.
* **(10.53) Amendment to Employment Agreement between Manfred Hanuschek and
IGI, Inc., dated March 9, 2000.
* **(10.54) Employment Agreement between IGI, Inc. and Robert McDaniel, dated
as of September 1, 1999.
*(10.55) Pledge Agreement by and between Fleet Capital Corporation and IGI,
Inc., dated October 29, 1999.
* **(10.56) Employment Agreement between IGI, Inc. and Rajiv Mathur, dated
February 22, 1999.
*(10.57) Amendment No.1 to the Note and Equity Purchase Agreement by and
between American Capital Strategies, Ltd. and IGI, Inc., together
with its subsidiaries dated as of April 12, 2000.
*(10.58) Amendment to Loan and Security Agreement by and between Fleet
Capital Corporation and IGI, Inc., together with its subsidiaries
dated as of April 12, 2000.
*(21) List of Subsidiaries.
*(23) Consent of PricewaterhouseCoopers LLP.
*(27.1) Financial Data Schedules for the year ended December 31, 1999.
*(27.2) Financial Data Schedules for the year ended December 31, 1998.
<PAGE> 1
EXHIBIT *(10.21)
IGI, INC.,
IGEN, INC.,
IMMUNOGENETICS, INC.
BLOOD CELLS, INC.
AND
FLEET CAPITAL CORPORATION
LOAN AND SECURITY AGREEMENT
Dated: October 29, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. CREDIT FACILITY 1
1.1 Revolving Credit Loans 1
1.2 Term Loan 1
1.3 Capital Expenditure Loans 2
1.4 Notes 2
SECTION 2. INTEREST, FEES AND CHARGES 3
2.1 Interest 3
2.2 Computation of Interest and Fees 7
2.3 Commitment Fee 7
2.4 Unused Line Fee 7
2.5 Collateral Management Fee 7
2.6 Audit Fees 8
2.7 Reimbursement of Expenses 8
2.8 Bank Charges 8
2.9 Indemnity re: LIBOR 8
SECTION 3. LOAN ADMINISTRATION 9
3.1 Manner of Borrowing Revolving Credit Loans and Capital
Expenditure Loans 9
3.2 Payments 10
3.3 Mandatory and Permissive Prepayments 11
3.4 Application of Payments and Collections 11
3.5 All Loans to Constitute One Obligation 12
3.6 Loan Account 12
3.7 Statements of Account 12
3.8 Agent for Borrowers- Each Borrower hereby appoints IGI as its
agent on behalf of each Borrower to make
requests for loans and to make such
interest rate elections which by the
terms of this Agreement may be requested
or elected by Borrowers, and any such
request or election made by IGI shall
constitute an effective request or
election hereunder notwithstanding any
reference generally to the "Borrowers" or
any of them. Lender is authorized to rely
on any such request or election so made
by IGI, and any such request or election
so made will be deemed to have been made
by all Borrowers.
SECTION 4.TERM AND TERMINATION 12
4.1 Term of Agreement 12
4.2 Termination 12
SECTION 5. SECURITY INTERESTS 13
5.1 Security Interest in Collateral 13
5.2 Lien Perfection; Further Assurances 14
5.3 Real Property 15
SECTION 6. COLLATERAL ADMINISTRATION 15
6.1 General 15
6.2 Administration of Accounts 16
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
6.3 Administration of Inventory 18
6.4 Administration of Equipment 18
6.5 Payment of Charges 19
SECTION 7. REPRESENTATIONS AND WARRANTIES 19
7.1 General Representations and Warranties 19
7.1.26 Year 2000 Compliance 24
7.2 Continuous Nature of Representations and Warranties 25
7.3 Survival of Representations and Warranties 25
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS 25
8.1 Affirmative Covenants 25
8.1.5 Year 2000 Compliance 27
8.2 Negative Covenants 27
8.3 Specific Financial Covenants 30
SECTION 9. CONDITIONS PRECEDENT 30
9.1 Documentation 30
9.2 No Default 31
9.3 Other Loan Documents 31
9.4 Availability 32
9.5 No Litigation 32
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT 32
10.1 Events of Default 32
10.2 Acceleration of the Obligations 34
10.3 Other Remedies 34
10.4 Remedies Cumulative; No Waiver 35
SECTION 11. MISCELLANEOUS 36
11.1 Power of Attorney 36
11.2 Indemnity 37
11.3 Modification of Agreement; Sale of Interest 37
11.4 Severability 37
11.5 Successors and Assigns 38
11.6 Cumulative Effect; Conflict of Terms 38
11.7 Execution in Counterparts 38
11.8 Notice 38
11.9 Lender's Consent 39
11.10 Credit Inquiries 39
11.11 Time of Essence 39
11.12 Entire Agreement 39
11.13 Interpretation 39
11.15 GOVERNING LAW; CONSENT TO FORUM 40
11.16 WAIVERS BY BORROWERS 41
</TABLE>
ii
<PAGE> 4
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 29th day of October, 1999, by
and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island corporation
with an office at 200 Glastonbury Boulevard, Glastonbury, CT 06033 and IGI, INC.
("IGI"), a Delaware corporation; IGEN, INC., ("IGEN"), a Delaware corporation,
IMMUNOGENETICS, INC., ("ImmunoGenetics"), a Delaware corporation, and BLOOD
CELLS, INC. ("Blood Cells"), a Delaware corporation, (IGI, IGEN, ImmunoGenetics,
and Blood Cells, each a "Borrower and collectively, "Borrowers"), each with its
chief executive office at Wheat Road and Lincoln Avenue, Buena, NJ 08310.
Capitalized terms used in this Agreement have the meanings assigned to them
in Appendix A, General Definitions. Accounting terms not otherwise specifically
defined herein shall be construed in accordance with GAAP, consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to $22,000,000
available upon Borrowers' request therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, for so long as no Default or
Event of Default exists, to make Revolving Credit Loans to Borrowers from time
to time, as requested by Borrowers in the manner set forth in subsection 3.1.1
hereof, up to a maximum principal amount at any time outstanding equal to the
Borrowing Base at such time which Revolving Credit Loans shall be repayable in
accordance with the terms of the Revolving Credit Note. If the unpaid balance of
the Revolving Credit Loans should exceed at any time the Borrowing Base or any
other limitation set forth in this Agreement, such excess Revolving Credit Loans
shall nevertheless constitute Obligations that are due and payable on demand,
secured by the Collateral (except the Georgia Real Estate) and entitled to all
benefits thereof. Lender shall have the right to establish reserves from time to
time, in its discretion, in such amounts and with respect to such matters, as
Lender deems necessary or appropriate.
1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used solely
(i) for Borrowers' working capital needs, in a manner consistent with the
provisions of this Agreement and all applicable laws, and (ii) to repay in full
Borrowers' existing borrowed institutional indebtedness.
1.2 Term Loan.
1.2.1 Term Loan A. Lender agrees to make (Term Loan A to Borrowers on
the Closing Date in the principal amount of $6,650,000, which shall be secured
by all of the Collateral (except the Georgia Real Estate) and shall be payable
in equal quarterly installments of $233,333.33 each commencing on the first day
of the tenth month following the month in which Closing occurs and continuing on
the first day of each quarter thereafter, with a final payment of the entire
balance of Term Loan A due on the earlier of (i) the last day of the Original
Term or (ii) termination of this
1
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Agreement in accordance with Section 4. Term Loan A shall be repaid in
accordance with the provisions of the Term Loan A Note.
1.2.2 Term Loan B. Lender agrees to make Term Loan B to Borrowers on
the Closing Date in the principal amount of $350,000, which shall be secured by
all of the Collateral (including without limitation the Georgia Real Estate) and
shall be payable in one installment of the full principal amount on the earlier
of (i) the last day of the Original Term or (ii) termination of this Agreement
in accordance with Section 4. Term Loan B shall be repaid in accordance with the
provisions of the Term Loan B Note.
1.2.3 Use of Proceeds. The proceeds of the Term Loan shall be used
solely to repay in full Borrowers' existing borrowed institutional indebtedness.
1.3 Capital Expenditure Loans.
1.3.1 Lender agrees to make Capital Expenditure Loans to Borrowers from
time to time, so long as no Default or Event of Default exists, as requested by
Borrowers in the manner set forth in subsection 3.1.1 provided however that the
Capital Expenditure Loans shall not exceed $3,000,000 in the aggregate. To the
extent payments are made from time to time on the Capital Expenditure Loans,
they may not be reborrowed. Each Capital Expenditure Loan shall be in the
minimum amount of One Hundred Thousand Dollars ($100,000) and no Capital
Expenditure Loan shall exceed ninety percent (90%) of the invoice price of new
equipment (exclusive of taxes, license, transportation and installation
expenses) acquired by Borrowers with such Capital Expenditure Loan for use in
Borrowers' existing manufacturing facilities. The Capital Expenditure Loans
shall be repaid in accordance with the provisions of the Capital Expenditure
Loan Note. Each Capital Expenditure Loan shall be secured by all of the
Collateral, and shall be payable in equal quarterly installments, each of which
shall be one-twentieth (1/20) of the initial principal balance of the particular
Capital Expenditure Loan, with the first payment for each Capital Expenditure
Loan commencing on the first day of the first full fiscal quarter beginning
after the date the respective Capital Expenditure Loan is made and continuing on
the first day of each fiscal quarter thereafter, with a final payment of the
entire balance of each Capital Expenditure Loan due on the earlier of (i) the
last day of the Original Term or (ii) termination of this Agreement in
accordance with Section 4.
1.3.2 Use of Proceeds The Capital Expenditure Loans shall be used
solely to finance Capital Expenditures permitted to be made under this
Agreement.
1.4 Notes. Borrowers shall execute Notes on the Closing Date to evidence
their obligation to repay the respective Loans.
2
<PAGE> 6
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Revolving Credit Interest:
(a) Rate Options. At the time of each Revolving Credit Loan under
the Revolving Credit Facility, and thereafter from time to time, Borrowers shall
have the right, subject to the terms and conditions of this Agreement, and
provided no Default or Event of Default has occurred and is continuing, to
designate to Lender in writing that all or a portion of the Revolving Credit
Loans shall bear interest at either the (i) Revolving Credit LIBOR Rate or (ii)
Revolving Credit Base Rate. Interest on each portion thereof shall accrue and be
paid at the time and rate applicable to the respective option selected by
Borrowers or otherwise governing under the terms of this Agreement. If for any
reason the Revolving Credit LIBOR Rate option is unavailable, the Revolving
Credit Base Rate shall apply. The rate of interest on Revolving Credit Base Rate
Loans shall increase or decrease by an amount equal to any increase or decrease
in the Base Rate effective as of the opening of business on the day that any
such change in the Base Rate occurs.
(i) Revolving Credit LIBOR Rate Option:
(A) Requests. Provided no Default or
Event of Default has occurred and is continuing, and subject to the provisions
of this Section 2.1.1 (a)(i), if Borrowers desire to have the Revolving Credit
LIBOR Rate apply to all or a portion of the Revolving Credit Loans, Borrowers
shall give Lender a written irrevocable request no later than 11:00 A.M. Eastern
time on the second (2nd) Business Day prior to the requested borrowing date
specifying (i) the date the Revolving Credit LIBOR Rate shall apply (which shall
be a Business Day), (ii) the LIBOR Interest Period, and (iii) the amount to be
subject to the Revolving Credit LIBOR Rate provided that such amount shall be in
the minimum amount of $500,000. In no event may Borrowers have outstanding at
any time more than six (6) LIBOR Rate Loans. If an Event of Default is
outstanding, Lender shall have the right, in its sole discretion, to convert any
or all of the Revolving Credit LIBOR Rate Loans then currently outstanding to
Revolving Credit Base Rate Loans, and Borrowers shall be required to reimburse
Lender for any applicable losses or expenses under Section 2.9 in connection
with any such conversion.
(B) LIBOR Interest Periods.
Revolving Credit LIBOR Rate Loans shall be selected by Borrowers for a LIBOR
Interest Period during which the Revolving Credit LIBOR Rate is applicable;
provided, however, that if the LIBOR Interest Period would otherwise end on a
day which shall not be a London Business Day, such LIBOR Interest Period shall
end on the next preceding London Business Day to which such Revolving Credit
LIBOR Rate Loan relates. All accrued and unpaid interest on a Revolving Credit
LIBOR Rate Loan shall be paid monthly in accordance with Section 3.2.2. No LIBOR
Interest Period with respect to the Revolving Credit may end after the Revolving
Credit Maturity Date. Subject to all of the terms and conditions applicable to a
request to convert all or a portion of the Revolving Credit Loans to a Revolving
Credit LIBOR Rate Loan, Borrowers may extend a Revolving Credit LIBOR Rate Loan
as of the last day of the LIBOR Interest Period to a new Revolving Credit LIBOR
Rate Loan. If Borrowers fail to notify Lender of the LIBOR Interest Period for a
subsequent Revolving Credit LIBOR Rate Loan at least two (2) Business Days prior
to the last day of the then current LIBOR Interest Period of an outstanding
Revolving Credit LIBOR Rate Loan, then such outstanding Revolving Credit LIBOR
3
<PAGE> 7
Rate Loan shall, at the end of the applicable LIBOR Interest Period accrue
interest at the Revolving Credit Base Rate.
(C) Adjustments. The Adjusted LIBOR
Rate may be automatically adjusted by Lender on a prospective basis to take into
account the additional or increased cost of maintaining any necessary reserves
for Eurodollar deposits or increased costs due to changes in applicable law or
regulation or the interpretation thereof occurring subsequent to the
commencement of the then applicable LIBOR Interest Period, including but not
limited to changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor or other
applicable governing body), excluding the Reserve Percentage which has resulted
in a payment pursuant to Section 2.10 below, that increase the cost to Lender of
funding the Revolving Credit LIBOR Rate Loan. Lender shall give Borrowers notice
of such a determination and adjustment prior to the effectiveness thereof, which
determination shall be prima facie evidence of the correctness of the fact and
the amount of such adjustment.
(D) Unavailability. If Borrowers shall
have requested the rate based on the Adjusted LIBOR Rate in accordance with this
Section 2.1.1(a)(i) and Lender shall have determined, in good faith, that
Eurodollar deposits equal to the amount of the principal of the requested
Revolving Credit LIBOR Rate Loan and for the LIBOR Interest Period specified are
unavailable, or that the rate based on the Adjusted LIBOR Rate will not
adequately and fairly reflect the cost of the Adjusted LIBOR Rate applicable to
the specified LIBOR Interest Period, of making or maintaining the principal
amount of the requested Revolving Credit LIBOR Rate Loan during the LIBOR
Interest Period specified, or that by reason of circumstances affecting
Eurodollar markets, adequate means do not exist for ascertaining the rate based
on the Adjusted LIBOR Rate applicable to the specified LIBOR Interest Period,
Lender shall promptly give notice of such determination to Borrowers that the
rate based on the Adjusted LIBOR Rate is not available. A determination, in good
faith, by Lender hereunder shall be prima facie evidence of the correctness of
the fact and amount of such additional costs or unavailability. Upon such a
determination, (i) the obligation to convert to, or maintain a Revolving Credit
LIBOR Rate Loan at the rate based on the Adjusted LIBOR Rate shall be suspended
until Lender shall have notified Borrowers that such conditions shall have
ceased to exist, and (ii) the portion of the Revolving Credit Loans subject to
the request or requested conversion shall accrue interest at the Revolving
Credit Base Rate.
(E) Unlawful. If, as a result of any
changes in applicable law or regulation or the interpretation thereof, it
becomes unlawful for Lender to maintain Eurodollar deposits sufficient to fund
any Revolving Credit LIBOR Rate Loan subject to the rate based on the Adjusted
LIBOR Rate, then Lender shall immediately notify Borrowers thereof and Lender's
obligations hereunder to convert to, or maintain a Revolving Credit LIBOR Rate
Loan at the rate based on the Adjusted LIBOR Rate shall be suspended until such
time as Lender may again cause the rate based on the Adjusted LIBOR Rate to be
applicable to such Revolving Credit LIBOR Rate Loan. Immediately upon such
occurrence, the Revolving Credit Loans subject to the Revolving Credit LIBOR
Rate shall accrue interest at the Revolving Credit Base Rate. Promptly after
becoming aware that it is no longer unlawful for Lender to maintain such
Eurodollar deposits, Lender shall notify Borrowers thereof and such suspension
shall cease to exist.
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<PAGE> 8
2.1.2 Term and Capital Expenditure Loans Interest:
(a) Rate Options. On the Closing Date and
thereafter from time to time, Borrowers shall have the right, subject to the
terms and conditions of this Agreement, and provided no Default or Event of
Default has occurred and is continuing, to designate to Lender in writing that
all, or a portion of the outstanding principal balance of the Term Loan and any
outstanding Capital Expenditure Loan shall bear interest at either the (i) Term
LIBOR Rate or (ii) Term Base Rate. Interest on each portion thereof shall accrue
and be paid at the time and rate applicable to the respective option selected by
Borrowers or otherwise governing under the terms of this Agreement. If for any
reason the Term LIBOR Rate option is unavailable, the Term Base Rate shall
apply. The rate of interest on Term Base Rate Loans shall increase or decrease
by an amount equal to any increase or decrease in the Base Rate, effective as of
the opening of business on the date that any such change in the Base Rate
occurs.
(i) Term LIBOR Rate Option:
(A) Requests. Provided no Default or
Event of Default has occurred and is continuing, and subject to the provisions
of this Section 2.1.2(a)(i) if Borrowers desire to have the Term LIBOR Rate
apply to all or a portion of the Term Loan or Capital Expenditure Loan,
Borrowers shall give Lender a written irrevocable request no later than 11:00
A.M. Eastern Time on the second (2nd) Business Day prior to the requested
borrowing date specifying (i) the date the Term LIBOR Rate shall apply (which
shall be a Business Day), (ii) the LIBOR Interest Period, and (iii) the amount
of the Term Loan or Capital Expenditure Loan to be subject to the Term LIBOR
Rate; provided that such amount shall be in the minimum amount of $500,000. In
no event may Borrowers have outstanding at any time more than six (6) LIBOR Rate
Loans. If an Event of Default is outstanding, Lender shall have the right, in
its sole discretion, to convert any or all of the Term LIBOR Rate Loans then
currently outstanding to Term Base Rate Loans, and Borrowers shall be required
to reimburse Lender for any applicable losses or expenses under Section 2.9 in
connection with any such conversion.
(B) LIBOR Interest Periods. Term LIBOR
Rate Loans or Capital Expenditure Loans shall be selected for a LIBOR Interest
Period during which the Term LIBOR Rate is applicable; provided, however, that
if the LIBOR Interest Period would otherwise end on a day which shall not be a
London Business Day, such LIBOR Interest Period shall end on the next preceding
London Business Day to which such Term LIBOR Rate Loans relates. All accrued and
unpaid interest on a Term LIBOR Rate Loan shall be paid monthly in accordance
with Section 3.2.2. No LIBOR Interest Period with respect to the Term Loan or
Capital Expenditure Loan may end after the applicable maturity due date for the
Term Loan or Capital Expenditure Loan. Subject to all of the terms and
conditions applicable to a request to convert all or a portion of the Term Loan
or Capital Expenditure Loans to a Term LIBOR Rate Loan, Borrowers may extend a
Term LIBOR Rate Loan as of the last day of the LIBOR Interest Period to a new
Term LIBOR Rate Loan. If Borrowers fail to notify Lender of the LIBOR Interest
Period for a subsequent Term LIBOR Rate Loan at least two (2) Business Days
prior to the last day of the then current LIBOR Interest Period of an
outstanding Term LIBOR Rate Loan, then such outstanding Term LIBOR Rate Loan
shall, at the end of the applicable LIBOR Interest Period accrue interest at the
Term Base Rate.
(C) Adjustments. The Adjusted LIBOR Rate
may be automatically adjusted by Lender on a prospective basis to take into
account the additional or increased cost of maintaining any necessary reserves
for Eurodollar deposits or increased costs
5
<PAGE> 9
due to changes in applicable law or regulation or the interpretation thereof
occurring subsequent to the commencement of the then applicable LIBOR Interest
Period, including but not limited to changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve System (or
any successor or other applicable governing body), that increase the cost to
Lender of funding the Term Loan. Lender shall give Borrowers notice of such a
determination and adjustment prior to the effectiveness thereof, which
determination shall be prima facie evidence of the correctness of the fact and
the amount of such adjustment.
(D) Unavailability. If Borrowers shall
have requested the rate based on the Adjusted LIBOR Rate in accordance with
Section 2.1.2(a)(i) and Lender shall have determined, in good faith, that
Eurodollar deposits equal to the amount of the principal of the requested Term
LIBOR Rate Loan and for the LIBOR Interest Period specified are unavailable, or
that the rate based on the Adjusted LIBOR Rate will not adequately and fairly
reflect the cost of the Adjusted LIBOR Rate applicable to the specified LIBOR
Interest Period, of making or maintaining the principal amount of the requested
Term LIBOR Rate Loan during the LIBOR Interest Period specified, or that by
reason of circumstances affecting Eurodollar markets, adequate means do not
exist for ascertaining the rate based on the Adjusted LIBOR Rate applicable to
the specified LIBOR Interest Period, Lender shall promptly give notice of such
determination to Borrowers that the rate based on the Adjusted LIBOR Rate is not
available. A determination, in good faith, by Lender hereunder shall be prima
facie evidence of the correctness of the fact and amount of such additional
costs or unavailability. Upon such a determination, (i) the obligation to
convert to, or maintain a Term LIBOR Rate Loan at the rate based on the Adjusted
LIBOR Rate shall be suspended until Lender shall have notified Borrowers that
such conditions shall have ceased to exist, and (ii) the portion of the Term
Loan subject to the request or requested conversion shall accrue interest at the
Term Base Rate.
(E) Unlawful. If, as a result of any
changes in applicable law or regulation or the interpretation thereof, it
becomes unlawful for Lender to maintain Eurodollar deposits sufficient to fund
any Term LIBOR Rate Loan subject to the rate based on the Adjusted LIBOR Rate,
then Lender shall immediately notify Borrowers thereof and Lender's obligations
hereunder to convert to, or maintain a Term LIBOR Rate Loan at the rate based on
the Adjusted LIBOR Rate shall be suspended until such time as Lender may again
cause the rate based on the Adjusted LIBOR Rate to be applicable to such Term
LIBOR Rate Loan. Immediately upon such occurrence, the portion of the Term Loan
subject to the Term LIBOR Rate shall continue to accrue interest at the Term
Base Rate. Promptly after becoming aware that it is no longer unlawful for
Lender to maintain such Eurodollar deposits, Lender shall notify Borrowers
thereof and such suspension shall cease to exist.
2.1.3 Minimum Loan. During the Original Term and any Renewal Terms,
the minimum outstanding Loans ("Minimum Loan") shall at all times be $5,000,000.
Borrowers shall at all times be required to pay interest on the greater of the
Minimum Loan or the actual outstanding principal balance of the Loans from month
to month.
2.1.4 Default Rate of Interest. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal amount of
all Loans shall bear interest at a rate per annum equal to the interest rate
otherwise applicable thereto plus 200 basis points (the "Default Rate").
6
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<PAGE> 11
2.1.5 Maximum Interest. In no event whatsoever shall the aggregate
of all amounts deemed interest hereunder or under the Notes and charged or
collected pursuant to the terms of this Agreement or pursuant to the Notes
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. If any
provisions of this Agreement or the Notes are in contravention of any such law,
the rate hereunder shall automatically be reduced to the maximum rate permitted
by applicable law, and Lender shall, in its discretion, to the extent permitted
by applicable law, apply such excess to the principal balance of the Loans or
refund such excess to Borrowers, and such provisions shall be deemed amended to
conform thereto.
2.2 Computation of Interest and Fees. Interest and collection charges
hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year of 360 days. For the purpose of computing interest
hereunder, all items of payment received by Lender shall be deemed applied by
Lender on account of the Obligations (subject to final payment of such items)
two (2) Business Days after receipt by Lender of fully collected funds from the
Dominion Account.
2.3 Commitment Fee. Borrowers shall pay to Lender on the Closing Date a
facility fee of $220,000, (less the $50,000 portion thereof previously paid)
which is deemed fully earned and nonrefundable on the Closing Date.
2.4 Unused Line Fee. Borrowers shall pay to Lender a fee ("Unused Line
Fee") equal to 0.50% per annum of the average daily difference during any
calendar month between (i) the Revolving Facility Limit and (ii) the average
principal balance of all outstanding Revolving Credit Loans. The Unused Line Fee
shall be payable monthly in arrears on the first day of each calendar month
hereafter.
2.5 Collateral Management Fee Borrowers shall pay Lender an annual
collateral management fee of $25,000, which fee shall be earned, nonrefundable
and payable quarterly in advance, with the first payment due on the Closing
Date, and continuing thereafter on the first day of each fiscal quarter.
2.6 Audit Fees. Notwithstanding Section 2.5 above, Borrowers shall, if an
Event of Default is outstanding, pay to Lender per person per diem reasonable
audit fees in connection with Lender's audits of Borrowers' books and records
and collateral, plus all reasonable out-of-pocket expenses incurred by Lender in
connection with such audits.
2.7 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender incurs reasonable legal
or accounting expenses or any other out-of-pocket costs or reasonable
out-of-pocket expenses in connection with (i) the analysis, negotiation and
preparation of this Agreement or any of the other Loan Documents, any amendment
of or modification of this Agreement or any of the other Loan Documents (whether
or not consummated); (ii) the administration or termination of this Agreement or
any of the other Loan Documents and the transactions contemplated hereby and
thereby or any consent or waiver requested of Lender concerning any provisions
hereof or thereof; (iii) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender, Borrowers or any other Person) in any way
relating to the Collateral, this Agreement or any of the other Loan Documents or
Borrowers' affairs; (iv) any attempt to enforce any rights of Lender against
Borrowers or any other Person which may be obligated to Lender by virtue of this
Agreement or any of the other Loan Documents, including, without limitation, the
Account Debtors; or (v) any attempt to inspect,
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<PAGE> 12
appraise, verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral or enforce, protect or
defend Lender's rights with respect thereto (including without limitation
expenses incurred by Lender in conjunction with any workout restructuring,
liquidation, bankruptcy, or reorganization); then all such reasonable legal and
accounting expenses, other reasonable costs and out of pocket expenses
(including, without limitation appraisal expenses) of Lender shall be charged to
Borrowers. All amounts chargeable to Borrowers under this Section 2.7 shall be
Obligations secured by all of the Collateral, shall be payable on demand to
Lender and shall bear interest from the date such demand is made until paid in
full at the highest rate applicable to Revolving Credit Loans from time to time.
Borrowers shall also reimburse Lender for reasonable expenses incurred by Lender
in its administration of the Collateral to the extent and in the manner provided
in Section 6 hereof.
2.8 Bank Charges. Borrowers shall pay to Lender, on demand, any and all
fees, costs or expenses which Lender pays to a bank or other similar institution
(including, without limitation, any fees paid by Lender to a Participating
Lender), arising out of or in connection with (i) the forwarding to Borrowers or
any other Person on behalf of Borrowers, by Lender, or any Participating Lender,
of proceeds of Loans made by Lender to Borrowers pursuant to this Agreement and
(ii) the depositing for collection, by Lender, or any Participating Lender, of
any check or item of payment received or delivered to Lender, or any
Participating Lender, on account of the Obligations.
2.9 Indemnity re: LIBOR. Borrowers hereby indemnify Lender and holds
Lender harmless from and against any and all losses or expenses that Lender may
sustain or incur as a consequence of any prepayment or any Default by Borrowers
in the payment of the principal of or interest on any LIBOR Rate Loan or failure
by Borrowers to complete a borrowing of, a prepayment of or conversion of or to
a LIBOR Rate Loan after notice thereof has been given by Borrowers, including
(but not limited to) any interest payable by Lender to lenders of funds obtained
by it in order to make or maintain its LIBOR Rate Loans hereunder, and any other
loss or expense incurred by Lender by reason of the liquidation or reemployment
of deposits or other funds acquired by Lender to make, continue, convert into or
maintain, a LIBOR Rate Loan except for prepayment of LIBOR Rate Loans resulting
from Lender's determinations under Sections 2.1.1(a)(i)(D) or (E) or
2.1.2(a)(i)(D) or (E).
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans and Capital Expenditure
Loans. Borrowings under the Credit Facility established pursuant to Section 1
hereof shall be as follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan or a
Capital Expenditure Loan shall be made, or shall be deemed to be made, in the
following manner: (i) Borrowers may give Lender notice of the intention to
borrow, in which notice Borrowers shall specify the amount of the proposed
borrowing and the proposed borrowing date (which shall be a Business Day), no
later than 1:00 P.M. Eastern time on the proposed borrowing date or, in the case
of a request for a Revolving Credit LIBOR Rate Loan, or a Capital Expenditure
Loan which will bear interest at the Term LIBOR Rate, no later than 11:00 A.M.
Eastern time on the second (2nd) Business Day prior to the proposed borrowing
date, which notice, in the case of requests for Capital Expenditure Loans, shall
be accompanied by a copy of the invoice regarding the particular item(s) of
equipment which will be purchased with the proceeds of the particular Capital
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Expenditure Loan, provided, however, that no such request may be made at a time
when there exists a Default or an Event of Default,; and (ii) the becoming due
of any amount required to be paid under this Agreement or the Notes, whether as
interest or for any other Obligation, shall be deemed irrevocably to be a
request for a Revolving Credit Loan on the due date in the amount required to
pay such interest or other Obligation. As an accommodation to Borrowers, Lender
may permit telephonic requests for Loans and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by Borrowers.
Borrowers shall specifically direct Lender in writing to accept or act upon
telephonic or electronic communications from specific representatives of
Borrowers ("Authorized Representative"). Lender shall have no liability to
Borrowers for any loss or damage suffered by Borrowers as a result of Lender's
honoring, in good faith, of any requests, execution of any instructions,
authorizations or agreements or reliance on any reports communicated to it
telephonically or electronically and purporting to have been sent to Lender by
an Authorized Representative of Borrowers and Lender shall have no duty to
verify the origin of any such communication or the authority of the Authorized
Representative sending it. All requests for loans or other instructions given to
Lender by any Borrower shall be deemed to have been given by, and to be binding
upon all Borrowers.
3.1.2 Disbursement. Borrowers hereby irrevocably authorize Lender to
disburse the proceeds of each Revolving Credit Loan or Capital Expenditure Loan
requested, or deemed to be requested, pursuant to this subsection 3.1.2 as
follows: (i) the proceeds of each Revolving Credit Loan or Capital Expenditure
Loan requested under subsection 3.1.1(i) shall be disbursed by Lender in lawful
money of the United States of America in immediately available funds, in the
case of the initial borrowing, in accordance with the terms of the written
disbursement letter from Borrowers, and in the case of each subsequent
borrowing, by wire transfer to such bank account as may be agreed upon by
Borrowers and Lender from time to time or elsewhere if pursuant to a written
direction from Borrowers; and (ii) the proceeds of each Revolving Credit Loan
requested under subsection 3.1.1(ii) shall be disbursed by Lender by way of
direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrowers hereby irrevocably authorize Lender,
in Lender's sole discretion, to advance to Borrowers, and to charge to
Borrowers' Loan Account hereunder as a Revolving Credit Loan, a sum sufficient
to pay all interest accrued on the Obligations during the immediately preceding
month, principal on the Loans when due and to pay all costs, fees and expenses
at any time owed by Borrowers to Lender hereunder.
3.1.4 Borrowing Base Certificates. Borrowers shall give Lender a
Borrowing Base Certificate (accompanied by such supporting documents as may be
satisfactory to Lender) on a daily basis, or on such less frequent basis as may
be agreed to in writing by Lender.
3.2 Payments. Except where evidenced by notes or other instruments issued
or made by Borrowers to Lender specifically containing payment provisions which
are in conflict with this Section 3.2 (in which event the conflicting provisions
of said notes or other instruments shall govern and control), the Obligations
shall be payable as follows:
3.2.1 Principal. Principal payable on account of the Revolving
Credit Loans shall be payable by Borrowers to Lender immediately upon the
earliest of (i) the receipt by Lender or any of the Borrowers of any proceeds of
any of the Collateral to the extent of said proceeds, (ii) the occurrence of an
Event of Default in consequence of which Lender elects to accelerate the
maturity and payment of the Obligations, or (iii) termination of this Agreement
pursuant to Section 4
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hereof; provided, however, that if an Overadvance shall exist at any time,
Borrowers shall, on demand, repay the Overadvance.
3.2.2 Interest. Interest accrued on the Loans (irrespective of the
rate option) shall be due on the earliest of (i) the first calendar day of each
month (for the immediately preceding month), computed through the last calendar
day of the preceding month, (ii) the occurrence of an Event of Default in
consequence of which Lender elects to accelerate the maturity and payment of the
Obligations, or (iii) termination of this Agreement pursuant to Section 4
hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrowers as and when provided in
Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
3.2.4 Other Obligations. The balance of the Obligations requiring
the payment of money shall be payable by Borrowers to Lender as and when
provided in this Agreement, the Notes, the Other Agreements or the Security
Documents, or on demand, whichever is later.
3.3 Mandatory and Permissive Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. Except for any dispositions of Equipment in accordance with
subsection 6.4.2 hereof, if any of the Borrowers sells any of the Equipment or
if any of the Collateral is lost or destroyed or taken by condemnation,
Borrowers shall pay to Lender, unless otherwise agreed by Lender in writing, as
and when received by Borrowers and as a mandatory prepayment first of the Term
Loan A, then to the Term Loan B and then to the Capital Expenditure Loan or (i)
if the sale, loss, destruction or taking concerns the Georgia Real Estate, then
as a mandatory prepayment of the Term Loan B, or (ii) if the acquisition of the
particular item(s) of equipment were financed by a Capital Expenditure Loan,
then as a mandatory prepayment of the particular Capital Expenditure Loan, a sum
equal to the proceeds (including insurance payments) received by Borrowers from
such sale, loss, destruction or condemnation. Any such prepayments shall be
applied to the Term Loan A, Term Loan B, or any Capital Expenditure Loans, as
the case may be, in the inverse order of maturity of unpaid installments
(balloon installment first).
3.3.2 Excess Cash Flow Recapture. Borrowers shall prepay the Term
Loan (first against Term Loan A and then against Term Loan B) in an amount equal
to 50% of Consolidated Group's Excess Cash Flow with respect to each fiscal year
of Borrowers (commencing with the fiscal year ending December 31, 1999), during
the term hereof, such prepayments to be made no later than the earlier of (i)
April 15 of the immediately succeeding year or (ii) 5 Business Days after
Lender's receipt of Borrowers' audited financial statements as required under
Section 8.1.3(i). Any such prepayment of Term Loan A shall be applied pro rata
to the remaining unpaid installments of the Term Loan A. The total amount of any
Excess Cash Flow payment hereunder in any year shall not exceed $500,000.
3.3.3 LIBOR Rate Loans. No portion of the LIBOR Rate Loans may be
prepaid during a LIBOR Interest Period unless Borrowers first satisfy in full
their obligations under Section 2.9 arising from such prepayment.
3.4 Application of Payments and Collections. Subject to subsection 2.2 of
this Agreement, all items of payment received by Lender by 12:00 Noon Eastern
time, on any Business Day shall be deemed received on that Business Day. All
items of payment received after 12:00 Noon Eastern time, on any Business Day
shall be deemed received on the following Business Day.
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Until payment in full of all Obligations and termination of this Agreement,
Borrowers irrevocably waive (except as otherwise expressly provided for by this
Agreement) the right to direct the application of any and all payments and
collections at any time or times hereafter received by Lender from or on behalf
of Borrowers, and each Borrower does hereby irrevocably agree that Lender shall
have the continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter by Lender or
its agent against the Obligations, in such manner as Lender may deem advisable,
but in no event in contravention of the other express provisions of this
Agreement, notwithstanding any entry by Lender upon any of its books and
records. If, as the result of collections of Accounts as authorized by
subsection 6.2.6 hereof, a credit balance exists in the Loan Account, such
credit balance shall not accrue interest in favor of Borrowers, but shall be
available to Borrowers at any time or times for so long as no Default or Event
of Default exists. Lender may, at its option, offset such credit balance against
any of the Obligations upon and after the occurrence of an Event of Default.
3.5 All Loans to Constitute One Obligation. The Loans and all other
Obligations, as well as all covenants and undertakings hereunder shall
constitute one general joint and several obligation of Borrowers, and shall be
secured by Lender's Lien upon all of the Collateral.
3.6 Loan Account. Lender shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrowers
on any Obligations and all proceeds of Collateral which are finally paid to
Lender, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrowers.
3.7 Statements of Account. Lender will account to Borrowers monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Lender shall be deemed final, binding and conclusive
upon Borrowers unless Lender is notified by Borrowers in writing to the contrary
within 30 Business Days of the date each accounting is mailed to Borrowers. Such
notice shall only be deemed an objection to those items specifically objected to
therein.
3.8 Agent for Borrowers - Each Borrower hereby appoints IGI as its agent
on behalf of each Borrower to make requests for loans and to make such interest
rate elections which by the terms of this Agreement may be requested or elected
by Borrowers, and any such request or election made by IGI shall constitute an
effective request or election hereunder notwithstanding any reference generally
to the "Borrowers" or any of them. Lender is authorized to rely on any such
request or election so made by IGI, and any such request or election so made
will be deemed to have been made by all Borrowers.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lender's right to cease making Loans to
Borrowers upon or after the occurrence, and during the continuance, of any
Default or Event of Default, this Agreement shall be in effect for a period of 5
years from the date hereof, through and including October ___, 2004 (the
"Original Term") and this Agreement shall automatically renew itself for
one-year periods thereafter (the "Renewal Terms") unless terminated as provided
in Section 4.2 hereof. Upon termination of this Agreement, Borrowers shall not
request and Lender shall not make any Loans.
4.2 Termination.
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4.2.1 Termination by Lender. Upon at least 90 days prior written
notice to Borrowers, Lender may terminate this Agreement as of the last day of
the Original Term or the then current Renewal Term and Lender may terminate this
Agreement without notice upon or after the occurrence, and during the
continuance, of an Event of Default.
4.2.2 Termination by Borrowers. Upon at least 90 days prior written
notice to Lender, Borrowers may, at their option, terminate this Agreement;
provided, however, no such termination shall be effective until Borrowers have
paid all of the Obligations in immediately available funds. Any notice of
termination given by Borrowers shall be irrevocable unless Lender otherwise
agrees in writing, and Lender shall have no obligation to make any Loans on or
after the termination date stated in such notice. Borrowers may elect to
terminate this Agreement in its entirety only. No section of this Agreement or
type of Loan available hereunder may be terminated singly.
4.2.3 Termination Charges. At the effective date of termination of
this Agreement for any reason (other than a termination under Section 4.2.1),
Borrowers shall pay to Lender (in addition to the then outstanding principal,
accrued interest and other charges owing under the terms of this Agreement and
any of the other Loan Documents) as liquidated damages for the loss of the
bargain and not as a penalty, an amount equal to (a) the greater of (i) the
Minimum Loan and (ii) the average aggregate loan balance during the preceding 12
months (or since the Closing if termination occurs in the first year after
Closing) times (b)(i) 3.0% if termination occurs during the first twelve-month
period of the Original Term; (ii) 2.0% if termination occurs during the second
twelve month period of the Original Term; and (iii) 1.0% if termination occurs
during the third twelve month period of the Original Term.
4.2.4 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any required
notice of termination of this Agreement. All undertakings, agreements,
covenants, warranties and representations of Borrowers contained in the Loan
Documents shall survive any such termination and Lender shall retain its Liens
in the Collateral and all of its rights and remedies under the Loan Documents
notwithstanding such termination until Borrowers have paid the Obligations to
Lender, in full, in immediately available funds, together with the applicable
liquidated damages charge under Section 4.2.3, if any. Notwithstanding the
payment in full of the Obligations, Lender shall not be required to terminate
its security interests in the Collateral unless, with respect to any loss or
damage Lender may incur as a result of dishonored checks or other items of
payment received by Lender from Borrowers or any Account Debtor and applied to
the Obligations, Lender shall, at its option, (i) have received a written
agreement, executed by Borrowers and by any Person whose loans or other advances
to Borrowers are used in whole or in part to satisfy the Obligations,
indemnifying Lender from any such loss or damage; or (ii) have retained such
monetary reserves and Liens on the Collateral for such period of time as Lender,
in its reasonable discretion, may deem necessary to protect Lender from any such
loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral.
5.1.1 Grant of Security Interest. To secure the prompt payment and
performance to Lender of all of the Obligations of all of the Borrowers
hereunder, each Borrower hereby grants
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to Lender a continuing first Lien upon all of such Borrower's Property,
including all of the following Property and interests in Property of such
Borrower, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located:
(i) Accounts;
(ii) Inventory;
(iii) Equipment;
(iv) General Intangibles;
(v) Fixtures;
(vi) Deposit Accounts;
(vii) Investment Property;
(viii) Chattel Paper;
(ix) Instruments;
(x) Documents;
(xi) All monies and other Property of any kind now or at any time or
times hereafter in the possession or under the control of Lender or a
bailee or Affiliate of Lender;
(xii) All books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer
materials and records) of such Borrowers pertaining to any of (i) through
(xi) above; and
(xiii) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (xii) above,
including, without limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the Collateral.
5.1.2 Georgia Real Estate. Notwithstanding anything to the contrary
contained in this Agreement, the Georgia Real Estate shall only secure the
prompt payment of the Term Loan B, and the performance of the obligations of the
Borrowers connected therewith.
5.2 Lien Perfection; Further Assurances. Borrowers shall execute such
UCC-1 financing statements as are required by the Code and such other
instruments, assignments or documents, including without limitation, original
motor vehicle certificates of title and trademark, patent and/or copyright
security documents, as may be necessary to perfect Lender's Lien upon any of the
Collateral and shall take such other action as may be required by applicable law
to perfect or to continue the perfection of Lender's Lien upon the Collateral.
Borrowers hereby authorize Lender to execute and file any such financing
statement on Borrowers' behalf. The parties agree that a carbon, photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof. At
Lender's request, Borrowers shall also promptly execute or cause to be executed
and shall deliver to Lender any and all
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documents, instruments and agreements reasonably deemed necessary by Lender to
give effect to or carry out the terms or intent of the Loan Documents.
5.3 Real Property.
5.3.1 Lien on Realty. Mortgages securing prompt payment and
performance of all of the Obligations of all of the Borrowers (or, in the case
of the Georgia Real Estate, securing the prompt payment of the Term Loan B, and
the performance of the obligations of the Borrowers connected therewith) shall
be executed by each Borrower, as applicable, in favor of Lender and shall be
duly recorded, at Borrowers' expense, in each office where such recording is
required to constitute a fully perfected Lien on the Real Property covered
thereby. Borrowers shall deliver to Lender, at Borrowers' expense, mortgagee
title insurance policies issued by a title insurance company satisfactory to
Lender, which policies shall be in form and substance satisfactory to Lender and
shall insure a valid first Lien in favor of Lender on the Real Property covered
thereby, subject only to those exceptions acceptable to Lender and its counsel.
Borrowers shall deliver to Lender such other documents, endorsements,
certificates, opinions and assurances, including, without limitation, current
survey prints and flood plain certificates of the Real Property, as Lender and
its counsel may request relating to the Real Property subject to the Mortgage.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
6.1.1 Location of Collateral. All Collateral, other than Inventory
in transit and motor vehicles, will at all times be kept by Borrowers at one or
more of the business locations set forth in Schedule 6.1.1 hereto and shall not,
without the prior written approval of Lender, be moved therefrom except, during
the absence of an Event of Default, for (i) sales of Inventory in the ordinary
course of business; and (ii) removals in connection with dispositions of
Equipment that are authorized by subsection 6.4.2 hereof; and (iii) removals in
connection with returns thereof to vendors in the ordinary course of Borrowers'
business.
6.1.2 Insurance of Collateral. Borrowers shall maintain and pay for
insurance upon all Collateral wherever located and with respect to each
Borrower's business, covering casualty, hazard, public liability, flood and such
other risks in such amounts and with such insurance companies as i) have a
Best's rating of at least "A", and ii) are otherwise reasonably satisfactory to
Lender. Borrowers shall deliver copies of such policies to Lender with
satisfactory lender's loss payable endorsements, naming Lender as lender loss
payee, assignee, mortgagee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever, a clause specifying that
the interest of Lender shall not be impaired or invalidated by any act or
neglect of Borrowers or the owner of the Property or by the occupation of the
premises for purposes more hazardous than are permitted by said policy and shall
provide that proceeds of any less or damage shall be payable to Lender. If
Borrowers fail to provide and pay for such insurance, Lender may, at its option,
but shall not be required to, procure the same and charge Borrowers therefor.
Borrowers agree to deliver to Lender, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies.
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6.1.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral or in respect of the sale thereof shall
be borne and paid by Borrowers. If Borrowers fail to promptly pay any portion
thereof when due, and Borrowers fail to immediately make such past due payment
after Lender requests, Lender may, at its option, but shall not be required to,
pay the same and charge Borrowers therefor. Lender shall not be liable or
responsible in any way for the safekeeping of any of the Collateral or for any
loss or damage thereto (except for reasonable care in the custody thereof while
any Collateral is in Lender's actual possession) or for any diminution in the
value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency, or other person whomsoever, but the same shall be at
Borrowers' sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Each Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the thirtieth day of each month from and
after the date hereof, Borrowers shall deliver to Lender, in form acceptable to
Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Lender's request therefor, copies of
proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts in an aggregate face amount in excess of $50,000 become
ineligible because they fall within one of the specified categories of
ineligibility set forth in the definition of Eligible Accounts or otherwise
established by Lender, Borrowers shall notify Lender of such occurrence on the
first Business Day following such occurrence and the Borrowing Base shall
thereupon be adjusted to reflect such occurrence. During the continuance of an
Event of Default, Borrowers shall, if requested by Lender, execute and deliver
to Lender formal written assignments of all of its Accounts from time to time,
which shall include all Accounts that have been created since the date of the
last assignment, together with copies of invoices or invoice registers related
thereto.
6.2.2 Discounts, Allowances, Disputes. If any Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrowers shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $50,000 are in dispute
between any Borrower and any Account Debtor, Borrowers shall provide Lender with
written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon an Event of Default, Lender shall
have the right to settle or adjust all disputes and claims directly with the
Account Debtor or obligor on any General Intangible and to compromise the amount
or extend the time for payment of any Accounts or General Intangibles upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, reasonable costs and expenses thereof, including reasonable
attorneys' fees, to Borrowers.
6.2.3 Taxes. If an Account includes a charge for any tax payable to
any governmental taxing authority, and such tax is not being actively contested
in good faith and by
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appropriate proceedings by Borrowers and Borrowers maintains reasonable reserves
on its books in accordance with GAAP, Lender is authorized (without any
obligation or duty on Lender's part), in its sole discretion, to pay the amount
thereof to the proper taxing authority for the account of Borrowers and to
charge Borrowers therefor, provided, however that Lender shall not be liable for
any taxes to any governmental taxing authority that may be due by Borrowers.
6.2.4 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Lender, any designee
of Lender or any of the Borrowers, to verify the validity, amount or any other
matter relating to any Accounts by mail, telephone, telegraph or otherwise.
Borrowers shall cooperate fully with Lender in an effort to facilitate and
promptly conclude any such verification process.
6.2.5 Maintenance of Dominion Account. Borrowers shall maintain a
lockbox and Dominion Account, acceptable to Lender with such banks as may be
selected by Borrowers and be acceptable to Lender. Borrowers shall issue to any
such banks an irrevocable letter of instruction directing such banks to transfer
all funds received in the lockbox or Dominion Account to Lender for application
on account of the Obligations. All payments from Account Debtors shall be paid
directly into such lockbox. All funds deposited in the lockbox or Dominion
Account shall immediately become the property of Lender and Borrowers shall
obtain the agreement by such banks in favor of Lender to waive any offset rights
against the funds so deposited. Lender assumes no responsibility for such
arrangement, including, without limitation, any claim of accord and satisfaction
or release with respect to deposits accepted by any bank thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrowers shall endeavor in the first instance to make collection of
its Accounts. All remittances received by Borrowers on account of Accounts,
together with the proceeds of any other Collateral, shall be held as Lender's
property by Borrowers as trustee of an express trust for Lender's benefit and
Borrowers shall immediately deposit same in kind in the Dominion Account. Lender
retains the right, at all times after an Event of Default, to notify Account
Debtors that Accounts have been assigned to Lender and to collect Accounts
directly in its own name and to charge the collection costs and expenses,
including attorneys' fees to Borrowers. Lender has no duty to protect, insure,
collect or realize upon the Accounts or preserve rights therein.
6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrowers shall keep
accurate and complete records of its Inventory. Borrowers shall furnish to
Lender Inventory reports in form and detail satisfactory to Lender at such times
as Lender may request, but at least once each month, not later than the
thirtieth (30th) day after the end of each month. Borrowers shall conduct a
physical inventory at least once a year and shall provide to Lender a report
based on each such physical inventory not later than the twentieth day of the
following month, together with such supporting information as Lender shall
request.
6.3.2 Returns of Inventory. If at any time or times hereafter, any
Account Debtor returns any Inventory to any Borrower in an amount in excess of
$50,000, Borrowers shall immediately notify Lender of the same, specifying the
reason for such return and the location, condition and intended disposition of
the returned Inventory.
6.4 Administration of Equipment.
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6.4.1 Records and Schedules of Equipment. Each Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
value of its Equipment and all dispositions made in accordance with subsection
6.4.2 hereof, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often if requested by
Lender. Immediately on request therefor by Lender, Borrowers shall deliver to
Lender any and all evidence of ownership of the Equipment.
6.4.2 Dispositions of Equipment. Borrowers will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to dispositions of Equipment in the ordinary course of
Borrowers' business (including dispositions of Equipment that is no longer
useful in Borrowers' business) or which, in the aggregate during any consecutive
twelve-month period, have a fair market value or book value, whichever is less,
of $50,000 or less; provided that all such proceeds (cash and non-cash) thereof
are in any event remitted to Lender for application in accordance with Section
3.3.1; or replacements of Equipment that is worn, damaged or obsolete with
Equipment of like function and value (as reasonably determined by Lender),
provided that the replacement Equipment shall be acquired prior to or
substantially concurrently with any disposition of the Equipment that is to be
replaced and the replacement Equipment shall be free and clear of Liens other
than Permitted Liens (that are not Purchase Money Liens, unless the Equipment
being replaced was previously subject to a Purchase Money Lien) and Borrowers
shall have given Lender at least 5 days prior written notice of such
disposition.
6.5 Payment of Charges. All amounts chargeable to Borrowers under Section
6 hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the highest rate applicable to Revolving Credit Loans from time to
time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to enter into
this Agreement and to make advances hereunder, each Borrower warrants,
represents and covenants to Lender that:
7.1.1. Organization and Qualification. Each Borrower and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each Borrower
and each of its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on Schedule 7.1.1 hereto and in all other states and jurisdictions where
the character of its Properties or the nature of its activities make such
qualification necessary, except such states and jurisdictions in which the
failure of such Borrowers or any of its Subsidiaries to be so qualified would
not be reasonably likely to have a Material Adverse Effect on the financial
condition, business or Properties of such Borrowers or any of its Subsidiaries.
7.1.2 Power and Authority. Each Borrower has full power and
authority to enter into, execute, deliver and perform this Agreement and each of
the other Loan Documents to which it is a party. The execution, delivery and
performance of this Agreement and each of the other Loan Documents have been
duly authorized by all necessary corporate action on the part of the Borrowers
and do not and will not (i) require any consent or approval (that has not been
obtained)
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of the Shareholders of any Borrower; (ii) contravene any Borrower's Charter,
Articles of Incorporation or by-laws; (iii) violate, or cause any Borrower to be
in default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to any Borrower; (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which any Borrower is a party or by which any Borrower or
any of its Properties may be bound or affected; or (v) result in, or require,
the creation or imposition of any Lien upon or with respect to any of the
Properties now owned or hereafter acquired by any Borrower, except pursuant to
this Agreement.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each Borrowers enforceable against it in
accordance with its respective terms.
7.1.4 Capital Structure. Schedule 7.1.4 hereto states (i) the
correct name of each of the domestic and foreign Subsidiaries of each Borrower,
its jurisdiction of incorporation and the percentage of its Voting Stock owned
by the applicable Borrower, (ii) the name of each Borrower's corporate or joint
venture Affiliates and the nature of the affiliation and the name and
jurisdiction of organization of any entities acting as representatives of any of
the Borrowers in any foreign country and the nature of the relationship, and
(iii) the number, nature and holder of all authorized, issued and outstanding
securities and treasury shares of each Borrower and each of its Subsidiaries
(publicly held shares may be listed generally). No Borrower has any
Subsidiaries other than those listed on Schedule 7.1.4. Except as disclosed on
Schedule 7.1.4, there are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell, or
any Securities or obligations convertible into, or any powers of attorney
relating to, capital stock of any Borrower or any of its Subsidiaries.
7.1.5 Corporate Names. No Borrower has been known as or used any
corporate, fictitious or trade names except those listed on Schedule 7.1.5
hereto. Except as set forth on Schedule 7.1.5, no Borrower has been the
surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person.
7.1.6 Business Locations; Agent for Process. Each Borrower's chief
executive office and other places of business are as listed on Schedule 6.1.1
hereto. During the preceding one-year period, no Borrower has had an office,
place of business or agent for service of process other than as listed on
Schedule 6.1.1. Except as shown on Schedule 6.1.1, no Inventory is stored with a
bailee, warehouseman or similar party, nor is any Inventory consigned to any
Person.
7.1.7 Title to Properties; Priority of Liens. Each Borrower has
good, indefeasible and marketable title to and fee simple ownership of, or valid
and subsisting leasehold interests in, all of its Real Property, and good title
to all of the Collateral and all of its other Property, in each case, free and
clear of all Liens except Permitted Liens. Each Borrower has paid or discharged,
or reserved for, all lawful claims which, if unpaid, might become a Lien against
any Properties of any Borrower that is not a Permitted Lien. The Liens granted
to Lender under Section 5 hereof are first priority Liens, subject only to
Permitted Liens.
7.1.8 Accounts. Lender may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by any Borrower
with respect to any Account or Accounts. Unless otherwise indicated in writing
to Lender, with respect to each Account:
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(i) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and
delivery of goods or rendition of services by any Borrower in the ordinary
course of its business and in substantial compliance with the terms and
conditions of all purchase orders, contracts or other documents relating
thereto and forming a part of the contract between such Borrower and the
Account Debtor;
(iii) It is for a liquidated amount maturing as stated
in the duplicate invoice covering such sale or rendition of services, a
copy of which has been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest
therein, is not, and will not (by voluntary act or omission of any
Borrower) be in the future, subject to any offset, Lien, deduction,
defense, dispute, counterclaim or any other adverse condition, and each
such Account is absolutely owing to a Borrower and is not contingent in
any respect or for any reason;
(v) No Borrower has made any agreement with any Account
Debtor thereunder for any extension, compromise, settlement or
modification of any such Account or any deduction therefrom, except
discounts which are granted by a Borrowers in the ordinary course of its
business for prompt payment or sales incentives and which are reflected in
the calculation of the net amount of each respective invoice related
thereto and are reflected in the Schedules of Accounts submitted to Lender
pursuant to subsection 6.2.1 hereof;
(vi) To the best of each Borrower's knowledge, there are
no facts, events or occurrences which in any way impair the validity or
enforceability of any Accounts or tend to reduce the amount payable
thereunder from the face amount of the invoice and statements delivered to
Lender with respect thereto;
(vii) To the best of each Borrower's knowledge, the
Account Debtor had the capacity to contract at the time any contract or
other document giving rise to the Account was executed; and
(viii) To the best of each Borrower's knowledge, there
are no proceedings or actions which are threatened or pending against any
Account Debtor thereunder which might result in any material adverse
change in such Account Debtor's financial condition or the collectibility
of such Account.
7.1.9 Equipment. The Equipment is in satisfactory operating
condition and repair, in light of its intended use, and all necessary
replacements of and repairs thereto shall be made so that such condition shall
be maintained and preserved, reasonable wear and tear excepted. No Borrower will
permit any material item of the Equipment to become affixed to any real Property
leased to any Borrower so that an interest arises therein under the real estate
laws of the applicable jurisdiction unless the landlord of such real Property
has executed a landlord waiver or leasehold mortgage in favor of and in form
acceptable to Lender, and no Borrower will permit any
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of the Equipment to become an accession to any personal Property other than
Equipment that is subject to first priority Liens in favor of Lender.
7.1.10 Financial Statements; Fiscal Year. The consolidated balance
sheets of Borrowers and such other Persons described therein as of August 31,
1999 and the related statements of income, changes in stockholder's equity, and
changes in financial position for the periods ended on such dates, present
fairly the financial positions of Borrowers and such other Persons at such dates
and the results of Borrowers' operations for such period. Since June 30, 1999,
there has been no material change in the condition, financial or otherwise, of
Borrowers and no change in the aggregate value of Equipment and real Property
owned by Borrowers, except changes in the ordinary course of business and the
transactions contemplated hereby, none of which individually or in the aggregate
has been materially adverse. The fiscal year of Borrowers and each of their
Subsidiaries ends on December 31st of each year.
7.1.11 Full Disclosure. The financial statements referred to in
subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of any Borrower to Lender upon which Lender reasonably and materially
relied, contain any untrue statement of a material fact or, (when taken as a
whole with all other information submitted by Borrowers or made available to,
and reviewed by Lender), omit a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact which Borrowers
have failed to disclose to Lender in writing which materially affects adversely
or, to Borrowers' knowledge, will materially affect adversely the Properties,
business, prospects, profits or condition (financial or otherwise) of any
Borrower or any of its Subsidiaries or the ability of any Borrower to perform
this Agreement or the other Loan Documents other than matters of a general
economic or political nature.
7.1.12 Solvent Financial Condition. Each Borrower and each of its
Subsidiaries is now and, after giving effect to the Loans to be made hereunder,
at all times will be, Solvent.
7.1.13 Surety Obligations. Except as set forth on Schedule 7.1.13
hereto, neither any Borrower nor any of its Subsidiaries is not obligated as
surety or indemnitor under any surety or similar bond or other contract issued
or entered into or any agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any Person.
7.1.14 Taxes. Each Borrower's federal tax identification number is
shown on Schedule 7.1.14 hereto. Each Borrower and each of its Subsidiaries has
filed all federal, state and local tax returns and other reports each is
required by law to file and has paid, or made provision for the payment of, all
taxes, assessments, fees, levies and other governmental charges upon it, its
income and Properties as and when such taxes, assessments, fees, levies and
charges are due and payable, unless and to the extent any thereof are being
actively contested in good faith and by appropriate proceedings and Borrowers
maintain reasonable reserves on their books therefor in accordance with GAAP.
The provision for taxes on the books of Borrowers and their Subsidiaries is
adequate for all years not closed by applicable statutes, and for its current
fiscal year.
7.1.15 Brokers. There are no claims against any Borrower or any of
its Subsidiaries for brokerage commissions, finder's fees or investment banking
fees in connection with the transactions contemplated by this Agreement, except
for those owed by Borrowers to Berwind Financial, L.P. in the amount of
$659,684.00. Borrowers have made no commitment or contractual undertaking on
Lender's behalf concerning any brokerage commission, finder's fee or investment
banking fee to any Person and has no knowledge of any basis for any claim
against or liability of Lender for any such obligation.
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7.1.16 Patents, Trademarks, Copyrights and Licenses. Each Borrower
owns or possess all the patents, trademarks, service marks, trade names,
copyrights and licenses necessary for the present and planned future conduct of
its business without any known conflict with the rights of others. All such
patents, trademarks, service marks, tradenames, copyrights, licenses and other
similar rights are listed on Schedule 7.1.16 hereto.
7.1.17 Governmental Consents. Each Borrower and each of its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Properties as now owned or leased by it.
7.1.18. Compliance with Laws. Except as set forth on Schedule 7.1.18
hereto, each Borrower and each of its Subsidiaries has duly complied with, and
its Properties, business operations and leaseholds are in compliance in all
material respects with, the provisions of all federal, state and local laws,
rules and regulations applicable to any Borrower or any of its Subsidiaries, its
Properties or the conduct of its business and there have been no citations,
notices or orders of noncompliance issued to any Borrower or any of its
Subsidiaries under any such law, rule or regulation, in each case except where
such noncompliance would not have a material and adverse effect on any
Borrower's or any of its Subsidiaries' business, Property, financial condition
or prospects. Each Borrower and each of its Subsidiaries has established and
maintains an adequate monitoring system to ensure that it remains in compliance
with all federal, state and local laws, regulations and rules applicable to it.
No Inventory has been produced in violation of the Fair Labor Standards Act (29
U.S.C. Section 201 et seq.), as amended.
7.1.19 Restrictions. Neither any Borrower nor any of its Subsidiary
is a party or subject to any contract, agreement, or charter or other corporate
or partnership restriction, which materially and adversely affects its business
or the use or ownership of any of its Properties. Neither any Borrower nor any
of its Subsidiary is not a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness, other than as set forth on
Schedule 7.1.19 hereto, none of which prohibit the execution of or compliance
with this Agreement or the other Loan Documents by any Borrower.
7.1.20 Litigation. Except as set forth on Schedule 7.1.20 hereto,
there are no actions, suits, proceedings or investigations pending or, to the
knowledge of any Borrower, threatened against or affecting any Borrower or any
of its Subsidiaries or the business, operations, Properties, prospects, profits
or condition of any Borrower or any of its Subsidiaries. Neither any Borrower
nor any of its Subsidiaries is in default with respect to any order, writ,
injunction, judgment, decree or rule of any court, governmental authority or
arbitration board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or any
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither any Borrower nor any of its Subsidiaries is in default, and no event has
occurred and no condition exists which constitutes, or which with the passage of
time or the giving of notice or both would constitute, a default, in the payment
of any Indebtedness to any Person for Money Borrowed.
7.1.22 Leases. Schedule 7.1.22(a) hereto is a complete listing of
all capitalized leases of Borrowers and Schedule 7.1.22(b) hereto is a complete
listing of each operating lease of
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Borrowers. Borrowers are in full compliance in all material respects with all of
the terms of each of its respective capitalized and operating leases.
7.1.23 Pension Plans. Except as disclosed on Schedule 7.1.23 hereto,
neither any Borrower nor any of its Subsidiaries has a Plan. Each Borrower and
its Subsidiaries are in full compliance in all material respects with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that could reasonably be expected to result in a
material adverse change in the financial condition of any Borrower or any of its
Subsidiaries exists in connection with any Plan. Neither any Borrower nor any of
its Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.
7.1.24 Trade Relations. There exists no actual or to the knowledge
of Borrowers, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between any Borrower or any
of its Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of any Borrower or
any of its Subsidiaries or with any material supplier, and there exists no
present condition or state of facts or circumstances which would materially
affect adversely any Borrower or any of its Subsidiaries or prevent any Borrower
or any of its Subsidiaries from conducting such business after the consummation
of the transactions contemplated by this Agreement in substantially the same
manner in which it has heretofore been conducted.
7.1.25 Labor Relations. Except as described on Exhibit 7.1.25
hereto, no Borrower is a party to any collective bargaining agreement. There are
no material grievances, disputes or controversies with any union or any other
organization of any Borrower's employees, or threats of strikes, work stoppages
or any asserted pending demands for collective bargaining by any union or
organization.
7.1.26 Year 2000 Compliance. Each Borrower and each of its
Subsidiaries have the reviewed the areas within their respective business and
operations which could be adversely affected by, and have developed and are
implementing and will complete installation, implementation and testing by
October 31, 1999 of a program to address on a timely basis, the risk that
certain computer applications used by each Borrower and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions involving
dates prior to and after December 31, 1999 (the "Year 2000 Problem"). The Year
2000 Problem is not reasonably expected to result in any Material Adverse
Effect.
7.1.27 Business and Assets of Subsidiaries. No Subsidiaries of any
Borrower (except for Subsidiaries which are Borrowers) possesses any assets or
property of any kind (including any Accounts) or conducts any business
(including billing accounts or receiving any cash or other payments from any
Account Debtor with respect to any Accounts). None of the entities listed on
Schedule 7.1.4 as representations of Borrowers in foreign countries possess any
assets or any property or conduct any business of any kind.
7.1.28 Leased Locations. All of the leased or rented locations of
the Borrowers, including all locations where Borrowers rent space for the
storage of Inventory, are used only for the storage and distribution of
Inventory, and none of any such locations contain any significant Fixtures (as
defined in the Code).
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature
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and shall, in all material respects, remain accurate, complete and not
misleading at all times during the term of this Agreement, except for changes in
the nature of any Borrower's or its Subsidiaries' business or operations that
would render the information in any exhibit attached hereto either materially
inaccurate, incomplete or misleading, so long as Lender has consented to such
changes or such changes are expressly permitted or not prohibited by this
Agreement.
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrowers contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, each Borrower
covenants that, it shall:
8.1.1 Visits and Inspections. Permit representatives of Lender, from
time to time, as often as may be reasonably requested, but (if no Event of
Default is outstanding) only during normal business hours, to visit and inspect
the Properties of each Borrower and its Subsidiaries, audit and make extracts
from its books and records, and discuss with its officers, its employees and its
independent accountants, each Borrower's business and the business of its
Subsidiaries, assets, liabilities, financial condition, business prospects and
results of operations.
8.1.2 Notices. Promptly notify Lender in writing of the occurrence
of any Default or Event of Default or of any other event or the existence of any
fact which renders any representation or warranty in this Agreement or any of
the other Loan Documents inaccurate, incomplete or misleading in any material
respect. Such notice, in each case, shall specify the nature of the occurrence
or existence, and what action Borrowers are taking (or proposes to take) with
respect thereto.
8.1.3 Financial Statements. Keep, and cause each Subsidiary to keep
adequate records and books of account with respect to its business activities in
which proper entries are made reflecting all its financial transactions in
accordance with GAAP; and cause to be prepared and furnished to Lender the
following (all to be prepared on a consistent basis for Borrowers (without
including or giving effect to any Subsidiary which is not a Borrower)):
(i) not later than 90 days after the close of each fiscal year
of Borrowers, unqualified audited consolidated financial statements (for
all purposes in this Agreement, "financial statements" shall mean the
balance sheet, income statement and statement of cash flows of Borrowers)
of Borrowers and their Subsidiaries as of the end of such year, certified
by a firm of independent certified public accountants of recognized
standing selected by Borrowers but acceptable to Lender to have been
prepared in accordance with GAAP;
(ii) not later than 30 days after the end of each month,
unaudited interim consolidated financial statements of Borrowers as of the
end of such month and of the portion of Borrowers' fiscal year then
elapsed, each certified by the principal financial officer of Borrowers as
prepared on a basis consistent with Borrowers' past practices for
preparing financial statements and fairly presenting the financial
position and results of
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operations of Borrowers for such month subject only to year-end
adjustments, and except that all such statements need not contain notes;
(iv) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports
which any Borrower has sent to all of its shareholders and copies of any
regular, periodic and special reports or registration statements which any
Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;
(v) promptly after the filing thereof, copies of any annual
report to be filed under ERISA in connection with each Plan; and
(vi) not later than 30 days after the end of each month,
accounts receivable aging schedule, accounts payable aging schedule, and
detailed inventory report;
(vi) such other data and information (financial and otherwise)
as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral, Borrowers' and their Subsidiaries financial
condition or results of operations.
Borrowers shall forward to Lender a copy of the accountants' letter
to Borrowers' management that is prepared in connection with such financial
statements described in clause (i) of this subsection 8.1.3 promptly upon
Borrowers' receipt thereof, but in no case later than April 30th of each year.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this subsection 8.1.3, or more frequently if requested by
Lender, Borrowers shall cause to be prepared and furnished to Lender a
Compliance Certificate in the form of Exhibit E hereto executed by the principal
financial officer, the chief operating officer or the executive vice president
general counsel of Borrowers.
8.1.4 Landlord and Storage Agreements. Provide Lender with copies of
all leases and other material written agreements between any Borrower, and any
of its Subsidiaries, and any landlord or warehouseman which owns any premises at
which any Inventory or Equipment may, from time to time, be kept, as well as
waivers, in form and substance acceptable to Lender, from landlords and
warehousemen for any locations where Collateral is located as Lender reasonably
may require. It is understood that Lender may establish reserves under the
Borrowing Base to cover some or all of the Inventory or Equipment located at any
premises not owned by Borrowers for which a landlord's or warehousemen's waiver
has not been provided. For such purpose, a landlord's or warehouseman's waiver
shall be deemed to have been required at each location where Collateral will be
located.
8.1.5. Year 2000 Compliance. By October 31, 1999, take all action
necessary to assure that at all times the computer-based systems utilized by
each Borrower and its Subsidiaries are able to recognize and perform properly
date-sensitive functions involving dates prior to and after December 31, 1999.
At Lender's request, each Borrower shall provide to Lender assurance reasonably
satisfactory to Lender that the computer-based systems utilized by each Borrower
and its Subsidiaries are able to recognize and perform properly date sensitive
functions involving dates prior to and after December 31, 1999.
8.1.6 Projections. No later than 15 days prior to the end of each of
Borrowers' fiscal years, deliver to Lender Projections of Borrowers for the
forthcoming fiscal year, month by month, in form acceptable to Lender.
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8.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, unless Lender otherwise
agrees in writing, each Borrower covenants that it will not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or consolidate,
or permit any Subsidiary of any Borrower to merge or consolidate, with any
Person; nor acquire nor permit any of its Subsidiaries to acquire, all or any
substantial part of the Properties of any Person.
8.2.2 Loans. Make, or permit any of its Subsidiaries to make, any
loans or other advances of money to any Person. Notwithstanding the foregoing,
IGI shall be permitted to engage in transactions involving the cashless exercise
of stock options by any officers, directors and employees of any of the
Borrowers within any stock option plans approved by a vote of the majority of
the Board of Directors of any Borrower.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to exist,
or permit any of its Subsidiaries to create, incur, assume or suffer to exist,
any Indebtedness, except:
(i) Obligations owing to Lender;
(ii) accounts payable to trade creditors and current operating
expenses (other than for Money Borrowed) which are not aged more than
60 days from the due date, in each case incurred in the ordinary
course of business and paid within such time period, unless the same
are being actively contested in good faith and by appropriate and
lawful proceedings; and Borrowers shall have set aside such reserves,
if any, with respect thereto as are required by GAAP and deemed
adequate by Borrowers or such Subsidiary and its independent
accountants;
(iii) Obligations to pay Rentals permitted by subsection 8.2.11
and Capitalized Lease Obligations permitted under subsection 8.2.7;
(iv) Permitted Purchase Money Indebtedness;
(v) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in the
ordinary course of business;
(vi) subordinated obligations pursuant to the terms of the
Subordinated Debt Agreements;
(vii) the Glaxo Debt; and
(viii) obligations for deferred salary compensation owing to Dr.
Edward Hager, Chief Executive Officer of the Borrowers.
8.2.4 Affiliate Transactions. Except as set forth in Schedule 8.2.4
hereto, enter into, or be a party to, or permit any Subsidiary of Borrower to
enter into or be a party to, any transaction with any Affiliate of Borrower
(except for any transactions solely amongst the Borrowers).
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8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of a Borrower to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due, or being contested in the
manner described in subsection 7.1.14 hereto, but only if in Lender's
judgment such Lien does not adversely affect Lender's rights or the
priority of Lender's Lien in the Collateral;
(iii) Liens arising in the ordinary course of Borrowers'
business by operation of law or regulation, but only if payment in respect
of any such Lien is not at the time past due and such Liens do not, in the
aggregate, materially detract from the value of the Property of any
Borrower or any of its Subsidiaries or materially impair the use thereof
in the operation of Borrowers' business;
(iv) such existing Liens as appear on Schedule 8.2.5
hereto;
(v) Purchase Money Liens securing Permitted Purchase
Money Indebtedness;
(vi) Liens granted to American Capital under the Subordinated
Debt agreements subordinate to the Liens granted to Lender; and
(vii) such other Liens as Lender may hereafter approve in
writing.
8.2.6 Distributions. Declare or make or permit any Subsidiary of a
Borrower to declare or make, any Distributions, except for Distributions to any
Borrower by a Subsidiary of such Borrower.
8.2.7 Capital Expenditures. Make non-financed Capital Expenditures
(including, without limitation, incurrence of Capitalized Lease
Obligations),which, in the aggregate, as to Borrowers, exceed (i) $150,000
during the period from the Closing Date through December 31, 1999, and (ii)
$500,000 during any fiscal year of Borrowers, beginning with the fiscal year
commencing January 1, 2000.
8.2.8 Disposition of Assets. Sell, lease or otherwise dispose of, or
permit any Subsidiary of Borrowers to sell, lease or otherwise dispose of, its
Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as there has been no
acceleration of the Obligations; (ii) a transfer of Property to any Borrower by
a Subsidiary of such Borrower or (iii) dispositions expressly authorized by this
Agreement.
8.2.9 Issuance of Stock. Issue or permit any of its Subsidiaries to
issue, any additional interests in or shares of its capital stock, except for
issuances to (i)(x) American Capital pursuant to the Subordinated Debt Documents
of warrants to acquire interests in or shares of the capital stock of IGI, (y)
holders of such warrants from time to time of the capital stock of IGI, issuable
upon the exercise of such warrants; and (z) holders of securities under (and as
defined in) the Subordinated Debt Documents; and (ii) to officers, directors,
consultants and employees of any
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Borrower or any of its Subsidiaries who are holders of options outstanding on
the date of this Agreement and disclosed on Schedule 7.1.4, or of common stock
upon the exercise of such options, pursuant to any plan, agreement or
arrangement approved by a vote of a majority of the Board of Directors of any
Borrower.
8.2.10 Restricted Investment. Make or have, or permit any of its
Subsidiaries to make or have any Restricted Investment. Notwithstanding the
foregoing, IGI shall be permitted to retain its investments in Indovax Private
Limited, an Indian private company limited by shares, and in IMX Corporation, a
Utah corporation.
8.2.11 Leases. Become, or permit any of its Subsidiaries to become,
a lessee under any operating lease (other than a lease under which a Borrower is
lessor) of Property if the aggregate Rentals payable during any current or
future period of 12 consecutive months under the lease in question and all other
leases (other than leases that are represented by Capitalized Lease Obligations)
under which any Borrower is then lessee would exceed $250,000.00. The term
"Rentals" means, as of the date of determination, all payments which the lessee
is required to make by the terms of any lease.
8.2.12 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than the other Borrowers
and their Subsidiaries existing as of the date of this Agreement.
8.2.13 Business and Assets of Subsidiaries. Permit any of its
Subsidiaries which are not Borrowers to own or hold any Property (including
Accounts) or conduct any business (including billing any Accounts or receiving
payment with respect to any Accounts).
8.3 Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender, Borrowers
covenants that Borrowers shall on a consolidated basis (without consideration
given to any Subsidiary which is not a Borrower) maintain the financial
covenants set forth on Schedule 8.3 hereto.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Lender
under the other sections of this Agreement, Lender shall not be required to make
any Loan under this Agreement unless and until each of the following conditions
has been and continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall reasonably require
in connection therewith from time to time, all in form and substance
satisfactory to Lender and its counsel, including, without limitation, the
following:
(A) Copies of Borrowers' casualty insurance policies, together with
loss payable endorsements on Lender's standard form of Lender Loss Payee naming
Lender as lender loss payee and copies of Borrowers' liability insurance
policies, together with endorsements naming Lender as additional insured;
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(B) All landlords' waivers on all leased locations, and
warehousemen's waivers for other locations, at which Collateral is located as
Lender may reasonably require;
(C) Certified copies of (i) resolutions of each Borrower's Board of
Directors authorizing the execution and delivery of this Agreement and the Loan
Documents and the performance of all transactions contemplated hereby and
thereby on behalf of such Borrower, (ii) each Borrower's by-laws and any
amendments thereto and (iii) an incumbency certificate of each Borrower;
(D) Good standing certificates for each Borrower and each of its
Subsidiaries issued by the Secretary of State or other appropriate official of
such Borrower's or its Subsidiary's jurisdiction of incorporation, and each
jurisdiction where the conduct of such Borrower's or its Subsidiary's business
activities or the ownership of its Properties necessitated qualification, and a
certified copy of the Articles or Certificate of Incorporation for each Borrower
and each of its Subsidiaries, and any amendments thereto, certified by the
Secretary of State or other appropriate official of its jurisdiction of
incorporation;
(E) A closing certificate signed by the chief executive officer or
chief operating officer of Borrowers, dated as of the date hereof, stating that
(i) the representations and warranties set forth in Section 7 hereof are true
and correct on and as of such date, (ii) Borrowers are on such date in
compliance with all the terms and provisions set forth in this Agreement and
(iii) on such date no Default or Event of Default has occurred or is continuing;
(F) The Security Documents duly executed, accepted and acknowledged
by or on behalf of each of the signatories thereto;
(G) The Other Agreements duly executed and delivered by Borrowers;
(H) The favorable, written opinion of Borrowers' counsel, as to the
transactions contemplated by this Agreement and any of the other Loan Documents
and such other opinions as Lender may reasonably require;
(I) Written instruction from Borrowers directing the application of
proceeds of the initial Loans made pursuant to this Agreement, and an initial
Borrowing Base Certificate from Borrowers;
(J) Duly executed agreements establishing the lockbox and Dominion
Account;
(K) Payoff letters and lien releases from Borrowers' existing
institutional lenders;
(L) Receipt by Borrowers of at least $7,000,000 in subordinated
loans pursuant to the Subordinated Debt Agreements;
(M) Receipt of copies of the Subordinated Debt Agreements;
(N) UCC, state and federal tax lien and judgment searches;
(O) Payment of all fees and expenses owing hereunder;
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(P) All conditions set forth in Lender's commitment letter of July
9, 1999 issued to Borrowers have been satisfied or fulfilled (unless waived or
amended in writing by Lender in its sole discretion); and
(Q) Such other documents, instruments and agreements as Lender shall
reasonably request in connection with the foregoing matters.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
9.4 Availability. Lender shall have determined that immediately after
Lender has made the initial Loans contemplated hereby, and paid all closing
costs incurred in connection with the transactions contemplated hereby have been
paid, Aggregate Adjusted Availability on the Closing Date shall not be less than
$1,500,000.
9.5 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement, the other Loan Documents, or the consummation of the transactions
contemplated hereby or thereby.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Obligations. Borrowers shall fail to pay any
Obligations owing hereunder or under the Notes, or any other of the Obligations,
on the due date thereof (whether due at stated installment due date, or
maturity, on demand, upon acceleration, or otherwise).
10.1.2 Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of any Borrower or any
Subsidiary of any Borrower in this Agreement, any of the other Loan Documents or
any instrument, certificate or financial statement furnished in compliance with
or in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.
10.1.3 Breach of Specific Covenants. Any Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Sections 6.2,
8.1.1, 8.1.2, 8.1.3, 8.2 (except 8.2.3(iii))or 8.3 hereof on the date that such
Borrower is required to perform, keep or observe such covenant.
10.1.4 Breach of Other Covenants. Any Borrower shall fail or neglect
to perform, keep or observe any covenant contained in this Agreement (other than
a covenant which is dealt with specifically elsewhere in Section 10.1 hereof)
and the breach of such other covenant is not cured to Lender's satisfaction
within 10 days after the sooner to occur of any Borrower's receipt of
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notice of such breach from Lender or the date on which such failure or neglect
first becomes known to any officer of any Borrower.
10.1.5 Default Under Security Documents/Other Agreements. Any event
of default shall occur under, or any Borrower shall default in the performance
or observance of any term, covenant, condition or agreement contained in, any of
the Security Documents or the Other Agreements and such default shall continue
beyond any applicable grace period.
10.1.6 Other Defaults. There shall occur any default or event of
default on the part of any Borrower or any of its Subsidiaries under any
agreement, document or instrument to which any Borrower or any of its
Subsidiaries is a party or by which such Borrower or any of its Subsidiaries or
any of their Property is bound, creating or relating to any Indebtedness (other
than the Obligations) which singly or in the aggregate with any such other
Indebtedness is in excess of $50,000, if the holder of such Indebtedness would
be entitled to accelerate such Indebtedness in consequence of such event of
default or default;
10.1.7 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
10.1.8 Adverse Changes. There shall occur any material adverse
change in the financial condition of any Borrower or its Subsidiaries, or
business prospects of any Borrower or its Subsidiaries, after giving effect to
the transactions contemplated hereby.
10.1.9 Insolvency and Related Proceedings. Any Borrower or any of
its Subsidiaries shall cease to be Solvent or shall suffer the appointment of a
receiver, trustee, custodian or similar fiduciary, or shall make an assignment
for the benefit of creditors, or any petition for an order for relief shall be
filed by or against any Borrower or any of its Subsidiaries under the Bankruptcy
Code (if against any Borrower or any of its Subsidiaries, the continuation of
such proceeding for more than 60 days, provided that nothing herein contained
shall compel Lender to make Revolving Credit Loans or prevent Lender from
seeking protection or relief from the court in any such proceeding), or any
Borrower shall make any offer of settlement, extension or composition to its
unsecured creditors generally.
10.1.10 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of any Borrower or any of its
Subsidiaries for a period which significantly affects such Borrower's or such
Subsidiary's capacity to continue its business, on a profitable basis; or any
Borrower or any of its Subsidiaries shall suffer the loss or revocation of any
license or permit now held or hereafter acquired by such Borrower or any of its
Subsidiaries which is necessary to the continued or lawful operation of its
business; or any Borrower's or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which such Borrower or any of its
Subsidiaries leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term and such cancellation or
termination will have a material adverse effect on such Borrower's or any of its
Subsidiaries' business, financial condition, Collateral or prospects; or any
material part of the Collateral shall be taken through condemnation or the value
of such Property shall be impaired in any material respect through condemnation.
10.1.11 Change of Control. The occurrence of a Change of
Control.
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10.1.12 ERISA. A Reportable Event shall occur which Lender, in its
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan of any
Borrower or any of its Subsidiaries or for the appointment by the appropriate
United States district court of a trustee for any Plan of any Borrower or any of
its Subsidiaries, or if any Plan shall be terminated in a "distress termination"
pursuant to Section 4041(c) or any such trustee shall be requested or appointed,
or if any Borrowers is in "default" (as defined in Section 4219(c)(5) of ERISA)
with respect to payments to a Multiemployer Plan resulting from any Borrower's
or any of its Subsidiaries' complete or partial withdrawal from such Plan.
10.1.13 Challenge to Agreement. Any Borrower or any of its
Subsidiaries shall challenge or contest in any action, suit or proceeding the
validity or enforceability of this Agreement, or any of the other Loan
Documents, the legality or enforceability of any of the Obligations or the
perfection or priority of any Lien granted to Lender.
10.1.14 Criminal Actions or Forfeiture. Any Borrower or any of its
Subsidiaries shall be criminally indicted or convicted under any law or any
judicial or administrative proceeding is commenced that could lead to a
forfeiture of any material Property of any Borrower or any of its Subsidiaries
to any Governmental Authority.
10.1.15 Judgments. Any money judgments not covered by insurance
which are in excess of $50,000 and are not stayed pending appeal or any writ of
attachment or similar process is filed against any Borrower or any of its
Subsidiaries or their Property.
10.2 Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence and during the continuation of an Event of Default, all or any
portion of the Obligations shall, at the option of Lender and without
presentment, demand, protest or further notice by Lender, become at once due and
payable and Borrowers shall forthwith pay to Lender, the full amount of such
Obligations, provided, that upon the occurrence of an Event of Default specified
in subsection 10.1.9 hereof, all of the Obligations shall become automatically
due and payable without declaration, notice or demand by Lender.
10.3 Other Remedies. Upon and after the occurrence and during the
continuance of an Event of Default, Lender shall have and may exercise from time
to time the following rights and remedies (to the full extent permitted by
applicable law):
10.3.1 All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable rights to
which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrowers to assemble the Collateral, at Borrowers' expense, and
make it available to Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrowers,
Borrowers agree not to charge Lender for storage thereof).
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10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Borrowers agree that 7 days prior
written notice to Borrowers of any public or private sale or other disposition
of Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Lender may designate in said notice. Lender shall have the right to
conduct such sales on Borrowers' premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable law.
Lender shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale of any Collateral may be applied, after Lender
obtains cleared funds, first to the costs, expenses and attorneys' fees incurred
by Lender in collecting the Obligations, in enforcing the rights of Lender under
the Loan Documents and in collecting, retaking, completing, protecting,
removing, storing, advertising for sale, selling and delivering any Collateral;
second to the interest due upon any of the Obligations; and third, to the
principal of the Obligations. If any deficiency shall arise, Borrowers shall
remain liable to Lender therefor.
10.3.4 Lender is hereby granted a license or other right to use,
without charge, each Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and each Borrower's rights under all
licenses and all franchise agreements shall inure to Lender's benefit.
10.3.5 Lender may, at its option, reduce or modify the Borrowing
Base, or any portion thereof or the advance rates or to take additional reserves
in the Borrowing Base.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrowers contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Lender or contained in any other agreement between
Lender and Borrowers, heretofore, concurrently, or hereafter entered into, shall
be deemed cumulative to and not in derogation or substitution of any of the
terms, covenants, conditions, or agreements of Borrowers herein contained. The
failure or delay of Lender to require strict performance by Borrowers of any
provision of this Agreement or to exercise or enforce any rights, Liens, powers,
or remedies hereunder or under any of the aforesaid agreements or other
documents or security or Collateral shall not operate as a waiver of such
performance, Liens, rights, powers and remedies, but all such requirements,
Liens, rights, powers, and remedies shall continue in full force and effect
until all Loans and all other Obligations owing or to become owing from
Borrowers to Lender shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and representations of Borrowers contained in
this Agreement or any of the other Loan Documents and no Event of Default by
Borrowers under this Agreement or any other Loan Documents shall be deemed to
have been suspended or waived by Lender, unless such suspension or waiver is by
an instrument in writing specifying such suspension or waiver and is signed by a
duly authorized representative of Lender and directed to Borrowers.
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SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Each Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender) as
such Borrower's true and lawful attorney (and agent-in-fact) and Lender, or
Lender's agent, may, without notice to such Borrower and in either such
Borrower's or Lender's name, but at the cost and expense of Borrowers:
11.1.1 At any time and from time to time as Lender or said agent, in
its sole discretion, may determine, endorse any Borrower's name on any checks,
notes, acceptances, drafts, money orders or any other evidence of payment or
proceeds of the Collateral which come into the possession of Lender or under
Lender's control.
11.1.2 At such time or times during the existence of an Event of
Default as Lender or its agent in its sole discretion may determine: (i) demand
payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of each
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such commercially reasonable terms, for such amounts and at such
time or times as Lender deems advisable; (iv) take control, in any manner, of
any item of payment or proceeds relating to any Collateral; (v) prepare, file
and sign any Borrower's name to a proof of claim in bankruptcy or similar
document against any Account Debtor or to any notice of lien, assignment or
satisfaction of lien or similar document in connection with any of the
Collateral; (vi) receive, open and dispose of all mail addressed to any Borrower
and to notify postal authorities to change the address for delivery thereof to
such address as Lender may designate; (vii) endorse the name of any Borrower
upon any of the items of payment or proceeds relating to any Collateral and
deposit the same to the account of Lender on account of the Obligations; (viii)
endorse the name of any Borrower upon any chattel paper, document, instrument,
invoice, freight bill, bill of lading or similar document or agreement relating
to the Accounts, Inventory and any other Collateral; (ix) use any Borrower's
stationery and sign the name of any Borrower to verifications of the Accounts
and notices thereof to Account Debtors; (x) use the information recorded on or
contained in any data processing equipment and computer hardware and software
relating to the Accounts, Inventory, Equipment and any other Collateral; (xi)
make and adjust claims under policies of insurance; and (xii) do all other acts
and things necessary, in Lender's determination, to fulfill Borrowers'
obligations under this Agreement.
11.2 Indemnity. Each Borrower hereby agrees to indemnify Lender and hold
Lender harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender (including attorneys' fees and
legal expenses) (collectively "Losses") as the result of any Borrower's failure
to observe, perform or discharge Borrowers' duties hereunder or of any claim or
claim of any creditor or shareholder of any Borrower against Lender. In
addition, Borrowers shall defend Lender against and save it harmless from all
claims of any Person with respect to the Collateral. Without limiting the
generality of the foregoing, these indemnities shall extend to any claims
asserted against Lender by any Person under any Environmental Laws or similar
laws by reason of any action, conduct, inaction or omission by any Borrower or
any Borrower's or any other Person's failure to comply with laws applicable to
solid or hazardous waste materials or other toxic substances. Notwithstanding
any contrary provision in this Agreement, the obligation of Borrowers under this
Section 11.2 shall survive the payment in full of the Obligations
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and the termination of this Agreement. Notwithstanding anything to the contrary
in this subsection 11.2, Borrowers shall not be liable to indemnify Lender for
any Losses or claims incurred as result of Lender's gross negligence or wilful
misconduct.
11.3 Modification of Agreement; Sale of Interest. This Agreement may not
be modified, altered or amended, except by an agreement in writing signed by
Borrowers and Lender. Borrowers may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including, without limitation, Borrowers' rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrowers
hereby consent to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were "Lender" hereunder and Lender shall be relieved of all
obligations hereunder upon (but only to the extent of) any such assignments. In
the case of a participation, Lender shall not be relieved of its obligations to
make Revolving Credit Loans and Capital Expenditure Loans and shall retain the
sole right and responsibility to enforce the obligations of Borrowers hereto.
Any participation agreement with a Participating Lender may provide that Lender
will not agree to any amendment of this Agreement if such amendment would reduce
the principal of, or rate of interest on, the Loans, or postpone the date fixed
for any scheduled payment of principal or interest without the consent of such
Participating Lender. Borrowers agree that they will use their best efforts to
assist and cooperate with Lender in any manner reasonably requested by Lender to
effect the sale of participations in or assignments of any of the Loan Documents
or any portion thereof or interest therein, including, without limitation,
assisting in the preparation of appropriate disclosure documents. Borrowers
further agree that Lender may disclose credit information regarding Borrowers to
any potential participant or assignee, subject to the terms and provisions of
Section 11.14 below.
11.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrowers and Lender permitted under Section 11.3
hereof.
11.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
11.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
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11.8 Notice. Except as otherwise provided herein, all notices, requests
and demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, one
Business Day after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
If to Lender: Fleet Capital Corporation
200 Glastonbury Boulevard
Glastonbury, CT 06033
Attention: Northeast Loan Administration Manager
Facsimile No.: 860-657-7759
With a copy to: Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Attention: Harvey I. Forman, Esquire
Facsimile No.: 215-569-5522
If to Borrowers:
c/o IGI, Inc.
Wheat Road and Lincoln Avenue
Buena, NJ 08310
Attention: Chairman
Facsimile No. 609-697-2259
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02104
Attention: C. Hall Swaim, Esquire
Paul P. Broutas, Esquire
Facsimile No. 617-526-5000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to subsections 2.1.1., 2.1.2, 3.1.1
or 4.2.2 hereof shall not be effective until received by Lender.
11.9 Lender's Consent. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or even
(unless such agreement otherwise expressly provides), Lender shall be authorized
to give or withhold such consent in its sole and absolute discretion and to
condition its consent upon the giving of additional collateral security for the
Obligations, the payment of money or any other matter.
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11.10 Credit Inquiries. Borrowers hereby authorize and permit Lender to
respond to usual and customary credit inquiries from third parties concerning
Borrowers. Lender shall endeavor to notify Borrowers of the inquiry as soon as
possible after such inquiry has been made.
11.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
11.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
11.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
11.14 Information and Confidentiality. Lender agrees to keep confidential
any information furnished or made available to it by Borrowers pursuant to this
Agreement that is marked confidential; provided that nothing herein shall
prevent Lender from disclosing such information (a) to any Affiliate of Lender,
or any officer, director, employee, attorney, agent, or advisor of Lender or any
Affiliate of Lender, provided that any such Person shall agree to be bound by
the same requirements to keep information confidential as are contained in this
Section, (b) to any other Person if reasonably incidental to the administration
of the credit facilities provided herein, provided that any such Person shall
agree to be bound by the same requirements to keep information confidential as
are contained in this Section, (c) as required by any law, rule, or regulation,
(d) upon the order of any court or administrative agency, (e) upon the request
or demand of any regulatory agency or authority, (f) that is or becomes
available to the public or that is or becomes available to Lender or any of its
Affiliates other than as a result of a disclosure by Lender or any of its
Affiliates prohibited by this Agreement, (g) in connection with any litigation
to which Lender or any of its Affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any remedy under this Agreement or
any other Loan Document, (i) subject to provisions substantially similar to
those contained in this Section 11.14 to any actual or proposed participant or
assignee and (j) to Gold Sheets and other bank trade publications, such
information to consist of deal terms and other information customarily found in
such publications.
11.15 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN PHILADELPHIA,
PENNSYLVANIA. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE PENNSYLVANIA; PROVIDED, HOWEVER, THAT IF ANY OF THE
COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW YORK, THE LAWS OF
SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE
OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF PENNSYLVANIA.
AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY
PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER OR
LENDER, EACH BORROWER HEREBY CONSENTS AND AGREES THAT THE COURTS OF STATE OF
PENNSYLVANIA OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF PENNSYLVANIA, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY
36
<PAGE> 41
CLAIMS OR DISPUTES BETWEEN ANY BORROWER(S) AND LENDER PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER HEREBY WAIVES ANY
OBJECTION WHICH SUCH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH
BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
RETURN RECEIPT REQUESTED ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF SUCH BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER
OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
11.16 WAIVERS BY BORROWERS. EACH BORROWER WAIVES (I) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL: (II) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH SUCH BORROWER MAY IN ANY WAY BE LIABLE AND
HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD EXCEPT FOR
LENDER'S WILFUL MISCONDUCT OR GROSS NEGLIGENCE; (III) EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED BY THIS AGREEMENT, NOTICE PRIOR TO TAKING POSSESSION OR
CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY
COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (IV) THE
BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (V) NOTICE OF
ACCEPTANCE HEREOF. EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS. EACH
BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH
ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties to this Loan and Security Agreement,
intending to be legally bound, have duly executed this Agreement on the day and
year specified at the beginning of this Agreement.
IGI, INC.
By: /s/ Manfred Hanuschek
___________________________
Name: Manfred Hanuschek
_______________________
Title: CFO
________________________
IGEN, INC.
By: /s/ Manfred Hanuschek
__________________________
Name: Manfred Hanuschek
_______________________
Title: CFO
________________________
IMMUNOGENETICS, INC.
By: /s/ Manfred Hanuschek
__________________________
Name: Manfred Hanuschek
_______________________
Title: CFO
________________________
BLOOD CELLS, INC.
By: /s/ Manfred Hanuschek
__________________________
Name: Manfred Hanuschek
_______________________
Title: CFO
________________________
FLEET CAPITAL CORPORATION
By: /s/ Walter Schuppe
___________________________
Name: Walter Schuppe
________________________
Title: CFO
_________________________
S - 1
<PAGE> 43
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of October 29, 1999,
by and between Fleet Capital Corporation and IGI, Inc., IGEN, Inc.,
ImmunoGenetics, Inc. and Blood Cells, Inc. the following terms shall have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated under or
on account of an Account, Chattel Paper, Instrument, Document or General
Intangible.
Accounts - collectively, all Accounts, whether now owned or
hereafter created or acquired by any Borrower or in which any Borrower now
has or hereafter acquired any interest.
Adjusted LIBOR Rate - For any LIBOR Interest Period, as applied to
either a Revolving Credit LIBOR Rate Loan or Term LIBOR Rate Loan the rate
per annum (rounded upwards, if necessary to the next 1/16 of 1%)
determined pursuant to the following formula:
Adjusted Libor Rate = Libor Rate
---------------------------
(1.00 - Reserve Percentage)
For purposes hereof, "Libor Rate" shall mean the arithmetic average of the
rates of interest per annum (rounded upwards, if necessary to the next
1/16 of 1%) at which Bank is offered deposits of United States Dollars in
the interbank eurodollar loan market on or about 2:00 P.M. New York time
two (2) Business Days prior to the commencement of such LIBOR Interest
Period on amounts substantially equal to the Revolving Credit LIBOR Rate
Loan or Term LIBOR Rate Loan as to which Borrowers may elect the Adjusted
LIBOR Rate to be applicable with a maturity of comparable duration to the
LIBOR Interest Period selected by Borrowers for such Revolving Credit
LIBOR Rate Loan or Term LIBOR Rate Loan.
Adjusted Net Earnings From Operations - with respect to any fiscal
period, means the net earnings (or pre-tax loss) as reflected on the
financial statements of Borrowers supplied to Lender pursuant to
subsection 8.1.3 of the Agreement, but excluding:
(i) any gain or loss arising from the sale of
capital assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of any of the Borrowers
accrued prior to the date it became a Subsidiary;
(iv) earnings of any corporation, substantially all the
assets of which have been acquired in any manner by any of the
Borrowers, realized by such corporation prior to the date of such
acquisition;
(v) net earnings of any business entity (other than a
Subsidiary of any Borrower) in which any of the Borrowers has an
ownership interest unless such net earnings shall have actually been
received by any of the Borrowers in the form of cash distributions;
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(vi) any portion of the net earnings of any Subsidiary of any of
the Borrowers which for any reason is unavailable for payment of
dividends to any of the Borrowers;
(vii) the earnings of any Person to which any assets of any of
the Borrowers shall have been sold, transferred of disposed of, or
into which any of the Borrowers shall have merged, or been a party to
any consolidation or other form of reorganization, prior to the date
of such transaction;
(viii) any gain arising from the acquisition of any Securities of
any of the Borrowers; and
(ix) any gain arising from extraordinary or non-recurring items.
Adjusted Tangible Net Worth - at any date means a sum equal to:
(i) the net book value (after deducting related depreciation,
obsolescence, amortization, valuation, and other proper reserves) at
which the assets of a Person would be shown on a balance sheet at such
date in accordance with GAAP, minus
(ii) the amount at which such Person's liabilities (other than
Subordinated Debt, capital stock and surplus), and including as
liabilities all reserves for contingencies and other potential
liabilities, all as would be shown on such balance sheet in accordance
with GAAP; minus
(iii) prepaid assets, deferred assets, deposits, prepaid
expenses, miscellaneous current assets, and assets which would be
considered intangible assets under GAAP.
Affiliate - With respect to any Person, any other Person (other than a
Subsidiary): (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control
with, such Person; (ii) which beneficially owns or holds 10% or more of any
class of the Voting Stock (or in the case of a Person which is not a
corporation, 10% or more of the equity interest) of such Person; or (iii)
10% or more of the Voting Stock (or in the case of a Person which is not a
corporation,10% or more of the equity interest) of which is beneficially
owned or held by such Person or a Subsidiary of such Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits and Schedules thereto and this
Appendix A as each of the same may be amended, modified, renewed, extended,
replaced, restated or substituted from time to time.
Aggregate Adjusted Availability - an amount equal to the Borrowing
Base less the sum of (i) the amount of Revolving Credit Loans then
outstanding and requested to be made as of the date of calculation
thereof, plus (ii) all sums due and owing to trade creditors which remain
outstanding beyond normal terms or any special terms granted in writing by
Borrowers' trade creditors, plus (iii) any reserves against the Borrowing
Base, plus (iv) as to any calculation on the Closing Date, transaction
fees, costs and expenses.
American Capital - American Capital Strategies, Ltd.
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<PAGE> 45
Authorized Representative - as defined in Section 3.1.1.
Availability - the amount of money which Borrowers are entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving
Credit Loans then outstanding (including any amounts which Lender may have
paid for the account of Borrowers pursuant to any of the Loan Documents
and which have not been reimbursed by Borrowers) is subtracted from the
Borrowing Base. If the amount outstanding is equal to or greater than the
Borrowing Base, Availability is 0.
Bank - Fleet National Bank, or such other bank as Lender may
hereafter designate.
Base Rate - the rate of interest announced or quoted by Bank from
time to time as its base rate for commercial loans, whether or not such
rate is the lowest rate charged by Bank to its most preferred borrowers;
and, if such base rate for commercial loans is discontinued by Bank as a
standard, a comparable reference rate designated by Bank as a substitute
therefor shall be the Base Rate.
Base Rate Loans - collectively, all Revolving Credit Base Rate Loans
and Term Base Rate Loans.
Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(i) The Revolving Facility Limit; or
(ii) the then applicable Formula Availability.
Borrowing Base Certificate - the certificate signed by the
chief executive officer or chief financial officer of Borrowers showing
the status of Borrowers' Accounts and Inventory, outstanding Revolving
Credit Loans and other information in the form of Exhibit A to the
Agreement.
Business Day - any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of Connecticut or is a day
on which banking institutions located in such state are closed.
Capital Expenditures - cash expenditures made for the acquisition of
any fixed assets or improvements, replacements, substitutions or additions
thereto which have a useful life of more than one year, including without
limitation the total principal portion of Capitalized Lease Obligations
excluding expenditures for the replacement of any assets leased under a
Capitalized Lease Obligation in connection with a casualty or loss
thereof.
Capital Expenditure Loans - the Loans described in Subsection 1.3 of
the Agreement.
Capital Expenditure Loan Note - the secured promissory note to be
executed by Borrowers on the Closing Date in favor of Lender to evidence
Borrowers' obligation to pay the Capital Expenditure Loans which shall be
in the form of Exhibit B to the Agreement.
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<PAGE> 46
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Change of Control - (i) the management of any of the Borrowers shall
cease to be reasonably satisfactory to Lender; (ii) any Person (other than
Borrowers or their Subsidiaries), together with members of any such
individual Person's immediate family and any trusts for the benefit of
such Person, or for the benefit of any such Person's immediate family and
any corporation controlled by such Person, or by the immediately family of
any such individual Person owns, legally or beneficially, more than 50% of
the Voting Stock of IGI; (iii) any transaction or series of related
transactions resulting in the sale, transfer, assignment or other
conveyance or disposition of any capital stock or any rights therein of
IGI by any holder(s) representing in the aggregate more than 50% of the
issued and outstanding capital stock; or (iv) IGI shall cease to own 100%
of the capital stock of any of IGEN, ImmunoGenetics or Blood Cells.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made or
issued under the Agreement.
Code - the Uniform Commercial Code as adopted and in force in the
Commonwealth of Pennsylvania and as from time to time in effect.
Collateral - all of the Property and interests in Property of the
Borrowers described in Section 5 of the Agreement, and all other Property
of the Borrowers and interests in Property that now or hereafter secure
the payment and performance of any of the Obligations.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Consolidated Group - IGI and its consolidated Subsidiaries,
including each Borrower.
Credit Facility - the Revolving Credit Facility, the Term Loan and
all Capital Expenditure Loans.
Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets
shown on a balance sheet at such date in accordance with GAAP.
Current Liabilities - at any date means the amount at which all of
the current liabilities of a Person would be properly classified as
current liabilities on a balance sheet at such date in accordance with
GAAP (including the Revolving Credit Loans and the current maturities of
any long-term Indebtedness).
Default - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - as defined in subsection 2.1.3 of the Agreement.
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<PAGE> 47
Distribution - in respect of any Person means and includes: (i) the
payment of any dividends (whether in cash or property) or other
distributions on capital stock or other ownership interest (including
partnership interests) and (ii) the redemption or acquisition of
Securities unless made contemporaneously from the net proceeds of the sale
of Securities.
Dominion Account - a special account of Lender established by
Borrowers pursuant to the Agreement at a bank selected by Borrowers, but
acceptable to Lender in its discretion, and over which Lender shall have
sole and exclusive access and control for withdrawal purposes.
EBITDA - Adjusted Net Earnings From Operations plus the sum of
depreciation, amortization and interest expenses and taxes during the
period for which Adjusted Net Earnings From Operations was calculated and
plus or minus any change in Borrowers' LIFO reserve from the immediately
preceding period of measurement, determined for the Borrowers for the
applicable measurement period.
Eligible Account - as to each Borrower, an Account arising in the
ordinary course of such Borrower's business from the sale of goods or
rendition of services and which Lender, in its sole credit judgment, deems
to be an Eligible Account. Without limiting the generality of the
foregoing, no Account shall be an Eligible Account if:
(i) it arises out of a sale made by a Borrower to
another Borrower, or to a Subsidiary or an such Affiliate of
Borrower, or to a Person controlled by such Borrower or an Affiliate
of such Borrower; or
(ii) it is unpaid more than 90 days after the original
invoice date (or in the case of international sales is unpaid more
than 150 days from invoice date) or in any event is more than 60
days from date due; or
(iii) 50% or more of the Accounts from the Account
Debtor are not deemed Eligible Accounts hereunder; or
(iv) the total unpaid Accounts of the Account Debtor
exceed 20% of the net amount of all Eligible Accounts, to the extent
of such excess; or
(v) any covenant, representation or warranty contained
in the agreement with respect to such Account has been materially
breached; or
(vi) the Account Debtor is also the Borrower's creditor
or supplier, or the Account Debtor has disputed liability with
respect to such Account or the Account Debtor has made any claim
with respect to any other Account due from such Account Debtor to
the Borrower, or the Account otherwise is or may become subject to
any right of setoff by the Account Debtor; or
(vii) the Account Debtor has commenced a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors, or a
decree or order for relief has been entered by a court having
jurisdiction in the premises in respect of the Account Debtor in an
involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other petition or other
application for relief under the federal bankruptcy laws has been
filed against the Account Debtor, or if the Account Debtor has
failed, suspended business, ceased to be Solvent, or
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<PAGE> 48
consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion
of its assets or affairs; or
(viii) it arises from a sale to an Account Debtor
outside the United States, unless the sale is on irrevocable letter
of credit, guaranty or acceptance terms, or covered by credit
insurance in each case acceptable to Lender in its sole discretion;
or
(ix) it arises from a sale to the Account Debtor on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis or otherwise
does not represent a final sale; or
(x) the Account Debtor is the United States of America
or any department, agency or instrumentality thereof, unless the
Borrower assigns its right to payment of such Account to Lender, in
a manner satisfactory to Lender, so as to comply with the Assignment
of Claims Act of 1940 (31 U.S.C. Section 203 et seq., as amended);
or
(xi) the Account is not at all times subject to Lender's
duly perfected, first priority security interest and/or is subject
to any other Lien other than a Permitted Lien; or
(xii) the goods giving rise to such Account have not
been delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by the Borrower
and accepted by the Account Debtor or the Account otherwise does not
represent a final sale; or
(xiii) the Account is evidenced by Chattel Paper or an
Instrument of any kind unless the same has been delivered to Lender,
or has been reduced to judgment; or
(xiv) the Borrower has made any agreement with the
Account Debtor for any deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business for
prompt payment and which discounts or allowances are reflected in
the calculation of the face value of each invoice related to such
Account; or
(xv) the Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof;
(xvi) the Account does not represent a claim for royalty
or license obligations; or
(xvii) any Account where the Account Debtor is Watera,
Inc., unless Lender in its sole discretion, shall determine
otherwise.
Notwithstanding any of the foregoing, Accounts where the Account Debtor is
Estee Lauder, Inc. or any of its Affiliates or Genesis Pharmaceutical, Inc. (or
its predecessor C&M Pharmacal) shall only be considered Eligible Accounts to the
extent that the aggregate amount of outstanding Accounts does not exceed
$650,000, in the case of Estee Lauder, Inc. and its Affiliates (taken as a
whole), and $350,000 in the case of Genesis Pharmaceutical, Inc. Any Accounts
from either of these two Account Debtors in excess of these limitations shall be
considered ineligible.
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<PAGE> 49
However, if at any time the Borrowers shall provide to Lender a written
agreement from either Estee Lauder, Inc. (and its Affiliates) or Genesis
Pharmaceutical, Inc., which agreement shall in form and substance be acceptable
to Lender, whereby either of these Account Debtors shall agree to waive any
rights of offset, defense, deduction or counterclaim with respect to its
Accounts (except as such rights may relate to the quality or quantity of goods
or services provided under the invoice in question), the foregoing restriction
on the eligibility of such Account Debtor shall not apply.
Eligible Inventory - as to each Borrower, such raw materials,
finished WIP, or finished goods Inventory of each such Borrower which
Lender, in its sole credit judgment, deems to be Eligible Inventory.
Without limiting the generality of the foregoing, no Inventory shall be
Eligible Inventory if:
(i) it is not in good, new and saleable condition; or
(ii) it is slow-moving, obsolete or unmerchantable; or
(iii) it does not meet all standards imposed by any
governmental agency or authority for Inventory of its type; or
(iv) it does not conform in all respects to the
warranties and representations set forth in the Agreement; or
(v) it is not at all times subject to Lender's duly
perfected, first priority security interest and/or is subject to any
other Lien except a Permitted Lien; or
(vi) it is not situated at a location in the United
States which is in compliance with the Agreement; or
(vii) it is not situated at a location owned by any of
the Borrowers or a location for which Lender has received a
landlord's waiver acceptable to Lender; or
(viii) it is consigned inventory, demonstration
inventory, or repossessed or returned inventory.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to environmental matters.
Equipment - collectively, all machinery, apparatus, equipment,
fittings, furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description used in
Borrowers' operations or owned by any Borrower or in which any Borrower
has an interest, whether now owned or hereafter acquired by any Borrower
and wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
therefor.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
Excess Cash Flow - for any period means Borrowers' (i) Adjusted Net
Earnings From Operations plus (ii) depreciation and amortization expenses
less (iii) Capital
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<PAGE> 50
Expenditures (which are not financed), less (iv) payments of long term
Indebtedness (including without limitation the Term Loan) and Capitalized
Lease Obligations.
Event of Default - as defined in Section 10.1 of the Agreement.
Fixed Charges - for any period, without duplication, (i) interest
expense for such period, plus (ii) scheduled payments of principal of all
Indebtedness of Borrowers during such period (including, without
limitation, that portion of any Capitalized Lease Obligations attributable
to principal amortization in accordance with GAAP) plus (iii) tax
payments.
Fixed Charge Coverage Ratio - the ratio obtained by dividing the sum
(i) of EBITDA minus non-financed Capital Expenditures minus other non-cash
income plus non-cash expenses plus Hager compensation deferral accrued
during such period by (ii) Fixed Charges plus any payment of the deferred
compensation made during such period to Hager as determined on a
consolidated basis for Borrowers for the applicable measurement period.
Formula Availability - as at any date of determination thereof, as
to the Borrowers, an amount equal to the sum of:
(i) the sum of 85% of the net amount of Eligible Accounts of
each Borrower outstanding at such date;
PLUS
(ii) the lesser of (a) $4,000,000 and (b) the sum of 60% of the
value of Eligible Inventory of each Borrower at such date, in
each case calculated on the basis of the lower of cost or
market on a first-in, first-out basis;
MINUS
(iii) such reserves as Lender may establish from time to time under
Section 1.1.1.
For purposes hereof, the net amount of Eligible Accounts at any time
shall be the face amount of such Eligible Accounts less any and all
returns, rebates, discounts (which may, at Lender's option, be calculated
on shortest terms), credits, allowances or excise taxes of any nature at
any time issued, owing, claimed by Account Debtors, granted, outstanding
or payable in connection with such Accounts at such time.
GAAP - generally accepted accounting principles in the United States
of America in effect from time to time.
Glaxo Debt - the Indebtedness of the Borrowers to Glaxo Wellcome
Inc. in the amounts of $200,000.00 and $608,000.00 under the terms of two
promissory notes, dated December 10, 1998 and December 18, 1998
respectively.
General Intangibles - collectively, all personal property of
Borrowers (including things in action) other than goods, Accounts, Chattel
Paper, Documents, Instruments and money, whether now owned or hereafter
created or acquired by Borrowers, including without limitation all
trademarks, patents, copyrights, applications therefor, customer lists,
goodwill, computer software and data, tax and other refunds, rights and
claims under insurance policies (including without limitation credit
insurance), letters of credit, licenses, royalties, franchises, contract
rights, deposits, books and records, and choses in action, and
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<PAGE> 51
all new drug approvals or any other such product approvals issued at any
time by the Food and Drug Administration and all manufacturer's
registrations with the Food and Drug Administration, and all equivalent
approvals and registrations with any governmental authorities of any state
or any foreign countries, including any foreign product registrations.
Georgia Real Estate - the leasehold interest of Borrowers in the
premises located at 1146 Airport Parkway, Gainesville, GA, and the
improvements located thereon.
Governmental Authority - shall mean any federal, state, local or
foreign court or governmental agency, authority, instrumentality,
subdivision or regulatory body.
Indebtedness - as applied to a Person means, without duplication.
(i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined, including, without limitation,
Capitalized Lease Obligations,
(ii) all monetary obligations of other Persons which
such Person has guaranteed,
(iii) all reimbursement obligations in connection with
letters of credit or letter of credit guaranties issued for the
account of such Person, and
(iv) in the case of Borrowers (without duplication), the
Obligations.
Inventory - collectively, all inventory of Borrowers, whether now
owned or hereafter acquired including, without limitation, any and all
inventory manufactured by Borrowers under any license agreements, all
goods intended for sale or lease by any Borrower, or for display or
demonstration; all work in process; all raw materials and other materials
and supplies of every nature and description used or which might be used
in connection with the manufacture, printing, packing, shipping,
advertising, selling, leasing or furnishing of such goods or otherwise
used or consumed in Borrowers' business; and all Documents evidencing and
General Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by any Borrower.
LIBOR Interest Period - a period of one, two, three or six months
duration during which the Revolving Credit LIBOR Rate or Term LIBOR Rate,
as the case may be, is applicable.
LIBOR Rate Loans - collectively, all Revolving Credit LIBOR Rate
Loans and Term LIBOR Rate Loans.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract and including,
without limitation, the security interest, security title or lien arising
from a security agreement, mortgage, deed of trust, deed to secure debt,
encumbrance, pledge, conditional sale or trust receipt, or a lease,
consignment or bailment for security purposes. The term "Lien" shall also
include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purpose of the
9
<PAGE> 52
Agreement, a Borrower shall be deemed to be the owner of any Property
which it has acquired or holds subject to a conditional sale agreement or
other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Lender
pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents as each of the same may be amended, modified, renewed,
extended, replaced, restated or substituted from time to time.
Loans - all loans and advances of any kind made at any time by
Lender pursuant to the Agreement.
London Business Day - any Business Day on which banks in London,
England are open for business.
Material Adverse Effect - A material adverse effect on the business,
Property, financial condition, operations or business prospects of
Borrowers or on the ability of Borrowers to pay and perform its
obligations under this Agreement or the other Loan Documents.
Minimum Loan - means $5,000,000.
Money Borrowed - means (i) Indebtedness arising from the lending of
money by any Person to any Borrower; (ii) Indebtedness, whether or not in
any such case arising from the lending by any Person of money to any
Borrower, (A) which is represented by notes payable or drafts accepted
that evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (C) upon
which interest charges are customarily paid (other than accounts payable)
or that was issued or assumed as full or partial payment for Property;
(iii) Indebtedness that constitutes a Capitalized Lease Obligation; (iv)
reimbursement obligations with respect to letters of credit or guaranties
of letters of credit and (v) Indebtedness of any Borrower under any
guaranty of obligations that would constitute Indebtedness for Money
Borrowed under clauses (i) through (iv) hereof, if owed directly by any
Borrower.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3)
of ERISA.
Net Cash Flow - for any period, Borrowers' (a) Adjusted Net Earnings
from Operations for such period plus (b) depreciation and amortization
expenses for such period plus (c) deferred taxes for such period, less (d)
non-financed Capital Expenditures, less (e) scheduled principal payments
on account of current maturities of long-term Indebtedness and (f) less
scheduled principal payments on Capitalized Lease Obligations, all as
determined in accordance with GAAP.
Notes - collectively, the Revolving Credit Note, the Term Loan Note
and the Capital Expenditure Loan Note.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and
other charges thereon, owing, arising, due or payable from Borrowers to
Lender of any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, whether arising under
10
<PAGE> 53
the Agreement or any of the other Loan Documents or otherwise whether
direct or indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising and however acquired. The term includes without
limitation, all interest, charges, fees, expenses, attorneys' fees, and
any other sums chargeable to Borrowers under any of the Loan Documents.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements and instruments (other
than the Agreement and the Security Documents) heretofore, now or
hereafter executed by Borrowers, any guarantor, or any other third party
and delivered to Lender in respect of the transactions contemplated by the
Agreement, as each of the same may be amended, modified, renewed,
extended, replaced, restated or substituted from time to time.
Overadvance - the amount, if any, by which the outstanding principal
amount of Revolving Credit Loans exceeds the Borrowing Base.
Participating Lender - each Person who shall be granted the right by
Lender to participate in any of the Loans described in the Agreement and
who shall have entered into a participation agreement in form and
substance satisfactory to Lender.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5
of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness
of Borrowers incurred after the date hereof which is secured by a Purchase
Money Lien and which, when aggregated with the principal amount of all
other such Indebtedness and Capitalized Lease Obligations of Borrowers at
the time outstanding, does not exceed $250,000.00. For the purposes of
this definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases shall be computed as a Capitalized Lease
Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for
employees of any Borrower that is covered by Title IV of ERISA.
Projections - Borrowers' forecasted (a) balance sheets, (b) profit
and loss statements, (c) cash flow statements, and (d) analysis of
borrowing availability, all prepared on a consistent basis with Borrowers'
historical financial statements, together with appropriate supporting
details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within 10 days prior to or after
the acquisition of any fixed assets for the purchase price thereof, and
(iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
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<PAGE> 54
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times be
confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness secured
by such Lien.
Real Property - Borrowers' premises (including buildings and
improvements) in New Jersey and Georgia.
Regulation D - Regulation D of the Board of Governors of the Federal
Reserve System, comprising Part 204 of Title 12, Code of Federal
Regulations, as amended, and any successor thereto.
Rentals - as defined in subsection 8.2.11 of the Agreement.
Renewal Terms - as defined in Section 4.1 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.
Reserve Percentage - for Bank on any day, that percentage (expressed
as a decimal) which is in effect on such day, prescribed by the Board of
Governors of the Federal Reserve System (or any successor or any other
banking authority to which Lender is subject, including any board or
governmental or administrative agency of the United States or any other
jurisdiction to which Bank is subject) for determining the maximum reserve
requirement (including without limitation any basic, supplemental,
marginal or emergency reserves) for (i) deposits of United States Dollars
or (ii) Eurocurrency liabilities as defined in Regulation D, in each case
used to fund a Revolving Credit LIBOR Rate Loan or Term LIBOR Rate Loan
subject to an Adjusted LIBOR Rate. The Adjusted LIBOR Rate shall be
adjusted automatically on and as of the effective day of any change in the
Reserve Percentage.
Restricted Investment - any investment made in cash or by delivery
of Property to any Person, whether by acquisition of stock, Indebtedness
or other obligation or Security, or by loan, advance or capital
contribution, or otherwise, or in any Property except the following:
(i) Property to be used in the ordinary course of
business;
(ii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrowers;
(iii) investments in direct obligations of the United
States of America, or any agency thereof or obligations guaranteed
by the United States of America, provided that such obligations
mature within one year from the date of acquisition thereof;
(iv) investments in certificates of deposit maturing
within one year from the date of acquisition issued by a bank or
trust company organized under the laws of the United States or any
state thereof having capital surplus and undivided profits
aggregating at least $100,000,000;
12
<PAGE> 55
(v) investments in commercial paper given the highest
rating by a national credit rating agency and maturing not more than
270 days from the date of creation thereof; and
(vi) mutual funds that invest in any of the foregoing.
Revolving Credit Base Rate - a per annum rate equal to the sum of
the Base Rate plus 100 basis points.
Revolving Credit Base Rate Loan - that portion of the Revolving
Credit Loans that bears interest at the Revolving Credit Base Rate.
Revolving Credit Facility - that portion of the credit facilities
established by Lender for Borrowers' benefit under which Revolving Credit
Loans are being made.
Revolving Credit LIBOR Rate - a per annum rate equal to the sum of
the Adjusted LIBOR Rate plus 325 basis points.
Revolving Credit LIBOR Rate Loan - that portion of the Revolving
Credit Loans on which interest accrues at the Revolving Credit LIBOR Rate.
Revolving Credit Loan - a Loan made by Lender as provided in Section
1.1 of the Agreement.
Revolving Credit Maturity Date - the last day of the Original Term
or, if any Renewal Term is in effect, then the last day of such Renewal
Term.
Revolving Credit Note - the secured promissory note to be executed
by Borrowers on the Closing Date in favor of Lender to evidence Borrowers'
obligation to repay the Revolving Credit Loans, which shall be in the form
of Exhibit C to the Agreement.
Revolving Facility Limit - $12,000,000.
Schedule of Accounts - as defined in subsection 6.2.1 of the
Agreement.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - all other instruments and agreements now or at
any time hereafter securing the whole or any part of the Obligations, as
each of the same may be amended, modified, renewed, extended, replaced,
restated or substituted from time to time.
Solvent - as to any Person, such Person (i) is able to pay all of
its Indebtedness as such Indebtedness matures and (ii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage. When applied to any Person
other than Borrowers, solvent shall additionally mean that such Person
owns Property whose fair saleable value is greater than the amount
required to pay all of such Person's Indebtedness (including contingent
debts).
Subordinated Debt - the Indebtedness of Borrowers owed to American
Capital under the Subordinated Debt Agreements.
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<PAGE> 56
Subordinated Debt Agreements - that certain Note and Equity Purchase
Agreement between Borrowers and American Capital dated as of the date
hereof, together with all documents contemplated thereby and connected
therewith.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination.
Term Base Rate - a per annum rate equal to the sum of the Base Rate
plus 150 basis points.
Term Base Rate Loan - that portion of the Term Loan or Capital
Expenditure Loans which bear interest at the Term Base Rate.
Term LIBOR Rate - a per annum rate equal to the sum of the Adjusted
LIBOR Rate plus 375 basis points.
Term LIBOR Rate Loan - that portion of the Term Loan or Capital
Expenditure Loans on which interest accrues at the Term LIBOR Rate.
Term Loan - collectively, the Term Loan A and the Term Loan B.
Term Loan A - the Loan described in Subsection 1.2.1 of the
Agreement.
Term Loan B - the Loan described in Subsection 1.2.2 of the
Agreement.
Term Loan Note - collectively, the Term Loan A Note and the Term
Loan B Note.
Term Loan A Note - the secured promissory note to be executed by
Borrowers on or about the Closing Date in favor of Lender to evidence
Borrowers' obligation to pay the Term Loan A, which shall be in the form
of Exhibit D-1 to the Agreement.
Term Loan B Note - The secured promissory note to be executed by
Borrowers on or about the Closing Date in favor of Lender to evidence
Borrowers' obligation to pay the Term Loan B, which shall be in the form
of Exhibit D-2 to the Agreement.
Termination Date - the last day of the Original Term or if extended,
the last day of any then existing Renewal Term.
Voting Stock - Securities of any class or classes of a corporation
the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or Persons
performing similar functions).
Other Terms. All other terms contained in the Agreement shall have,
when the context so indicates, the meanings provided for by the Code to
the extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a
whole and not to any particular section, paragraph or subdivision. Any
pronoun used shall be deemed to cover all genders. The section titles,
table of contents and list of schedules and exhibits appear as a
14
<PAGE> 57
matter of convenience only and shall not affect the interpretation of the
Agreement. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
All references to any of the Loan Documents shall include any and all
modifications thereto and any and all extensions or renewals thereof.
15
<PAGE> 58
LIST OF EXHIBITS AND SCHEDULES
<TABLE>
<S> <C>
Exhibit A Borrowing Base Certificate
Exhibit B Capital Expenditure Loan Note
Exhibit C Revolving Credit Note
Exhibit D-1 Term Loan A Note
Exhibit D-2 Term Loan B Note
Exhibit E Compliance Certificate
Schedule 6.11 Borrowers' Business Locations
Schedule 7.1.1 Jurisdictions in which Borrowers is Authorized to do Business
Schedule 7.1.4 Capital Structure of Borrowers
Schedule 7.1.5 Corporate Names
Schedule 7.1.13 Existing Sureties
Schedule 7.1.14 Tax Identification Numbers of Subsidiaries
Schedule 7.1.16 Patents, Trademarks, Copyrights and Licenses
Schedule 7.1.18 Compliance with Laws
Schedule 7.1.19 Contracts Restricting Borrowers' Right to Incur Debts
Schedule 7.1.20 Litigation
Schedule 7.1.22(a) Capitalized Leases
Schedule 7.1.22(b) Operating Leases
Schedule 7.1.23 Pension Plans
Schedule 7.1.25 Labor Contracts
Schedule 8.2.4 Affiliate Transactions
Schedule 8.2.5 Permitted Liens
Schedule 8.3 Financial Covenants
</TABLE>
<PAGE> 1
EXHIBIT *(10.22)
REVOLVING CREDIT NOTE
$12,000,000.00 October 29, 1999
FOR VALUE RECEIVED, and intending to be legally bound, the undersigned,
IGI, INC., IGEN, INC., IMMUNOGENETICS, INC., and BLOOD CELLS, INC., each a
Delaware corporation (collectively, "Borrowers," and severally, each a
"Borrower") promises to pay to the order of Fleet Capital Corporation
("Lender"), in such coin or currency of the United States which shall be legal
tender in payment of all debts and dues, public and private, at the time of
payment, the principal sum of Twelve Million Dollars($12,000,000.00) or such
lesser sum which then represents the aggregate unpaid principal balance of
Revolving Credit Loans, together with interest from and after the date hereof on
the unpaid principal balance outstanding at the rates per annum set forth in the
Loan Agreement (as defined below). Interest shall be computed in the manner
provided in Section 2 of the Loan Agreement.
This Revolving Credit Note (the "Note") is the Revolving Credit Note
referred to in, and is issued pursuant to, that certain Loan and Security
Agreement among Borrowers and Lender, dated the date hereof (as amended from
time to time, the "Loan Agreement"), and is entitled to all of the benefits and
security of the Loan Agreement. All of the terms, covenants and conditions of
the Loan Agreement and the Security Documents are hereby made a part of this
Note and are deemed incorporated herein in full. All capitalized terms used
herein, unless otherwise specifically defined in this Note, shall have the
meanings ascribed to them in the Loan Agreement.
The principal amount and accrued interest on this Note shall be due and
payable on the dates and in the manner hereinafter set forth:
(a) Interest shall be due and payable monthly, in arrears, on the
first day of each month, commencing on the first day of the first month
following the date hereof, and continuing until such time as the full
principal balance, together with all other amounts owing hereunder, shall
have been paid in full.
(b) Principal shall be due and payable in accordance with the Loan
Agreement and all outstanding principal, together with any and all other
unpaid amounts hereunder, shall in any event be due and payable on the
Revolving Credit Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal balance and
accrued interest on this Note shall be due and payable immediately upon the
earlier of acceleration of the Obligations following an Event of Default under
the Loan Agreement or termination of the Loan Agreement pursuant to Section 4
thereof.
This Note shall be subject to prepayment (and prepayment premium, if
applicable) in accordance with the provisions of Section 3.3 of the Loan
Agreement. Borrower may also terminate the Loan Agreement and, in connection
with such termination, prepay this Note in the manner and subject to the
conditions provided in Section 4 of the Loan Agreement.
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<PAGE> 2
Upon the occurrence of an Event of Default, Lender shall have all of the
rights and remedies set forth in Section 10 of the Loan Agreement or as
available at law or in equity to protect and enforce Lender's rights hereunder.
Time is of the essence under this Note. To the fullest extent permitted by
applicable law, each Borrower, for itself and its legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, and diligence in
collection.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any Collateral securing this Note without
enforcing its rights against Borrowers (or any one or more of them) or any other
property to Borrower. Each Borrower agrees that, without releasing or impairing
Borrowers' liability hereunder, Lender may at any time release, surrender,
substitute or exchange any Collateral securing this Note and may at any time
release any party primarily or secondarily liable for the indebtedness evidenced
by this Note.
IN ANY LITIGATION ARISING OUT OF OR RELATING TO ANY OF THE MATTERS
CONTAINED IN THIS NOTE OR ANY OF THE DOCUMENTS DELIVERED IN CONNECTION HEREWITH
IN WHICH LENDER AND BORROWER ARE ADVERSE PARTIES, THE LENDER AND EACH BORROWER
WAIVE TRIAL BY JURY.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of Pennsylvania. All obligations of Borrower
hereunder shall be joint and several.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
2
<PAGE> 3
IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
and delivered on the date first above written.
IGI, INC.
Attest:
/s/ Robert E. McDaniel By: /s/ Manfred Hanuschek
- --------------------------- ------------------------------------
Name: Manfred Hanuschek
------------------------------------
Title: CFO
------------------------------------
IGEN, INC.
Attest:
/s/ Robert E. McDaniel By: /s/ Manfred Hanuschek
- --------------------------- ------------------------------------
Name: Manfred Hanuschek
------------------------------------
Title: CFO
------------------------------------
IMMUNOGENETICS, INC.
Attest:
/s/ Robert E. McDaniel By: /s/ Manfred Hanuschek
- --------------------------- ------------------------------------
Name: Manfred Hanuschek
------------------------------------
Title: CFO
------------------------------------
BLOOD CELLS, INC.
Attest:
/s/ Robert E. McDaniel By: /s/ Manfred Hanuschek
- --------------------------- ------------------------------------
Name: Manfred Hanuschek
------------------------------------
Title: CFO
------------------------------------
3
<PAGE> 1
EXHIBIT *(10.23)
TERM LOAN A NOTE
$6,650,000.00 October 29, 1999
FOR VALUE RECEIVED, and intending to be legally bound, the undersigned,
IGI, INC., IGEN, Inc., ImmunoGenetics, Inc. and Blood Cells, Inc., each a
Delaware corporation, (collectively, "Borrowers" and severally, each a
"Borrower") promises to pay to the order of FLEET CAPITAL CORPORATION
("Lender"), in such coin or currency of the United States which shall be legal
tender in payment of all debts and dues, public and private, at the time of
payment, the principal sum of Six Million Six Hundred Fifty Thousand Dollars
($6,650,000.00), together with interest from and after the date hereof on the
unpaid principal balance outstanding at the applicable rates per annum set forth
in the Loan Agreement (as defined below). Interest shall be computed in the
manner provided in Section 2 of the Loan Agreement.
This Term Loan A Note (the "Note") is the Term Loan A Note referred to in,
and is issued pursuant to, that certain Loan and Security Agreement between
Borrowers and Lender dated the date hereof (as amended from time to time, the
"Loan Agreement"), and is entitled to all of the benefits and security of the
Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement
and the Security Documents are hereby made a part of this Note and are deemed
incorporated herein in full. All capitalized terms used herein, unless otherwise
specifically defined in this Note, shall have the meanings ascribed to them in
the Loan Agreement.
The principal amount and accrued interest of this Note shall be due and
payable on the dates and in the manner hereinafter set forth:
(a) Interest shall be due and payable in arrears, on the first day
of each month, commencing on the first day of the first month following
the date hereof, and continuing until such time as the full principal
balance, together with all other amounts owing hereunder, shall have been
paid in full.
(b) Principal shall be due and payable in quarterly installments of
$233,333.33 each, commencing on August 1, 2000, and continuing on the
first day of each November, February, May and August thereafter.
(c) The entire remaining principal amount then outstanding, together
with any and all other unpaid amounts hereunder, shall be due and payable
on the Revolving Credit Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal balance and
accrued interest on this Note shall be due and payable immediately upon the
earlier of acceleration of the Obligations following an Event of Default under
the Loan Agreement or termination of the Loan Agreement pursuant to Section 4
thereof.
This Note shall be subject to mandatory prepayment (and prepayment
premium, if applicable) in accordance with the provisions of Section 3.3 of the
Loan Agreement. Borrower may also terminate the Loan Agreement and, in
connection with such termination, prepay this Note in the manner provided in
Section 4 of the Loan Agreement.
1
<PAGE> 2
Upon the occurrence of an Event of Default, Lender shall have all of the
rights and remedies set forth in Section 10 of the Loan Agreement or as
available at law or in equity to protect and enforce Lender's rights hereunder.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, each Borrower, for itself and its legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, and diligence in
collection.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any Collateral securing this Note without
enforcing its rights against Borrowers (or any one or more of them) or any other
property of any Borrower. Each Borrower agrees that, without releasing or
impairing Borrowers' liability hereunder, Lender may at any time release,
surrender, substitute or exchange any Collateral securing this Note and may at
any time release any party primarily or secondarily liable for the indebtedness
evidenced by this Note.
IN ANY LITIGATION ARISING OUT OF OR RELATING TO ANY OF THE MATTERS
CONTAINED IN THIS NOTE OR ANY OF THE DOCUMENTS DELIVERED IN CONNECTION HEREWITH
IN WHICH LENDER AND BORROWER ARE ADVERSE PARTIES, LENDER AND EACH BORROWER WAIVE
TRIAL BY JURY.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of Pennsylvania. All obligations of Borrowers
hereunder shall be joint and several.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
2
<PAGE> 3
IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
and delivered on the date first above written.
IGI, INC.
Attest:
/s/ Robert E. McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
------------------------------------
Title: CFO
------------------------------------
IGEN, INC.
Attest:
/s/ Robert E. McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
------------------------------------
Title: CFO
------------------------------------
IMMUNOGENETICS, INC.
Attest:
/s/ Robert E. McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
------------------------------------
Title: CFO
------------------------------------
BLOOD CELLS, INC.
Attest:
/s/ Robert E. McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
------------------------------------
Title: CFO
------------------------------------
3
<PAGE> 1
EXHIBIT *(10.24) TERM LOAN B NOTE
$350,000.00 October 29, 1999
FOR VALUE RECEIVED, and intending to be legally bound, the undersigned,
IGI, INC., IGEN, INC., IMMUNOGENETICS, INC., and BLOOD CELLS, INC., each a
Delaware corporation (collectively, "Borrowers," and severally, each a
"Borrower") promises to pay to the order of FLEET CAPITAL CORPORATION
("Lender"), in such coin or currency of the United States which shall be legal
tender in payment of all debts and dues, public and private, at the time of
payment, the principal sum of Three Hundred Fifty Thousand Dollars
($350,000.00), together with interest from and after the date hereof on the
unpaid principal balance outstanding at the applicable rates per annum set forth
in the Loan Agreement (as defined below). Interest shall be computed in the
manner provided in Section 2 of the Loan Agreement.
This Term Loan B Note (the "Note") is the Term Loan B Note referred to in,
and is issued pursuant to, that certain Loan and Security Agreement between
Borrowers and Lender dated the date hereof (as amended from time to time, the
"Loan Agreement"), and is entitled to all of the benefits and security of the
Loan Agreement. All of the terms, covenants and conditions of the Loan Agreement
and the Security Documents are hereby made a part of this Note and are deemed
incorporated herein in full. All capitalized terms used herein, unless otherwise
specifically defined in this Note, shall have the meanings ascribed to them in
the Loan Agreement.
The principal amount and accrued interest of this Note shall be due and
payable on the dates and in the manner hereinafter set forth:
(a) Interest shall be due and payable in arrears, on the first day
of each month, commencing on the first day of the first month following
the date hereof, and continuing until such time as the full principal
balance, together with all other amounts owing hereunder, shall have been
paid in full.
(b) The entire principal amount then outstanding, together with any
and all other unpaid amounts hereunder, shall be due and payable on the
Revolving Credit Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal balance and
accrued interest on this Note shall be due and payable immediately upon the
earlier of acceleration of the Obligations following an Event of Default under
the Loan Agreement or termination of the Loan Agreement pursuant to Section 4
thereof.
This Note shall be subject to mandatory prepayment (and prepayment
premium, if applicable) in accordance with the provisions of Section 3.3 of the
Loan Agreement. Borrower may also terminate the Loan Agreement and, in
connection with such termination, prepay this Note in the manner provided in
Section 4 of the Loan Agreement.
Upon the occurrence of an Event of Default, Lender shall have all of the
rights and remedies set forth in Section 10 of the Loan Agreement or as
available at law or in equity to protect and enforce Lender's rights hereunder.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, each Borrower, for itself and its legal representatives,
successors and assigns, expressly waives presentment,
1
<PAGE> 2
demand, protest, notice of dishonor, notice of non-payment, notice of maturity,
notice of protest, presentment for the purpose of accelerating maturity, and
diligence in collection.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any Collateral securing this Note without
enforcing its rights against Borrowers (or any one or more of them) or any other
property of any Borrower. Each Borrower agrees that, without releasing or
impairing Borrowers' liability hereunder, Lender may at any time release,
surrender, substitute or exchange any Collateral securing this Note and may at
any time release any party primarily or secondarily liable for the indebtedness
evidenced by this Note.
IN ANY LITIGATION ARISING OUT OF OR RELATING TO ANY OF THE MATTERS
CONTAINED IN THIS NOTE OR ANY OF THE DOCUMENTS DELIVERED IN CONNECTION HEREWITH
IN WHICH LENDER AND BORROWER ARE ADVERSE PARTIES, LENDER AND EACH BORROWER WAIVE
TRIAL BY JURY.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of Pennsylvania. All obligations of Borrowers
hereunder shall be joint and several.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
2
<PAGE> 3
IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
and delivered on the date first above written.
IGI, INC.
Attest:
/s/ Robert McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
-----------------------------------
Title: CFO
-----------------------------------
IGEN, INC.
Attest:
/s/ Robert McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
-----------------------------------
Title: CFO
-----------------------------------
IMMUNOGENETICS, INC.
Attest:
/s/ Robert McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
-----------------------------------
Title: CFO
-----------------------------------
BLOOD CELLS, INC.
Attest:
/s/ Robert McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
-----------------------------------
Title: CFO
-----------------------------------
3
<PAGE> 1
EXHIBIT *(10.25)
CAPITAL EXPENDITURE LOAN NOTE
$3,000,000.00 October 29, 1999
FOR VALUE RECEIVED, and intending to be legally bound, the undersigned,
IGI, INC., IGEN, INC., IMMUNOGENETICS, INC., and BLOOD CELLS, INC., each a
corporation, (collectively, "Borrowers" and severally, each a "Borrower") hereby
promises to pay to the order of FLEET CAPITAL CORPORATION ("Lender"), in such
coin or currency of the United States which shall be legal tender in payment of
all debts and dues, public and private, at the time of payment, the principal
sum of Three Million Dollars ($3,000,000.00), or such lesser sum which then
represents the aggregate unpaid principal balance of Capital Expenditure Loans,
together with interest from and after the date hereof on the unpaid principal
balance outstanding at the applicable per annum rate(s) set forth in the Loan
Agreement (as defined below). Interest shall be computed in the manner provided
in Section 2 of the Loan Agreement.
This Capital Expenditure Loan Note ("Note") is the Capital Expenditure
Loan Note referred to in, and is issued pursuant to, that certain Loan and
Security Agreement between Borrowers and Lender dated the date hereof (as
amended from time to time, the "Loan Agreement"), and is entitled to all of the
benefits and security of the Loan Agreement. All of the terms, covenants and
conditions of the Loan Agreement and the Security Documents are hereby made a
part of this Note and are deemed incorporated herein in full. All capitalized
terms used herein, unless otherwise specifically defined in this Note, shall
have the meanings ascribed to them in the Loan Agreement.
Except as otherwise provided herein, the principal amount and accrued
interest of this Note shall be due and payable on the dates and in the manner
hereinafter set forth:
1. Interest shall be due and payable in arrears, on the first day of each
calendar month, commencing with the first month after the initial Capital
Expenditure Loan is made and continuing until such time as the full principal
balance of the Capital Expenditure Loan, together with all other amounts owing
hereunder, shall have been paid in full.
2. Principal shall be due and payable as follows: (a) Subject to clause (b)
below, each Capital Expenditure Loan shall be repaid in equal and consecutive
quarterly installments, each in the amount of one-twentieth of the initial
amount of such Capital Expenditure Loan, commencing on the first day of the next
fiscal quarter immediately following the date on which such advance is made and
continuing on the first day of each successive fiscal quarter thereafter, and
(b) all outstanding principal, together with any and all other unpaid amounts
hereunder, shall in any event be due and payable on the Revolving Credit
Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal balance and
accrued interest on this Note shall be due and payable immediately upon the
earlier of acceleration of the Obligations following an Event of Default under
the Loan Agreement or termination of the Loan Agreement pursuant to Section 4
thereof.
1
<PAGE> 2
This Note shall be subject to mandatory prepayment (and prepayment
premium, if applicable) in accordance with the provisions of Section 3.3 of the
Loan Agreement. Borrower may also terminate the Loan Agreement and, in
connection with such termination, prepay this Note in the manner and under the
terms provided in Section 4 of the Loan Agreement. All prepayments shall be
applied to the principal balance in the inverse order of the due dates of unpaid
installments.
Upon the occurrence of an Event of Default, Lender shall have all of the
rights and remedies set forth in Section 10 of the Loan Agreement or as
available at law or in equity to protect and enforce Lender's rights hereunder.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, each Borrower, for itself and its legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, and diligence in
collection.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any Collateral securing this Note without
enforcing its rights against Borrowers (or any one or more of them) or any other
property of any Borrower. Each Borrower agrees that, without releasing or
impairing Borrowers' liability hereunder, Lender may at any time release,
surrender, substitute or exchange any Collateral securing this Note and may at
any time release any party primarily or secondarily liable for the indebtedness
evidenced by this Note. All rights and remedies of Lender are cumulative and not
alternative and may be exercised in any order against any one or more parties
liable for the indebtedness evidenced by this Note.
IN ANY LITIGATION ARISING OUT OF OR RELATING TO ANY OF THE MATTERS
CONTAINED IN THIS NOTE OR ANY OF THE DOCUMENTS DELIVERED IN CONNECTION HEREWITH
IN WHICH LENDER AND BORROWER ARE ADVERSE PARTIES, LENDER AND EACH BORROWER WAIVE
TRIAL BY JURY.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of Pennsylvania. All
2
<PAGE> 3
obligations of Borrowers hereunder shall be joint and several.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
3
<PAGE> 4
IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
and delivered on the date first above written.
IGI, INC.
Attest
/s/ Robert McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
-----------------------------------
Title: CFO
-----------------------------------
IGEN, INC.
Attest:
/s/ Robert McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
-----------------------------------
Title: CFO
-----------------------------------
IMMUNOGENETICS, INC.
Attest:
/s/ Robert McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
-----------------------------------
Title: CFO
-----------------------------------
BLOOD CELLS, INC.
Attest:
/s/ Robert McDaniel By: /s/ Manfred Hanuschek
- ---------------------------- --------------------------------------
Name: Manfred Hanuschek
-----------------------------------
Title: CFO
-----------------------------------
4
<PAGE> 1
EXHIBIT *(10.26)
TRADEMARK SECURITY AGREEMENT
This Trademark Security Agreement ("Agreement") is made as of the 29th day
of October, 1999 by IGI, INC. ("Grantor"), a Delaware corporation, having a
mailing address at Wheat Road and Lincoln Avenue, Buena, NJ 08310, and delivered
to FLEET CAPITAL CORPORATION, a Rhode Island corporation having a mailing
address at 200 Glastonbury Blvd., Glastonbury, CT 06033 ("Lender").
BACKGROUND
A. This Agreement is being executed contemporaneously with that certain
Loan and Security Agreement of even date herewith among Grantor, IGEN, Inc.,
ImmunoGenetics, Inc., and Blood Cells, Inc. (collectively, "Borrowers") and
Lender (as it may hereafter be supplemented, restated, amended, superseded or
replaced from time to time, the "Loan Agreement"), under which, inter alia,
Borrower is granting Lender a lien on and security interest in certain assets of
Borrower associated with or relating to products leased or sold or services
provided under Borrower's trademarks and the goodwill associated therewith as
security for the payment and performance of all the Obligations (as defined in
the Loan Agreement) of all the Borrowers under the Loan Agreement, and under
which Lender is entitled to foreclose or otherwise deal with such assets,
trademarks, service marks and tradenames under the terms and conditions set
forth therein. Capitalized terms not defined herein shall have the meanings
given to such terms in the Loan Agreement.
B. Grantor has adopted, used and is using (or has filed applications for
the registration of) the trademarks, servicemarks and tradenames listed on
SCHEDULE "A" attached hereto and made part hereof (all such marks or names
hereinafter referred to as the "Trademarks").
C. Pursuant to the Loan Agreement, Lender is acquiring a lien on, security
interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default) the Trademarks, together with
all the goodwill of Grantor associated therewith and represented thereby, as
security for all of the Obligations, and desires to have its security interest
in such Trademarks confirmed by a document identifying same and in such form
that it may be recorded in the United States Patent and Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed
incorporated by reference and made a part hereof, and in consideration of the
premises and mutual promises herein contained, the parties hereto, intending to
be legally bound hereby, covenant and agree as follows:
1. In consideration of and pursuant to the terms of the Loan Documents,
and for other good, valuable and sufficient consideration, the receipt of which
is hereby acknowledged, and to secure the payment and performance of all the
Obligations of all Borrowers under the Loan Agreement, Grantor grants a lien and
security interest to Lender in all of its present and future right, title and
interest in and to the Trademarks, together with all the goodwill of Grantor
associated with and represented by the Trademarks, and the registration thereof
and the right (but not the obligation) to sue for past, present and future
infringements, and the proceeds thereof, including, without limitation, license
royalties and proceeds of infringement suits, (collectively the "Collateral").
-1-
<PAGE> 2
2. Grantor hereby covenants and agrees to maintain the Trademarks in full
force and effect and otherwise perform all of its obligations and undertakings
under this Agreement until all of the Obligations are indefeasibly paid and
satisfied in full and the Loan Agreement has been terminated.
3. Grantor represents, warrants and covenants that:
(a) The Trademarks are subsisting and have not been adjudged invalid
or unenforceable;
(b) Each of the Trademarks is registered (or in the process of
application for registration), and, to the best of Grantor's knowledge, is valid
and enforceable;
(c) Grantor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Trademarks, and
except for Liens permitted under Section 8.2.5 of the Loan Agreement, each of
the Trademarks is free and clear of any liens, claims, charges and encumbrances,
including, without limitation, pledges, assignments, options, and covenants by
Grantor not to sue third persons;
(d) Grantor has the unqualified right, power and authority to enter
into this Agreement and perform its terms;
(e) Grantor has complied with, and will continue for the duration of
this Agreement to comply with, the requirements set forth in 15 U.S.C.
Section 1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Trademarks;
(f) Grantor has used and will continue to use for the duration of
this Agreement consistent standards of quality in services or products leased or
sold under the Trademarks, and hereby grants to Lender and its employees and
agents the right (with no obligation of any kind upon Lender to do so) to visit
Grantor's affiliates, franchises or management locations and to inspect the use
of the Trademarks and quality control records relating thereto at reasonable
times during regular business hours to ensure Grantor's compliance with this
paragraph 3(f); and
(g) Grantor has no notice of any suits or actions commenced or
threatened against it, or notice of claims asserted or threatened against it,
with reference to the Trademarks.
4. Grantor further covenants that:
(a) Until all of the Obligations have been indefeasibly paid and
satisfied in full and the Revolving Credit has been terminated, Grantor will not
enter into any agreement which is inconsistent with Grantor's obligations under
this Agreement or which restrict or impair Agent's right or priorities
hereunder.
(b) If Grantor acquires rights to any new trademarks, the provisions
of this Agreement shall automatically apply thereto and such trademarks shall be
deemed part of the Trademarks. Grantor shall give Lender written notice promptly
upon its first use thereof along with an amended SCHEDULE "A".
-2-
<PAGE> 3
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and is
continuing under the Loan Agreement and that Lender has elected to exercise its
rights hereunder, Grantor shall continue to have the right to use the Trademarks
and Lender shall have no right to use the Trademarks or issue any exclusive or
non-exclusive license with respect thereto, or assign, pledge or otherwise
transfer title in the Trademarks to anyone else.
6. Grantor agrees not to sell, grant any option, assign or further
encumber its rights and interest in the Trademarks without prior written consent
of Lender or as may be expressly permitted under the Loan Agreement.
Notwithstanding the foregoing, and providing that no Default or Event of Default
has occurred and is outstanding, Grantor shall be entitled to license any
Trademarks in exchange for fair market consideration in the exercise of its
reasonable business judgment.
7. Following the occurrence and during the continuance of an Event of
Default under the Loan Agreement, Lender, as the holder of a security interest
under the Uniform Commercial Code, as now or hereafter in effect in the State
whose law governs the interpretation of the Loan Agreement, may take such action
permitted under the Loan Documents, hereunder or under any law, in its exclusive
discretion, to foreclose upon or otherwise exercise its rights against the
Trademarks covered hereby. For such purposes, Grantor authorizes and empowers
Lender, its successors and assigns, and any officer or agent of Lender as Lender
may select, in its exclusive discretion, as Grantor's true and lawful
attorney-in-fact, with the power to endorse Grantor's name on all applications,
assignments, documents, papers and instruments necessary for Lender to use the
Trademarks or to grant or issue any exclusive or non-exclusive license under the
Trademarks to anyone else, or necessary for Lender to assign, pledge, convey or
otherwise transfer title in or dispose of the Trademarks to anyone else
including, without limitation, the power to execute on Grantor's behalf a
trademark assignment in the form attached hereto as EXHIBIT I. Grantor hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof and in accordance with the terms hereof, except for the gross negligence
or willful misconduct of such attorney. This power of attorney shall be
irrevocable for the life of this Agreement, the Loan Documents, and until all
the Obligations are indefeasibly paid and satisfied in full and the Loan
Agreement is terminated.
8. This Agreement shall not be modified without the written consent of the
parties hereto.
9. All rights and remedies herein granted to Lender shall be in addition
to any rights and remedies granted under the Loan Documents and shall be
cumulative. In the event of an inconsistency between this Agreement and the Loan
Agreement, the language of the Loan Agreement shall control.
10. Upon full and unconditional satisfaction of all of the Obligations and
termination of the Revolving Credit, Lender shall execute and deliver to Grantor
all documents reasonably necessary to terminate Lender's security interest in
the Trademarks.
11. Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses incurred by
Lender in connection with the preparation and execution of this Agreement and
all other documents relating hereto, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the payment or
discharge of any taxes, reasonable counsel fees, maintenance fees, encumbrances
or costs otherwise incurred in protecting, maintaining, preserving the
Trademarks, or in defending or prosecuting any actions or
-3-
<PAGE> 4
proceedings arising out of or related to the Trademarks, or defending,
protecting or enforcing Lender's rights hereunder, in each case in accordance
with the terms of this Agreement, shall be borne and paid by Grantor on demand
by Lender and until so paid shall be added to the principal amount of the
Obligations and shall bear interest at the highest rate applicable to Revolving
Credit Loans from time to time under the Loan Agreement.
12. Subject to any applicable terms of the Loan Agreement, Grantor shall
have the duty to prosecute diligently any trademark application with respect to
the Trademarks pending as of the date of this Agreement or thereafter to
preserve and maintain all rights in the Trademarks, and upon reasonable request
of Lender, Grantor shall make federal application on registrable but
unregistered trademarks belonging to Grantor. Any reasonable expenses incurred
in connection with such applications shall be borne by Grantor. Grantor shall
not abandon any Trademark without the prior written consent of the Lender, which
consent shall not unreasonably be withheld.
13. Grantor shall have the right to bring suit in its own name to enforce
the Trademarks, in which event Lender may, if Grantor reasonably deems it
necessary, be joined as a nominal party to such suit if Lender shall have been
satisfied, in its sole discretion, that it is not thereby incurring any risk of
liability because of such joinder. Grantor shall promptly, upon demand,
reimburse and indemnify Lender for all damages, reasonable costs and expenses,
including attorneys' fees, incurred by Lender in the fulfillment of the
provisions of this paragraph.
14. If an Event of Default is outstanding under the Loan Agreement, Lender
may, without any obligation to do so, complete any obligation of Grantor
hereunder, in Grantor's name or in Lender's name, but at Grantor's expense, and
Grantor hereby agrees to reimburse Lender in full for all reasonable costs and
expenses, including attorneys' fees, incurred by Lender in protecting, defending
and maintaining the Trademarks.
15. No course of dealing between Grantor and Lender nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right, power
or privilege hereunder, shall operate as a waiver thereof, and all of Lender's
rights and remedies with respect to the Trademarks, whether established hereby
or by the Loan Documents, or by any other future agreements between Grantor and
Lender or by law, shall be cumulative and may be exercised singularly or
concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and effect.
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with
the laws of the Commonwealth of Pennsylvania without regard to its otherwise
applicable principles of conflicts of laws.
19. GRANTOR AND LENDER EACH WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A JURY
TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING OR COUNTERCLAIM ARISING WITH
RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT.
-4-
<PAGE> 5
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Trademark
Security Agreement the day and year first above written.
IGI, INC.
By: /s/ Manfred Hanuschek
-----------------------------------
Name: Manfred Hanuschek
-----------------------------------
Title: CFO
-----------------------------------
S-1
<PAGE> 7
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared
___________________, to me known and being duly sworn, deposes and says that
s/he is ________________________of IGI INC.; that s/he signed the Agreement
thereto as such officer pursuant to the authority vested in him by law; that the
within Agreement is the voluntary act of such corporation; and s/he desires the
same to be recorded as such.
________________________________
Notary Public
My Commission Expires:
-7-
<PAGE> 8
Exhibit I
TRADEMARK ASSIGNMENT
WHEREAS, IGI, INC. ("Grantor") is the registered owner of the United
States trademarks, tradenames and registrations listed on SCHEDULE "A" attached
hereto and made a part hereof (the "Trademarks"), which are registered in the
United States Patent and Trademark Office; and
WHEREAS, _____________________________ ("Grantee"), having a place of
business at ___________________________________________________, is desirous
of acquiring said Trademarks;
NOW THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound hereby, Grantor, its
successors and assigns, does hereby transfer, assign and set over unto Grantee,
its successors, transferees and assigns, all of its present and future right,
title and interest in and to the Trademarks and all proceeds thereof and all
goodwill associated therewith issued under and pursuant to the Power of
Attorney.
IN WITNESS WHEREOF, the undersigned has caused this Trademark Assignment
to be executed as of the 29th day of October, 1999.
_______________________________________
By: _________________________________
Attorney-in-fact
-8-
<PAGE> 9
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, ____ before me, a Notary Public for the
said County and State, personally appeared known to me or satisfactorily proven
to me to be attorney-in-fact on behalf of IGI, INC. ("Grantor") and s/he
acknowledged to me that s/he executed the foregoing Trademark Assignment on
behalf of Grantor, and as the act and deed of Grantor for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
________________________________________
Notary Public
My Commission Expires:
___________________________________
-9-
<PAGE> 10
POWER OF ATTORNEY
IGI, INC., ("Grantor"), hereby authorizes FLEET CAPITAL CORPORATION, its
successors and assigns, and any officer or agent thereof (collectively,
"Lender") as Grantor's true and lawful attorney-in-fact, with the power to
endorse Grantor's name on all applications, assignments, documents, papers and
instruments necessary for Grantee to enforce and effectuate its rights under a
certain Trademark Security Agreement between Grantor and Lender dated the date
hereof (as it may hereafter be supplemented, restated, superseded, amended or
replaced, the "Trademark Agreement"), including, without limitation, the power
to use the Trademarks (as defined in the Trademark Agreement) and listed on
SCHEDULE A attached hereto and made a part hereof, to grant or issue any
exclusive or nonexclusive license under the Trademarks to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the
Trademarks, in each case subject to the terms of the Trademark Agreement.
This Power of Attorney is given and any action taken pursuant hereto is
intended to be so given or taken pursuant to and subject to the provisions of a
certain Loan and Security Agreement bearing even date herewith among Grantor and
Lender, as each document may be hereinafter supplemented, restated, superseded,
amended or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof and in accordance with the
terms of the Trademark Agreement.
This Power of Attorney shall be irrevocable for the life of the Trademark
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, this
29th day of October, 1999
IGI, INC.
By: /s/ Manfred Hanuschek
------------------------------
Name: Manfred Hanuschek
------------------------------
Title: CFO
------------------------------
-10-
<PAGE> 11
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999 personally appeared ____________________, to
me known and being duly sworn, deposes and says that s/he is ______________of
IGI, INC., the Grantor corporation described in the foregoing Power of Attorney;
that s/he signed the Power of Attorney as such officer pursuant to the authority
vested in her/him by law; that the within Power of Attorney is the voluntary act
of such corporation; and s/he desires the same to be recorded as such.
______________________________
Notary Public
My Commission Expires:
-11-
<PAGE> 12
SCHEDULE "A"
TRADEMARKS
<TABLE>
<CAPTION>
Name/Title Registration Number Date of Registration
- ---------- ------------------- --------------------
<S> <C> <C>
</TABLE>
-12-
<PAGE> 1
EXHIBIT *(10.27)
TRADEMARK SECURITY AGREEMENT
This Trademark Security Agreement ("Agreement") is made as of the 29th day
of October, 1999 by IGEN, INC. ("Grantor"), a Delaware corporation, and
successor by merger to Medatz, Inc., which was successor by purchase to certain
trademarks originally owned by Vineland Laboratories, Inc having a mailing
address at Wheat Road and Lincoln Avenue, Buena, NJ 08310, and delivered to
FLEET CAPITAL CORPORATION, a Rhode Island corporation having a mailing address
at 200 Glastonbury Blvd., Glastonbury, CT 06033 ("Lender").
BACKGROUND
A. This Agreement is being executed contemporaneously with that certain
Loan and Security Agreement of even date herewith among Grantor, IGI, Inc.,
ImmunoGenetics, Inc., and Blood Cells, Inc. (collectively, "Borrowers") and
Lender (as it may hereafter be supplemented, restated, amended, superseded or
replaced from time to time, the "Loan Agreement"), under which, inter alia,
Borrower is granting Lender a lien on and security interest in certain assets of
Borrower associated with or relating to products leased or sold or services
provided under Borrower's trademarks and the goodwill associated therewith as
security for the payment and performance of all the Obligations (as defined in
the Loan Agreement) of all the Borrowers under the Loan Agreement, and under
which Lender is entitled to foreclose or otherwise deal with such assets,
trademarks, service marks and tradenames under the terms and conditions set
forth therein. Capitalized terms not defined herein shall have the meanings
given to such terms in the Loan Agreement.
B. Grantor owns, has adopted, used and is using (or has filed applications
for the registration of) the trademarks, servicemarks and tradenames listed on
SCHEDULE "A" attached hereto and made part hereof (all such marks or names
hereinafter referred to as the "Schedule A Trademarks"). In addition, Grantor
has the right under a certain license agreement dated December 13, 1995 between
Grantor and Micro-Pak, Inc. ("License Agreement") to use certain trademarks,
servicesmarks and tradenames owned by Micro-Pak, Inc. listed on SCHEDULE "B"
attached hereto and made part hereof (all such marks and names hereinafter
referred to as the "Schedule B Trademarks.") Collectively, the Schedule A
Trademarks and the Schedule B Trademarks shall be referred to as the
"Trademarks."
C. Pursuant to the Loan Agreement, Lender is acquiring a lien on, security
interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default) the Schedule A Trademarks and
the Grantor's rights under the License Agreement, together with all the goodwill
of Grantor associated therewith and represented thereby, as security for all of
the Obligations, and desires to have its security interest in such Schedule A
Trademarks and the Grantor's right to use the Schedule B Trademarks and other
rights under the License Agreement confirmed by a document identifying same and
in such form that it may be recorded in the United States Patent and Trademark
Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed
incorporated by reference and made a part hereof, and in consideration of the
premises and mutual promises herein contained, the parties hereto, intending to
be legally bound hereby, covenant and agree as follows:
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<PAGE> 2
1. In consideration of and pursuant to the terms of the Loan Documents,
and for other good, valuable and sufficient consideration, the receipt of which
is hereby acknowledged, and to secure the payment and performance of all the
Obligations of all Borrowers under the Loan Agreement, Grantor grants a lien and
security interest to Lender in all of its present and future right, title and
interest in and to the Schedule A Trademarks and the Grantor's right to use the
Schedule B Trademarks and other rights under the License Agreement, together
with all the goodwill of Grantor associated with and represented by the
Trademark Collateral, and the registration thereof and the right (but not the
obligation) to sue for past, present and future infringements, and the proceeds
thereof, including, without limitation, license royalties and proceeds of
infringement suits, (collectively the "Collateral").
2. Grantor hereby covenants and agrees to maintain the Trademarks in full
force and effect and otherwise perform all of its obligations and undertakings
under this Agreement until all of the Obligations are indefeasibly paid and
satisfied in full and the Loan Agreement has been terminated.
3. Grantor represents, warrants and covenants that:
(a) The Trademarks are subsisting and have not been adjudged
invalid or unenforceable;
(b) Each of the Trademarks is registered (or in the process of
application for registration), and, to the best of Grantor's knowledge, is valid
and enforceable;
(c) Grantor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Schedule A
Trademarks, and except for Liens permitted under Section 8.2.5 of the Loan
Agreement, each of the Schedule A Trademarks is free and clear of any liens,
claims, charges and encumbrances, including, without limitation, pledges,
assignments, options, and covenants by Grantor not to sue third persons;
(d) Except for Liens permitted under Section 8.2.5 of the Loan
Agreement, the Grantor's rights under the License Agreement, including the right
to use the Schedule B Trademarks, are free and clear of any liens, claims,
charges and encumbrances, including, without limitation, pledges, assignments,
options, and covenants by Grantor not to sue third persons;
(e) Grantor has the unqualified right, power and authority to enter
into this Agreement and perform its terms;
(f) Grantor has complied with, and will continue for the duration of
this Agreement to comply with, the requirements set forth in 15 U.S.C.
Section 1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Trademarks;
(g) Grantor has used and will continue to use for the duration of
this Agreement consistent standards of quality in services or products leased or
sold under the Trademarks, and hereby grants to Lender and its employees and
agents the right (with no obligation of any kind upon Lender to do so) to visit
Grantor's affiliates, franchises or management locations and to inspect the use
of the Trademarks and quality control records relating thereto at reasonable
times during regular business hours to ensure Grantor's compliance with this
paragraph 3(f); and
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<PAGE> 3
(h) Grantor has no notice of any suits or actions commenced or
threatened against it, or notice of claims asserted or threatened against it,
with reference to the Trademarks.
4. Grantor further covenants that:
(a) Until all of the Obligations have been indefeasibly paid and
satisfied in full and the Revolving Credit has been terminated, Grantor will not
enter into any agreement which is inconsistent with Grantor's obligations under
this Agreement or which restrict or impair Agent's right or priorities
hereunder.
(b) If Grantor acquires rights of ownership to any new trademarks,
the provisions of this Agreement shall automatically apply thereto and such
trademarks shall be deemed part of the Schedule A Trademarks. Grantor shall give
Lender written notice promptly upon its first use thereof along with an amended
SCHEDULE "A". Furthermore, if Grantor acquires rights as a licensee to any new
trademarks, the provisions of this Agreement shall automatically apply thereto
and such trademarks shall be deemed part of the Schedule B Trademarks, and any
license agreement pursuant to which Grantor acquires such rights shall be deemed
to be included in the definition of "License Agreement." Grantor shall give
Lender written notice promptly upon its first use thereof along with an amended
SCHEDULE "B".
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and is
continuing under the Loan Agreement and that Lender has elected to exercise its
rights hereunder, Grantor shall continue to have the right to use the Trademarks
and Lender shall have no right to use the Trademarks or issue any exclusive or
non-exclusive license with respect thereto, or assign, pledge or otherwise
transfer title in the Trademarks to anyone else.
6. Grantor agrees not to sell, grant any option, assign or further
encumber its rights and interest in the Trademarks without prior written consent
of Lender or as may be expressly permitted under the Loan Agreement.
Notwithstanding the foregoing, and providing that no Default or Event of Default
has occurred and is outstanding, Grantor shall be entitled to license any
Trademarks in exchange for fair market consideration in the exercise of its
reasonable business judgment.
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<PAGE> 4
7. Following the occurrence and during the continuance of an Event of
Default under the Loan Agreement, Lender, as the holder of a security interest
under the Uniform Commercial Code, as now or hereafter in effect in the State
whose law governs the interpretation of the Loan Agreement, may take such action
permitted under the Loan Documents, hereunder or under any law, in its exclusive
discretion, to foreclose upon or otherwise exercise its rights against the
Trademarks or the Grantor's rights under the License Agreement covered hereby.
For such purposes, Grantor authorizes and empowers Lender, its successors and
assigns, and any officer or agent of Lender as Lender may select, in its
exclusive discretion, as Grantor's true and lawful attorney-in-fact, with the
power to endorse Grantor's name on all applications, assignments, documents,
papers and instruments necessary for Lender to use the Trademarks or to grant or
issue any exclusive or non-exclusive license under the Trademarks to anyone
else, or necessary for Lender to assign, pledge, convey or otherwise transfer
title in or dispose of the Trademarks to anyone else including, without
limitation, the power to execute on Grantor's behalf a trademark assignment in
the form attached hereto as EXHIBIT I. Grantor hereby ratifies all that such
attorney shall lawfully do or cause to be done by virtue hereof and in
accordance with the terms hereof, except for the gross negligence or willful
misconduct of such attorney. This power of attorney shall be irrevocable for the
life of this Agreement, the Loan Documents, and until all the Obligations are
indefeasibly paid and satisfied in full and the Loan Agreement is terminated.
8. This Agreement shall not be modified without the written consent of the
parties hereto.
9. All rights and remedies herein granted to Lender shall be in addition
to any rights and remedies granted under the Loan Documents and shall be
cumulative. In the event of an inconsistency between this Agreement and the Loan
Agreement, the language of the Loan Agreement shall control.
10. Upon full and unconditional satisfaction of all of the Obligations and
termination of the Revolving Credit, Lender shall execute and deliver to Grantor
all documents reasonably necessary to terminate Lender's security interest in
the Trademarks and the Grantor's rights under the License Agreement.
11. Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses incurred by
Lender in connection with the preparation and execution of this Agreement and
all other documents relating hereto, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the payment or
discharge of any taxes, reasonable counsel fees, maintenance fees, encumbrances
or costs otherwise incurred in protecting, maintaining, preserving the
Trademarks, or in defending or prosecuting any actions or proceedings arising
out of or related to the Trademarks, or defending, protecting or enforcing
Lender's rights hereunder, in each case in accordance with the terms of this
Agreement, shall be borne and paid by Grantor on demand by Lender and until so
paid shall be added to the principal amount of the Obligations and shall bear
interest at the highest rate applicable to Revolving Credit Loans from time to
time under the Loan Agreement.
12. Subject to any applicable terms of the Loan Agreement, Grantor shall
have the duty to prosecute diligently any trademark application with respect to
the Schedule A Trademarks pending as of the date of this Agreement or thereafter
to preserve and maintain all rights in the Schedule A Trademarks, and upon
reasonable request of Lender, Grantor shall make federal application on
registrable but unregistered trademarks belonging to Grantor. To the extent that
Grantor has the duty or right to make any trademark applications under the
License Agreement, Grantor shall have the same
-4-
<PAGE> 5
duties with respect to the Schedule B Trademarks as stated in the previous
sentence. Any reasonable expenses incurred in connection with such applications
shall be borne by Grantor. Grantor shall not abandon any Trademark without the
prior written consent of the Lender, which consent shall not unreasonably be
withheld.
13. Grantor shall have the right to bring suit in its own name to enforce
the Trademarks, in which event Lender may, if Grantor reasonably deems it
necessary, be joined as a nominal party to such suit if Lender shall have been
satisfied, in its sole discretion, that it is not thereby incurring any risk of
liability because of such joinder. Grantor shall promptly, upon demand,
reimburse and indemnify Lender for all damages, reasonable costs and expenses,
including attorneys' fees, incurred by Lender in the fulfillment of the
provisions of this paragraph.
14. If an Event of Default is outstanding under the Loan Agreement, Lender
may, without any obligation to do so, complete any obligation of Grantor
hereunder, in Grantor's name or in Lender's name, but at Grantor's expense, and
Grantor hereby agrees to reimburse Lender in full for all reasonable costs and
expenses, including attorneys' fees, incurred by Lender in protecting, defending
and maintaining the Trademarks.
15. No course of dealing between Grantor and Lender nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right, power
or privilege hereunder, shall operate as a waiver thereof, and all of Lender's
rights and remedies with respect to the Trademarks and the Grantor's rights
under the License Agreement, whether established hereby or by the Loan
Documents, or by any other future agreements between Grantor and Lender or by
law, shall be cumulative and may be exercised singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and effect.
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with
the laws of the Commonwealth of Pennsylvania without regard to its otherwise
applicable principles of conflicts of laws.
19. GRANTOR AND LENDER EACH WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A JURY
TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING OR COUNTERCLAIM ARISING WITH
RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Trademark
Security Agreement the day and year first above written.
IGEN, INC.
By: /s/ Robert E. McDaniel
------------------------------------------
Name: Robert E. McDaniel
--------------------------------------
Title: Secretary
--------------------------------------
S-1
<PAGE> 7
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this ________ of October, 1999, before me personally appeared
___________________, to me known and being duly sworn, deposes and says that
s/he is ________________________of IGEN INC.; that s/he signed the Agreement
thereto as such officer pursuant to the authority vested in him by law; that the
within Agreement is the voluntary act of such corporation; and s/he desires the
same to be recorded as such.
__________________________________
Notary Public
My Commission Expires:
-7-
<PAGE> 8
Exhibit I
TRADEMARK ASSIGNMENT
WHEREAS, IGEN, INC. ("Grantor") is the registered owner of the United
States trademarks, tradenames and registrations listed on SCHEDULE "A" attached
hereto and made a part hereof (the "Trademarks"), which are registered in the
United States Patent and Trademark Office; and
WHEREAS, _____________________________ ("Grantee"), having a place of
business at ___________________________________________________, is desirous
of acquiring said Trademarks;
NOW THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound hereby, Grantor, its
successors and assigns, does hereby transfer, assign and set over unto Grantee,
its successors, transferees and assigns, all of its present and future right,
title and interest in and to the Trademarks and all proceeds thereof and all
goodwill associated therewith issued under and pursuant to the Power of
Attorney.
IN WITNESS WHEREOF, the undersigned has caused this Trademark Assignment
to be executed as of the 29th day of October, 1999.
__________________________________
By: _________________________________
Attorney-in-fact
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<PAGE> 9
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, ____ before me, a Notary Public for the
said County and State, personally appeared known to me or satisfactorily proven
to me to be attorney-in-fact on behalf of IGEN, INC. ("Grantor") and s/he
acknowledged to me that s/he executed the foregoing Trademark Assignment on
behalf of Grantor, and as the act and deed of Grantor for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
__________________________________
Notary Public
My Commission Expires:
__________________________________
-9-
<PAGE> 10
POWER OF ATTORNEY
IGEN, INC., ("Grantor"), hereby authorizes FLEET CAPITAL CORPORATION, its
successors and assigns, and any officer or agent thereof (collectively,
"Lender") as Grantor's true and lawful attorney-in-fact, with the power to
endorse Grantor's name on all applications, assignments, documents, papers and
instruments necessary for Grantee to enforce and effectuate its rights under a
certain Trademark Security Agreement between Grantor and Lender dated the date
hereof (as it may hereafter be supplemented, restated, superseded, amended or
replaced, the "Trademark Agreement"), including, without limitation, the power
to use the Trademarks (as defined in the Trademark Agreement) and listed on
SCHEDULE A attached hereto and made a part hereof, to grant or issue any
exclusive or nonexclusive license under the Trademarks to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the
Trademarks, in each case subject to the terms of the Trademark Agreement.
This Power of Attorney is given and any action taken pursuant hereto is
intended to be so given or taken pursuant to and subject to the provisions of a
certain Loan and Security Agreement bearing even date herewith among Grantor and
Lender, as each document may be hereinafter supplemented, restated, superseded,
amended or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof and in accordance with the
terms of the Trademark Agreement.
This Power of Attorney shall be irrevocable for the life of the Trademark
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, this
29th day of October, 1999
IGEN, INC.
By: /s/ Robert E. McDaniel
---------------------------------
Name: Robert E. McDaniel
---------------------------------
Title: Secretary
---------------------------------
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<PAGE> 11
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999 personally appeared ____________________, to
me known and being duly sworn, deposes and says that s/he is ______________of
IGEN, INC., the Grantor corporation described in the foregoing Power of
Attorney; that s/he signed the Power of Attorney as such officer pursuant to the
authority vested in her/him by law; that the within Power of Attorney is the
voluntary act of such corporation; and s/he desires the same to be recorded as
such.
_____________________________________
Notary Public
My Commission Expires:
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<PAGE> 12
SCHEDULE "A"
TRADEMARKS
<TABLE>
<CAPTION>
Name/Title Registration Number Date of Registration
- ---------- ------------------- --------------------
<S> <C> <C>
</TABLE>
-12-
<PAGE> 1
EXHIBIT *(10.28)
TRADEMARK SECURITY AGREEMENT
This Trademark Security Agreement ("Agreement") is made as of the 29th day
of October, 1999 by IMMUNOGENETICS, INC. ("Grantor"), a Delaware corporation
having a mailing address at Wheat Road and Lincoln Avenue, Buena, NJ 08310, and
delivered to FLEET CAPITAL CORPORATION, a Rhode Island corporation having a
mailing address at 200 Glastonbury Blvd., Glastonbury, CT 06033 ("Lender").
BACKGROUND
A. This Agreement is being executed contemporaneously with that certain
Loan and Security Agreement of even date herewith among Grantor, IGI, Inc.,
IGEN, Inc., and Blood Cells, Inc. (collectively, "Borrowers") and Lender (as it
may hereafter be supplemented, restated, amended, superseded or replaced from
time to time, the "Loan Agreement"), under which, inter alia, Borrower is
granting Lender a lien on and security interest in certain assets of Borrower
associated with or relating to products leased or sold or services provided
under Borrower's trademarks and the goodwill associated therewith as security
for the payment and performance of all the Obligations (as defined in the Loan
Agreement) of all the Borrowers under the Loan Agreement, and under which Lender
is entitled to foreclose or otherwise deal with such assets, trademarks, service
marks and tradenames under the terms and conditions set forth therein.
Capitalized terms not defined herein shall have the meanings given to such terms
in the Loan Agreement.
B. Grantor has adopted, used and is using (or has filed applications for
the registration of) the trademarks, servicemarks and tradenames listed on
SCHEDULE "A" attached hereto and made part hereof (all such marks or names
hereinafter referred to as the "Trademarks").
C. Pursuant to the Loan Agreement, Lender is acquiring a lien on, security
interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default) the Trademarks, together with
all the goodwill of Grantor associated therewith and represented thereby, as
security for all of the Obligations, and desires to have its security interest
in such Trademarks confirmed by a document identifying same and in such form
that it may be recorded in the United States Patent and Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed
incorporated by reference and made a part hereof, and in consideration of the
premises and mutual promises herein contained, the parties hereto, intending to
be legally bound hereby, covenant and agree as follows:
1. In consideration of and pursuant to the terms of the Loan Documents,
and for other good, valuable and sufficient consideration, the receipt of which
is hereby acknowledged, and to secure the payment and performance of all the
Obligations of all Borrowers under the Loan Agreement, Grantor grants a lien and
security interest to Lender in all of its present and future right, title and
interest in and to the Trademarks, together with all the goodwill of Grantor
associated with and represented by the Trademarks, and the registration thereof
and the right (but not the obligation) to sue for past, present and future
infringements, and the proceeds thereof, including, without limitation, license
royalties and proceeds of infringement suits, (collectively the "Collateral").
-1-
<PAGE> 2
2. Grantor hereby covenants and agrees to maintain the Trademarks in full
force and effect and otherwise perform all of its obligations and undertakings
under this Agreement until all of the Obligations are indefeasibly paid and
satisfied in full and the Loan Agreement has been terminated.
3. Grantor represents, warrants and covenants that:
(a) The Trademarks are subsisting and have not been adjudged
invalid or unenforceable;
(b) Each of the Trademarks is registered (or in the process of
application for registration), and, to the best of Grantor's knowledge, is valid
and enforceable;
(c) Grantor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to each of the Trademarks, and
except for Liens permitted under Section 8.2.5 of the Loan Agreement, each of
the Trademarks is free and clear of any liens, claims, charges and encumbrances,
including, without limitation, pledges, assignments, options, and covenants by
Grantor not to sue third persons;
(d) Grantor has the unqualified right, power and authority to enter
into this Agreement and perform its terms;
(e) Grantor has complied with, and will continue for the duration of
this Agreement to comply with, the requirements set forth in 15 U.S.C.
Section 1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Trademarks;
(f) Grantor has used and will continue to use for the duration of
this Agreement consistent standards of quality in services or products leased or
sold under the Trademarks, and hereby grants to Lender and its employees and
agents the right (with no obligation of any kind upon Lender to do so) to visit
Grantor's affiliates, franchises or management locations and to inspect the use
of the Trademarks and quality control records relating thereto at reasonable
times during regular business hours to ensure Grantor's compliance with this
paragraph 3(f); and
(g) Grantor has no notice of any suits or actions commenced or
threatened against it, or notice of claims asserted or threatened against it,
with reference to the Trademarks.
4. Grantor further covenants that:
(a) Until all of the Obligations have been indefeasibly paid and
satisfied in full and the Revolving Credit has been terminated, Grantor will not
enter into any agreement which is inconsistent with Grantor's obligations under
this Agreement or which restrict or impair Agent's right or priorities
hereunder.
(b) If Grantor acquires rights to any new trademarks, the provisions
of this Agreement shall automatically apply thereto and such trademarks shall be
deemed part of the Trademarks. Grantor shall give Lender written notice promptly
upon its first use thereof along with an amended SCHEDULE "A".
-2-
<PAGE> 3
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and is
continuing under the Loan Agreement and that Lender has elected to exercise its
rights hereunder, Grantor shall continue to have the right to use the Trademarks
and Lender shall have no right to use the Trademarks or issue any exclusive or
non-exclusive license with respect thereto, or assign, pledge or otherwise
transfer title in the Trademarks to anyone else.
6. Grantor agrees not to sell, grant any option, assign or further
encumber its rights and interest in the Trademarks without prior written consent
of Lender or as may be expressly permitted under the Loan Agreement.
Notwithstanding the foregoing, and providing that no Default or Event of Default
has occurred and is outstanding, Grantor shall be entitled to license any
Trademarks in exchange for fair market consideration in the exercise of its
reasonable business judgment.
7. Following the occurrence and during the continuance of an Event of
Default under the Loan Agreement, Lender, as the holder of a security interest
under the Uniform Commercial Code, as now or hereafter in effect in the State
whose law governs the interpretation of the Loan Agreement, may take such action
permitted under the Loan Documents, hereunder or under any law, in its exclusive
discretion, to foreclose upon or otherwise exercise its rights against the
Trademarks covered hereby. For such purposes, Grantor authorizes and empowers
Lender, its successors and assigns, and any officer or agent of Lender as Lender
may select, in its exclusive discretion, as Grantor's true and lawful
attorney-in-fact, with the power to endorse Grantor's name on all applications,
assignments, documents, papers and instruments necessary for Lender to use the
Trademarks or to grant or issue any exclusive or non-exclusive license under the
Trademarks to anyone else, or necessary for Lender to assign, pledge, convey or
otherwise transfer title in or dispose of the Trademarks to anyone else
including, without limitation, the power to execute on Grantor's behalf a
trademark assignment in the form attached hereto as EXHIBIT I. Grantor hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof and in accordance with the terms hereof, except for the gross negligence
or willful misconduct of such attorney. This power of attorney shall be
irrevocable for the life of this Agreement, the Loan Documents, and until all
the Obligations are indefeasibly paid and satisfied in full and the Loan
Agreement is terminated.
8. This Agreement shall not be modified without the written consent of the
parties hereto.
9. All rights and remedies herein granted to Lender shall be in addition
to any rights and remedies granted under the Loan Documents and shall be
cumulative. In the event of an inconsistency between this Agreement and the Loan
Agreement, the language of the Loan Agreement shall control.
10. Upon full and unconditional satisfaction of all of the Obligations and
termination of the Revolving Credit, Lender shall execute and deliver to Grantor
all documents reasonably necessary to terminate Lender's security interest in
the Trademarks.
11. Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses incurred by
Lender in connection with the preparation and execution of this Agreement and
all other documents relating hereto, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the payment or
discharge of any taxes, reasonable counsel fees, maintenance fees, encumbrances
or costs otherwise incurred in protecting, maintaining, preserving the
Trademarks, or in defending or prosecuting any actions or
-3-
<PAGE> 4
proceedings arising out of or related to the Trademarks, or defending,
protecting or enforcing Lender's rights hereunder, in each case in accordance
with the terms of this Agreement, shall be borne and paid by Grantor on demand
by Lender and until so paid shall be added to the principal amount of the
Obligations and shall bear interest at the highest rate applicable to Revolving
Credit Loans from time to time under the Loan Agreement.
12. Subject to any applicable terms of the Loan Agreement, Grantor shall
have the duty to prosecute diligently any trademark application with respect to
the Trademarks pending as of the date of this Agreement or thereafter to
preserve and maintain all rights in the Trademarks, and upon reasonable request
of Lender, Grantor shall make federal application on registrable but
unregistered trademarks belonging to Grantor. Any reasonable expenses incurred
in connection with such applications shall be borne by Grantor. Grantor shall
not abandon any Trademark without the prior written consent of the Lender, which
consent shall not unreasonably be withheld.
13. Grantor shall have the right to bring suit in its own name to enforce
the Trademarks, in which event Lender may, if Grantor reasonably deems it
necessary, be joined as a nominal party to such suit if Lender shall have been
satisfied, in its sole discretion, that it is not thereby incurring any risk of
liability because of such joinder. Grantor shall promptly, upon demand,
reimburse and indemnify Lender for all damages, reasonable costs and expenses,
including attorneys' fees, incurred by Lender in the fulfillment of the
provisions of this paragraph.
14. If an Event of Default is outstanding under the Loan Agreement, Lender
may, without any obligation to do so, complete any obligation of Grantor
hereunder, in Grantor's name or in Lender's name, but at Grantor's expense, and
Grantor hereby agrees to reimburse Lender in full for all reasonable costs and
expenses, including attorneys' fees, incurred by Lender in protecting, defending
and maintaining the Trademarks.
15. No course of dealing between Grantor and Lender nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right, power
or privilege hereunder, shall operate as a waiver thereof, and all of Lender's
rights and remedies with respect to the Trademarks, whether established hereby
or by the Loan Documents, or by any other future agreements between Grantor and
Lender or by law, shall be cumulative and may be exercised singularly or
concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and effect.
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with
the laws of the Commonwealth of Pennsylvania without regard to its otherwise
applicable principles of conflicts of laws.
19. GRANTOR AND LENDER EACH WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A JURY
TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING OR COUNTERCLAIM ARISING WITH
RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT.
-4-
<PAGE> 5
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Trademark
Security Agreement the day and year first above written.
IMMUNOGENETICS, INC.
By: /s/ Robert E. McDaniel
___________________________________________
Name: Robert E. McDaniel
______________________________________
Title: Secretary
______________________________________
S-1
<PAGE> 7
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared
___________________, to me known and being duly sworn, deposes and says that
s/he is ________________________of IMMUNOGENETICS INC.; that s/he signed the
Agreement thereto as such officer pursuant to the authority vested in him by
law; that the within Agreement is the voluntary act of such corporation; and
s/he desires the same to be recorded as such.
____________________________________
Notary Public
My Commission Expires:
-7-
<PAGE> 8
Exhibit I
TRADEMARK ASSIGNMENT
WHEREAS, IMMUNOGENETICS, INC. ("Grantor") is the registered owner of the
United States trademarks, tradenames and registrations listed on SCHEDULE "A"
attached hereto and made a part hereof (the "Trademarks"), which are registered
in the United States Patent and Trademark Office; and
WHEREAS, _____________________________ ("Grantee"), having a place of
business at ___________________________________________________, is desirous
of acquiring said Trademarks;
NOW THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound hereby, Grantor, its
successors and assigns, does hereby transfer, assign and set over unto Grantee,
its successors, transferees and assigns, all of its present and future right,
title and interest in and to the Trademarks and all proceeds thereof and all
goodwill associated therewith issued under and pursuant to the Power of
Attorney.
IN WITNESS WHEREOF, the undersigned has caused this Trademark Assignment
to be executed as of the 29th day of October, 1999.
_______________________________________
By: _________________________________
Attorney-in-fact
-8-
<PAGE> 9
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999 before me, a Notary Public for the said
County and State, personally appeared known to me or satisfactorily proven to me
to be attorney-in-fact on behalf of IMMUNOGENETICS, INC. ("Grantor") and s/he
acknowledged to me that s/he executed the foregoing Trademark Assignment on
behalf of Grantor, and as the act and deed of Grantor for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
_____________________________________
Notary Public
My Commission Expires:
____________________________________
-9-
<PAGE> 10
POWER OF ATTORNEY
IMMUNOGENETICS, INC., ("Grantor"), hereby authorizes FLEET CAPITAL
CORPORATION, its successors and assigns, and any officer or agent thereof
(collectively, "Lender") as Grantor's true and lawful attorney-in-fact, with the
power to endorse Grantor's name on all applications, assignments, documents,
papers and instruments necessary for Grantee to enforce and effectuate its
rights under a certain Trademark Security Agreement between Grantor and Lender
dated the date hereof (as it may hereafter be supplemented, restated,
superseded, amended or replaced, the "Trademark Agreement"), including, without
limitation, the power to use the Trademarks (as defined in the Trademark
Agreement) and listed on SCHEDULE A attached hereto and made a part hereof, to
grant or issue any exclusive or nonexclusive license under the Trademarks to
anyone else, or to assign, pledge, convey or otherwise transfer title in or
dispose of the Trademarks, in each case subject to the terms of the Trademark
Agreement.
This Power of Attorney is given and any action taken pursuant hereto is
intended to be so given or taken pursuant to and subject to the provisions of a
certain Loan and Security Agreement bearing even date herewith among Grantor and
Lender, as each document may be hereinafter supplemented, restated, superseded,
amended or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof and in accordance with the
terms of the Trademark Agreement.
This Power of Attorney shall be irrevocable for the life of the Trademark
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, this
29th day of October, 1999
IMMUNOGENETICS, INC.
By: /s/ Robert E. McDaniel
___________________________________________
Name: Robert E. McDaniel
______________________________________
Title: Secretary
______________________________________
-10-
<PAGE> 11
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999 personally appeared ____________________, to
me known and being duly sworn, deposes and says that s/he is ______________of
IMMUNOGENETICS, INC., the Grantor corporation described in the foregoing Power
of Attorney; that s/he signed the Power of Attorney as such officer pursuant to
the authority vested in her/him by law; that the within Power of Attorney is the
voluntary act of such corporation; and s/he desires the same to be recorded as
such.
_____________________________________
Notary Public
My Commission Expires:
-11-
<PAGE> 12
SCHEDULE "A"
TRADEMARKS
<TABLE>
<CAPTION>
Name/Title Registration Number Date of Registration
- ---------- ------------------- --------------------
<S> <C> <C>
</TABLE>
-12-
<PAGE> 1
EXHIBIT *(10.29)
PATENT SECURITY AGREEMENT
(United States Patents)
This Patent Security Agreement ("Agreement") is made this 29th day of
October, 1999, by IGI, INC., a Delaware corporation having a mailing address at
Wheat Road and Lincoln Avenue, Buena, NJ 08310 ("Grantor") and delivered to
FLEET CAPITAL CORPORATION, a Rhode Island corporation having a mailing address
at 200 Glastonbury Blvd., Glastonbury, CT 06033 ("Lender").
BACKGROUND
A. This Agreement is being executed contemporaneously with that certain
Loan and Security Agreement of even date herewith between Grantor, IGI, Inc.,
ImmunoGenetics, Inc. and Blood Cells, Inc. (collectively, "Borrowers") and
Lender (as it may hereafter be amended, supplemented or replaced, the "Loan
Agreement"), under which, inter alia, Grantor is granting Lender a lien on and
security interest in certain assets of Grantor associated with or relating to
services or products sold under Borrower's Patent Collateral (as defined herein)
as security for the payment and performance of all the Obligations (as defined
in the Loan Agreement) of all the Borrowers under the Loan Agreement, and under
which Lender is entitled to foreclose or otherwise deal with such assets under
the terms and conditions set forth therein. Capitalized terms not defined herein
shall have the meanings given to such terms in the Loan Agreement.
B. Grantor has adopted, used and/or is using (i) the United States
Letters Patent and the inventions described and claimed therein set forth on
SCHEDULE A hereto (hereinafter referred to collectively as the "Schedule A
Patents") and (ii) the applications for Letters Patent and the inventions
described and claimed therein set forth on SCHEDULE A hereto and any United
States Letters Patent which may be issued upon any of said applications
(hereinafter referred to collectively as the "Applications"). In conjunction
with the Patents and Applications, Grantor may use or adopt any reissues,
extensions, divisions or continuations of the Patents or Applications (such
reissues, extension, divisions and continuations being herein referred to
collectively as the "Reissued Patents"); and may be entitled to all future
royalties or other fees paid or payments made to Grantor in respect of the
Patents (hereinafter referred to collectively as the "Royalties"). Furthermore,
Grantor has the right under a certain license agreement dated January 1, 19965
between Grantor and Tristrata Technology, Inc. ("License Agreement") to use
certain patents, inventions and applications therefore described and claimed
therein set forth on SCHEDULE B hereto (hereinafter referred to as the "Schedule
B Patents," and together with the Schedule A Patents shall be referred to as the
Patents) owned by Tristrata Technology, Inc. The Schedule A Patents,
Applications and the Reissued Patents, the Royalties, and the Grantor's rights
under the License Agreement, including the right to use the Schedule B Patents,
are herein referred to collectively as the "Patent Rights").
C. Pursuant to the Loan Agreement, Lender is acquiring a lien on,
security interest in and a license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default) the Patent Collateral (as
defined herein) and the registration thereof, as security for all of the
Obligations under the Loan Agreement, and Lender desires to have its security
interest in such Patent Collateral confirmed by a document identifying same and
in such form that it may be recorded in the United States Patent and Trademark
Office.
<PAGE> 2
NOW THEREFORE, with the foregoing Background hereinafter deemed
incorporated by reference and made a part hereof, and in consideration of the
premises and mutual promises herein contained, the parties hereto, intending to
be legally bound hereby, covenant and agree as follows:
1. In consideration of and pursuant to the terms of the Loan Agreement,
and for other good, valuable and sufficient consideration, the receipt of which
is hereby acknowledged, and to secure the payment and performance of all the
Obligations of all Borrowers under the Loan Agreement, Grantor grants to Lender
a lien on and security interest in all of the Patent Rights and all proceeds
thereof and all Grantor's right, title, interest, claims and demands that
Grantor has or may have in profits and damages for past and future infringements
of the Patent Rights (such rights, interest, claims and demand being herein
called the "Claims") (the Patent Rights and Claims are collectively referred to
as the "Patent Collateral").
2. Grantor hereby covenants and agrees to maintain the Patent
Collateral in full force and effect until all of the Obligations are satisfied
in full, subject to the provisions of paragraph 12 below.
3. Grantor represents, warrants and covenants to Lender that:
(a) The Patent Collateral is subsisting and has not been adjudged
invalid or unenforceable;
(b) All of the Patent Rights are subsisting, and, to the best of
Grantor's knowledge, valid and enforceable;
(c) Grantor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to the Patent Collateral
(excepting the Schedule B Patents, but including the Grantor's rights under the
License Agreement). Except for Liens permitted under Section 8.2.5 of the Loan
Agreement, all of the Patent Collateral (excepting the Schedule B Patents, but
including the Grantor's rights under the License Agreement) is free and clear of
any liens, charges and encumbrances including, without limitation, pledges,
assignments, options, and covenants by Grantor not to sue third persons.
Notwithstanding any of the foregoing, Grantor currently has and in the future
may grant licenses to third parties, subject to the provisions of paragraph 12
below;
(d) Except for Liens permitted under Section 8.2.5 of the Loan
Agreement, the Grantor's rights under the License Agreement, including the right
to use the Schedule B Patents, are free and clear of any liens, claims, charges
and encumbrances, including, without limitation, pledges, assignments, options,
and covenants by Grantor not to sue third persons;
(e) Grantor has no notice of any suits or actions commenced or
threatened against it, or notice of claims asserted or threatened against it,
with reference to the Patent Collateral;
(f) Grantor has the unqualified right, power and authority to enter
into this Agreement and perform its terms; and
2-
<PAGE> 3
(g) Grantor has complied with, and will continue for the duration of
this Agreement to comply with the requirements set forth in 35 U.S.C. Section 1
et seq., and any other applicable statutes, rules and regulations in connection
with its use of the Patent Collateral except where failure to comply would not
have a material adverse effect on Grantor or its Property.
4. Grantor further covenants that:
(a) Until all of the Obligations have been satisfied in full,
Grantor will not enter into any agreement which is inconsistent with Grantor's
obligations under this Agreement, Grantor's obligations under the Loan Agreement
or which may restrict or impair Lender's rights or priorities hereunder.
(b) If Grantor acquires rights to any new owned Patent Collateral,
the provisions of this Agreement shall automatically apply thereto and such
Patent Collateral shall be deemed part of the Patent Collateral. Grantor shall
give Lender prompt written notice thereof along with an amended SCHEDULE "A."
Furthermore, if Grantor acquires rights as a licensee to any new patents, the
provisions of this Agreement shall automatically apply thereto and such patent
shall be deemed part of the Schedule B Patents, and any license agreement
pursuant to which Grantor acquires such rights shall be deemed to be included in
the definition of "License Agreement." Grantor shall give Lender written notice
promptly upon its first use thereof along with an amended SCHEDULE "B".
5. So long as this Agreement is in effect and so long as Grantor has
not received notice from Lender that an Event of Default has occurred and is
continuing under the Loan Agreement and that Lender has elected to exercise its
rights hereunder (i) Grantor shall continue to have the right to use the Patent
Collateral; and (ii) Lender shall have no right to use the Patent Collateral or
issue any exclusive or non-exclusive license with respect thereto, or assign,
pledge or otherwise transfer title in the Patent Collateral to anyone else.
6. Grantor agrees not to sell, grant any option, assign or further
encumber its rights and interest in the Patent Collateral to any entity or
person other than Grantor without the prior written consent of Lender or as may
be expressly permitted under the Loan Agreement. Notwithstanding the foregoing,
and providing that no Default or Event of Default has occurred and is
outstanding, Grantor shall be entitled to license any Patents in exchange for
fair market consideration in the exercise of its reasonable business judgment.
7. Anything herein contained to the contrary notwithstanding, if and
while Grantor shall be in default hereunder or an Event of Default exists under
the Loan Agreement, Grantor hereby covenants and agrees that Lender, as the
holder of a security interest under the Uniform Commercial Code, as now or
hereafter in effect in the State whose law governs the interpretation of the
Loan Documents, may take such action permitted under the Loan Documents,
hereunder or under any law, in its exclusive discretion, to foreclose upon the
Patent Collateral covered hereby. For such purposes, Grantor hereby authorizes
and empowers Lender, its successors and assigns to make, constitute and
3-
<PAGE> 4
appoint any officer or agent of Lender as Lender may select, in its exclusive
discretion, as Grantor's true and lawful attorney-in-fact, with the power to
endorse Grantor's name on all applications, documents, papers and instruments
necessary for Lender to use the Patent Collateral or to grant or issue any
exclusive or non-exclusive license under the Patent Collateral to anyone else,
or necessary for Lender to assign, pledge, convey or otherwise transfer title in
or dispose of the Patent Collateral to anyone else including, without
limitation, the power to execute a Patent Collateral assignment in the form
attached hereto as EXHIBIT I. Grantor hereby ratifies all that such attorney
shall lawfully do or cause to be done by virtue hereof, except for the gross
negligence or willful misconduct of such attorney. This power of attorney shall
be irrevocable for the life of this Agreement, the Loan Documents, and until all
of the Obligations of all of the Borrowers are indefeasibly paid and satisfied
in full and the Loan Agreement is terminated.
8. This Agreement shall be subject to the terms, provisions, and
conditions set forth in the Loan Agreement and may not be modified without the
written consent of the party against whom enforcement is being sought.
9. All rights and remedies herein granted to Lender shall be in
addition to any rights and remedies granted to Lender under the Loan Documents.
In the event of an inconsistency between this Agreement and Loan Agreement, the
language of this Agreement shall control.
10. Upon Borrowers performance of all of the Obligations under the Loan
Documents and full and unconditional satisfaction of all of the Borrowers'
Obligations, Lender shall execute and deliver to Grantor all documents
reasonably necessary to terminate Lender's security interest in the Patent
Collateral.
11. Any and all reasonable fees, costs and expenses, of whatever kind
or nature, including the reasonable attorneys' fees and legal expenses incurred
by Lender in connection with the preparation of this Agreement and all other
documents relating hereto and the consummation of this transaction, the filing
or recording of any documents (including all taxes in connection therewith) in
public offices, the payment or discharge of any taxes, reasonable counsel fees,
maintenance fees, encumbrances or costs otherwise incurred in protecting,
maintaining, preserving the Patent Collateral, or in defending or prosecuting
any actions or proceedings arising out of or related to the Patent Collateral,
in each case in accordance with the terms of this Agreement, shall be borne and
paid by Grantor on demand by Lender and until so paid shall be added to the
principal amount of the Obligations to Lender and shall bear interest at the
highest rate applicable to Revolving Credit Loans from time to time under the
Loan Agreement.
12. Subject to the terms of the Loan Agreement, Grantor shall have the
duty to prosecute diligently any application with respect to the Patent
Collateral (other than the Schedule B Patents or any applications or inventions
relating thereto) pending as of the date of this Agreement or thereafter, until
Borrowers' Obligations shall have been satisfied in full, to preserve and
maintain all rights in the Patent Collateral (other than the Schedule B Patents
or any applications or inventions relating thereto),
4-
<PAGE> 5
and upon reasonable request of Lender, Grantor shall make federal application
regarding Patent Collateral (other than the Schedule B Patents or any
applications or inventions relating thereto) belonging to Grantor and licensed
to Grantor. To the extent that Grantor has the duty or right to make any patent
applications under the License Agreement, Grantor shall have the same duties
with respect to the Schedule B Patents as stated in the previous sentence. Any
reasonable expenses incurred in connection with such applications shall be borne
exclusively by Grantor. Grantor shall not abandon any Patent Collateral without
the prior written consent of the Lender, which consent shall not be unreasonably
withheld.
13. Grantor shall have the right to bring suit in its own name to
enforce the Patent Collateral, in which event Lender may, if Grantor reasonably
deems it necessary, be joined as a nominal party to such suit if Lender shall
have been satisfied, in its sole discretion, that it is not thereby incurring
any risk of liability because of such joinder. Grantor shall promptly, upon
demand, reimburse and indemnify Lender for all damages, costs and expenses,
including reasonable attorneys' fees and costs, incurred by Lender in the
fulfillment of the provisions of this paragraph.
14. Upon the occurrence of an Event of Default under the Loan Agreement
or hereunder, Lender may, without any obligation to do so, complete any
obligation of Grantor hereunder, in Grantor's name or in Lender's name, but at
the expense of Grantor, and Grantor hereby agrees to reimburse Lender in full
for all expenses, including, without limitation, all reasonable attorneys' fees
incurred by Lender in protecting, defending and maintaining the Patent
Collateral.
15. No course of dealing between Grantor and Lender, nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right, power
or privilege hereunder, shall operate as a waiver thereof, and all of Lender's
rights and remedies with respect to the Patent Collateral, whether established
hereby or by the Loan Documents, or by any other future agreements between
Grantor and Lender or by law, shall be cumulative and may be exercised
singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity
or unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and effect.
17. This Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity
with the laws of the State of Pennsylvania, without regard to its otherwise
applicable principles of conflicts of laws.
19. GRANTOR AND LENDER EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE
TO A JURY TRIAL ARISING IN CONNECTION WITH ANY PROCEEDING OR CONTROVERSY
RELATING TO THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN GRANTOR AND LENDER.
5-
<PAGE> 6
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Patent
Security Agreement, under seal, the day and year first above written.
IGI, INC.
By: /s/ Manfred Hanuschek
__________________________________________
Name: Manfred Hanuschek
________________________________________
Title: CFO
______________________________________
S-1
<PAGE> 8
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared
___________________, to me known and being duly sworn, deposes and says that
s/he is ________________________of IGI, INC.; that s/he signed the Agreement
thereto as such officer pursuant to the authority vested in him by law; that the
within Agreement is the voluntary act of such corporation; and s/he desires the
same to be recorded as such.
--------------------------------
Notary Public
My Commission Expires:
8-
<PAGE> 9
SCHEDULE A
<TABLE>
<CAPTION>
Patent Registration No. Country Filing Date
- ------ ---------------- ------- -----------
<S> <C> <C> <C>
</TABLE>
<PAGE> 10
EXHIBIT I
PATENT ASSIGNMENT
WHEREAS, IGI, INC., a Delaware corporation ("Grantor") is the
registered owner of: (i) the United States Letters Patent and the inventions
described and claimed therein set forth on Schedule A hereto (hereinafter
referred to collectively as the "Patents"); (ii) the applications for Letters
Patent and the inventions described and claimed therein set forth on Schedule A
hereto and any United States Letters Patent which may be issued upon any of said
applications (hereinafter referred to collectively as the "Applications"), which
are registered with the United States Patent and Trademark Office.
WHEREAS, in conjunction with the Patents and Applications, Grantor may
use or adopt any reissues, extensions, divisions or continuations of the Patents
or Applications (such reissues, extension, divisions and continuations being
herein referred to collectively as the "Reissued Patents"); may be entitled to
all future royalties or other fees paid or payments made to Grantor in respect
of the Patents (hereinafter referred to collectively as the "Royalties"), (the
Patents, Applications and the Reissued Patents and the Royalties being herein
referred to collectively as the "Patent Rights") and may be entitled to profits
and damages for past and future infringements of the Patent Rights (such rights,
interest, claims and demand being herein called the "Claims") (the Patent Rights
and Claims are collectively referred to as the "Patent Collateral").
.
WHEREAS, ______________________ ("Grantee") having a place of business
at ___________________________________ is desirous of acquiring said Patent
Collateral;
NOW THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound hereby, Grantor, its
successors and assigns, does hereby transfer, assign and set over unto Grantee,
its successors, transferees and assigns, all of its present and future right,
title and interest in and to the Patent Collateral and all proceeds thereof and
all goodwill associated therewith. No rights or duties of any kind are intended
to be granted or conferred upon Grantee unless and until this Patent Assignment
is recorded with the United States Patent and Trademark Office.
IN WITNESS WHEREOF, the undersigned has caused this Patent Assignment
to be executed as of the 29th day of October, 1999.
IGI, INC.
By: _________________________________
As Attorney-in-fact
<PAGE> 11
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, before me, a Notary Public for the
said County and State, personally appeared known to me or satisfactorily proven
to me to be attorney-in-fact on behalf of IGI, INC. ("Grantor") and s/he
acknowledged to me that s/he executed the foregoing Patent Assignment on behalf
of Grantor, and as the act and deed of Grantor for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------------------
Notary Public
My Commission Expires:
- -------------------------------
<PAGE> 12
POWER OF ATTORNEY
IGI, INC., a New Jersey corporation, ("Grantor"), hereby authorizes
FLEET CAPITAL CORPORATION its successors and assigns, and any officer or agent
thereof (collectively, "Lender") as Grantor's true and lawful attorney-in-fact,
with the power to endorse Grantor's name on all applications, assignments,
documents, papers and instruments necessary for Lender to enforce and effectuate
its rights under a certain Patent Security Agreement (United States Patents)
between Grantor and Lender dated the date hereof (as it may hereafter be
supplemented, restated, superseded, amended or replaced, the "Patent
Agreement"), including, without limitation, the power to use the Patent
Collateral (as defined in the Patent Agreement), to grant or issue any exclusive
or nonexclusive license under the Patent Collateral to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral.
This Power of Attorney is given and any action taken pursuant hereto is
intended to be so given or taken pursuant to a certain Loan and Security
agreement bearing even date herewith between Grantor and Lender as it may be
hereinafter supplemented, restated, superseded, amended or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall be irrevocable for the life of the Patent
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney,
under seal, this 29th day of October, 1999.
IGI, INC.
By: /s/ Manfred Hanuschek
_________________________________
Name: Manfred Hanuschek
Title: CFO
<PAGE> 13
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999 personally appeared ____________________,
to me known and being duly sworn, deposes and says that s/he is ______________of
IGI, INC., the Grantor corporation described in the foregoing Power of Attorney;
that s/he signed the Power of Attorney as such officer pursuant to the authority
vested in her/him by law; that the within Power of Attorney is the voluntary act
of such corporation; and s/he desires the same to be recorded as such.
-------------------------
Notary Public
My Commission Expires:
<PAGE> 1
EXHIBIT *(10.30)
PATENT SECURITY AGREEMENT
(United States Patents)
This Patent Security Agreement ("Agreement") is made this 29th day of
October, 1999, by IGEN, INC., a Delaware corporation having a mailing address at
Wheat Road and Lincoln Avenue, Buena, NJ 08310 ("Grantor") and delivered to
FLEET CAPITAL CORPORATION, a Rhode Island corporation having a mailing address
at 200 Glastonbury Blvd., Glastonbury, CT 06033 ("Lender").
BACKGROUND
A. This Agreement is being executed contemporaneously with that certain
Loan and Security Agreement of even date herewith between Grantor, IGI, Inc.,
ImmunoGenetics, Inc. and Blood Cells, Inc. (collectively, "Borrowers") and
Lender (as it may hereafter be amended, supplemented or replaced, the "Loan
Agreement"), under which, inter alia, Grantor is granting Lender a lien on and
security interest in certain assets of Grantor associated with or relating to
services or products sold under Borrower's Patent Collateral (as defined herein)
as security for the payment and performance of all the Obligations (as defined
in the Loan Agreement) of all the Borrowers under the Loan Agreement, and under
which Lender is entitled to foreclose or otherwise deal with such assets under
the terms and conditions set forth therein. Capitalized terms not defined herein
shall have the meanings given to such terms in the Loan Agreement.
B. Grantor has adopted, used and/or is using (i) the United States
Letters Patent and the inventions described and claimed therein set forth on
SCHEDULE A hereto (hereinafter referred to collectively as the "Schedule A
Patents") and (ii) the applications for Letters Patent and the inventions
described and claimed therein set forth on SCHEDULE A hereto and any United
States Letters Patent which may be issued upon any of said applications
(hereinafter referred to collectively as the "Applications"). In conjunction
with the Patents and Applications, Grantor may use or adopt any reissues,
extensions, divisions or continuations of the Patents or Applications (such
reissues, extension, divisions and continuations being herein referred to
collectively as the "Reissued Patents"); and may be entitled to all future
royalties or other fees paid or payments made to Grantor in respect of the
Patents (hereinafter referred to collectively as the "Royalties"). Furthermore,
Grantor has the right under a certain license agreement dated December 13, 1995
between Grantor and Micro-Pak, Inc. ("License Agreement") to use certain
patents, inventions and applications therefore described and claimed therein set
forth on SCHEDULE B hereto (hereinafter referred to as the "Schedule B Patents,"
and together with the Schedule A Patents shall be referred to as the Patents)
owned by Micro-Pak, Inc. The Schedule A Patents, Applications and the Reissued
Patents, the Royalties, and the Grantor's rights under the License Agreement,
including the right to use the Schedule B Patents, are herein referred to
collectively as the "Patent Rights").
C. Pursuant to the Loan Agreement, Lender is acquiring a lien on,
security interest in and a license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default) the Patent Collateral (as
defined herein) and the registration thereof, as security for all of the
Obligations under the Loan Agreement, and Lender desires to have its security
interest in such Patent Collateral confirmed by a document identifying same and
in such form that it may be recorded in the United States Patent and Trademark
Office.
<PAGE> 2
NOW THEREFORE, with the foregoing Background hereinafter deemed
incorporated by reference and made a part hereof, and in consideration of the
premises and mutual promises herein contained, the parties hereto, intending to
be legally bound hereby, covenant and agree as follows:
1. In consideration of and pursuant to the terms of the Loan Agreement,
and for other good, valuable and sufficient consideration, the receipt of which
is hereby acknowledged, and to secure the payment and performance of all the
Obligations of all Borrowers under the Loan Agreement, Grantor grants to Lender
a lien on and security interest in all of the Patent Rights and all proceeds
thereof and all Grantor's right, title, interest, claims and demands that
Grantor has or may have in profits and damages for past and future infringements
of the Patent Rights (such rights, interest, claims and demand being herein
called the "Claims") (the Patent Rights and Claims are collectively referred to
as the "Patent Collateral").
2. Grantor hereby covenants and agrees to maintain the Patent
Collateral in full force and effect until all of the Obligations are satisfied
in full, subject to the provisions of paragraph 12 below.
3. Grantor represents, warrants and covenants to Lender that:
(a) The Patent Collateral is subsisting and has not been adjudged
invalid or unenforceable;
(b) All of the Patent Rights are subsisting, and, to the best of
Grantor's knowledge, valid and enforceable;
(c) Grantor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to the Patent Collateral
(excepting the Schedule B Patents, but including the Grantor's rights under the
License Agreement). Except for Liens permitted under Section 8.2.5 of the Loan
Agreement, all of the Patent Collateral (excepting the Schedule B Patents, but
including the Grantor's rights under the License Agreement) is free and clear of
any liens, charges and encumbrances including, without limitation, pledges,
assignments, options, and covenants by Grantor not to sue third persons.
Notwithstanding any of the foregoing, Grantor currently has and in the future
may grant licenses to third parties, subject to the provisions of paragraph 12
below;
(d) Except for Liens permitted under Section 8.2.5 of the Loan
Agreement, the Grantor's rights under the License Agreement, including the right
to use the Schedule B Patents, are free and clear of any liens, claims, charges
and encumbrances, including, without limitation, pledges, assignments, options,
and covenants by Grantor not to sue third persons;
(e) Grantor has no notice of any suits or actions commenced or
threatened against it, or notice of claims asserted or threatened against it,
with reference to the Patent Collateral, other than the current opposition
proceeding in Europe concerning European Patent Number 352 282 - Paucilamellar
Lipid Vesicles (one of the Schedule B Patents);
2-
<PAGE> 3
(f) Grantor has the unqualified right, power and authority to enter
into this Agreement and perform its terms; and
(g) Grantor has complied with, and will continue for the duration of
this Agreement to comply with the requirements set forth in 35 U.S.C. Section 1
et seq., and any other applicable statutes, rules and regulations in connection
with its use of the Patent Collateral except where failure to comply would not
have a material adverse effect on Grantor or its Property.
4. Grantor further covenants that:
(a) Until all of the Obligations have been satisfied in full,
Grantor will not enter into any agreement which is inconsistent with Grantor's
obligations under this Agreement, Grantor's obligations under the Loan Agreement
or which may restrict or impair Lender's rights or priorities hereunder.
(b) If Grantor acquires rights to any new owned Patent Collateral,
the provisions of this Agreement shall automatically apply thereto and such
Patent Collateral shall be deemed part of the Patent Collateral. Grantor shall
give Lender prompt written notice thereof along with an amended SCHEDULE "A."
Furthermore, if Grantor acquires rights as a licensee to any new patents, the
provisions of this Agreement shall automatically apply thereto and such patent
shall be deemed part of the Schedule B Patents, and any license agreement
pursuant to which Grantor acquires such rights shall be deemed to be included in
the definition of "License Agreement." Grantor shall give Lender written notice
promptly upon its first use thereof along with an amended SCHEDULE "B".
5. So long as this Agreement is in effect and so long as Grantor has
not received notice from Lender that an Event of Default has occurred and is
continuing under the Loan Agreement and that Lender has elected to exercise its
rights hereunder (i) Grantor shall continue to have the right to use the Patent
Collateral; and (ii) Lender shall have no right to use the Patent Collateral or
issue any exclusive or non-exclusive license with respect thereto, or assign,
pledge or otherwise transfer title in the Patent Collateral to anyone else.
6. Grantor agrees not to sell, grant any option, assign or further
encumber its rights and interest in the Patent Collateral to any entity or
person other than Grantor without the prior written consent of Lender or as may
be expressly permitted under the Loan Agreement. Notwithstanding the foregoing,
and providing that no Default or Event of Default has occurred and is
outstanding, Grantor shall be entitled to license any Patents in exchange for
fair market consideration in the exercise of its reasonable business judgment.
7. Anything herein contained to the contrary notwithstanding, if and
while Grantor shall be in default hereunder or an Event of Default exists under
the Loan Agreement, Grantor hereby covenants and agrees that Lender, as the
holder of a security interest under the Uniform Commercial Code, as now or
hereafter in effect in the State whose law governs the interpretation of the
Loan Documents, may take such action permitted under the Loan Documents,
hereunder or under any law,
3-
<PAGE> 4
in its exclusive discretion, to foreclose upon the Patent Collateral covered
hereby. For such purposes, Grantor hereby authorizes and empowers Lender, its
successors and assigns to make, constitute and appoint any officer or agent of
Lender as Lender may select, in its exclusive discretion, as Grantor's true and
lawful attorney-in-fact, with the power to endorse Grantor's name on all
applications, documents, papers and instruments necessary for Lender to use the
Patent Collateral or to grant or issue any exclusive or non-exclusive license
under the Patent Collateral to anyone else, or necessary for Lender to assign,
pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral to anyone else including, without limitation, the power to execute a
Patent Collateral assignment in the form attached hereto as EXHIBIT I. Grantor
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof, except for the gross negligence or willful misconduct of such
attorney. This power of attorney shall be irrevocable for the life of this
Agreement, the Loan Documents, and until all of the Obligations of all of the
Borrowers are indefeasibly paid and satisfied in full and the Loan Agreement is
terminated.
8. This Agreement shall be subject to the terms, provisions, and
conditions set forth in the Loan Agreement and may not be modified without the
written consent of the party against whom enforcement is being sought.
9. All rights and remedies herein granted to Lender shall be in
addition to any rights and remedies granted to Lender under the Loan Documents.
In the event of an inconsistency between this Agreement and Loan Agreement, the
language of this Agreement shall control.
10. Upon Borrowers performance of all of the Obligations under the Loan
Documents and full and unconditional satisfaction of all of the Borrowers'
Obligations, Lender shall execute and deliver to Grantor all documents
reasonably necessary to terminate Lender's security interest in the Patent
Collateral.
11. Any and all reasonable fees, costs and expenses, of whatever kind
or nature, including the reasonable attorneys' fees and legal expenses incurred
by Lender in connection with the preparation of this Agreement and all other
documents relating hereto and the consummation of this transaction, the filing
or recording of any documents (including all taxes in connection therewith) in
public offices, the payment or discharge of any taxes, reasonable counsel fees,
maintenance fees, encumbrances or costs otherwise incurred in protecting,
maintaining, preserving the Patent Collateral, or in defending or prosecuting
any actions or proceedings arising out of or related to the Patent Collateral,
in each case in accordance with the terms of this Agreement, shall be borne and
paid by Grantor on demand by Lender and until so paid shall be added to the
principal amount of the Obligations to Lender and shall bear interest at the
highest rate applicable to Revolving Credit Loans from time to time under the
Loan Agreement.
12. Subject to the terms of the Loan Agreement, Grantor shall have the
duty to prosecute diligently any application with respect to the Patent
Collateral (other than the Schedule B Patents or
4-
<PAGE> 5
any applications or inventions relating thereto) pending as of the date of this
Agreement or thereafter, until Borrowers' Obligations shall have been satisfied
in full, to preserve and maintain all rights in the Patent Collateral (other
than the Schedule B Patents or any applications or inventions relating thereto),
and upon reasonable request of Lender, Grantor shall make federal application
regarding Patent Collateral (other than the Schedule B Patents or any
applications or inventions relating thereto) belonging to Grantor and licensed
to Grantor. To the extent that Grantor has the duty or right to make any patent
applications under the License Agreement, Grantor shall have the same duties
with respect to the Schedule B Patents as stated in the previous sentence. Any
reasonable expenses incurred in connection with such applications shall be borne
exclusively by Grantor. Grantor shall not abandon any Patent Collateral without
the prior written consent of the Lender, which consent shall not be unreasonably
withheld.
13. Grantor shall have the right to bring suit in its own name to
enforce the Patent Collateral, in which event Lender may, if Grantor reasonably
deems it necessary, be joined as a nominal party to such suit if Lender shall
have been satisfied, in its sole discretion, that it is not thereby incurring
any risk of liability because of such joinder. Grantor shall promptly, upon
demand, reimburse and indemnify Lender for all damages, costs and expenses,
including reasonable attorneys' fees and costs, incurred by Lender in the
fulfillment of the provisions of this paragraph.
14. Upon the occurrence of an Event of Default under the Loan Agreement
or hereunder, Lender may, without any obligation to do so, complete any
obligation of Grantor hereunder, in Grantor's name or in Lender's name, but at
the expense of Grantor, and Grantor hereby agrees to reimburse Lender in full
for all expenses, including, without limitation, all reasonable attorneys' fees
incurred by Lender in protecting, defending and maintaining the Patent
Collateral.
15. No course of dealing between Grantor and Lender, nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right, power
or privilege hereunder, shall operate as a waiver thereof, and all of Lender's
rights and remedies with respect to the Patent Collateral, whether established
hereby or by the Loan Documents, or by any other future agreements between
Grantor and Lender or by law, shall be cumulative and may be exercised
singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity
or unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and effect.
17. This Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity
with the laws of the State of Pennsylvania, without regard to its otherwise
applicable principles of conflicts of laws.
5-
<PAGE> 6
19. GRANTOR AND LENDER EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE
TO A JURY TRIAL ARISING IN CONNECTION WITH ANY PROCEEDING OR CONTROVERSY
RELATING TO THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN GRANTOR AND LENDER.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Patent
Security Agreement, under seal, the day and year first above written.
IGEN, INC.
By: /s/ Robert E. McDaniel
___________________________________________
Name: Robert E. McDaniel
______________________________________
Title: Secretary
______________________________________
S - 1
<PAGE> 8
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared
___________________, to me known and being duly sworn, deposes and says that
s/he is ________________________of IGEN, INC.; that s/he signed the Agreement
thereto as such officer pursuant to the authority vested in him by law; that the
within Agreement is the voluntary act of such corporation; and s/he desires the
same to be recorded as such.
--------------------------------
Notary Public
My Commission Expires:
8-
<PAGE> 9
SCHEDULE A
<TABLE>
<CAPTION>
Patent Registration No. Country Filing Date
- ------ ---------------- ------- -----------
<S> <C> <C> <C>
</TABLE>
<PAGE> 10
EXHIBIT I
PATENT ASSIGNMENT
WHEREAS, IGEN, INC., a Delaware corporation ("Grantor") is the
registered owner of: (i) the United States Letters Patent and the inventions
described and claimed therein set forth on Schedule A hereto (hereinafter
referred to collectively as the "Patents"); (ii) the applications for Letters
Patent and the inventions described and claimed therein set forth on Schedule A
hereto and any United States Letters Patent which may be issued upon any of said
applications (hereinafter referred to collectively as the "Applications"), which
are registered with the United States Patent and Trademark Office.
WHEREAS, in conjunction with the Patents and Applications, Grantor may
use or adopt any reissues, extensions, divisions or continuations of the Patents
or Applications (such reissues, extension, divisions and continuations being
herein referred to collectively as the "Reissued Patents"); may be entitled to
all future royalties or other fees paid or payments made to Grantor in respect
of the Patents (hereinafter referred to collectively as the "Royalties"), (the
Patents, Applications and the Reissued Patents and the Royalties being herein
referred to collectively as the "Patent Rights") and may be entitled to profits
and damages for past and future infringements of the Patent Rights (such rights,
interest, claims and demand being herein called the "Claims") (the Patent Rights
and Claims are collectively referred to as the "Patent Collateral"). .
WHEREAS, ______________________ ("Grantee") having a place of business
at ___________________________________ is desirous of acquiring said Patent
Collateral;
NOW THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, and intending to be legally bound hereby, Grantor, its
successors and assigns, does hereby transfer, assign and set over unto Grantee,
its successors, transferees and assigns, all of its present and future right,
title and interest in and to the Patent Collateral and all proceeds thereof and
all goodwill associated therewith. No rights or duties of any kind are intended
to be granted or conferred upon Grantee unless and until this Patent Assignment
is recorded with the United States Patent and Trademark Office.
IN WITNESS WHEREOF, the undersigned has caused this Patent Assignment
to be executed as of the 29th day of October, 1999.
IGEN, INC.
By: _________________________________
As Attorney-in-fact
<PAGE> 11
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, before me, a Notary Public for the
said County and State, personally appeared known to me or satisfactorily proven
to me to be attorney-in-fact on behalf of IGEN, INC. ("Grantor") and s/he
acknowledged to me that s/he executed the foregoing Patent Assignment on behalf
of Grantor, and as the act and deed of Grantor for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-----------------------------
Notary Public
My Commission Expires:
- -----------------------------
<PAGE> 12
POWER OF ATTORNEY
IGEN, INC., a New Jersey corporation, ("Grantor"), hereby authorizes
FLEET CAPITAL CORPORATION its successors and assigns, and any officer or agent
thereof (collectively, "Lender") as Grantor's true and lawful attorney-in-fact,
with the power to endorse Grantor's name on all applications, assignments,
documents, papers and instruments necessary for Lender to enforce and effectuate
its rights under a certain Patent Security Agreement (United States Patents)
between Grantor and Lender dated the date hereof (as it may hereafter be
supplemented, restated, superseded, amended or replaced, the "Patent
Agreement"), including, without limitation, the power to use the Patent
Collateral (as defined in the Patent Agreement), to grant or issue any exclusive
or nonexclusive license under the Patent Collateral to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral.
This Power of Attorney is given and any action taken pursuant hereto is
intended to be so given or taken pursuant to a certain Loan and Security
agreement bearing even date herewith between Grantor and Lender as it may be
hereinafter supplemented, restated, superseded, amended or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall be irrevocable for the life of the Patent
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney,
under seal, this 29th day of October, 1999.
IGEN, INC.
By: /s/ Robert E. McDaniel
___________________________________________
Name: Robert E. McDaniel
Title: Secretary
<PAGE> 13
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999 personally appeared ____________________,
to me known and being duly sworn, deposes and says that s/he is ______________of
IGEN, INC., the Grantor corporation described in the foregoing Power of
Attorney; that s/he signed the Power of Attorney as such officer pursuant to the
authority vested in her/him by law; that the within Power of Attorney is the
voluntary act of such corporation; and s/he desires the same to be recorded as
such.
-------------------------
Notary Public
My Commission Expires:
<PAGE> 1
EXHIBIT *(10.31)
PLEDGE AGREEMENT
This Pledge Agreement ("Pledge Agreement") is made by IGEN, INC.
("Pledgor") and delivered to FLEET CAPITAL CORPORATION ("Lender") and is given
and is intended to provide additional security for all Obligations under a
certain Loan and Security Agreement (as it may from time to time be
supplemented, amended or replaced, the "Loan Agreement") dated October 29, 1999
among IGI, INC.; IGEN, INC.; IMMUNOGENETICS, INC.; and BLOOD CELLS, INC.
(collectively, "Borrowers") and Lender. All capitalized terms not otherwise
defined herein shall have the respective meanings ascribed thereto in the Loan
Agreement.
Pledgor, intending to be legally bound hereby, and for other good and
sufficient consideration, the receipt of which is hereby acknowledged, does
hereby assign, pledge, hypothecate, deliver and set over to Lender, its
successors and assigns, for the ratable benefit of the Lenders under the Loan
Agreement, the property described in the Schedule of Collateral attached hereto
and made part hereof, including all additions, exchanges, replacements and
substitutions therefor, dividends and distributions with respect thereto,
interest thereon and the proceeds thereof, (collectively, the "Collateral") and
Pledgor hereby grants to Lender a continuing lien and security interest in the
Collateral as collateral security for the payment and performance of all of the
Obligations of all Borrowers under the Loan Agreement.
(1) Pledgor hereby represents and warrants that:
(a) Except as pledged herein, Pledgor has not sold, assigned,
transferred, pledged or granted any option or security interest in or otherwise
hypothecated the Collateral in any manner whatsoever and the Collateral is
pledged herewith free and clear of any and all liens, security interests,
encumbrances, claims, pledges, restrictions, legends, and options (except for
any security interests or liens granted to American Capital under the
Subordinated Debt Documents, which security interests and liens are subordinate
to those of Lender);
(b) Pledgor has the full power and authority to execute, deliver,
and perform under this Pledge Agreement and to pledge the Collateral hereunder;
(c) This Pledge Agreement constitutes the valid and binding
obligation of Pledgor, enforceable in accordance with its terms, and the pledge
of the Collateral referred to herein is not in violation of and shall create any
default under any agreement, undertaking or obligation of Pledgor;
(d) The Collateral has been duly and validly authorized and/or
issued by the issuer thereof and such Collateral is fully paid for and
non-assessable, and none of the Collateral is subject to any setoffs, defenses,
offsets, deductions or counterclaims of any kind;
<PAGE> 2
(e) Any capital stock or other equity interests of any Person being
pledged by Pledgor hereunder is one hundred percent (100%) of the issued and
outstanding stock or other equity interests of such Person that is owned by the
Pledgor; and
(f) Pledgor is, contemporaneously with the execution hereof,
delivering to Lender all certificates or instruments representing or evidencing
the Collateral, accompanied by duly executed instruments of transfer or
assignments in blank, to be held by Lender in accordance with the terms hereof.
(2) The pledge described herein shall continue in effect to secure all
Obligations from time to time incurred or arising unless and until all
Obligations have been indefeasibly paid and satisfied in full and any commitment
of Lender in connection therewith has been terminated.
(3) If an Event of Default occurs and is continuing under the Loan
Agreement, then Lender may, at its sole option, exercise from time to time with
respect to the Collateral any and/or all rights and remedies available to it
hereunder, under the Uniform Commercial Code, or otherwise available to it, at
law or in equity, including without limitation the right to dispose of the
Collateral at public or private sale(s) or other proceedings, and Pledgor agrees
that, if permitted by law, Lender or its nominee may become the purchaser at any
such sale(s).
(4)(a) In addition to all other rights granted to Lender herein or
otherwise available at law or in equity, Lender shall have the following rights,
as they may be applicable to the Collateral, each of which may be exercised at
Lender's sole discretion (but without any obligation to do so), at any time
following the occurrence and during the continuance of an Event of Default under
the Loan Agreement, without further consent of Pledgor: (i) to transfer the
whole or any part of the Collateral into the name of itself or its nominee or to
conduct a sale of the Collateral pursuant to the Uniform Commercial Code as
enacted in Pennsylvania or pursuant to any other applicable law; (ii) to vote
the Collateral; (iii) to notify the persons obligated on any of the Collateral
to make payment to Lender of any amounts due or to become due thereon; and (iv)
to release, surrender or exchange any of the Collateral at any time, or to
compromise any dispute with respect to the same. Lender may proceed against the
Collateral, or any other collateral securing the Obligations, in any order, and
against Pledgor and any other obligors, jointly and/or severally, in any order
to satisfy the Obligations. Pledgor waives and releases any right to require
Lender to first collect any of the Obligations secured hereby from any other
collateral of Pledgor or any other party securing the Obligations under any
theory of marshalling of assets, or otherwise. All rights and remedies of Lender
are cumulative, not alternative.
(b) Pledgor hereby appoints Lender its attorney-in-fact to arrange,
at Lender's option, during the continuance of any Event of Default under the
Loan Agreement, (i) to effectuate the transfer of the Collateral on the books of
the issuer thereof to the name of Lender or to the name of Lender's nominee,
designee or assignee; (ii) to endorse the certificates or instruments
representing the Collateral, or to execute separate instruments of transfer and
assignment, in the name of Pledgor for transfer to a third party; (ii) to
endorse and collect checks payable to Pledgor
2-
<PAGE> 3
representing distributions or other payments on the Collateral, and (iii) to
carry out the terms and provisions hereof.
(5) The proceeds of any Collateral received by Lender at any time after
the occurrence and during the continuance of an Event of Default under the Loan
Agreement, whether from the sale of Collateral or otherwise, may be applied to
or on account of the Obligations and in such order as Lender may elect. In
addition, Lender may, in its discretion, apply any such proceeds to or on
account of the payment of all reasonable costs and expenses (including
attorneys' fees and legal expenses) which may be incurred by Lender in the
enforcement, protection, preservation or defense of Lender's rights hereunder,
including without limitation the custody, preservation, use, operation,
preparation for sale or sale of the Collateral.
(6) Pledgor recognizes that Lender may be unable to effect, or may
effect only after such delay which would adversely affect the value that might
be realized from the Collateral, a public sale of all or part of the Collateral
by reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire such securities for their own account, for investment and not with a
view to the distribution or resale thereof. Pledgor agrees that any such private
sale may be at prices and on terms less favorable to Lender or the seller than
if sold at public sales, and therefore recognizes and confirms that such private
sales shall not be deemed to have been made in a commercially unreasonable
manner solely because they were made privately. Pledgor agrees that Lender has
no obligation to delay the sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act of 1933, as amended.
(7) In the event that any stock dividend, reclassification,
readjustment or other change is made or declared in the capital structure of, or
Pledgor acquires or in any other manner receives additional shares of stock in,
any corporation described in the attached Schedule of Collateral, or any option
included within the Collateral is exercised, or both, all new, substituted and
additional shares, or other securities, issued by reason of any such change or
exercise shall be delivered to and held by Lender under the terms hereof in the
same manner as the Collateral originally pledged hereunder.
(8) So long as no Event of Default has occurred and is continuing under
the Loan Agreement, and, until Lender notifies Pledgor in writing of the
exercise of its rights hereunder, Pledgor shall retain the sole right to vote
the Collateral and exercise all rights of ownership with respect to all
corporate questions for all purposes not inconsistent with the terms hereof.
(9) Lender shall have no obligation to take any steps to preserve,
protect or defend the rights of Pledgor or Lender in the Collateral against
other parties. Lender shall have no obligation to sell or otherwise deal with
the Collateral at any time for any reason, whether or not upon request of
Pledgor, and whether or not the value of the Collateral, in the opinion of
Lender or Pledgor, is more or less than the aggregate amount of the Obligations
secured hereby, and any such refusal or inaction by Lender shall not be deemed a
breach of any duty which Lender may
3-
<PAGE> 4
have under law to preserve the Collateral. Unless expressly set forth herein, no
duty, obligation or responsibility of any kind is intended to be delegated to or
assumed by Lender at any time with respect to the Collateral.
(10) To the extent Lender is required by law to give Pledgor prior
notice of any public or private sale, or other disposition of the Collateral,
Pledgor agrees that ten (10) days' prior written notice to Pledgor shall be a
commercially reasonable and sufficient notice of such sale or other intended
disposition. Pledgor further recognizes and agrees that if the Collateral, or a
portion thereof, threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Pledgor shall not be entitled to any
prior notice of sale or other intended disposition.
(11) Pledgor shall indemnify, defend and hold harmless Lender from and
against any and all claims, losses and liabilities resulting from any breach by
Pledgor of Pledgor's representations and covenants under this Pledge Agreement,
other than to the extent such arise from Lender's own gross negligence of
willful misconduct.
(12) Pledgor hereby waives notice of (a) acceptance of this Pledge
Agreement, (b) the existence and incurrence from time to time of any Obligations
under the Loan Agreement, (c) the existence of any Event of Default, the making
of demand, or the taking of any action by Lender under the Loan Agreement, and
(d) demand and default hereunder.
(13) Pledgor hereby consents and agrees that Lender may at any time or
from time to time in its sole discretion (a) settle, compromise or grant
releases for any Obligations and/or any person or persons liable for payment of
any Obligations, (b) exchange, release, surrender, sell, subordinate or
compromise any collateral of any party now or hereafter securing any of the
Obligations and (c) apply any and all payments received from any source by
Lender at any time against the Obligations in any order as Lender may determine;
all of the foregoing in such manner and upon such terms as Lender may determine
and without notice to or further consent from Pledgor and without impairing or
modifying the terms and conditions of this Pledge Agreement which shall remain
in full force and effect.
(14) This Pledge Agreement shall remain in full force and effect and
shall not be limited, impaired or otherwise affected in any way by reason of (a)
any delay in making demand on Borrowers or Pledgor for or delay in enforcing or
failure to enforce, performance or payment of Borrowers' or Pledgor's
obligations, of (b) any failure, neglect or omission on Lender's part to perfect
any lien upon, protect, exercise rights against, or realize on, any property of
Borrowers, Pledgor or any other party securing the Obligations.
(15) Pledgor covenants and agrees that Pledgor shall not, without the
prior written consent of Lender, sell, encumber or grant any lien, security
interest or option on or with respect to any of the Collateral.
4-
<PAGE> 5
(16) Any failure of or delay by Lender to exercise any right or remedy
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right or remedy at any other time.
(17) This Pledge Agreement constitutes the entire agreement between the
parties hereto regarding the subject matter hereof and may be modified only by a
written instrument signed by the party or parties against whom any change is
sought to be enforced.
(18) This Pledge Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, and the provisions
hereof shall be deemed severable in the event of the invalidity of any
provision. PLEDGOR AND LENDER EACH IRREVOCABLY WAIVE ANY AND ALL RIGHT TO A JURY
TRIAL IN ANY ACTION, PROCEEDING OR CONTROVERSY ARISING FROM OR RELATING TO THIS
PLEDGE AGREEMENT.
(19) All communications which Lender may provide to Pledgor herein
shall be sent to Pledgor at its respective address set forth below.
(20) This Pledge Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and assigns.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
5-
<PAGE> 6
This Pledge Agreement is executed this 29th day of October, 1999.
IGEN, INC.
BY: /s/ MANFRED HANUSCHEK
---------------------------------------
Name: MANFRED HANUSCHEK
Title: CFO
Attest: /s/ LINDA HANSON
-----------------------------------
Address: IGEN, Inc.
Wheat Road and Lincoln Avenue
Buena, NJ 08310
<PAGE> 7
S - 1
SCHEDULE OF COLLATERAL
The following Collateral is hereby pledged by Pledgor to Lender
pursuant to the Pledge Agreement to which this Schedule is attached:
CAPITAL STOCK AND EQUITY INTERESTS
<TABLE>
<CAPTION>
% of Shares
Class Number Outstanding
Issuer Certificate(s) No. of Stock of Shares of Issuer
- ------ ------------------ -------- --------- -----------
<S> <C> <C> <C> <C>
</TABLE>
PROMISSORY NOTES AND DEBT INSTRUMENTS
<TABLE>
<CAPTION>
Issuer Date of Issuance Principal Amount
- ------ ---------------- ----------------
<S> <C> <C>
</TABLE>
<PAGE> 1
EXHIBIT *(10.32)
IGI, INC.
to
FLEET CAPITAL CORPORATION
==================================================
OPEN-ENDED MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
==================================================
Dated: October 29, 1999
Location: County of Atlantic
State of New Jersey
RECORD AND RETURN TO:
Blank Rome Comisky & McCauley LLP
a Pennsylvania LLP
Woodland Falls Corporate Park
210 Lake Drive East
Cherry Hill, New Jersey 08002
Attention: Peter W. Leibundgut, Esquire
<PAGE> 2
OPEN-ENDED MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
THIS OPEN-ENDED MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT
OF LEASES AND RENTS made the 29th day of October, 1999,
between IGI, INC. a Delaware corporation, having a mailing
address at Wheat Road and Lincoln Avenue, Buena, New Jersey
03104 (the "MORTGAGOR"), and FLEET CAPITAL CORPORATION, a
Rhode Island corporation, having an office at 200 Glastonbury
Boulevard, Glastonbury, Connecticut 06033 (the "MORTGAGEE"),
W I T N E S S E T H:
THIS MORTGAGE SECURES FUTURE ADVANCES AND ALL FUTURE OBLIGATIONS
WHATSOEVER OF MORTGAGOR TO MORTGAGEE.
Terms not otherwise defined herein shall have the meanings ascribed
thereto in the Loan and Security Agreement between Mortgagor and Mortgagee of
even date herewith as same may, from time to time, be amended or restated (the
"Loan Agreement").
Whereas the Mortgagor is the owner of a fee estate in the premises
described in Exhibit A attached hereto (the "Premises");
NOW THEREFORE, to secure the payment of all indebtedness incurred under
the Credit Facility in the aggregate outstanding principal amount of Twenty Two
Million Dollars ($22,000,000.00), lawful money of the United States of America,
which sum is comprised of (i) a Term Loan A in the amount of $6,650,000; (ii) a
Term Loan B in the amount of $350,000; (iii) Revolving Credit Facility in the
maximum amount of $12,000,000; and (iv) Capital Expenditure Loans in the
aggregate amount of $3,000,000, or so much thereof as may be advanced in
accordance with the provisions of the Loan Agreement, to be paid with interest
(said principal indebtedness, interest and all other sums which may or shall at
any time be owing being hereinafter collectively referred to as the "DEBT")
according to certain promissory notes dated the date hereof or given in the
future by the Mortgagor to the Mortgagee (collectively, as they may be amended
or restated from time to time, the "NOTE"), all other amounts which Mortgagor
and Mortgagee may agree are to be secured hereby, with interest thereon at the
rate or rates agreed upon; all other existing or future obligations of
Mortgagor, its successors or assigns, to Mortgagee, whether oral or written,
secured or unsecured, direct or indirect, primary or secondary, absolute or
contingent, joint or several, which are now due or to become due, and regardless
of their nature, together with any such future obligations; the Mortgagor has
mortgaged, given, granted, bargained, sold, aliened, enfeoffed, conveyed,
confirmed and assigned, and by these presents does mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm and assign unto the Mortgagee
forever all right, title and interest of the Mortgagor now owned, or hereafter
acquired, in and to the following property, rights and interest (such property,
rights and interests being hereinafter collectively referred to as the
"MORTGAGED PROPERTY"):
(a) The Premises;
(b) all buildings and improvements now or hereafter located on the
Premises (the "IMPROVEMENTS");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of the Mortgagor, either in law or in equity, in possession or
expectancy, in and to the Mortgaged Property or any part thereof;
(d) all easements, rights-of-way, gores of land, streets, ways, alleys,
passages, sewer rights, waters,
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water courses, water rights and powers, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments, and appurtenances of
any nature whatsoever, in any way belonging, relating or pertaining to the
Mortgaged Property (including, without limitation, any and all development
rights, air rights or similar or comparable rights of any nature whatsoever now
or hereafter appurtenant to the Premises or now or hereafter transferred to the
Premises) and all land lying in the bed of any street, road or avenue, opened or
proposed, in front of or adjoining the Premises to the center line thereof;
(e) except as provided in the Loan Agreement, all machinery, apparatus,
equipment, fittings, fixtures and other property of every kind and nature
whatsoever owned by the Mortgagor, or in which the Mortgagor has or shall have
an interest, now or hereafter located upon the Mortgaged Property, or
appurtenances thereto, and usable in connection with the present or future
operation and occupancy of the Mortgaged Property and all building equipment,
materials and supplies of any nature whatsoever owned by the Mortgagor, or in
which the Mortgagor has or shall have an interest, now or hereafter located upon
the Mortgaged Property (collectively, the "EQUIPMENT"), and the right, title and
interest of the Mortgagor in and to any of the Equipment which may be subject to
any security agreements (as defined in the Uniform Commercial Code of the State
in which the Premises are located), superior in lien to lien of this Mortgage;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Mortgaged Property,
whether from the exercise of the right of eminent domain (including any transfer
made in lieu of the exercise of said right), or for any other injury to or
decrease in the value of the Mortgaged Property;
(g) all leases and other agreements affecting the use or occupancy of
the Mortgaged Property now or hereafter entered into (the "LEASES") and the
right to receive and apply the rents, issues and profits of the Mortgaged
Property (the "RENTS") to the payment of the Debt;
(h) all proceeds of and any unearned premiums on any insurance policies
covering the Mortgaged Property, including, without limitation, the right to
receive and apply the proceeds of any insurance, judgments, or settlements made
in lieu thereof, for damage to the Mortgaged Property; and
(i) the right, in the name and on behalf of the Mortgagor, to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to protect the interest of the
Mortgagee in the Mortgaged Property.
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the proper use and benefit of the Mortgagee, and the successors and
assigns of the Mortgagee, forever.
AND the Mortgagor covenants and agrees with and represents and warrants
to the Mortgagee as follows:
1. Payment of Debt. The Mortgagor will pay the Debt at the time and in
the manner provided for its payment in the Note.
2. Warranty of Title. Subject only to those exceptions to title
specifically set forth in the title policy issued or to be issued by Chicago
Title Insurance Company, commitment No. BT-9951, to the Mortgagee and insuring
the lien of this Mortgage, the Mortgagor warrants the title to the Premises, the
Improvements, the Equipment and the balance of the Mortgaged Property. the
Mortgagor also represents and warrants that (i) the Mortgagor is now, and after
giving effect to this Mortgage, will be in a solvent condition, (ii) the
execution and delivery of this Mortgage by the Mortgagor does not constitute a
"fraudulent conveyance" within the meaning of Title 11 of the United States Code
as now constituted or under any other applicable statute, and (iii) no
bankruptcy or insolvency proceedings are pending or contemplated by or against
the Mortgagor.
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3. Insurance. The Mortgagor shall maintain insurance as required by the
Loan Agreement, the proceeds of which are to be paid to the Mortgagee for
application as provided by the Loan Agreement.
4. Payment of Taxes, etc. The Mortgagor shall pay all taxes,
assessments, water rates, sewer rents and other charges, including vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed against the Mortgaged Property
(the "Taxes") prior to the date upon which any fine, penalty, interest or cost
may be added thereto or imposed by law for the nonpayment thereof. The Mortgagor
shall deliver to the Mortgagee, upon request, receipted bills, canceled checks
and other evidence satisfactory to the Mortgagee evidencing that the payment of
all taxes is current.
5. Escrow Fund. If an Event of Default is outstanding, the Mortgagor
will, at the option of the Mortgagee, pay to the Mortgagee on the first day of
each calendar month one-twelfth of an amount (the "ESCROW FUND") which would be
sufficient to pay the Taxes payable, or estimated by the Mortgagee to be
payable, during the ensuing twelve (12) months. The Mortgagee will apply the
Escrow Fund to the payment of Taxes which are required to be paid by the
Mortgagor pursuant to the provisions of this Mortgage. If the amount of the
Escrow Fund shall exceed the amount of the Taxes payable by the Mortgagor
pursuant to the provisions of this Mortgage, the Mortgagee shall, in its
discretion, (a) return any excess to the Mortgagor, or (b) credit such excess
against future payments to be made to the Escrow Fund or (c) credit such excess
to the Debt. In allocating such excess, the Mortgagee may deal with the person
shown on the records of the Mortgagee to be the owner of the Mortgaged Property.
If the Escrow Fund is not sufficient to pay the Taxes, as the same become
payable, the Mortgagor shall pay to the Mortgagee, upon request, an amount which
the Mortgagee shall estimate as sufficient to make up the deficiency. Until
expended or applied as above provided, any amounts in the Escrow Fund may be
commingled with the general funds of the Mortgagee and shall constitute
additional security for the Debt and shall not bear interest.
6. Condemnation. Notwithstanding any taking by any public or
quasi-public authority through eminent domain or otherwise, the Mortgagor shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and this Mortgage and the Debt shall not be reduced until any award
or payment therefor shall have been actually received and applied by the
Mortgagee to the discharge of the Debt. The Mortgagee shall have the option to
apply the entire amount of any such award or payment to the discharge of the
Debt whether or not then due and payable in such order, priority and proportions
as the Mortgagee in its discretion shall deem proper. If the Mortgaged Property
is sold, through foreclosure or otherwise, prior to the receipt by the Mortgagee
of such award or payment, the Mortgagee shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or denied, to
receive such award or payment, or a portion thereof sufficient to pay the Debt,
whichever is less. The Mortgagor shall file and prosecute its claim or claims
for any such award or payment in good faith and with due diligence and cause the
same to be collected and paid over to the Mortgagee. The Mortgagor hereby
irrevocably authorizes and empowers the Mortgagee, in the name of the Mortgagor
or otherwise, to collect and receipt for any such award or payment and to file
and prosecute such claim or claims. Although it is hereby expressly agreed that
the same shall not be necessary in any event, the Mortgagor shall, upon demand
of the Mortgagee, make, execute and deliver any and all assignments and other
instruments sufficient for the purpose of assigning any such award or payment to
the Mortgagee, free and clear of any encumbrances of any kind or nature
whatsoever.
7. Leases and Rents. Subject to the terms of this paragraph, the
Mortgagee waives the right to enter the Mortgaged Property for the purpose of
collecting the Rents, and grants the Mortgagor the right to collect the Rents.
The Mortgagor shall hold the Rents, or an amount sufficient to discharge all
current sums due on the Debt, in trust for use in payment of the Debt. The right
of the Mortgagor to collect the Rents may be revoked by the Mortgagee upon an
Event of Default by giving notice of such revocation to the Mortgagor. Following
such notice the Mortgagee may retain and apply the Rents toward payment of the
Debt in such order, priority and proportions as the Mortgagee, in its
discretion, shall deem proper, or to the operation, maintenance and repair of
the Mortgaged Property, and irrespective of whether the Mortgagee shall have
commenced a foreclosure of
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this Mortgage or shall have applied or arranged for the appointment of a
receiver. The Mortgagor shall not, without the consent of the Mortgagee, make,
or suffer to be made, any Leases or modify or cancel any Leases or accept
prepayments of installments of the Rents for a period of more than one (1) month
in advance or further assign the whole or any part of the Rents. The Mortgagor
shall (a) fulfill or perform each and every provision of the Leases on the part
of the Mortgagor to be fulfilled or performed, (b) promptly send copies of all
notices of default which the Mortgagor shall send or receive under the Leases to
the Mortgagee, and (c) enforce, short of termination of the Leases, the
performance or observance of the provisions thereof by the tenants thereunder.
8. Maintenance of the Mortgaged Property. The Mortgagor shall cause the
Mortgaged Property to be maintained in good condition and repair and will not
commit or suffer to be committed any waste of the Mortgaged Property. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment), without the consent of
the Mortgagee. The Mortgagor shall promptly comply with all existing and future
governmental laws, orders, ordinances, rules and regulations affecting the
Mortgaged Property, or any portion thereof or the use thereof. The Mortgagor
shall promptly repair, replace or rebuild any part of the Mortgaged Property
which may be damaged or destroyed by fire or other property hazard or casualty
(including any fire or other property hazard or casualty for which insurance was
not obtained or obtainable) or which may be affected by any taking by any public
or quasi-public authority through eminent domain or otherwise, and shall
complete and pay for, within a reasonable time, any structure at any time in the
process of construction or repair on the Premises. The Mortgagor will not,
without obtaining the prior consent of the Mortgagee, initiate, join in or
consent to any private restrictive covenant, zoning ordinance, or other public
or private restrictions, limiting or affecting the uses which may be made of the
Mortgaged Property or any part thereof.
9. Environmental Provisions. For the purposes of this paragraph the
following terms shall have the following meanings: (i) the term "HAZARDOUS
MATERIAL" shall mean any material or substance including petroleum products
that, whether by its nature or use, is subject to regulation under any
Environmental Requirement, (ii) the term "ENVIRONMENTAL REQUIREMENTS" shall
collectively mean the Spill Compensation and Control Act, N.J.S.A. 58:11-23.11,
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section 2601 et seq.), the Clean Air Act (42 U.S.C. Section 7401
et seq.) and the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), all as presently in effect and as the same may hereafter be amended, any
regulation pursuant thereto, or any other present or future law, ordinance,
rule, regulation, order or directive addressing environmental, health or safety
issues of or by any Governmental Authority, (iii) the term "GOVERNMENTAL
AUTHORITY" shall mean the Federal government, or any state or other political
subdivision thereof, or any agency, court or body of the Federal government, any
state or other political subdivision thereof, exercising executive, legislative,
judicial, regulatory or administrative functions, and (iv) the term "DILIGENT
INQUIRY" shall mean a level of inquiry at least equal to an environmental site
assessment of the Mortgaged Property conducted in accordance with the
Mortgagee's environmental policies and procedures. The Mortgagor hereby
represents and warrants to the Mortgagee that to the best of the Mortgagor's
knowledge after diligent inquiry (i) except for Hazardous Material used in the
ordinary course of Mortgagor's business in compliance with all Environmental
Requirements, no Hazardous Material has been or is currently located at, in, on,
under or about the Mortgaged Property in a manner which violates any
Environmental Requirement, or which requires cleanup or corrective action of any
kind under any Environmental Requirement, (ii) no releasing, emitting,
discharging, leaching, dumping or disposing of any Hazardous Material from the
Mortgaged Property onto or into any other property or from any other property
onto or into the Mortgaged Property has occurred or is occurring in violation of
any Environmental Requirement, (iii) no notice of violation, lien, complaint,
suit, order or other notice with respect to the environmental condition of the
Mortgaged Property is outstanding, nor has any such notice been issued which has
not been fully satisfied and complied with in a timely fashion so as to bring
the Mortgaged
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Property into full compliance with all Environmental Requirements, (iv) no lien
has been attached to any revenues of, or any real or personal property owned by,
the Mortgagor and located in the State of New Jersey under any Environmental
Requirement, (v) no Hazardous Material is currently located at, on, in, under or
about any real property owned or occupied by the Mortgagor and located in the
State of New Jersey, in a manner which violates any Environmental Requirement or
which requires cleanup or corrective action of any kind under any Environmental
Requirement, (vi) Mortgagor has, and will continue to have, all necessary
federal, state and local licenses, certificates, permits and approvals relating
to its facilities, business, premises and equipment at the Mortgaged Property
and is in compliance with all applicable consent orders, judgments, injunctions
and Environmental Requirements, and (vii) all closures, terminations and
transfers of operations, as defined by the New Jersey Industrial Site Recovery
Act, N.J.S.A. 13:1K-6 et seq. and the regulations thereunder ("ISRA"), on or
relating to the Mortgaged Property since December 31, 1983 have been completed
only after full compliance with ISRA, to the extent applicable. The Mortgagor
shall comply, and shall cause all tenants or other occupants of the Mortgaged
Property to comply, in all respects with all Environmental Requirements, and
will not generate, store, handle, process, dispose of or otherwise use, and will
not permit any tenant or other occupant of the Mortgaged Property to generate,
store, handle, process, dispose of or otherwise use, Hazardous Materials at, in,
on, under or about the Mortgaged Property in a manner that could lead or
potentially lead to the imposition on the Mortgagor, the Mortgagee or the
Mortgaged Property of any liability or lien of any nature whatsoever under any
Environmental Requirement. All closures, terminations and transfers of
operations, as defined by ISRA, on or relating to the Mortgaged Property during
the term of this Mortgage, shall be completed only after full compliance with
ISRA, to the extent applicable, by the Mortgagor and all tenants or other
occupants of the Mortgaged Property to the extent Mortgagor believes that ISRA
is not applicable to any closures, terminations or transfers of operations at
the Mortgaged Property during the term of this Mortgage, Mortgagor shall obtain
a Letter of Non-Applicability as provided for in ISRA. The Mortgagor shall
notify the Mortgagee promptly in the event of any spill or other release of any
Hazardous Material at, in, on, under or about the Mortgaged Property which is
required to be reported to a Governmental Authority under any Environmental
Requirement, will promptly forward to the Mortgagee copies of any notices
received by the Mortgagor relating to alleged violations of any Environmental
Requirement and will promptly pay when due any fine or assessment against the
Mortgagee, the Mortgagor or the Mortgaged Property relating to any Environmental
Requirement. If at any time it is determined that the past, present or future
operation or use of the Mortgaged Property violates any applicable Environmental
Requirement or that there are Hazardous Materials located at, in, on, under or
about the Mortgaged Property which, under any Environmental Requirement, require
special handling in collection, storage, treatment or disposal, or any other
form of cleanup or corrective action, the Mortgagor shall, within thirty (30)
days after receipt of notice thereof from any Governmental Authority or from the
Mortgagee, take, at its sole cost and expense, such actions as may be necessary
to fully comply in all respects with all Environmental Requirements, provided,
however, that if such compliance cannot reasonably be completed within such
thirty (30) day period, the Mortgagor shall commence such necessary action
within such thirty (30) day period and shall thereafter diligently and
expeditiously proceed to fully comply in all respects and in a timely fashion
with all Environmental Requirements. If the Mortgagor fails to timely take, or
to diligently and expeditiously proceed to complete in a timely fashion, any
such action, the Mortgagee may, in its sole and absolute discretion, make
advances or payments towards the performance or satisfaction of the same, but
shall in no event be under any obligation to do so. All sums so advanced or paid
by the Mortgagee (including, without limitation, counsel and consultant fees and
expenses, investigation and laboratory fees and expenses, and fines or other
penalty payments) and all sums advanced or paid in connection with any judicial
or administrative investigation or proceeding relating thereto, will
immediately, upon demand, become due and payable from the Mortgagor and shall
bear interest at the Default Rate (as defined in the Loan Agreement) from the
date any such sums are so advanced or paid by the Mortgagee until the date any
such sums are repaid by the Mortgagor to the Mortgagee. The Mortgagor will
execute and deliver, promptly upon request, such instruments as the Mortgagee
may deem useful or necessary to permit the Mortgagee to take any such action,
and such additional notes and mortgages, as the Mortgagee may require to secure
all sums so advanced or paid by the Mortgagee. If a lien is filed against the
Mortgaged Property by any Governmental Authority resulting from the need to
expend or the actual expending of monies arising from an action or omission,
whether intentional or unintentional, of the Mortgagor or for which the
Mortgagor is responsible, resulting in the releasing, spilling, leaking,
leaching, pumping, emitting, pouring, emptying or dumping of any Hazardous
Material into the waters or onto land located within
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or without the State where the Mortgaged Property is located, then the Mortgagor
will, within ten (10) days from the date that the Mortgagor is first given
notice that such lien has been placed against the Mortgaged Property (or within
such shorter period of time as may be specified by the Mortgagee if such
Governmental Authority has commenced steps to cause the Mortgaged Property to be
sold pursuant to such lien) either (a) pay the claim and remove the lien, or (b)
furnish a cash deposit, bond, or such other security with respect thereto as is
satisfactory in all respects to the Mortgagee and is sufficient to effect a
complete discharge of such lien on the Mortgaged Property. As a condition
precedent to any action by Mortgagor, whether in equity or at law, to seek to
rescind its interest in the Mortgaged Property, including, without limitation,
any statutory rights of rescission under either N.J.S.A. 13:1K-13(b) or N.J.S.A.
13:18A-22(c), Mortgagor shall notify Mortgagee and provide replacement
collateral which in Mortgagee's sole discretion is equivalent to the Mortgaged
Premises. The Mortgagee may, at its option, if the Mortgagee reasonably believes
that a Hazardous Material or other environmental condition violates or threatens
to violate any Environmental Requirement, cause an environmental audit of the
Mortgaged Property or portions thereof to be conducted to confirm the
Mortgagor's compliance with the provisions of this paragraph, and the Mortgagor
shall cooperate in all reasonable ways with the Mortgagee in connection with any
such audit and shall pay all costs and expenses incurred in connection
therewith. The Mortgagor will defend, indemnify, and hold harmless the
Mortgagee, its employees, agents, officers, and directors, from and against any
and all claims, demands, penalties, causes of action, fines, liabilities,
settlements, damages, costs, or expenses of whatever kind or nature, known or
unknown, foreseen or unforeseen, contingent or otherwise (including, without
limitation, counsel and consultant fees and expenses, (including, without
limitation, counsel and consultant fees and expenses, investigation and
laboratory fees and expenses, court costs, and litigation expenses) arising out
of, in any way related to, (i) any breach by the Mortgagor of any of the
provisions of this paragraph, (ii) the presence, disposal, spillage, discharge,
emission, leakage, release, or threatened release of any Hazardous Material
which is at, in, on, under, about, from or affecting the Mortgaged Property,
including, without limitation, any damage or injury resulting from any such
Hazardous Material to or affecting the Mortgaged Property or the soil, water,
air, vegetation, buildings, personal property, persons or animals located on the
mortgaged Property or on any other property or otherwise, (iii) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to any such Hazardous Material, (iv) any lawsuit brought or
threatened, settlement reached, or order or directive of or by any Governmental
Authority relating to such Hazardous Material, or (v) any violation of any
Environmental Requirement or any policy or requirement of the Mortgagee
hereunder. This indemnification shall, notwithstanding any exculpatory or other
provision of any nature whatsoever to the contrary set forth in the Note, this
Mortgage or any other document or instrument now or hereafter executed and
delivered in connection with the loan evidenced by the Note and secured by this
Mortgage, constitute the personal recourse undertakings, obligations and
liabilities of the Mortgagor. If this Mortgage is foreclosed or the Mortgagor
tenders a deed or assignment in lieu of foreclosure, the Mortgagor shall deliver
the Mortgaged Property to the purchaser at foreclosure or to the Mortgagee, its
nominee, or wholly owned subsidiary, as the case may be, in a condition that
complies in all respects with all Environmental Requirements. The obligations
and liabilities of the Mortgagor under this paragraph shall survive and continue
in full force and effect and shall not be terminated, discharged or released, in
whole or in part, irrespective of whether the Debt has been paid in full and
irrespective of any foreclosure of this Mortgage or acceptance by the Mortgagee,
its nominee or wholly owned subsidiary of a deed or assignment in lieu of
foreclosure and irrespective of any other fact or circumstance of any nature
whatsoever.
10. Transfer or Encumbrance of the Mortgaged Property. Except for
Permitted Liens, no part of the Mortgaged Property nor any interest of any
nature whatsoever therein shall in any manner be further encumbered, sold,
transferred or conveyed, or permitted to be further encumbered, sold,
transferred, assigned or conveyed without the prior consent of the Mortgagee,
which consent in any and all circumstances may be withheld in the sole and
absolute discretion of the Mortgagee. The provisions of the foregoing sentence
of this paragraph shall apply to each and every such further encumbrance, sale,
transfer, assignment or conveyance, regardless of whether or not the Mortgagee
has consented to, or waived by its action or inaction its rights hereunder with
respect to, any such previous further encumbrance, sale, transfer, assignment or
conveyance, and irrespective of whether such further encumbrance, sale,
transfer, assignment or conveyance is voluntary, by reason of operation of law
or is otherwise made.
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11. Notice. Any notice, request, demand, statement, authorization,
approval or consent made hereunder shall be in writing and shall be hand
delivered or sent by Federal Express, or other reputable courier service, or by
postage pre-paid registered or certified mail, return receipt requested, and
shall be deemed given (i) when received at the following addresses if hand
delivered or sent by Federal Express, or other reputable courier service, and
(ii) three (3) business days after being postmarked and addressed as follows if
sent by registered or certified mail, return receipt requested:
If to the Mortgagor: IGI, Inc.
Wheat Road & Lincoln Avenue
Buena, New Jersey 08310
Attn: Paul Woitach, President
Telecopy No.: 609-697-1001
If to the Mortgagee: Fleet Capital Corporation
200 Glastonbury Boulevard
Glastonbury, Connecticut
Attn.: Walter Schuppe
Telecopy No.: 860-657-7759/7689
With a copy to: Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Attn: Harvey I. Forman, Esquire
Telecopy No.: 215-569-5522
Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.
12. Sale of Mortgaged Property. If this Mortgage is foreclosed, the
Mortgaged Property, or any interest therein, may, at the discretion of the
Mortgagee, be sold in one or more parcels or in several interests or portions
and in any order or manner.
13. Changes in Laws Regarding Taxation. In the event of the passage
after the date of this Mortgage of any law of the State in which the Premises
are located deducting from the value of real property for the purpose of
taxation any lien or encumbrance thereon or changing in any way the laws for the
taxation of mortgages or debts secured by mortgages for state or local purposes
or the manner of the collection of any such taxes, and imposing a tax, either
directly or indirectly, on this Mortgage, the Note or the Debt, the Mortgagor
shall, if permitted by law, pay any tax imposed as a result of any such law
within the statutory period or within fifteen (15) days after demand by the
Mortgagee, whichever is less.
14. No Credits on Account of the Debt. The Mortgagor will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes assessed against the Mortgaged Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Mortgaged Property, or any part thereof, by reason of this Mortgage or the
Debt.
15. Other Security for the Debt. The Mortgagor shall observe and
perform all of the terms, covenants and provisions contained in the Note and in
all other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Debt, in whole or in part, or otherwise executed and
delivered in connection with the Note, this Mortgage or the loan evidenced and
secured thereby.
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16. Documentary Stamps. If at any time the United States of America,
any state thereof, or any governmental subdivision of any such state, shall
require revenue or other stamps to be affixed to the Note or this Mortgage, the
Mortgagor will pay for the same, with interest and penalties thereon, if any.
17. Right of Entry. The Mortgagee and its agents shall have the right
to enter and inspect the Mortgaged Property at all reasonable times upon
reasonable prior notice.
18. Performance of Other Agreements. The Mortgagor shall observe and
perform each and every term to be observed or performed by the Mortgagor
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Mortgaged Property.
19. Events of Defaults. The Debt shall become due at the option of the
Mortgagee upon the occurrence of any one or more of the following events
(collectively, "EVENTS OF DEFAULT"):
(a) the occurrence of an Event of Default under the Loan Agreement;
(b) if any representation or warranty in this Mortgage is false or
incorrect in any material respect or the Mortgagor fails to perform or fulfill
any covenant, condition or undertaking continued in this Mortgage; or
(c) if the Mortgaged Property shall become subject (i) to any tax
lien, other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice of
intention to file mechanic's or materialman's lien, mechanic's or materialman's
lien or other lien of any nature whatsoever and the same shall not either be
discharged of record or in the alternative insured over to the satisfaction of
the Mortgagee by the title company insuring the lien of this Mortgage within a
period of ten (10) days after the same is filed or recorded, and irrespective of
whether the same is superior or subordinate in lien or other priority to the
lien of this Mortgage and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbered on the Mortgaged Property or is only a
matter of record or notice.
To the extent any of the above provisions conflict with the Loan Agreement, the
terms of the Loan Agreement shall control. Upon the occurrence of any Event of
Default, the Mortgagee may commence an action to foreclose this Mortgage and/or
exercise any and all other rights contained in this Mortgage or otherwise
available at law or in equity to enforce its rights.
20. Right to Cure Defaults. If default in the performance of any of the
covenants of the Mortgagor herein occurs, the Mortgagee may, at its discretion,
remedy the same and for such purpose shall have the right to enter upon the
Mortgaged Property or any portion thereof without thereby becoming liable to the
Mortgagor or any person in possession thereof holding under the Mortgagor. If
the Mortgagee shall remedy such a default or appear in, defend, or bring any
action or proceeding to protect its interest in the Mortgaged Property or to
foreclose this Mortgage or collect the Debt, the costs and expenses thereof
(including reasonable attorneys' fees to the extent permitted by law), with
interest as provided in this paragraph, shall be paid by the Mortgagor to the
Mortgagee upon demand and shall constitute part of the Debt secured by this
Mortgage. All such costs and expenses incurred by the Mortgagee in remedying
such default or in appearing in, defending, or bringing any such action or
proceeding shall be paid by the Mortgagor to the Mortgagee upon demand, with
interest (calculated for the actual number of days elapsed on the basis of a
360-day year) at a rate per annum equal to the Default Rate set forth in the
Loan Agreement.
21. Appointment of Receiver. The Mortgagee, in any action to foreclose
this Mortgage or upon the actual or threatened waste to any part of the
Mortgaged Property or upon the occurrence of any default hereunder, shall be at
liberty, without notice, to apply for the appointment of a receiver of the
Rents, and shall be entitled to the appointment of such receiver as a matter of
right, without regard to the value of the Mortgaged Property as security for the
Debt, or the solvency or insolvency of any person then liable for the payment of
the Debt.
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<PAGE> 10
22. Non-Waiver. The failure of the Mortgagee to insist upon strict
performance of any term of this Mortgage shall not be deemed to be a waiver of
any term of this Mortgage. The Mortgagor shall not be relieved of the
Mortgagor's obligation to pay the Debt at the time and in the manner provided
for its payment in the Note and this Mortgage by reason of (i) failure of the
Mortgagee to comply with any request of the Mortgagor to take any action to
foreclose this Mortgage or otherwise enforce any of the provisions hereof or of
the Note or any other mortgage, instrument or document evidencing, securing or
guaranteeing payment of the Debt or any portion thereof, (ii) the release,
regardless of consideration, of the whole or any part of the Mortgaged Property
or any other security for the Debt, or (iii) any agreement or stipulation
between the Mortgagee and any subsequent owner or owners of the Mortgaged
Property or other person extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Mortgage or any other mortgage,
instrument or document evidencing, securing or guaranteeing payment of the Debt
or any portion thereof, without first having obtained the consent of the
Mortgagor, and in the latter event, the Mortgagor shall continue to be obligated
to pay the Debt at the time and in the manner provided in the Note and this
Mortgage, as so extended, modified and supplemented, unless expressly released
and discharged from such obligation by the Mortgagee in writing. Regardless of
consideration, and without the necessity for any notice to or consent by the
holder of any subordinate lien, encumbrance, right, title or interest in or to
the Mortgaged Property, the Mortgagee may release any person at any time liable
for the payment of the Debt or any portion thereof or any part of the security
held for the Debt and may extend the time of payment or otherwise modify the
terms of the Note or this Mortgage, including, without limitation, a
modification of the interest rate payable on the principle balance of the Note,
without in any manner impairing or affecting this Mortgage or the lien thereof
or the priority of this Mortgage, as so extended and modified, as security for
the Debt over any such subordinate lien, encumbrance, right, title or interest.
The Mortgagee may resort for the payment of the Debt to any other security held
by the Mortgagee in such order and manner as the Mortgagee, in its discretion,
may elect. The Mortgagee may take action to recover the Debt, or any portion
thereof, or to enforce any covenant hereof without prejudice to the right of the
Mortgagee thereafter to foreclose this Mortgage. The Mortgagee shall not be
limited exclusively to the rights and remedies herein stated but shall be
entitled to every additional right and remedy now or hereafter afforded by law.
The rights of the Mortgagee under this Mortgage shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the others. No act
of the Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision.
23. Liability. If the Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several.
24. Construction. The terms of this Mortgage shall be construed in
accordance with the laws of the State in which the Premises are located.
25. Security Agreement. This Mortgage constitutes both a real property
mortgage and a "security agreement", within the meaning of the Uniform
Commercial Code, and the Mortgaged Property includes both real and personal
property and all other rights and interest, whether tangible or intangible in
nature, of the Mortgagor in the Mortgaged Property. The Mortgagor by executing
and delivering this Mortgage has granted to the Mortgagee, as security for the
Debt, a security interest in the Equipment. If an Event of Default occurs under
the Loan Agreement or this Mortgage, the Mortgagee, in addition to any other
rights and remedies which it may have, shall have and may exercise immediately
and without demand, any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing, the right to take possession of the Equipment or
any part thereof, and to take such other measures as the Mortgagee may deem
necessary for the care, protection and preservation of the Equipment. Upon
request or demand of the Mortgagee, the Mortgagor shall at its expense assemble
the Equipment and make it available to the Mortgagee at a convenient place
acceptable to the Mortgagee. The Mortgagor shall pay to the Mortgagee on demand
any and all expenses, including legal expenses and attorneys' fees, incurred or
paid by the Mortgagee in protecting its interest in the Equipment and in
enforcing its rights hereunder with respect to the Equipment. Any notice of
sale, disposition or other intended action by the Mortgagee with respect to the
Equipment sent to the Mortgagor in accordance with the provisions of this
Mortgage at least seven (7) days prior to the date of any such sale, disposition
or other action, shall constitute reasonable notice to the Mortgagor, and the
method of sale or disposition or other intended action set forth or specified in
such notice shall conclusively
10
<PAGE> 11
be deemed to be commercially reasonable within the meaning of the Uniform
Commercial Code unless objected to in writing by the Mortgagor within five (5)
days after receipt by the Mortgagor of such notice. The proceeds of any sale or
disposition of the Equipment, or any part thereof, may be applied by the
Mortgagee to the payment of the Debt in such order, priority and proportions as
the Mortgagee in its discretion shall deem proper.
26. Further Acts, etc. The Mortgagor will, at the cost of the
Mortgagor, and without expense to the Mortgagee, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignments, transfers and assurances as the Mortgagee
shall, from time to time, require for the better assuring, conveying, assigning,
transferring and confirming unto the Mortgagee the property and rights hereby
mortgaged or intended now or hereafter so to be, or which the Mortgagor may be
or may hereafter become bound to convey or assign to the Mortgagee, or for
carrying out the intention or facilitating the performance of the terms of this
Mortgage or for filing, registering or recording this mortgage and, on demand,
will execute and deliver and hereby authorizes the Mortgagee to execute in the
name of the Mortgagor to the extent the Mortgagee may lawfully do so, one or
more financing statements, chattel mortgages or comparable security instruments,
to evidence more effectively the lien hereof upon the Mortgaged Property.
27. Headings, etc. The headings and captions of various paragraphs of
this Mortgage are for convenience of reference only and are not to be construed
as defined or limiting, in any way, the scope or intent of the provisions
hereof.
28. Filing of Mortgage, etc. The Mortgagor forthwith upon the execution
and delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage, and any security instrument creating a lien or evidencing the lien
hereof upon the Mortgaged Property and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect, preserve and perfect the lien hereof upon, and the interest of the
Mortgagee in, the Mortgaged Property. The Mortgagor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property, and any
instrument of further assurance, and all Federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance. The Mortgagor shall hold harmless and indemnify
the Mortgagee, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this
Mortgage.
29. Usury Laws. This Mortgage and the Note are subject to the express
condition that at no time shall the Mortgagor be obligated or required to pay
interest on the principal balance due under the Note at a rate which could
subject the holder of the Note to either civil or criminal liability as a result
of being in excess of the maximum interest rate which the Mortgagor is permitted
by law to contract or agree to pay. If by the terms of this Mortgage or the
Note, the Mortgagor is at any time required or obligated to pay interest on the
principal balance due under the Note at a rate in excess of such maximum rate,
the rate of interest under the Note shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of the Note.
30. Recovery of Sums Required To Be Paid. The Mortgagee shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of the Mortgagee thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by the Mortgagor existing at the time such
earlier action was commenced.
31. Authority. The Mortgagor (and the undersigned representative of the
Mortgagor, if any) has full power, authority and legal right to execute this
Mortgage, and to mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm and assign the Mortgaged Property pursuant to the terms hereof and to
keep and observe all of the terms of this Mortgage on the Mortgagor's part to be
performed.
11
<PAGE> 12
32. Actions and Proceedings. The Mortgagee shall have the right to
appear in and defend any action or proceeding brought with respect to the
Mortgaged Property and to bring any action or proceeding, in the name and on
behalf of the Mortgagor, which the Mortgagee, in its discretion, feels should be
brought to protect its interest in the Mortgaged Property.
33. Inapplicable Provisions. If any term, covenant or condition of this
Mortgage shall be held to be invalid, illegal or unenforceable in any respect,
this Mortgage shall be construed without such provision.
34. Duplicate Originals. This Mortgage may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute but one and the same instrument.
35. Certain Definitions. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage shall be used interchangeably in singular or plural form and the
word "Mortgagor" shall mean each the Mortgagor and any subsequent owner or
owners of the Mortgaged Property or any part thereof or interest therein; the
word "Mortgagee" shall mean the Mortgagee or any subsequent holder of the Note;
the word "Note" shall mean the Revolving Credit Note, Term Loan Note Capital
Expenditure Note or any other evidence of indebtedness secured by this Mortgage;
the word "Guarantor" shall mean each person guaranteeing payment of the Debt or
any portion thereof or performance by the Mortgagor of any of the terms of this
Mortgage and their respective heirs, executors, administrators, legal
representatives, successors and assigns; the word "person" shall include an
individual, corporation, partnership, trust, unincorporated association,
government, governmental authority, or other entity; the words "Mortgaged
Property" shall include any portion of the Mortgaged Property or interest
therein; and the word "Debt" shall mean all sums secured by this Mortgage; and
the word "default" shall mean the occurrence of any default by the Mortgagor or
other person in the observance or performance of any of the terms, covenants or
provisions of the Loan Agreement, Note or this Mortgage on the part of the
Mortgagor or such other person to be observed or performed without regard to
whether such default constitutes or would constitute upon notice or lapse of
time, or both, an Event of Default under this Mortgage. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.
36. Waiver of Notice. The Mortgagor shall not be entitled to any
notices of any nature whatsoever from the Mortgagee except with respect to
matters for which this Mortgage specifically and expressly provides for the
giving of notice by the Mortgagee to the Mortgagor, and the Mortgagor hereby
expressly waives the right to receive any notice from the Mortgagee with respect
to any matter for which this Mortgage does not specifically and expressly
provide for the giving of notice by the Mortgagee to the Mortgagor.
37. No Oral Change. This Mortgage may only be modified, amended or
changed by an agreement in writing signed by the Mortgagor and the Mortgagee,
and may only be released, discharged or satisfied of record by an agreement in
writing signed by the Mortgagee. No waiver of any term, covenant or provision of
this Mortgage shall be effective unless given in writing by the Mortgagee and if
so given by the Mortgagee shall only be effective in the specific instance in
which given. The Mortgagor acknowledges that the Note, this Mortgage, the Loan
Agreement, and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the loan secured hereby set
forth the entire agreement and understanding of the Mortgagor and the Mortgagee
with respect to the loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Note, this Mortgage, the Loan
Agreement and such other executed and delivered documents and instruments.
38. Absolute and Unconditional Obligation. The Mortgagor acknowledges
that the Mortgagor's obligation to pay the Debt in accordance with the provision
of the Note and this Mortgage is and shall at all times continue to be absolute
and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Note or this
Mortgage or the obligation of the Mortgagor thereunder to pay the Debt or the
obligations of any other person relating to the Note or this Mortgage or the
obligations of the Mortgagor under
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<PAGE> 13
the Note or this Mortgage or otherwise with respect to the loan secured hereby,
and the Mortgagor absolutely, unconditionally and irrevocably waives any and all
right to assert any defense, setoff, counterclaim or crossclaim of any nature
whatsoever with respect to the obligation of the Mortgagor to pay the Debt in
accordance with the provisions of the Note and this Mortgage or the obligations
of any other person relating to the Note or this Mortgage or obligations of the
Mortgagor under the Note or this Mortgage or otherwise with respect to the loan
secured hereby in any action or proceeding brought by the Mortgagee to collect
the Debt, or any portion thereof, or to enforce, foreclose and realize upon the
lien and security interest created by this Mortgage or any other document or
instrument securing repayment of the Debt, in whole or in part.
39. Waiver of Trial by Jury. The Mortgagor hereby irrevocably and
unconditionally waives, and the Mortgagee by its acceptance of the Note and this
Mortgage irrevocably and unconditionally waives, any and all rights to trial by
jury in any action, suit or counterclaim arising in connection with, out of or
otherwise relating to the Note, this Mortgage the Loan Agreement, any other
document or instrument now or hereafter executed and delivered in connection
therewith or the loan secured by this Mortgage.
40. Waiver of Statutory Rights. The Mortgagor shall not and will not
apply for or avail itself of any appraisement, valuation, stay, extension or
exemption laws, or any so-called "Moratorium Laws", now existing or hereafter
enacted, in order to prevent or hinder the enforcement or foreclosure of this
Mortgage, but hereby waives the benefit of such laws to the full extent that the
Mortgagor may do so under applicable law. The Mortgagor for itself and all who
may claim through or under it waives any and all right to have the property and
estates comprising the Mortgaged Property marshaled upon any foreclosure of the
lien of this Mortgage and agrees that any court having jurisdiction to foreclose
such lien may order the Mortgaged Property sold as an entirety. The Mortgagor
hereby waives for itself and all who may claim through or under it, and to the
full extent the Mortgagor may do so under applicable law, any and all rights of
redemption from sale under any order of decree of foreclosure of this Mortgage
or granted under any statute now existing or hereafter enacted.
41. True Copy. The Mortgagor acknowledges receipt of a true copy of
this Mortgage without charge.
42. Future Disbursements. This Mortgage secures a loan which by its
terms is subject to modification as defined in N.J.S.A. 46:9-8.1.
43. Relationship. The relationship of the Mortgagee to the Mortgagor
hereunder is strictly and solely that of lender and borrower and nothing
contained in the Note, this Mortgage, the Loan Agreement or any other document
or instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between the Mortgagee and the Mortgagor
other than as lender and borrower.
13
<PAGE> 14
IN WITNESS WHEREOF, the Mortgagor has duly executed this Mortgage the
day and year first above written. Mortgagor acknowledges receipt of a true copy
of this Mortgage.
Attest: IGI, INC.
By: /s/ ROBERT E. McDANIEL By: /s/ MANFRED HANUSCHEK
---------------------------- --------------------------
Name: ROBERT E. McDANIEL Name: MANFRED HANUSCHEK
-------------------------- ------------------------
Title: GENERAL COUNSEL Title: CFO
------------------------- ------------------------
14
<PAGE> 15
CORPORATE ACKNOWLEDGMENT
STATE OF :
: ss
COUNTY OF :
On this, the 29th day of October, 1999, before me, the subscriber, a
notary public in and for the State and County aforesaid, personally appeared
_________________________, a _______________ of IGI, Inc., a Delaware
corporation, and who acknowledged that _____, as such ___________________, being
authorized to do so, executed the foregoing instrument on behalf of said
corporation for the purposes therein contained.
WITNESS my hand and seal the day and year aforesaid.
Notary Public
My Commission Expires:
15
<PAGE> 16
EXHIBIT A
(Description of Premises)
<PAGE> 17
EXHIBIT 10.32
DESCRIPTION
All that certain tract, lot and parcel of land lying and being in the Borough of
Buena, County of Atlantic, and State of New Jersey, being more particularly
described as follows:
BEGINNING at a point in the Northeasterly line of Harding Highway, also known as
N.J.S.H. Route 40, (66 feet wide - Tax Map), at the intersection of the
Southeasterly line of Catherine Avenue (50 feet wide - Tax Map) and extending:
1. North 51 degrees 33 minutes 58 seconds East, along the Southeasterly
line of Catherine Avenue, 550.67 feet to a point in the same, at a
corner to Lot 28, block 205; thence
2. South 37 degrees 41 minutes 02 seconds East, along the lie of Lots 27
and 28, Block 205, 254.30 feet to a corner to Lot 27, Block 205; thence
3. North 52 degrees 08 minutes 58 seconds East, along the line of Lot 27,
Block 205, 79.96 feet to a point in the same, at a corner to Lot 16.01,
Block 205; thence
4. South 38 degrees 05 minutes 37 seconds East, along the line of Lot
16.01, Block 205, 335.24 feet to a point in the same, at a corner to
Lot 3, Block 205; thence
5. South 51 degrees 30 minutes 00 seconds West, along the line of Lot 3,
Block 205, 432.36 feet to a corner to same; thence
6. North 37 degrees 45 minutes 00 seconds West, along the same 96.50 feet
to a point; thence
7. South 51 degrees 30 minutes 00 seconds West, still along the line of
Lot 3, Block 205, 200.00 feet to a corner to same, in the Northeasterly
line of Harding Highway 9N.J.S.H. Route 40); thence
8. North 37 degrees 45 minutes 00 seconds West, along the Northeasterly
line of Harding Highway 9N.J.S.H. Route 40) 494.61 feet to the point of
Beginning.
NOTE: FOR INFORMATION PURPOSES ONLY: Being Lot 1 in Block 205, Tax map of the
Borough of Buena.
Title of record to Tract No. 3, became vested in Immunogenetics, Inc., a
Corporation of the State of Delaware, by Deed from Medatz, Inc., a corporation
of Delaware dated 12/31/87 and recorded 2/18/88 in Deed Book 4630, page 309.
<PAGE> 18
EXHIBIT 10.32
DESCRIPTION
All that certain tract, lot and parcel of land lying and being in the Borough of
Buena, County of Atlantic, and State of New Jersey, being more particularly
described as follows:
BEGINNING at a spike at the intersection of the centerline of Wheat Road and
Lincoln Avenue as widened 35 feet from the centers of both and extending; thence
1. South 46 degrees 40 minutes West along the center of Lincoln Avenue,
444.46 feet to a plug; thence
2. South 43 degrees 20 minutes East, along Lot 22.02, 476.03 feet to a
steel pin; thence
3. South 46 degrees 40 minutes West, along Lot 22.02, 190 feet to a steel
pin; thence
4. South 43 degrees 20 minutes East, along Lot 22, 441.02 feet to a steel
pin; thence
5. North 46 degrees 40 minutes, along Lot 6, 285 feet to a steel pin;
thence
6. North 43 degrees 20 minutes West, along Lot 1, 364.74 feet to a
concrete stone; thence
7. North I degree 20 minutes West, along Lot 1, 644.20 feet to a plug in
the center of Wheat Road; thence
8. South 88 degrees 40 minutes West, along the center of Wheat Road,
109.88 feet to the center of Lincoln Avenue and the point of Beginning.
NOTE: FOR INFORMATION PURPOSES ONLY: Being Lots 22.01, 23.01, 23 and a portion
of Lot 22 in Block 5501, Tax Map of Buena Vista Township.
Title of record to Tract No. 4 became vested in Immunogenetics, Inc., by Deed of
Subdivision from Immunogenetics, Inc., dated 7/6/95 and recorded 7/11/95 in Deed
Book 5828, Page 92.
<PAGE> 19
EXHIBIT 10.32
DESCRIPTION
All that certain tract, lot and parcel of land lying and being in the Borough of
Buena, County of Atlantic, and State of New Jersey, being more particularly
described as follows:
Beginning at a plug in the center of Lincoln Avenue as widened 35 feet from the
center of same, South 46 degrees 40 minutes West, 444.46 feet from the center of
Wheat Road and extending; thence
1. South 46 degrees 40 minutes West along the center of Lincoln Avenue,
190 feet to a plug; thence
2. South 43 degrees 20 minutes East, along Lot 22, 476.03 feet to a point;
thence
3. North 46 degrees 40 minutes East, along same, 190 feet to a point;
thence
4. North 43 degrees 20 minutes West, along Lot 22.01, 476.03 feet to the
center of Lincoln Avenue and the place of Beginning.
NOTE: FOR INFORMATION PURPOSES ONLY: Being Lot 22.02 in Block 5501, Tax map of
Buena Vista Township.
Title of record to Tract No. 5 became vested in Immunogenetics, Inc., by Deed
from Baruffi Associates, a New Jersey partnership dated 11/13/95 and recorded
11/17/95 in Deed Book 5888, Page 113.
<PAGE> 1
EXHIBIT 10.33
IGI, INC.
to
FLEET CAPITAL CORPORATION
OPEN-ENDED MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
Dated: October 29, 1999
Location: County of Cumberland
State of New Jersey
RECORD AND RETURN TO:
Blank Rome Comisky & McCauley LLP
a Pennsylvania LLP
Woodland Falls Corporate Park
210 Lake Drive East
Cherry Hill, New Jersey 08002
Attention: Peter W. Leibundgut, Esquire
<PAGE> 2
OPEN-ENDED MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
THIS OPEN-ENDED MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES
AND RENTS made the 29th day of October, 1999, between IGI, INC. a
Delaware corporation, having a mailing address at Wheat Road and
Lincoln Avenue, Buena, New Jersey 03104 (the "MORTGAGOR"), and FLEET
CAPITAL CORPORATION, a Rhode Island corporation, having an office at
200 Glastonbury Boulevard, Glastonbury, Connecticut 06033 (the
"MORTGAGEE"),
W I T N E S S E T H:
THIS MORTGAGE SECURES FUTURE ADVANCES AND ALL FUTURE OBLIGATIONS
WHATSOEVER OF MORTGAGOR TO MORTGAGEE.
Terms not otherwise defined herein shall have the meanings ascribed
thereto in the Loan and Security Agreement between Mortgagor and Mortgagee of
even date herewith as same may, from time to time, be amended or restated (the
"Loan Agreement").
Whereas the Mortgagor is the owner of a fee estate in the premises
described in Exhibit A attached hereto (the "Premises");
NOW THEREFORE, to secure the payment of all indebtedness incurred under
the Credit Facility in the aggregate outstanding principal amount of Twenty Two
Million Dollars ($22,000,000.00), lawful money of the United States of America,
which sum is comprised of (i) a Term Loan A in the amount of $6,650,000; (ii) a
Term Loan B in the amount of $350,000; (iii) Revolving Credit Facility in the
maximum amount of $12,000,000; and (iv) Capital Expenditure Loans in the
aggregate amount of $3,000,000, or so much thereof as may be advanced in
accordance with the provisions of the Loan Agreement, to be paid with interest
(said principal indebtedness, interest and all other sums which may or shall at
any time be owing being hereinafter collectively referred to as the "DEBT")
according to certain promissory notes dated the date hereof or given in the
future by the Mortgagor to the Mortgagee (collectively, as they may be amended
or restated from time to time, the "NOTE"), all other amounts which Mortgagor
and Mortgagee may agree are to be secured hereby, with interest thereon at the
rate or rates agreed upon; all other existing or future obligations of
Mortgagor, its successors or assigns, to Mortgagee, whether oral or written,
secured or unsecured, direct or indirect, primary or secondary, absolute or
contingent, joint or several, which are now due or to become due, and regardless
of their nature, together with any such future obligations; the Mortgagor has
mortgaged, given, granted, bargained, sold, aliened, enfeoffed, conveyed,
confirmed and assigned, and by these presents does mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm and assign unto the Mortgagee
forever all right, title and interest of the Mortgagor now owned, or hereafter
acquired, in and to the following property, rights and interest (such property,
rights and interests being hereinafter collectively referred to as the
"MORTGAGED PROPERTY"):
(a) The Premises;
(b) all buildings and improvements now or hereafter located on the
Premises (the "IMPROVEMENTS");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of the Mortgagor, either in law or in equity, in possession or
expectancy, in and to the Mortgaged Property or any part thereof;
<PAGE> 3
(d) all easements, rights-of-way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water rights and powers, and all
estates, rights, titles, interests, privileges, liberties, tenements,
hereditaments, and appurtenances of any nature whatsoever, in any way belonging,
relating or pertaining to the Mortgaged Property (including, without limitation,
any and all development rights, air rights or similar or comparable rights of
any nature whatsoever now or hereafter appurtenant to the Premises or now or
hereafter transferred to the Premises) and all land lying in the bed of any
street, road or avenue, opened or proposed, in front of or adjoining the
Premises to the center line thereof;
(e) except as provided in the Loan Agreement, all machinery, apparatus,
equipment, fittings, fixtures and other property of every kind and nature
whatsoever owned by the Mortgagor, or in which the Mortgagor has or shall have
an interest, now or hereafter located upon the Mortgaged Property, or
appurtenances thereto, and usable in connection with the present or future
operation and occupancy of the Mortgaged Property and all building equipment,
materials and supplies of any nature whatsoever owned by the Mortgagor, or in
which the Mortgagor has or shall have an interest, now or hereafter located upon
the Mortgaged Property (collectively, the "EQUIPMENT"), and the right, title and
interest of the Mortgagor in and to any of the Equipment which may be subject to
any security agreements (as defined in the Uniform Commercial Code of the State
in which the Premises are located), superior in lien to lien of this Mortgage;
(f) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Mortgaged Property,
whether from the exercise of the right of eminent domain (including any transfer
made in lieu of the exercise of said right), or for any other injury to or
decrease in the value of the Mortgaged Property;
(g) all leases and other agreements affecting the use or occupancy of
the Mortgaged Property now or hereafter entered into (the "LEASES") and the
right to receive and apply the rents, issues and profits of the Mortgaged
Property (the "RENTS") to the payment of the Debt;
(h) all proceeds of and any unearned premiums on any insurance policies
covering the Mortgaged Property, including, without limitation, the right to
receive and apply the proceeds of any insurance, judgments, or settlements made
in lieu thereof, for damage to the Mortgaged Property; and
(i) the right, in the name and on behalf of the Mortgagor, to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to protect the interest of the
Mortgagee in the Mortgaged Property.
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the proper use and benefit of the Mortgagee, and the successors and
assigns of the Mortgagee, forever.
AND the Mortgagor covenants and agrees with and represents and warrants
to the Mortgagee as follows:
1. Payment of Debt. The Mortgagor will pay the Debt at the time and in
the manner provided for its payment in the Note.
2. Warranty of Title. Subject only to those exceptions to title
specifically set forth in the title policy issued or to be issued by Chicago
Title Insurance Company, commitment No. BT-9951, to the Mortgagee and insuring
the lien of this Mortgage, the Mortgagor warrants the title to the Premises, the
Improvements, the Equipment and the balance of the Mortgaged Property. the
Mortgagor also represents and warrants that (i) the Mortgagor is now, and after
giving effect to this Mortgage, will be in a solvent condition, (ii) the
execution and delivery of this Mortgage by the Mortgagor does not constitute a
"fraudulent conveyance" within the meaning of Title 11 of the United States Code
as now constituted or
<PAGE> 4
under any other applicable statute, and (iii) no bankruptcy or insolvency
proceedings are pending or contemplated by or against the Mortgagor.
3. Insurance. The Mortgagor shall maintain insurance as required by the
Loan Agreement, the proceeds of which are to be paid to the Mortgagee for
application as provided by the Loan Agreement.
4. Payment of Taxes, etc. The Mortgagor shall pay all taxes,
assessments, water rates, sewer rents and other charges, including vault charges
and license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed against the Mortgaged Property
(the "TAXES") prior to the date upon which any fine, penalty, interest or cost
may be added thereto or imposed by law for the nonpayment thereof. The Mortgagor
shall deliver to the Mortgagee, upon request, receipted bills, canceled checks
and other evidence satisfactory to the Mortgagee evidencing that the payment of
all taxes is current.
5. Escrow Fund. If an Event of Default is outstanding, the Mortgagor
will, at the option of the Mortgagee, pay to the Mortgagee on the first day of
each calendar month one-twelfth of an amount (the "ESCROW FUND") which would be
sufficient to pay the Taxes payable, or estimated by the Mortgagee to be
payable, during the ensuing twelve (12) months. The Mortgagee will apply the
Escrow Fund to the payment of Taxes which are required to be paid by the
Mortgagor pursuant to the provisions of this Mortgage. If the amount of the
Escrow Fund shall exceed the amount of the Taxes payable by the Mortgagor
pursuant to the provisions of this Mortgage, the Mortgagee shall, in its
discretion, (a) return any excess to the Mortgagor, or (b) credit such excess
against future payments to be made to the Escrow Fund or (c) credit such excess
to the Debt. In allocating such excess, the Mortgagee may deal with the person
shown on the records of the Mortgagee to be the owner of the Mortgaged Property.
If the Escrow Fund is not sufficient to pay the Taxes, as the same become
payable, the Mortgagor shall pay to the Mortgagee, upon request, an amount which
the Mortgagee shall estimate as sufficient to make up the deficiency. Until
expended or applied as above provided, any amounts in the Escrow Fund may be
commingled with the general funds of the Mortgagee and shall constitute
additional security for the Debt and shall not bear interest.
6. Condemnation. Notwithstanding any taking by any public or
quasi-public authority through eminent domain or otherwise, the Mortgagor shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note and this Mortgage and the Debt shall not be reduced until any award
or payment therefor shall have been actually received and applied by the
Mortgagee to the discharge of the Debt. The Mortgagee shall have the option to
apply the entire amount of any such award or payment to the discharge of the
Debt whether or not then due and payable in such order, priority and proportions
as the Mortgagee in its discretion shall deem proper. If the Mortgaged Property
is sold, through foreclosure or otherwise, prior to the receipt by the Mortgagee
of such award or payment, the Mortgagee shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or denied, to
receive such award or payment, or a portion thereof sufficient to pay the Debt,
whichever is less. The Mortgagor shall file and prosecute its claim or claims
for any such award or payment in good faith and with due diligence and cause the
same to be collected and paid over to the Mortgagee. The Mortgagor hereby
irrevocably authorizes and empowers the Mortgagee, in the name of the Mortgagor
or otherwise, to collect and receipt for any such award or payment and to file
and prosecute such claim or claims. Although it is hereby expressly agreed that
the same shall not be necessary in any event, the Mortgagor shall, upon demand
of the Mortgagee, make, execute and deliver any and all assignments and other
instruments sufficient for the purpose of assigning any such award or payment to
the Mortgagee, free and clear of any encumbrances of any kind or nature
whatsoever.
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7. Leases and Rents. Subject to the terms of this paragraph, the
Mortgagee waives the right to enter the Mortgaged Property for the purpose of
collecting the Rents, and grants the Mortgagor the right to collect the Rents.
The Mortgagor shall hold the Rents, or an amount sufficient to discharge all
current sums due on the Debt, in trust for use in payment of the Debt. The right
of the Mortgagor to collect the Rents may be revoked by the Mortgagee upon an
Event of Default by giving notice of such revocation to the Mortgagor. Following
such notice the Mortgagee may retain and apply the Rents toward payment of the
Debt in such order, priority and proportions as the Mortgagee, in its
discretion, shall deem proper, or to the operation, maintenance and repair of
the Mortgaged Property, and irrespective of whether the Mortgagee shall have
commenced a foreclosure of this Mortgage or shall have applied or arranged for
the appointment of a receiver. The Mortgagor shall not, without the consent of
the Mortgagee, make, or suffer to be made, any Leases or modify or cancel any
Leases or accept prepayments of installments of the Rents for a period of more
than one (1) month in advance or further assign the whole or any part of the
Rents. The Mortgagor shall (a) fulfill or perform each and every provision of
the Leases on the part of the Mortgagor to be fulfilled or performed, (b)
promptly send copies of all notices of default which the Mortgagor shall send or
receive under the Leases to the Mortgagee, and (c) enforce, short of termination
of the Leases, the performance or observance of the provisions thereof by the
tenants thereunder.
8. Maintenance of the Mortgaged Property. The Mortgagor shall cause the
Mortgaged Property to be maintained in good condition and repair and will not
commit or suffer to be committed any waste of the Mortgaged Property. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment), without the consent of
the Mortgagee. The Mortgagor shall promptly comply with all existing and future
governmental laws, orders, ordinances, rules and regulations affecting the
Mortgaged Property, or any portion thereof or the use thereof. The Mortgagor
shall promptly repair, replace or rebuild any part of the Mortgaged Property
which may be damaged or destroyed by fire or other property hazard or casualty
(including any fire or other property hazard or casualty for which insurance was
not obtained or obtainable) or which may be affected by any taking by any public
or quasi-public authority through eminent domain or otherwise, and shall
complete and pay for, within a reasonable time, any structure at any time in the
process of construction or repair on the Premises. The Mortgagor will not,
without obtaining the prior consent of the Mortgagee, initiate, join in or
consent to any private restrictive covenant, zoning ordinance, or other public
or private restrictions, limiting or affecting the uses which may be made of the
Mortgaged Property or any part thereof.
9. Environmental Provisions. For the purposes of this paragraph the
following terms shall have the following meanings: (i) the term "HAZARDOUS
MATERIAL" shall mean any material or substance including petroleum products
that, whether by its nature or use, is subject to regulation under any
Environmental Requirement, (ii) the term "ENVIRONMENTAL REQUIREMENTS" shall
collectively mean the Spill Compensation and Control Act, N.J.S.A. 58:11-23.11,
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Toxic Substances Control
Act (15 U.S.C. Section2601 et seq.), the Clean Air Act (42 U.S.C. Section 7401
et seq.) and the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), all as presently in effect and as the same may hereafter be amended, any
regulation pursuant thereto, or any other present or
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<PAGE> 6
future law, ordinance, rule, regulation, order or directive addressing
environmental, health or safety issues of or by any Governmental Authority,
(iii) the term "GOVERNMENTAL AUTHORITY" shall mean the Federal government, or
any state or other political subdivision thereof, or any agency, court or body
of the Federal government, any state or other political subdivision thereof,
exercising executive, legislative, judicial, regulatory or administrative
functions, and (iv) the term "DILIGENT INQUIRY" shall mean a level of inquiry at
least equal to an environmental site assessment of the Mortgaged Property
conducted in accordance with the Mortgagee's environmental policies and
procedures. The Mortgagor hereby represents and warrants to the Mortgagee that
to the best of the Mortgagor's knowledge after diligent inquiry (i) except for
Hazardous Material used in the ordinary course of Mortgagor's business in
compliance with all Environmental Requirements, no Hazardous Material has been
or is currently located at, in, on, under or about the Mortgaged Property in a
manner which violates any Environmental Requirement, or which requires cleanup
or corrective action of any kind under any Environmental Requirement, (ii) no
releasing, emitting, discharging, leaching, dumping or disposing of any
Hazardous Material from the Mortgaged Property onto or into any other property
or from any other property onto or into the Mortgaged Property has occurred or
is occurring in violation of any Environmental Requirement, (iii) no notice of
violation, lien, complaint, suit, order or other notice with respect to the
environmental condition of the Mortgaged Property is outstanding, nor has any
such notice been issued which has not been fully satisfied and complied with in
a timely fashion so as to bring the Mortgaged Property into full compliance with
all Environmental Requirements, (iv) no lien has been attached to any revenues
of, or any real or personal property owned by, the Mortgagor and located in the
State of New Jersey under any Environmental Requirement, (v) no Hazardous
Material is currently located at, on, in, under or about any real property owned
or occupied by the Mortgagor and located in the State of New Jersey, in a manner
which violates any Environmental Requirement or which requires cleanup or
corrective action of any kind under any Environmental Requirement, (vi)
Mortgagor has, and will continue to have, all necessary federal, state and local
licenses, certificates, permits and approvals relating to its facilities,
business, premises and equipment at the Mortgaged Property and is in compliance
with all applicable consent orders, judgments, injunctions and Environmental
Requirements, and (vii) all closures, terminations and transfers of operations,
as defined by the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et
seq. and the regulations thereunder ("ISRA"), on or relating to the Mortgaged
Property since December 31, 1983 have been completed only after full compliance
with ISRA, to the extent applicable. The Mortgagor shall comply, and shall cause
all tenants or other occupants of the Mortgaged Property to comply, in all
respects with all Environmental Requirements, and will not generate, store,
handle, process, dispose of or otherwise use, and will not permit any tenant or
other occupant of the Mortgaged Property to generate, store, handle, process,
dispose of or otherwise use, Hazardous Materials at, in, on, under or about the
Mortgaged Property in a manner that could lead or potentially lead to the
imposition on the Mortgagor, the Mortgagee or the Mortgaged Property of any
liability or lien of any nature whatsoever under any Environmental Requirement.
All closures, terminations and transfers of operations, as defined by ISRA, on
or relating to the Mortgaged Property during the term of this Mortgage, shall be
completed only after full compliance with ISRA, to the extent applicable, by the
Mortgagor and all tenants or other occupants of the Mortgaged Property to the
extent Mortgagor believes that ISRA is not applicable to any closures,
terminations or transfers of operations at the Mortgaged Property during the
term of this Mortgage, Mortgagor shall obtain a Letter of Non-Applicability as
provided for in ISRA. The Mortgagor shall notify the Mortgagee promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Mortgaged Property which is required to be reported to a
Governmental Authority under any Environmental Requirement, will promptly
forward to the Mortgagee copies of any notices received by the Mortgagor
relating to alleged violations of any Environmental Requirement and will
promptly pay when due any fine or assessment against the Mortgagee, the
Mortgagor or the Mortgaged Property relating to any Environmental Requirement.
If at any time it is determined that the past, present or future operation or
use of the
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<PAGE> 7
Mortgaged Property violates any applicable Environmental Requirement or that
there are Hazardous Materials located at, in, on, under or about the Mortgaged
Property which, under any Environmental Requirement, require special handling in
collection, storage, treatment or disposal, or any other form of cleanup or
corrective action, the Mortgagor shall, within thirty (30) days after receipt of
notice thereof from any Governmental Authority or from the Mortgagee, take, at
its sole cost and expense, such actions as may be necessary to fully comply in
all respects with all Environmental Requirements, provided, however, that if
such compliance cannot reasonably be completed within such thirty (30) day
period, the Mortgagor shall commence such necessary action within such thirty
(30) day period and shall thereafter diligently and expeditiously proceed to
fully comply in all respects and in a timely fashion with all Environmental
Requirements. If the Mortgagor fails to timely take, or to diligently and
expeditiously proceed to complete in a timely fashion, any such action, the
Mortgagee may, in its sole and absolute discretion, make advances or payments
towards the performance or satisfaction of the same, but shall in no event be
under any obligation to do so. All sums so advanced or paid by the Mortgagee
(including, without limitation, counsel and consultant fees and expenses,
investigation and laboratory fees and expenses, and fines or other penalty
payments) and all sums advanced or paid in connection with any judicial or
administrative investigation or proceeding relating thereto, will immediately,
upon demand, become due and payable from the Mortgagor and shall bear interest
at the Default Rate (as defined in the Loan Agreement) from the date any such
sums are so advanced or paid by the Mortgagee until the date any such sums are
repaid by the Mortgagor to the Mortgagee. The Mortgagor will execute and
deliver, promptly upon request, such instruments as the Mortgagee may deem
useful or necessary to permit the Mortgagee to take any such action, and such
additional notes and mortgages, as the Mortgagee may require to secure all sums
so advanced or paid by the Mortgagee. If a lien is filed against the Mortgaged
Property by any Governmental Authority resulting from the need to expend or the
actual expending of monies arising from an action or omission, whether
intentional or unintentional, of the Mortgagor or for which the Mortgagor is
responsible, resulting in the releasing, spilling, leaking, leaching, pumping,
emitting, pouring, emptying or dumping of any Hazardous Material into the waters
or onto land located within or without the State where the Mortgaged Property is
located, then the Mortgagor will, within ten (10) days from the date that the
Mortgagor is first given notice that such lien has been placed against the
Mortgaged Property (or within such shorter period of time as may be specified by
the Mortgagee if such Governmental Authority has commenced steps to cause the
Mortgaged Property to be sold pursuant to such lien) either (a) pay the claim
and remove the lien, or (b) furnish a cash deposit, bond, or such other security
with respect thereto as is satisfactory in all respects to the Mortgagee and is
sufficient to effect a complete discharge of such lien on the Mortgaged
Property. As a condition precedent to any action by Mortgagor, whether in equity
or at law, to seek to rescind its interest in the Mortgaged Property, including,
without limitation, any statutory rights of rescission under either N.J.S.A.
13:1K-13(b) or N.J.S.A. 13:18A-22(c), Mortgagor shall notify Mortgagee and
provide replacement collateral which in Mortgagee's sole discretion is
equivalent to the Mortgaged Premises. The Mortgagee may, at its option, if the
Mortgagee reasonably believes that a Hazardous Material or other environmental
condition violates or threatens to violate any Environmental Requirement, cause
an environmental audit of the Mortgaged Property or portions thereof to be
conducted to confirm the Mortgagor's compliance with the provisions of this
paragraph, and the Mortgagor shall cooperate in all reasonable ways with the
Mortgagee in connection with any such audit and shall pay all costs and expenses
incurred in connection therewith. The Mortgagor will defend, indemnify, and hold
harmless the Mortgagee, its employees, agents, officers, and directors, from and
against any and all claims, demands, penalties, causes of action, fines,
liabilities, settlements, damages, costs, or expenses of whatever kind or
nature, known or unknown, foreseen or unforeseen, contingent or otherwise
(including, without limitation, counsel and consultant fees and expenses,
(including, without limitation, counsel and consultant fees and expenses,
investigation and laboratory fees and expenses, court costs, and litigation
expenses) arising out of, in any way related to, (i) any breach by the Mortgagor
of any of the provisions of this paragraph, (ii) the presence, disposal,
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spillage, discharge, emission, leakage, release, or threatened release of any
Hazardous Material which is at, in, on, under, about, from or affecting the
Mortgaged Property, including, without limitation, any damage or injury
resulting from any such Hazardous Material to or affecting the Mortgaged
Property or the soil, water, air, vegetation, buildings, personal property,
persons or animals located on the mortgaged Property or on any other property or
otherwise, (iii) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to any such Hazardous
Material, (iv) any lawsuit brought or threatened, settlement reached, or order
or directive of or by any Governmental Authority relating to such Hazardous
Material, or (v) any violation of any Environmental Requirement or any policy or
requirement of the Mortgagee hereunder. This indemnification shall,
notwithstanding any exculpatory or other provision of any nature whatsoever to
the contrary set forth in the Note, this Mortgage or any other document or
instrument now or hereafter executed and delivered in connection with the loan
evidenced by the Note and secured by this Mortgage, constitute the personal
recourse undertakings, obligations and liabilities of the Mortgagor. If this
Mortgage is foreclosed or the Mortgagor tenders a deed or assignment in lieu of
foreclosure, the Mortgagor shall deliver the Mortgaged Property to the purchaser
at foreclosure or to the Mortgagee, its nominee, or wholly owned subsidiary, as
the case may be, in a condition that complies in all respects with all
Environmental Requirements. The obligations and liabilities of the Mortgagor
under this paragraph shall survive and continue in full force and effect and
shall not be terminated, discharged or released, in whole or in part,
irrespective of whether the Debt has been paid in full and irrespective of any
foreclosure of this Mortgage or acceptance by the Mortgagee, its nominee or
wholly owned subsidiary of a deed or assignment in lieu of foreclosure and
irrespective of any other fact or circumstance of any nature whatsoever.
10. Transfer or Encumbrance of the Mortgaged Property. Except for
Permitted Liens, no part of the Mortgaged Property nor any interest of any
nature whatsoever therein shall in any manner be further encumbered, sold,
transferred or conveyed, or permitted to be further encumbered, sold,
transferred, assigned or conveyed without the prior consent of the Mortgagee,
which consent in any and all circumstances may be withheld in the sole and
absolute discretion of the Mortgagee. The provisions of the foregoing sentence
of this paragraph shall apply to each and every such further encumbrance, sale,
transfer, assignment or conveyance, regardless of whether or not the Mortgagee
has consented to, or waived by its action or inaction its rights hereunder with
respect to, any such previous further encumbrance, sale, transfer, assignment or
conveyance, and irrespective of whether such further encumbrance, sale,
transfer, assignment or conveyance is voluntary, by reason of operation of law
or is otherwise made.
11. Notice. Any notice, request, demand, statement, authorization,
approval or consent made hereunder shall be in writing and shall be hand
delivered or sent by Federal Express, or other reputable courier service, or by
postage pre-paid registered or certified mail, return receipt requested, and
shall be deemed given (i) when received at the following addresses if hand
delivered or sent by Federal Express, or other reputable courier service, and
(ii) three (3) business days after being postmarked and addressed as follows if
sent by registered or certified mail, return receipt requested:
If to the Mortgagor: IGI, Inc.
Wheat Road & Lincoln Avenue
Buena, New Jersey 08310
Attn: Paul Woitach, President
Telecopy No.: 609-697-1001
If to the Mortgagee: Fleet Capital Corporation
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200 Glastonbury Boulevard
Glastonbury, Connecticut
Attn.: Walter Schuppe
Telecopy No.: 860-657-7759/7689
With a copy to: Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Attn: Harvey I. Forman, Esquire
Telecopy No.: 215-569-5522
Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.
12. Sale of Mortgaged Property. If this Mortgage is foreclosed, the
Mortgaged Property, or any interest therein, may, at the discretion of the
Mortgagee, be sold in one or more parcels or in several interests or portions
and in any order or manner.
13. Changes in Laws Regarding Taxation. In the event of the passage
after the date of this Mortgage of any law of the State in which the Premises
are located deducting from the value of real property for the purpose of
taxation any lien or encumbrance thereon or changing in any way the laws for the
taxation of mortgages or debts secured by mortgages for state or local purposes
or the manner of the collection of any such taxes, and imposing a tax, either
directly or indirectly, on this Mortgage, the Note or the Debt, the Mortgagor
shall, if permitted by law, pay any tax imposed as a result of any such law
within the statutory period or within fifteen (15) days after demand by the
Mortgagee, whichever is less.
14. No Credits on Account of the Debt. The Mortgagor will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes assessed against the Mortgaged Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Mortgaged Property, or any part thereof, by reason of this Mortgage or the
Debt.
15. Other Security for the Debt. The Mortgagor shall observe and
perform all of the terms, covenants and provisions contained in the Note and in
all other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Debt, in whole or in part, or otherwise executed and
delivered in connection with the Note, this Mortgage or the loan evidenced and
secured thereby.
16. Documentary Stamps. If at any time the United States of America,
any state thereof, or any governmental subdivision of any such state, shall
require revenue or other stamps to be affixed to the Note or this Mortgage, the
Mortgagor will pay for the same, with interest and penalties thereon, if any.
17. Right of Entry. The Mortgagee and its agents shall have the right
to enter and inspect the Mortgaged Property at all reasonable times upon
reasonable prior notice.
18. Performance of Other Agreements. The Mortgagor shall observe and
perform each and every term to be observed or performed by the Mortgagor
pursuant to the terms of any agreement
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or recorded instrument affecting or pertaining to the Mortgaged Property.
19. Events of Defaults. The Debt shall become due at the option of the
Mortgagee upon the occurrence of any one or more of the following events
(collectively, "EVENTS OF DEFAULT"):
(a) the occurrence of an Event of Default under the Loan
Agreement;
(b) if any representation or warranty in this Mortgage is
false or incorrect in any material respect or the Mortgagor fails to perform or
fulfill any covenant, condition or undertaking continued in this Mortgage; or
(c) if the Mortgaged Property shall become subject (i) to any
tax lien, other than a lien for local real estate taxes and assessments not due
and payable, or (ii) to any lis pendens, notice of pendency, stop order, notice
of intention to file mechanic's or materialman's lien, mechanic's or
materialman's lien or other lien of any nature whatsoever and the same shall not
either be discharged of record or in the alternative insured over to the
satisfaction of the Mortgagee by the title company insuring the lien of this
Mortgage within a period of ten (10) days after the same is filed or recorded,
and irrespective of whether the same is superior or subordinate in lien or other
priority to the lien of this Mortgage and irrespective of whether the same
constitutes a perfected or inchoate lien or encumbered on the Mortgaged Property
or is only a matter of record or notice.
To the extent any of the above provisions conflict with the Loan Agreement, the
terms of the Loan Agreement shall control. Upon the occurrence of any Event of
Default, the Mortgagee may commence an action to foreclose this Mortgage and/or
exercise any and all other rights contained in this Mortgage or otherwise
available at law or in equity to enforce its rights.
20. Right to Cure Defaults. If default in the performance of any of the
covenants of the Mortgagor herein occurs, the Mortgagee may, at its discretion,
remedy the same and for such purpose shall have the right to enter upon the
Mortgaged Property or any portion thereof without thereby becoming liable to the
Mortgagor or any person in possession thereof holding under the Mortgagor. If
the Mortgagee shall remedy such a default or appear in, defend, or bring any
action or proceeding to protect its interest in the Mortgaged Property or to
foreclose this Mortgage or collect the Debt, the costs and expenses thereof
(including reasonable attorneys' fees to the extent permitted by law), with
interest as provided in this paragraph, shall be paid by the Mortgagor to the
Mortgagee upon demand and shall constitute part of the Debt secured by this
Mortgage. All such costs and expenses incurred by the Mortgagee in remedying
such default or in appearing in, defending, or bringing any such action or
proceeding shall be paid by the Mortgagor to the Mortgagee upon demand, with
interest (calculated for the actual number of days elapsed on the basis of a
360-day year) at a rate per annum equal to the Default Rate set forth in the
Loan Agreement.
21. Appointment of Receiver. The Mortgagee, in any action to foreclose
this Mortgage or upon the actual or threatened waste to any part of the
Mortgaged Property or upon the occurrence of any default hereunder, shall be at
liberty, without notice, to apply for the appointment of a receiver of the
Rents, and shall be entitled to the appointment of such receiver as a matter of
right, without regard to the value of the Mortgaged Property as security for the
Debt, or the solvency or insolvency of any person then liable for the payment of
the Debt.
22. Non-Waiver. The failure of the Mortgagee to insist upon strict
performance of any term
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of this Mortgage shall not be deemed to be a waiver of any term of this
Mortgage. The Mortgagor shall not be relieved of the Mortgagor's obligation to
pay the Debt at the time and in the manner provided for its payment in the Note
and this Mortgage by reason of (i) failure of the Mortgagee to comply with any
request of the Mortgagor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or any other
mortgage, instrument or document evidencing, securing or guaranteeing payment of
the Debt or any portion thereof, (ii) the release, regardless of consideration,
of the whole or any part of the Mortgaged Property or any other security for the
Debt, or (iii) any agreement or stipulation between the Mortgagee and any
subsequent owner or owners of the Mortgaged Property or other person extending
the time of payment or otherwise modifying or supplementing the terms of the
Note, this Mortgage or any other mortgage, instrument or document evidencing,
securing or guaranteeing payment of the Debt or any portion thereof, without
first having obtained the consent of the Mortgagor, and in the latter event, the
Mortgagor shall continue to be obligated to pay the Debt at the time and in the
manner provided in the Note and this Mortgage, as so extended, modified and
supplemented, unless expressly released and discharged from such obligation by
the Mortgagee in writing. Regardless of consideration, and without the necessity
for any notice to or consent by the holder of any subordinate lien, encumbrance,
right, title or interest in or to the Mortgaged Property, the Mortgagee may
release any person at any time liable for the payment of the Debt or any portion
thereof or any part of the security held for the Debt and may extend the time of
payment or otherwise modify the terms of the Note or this Mortgage, including,
without limitation, a modification of the interest rate payable on the principle
balance of the Note, without in any manner impairing or affecting this Mortgage
or the lien thereof or the priority of this Mortgage, as so extended and
modified, as security for the Debt over any such subordinate lien, encumbrance,
right, title or interest. The Mortgagee may resort for the payment of the Debt
to any other security held by the Mortgagee in such order and manner as the
Mortgagee, in its discretion, may elect. The Mortgagee may take action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of the Mortgagee thereafter to foreclose this
Mortgage. The Mortgagee shall not be limited exclusively to the rights and
remedies herein stated but shall be entitled to every additional right and
remedy now or hereafter afforded by law. The rights of the Mortgagee under this
Mortgage shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of the Mortgagee shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision.
23. Liability. If the Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several.
24. Construction. The terms of this Mortgage shall be construed in
accordance with the laws of the State in which the Premises are located.
25. Security Agreement. This Mortgage constitutes both a real property
mortgage and a "security agreement", within the meaning of the Uniform
Commercial Code, and the Mortgaged Property includes both real and personal
property and all other rights and interest, whether tangible or intangible in
nature, of the Mortgagor in the Mortgaged Property. The Mortgagor by executing
and delivering this Mortgage has granted to the Mortgagee, as security for the
Debt, a security interest in the Equipment. If an Event of Default occurs under
the Loan Agreement or this Mortgage, the Mortgagee, in addition to any other
rights and remedies which it may have, shall have and may exercise immediately
and without demand, any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing, the right to take possession of the Equipment or
any part thereof, and to take such other measures as the Mortgagee may deem
necessary for the care, protection and preservation of the Equipment. Upon
request or demand of the
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Mortgagee, the Mortgagor shall at its expense assemble the Equipment and make it
available to the Mortgagee at a convenient place acceptable to the Mortgagee.
The Mortgagor shall pay to the Mortgagee on demand any and all expenses,
including legal expenses and attorneys' fees, incurred or paid by the Mortgagee
in protecting its interest in the Equipment and in enforcing its rights
hereunder with respect to the Equipment. Any notice of sale, disposition or
other intended action by the Mortgagee with respect to the Equipment sent to the
Mortgagor in accordance with the provisions of this Mortgage at least seven (7)
days prior to the date of any such sale, disposition or other action, shall
constitute reasonable notice to the Mortgagor, and the method of sale or
disposition or other intended action set forth or specified in such notice shall
conclusively be deemed to be commercially reasonable within the meaning of the
Uniform Commercial Code unless objected to in writing by the Mortgagor within
five (5) days after receipt by the Mortgagor of such notice. The proceeds of any
sale or disposition of the Equipment, or any part thereof, may be applied by the
Mortgagee to the payment of the Debt in such order, priority and proportions as
the Mortgagee in its discretion shall deem proper.
26. Further Acts, etc. The Mortgagor will, at the cost of the
Mortgagor, and without expense to the Mortgagee, do, execute, acknowledge and
deliver all and every such further acts, deeds, conveyances, mortgages,
assignments, notices of assignments, transfers and assurances as the Mortgagee
shall, from time to time, require for the better assuring, conveying, assigning,
transferring and confirming unto the Mortgagee the property and rights hereby
mortgaged or intended now or hereafter so to be, or which the Mortgagor may be
or may hereafter become bound to convey or assign to the Mortgagee, or for
carrying out the intention or facilitating the performance of the terms of this
Mortgage or for filing, registering or recording this mortgage and, on demand,
will execute and deliver and hereby authorizes the Mortgagee to execute in the
name of the Mortgagor to the extent the Mortgagee may lawfully do so, one or
more financing statements, chattel mortgages or comparable security instruments,
to evidence more effectively the lien hereof upon the Mortgaged Property.
27. Headings, etc. The headings and captions of various paragraphs of
this Mortgage are for convenience of reference only and are not to be construed
as defined or limiting, in any way, the scope or intent of the provisions
hereof.
28. Filing of Mortgage, etc. The Mortgagor forthwith upon the execution
and delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage, and any security instrument creating a lien or evidencing the lien
hereof upon the Mortgaged Property and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect, preserve and perfect the lien hereof upon, and the interest of the
Mortgagee in, the Mortgaged Property. The Mortgagor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property, and any
instrument of further assurance, and all Federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance. The Mortgagor shall hold harmless and indemnify
the Mortgagee, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this
Mortgage.
29. Usury Laws. This Mortgage and the Note are subject to the express
condition that at no time shall the Mortgagor be obligated or required to pay
interest on the principal balance due under the Note at a rate which could
subject the holder of the Note to either civil or criminal liability as a result
of being in excess of the maximum interest rate which the Mortgagor is permitted
by law to contract or
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agree to pay. If by the terms of this Mortgage or the Note, the Mortgagor is at
any time required or obligated to pay interest on the principal balance due
under the Note at a rate in excess of such maximum rate, the rate of interest
under the Note shall be deemed to be immediately reduced to such maximum rate
and the interest payable shall be computed at such maximum rate and all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments in reduction of the principal balance of the Note.
30. Recovery of Sums Required To Be Paid. The Mortgagee shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of the Mortgagee thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by the Mortgagor existing at the time such
earlier action was commenced.
31. Authority. The Mortgagor (and the undersigned representative of the
Mortgagor, if any) has full power, authority and legal right to execute this
Mortgage, and to mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm and assign the Mortgaged Property pursuant to the terms hereof and to
keep and observe all of the terms of this Mortgage on the Mortgagor's part to be
performed.
32. Actions and Proceedings. The Mortgagee shall have the right to
appear in and defend any action or proceeding brought with respect to the
Mortgaged Property and to bring any action or proceeding, in the name and on
behalf of the Mortgagor, which the Mortgagee, in its discretion, feels should be
brought to protect its interest in the Mortgaged Property.
33. Inapplicable Provisions. If any term, covenant or condition of this
Mortgage shall be held to be invalid, illegal or unenforceable in any respect,
this Mortgage shall be construed without such provision.
34. Duplicate Originals. This Mortgage may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute but one and the same instrument.
35. Certain Definitions. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage shall be used interchangeably in singular or plural form and the
word "Mortgagor" shall mean each the Mortgagor and any subsequent owner or
owners of the Mortgaged Property or any part thereof or interest therein; the
word "Mortgagee" shall mean the Mortgagee or any subsequent holder of the Note;
the word "Note" shall mean the Revolving Credit Note, Term Loan Note Capital
Expenditure Note or any other evidence of indebtedness secured by this Mortgage;
the word "Guarantor" shall mean each person guaranteeing payment of the Debt or
any portion thereof or performance by the Mortgagor of any of the terms of this
Mortgage and their respective heirs, executors, administrators, legal
representatives, successors and assigns; the word "person" shall include an
individual, corporation, partnership, trust, unincorporated association,
government, governmental authority, or other entity; the words "Mortgaged
Property" shall include any portion of the Mortgaged Property or interest
therein; and the word "Debt" shall mean all sums secured by this Mortgage; and
the word "default" shall mean the occurrence of any default by the Mortgagor or
other person in the observance or performance of any of the terms, covenants or
provisions of the Loan Agreement, Note or this Mortgage on the part of the
Mortgagor or such other person to be observed or performed without regard to
whether such default constitutes or would constitute upon notice or lapse of
time, or both, an Event of Default under this Mortgage. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.
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36. Waiver of Notice. The Mortgagor shall not be entitled to any
notices of any nature whatsoever from the Mortgagee except with respect to
matters for which this Mortgage specifically and expressly provides for the
giving of notice by the Mortgagee to the Mortgagor, and the Mortgagor hereby
expressly waives the right to receive any notice from the Mortgagee with respect
to any matter for which this Mortgage does not specifically and expressly
provide for the giving of notice by the Mortgagee to the Mortgagor.
37. No Oral Change. This Mortgage may only be modified, amended or
changed by an agreement in writing signed by the Mortgagor and the Mortgagee,
and may only be released, discharged or satisfied of record by an agreement in
writing signed by the Mortgagee. No waiver of any term, covenant or provision of
this Mortgage shall be effective unless given in writing by the Mortgagee and if
so given by the Mortgagee shall only be effective in the specific instance in
which given. The Mortgagor acknowledges that the Note, this Mortgage, the Loan
Agreement, and the other documents and instruments executed and delivered in
connection therewith or otherwise in connection with the loan secured hereby set
forth the entire agreement and understanding of the Mortgagor and the Mortgagee
with respect to the loan secured hereby and that no oral or other agreements,
understanding, representation or warranties exist with respect to the loan
secured hereby other than those set forth in the Note, this Mortgage, the Loan
Agreement and such other executed and delivered documents and instruments.
38. Absolute and Unconditional Obligation. The Mortgagor acknowledges
that the Mortgagor's obligation to pay the Debt in accordance with the provision
of the Note and this Mortgage is and shall at all times continue to be absolute
and unconditional in all respects, and shall at all times be valid and
enforceable irrespective of any other agreements or circumstances of any nature
whatsoever which might otherwise constitute a defense to the Note or this
Mortgage or the obligation of the Mortgagor thereunder to pay the Debt or the
obligations of any other person relating to the Note or this Mortgage or the
obligations of the Mortgagor under the Note or this Mortgage or otherwise with
respect to the loan secured hereby, and the Mortgagor absolutely,
unconditionally and irrevocably waives any and all right to assert any defense,
setoff, counterclaim or crossclaim of any nature whatsoever with respect to the
obligation of the Mortgagor to pay the Debt in accordance with the provisions of
the Note and this Mortgage or the obligations of any other person relating to
the Note or this Mortgage or obligations of the Mortgagor under the Note or this
Mortgage or otherwise with respect to the loan secured hereby in any action or
proceeding brought by the Mortgagee to collect the Debt, or any portion thereof,
or to enforce, foreclose and realize upon the lien and security interest created
by this Mortgage or any other document or instrument securing repayment of the
Debt, in whole or in part.
39. Waiver of Trial by Jury. The Mortgagor hereby irrevocably and
unconditionally waives, and the Mortgagee by its acceptance of the Note and this
Mortgage irrevocably and unconditionally waives, any and all rights to trial by
jury in any action, suit or counterclaim arising in connection with, out of or
otherwise relating to the Note, this Mortgage the Loan Agreement, any other
document or instrument now or hereafter executed and delivered in connection
therewith or the loan secured by this Mortgage.
40. Waiver of Statutory Rights. The Mortgagor shall not and will not
apply for or avail itself of any appraisement, valuation, stay, extension or
exemption laws, or any so-called "Moratorium Laws", now existing or hereafter
enacted, in order to prevent or hinder the enforcement or foreclosure of this
Mortgage, but hereby waives the benefit of such laws to the full extent that the
Mortgagor may do so
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under applicable law. The Mortgagor for itself and all who may claim through or
under it waives any and all right to have the property and estates comprising
the Mortgaged Property marshaled upon any foreclosure of the lien of this
Mortgage and agrees that any court having jurisdiction to foreclose such lien
may order the Mortgaged Property sold as an entirety. The Mortgagor hereby
waives for itself and all who may claim through or under it, and to the full
extent the Mortgagor may do so under applicable law, any and all rights of
redemption from sale under any order of decree of foreclosure of this Mortgage
or granted under any statute now existing or hereafter enacted.
41. True Copy. The Mortgagor acknowledges receipt of a true copy of
this Mortgage without charge.
42. Future Disbursements. This Mortgage secures a loan which by its
terms is subject to modification as defined in N.J.S.A. 46:9-8.1.
43. Relationship. The relationship of the Mortgagee to the Mortgagor
hereunder is strictly and solely that of lender and borrower and nothing
contained in the Note, this Mortgage, the Loan Agreement or any other document
or instrument now or hereafter executed and delivered in connection therewith or
otherwise in connection with the loan secured hereby is intended to create, or
shall in any event or under any circumstance be construed as creating, a
partnership, joint venture, tenancy-in-common, joint tenancy or other
relationship of any nature whatsoever between the Mortgagee and the Mortgagor
other than as lender and borrower.
IN WITNESS WHEREOF, the Mortgagor has duly executed this Mortgage the
day and year first above written. Mortgagor acknowledges receipt of a true copy
of this Mortgage.
<TABLE>
<CAPTION>
Attest: IGI, INC.
<S> <C>
By: /s/ Robert E. McDaniel By: /s/ Manfred Hanuschek
Title: General counsel_____________ Title: __Chief Financial Officer__________________________
</TABLE>
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<PAGE> 16
CORPORATE ACKNOWLEDGMENT
STATE OF :
: ss
COUNTY OF :
On this, the 29th day of October, 1999, before me, the subscriber, a
notary public in and for the State and County aforesaid, personally appeared
Manfred Hanuschek, a CFO of IGI, Inc., a Delaware corporation, and who
acknowledged that he, as such CFO, being authorized to do so, executed the
foregoing instrument on behalf of said corporation for the purposes therein
contained.
WITNESS my hand and seal the day and year aforesaid.
/s/ Carolyn Elliott
Notary Public
My Commission Expires: 1/8/00
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EXHIBIT A
(Description of Premises)
<PAGE> 1
EXHIBIT *(10.34)
SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT (this "Agreement") as of October 29, 1999,
between FLEET CAPITAL CORPORATION (the "Senior Creditor") and AMERICAN CAPITAL
STRATEGIES, LTD. (the "Subordinated Creditor").
Each of Senior Creditor and Subordinated Creditor are entering into
financing arrangements with IGI, Inc. ("IGI"), IGEN, Inc., ImmunoGenetics, Inc.
and Blood Cells, Inc. (collectively, the "Companies" and severally each a
"Company").
To induce the Senior Creditor to enter into the Fleet Financing
Agreement (as hereinafter defined) and to make loans and extensions of credit
thereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Subordinated Creditor has
agreed to subordinate the Subordinated Debt (as hereinafter defined) to the
Senior Debt (as hereinafter defined) as well as subordinate all liens and rights
in collateral securing the Subordinated Debt, all in the manner and to the
extent hereinafter provided. Accordingly, the parties hereto agree as follows:
Section 1. Definitions. Unless otherwise defined herein capitalized
terms herein shall have the meanings provided to such terms in the Fleet
Financing Agreement. In addition, as used herein:
"Fleet Financing Agreement" shall mean the Loan and Security Agreement
of even date herewith between the Senior Creditor and the Companies, as the same
may be amended, modified, supplemented or restated from time to time.
"Permissible Securities" shall mean (a) any debt securities the payment
of which is subordinated, at least to the extent provided in Section 2 with
respect to the Subordinated Debt, to the payment of all Senior Debt at the time
outstanding and all securities issued in exchange therefore and (b) any shares
of common stock of IGI.
"Permitted Refinancing" means any amendment, modification, extension,
renewal, refunding or refinancing (whether by the Senior Creditor or any
institutional lender providing replacement financing) of all (but not less than
all) of the Senior Debt, provided that (i) such amendment, modification,
extension, renewal, refunding or refinancing shall not (A) increase the
principal amount thereof or (B) advance the originally scheduled dates for
payment of principal, interest or other sums payable in respect of the
indebtedness thereby amended, modified, extended, renewed, refunded or
refinanced, and (ii) the documents evidencing the incurrence of such
indebtedness shall not (A) impose upon the Companies rates of interest (apart
from any post default rate applicable if an Event of Default is outstanding) in
excess of 1% higher than the applicable rate(s) provided for with respect to the
indebtedness thereby amended, modified, extended, renewed, refunded or
refinanced, (B) impose prepayment charges that are greater in any material
respect than the respective amounts thereof payable under the terms of the
indebtedness thereby amended, modified, extended, renewed, refunded or
refinanced, or (C) contain terms or conditions that would prohibit payment of
principal, interest and other amounts payable with respect to the Subordinated
Debt when due (except to the extent provided in this Agreement).
<PAGE> 2
"Senior Debt" shall mean all loans, advances, extensions of credit,
liabilities and obligations, including reimbursement obligations on letters of
credit, letter of credit guaranties, foreign exchange obligations or interest
rate hedging agreements, together with all interest, fees, expenses and other
charges thereon, in which case owing, arising, due or payable from the Companies
to the Senior Creditor, of any kind or nature, whether or not evidenced by any
note, guaranty or other agreement or instrument, in each case arising under or
in connection with the Fleet Financing Agreement (or any Permitted Refinancing)
or any related agreement or document, whether direct or indirect (including
those acquired by assignment), absolute or contingent, primary or secondary,
joint or several, due or to become due, now existing or hereafter arising and
however acquired, including, without limitation, debts, liabilities and
obligations arising or occurring after the commencement of any bankruptcy,
reorganization, insolvency or similar proceeding with respect to the Company,
whether or not a claim for such post-commencement obligation is allowed;
provided that in no event shall the principal amount of obligations considered
as "Senior Debt" exceed $24,500,000 minus the aggregate amount of all scheduled
repayments of term loans (including, without limitation, any Capital Expenditure
Loans) actually made or prepaid after the date hereof.
"Subordinated Debt" shall mean the principal of, and interest and
premium (if any) on, the loans made, and any other amounts owing, under the
Subordinated Debt Documents.
"Subordinated Debt Documents" shall mean the Note and Equity Purchase
Agreement, the Pledge Agreement and the Security Agreement, each of even date
herewith, among the Subordinated Creditor, IGI and certain of its subsidiaries,
as the same may be amended, modified, supplemented or restated from time to
time.
Section 2. Subordination.
2.01 Subordination of Subordinated Debt. The Subordinated Creditor
covenants and agrees, that, to the extent and in the manner set forth in this
Agreement, the Subordinated Debt, and the payment from whatever source of the
principal of, and interest and premium (if any) on, the Subordinated Debt, are
hereby expressly made subordinate and subject in right of payment to the prior
payment in full in cash of all Senior Debt.
2.02 Payments Upon Bankruptcy or Dissolution. In the event of (a) any
insolvency or bankruptcy, receivership, liquidation, reorganization or other
similar case or proceeding relative to any of the Companies or its assets,
whether voluntary or involuntary, or (b) any liquidation, dissolution or other
winding up of any of the Companies, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of any of the
Companies, then and in any such event:
(1) the Senior Creditor shall be entitled to receive payment
in full in cash of all amounts owing, due or to become due on or in
respect of all Senior Debt before any Subordinated Creditor shall be
entitled to receive any payment on account of principal of, or interest
or premium (if any) on, the Subordinated Debt;
(2) any payment or distribution of assets of the applicable
Company(ies) of any kind or character, whether in cash, property or
securities, by set-off or otherwise, to which the
2
<PAGE> 3
Subordinated Creditor would be entitled but for the provisions of this
Agreement (other than Permissible Securities), including any such
payment or distribution that may be payable or deliverable by reason of
the payment of any other indebtedness of the applicable Company(ies)
being subordinated to the payment of the Subordinated Debt, shall be
paid by the party making such payment or distribution, whether a
trustee in bankruptcy, receiver, liquidating trustee, agent, debtor, or
otherwise, directly to the Senior Creditor to the extent necessary to
make payment in full in cash of all Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution to the Senior
Creditor; and
(3) if any Subordinated Creditor shall have failed to file
claims or proofs of claim with respect to the Subordinated Debt earlier
than 30 days prior to the deadline for any such filing, the Senior
Creditor shall be unconditionally authorized to file such claims or
proofs of claim (in its sole discretion and without any obligation to
do so). Subject only to the foregoing limitation, the Subordinated
Creditor hereby appoints the Senior Creditor as its attorney-in-fact to
file any such claim or proof of claim and to demand, vote, collect,
prosecute and enforce such claim and receive, endorse, deposit and
retain any proceeds or distributions thereon (in the name of the
Subordinated Creditor of the Senior Creditor. Nothing herein contained
is intended to authorize or allow the Senior Creditor to become (in the
name of the Subordinated Creditor) a member of any creditors' committee
in any bankruptcy or reorganization proceeding.
2.03 No Payment When Senior Debt in Default.
(a) In the event that (1) any payment with respect to any principal of
or interest on the Senior Debt is not made when due, whether at a due date,
stated maturity, by mandatory prepayment, by acceleration, or otherwise (each
such failure, a "Senior Debt Payment Default") or (2) any Event of Default under
the Fleet Financing Agreement other than as described in clause (1) above (for
the purposes hereof, a "Non-Payment Default") shall have occurred and be
continuing permitting the Senior Creditor to declare the Senior Debt due and
payable prior to the date on which it would otherwise have become due and
payable, then no payment on account of the principal of, or interest or premium
(if any) on, the Subordinated Debt or any judgment with respect thereto (and no
payment on account of the purchase or redemption or other acquisition of the
Subordinated Debt) shall be made by or on behalf of any of the Companies, for
the period (the "Blockage Period") from the date the Subordinated Creditor
receives written notice of the existence of either a Senior Debt Payment Default
or a Non-Payment Default (each a "Senior Debt Event of Default" from the Senior
Creditor (a "Blocking Notice") until the earliest of (i) the date 180 days after
such date, (ii) the date on which such Senior Debt Event of Default is waived or
a cure thereof is accepted in writing by the Senior Creditor, and (iii) the date
on which the Senior Creditor has waived in writing the benefits of this Section
2.03 in respect of such Senior Debt Event of Default,
provided that, for purposes of the above clause(A) only one Blocking Notice
relating to any Senior Debt Event of Default may be given during any one
twelve-month period, and (B) nothing herein contained is intended to restrict or
limit the rights of the Senior Creditor hereunder if a Senior Debt Event of
Default at any time occurs.
(b) For the purposes of subsection (a) above, no Non-Payment Default
known to the holder of Senior Debt giving any Blocking Notice on the date any
Blocking Notice is given may be
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<PAGE> 4
used or shall be effective as a basis for any subsequent Blocking Notice, it
being understood and agreed that any breach or violation of a financial covenant
with respect to the Senior Debt as of any measurement date thereof will be a new
Non-Payment Default regardless of whether a breach of such or any other covenant
which occurred on any prior measurement date was waived, cured or remains
outstanding.
(c) Immediately upon the expiration of any Blockage Period under this
Section 2.03 during which no payment may be made on account of the Subordinated
Debt, the Companies may resume making any and all payments of principal of, and
interest and premium (if any) thereafter becoming due on, the Subordinated Debt.
(d) If (1) any Senior Debt shall have been accelerated, (2) the
maturity of the Subordinated Debt shall have been accelerated pursuant to the
provisions of the Subordinated Debt Documents, (3) no "Event of Default" under
(and as defined in) the Subordinated Debt Documents (a "Subordinated Debt Event
of Default") shall have occurred and be continuing on the date of such
acceleration other than by reason of a Subordinated Debt Event of Default based
upon the acceleration of the maturity of such Senior Debt, (4) after the date of
such acceleration the holders of such Senior Debt shall duly rescind and annul
such acceleration of the maturity of such Senior Debt, and (5) on the date of
such rescission and annulment, no Subordinated Debt Event of Default shall have
occurred and be continuing in respect of the Subordinated Debt other than by
reason of a Subordinated Debt Event of Default based upon the acceleration of
the maturity of such Senior Debt, then such acceleration of the maturity of the
Subordinated Debt shall thereupon be deemed rescinded and annulled without
action on the part of any Subordinated Creditor, but such rescission and
annulment shall not affect the rights of any Subordinated Creditor with respect
to any subsequent or other default or Subordinated Debt Event of Default that
may occur.
(d) The provisions of this Section 2.03 shall not alter the rights of
the holders of Senior Debt under the provisions of Section 2.02 hereof.
2.04 Permitted Payments. Nothing contained in this Agreement or in any
of the Subordinated Debt Documents shall affect the obligation of the Companies
to make (or prevent the Companies from making) regularly scheduled payments of
principal of, or interest and premium (if any) on, the Subordinated Debt or any
other amount payable by the Companies under the Subordinated Debt Documents
except (x) during the pendency of any case, proceeding, dissolution, liquidation
or other winding up, assignment for the benefit of creditors or other marshaling
of assets and liabilities of any of the Companies referred to in Section 2.02
hereof, or (y) under the conditions described in Section 2.03 hereof, or (z) as
restricted by the provisions of Section 2.08 hereof. At no time may any
prepayment be made of or on account of the Subordinated Debt without the prior
written consent of the Senior Creditor.
2.05 Subrogation. Subject to the prior payment in full in cash of all
Senior Debt, the Subordinated Creditor shall be subrogated (equally and ratably
with the holders of all indebtedness of the Companies that by its express terms
is subordinated to Senior Debt of the Companies to the same extent as the
Subordinated Debt is subordinated and that is entitled to like rights of
subrogation) to the rights of the Senior Creditor to receive payments and
distributions of cash, property and securities applicable to the Senior Debt
until the principal of, and interest and premium (if any) on, the Subordinated
Debt shall be paid in full in cash. For purposes of such subrogation, and to the
extent
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permitted by law, no payments or distributions to the Senior Creditor of any
cash, property or securities to which the Subordinated Creditor would be
entitled except for the provisions of this Section 2, and no payments over
pursuant to the provisions of this Section 2 to the Senior Creditor by the
Subordinated Creditor, shall, as between the Companies, their creditors other
than the Senior Creditor, and the Subordinated Creditor, be deemed to be a
payment or distribution by the applicable Companies to or on account of the
Senior Debt.
2.06 Provisions Solely to Define Relative Rights. The provisions of
this Section 2 are and are intended solely for the purpose of defining the
relative rights of the Subordinated Creditor on the one hand and the Senior
Creditor on the other hand. No rights are intended to be created hereunder for
the benefit of the Companies or any other alleged third party beneficiary.
Subject to the subordination provisions hereof, nothing contained in this
Section 2 or elsewhere in this Agreement or in the Subordinated Debt Documents
is intended to or shall:
(a) impair, as among the Companies, their creditors other than the
Senior Creditor and the Subordinated Creditor, the obligation of the Companies,
which is absolute and unconditional, to pay to the Subordinated Creditor the
principal of and interest on the Subordinated Debt as and when the same shall
become due and payable in accordance with its terms; or
(b) affect the relative rights of the Subordinated Creditor against the
Companies under the Subordinated Debt Documents.
2.07 No Waiver of Subordination Provisions. The Senior Creditor may (in
its sole discretion), at any time and from time to time, without the consent of
or notice to the Subordinated Creditor, without incurring responsibility to the
Subordinated Creditor and without impairing, affecting or releasing the
subordination provided in this Section 2 or the obligations hereunder of the
Subordinated Creditor to the holders of Senior Debt, do any one or more of the
following: (a) modify, increase (subject to the limits set forth in the
definition of "Senior Debt"), renew, extend, change the time, manner, place or
terms of payment of any Senior Debt, or otherwise waive, modify, supplement or
waive non-performance in any respect of any provisions of the Fleet Financing
Agreement or any other agreement or instrument evidencing or relating to any of
the Senior Debt; (b) sell, exchange, release, enforce its rights against, or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Debt; (c) release or compromise claims against any of the Companies or any other
party liable in any manner for the collection of Senior Debt; and (d) exercise
or refrain from exercising any rights against any of the Companies or any other
party.
2.08 Lien Priority and Enforcement Action.
(a) The Subordinated Creditor agrees that, notwithstanding anything to
the contrary contained in any Subordinated Debt Documents or in any mortgage,
pledge, assignment or security agreement related thereto, the liens, pledges,
assignments, security interests, mortgages or any other security arrangements of
the Senior Creditor at any time securing the Senior Debt (collectively, "Senior
Security Interests") are senior and prior in operation and effect to any liens,
pledges, assignments, security interests, mortgages, or other security
arrangements of Subordinated Creditor (collectively, "Junior Security
Interests") and the Junior Security Interests shall be subordinate, junior and
inferior, and shall be postponed in priority, operation and effect to the Senior
Security Interests.
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<PAGE> 6
(b) The priority of security interests set forth in Section 2.08(a)
hereof shall apply and control irrespective of (1) any statement to the contrary
elsewhere herein, in any agreement creating or evidencing the Junior Security
Interests, or in any agreement or other document executed and delivered by any
party hereto or any affiliate thereof, (2) the time, order, or method of
attachment or perfection of security interests, mortgages or other liens, or (3)
the giving of, or the failure to give, notice of the acquisition or expected
acquisition of any purchase money or other security interests or liens.
(c) Until such time as the Senior Debt shall have been paid in full in
cash and the commitment of the Senior Creditor to lend has been terminated, the
Subordinated Creditor shall not contest or challenge the validity,
enforceability, priority or perfection of, or restrict, interfere with or
prevent any action taken by the Senior Creditor to foreclose on or enforce, the
Senior Security Interests.
(d) Notwithstanding anything to the contrary contained herein, the
Subordinated Creditor agrees that in the event that any property of any of the
Companies that is subject to the Junior Security Interests herein is sold,
transferred, conveyed or otherwise disposed of (1) as permitted under the Fleet
Financing Agreement or (2) as otherwise consented to by the Senior Creditor, the
Subordinated Creditor shall be deemed to have consented to the sale, transfer or
conveyance and shall release all rights to and interests in such property
(including the Junior Security Interests), and such property shall be
transferred free and clear of all liens and security interests (including the
Junior Security Interests) in favor of the Subordinated Creditor, provided,
however, that such consent and release by the Subordinated Creditor shall not be
effective unless written notice of the proposed sale, transfer or conveyance
containing the material terms of the transaction is provided to the Subordinated
Creditor and the Subordinated Creditor fails to deliver to the selling Company
and the Senior Creditor a bona fide, signed written commitment from another
buyer directed to the selling Company, the Senior Creditor and the Subordinated
Creditor who is ready, willing and able to purchase the property in question on
the identical terms as set forth in the notice given to the Subordinated
Creditor and is also ready, willing and able to increase the purchase price by
an amount in cash equal to 15% of the total purchase price set forth in such
notice. The Subordinated Creditor shall execute such termination and release
documents as the Senior Creditor may request to effectuate the terms hereof. To
implement the provisions of this clause (d), the Subordinated Creditor hereby
appoints the Senior Creditor as its attorney-in-fact to execute and deliver, on
behalf of the Subordinated Creditor, termination and release documents, which
Power of Attorney may be exercised (in the sole discretion of the Senior
Creditor and without any obligation to do so) if the Subordinated Creditor fails
to execute any such termination and release documents following not less than
three (3) days written notice from either the Senior Creditor or the Company.
(e) Until such time as the Senior Debt shall have been paid in full in
cash and the commitment of the Senior Creditor to lend has been terminated, the
Subordinated Creditor shall not take any action to foreclose, enforce or realize
upon any of the Junior Security Interests or exercise any right or remedy to
enforce the Junior Security Interests if:
(i) the Senior Debt has been accelerated and the holder of the
Senior Debt has commenced action to enforce its rights against a
material portion of the Collateral, or
(ii) if no acceleration of the Senior Debt has occurred, until
the expiration of (A) a period of 180 days ("Enforcement Blockage
Period") after the occurrence of an Subordinated
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<PAGE> 7
Debt Event of Default (irrespective of the existence of a Blockage
Period, if any, then preventing such payment from being made) and such
failure has not been cured by the Companies or (at its sole discretion,
and without any obligation to do so) by the Senior Creditor and (B) the
60th day after written notice by the Subordinated Creditor of the
intent to take action against the Junior Security Interests has been
given to the Senior Creditor, which notice under this clause (B) may
only be given following the 180th day of the Enforcement Blockage
Period.
(f) Nothing contained herein is intended to prevent the Subordinated
Creditor from obtaining a judgment or filing an involuntary bankruptcy petition
against the Companies following the occurrence of a Subordinated Debt Event of
Default so long as (i) the Subordinated Debt Event of Default has not been cured
or waived and (ii) either (A) the Enforcement Blockage Period has expired or (B)
the events contained in clause (i) above have occurred.
(g) The Senior Creditor may at any time apply the proceeds of any of
the property subject to the Senior Security Interests (including without
limitation proceeds of any sale of property subject to the provisions of clause
(d) above), together with any rights of the Senior Creditor under any insurance
policy, including (without limitation) any hazard or casualty insurance, credit
insurance, business interruption or title insurance policy or condemnation
proceeding, to the Senior Debt, and among such obligations at such time and in
such order as it shall determine.
(h) The Subordinated Creditor shall not have any right to receive or
retain any portion of any property securing the Subordinated Debt or proceeds
thereof, or apply any portion thereof to the Subordinated Debt, until such time
as the Senior Debt shall have been paid in full in cash and the commitment of
the Senior Creditor to lend has been terminated.
Section 3. Representations and Warranties of the Subordinated Creditor.
The Subordinated Creditor represents and warrants to the Senior Creditor that:
3.01 Corporate Existence. The Subordinated Creditor is a corporation
duly organized and validly existing under the laws of the jurisdiction of its
incorporation.
3.02 No Breach. None of the execution and delivery of this Agreement,
the consummation of the transactions herein contemplated or compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent under, the charter or bylaws of the Subordinated Creditor,
any applicable law or regulation, or any order, writ, injunction or decree of
any court or governmental authority or agency, or any agreement or instrument to
which the Subordinated Creditor is a party or by which the Subordinated Creditor
is bound or to which the Subordinated Creditor is subject, or constitute a
default under any such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the revenues or assets of the Subordinated
Creditor pursuant to the terms of any such agreement or instrument.
3.03 Corporate Action: Execution and Delivery. The Subordinated
Creditor has all necessary corporate power and authority to execute, deliver and
perform its obligations under this Agreement; the execution, delivery and
performance by the Subordinated Creditor of this Agreement have been duly
authorized by all necessary action on its part; and this Agreement has been duly
and validly
7
<PAGE> 8
executed and delivered by the Subordinated Creditor and constitutes the
legal, valid and binding obligation of the Subordinated Creditor,
enforceable in accordance with its terms.
3.04 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency are necessary for the execution, delivery or performance by the
Subordinated Creditor of this Agreement or for the validity or enforceability
hereof.
Section 4. Representations and Warranties of the Senior Creditor. The
Senior Creditor represents and warrants to the Subordinated Creditor that:
4.01 Corporate Existence. The Senior Creditor is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation.
4.02 No Breach. None of the execution and delivery of this Agreement,
the consummation of the transactions herein contemplated or compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent under, the charter or bylaws of the Senior Creditor, any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any agreement or instrument to
which the Senior Creditor is a party or by which the Senior Creditor is bound or
to which the Senior Creditor is subject, or constitute a default under any such
agreement or instrument, or result in the creation or imposition of any Lien
upon any of the revenues or assets of the Senior Creditor pursuant to the terms
of any such agreement or instrument.
4.03 Corporate Action: Execution and Delivery. The Senior Creditor has
all necessary corporate power and authority to execute, deliver and perform its
obligations under this Agreement; the execution, delivery and performance by the
Senior Creditor of this Agreement have been duly authorized by all necessary
action on its part; and this Agreement has been duly and validly executed and
delivered by the Senior Creditor and constitutes the legal, valid and binding
obligation of the Senior Creditor, enforceable in accordance with its terms.
4.04 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency are necessary for the execution, delivery or performance by the Senior
Creditor of this Agreement or for the validity or enforceability hereof.
Section 5. Payments Held in Trust. In the event that, notwithstanding
the foregoing provisions of Sections 2.02, 2.03, 2.08 or any other provision
hereof, the Subordinated Creditor shall have received any payment or
distribution of assets or proceeds (other than Permissible Securities)
prohibited by the provisions of this Agreement, including, without limitation,
any such payment arising out of the exercise by any Subordinated Creditor of a
right of set-off or counterclaim and any such payment received by reason of
other indebtedness of the Companies being subordinated to the Subordinated Debt,
then, and in any such event, such payment shall be held in trust for the benefit
of, and shall be immediately paid over or delivered to, the Senior Creditor, for
application to the Senior Debt whether or not then due and payable.
Section 6. Bailment for Perfection. Senior Creditor agrees that it
shall hold any collateral as to which perfection is accomplished solely by
possession for its own benefit, and, for the purposes of perfection only, for
the benefit of the Subordinated Creditor, subject to the provisions of this
8
<PAGE> 9
Agreement. Notwithstanding the foregoing, Senior Creditor shall not owe any
duties or obligations, or incur any liabilities, of any kind whatsoever toward
the Subordinated Creditor as a result of this agreement by the Senior Creditor,
including without limitation any duty to exercise reasonable care in the holding
of such collateral, any duty to retain, preserve or protect any such collateral,
or any duty to sell or not to sell any such collateral. In no way shall the
Senior Creditor be deemed to stand in a trust or fiduciary relationship with the
Subordinated Creditor.
Section 7. Miscellaneous.
7.01 No Waiver. No failure on the part of the Senior Creditor to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder or under the Fleet Financing Agreement or
related agreements shall operate as a waiver thereof; nor shall any single or
partial exercise by the Senior Creditor of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not exclusive
of any remedies provided at law or in equity.
7.02 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Pennsylvania (without regard
to Pennsylvania conflicts of laws principles).
7.03 Notices. All notices, requests, consents and demands hereunder
shall be in writing and telexed, telecopied or delivered to the intended
recipient at the "Address for Notices" specified beneath its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a written notice to each other party. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telex or telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
7.04 No Modifications. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by the
Subordinated Creditor and Senior Creditor.
7.05 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the
Subordinated Creditor and the Senior Creditor. The terms "Senior Creditor" and
"Subordinated Creditor" shall respectively apply to any successor and assign of
any such party. Each party agrees to notify any successor and assign of the
existence and terms of this Agreement.
7.06 Captions. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
7.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
7.08 Subordination Legend. Each instrument, document or agreement
creating or evidencing the Subordinated Debt and Junior Security Interests shall
contain a conspicuous legend (in form and
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substance satisfactory to the Senior Creditor) that such instrument, document or
agreement and the rights therein are subject to the provisions of this
Agreement.
7.09 Amendment to Subordinated Debt Documents. The Subordinated
Creditor covenants and agrees that it will not modify any of the Subordinated
Debt Documents in any manner which would accelerate the date on which any
payment thereunder is to become due, increase the Companies' monetary
obligations thereunder, or make more restrictive any financial covenants
thereunder.
7.10 Expenses. Senior Creditor shall have the right to recover on
demand from Subordinated Creditor all expenses incurred by the Senior Creditor
to enforce the provisions of this Agreement against the Subordinated Creditor.
7.11 Proceeds of Key-Executive Life Insurance. Notwithstanding anything
set forth in this Agreement to the contrary, including, without limitation, any
of the provisions of Sections 2.02, 2.03 and 2.08, the holders of the
Subordinated Debt shall be entitle to receive and retain, and apply to the
payment, prepayment, forgiveness or reductions of the Subordinated Debt, any
distributions, payments or proceed of any life insurance policy upon the life of
Paul Woitach or Robert McDaniel paid to the holders of the Subordinated Debt, as
beneficiaries and assignees of such policy.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
SUBORDINATED CREDITOR SENIOR CREDITOR
AMERICAN CAPITAL STRATEGIES, LTD. FLEET CAPITAL CORPORATION
By: /s/ JOHN R. ERICKSON By: /s/ WALTER SCHUPPE
---------------------- ----------------------------
Name: JOHN R. ERICKSON Name: WALTER SCHUPPE
Title: CFO Title: S.V.P.
Address for Notices:
2 Bethesda Metro Center, 14th Floor Address for Notices:
Bethesda, MD 20814
200 Glastonbury Boulevard
Glastonbury, Connecticut 06033
Attention: Chairman
Attention: Northeast Loan
Administration
Facsimile No.: (301) 654-6714
Facsimile No.: (860) 657-7759
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ACKNOWLEDGED AND AGREED:
IGI, INC.
IGEN, INC.
IMMUNOGENETICS, INC.
BLOOD CELLS, INC.
By: /s/ MANFRED HANUSCHEK
-----------------------------
Name: MANFRED HANUSCHEK
As authorized officer of each of the above
named companies
(Signature Page to Subordination Agreement)
11
<PAGE> 1
EXHIBIT *(10.35)
NOTE AND EQUITY PURCHASE AGREEMENT
by and between
IGI, INC., IGEN, INC., IMMUNOGENETICS, INC.
AND BLOOD CELLS, INC.
AND
AMERICAN CAPITAL STRATEGIES, LTD.
OCTOBER 29, 1999
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1 DEFINITIONS................................................ 2
1.1 CERTAIN DEFINITIONS............................................ 2
1.2 ACCOUNTING PRINCIPLES.......................................... 12
1.3 OTHER DEFINITIONAL PROVISIONS; CONSTRUCTION.................... 13
ARTICLE 2 ISSUE AND SALE OF SECURITIES............................... 13
2.1 AUTHORIZATION AND ISSUANCE OF THE NOTES........................ 13
2.2 AUTHORIZATION AND ISSUANCE OF THE WARRANTS..................... 14
2.3 SALE AND PURCHASE.............................................. 14
2.4 THE CLOSING.................................................... 14
ARTICLE 3 REPAYMENT OF THE NOTES..................................... 14
3.1 INTEREST RATES AND INTEREST PAYMENTS........................... 14
3.2 REPAYMENT OF THE NOTES......................................... 15
3.3 OPTIONAL PREPAYMENT OF NOTES................................... 15
3.4 NOTICE OF OPTIONAL PREPAYMENT.................................. 15
3.5 MANDATORY PREPAYMENT........................................... 16
3.6 HOME OFFICE PAYMENT............................................ 16
3.7 TAXES.......................................................... 16
3.8 MAXIMUM LAWFUL RATE............................................ 17
3.9 CAPITAL ADEQUACY............................................... 18
ARTICLE 4 CONDITIONS................................................. 18
4.1 CONDITIONS TO PURCHASE OF SECURITIES........................... 18
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES......... 22
5.1 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES............. 22
5.2 ABSOLUTE RELIANCE ON THE REPRESENTATIONS AND WARRANTIES........ 29
ARTICLE 6 TRANSFER OF NOTES.......................................... 29
6.1 RESTRICTED SECURITIES.......................................... 29
6.2 LEGENDS; PURCHASER'S REPRESENTATIONS........................... 30
6.3 TRANSFER OF NOTES.............................................. 30
6.4 REPLACEMENT OF LOST SECURITIES................................. 30
6.5 NO OTHER REPRESENTATIONS AFFECTED.............................. 30
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 7 COVENANTS.................................................. 31
7.1 AFFIRMATIVE COVENANTS.......................................... 31
7.2 NEGATIVE COVENANTS............................................. 36
7.3 FINANCIAL COVENANTS............................................ 41
ARTICLE 8 EVENTS OF DEFAULT.......................................... 42
8.1 EVENTS OF DEFAULT.............................................. 42
8.2 CONSEQUENCES OF EVENT OF DEFAULT............................... 43
8.3 SECURITY....................................................... 44
ARTICLE 9 PUT OPTION................................................. 45
9.1 GRANT OF OPTION................................................ 45
9.2 PUT PRICE...................................................... 45
9.3 EXERCISE OF PUT OPTION......................................... 45
9.4 CERTAIN REMEDIES............................................... 46
9.5 PUT OPTION CLOSING............................................. 46
ARTICLE 10 PREEMPTIVE RIGHTS......................................... 46
10.1 LIMITED PREEMPTIVE RIGHTS...................................... 47
10.2 EXCEPTIONS..................................................... 47
ARTICLE 11 REGISTRATION RIGHTS....................................... 48
11.1 PIGGYBACK REGISTRATIONS........................................ 48
11.2 DEMAND REGISTRATION RIGHTS..................................... 49
11.3 S-3 DEMAND REGISTRATION RIGHTS................................. 50
11.4 HOLDBACK AGREEMENTS............................................ 50
11.5 REGISTRATION PROCEDURES........................................ 51
11.6 REGISTRATION EXPENSES.......................................... 53
11.7 INDEMNIFICATION................................................ 53
11.8 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.................... 55
ARTICLE 12 MISCELLANEOUS............................................. 55
12.1 SUCCESSORS AND ASSIGNS......................................... 55
12.2 MODIFICATIONS, AMENDMENTS OR WAIVERS........................... 55
12.3 NO IMPLIED WAIVERS; CUMULATIVE REMEDIES; WRITING REQUIRED...... 55
12.4 REIMBURSEMENT OF EXPENSES; TAXES............................... 56
12.5 HOLIDAYS....................................................... 56
12.6 NOTICES........................................................ 56
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
12.7 SURVIVAL....................................................... 57
12.8 GOVERNING LAW.................................................. 58
12.9 JURISDICTION, CONSENT TO SERVICE OF PROCESS.................... 58
12.10 JURY TRIAL WAIVER.............................................. 59
12.11 SEVERABILITY................................................... 59
12.12 HEADINGS....................................................... 59
12.13 INDEMNITY...................................................... 60
12.14 ENVIRONMENTAL INDEMNITY........................................ 60
12.15 COUNTERPARTS................................................... 61
12.16 INTEGRATION.................................................... 61
12.17 SUBORDINATION.................................................. 62
</TABLE>
ANNEX 1
SCHEDULES 8
EXHIBITS 7
-iii-
<PAGE> 5
NOTE AND EQUITY PURCHASE AGREEMENT
$6,650,000 AGGREGATE PRINCIPAL AMOUNT OF
SERIES A SENIOR SUBORDINATED NOTES DUE SEPTEMBER 30, 2006
OF THE LOAN PARTIES
$350,000 AGGREGATE PRINCIPAL AMOUNT OF
SERIES B SUBORDINATED NOTES (THE "GEORGIA NOTES") DUE
SEPTEMBER 30, 2006 OF THE LOAN PARTIES
WARRANTS TO PURCHASE 1,907,543 SHARES
OF IGI COMMON STOCK
THIS NOTE AND EQUITY PURCHASE AGREEMENT (this "Agreement"), dated as of
October 29, 1999, is by and between IGI, INC., a Delaware corporation ("IGI"),
IGEN, INC., a Delaware corporation ("Igen"), IMMUNOGENETICS, INC., a Delaware
corporation ("ImmunoGenetics") and Blood Cells, Inc., a Delaware corporation
("Blood Cells") (IGI, Igen, ImmunoGenetics and Blood Cells are collectively
referred to herein as the "Loan Parties"), and AMERICAN CAPITAL STRATEGIES,
LTD., a Delaware corporation ("ACAS" or "Purchaser"). Capitalized terms used and
not defined elsewhere in this Agreement are defined in Article 1 hereof.
RECITALS
A. The Loan Parties have proposed selling subordinated Notes to provide the
Loan Parties financing in the amount of $7,000,000.
B. Purchaser has agreed to purchase the Notes to provide to the Loan
Parties financing so that the Loan Parties may refinance existing debt in
conjunction with obtaining new senior financing.
C. In order to induce Purchaser to purchase the Notes to be issued pursuant
to this Agreement, IGI has agreed to issue and sell to Purchaser, in connection
with the purchase of such Notes, warrants exercisable for 1,907,543 shares of
Common Stock, subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the premises and
their mutual covenants and agreements herein set forth and intending to be
legally bound hereby, covenant and agree as follows:
<PAGE> 6
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions. In addition to other words and terms defined
elsewhere in this Agreement, the following words and terms shall have the
meanings set forth below (and such meanings shall be equally applicable to both
the singular and plural form of the terms defined, as the context may require):
"ACAS" shall have the meaning assigned to such term in the preamble hereto.
"ACS CIC" shall mean ACS Capital Investments Corporation, a Delaware
corporation and unconsolidated operating subsidiary of ACAS.
"Affiliate" shall mean with respect to any Person, any other Person which
is directly or indirectly controlling, controlled by or under common control
with such Person or entity or any of its Subsidiaries, and the term "control"
(including the terms "controlled by" and "under common control with") means
having, directly or indirectly, the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities or by contract or otherwise. Without limiting the foregoing, the
ownership of ten percent (10%) or more of the voting securities of a Person
shall be deemed to constitute control and notwithstanding anything to the
contrary herein, neither Purchaser nor any of its Affiliates shall be deemed to
be Affiliates of the Loan Parties by virtue of the transactions contemplated in
this Agreement.
"Agreement" shall mean this Note and Equity Purchase Agreement, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
"Appraised Value" shall mean the value of the equity of IGI on a control
premium basis without discount for limitations on voting rights, minority
interests, illiquidity or restrictions on transfer, as determined by an
appraisal performed at IGI's expense by any of (x) Houlihan, Lokey, Howard &
Zukin, (y) Duff & Phelps or (z) Willamette Management Associates, or any
successor to such firms, as IGI shall elect; provided that such appraiser shall
be directed to determine fair market value of such securities or property as
soon as practicable, but in no event later than thirty (30) days from the date
of its selection and for such purposes all rights, options and warrants to
subscribe for or purchase, and other securities convertible into or exchangeable
for Common Stock shall be deemed to be exercised, exchanged or converted, and
the underlying shares of Common Stock shall be deemed outstanding.
"Blood Cells" shall have the meaning assigned to such term in the preamble
hereto.
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<PAGE> 7
"Business" shall mean the principal business of the Loan Parties as set
forth in Section 5.1(b) herein and as such shall continue to be conducted
following the purchase and sale of the Notes and Warrants.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which banking institutions in Maryland are authorized or required by law
to close.
"Capital Expenditures" shall mean for any period of determination the sum
of capital expenditures and payments under Capitalized Leases of the Loan
Parties for such period determined and consolidated in accordance with GAAP.
"Capitalized Interest" shall have that meaning given such term in Section
3.1 hereof.
"Capitalized Leases" shall mean, with respect to any Person, leases of (or
other agreements conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee that, in accordance with GAAP (as
defined in Section 1.2 hereof), either would be required to be classified and
accounted for as capital leases on a balance sheet of such Person or otherwise
be disclosed as such in a note to such balance sheet.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Section 9604, et seq.), as amended, and rules,
regulations, standards guidelines and publications issued thereunder.
"Change of Control" shall mean the occurrence of any of the following:
(a) any transaction or series of related transactions resulting in the
sale or issuance of securities or any rights to securities of IGI by IGI
representing in the aggregate more than 50% of the issued and outstanding
Common Stock, or any transaction or series of related transactions
resulting in the sale, transfer, assignment or other conveyance or
disposition of any securities or any rights to securities of IGI by any
holder or holders thereof representing in the aggregate more than 50% of
the issued and outstanding Common Stock and the receipt of any
consideration in connection therewith;
(b) a merger, consolidation, reorganization, recapitalization or share
exchange in which the stockholders of IGI immediately prior to such
transaction receive, in exchange for securities of IGI owned by them, cash,
property or securities of the resulting or surviving entity and as a result
thereof Persons who were holders of Common Stock and Underlying Common
Stock hold less than 50% of the capital stock, calculated on a Fully
Diluted Basis, of the resulting corporation entitled to vote in the
election of directors;
(c) a sale, transfer or other disposition of 30% or more of the assets
of any of the Loan Parties;
(d) any sale or issuance or series of sales or issuances of the Common
Stock or any other voting security (or security convertible into,
exchangeable for,
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<PAGE> 8
or exercisable for any other voting security) of IGI within a 12-month
period which results in a transfer of more than 50% of the issued and
outstanding shares of capital stock of IGI or a transfer of more than 50%
of the voting power of IGI;
(e) a secondary public offer of securities by IGI other than an
offering of securities for an employee benefit plan on SEC Form S-8 or a
successor form;
(f) the Loan Parties' management shall cease to be reasonably
satisfactory to the Purchaser; and
(g) IGI shall cease to own 100% of the capital stock of either Igen or
ImmunoGenetics or 90% of the capital stock of Blood Cells.
"Charter Documents" shall mean the Articles of Incorporation, Certificate
of Incorporation or Charter of the Loan Parties, as applicable, including all
amendments and supplements thereto.
"Closing" shall mean the closing of the purchase and sale of the Securities
pursuant to this Agreement.
"Closing Date" shall mean the date and time for delivery and payment of the
Notes as finally determined pursuant to Section 2.4 hereof.
"Closing Processing Fee" shall mean a fee in an amount equal to $70,000
payable by the Loan Parties to ACS-CIC in consideration of the structuring of
the financing contemplated hereby.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral Assignment" shall have the meaning assigned to such term in
Section 4.1(e) hereof.
"Common Stock" shall mean IGI's Common Stock, $0.01 par value.
"Condition" shall mean any condition that results in or otherwise relates
to any Environmental Liabilities.
"Controlled Group" shall mean the "controlled group of corporations" as
that term is defined in Section 1563 of the Internal Revenue Code of 1986, as
amended, of which the Loan Parties are a part from time to time.
"Default" shall mean any event or condition that, but for the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"EBITDA" shall mean earnings before interest, taxes, depreciation and
amortization.
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<PAGE> 9
"Environmental Laws" shall mean any Laws which address, are related to or
are otherwise concerned with environmental, health or safety issues, including
any Laws relating to any emissions, releases or discharges of Pollutants into
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, handling, clean-up or control of Pollutants or any exposure or impact
on worker health and safety.
"Environmental Liabilities" shall mean any obligations or liabilities
(including any claims, suits or other assertions of obligations or liabilities)
that are:
(a) related to environmental, health or safety issues (including
on-site or off-site contamination by Pollutants of surface or subsurface
soil or water, and occupational safety and health); and
(b) based upon or related to (i) any provision of past, present or
future United States or foreign Environmental Law (including CERCLA and
RCRA) or common law, or (ii) any judgment, order, writ, decree, permit or
injunction imposed by any court, administrative agency, tribunal or
otherwise.
The term "Environmental Liabilities" includes: (i) fines, penalties, judgments,
awards, settlements, losses, damages (including foreseeable and unforeseeable
consequential damages), costs, fees (including attorneys' and consultants'
fees), expenses and disbursements; (ii) defense and other responses to any
administrative or judicial action (including claims, notice letters, complaints,
and other assertions of liability); and (iii) financial responsibility for (1)
cleanup costs and injunctive relief, including any Removal, Remedial or other
Response actions, and natural resource damages, and (2) any other compliance or
remedial measures.
"EPA" shall mean the United States Environmental Protection Agency and any
governmental body or agency succeeding to the functions thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may from time to time be amended, and the rules and regulations of any
governmental agency or authority, as from time to time in effect, promulgated
thereunder.
"Event of Default" shall mean any of the events of default described in
Section 8.1 hereof.
"Fair Market Value" shall mean the greatest of (i) the Market Price and
(ii) the amount paid for each share of Common Stock as of the date of the sale
of IGI, provided, however, that if the Common Stock does not qualify as a
"margin security" or "margin stock" under Regulations T or U, respectively, of
the Board of Governors of the Federal Reserve System, the Fair Market Value
shall be the Appraised Value.
"Financing Statements" shall have the meaning assigned to such term in
Section 4.1(e) hereof.
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<PAGE> 10
"Fiscal Year" or "fiscal year" shall mean each twelve-month period ending
on December 31 of each year.
"Fixed Charges Coverage Ratio" shall mean the ratio of (i) EBITDA less the
unfinanced portion of Capital Expenditures to (ii) the sum of principal and
interest payments made during the Measurement Period in respect of the
Indebtedness (other than any non-cash charges relating to the issuance of the
Warrants pursuant to this Agreement).
"Fully Diluted Basis" shall mean, at any given time, the number of shares
of Common Stock actually outstanding at such time, plus the number of Stock
Equivalents then outstanding (including Warrants), regardless of their exercise
price or its equivalent.
"GAAP" shall have the meaning assigned to such term in Section 1.2 hereof.
"Georgia Collateral" shall mean the leasehold interest of the Loan Parties
in the premises located at 1146 Airport Parkway, Gainesville, Georgia, and the
improvements located thereon.
"Georgia Note" shall have the meaning assigned to such term in Section
2.1(a).
"Governmental Authorities" shall mean any federal, state or municipal court
or other governmental department, commission, board, bureau, agency or
instrumentality, governmental or quasi-governmental, domestic or foreign.
"Guaranty" shall mean any guaranty of the payment or performance of any
Indebtedness or other obligation and any other arrangement whereby credit is
extended to one obligor on the basis of any promise of another Person, whether
that promise is expressed in terms of an obligation to pay the Indebtedness of
such obligor, or to purchase an obligation owed by such obligor, or to purchase
goods and services from such obligor pursuant to a take-or-pay contract, or to
maintain the capital, working capital, solvency or general financial condition
of such obligor, whether or not any such arrangement is reflected on the balance
sheet of such other Person, firm or corporation, or referred to in a footnote
thereto, but shall not include endorsements of items for collection in the
ordinary course of business. For the purpose of all computations made under this
Agreement, the amount of a Guaranty in respect of any obligation shall be deemed
to be equal to the maximum aggregate amount of such obligation or, if the
Guaranty is limited to less than the full amount of such obligation, the maximum
aggregate potential liability under the terms of the Guaranty.
"Holder" shall have the meaning assigned to such term in Section 9.1
hereof.
"IGI" shall have the meaning assigned to such term in the preamble hereto.
"Igen" shall have the meaning assigned to such term in the preamble hereto.
"ImmunoGenetics" shall have the meaning assigned to such term in the
preamble hereto.
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<PAGE> 11
"Indebtedness" shall mean, for any Person at the time of any determination,
without duplication, all obligations, contingent or otherwise, of such Person
which, in accordance with GAAP, should be classified upon the balance sheet of
such Person as indebtedness, but in any event including: (i) all obligations for
borrowed money, (ii) all obligations arising from installment purchases of
property or representing the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities incurred in
the ordinary course of business on terms customary in the trade), (iii) all
obligations evidenced by notes, bonds, debentures, acceptances or instruments,
or arising out of letters of credit or bankers' acceptances issued for such
Person's account, (iv) all obligations, whether or not assumed, secured by any
Lien or payable out of the proceeds or production from any property or assets
now or hereafter owned or acquired by such Person, (v) all obligations for which
such Person is obligated pursuant to a Guaranty, (vi) the capitalized portion of
lease obligations under Capitalized Leases, (vii) all obligations for which such
Person is obligated pursuant to any Interest Rate Protection Agreements or
derivative agreements or arrangements, and (viii) all obligations of such Person
upon which interest charges are customarily paid or accrued.
"Interest Payment Date" shall have the meaning assigned to such term in
Section 3.1 hereof.
"Interest Rate Protection Agreement" shall mean any interest rate swap,
interest rate cap, interest rate collar or other interest rate hedging agreement
or arrangement.
"Investment" as applied to any Person shall mean the amount paid or agreed
to be paid or loaned, advanced or contributed to other Persons, and in any event
shall include (i) any direct or indirect purchase or other acquisition of any
notes, obligations, instruments, stock, securities or ownership interest
(including partnership interests and joint venture interests) and (ii) any
capital contribution to any other Person.
"IRS" shall mean the Internal Revenue Service and any governmental body or
agency succeeding to the functions thereof.
"Laws" shall mean all U.S. and foreign federal, state or local statutes,
laws, rules, regulations, ordinances, codes, policies, rules of common law, and
the like, now or hereafter in effect, including any judicial or administrative
interpretations thereof, and any judicial or administrative orders, consents,
decrees or judgments.
"Lien" shall mean any security interest, pledge, bailment, mortgage,
hypothecation, deed of trust, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance or other
similar arrangement or interest in real or personal property, now owned or
hereafter acquired, whether such interest is based on common law, statute or
contract.
"Life Insurance" shall have the meaning assigned to such term in Section
4.1(j) hereof.
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<PAGE> 12
"Loan Points" shall mean the aggregate loan points equal to $113,750 to be
paid by the Loan Parties to ACAS or its designee in connection with the issuance
of the Notes hereunder.
"Manage" and "Management" shall mean generation, production, handling,
distribution, processing, use, storage, treatment, operation, transportation,
recycling, reuse and/or disposal, as those terms are defined in CERCLA, RCRA and
other Environmental Laws (including as those terms are further defined,
construed, or otherwise used in rules, regulations, standards, guidelines and
publications issued pursuant to, or otherwise in implementation of, such
Environmental Laws).
"Market Price" of any security shall mean the average of the closing prices
of such security's sales on all securities exchanges on which such security may
at the time be listed, or, if there has been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of each day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of five (5) days consisting of the day
as of which "Market Price" is being determined and the four (4) consecutive
business days prior to such day. If at any time such security is not listed on
any securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the "Market Price" shall be the fair value thereof determined jointly by
IGI and the Holders of Warrants representing a majority of the shares of Common
Stock obtainable upon exercise of the Warrants. If such parties are unable to
reach agreement within a reasonable period of time, such fair value shall be the
Appraised Value divided by the number of shares of Common Stock outstanding on a
Fully Diluted Basis. For such purposes, a share of Common Stock acquirable upon
exercise or conversion of options or rights to acquire any shares of Common
Stock shall be deemed outstanding only if the applicable conversion price,
exercise price or other acquisition price is equal or less than the Market Price
so determined.
"Material Adverse Effect" shall mean a material adverse effect on
the business, properties, assets, liabilities or condition (financial or
otherwise) of the Loan Parties.
"Maximum Debt to Equity Ratio" shall mean the ratio of total liabilities
(other than any liabilities relating to the issuance of the Warrant pursuant to
this Agreement) to stockholders equity.
"Maximum Leverage Ratio" shall mean the ratio of (x) the sum of Senior Debt
to (y) EBITDA.
"Measurement Date" shall mean the date which marks the end of each calendar
quarter.
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<PAGE> 13
"Measurement Period" shall mean the twelve (12) month period ending on each
Measurement Date.
"Mortgage" shall have the meaning assigned to such term in Section 4.1(f)
hereof.
"Multiemployer Plan" shall mean a multiemployer plan (within the meaning of
Section 3(37) of ERISA) that is maintained for the benefit of the employees of
the Loan Parties or any member of the Controlled Group.
"Notes" shall have the meaning set forth in Section 2.1 hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any other governmental agency,
department or instrumentality succeeding to the functions thereof.
"Permitted Liens" shall have the meanings assigned to such term Section
7.2(b) hereof.
"Person" shall mean any individual, partnership, limited partnership,
corporation, limited liability company, association, joint stock company, trust,
joint venture, unincorporated organization or governmental entity or department,
agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan (within the meaning of Section
3(3) of ERISA), other than a Multiemployer Plan, established or maintained by
the Loan Parties or any member of the Controlled Group.
"Pledge Agreement" shall mean that certain Pledge and Security Agreement
dated of even date herewith executed by IGI in favor of Purchaser.
"Pollutant" shall include any "hazardous substance" and any "pollutant or
contaminant" as those terms are defined in CERCLA; any "hazardous waste" as that
term is defined in RCRA; and any "hazardous material" as that term is defined in
the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), as
amended (including as those terms are further defined, construed, or otherwise
used in rules, regulations, standards, guidelines and publications issued
pursuant to, or otherwise in implementation of, said Environmental Laws); and
including without limitation any petroleum product or byproduct, solvent,
flammable or explosive material, radioactive material, asbestos, polychlorinated
biphenyls (PCBs), dioxins, dibenzofurans, heavy metals, and radon gas; and
including any other substance or material that is reasonably determined to
present a threat, hazard or risk to human health or the environment.
"Prime Rate" shall mean the rate of interest that under current practice is
listed as such under the heading "Money Rates" in the Eastern Edition of the
Wall Street Journal, and if a range of rates is listed, the highest such rate,
and should such practice change, such other indication of the prevailing prime
rate of interest as may reasonably be chosen by Purchaser.
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<PAGE> 14
"Properties and Facilities" shall have the meaning assigned to such term in
Section 5.1(q).
"Proprietary Rights" shall mean all patents, patent applications,
trademarks, trade names, service marks, copyrights, inventions, production
methods, licenses, formulas, know-how and trade secrets.
"Purchase Documents" shall mean this Agreement, the Notes, the Warrants and
the Security Documents and all other agreements, instruments and documents
delivered in connection therewith as any or all of the foregoing may be
supplemented or amended from time to time.
"Purchaser" shall have the meaning assigned to such term in the preamble
hereto and in Section 6.2 hereof.
"Put Option" shall have the meaning assigned to such term in Section 9.1
hereof.
"Put Option Closing" shall have the meaning assigned to such term in
Section 9.5 hereof.
"Put Price" shall have the meaning assigned to such term in Section 9.2
hereof.
"Put Shares" shall have the meaning assigned to such term in Section 9.2
hereof.
"RCRA" shall mean the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), as amended, and all rules, regulations, standards,
guidelines, and publications issued thereunder.
"Registrable Securities" shall mean any shares of Common Stock purchased
upon the exercise of any Warrant, any shares of Common Stock issued in payment
of Capitalized Interest pursuant to Section 3.1 hereof, and any shares of Common
Stock purchased pursuant to Article 10 hereof.
"Removal," "Remedial" and "Response" actions shall include the types of
activities covered by CERCLA, RCRA, and other comparable Environmental Laws, and
whether the activities are those which might be taken by a government entity or
those which a government entity or any other person might seek to require of
waste generators, handlers, distributors, processors, users, storers, treaters,
owners, operators, transporters, recyclers, reusers, disposers, or other persons
under "removal," "remedial," or other "response" actions.
"Reportable Event" shall mean any of the events which are reportable under
Section 4043 of ERISA and the regulations promulgated thereunder, other than an
occurrence for which the thirty (30) day notice contained in 29 C.F.R. Section
2615.3(a) is waived.
"Revolving Financing" shall mean a secured revolving line of credit
facility of the Loan Parties with the Senior Lenders in an aggregate amount not
to exceed $12,000,000.
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<PAGE> 15
"SEC" shall mean the Securities and Exchange Commission and any
governmental body or agency succeeding to the functions thereof.
"Securities" shall have the meaning assigned to such term in Section 2.3
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Security Agreement" shall have the meaning assigned to such term in
Section 4.1(e) hereof.
"Security Documents" shall mean the Security Agreement, the Mortgage, the
Collateral Assignment, the Pledge Agreement, the Financing Statements, and all
other documents, instruments and other materials necessary to create or perfect
the security interests created pursuant to the Security Agreement.
"Senior Credit Agreement" shall mean that certain Loan and Security
Agreement by and between the Loan Parties and Fleet Capital Corporation, dated
as of October 29, 1999.
"Senior Debt" shall mean, as of any date of determination, the indebtedness
of the Loan Parties classified as "Long Term Debt" in accordance with GAAP,
including the current portion thereof and including the outstanding balance of
the Revolving Financing. The Subordinated Debt shall not be included in the
Senior Debt.
"Senior Financing" shall mean, collectively, the Revolving Financing and
the Term Financing.
"Senior Lenders" shall mean the banks party to the Senior Credit Agreement.
"Stock Equivalents" shall mean any option, warrant, right or similar
security or claim exercisable into, exchangeable for, or convertible to shares
of Common Stock or the economic equivalent value of shares of Common Stock
(including, by way of illustration, stock appreciation rights).
"Subject Securities" shall mean the Warrants, any shares of Common Stock
purchased upon the exercise of any Warrant, any shares of Common Stock issued in
payment of Capitalized Interest pursuant to Section 3.1 hereof, and any Common
Stock purchased pursuant to Article 10 hereof.
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<PAGE> 16
"Subordinated Debt" shall mean any unsecured Indebtedness of the Loan
Parties (a) no part of the principal of which is stated to be payable or is
required to be paid (whether by way of mandatory sinking fund, mandatory
redemption, mandatory prepayment or otherwise) prior to September 30, 2006, and
the payment of the principal of and interest on which and other obligations of
the Loan Parties in respect thereof are subordinated to the prior payment in
full of the principal of and interest (including post-petition interest) related
to the Senior Financing and all other obligations and liabilities of the Loan
Parties to the Senior Lenders on terms and conditions first approved in writing
by the Senior Lenders and (b) otherwise containing terms, covenants and
conditions satisfactory in form and substance to the Senior Lenders, as
evidenced by their prior written approval thereof.
"Subsidiary" of any corporation shall mean any other corporation or limited
liability company of which the outstanding capital stock possessing a majority
of voting power in the election of directors (otherwise than as the result of a
default) is owned or controlled by such corporation directly or indirectly
through Subsidiaries.
"Term Financing" shall mean a secured term credit facility with the Senior
Lenders with an aggregate principal amount not to exceed $10,000,000, including
Capitalized Leases, on the Closing Date, on terms reasonably acceptable to
Purchaser.
"Transaction Documents" shall have the meaning assigned to such term in
Section 5.1(f) hereof.
"Transactions" shall mean the incurrence of debt and the issuance of equity
in connection therewith, as contemplated by this Agreement, the Notes and all
other agreements contemplated hereby and thereby.
"Underlying Common Stock" shall mean (i) the Common Stock issued or
issuable upon exercise of the Warrants and (ii) any equity securities issued or
issuable with respect to the securities referred to in clause (i) above by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"UST" shall mean an underground storage tank, including as that term is
defined, construed and otherwise used in RCRA and in rules, regulations,
standards, guidelines and publications issued pursuant to RCRA and comparable
state and local laws.
"Warrants" shall have the meaning assigned to such term in Section 2.2
hereof.
"Working Capital" shall mean as of any date the current assets of the Loan
Parties minus the current liabilities of the Loan Parties, but not Indebtedness,
as of such date, all determined in accordance with GAAP.
1.2 Accounting Principles. The character or amount of any asset, liability,
capital account or reserve and of any item of income or expense to be
determined, and any consolidation or other accounting computation to be made,
and the construction of any definition containing a financial term, pursuant to
this Agreement shall be determined or
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<PAGE> 17
made in accordance with generally accepted accounting principles in the
United States of America consistently applied ("GAAP"), unless such principles
are inconsistent with the express requirements of this Agreement.
1.3 Other Definitional Provisions; Construction. Whenever the context so
requires, neuter gender includes the masculine and feminine, the singular number
includes the plural and vice versa. The words "hereof" "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not in any particular provision of this agreement, and
references to section, article, annex, schedule, exhibit and like references are
references to this Agreement unless otherwise specified. A Default or Event of
Default shall "continue" or be "continuing" until such Default or Event of
Default has been cured or waived by Purchaser. References in this Agreement to
any Persons shall include such Persons, successors and permitted assigns. Other
terms contained in this Agreement (which are not otherwise specifically defined
herein) shall have meanings provided in Article 9 of the Maryland Uniform
Commercial Code on the date hereof to the extent the same are used or defined
therein.
ARTICLE 2
ISSUE AND SALE OF SECURITIES
2.1 Authorization and Issuance of the Notes. The Loan Parties have duly
authorized the issuance and sale to Purchaser of (i) $6,650,000 in aggregate
principal amount of the Loan Parties' Series A Senior Subordinated Notes Due
September 30, 2006 (including any Series A Notes issued in substitution therefor
pursuant to Sections 6.3 and 6.4 hereof, any Series A Notes issued in payment of
any Capitalized Interest pursuant to Section 3.1, and any Series A Notes issued
in exchange for Put Shares pursuant to Section 9.4 or Section 9.5, the "Series A
Notes"), to be substantially in the form of the Series A Note attached hereto as
Exhibit A and (ii) $350,000 in aggregate principal amount of the Loan Parties'
Series B Subordinated Notes Due September 30, 2006 (including any Series B Notes
issued in substitution therefor pursuant to Sections 6.3 and 6.4 hereof, any
Series B Notes issued in payment of any Capitalized Interest pursuant to Section
3.1, and any Series B Notes issued in exchange for Put Shares pursuant to
Section 9.4 or Section 9.5, the "Georgia Notes"), to be substantially in the
form of the Georgia Note attached hereto as Exhibit A-1 ") (the Series A Notes
and the Georgia Notes are referred to herein at the "Notes").
2.2 Authorization and Issuance of the Warrants. IGI has duly authorized the
issuance and sale to Purchaser of stock purchase warrants substantially in the
form of the warrant attached hereto as Exhibit B (collectively, the "Warrants")
evidencing Purchaser's right to acquire 1,907,543 shares of Common Stock.
2.3 Sale and Purchase. Subject to the terms and conditions and in reliance
upon the representations, warranties and agreements set forth herein, the Loan
Parties shall sell to Purchaser, and Purchaser shall purchase from the Loan
Parties, the Notes in the
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<PAGE> 18
aggregate principal amount set forth in Section 2.1 hereof for $7,000,000 in the
aggregate, and IGI shall sell to Purchaser, and Purchaser shall purchase from
IGI the Warrants for $100 in the aggregate. (The Warrants and the Notes are
sometimes referred to herein collectively as the "Securities.")
2.4 The Closing. Delivery of and payment for the Securities (the "Closing")
shall be made at the offices of Arnold & Porter, 555 Twelfth Street, N.W.,
Washington, D.C., commencing at 10:00 a.m., local time, on October 29, 1999 or
at such place or on such other date on or before October 31, 1999 as may be
mutually agreeable to the Loan Parties and Purchaser. The date and time of the
Closing as finally determined pursuant to this Section 2.4 are referred to
herein as the "Closing Date." Delivery of the Securities shall be made to
Purchaser against payment of the purchase price therefor, less any unpaid Loan
Points, the Closing Processing Fee and any other amounts payable pursuant to
Section 4.1(l) hereof, in federal funds by check or draft payable to or upon the
order of the Loan Parties, or by wire transfer of immediately available funds in
the manner agreed to by the Loan Parties and Purchaser. The Notes shall be
issued in such name or names and in such permitted denomination or denominations
as set forth in Annex A or as Purchaser may request in writing not less than two
(2) Business Days before the Closing Date.
ARTICLE 3
REPAYMENT OF THE NOTES
3.1 Interest Rates and Interest Payments. The Notes will bear interest on
the outstanding principal amount thereof at a fixed rate of fourteen and
one-half percent (14.5%) per annum, 12.5% of which shall be payable in cash by
the Loan Parties on the first Business Day of each month (each such date
referred to as an "Interest Payment Date") and 2.0% of which shall be
capitalized on such Interest Payment Date and added to the principal of the
Notes (such capitalized interest being hereinafter referred to as "Capitalized
Interest"). On the Interest Payment Date occurring in October of each year, the
Loan Parties shall issue to each holder of a Note a note substantially in the
form attached hereto as Exhibit A in the amount of the Capitalized Interest
accrued in respect of such Note; provided that the Loan Parties may, on such
Interest Payment Date, at their election, in lieu of issuing such note, pay such
Capitalized Interest in cash or deliver shares of Common Stock having an
aggregate Market Price equal to such Capitalized Interest; and provided further
that all unpaid Capitalized Interest payable upon the maturity of the Notes,
together with all interest accrued thereon, shall be paid in cash by the Loan
Parties. Interest on the Notes will be computed on the basis of a year of 360
days, composed of twelve 30-day months, and the actual number of days elapsed.
3.2 Repayment of the Notes. The Loan Parties jointly and severally covenant
and agree to repay the unpaid principal balance of the Notes in full, together
with all accrued and unpaid interest (including, without limitation, Capitalized
Interest and interest accrued thereon), fees and other amounts due thereunder,
on September 30, 2006.
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<PAGE> 19
3.3 Optional Prepayment of Notes. Subject to the terms of this Section 3.3,
the Loan Parties may prepay the outstanding principal amount of the Notes in
whole or in part in multiples of $100,000 at any time at a price equal to (1)
the accrued interest, if any, to the date set for prepayment, plus (2) a
prepayment fee representing the amortization of certain of Purchaser's costs
incurred in connection with the purchase of the Notes equal to the principal
amount prepaid multiplied by the following percentage:
<TABLE>
<CAPTION>
If Prepaid During
the 12-Month Period
Ending on September 30
of the Following Years: Percentage
<S> <C>
2000 5%
2001 4%
2002 3%
2003 2%
2004 1%
</TABLE>
provided, however, that no prepayment fee shall be applied to any prepayment of
the outstanding principal amount of the Notes in connection with any prepayment
attributable to Life Insurance proceeds. Any prepayment must be at least equal
in the aggregate to $100,000 (or such lesser principal amount then outstanding
under all of the Notes). All such prepayments shall be applied to the
outstanding principal in the inverse order of maturity after application of such
prepayment to any accrued interest and prepayment premium payable in connection
therewith.
3.4 Notice of Optional Prepayment. If the Loan Parties shall elect to
prepay any Notes pursuant to Section 3.3 hereof, the Loan Parties shall give
notice of such prepayment to each holder of the Notes to be prepaid not less
than thirty (30) days or more than ninety (90) days prior to the date fixed for
prepayment, specifying (i) the date on which such prepayment is to be made, (ii)
the principal amount of such Notes to be prepaid on such date, and (iii) the
premium, if any, and accrued interest applicable to the prepayment. Such notice
shall be accompanied by a certificate of the Chairman of the Board of Directors,
the President or the Vice President and of the Treasurer of the Loan Parties
that such prepayment is being made in compliance with Section 3.3. Notice of
prepayment having been so given, the aggregate principal amount of the Notes
specified in such notice, together with accrued interest thereon and the
premium, if any, shall become due and payable on the prepayment date set forth
in such notice.
3.5 Mandatory Prepayment.
(a) The Notes shall be prepaid in full, together with all interest, fees
and expenses plus a prepayment premium computed in accordance with Section 3.3,
as if such prepayment were a voluntary prepayment, in the event of a Change of
Control; provided, however, that no prepayment premium shall be payable in
connection with any prepayment of the outstanding principal amount of the Notes
made by reason of clause (e) of the definition of "Change in Control."
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(b) Not later than the third Business Day following the exercise by any
holder of any warrant, option or other security exercisable for or convertible
into Common Stock of such holder's rights thereunder, IGI shall apply 100% of
the cash proceeds received with respect thereto to prepay the Notes. Such
prepayment shall be made without any prepayment premium and shall be applied to
the outstanding principal in inverse order of maturity after application of such
prepayment to any accrued interest and other amounts payable under the Notes.
3.6 Home Office Payment. So long as Purchaser or its successors and assigns
shall be the holder of any Note, and notwithstanding anything contained in this
Agreement or such Note to the contrary, the Loan Parties will pay all sums
becoming due on such Note for principal, premium, if any, and interest by the
method and at the address specified for such purpose below the holder's name in
Annex A, or by such other method or at such other address as the holder shall
have from time to time specified to the Loan Parties in writing for such
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Loan Parties made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, the holder shall surrender such Note for cancellation, reasonably
promptly after such request, to the Loan Parties at their principal executive
office.
3.7 Taxes. Any and all payments by the Loan Parties hereunder or under the
Notes or other Purchase Documents which are made to or for the benefit of
Purchaser shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings
and penalties, interests and all other liabilities with respect thereto
(collectively, "Taxes"), excluding, taxes imposed on Purchaser's net income or
capital and franchise taxes imposed on it by the jurisdiction under the laws of
which it is organized or any political subdivision thereof (all such nonexcluded
Taxes being hereinafter referred to as "Covered Taxes"). If any Loan Party shall
be required by law to deduct any Covered Taxes from or in respect of any sum
payable hereunder or under any Notes or other Purchase Document to or for the
benefit of Purchaser, the sum payable shall be increased as may be necessary so
that after making all required deductions of Covered Taxes (including deductions
of Covered Taxes applicable to additional sums payable under this paragraph),
Purchaser receives an amount equal to the sum it would have received had no such
deductions been made. The Loan Parties shall make such deductions and the Loan
Parties shall pay the full amount so deducted to the relevant taxation authority
or other authority in accordance with applicable law. In addition, the Loan
Parties agrees to pay any present or future stamp, documentary, excise,
privilege, intangible or similar levies that arise at any time or from time to
time from any payment made under any and all Purchase Documents or from the
execution or delivery by the Loan Parties or from the filing or recording or
maintenance of, or otherwise with respect to the exercise by Purchaser of its
rights under any and all Purchase Documents (collectively, "Other Taxes"). The
Loan Parties will indemnify Purchaser for the full amount of Covered Taxes
imposed on or with respect to amounts payable hereunder and Other Taxes, and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. Payment of this indemnification shall be made within thirty
(30) days from the date Purchaser provides the Loan Parties with a certificate
certifying and setting forth in reasonable detail the calculation thereof as
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to the amount and type of such Taxes. Any such certificates submitted by
Purchaser in good faith to the Loan Parties shall, absent manifest error, be
final, conclusive and binding on all parties. The obligation of the Loan Parties
under this Section 3.7 shall survive the payment of the Notes and the
termination of this Agreement. Within thirty (30) days after the Loan Parties
having received a receipt for payment of Covered Taxes and/or Other Taxes, the
Loan Parties shall furnish to Purchaser, the original or certified copy of a
receipt evidencing payment thereof.
3.8 Maximum Lawful Rate. This Agreement, the Notes and the other Purchase
Documents are hereby limited by this Section 3.8. In no event, whether by reason
of acceleration of the maturity of the amounts due hereunder or otherwise, shall
interest and fees contracted for, charged, received, paid or agreed to be paid
to Purchaser exceed the maximum amount permissible under such applicable law.
If, from any circumstance whatsoever, interest and fees would otherwise be
payable to Purchaser in excess of the maximum amount permissible under
applicable law, the interest and fees shall be reduced to the maximum amount
permitted under applicable law. If from any circumstance, Purchaser shall have
received anything of value deemed interest by applicable law in excess of the
maximum lawful amount, an amount equal to any excess of interest shall be
applied to the reduction of the principal amount of the Notes, in such manner as
may be determined by Purchaser, and not to the payment of fees or interest, or
if such excessive interest exceeds the unpaid balance of the principal amount of
the Notes, such excess shall be refunded to the Loan Parties.
3.9 Capital Adequacy. If, after the date hereof, either the introduction of
or any change of the interpretation of any law or the compliance by Purchaser
with any guideline or request from any governmental authority (whether or not
having the force of law) has or would have the effect of reducing the rate of
return on the capital or assets of Purchaser as a consequence of, as determined
by Purchaser in its sole discretion, the existence of Purchaser's obligations
under this Agreement or any other Purchase Documents, then, upon demand by
Purchaser, the Loan Parties immediately shall pay to Purchaser, from the time as
specified by Purchaser, additional amounts sufficient to compensate Purchaser in
light of such circumstances. The obligations of the Loan Parties under this
Section 3.9 shall survive the payments of the Notes and the termination of this
Agreement.
ARTICLE 4
CONDITIONS
4.1 Conditions to Purchase of Securities. The obligation of Purchaser to
purchase and pay for the Securities is subject to the satisfaction, prior to or
at the Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties contained in Article 5 hereof shall be true and correct in all
material respects at and as of the Closing Date as though then made, except
to the extent of
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changes caused by the transactions expressly contemplated herein and except
to the extent that representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall be as
of such earlier date.
(b) Material Adverse Change. There will have been no material adverse
change in the business or financial condition of the Loan Parties or the
capital markets since August 3, 1999.
(c) Employment Agreements. IGI shall have entered into employment
agreements with Paul Woitach and Robert McDaniel on terms reasonably
satisfactory to Purchaser, and such employment agreements shall be in full
force and effect as of the Closing Date and shall not have been amended or
modified. The Loan Parties shall have provided Purchaser with copies of all
employment contracts and all other agreements providing compensation in any
form whatsoever, including but not limited to, any benefit plans, between
the Loan Parties and any and all directors, officers or employees of the
Loan Parties.
(d) Working Capital. IGI shall have no less than $10,000,000 of
Working Capital as of the Closing.
(e) Security Agreement; Collateral Assignment. The Loan Parties and
Purchaser shall have entered into (i) a security agreement, with Purchaser
subordinated in lien priority only to the Liens in favor of the Senior
Lender as contemplated therein, in form and substance as set forth in
Exhibit C attached hereto (as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Security Agreement") and (ii) a trademark security agreement and a patent
security agreement, each in form and substance as set forth in Exhibit D
(collectively, as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof, the "Collateral
Assignment"). The Loan Parties shall have executed and delivered to
Purchaser such financing statements ("Financing Statements") as Purchaser
shall require in order to perfect and maintain the continued perfection of
the security interest created by the Security Agreement. Purchaser shall
have received reports of filings with appropriate government agencies
showing that there are no Liens on the assets of the Loan Parties other
than Permitted Liens.
(f) Mortgage and Title Insurance. The Loan Parties, as applicable,
shall have executed and delivered mortgages and assignments of rents and
leases (as the same may be amended, modified or supplemented and in effect
from time to time in accordance with the terms thereof, the "Mortgages")in
form and substance as set forth in Exhibit E attached hereto encumbering
(i) each of the parcels of real property owned by the Loan Parties and
located in New Jersey and (ii) the Georgia Collateral. Notwithstanding
anything contained herein to the contrary, the Georgia Collateral shall
only secure the payment of the Georgia Notes and the performance of the
obligations of the Loan Parties in connection therewith. The Loan Parties
shall also have delivered to the Purchaser (i) a survey of each parcel of
real estate owned or leased by any of the Loan Parties, together
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with appropriate certifications as may be requested by Purchaser and (ii) a
fully paid title insurance policy issued by a nationally-recognized title
insurance company with such endorsements as Purchaser may request, insuring
the Lien of the Mortgage and showing only those items shown on the
"Permitted Encumbrances Schedule" contemplated by Section 7.2(b)(iv) as
exceptions to title.
(g) Shareholders' Equity. As of the Closing, IGI shall have not less
than $5,300,000 of shareholders' equity as determined in accordance with
GAAP.
(h) Environmental Reports. Purchaser shall have received reports
covering the Loan Parties' properties in form and substance satisfactory to
Purchaser regarding the Loan Parties' compliance with Environmental Laws.
(i) Senior Financing. The Loan Parties and the Senior Lenders shall
have consummated the Senior Financing, including an inter-creditor
agreement between the Senior Lenders and Purchaser, on terms reasonably
satisfactory to Purchaser.
(j) Life Insurance. The Loan Parties shall have delivered to Purchaser
a paid life insurance policy insuring the lives of each of Paul Woitach and
Robert McDaniel in the amount of $1,000,000, and in each case naming
Purchaser as the beneficiary and issued by a carrier reasonably acceptable
to Purchaser (the "Life Insurance").
(k) Closing Documents. The Loan Parties will have delivered or caused
to be delivered to Purchaser all of the following documents in form and
substance satisfactory to Purchaser:
(i) one or more Notes (as designated by Purchaser pursuant to
Section 2.3 hereof) in aggregate original principal amounts as set
forth herein, duly completed and executed by the Loan Parties;
(ii) one or more Warrants (as designated by Purchaser pursuant to
Section 2.3 hereof) evidencing the right to acquire the number of
shares of IGI Common Stock set forth in Section 2.2 hereof, subject to
adjustment from time to time in accordance with the terms thereof;
(iii) certificates of good standing dated not more than 10 days
prior to the Closing Date for each of the Loan Parties issued by the
State of Delaware and the States of Arkansas, California, Georgia,
Maryland, Mississippi, New Hampshire, New Jersey, Pennsylvania and
Texas;
(iv) a copy of the Charter Documents of each of the Loan Parties,
certified by the appropriate governmental official of the jurisdiction
of its incorporation as of a date not more than 10 days prior to the
Closing Date;
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(v) a copy of the Bylaws of each of the Loan Parties, certified
as of the Closing Date by the secretary or assistant secretary of the
respective Loan Parties;
(vi) a certificate of the secretary or the assistant secretary of
each of the Loan Parties, certifying as to the names and true
signatures of the officers of the respective Loan Party authorized to
sign this Agreement and the other documents to be delivered by the
respective Loan Party hereunder;
(vii) copies of the resolutions duly adopted by the each of the
Loan Parties' board of directors authorizing the execution, delivery
and performance by the respective Loan Party of this Agreement and
each of the other agreements, instruments and documents contemplated
hereby to which the respective Loan Party is a party, and the
consummation of all of the other Transactions, certified as of the
Closing Date by the secretary or assistant secretary of the respective
Loan Party;
(viii) a certificate dated as of the Closing Date from an officer
of each of the Loan Parties stating that the conditions specified in
this Section 4.1 have been fully satisfied or waived by Purchaser;
(ix) certificates of insurance evidencing the existence of all
insurance required to be maintained by the Loan Parties pursuant to
Section 7.1(c), and Purchaser shall be satisfied with the type and
extent of such coverage;
(x) an opinion of Hale and Dorr LLP, counsel to the Loan Parties,
in form and substance satisfactory to Purchaser;
(xi) copies of all material leases to which the Loan Parties are
a party; and
(xii) such other documents relating to the Transactions
contemplated by this Agreement as Purchaser or its special counsel may
reasonably request.
(l) Purchaser's Fees and Expenses.
(i) Loan Points. On the Closing Date, the Loan Parties shall pay
the balance of the Loan Points to Purchaser or it designee (and the
Loan Parties hereby authorize Purchaser to deduct from the aggregate
proceeds from the sale of the Notes by the Loan Parties, the unpaid
amount of such Loan Points);
(ii) Closing Processing Fee: On the Closing Date, the Loan
Parties shall pay the Closing Processing Fee to ACS-CIC (and the Loan
Parties hereby authorize Purchaser to deduct from the aggregate
proceeds
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from the sales of the Notes in the Loan Parties, the unpaid amount of
such Closing Processing Fee); and
(iii) Other Fees and Expenses. On the Closing Date, the Loan
Parties shall have paid the fees and expenses of Purchaser, payable by
the Loan Parties pursuant to Section 12.4 hereof (and the Loan Parties
hereby authorize Purchaser to deduct from the aggregate proceeds of
the sale of the Notes by the Loan Parties, all such amounts).
(m) Legal Investment. On the Closing Date, Purchaser's purchase of the
Securities shall not be prohibited by any applicable law, rule or
regulation of any Governmental Authority (including, without limitation,
Regulations T, U or X of the Board of Governors of the Federal Reserve
System) as a result of the promulgation or enactment thereof or any changes
therein, or change in the interpretation thereof by any Governmental
Authority, subsequent to the date of this Agreement.
(n) Proceedings. All proceedings taken or required to be taken in
connection with the transactions contemplated hereby to be consummated at
or prior to the Closing and all documents incident thereto will be
satisfactory in form and substance to Purchaser and its special counsel.
(o) Waiver. Any condition specified in this Section 4.1 may be waived
by Purchaser; provided that no such waiver will be effective against
Purchaser unless it is set forth in a writing executed by Purchaser.
(p) Due Diligence. Purchaser shall have completed its business, legal
and accounting due diligence review of the Loan Parties and related
matters.
(q) Credit Approval. Purchaser shall have completed its credit
approval process for the transactions contemplated herein.
(r) Background Investigations. Purchaser shall be satisfied with the
results of background investigations of Edward B. Hager, Paul Woitach and
Fred Hanuschek.
(s) Payoff Letters. The Loan Parties shall have delivered to Purchaser
payoff letters and lien releases from the Loan Parties' existing
institutional lenders.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
5.1 Representations and Warranties of the Loan Parties. As a material
inducement to Purchaser to enter into this Agreement and purchase the Notes and
the
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Warrants, the Loan Parties jointly and severally hereby represent and warrant to
Purchaser as follows:
(a) Organization and Power. Each of the Loan Parties (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (ii) has all requisite corporate power and
authority and all material licenses, permits, approvals and authorizations
necessary to own and operate its properties, to carry on its business as
now conducted and presently proposed to be conducted and to carry out the
Transactions, (iii) has its principal place of business at Wheat Road and
Lincoln Avenue, Buena (Atlantic County), New Jersey 08310, and (iv) is
qualified to do business in the States of Arkansas, California, Georgia,
Maryland, Mississippi, New Hampshire, New Jersey, Pennsylvania and Texas,
which include every jurisdiction where the failure to so qualify might
reasonably be expected to have a Material Adverse Effect. The copies of the
organizational documents of each of the Loan Parties which have been
furnished to Purchaser reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete.
(b) Principal Business. The Loan Parties are diversified companies
primarily engaged in the business of (i) producing and marketing poultry
vaccines and related products, (ii) producing and marketing companion pet
products such as pharmaceuticals, nutritional supplements and grooming
aids, (iii) producing and marketing cosmetics and skin care products, and
(iv) developing commercial applications for micro-encapsulation and
compatible or related technologies.
(c) Financial Statements and Financial Projections.
(i) Financial Statements. Historical Statements. IGI has
delivered to the Purchaser copies of its audited consolidated
year-end financial statements for and as of the end of the two
fiscal years ended December 31, 1998 (the "Annual Statements")
and copies of its financial statements for the seven (7) month
period ending on July 31, 1999 (the "Interim Statements"). The
Annual Statements and the Interim Statements were prepared from
the books and records maintained by IGI's management, are correct
and complete and fairly represent the consolidated financial
condition of IGI as of their dates and the results of operations
for the fiscal periods then ended and have been prepared in
accordance with GAAP consistently applied.
(ii) Financial Projections. IGI has delivered to the
Purchaser financial projections of IGI for the period September
30, 1999, through September 30, 2004, derived from various
assumptions of IGI's management (the "Financial Projections").
The Financial Projections represent a reasonable range of
possible results in light of the history of the business, present
and foreseeable conditions and the intentions of IGI's
management. The Financial Projections accurately reflect the
liabilities of
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IGI upon consummation of the transactions contemplated hereby as
of the Closing Date.
(iii) Accuracy of Financial Statements. IGI does not have
any material liabilities, contingent or otherwise, or forward or
long-term commitments that are not disclosed in the Annual
Statements or in the notes thereto, and except as disclosed
therein there are no unrealized or anticipated losses from any
commitments of IGI which may cause a Material Adverse Effect.
Since August 3, 1999, no Material Adverse Effect has occurred.
(d) Capital Stock and Related Matters. As of the Closing Date and
immediately thereafter, the authorized capital stock of IGI will consist of
(i) 50,000,000 shares of Common Stock of which 9,585,645 shares of Common
Stock are issued and outstanding and of which 1,907,543 shares of Common
Stock have been reserved for issuance upon exercise of the Warrants, and
(ii) 1,000,000 shares of preferred stock of IGI, $0.01 par value, of which
no shares are issued and outstanding. As of the Closing Date, IGI will not
have outstanding any stock or securities convertible or exchangeable for
any shares of its capital stock other than the Warrants and it will not
have outstanding any rights or options to subscribe for or to purchase its
capital stock or any stock or securities convertible into or exchangeable
for its capital stock, other than the Warrants and the warrants, options
and other securities identified on the "Outstanding Options and Warrants
Schedule" attached hereto. As of the Closing Date, IGI will not be subject
to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock, except as set forth
herein and the Charter Documents as in effect on the date hereof. As of the
Closing, all of the outstanding shares of IGI's capital stock will be
validly issued, fully paid and nonassessable.
There are no statutory or contractual stockholders' preemptive rights
with respect to the issuance of the Warrants hereunder. IGI has not
violated any applicable federal or state securities laws in connection with
the offer, sale or issuance of any of its capital stock, and the offer,
sale and issuance of the Securities hereunder do not require registration
under the Securities Act or any applicable state securities laws. There are
no agreements among IGI's stockholders with respect to the voting or
transfer of IGI's capital stock other than as contemplated herein.
(e) Subsidiaries. The Loan Parties do not own, or hold any rights to
acquire, any shares of stock or any other security or interest in any other
Person, and the Loan Parties have no Subsidiaries, except in each case as
set forth in the "Subsidiaries Schedule."
(f) Authorization; No Breach. The execution, delivery and performance
by the Loan Parties of this Agreement, the other Purchase Documents and all
other agreements contemplated hereby and thereby to which
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the Loan Parties are a party (collectively, the "Transaction Documents"),
and the consummation by the Loan Parties of the Transactions have been duly
authorized by each of the Loan Parties. The Transaction Documents have been
duly and validly executed and delivered by each of the Loan Parties and
constitute legal, valid and binding obligations of each of the Loan
Parties, enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
rights of creditors and other parties to contracts generally and by the
effect of general principles of equity, regardless of whether enforcement
is considered in a proceeding in equity or at law.. The execution and
delivery by each of the Loan Parties of the Transaction Documents and the
consummation by each of the Loan Parties of the Transactions do not and
will not (i) conflict with or result in a breach of the terms, conditions
or provisions of, (ii) constitute a default under, (iii) except as created
pursuant to the Security Documents, result in the creation of any Lien upon
any of the Loan Parties' capital stock or assets pursuant to, (iv) give any
third party the right to accelerate any obligation under, (v) result in a
violation of, or (vi) require any authorization, consent, approval,
exemption or other action by or notice to any Governmental Authority
pursuant to, the Charter Documents of any of the Loan Parties, or any law,
statute, rule or regulation to which any of the Loan Parties are subject,
or any agreement, instrument, order, judgment or decree to which any of the
Loan Parties are a party or to which they or their assets are subject.
(g) Governmental Approvals. Except as specifically provided by the
Transaction Documents, no registration with or consent or approval of, or
other action by, any Governmental Authority is or will be required in
connection with the consummation of the Transactions by the Loan Parties.
(h) No Material Adverse Change. Since August 3, 1999, there has been
no event or occurrence that is likely to have a Material Adverse Effect.
(i) Litigation. Except as described in the "Litigation Schedule,"
there are no actions, suits or proceedings at law or in equity or by or
before any arbitrator or any Governmental Authority now pending or, to the
best knowledge of the Loan Parties' management after due inquiry,
threatened against or filed by or affecting any of the Loan Parties or any
of their directors or officers or the businesses, assets or rights of the
Loan Parties. The Loan Parties and their directors or officers shall
promptly provide Purchaser with a copy of all pleadings of all lawsuits
filed against others and, in the case of other actions, a letter stating
the nature of such suits and a copy of all pleadings.
(j) Compliance with Laws. The Loan Parties are not in violation in any
material respect of any applicable Law which is material to the business of
any of the Loan Parties. The Loan Parties are not in default with respect
to any judgment, order, writ, injunction, or decree of any Governmental
Authority specifically naming any of the Loan Parties. The consummation of
the Transactions will not cause any default concerning any judgment, order,
writ,
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injunction or decree of any Governmental Authority specifically naming any
of the Loan Parties, and there is no investigation, enforcement action or
regulatory action pending or, to the best knowledge of the Loan Parties,
threatened against or affecting the Loan Parties by any Governmental
Authority, except as set forth on the "Pending or Threatened Actions
Schedule." Except as set forth in the "Pending or Threatened Actions
Schedule," there is no remedial or other corrective action that the Loan
Parties are required to take to remain in compliance with any judgment,
order, writ, injunction or decree of any Governmental Authority
specifically naming any of the Loan Parties or to maintain any material
permits, approvals or licenses granted by any Governmental Authority in
full force and effect. Except as disclosed on the Management Information
Schedule, during the past ten (10) years, none of the officers, directors
or management of any of the Loan Parties has been arrested or convicted of
any material crime nor has any of them been bankrupt or an officer or
director of a bankrupt company.
(k) Year 2000 Compliance. The Loan Parties have (i) initiated a review
and assessment of all areas within their businesses and operations that
could be materially adversely affected by the risk that computer
applications used by the Loan Parties may be unable properly to recognize
and perform date-sensitive functions involving certain dates prior to and
any date after December 31, 1999 (the "Year 2000 Problem"), (ii) developed
a plan and timetable for addressing the Year 2000 Problem on a timely
basis, and (iii) to date, implemented that plan in accordance with such
timetable. Based on the foregoing, the Loan Parties believe that all
computer applications that are material to their business and operations
are reasonably expected on a timely basis to be able properly to perform
date-sensitive functions for all dates before and after January 1, 2000,
except to the extent that a failure to do so could not reasonably be
expected to have a Material Adverse Effect.
(l) Environmental Protection. Except as specified in "Environmental
Schedule" and after giving effect to the Transactions: (a) the business of
the Loan Parties, the methods and means employed by the Loan Parties in the
operation thereof (including all operations and conditions at or in the
properties of the Loan Parties), and the assets owned, leased, managed,
used, controlled, held or operated by the Loan Parties, comply in all
material respects with all applicable Environmental Laws; (b) with respect
to the Properties and Facilities, and except as disclosed in the
Environmental Schedule, the Loan Parties have obtained, possess, and are in
full compliance with all permits, licenses, reviews, certifications,
approvals, registrations, consents, and any other authorizations required
under any Environmental Laws; (c) the Loan Parties have not received (i)
any written claim or notice of violation, lien, complaint, suit, order or
other written claim or notice to the effect that the Loan Parties are or
may be liable to any Person as a result of (A) the environmental condition
of any of their properties or any other property, or (B) the release or
threatened release of any Pollutant, or (ii) any letter or written request
for information under Section 104 of the CERCLA, or comparable state laws,
and to the best of the Loan Parties'
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knowledge, none of the operations of the Loan Parties is the subject of any
investigation by a Governmental Authority evaluating whether any remedial
action is needed to respond to a release or threatened release of any
Pollutant at the Properties and Facilities or at any other location,
including any location to which the Loan Parties have transported, or
arranged for the transportation of, any Pollutants with respect to the
Properties and Facilities; (d) except as disclosed in the Environmental
Schedule, neither the Loan Parties nor any prior owner or operator has
incurred in the past, or is now subject to, any Environmental Liabilities;
(e) except as disclosed in the Environmental Schedule, there are no Liens,
covenants, deed restrictions, notice or registration requirements, or other
limitations applicable to the Properties and Facilities, based upon any
Environmental Laws or other legal obligations; (f) there are no USTs
located in, at, on, or under the Properties and Facilities other than the
USTs identified in the Environmental Schedule as USTs; and each of those
USTs is in full compliance with all Environmental Laws and other legal
obligations, except as disclosed on the Environmental Schedule; and (g)
except as disclosed in the Environmental Schedule, there are no PCBs, lead
paint, asbestos (of any type or form), or materials, articles or products
containing PCBs, lead paint or asbestos, located in, at, on, under, a part
of, or otherwise related to the Properties and Facilities (including,
without limitation, any building, structure, or other improvement that is a
part of the Properties and Facilities), and all of the PCBs, lead paint,
asbestos, and materials, articles and products containing PCBs, lead paint
or asbestos identified in the Environmental Schedule are in full compliance
with all Environmental Laws and other legal obligations.
(m) Legal Investments; Use of Proceeds. The Loan Parties will use the
proceeds from the sale of the Notes to refinance existing debt in
conjunction with obtaining new senior financing. The Loan Parties are not
engaged in the business of extending credit for the purpose of purchasing
or carrying any "margin stock" or "margin security" (within the meaning of
Regulations T, U or X issued by the Board of Governors of the Federal
Reserve System), and no proceeds of the sale of the Notes will be used to
purchase or carry any margin stock or margin security or to extend credit
to others for the purpose of purchasing or carrying any margin stock or
margin security.
(n) Taxes. The Loan Parties have filed or caused to be filed all
Federal, state and local tax returns which are required to be filed by it,
and has paid or caused to be paid or established adequate reserves for all
taxes shown to be due and payable on such returns or on any assessments
received by it, including payroll taxes.
(o) Labor and Employment. The Loan Parties are and each of their Plans
are in compliance in all material respects with those provisions of ERISA,
the Code, the Age Discrimination in Employment Act, and the regulations and
published interpretations thereunder which are applicable to the Loan
Parties or any such Plan. As of the date hereof, no Reportable Event has
occurred with respect to any Plan as to which any of the Loan Parties are
or were required to file
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a report with the PBGC. No Plan has any material amount of unfunded benefit
liabilities (within the meaning of Section 4001(a)(18) of ERISA) or any
accumulated funding deficiency (within the meaning of Section 302(a)(2) of
ERISA), whether or not waived, and neither the Loan Parties nor any member
of the Controlled Group have incurred or expects to incur any material
withdrawal liability under Subtitle E of Title IV of ERISA to a
Multiemployer Plan. Except as reflected in the Loan Parties' balance sheets
dated as of December 31, 1998, the Loan Parties are in compliance in all
material respects with all labor and employment laws, rules, regulations
and requirements of all applicable domestic and foreign jurisdictions.
There are no pending or, to the best knowledge of the Loan Parties,
threatened labor disputes, work stoppages or strikes.
(p) Investment Company Act; Public Utility Holding Company Act. None
of the Loan Parties is (a) an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, or (b) a "holding company"
or a "subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
(q) Properties; Security Interests. The Loan Parties have good and
marketable title to, or valid leasehold interests in, all of the material
assets and properties used or useful by the Loan Parties in the Business
(collectively, the "Properties and Facilities"), subject to no Liens except
for Permitted Liens. All of the Properties and Facilities are in good
repair, working order and condition, normal wear and tear excepted, and all
such assets and properties are owned by the Loan Parties free and clear of
all Liens except for Permitted Liens. The Properties and Facilities
constitute all of the material assets, properties and rights of any type
used in or necessary for the conduct of the Business. The Security
Agreement creates and grants to Purchaser a valid and perfected first
priority security interest in all the collateral thereunder, subject only
to Permitted Liens. All real estate owned or leased by the Loan Parties is
listed on the "Properties Schedule."
(r) Intellectual Property; Licenses. The Loan Parties own or have the
right to use all Proprietary Rights necessary to conduct the Business as
heretofore conducted or as proposed to be conducted. All Proprietary Rights
registered in the name of the Loan Parties and applications therefor filed
by the Loan Parties are listed on the "Intellectual Property Schedule." No
event has occurred which permits, or after notice or lapse of time or both
would permit, the revocation or termination of any of the foregoing which
taken in isolation or when considered with all other such revocations or
terminations could have a Material Adverse Effect. The Loan Parties do not
have notice or knowledge of any facts or any past, present or threatened
occurrence that could preclude or impair the Loan Parties' ability to
retain or obtain any authorization necessary for the operation of the
Business.
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(s) Solvency. After giving effect to the Transactions, (i) the fair
value of the assets of the Loan Parties, at a fair valuation, will exceed
their debts and liabilities, subordinated, contingent or otherwise, (ii)
the present fair saleable value of the property of the Loan Parties will be
greater than the amount that will be required to pay the probable liability
of their debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured,
(iii) the Loan Parties will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, and (iv) the Loan Parties will not have unreasonably
small capital with which to conduct the business in which they are engaged
as such business is now conducted and is proposed to be conducted following
the Closing Date.
(t) Complete Disclosure. All factual information furnished by or on
behalf of the Loan Parties to Purchaser for purposes of or in connection
with this Agreement or the Transactions is, and all other such factual
information hereafter furnished by or on behalf of the Loan Parties will
be, true and accurate in all material respects on the date as of which such
information is furnished and not incomplete by omitting to state any fact
necessary to make such information not misleading at such time in light of
the circumstances under which such information was provided.
(u) Side Agreements. Neither the Loan Parties nor any Affiliate of the
Loan Parties nor any director, officer or employee of the Loan Parties or
any of their Affiliates, respectively, has entered into, as of the date
hereof, any agreement, either oral or written, with any individual or
business, pursuant to which the director, officer, employee, Loan Parties
or Affiliate have agreed to do anything beyond the requirements of the
formal, written contracts executed by the Loan Parties and disclosed to
Purchaser herein.
(v) Broker's or Finder's Commissions. No broker's or finder's or
placement fee or commission will be payable to any broker or agent engaged
by the Loan Parties or any of their officers, directors or agents with
respect to the issue of the Notes, the Warrants or the transactions
contemplated by this Agreement, including without limitation the
Transactions, except for fees payable to (i) Purchaser, and (ii) Berwind
Financial in an amount not to exceed $660,000 (plus reasonable expenses).
The Loan Parties agree to indemnify Purchaser and hold it harmless from
against any claim, demand or liability for broker's or finder's or
placement fees or similar commissions, whether or not payable by the Loan
Parties, alleged to have been incurred in connection with such
transactions, other than any broker's or finder's fees payable to Persons
engaged by Purchaser.
5.2 Absolute Reliance on the Representations and Warranties. All
representations and warranties contained in this Agreement and any instruments,
certificates, schedules
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or other documents delivered in connection herewith, shall survive the execution
and delivery of this Agreement, regardless of any investigation made by
Purchaser or on Purchaser's behalf.
ARTICLE 6
TRANSFER OF NOTES
6.1 Restricted Securities. Purchaser acknowledges that the Securities have
not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
from registration is available, and that the Loan Parties are not required to
register the Notes or the Warrants, as the case may be.
6.2 Legends; Purchaser's Representations. Purchaser hereby represents and
warrants to the Loan Parties that it is an "accredited investor" within the
meaning of Rule 501(a) under the Securities Act and is acquiring the Securities
for investment for its own account, with no present intention of dividing its
participation with others (except for a potential transfer or transfers of the
Securities to an affiliate or affiliates of Purchaser) or reselling or otherwise
distributing the same in violation of the Securities Act or any applicable state
securities laws. The Loan Parties may place an appropriate legend on the
Securities owned by Purchaser concerning the restrictions set forth in this
Article 6. Upon the assignment or transfer by Purchaser or any of its successors
or assignees of all or any part of the Securities, the term "Purchaser" as used
herein shall thereafter mean, to the extent thereof, the then holder or holders
of such Securities, or portion thereof.
6.3 Transfer of Notes. Subject to Section 6.2 hereof, a holder of a Note
may transfer such Note to a new holder, or may exchange such Note for Notes of
different denominations (but in no event of denominations of less than $500,000
in original principal amount), by surrendering such Note to the Loan Parties
duly endorsed for transfer or accompanied by a duly executed instrument of
transfer naming the new holder (or the current holder if submitted for exchange
only), together with written instructions for the issuance of one or more new
Notes specifying the respective principal amounts of each new Note and the name
of each new holder and each address therefor. The Loan Parties shall
simultaneously deliver to such holder or its designee such new Notes and shall
mark the surrendered Notes as canceled. In lieu of the foregoing procedures, a
holder may assign a Note (in whole but not in part) to a new holder by sending
written notice to the Loan Parties of such assignment specifying the new
holder's name and address; in such case, the Loan Parties shall promptly
acknowledge such assignment in writing to both the old and new holder. The Loan
Parties shall not be required to recognize any subsequent holder of a Note
unless and until the Loan Parties have received reasonable assurance that all
applicable transfer taxes have been paid.
6.4 Replacement of Lost Securities. Upon receipt of evidence reasonably
satisfactory to the Loan Parties of the mutilation, destruction, loss or theft
of any
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Securities and the ownership thereof, the Loan Parties shall, upon the written
request of the holder of such Securities, execute and deliver in replacement
thereof new Securities in the same form, in the same original principal amount
and dated the same date as the Securities so mutilated, destroyed, lost or
stolen; and such Securities so mutilated, destroyed, lost or stolen shall then
be deemed no longer outstanding hereunder. If the Securities being replaced have
been mutilated, they shall be surrendered to the Loan Parties; and if such
replaced Securities have been destroyed, lost or stolen, such holder shall
furnish the Loan Parties with an indemnity in writing to save it harmless in
respect of such replaced Security.
6.5 No Other Representations Affected. Nothing contained in this Article 6
shall limit the full force or effect of any representation, agreement or
warranty made herein or in connection herewith to Purchaser.
ARTICLE 7
COVENANTS
7.1 Affirmative Covenants. The Loan Parties covenant that, so long as all
or any of the principal amount of the Notes or any interest thereon shall remain
outstanding, and, thereafter, so long as the Purchaser owns any Warrants or
Underlying Common Stock, the Loan Parties shall:
(a) Existence. Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence.
(b) Businesses and Properties; Compliance with Laws. At all times (i)
do or cause to be done all things necessary to preserve, renew and keep in
full force and effect the rights, licenses, registrations, permits,
certifications, approvals, consents, franchises, patents, copyrights,
trademarks and trade names, and any other trade names which may be material
to the conduct of their businesses, (ii) comply in all material respects
with all material laws and regulations applicable to the operation of such
business, including but not limited to, all Environmental Laws, whether now
in effect or hereafter enacted and with all other applicable laws and
regulations, (iii) take all action which may be required to obtain,
preserve, renew and extend all rights, patents, copyrights, trademarks,
tradenames, franchises, registrations, certifications, approvals, consents,
licenses, permits and any other authorizations which may be material to the
operation of such business, (iv) maintain, preserve and protect all
property material to the conduct of such business, and (v) except for
obsolete or worn out equipment, keep their property in good repair, working
order and condition, normal wear and tear excepted, and from time to time
make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that
the business carried on in connection therewith may be properly conducted
at all times.
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(c) Insurance. Maintain insurance required by the Purchase Documents,
including but not limited to: (i) the Life Insurance until the Notes have
been repaid in full; (ii) coverage on their insurable properties (including
all inventory, equipment and real property) against the perils of fire,
theft and burglary; (iii) public liability; (iv) workers' compensation; (v)
business interruption; (vi) product liability; and (vii) such other risks
as are customary with companies similarly situated and in the same or
similar business as that of the Loan Parties under policies issued by
financially sound and reputable insurers in such amounts as are customary
with companies similarly situated and in the same or similar business. The
Loan Parties shall pay all insurance premiums payable by it and shall
deliver the policy or policies of such insurance (or certificates of
insurance with copies of such policies) to Purchaser. All insurance
policies of the Loan Parties shall contain endorsements, in form and
substance reasonably satisfactory to Purchaser, providing that the
insurance shall not be cancelable except upon thirty (30) days' prior
written notice to Purchaser. The holders of the Notes shall be shown as a
loss payee and an additional named insured party under all such insurance
policies.
(d) Obligations and Taxes. Pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon them or
upon their income or profits or in respect of their properties before the
same shall become delinquent or in default, as well as all lawful claims
for labor, materials and supplies or otherwise, which, if unpaid, might
give rise to Liens or charges upon such properties or any part thereof;
provided, however, that the Loan Parties shall not be required to pay and
discharge or to cause to be paid and discharged any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the Loan Parties
shall have set aside on their books adequate reserves with respect thereto.
(e) Financial Statements; Reports. Furnish to Purchaser:
(i) Annual Statements. Within ninety (90) days after the end of
each fiscal year, a balance sheet and statements of operations,
stockholders' equity and cash flows of IGI showing the financial
condition of IGI as of the close of such year and the results of
operations during such year, all the foregoing financial statements to
be audited by a firm of independent certified public accountants of
recognized national standing acceptable to Purchaser and accompanied
by an opinion of such accountants without material exceptions or
qualifications.
(ii) Monthly Statements. Within thirty (30) calendar days after
the end of each calendar month, financial statements (including a
balance sheet and cash flow and income statements) showing the
financial condition and results of operations of IGI as of the end of
each such month and for the then elapsed portion of the current fiscal
year, together with comparisons to the corresponding periods in the
preceding year and the budget for such periods, accompanied by a
certificate of an officer that
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such financial statements have been prepared in accordance with GAAP,
consistently applied (except for normal and recurring year-end
adjustments and the omission of footnotes), and setting forth in
comparative form the respective financial statements for the
corresponding date and period in the previous fiscal year.
(iii) Certificate of Compliance. Each financial statement
furnished to Purchaser pursuant to subsections (i) and (ii) of this
Section 7.1(e) shall be accompanied by a written certificate signed by
IGI's chief financial officer, chief accounting officer or treasurer
(A) to the effect that no Default or Event of Default has occurred
during the period covered by such statements or, if any such Default
or Event of Default has occurred during such period, setting forth a
description of such Default or Event of Default and specifying the
action, if any, taken by IGI to remedy the same, and (B) a compliance
certificate in the form of Exhibit F showing IGI's compliance with the
covenants set forth in Section 7.3.
(iv) Accountant Reports. Promptly after the receipt thereof,
copies of all reports, if any, submitted to IGI by independent
certified public accountants in connection with each annual, interim
or special audit or review of the financial statements of IGI made by
such accountants, including but not limited to, any comment letter
submitted by such accountants to management in connection with any
annual review.
(v) Projections. As soon as available, but in no event later than
December 15 of each year, a projection of IGI's balance sheet, and
income, retained earnings and cash flow statements for the following
three fiscal years; and within ten (10) business days after any
material update or amendment of any such plan or forecast, a copy of
such update or amendment, including a description of and reasons for
such update or amendment. Each such projection, update or amendment
shall be accompanied by a written certificate signed by IGI's chief
financial officer, chief accounting officer or treasurer to the effect
that it has been prepared on the basis of IGI's historical financial
statements and records, together with the assumptions set forth in
such projection and that it reflects expectations, after reasonable
analysis, of IGI's management as to the matters set forth therein.
(vi) Additional Information. Promptly, from time to time, such
other information regarding the compliance by IGI with the terms of
this Agreement and the other Purchase Documents or the affairs,
operations or condition (financial or otherwise) of IGI as Purchaser
may reasonably request and which is capable of being obtained,
produced or generated by IGI or of which IGI has knowledge.
(f) Litigation and Other Notices. Give Purchaser prompt written notice
of the following:
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(i) Orders; Injunctions. The issuance by any court or
governmental agency or authority of any injunction, order, decision or
other restraint specifically naming any of the Loan Parties and
prohibiting, or having the effect of prohibiting, the making of any
loan or the initiation of any litigation or similar proceeding seeking
any such injunction, order or other restraint.
(ii) Litigation. The written notice, filing or commencement of
any action, suit or proceeding against any of the Loan Parties whether
at law or in equity or by or before any court or any Federal, state,
municipal or other governmental agency or authority and which, if
adversely determined against any of the Loan Parties, could resulted
in uninsured liability in excess of $250,000 in the aggregate.
(iii) Environmental Matters. (i) Any release or threatened
release of any Pollutant required to be reported to any Federal, state
or local governmental or regulatory agency under any applicable
Environmental Laws, (ii) any Removal, Remedial or Response action
taken by any of the Loan Parties or any other person in response to
any Pollutant in, at, on or under, a part of or about any of the Loan
Parties' properties or any other property, (iii) any violation by any
of the Loan Parties of any Environmental Law, in each case, which
could result in a Material Adverse Effect, or (iv) any written notice,
claim or other information that any of the Loan Parties might be
subject to an Environmental Liability.
(iv) Default. Any Default or Event of Default, specifying the
nature and extend thereof and the action (if any) which is proposed to
be taken with respect thereto.
(v) Material Adverse Effect. Any development in the business or
affairs of any of the Loan Parties which could have a Material Adverse
Effect.
(vi) Board Meetings. Written notice of (a) each regular meeting
of each of the Loan Parties' Board of Directors at least thirty (30)
days in advance of such meeting and (b) each special meeting of the
Board of Directors no later than the date on which the members of the
Board of Directors are notified of such meeting, but in any case such
notice shall be delivered at least twenty-four (24) hours in advance
of such meeting. In addition, the Loan Parties will send Purchaser
copies of all reports and materials provided to members of the Board
of Directors at meetings or otherwise.
(g) ERISA. Comply in all material respects with the applicable
provisions of ERISA and the provisions of the Code relating thereto and
furnish to Purchaser (i) as soon as possible, and in any event within
thirty (30) days after
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the Loan Parties know or have reason to know thereof, notice of (A) the
establishment by the Loan Parties of any Plan, (B) the commencement by the
Loan Parties of contributions to a Multiemployer Plan, (C) any failure by
the Loan Parties or any of their ERISA Affiliates to make contributions
required by Section 302 of ERISA (whether or not such requirement is waived
pursuant to Section 303 of ERISA), or (D) the occurrence of any Reportable
Event with respect to any Plan or Multiemployer Plan for which the
reporting requirement is not waived, together with a statement of an
officer setting forth details as to such Reportable Event and the action
which the Loan Parties propose to take with respect thereto, together with
a copy of the notice of such Reportable Event given to the PBGC if any such
notice was provided by the Loan Parties, and (ii) promptly after receipt
thereof, a copy of any notice the Loan Parties may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan or
Multiemployer Plan, or to appoint a trustee to administer any Plan or
Multiemployer Plan, and (iii) promptly after receipt thereof, a copy of any
notice of withdrawal liability from any Multiemployer Plan.
(h) Maintaining Records; Access to Premises and Inspections. Maintain
financial records in accordance with generally accepted practices and, upon
reasonable notice, at all reasonable times and as often as any Purchaser
may reasonably request (and at any time after the occurrence and during the
continuation of a Default or Event of Default), permit any authorized
representative designated by Purchaser to visit and inspect the properties
and financial records of the Loan Parties and to make extracts from such
financial records, all at the Loan Parties' reasonable expense, and permit
any authorized representative designated by Purchaser to discuss the
affairs, finances and conditions of the Loan Parties with the Loan Parties'
chief financial officers and such other officers as the Loan Parties shall
deem appropriate, and the Loan Parties' independent public accountants.
(i) Board of Directors.
(i) The IGI's Board of Directors shall meet at least once per calendar
quarter. Purchaser shall have the right to designate for election such
number of the members of IGI's Board of Directors that bears the same ratio
to the total number of directors as the number of shares of Common Stock
owned by Purchaser and Underlying Common Stock for which any Warrants held
by Purchaser are exercisable bears to the total number of outstanding
shares of Common Stock, on a Fully Diluted Basis and rounded to the nearest
whole number; provided that so long as all or any of the principal amount
of the Notes or interest thereon shall remain outstanding, or for so long
as Purchaser shall hold Common Stock and Underlying Common Stock that, in
the aggregate, constitute at least five percent (5%) of the outstanding
shares of IGI's Common Stock, the Purchaser shall have the right to
designate at least one such director.
(ii) In the event Purchaser shall waive its right to designate a
Director pursuant to this Section 7.1(i), Purchaser may designate an
observer, without
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voting rights, who will be entitled to attend all meetings of IGI's Board
of Directors (including committees) and stockholders. Any observer
designated by Purchaser shall be entitled to notice of all meetings of
IGI's Board of Directors (including committee meetings) and to information
provided to Directors. Such observer shall receive reimbursement for
reasonable out-of-pocket expenses from the Loan Parties incurred in
connection with attendance at Board of Directors, committee and stockholder
meetings.
IGI's Board of Directors shall maintain the following committees:
(i) an executive committee; (ii) an audit committee; and (iii) a
compensation committee. The audit committee and the compensation committee
shall be comprised of directors who are not otherwise employed by the Loan
Parties. Purchaser shall have the right to designate one member of each of
such committees so long as any Note shall remain outstanding, or so long
as Purchaser Common Stock and Underlying Common Stock that, in the
aggregate, constitute at least five percent (5%) of the outstanding shares
of IGI's Common Stock
(j) Future Financings. The Loan Parties shall give to Purchaser an
opportunity to participate in any future financings of the Loan Parties.
7.2 Negative Covenants. The Loan Parties covenant that, so long as all or
any part of the principal amount of the Notes or any interest thereon shall
remain outstanding:
(a) Indebtedness. The Loan Parties shall not create, incur, assume
guarantee or be or remain liable for, contingently or otherwise, or suffer
to exist any Indebtedness, except:
(i) Indebtedness under this Agreement;
(ii) Indebtedness under the Senior Financing;
(iii) Indebtedness incurred in the ordinary course of business
with respect to customer deposits, trade payables and other unsecured
current liabilities not the result of borrowing and not evidenced by
any note or other evidence of indebtedness.; and
(iv) Indebtedness outstanding on the date hereof and set forth on
the "Indebtedness Schedule."
(b) Negative Pledge; Liens. The Loan Parties shall not create, incur,
assume or suffer to exist any Lien of any kind on any of their properties
or assets of any kind, except the following (collectively, "Permitted
Liens"):
(i) Liens created in connection with the Senior Financing, which
Liens Purchaser will subordinate to on terms that are reasonably
acceptable to Purchaser;
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(ii) Liens for or priority claims imposed by law that are
incidental to the conduct of business or the ownership of properties
and assets (including mechanic's, warehousemen's, attorneys' and
statutory landlords' liens) and deposits, pledges or liens to secure
statutory obligations, surety or appeal bonds or other liens of like
general nature incurred in the ordinary course of business and not in
connection with the borrowing of money; provided, however, that in
each case, the obligation secured is not overdue, or, if overdue, is
being contested in good faith and adequate reserves have been set up
by the Loan Parties as the case may be; and provided, further, that
the lien and security interest provided in the Security Documents or
any portion thereof created or intended to be created thereby is not,
in the opinion of Purchaser, unreasonably jeopardized thereby;
(iii) Liens securing the payments of taxes, assessments and
governmental charges or levies incurred in the ordinary course of
business that either (a) are not delinquent, or (b) are being
contested in good faith by appropriate legal or administrative
proceedings and as to which adequate reserves have been set aside on
their books, and so long as during the period of any such contest, the
Loan Parties shall suffer no loss of any privilege of doing business
or any other right, power or privilege necessary or material to the
operation of the Business;
(iv) Liens listed on the Permitted Encumbrances Schedule;
(v) extensions, renewals and replacements of Liens referred to in
clauses (i) through (iv) of this Section 7.2(b); provided, however,
that any such extension, renewal or replacement Lien shall be limited
to the property or assets covered by the Lien extended, renewed or
replaced and that the obligations secured by any such extension,
renewal or replacement Lien shall be in an amount not greater than the
amount of the obligations secured by the Lien extended, renewed or
replaced.
(c) Contingent Liabilities. The Loan Parties shall not become liable
for any Guaranties, except for the endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business.
(d) Leases. At no point shall the sum of the aggregate amount of
annualized payments on operating leases during any current or future twelve
(12) month period exceed $250,000.
(e) Capital Expenditures. The Loan Parties shall not make or commit to
make any payments in any fiscal year on account of the purchase or lease of
any assets that if purchased would constitute fixed assets or that if
leased would constitute a Capitalized Lease that in the aggregate would
cost more than $1,900,000 for the period beginning on the Closing Date and
ending on September 30, 2000, and $750,000 for each twelve (12) month
period thereafter
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ending on September 30; provided, however, that all such capital
expenditures and leases shall be made under usual and customary terms and
in the ordinary course of business. Annual limits after Fiscal Year 1999
may be reconsidered upon receipt of the Loan Parties' annual budget.
(f) Mergers, etc. The Loan Parties shall not merge into or consolidate
or combine with any other Person, or purchase, lease or otherwise acquire
(in one transaction or a series of related transactions) all or any part of
the property or assets of any Person other than purchases or other
acquisitions of inventory, materials, leases, property and equipment in the
ordinary course of business. Except as expressly permitted by the Security
Documents, the Loan Parties shall not sell, transfer or otherwise dispose
of any of their assets, including the collateral under the respective
Security Documents.
(g) Affiliate Transactions. The Loan Parties shall not make any loan
or advance to any director, officer or employee of the Loan Parties or any
Affiliate, or enter into or be a party to any transaction or arrangement
with any Affiliate of the Loan Parties, including, without limitation, the
purchase from, sale to or exchange of property with, any merger or
consolidation with or into, or the rendering of any service by or for, any
Affiliate, except (i) pursuant to the reasonable requirements of the Loan
Parties' business and upon fair and reasonable terms no less favorable to
the Loan Parties than would be obtained in a comparable arm's-length
transaction with a Person other than an Affiliate, and (ii) for the
cashless exercise of stock options by employees, officers or directors of
IGI.
(h) Dividends and Stock Purchases. The Loan Parties shall not directly
or indirectly: declare or pay any dividends or make any distribution of any
kind on their outstanding capital stock or any other payment of any kind to
any of their stockholders or their Affiliates (including any redemption,
purchase or acquisition of, whether in cash or in property, securities or a
combination thereof, any partnership interests or capital accounts or
warrants, options or any of their other securities), or set aside any sum
for any such purpose; provided, however, that this Section 7.2(h) shall not
apply to stock purchases pursuant to Article 9 hereof.
(i) Advances, Investments and Loans. The Loan Parties shall not
purchase, or hold beneficially any stock, other securities or evidences of
Indebtedness of, or make or permit to exist any loan, Guaranty or advance
to, or make any investment or acquire any interest whatsoever in, any other
Person (including, but not limited to, the formation or acquisition of any
Subsidiaries), except:
(i) securities issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality
thereof having maturities of not more than six months from the date of
acquisition;
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(ii) United States dollar-denominated time deposits, certificates
of deposit and bankers acceptances of any bank or any bank whose
short-term debt rating from Standard & Poor's Ratings Group, a
division of The McGraw-Hill Companies, Inc. ("S&P"), is at least A-1
or the equivalent or from Moody's Investors Service, Inc. ("Moody's")
is at least P-1 or the equivalent with maturities of not more than six
months from the date of acquisition;
(iii) commercial paper with a rating of at least A-1 or the
equivalent by S&P or at least P-1 or the equivalent by Moody's
maturing within six months after the date of acquisition;
(iv) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within six months
from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from either S&P or
Moody's;
(v) Investments in money market funds substantially all the
assets of which are comprised of securities of the types described in
clauses (i) through (iv) above;
(vi) deposit accounts maintained in accordance with any loan
agreement evidencing the Senior Financing;
(vii) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business;
(viii) receivables owing to the Loan Parties created or acquired
in the ordinary course of business and payable on customary trade
terms of the Loan Parties;
(ix) deposits made in the ordinary course of business consistent
with past practices to secure the performance of leases or in
connection with bidding on government contracts;
(x) advances to employees in the ordinary course of business for
business expenses; provided, however, that the aggregate amount of
such advances at any time outstanding shall not exceed $100,000, and
(xi) other Investments existing as of the date hereof as set
forth on the "Investments Schedule."
In determining the amount of Investments, acquisitions, loans, advances and
Guaranties, permitted pursuant to this Section 7.2(i), Investments and
acquisitions
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shall always be taken at the original cost thereof (regardless of any
subsequent appreciation or depreciation therein), loans and advances shall
be taken at the principal amount thereof then remaining unpaid, and
Guaranties shall be taken at the amount of obligations guaranteed thereby.
(j) Use of Proceeds. The Loan Parties shall not use any proceeds from
the sale of the Notes hereunder, directly or indirectly, for the purposes
of purchasing or carrying any "margin securities" within the meaning of
Regulations T, U or X 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."
(k) Stock Issuances. Except as provided in Section 3.1, the Loan
Parties shall not issue any capital stock or other equity interests or any
options or warrants to purchase, or securities convertible into capital or
equity interests or establish any stock appreciation rights or similar
programs based on the value of the Loan Parties' equity interests;
provided, however, that so long as no Default or Event of Default shall
exist or be continuing hereunder or be created as a result thereof, IGI may
issue shares of Common Stock in connection with IGI's employee incentive
awards and option plans provided that the aggregate amount of Common Stock
issuable pursuant to all such awards and Plans shall not exceed fifteen
percent (15%) of IGI's outstanding Common Stock, as of the Closing Date, on
a Fully Diluted Basis.
(l) Amendment of Charter Documents. The Loan Parties shall not amend,
terminate, modify or waive or agree to the amendment, modification or
waiver of any material term or provision of their Charter Documents, or
Bylaws.
(m) Subsidiaries. The Loan Parties shall not establish or acquire any
Subsidiary.
(n) Business. The Loan Parties shall not engage, directly or
indirectly, in any business other than the business of (i) producing
and marketing poultry vaccines and related products, (ii) producing
and marketing companion pet products such as pharmaceuticals,
nutritional supplements and grooming aids, (iii) producing and
marketing cosmetics and skin care products, and other related
activities and (iv) developing commercial applications for
micro-encapsulation and compatible and related technologies.
(o) Fiscal Year; Accounting. The Loan Parties shall not change
their Fiscal Year from ending on December 31 or method of accounting
(other than immaterial changes in methods), except as required by
GAAP.
(p) Establishment of New or Changed Business Locations. The Loan
Parties shall not relocate their principal executive offices or other
facilities, and it shall not establish new business locations or store
any inventory or other assets at
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a location not identified to Purchaser on or before the date hereof,
without providing not less than thirty (30) days advance written notice to
Purchaser.
(q) Changed or Additional Business Names. The Loan Parties shall
not change their corporate name or establish new or additional trade
names without providing not less than thirty (30) days advance written
notice to Purchaser.
(r) Amendment to Stock Option Plan. The Loan Parties shall not
amend their employee stock option plans without the prior written
consent of the Purchaser.
7.3 Financial Covenants. IGI covenants that, so long as all or any part of
the principal amount of the Notes or any interest thereon shall remain
outstanding, it shall maintain at the end of each calendar quarter (i.e., March
31, June 30, September 30 and December 31) (each such date being a "Measurement
Date") beginning with the calendar quarter ending December 31, 1999:
(a) Minimum Fixed Charges Coverage Ratio. A Minimum Fixed Charges
Coverage Ratio, calculated monthly on a rolling twelve-month basis, for the
applicable Measurement Date as follows:
<TABLE>
<CAPTION>
Period Ratio
<S> <C>
On 12-31-99 0.8 to 1.0
On 3-31-2000 1.01 to 1.0
On 6-30-2000 1.01 to 1.0
On 9-30-2000 1.01 to 1.0
From 10-1-2000 to 9-30-2001 1.01 to 1.0
From 10-1-2001 to 9-30-2002 1.20 to 1.0
From 10-1-2002 and thereafter 1.50 to 1.0
</TABLE>
(b) Maximum Leverage Ratio. A Maximum Leverage Ratio, calculated
monthly using EBITDA on a rolling twelve-month basis, for the applicable
Measurement Date as follows:
<TABLE>
<CAPTION>
Period Ratio
<S> <C>
On 12-31-99 6.0 to 1.0
On 3-31-2000 5.5 to 1.0
On 6-30-2000 5.0 to 1.0
On 9-30-2000 4.0 to 1.0
From the Closing Date to 9-30-2000 3.75 to 1.0
From 10-1-2000 and thereafter 3.5 to 1.0
</TABLE>
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(c) Maximum Debt to Equity Ratio. A Maximum Debt to Equity Ratio as
follows:
<TABLE>
<CAPTION>
Period Ratio
<S> <C>
From the Closing Date to 9-30-2000 4.25 to 1.0
From 10-1-2000 and thereafter 4.0 to 1.0
</TABLE>
ARTICLE 8
EVENTS OF DEFAULT
8.1 Events of Default. An Event of Default shall mean the occurrence of one
or more of the following described events:
(a) if any Loan Party shall default in the payment of (i) interest on
the Notes within five (5) days after its due date or (ii) principal of the
Notes when due, whether at maturity, upon notice of prepayment in
accordance with Sections 3.3 or 3.4, upon any scheduled payment date or by
acceleration or otherwise;
(b) if any Loan Party shall default under any agreement under which
any Indebtedness in an aggregate principal amount of $250,000 or more is
created in a manner entitling the holder of such Indebtedness to accelerate
the maturity of such Indebtedness.
(c) if any representation or warranty herein made by any Loan Party,
or any certificate or financial statement furnished pursuant to the
provisions hereof, shall prove to have been false or misleading in any
material respect as of the time made or furnished or deemed made or
furnished;
(d) if any Loan Party shall default in the performance of any
covenant, condition or provision of Section 7.1(h), 7.2 or 7.3;
(e) if a default or event of default shall occur under any of the
other Purchase Documents, beyond any applicable notice or cure periods;
(f) if any Loan Party shall default in the performance of any other
covenant, condition or provision of this Agreement, the Notes or the other
Purchase Documents, and such default shall not be remedied for a period of
thirty (30) days of the earlier of (i) written notice from a Purchaser of
such default or (ii) actual knowledge by any Loan Party of such default;
(g) if a proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in
respect of any Loan Party in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
for the appointment of a receiver,
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liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of any Loan Party or for any substantial part of their property,
or for the winding-up or liquidation of their affairs, and such proceeding
shall remain undismissed or unstayed and in effect for a period of sixty
(60) days;
(h) if any Loan Party shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment of or taking
possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of any Loan Party or for any substantial part of their property,
or shall make a general assignment for the benefit of creditors, or shall
fail generally to their debts as they become due, or shall take any action
in furtherance of any of the foregoing;
(i) if both the following events shall occur; (i) a Reportable Event,
the occurrence of which would have a Material Adverse Effect which could
cause the imposition of a Lien under Section 4068 of ERISA, shall have
occurred with respect to any Plan or Plans; and (ii) the aggregate amount
of the then "current liability" (as defined in Section 412(l)(7) of the
Internal Revenue Code of 1986, as amended) of all accrued benefits under
such Plan or Plans exceeds the then current value of the assets allocable
to such benefits by more than $100,000 at such time;
(j) if a final judgment which, with other undischarged final judgments
against any Loan Party, exceeds an aggregate of $250,000 (excluding
judgments to the extent the applicable Loan Party is fully insured or the
deductible or retention limit does not exceed $250,000 and with respect to
which the insurer has assumed responsibility in writing), shall have been
entered against any Loan Party if, within thirty (30) days after the entry
thereof, such judgment shall not have been discharged or execution thereof
stayed pending appeal, or if, within thirty (30) days after the expiration
of any such stay, such judgment shall not have been discharged;
(k) if any Security Document shall at any time after the Closing Date
cease for any reason to be in full force and effect or shall cease to
create perfected security interests in favor of Purchaser in the collateral
subject or purported to be subject thereto, subject to no other Liens other
than Permitted Liens, or such collateral shall have been transferred to any
Person without the prior written consent of the holders of a majority in
principal amount of the outstanding Notes; and
(l) a Change of Control shall have occurred.
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<PAGE> 47
8.2 Consequences of Event of Default.
(a) Bankruptcy. If an Event of Default specified in paragraphs (g),
(h) or (l) of Section 8.1 hereof shall occur, the unpaid balance of the
Notes and interest (including, without limitation, Capitalized Interest and
interest accrued thereon) accrued thereon and all other liabilities of the
Loan Parties to the holders thereof hereunder and thereunder shall be
immediately due and payable, without presentment, demand, protest or
(except as expressly required hereby) notice of any kind, all of which are
hereby expressly waived.
(b) Other Defaults. If any other Event of Default shall occur, the
holders of a majority of the outstanding principal balance of the Notes may
at their option, by written notice to the Loan Parties, declare the entire
unpaid balance of the Notes, as the case may be, and interest (including,
without limitation, Capitalized Interest and interest accrued thereon)
accrued thereon and all other liabilities of the Loan Parties hereunder and
thereunder to be forthwith due and payable, and the same shall thereupon
become immediately due and payable, without presentment, demand, protest or
(except as expressly required hereby) notice of any kind, all of which are
hereby expressly waived.
(c) Penalty Interest. Following the occurrence and during the
continuance of any Event of Default, the holders of the Notes shall be
entitled to receive, to the extent permitted by applicable law, interest on
the outstanding principal of, and premium and overdue interest, if any, on,
the Notes at a rate per annum equal to the interest rate thereon
(determined as provided in Section 3.1) plus three hundred (300) basis
points.
(d) Premium. In the event of any acceleration of Notes pursuant to
Section 8.2(b) hereof, the Loan Parties shall also pay to holders of Notes
the prepayment premium that would otherwise be payable upon any voluntary
prepayment of such Notes.
8.3 Security. Payments of principal of, and premium, if any, and interest
on, the Notes and all other obligations of the Loan Parties under this Agreement
or the Notes are secured pursuant to the terms of the Security Documents.
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ARTICLE 9
PUT OPTION
9.1 Grant of Option. IGI hereby grants to each holder of Subject Securities
(a "Holder") an option to sell to IGI, and IGI is obligated to purchase from
each Holder under such option (the "Put Option"), all (or such portion as is
designated by any such Holder pursuant to Section 9.3 below) of the Subject
Securities then owned by such Holder. This Put Option will be effective at any
time and from time to time after the earliest to occur of (i) the fifth
anniversary of the Closing Date, (ii) the date of the payment in full of the
outstanding principal, interest and fees of the Notes, (iii) the date of the
payment in full of the outstanding principal, interest and fees of the Senior
Debt, or (iv) the sale of IGI or of at least 30% of its assets as part of a
single transaction or series of related transactions, and will remain in effect
until the date on which the following three (3) conditions are satisfied: (i)
the average daily trading volume of the Common Stock for the six (6) month
period immediately preceding such date is at least equal to ten percent (10%) of
the aggregate number of shares of Common Stock and Underlying Common Stock owned
by Purchaser; provided, however, that such six (6) month period shall not
include the first thirty (30) day period immediately following a secondary
public offering of the Common Stock; and (ii) the Market Price of the Common
Stock on such date is at least equal to Five Dollars ($5.00) per share; and
(iii) IGI has an effective shelf registration statement on file with the
Securities and Exchange Commission covering the Common Stock and the Underlying
Common Stock owned by the Purchaser.
9.2 Put Price. In the event that any Holder exercises the Put Option, the
price (the "Put Price") to be paid to each such Holder pursuant to this
Agreement will be the sum of the amount determined by multiplying the number of
shares of Subject Securities (or, in the case of any Warrant, the number of
shares of Underlying Common Stock into which such Warrant is convertible) for
which the Put Option is being exercised (collectively, the "Put Shares") by the
Fair Market Value therefor.
9.3 Exercise of Put Option. If any Holder elects to exercise its Put
Option, such Holder shall give written notice to IGI and each other Holder of
such Holder's election to exercise the Put Option, specifying, among other
things, the date on which the Put Option Closing (as hereinafter defined) shall
occur, which date shall not be less than twenty-one (21) days after the date of
such notice. If a Holder receives such notice of another Holder's exercise of
such other Holder's Put Option and the Put Option of the Holder receiving such
notice is effective pursuant to Section 9.1, the Holder receiving such notice
may elect to exercise its Put Option and designate a Put Option Closing
simultaneous with that of such other Holder. IGI will provide each Holder
desiring to exercise its Put Option with the name and address of each other
Holder. Notwithstanding the foregoing, the right of each Holder to exercise its
Put Option shall be an individual and separate right, and the exercise of any
Put Option by any Holder shall not be conditioned upon the exercise by any other
Holder of its Put Option; provided, however,
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<PAGE> 49
that IGI shall not be required to redeem in any Put Option Closing shares of
Common Stock and Underlying Common Stock in excess of fifteen percent (15%) of
the shares of Common Stock that are issued and outstanding as of the date of
such Put Option Closing.
9.4 Certain Remedies. In the event that IGI defaults on its obligation to
purchase all or any portion of the Put Shares upon exercise of the Put Option by
any Holder, the Holder may elect, in addition to any other rights or remedies of
such Holder, either to (i) rescind its exercise of the Put Option, in which case
the Put Option will continue in full force and effect, or (ii) receive a Note in
the form attached hereto as Exhibit A, duly executed by IGI, payable to the
Holder in the principal amount of the Put Price, which Note shall constitute a
"Note" for all purposes hereunder and under the Transaction Documents; provided,
however, that such Note shall bear interest on the outstanding principal thereof
at a rate per annum equal to the Prime Rate, as such may adjust from time to
time, plus three hundred (300) basis points per annum; provided, further, that
IGI shall repay the unpaid principal balance of such Note in full, together with
all accrued and unpaid interest, fees and other amounts due thereunder, in 60
consecutive equal monthly payments commencing on the first Business Day of the
first full month following the execution of such Note and there shall be no
premium charged for prepaying such Note.
9.5 Put Option Closing. Each closing for the purchase and sale of the Put
Shares as to which any Holder has notified IGI of such Holder's intention to
exercise the Put Option (a "Put Option Closing") shall occur on the date
specified in such notice of exercise. At any Put Option Closing, to the extent
applicable, the Holder of the Put Shares will deliver the certificate or
certificates evidencing the Put Shares being purchased, duly endorsed in blank.
In consideration therefor, IGI will deliver to the Holder the Put Price, which
will be payable by cashier's or certified check, by wire transfer of immediately
payable funds to an account designated by such Holder, or, at the option of
Purchaser in its sole discretion, by note, provided such note contains terms
mutually acceptable to IGI and the Holder. In the event multiple Holders have
exercised the Put Option and there is insufficient cash available to pay each
such Holder the full amount of funds they have requested pursuant to the
preceding sentence, any payment of cash will be made on a pro rata basis among
such Holders in proportion to their respective number of Put Shares.
ARTICLE 10
PREEMPTIVE RIGHTS
10.1 Limited Preemptive Rights. If after the date of this Agreement, IGI
authorizes the issuance and sale of any shares of capital stock or any
securities containing options or rights to acquire any shares of capital stock
(other than in connection with an underwritten public offering, the issuance of
such securities in exchange for the securities or assets of another Person as a
part of an acquisition of a business as a going concern, or the grant of options
or rights to acquire no more than fifteen percent (15%) of shares of Common
Stock, on a Fully Diluted Basis, pursuant to an employee stock option plan) at
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any time that Purchaser holds any Common Stock or Warrants, IGI will offer to
sell to Purchaser a portion of such securities equal to the percentage
determined by dividing (i) the number of shares of Common Stock and Underlying
Common Stock (without duplication) then held by Purchaser by (ii) the number of
shares of Common Stock outstanding (determined on a Fully Diluted Basis). For
purposes of clause (ii) above, a share of Common Stock acquirable upon exercise
or conversion of options or rights to acquire any shares of Common Stock shall
be deemed outstanding only if the applicable conversion price, exercise price or
other acquisition price is equal to or less than the then current Market Price
of a share of Common Stock. Purchaser will be entitled to purchase such stock or
securities at the same price and on the same terms as such stock or securities
are to be offered to any other Person. Purchaser must exercise its purchase
rights within thirty (30) days after receipt of written notice from IGI
describing in reasonable detail the stock or securities being so offered, the
purchase price thereof, the payment terms and Purchaser's percentage allotment.
Upon the expiration of such period of thirty (30) days, IGI will be free to sell
such stock or securities which Purchaser has not elected to purchase during the
one hundred twenty (120) days following such expiration on terms and conditions
no more favorable to purchasers thereof than those offered to Purchaser. Any
stock or securities offered or sold by IGI after such one hundred twenty (120)
day period must be reoffered to Purchaser pursuant to the terms of this Section
10.1. Any stock or securities purchased by a Purchaser from IGI pursuant to this
Section 10.1 shall, upon such purchase and thereafter be deemed to be Securities
and Registrable Securities for all purposes of this Agreement.
10.2 Exceptions. The provisions of Section 10.1 shall not apply to
issuances of Common Stock upon exercise of the Warrants. The provisions of
Section 10.1 shall terminate upon the consummation of an underwritten public
offering of the Common Stock registered under the Securities Act with an
investment banking firm of national reputation as managing underwriter.
ARTICLE 11
REGISTRATION RIGHTS
11.1 Piggyback Registrations.
(a) Whenever IGI proposes to register any of its securities under the
Securities Act and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), IGI
will give prompt written notice (in any event within three Business Days
after its receipt of notice of any exercise of demand registration rights
other than under this Agreement) to all holders of Registrable Securities
with respect of the proposed offering at least thirty (30) days before the
initial filing with the SEC of such registration statement, and offer to
include in such filing such Registrable Securities as any such holder may
request. Each such holder of Registrable Securities desiring to have
Registrable Securities registered under this Section 11.1 shall advise IGI
in writing within fifteen (15) days after the date of receipt of
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such notice from IGI, setting forth the amount of such Registrable
Securities for which registration is requested. IGI shall thereupon include
in such filing the number of Registrable Securities for which registration
is so requested, and shall use its best efforts to effect registration
under the Securities Act of such Registrable Securities.
(b) The registration expenses of the holders of Registrable Securities
will be paid by IGI in all Piggyback Registrations to the extent provided
in Section 11.6.
(c) If a Piggyback Registration is an underwritten primary
registration on behalf of IGI, and the managing underwriters advise IGI in
writing that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in an
orderly manner in such offering within a price range acceptable to IGI, IGI
will include in such registration: (i) first, the securities IGI proposes
to sell, (ii) second, the Registrable Securities requested to be included
in such registration, pro rata among the holders of the securities
requested to be included in such registration, provided that no holders of
such securities will have priority for inclusion in such registration over
the holders of the Registrable Securities.
(d) If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of IGI's securities, and the managing
underwriters advise IGI in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
that can be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration, IGI will
include in such registration, the Registrable Securities requested to be
included in such registration, pro rata among the holders of other
securities requested to be included in such registration, provided that no
holders of such securities will have priority for inclusion in such
registration over the holders of the Registrable Securities.
(e) If any Piggyback Registration is an underwritten offering, the
selection of investment banker(s) and manager(s) for the offering must be
approved by the holders of a majority of the Registrable Securities who
request to be included in such Piggyback Registration. Such approval will
not be unreasonably withheld.
(f) If IGI has previously filed a registration statement with respect
to Registrable Securities pursuant to this Section 11.1, and if such
previous registration has not been withdrawn or abandoned, IGI will not
file or cause to be effected any other registration of any of its equity
securities or securities convertible or exchangeable into or exercisable
for its equity securities under the Securities Act (except on Form S-8 or
any successor form), whether on its own behalf or at the request of any
holder or holders of such securities, until a period of at least 180 days
has elapsed from the effective date of such previous registration.
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11.2 Demand Registration Rights.
(a) If, at any time after IGI has filed any registration statement
under the Securities Act or the Securities Exchange Act, except with
respect to registration statements filed on Form S-8 or any successor form,
IGI receives a written request by the holders of a majority of the
Registrable Securities to effect the registration under the Securities Act
of such shares of Common Stock, IGI shall follow the procedures described
in this Section 11.2. Within five (5) days of its receipt of such request,
IGI shall give written notice of such proposed registration (a "Demand
Registration") to all holders of Registrable Securities, and thereupon, IGI
shall, as expeditiously as possible, use its best reasonable efforts to
effect the registration on a form of general use under the Securities Act
of the shares it has been requested to register in such initial request and
in any response to such notice given to IGI within twenty (20) days after
IGI's giving of such notice; provided, however, that IGI shall not be
required to effect a Demand Registration if the value of the Registrable
Securities and the value of all other securities to be included in such
offering are less than $30,000,000 or if two or more Demand Registrations
have been undertaken.
(b) IGI may not be required to effect a registration pursuant to this
Section 11.2 during the first 180 days after the effective date of any
registration statement filed by IGI under Section 11.1 if the holders of
Registrable Securities requesting registration have been afforded the
opportunity to register in such registration all or a majority of their
Registrable Securities.
(c) IGI may include in any registration under this Section 11.2 any
other shares of Common Stock (including issued and outstanding shares of
stock as to which the holders thereof have contracted with IGI for
"piggyback" registration rights) so long as the inclusion in such
registration of such shares will not, in the opinion of the managing
underwriter of the shares of the stockholder or stockholders first
demanding registration (if the offering is underwritten), interfere with
the successful marketing in accordance with the intended method of sale or
other disposition of all the stock sought to be registered by such
demanding stockholder or stockholders pursuant to this Section 11.2.
11.3 S-3 Demand Registration Rights. In addition to the registration rights
provided in Sections 11.1 and 11.2 above, if at any time IGI is eligible to use
SEC Form S-3 (or any successor form) for registration of secondary sales of
Registrable Securities, any holder of Registrable Securities may request in
writing that IGI register shares of Registrable Securities on such form. Upon
receipt of such request, IGI will promptly notify all holders of Registrable
Securities in writing of the receipt of such request and each such Holder may
elect (by written notice sent to IGI within thirty (30) days of receipt of IGI's
notice) to have its Registrable Securities included in such registration
pursuant to this Section 11.3. Thereupon, IGI will, as soon as practicable, use
its best efforts to effect the registration on Form S-3 of all Registrable
Securities that IGI has so been requested to register by such holder for sale.
IGI will use its best efforts to qualify
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and maintain its qualification for eligibility to use Form S-3 for such
purposes. IGI shall not be required to effect more than three registrations
pursuant to this Section 11.3
11.4 Holdback Agreements.
(a) Each holder of Registrable Securities agrees not to effect any
public sale or distribution (including sales pursuant to Rule 144) of
equity securities of IGI, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days
prior to and the 90-day period (or such longer period, not to exceed 90
additional days, as the managing underwriter shall require) beginning on
the effective date of any underwritten Piggyback Registration in which
Registrable Securities are included or Demand Registration (except as part
of such underwritten registration), unless the underwriters managing the
registered public offering otherwise agree.
(b) IGI agrees (i) not to effect any public sale or distribution of
its equity securities, or any securities convertible into or exchangeable
or exercisable for such securities, during the seven days prior to and
during the 90-day period beginning on the effective date of or any
underwritten Piggyback Registration or Demand Registration (except as part
of such underwritten registration or pursuant to registrations on Form S-8
or any successor form), unless the underwriters managing the registered
public offering otherwise agree, and (ii) to use commercially reasonable
efforts to cause each holder of at least 10% (on a fully-diluted basis) of
its Common Stock, or any securities convertible into or exchangeable or
exercisable for Common Stock, purchased from IGI at any time after the date
of this Agreement (other than in a registered public offering) to agree not
to effect any public sale or distribution (including sales pursuant to Rule
144) of any such securities during such period (except as part of such
underwritten registration, if otherwise permitted), unless the underwriters
managing the registered public offering otherwise agree.
11.5 Registration Procedures. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, IGI will use commercially reasonable efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof (including the registration of Warrants
held by a holder of Registrable Securities requesting registration as to which
IGI has received reasonable assurances that only Registrable Securities will be
distributed to the public), and pursuant thereto IGI will as expeditiously as
possible:
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use commercially reasonable
efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments
or supplements thereto, IGI will furnish to the counsel selected by the
holders of a majority of the Registrable Securities covered by such
registration statement copies of all such
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<PAGE> 54
documents proposed to be filed, which documents will be subject to the
review of such counsel);
(b) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
(c) use commercially reasonable efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller of Registrable Securities reasonably requests
and do any and all other acts and things which may be reasonably necessary
or advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller (provided
that IGI will not be required to (i) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but
for this subparagraph, (ii) subject itself to taxation in any such
jurisdictions, (iii) consent to general service of process in each such
jurisdiction or (iv) undertake such actions in any jurisdiction other than
the states of the United States of America and the District of Columbia);
(d) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein, in light of the circumstances in which they were made,
not misleading, and, at the request of any such seller, IGI will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered
to purchasers of such Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading;
(e) use commercially reasonable efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by IGI are then listed and, if not so listed, to be
listed on the NASD automated quotation system and, if listed on the NASD
automated quotation system, use its best efforts to secure designation of
all such Registrable Securities covered by such registration statements as
a NASDAQ "national market system security" within the meaning of Rule
11Aa2-1 of the Securities and Exchange Commission or, failing that, to
secure NASDAQ authorization for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable
Securities with the NASD;
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(f) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration
statement;
(g) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities (including, without
limitation, effecting a stock split or a combination of shares);
(h) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of IGI, and cause
IGI's officers, directors, employees and independent accountants to supply
all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement;
(i) otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day
of IGI's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(j) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of IGI, to participate in the preparation of such
registration or comparable statement and to require the insertion therein
of material, furnished to IGI, in writing, which in the reasonable judgment
of such holder and its counsel should be included; and
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any Common Stock included in such registration statement
for sale in any jurisdiction, IGI will use commercially reasonable efforts
promptly to obtain the withdrawal of such order. If any such registration
or comparable statement refers to any holder by name or otherwise as the
holder of any securities of IGI and if in its sole and exclusive judgment
such holder is or might be deemed to be a controlling person of IGI, such
holder shall have the right to require (i) the insertion therein of
language, in form and substance satisfactory to such holder and presented
to IGI in writing, to the effect that the holding by such holder of such
securities is not to be construed as a recommendation by such holder of the
investment quality of IGI's securities covered thereby and that such
holding does not imply that such
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<PAGE> 56
holder will assist in meeting any future financial requirements of IGI,
(ii) in the event that such reference to such holder by name or otherwise
is not required by the Securities Act or any similar federal statute then
in force, the deletion of the reference to such holder; provided that with
respect to this clause (ii) such holder shall furnish to IGI an opinion of
counsel to such effect, which opinion and counsel shall be reasonably
satisfactory to IGI.
11.6 Registration Expenses. All expenses incident to IGI's performance of
or compliance with this Article 11, including without limitation all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for IGI and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by IGI (all such expenses, excluding underwriting discounts and
commissions, being herein called "Registration Expenses"), will be borne by IGI.
IGI will bear the cost of one set of counsel for the Holders of Registrable
Securities participating in any Piggyback Registration or Demand Registration.
All brokerage fees and underwriting discounts and commissions will be borne by
the seller of the securities sold pursuant to the registration.
11.7 Indemnification.
(a) IGI agrees to indemnify, to the extent permitted by law, each
holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by
or contained in any information furnished in writing to IGI by such holder
expressly for use therein or by such holder's failure to deliver a copy of
the registration statement or prospectus or any amendments or supplements
thereto after IGI has furnished such holder with a sufficient number of
copies of the same. In connection with an underwritten offering, IGI will
indemnify such underwriters, their officers and directors and each Person
who controls such underwriters (within the meaning of the Securities Act)
to the same extent as provided above with respect to the indemnification of
the holders of Registrable Securities.
(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder will furnish to
IGI in writing such information and affidavits as IGI reasonably requests
for use in connection with any such registration statement or prospectus
and, to the extent permitted by law, will indemnify IGI, its directors and
officers and each Person who controls IGI (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement,
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prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein not
misleading but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder;
(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for
any settlement made by the indemnified party without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not
be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the transfer of
securities. IGI also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such party in the
event IGI's indemnification is unavailable for any reason.
11.8 Participation in Underwritten Registrations. No Person may participate
in any registration hereunder which is underwritten unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that no
holder of Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to IGI or the underwriters
other than representations and warranties regarding such holder and such
holder's intended method of distribution.
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ARTICLE 12
MISCELLANEOUS
12.1 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that (i) the Loan Parties may not assign or transfer their
rights hereunder or any interest herein or delegate its duties hereunder without
the prior written consent of Purchaser and (ii) Purchaser shall have the right
to assign its rights hereunder and under the Securities.
12.2 Modifications, Amendments or Waivers. The provisions of this Agreement
may be modified, amended or waived, but only by a written instrument signed by
each of the Loan Parties and Purchaser and to the extent such modification,
amendment or waiver relates to the Notes, the Warrants or the Underlying Shares,
by prior written consent of holders of a majority in aggregate principal amount
of the outstanding Notes or holders of a majority of the Warrants or the
Underlying Shares, as applicable; provided that no such action will change (i)
the rate at which, or the manner in which, interest accrues on the Notes or the
times at which such interest becomes payable, (ii) any provision relating to the
scheduled payments or prepayments of principal on the Notes, or (iii) this
Section 12.2 without the written consent of all holders of Notes.
12.3 No Implied Waivers; Cumulative Remedies; Writing Required. No delay or
failure in exercising any right, power or remedy hereunder shall affect or
operate as a waiver thereof; nor shall any single or partial exercise thereof or
any abandonment or discontinuance of steps to enforce such a right, power or
remedy preclude any further exercise thereof or of any other right, power or
remedy. The rights and remedies hereunder are cumulative and not exclusive of
any rights or remedies which Purchaser or any holder of Notes would otherwise
have. Any waiver, permit, consent or approval of any kind or character of any
breach or default under this Agreement or any such waiver of any provision or
condition of this Agreement must be in writing and shall be effective only to
the extent in such writing specifically set forth.
12.4 Reimbursement of Expenses; Taxes. The Loan Parties upon demand shall
pay or reimburse Purchaser for all fees and expenses incurred or payable by
Purchaser (including, without limitation, reasonable fees and expenses of
special counsel for Purchaser), from time to time (i) arising in connection with
the negotiation, preparation and execution of this Agreement, the Notes, the
other Purchase Documents and all other instruments and documents to be delivered
hereunder or thereunder or arising in connection with the transactions
contemplated hereunder or thereunder, (ii) relating to any amendments, waivers
or consents pursuant to the provisions hereof or thereof, and (iii) arising in
connection with the enforcement of this Agreement or collection of the Notes.
The Loan Parties agree to pay and save Purchaser harmless from all liability for
any stamp, transfer or other similar taxes which may be payable in connection
with this Agreement or the performance of any transactions contemplated hereby
other than in connection with the transfer of any Notes.
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12.5 Holidays. Whenever any payment or action to be made or taken hereunder
or under the Notes shall be stated to be due on a day which is not a Business
Day, such payment or action shall be made or taken on the next following
Business Day, and such extension of time shall be included in computing interest
or fees, if any, in connection with such payment or action.
12.6 Notices. All notices and other communications given to or made upon
any party hereto in connection with this Agreement shall, except as otherwise
expressly herein provided, be in writing (including telecopy, but in such case,
a confirming copy will be sent by another permitted means) and mailed via
certified mail, telecopied or delivered by guaranteed overnight parcel express
service or courier to the respective parties, as follows:
to the Loan Parties:
c/o IGI, Inc.
Wheat Road and Lincoln Avenue
Buena, NJ 08310
Attn: Chairman
Telecopier: (609) 697-2259
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attn: C. Hall Swaim, Esq.
Paul P. Brountas, Esq.
Telecopier: (617) 526-5000
to Purchaser:
American Capital Strategies, Ltd.
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
Attn: Chairman
Telecopier: (301) 654-6714
with a copy to:
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attn: Samuel A. Flax, Esq.
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<PAGE> 60
Telecopier: (202) 942-5999
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery if delivered by
courier or overnight parcel express service; in the case of certified mail,
three (3) Business Days after the date sent; or in the case of telecopy, when
received.
12.7 Survival. All representations, warranties, covenants and agreements of
the Loan Parties contained herein or made in writing in connection herewith
shall survive the execution and delivery of this Agreement and the purchase of
the Notes and the Warrants and shall continue in full force and effect so long
as any Note or Warrant is outstanding and until payment in full of all of the
Loan Parties' obligations hereunder or thereunder.
12.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES.
12.9 Jurisdiction, Consent to Service of Process.
(a) THE LOAN PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
FOR THEMSELVES AND THEIR PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
MARYLAND STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA
SITTING IN THE STATE OF MARYLAND, AND ANY APPELLATE COURT FROM ANY THEREOF,
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE NOTES OR ANY OTHER PURCHASE DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH MARYLAND OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT PURCHASER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, THE NOTES OR ANY OTHER PURCHASE DOCUMENT AGAINST THE LOAN
PARTIES OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(b) THE LOAN PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO
THE FULLEST EXTENT THEY MAY
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LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER PURCHASE DOCUMENT
IN ANY MARYLAND OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF
AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT.
(c) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 12.6 HEREOF. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
12.10 Jury Trial Waiver. THE LOAN PARTIES HEREBY IRREVOCABLY WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY
RIGHTS UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR (II) ARISING FROM ANY
DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO THIS AGREEMENT AND
AGREES THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
12.11 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.
12.12 Headings.
Article, section and subsection headings in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
12.13 Confidentiality.
Purchaser agrees that it will keep confidential and will not disclose or
divulge, and will cause its agents and representatives to keep confidential and
not disclose or divulge, any confidential, proprietary or secret information
that the Purchaser or its agents or representatives has obtained from the Loan
Parties pursuant to this Agreement, or pursuant to board, visitation or
inspection rights granted hereunder, and that the Loan Parties have identified
in writing to the Purchaser as confidential, proprietary or secret information;
provided, however, that Purchaser may disclose such information (i) to its
directors, employees and agents and to its auditors, counsel and other
professional advisors in connection with the performance of Purchaser's
obligations hereunder; (ii) at
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the demand or request of any bank regulatory authority, court or other
Governmental Authority having or asserting jurisdiction over Purchaser, as may
be required pursuant to subpoena or other legal process, or otherwise in order
to comply with any applicable requirement of Law; (iii) in connection with any
proceeding to enforce its rights hereunder or under any other Purchase Document
or any other litigation or proceeding related hereto or to which it is a party;
(iv) to the extent the same has become publicly available other than as a result
of a breach of this Agreement; and (v) to any prospective purchaser of any
Securities from Purchaser as long as such prospective purchaser agrees in
writing to be bound by the provisions of this Section 12.13.
12.14 Indemnity. The Loan Parties hereby agree to indemnify, defend and
hold harmless Purchaser and its officers, directors, employees, agents and
representatives, and its respective successors and assigns in connection with
any losses, claims, damages, liabilities and expenses, including reasonable
attorneys' fees, to which Purchaser may become subject (other than as a result
of the gross negligence or willful misconduct of any such Person), insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or by reason of any investigation, litigation or other proceedings
related to or resulting from any act of, or omission by, the Loan Parties or
their Affiliates or any officer, director, employee, agent or representative of
the Loan Parties or their Affiliates with respect to the Transactions, the
Notes, Charter Documents, the Bylaws or any agreements entered into in
connection with any such agreements, instruments or documents and to reimburse
Purchaser and each such Person and Affiliate, upon demand, for any legal or
other expenses incurred in connection with investigating or defending any such
loss, claim, damage, liability, expense or action. To the extent that the
foregoing undertakings may be unenforceable for any reason, the Loan Parties
agree to make the maximum contribution to the payment and satisfaction of
indemnified liabilities set forth in this Section 12.13 which is permissible
under applicable law.
12.15 Environmental Indemnity.
The Loan Parties, and their successors and assigns, hereby release and
discharge, and agree to defend, indemnify and hold harmless, Purchaser and its
Affiliates (including their partners, subsidiaries, customers, guests, and
invitees, and the successors and assigns of all of the foregoing, and their
respective officers, employees and agents) from and against any and all
Environmental Liabilities, whenever and by whomever asserted, to the extent that
such Environmental Liabilities are based upon, or otherwise relate to: (i) any
Condition at any time in, at, on, under, a part of, involving or otherwise
related to the Properties and Facilities (including any of the properties,
materials, articles, products, or other things included in or otherwise a part
of the Properties and Facilities); (ii) any action or failure to act of any
Person, including any prior owner or operator of the Properties and Facilities
(including any of the properties, materials, articles, products, or other things
included in or otherwise a part of the Properties and Facilities), involving or
otherwise related to the Properties and Facilities or operations of the Loan
Parties; (iii) the Management of any Pollutant, material, article or product
(including Management of any material, article or product containing a
Pollutant) in any physical state and at any time, involving or otherwise related
to the Properties and Facilities or any property covered by clause (iv)
(including Management either from the Properties and Facilities or
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from any property covered by clause (iv), and Management to, at, involving or
otherwise related to the Properties and Facilities or any property covered by
clause (iv)); (iv) Conditions, and actions or failures to act, in, at, on,
under, a part of, involving or otherwise related to any property other than the
Properties and Facilities, which property was, at or prior to the Closing Date,
(I) acquired, held, sold, owned, operated, leased, managed, or divested by, or
otherwise associated with, (A) the Loan Parties, (B) any of the Loan Parties'
Affiliates, or (C) any predecessor or successor organization of those identified
in (A) or (B); or (II) engaged in any tolling, contract manufacturing or
processing, or other similar activities for, with, or on behalf of the Loan
Parties; (v) any violation of or noncompliance with or the assertion of any Lien
under the Environmental Laws, (vi) the presence of any toxic or hazardous
substances, wastes or contaminants on, at or from the past and present
properties and facilities, including, without limitation, human exposure
thereto; (vii) any spill, release, discharge or emission affecting the past and
present properties and facilities, whether or not the same originates or
emanates from such properties and facilities or any contiguous real estate,
including, without limitation, any loss of value of such properties and
facilities as a result thereof; or (viii) a misrepresentation in any
representation or warranty or breach of or failure to perform any covenant made
by the Loan Parties in this Agreement. This indemnity and agreement to defend
and hold harmless shall survive any termination or satisfaction of the Notes or
the sale, assignment or foreclosure thereof or the sale, transfer or conveyance
of all or part of the past and present properties and facilities or any other
circumstances which might otherwise constitute a legal or equitable release or
discharge, in whole or in part, of the Loan Parties under the Notes.
12.16 Counterparts. This Agreement may be executed in any number of
counterparts and by either party hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute one and the same instrument.
12.17 Integration. This Agreement and the other Purchase Documents set
forth the entire understanding of the parties hereto with respect to all matters
contemplated hereby and supersede all previous agreements and understandings
among them concerning such matters, including without limitation, the Financing
Term Sheet dated August 3, 1999. No statements or agreements, oral or written,
made prior to or at the signing hereof, shall vary, waive or modify the written
terms hereof.
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12.18 Subordination. THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN
THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT
(THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER 29, 1999, AMONG FLEET
CAPITAL CORPORATION, PURCHASER, AND THE LOAN PARTIES, TO THE INDEBTEDNESS AND
OTHER LIABILITIES OWED BY THE LOAN PARTIES UNDER AND PURSUANT TO THE SENIOR
CREDIT AGREEMENT AND EACH RELATED "LOAN DOCUMENT" (AS DEFINED THEREIN), AND EACH
HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY
THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
* * *
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SIGNATURE PAGE TO
NOTE AND EQUITY PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
IGI, INC.
By: /s/ EDWARD B. HAGER
Name: EDWARD B. HAGER
Title:
IGEN, INC.
By: /s/ EDWARD B. HAGER
Name: EDWARD B. HAGER
Title:
IMMUNOGENETICS, INC.
By: /s/ EDWARD B. HAGER
Name: EDWARD B. HAGER
Title:
BLOOD CELLS, INC.
By: /s/ EDWARD B. HAGER
Name: EDWARD B. HAGER
Title:
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<PAGE> 66
SIGNATURE PAGE TO
NOTE AND EQUITY PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
AMERICAN CAPITAL STRATEGIES,
LTD.
By: /s/ JOHN ERICKSON
_____________________________
Name: JOHN ERICKSON
Title: CFO
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<PAGE> 67
ANNEX
<TABLE>
<CAPTION>
Annex A Purchaser Information
SCHEDULES
<S> <C>
"Outstanding Options and Warrants Schedule (Section 5.1(d))
"Subsidiaries Schedule" (Section 5.1(e))
"Litigation Schedule" (Section 5.1(i))
"Pending or Threatened Actions Schedule" (Section 5.1(j)(Part I))
"Management Information Schedule" (Section 5.1(j)(Part II)
"Environmental Schedule" (Section 5.1(l))
"Properties Schedule" (Section 5.1(q))
"Intellectual Properties Schedule" (Section 5.1(r))
"Permitted Encumbrances Schedule" (Section 7.2(b)(iv))
"Investments Schedule" (Section 7.2(i)(xi))
EXHIBITS
EXHIBIT A Form of Series A Senior Note
EXHIBIT A-1 Form of Series B Senior Note (the Georgia Note)
EXHIBIT B Form of Warrant
EXHIBIT C Form of Security Agreement
EXHIBIT D Form of Collateral Assignment
EXHIBIT E Form of Mortgage
EXHIBIT F Form of Compliance Certificate
</TABLE>
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<PAGE> 68
ANNEX A
INFORMATION RELATING TO PURCHASER
<TABLE>
<CAPTION>
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
<S> <C>
AMERICAN CAPITAL STRATEGIES, LTD. Notes $7,000,000
2 Bethesda Metro Center
14th Floor
Bethesda, MD 20814
</TABLE>
(1) All payments:
If by wire:
Account Name: American Capital Strategies, Ltd.
Account No.: 17259043
Bank: Riggs Bank, N.A.,
Washington, DC
ABA #: 054000030
If by mail: Commercial Loan Processing RN-308
Riggs Bank, N.A.
5700 Rivertech Court
Riverdale, MD 20737
Attn: Karen Drum
with sufficient information to identify the source and
application of such funds.
(2) All notices of payments and written confirmations of such wire
transfers:
American Capital Strategies, Ltd.
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
Attn: Chairman
Telecopier: (301) 654-6714
(3) All other communications:
American Capital Strategies, Ltd.
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
Attn: Chairman
Telecopier: (301) 654-6714
<PAGE> 69
SCHEDULE 5.1(d)
OUTSTANDING WARRANTS
Fleet Bank Warrants
Mellon Bank Warrants
<PAGE> 70
SCHEDULE 5.1(e)
SUBSIDIARIES SCHEDULE
IGEN, INC.
Wheat Road and Lincoln Avenue
Buena, New Jersey 08310
IMMUNOGENETICS, INC.
Wheat Road and Lincoln Avenue
Buena, New Jersey 08310
MARKETING ASPECTS, INC.
Wheat Road and Lincoln Avenue
Buena, New Jersey 08310
BLOOD CELLS, INC.
Wheat Road and Lincoln Avenue
Buena, New Jersey 08310
FLAVORSOME, LTD.
Wheat Road and Lincoln Avenue
Buena, New Jersey 08310
VISTA INTERNATIONAL
208 Citibank Building
Veterans Drive
Charlotte Amalie, St. Thomas, US Virgin Islands
MICROBURST ENERGY, INC.
Wheat Road and Lincoln Avenue
Buena, New Jersey 08310
IGI DO BRASIL
A Brazil corporation
Rua Artur de Asevedo 636
05404-0000 Sao Paulo
SP Brazil
<PAGE> 71
SCHEDULE 5.1(i)
LITIGATION SCHEDULE
<PAGE> 72
SECTION 5.1(j)(Part I)
PENDING OR THREATENED ACTIONS SCHEDULE
[STATUS OF INFORMAL SEC INVESTIGATION]
SECTION 5.1(j)(part II)
MANAGEMENT INFORMATION SCHEDULE
<PAGE> 73
SCHEDULE 5.1 (l)
ENVIRONMENTAL SCHEDULE
<PAGE> 74
SCHEDULE 5.1 (q)
PROPERTIES SCHEDULE
<TABLE>
<S> <C> <C>
OWNED PROPERTIES:
IGI, Inc. Wheat Road & Lincoln Ave. Buena, NJ 08310
Vineland Laboratories 2285 East Landis Avenue Vineland, NJ 08360
Evsco Pharmaceuticals 711 Harding Highway Buena, NJ 08310
Gainesville Warehouse 1146 Airport Parkway Gainesville, GA 30501
Grant Avenue Property 485 East Grant Avenue Vineland, NJ 08360
LEASED PROPERTIES:
Arkansas Warehouse 1906 Lowell Road Springdale, AR 72764
Fresno Warehouse 3295 West Sussex Way Fresno, CA 93722
Mississippi Warehouse Box 476 Hwy 35 North Forest, MS 39074
Delmarva Warehouse Rt. 3, Carioca Road Delmar, MD 21875
Amos Martin Warehouse Rt. 14, Box 1460 Nacogdoches, TX 75961
Brunozzi Transfer 22 DeRosa Avenue Vineland, NJ 08360
</TABLE>
<PAGE> 75
SCHEDULE 5.1.(r)
INTELLECTUAL PROPERTIES SCHEDULE
<TABLE>
<CAPTION>
DKT.NO./TITLE CTY STATUS APP.NO./APP.DT. REG.NO./REG.DT
- ------------- ------ --------------- --------------
<S> <C> <C> <C> <C>
IMH-0057FR France G 93/478240 28JL99 93478240 28JLI993
Novasome
IMH-0066 USA G 73/451453 07NO1983 1305699 20NO1984
Biocaine
IMH-0067 USA G 366721 27MY1982 1357555 03SE1985
Protecta-Pad
IMH-0068 USA G 73/366720 27MY1982 1357555 11JE1985
Nik Stop
IMH-0069 USA G 366725 27MY1982 1315317 22JA1985
Metox
IMH-0070 USA G 73/366724 27MY1982 1312930 08JA1985
Preen Gleem
IMH-0071 ARGEN G 1681660 15FE1989 1407461 300C1992
Chick Sino Vac
IMH-0075DE GERW G E22059/31WZ 02MR1981 1030553 02MR1991
Felovite
IMH-0076DE GERW G E22060/31WZ 02MR1981 1042612 02MR1981
Nutri-Cal
IMH-008LJP JAPAN G 02-140371 19DE1990 2510817 26FE1993
Vineland
IMH_0092JP JAPAN G 03-019923 01MR1991 252897 28AP1993
Vineland
IMH-0099FR FRANCE G N/A 28FE1990 234192 28FE1990
Laxatone
IMH-0104FR FRANCE G 281928 22AP1991 1657245 22AP1991
Nutrical
IMH-0113 PERU G 73650 19JA1988
Vi Bursa L
IMH-0115 USA G 369673 02SE1970 922226 190C1971
Liquichlor
IMH-0117 USA G 369672 02SE1970 921031 28SE1971
Evsco
</TABLE>
<PAGE> 76
<TABLE>
<CAPTION>
DKT.NO./TITLE CTY STATUS APP.NO./APP.DT. REG.NO./REG.DT
- ------------- ------ --------------- --------------
<S> <C> <C> <C> <C>
EM-0 I 19DE GERW G E22947/5WZ 14MY1982 1068608 14MY1982
Evsco
IMH-0124 PERU G 73614 28FE1988
Vineland
IMH-0141 USA G 401950 03SE1971 945096 170C1972
Chlorasone
IMH-0161 USA G 72/414312 02FE1972 955587 20MR1973
Felovite
IMH-0164 USA G 72/414317 02FE1972 955590 29NIR1973
Methigel
IMH-0166 USA G 72/414323 02FE1972 955593 20MR1973
Optisone
IMH-0169 USA G 614736 14AU1986 1461618 20OC1987
Puppyvite
IMH-0174AR ARGEN G 1681653 15FE1989 1385048 31DE1991
Chick Uni Hol
IMH-0177 USA G 72/414314 02FE1972 953409 20FE1973
Sect-A-Spray
IMH-0179 USA G 72/404408 06OC1972 962127 26JE1973
Medicollar
IMH-0180 USA G 72/414326 02FE1972 96108 26JE1973
Nutri-Cal
IMH-181TR TRIN G 11366 05JE1979 11366 05JE1979
Vineland
IMH-0185 GREC G 112756 15FE1993 112756 15FE1993
Chlorasone
IMH-0187 GREC G 112755 15FE1993 112755 15FE1993
Liquichlor
IMH-0188 GREC G 112758 15FE1993 112758 15FE1993
Cardoxin
IMH-0190 GREC G 112744 12FE1993 112744 12FE1993
Chloricol
IMH-0191 GREC G 112743 12FE1993 112743 12FE1 993
Cerumite
IMH-0193 GREC G 112750 12FE1993 112750 12FE1993
Allerspray
</TABLE>
<PAGE> 77
<TABLE>
<CAPTION>
DKT.NO./TITLE CTY STATUS APP.NO./APP.DT. REG.NO./REG.DT
- ------------- ------ --------------- --------------
<S> <C> <C> <C> <C>
IMH-0195 GREC G 112757 15FE1993 112757 15FE1993
Micro Pearls
IMH-0200 HONG G 08091/93 03AU1993 08609/95 03AU1993
Tomlyn Products
IMH-0202 SING G S/3772/86 26AU1986 S/3772/86 26AU1986
Vineland
IMH-0208 USA G 414330 02FE1972 970167 090C1973
Fecalyzer
IMH-0217 CANA G 271801 050C1962 133688 06DE1963
Vineland
IMH-0218 JAPAN G 05-078050 27JI1993 3173074 28JE1996
Evsco
IMH-0220 JAPAN G M05-078052 27JLI993 3173075 28JE1996
Laxatone
IMH-0231 HONG G 08092/93 03AU1993 07756/1995 03AU1993
Evsco
IMH-0234 BENE G 800217 12JL1993 536808 12JL1993
Evsco
IMH-0235 BENE G 800219 12JL1993 536810 12JL1993
Nutri-Cal
IMH-0236 BENE G 800218 12JL1993 536809 12JL1993
Laxatone
IMH-0240 FRANCE G 93/482072 01SE1993 93482072 01SE1993
Evsco
IMH-0251 USA G 72/414321 02FE1972 980694 19MR1974
Groom-Aid
IMH-0252 COST G No serial no. 290C1993 89.853 09JA1995
Evsco
IMH-0253 COST G No serial no. 290C1993 86.663 19AP1994
Nutri-Cal
IMH-0254 USA G 450536 05MR1973 981854 09AP1974
Vi Uni Bronc
IMH-0255 USA G 450538 05MR1973 982200 16AP1974
Vi Banco
IMH-0256 USA G 450537 05MR1973 982458 23AP1974
Vi So Bronc
</TABLE>
<PAGE> 78
<TABLE>
<CAPTION>
DKT.NO./TITLE CTY STATUS APP.NO./APP.DT. REG.NO./REG.DT
- ------------- ------ --------------- --------------
<S> <C> <C> <C> <C>
IMH-0257 BENE G 803985 29SE1993 540728 29SE1993
Micro Pearls
IMH-0258 BENE G 803986 29SE1993 544156 29SE1993
Novasome
IMH-0272 HONG G 1086/79 24MY1979 B1360/1982 24MY1979
Vineland
MM-0283 CANA G 232769 20AP1979
Laxatone
IMH-0284 ATRA G AM1222/94 15MR1994 152849 31MY1994
Evsco
IMH-0285 VIET G N-1659/94 19MY1994 15183 19MY1994
Vineland
IMH-0307 IREL G 94/6643 03NO1994 165407 03NO1994
Evsco
IMH-0376 COLO G 140974 04JE1993
Vi Mark FD
IMH-0377 COLO G 167911 28SE1994
Vi Clemcol C
IMH-0378 COLO G 297534 26JAI989 200.013 30MR1994
Vi Bursa K
IMH-0381 COLO G N/A 167185 26AU1994
Chick Syno Vac
IMH-0382 COST G 73049 02OC1990
Vineland
IMH-0361 USA G 08n72354 23DE1996 5776536 07JLI998
Reduced Fat Chocolate
and Method of Manufacture
IMH-0374 USA G 08/838633 11AP1997 5756014 26MY1998
Heat Resistant Lipid
Vesicles
IMH-0374PC PCT F PCT/US98/07451 IOAP1998
Heat Resistant Lipid
Vesicles
IMH-0386 USA F 09/165436 02OC1998
Glucoside Paucilamellar
Vesicles
IMH-0390 USA F 09/252546 19FE1999
Lipid Vesicle-Based Fuel
Additives and Liquid Energy
Sources Containing Same
</TABLE>
<PAGE> 79
SCHEDULE 7.2 (b) (iv)
PERMITTED ENCUMBRANCES SCHEDULE
[GLAXO LIEN ON WELLSKIN TRADEMARK, ACCOUNTS, INVENTORY, ETC.]
<PAGE> 80
SCHEDULE 7.2(i)(xi)
INVESTMENTS SCHEDULE
<PAGE> 81
EXHIBIT A
THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT
SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT (THE "SUBORDINATION
AGREEMENT") DATED AS OF OCTOBER 29, 1999, AMONG FLEET CAPITAL CORPORATION,
AMERICAN CAPITAL STRATEGIES, LTD., IGI, INC., IGEN, INC., IMMUNOGENETICS, INC.,
AND BLOOD CELLS, INC., TO THE INDEBTEDNESS AND OTHER LIABILITIES OWED BY IGI,
INC., IGEN, INC., IMMUNOGENETICS, INC., AND BLOOD CELLS, INC. UNDER AND PURSUANT
TO THE LOAN AND SECURITY AGREEMENT DATED AS OF OCTOBER 29, 1999, AND EACH
RELATED "LOAN DOCUMENT" (AS DEFINED THEREIN), AND EACH HOLDER HEREOF, BY ITS
ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT.
IGI, INC., IGEN, INC., IMMUNOGENETICS, INC., AND BLOOD CELLS, INC.
SERIES A SENIOR SUBORDINATED NOTE DUE SEPTEMBER 30, 2006
No. SSN - 1 October 29, 1999
$6,650,000
FOR VALUE RECEIVED, the undersigned IGI, INC., a Delaware corporation,
("IGI"), IGEN, INC., a Delaware corporation ("Igen"), IMMUNOGENETICS, INC., a
Delaware corporation, ("ImmunoGenetics"), and BLOOD CELLS, INC., a Delaware
corporation ("Blood Cells") (IGI, Igen, ImmunoGenetics and Blood Cells are
referred to herein as the "Loan Parties"), hereby promise to pay to AMERICAN
CAPITAL STRATEGIES, LTD., or registered assigns (the "Holder"), the principal
sum of SIX MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS ($6,650,000), with
interest thereon, on the terms and conditions set forth in the Purchase
Agreement (as defined herein).
Payments of principal of, interest on and any premium with respect to
this Note are to be made in lawful money of the United States of America by
check mailed and addressed to the registered Holder hereof at the address shown
in the register maintained by the Loan Parties for such purpose, or, at the
option of the Holder, in such manner and at such other place in the United
States of America as the Holder hereof shall have designated to the Loan Parties
in writing.
Notwithstanding any provision to the contrary in this Note, the
Purchase Agreement or any other agreement, the Loan Parties shall not be
required to pay, and the Holder shall not be permitted to contract for, take,
reserve, charge or receive, any compensation which constitutes interest under
applicable law in excess of the maximum amount of interest permitted by law.
This Note is one of a series of Series A Senior Subordinated Notes Due
September 30, 2006 (herein called the "Notes") issued pursuant to the Note and
Equity Purchase Agreement, dated as of October 29, 1999 (as from time to time
amended, the
<PAGE> 82
"Purchase Agreement"), between the Loan Parties and American Capital Strategies,
Ltd., a corporation organized and existing under the laws of the State of
Delaware, and is entitled to the benefits thereof. All terms used herein shall
have the meanings ascribed to them in the Purchase Agreement. Each Holder of
this Note will be deemed, by its acceptance hereof, to have agreed to the
provisions and to have made the representations and warranties set forth in
Article 6 of the Purchase Agreement.
The Notes are issuable as registered notes. This Note is transferable
only by surrender hereof at the principal office of the Loan Parties at Wheat
Road and Lincoln Avenue, Buena (Atlantic County), New Jersey, duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
Holder of this Note.
This Note is also subject to optional prepayment, in whole or in part
at the times and on the terms specified in the Purchase Agreement, but not
otherwise.
If an Event of Default as defined in the Purchase Agreement occurs and
is continuing, the unpaid principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
premium) and with the effect provided in the Purchase Agreement.
Payments of principal, interest on and any premium with respect to this
Note are secured pursuant to the terms of the Security Documents.
This Note and the rights and obligations of the parties hereto shall be
deemed to be contracts under the laws of the State of Maryland and for all
purposes shall be governed by and construed and enforced in accordance with the
laws of said State, except for its rules relating to the conflict of laws.
IGI, INC.
By: /s/ MANFRED HANUSCHEK
____________________________________
Name: MANFRED HANUSCHEK
Title: CFO
IGEN, INC.
By: /s/ MANFRED HANUSCHEK
____________________________________
Name: MANFRED HANUSCHEK
Title: CFO
- 2 -
<PAGE> 83
IMMUNOGENETICS, INC.
By:
------------------------------------
Name:
Title:
BLOOD CELLS, INC.
By:
------------------------------------
Name:
Title:
- 3 -
<PAGE> 84
EXHIBIT A-1
THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT
SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT (THE "SUBORDINATION
AGREEMENT") DATED AS OF OCTOBER 29, 1999, AMONG FLEET CAPITAL CORPORATION,
AMERICAN CAPITAL STRATEGIES, LTD., IGI, INC., IGEN, INC., IMMUNOGENETICS, INC.,
AND BLOOD CELLS, INC., TO THE INDEBTEDNESS AND OTHER LIABILITIES OWED BY IGI,
INC., IGEN, INC., IMMUNOGENETICS, INC., AND BLOOD CELLS, INC. UNDER AND
PURSUANT TO THE LOAN AND SECURITY AGREEMENT DATED AS OF OCTOBER 29, 1999, AND
EACH RELATED "LOAN DOCUMENT" (AS DEFINED THEREIN), AND EACH HOLDER HEREOF, BY
ITS ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF
THE SUBORDINATION AGREEMENT.
IGI, INC., igen, inc., immunogenetics, inc., and blood cells, inc.
SERIES B SENIOR SUBORDINATED NOTE DUE SEPTEMBER 30, 2006
No. SSN - 1 October 29, 1999
$350,000
FOR VALUE RECEIVED, the undersigned IGI, INC., a Delaware corporation,
("IGI"), IGEN, INC., a Delaware corporation ("Igen"), IMMUNOGENETICS, INC., a
Delaware corporation, ("ImmunoGenetics"), and BLOOD CELLS, INC., a Delaware
corporation ("Blood Cells") (IGI, Igen, ImmunoGenetics and Blood Cells are
referred to herein as the "Loan Parties"), hereby promise to pay to AMERICAN
CAPITAL STRATEGIES, LTD., or registered assigns (the "Holder"), the principal
sum of THREE HUNDRED FIFTY THOUSAND DOLLARS ($350,000), with interest thereon,
on the terms and conditions set forth in the Purchase Agreement (as defined
herein).
Payments of principal of, interest on and any premium with respect to
this Georgia Note are to be made in lawful money of the United States of America
by check mailed and addressed to the registered Holder hereof at the address
shown in the register maintained by the Loan Parties for such purpose, or, at
the option of the Holder, in such manner and at such other place in the United
States of America as the Holder hereof shall have designated to the Loan Parties
in writing.
Notwithstanding any provision to the contrary in this Georgia Note, the
Purchase Agreement or any other agreement, the Loan Parties shall not be
required to pay, and the Holder shall not be permitted to contract for, take,
reserve, charge or receive, any compensation which constitutes interest under
applicable law in excess of the maximum amount of interest permitted by law.
This Georgia Note is one of a series of Series B Senior Subordinated
Notes Due September 30, 2006 (herein called the "Georgia Notes") issued pursuant
to the Note and
- 4 -
<PAGE> 85
Equity Purchase Agreement, dated as of October 29, 1999 (as from time to time
amended, the "Purchase Agreement"), between the Loan Parties and American
Capital Strategies, Ltd., a corporation organized and existing under the laws of
the State of Delaware, and is entitled to the benefits thereof. All terms used
herein shall have the meanings ascribed to them in the Purchase Agreement. Each
Holder of this Georgia Note will be deemed, by its acceptance hereof, to have
agreed to the provisions and to have made the representations and warranties set
forth in Article 6 of the Purchase Agreement.
The Georgia Notes are issuable as registered notes. This Georgia Note
is transferable only by surrender hereof at the principal office of the Loan
Parties at Wheat Road and Lincoln Avenue, Buena (Atlantic County), New Jersey,
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered Holder of this Georgia Note.
This Georgia Note is also subject to optional prepayment, in whole or
in part at the times and on the terms specified in the Purchase Agreement, but
not otherwise.
If an Event of Default as defined in the Purchase Agreement occurs and
is continuing, the unpaid principal of this Georgia Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable premium) and with the effect provided in the Purchase Agreement.
Payments of principal, interest on and any premium with respect to this
Georgia Note are secured pursuant to the terms of the Security Documents.
This Note and the rights and obligations of the parties hereto shall be
deemed to be contracts under the laws of the State of Maryland and for all
purposes shall be governed by and construed and enforced in accordance with the
laws of said State, except for its rules relating to the conflict of laws.
IGI, INC.
By:
------------------------------------
Name:
Title:
IGEN, INC.
By:
------------------------------------
Name:
Title:
- 5 -
<PAGE> 86
IMMUNOGENETICS, INC.
By:
____________________________________
Name:
Title:
BLOOD CELLS, INC.
By:
____________________________________
Name:
Title:
- 6 -
<PAGE> 1
EXHIBIT *(10.36)
THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT
SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT (THE "SUBORDINATION
AGREEMENT") DATED AS OF OCTOBER 29, 1999, AMONG FLEET CAPITAL CORPORATION,
AMERICAN CAPITAL STRATEGIES, LTD., IGI, INC., IGEN, INC., IMMUNOGENETICS, INC.,
AND BLOOD CELLS, INC., TO THE INDEBTEDNESS AND OTHER LIABILITIES OWED BY IGI,
INC., IGEN, INC., IMMUNOGENETICS, INC., AND BLOOD CELLS, INC. UNDER AND PURSUANT
TO THE LOAN AND SECURITY AGREEMENT DATED AS OF OCTOBER 29, 1999, AND EACH
RELATED "LOAN DOCUMENT" (AS DEFINED THEREIN), AND EACH HOLDER HEREOF, BY ITS
ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT.
IGI, INC., IGEN, INC., IMMUNOGENETICS, INC., AND BLOOD CELLS, INC.
SERIES A SENIOR SUBORDINATED NOTE DUE SEPTEMBER 30, 2006
No. SSN - 1 October 29, 1999
$6,650,000
FOR VALUE RECEIVED, the undersigned IGI, INC., a Delaware corporation,
("IGI"), IGEN, INC., a Delaware corporation ("Igen"), IMMUNOGENETICS, INC., a
Delaware corporation, ("ImmunoGenetics"), and BLOOD CELLS, INC., a Delaware
corporation ("Blood Cells") (IGI, Igen, ImmunoGenetics and Blood Cells are
referred to herein as the "Loan Parties"), hereby promise to pay to AMERICAN
CAPITAL STRATEGIES, LTD., or registered assigns (the "Holder"), the principal
sum of SIX MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS ($6,650,000), with
interest thereon, on the terms and conditions set forth in the Purchase
Agreement (as defined herein).
Payments of principal of, interest on and any premium with respect to
this Note are to be made in lawful money of the United States of America by
check mailed and addressed to the registered Holder hereof at the address shown
in the register maintained by the Loan Parties for such purpose, or, at the
option of the Holder, in such manner and at such other place in the United
States of America as the Holder hereof shall have designated to the Loan Parties
in writing.
Notwithstanding any provision to the contrary in this Note, the
Purchase Agreement or any other agreement, the Loan Parties shall not be
required to pay, and the Holder shall not be permitted to contract for, take,
reserve, charge or receive, any compensation which constitutes interest under
applicable law in excess of the maximum amount of interest permitted by law.
<PAGE> 2
This Note is one of a series of Series A Senior Subordinated Notes Due
September 30, 2006 (herein called the "Notes") issued pursuant to the Note and
Equity Purchase Agreement, dated as of October 29, 1999 (as from time to time
amended, the "Purchase Agreement"), between the Loan Parties and American
Capital Strategies, Ltd., a corporation organized and existing under the laws of
the State of Delaware, and is entitled to the benefits thereof. All terms used
herein shall have the meanings ascribed to them in the Purchase Agreement. Each
Holder of this Note will be deemed, by its acceptance hereof, to have agreed to
the provisions and to have made the representations and warranties set forth in
Article 6 of the Purchase Agreement.
The Notes are issuable as registered notes. This Note is transferable
only by surrender hereof at the principal office of the Loan Parties at Wheat
Road and Lincoln Avenue, Buena (Atlantic County), New Jersey, duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
Holder of this Note.
This Note is also subject to optional prepayment, in whole or in part
at the times and on the terms specified in the Purchase Agreement, but not
otherwise.
If an Event of Default as defined in the Purchase Agreement occurs and
is continuing, the unpaid principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
premium) and with the effect provided in the Purchase Agreement.
Payments of principal, interest on and any premium with respect to this
Note are secured pursuant to the terms of the Security Documents.
This Note and the rights and obligations of the parties hereto shall be
deemed to be contracts under the laws of the State of Maryland and for all
purposes shall be governed by and construed and enforced in accordance with the
laws of said State, except for its rules relating to the conflict of laws.
IGI, INC.
By: /s/ Paul Woitach
____________________________________
Name: Paul Woitach
Title: President
IGEN, INC.
By: /s/ Paul Woitach
____________________________________
Name: Paul Woitach
President
<PAGE> 3
Title:
IMMUNOGENETICS, INC.
By: /s/ Paul Woitach
____________________________________
Name: Paul Woitach
Title: President
BLOOD CELLS, INC.
By: /s/ Paul Woitach
_____________________________________
Name: Paul Woitach
Title: President
<PAGE> 1
EXHIBIT *(10.37)
<TABLE>
<S> <C>
THE OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT
SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT")
DATED AS OF OCTOBER 29, 1999, AMONG FLEET CAPITAL CORPORATION, AMERICAN CAPITAL
STRATEGIES, LTD., IGI, INC., IGEN, INC., IMMUNOGENETICS, INC., AND BLOOD CELLS,
INC., TO THE INDEBTEDNESS AND OTHER LIABILITIES OWED BY IGI, INC., IGEN, INC.,
IMMUNOGENETICS, INC., AND BLOOD CELLS, INC. UNDER AND PURSUANT TO THE LOAN AND
SECURITY AGREEMENT DATED AS OF OCTOBER 29, 1999, AND EACH RELATED "LOAN
DOCUMENT" (AS DEFINED THEREIN), AND EACH HOLDER HEREOF, BY ITS ACCEPTANCE
HEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT.
</TABLE>
IGI, INC., IGEN, INC., IMMUNOGENETICS, INC., AND BLOOD CELLS, INC.
SERIES B SENIOR SUBORDINATED NOTE DUE SEPTEMBER 30, 2006
No. SSN - 1 October 29, 1999
$350,000
FOR VALUE RECEIVED, the undersigned IGI, INC., a Delaware corporation,
("IGI"), IGEN, INC., a Delaware corporation ("Igen"), IMMUNOGENETICS, INC., a
Delaware corporation, ("ImmunoGenetics"), and BLOOD CELLS, INC., a Delaware
corporation ("Blood Cells") (IGI, Igen, ImmunoGenetics and Blood Cells are
referred to herein as the "Loan Parties"), hereby promise to pay to AMERICAN
CAPITAL STRATEGIES, LTD., or registered assigns (the "Holder"), the principal
sum of THREE HUNDRED FIFTY THOUSAND DOLLARS ($350,000), with interest thereon,
on the terms and conditions set forth in the Purchase Agreement (as defined
herein).
Payments of principal of, interest on and any premium with respect to
this Georgia Note are to be made in lawful money of the United States of America
by check mailed and addressed to the registered Holder hereof at the address
shown in the register maintained by the Loan Parties for such purpose, or, at
the option of the Holder, in such manner and at such other place in the United
States of America as the Holder hereof shall have designated to the Loan Parties
in writing.
Notwithstanding any provision to the contrary in this Georgia Note, the
Purchase Agreement or any other agreement, the Loan Parties shall not be
required to pay, and the Holder shall not be permitted to contract for, take,
reserve, charge or receive, any compensation which constitutes interest under
applicable law in excess of the maximum amount of interest permitted by law.
This Georgia Note is one of a series of Series B Senior Subordinated
Notes Due September 30, 2006 (herein called the "Georgia Notes") issued pursuant
to the Note and Equity Purchase Agreement, dated as of October 29, 1999 (as from
time to time amended, the "Purchase Agreement"), between the Loan Parties and
American Capital Strategies, Ltd., a corporation organized and existing under
the laws of the State of
<PAGE> 2
Delaware, and is entitled to the benefits thereof. All terms used herein shall
have the meanings ascribed to them in the Purchase Agreement. Each Holder of
this Georgia Note will be deemed, by its acceptance hereof, to have agreed to
the provisions and to have made the representations and warranties set forth in
Article 6 of the Purchase Agreement.
The Georgia Notes are issuable as registered notes. This Georgia Note
is transferable only by surrender hereof at the principal office of the Loan
Parties at Wheat Road and Lincoln Avenue, Buena (Atlantic County), New Jersey,
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered Holder of this Georgia Note.
This Georgia Note is also subject to optional prepayment, in whole or
in part at the times and on the terms specified in the Purchase Agreement, but
not otherwise.
If an Event of Default as defined in the Purchase Agreement occurs and
is continuing, the unpaid principal of this Georgia Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable premium) and with the effect provided in the Purchase Agreement.
Payments of principal, interest on and any premium with respect to this
Georgia Note are secured pursuant to the terms of the Security Documents.
This Note and the rights and obligations of the parties hereto shall be
deemed to be contracts under the laws of the State of Maryland and for all
purposes shall be governed by and construed and enforced in accordance with the
laws of said State, except for its rules relating to the conflict of laws.
IGI, INC.
By: /s/ Paul Woitach
------------------------------------
Name: Paul Woitach
Title: President
IGEN, INC.
By: /s/ Paul Woitach
------------------------------------
Name: Paul Woitach
Title: President
IMMUNOGENETICS, INC.
<PAGE> 3
By: /s/ Paul Woitach
____________________________________
Name: Paul Woitach
Title: President
BLOOD CELLS, INC.
By: /s/ Paul Woitach
____________________________________
Name: Paul Woitach
Title: President
<PAGE> 1
EXHIBIT *(10.38)
This Warrant was originally issued on October 29, 1999, and such
issuance was not registered under the Securities Act of 1933, as amended. The
transfer of this Warrant and the securities obtainable upon exercise thereof is
subject to the conditions on transfer specified in the Note and Equity Purchase
Agreement, dated as of October 29, 1999 (as amended from time to time, the
"Purchase Agreement") by and among the issuer hereof (the "Company") and the
Purchaser (as such term is defined in the Purchase Agreement), and the Company
reserves the right to refuse the transfer of such security until such conditions
have been fulfilled with respect to such transfer. Upon written request, a copy
of such conditions will be furnished by the Company to the holder hereof without
charge. This Warrant and the Common Stock or other securities issuable upon
exercise hereof may not be offered or sold except pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or an
applicable exemption from registration under the Securities Act of 1933, as
amended.
WARRANT
Date of Issuance: October 29, 1999 Certificate No. W-1
FOR VALUE RECEIVED, IGI, INC., a Delaware corporation (the "Company"),
hereby grants to American Capital Strategies, Ltd., or its registered assigns
(the "Registered Holder") the right to purchase from the Company 1,907,543
shares (as adjusted from time to time hereunder, the "Exercise Shares"), of the
Company's Common Stock, $0.01 par value per share (the "Common Stock"), at a
price per share of $0.01 (as adjusted from time to time hereunder, but in no
event less than the par value per share of the Common Stock, the "Exercise
Price"). This Warrant is one of one or more Warrants (collectively, the
"Warrants") originally issued by the Company to certain investors on October 29,
1999. Certain capitalized terms used herein are defined in Section 4 hereof.
Certain capitalized terms used and not defined herein are defined in the
Purchase Agreement. The amount and kind of securities purchasable pursuant to
the rights granted hereunder and the Exercise Price for such securities are
subject to adjustment pursuant to the provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Exercise Period. The Registered Holder may exercise, in whole or in
part (but not as to a fractional share of Common Stock), the purchase rights
represented by this Warrant at any time and from time to time, to and including
October 29, 2009 (the "Exercise Period"). The Company will give the Registered
Holder written notice at least 30 days but not more than 90 days prior to the
expiration of the Exercise Period.
(i) Exercise Procedure. This Warrant will be deemed to have been
exercised on the date (the "Exercise Time") on which the Company has received
all of the following items:
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(a) a completed Exercise Agreement, as described in paragraph
1B below, executed by the Person exercising all or part of the purchase rights
represented by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the
initial Purchaser, an Assignment or Assignments in the form set forth in Exhibit
II hereto evidencing the assignment of this Warrant to the Purchaser, in which
case the Registered Holder will have complied with the provisions set forth in
Section 6 hereof; and
(d) a check payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise (the "Aggregate Exercise Price"); provided,
however, that the Registered Holder may exercise this Warrant in whole or in
part by the surrender of this Warrant to the Company, with a duly executed
Exercise Agreement marked to reflect "Net Issue Exercise" and specify the number
of shares of Common Stock to be purchased and upon such Net Issue Exercise, the
Registered Holder shall be entitled to pay the exercise price for Common Stock
purchased hereunder by cancellation of shares of Common Stock to be purchased
hereunder, valued at Fair Market Value less the Exercise Price thereof.
(ii) Certificates for shares of Common Stock purchased upon exercise
of this Warrant will be delivered by the Company to the Purchaser within five
business days after the date of the Exercise Time. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company will prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and will, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Common Stock issuable upon the exercise of this Warrant
will be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser will be deemed for all purposes to have become the record holder
of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant will be made without charge to the Registered Holder or
the Purchaser for any issuance tax in respect thereof or other cost incurred by
the Company in connection with such exercise and the related issuance of shares
of Common Stock. Each share of Common Stock issuable upon exercise of this
Warrant will, upon payment of the Exercise Price therefor, be fully paid and
nonassessable and free from all liens and charges with respect to the issuance
thereof.
(v) The Company will not close its books against the transfer of
this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner that interferes with the timely exercise
of this Warrant. The Company will from time to time take all such action as may
be necessary to assure that the par value per share of the unissued Common Stock
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price then in effect.
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(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a public offering
or sale of the Company, the exercise of any portion of this Warrant may, at the
election of the holder hereof, be conditioned upon the consummation of the
public offering or sale of the Company in which case such exercise shall not be
deemed to be effective until the consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of Common
Stock issuable upon the exercise of all outstanding Warrants. All shares of
Common Stock that are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or governmental regulation or any requirements of any domestic securities
exchange upon which shares of Common Stock may be listed (except for official
notice of issuance which shall be immediately delivered by the Company upon each
such issuance).
1B. Exercise Agreement. Upon any exercise of this Warrant, the Exercise
Agreement will be substantially in the form set forth in Exhibit I hereto,
except that if the shares of Common Stock are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement will
also state the name of the Person to whom the certificates for the shares of
Common Stock are to be issued, and if the number of shares of Common Stock to be
issued does not include all the shares of Common Stock purchasable hereunder, it
will also state the name of the Person to whom a new Warrant for the unexercised
portion of the rights hereunder is to be delivered. Such Exercise Agreement will
be dated the actual date of execution thereof.
1C. Fractional Shares. If a fractional share of Common Stock would, but
for the provisions of paragraph 1A, be issuable upon exercise of the rights
represented by this Warrant, the Company will, within five business days after
the date of the Exercise Time, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share in an amount equal to the difference
between Fair Market Value of such fractional share as of the date of the
Exercise Time and the Exercise Price of such fractional share.
Section 2. Adjustment of Number of Exercise Shares. In order to prevent
dilution of the rights granted under this Warrant, the number of Exercise Shares
shall be subject to adjustment from time to time as provided in this Section 2.
2A. Adjustment of Number of Exercise Shares upon Issuance of Shares of
Common Stock or Stock Equivalents. If and whenever, on or after the Closing
Date, the Company issues or sells, or in accordance with paragraph 2B is deemed
to have issued or sold, any shares of Common Stock for a consideration per share
of Common Stock less than the Fair Market Value per share of Common Stock at the
time of such issue or sale (not including the issuance of shares of Common Stock
pursuant to exercise of (i) the Warrants or (ii) any other Stock Equivalent),
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then forthwith upon such issue or sale, the Exercise Shares will be increased by
multiplying such number by a fraction, (A) the numerator of which is the Fair
Market Value per share of Common Stock at the time of such issue or sale and (B)
the denominator of which is the amount determined by dividing (a) the sum of (1)
the product derived by multiplying the Fair Market Value per share of Common
Stock at the time of such issue or sale times the number of shares of Common
Stock outstanding on a Fully Diluted Basis immediately prior to such issue or
sale, plus (2) the aggregate consideration, if any, received by the Company upon
such issue or sale, by (b) the number of shares of Common Stock outstanding on a
Fully Diluted Basis immediately after such issue or sale; provided, however,
there shall be no such adjustment in respect of shares of Common Stock purchased
by an employee of the Company under the Company's employee stock purchase plan
as in effect as of the date of this Warrant and as amended from time to time in
accordance with the Purchase Agreement.
2B. Effect on Exercise Shares of Certain Events. For purposes of
determining the adjusted Exercise Shares of Common Stock under paragraph 2A
above, the following will be applicable:
(i) Issuance of Stock Equivalents. If the Company in any manner
grants or issues Stock Equivalents as permitted by the Purchase Agreement and
the lowest price per share of Common Stock for which any one share of Common
Stock of the Company or analogous economic right is issuable upon the exercise
of any such Stock Equivalent is less than the Fair Market Value at the time of
the granting or issuing of such Stock Equivalent, then such shares of Common
Stock will be deemed to have been issued and sold by the Company for such price
per share of Common Stock. For purposes of this paragraph, the "lowest price per
share of Common Stock for which any one share of Common Stock or analogous
economic right is issuable" will be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock or analogous economic right upon the exercise of the
Stock Equivalent (whether by conversion, exchange or otherwise) or other similar
indication of the price per share of Common Stock as of the time of granting
(such as the floor value for stock appreciation rights). No further adjustment
of the Exercise Shares will be made upon the actual issue of such shares of
Common Stock or upon the exercise of any rights under the Stock Equivalents.
(ii) Change in Option Price or Conversion Rate. If the purchase
price provided for in any Stock Equivalent, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Stock Equivalent, or
the rate at which any Stock Equivalent is convertible into or exchangeable for
shares of Common Stock changes at any time, the Exercise Shares in effect at the
time of such change will be readjusted to the Exercise Shares that would have
been in effect at such time had such Stock Equivalent still outstanding provided
for such changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold;
provided that if such adjustment would result in a decrease in the Exercise
Shares then in effect, such adjustment will not be effective until thirty (30)
days after written notice thereof has been given by the Company to all holders
of the Warrants.
(iii) Treatment of Expired and Unexercised Stock Equivalents. Upon
the expiration of any Stock Equivalent or the termination of any right to
convert or exchange any Stock Equivalent without the exercise of such Stock
Equivalent, the Exercise Shares then in
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effect will be adjusted to the Exercise Shares which would have been in effect
at the time of such expiration or termination had such Stock Equivalent, to the
extent outstanding immediately prior to such expiration or termination, never
been issued; provided that if such expiration or termination would result in a
decrease in the Exercise Shares then in effect, such decrease shall not be
effective until thirty (30) days after written notice thereof has been given to
all holders of the Warrants.
(iv) Calculation of Consideration Received. If any shares of Common
Stock or Stock Equivalents are issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor will be deemed to be the net
amount received by the Company. In case any shares of Common Stock or Stock
Equivalents are issued or sold for a consideration other than cash, the amount
of the consideration other than cash received by the Company will be the Fair
Market Value of such consideration. In case any shares of Common Stock or Stock
Equivalents are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of
consideration therefor will be deemed to be the Fair Market Value of such
portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock or Stock Equivalents, as the case
may be.
(v) Integrated Transactions. In case any Stock Equivalent is issued
in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Stock Equivalent by the parties thereto, the
Stock Equivalent will be deemed to have been issued without consideration.
(vi) Record Date. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, or Stock Equivalents or (B) to
subscribe for or purchase Common Stock or Stock Equivalents, then such record
date will be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
2C. Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Shares in effect immediately prior to
such subdivision will be proportionately increased. If the Company at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Shares in effect immediately prior to such combination will be proportionately
decreased.
2D. Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets to another Person or
other transaction which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "Organic Change." Prior to the consummation of any Organic Change,
the Company will make appropriate provision (in form and substance reasonably
satisfactory to the
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Registered Holders of the Warrants representing a majority of the Common Stock
obtainable upon exercise of all Warrants then outstanding) to ensure that each
of the Registered Holders of the Warrants will thereafter have the right to
acquire and receive in lieu of or addition to (as the case may be) the shares of
Common Stock immediately theretofore acquirable and receivable upon the exercise
of such holder's Warrant, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
such holder's Warrant had such Organic Change not taken place. In any such case,
the Company will make appropriate provision (in form and substance satisfactory
to the Registered Holders of the Warrants representing a majority of the Common
Stock obtainable upon exercise of all Warrants then outstanding) with respect to
such holders' rights and interests to ensure that the provisions of this Section
2 and Sections 3 and 4 hereof will thereafter be applicable to the Warrants
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the Exercise Price to the value for the Common Stock reflected by
the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of Exercise Shares, if the value so reflected is less
than the Exercise Price in effect immediately prior to such consolidation,
merger or sale). The Company will not effect any such consolidation, merger or
sale, unless prior to the consummation thereof, the successor entity (if other
than the Company) resulting from consolidation or merger or the corporation
purchasing such assets assumes by written instrument (in form and substance
satisfactory to the Registered Holders of Warrants representing a majority of
the Common Stock obtainable upon exercise of all of the Warrants then
outstanding), the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to acquire.
2E. Notices.
(i) Immediately upon any adjustment of the Exercise Shares, the
Company will give written notice thereof to the Registered Holder, setting forth
in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company will give written notice to the Registered Holder
at least 20 days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata subscription offer to holders of Common
Stock or (C) for determining rights to vote with respect to any Organic Change,
dissolution or liquidation.
(iii) The Company will also give written notice to the Registered
Holders at least 20 days prior to the date on which any Organic Change,
dissolution or liquidation will take place.
Section 3. Dividends
3A. In the event that, during the term of the Warrants, the Company
pays any cash dividend or makes any cash distribution to any holder of Common
Stock each Registered Holder shall be entitled to receive in respect of its
Warrant a dilution fee in cash (the "Dilution Fee") on the date of payment of
such dividend or distribution, which Dilution Fee shall be equal to the
difference between (a) the product of (i) the highest amount per share paid to
holders of
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Common Stock times (ii) the number of Exercise Shares to which the Holder is
then entitled. No such dividend or distribution shall be paid unless the Holders
shall have received advance written notice thereof at least ten (10) days prior
to the record date therefor.
3B. If the Company declares or pays a dividend upon the Common Stock
payable otherwise than in cash out of earnings or earned surplus (determined in
accordance with generally accepted accounting principles, consistently applied)
except for a stock dividend payable in shares of Common Stock (a "Liquidating
Dividend"), then the Company will pay to the Registered Holder of this Warrant
at the time of payment thereof the Liquidating Dividend which would have been
paid to such Registered Holder on the Common Stock had this Warrant been fully
exercised immediately prior to the date on which a record is taken for such
Liquidating Dividend, or, if no record is taken, the date as of which the record
holders of Common Stock entitled to such dividends are to be determined.
Section 4. Definitions. The following terms have meanings set forth
below:
"Common Stock" means the common stock of the Company and, except for
purposes of the shares obtainable upon exercise of this Warrant, any capital
stock of any class of the Company hereafter authorized which is not limited to a
fixed sum or percentage of par or stated value in respect to the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon any liquidation, dissolution or winding up of the Company.
"Fair Market Value" shall have the meaning set forth in the Purchase
Agreement.
"Fully Diluted Basis" means, at any given time, the number of shares of
Common Stock actually outstanding at such time, plus the number of Stock
Equivalents then outstanding (including Warrants), regardless of their exercise
price or its equivalent.
"Person" means an individual, a partnership, a joint venture, a limited
liability company, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Stock Equivalents" means any option, warrant, right or similar
security or claim exercisable into, exchangeable for, or convertible to shares
of Common Stock or the economic equivalent value of shares of Common Stock
(including, by way of illustration, stock appreciation rights).
Section 5. No Voting Rights; Limitations of Liability. This Warrant
will not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Common Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 6. Warrant Transferable. Subject to the transfer conditions
referred to in the legend endorsed hereon, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Registered Holder,
upon surrender of this Warrant with a properly executed Assignment (in the form
of Exhibit II hereto) at the principal office of the Company.
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Section 7. Warrant Exchangeable for Different Denominations. This
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
will represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. The date the Company initially issues this
Warrant will be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexplored and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
Section 8. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the holder is a financial institution or other institutional
investor its own agreement will be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Company will (at its expense)
execute and deliver in lieu of such certificate a new certificate of like kind
representing the same rights represented by such lost, stolen, destroyed or
mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate.
Section 9. Notices. Except as otherwise expressly provided herein, all
notices referred to in this Warrant will be in writing and will be delivered
personally, sent by reputable express courier service (charges prepaid) or sent
by registered or certified mail, return receipt requested, postage prepaid and
will be deemed to have been given when so delivered, one business day after
being so sent or three business days after being so deposited in the U.S. Mail
(i) to the Company, at its principal executive offices and (ii) to the
Registered Holder of this Warrant, at such holder's address as it appears in the
records of the Company (unless otherwise indicated by any such holder).
Section 10. Amendment and Waiver. Except as otherwise provided herein,
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of Warrants representing a majority of the shares of Common
Stock obtainable upon exercise of the Warrants; provided that no such action may
change the Exercise Price of the Warrants or the number of shares or class of
stock obtainable upon exercise of each Warrant without the written consent of
the Registered Holders of Warrants representing at least 60% of the shares of
Common Stock obtainable upon exercise of the Warrants.
Section 11. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The construction,
validity and interpretation of this Warrant will be governed by the internal
law, and not the conflicts law, of the State of Delaware.
* * * * *
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SIGNATURE PAGE TO WARRANT
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed and attested by its duly authorized officers under its corporate seal and
to be dated the Date of Issuance hereof.
IGI, INC.
By: /s/ Paul Woitach
-----------------------------------
Name: Paul Woitach
Title: President
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EXHIBIT I
EXERCISE AGREEMENT
To:
Dated:
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W- ), hereby agrees to subscribe for the
purchase of 1,907,543 shares of the Common Stock covered by such Warrant and
makes payment herewith in full therefor at the price per share provided by such
Warrant.
/ / CHECK BOX FOR NET ISSUE EXERCISE
Signature _________________________________
Address ___________________________________
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EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, IGI, Inc. hereby sells, assigns, and
transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W- ) with respect to the number of shares of the Common Stock
covered thereby set forth below, unto:
<TABLE>
<CAPTION>
Names of Assignee Address No. of Shares
----------------- ------- -------------
<S> <C> <C>
American Capital Strategies, Ltd. 2 Bethesda Metro Center, 14th Floor 1,907,543
Bethesda, Maryland 20814
</TABLE>
Signature ______________________________
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EXHIBIT *(10.39)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, is entered into as of October 29, 1999 (as
from time to time amended, modified, restated, supplemented and in effect, this
"Security Agreement"), by and among IGI, INC., a Delaware corporation ("IGI"),
IGEN, INC., a Delaware corporation ("Igen"), IMMUNOGENETICS, INC., a Delaware
corporation ("ImmunoGenetics"), and BLOOD CELLS, INC., a Delaware corporation
("Blood Cells") (IGI, Igen, ImmunoGenetics and Blood Cells are collectively
referred to herein as the "Grantors"), in favor of AMERICAN CAPITAL STRATEGIES,
LTD., a Delaware corporation (the "Secured Party").
RECITALS
A. As of the date hereof, the Grantors and Secured Party have entered
into a Subordinated Note Purchase Agreement dated as of even date herewith (the
"Note Agreement") pursuant to which the Secured Party has agreed to purchase:
(i) Senior Subordinated Notes of the Grantors in the aggregate original
principal amount of $7,000,000 (collectively, the "Notes") and (ii) warrants to
purchase 1,907,543 shares of Common Stock (as defined in the Note Agreement) of
IGI (the "Warrants").
B. In order to induce the Secured Party to purchase the Notes and the
Warrants, and in consideration therefor, the Grantors have agreed to grant to
the Secured Party a perfected lien on and security interest in all of the
Grantors' assets and properties, whether now or hereafter existing, owned or
acquired all pursuant to the terms of this Security Agreement in order to secure
(i) the due and punctual payment of (A) the principal and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Notes, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, and (B) all other monetary obligations, including but not limited to,
fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding regardless of whether allowed or allowable in such proceeding), of
the Grantors under the Note Agreement, the Notes, this Security Agreement, or
any of the other Purchase Documents (as defined in the Note Agreement), and (ii)
the due and punctual performance of all covenants, agreements, obligations and
liabilities of the Grantors under or pursuant to the Note Agreement, the Notes,
this Security Agreement and the other Purchase Documents (collectively, the
"Obligations").
C. It is a condition precedent to the purchase of the Notes and the
Warrants that the Grantors execute and deliver this Security Agreement.
<PAGE> 2
AGREEMENT
NOW THEREFORE, for and in consideration of the covenants and provisions
set forth herein, and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
SECURITY INTEREST
SECTION 1.1 GRANT OF SECURITY INTEREST. As security for the
Obligations, each Grantor hereby sells, conveys, assigns, pledges and grants a
continuing and unconditional security interest to the Secured Party, its
successors and assigns, in and to:
(a) all equipment (including all "Equipment" as term is defined in
Section 9-109(2) of the Uniform Commercial Code as in effect from time to time
(such code, together with any other successor or applicable adoption of the
Uniform Commercial Code in any applicable jurisdiction, the "Code")) in the
machinery, vehicles, fixtures, improvements, supplies, office furniture, fixed
assets, all as now owned or hereafter acquired by such Grantor or in which such
Grantor has or hereafter acquires any interest, and any items substituted
therefor as replacements and any additions or accessions thereto;
(b) all goods (including all "Goods" as defined in Section 9-105 of the
Code) and all inventory (including all "Inventory" as defined in Section
9-109(4) of the Code) of such Grantor, now owned or hereafter acquired by such
Grantor or in which such Grantor has or hereafter acquires any interest,
including but not limited to, raw materials, scrap inventory, work in process,
products, packaging materials, finished goods, all documents of title, chattel
paper and other instruments covering the same and all substitutions therefor and
additions thereto (all of the property described in this clause (b) being
hereinafter collectively referred to as "Inventory");
(c) all present and future accounts in which such Grantor has or
hereafter acquires any interest (including all "Accounts" as defined in Section
9-106 of the Code), contract rights (including all rights to receive payments
and other rights under all equipment and other leasing contracts) and rights to
payment and rights or accounts receivable evidencing or representing
Indebtedness due or to become due such Grantor on account of goods sold or
leased or services rendered, claims, instruments and other general intangibles
(including tax refunds, royalties and all other rights to the payment of money
of every nature and description), including but not limited to, any such right
evidenced by chattel paper, and all liens, securities, guaranties, remedies,
security interests and privileges pertaining thereto (all of the property
described in this clause (c) being hereinafter collectively referred to as
"Accounts");
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(d) all investment property now owned or hereafter acquired by such
Grantor, including, without limitation, all securities (certificated and
uncertificated), securities accounts, securities entitlements, commodity
contracts and commodity accounts;
(e) all general intangibles now owned or hereafter acquired by such
Grantor or in which such Grantor has or hereafter acquires any interest,
(including all "General Intangibles" as defined in Section 9-106 of the Code)
including but not limited to, choses in action and causes of action and all
licenses and permits (to the extent the collateral assignment of such licenses
and permits is not prohibited by applicable law), registrations, franchises,
corporate or other business records, systems, designs, software, goodwill,
logos, indicia, business identifiers, inventions, processes, production methods,
proprietary information, know-how and trade-secrets of such Grantor, and all
trade-names, copyrights, patents, trademarks (including service marks) or patent
or trademark applications, contract rights (including but not limited to all
rights to receive payments and other rights under all equipment and other
leasing contracts, instruments and documents owned or used by such Grantor, and
any goodwill relating thereto);
(f) all other property owned by such Grantor or in which such Grantor
has or hereafter acquires any interest, wherever located, and of whatever kind
or nature, tangible or intangible;
(g) all insurance policies of any kind maintained in effect by such
Grantor, now existing or hereafter acquired, under which any of the property
referred to in clauses (a) through (f) above is insured, including but not
limited to, any proceeds payable to such Grantor pursuant to such policies;
(h) all moneys, cash collateral, chattel paper, checks, notes, bills of
exchange, documents of title, money orders, negotiable instruments, commercial
paper, and other securities, instruments, documents, deposit accounts, deposits
and credits from time to time whether or not in the possession of or under the
control of any of the Secured Party;
(i) any consideration received when all or any part of the property
referred to in clauses (a) through (h) above is sold, transferred, exchanged,
leased, collected or otherwise disposed of, or any value received as a
consequence of possession thereof, including but not limited to, all products,
proceeds (including all "Proceeds" as defined in Section 9-306(l) the Code),
cash, negotiable instruments and other instruments for the payment of money,
chattel paper, security agreements or other documents, insurance proceeds or
proceeds of other proceeds now or hereafter owned by such Grantor or in which
such Grantor has an interest.
The property set forth in clauses (a) through (i) of the preceding
sentence, together with property of a similar nature which such Grantor
hereafter owns or in which such Grantor hereafter acquires any interest, is
referred to herein as the "Collateral."
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 REPRESENTATIONS AND WARRANTIES. The Grantors represent,
warrant and agree that:
(a) the Grantors have and shall have absolute, good and exclusive title
to all the Collateral, wherever and whenever acquired, free and clear of any
lien except as permitted by the Note Agreement and the Grantors have not filed,
nor is there on record, a financing statement under the Code (or similar
statement or instrument of registration under the law of any jurisdiction)
covering any Collateral except as permitted by the Note Agreement;
(b) the Grantors have paid or will pay when due all taxes, fees,
assessments and other charges now or hereafter imposed upon the Collateral
except for any tax, fee, assessment or other charge the validity of which is
being contested in good faith by appropriate proceedings and which may not
result in any material impairment of the Lien of the Secured Party on such
Collateral;
(c) as a result of the execution and delivery of this Security
Agreement and the filing of any financing statements or other documents
necessary to assure, preserve and perfect the security interest created hereby
and except as permitted by the Note Agreement, the Secured Party shall have a
valid, perfected, enforceable lien on, and a continuing security interest in,
the Collateral, enforceable and superior as such as against creditors and
purchasers (other than purchasers of Inventory in the ordinary course of
business) and as against any owner of real property where any of the equipment
or Inventory is located and as against any purchaser of such real property and
any present or future creditor obtaining a mortgage or other lien on such real
property, and such lien shall be superior and prior to all other Liens, except
as otherwise permitted by the Note Agreement;
(d) the amount that has been or that shall be represented by the
Grantors to the Secured Party from time to time owing by all obligors (such
obligors being hereinafter referred to as the "Account Debtors") in the
aggregate with respect to Accounts has not and will not materially deviate from
the correct amount actually and unconditionally owing at such time by such
Account Debtors; all Accounts represented bona fide transactions completed in
accordance with the terms and provisions contained in the invoices and other
documents evidencing the same; there are no material setoffs, counterclaims or
disputes existing or asserted with respect to Accounts and the Grantors have not
made any agreement with any Account Debtor for any material deduction therefrom;
to the Grantors' knowledge, all Account Debtors have the capacity to contract
and are solvent; the goods giving rise to Accounts are not subject to any lien,
claim or encumbrance, except in favor of the Secured Party and except as
permitted by the Note Agreement; and the Grantors have no knowledge of any fact
or circumstances which would impair the validity or collectability of Accounts;
and
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(e) none of the Collateral is held by a third party in any location as
assignee, trustee, bailee, consignee or in any similar capacity.
(f) Exhibit A hereto lists (i) each Grantor's chief executive office
and place of business, (ii) the address where records relating to the Collateral
are maintained, (iii) any other location of any other equipment and goods (other
than mobile goods) included in the Collateral, and (iv) any fictitious name used
by such Grantor.
SECTION 2.2 Survival. All representations, warranties and agreements of
the Grantors contained in this Security Agreement shall survive the execution,
delivery and performance of this Security Agreement until the termination of
this Security Agreement pursuant to Section 6.5 hereof.
ARTICLE 3
COVENANTS
SECTION 3.1 COVENANTS. The Grantors hereby jointly and severally
covenant and agree with the Secured Party that so long as this Security
Agreement shall remain in effect or any Obligations shall remain unpaid or
unperformed: (a) the Grantors shall promptly give written notice to the Secured
Party of any levy or attachment, execution or other process against any of the
Collateral; (b) at their own cost and expense, the Grantors shall take any and
all actions reasonably necessary or desirable to defend the Collateral against
the claims and demands of all Persons other than the Secured Party and holders
of adverse Liens permitted by the Purchase Agreement and to defend the security
interest of the Secured Party in the Collateral and the priority thereof against
any adverse Lien of any nature not permitted by the Purchase Agreement; (c) the
Grantors shall keep all tangible Collateral properly insured in the manner and
form required under the Note Agreement and in good order and repair (normal wear
and tear excepted) and immediately notify the Secured Party of any event causing
any material loss, damage or depreciation in value of the Collateral and of the
extent of such loss, damage or depreciation; (d) the Grantors shall mark any
Collateral that is chattel paper with a legend showing the Secured Party's lien
and security interest therein; (e) the Grantors shall promptly give written
notice to the Secured Party of any change in the Intellectual Property Rights
material to their businesses; and (f) the Grantors shall not: amend or terminate
any contract or other document or instrument constituting part of the
Collateral, except for transactions in the ordinary course of business
substantially consistent with past practice; voluntarily or involuntarily
exchange, lease, sell, transfer or otherwise dispose of any Collateral, except
as permitted by the Note Agreement; make any compromise, settlement, discharge
or adjustment or grant any extension of time for payment with respect to any
Account or any Lien, Guaranty or remedy pertaining thereto, except for
transactions in the ordinary course of business substantially consistent with
past practice; change their name or use any fictitious or trade name; change the
location of their chief executive offices; or permit any of the Collateral
(other than Collateral that constitutes goods which are mobile and which are of
a type normally used in more than one jurisdiction) to be removed from or
located in any place not identified as the location
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of such Collateral to the Secured Party, as the case may be, except after
written notice to and with written consent of the Secured Party and compliance
with such procedures as the Secured Party may reasonably impose to prevent any
interruptions or discontinuity in the security interest granted pursuant to this
Security Agreement.
ARTICLE 4
REMEDIAL MATTERS
SECTION 4.1 Powers of Attorney.
(a) Grantor hereby irrevocably appoints the Secured Party (and any
officer or agent of the Secured Party) as its true and lawful attorney-in-fact,
with power of substitution for and in the name of the Secured Party or
otherwise, for the use and benefit of the Secured Party, effective upon the
occurrence and during the continuance of an Event of Default: (i) to receive,
endorse the name of such Grantor upon and deliver any notes, acceptances,
checks, drafts, money orders or other evidences of payment that may come into
the possession of the Secured Party with respect to the Collateral; (ii) to
cause such Grantor's mail to be transferred to the Secured Party's own offices
and to receive and open all mail addressed to such Grantor for the purposes of
removing any such notes, acceptances, checks, drafts, money orders or other
evidences of payment; (iii) to demand, collect and receive payment in respect of
the Collateral and to apply any such payments directly to the payment of the
Obligations in accordance with Section 4.6 hereof; (iv) to receive and give
discharges and releases of all or any of the Collateral; (v) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction, to collect or otherwise realize on all or any
part of the Collateral or to enforce any rights in respect thereof; (vi) to sign
the name of such Grantor on any invoice or bill of lading relating to any of the
Collateral; (vii) to send verification of any Accounts to any Account Debtor or
customer; (viii) to notify any Account Debtor or other obligor of the company
with respect to any Collateral to make payment to the Secured Party; (ix) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating or pertaining to all or any of the Collateral; (x) to take any action
for purposes of carrying out of the terms of this Security Agreement; (xi) to
enforce all of each Grantor's rights and powers under and pursuant to any and
all agreements with respect to the Collateral; and (xii) generally to sell,
assign, transfer, pledge, make any agreement with respect to or otherwise deal
with all or any of the Collateral, and to do all other acts and things necessary
to carry out this Security Agreement, as fully and completely as though the
Purchaser were the absolute owner of the Collateral for all purposes; provided,
however, that nothing herein contained shall be construed as requiring or
obligating the Secured Party to make any commitment or to make any inquiry as to
the nature or sufficiency of any payment received by the Secured Party, or to
present or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken by the Secured
Party or omitted to be taken with respect to the Collateral or any part thereof
shall give rise to any defense, counterclaim or offset in favor of such Grantor
or to any claim or action against the Secured Party. It is
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<PAGE> 7
understood and agreed that the power of attorney granted to the Secured Party
for the purposes set forth above in this Section 4.1 is coupled with an interest
and is irrevocable and such Grantor hereby ratifies all actions taken by its
attorney-in-fact by virtue hereof. The provisions of this Section 4.1 shall in
no event relieve such Grantor of any of its obligations hereunder or under any
of the other Security Documents with respect to the Collateral or any part
thereof or impose any obligation on the Secured Party to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Secured Party of any other or further right which
it may have on the date of this Security Agreement or hereafter, whether
hereunder, under any of the other Security Documents, by law or otherwise.
(b) The Secured Party shall not, under any circumstance or in any event
whatsoever, have any liability for any part of the Collateral, nor shall the
Secured Party have any liability for any error or omission or delivery of any
kind incurred in the good faith settlement, collection or payment of any of the
Collateral or any monies received in payment therefor or for any damages
resulting therefrom, nor shall this Security Agreement impose upon the Secured
Party any obligation to perform any obligation with respect to the Collateral.
The costs of collection, notification and enforcement, including but not limited
to, attorneys' fees and out-of-pocket expenses, shall be borne solely by the
Grantors, whether the same are incurred by the Grantors or the Secured Party.
The Grantors jointly and severally agree to indemnify, defend and hold the
Secured Party harmless from and against any and all other claims, demands,
losses, judgments and liabilities (including but not limited to, liabilities for
penalties) of any nature, and to reimburse the Secured Party for all reasonable
costs and expenses, including but not limited to attorneys' fees and expenses,
arising from this Security Agreement or the exercise of any right or remedy
granted to the Secured Party hereunder other than those incurred solely as a
result of the gross negligence and willful misconduct of the Secured Party. In
no event shall the Secured Party be liable for any matter or thing in connection
with this Security Agreement other than to account for moneys actually received
by the Secured Party in accordance with the terms hereof, and matters arising
out of the gross negligence or willful misconduct of the Secured Party.
SECTION 4.2 COLLATERAL RESERVE ACCOUNT. Subject to the rights of any
other secured party having rights senior to the Secured Party, if requested by
the Secured Party to do so on or at any time after an Event of Default has
occurred and during its continuance, the Grantors shall establish and thereafter
maintain with the Secured Party or its designee a demand deposit account for the
concentration and collection of proceeds of certain Collateral (the "Collateral
Reserve Account") into which the Grantors shall transfer and deliver all cash,
checks, drafts, items and other instruments for the payment of money which it
now has or may at any time hereafter receive in full or partial payment for the
Collateral or otherwise as proceeds of the Collateral and, pending such transfer
and delivery, the Grantor shall be deemed to hold same in trust for the benefit
of the Secured Party. The Grantors shall not be entitled to withdraw funds on
deposit in the Collateral Reserve Account after its inception without the prior
written consent of the Secured Party; provided, however, that, at any time
during which collected funds exist on deposit in the Collateral Reserve Account,
the Secured Party may withdraw such
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deposits, or any portion thereof, therefrom, for application against the
Obligations in such manner as the Secured Party, in its sole discretion, may
determine.
SECTION 4.3 COLLECTIONS. Upon the occurrence and during the continuance
of an Event of Default, the Secured Party may, in its sole discretion, in its
name or in the name of any of the Grantors, or otherwise, (a) demand, sue for,
collect or receive any money or property at any time payable or receivable on
account of or in exchange for, or make any compromise or settlement deemed
desirable with respect to any of the Collateral, but shall be under no
obligation to do so, or (b) extend the time of payment, arrange for payment in
installments, or otherwise modify the term of, or release, any of the
Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, the Grantors, other than to discharge the
Grantors in so doing with respect to liabilities of the Grantors to the extent
that the liabilities are paid or repaid. After the occurrence and during the
continuance of an Event of Default, any money, checks, notes, bills, drafts, or
commercial paper received by the Grantors shall be held in trust for the Secured
Party and any other secured party having rights thereto senior to the Secured
Party and shall be promptly turned over to the Secured Party or any other
secured party having rights thereto senior to the Secured Party as their
interest shall appear. The Secured Party may make such payments and take such
actions as the Secured Party, in its sole discretion, deems necessary to protect
its security interest in the Collateral or the value thereof, and the Secured
Party is hereby unconditionally and irrevocably authorized (without limiting the
general nature of the authority hereinabove conferred) to pay, purchase, contest
or compromise any Liens which in the judgment of the Secured Party appear to be
equal to, prior to or superior to its security interest in the Collateral and
any Liens not expressly permitted by this Security Agreement, the Note Agreement
or the other Security Documents.
SECTION 4.4 POSSESSION; SALE OF COLLATERAL.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Secured Party may, subject to the rights of any other secured party
having rights senior the Secured Party (i) require the Grantors to assemble the
tangible assets which comprise part of the Collateral and make them available to
the Secured Party at any place or places reasonably designated by the Secured
Party, (ii) to the extent permitted by applicable law, with or without notice or
demand for performance and without liability for trespass, enter any premises
where the Collateral may be located and peaceably take possession of the same,
and may demand and receive such possession from any person who has possession
thereof, and may take such measures as it may deem necessary or proper for the
care or protection thereof, including but not limited to, the right to remove
all or any portion of the Collateral, and (iii) with or without taking such
possession may sell or cause to be sold, in one or more sales or parcels, for
cash, on credit or for future delivery, without assumption of any credit risk,
all or any portion of the Collateral, at public or private sale or at any
broker's board or any securities exchange, without demand of performance or
notice of intention to sell or of time or place of sale, except ten (10)
Business Days' written notice to the Grantors of the time and place of such sale
or sales (and such other notices as may be required by applicable statute, if
any, and which cannot be waived), which the Grantors hereby expressly
acknowledge is commercially
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reasonable. The Collateral may be sold or disposed of for cash, upon credit or
for future delivery as the Secured Party shall deem appropriate. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any of the Grantors, and each Grantor hereby
waives (to the extent permitted by law) all rights of redemption, stay and
appraisal that such Grantor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. At any such sale,
the Collateral, or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Secured Party may (in its sole and
absolute discretion) determine. The Secured Party shall not be obligated to make
any sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The Secured
Party may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Secured Party until the sale price is
paid by the purchaser or purchasers thereof, but the Secured Party shall not
incur any liability for the failure to collect or realize upon any or all of the
Collateral or for any delay in doing so and, in case of any such failure, shall
not be under any obligation to take any action with respect thereto; provided,
however, that such Collateral may be sold again upon like notice. At any public
sale made pursuant to this Section 4.4, the Secured Party may bid for or
purchase, free from any right of redemption, stay or appraisal and all rights of
marshalling, the Collateral and any other security for the Obligations or
otherwise on the part of the Grantors (all said rights being also hereby waived
and released by the Grantors to the fullest extent permitted by law), the
Collateral or any part thereof offered for sale and may make payment on account
thereof by using any claim then due and payable to the Secured Party from the
Grantors as a credit against the purchase price, and the Secured Party may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to the Grantors therefor. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Secured Party shall be free to carry out such
sale pursuant to such agreement, and the Grantors shall not be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Secured Party shall have entered into such an agreement,
all Events of Default shall have been remedied and any obligations to the
Secured Party shall have been paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Secured Party may proceed by a suit
or suits at law or in equity to foreclose this Security Agreement and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. In any action hereunder, the Secured Party shall be
entitled to the appointment of a receiver without notice, to peaceably take
possession of all or any portion of the Collateral and to exercise such powers
as the court shall confer upon the receiver. Notwithstanding the foregoing, if
an Event of Default shall occur and be continuing, the Secured Party shall be
entitled to apply, without notice to the Grantors, any cash or cash items
constituting Collateral in their possession to payment of the Obligations.
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(b) If an Event of Default shall occur and be continuing, the Secured
Party shall, in addition to exercising any and all rights and remedies afforded
to them hereunder, have all the rights and remedies of a secured party under all
applicable provisions of law, including but not limited to, the Code.
(c) The Grantors agree that notwithstanding anything to the contrary
contained in this Security Agreement, the Grantors shall remain liable under
each contract or other agreement giving rise to Accounts and general intangibles
and all other contracts or agreements constituting part of the Collateral and
the Secured Party shall not have any obligation or liability in respect thereof.
(d) After the occurrence and during the continuance of an Event of
Default, upon the Secured Party's request, but subject to the rights of any
other secured party having rights senior to the Secured Party, the Grantors
shall deliver to the Secured Party all original and other documents, evidencing
and relating to the sale and delivery of Inventory or Accounts, including but
not limited to, all original orders, invoices and shipping receipts. The
Grantors shall also furnish to the Secured Party, promptly upon the request of
the Secured Party, such reports, reconciliations and aging balances regarding
Accounts as the Secured Party may request from time to time.
SECTION 4.5 EVENT OF DEFAULT. An "Event of Default "shall exist
hereunder (a) if the Grantors shall breach in any material respect any agreement
contained herein or otherwise default in any material respect in the observance
or performance of any of the covenants, terms, conditions or agreements on the
part of the Grantors contained in this Security Agreement and, with respect to
nonmonetary covenants, terms, conditions or agreements, such non observance or
non performance continues for a period of thirty (30) days after the earlier of
(i) written notice from the Secured Party of such default or (ii) actual
knowledge of the Grantors of such default, or (b) if an "Event of Default" under
(and as defined in) the Note Agreement shall have occurred and be continuing.
SECTION 4.6 Application of Proceeds. Unless the Secured Party otherwise
directs pursuant to the Purchase Agreement, the proceeds of any sale of
Collateral pursuant to this Security Agreement or otherwise, as any Collateral
consisting of cash, shall be applied after receipt by the Secured Party as
follows, subject to the rights of any other secured party having rights senior
to the Secured Party:
FIRST, to the payment of all reasonable costs, fees and
expenses of the Secured Party and their agents, representatives and
attorneys incurred in connection with such sale or with the retaking,
holding, handling, preparing for sale (or other disposition) of the
Collateral or otherwise in connection with the Note, this Security
Agreement or any of the Obligations, including but not limited to, the
reasonable fees and expenses of the Secured Party's agents and
attorneys and court costs (whether at trial, appellate or
administrative levels), if any, incurred by the Secured Party in so
doing;
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SECOND, to the payment of the outstanding principal balance
and accrued interest and fees on the Obligations;
THIRD, to pay all other amounts payable by the Grantors under
the Notes; and
FOURTH, to the Grantors or to such other Person as a court may
direct.
SECTION 4.7 AUTHORITY OF SECURED PARTY. The Secured Party shall have
and be entitled to exercise all such powers hereunder as are specifically
delegated to the Secured Party by the terms hereof, together with such powers as
are reasonably incidental thereto. The Secured Party may execute any of their
duties hereunder by or through their agents or employees and shall be entitled
to retain counsel and to act in reliance upon the advice of such counsel
concerning all matters pertaining to their duties hereunder.
SECTION 4.8 CERTAIN WAIVERS; GRANTORS NOT DISCHARGED. The Grantors
expressly and irrevocably waive (to the extent permitted by applicable law)
presentment, demand of payment and protest of nonpayment in respect of their
Obligations under this Security Agreement. The obligations and duties of the
Grantors hereunder are irrevocable, absolute, and unconditional and shall not be
discharged, impaired or otherwise affected by (a) the failure of the Secured
Party to assert any claim or demand or to enforce any right or remedy against
the Grantors or any grantee under the provisions of this Security Agreement or
any other Security Document or any grantee under the provisions of this Security
Agreement or any other Security Document or any waiver, consent, extension,
indulgence or other action or inaction in respect thereof, (b) any extension or
renewal of any part of the Obligations, (c) any rescission, waiver, amendment or
modification of any of the terms or provisions of the Purchase Agreement or any
Security Document or of any agreement related thereto, (d) the release of any
liens on or security interests in any part of the Collateral or the release,
sale or exchange of or failure to foreclose against any security held by or for
the benefit of the Secured Party for payment or performance of the Obligations,
(e) the bankruptcy, insolvency or reorganization of the Grantors or any grantee
or any other Persons, (f) the invalidity or unenforceability of the Note
Agreement or the Security Documents, (g) any change, restructuring or
termination of the corporate structure or existence of the Grantors or any
grantee or any restructuring or refinancing of all or any portion of the
Obligations, or (h) any other event which under law would discharge the
obligations of a surety.
SECTION 4.9 TRANSFER OF SECURITY INTEREST. The Secured Party may
transfer to any other Person all or any part of the liens and security interests
granted hereby, and all, or any part of the Collateral which may be in the
Secured Party's possession after the occurrence and during the continuance of an
Event of Default or, if to a successor Secured Party in accordance with the Note
Agreement, at any time. Upon such transfer, the transferee shall be vested with
all the rights and powers of the Secured Party hereunder with respect to such of
the Collateral as is so transferred, but, with respect to any of the Collateral
not so transferred, the Secured Party shall retain all of their rights and
powers (whether given to it in this Security Agreement, or otherwise).
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The Secured Party or any of them may, at any time, assign their rights as the
secured party hereunder to any Person, in the Secured Party's discretion, and
upon notice to the Grantors, but without any requirement for consent or approval
by or from Grantors, and any such assignment shall be valid and binding upon the
Grantors, as fully as it had expressly approved the same.
ARTICLE 5
SECURED PARTY'S INTERESTS
SECTION 5.1 PRO RATA INTERESTS. The security interests and other rights
granted or reserved to the Secured Party and its successors and assigns (the
"Note Holders") under this Security Agreement (the "Contractual Rights") and the
other rights available to the Note Holders under applicable law by reason of the
existence of this Security Agreement and the attachment and perfection of the
security interests created under this Security Agreement (the "Statutory
Rights") are for the pro rata benefit of the Note Holders according to the
outstanding principal amount of Notes held by each Note Holder, respectively,
expressed as a percentage of the aggregate outstanding principal amount of all
Notes, and shall be held by the Note Holders in such percentages, pari passu,
regardless of the time or order of the attachment or perfection of their
respective security interests or the time or manner of filing of their
respective financing statements or assignments thereof and regardless of which
Note Holder may hold possession of Collateral. All Contractual Rights and
Statutory Rights shall be exercised from time to time as shall be determined by
Note Holders representing a majority of the outstanding principal amount of the
Notes (the "Majority Holders"). No waiver of any Contractual Rights or Statutory
Rights shall be binding upon a Note Holder unless set forth in a written
document signed by such Note Holder or signed by the Majority Holders. All
recoveries attributable to enforcement of Contractual Rights or Statutory
Rights, or both, shall be shared ratably by the Note Holders according to their
respective pro rata interests as provided in this Security Agreement. All
reasonable expenses incurred by any Note Holder in the enforcement of
Contractual Rights or Statutory Rights, or both, on behalf of or for the benefit
of the Note Holders shall be shared ratably by the Note Holders according to
their respective pro rata interests as provided in this Security Agreement.
SECTION 5.2 GRANTORS' OBLIGATION. The provisions of this Article 5 are
for the purpose of defining the relative rights of the Note Holders with respect
to the Collateral and the exercise of Contractual Rights and Statutory Rights.
Nothing herein shall impair the obligations of the Grantors, which are absolute
and unconditional, to pay and perform the Obligations as and when due. No
provision of this Security Agreement shall be construed to prevent any Note
Holder from exercising remedies that may otherwise be available to it.
SECTION 5.3 POWER OF ATTORNEY. As may be necessary for the proper
enforcement of the Contractual Rights and Statutory Rights on behalf of the Note
Holders, each Note Holder hereby constitutes and appoints as its agent and
attorney-in-fact such Person as shall be designated or appointed to act by, or
be otherwise acting at the direction of, the Majority Holders.
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<PAGE> 13
ARTICLE 6
MISCELLANEOUS
SECTION 6.1 FURTHER ASSURANCES. The Grantors agree, at their expense,
to do such further things, to execute, acknowledge, deliver and cause to be duly
filed all such further instruments and documents and take all such actions as
the Secured Party may from time to time reasonably request for the better
assuming and preserving of the security interests and the rights and remedies
created hereby, including but not limited to, the execution and delivery of such
additional conveyances, assignments, agreements and instruments, the payment of
any fees and taxes required in connection with the execution and delivery of
this Security Agreement, the granting of the security interests created hereby
and the execution, filing and recordation of any financing statements (including
fixture filings) or other documents as the Secured Party may deem reasonably
necessary or desirable for the perfection of the security interests granted
hereunder. The Grantors hereby authorize the Secured Party, as secured party
under the Code, to file financing statements or continuation statements signed
only by the Secured Party, and agree to pay all expenses in connection with any
such filing. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged and delivered
to the Secured Party, duly endorsed in a manner satisfactory to the Secured
Party, subject to the rights of any other secured party having rights senior to
the Secured Party. If at any time the Grantors shall take and perfect a security
interest in any property to secure payment and performance of an Account, the
Grantors, upon the request of the Secured Party, shall promptly assign such
security interest to the Secured Party, subject to the rights of any other
secured party having rights senior to the Secured Party. The Grantor agrees to
notify the Secured Party thirty (30) days prior to any change (a) in such
Grantor's corporate name, (b) in the location of such Grantor's chief executive
office, (c) in such Grantor's chief place of business, or (d) in the office or
offices where such Grantor keeps its records relating to the Collateral. The
Grantors agree that, after the occurrence and during the continuance of an Event
of Default, they shall upon request of the Secured Party, take any and all
actions, to the extent permitted by applicable law, at the Grantors' own
expense, to obtain the approval of any governmental authority for any action or
transaction contemplated by this Security Agreement which is then required by
law, and specifically, without limitation, upon request of the Secured Party, to
prepare, sign and file with any governmental authority the Grantors' portion of
any application or applications for consent to the assignment of licenses held
by the Grantors, or for consent to the possession and sale of any of the
Collateral by or on behalf of the Secured Party. The Grantors further agree that
they shall at all times, at Grantors' own expense and cost, keep accurate and
complete records with respect to the Collateral, including but not limited to, a
record of all payments and proceeds received in connection therewith or as a
result of the sale thereof and of all credits granted, and agree that the
Secured Party or its representatives shall have the right at any reasonable time
and from time to time to call at the Grantors' place or places of business to
inspect the Collateral and to examine or cause to be examined all of the books,
records, journals and other data relating to the Collateral and to make extracts
therefrom or copies thereof as are reasonably requested.
- 13 -
<PAGE> 14
SECTION 6.2 EFFECTIVENESS. This Security Agreement shall take effect
immediately upon execution by the Grantors.
SECTION 6.3 INDEMNITY; REIMBURSEMENT OF SECURED PARTY; DEFICIENCY. In
connection with the Collateral, this Security Agreement and the administration
and enforcement or exercise of any right or remedy granted to the Secured Party
hereunder or under the other Security Documents, the Grantors jointly and
severally agree (a) to indemnify, defend and hold harmless the Secured Party
from and against any and all claims, demands, losses, judgments and liabilities
(including but not limited to, liabilities for penalties) of whatever nature,
relating thereto or resulting therefrom, and (b) to reimburse the Secured Party
for all costs and expenses, including but not limited to, the fees and
disbursements of attorneys, relating thereto or resulting therefrom. The
foregoing indemnity agreement includes all costs incurred by the Secured Party
in connection with any litigation relating to the Collateral whether or not the
Secured Party shall be a party to such litigation, including but not limited to,
the fees and disbursements of attorneys for the Secured Party, and any
out-of-pocket costs incurred by the Secured Party in appearing as a witness or
in otherwise complying with legal process served upon it. In no event shall the
Secured Party be liable, in the absence of gross negligence or willful
misconduct on its part, for any matter or thing in connection with this Security
Agreement other than to account for moneys actually received by it in accordance
with the terms hereof and the Grantors hereby release the Secured Party from any
and all claims, causes of action and demands at any time arising out of or with
respect to this Security Agreement, any other Security Document or the
Collateral. All indemnities contained in this Section 6.3 and elsewhere in this
Security Agreement shall survive the expiration or earlier termination of this
Security Agreement. After application of the proceeds by the Secured Party
pursuant to Section 4.6 hereof, the Grantors shall remain liable to the Secured
Party for any deficiency.
SECTION 6.4 CONTINUING LIEN. It is the intent of the parties hereto
that (a) this Security Agreement shall constitute a continuing agreement as to
any and all future, as well as existing transactions, between the Grantors and
the Secured Party under or in connection with the Notes, and (b) the security
interest provided for herein shall attach to after-acquired as well as existing
Collateral and the Obligations covered by this Security Agreement shall include
any future advances under or in connection with the Purchase Agreement.
SECTION 6.5 TERMINATION. Upon payment in full of all Obligations and
termination of all commitments relating thereto, the Secured Party shall
reassign and redeliver (or cause to be so reassigned and redelivered), without
recourse upon or warranty by the Secured Party, and at the sole expense of the
Grantors, to the Grantors, against receipt therefor, such of the Collateral (if
any) as shall not have been sold or otherwise applied by the Secured Party
pursuant to the terms hereof and not theretofore reassigned and redelivered to
the Grantors, together with appropriate instruments of reassignment and release.
SECTION 6.6 NOTICES. All notices and other communications given to or
made upon any party hereto in connection with this Security Agreement shall,
except as
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<PAGE> 15
otherwise expressly herein provided, be in writing (including telecopy, telexed
or telegraphic communication) and mailed via certified mail, delivered by
guaranteed overnight delivery service, telecopied (with a confirming copy sent
by another permitted delivery method), telexed, telegraphed or delivered by hand
to the respective parties, as follows:
to the Grantors:
c/o IGI, Inc.
Wheat Road and Lincoln Avenue
Buena, NJ 08310
Attn: President
Telecopier: (609)697-2259
to ACAS:
American Capital Strategies, Ltd.
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
Attn: President
Telecopier: (301) 654-6714
SECTION 6.7 SUCCESSORS AND ASSIGNS. Whenever in this Security Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party, and all covenants, promises
and agreements by or on behalf of the Secured Party that are contained in this
Security Agreement shall bind and inure to the benefit of its respective
successors and assigns. The Grantors may not assign or transfer any of their
rights or obligations hereunder without the prior written consent of the Secured
Party.
SECTION 6.8 APPLICABLE LAW. THIS SECURITY AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF MARYLAND, WITHOUT
GIVING EFFECT TO MARYLAND CHOICE OF LAW DOCTRINE.
SECTION 6.9 WAIVERS. No failure or delay of the Secured Party in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or future exercise thereof or the exercise of any other right
or power. The rights and remedies of the Secured Party hereunder are cumulative
and not exclusive of any rights or remedies which they would otherwise have. No
waiver of any provision of this Security
- 15 -
<PAGE> 16
Agreement or consent to any departure by the Grantors therefrom shall in any
event be effective unless the same shall be authorized as provided in Section
5.1 or Section 6.10, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on the Grantors in any case shall entitle the Grantors to any other or
further notice or demand in similar or other circumstances.
SECTION 6.10 AMENDMENTS. Neither this Security Agreement nor any
provision hereof may be amended or modified except pursuant to an agreement or
agreements in writing entered into by the Grantors and the Secured Party.
SECTION 6.11 SEVERABILITY. In the event any one or more of the
provisions contained in this Security Agreement should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby.
SECTION 6.12 COUNTERPARTS. This Security Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which when taken together shall constitute but one contract, and shall become
effective when copies hereof which, when taken together, bear the signatures of
each of the parties hereto shall be delivered or mailed to the Secured Party.
SECTION 6.13 HEADINGS. Article and Section headings used herein are for
convenience of reference only and are not to affect the construction of, or to
be taken into consideration in interpreting, this Security Agreement.
SECTION 6.14 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY EXPRESSLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHT, POWER, OR REMEDY UNDER OR IN CONNECTION WITH THIS SECURITY
AGREEMENT AND AGREE THAT ANY SUCH ACTION SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY. THE TERMS AND PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THIS SECURITY AGREEMENT.
SECTION 6.15 INTERPRETATION. In the event of a conflict between this
Security Agreement and the Note Agreement, the terms of Note Agreement shall
control.
SECTION 6.16 SUBORDINATION. THE OBLIGATIONS SECURED HEREBY AND THE
SECURITY INTERESTS GRANTED HEREUNDER ARE SUBORDINATE IN THE MANNER AND TO THE
EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT (THE "SUBORDINATION
AGREEMENT") DATED AS OF OCTOBER 29, 1999, AMONG AMERICAN CAPITAL STRATEGIES,
LTD., AND FLEET CAPITAL CORPORATION, A RHODE ISLAND CORPORATION, TO THE
INDEBTEDNESS AND OTHER LIABILITIES OWED BY THE GRANTORS UNDER AND PURSUANT TO
THE CREDIT AGREEMENT DATED AS OF OCTOBER 29, 1999, AND EACH RELATED "LOAN
- 16 -
<PAGE> 17
DOCUMENT" (AS DEFINED THEREIN), AND EACH SECURED PARTY HEREUNDER, BY ITS
ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT.
* * * * *
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<PAGE> 18
IN WITNESS WHEREOF, the Grantors have executed this Security Agreement
as of the date first above written.
IGI, INC.
By: /s/ Paul Woitach
______________________
Name: Paul Woitach
Title: President
IGEN, INC.
By: /s/ Paul Woitach
______________________
Name: Paul Woitach
Title: President
IMMUNOGENETICS, INC.
By: /s/ Paul Woitach
______________________
Name: Paul Woitach
Title: President
BLOOD CELLS, INC.
By: /s/ Paul Woitach
______________________
Name: Paul Woitach
Title: President
- 18 -
<PAGE> 19
IN WITNESS WHEREOF, the Secured Party has executed this Security
Agreement as of the date first above written.
AMERICAN CAPITAL STRATEGIES, LTD.
By: /s/ JOHN ERICKSON
______________________________
Name: JOHN ERICKSON
Title: CHIEF FINANCIAL OFFICER
- 19 -
<PAGE> 1
EXHIBIT *(10.40)
TRADEMARK SECURITY AGREEMENT
This Trademark Security Agreement ("Agreement") is made as of the 29th day of
October, 1999 by IGI, INC. ("Grantor"), a Delaware corporation, and successor by
merger to Vineland Laboratories, Inc. having a mailing address at Wheat Road and
Lincoln Avenue, Buena, NJ 08310, and delivered to AMERICAN CAPITAL STRATEGIES,
LTD., a Delaware corporation having a mailing address at 2 Bethesda Metro
Center, 14th Floor, Bethesda, Maryland 20814 ("Lender").
BACKGROUND
A. Grantor has entered into that certain Note and Equity Purchase Agreement
dated as of even date herewith among Grantor, IGEN, Inc., ImmunoGenetics, Inc.,
and Blood Cells, Inc. (collectively, "Borrowers") and Lender (as it may
hereafter be supplemented, restated, amended, superseded or replaced from time
to time, the "Purchase Agreement"). Capitalized terms not defined herein shall
have the meanings given to such terms in the Purchase Agreement.
B. This Agreement is being executed contemporaneously with that certain Security
Agreement of even date herewith among Borrowers and Lender (as it may hereafter
be supplemented, restated, amended, superseded or replaced from time to time,
the "Security Agreement"), under which, inter alia, Grantor is granting Lender a
lien on and security interest in certain assets of Grantor associated with or
relating to products leased or sold or services provided under Grantor's
trademarks and the goodwill associated therewith as security for the payment and
performance of all the Obligations (as defined in the Security Agreement) of all
the Borrowers, and under which Lender is entitled to foreclose or otherwise deal
with such assets, trademarks, service marks and tradenames under the terms and
conditions set forth therein.
C. Pursuant to the Security Agreement, Lender is acquiring a lien on, and
security interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default) the trademarks, service marks
and trade names listed on Schedule "A" attached hereto (the "Trademarks"),
together with all the goodwill of Grantor associated therewith and represented
thereby, as security for all of the Obligations, and desires to have its
security interest in such Trademarks confirmed by a document identifying same
and in such form that it may be recorded in the United States Patent and
Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed incorporated by
reference and made a part hereof, and in consideration of the premises and
mutual promises herein contained, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. In consideration of and pursuant to the terms of the Purchase Documents,
and for other good, valuable and sufficient consideration, the receipt of
which is hereby acknowledged, and to secure the payment and performance of
all the Obligations,
<PAGE> 2
Grantor grants a lien and security interest to Lender in all of its present
and future right, title and interest in and to all service marks,
trademarks, trademark and service mark registrations, trademark or service
mark applications and trade names including, without limitation, the
service marks, trademarks, trademark and service mark registrations,
trademark or service mark applications and trade names listed on Schedule
"A" hereto (the "Trademarks"), all of Grantor's rights and obligations
pursuant to any license agreements between Grantor and any other Person or
Persons with respect to any Patents, whether Grantor is a licensor or
licensee under any such license agreements, including, without limitation,
the licenses listed on Schedule "B" attached hereto and made a part hereof,
and, subject to the terms of such licenses, the right to prepare for sale,
sell and advertise for sale, all Inventory now or hereafter owned by such
Assignor and now or hereafter covered by such licenses (collectively, the
"Licenses"), together with all the goodwill of Grantor associated with and
represented by the Trademarks, and the registration thereof and the right
(but not the obligation) to sue for past, present and future infringements,
and all proceeds thereof, including, without limitation, license royalties
and proceeds of infringement suits (collectively the "Collateral").
2. Grantor hereby covenants and agrees to maintain the Trademarks in full
force and effect and otherwise perform all of its obligations and
undertakings under this Agreement until all of the Obligations are
indefeasibly paid and satisfied in full and the Security Agreement has been
terminated.
3. Grantor represents, warrants and covenants that:
(a) The Trademarks are subsisting and have not been adjudged invalid or
unenforceable;
(b) Each of the Trademarks is registered (or in the process of application
for registration), and, to the best of Grantor's knowledge, is valid and
enforceable;
(c) Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to each of the Trademarks, and except for Liens
permitted under Section 7.2(b) of the Purchase Agreement, each of the Trademarks
is free and clear of any liens, claims, charges and encumbrances, including,
without limitation, pledges, assignments, options, and covenants by Grantor not
to sue third persons;
(d) Grantor has the unqualified right, power and authority to enter into
this Agreement and perform its terms;
(e) Grantor has complied with, and will continue for the duration of this
Agreement to comply with, the requirements set forth in 15 U.S.C.
Section1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Trademarks;
(f) Grantor has used and will continue to use for the duration of this
Agreement, consistent standards of quality in services or products leased or
sold under
<PAGE> 3
the Trademarks, and hereby grants to Lender and its employees and agents the
right (with no obligation of any kind upon Lender to do so) to visit Grantor's
affiliates, franchises or management locations and to inspect the use of the
Trademarks and quality control records relating thereto at reasonable times
during regular business hours to ensure Grantor's compliance with this paragraph
3(f); and
(g) Grantor has no notice of any suits or actions commenced or threatened
against it, or notice of claims asserted or threatened against it, with
reference to the Trademarks.
4. Grantor further covenants that:
(a) Until all of the Obligations have been indefeasibly paid and satisfied
in full, Grantor will not enter into any agreement which is inconsistent with
Grantor's obligations under this Agreement or which restrict or impair Agent's
right or priorities hereunder.
(b) If Grantor acquires rights to any new trademarks, the provisions of
this Agreement shall automatically apply thereto and such trademarks shall be
deemed part of the Trademarks. Grantor shall give Lender written notice promptly
upon its first use thereof along with an amended Schedule "A".
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and is
continuing under the Notes or the Purchase Agreement and that Lender has
elected to exercise its rights hereunder, Grantor shall continue to have
the exclusive right to use the Trademarks and Lender shall have no right to
use the Trademarks or issue any exclusive or non-exclusive license with
respect thereto, or assign, pledge or otherwise transfer title in the
Trademarks to anyone else.
6. Grantor agrees not to sell, license, grant any option, assign or further
encumber its rights and interest in the Trademarks without prior written
consent of Lender or as may be expressly permitted under the Purchase
Agreement. Notwithstanding the foregoing, and providing that no Default or
Event of Default has occurred and is outstanding, Grantor shall be entitled
to license any Trademarks in exchange for fair market consideration in the
exercise of its reasonable business judgment.
7. Following the occurrence and during the continuance of an Event of Default
under the Notes or the Purchase Agreement, Lender, as the holder of a
security interest under the Uniform Commercial Code, as now or hereafter in
effect in the State whose law governs the interpretation of the Security
Agreement, may take such action permitted under the Purchase Documents,
hereunder or under any law, in its exclusive discretion, to foreclose upon
or otherwise exercise its rights against the Trademarks covered hereby. For
such purposes, Grantor authorizes and empowers Lender, its successors and
assigns, and any officer or agent of Lender as Lender may select, in its
exclusive discretion, as Grantor's true and lawful attorney-in-fact, with
the power to endorse Grantor's name on all
<PAGE> 4
applications, assignments, documents, papers and instruments necessary for
Lender to use the Trademarks or to grant or issue any exclusive or
non-exclusive license under the Trademarks to anyone else, or necessary for
Lender to assign, pledge, convey or otherwise transfer title in or dispose
of the Trademarks to anyone else including, without limitation, the power
to execute on Grantor's behalf a trademark- assignment in the form attached
hereto as Exhibit 1. Grantor hereby ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof and in accordance with the
terms hereof, except for the gross negligence or willful misconduct of such
attorney. This power of attorney shall be irrevocable for the life of this
Agreement, the Purchase Documents, and until all the Obligations are
indefeasibly paid and satisfied in full and the Security Agreement is
terminated.
8. This Agreement shall not be modified without the written consent of the
parties hereto.
9. All rights and remedies herein granted to Lender shall be in addition to
any rights and remedies granted under the Purchase Documents and shall be
cumulative. In the event of an inconsistency between this Agreement and the
Security Agreement, the language of the Security Agreement shall control.
10. Upon full and unconditional satisfaction of all of the Obligations, Lender
shall execute and deliver to Grantor all documents reasonably necessary to
terminate Lender's security interest in the Trademarks.
11. Any and all fees, costs and expenses, of whatever kind or nature, including
the attorneys' fees and legal expenses incurred by Lender in connection
with the preparation and execution of this Agreement and all other
documents relating hereto, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, reasonable counsel fees, maintenance
fees, encumbrances or costs otherwise incurred in protecting, maintaining,
preserving the Trademarks, or in defending or prosecuting any actions or
proceedings arising out of or related to the Trademarks, or defending,
protecting or enforcing Lender's rights hereunder, in each case in
accordance with the terms of this Agreement, shall be borne and paid by
Grantor on demand by Lender and until so paid shall be added to the
principal amount of the Obligations and shall bear interest at the rate of
interest determined in accordance with Section 8.2(c) of the Purchase
Agreement.
12. Subject to any applicable terms of the Security Agreement, Grantor shall
have the duty to prosecute diligently any trademark application with
respect to the Trademarks pending as of the date of this Agreement or
thereafter to preserve and maintain all rights in the Trademarks, and upon
reasonable request of Lender, Grantor shall make federal application on
registrable but unregistered trademarks belonging to Grantor. Any
reasonable expenses incurred in connection with such applications shall be
borne by Grantor. Grantor shall not abandon any Trademark
<PAGE> 5
without the prior written consent of the Lender, which consent shall not
unreasonably be withheld.
13. Grantor shall have the right to bring suit in its own name to enforce the
Trademarks, in which event Lender may, if Grantor reasonably deems it
necessary, be joined as a nominal party to such suit if Lender shall have
been satisfied, in its sole discretion, that it is not thereby incurring
any risk of liability because of such joinder. Grantor shall promptly, upon
demand, reimburse and indemnify Lender for all damages, reasonable costs
and expenses, including attorneys' fees, incurred by Lender in the
fulfillment of the provisions of this paragraph.
14. If an Event of Default is outstanding under the Notes or the Purchase
Agreement, Lender may, without any obligation to do so, complete any
obligation of Grantor hereunder, in Grantor's name or in Lender's name, but
at Grantor's expense, and Grantor hereby agrees to reimburse Lender in full
for all reasonable costs and expenses, including attorneys' fees, incurred
by Lender in protecting, defending and maintaining the Trademarks.
15. No course of dealing between Grantor and Lender nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right,
power or privilege hereunder, shall operate as a waiver thereof, and all of
Lender's rights and remedies with respect to the Trademarks, whether
established hereby or by the Purchase Documents, or by any other future
agreements between Grantor and Lender or by law, shall be cumulative and
may be exercised singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in fall force and effect.
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with the
laws of the State of Maryland without regard to its otherwise applicable
principles of conflicts of laws.
19. Grantor and Lender each waive any and all rights it may have to a jury
trial in connection with any litigation, proceeding or counterclaim arising
with respect to rights and obligations of the parties under this Agreement.
20. THE OBLIGATIONS SECURED HEREBY AND THE SECURITY INTERESTS GRANTED
HEREUNDER ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN
THAT CERTAIN SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT")
DATED AS OF OCTOBER 19, 1999, AMONG FLEET CAPITAL CORPORATION, AS AGENT
FOR THE SENIOR LENDERS,
<PAGE> 6
AMERICAN CAPITAL STRATEGIES, LTD., AND ASSIGNORS TO THE INDEBTEDNESS AND
OTHER LIABILITIES OWED BY ASSIGNORS UNDER AND PURSUANT TO THE LOAN AND
SECURITY AGREEMENT DATED AS OF OCTOBER 19, 1999, AND EACH RELATED "LOAN
DOCUMENT" (AS DEFINED THEREIN), AND EACH ASSIGNEE HEREUNDER, BY ITS
ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF
THE SUBORDINATION AGREEMENT.
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Trademark Security
Agreement the day and year first above written.
IGI, INC.
By: /s/ Manfred Hanuschek
Name: Manfred Hanuschek
Title: CFO
<PAGE> 8
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared __________________
to me known and being duly sworn, deposes and says that s/he is ________________
of IGI INC.; that s/he signed the Agreement thereto as such officer pursuant to
the authority vested in him by law; _______________ that the within Agreement is
the voluntary act of such corporation; and s/he desires the same to be recorded
as such.
_____________________________________
Notary Public
My Commission Expires:
<PAGE> 9
Exhibit I
TRADEMARK ASSIGNMENT
WHEREAS, IGI, INC. ("Grantor") is the registered owner of the United States
trademarks, tradenames and registrations listed on Schedule "A" attached hereto
and made a part hereof (the "Trademarks"), which are registered in the United
States Patent and Trademark Office; and
WHEREAS, ("Grantee" ), having a place of business at
, is desirous of acquiring said Trademarks;
NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, Grantor, its successors
and assigns, does hereby transfer, assign and set over unto Grantee, its
successors, transferees and assigns, all of its present and future right, title
and interest in and to the Trademarks and all proceeds thereof and all goodwill
associated therewith issued under and pursuant to the Power of Attorney.
IN WITNESS WHEREOF, the undersigned has caused this Trademark Assignment to be
executed as of the 29th day of October, 1999.
_____________________________________
By: _________________________________
Attorney-in-fact
<PAGE> 10
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, __________________ before me, a Notary Public
for the said County and State, personally appeared known to me or satisfactorily
proven to me to be attorney-in-fact on behalf of IGI, INC. ("Grantor") and s/he
acknowledged to me that s/he executed the foregoing Trademark Assignment on
behalf of Grantor, and as the act and deed of Grantor for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
_______________________________
Notary Public
My Commission Expires:
__________________________________
<PAGE> 11
POWER OF ATTORNEY
IGI, INC., ("Grantor"), hereby authorizes AMERICAN CAPITAL STRATEGIES, its
successors and assigns, and any officer or agent thereof (collectively,
"Lender") as Grantor's true and lawful attorney-in-fact, with the power to
endorse Grantor's name on all applications, assignments, documents, papers and
instruments necessary for Grantee to enforce and effectuate its rights under a
certain Trademark Security Agreement between Grantor and Lender dated the date
hereof (as it may hereafter be supplemented, restated, superseded, amended or
replaced, the "Trademark Agreement", including, without limitation, the power to
use the Trademarks (as defined in the Trademark Agreement) and listed on
Schedule A attached hereto and made a part hereof, to grant or issue any
exclusive or nonexclusive license under the Trademarks to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the
Trademarks, in each case subject to the terms of the Trademark Agreement.
This Power of Attorney is given and any action taken pursuant hereto is intended
to be so given or taken pursuant to and subject to the provisions of a certain
Loan and Security Agreement bearing even date herewith among Grantor and Leader,
as each document may be hereinafter supplemented, restated, superseded, amended
or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall lawfully do
or cause to be done by virtue hereof and in accordance with the terms of the
Trademark Agreement.
This Power of Attorney shall be irrevocable for the life of the Trademark
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, this 29th
day of October, 1999.
IGI, INC.
By: /s/ MANFRED HANUSCHEK
Name: MANFRED HANUSCHEK
Title: CFO
<PAGE> 1
EXHIBIT *(10.41)
TRADEMARK SECURITY AGREEMENT
This Trademark Security Agreement ("Agreement") is made as of the 29th day of
October, 1999 by ImmunoGenetics, INC. ("Grantor"), a Delaware corporation,
having a mailing address at Wheat Road and Lincoln Avenue, Buena, NJ 08310, and
delivered to AMERICAN CAPITAL STRATEGIES, LTD., a Delaware corporation having a
mailing address at 2 Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814
("Lender").
BACKGROUND
A. Grantor has entered into that certain Note and Equity Purchase Agreement
dated as of even date herewith among Grantor, IGI, Inc., IGEN, Inc., and Blood
Cells, Inc. (collectively, "Borrowers") and Lender (as it may hereafter be
supplemented, restated, amended, superseded or replaced from time to time, the
"Purchase Agreement"). Capitalized terms not defined herein shall have the
meanings given to such terms in the Purchase Agreement.
B. This Agreement is being executed contemporaneously with that certain Security
Agreement of even date herewith among Borrowers and Lender (as it may hereafter
be supplemented, restated, amended, superseded or replaced from time to time,
the "Security Agreement"), under which, inter alia, Grantor is granting Lender a
lien on and security interest in certain assets of Grantor associated with or
relating to products leased or sold or services provided under Grantor's
trademarks and the goodwill associated therewith as security for the payment and
performance of all the Obligations (as defined in the Security Agreement) of all
the Borrowers, and under which Lender is entitled to foreclose or otherwise deal
with such assets, trademarks, service marks and tradenames under the terms and
conditions set forth therein.
C. Pursuant to the Security Agreement, Lender is acquiring a lien on, and
security interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default) the trademarks, service marks
and trade names listed on Schedule "A" attached hereto (the "Trademarks"),
together with all the goodwill of Grantor associated therewith and represented
thereby, as security for all of the Obligations, and desires to have its
security interest in such Trademarks confirmed by a document identifying same
and in such form that it may be recorded in the United States Patent and
Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed incorporated by
reference and made a part hereof, and in consideration of the premises and
mutual promises herein contained, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. In consideration of and pursuant to the terms of the Purchase Documents,
and for other good, valuable and sufficient consideration, the receipt of
which is hereby acknowledged, and to secure the payment and performance of
all the Obligations, Grantor grants a lien and security interest to Lender
in all of its present and future
<PAGE> 2
right, title and interest in and to all service marks, trademarks,
trademark and service mark registrations, trademark or service mark
applications and trade names including, without limitation, the service
marks, trademarks, trademark and service mark registrations, trademark or
service mark applications and trade names listed on Schedule "A" hereto
(the "Trademarks"), all of Grantor's rights and obligations pursuant to any
license agreements between Grantor and any other Person or Persons with
respect to any Patents, whether Grantor is a licensor or licensee under any
such license agreements, including, without limitation, the licenses listed
on Schedule "B" attached hereto and made a part hereof, and, subject to the
terms of such licenses, the right to prepare for sale, sell and advertise
for sale, all Inventory now or hereafter owned by such Assignor and now or
hereafter covered by such licenses (collectively, the "Licenses"), together
with all the goodwill of Grantor associated with and represented by the
Trademarks, and the registration thereof and the right (but not the
obligation) to sue for past, present and future infringements, and all
proceeds thereof, including, without limitation, license royalties and
proceeds of infringement suits (collectively the "Collateral").
2. Grantor hereby covenants and agrees to maintain the Trademarks in full
force and effect and otherwise perform all of its obligations and
undertakings under this Agreement until all of the Obligations are
indefeasibly paid and satisfied in full and the Security Agreement has been
terminated.
3. Grantor represents, warrants and covenants that:
(a) The Trademarks are subsisting and have not been adjudged invalid or
unenforceable;
(b) Each of the Trademarks is registered (or in the process of application
for registration), and, to the best of Grantor's knowledge, is valid and
enforceable;
(c) Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to each of the Trademarks, and except for Liens
permitted under Section 7.2(b) of the Purchase Agreement, each of the Trademarks
is free and clear of any liens, claims, charges and encumbrances, including,
without limitation, pledges, assignments, options, and covenants by Grantor not
to sue third persons;
(d) Grantor has the unqualified right, power and authority to enter into
this Agreement and perform its terms;
(e) Grantor has complied with, and will continue for the duration of this
Agreement to comply with, the requirements set forth in 15 U.S.C.
Section 1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Trademarks;
(f) Grantor has used and will continue to use for the duration of this
Agreement, consistent standards of quality in services or products leased or
sold under the Trademarks, and hereby grants to Lender and its employees and
agents the right (with
<PAGE> 3
no obligation of any kind upon Lender to do so) to visit Grantor's affiliates,
franchises or management locations and to inspect the use of the Trademarks and
quality control records relating thereto at reasonable times during regular
business hours to ensure Grantor's compliance with this paragraph 3(f); and
(g) Grantor has no notice of any suits or actions commenced or threatened
against it, or notice of claims asserted or threatened against it, with
reference to the Trademarks.
4. Grantor further covenants that:
(a) Until all of the Obligations have been indefeasibly paid and satisfied
in full, Grantor will not enter into any agreement which is inconsistent with
Grantor's obligations under this Agreement or which restrict or impair Agent's
right or priorities hereunder.
(b) If Grantor acquires rights to any new trademarks, the provisions of
this Agreement shall automatically apply thereto and such trademarks shall be
deemed part of the Trademarks. Grantor shall give Lender written notice promptly
upon its first use thereof along with an amended Schedule "A".
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and is
continuing under the Notes or the Purchase Agreement and that Lender has
elected to exercise its rights hereunder, Grantor shall continue to have
the exclusive right to use the Trademarks and Lender shall have no right to
use the Trademarks or issue any exclusive or non-exclusive license with
respect thereto, or assign, pledge or otherwise transfer title in the
Trademarks to anyone else.
6. Grantor agrees not to sell, license, grant any option, assign or further
encumber its rights and interest in the Trademarks without prior written
consent of Lender or as may be expressly permitted under the Purchase
Agreement. Notwithstanding the foregoing, and providing that no Default or
Event of Default has occurred and is outstanding, Grantor shall be entitled
to license any Trademarks in exchange for fair market consideration in the
exercise of its reasonable business judgment.
7. Following the occurrence and during the continuance of an Event of Default
under the Notes or the Purchase Agreement, Lender, as the holder of a
security interest under the Uniform Commercial Code, as now or hereafter in
effect in the State whose law governs the interpretation of the Security
Agreement, may take such action permitted under the Purchase Documents,
hereunder or under any law, in its exclusive discretion, to foreclose upon
or otherwise exercise its rights against the Trademarks covered hereby. For
such purposes, Grantor authorizes and empowers Lender, its successors and
assigns, and any officer or agent of Lender as Lender may select, in its
exclusive discretion, as Grantor's true and lawful attorney-in-fact, with
the power to endorse Grantor's name on all applications, assignments,
documents, papers and instruments necessary for
<PAGE> 4
Lender to use the Trademarks or to grant or issue any exclusive or
non-exclusive license under the Trademarks to anyone else, or necessary for
Lender to assign, pledge, convey or otherwise transfer title in or dispose
of the Trademarks to anyone else including, without limitation, the power
to execute on Grantor's behalf a trademark- assignment in the form attached
hereto as Exhibit 1. Grantor hereby ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof and in accordance with the
terms hereof, except for the gross negligence or willful misconduct of such
attorney. This power of attorney shall be irrevocable for the life of this
Agreement, the Purchase Documents, and until all the Obligations are
indefeasibly paid and satisfied in full and the Security Agreement is
terminated.
8. This Agreement shall not be modified without the written consent of the
parties hereto.
9. All rights and remedies herein granted to Lender shall be in addition to
any rights and remedies granted under the Purchase Documents and shall be
cumulative. In the event of an inconsistency between this Agreement and the
Security Agreement, the language of the Security Agreement shall control.
10. Upon full and unconditional satisfaction of all of the Obligations, Lender
shall execute and deliver to Grantor all documents reasonably necessary to
terminate Lender's security interest in the Trademarks.
11. Any and all fees, costs and expenses, of whatever kind or nature, including
the attorneys' fees and legal expenses incurred by Lender in connection
with the preparation and execution of this Agreement and all other
documents relating hereto, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, reasonable counsel fees, maintenance
fees, encumbrances or costs otherwise incurred in protecting, maintaining,
preserving the Trademarks, or in defending or prosecuting any actions or
proceedings arising out of or related to the Trademarks, or defending,
protecting or enforcing Lender's rights hereunder, in each case in
accordance with the terms of this Agreement, shall be borne and paid by
Grantor on demand by Lender and until so paid shall be added to the
principal amount of the Obligations and shall bear interest at the rate of
interest determined in accordance with Section 8.2(c) of the Purchase
Agreement.
12. Subject to any applicable terms of the Security Agreement, Grantor shall
have the duty to prosecute diligently any trademark application with
respect to the Trademarks pending as of the date of this Agreement or
thereafter to preserve and maintain all rights in the Trademarks, and upon
reasonable request of Lender, Grantor shall make federal application on
registrable but unregistered trademarks belonging to Grantor. Any
reasonable expenses incurred in connection with such applications shall be
borne by Grantor. Grantor shall not abandon any Trademark without the prior
written consent of the Lender, which consent shall not unreasonably be
withheld.
<PAGE> 5
13. Grantor shall have the right to bring suit in its own name to enforce the
Trademarks, in which event Lender may, if Grantor reasonably deems it
necessary, be joined as a nominal party to such suit if Lender shall have
been satisfied, in its sole discretion, that it is not thereby incurring
any risk of liability because of such joinder. Grantor shall promptly, upon
demand, reimburse and indemnify Lender for all damages, reasonable costs
and expenses, including attorneys' fees, incurred by Lender in the
fulfillment of the provisions of this paragraph.
14. If an Event of Default is outstanding under the Notes or the Purchase
Agreement, Lender may, without any obligation to do so, complete any
obligation of Grantor hereunder, in Grantor's name or in Lender's name, but
at Grantor's expense, and Grantor hereby agrees to reimburse Lender in full
for all reasonable costs and expenses, including attorneys' fees, incurred
by Lender in protecting, defending and maintaining the Trademarks.
15. No course of dealing between Grantor and Lender nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right,
power or privilege hereunder, shall operate as a waiver thereof, and all of
Lender's rights and remedies with respect to the Trademarks, whether
established hereby or by the Purchase Documents, or by any other future
agreements between Grantor and Lender or by law, shall be cumulative and
may be exercised singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in fall force and effect.
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with the
laws of the State of Maryland without regard to its otherwise applicable
principles of conflicts of laws.
19. Grantor and Lender each waive any and all rights it may have to a jury
trial in connection with any litigation, proceeding or counterclaim arising
with respect to rights and obligations of the parties under this Agreement.
20. THE OBLIGATIONS SECURED HEREBY AND THE SECURITY INTERESTS GRANTED HEREUNDER
ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER
19, 1999, AMONG FLEET CAPITAL CORPORATION, AS AGENT FOR THE SENIOR LENDERS,
AMERICAN CAPITAL STRATEGIES, LTD., AND ASSIGNORS TO THE INDEBTEDNESS AND
OTHER LIABILITIES OWED BY ASSIGNORS
<PAGE> 6
UNDER AND PURSUANT TO THE LOAN AND SECURITY AGREEMENT DATED AS OF OCTOBER
19, 1999, AND EACH RELATED "LOAN DOCUMENT" (AS DEFINED THEREIN), AND EACH
ASSIGNEE HEREUNDER, BY ITS ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE
BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Trademark Security
Agreement the day and year first above written.
IMMUNOGENETICS, INC.
By: /s/ MANFRED HANUSCHEK
Name: MANFRED HANUSCHEK
Title: CFO
<PAGE> 8
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999, before me personally ___________________ appeared
_______________ to me known and being duly sworn, deposes and _______________
says that s/he is of IMMUNOGENETICS, INC.; that s/he signed the Agreement
thereto as such officer pursuant to the authority vested in him by law;
________________ that the within Agreement is the voluntary act of such
corporation; and s/he desires the same to be recorded as such.
______________________________
Notary Public
My Commission Expires:
<PAGE> 9
Exhibit I
TRADEMARK ASSIGNMENT
WHEREAS, IMMUNOGENETICS, INC. ("Grantor") is the registered owner of the United
States trademarks, tradenames and registrations listed on Schedule "A" attached
hereto and made a part hereof (the "Trademarks"), which are registered in the
United States Patent and Trademark Office; and
WHEREAS, ("Grantee" ), having a place of business at
, is desirous of acquiring said Trademarks;
NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, Grantor, its successors
and assigns, does hereby transfer, assign and set over unto Grantee, its
successors, transferees and assigns, all of its present and future right, title
and interest in and to the Trademarks and all proceeds thereof and all goodwill
associated therewith issued under and pursuant to the Power of Attorney.
IN WITNESS WHEREOF, the undersigned has caused this Trademark Assignment to be
executed as of the 29th day of October, 1999.
By:
Attorney-in-fact
<PAGE> 10
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, before me, a Notary Public for
the said County and State, personally appeared known to me or satisfactorily
proven to me to be attorney-in-fact on behalf of IMMUNOGENETICS, INC.
("Grantor") and s/he acknowledged to me that s/he executed the foregoing
Trademark Assignment on behalf of Grantor, and as the act and deed of Grantor
for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My Commission Expires:
<PAGE> 11
POWER OF ATTORNEY
IMMUNOGENETICS, INC., ("Grantor"), hereby authorizes AMERICAN CAPITAL
STRATEGIES, its successors and assigns, and any officer or agent thereof
(collectively, "Lender") as Grantor's true and lawful attorney-in-fact, with the
power to endorse Grantor's name on all applications, assignments, documents,
papers and instruments necessary for Grantee to enforce and effectuate its
rights under a certain Trademark Security Agreement between Grantor and Lender
dated the date hereof (as it may hereafter be supplemented, restated,
superseded, amended or replaced, the "Trademark Agreement", including, without
limitation, the power to use the Trademarks (as defined in the Trademark
Agreement) and listed on Schedule A attached hereto and made a part hereof, to
grant or issue any exclusive or nonexclusive license under the Trademarks to
anyone else, or to assign, pledge, convey or otherwise transfer title in or
dispose of the Trademarks, in each case subject to the terms of the Trademark
Agreement.
This Power of Attorney is given and any action taken pursuant hereto is intended
to be so given or taken pursuant to and subject to the provisions of a certain
Loan and Security Agreement bearing even date herewith among Grantor and Leader,
as each document may be hereinafter supplemented, restated, superseded, amended
or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall lawfully do
or cause to be done by virtue hereof and in accordance with the terms of the
Trademark Agreement.
This Power of Attorney shall be irrevocable for the life of the Trademark
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, this 29th
day of October, 1999.
IMMUNOGENETICS, INC.
By: /s/ Manfred Hanuschek
Name: Manfred Hanuschek
Title: CFO
<PAGE> 1
EXHIBIT *(10.42)
TRADEMARK SECURITY AGREEMENT
This Trademark Security Agreement ("Agreement") is made as of the 29th day of
October, 1999 by BLOOD CELLS, INC. ("Grantor"), a Delaware corporation, having a
mailing address at Wheat Road and Lincoln Avenue, Buena, NJ 08310, and delivered
to AMERICAN CAPITAL STRATEGIES, LTD., a Delaware corporation having a mailing
address at 2 Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814
("Lender").
BACKGROUND
A. Grantor has entered into that certain Note and Equity Purchase Agreement
dated as of even date herewith among Grantor, IGI, Inc., IGEN, Inc., and
ImmunoGenetics, Inc. (collectively, "Borrowers") and Lender (as it may hereafter
be supplemented, restated, amended, superseded or replaced from time to time,
the "Purchase Agreement"). Capitalized terms not defined herein shall have the
meanings given to such terms in the Purchase Agreement.
B. This Agreement is being executed contemporaneously with that certain Security
Agreement of even date herewith among Borrowers and Lender (as it may hereafter
be supplemented, restated, amended, superseded or replaced from time to time,
the "Security Agreement"), under which, inter alia, Grantor is granting Lender a
lien on and security interest in certain assets of Grantor associated with or
relating to products leased or sold or services provided under Grantor's
trademarks and the goodwill associated therewith as security for the payment and
performance of all the Obligations (as defined in the Security Agreement) of all
the Borrowers, and under which Lender is entitled to foreclose or otherwise deal
with such assets, trademarks, service marks and tradenames under the terms and
conditions set forth therein.
C. Pursuant to the Security Agreement, Lender is acquiring a lien on, and
security interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default) the trademarks, service marks
and trade names listed on Schedule "A" attached hereto (the "Trademarks"),
together with all the goodwill of Grantor associated therewith and represented
thereby, as security for all of the Obligations, and desires to have its
security interest in such Trademarks confirmed by a document identifying same
and in such form that it may be recorded in the United States Patent and
Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed incorporated by
reference and made a part hereof, and in consideration of the premises and
mutual promises herein contained, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. In consideration of and pursuant to the terms of the Purchase Documents,
and for other good, valuable and sufficient consideration, the receipt of
which is hereby acknowledged, and to secure the payment and performance of
all the Obligations, Grantor grants a lien and security interest to Lender
in all of its present and future
<PAGE> 2
right, title and interest in and to all service marks, trademarks,
trademark and service mark registrations, trademark or service mark
applications and trade names including, without limitation, the service
marks, trademarks, trademark and service mark registrations, trademark or
service mark applications and trade names listed on Schedule "A" hereto
(the "Trademarks"), all of Grantor's rights and obligations pursuant to any
license agreements between Grantor and any other Person or Persons with
respect to any Patents, whether Grantor is a licensor or licensee under any
such license agreements, including, without limitation, the licenses listed
on Schedule "B" attached hereto and made a part hereof, and, subject to the
terms of such licenses, the right to prepare for sale, sell and advertise
for sale, all Inventory now or hereafter owned by such Assignor and now or
hereafter covered by such licenses (collectively, the "Licenses"), together
with all the goodwill of Grantor associated with and represented by the
Trademarks, and the registration thereof and the right (but not the
obligation) to sue for past, present and future infringements, and all
proceeds thereof, including, without limitation, license royalties and
proceeds of infringement suits (collectively the "Collateral").
2. Grantor hereby covenants and agrees to maintain the Trademarks in full
force and effect and otherwise perform all of its obligations and
undertakings under this Agreement until all of the Obligations are
indefeasibly paid and satisfied in full and the Security Agreement has been
terminated.
3. Grantor represents, warrants and covenants that:
(a) The Trademarks are subsisting and have not been adjudged invalid or
unenforceable;
(b) Each of the Trademarks is registered (or in the process of application
for registration), and, to the best of Grantor's knowledge, is valid and
enforceable;
(c) Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to each of the Trademarks, and except for Liens
permitted under Section 7.2(b) of the Purchase Agreement, each of the Trademarks
is free and clear of any liens, claims, charges and encumbrances, including,
without limitation, pledges, assignments, options, and covenants by Grantor not
to sue third persons;
(d) Grantor has the unqualified right, power and authority to enter into
this Agreement and perform its terms;
(e) Grantor has complied with, and will continue for the duration of this
Agreement to comply with, the requirements set forth in 15 U.S.C.
Section 1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Trademarks;
(f) Grantor has used and will continue to use for the duration of this
Agreement, consistent standards of quality in services or products leased or
sold under the Trademarks, and hereby grants to Lender and its employees and
agents the right (with
<PAGE> 3
no obligation of any kind upon Lender to do so) to visit Grantor's affiliates,
franchises or management locations and to inspect the use of the Trademarks and
quality control records relating thereto at reasonable times during regular
business hours to ensure Grantor's compliance with this paragraph 3(f); and
(g) Grantor has no notice of any suits or actions commenced or threatened
against it, or notice of claims asserted or threatened against it, with
reference to the Trademarks.
4. Grantor further covenants that:
(a) Until all of the Obligations have been indefeasibly paid and satisfied
in full, Grantor will not enter into any agreement which is inconsistent with
Grantor's obligations under this Agreement or which restrict or impair Agent's
right or priorities hereunder.
(b) If Grantor acquires rights to any new trademarks, the provisions of
this Agreement shall automatically apply thereto and such trademarks shall be
deemed part of the Trademarks. Grantor shall give Lender written notice promptly
upon its first use thereof along with an amended Schedule "A".
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and is
continuing under the Notes or the Purchase Agreement and that Lender has
elected to exercise its rights hereunder, Grantor shall continue to have
the exclusive right to use the Trademarks and Lender shall have no right to
use the Trademarks or issue any exclusive or non-exclusive license with
respect thereto, or assign, pledge or otherwise transfer title in the
Trademarks to anyone else.
6. Grantor agrees not to sell, license, grant any option, assign or further
encumber its rights and interest in the Trademarks without prior written
consent of Lender or as may be expressly permitted under the Purchase
Agreement. Notwithstanding the foregoing, and providing that no Default or
Event of Default has occurred and is outstanding, Grantor shall be entitled
to license any Trademarks in exchange for fair market consideration in the
exercise of its reasonable business judgment.
7. Following the occurrence and during the continuance of an Event of Default
under the Notes or the Purchase Agreement, Lender, as the holder of a
security interest under the Uniform Commercial Code, as now or hereafter in
effect in the State whose law governs the interpretation of the Security
Agreement, may take such action permitted under the Purchase Documents,
hereunder or under any law, in its exclusive discretion, to foreclose upon
or otherwise exercise its rights against the Trademarks covered hereby. For
such purposes, Grantor authorizes and empowers Lender, its successors and
assigns, and any officer or agent of Lender as Lender may select, in its
exclusive discretion, as Grantor's true and lawful attorney-in-fact, with
the power to endorse Grantor's name on all applications, assignments,
documents, papers and instruments necessary for
<PAGE> 4
Lender to use the Trademarks or to grant or issue any exclusive or
non-exclusive license under the Trademarks to anyone else, or necessary for
Lender to assign, pledge, convey or otherwise transfer title in or dispose
of the Trademarks to anyone else including, without limitation, the power
to execute on Grantor's behalf a trademark- assignment in the form attached
hereto as Exhibit 1. Grantor hereby ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof and in accordance with the
terms hereof, except for the gross negligence or willful misconduct of such
attorney. This power of attorney shall be irrevocable for the life of this
Agreement, the Purchase Documents, and until all the Obligations are
indefeasibly paid and satisfied in full and the Security Agreement is
terminated.
8. This Agreement shall not be modified without the written consent of the
parties hereto.
9. All rights and remedies herein granted to Lender shall be in addition to
any rights and remedies granted under the Purchase Documents and shall be
cumulative. In the event of an inconsistency between this Agreement and the
Security Agreement, the language of the Security Agreement shall control.
10. Upon full and unconditional satisfaction of all of the Obligations, Lender
shall execute and deliver to Grantor all documents reasonably necessary to
terminate Lender's security interest in the Trademarks.
11. Any and all fees, costs and expenses, of whatever kind or nature, including
the attorneys' fees and legal expenses incurred by Lender in connection
with the preparation and execution of this Agreement and all other
documents relating hereto, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, reasonable counsel fees, maintenance
fees, encumbrances or costs otherwise incurred in protecting, maintaining,
preserving the Trademarks, or in defending or prosecuting any actions or
proceedings arising out of or related to the Trademarks, or defending,
protecting or enforcing Lender's rights hereunder, in each case in
accordance with the terms of this Agreement, shall be borne and paid by
Grantor on demand by Lender and until so paid shall be added to the
principal amount of the Obligations and shall bear interest at the rate of
interest determined in accordance with Section 8.2(c) of the Purchase
Agreement.
12. Subject to any applicable terms of the Security Agreement, Grantor shall
have the duty to prosecute diligently any trademark application with
respect to the Trademarks pending as of the date of this Agreement or
thereafter to preserve and maintain all rights in the Trademarks, and upon
reasonable request of Lender, Grantor shall make federal application on
registrable but unregistered trademarks belonging to Grantor. Any
reasonable expenses incurred in connection with such applications shall be
borne by Grantor. Grantor shall not abandon any Trademark without the prior
written consent of the Lender, which consent shall not unreasonably be
withheld.
<PAGE> 5
13. Grantor shall have the right to bring suit in its own name to enforce the
Trademarks, in which event Lender may, if Grantor reasonably deems it
necessary, be joined as a nominal party to such suit if Lender shall have
been satisfied, in its sole discretion, that it is not thereby incurring
any risk of liability because of such joinder. Grantor shall promptly, upon
demand, reimburse and indemnify Lender for all damages, reasonable costs
and expenses, including attorneys' fees, incurred by Lender in the
fulfillment of the provisions of this paragraph.
14. If an Event of Default is outstanding under the Notes or the Purchase
Agreement, Lender may, without any obligation to do so, complete any
obligation of Grantor hereunder, in Grantor's name or in Lender's name, but
at Grantor's expense, and Grantor hereby agrees to reimburse Lender in full
for all reasonable costs and expenses, including attorneys' fees, incurred
by Lender in protecting, defending and maintaining the Trademarks.
15. No course of dealing between Grantor and Lender nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right,
power or privilege hereunder, shall operate as a waiver thereof, and all of
Lender's rights and remedies with respect to the Trademarks, whether
established hereby or by the Purchase Documents, or by any other future
agreements between Grantor and Lender or by law, shall be cumulative and
may be exercised singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in fall force and effect.
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with the
laws of the State of Maryland without regard to its otherwise applicable
principles of conflicts of laws.
19. Grantor and Lender each waive any and all rights it may have to a jury
trial in connection with any litigation, proceeding or counterclaim arising
with respect to rights and obligations of the parties under this Agreement.
20. THE OBLIGATIONS SECURED HEREBY AND THE SECURITY INTERESTS GRANTED HEREUNDER
ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER
19, 1999, AMONG FLEET CAPITAL CORPORATION, AS AGENT FOR THE SENIOR LENDERS,
AMERICAN CAPITAL STRATEGIES, LTD., AND ASSIGNORS TO THE INDEBTEDNESS AND
OTHER LIABILITIES OWED BY ASSIGNORS
<PAGE> 6
UNDER AND PURSUANT TO THE LOAN AND SECURITY AGREEMENT DATED AS OF OCTOBER
19, 1999, AND EACH RELATED "LOAN DOCUMENT" (AS DEFINED THEREIN), AND EACH
ASSIGNEE HEREUNDER, BY ITS ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE
BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Trademark Security
Agreement the day and year first above written.
BLOOD CELLS, INC.
By: /s/ Manfred Hanuschek
Name: Manfred Hanuschek
Title: CFO
<PAGE> 8
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared to me
known and being duly sworn, deposes and says that s/he is of BLOOD
CELLS, INC.; that s/he signed the Agreement thereto as such officer pursuant to
the authority vested in him by law; that the within Agreement is the
voluntary act of such corporation; and s/he desires the same to be recorded as
such.
Notary Public
My Commission Expires:
<PAGE> 9
Exhibit I
TRADEMARK ASSIGNMENT
WHEREAS, BLOOD CELLS, INC. ("Grantor") is the registered owner of the United
States trademarks, tradenames and registrations listed on Schedule "A" attached
hereto and made a part hereof (the "Trademarks"), which are registered in the
United States Patent and Trademark Office; and
WHEREAS, ("Grantee" ), having a place of business at
, is desirous of acquiring said Trademarks;
NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, Grantor, its successors
and assigns, does hereby transfer, assign and set over unto Grantee, its
successors, transferees and assigns, all of its present and future right, title
and interest in and to the Trademarks and all proceeds thereof and all goodwill
associated therewith issued under and pursuant to the Power of Attorney.
IN WITNESS WHEREOF, the undersigned has caused this Trademark Assignment to be
executed as of the 29th day of October, 1999.
By:
Attorney-in-fact
<PAGE> 10
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, before me, a Notary Public for the
said County and State, personally appeared known to me or satisfactorily proven
to me to be attorney-in-fact on behalf of BLOOD CELLS, INC. ("Grantor") and s/he
acknowledged to me that s/he executed the foregoing Trademark Assignment on
behalf of Grantor, and as the act and deed of Grantor for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My Commission Expires:
<PAGE> 11
POWER OF ATTORNEY
BLOOD CELLS, INC., ("Grantor"), hereby authorizes AMERICAN CAPITAL STRATEGIES,
its successors and assigns, and any officer or agent thereof (collectively,
"Lender") as Grantor's true and lawful attorney-in-fact, with the power to
endorse Grantor's name on all applications, assignments, documents, papers and
instruments necessary for Grantee to enforce and effectuate its rights under a
certain Trademark Security Agreement between Grantor and Lender dated the date
hereof (as it may hereafter be supplemented, restated, superseded, amended or
replaced, the "Trademark Agreement", including, without limitation, the power to
use the Trademarks (as defined in the Trademark Agreement) and listed on
Schedule A attached hereto and made a part hereof, to grant or issue any
exclusive or nonexclusive license under the Trademarks to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the
Trademarks, in each case subject to the terms of the Trademark Agreement.
This Power of Attorney is given and any action taken pursuant hereto is intended
to be so given or taken pursuant to and subject to the provisions of a certain
Loan and Security Agreement bearing even date herewith among Grantor and Leader,
as each document may be hereinafter supplemented, restated, superseded, amended
or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall lawfully do
or cause to be done by virtue hereof and in accordance with the terms of the
Trademark Agreement.
This Power of Attorney shall be irrevocable for the life of the Trademark
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, this 29th
day of October, 1999.
BLOOD CELLS, INC.
By: /s/ Manfred Hanuschek
Name: Manfred Hanuschek
Title: CFO
<PAGE> 1
EXHIBIT *(10.43)
TRADEMARK SECURITY AGREEMENT
This Trademark Security Agreement ("Agreement") is made as of the 29th day of
October, 1999 by IGEN, INC. ("Grantor"), a Delaware corporation, having a
mailing address at Wheat Road and Lincoln Avenue, Buena, NJ 08310, and delivered
to AMERICAN CAPITAL STRATEGIES, LTD., a Delaware corporation having a mailing
address at 2 Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814
("Lender").
BACKGROUND
A. Grantor has entered into that certain Note and Equity Purchase Agreement
dated as of even date herewith among Grantor, IGI, Inc., ImmunoGenetics, Inc.,
and Blood Cells, Inc. (collectively, "Borrowers") and Lender (as it may
hereafter be supplemented, restated, amended, superseded or replaced from time
to time, the "Purchase Agreement"). Capitalized terms not defined herein shall
have the meanings given to such terms in the Purchase Agreement.
B. This Agreement is being executed contemporaneously with that certain Security
Agreement of even date herewith among Borrowers and Lender (as it may hereafter
be supplemented, restated, amended, superseded or replaced from time to time,
the "Security Agreement"), under which, inter alia, Grantor is granting Lender a
lien on and security interest in certain assets of Grantor associated with or
relating to products leased or sold or services provided under Grantor's
trademarks and the goodwill associated therewith as security for the payment and
performance of all the Obligations (as defined in the Security Agreement) of all
the Borrowers, and under which Lender is entitled to foreclose or otherwise deal
with such assets, trademarks, service marks and tradenames under the terms and
conditions set forth therein.
C. Pursuant to the Security Agreement, Lender is acquiring a lien on, and
security interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default) the trademarks, service marks
and trade names listed on Schedule "A" attached hereto (the "Trademarks"),
together with all the goodwill of Grantor associated therewith and represented
thereby, as security for all of the Obligations, and desires to have its
security interest in such Trademarks confirmed by a document identifying same
and in such form that it may be recorded in the United States Patent and
Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed incorporated by
reference and made a part hereof, and in consideration of the premises and
mutual promises herein contained, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. In consideration of and pursuant to the terms of the Purchase Documents,
and for other good, valuable and sufficient consideration, the receipt of
which is hereby acknowledged, and to secure the payment and performance of
all the Obligations, Grantor grants a lien and security interest to Lender
in all of its present and future
<PAGE> 2
right, title and interest in and to all service marks, trademarks,
trademark and service mark registrations, trademark or service mark
applications and trade names including, without limitation, the service
marks, trademarks, trademark and service mark registrations, trademark or
service mark applications and trade names listed on Schedule "A" hereto
(the "Trademarks"), all of Grantor's rights and obligations pursuant to any
license agreements between Grantor and any other Person or Persons with
respect to any Patents, whether Grantor is a licensor or licensee under any
such license agreements, including, without limitation, the licenses listed
on Schedule "B" attached hereto and made a part hereof, and, subject to the
terms of such licenses, the right to prepare for sale, sell and advertise
for sale, all Inventory now or hereafter owned by such Assignor and now or
hereafter covered by such licenses (collectively, the "Licenses"), together
with all the goodwill of Grantor associated with and represented by the
Trademarks, and the registration thereof and the right (but not the
obligation) to sue for past, present and future infringements, and all
proceeds thereof, including, without limitation, license royalties and
proceeds of infringement suits (collectively the "Collateral").
2. Grantor hereby covenants and agrees to maintain the Trademarks in full
force and effect and otherwise perform all of its obligations and
undertakings under this Agreement until all of the Obligations are
indefeasibly paid and satisfied in full and the Security Agreement has been
terminated.
3. Grantor represents, warrants and covenants that:
(a) The Trademarks are subsisting and have not been adjudged invalid or
unenforceable;
(b) Each of the Trademarks is registered (or in the process of application
for registration), and, to the best of Grantor's knowledge, is valid and
enforceable;
(c) Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to each of the Trademarks, and except for Liens
permitted under Section 7.2(b) of the Purchase Agreement, each of the Trademarks
is free and clear of any liens, claims, charges and encumbrances, including,
without limitation, pledges, assignments, options, and covenants by Grantor not
to sue third persons;
(d) Grantor has the unqualified right, power and authority to enter into
this Agreement and perform its terms;
(e) Grantor has complied with, and will continue for the duration of this
Agreement to comply with, the requirements set forth in 15 U.S.C.
Section1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Trademarks;
(f) Grantor has used and will continue to use for the duration of this
Agreement, consistent standards of quality in services or products leased or
sold under the Trademarks, and hereby grants to Lender and its employees and
agents the right (with
<PAGE> 3
no obligation of any kind upon Lender to do so) to visit Grantor's affiliates,
franchises or management locations and to inspect the use of the Trademarks and
quality control records relating thereto at reasonable times during regular
business hours to ensure Grantor's compliance with this paragraph 3(f); and
(g) Grantor has no notice of any suits or actions commenced or threatened
against it, or notice of claims asserted or threatened against it, with
reference to the Trademarks.
4. Grantor further covenants that:
(a) Until all of the Obligations have been indefeasibly paid and satisfied
in full, Grantor will not enter into any agreement which is inconsistent with
Grantor's obligations under this Agreement or which restrict or impair Agent's
right or priorities hereunder.
(b) If Grantor acquires rights to any new trademarks, the provisions of
this Agreement shall automatically apply thereto and such trademarks shall be
deemed part of the Trademarks. Grantor shall give Lender written notice promptly
upon its first use thereof along with an amended Schedule "A".
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and is
continuing under the Notes or the Purchase Agreement and that Lender has
elected to exercise its rights hereunder, Grantor shall continue to have
the exclusive right to use the Trademarks and Lender shall have no right to
use the Trademarks or issue any exclusive or non-exclusive license with
respect thereto, or assign, pledge or otherwise transfer title in the
Trademarks to anyone else.
6. Grantor agrees not to sell, license, grant any option, assign or further
encumber its rights and interest in the Trademarks without prior written
consent of Lender or as may be expressly permitted under the Purchase
Agreement. Notwithstanding the foregoing, and providing that no Default or
Event of Default has occurred and is outstanding, Grantor shall be entitled
to license any Trademarks in exchange for fair market consideration in the
exercise of its reasonable business judgment.
7. Following the occurrence and during the continuance of an Event of Default
under the Notes or the Purchase Agreement, Lender, as the holder of a
security interest under the Uniform Commercial Code, as now or hereafter in
effect in the State whose law governs the interpretation of the Security
Agreement, may take such action permitted under the Purchase Documents,
hereunder or under any law, in its exclusive discretion, to foreclose upon
or otherwise exercise its rights against the Trademarks covered hereby. For
such purposes, Grantor authorizes and empowers Lender, its successors and
assigns, and any officer or agent of Lender as Lender may select, in its
exclusive discretion, as Grantor's true and lawful attorney-in-fact, with
the power to endorse Grantor's name on all applications, assignments,
documents, papers and instruments necessary for
<PAGE> 4
Lender to use the Trademarks or to grant or issue any exclusive or
non-exclusive license under the Trademarks to anyone else, or necessary for
Lender to assign, pledge, convey or otherwise transfer title in or dispose
of the Trademarks to anyone else including, without limitation, the power
to execute on Grantor's behalf a trademark- assignment in the form attached
hereto as Exhibit 1. Grantor hereby ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof and in accordance with the
terms hereof, except for the gross negligence or willful misconduct of such
attorney. This power of attorney shall be irrevocable for the life of this
Agreement, the Purchase Documents, and until all the Obligations are
indefeasibly paid and satisfied in full and the Security Agreement is
terminated.
8. This Agreement shall not be modified without the written consent of the
parties hereto.
9. All rights and remedies herein granted to Lender shall be in addition to
any rights and remedies granted under the Purchase Documents and shall be
cumulative. In the event of an inconsistency between this Agreement and the
Security Agreement, the language of the Security Agreement shall control.
10. Upon full and unconditional satisfaction of all of the Obligations, Lender
shall execute and deliver to Grantor all documents reasonably necessary to
terminate Lender's security interest in the Trademarks.
11. Any and all fees, costs and expenses, of whatever kind or nature, including
the attorneys' fees and legal expenses incurred by Lender in connection
with the preparation and execution of this Agreement and all other
documents relating hereto, the filing or recording of any documents
(including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, reasonable counsel fees, maintenance
fees, encumbrances or costs otherwise incurred in protecting, maintaining,
preserving the Trademarks, or in defending or prosecuting any actions or
proceedings arising out of or related to the Trademarks, or defending,
protecting or enforcing Lender's rights hereunder, in each case in
accordance with the terms of this Agreement, shall be borne and paid by
Grantor on demand by Lender and until so paid shall be added to the
principal amount of the Obligations and shall bear interest at the rate of
interest determined in accordance with Section 8.2(c) of the Purchase
Agreement.
12. Subject to any applicable terms of the Security Agreement, Grantor shall
have the duty to prosecute diligently any trademark application with
respect to the Trademarks pending as of the date of this Agreement or
thereafter to preserve and maintain all rights in the Trademarks, and upon
reasonable request of Lender, Grantor shall make federal application on
registrable but unregistered trademarks belonging to Grantor. Any
reasonable expenses incurred in connection with such applications shall be
borne by Grantor. Grantor shall not abandon any Trademark without the prior
written consent of the Lender, which consent shall not unreasonably be
withheld.
<PAGE> 5
13. Grantor shall have the right to bring suit in its own name to enforce the
Trademarks, in which event Lender may, if Grantor reasonably deems it
necessary, be joined as a nominal party to such suit if Lender shall have
been satisfied, in its sole discretion, that it is not thereby incurring
any risk of liability because of such joinder. Grantor shall promptly, upon
demand, reimburse and indemnify Lender for all damages, reasonable costs
and expenses, including attorneys' fees, incurred by Lender in the
fulfillment of the provisions of this paragraph.
14. If an Event of Default is outstanding under the Notes or the Purchase
Agreement, Lender may, without any obligation to do so, complete any
obligation of Grantor hereunder, in Grantor's name or in Lender's name, but
at Grantor's expense, and Grantor hereby agrees to reimburse Lender in full
for all reasonable costs and expenses, including attorneys' fees, incurred
by Lender in protecting, defending and maintaining the Trademarks.
15. No course of dealing between Grantor and Lender nor any failure to
exercise, nor any delay in exercising, on the part of Lender, any right,
power or privilege hereunder, shall operate as a waiver thereof, and all of
Lender's rights and remedies with respect to the Trademarks, whether
established hereby or by the Purchase Documents, or by any other future
agreements between Grantor and Lender or by law, shall be cumulative and
may be exercised singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in fall force and effect.
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with the
laws of the State of Maryland without regard to its otherwise applicable
principles of conflicts of laws.
19. Grantor and Lender each waive any and all rights it may have to a jury
trial in connection with any litigation, proceeding or counterclaim arising
with respect to rights and obligations of the parties under this Agreement.
20. THE OBLIGATIONS SECURED HEREBY AND THE SECURITY INTERESTS GRANTED HEREUNDER
ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER
19, 1999, AMONG FLEET CAPITAL CORPORATION, AS AGENT FOR THE SENIOR LENDERS,
AMERICAN CAPITAL STRATEGIES, LTD., AND ASSIGNORS TO THE INDEBTEDNESS AND
OTHER LIABILITIES OWED BY ASSIGNORS
<PAGE> 6
UNDER AND PURSUANT TO THE LOAN AND SECURITY AGREEMENT DATED AS OF OCTOBER
19, 1999, AND EACH RELATED "LOAN DOCUMENT" (AS DEFINED THEREIN), AND EACH
ASSIGNEE HEREUNDER, BY ITS ACCEPTANCE HEREOF, ACKNOWLEDGES AND AGREES TO BE
BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Trademark Security
Agreement the day and year first above written.
IGEN, INC.
By: /s/ Manfred Hanuschek
Name: Manfred Hanuschek
Title: CFO
<PAGE> 8
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared
to me known and being duly sworn, deposes and says that s/he is
of IGEN INC.; that s/he signed the Agreement thereto as such officer pursuant to
the authority vested in him by law;
that the within Agreement is the voluntary act of such corporation; and s/he
desires the same to be recorded as such.
Notary Public
My Commission Expires:
<PAGE> 9
Exhibit I
TRADEMARK ASSIGNMENT
WHEREAS, IGEN, INC. ("Grantor") is the registered owner of the United States
trademarks, tradenames and registrations listed on Schedule "A" attached hereto
and made a part hereof (the "Trademarks"), which are registered in the United
States Patent and Trademark Office; and
WHEREAS, ("Grantee" ), having a place of business at
, is desirous of acquiring said Trademarks;
NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, Grantor, its successors
and assigns, does hereby transfer, assign and set over unto Grantee, its
successors, transferees and assigns, all of its present and future right, title
and interest in and to the Trademarks and all proceeds thereof and all goodwill
associated therewith issued under and pursuant to the Power of Attorney.
IN WITNESS WHEREOF, the undersigned has caused this Trademark Assignment to be
executed as of the 29th day of October, 1999.
By:
Attorney-in-fact
<PAGE> 10
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, before me, a Notary Public for the
said County and State, personally appeared known to me or satisfactorily proven
to me to be attorney-in-fact on behalf of IGEN, INC. ("Grantor") and s/he
acknowledged to me that s/he executed the foregoing Trademark Assignment on
behalf of Grantor, and as the act and deed of Grantor for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My Commission Expires:
<PAGE> 11
POWER OF ATTORNEY
IGEN, INC., ("Grantor"), hereby authorizes AMERICAN CAPITAL STRATEGIES, its
successors and assigns, and any officer or agent thereof (collectively,
"Lender") as Grantor's true and lawful attorney-in-fact, with the power to
endorse Grantor's name on all applications, assignments, documents, papers and
instruments necessary for Grantee to enforce and effectuate its rights under a
certain Trademark Security Agreement between Grantor and Lender dated the date
hereof (as it may hereafter be supplemented, restated, superseded, amended or
replaced, the "Trademark Agreement", including, without limitation, the power to
use the Trademarks (as defined in the Trademark Agreement) and listed on
Schedule A attached hereto and made a part hereof, to grant or issue any
exclusive or nonexclusive license under the Trademarks to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the
Trademarks, in each case subject to the terms of the Trademark Agreement.
This Power of Attorney is given and any action taken pursuant hereto is intended
to be so given or taken pursuant to and subject to the provisions of a certain
Loan and Security Agreement bearing even date herewith among Grantor and Leader,
as each document may be hereinafter supplemented, restated, superseded, amended
or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall lawfully do
or cause to be done by virtue hereof and in accordance with the terms of the
Trademark Agreement.
This Power of Attorney shall be irrevocable for the life of the Trademark
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, this 29th
day of October, 1999.
IGEN, INC.
By: /s/ Manfred Hanuschek
Name: Manfred Hanuschek
Title: CFO
<PAGE> 1
EXHIBIT *(10.44)
PATENT SECURITY AGREEMENT
(United States Patents)
This Patent Security Agreement ("Agreement") is made this 29th day of October,
1999, by IGI, INC., a Delaware corporation having a mailing address at Wheat
Road and Lincoln Avenue, Buena, NJ 08310 ("Grantor") and delivered to AMERICAN
CAPITAL STRATEGIES, LTD., a Delaware corporation having a mailing address at 2
Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814 ("Lender").
BACKGROUND
A. Grantor has entered into that certain Note and Equity Purchase Agreement
dated as of even date herewith among Grantor, IGEN, Inc., ImmunoGenetics, Inc.,
and Blood Cells, Inc. (collectively, "Borrowers") and Lender (as it may
hereafter be supplemented, restated, amended, superseded or replaced from time
to time, the "Purchase Agreement"). Capitalized terms not defined herein shall
have the meanings given to such terms in the Purchase Agreement.
B. This Agreement is being executed contemporaneously with that certain Security
Agreement of even date herewith among Borrowers and Lender (as it may hereafter
be supplemented, restated, amended, superseded or replaced from time to time,
the "Security Agreement"), under which, inter alia, Grantor is granting Lender a
lien on and security interest in certain assets of Grantor associated with or
relating to products leased or sold or services provided under Grantor's patents
and the goodwill associated therewith as security for the payment and
performance of all the Obligations (as defined in the Security Agreement) of all
the Borrowers, and under which Lender is entitled to foreclose or otherwise deal
with such assets and patents under the terms and conditions set forth therein.
C. Pursuant to the Security Agreement, Lender is acquiring a lien on, and
security interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default), among other things, (i) the
United States Letters Patent and the inventions described and claimed therein
set forth on Schedule A hereto and (ii) the applications for Letters Patent and
the inventions described and claimed therein set forth on Schedule A hereto and
any United States Letters Patent which may be issued upon any of said
applications, together with all the goodwill of Grantor associated therewith and
represented thereby, as security for all of the Obligations, and desires to have
its security interest in such letters patent and applications confirmed by a
document identifying same and in such form that it may be recorded in the United
States Patent and Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed incorporated by
reference and made a part hereof, and in consideration of the premises and
mutual promises herein contained, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
<PAGE> 2
1. In consideration of and pursuant to the terms of the Purchase Agreement,
and for other good, valuable and sufficient consideration, the receipt of
which is hereby acknowledged, and to secure the payment and performance of
all the Obligations of all Borrowers under the Purchase Documents, Grantor
grants to Lender a lien on and security interest in all patents and patent
applications, including, without limitation, the inventions and
improvements described and claimed therein, and those patents and patent
applications listed on Schedule "A" attached hereto and made a part hereof,
and the reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof (collectively, the "Schedule A Patents"), all
of Grantor's rights and obligations pursuant to any license agreements
between Grantor and any other Person or Persons, whether Grantor is a
licensor or licensee under any such license agreements, including, without
limitation, the licenses listed on Schedule "C" attached hereto and made a
part hereof with respect to the patents and patent applications listed on
Schedule "B" attached hereto and made a part hereof (collectively the
"Schedule B Patents" and, together with the Schedule A Patents, the
"Patents"), and, subject to the terms of such licenses, the right to
prepare for sale, sell and advertise for sale, all Inventory now or
hereafter owned by such Assignor and now or hereafter covered by such
licenses (collectively, the "Licenses", and together with the Patents, the
"Patent Rights") and all proceeds thereof and all Grantor's right, title,
interest, claims and demands that Grantor has or may have in profits and
damages for past and future infringements of the Patent Rights (such
rights, interest, claims and demand being herein called the "Claims") (the
Patent Rights and Claims are collectively referred to as the "Patent
Collateral").
2. Grantor hereby covenants and agrees to maintain the Patent Collateral in
full force and effect until all of the Obligations are satisfied in full.
3. Grantor represents, warrants and covenants to Lender that:
(a) The Patent Collateral is subsisting and has not been adjudged invalid
or unenforceable;
(b) All of the Patent Rights subsisting, and, to the best of Grantor's
knowledge, valid and enforceable;
(c) Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to the Patent Collateral (excepting the
Schedule B Patents, but including the Grantor's rights under the Licenses).
Except for Liens permitted under Section 7.2(b) of the Purchase Agreement, all
of the Patent Collateral (other than the Schedule B Patents, but including
Grantor's right under the Licenses) is free and clear of any liens, charges and
encumbrances including, without limitation, pledges, assignments, options and
covenants by Grantor not to sue third persons;
(d) Except for Liens permitted under Section 7.2(b) of the Purchase
Agreement, the Grantor's rights under the Licenses are free and clear of any
liens, claims,
2
<PAGE> 3
charges and encumbrances, including, without limitation, pledges, assignments,
options, and covenants by Grantor not to sue third persons;
(e) Grantor has no notice of any suits or actions commenced or threatened
against it, or notice of claims asserted or threatened against it, with
reference to the Patent Collateral;
(f) Grantor has the unqualified right, power and authority to enter into
this Agreement and perform its terms; and
(g) Grantor has complied with, and will continue for the duration of this
Agreement to comply with the requirements set forth in 15 U.S.C.
Section1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Patent Collateral except where failure to comply
would not have a material adverse effect on Grantor or its Property.
4. Grantor further covenants that:
(a) Until all of the Obligations have been satisfied in full, Grantor will
not enter into any agreement which is inconsistent with Grantor's obligations
under this Agreement, Grantor's obligations under the Purchase Agreement or
which may restrict or impair Lender's rights or priorities hereunder.
(b) If Grantor acquires rights to any new owned Patent Collateral, the
provisions of this Agreement shall automatically apply thereto and such Patent
Collateral shall be deemed part of the Patent Collateral. Grantor shall give
Lender prompt written notice thereof along with an amended Schedule "A."
Furthermore, if Grantor acquires rights as a licensee to any new patents, the
provisions of this Agreement shall automatically apply thereto and such patent
shall be deemed part of the Schedule B Patents, and any license agreement
pursuant to which Grantor acquires such rights shall be deemed to be included in
the definition of "Licenses." Grantor shall give Lender written notice promptly
upon its first use thereof along with an amended Schedule "B."
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and is
continuing under the Notes and the Purchase Agreement and that Lender has
elected to exercise its rights hereunder (i) Grantor shall continue to have
the exclusive right to use the Patent Collateral; and (ii) Lender shall
have no right to use the Patent Collateral or issue any exclusive or
non-exclusive license with respect thereto, or assign, pledge or otherwise
transfer title in the Patent Collateral to anyone else.
6. Grantor agrees not to sell, license, grant any option, assign or further
encumber its rights and interest in the Patent Collateral to any entity or
person other than Grantor without the prior written consent of Lender or as
may be expressly permitted under the Purchase Agreement. Notwithstanding
the foregoing, and providing that no Default or Event of Default has
occurred and is outstanding, Grantor shall be entitled to license any
Patents in exchange for fair market consideration in the exercise of its
reasonable business judgment.
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<PAGE> 4
7. Anything herein contained to the contrary notwithstanding, if and while
Grantor shall be in default hereunder or an Event of Default exists under
the Notes or the Purchase Agreement, Grantor hereby covenants and agrees
that Lender as the holder of a security interest under the Uniform
Commercial Code, as now or hereafter in effect in the State whose law
governs the interpretation of the Purchase Documents, may take such action
permitted under the Purchase Documents, hereunder or under any law, in its
exclusive discretion, to foreclose upon the Patent Collateral covered
hereby. For such purposes, Grantor hereby authorizes and empowers Lender,
its successors and assigns to make, constitute and appoint any officer or
agent of Lender as Lender may select, in its exclusive discretion, as
Grantor's true and lawful attorney-in-fact, with the power to endorse
Grantor's name on all applications, documents, papers and instruments
necessary for Lender to use the Patent Collateral or to grant or issue any
exclusive or non-exclusive license under the Patent Collateral to anyone
else, or necessary for Lender to assign, pledge, convey or otherwise
transfer title in or dispose of the Patent Collateral to anyone else
including, without limitation, the power to execute a Patent Collateral
assignment in the form attached hereto as Exhibit 1. Grantor hereby
ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof, except for the gross negligence or willful misconduct of
such attorney. This power of attorney shall be irrevocable for the life of
this Agreement, the Purchase Documents, and until all of the Obligations of
all of the Borrowers are indefeasibly paid and satisfied in full.
8. This Agreement shall be subject to the terms, provisions, and conditions
set forth in the Purchase Agreement and may not be modified without the
written consent of the party against whom enforcement is being sought.
9. All rights and remedies herein granted to Lender shall be in addition to
any rights and remedies granted to Lender under the Purchase Documents. In
the event of an inconsistency between this Agreement and Purchase
Agreement, the language of this Agreement shall control.
10. Upon Borrowers' performance of all of the Obligations under the Purchase
Documents and full and unconditional satisfaction of all of the Borrowers'
Obligations, Lender shall execute and deliver to Grantor all documents
reasonably necessary to terminate Lender's security interest in the Patent
Collateral.
11. Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses
incurred by Lender in connection with the preparation of this Agreement and
all other documents relating hereto and the consummation of this
transaction, the filing or recording of any documents (including all taxes
in connection therewith) in public offices, the payment or discharge of any
taxes, reasonable counsel fees, maintenance fees, encumbrances or costs
otherwise incurred in protecting, maintaining, preserving the Patent
Collateral, or in defending or prosecuting any actions or proceedings
arising out of or related to the Patent Collateral, in each case in
accordance with the terms of this Agreement, shall be borne and paid by
Grantor on demand by
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<PAGE> 5
Lender and until so paid shall be added to the principal amount of the
Obligations to Lender and shall bear interest at the rate of interest
determined in accordance with Section 8.2(c) of the Purchase Agreement.
12. Subject to the terms of the Purchase Agreement and the Notes, Grantor shall
have the duty to prosecute diligently any application with respect to the
Patent Collateral (other than the Schedule B Patents or any applications or
inventions relating thereto) pending as of the date of this Agreement or
thereafter, until Borrowers' Obligations shall have been satisfied in full,
to preserve and maintain all rights in the Patent Collateral (other than
the Schedule B Patents or any application or inventions relating thereto),
and upon reasonable request of Lender, Grantor shall make federal
application on registrable but unregistered Patent Collateral (other than
the Schedule B Patents or any applications, or inventions relating thereto)
belonging to Grantor and licensed to Grantor. To the extent that Grantor
has the duty or right to make any patent applications under any License,
Grantor shall have the same duties with respect to the Schedule B Patents
as stated in the previous sentence. Grantor shall not abandon any Patent
Collateral without the prior written consent of the Lender, which consent
shall not be unreasonably withheld.
13. Grantor shall have the right to bring suit in its own name to enforce the
Patent Collateral, in which event Lender may, if Grantor reasonably deems
it necessary, be joined as a nominal party to such suit if Lender shall
have been satisfied, in its sole discretion, that it is not thereby
incurring any risk of liability because of such joinder. Grantor shall
promptly, upon demand, reimburse and indemnify Lender for all damages,
costs and expenses, including attorneys' fees and costs, incurred by Lender
in the fulfillment of the provisions of this paragraph.
14. Upon the occurrence of an Event of Default under the Purchase Agreement or
hereunder, Lender may, without any obligation to do so, complete any
obligation of Grantor hereunder, in Grantor's name or in Lender's name, but
at the expense of Grantor, and Grantor hereby agrees to reimburse Lender in
full for all expenses, including, without limitation, all attorneys' fees
incurred by Lender in protecting, defending and maintaining the Patent
Collateral.
15. No course of dealing between Grantor and Lender, nor any failure to
exercise, nor any delay in exercising, on the part of Agent, any right,
power or privilege hereunder, shall operate as a waiver thereof, and all of
Lender's rights and remedies with respect to the Patent Collateral, whether
established hereby or by the Purchase Documents, or by any other future
agreements between Grantor and Lender or by law, shall be cumulative and
may be exercised singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and effect.
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<PAGE> 6
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with the
laws of the State of Maryland, without regard to its otherwise applicable
principles of conflicts of laws.
19. GRANTOR AND LENDER EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE TO A JURY
TRIAL ARISING IN CONNECTION WITH ANY PROCEEDING OR CONTROVERSY RELATING TO
THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN GRANTOR AND LENDER.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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20. GRANTOR AND LENDER EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE TO A JURY
TRIAL ARISING IN CONNECTION WITH ANY PROCEEDING OR CONTROVERSY RELATING TO THIS
AGREEMENT OR ANY OTHER AGREEMENT BETWEEN GRANTOR AND LENDER.
21. THE OBLIGATIONS SECURED HEREBY AND THE SECURITY INTERESTS GRANTED HEREUNDER
ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER 29,
1999, AMONG FLEET CAPITAL CORPORATION, AS AGENT FOR THE SENIOR LENDERS, AMERICAN
CAPITAL STRATEGIES, LTD., AND ASSIGNORS TO THE INDEBTEDNESS AND OTHER
LIABILITIES OWED BY ASSIGNORS UNDER AND PURSUANT TO THE LOAN AND SECURITY
AGREEMENT DATED AS OF OCTOBER 29, 1999, AND EACH RELATED "LOAN DOCUMENT" (AS
DEFINED THEREIN), AND EACH ASSIGNEE HEREUNDER, BY ITS ACCEPTANCE HEREOF,
ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Patent Security
Agreement, under seal, the day and year first above written.
IGI, INC.
By: /s/ Manfred Hanuschek
Name: Manfred Hanuschek
Title: CFO
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<PAGE> 8
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared to me known
and being duly sworn, deposes and says that s/he is
of IGI, INC.; that s/he signed the Agreement thereto as such officer pursuant
to the authority vested in him by law; that the within Agreement is the
voluntary act of such corporation; and s/he desires the same to be recorded as
such.
Notary Public
My Commission Expires:
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<PAGE> 9
SCHEDULE A
<TABLE>
<CAPTION>
Patent Registration No. Country Filing Date
<S> <C> <C> <C>
</TABLE>
9
<PAGE> 10
EXHIBIT I
PATENT ASSIGNMENT
WHEREAS, IGI, INC., a Delaware corporation ("Grantor") is the registered owner
of: (i) the United States Letters Patent and the inventions described and
claimed therein set forth on Schedule A hereto (hereinafter referred to
collectively as the "Patents"); (ii) the applications for Letters Parent and the
inventions described and claimed therein set forth on Schedule A hereto and any
United States Letters Patent which may be issued upon any of said applications
(hereinafter referred to collectively as the "Applications"), which are
registered with the United States Patent and Trademark Office.
WHEREAS, in conjunction with the Patents and Applications, Grantor may use or
adopt any reissues, extensions, divisions or continuations of the Patents or
Applications (such reissues, extension, divisions and continuations being herein
referred to collectively as the "Reissued Patents"); may be entitled to all
future royalties or other fees paid or payments made to Grantor in respect of
the Patents (hereinafter referred to collectively as the "Royalties"), (the
Patents, Applications and the Reissued Patents and the Royalties being herein
referred to collectively as the "Patent Rights") and may be entitled to profits
and damages for past and future infringements of the Patent Rights (such rights,
interest, claims and demand being herein called the "Claims') (the Patent Rights
and Claims are collectively referred to as the "Patent Collateral").
WHEREAS, , ("Grantee") having a place of business at
is desirous of acquiring said Patent Collateral;
NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, Grantor, its successors
and assigns, does hereby transfer, assign and set over unto Grantee, its
successors, transferees and assigns, all of its present and future right, title
and interest in and to the Patent Collateral and all proceeds thereof and all
goodwill associated therewith. No rights or duties of any kind are intended to
be granted or conferred upon Grantee unless and until this Patent Assignment is
recorded with the United States Patent and Trademark Office.
IN WITNESS WHEREOF, the undersigned has caused this Patent Assignment to be
executed as of the 29th day of October, 1999.
IGI, INC.
By:
As Attorney-in-fact
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STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, before me, a Notary Public for the said
County and State, personally appeared known to me or satisfactorily proven to me
to be attorney-in-fact on behalf of IGI, INC. ("Grantor") and s/he acknowledged
to me that s/he executed the foregoing Patent Assignment on behalf of Grantor,
and as the act and deed of Grantor for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My Commission Expires:
11
<PAGE> 12
POWER OF ATTORNEY
IGI., INC., a Delaware corporation, ("Grantor"), hereby authorizes AMERICAN
CAPITAL STRATEGIES, LTD., its successors and assigns, and any officer or agent
thereof (collectively, "Lender") as Grantor's true and lawful attorney-in-fact,
with the power to endorse Grantor's name on all applications, assignments,
documents, papers and instruments necessary for Lender to enforce and effectuate
its rights under a certain Patent Security Agreement (United States Patents)
between Grantor and Lender dated the date hereof (as it may hereafter be
supplemented, restated, superseded, amended or replaced, the "Patent
Agreement"), including, without limitation, the power to use the Patent
Collateral (as defined in the Patent Agreement), to grant or issue any exclusive
or nonexclusive license under the Patent Collateral to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral.
This Power of Attorney is given and any action taken pursuant hereto is intended
to be so given or taken pursuant to a certain Loan and Security agreement
bearing even date herewith between Grantor and Lender as it may be hereinafter
supplemented, restated, superseded, amended or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall law fully
do or cause to be done by virtue hereof.
This Power of Attorney shall be irrevocable for the life of the Patent
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, under seal,
this 29th day of October, 1999.
IGI, INC.
By: /s/ MANFRED HANUSCHEK
Name: MANFRED HANUSCHEK
Title: CFO
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<PAGE> 13
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999 personally appeared, to me known and being duly
sworn, deposes and says that s/he is ____________ of IGI, INC., the Grantor
corporation described in the foregoing Power of Attorney; that s/he signed the
Power of Attorney as such officer pursuant to the authority vested in her/him by
law; that the within Power of Attorney is the voluntary act of such corporation;
and s/he desires the same to be recorded as such.
Notary Public
My Commission Expires
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<PAGE> 1
EXHIBIT *(10.45)
PATENT SECURITY AGREEMENT
(United States Patents)
This Patent Security Agreement ("Agreement") is made this 29th day of October,
1999, by IMMUNOGENETICS, INC., a Delaware corporation having a mailing address
at Wheat Road and Lincoln Avenue, Buena, NJ 08310 ("Grantor") and delivered to
AMERICAN CAPITAL STRATEGIES, LTD., a Delaware corporation having a mailing
address at 2 Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814
("Lender").
BACKGROUND
A. Grantor has entered into that certain Note and Equity Purchase Agreement
dated as of even date herewith among Grantor, IGI, Inc., IGEN, Inc., and Blood
Cells, Inc. (collectively, "Borrowers") and Lender (as it may hereafter be
supplemented, restated, amended, superseded or replaced from time to time, the
"Purchase Agreement"). Capitalized terms not defined herein shall have the
meanings given to such terms in the Purchase Agreement.
B. This Agreement is being executed contemporaneously with that certain Security
Agreement of even date herewith among Borrowers and Lender (as it may hereafter
be supplemented, restated, amended, superseded or replaced from time to time,
the "Security Agreement"), under which, inter alia, Grantor is granting Lender a
lien on and security interest in certain assets of Grantor associated with or
relating to products leased or sold or services provided under Grantor's patents
and the goodwill associated therewith as security for the payment and
performance of all the Obligations (as defined in the Security Agreement) of all
the Borrowers, and under which Lender is entitled to foreclose or otherwise deal
with such assets and patents under the terms and conditions set forth therein.
C. Pursuant to the Security Agreement, Lender is acquiring a lien on, and
security interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default), among other things, (i) the
United States Letters Patent and the inventions described and claimed therein
set forth on Schedule A hereto and (ii) the applications for Letters Patent and
the inventions described and claimed therein set forth on Schedule A hereto and
any United States Letters Patent which may be issued upon any of said
applications, together with all the goodwill of Grantor associated therewith and
represented thereby, as security for all of the Obligations, and desires to have
its security interest in such letters patent and applications confirmed by a
document identifying same and in such form that it may be recorded in the United
States Patent and Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed incorporated by
reference and made a part hereof, and in consideration of the premises and
mutual promises herein contained, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
<PAGE> 2
1. In consideration of and pursuant to the terms of the Purchase Agreement,
and for other good, valuable and sufficient consideration, the receipt of
which is hereby acknowledged, and to secure the payment and performance of
all the Obligations of all Borrowers under the Purchase Documents, Grantor
grants to Lender a lien on and security interest in all patents and patent
applications, including, without limitation, the inventions and
improvements described and claimed therein, and those patents and patent
applications listed on Schedule "A" attached hereto and made a part hereof,
and the reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof (collectively, the "Schedule A Patents"), all
of Grantor's rights and obligations pursuant to any license agreements
between Grantor and any other Person or Persons, whether Grantor is a
licensor or licensee under any such license agreements, including, without
limitation, the licenses listed on Schedule "C" attached hereto and made a
part hereof with respect to the patents and patent applications listed on
Schedule "B" attached hereto and made a part hereof (collectively the
"Schedule B Patents" and, together with the Schedule A Patents, the
"Patents"), and, subject to the terms of such licenses, the right to
prepare for sale, sell and advertise for sale, all Inventory now or
hereafter owned by such Assignor and now or hereafter covered by such
licenses (collectively, the "Licenses", and together with the Patents, the
"Patent Rights") and all proceeds thereof and all Grantor's right, title,
interest, claims and demands that Grantor has or may have in profits and
damages for past and future infringements of the Patent Rights (such
rights, interest, claims and demand being herein called the "Claims") (the
Patent Rights and Claims are collectively referred to as the "Patent
Collateral").
2. Grantor hereby covenants and agrees to maintain the Patent Collateral in
full force and effect until all of the Obligations are satisfied in full.
3. Grantor represents, warrants and covenants to Lender that:
(a) The Patent Collateral is subsisting and has not been adjudged invalid
or unenforceable;
(b) All of the Patent Rights subsisting, and, to the best of Grantor's
knowledge, valid and enforceable;
(c) Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to the Patent Collateral (excepting the
Schedule B Patents, but including the Grantor's rights under the Licenses).
Except for Liens permitted under Section 7.2(b) of the Purchase Agreement, all
of the Patent Collateral (other than the Schedule B Patents, but including
Grantor's right under the Licenses) is free and clear of any liens, charges and
encumbrances including, without limitation, pledges, assignments, options and
covenants by Grantor not to sue third persons;
(d) Except for Liens permitted under Section 7.2(b) of the Purchase
Agreement, the Grantor's rights under the Licenses are free and clear of any
liens, claims,
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<PAGE> 3
charges and encumbrances, including, without limitation, pledges, assignments,
options, and covenants by Grantor not to sue third persons;
(e) Grantor has no notice of any suits or actions commenced or threatened
against it, or notice of claims asserted or threatened against it, with
reference to the Patent Collateral;
(f) Grantor has the unqualified right, power and authority to enter into
this Agreement and perform its terms; and
(g) Grantor has complied with, and will continue for the duration of this
Agreement to comply with the requirements set forth in 15 U.S.C.
Section1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Patent Collateral except where failure to comply
would not have a material adverse effect on Grantor or its Property.
4. Grantor further covenants that:
(a) Until all of the Obligations have been satisfied in full, Grantor will
not enter into any agreement which is inconsistent with Grantor's obligations
under this Agreement, Grantor's obligations under the Purchase Agreement or
which may restrict or impair Lender's rights or priorities hereunder.
(b) If Grantor acquires rights to any new owned Patent Collateral, the
provisions of this Agreement shall automatically apply thereto and such Patent
Collateral shall be deemed part of the Patent Collateral. Grantor shall give
Lender prompt written notice thereof along with an amended Schedule "A."
Furthermore, if Grantor acquires rights as a licensee to any new patents, the
provisions of this Agreement shall automatically apply thereto and such patent
shall be deemed part of the Schedule B Patents, and any license agreement
pursuant to which Grantor acquires such rights shall be deemed to be included in
the definition of "Licenses." Grantor shall give Lender written notice promptly
upon its first use thereof along with an amended Schedule "B."
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and is
continuing under the Notes and the Purchase Agreement and that Lender has
elected to exercise its rights hereunder (i) Grantor shall continue to have
the exclusive right to use the Patent Collateral; and (ii) Lender shall
have no right to use the Patent Collateral or issue any exclusive or
non-exclusive license with respect thereto, or assign, pledge or otherwise
transfer title in the Patent Collateral to anyone else.
6. Grantor agrees not to sell, license, grant any option, assign or further
encumber its rights and interest in the Patent Collateral to any entity or
person other than Grantor without the prior written consent of Lender or as
may be expressly permitted under the Purchase Agreement. Notwithstanding
the foregoing, and providing that no Default or Event of Default has
occurred and is outstanding, Grantor shall be entitled to license any
Patents in exchange for fair market consideration in the exercise of its
reasonable business judgment.
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<PAGE> 4
7. Anything herein contained to the contrary notwithstanding, if and while
Grantor shall be in default hereunder or an Event of Default exists under
the Notes or the Purchase Agreement, Grantor hereby covenants and agrees
that Lender as the holder of a security interest under the Uniform
Commercial Code, as now or hereafter in effect in the State whose law
governs the interpretation of the Purchase Documents, may take such action
permitted under the Purchase Documents, hereunder or under any law, in its
exclusive discretion, to foreclose upon the Patent Collateral covered
hereby. For such purposes, Grantor hereby authorizes and empowers Lender,
its successors and assigns to make, constitute and appoint any officer or
agent of Lender as Lender may select, in its exclusive discretion, as
Grantor's true and lawful attorney-in-fact, with the power to endorse
Grantor's name on all applications, documents, papers and instruments
necessary for Lender to use the Patent Collateral or to grant or issue any
exclusive or non-exclusive license under the Patent Collateral to anyone
else, or necessary for Lender to assign, pledge, convey or otherwise
transfer title in or dispose of the Patent Collateral to anyone else
including, without limitation, the power to execute a Patent Collateral
assignment in the form attached hereto as Exhibit 1. Grantor hereby
ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof, except for the gross negligence or willful misconduct of
such attorney. This power of attorney shall be irrevocable for the life of
this Agreement, the Purchase Documents, and until all of the Obligations of
all of the Borrowers are indefeasibly paid and satisfied in full.
8. This Agreement shall be subject to the terms, provisions, and conditions
set forth in the Purchase Agreement and may not be modified without the
written consent of the party against whom enforcement is being sought.
9. All rights and remedies herein granted to Lender shall be in addition to
any rights and remedies granted to Lender under the Purchase Documents. In
the event of an inconsistency between this Agreement and Purchase
Agreement, the language of this Agreement shall control. 10. Upon
Borrowers' performance of all of the Obligations under the Purchase
Documents and full and unconditional satisfaction of all of the Borrowers'
Obligations, Lender shall execute and deliver to Grantor all documents
reasonably necessary to terminate Lender's security interest in the Patent
Collateral.
11. Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses
incurred by Lender in connection with the preparation of this Agreement and
all other documents relating hereto and the consummation of this
transaction, the filing or recording of any documents (including all taxes
in connection therewith) in public offices, the payment or discharge of any
taxes, reasonable counsel fees, maintenance fees, encumbrances or costs
otherwise incurred in protecting, maintaining, preserving the Patent
Collateral, or in defending or prosecuting any actions or proceedings
arising out of or related to the Patent Collateral, in each case in
accordance with the terms of this Agreement, shall be borne and paid by
Grantor on demand by
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<PAGE> 5
Lender and until so paid shall be added to the principal amount of the
Obligations to Lender and shall bear interest at the rate of interest
determined in accordance with Section 8.2(c) of the Purchase Agreement.
12. Subject to the terms of the Purchase Agreement and the Notes, Grantor shall
have the duty to prosecute diligently any application with respect to the
Patent Collateral (other than the Schedule B Patents or any applications or
inventions relating thereto) pending as of the date of this Agreement or
thereafter, until Borrowers' Obligations shall have been satisfied in full,
to preserve and maintain all rights in the Patent Collateral (other than
the Schedule B Patents or any application or inventions relating thereto),
and upon reasonable request of Lender, Grantor shall make federal
application on registrable but unregistered Patent Collateral (other than
the Schedule B Patents or any applications, or inventions relating thereto)
belonging to Grantor and licensed to Grantor. To the extent that Grantor
has the duty or right to make any patent applications under any License,
Grantor shall have the same duties with respect to the Schedule B Patents
as stated in the previous sentence. Grantor shall not abandon any Patent
Collateral without the prior written consent of the Lender, which consent
shall not be unreasonably withheld.
13. Grantor shall have the right to bring suit in its own name to enforce the
Patent Collateral, in which event Lender may, if Grantor reasonably deems
it necessary, be joined as a nominal party to such suit if Lender shall
have been satisfied, in its sole discretion, that it is not thereby
incurring any risk of liability because of such joinder. Grantor shall
promptly, upon demand, reimburse and indemnify Lender for all damages,
costs and expenses, including attorneys' fees and costs, incurred by Lender
in the fulfillment of the provisions of this paragraph.
14. Upon the occurrence of an Event of Default under the Purchase Agreement or
hereunder, Lender may, without any obligation to do so, complete any
obligation of Grantor hereunder, in Grantor's name or in Lender's name, but
at the expense of Grantor, and Grantor hereby agrees to reimburse Lender in
full for all expenses, including, without limitation, all attorneys' fees
incurred by Lender in protecting, defending and maintaining the Patent
Collateral.
15. No course of dealing between Grantor and Lender, nor any failure to
exercise, nor any delay in exercising, on the part of Agent, any right,
power or privilege hereunder, shall operate as a waiver thereof, and all of
Lender's rights and remedies with respect to the Patent Collateral, whether
established hereby or by the Purchase Documents, or by any other future
agreements between Grantor and Lender or by law, shall be cumulative and
may be exercised singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and effect.
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<PAGE> 6
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with the
laws of the State of Maryland, without regard to its otherwise applicable
principles of conflicts of laws.
19. GRANTOR AND LENDER EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE TO A JURY
TRIAL ARISING IN CONNECTION WITH ANY PROCEEDING OR CONTROVERSY RELATING TO
THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN GRANTOR AND LENDER.
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6
<PAGE> 7
20. GRANTOR AND LENDER EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE TO A JURY
TRIAL ARISING IN CONNECTION WITH ANY PROCEEDING OR CONTROVERSY RELATING TO THIS
AGREEMENT OR ANY OTHER AGREEMENT BETWEEN GRANTOR AND LENDER.
21. THE OBLIGATIONS SECURED HEREBY AND THE SECURITY INTERESTS GRANTED HEREUNDER
ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER 29,
1999, AMONG FLEET CAPITAL CORPORATION, AS AGENT FOR THE SENIOR LENDERS, AMERICAN
CAPITAL STRATEGIES, LTD., AND ASSIGNORS TO THE INDEBTEDNESS AND OTHER
LIABILITIES OWED BY ASSIGNORS UNDER AND PURSUANT TO THE LOAN AND SECURITY
AGREEMENT DATED AS OF OCTOBER 29, 1999, AND EACH RELATED "LOAN DOCUMENT" (AS
DEFINED THEREIN), AND EACH ASSIGNEE HEREUNDER, BY ITS ACCEPTANCE HEREOF,
ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Patent Security
Agreement, under seal, the day and year first above written.
IMMUNOGENETICS, INC.
By: /s/ MANFRED HANUSCHEK
Name: MANFRED HANUSCHEK
Title: CFO
7
<PAGE> 8
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared to me known
and being duly sworn, deposes and says that s/he is
of IMMUNOGENETICS, INC.; that s/he signed the Agreement thereto as such officer
pursuant to the authority vested in him by law; that the within Agreement is the
voluntary act of such corporation; and s/he desires the same to be recorded as
such.
Notary Public
My Commission Expires:
8
<PAGE> 9
SCHEDULE A
<TABLE>
<CAPTION>
Patent Registration No. Country Filing Date
<S> <C> <C> <C>
</TABLE>
9
<PAGE> 10
EXHIBIT I
PATENT ASSIGNMENT
WHEREAS, IMMUNOGENETICS, INC., a Delaware corporation ("Grantor") is the
registered owner of: (i) the United States Letters Patent and the inventions
described and claimed therein set forth on Schedule A hereto (hereinafter
referred to collectively as the "Patents"); (ii) the applications for Letters
Parent and the inventions described and claimed therein set forth on Schedule A
hereto and any United States Letters Patent which may be issued upon any of said
applications (hereinafter referred to collectively as the "Applications"), which
are registered with the United States Patent and Trademark Office.
WHEREAS, in conjunction with the Patents and Applications, Grantor may use or
adopt any reissues, extensions, divisions or continuations of the Patents or
Applications (such reissues, extension, divisions and continuations being herein
referred to collectively as the "Reissued Patents"); may be entitled to all
future royalties or other fees paid or payments made to Grantor in respect of
the Patents (hereinafter referred to collectively as the "Royalties"), (the
Patents, Applications and the Reissued Patents and the Royalties being herein
referred to collectively as the "Patent Rights") and may be entitled to profits
and damages for past and future infringements of the Patent Rights (such rights,
interest, claims and demand being herein called the "Claims') (the Patent Rights
and Claims are collectively referred to as the "Patent Collateral").
WHEREAS, , ("Grantee") having a place of business at
is desirous of acquiring said Patent Collateral;
NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, Grantor, its successors
and assigns, does hereby transfer, assign and set over unto Grantee, its
successors, transferees and assigns, all of its present and future right, title
and interest in and to the Patent Collateral and all proceeds thereof and all
goodwill associated therewith. No rights or duties of any kind are intended to
be granted or conferred upon Grantee unless and until this Patent Assignment is
recorded with the United States Patent and Trademark Office.
IN WITNESS WHEREOF, the undersigned has caused this Patent Assignment to be
executed as of the 29th day of October, 1999.
IMMUNOGENETICS, INC.
By:
As Attorney-in-fact
10
<PAGE> 11
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, before me, a Notary Public for the
said County and State, personally appeared known to me or satisfactorily proven
to me to be attorney-in-fact on behalf of IMMUNOGENETICS, INC. ("Grantor") and
s/he acknowledged to me that s/he executed the foregoing Patent Assignment on
behalf of Grantor, and as the act and deed of Grantor for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public
My Commission Expires:
11
<PAGE> 12
POWER OF ATTORNEY
IMMUNOGENETICS., INC., a Delaware corporation, ("Grantor"), hereby authorizes
AMERICAN CAPITAL STRATEGIES, LTD., its successors and assigns, and any officer
or agent thereof (collectively, "Lender") as Grantor's true and lawful
attorney-in-fact, with the power to endorse Grantor's name on all applications,
assignments, documents, papers and instruments necessary for Lender to enforce
and effectuate its rights under a certain Patent Security Agreement (United
States Patents) between Grantor and Lender dated the date hereof (as it may
hereafter be supplemented, restated, superseded, amended or replaced, the
"Patent Agreement"), including, without limitation, the power to use the Patent
Collateral (as defined in the Patent Agreement), to grant or issue any exclusive
or nonexclusive license under the Patent Collateral to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral.
This Power of Attorney is given and any action taken pursuant hereto is intended
to be so given or taken pursuant to a certain Loan and Security agreement
bearing even date herewith between Grantor and Lender as it may be hereinafter
supplemented, restated, superseded, amended or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall law fully
do or cause to be done by virtue hereof.
This Power of Attorney shall be irrevocable for the life of the Patent
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, under seal,
this 29th day of October, 1999.
IMMUNOGENETICS, INC.
By: /s/ MANFRED HANUSCHEK
Name: MANFRED HANUSCHEK
Title: CFO
12
<PAGE> 13
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF : SS
COUNTY OF :
On this 29th of October, 1999 personally appeared, to me known and being duly
sworn, deposes and says that s/he is ____________ of IMMUNOGENETICS, INC., the
Grantor corporation described in the foregoing Power of Attorney; that s/he
signed the Power of Attorney as such officer pursuant to the authority vested in
her/him by law; that the within Power of Attorney is the voluntary act of such
corporation; and s/he desires the same to be recorded as such.
Notary Public
My Commission Expires:
13
<PAGE> 1
EXHIBIT *(10.46)
PATENT SECURITY AGREEMENT
(United States Patents)
This Patent Security Agreement ("Agreement") is made this 29th day of October,
1999, by BLOOD CELLS, INC., a Delaware corporation having a mailing address at
Wheat Road and Lincoln Avenue, Buena, NJ 08310 ("Grantor") and delivered to
AMERICAN CAPITAL STRATEGIES, LTD., a Delaware corporation having a mailing
address at 2 Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814
("Lender").
BACKGROUND
A. Grantor has entered into that certain Note and Equity Purchase Agreement
dated as of even date herewith among Grantor, IGI, Inc., IGEN, Inc., and
ImmunoGenetics, Inc. (collectively, "Borrowers") and Lender (as it may hereafter
be supplemented, restated, amended, superseded or replaced from time to time,
the "Purchase Agreement"). Capitalized terms not defined herein shall have the
meanings given to such terms in the Purchase Agreement.
B. This Agreement is being executed contemporaneously with that certain Security
Agreement of even date herewith among Borrowers and Lender (as it may hereafter
be supplemented, restated, amended, superseded or replaced from time to time,
the "Security Agreement"), under which, inter alia, Grantor is granting Lender a
lien on and security interest in certain assets of Grantor associated with or
relating to products leased or sold or services provided under Grantor's patents
and the goodwill associated therewith as security for the payment and
performance of all the Obligations (as defined in the Security Agreement) of all
the Borrowers, and under which Lender is entitled to foreclose or otherwise deal
with such assets and patents under the terms and conditions set forth therein.
C. Pursuant to the Security Agreement, Lender is acquiring a lien on, and
security interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default), among other things, (i) the
United States Letters Patent and the inventions described and claimed therein
set forth on Schedule A hereto and (ii) the applications for Letters Patent and
the inventions described and claimed therein set forth on Schedule A hereto and
any United States Letters Patent which may be issued upon any of said
applications, together with all the goodwill of Grantor associated therewith and
represented thereby, as security for all of the Obligations, and desires to have
its security interest in such letters patent and applications confirmed by a
document identifying same and in such form that it may be recorded in the United
States Patent and Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed incorporated by
reference and made a part hereof, and in consideration of the premises and
mutual promises herein contained, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
<PAGE> 2
1. In consideration of and pursuant to the terms of the Purchase
Agreement, and for other good, valuable and sufficient consideration,
the receipt of which is hereby acknowledged, and to secure the payment
and performance of all the Obligations of all Borrowers under the
Purchase Documents, Grantor grants to Lender a lien on and security
interest in all patents and patent applications, including, without
limitation, the inventions and improvements described and claimed
therein, and those patents and patent applications listed on Schedule
"A" attached hereto and made a part hereof, and the reissues,
divisions, continuations, renewals, extensions and
continuations-in-part thereof (collectively, the "Schedule A Patents"),
all of Grantor's rights and obligations pursuant to any license
agreements between Grantor and any other Person or Persons, whether
Grantor is a licensor or licensee under any such license agreements,
including, without limitation, the licenses listed on Schedule "C"
attached hereto and made a part hereof with respect to the patents and
patent applications listed on Schedule "B" attached hereto and made a
part hereof (collectively the "Schedule B Patents" and, together with
the Schedule A Patents, the "Patents"), and, subject to the terms of
such licenses, the right to prepare for sale, sell and advertise for
sale, all Inventory now or hereafter owned by such Assignor and now or
hereafter covered by such licenses (collectively, the "Licenses", and
together with the Patents, the "Patent Rights") and all proceeds
thereof and all Grantor's right, title, interest, claims and demands
that Grantor has or may have in profits and damages for past and future
infringements of the Patent Rights (such rights, interest, claims and
demand being herein called the "Claims") (the Patent Rights and Claims
are collectively referred to as the "Patent Collateral").
2. Grantor hereby covenants and agrees to maintain the Patent Collateral in
full force and effect until all of the Obligations are satisfied in full.
3. Grantor represents, warrants and covenants to Lender that:
(a) The Patent Collateral is subsisting and has not been adjudged
invalid or unenforceable;
(b) All of the Patent Rights subsisting, and, to the best of Grantor's
knowledge, valid and enforceable;
(c) Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to the Patent Collateral (excepting the
Schedule B Patents, but including the Grantor's rights under the Licenses).
Except for Liens permitted under Section 7.2(b) of the Purchase Agreement, all
of the Patent Collateral (other than the Schedule B Patents, but including
Grantor's right under the Licenses) is free and clear of any liens, charges and
encumbrances including, without limitation, pledges, assignments, options and
covenants by Grantor not to sue third persons;
(d) Except for Liens permitted under Section 7.2(b) of the Purchase
Agreement, the Grantor's rights under the Licenses are free and clear of any
liens, claims,
2
<PAGE> 3
charges and encumbrances, including, without limitation, pledges, assignments,
options, and covenants by Grantor not to sue third persons;
(e) Grantor has no notice of any suits or actions commenced or threatened
against it, or notice of claims asserted or threatened against it, with
reference to the Patent Collateral;
(f) Grantor has the unqualified right, power and authority to enter into
this Agreement and perform its terms; and
(g) Grantor has complied with, and will continue for the duration of this
Agreement to comply with the requirements set forth in 15 U.S.C.
Section 1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Patent Collateral except where failure to comply
would not have a material adverse effect on Grantor or its Property.
4. Grantor further covenants that:
(a) Until all of the Obligations have been satisfied in full, Grantor will
not enter into any agreement which is inconsistent with Grantor's obligations
under this Agreement, Grantor's obligations under the Purchase Agreement or
which may restrict or impair Lender's rights or priorities hereunder.
(b) If Grantor acquires rights to any new owned Patent Collateral, the
provisions of this Agreement shall automatically apply thereto and such Patent
Collateral shall be deemed part of the Patent Collateral. Grantor shall give
Lender prompt written notice thereof along with an amended Schedule "A."
Furthermore, if Grantor acquires rights as a licensee to any new patents, the
provisions of this Agreement shall automatically apply thereto and such patent
shall be deemed part of the Schedule B Patents, and any license agreement
pursuant to which Grantor acquires such rights shall be deemed to be included in
the definition of "Licenses." Grantor shall give Lender written notice promptly
upon its first use thereof along with an amended Schedule "B."
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and
is continuing under the Notes and the Purchase Agreement and that
Lender has elected to exercise its rights hereunder (i) Grantor shall
continue to have the exclusive right to use the Patent Collateral; and
(ii) Lender shall have no right to use the Patent Collateral or issue
any exclusive or non-exclusive license with respect thereto, or assign,
pledge or otherwise transfer title in the Patent Collateral to anyone
else.
6. Grantor agrees not to sell, license, grant any option, assign or
further encumber its rights and interest in the Patent Collateral to
any entity or person other than Grantor without the prior written
consent of Lender or as may be expressly permitted under the Purchase
Agreement. Notwithstanding the foregoing, and providing that no
Default or Event of Default has occurred and is outstanding, Grantor
shall be entitled to license any Patents in exchange for fair market
consideration in the exercise of its reasonable business judgment.
3
<PAGE> 4
7. Anything herein contained to the contrary notwithstanding, if and while
Grantor shall be in default hereunder or an Event of Default exists
under the Notes or the Purchase Agreement, Grantor hereby covenants and
agrees that Lender as the holder of a security interest under the
Uniform Commercial Code, as now or hereafter in effect in the State
whose law governs the interpretation of the Purchase Documents, may
take such action permitted under the Purchase Documents, hereunder or
under any law, in its exclusive discretion, to foreclose upon the
Patent Collateral covered hereby. For such purposes, Grantor hereby
authorizes and empowers Lender, its successors and assigns to make,
constitute and appoint any officer or agent of Lender as Lender may
select, in its exclusive discretion, as Grantor's true and lawful
attorney-in-fact, with the power to endorse Grantor's name on all
applications, documents, papers and instruments necessary for Lender to
use the Patent Collateral or to grant or issue any exclusive or
non-exclusive license under the Patent Collateral to anyone else, or
necessary for Lender to assign, pledge, convey or otherwise transfer
title in or dispose of the Patent Collateral to anyone else including,
without limitation, the power to execute a Patent Collateral assignment
in the form attached hereto as Exhibit 1. Grantor hereby ratifies all
that such attorney shall lawfully do or cause to be done by virtue
hereof, except for the gross negligence or willful misconduct of such
attorney. This power of attorney shall be irrevocable for the life of
this Agreement, the Purchase Documents, and until all of the
Obligations of all of the Borrowers are indefeasibly paid and satisfied
in full.
8. This Agreement shall be subject to the terms, provisions, and conditions
set forth in the Purchase Agreement and may not be modified without the
written consent of the party against whom enforcement is being sought.
9. All rights and remedies herein granted to Lender shall be in addition to
any rights and remedies granted to Lender under the Purchase Documents. In
the event of an inconsistency between this Agreement and Purchase
Agreement, the language of this Agreement shall control.
10. Upon Borrowers' performance of all of the Obligations under the Purchase
Documents and full and unconditional satisfaction of all of the Borrowers'
Obligations, Lender shall execute and deliver to Grantor all documents
reasonably necessary to terminate Lender's security interest in the Patent
Collateral.
11. Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses
incurred by Lender in connection with the preparation of this Agreement
and all other documents relating hereto and the consummation of this
transaction, the filing or recording of any documents (including all
taxes in connection therewith) in public offices, the payment or
discharge of any taxes, reasonable counsel fees, maintenance fees,
encumbrances or costs otherwise incurred in protecting, maintaining,
preserving the Patent Collateral, or in defending or prosecuting any
actions or proceedings arising out of or related to the Patent
Collateral, in each case in accordance with the terms of this
Agreement, shall be borne and paid by Grantor on demand by
4
<PAGE> 5
Lender and until so paid shall be added to the principal amount of the
Obligations to Lender and shall bear interest at the rate of interest
determined in accordance with Section 8.2(c) of the Purchase Agreement.
12. Subject to the terms of the Purchase Agreement and the Notes, Grantor
shall have the duty to prosecute diligently any application with
respect to the Patent Collateral (other than the Schedule B Patents or
any applications or inventions relating thereto) pending as of the date
of this Agreement or thereafter, until Borrowers' Obligations shall
have been satisfied in full, to preserve and maintain all rights in the
Patent Collateral (other than the Schedule B Patents or any application
or inventions relating thereto), and upon reasonable request of Lender,
Grantor shall make federal application on registrable but unregistered
Patent Collateral (other than the Schedule B Patents or any
applications, or inventions relating thereto) belonging to Grantor and
licensed to Grantor. To the extent that Grantor has the duty or right
to make any patent applications under any License, Grantor shall have
the same duties with respect to the Schedule B Patents as stated in the
previous sentence. Grantor shall not abandon any Patent Collateral
without the prior written consent of the Lender, which consent shall
not be unreasonably withheld.
13. Grantor shall have the right to bring suit in its own name to enforce
the Patent Collateral, in which event Lender may, if Grantor reasonably
deems it necessary, be joined as a nominal party to such suit if Lender
shall have been satisfied, in its sole discretion, that it is not
thereby incurring any risk of liability because of such joinder.
Grantor shall promptly, upon demand, reimburse and indemnify Lender for
all damages, costs and expenses, including attorneys' fees and costs,
incurred by Lender in the fulfillment of the provisions of this
paragraph.
14. Upon the occurrence of an Event of Default under the Purchase Agreement or
hereunder, Lender may, without any obligation to do so, complete any
obligation of Grantor hereunder, in Grantor's name or in Lender's name,
but at the expense of Grantor, and Grantor hereby agrees to reimburse
Lender in full for all expenses, including, without limitation, all
attorneys' fees incurred by Lender in protecting, defending and
maintaining the Patent Collateral.
15. No course of dealing between Grantor and Lender, nor any failure to
exercise, nor any delay in exercising, on the part of Agent, any right,
power or privilege hereunder, shall operate as a waiver thereof, and all
of Lender's rights and remedies with respect to the Patent Collateral,
whether established hereby or by the Purchase Documents, or by any other
future agreements between Grantor and Lender or by law, shall be
cumulative and may be exercised singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and effect.
5
<PAGE> 6
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with the
laws of the State of Maryland, without regard to its otherwise applicable
principles of conflicts of laws.
19. GRANTOR AND LENDER EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE TO A
JURY TRIAL ARISING IN CONNECTION WITH ANY PROCEEDING OR CONTROVERSY
RELATING TO THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN GRANTOR AND
LENDER.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
6
<PAGE> 7
20. GRANTOR AND LENDER EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE TO A JURY
TRIAL ARISING IN CONNECTION WITH ANY PROCEEDING OR CONTROVERSY RELATING TO THIS
AGREEMENT OR ANY OTHER AGREEMENT BETWEEN GRANTOR AND LENDER.
21. THE OBLIGATIONS SECURED HEREBY AND THE SECURITY INTERESTS GRANTED HEREUNDER
ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER 29,
1999, AMONG FLEET CAPITAL CORPORATION, AS AGENT FOR THE SENIOR LENDERS, AMERICAN
CAPITAL STRATEGIES, LTD., AND ASSIGNORS TO THE INDEBTEDNESS AND OTHER
LIABILITIES OWED BY ASSIGNORS UNDER AND PURSUANT TO THE LOAN AND SECURITY
AGREEMENT DATED AS OF OCTOBER 29, 1999, AND EACH RELATED "LOAN DOCUMENT" (AS
DEFINED THEREIN), AND EACH ASSIGNEE HEREUNDER, BY ITS ACCEPTANCE HEREOF,
ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Patent Security
Agreement, under seal, the day and year first above written.
BLOOD CELLS, INC.
By: /S/ MANFRED HANUSCHEK
____________________________________
Name: MANFRED HANUSCHEK
____________________________________
Title: CFO
___________________________________
7
<PAGE> 8
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF :SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared to me known
and being duly sworn, deposes and says that s/he is
of BLOOD CELLS, INC.; that s/he signed the Agreement thereto as such officer
pursuant to the authority vested in him by law; that the within Agreement is the
voluntary act of such corporation; and s/he desires the same to be recorded as
such.
_______________________________________
Notary Public
My Commission Expires:
8
<PAGE> 9
SCHEDULE A
<TABLE>
<CAPTION>
Patent Registration No. Country Filing Date
- ------ ---------------- ------- -----------
<S> <C> <C> <C>
</TABLE>
9
<PAGE> 10
EXHIBIT I
PATENT ASSIGNMENT
WHEREAS, BLOOD CELLS, INC., a Delaware corporation ("Grantor") is the registered
owner of: (i) the United States Letters Patent and the inventions described and
claimed therein set forth on Schedule A hereto (hereinafter referred to
collectively as the "Patents"); (ii) the applications for Letters Parent and the
inventions described and claimed therein set forth on Schedule A hereto and any
United States Letters Patent which may be issued upon any of said applications
(hereinafter referred to collectively as the "Applications"), which are
registered with the United States Patent and Trademark Office.
WHEREAS, in conjunction with the Patents and Applications, Grantor may use or
adopt any reissues, extensions, divisions or continuations of the Patents or
Applications (such reissues, extension, divisions and continuations being herein
referred to collectively as the "Reissued Patents"); may be entitled to all
future royalties or other fees paid or payments made to Grantor in respect of
the Patents (hereinafter referred to collectively as the "Royalties"), (the
Patents, Applications and the Reissued Patents and the Royalties being herein
referred to collectively as the "Patent Rights") and may be entitled to profits
and damages for past and future infringements of the Patent Rights (such rights,
interest, claims and demand being herein called the "Claims') (the Patent Rights
and Claims are collectively referred to as the "Patent Collateral").
WHEREAS, , ("Grantee") having a place of business at
is desirous of acquiring said Patent Collateral;
NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, Grantor, its successors
and assigns, does hereby transfer, assign and set over unto Grantee, its
successors, transferees and assigns, all of its present and future right, title
and interest in and to the Patent Collateral and all proceeds thereof and all
goodwill associated therewith. No rights or duties of any kind are intended to
be granted or conferred upon Grantee unless and until this Patent Assignment is
recorded with the United States Patent and Trademark Office.
IN WITNESS WHEREOF, the undersigned has caused this Patent Assignment to be
executed as of the 29th day of October, 1999.
BLOOD CELLS, INC.
By: _________________________________
As Attorney-in-fact
10
<PAGE> 11
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, before me, a Notary Public for the
said County and State, personally appeared known to me or satisfactorily proven
to me to be attorney-in-fact on behalf of BLOOD CELLS, INC. ("Grantor") and s/he
acknowledged to me that s/he executed the foregoing Patent Assignment on behalf
of Grantor, and as the act and deed of Grantor for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
__________________________________
Notary Public
My Commission Expires:
_______________________________
11
<PAGE> 12
POWER OF ATTORNEY
BLOOD CELLS., INC., a Delaware corporation, ("Grantor"), hereby authorizes
AMERICAN CAPITAL STRATEGIES, LTD., its successors and assigns, and any officer
or agent thereof (collectively, "Lender") as Grantor's true and lawful
attorney-in-fact, with the power to endorse Grantor's name on all applications,
assignments, documents, papers and instruments necessary for Lender to enforce
and effectuate its rights under a certain Patent Security Agreement (United
States Patents) between Grantor and Lender dated the date hereof (as it may
hereafter be supplemented, restated, superseded, amended or replaced, the
"Patent Agreement"), including, without limitation, the power to use the Patent
Collateral (as defined in the Patent Agreement), to grant or issue any exclusive
or nonexclusive license under the Patent Collateral to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral.
This Power of Attorney is given and any action taken pursuant hereto is intended
to be so given or taken pursuant to a certain Loan and Security agreement
bearing even date herewith between Grantor and Lender as it may be hereinafter
supplemented, restated, superseded, amended or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall law fully
do or cause to be done by virtue hereof.
This Power of Attorney shall be irrevocable for the life of the Patent
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, under seal,
this 29th day of October, 1999.
BLOOD CELLS, INC.
By: /s/ MANFRED HANUSCHEK
-------------------------------
Name: MANFRED HANUSCHEK
Title: CFO
12
<PAGE> 13
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF :SS
COUNTY OF :
On this 29th of October, 1999 personally appeared, to me known and being duly
sworn, deposes and says that s/he is ____________ of BLOOD CELLS, INC., the
Grantor corporation described in the foregoing Power of Attorney; that s/he
signed the Power of Attorney as such officer pursuant to the authority vested in
her/him by law; that the within Power of Attorney is the voluntary act of such
corporation; and s/he desires the same to be recorded as such.
___________________________________
Notary Public
My Commission Expires:
13
<PAGE> 1
EXHIBIT *(10.47)
PATENT SECURITY AGREEMENT
(United States Patents)
This Patent Security Agreement ("Agreement") is made this 29th day of October,
1999, by IGEN, INC., a Delaware corporation having a mailing address at Wheat
Road and Lincoln Avenue, Buena, NJ 08310 ("Grantor") and delivered to AMERICAN
CAPITAL STRATEGIES, LTD., a Delaware corporation having a mailing address at 2
Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814 ("Lender").
BACKGROUND
A. Grantor has entered into that certain Note and Equity Purchase Agreement
dated as of even date herewith among Grantor, IGI, Inc., ImmunoGenetics, Inc.,
and Blood Cells, Inc. (collectively, "Borrowers") and Lender (as it may
hereafter be supplemented, restated, amended, superseded or replaced from time
to time, the "Purchase Agreement"). Capitalized terms not defined herein shall
have the meanings given to such terms in the Purchase Agreement.
B. This Agreement is being executed contemporaneously with that certain Security
Agreement of even date herewith among Borrowers and Lender (as it may hereafter
be supplemented, restated, amended, superseded or replaced from time to time,
the "Security Agreement"), under which, inter alia, Grantor is granting Lender a
lien on and security interest in certain assets of Grantor associated with or
relating to products leased or sold or services provided under Grantor's patents
and the goodwill associated therewith as security for the payment and
performance of all the Obligations (as defined in the Security Agreement) of all
the Borrowers, and under which Lender is entitled to foreclose or otherwise deal
with such assets and patents under the terms and conditions set forth therein.
C. Pursuant to the Security Agreement, Lender is acquiring a lien on, and
security interest in, and license to use (which license is conditioned upon the
occurrence and continuance of an Event of Default), among other things, (i) the
United States Letters Patent and the inventions described and claimed therein
set forth on Schedule A hereto and (ii) the applications for Letters Patent and
the inventions described and claimed therein set forth on Schedule A hereto and
any United States Letters Patent which may be issued upon any of said
applications, together with all the goodwill of Grantor associated therewith and
represented thereby, as security for all of the Obligations, and desires to have
its security interest in such letters patent and applications confirmed by a
document identifying same and in such form that it may be recorded in the United
States Patent and Trademark Office.
NOW THEREFORE, with the foregoing Background hereinafter deemed incorporated by
reference and made a part hereof, and in consideration of the premises and
mutual promises herein contained, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
<PAGE> 2
1. In consideration of and pursuant to the terms of the Purchase
Agreement, and for other good, valuable and sufficient consideration,
the receipt of which is hereby acknowledged, and to secure the payment
and performance of all the Obligations of all Borrowers under the
Purchase Documents, Grantor grants to Lender a lien on and security
interest in all patents and patent applications, including, without
limitation, the inventions and improvements described and claimed
therein, and those patents and patent applications listed on Schedule
"A" attached hereto and made a part hereof, and the reissues,
divisions, continuations, renewals, extensions and
continuations-in-part thereof (collectively, the "Schedule A Patents"),
all of Grantor's rights and obligations pursuant to any license
agreements between Grantor and any other Person or Persons, whether
Grantor is a licensor or licensee under any such license agreements,
including, without limitation, the licenses listed on Schedule "C"
attached hereto and made a part hereof with respect to the patents and
patent applications listed on Schedule "B" attached hereto and made a
part hereof (collectively the "Schedule B Patents" and, together with
the Schedule A Patents, the "Patents"), and, subject to the terms of
such licenses, the right to prepare for sale, sell and advertise for
sale, all Inventory now or hereafter owned by such Assignor and now or
hereafter covered by such licenses (collectively, the "Licenses", and
together with the Patents, the "Patent Rights") and all proceeds
thereof and all Grantor's right, title, interest, claims and demands
that Grantor has or may have in profits and damages for past and future
infringements of the Patent Rights (such rights, interest, claims and
demand being herein called the "Claims") (the Patent Rights and Claims
are collectively referred to as the "Patent Collateral").
2. Grantor hereby covenants and agrees to maintain the Patent Collateral in
full force and effect until all of the Obligations are satisfied in full.
3. Grantor represents, warrants and covenants to Lender that:
(a) The Patent Collateral is subsisting and has not been adjudged
invalid or unenforceable;
(b) All of the Patent Rights subsisting, and, to the best of Grantor's
knowledge, valid and enforceable;
(c) Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to the Patent Collateral (excepting the
Schedule B Patents, but including the Grantor's rights under the Licenses).
Except for Liens permitted under Section 7.2(b) of the Purchase Agreement, all
of the Patent Collateral (other than the Schedule B Patents, but including
Grantor's right under the Licenses) is free and clear of any liens, charges and
encumbrances including, without limitation, pledges, assignments, options and
covenants by Grantor not to sue third persons;
(d) Except for Liens permitted under Section 7.2(b) of the Purchase
Agreement, the Grantor's rights under the Licenses are free and clear of any
liens, claims,
2
<PAGE> 3
charges and encumbrances, including, without limitation, pledges,
assignments, options, and covenants by Grantor not to sue third persons;
(e) Grantor has no notice of any suits or actions commenced or threatened
against it, or notice of claims asserted or threatened against it, with
reference to the Patent Collateral;
(f) Grantor has the unqualified right, power and authority to enter into
this Agreement and perform its terms; and
(g) Grantor has complied with, and will continue for the duration of this
Agreement to comply with the requirements set forth in 15 U.S.C.
Section 1051-1127 and any other applicable statutes, rules and regulations in
connection with its use of the Patent Collateral except where failure to comply
would not have a material adverse effect on Grantor or its Property.
4. Grantor further covenants that:
(a) Until all of the Obligations have been satisfied in full, Grantor will
not enter into any agreement which is inconsistent with Grantor's obligations
under this Agreement, Grantor's obligations under the Purchase Agreement or
which may restrict or impair Lender's rights or priorities hereunder.
(b) If Grantor acquires rights to any new owned Patent Collateral, the
provisions of this Agreement shall automatically apply thereto and such Patent
Collateral shall be deemed part of the Patent Collateral. Grantor shall give
Lender prompt written notice thereof along with an amended Schedule "A."
Furthermore, if Grantor acquires rights as a licensee to any new patents, the
provisions of this Agreement shall automatically apply thereto and such patent
shall be deemed part of the Schedule B Patents, and any license agreement
pursuant to which Grantor acquires such rights shall be deemed to be included in
the definition of "Licenses." Grantor shall give Lender written notice promptly
upon its first use thereof along with an amended Schedule "B."
5. So long as this Agreement is in effect and so long as Grantor has not
received notice from Lender that an Event of Default has occurred and
is continuing under the Notes and the Purchase Agreement and that
Lender has elected to exercise its rights hereunder (i) Grantor shall
continue to have the exclusive right to use the Patent Collateral; and
(ii) Lender shall have no right to use the Patent Collateral or issue
any exclusive or non-exclusive license with respect thereto, or assign,
pledge or otherwise transfer title in the Patent Collateral to anyone
else.
6. Grantor agrees not to sell, license, grant any option, assign or
further encumber its rights and interest in the Patent Collateral to
any entity or person other than Grantor without the prior written
consent of Lender or as may be expressly permitted under the Purchase
Agreement. Notwithstanding the foregoing, and providing that no
Default or Event of Default has occurred and is outstanding, Grantor
shall be entitled to license any Patents in exchange for fair market
consideration in the exercise of its reasonable business judgment.
3
<PAGE> 4
7. Anything herein contained to the contrary notwithstanding, if and while
Grantor shall be in default hereunder or an Event of Default exists
under the Notes or the Purchase Agreement, Grantor hereby covenants and
agrees that Lender as the holder of a security interest under the
Uniform Commercial Code, as now or hereafter in effect in the State
whose law governs the interpretation of the Purchase Documents, may
take such action permitted under the Purchase Documents, hereunder or
under any law, in its exclusive discretion, to foreclose upon the
Patent Collateral covered hereby. For such purposes, Grantor hereby
authorizes and empowers Lender, its successors and assigns to make,
constitute and appoint any officer or agent of Lender as Lender may
select, in its exclusive discretion, as Grantor's true and lawful
attorney-in-fact, with the power to endorse Grantor's name on all
applications, documents, papers and instruments necessary for Lender to
use the Patent Collateral or to grant or issue any exclusive or
non-exclusive license under the Patent Collateral to anyone else, or
necessary for Lender to assign, pledge, convey or otherwise transfer
title in or dispose of the Patent Collateral to anyone else including,
without limitation, the power to execute a Patent Collateral assignment
in the form attached hereto as Exhibit 1. Grantor hereby ratifies all
that such attorney shall lawfully do or cause to be done by virtue
hereof, except for the gross negligence or willful misconduct of such
attorney. This power of attorney shall be irrevocable for the life of
this Agreement, the Purchase Documents, and until all of the
Obligations of all of the Borrowers are indefeasibly paid and satisfied
in full.
8. This Agreement shall be subject to the terms, provisions, and conditions
set forth in the Purchase Agreement and may not be modified without the
written consent of the party against whom enforcement is being sought.
9. All rights and remedies herein granted to Lender shall be in addition to
any rights and remedies granted to Lender under the Purchase Documents. In
the event of an inconsistency between this Agreement and Purchase
Agreement, the language of this Agreement shall control.
10. Upon Borrowers' performance of all of the Obligations under the Purchase
Documents and full and unconditional satisfaction of all of the Borrowers'
Obligations, Lender shall execute and deliver to Grantor all documents
reasonably necessary to terminate Lender's security interest in the Patent
Collateral.
11. Any and all reasonable fees, costs and expenses, of whatever kind or
nature, including the reasonable attorneys' fees and legal expenses
incurred by Lender in connection with the preparation of this Agreement
and all other documents relating hereto and the consummation of this
transaction, the filing or recording of any documents (including all
taxes in connection therewith) in public offices, the payment or
discharge of any taxes, reasonable counsel fees, maintenance fees,
encumbrances or costs otherwise incurred in protecting, maintaining,
preserving the Patent Collateral, or in defending or prosecuting any
actions or proceedings arising out of or related to the Patent
Collateral, in each case in accordance with the terms of this
Agreement, shall be borne and paid by Grantor on demand by
4
<PAGE> 5
Lender and until so paid shall be added to the principal amount of the
Obligations to Lender and shall bear interest at the rate of interest
determined in accordance with Section 8.2(c) of the Purchase Agreement.
12. Subject to the terms of the Purchase Agreement and the Notes, Grantor
shall have the duty to prosecute diligently any application with
respect to the Patent Collateral (other than the Schedule B Patents or
any applications or inventions relating thereto) pending as of the date
of this Agreement or thereafter, until Borrowers' Obligations shall
have been satisfied in full, to preserve and maintain all rights in the
Patent Collateral (other than the Schedule B Patents or any application
or inventions relating thereto), and upon reasonable request of Lender,
Grantor shall make federal application on registrable but unregistered
Patent Collateral (other than the Schedule B Patents or any
applications, or inventions relating thereto) belonging to Grantor and
licensed to Grantor. To the extent that Grantor has the duty or right
to make any patent applications under any License, Grantor shall have
the same duties with respect to the Schedule B Patents as stated in the
previous sentence. Grantor shall not abandon any Patent Collateral
without the prior written consent of the Lender, which consent shall
not be unreasonably withheld.
13. Grantor shall have the right to bring suit in its own name to enforce
the Patent Collateral, in which event Lender may, if Grantor reasonably
deems it necessary, be joined as a nominal party to such suit if Lender
shall have been satisfied, in its sole discretion, that it is not
thereby incurring any risk of liability because of such joinder.
Grantor shall promptly, upon demand, reimburse and indemnify Lender for
all damages, costs and expenses, including attorneys' fees and costs,
incurred by Lender in the fulfillment of the provisions of this
paragraph.
14. Upon the occurrence of an Event of Default under the Purchase Agreement or
hereunder, Lender may, without any obligation to do so, complete any
obligation of Grantor hereunder, in Grantor's name or in Lender's name,
but at the expense of Grantor, and Grantor hereby agrees to reimburse
Lender in full for all expenses, including, without limitation, all
attorneys' fees incurred by Lender in protecting, defending and
maintaining the Patent Collateral.
15. No course of dealing between Grantor and Lender, nor any failure to
exercise, nor any delay in exercising, on the part of Agent, any right,
power or privilege hereunder, shall operate as a waiver thereof, and all
of Lender's rights and remedies with respect to the Patent Collateral,
whether established hereby or by the Purchase Documents, or by any other
future agreements between Grantor and Lender or by law, shall be
cumulative and may be exercised singularly or concurrently.
16. The provisions of this Agreement are severable and the invalidity or
unenforceability of any provision herein shall not affect the remaining
provisions which shall continue unimpaired and in full force and effect.
5
<PAGE> 6
17. This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties.
18. This Agreement shall be governed by and construed in conformity with the
laws of the State of Maryland, without regard to its otherwise applicable
principles of conflicts of laws.
19. GRANTOR AND LENDER EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE TO A
JURY TRIAL ARISING IN CONNECTION WITH ANY PROCEEDING OR CONTROVERSY
RELATING TO THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN GRANTOR AND
LENDER.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
6
<PAGE> 7
20. GRANTOR AND LENDER EACH WAIVES ANY AND ALL RIGHTS EITHER MAY HAVE TO A JURY
TRIAL ARISING IN CONNECTION WITH ANY PROCEEDING OR CONTROVERSY RELATING TO THIS
AGREEMENT OR ANY OTHER AGREEMENT BETWEEN GRANTOR AND LENDER.
21. THE OBLIGATIONS SECURED HEREBY AND THE SECURITY INTERESTS GRANTED HEREUNDER
ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER 29,
1999, AMONG FLEET CAPITAL CORPORATION, AS AGENT FOR THE SENIOR LENDERS, AMERICAN
CAPITAL STRATEGIES, LTD., AND ASSIGNORS TO THE INDEBTEDNESS AND OTHER
LIABILITIES OWED BY ASSIGNORS UNDER AND PURSUANT TO THE LOAN AND SECURITY
AGREEMENT DATED AS OF OCTOBER 29, 1999, AND EACH RELATED "LOAN DOCUMENT" (AS
DEFINED THEREIN), AND EACH ASSIGNEE HEREUNDER, BY ITS ACCEPTANCE HEREOF,
ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Patent Security
Agreement, under seal, the day and year first above written.
IGEN, INC.
By: /s/ MANFRED HANUSCHEK
-------------------------------
Name: MANFRED HANUSCHEK
-----------------------------
Title: CFO
-----------------------------
7
<PAGE> 8
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF :SS
COUNTY OF :
On this 29th of October, 1999, before me personally appeared to me known
and being duly sworn, deposes and says that s/he is
of IGEN, INC.; that s/he signed the Agreement thereto as such officer pursuant
to the authority vested in him by law; that the within Agreement is the
voluntary act of such corporation; and s/he desires the same to be recorded as
such.
_________________________________
Notary Public
My Commission Expires:
8
<PAGE> 9
SCHEDULE A
<TABLE>
<CAPTION>
Patent Registration No. Country Filing Date
- ------ ---------------- ------- -----------
<S> <C> <C> <C>
</TABLE>
9
<PAGE> 10
EXHIBIT I
PATENT ASSIGNMENT
WHEREAS, IGEN, INC., a Delaware corporation ("Grantor") is the registered owner
of: (i) the United States Letters Patent and the inventions described and
claimed therein set forth on Schedule A hereto (hereinafter referred to
collectively as the "Patents"); (ii) the applications for Letters Parent and the
inventions described and claimed therein set forth on Schedule A hereto and any
United States Letters Patent which may be issued upon any of said applications
(hereinafter referred to collectively as the "Applications"), which are
registered with the United States Patent and Trademark Office.
WHEREAS, in conjunction with the Patents and Applications, Grantor may use or
adopt any reissues, extensions, divisions or continuations of the Patents or
Applications (such reissues, extension, divisions and continuations being herein
referred to collectively as the "Reissued Patents"); may be entitled to all
future royalties or other fees paid or payments made to Grantor in respect of
the Patents (hereinafter referred to collectively as the "Royalties"), (the
Patents, Applications and the Reissued Patents and the Royalties being herein
referred to collectively as the "Patent Rights") and may be entitled to profits
and damages for past and future infringements of the Patent Rights (such rights,
interest, claims and demand being herein called the "Claims') (the Patent Rights
and Claims are collectively referred to as the "Patent Collateral").
WHEREAS, , ("Grantee") having a place of business at
is desirous of acquiring said Patent Collateral;
NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound hereby, Grantor, its successors
and assigns, does hereby transfer, assign and set over unto Grantee, its
successors, transferees and assigns, all of its present and future right, title
and interest in and to the Patent Collateral and all proceeds thereof and all
goodwill associated therewith. No rights or duties of any kind are intended to
be granted or conferred upon Grantee unless and until this Patent Assignment is
recorded with the United States Patent and Trademark Office.
IN WITNESS WHEREOF, the undersigned has caused this Patent Assignment to be
executed as of the 29th day of October, 1999.
IGEN, INC.
By: _________________________________
As Attorney-in-fact
10
<PAGE> 11
STATE OF :
: S.S.
COUNTY OF :
On this 29th day of October, 1999, ____________________ before me, a Notary
Public for the said County and State, personally appeared known to me or
satisfactorily proven to me to be attorney-in-fact on behalf of IGEN, INC.
("Grantor") and s/he acknowledged to me that s/he executed the foregoing Patent
Assignment on behalf of Grantor, and as the act and deed of Grantor for the
purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
_________________________________
Notary Public
My Commission Expires:
_________________________________
11
<PAGE> 12
POWER OF ATTORNEY
IGEN., INC., a Delaware corporation, ("Grantor"), hereby authorizes AMERICAN
CAPITAL STRATEGIES, LTD., its successors and assigns, and any officer or agent
thereof (collectively, "Lender") as Grantor's true and lawful attorney-in-fact,
with the power to endorse Grantor's name on all applications, assignments,
documents, papers and instruments necessary for Lender to enforce and effectuate
its rights under a certain Patent Security Agreement (United States Patents)
between Grantor and Lender dated the date hereof (as it may hereafter be
supplemented, restated, superseded, amended or replaced, the "Patent
Agreement"), including, without limitation, the power to use the Patent
Collateral (as defined in the Patent Agreement), to grant or issue any exclusive
or nonexclusive license under the Patent Collateral to anyone else, or to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral.
This Power of Attorney is given and any action taken pursuant hereto is intended
to be so given or taken pursuant to a certain Loan and Security agreement
bearing even date herewith between Grantor and Lender as it may be hereinafter
supplemented, restated, superseded, amended or replaced.
Grantor hereby unconditionally ratifies all that such attorney shall law fully
do or cause to be done by virtue hereof.
This Power of Attorney shall be irrevocable for the life of the Patent
Agreement.
IN WITNESS WHEREOF, the Grantor has executed this Power of Attorney, under seal,
this 29th day of October, 1999.
IGEN, INC.
By: /s/ MANFRED HANUSCHEK
-------------------------------
Name: MANFRED HANUSCHEK
Title: CFO
12
<PAGE> 13
CORPORATE ACKNOWLEDGMENT
UNITED STATES OF AMERICA :
STATE OF :SS
COUNTY OF :
On this 29th of October, 1999 personally appeared, to me known and being duly
sworn, deposes and says that s/he is ____________ of IGEN, INC., the Grantor
corporation described in the foregoing Power of Attorney; that s/he signed the
Power of Attorney as such officer pursuant to the authority vested in her/him by
law; that the within Power of Attorney is the voluntary act of such corporation;
and s/he desires the same to be recorded as such.
_________________________________
Notary Public
My Commission Expires:
13
<PAGE> 1
EXHIBIT *(10.48)
This instrument was prepared and after recording should be returned to:
Michael W. Oshima, Esq.
Arnold & Porter
New York, New York 10022
THIS LEASEHOLD DEED AND THE OBLIGATIONS SECURED HEREBY ARE SUBORDINATE IN THE
MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AGREEMENT (THE
"SUBORDINATION AGREEMENT") DATED AS OF OCTOBER 29, 1999, AMONG FLEET CAPITAL
CORPORATION, AMERICAN CAPITAL STRATEGIES, LTD., IGI, INC., IGEN, INC.,
IMMUNOGENETICS, INC., AND BLOOD CELLS, INC., TO THE INDEBTEDNESS AND OTHER
LIABILITIES OWED BY IGI, INC., IGEN, INC., IMMUNOGENETICS, INC., AND BLOOD
CELLS, INC. UNDER AND PURSUANT TO THE LOAN AND SECURITY AGREEMENT DATED AS OF
OCTOBER 29, 1999, AND EACH RELATED "LOAN DOCUMENT" (AS DEFINED THEREIN), AND
EACH HOLDER OF THE NOTE SECURED HEREBY, BY ITS ACCEPTANCE THEREOF, ACKNOWLEDGES
AND AGREES TO BE BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
GEORGIA LEASEHOLD DEED TO SECURE DEBT
THIS GEORGIA LEASEHOLD DEED TO SECURE DEBT (this "Deed"), made this 29th
day of October, 1999, between IGI, INC., a Delaware corporation ("Grantor"),
having a mailing address of Wheat Road and Lincoln Avenue, Buena, New Jersey
08310, and AMERICAN CAPITAL STRATEGIES, a Delaware corporation, having mailing
address of 2 Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814
("Lender").
W I T N E S S E T H:
That for and in consideration of the sum of TEN AND NO/100 ($10.00)
DOLLARS in hand paid and other valuable consideration, receipt whereof is hereby
acknowledged, and to secure payment of the indebtedness hereinafter described,
Grantor does hereby bargain, sell, grant and convey to Lender and Lender's, its
successors and assigns, all of Grantor's estate, right, title and interest in,
to and under any and all of the following described property (collectively, the
"Premises"):
<PAGE> 2
(a) the leasehold estate created under and all right, title and interest
of Grantor under that certain Lease dated August 6, 1975, filed July 15, 1992,
recorded at Deed Book 1794, Page 49, Hall County, Georgia records having Walter
R. Cooper, as lessee, and the City of Gainesville, Georgia ("Ground Lessor"), as
lessor, transferred by Assignment of Leases and Improvements, dated July 16,
1976, filed September 10, 1992, recorded at Deed Book 1823, Page 268, aforesaid
records, by Walter R. Cooper, as assignor, to Edward Breedlove, a/k/a Ed
Breedlove, as assignee, and also by Quit-Claim Deed, dated June 29, 1976, filed
June 30, 1976, recorded at Deed Book 603, Page 527, and further transferred by
Assignment of Leases and Improvements, dated September 9, 1992, filed September
11, 1992, recorded at Deed Book 1823, Page 263, between Edward Breedlove, a/k/a
Ed Breedlove, as assignor, and Grantor, as assignee, and also by Quit-Claim
Deed, dated September 9, 1992, filed September 11, 1992, recorded at Deed Book
1823, Page 271, aforesaid records, consented and agreed to by the City of
Gainesville, Georgia by that certain Assignment of Lease and Improvements, dated
September 4, 1992, filed September 11, 1992, recorded at Deed Book 1823, Page
266, aforesaid records (said lease, together with all amendments, modifications,
extensions and assignments thereof permitted by the Purchase Agreement, is
hereafter referred to collectively as the "Ground Lease")(said leasehold estate
and the right, title and interest of Grantor in the Ground Lease is hereafter
collectively referred to as the "Leasehold Estate"), which Ground Lease affects
the following described premises:
All those certain tracts or parcels of land being more particularly
described on Exhibit A attached hereto and by this reference made a part
hereof and all reversions and remainders in and to said land and the
tenements, hereditaments, easements, rights-of-way, rights (including,
without limitation, mineral, water, oil and gas rights), privileges,
royalties and appurtenances to said land, now or hereafter belonging or in
any way appertaining thereto, including, without limitation, any right,
title, interest of Grantor in, to or under the Ground Lease in any
agreement or right granting, conveying or creating, for the benefit of
said land, any easement, right or license in any other property, and in,
to or under any streets, ways, alleys, vaults, gores or
2
<PAGE> 3
strips of land adjoining said land or any parcel thereof, or in or to the
air space over said land, and all claims or demands of Grantor at law or
in equity, in possession or expectancy of, in or to the same (all of the
foregoing hereinafter collectively called the "Land"; and, together with
the Leasehold Estate, hereinafter sometimes collectively called the "Real
Property");
Together with the appurtenances, including, but not limited to,
renewal and option rights, and all the estate and rights of Grantor of, in
and to the Real Property under and by virtue of the Lease;
Together with all right, title and interest of Grantor, if any, in
and to: (i) all modifications, extensions, renewals, supplements and
restatements of the Ground Lease and in and to all rights to renew or
extend the term of the Lease; (ii) all credits to and deposits of (other
than security deposits made by sublessees) Grantor under the Lease; and
(iii) all other options, privileges and rights granted and demised to
Grantor under the Lease, including, without limitation, options and rights
to purchase or of first refusal with respect to the Land, or any part
thereof;
Together with all the right or privilege of Grantor to terminate,
cancel, surrender, merge, modify, renew, extend or amend the Lease; and
all other titles, estates, options, privileges, interests and rights that
Grantor may now have or hereafter acquire in and to the Land and the
Ground Lease including, without limitation, the right of Grantor to
possession under Section 365 of the United States Bankruptcy Code, 11
U.S.C. Sections 101 et seq., as amended (the "Bankruptcy Code"), in
the event of the rejection of the Ground Lease by Ground Lessor or its
trustee pursuant to said section, the right to exercise options or give
consents with respect to the Lease, or to modify, extend or terminate the
Lease, the right to surrender the Lease, reject the Ground Lease or elect
to treat the Ground Lease as rejected or remain in possession under
Section 365 of the Bankruptcy Code, and the right to receive all deposits
and other amounts payable to Grantor under the Lease.
3
<PAGE> 4
(b) any and all buildings and all other improvements now on, or hereafter
constructed on, the Land, and all fixtures now or hereafter affixed to, placed
upon or used in connection with the Premises;
(c) any and all lands, fixtures, structures, improvements, easements,
rights-of-way, strips and gores of land, estates, rights, titles, royalties,
privileges, liberties, tenements and hereditaments of whatever kind or
description and wherever situated, now owned by, or at any time hereafter
acquired by or for, Grantor and contiguous or appurtenant to the Land, and all
other things of whatsoever kind and in any way or at any time belonging or
appurtenant to, or used in connection with, any of the other Premises;
(d) any and all leases and leasehold rights now held or hereafter acquired
by Grantor for use in connection with or belonging or appertaining to any of
Grantor's real property now or hereafter subject to the security title of this
Deed;
(e) any and all additions, betterments and improvements hereafter acquired
or constructed upon or in connection with any other property, real or personal,
now or at any time hereafter subject to the security title of this Deed;
(f) any and all rights, powers, franchises, privileges, immunities,
permits and licenses now or hereafter owned or possessed by Grantor that now or
at any time hereafter may be necessary for, or appurtenant to, the use,
operation, management, maintenance, renewal, alteration or improvement of any of
the other Premises;
(g) any and all subleases of the Ground Lease ("Subleases");
(h) any and all monies and proceeds derived by Grantor from the Real
Property or the Ground Lease, including, without limitation, all Rents, and all
payments, awards, judgments or settlements (including interest thereon) to which
Grantor may be or may become entitled as a result of the exercise of the right
of eminent domain with respect to any part or all of the Premises or any
improvements on the Land, and all proceeds of policies of insurance which insure
against loss or damage to any
4
<PAGE> 5
property described above and all proceeds from and payments under such policies;
and
(i) any right or option of Grantor to purchase Ground Lessor's interest
pursuant to the Ground Lease or any other document relating to the Land.
TO HAVE AND TO HOLD the Premises and all parts, rights, members and
appurtenances thereof, to the use, benefit and behoof of Lender, its successors
and assigns, to the extent of the Leasehold Estate.
GRANTOR WARRANTS that (i) Grantor is lawfully seized and possessed of the
Leasehold Estate, (ii) Grantor has lawfully seized and possessed the Premises,
(iii) Grantor has the right to convey the Premises, and the Premises are
unencumbered except for Permitted Liens, and (iv) Grantor does warrant and shall
forever defend the title to the Premises unto Lender against the claims of all
Persons whomsoever except for Permitted Liens.
This conveyance is intended to operate and be construed as a deed passing
the title to the Premises to Lender and is made under those provisions of the
existing laws of the State of Georgia relating to deeds to secure debt, and not
as a mortgage. This Deed establishes a perpetual security interest in the
Premises in favor of Lender and is given to secure the payment and performance
of the following indebtedness and obligations (hereinafter collectively referred
to as the "Indebtedness"):
(a) All indebtedness evidenced by that certain Series B Senior
Subordinated Note Due September 30, 2006, issued by Grantor to Lender in
the original principal amount of THREE HUNDRED FIFTY AND NO/100 DOLLARS
($350,000) (hereinafter referred to as the "Note"), final payment of which
Note is due on or before September 30, 2006, together with any and all
renewals, modifications, consolidations, replacements and extensions of
all or any portion of the indebtedness evidenced by the Note; and
(b) Any and all advances made or expenses incurred by Lender to
protect or preserve the Premises or the security title created hereby with
respect to the Premises, or for Taxes or insurance premiums as hereinafter
provided or for performance of any of Grantor's obligations hereunder or
for any other
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purpose provided herein (whether or not the original Grantor remains the
owner of the Premises at the time of such advances); and
(c) All costs of collection of the indebtedness evidenced by the
Note, including, without limitation, reasonable attorneys' fees and court
costs if the Note is collected by or through an attorney at law.
GRANTOR COVENANTS WITH LENDER AS FOLLOWS:
ARTICLE I
As used herein, the following terms shall have the following meanings
ascribed to them:
"Applicable Law" shall mean all state, federal, county, municipal or
other laws, rules, regulations, codes, ordinances or orders applicable to
the Person, conduct, transaction, property or matter in question.
"Business Day" shall mean any other day other than a Saturday,
Sunday or bank holiday under the laws of the State of Georgia.
"Deed" shall have the meaning ascribed to it earlier in this
instrument.
"Environmental Complaint" shall have the meaning ascribed to it
in Section 2.05 hereof.
"Event of Default" shall have the meaning ascribed to it in
Section 3.01 hereof.
"Hazardous Discharge" shall have the meaning ascribed to it in
Section 2.05 hereof.
"Hazardous Material" shall have the meaning ascribed to it in
Section 2.05 hereof.
"Indebtedness" shall have the meaning ascribed to it earlier in
this Deed.
"Note" shall have the meaning ascribed to it earlier in this Deed.
"Permitted Liens" shall mean the liens and other encumbrances
described on Exhibit B attached hereto.
"Person" shall mean any individual, proprietorship, corporation,
partnership, trust,
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limited liability company, governmental unit or other form of entity.
"Premises" shall have the meaning ascribed to it earlier in this
Deed.
"Purchase Agreement" shall mean the Note and Equity Purchase
Agreement of even date herewith by and among Grantor, IGEN, Inc.,
ImmunoGenetics, Inc., Blood Cells, Inc. and Lender, as at any time
amended.
"Taxes" shall mean all state, federal, county, municipal or other
taxes, assessments (general or special), and other governmental charges
levied on or assessed, placed or made against or payable with respect to
any of the Premises, this Deed, the Indebtedness or any interest of Lender
in any of the Premises, this Deed or the Indebtedness, including, without
limitation, all intangibles taxes and intangibles recording taxes (if any)
payable at any time in connection with this Deed or any of the
Indebtedness.
ARTICLE II
2.01. PAYMENTS BY GRANTOR. Grantor shall pay or cause to be paid as and
when the same shall become due and payable (i) the Indebtedness in accordance
with the terms and conditions of the agreements or instruments evidencing the
same; (ii) all Taxes; and (iii) all premiums for insurance required by this Deed
or by any other agreement of Grantor with Lender.
2.02. INSURANCE. Grantor shall keep the Premises continuously insured
against loss or damage by fire, lighting, windstorm and vandalism and against
such other hazards as are presently included in so-called "extended coverage"
and in such amounts as Lender shall from time to time require, for the benefit
of Lender, and Grantor shall maintain public liability insurance covering all
liabilities incident to the ownership, use and occupancy of the Premises.
Grantor agrees that all such property insurance shall be with an insurance
company or companies and on terms acceptable to Lender, with loss, if any,
payable to Lender as its interest may appear, pursuant to a mortgagee clause
which shall be satisfactory to Lender, and that all liability insurance shall
name Lender as an additional insured. Forthwith upon the issuance of any such
policies, Grantor shall deliver the same and all
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renewals thereof to Lender and shall also deliver to Lender receipts for the
premiums paid thereon. Any policies furnished Lender shall become its property
in the event Lender becomes the owner of the Premises by foreclosure or
otherwise. Lender is hereby authorized and empowered, at its option, to adjust
or compromise any loss under any insurance policies on the Premises, and to
collect and receive the proceeds from any such policy or policies. Each
insurance company is hereby authorized and directed to make payment for all such
losses directly to Lender, instead of to Grantor and Lender jointly. In case of
loss under any such policy of insurance, Lender may apply the net proceeds or
any part thereof, at its option, (i) to the payment of the Indebtedness, whether
then due or not, (ii) to the repair or restoration of the Premises, or (iii) for
any other purpose or object for which Lender is entitled to advance funds under
this Deed, all without affecting the lien of this Deed or the Indebtedness.
2.03. OWNERSHIP, USE AND CARE OF PREMISES.
(a) Grantor shall not sell, convey, transfer, mortgage or otherwise
dispose of or encumber any part of the Premises or any interest therein, and,
except for Permitted Liens, Grantor shall keep the Premises free and clear of
all liens.
(b) Grantor shall keep the improvements now or hereafter erected on the
Real Property in good condition and repair, shall not commit or suffer any
waste, shall not do or suffer to be done anything which will increase the risk
of fire or other hazard to the Premises or any part thereof and shall cause the
Premises and Grantor's use thereof to be in compliance with all Applicable Laws.
(c) Grantor shall not remove or demolish nor alter the design or
structural character of any part of the Premises without the written consent of
Lender and shall not seek or consent to any change of zoning of or condition of
use of the Premises.
(d) If the Premises or any part thereof is damaged by fire or any other
cause, Grantor shall give immediate written notice of the same to Lender and
shall promptly restore the Premises to the equivalent of its original condition;
and if a part of the Premises shall be taken through condemnation, Grantor shall
promptly restore,
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repair or alter the remaining property in a manner satisfactory to Lender.
(e) Lender or its representative is hereby authorized to enter upon and
inspect the Premises at any time during normal business hours.
2.04. CONDEMNATION. If all or any part of the Premises shall be damaged or
taken through condemnation (which term when used in this Deed shall include any
damage or taking by any governmental authority and any transfer by private sale
in lieu thereof), either temporarily or permanently, the entire Indebtedness
shall, at the option of Lender, become immediately due and payable. Lender shall
be entitled to all compensation, awards, and other payments or relief thereof
and is hereby authorized, at its option, to commence, appear in and prosecute,
in its own or Grantor's name, any action or proceeding relating to any
condemnation, and to settle or compromise any claim in connection therewith. All
such compensation, awards, damages, claims, rights of action and proceeds and
the right thereto are hereby assigned by Grantor to Lender, who after deducting
therefrom all its expenses, including attorneys' fees, may release any monies so
received by it without affecting the lien of this Deed and may apply the same in
such manner as Lender shall determine, to the reduction of the Indebtedness, and
any balance of such monies then remaining shall be paid to Grantor. Grantor
agrees to execute such further assignment of any compensation, awards, damages,
claims, rights of action and proceeds as Lender may require.
2.05. HAZARDOUS MATERIALS. Grantor shall indemnify Lender and hold Lender
harmless from and against any and all losses, liabilities and expenses of any
and every kind whatsoever paid, incurred or suffered by, or asserted against
Lender, with respect to the presence on or under the Premises, or the leakage or
discharge, of any hazardous, toxic or dangerous substance or material
("Hazardous Material") defined as such in any Applicable Law. If Grantor
receives any notice of (i) discharge or disposal of any Hazardous Material (a
"Hazardous Discharge") affecting Grantor or the Premises or (ii) any complaint,
order, citation or notice with regard to air emissions, water discharges,
surface contaminations, noise emissions or any other environmental, health or
safety matter affecting Grantor or the Premises (an "Environmental Complaint")
from any Person, then Grantor will give, within
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seven (7) Business Days after receipt of such notice, oral and written notice of
same to Lender. Without limitation of Lender's rights under this Deed, Lender
shall have the right, but not the obligation, to enter onto the Real Property or
to take such other actions as it deems necessary or advisable to clean up,
remove, resolve or minimize the impact of, or otherwise deal with, any such
Hazardous Discharge or Environmental Complaint upon its receipt of any notice
from any Person.
2.06. SUBLEASES AFFECTING THE PREMISES. Grantor shall perform all
covenants to be performed by the landlord under any and all Subleases respecting
the Premises or any part thereof and shall not, without the prior written
consent of Lender, cancel, surrender or modify any Sublease which Grantor has
assigned to Lender. Upon demand, Grantor will furnish Lender copies of any
Sublease respecting the Premises or any part thereof.
2.07. EXPENSES. Grantor will pay or reimburse Lender for all attorneys'
fees, costs and expenses incurred by Lender in any action, legal proceeding or
dispute of any kind in which Lender is made a party, or appears as party
plaintiff or defendant, affecting the Indebtedness, this Deed or the interest
created herein, or the Premises, including, but not limited to, the exercise of
the power of sale of this Deed, any condemnation action involving the Premises
or any action to protect the security hereof; and any such amounts paid by
Lender shall be added to the Indebtedness.
2.08. SUBROGATION. Lender shall be subrogated to the claims and liens of
all Persons whose claims or liens are discharged or paid with the proceeds of
any of the Indebtedness.
2.09. PERFORMANCE BY LENDER OF DEFAULTS BY GRANTOR. If Grantor shall
default in the payment of any Tax; in the payment of any utility charge, whether
public or private; in the payment of any insurance premium; in the procurement
of insurance coverage and the delivery of the insurance policies required
hereunder; or in the performance or observance of any other covenant, condition
or term of this Deed, then Lender, at its option, may perform or observe the
same, and all payments made for costs or incurred by Lender in connection
therewith, shall be secured hereby and shall be, without demand, immediately
repaid by Grantor to Lender with interest thereon at the rate of interest in
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effect from time to time under the Note. Lender shall be the sole judge of the
legality, validity and priority of any such Tax, claim and premium; of the
necessity for any such actions; and of the amount necessary to be paid in
satisfaction thereof. Lender is hereby empowered to enter and to authorize
others to enter upon the Premises or any part thereof for the purpose of
performing or observing any such defaulted covenant, condition or term, without
thereby becoming liable to Grantor or any Person in possession holding under
Grantor.
2.10. FURTHER ASSURANCES. At any time, and from time to time, upon request
by Lender, Grantor will make, execute and deliver or cause to be made, executed
and delivered, to Lender, any and all other further instruments, certificates
and other documents as may, in the opinion of Lender, be necessary or desirable
in order to effectuate, complete, perfect or continue and preserve the
obligations of Grantor under the Note and this Deed and the priority of the lien
and security title of this Deed. Upon any failure by Grantor so to do, Lender
may make, execute and record any and all such instruments, certificates and
documents for and in the name of Grantor and Grantor hereby irrevocably appoints
Lender, the agent and attorney-in-fact of Grantor so to do.
2.11. REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING THE LEASEHOLD
ESTATE. With respect to the Ground Lease, Grantor hereby represents, covenants
and warrants that:
(a) The Ground Lease is in full force and effect and unmodified.
(b) All rents (including additional rents and other charges)
reserved in the Ground Lease and all services or other consideration to be
provided or paid under the Ground Lease have been paid or provided to the
extent they were payable or required prior to the date hereof.
(c) There is no existing default under the provisions of the Ground
Lease or in the performance of any of the terms, covenants, conditions or
warranties thereof on the part of the lessee to be observed and performed
beyond any applicable grace period.
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(d) Grantor has not sublet the Leasehold Estate or assigned the
Ground Lease.
(e) Grantor shall also provide all services required by the Ground
Lease, for which provisions have not been made hereinbefore, when and as
the same shall become due and payable, and shall cause the Ground Lessor
under the Ground Lease, to the extent permitted by the Ground Lease, to
pay any portion of said taxes, assessments, rates, charges and impositions
to be borne by the Ground Lessor under the Ground Lease, if any, that
might become liens on the Real Property or the Leasehold Estate when due,
and Grantor shall in every case take, or cause to be taken, a proper
receipt for any such item so paid by Grantor and, upon request of Lender,
Grantor shall deliver, or cause to be delivered to Lender on the first day
of the calendar month following any such payment, evidence, reasonably
acceptable to Lender, of any such payments by Grantor and will observe and
timely perform all of the covenants.
(f) Grantor shall at all times promptly and faithfully keep and
perform, or cause to be kept and performed, all the covenants and
conditions contained in the Ground Lease by the lessee therein to be kept
and performed. Grantor further covenants that it will not do or permit
anything to be done, the doing of which, or refrain from doing anything,
the omission of which, will impair the security of this Deed or will be
grounds for declaring a forfeiture of the Ground Lease. If Grantor shall
fail to comply with all covenants and conditions imposed upon or assumed
by it as tenant under the Ground Lease, without waiving or releasing
Grantor from any of its obligations hereunder, Lender may (but shall not
be obligated to) take any action Lender deems necessary or desirable to
prevent or to cure any default by Grantor in the compliance with any of
Grantor's covenants under the Ground Lease. Upon receipt by Lender from
the Ground Lessor under the Ground Lease of any written notice of default
by tenant thereunder, Lender may rely thereon and take any action, as
aforesaid, to cure such default even though the existence of such default
or the nature thereof be questioned or denied by Grantor or by any party
on behalf of Grantor.
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(g) Grantor hereby expressly grants to Lender (to the extent
permitted under the Ground Lease), and agrees that Lender shall have the
absolute and immediate right (to the extent permitted under the Ground
Lease), to enter in and upon the Premises or any part thereof to such
extent and as often as Lender, in its sole discretion, deems necessary or
desirable, in order to prevent or to cure any such default by Grantor
under the Ground Lease beyond any applicable grace or notice period, if
any. Lender may pay and expend such sums or money as Lender, in its sole
discretion, deems necessary for such purpose, and Grantor hereby agrees to
pay to Lender, promptly after written request, all such sums so paid and
expended by Lender, together with interest thereon from the date of such
expenditure to the date of repayment at the rate of interest determined in
accordance with Section 8.2(c) of the Purchase Agreement (the "Default
Rate"). All sums so paid and expended by Lender, and the interest thereon
shall be added to and be secured by the lien of this Deed.
(h) Grantor also covenants that it will not modify or in any way
alter any material term of the Ground Lease or cancel or surrender the
Ground Lease, or waive, excuse, condone or in any way release or discharge
the lessor thereunder of or from the obligations, covenants, conditions
and agreements by said Ground Lessor to be done and performed; and Grantor
does by these presents expressly release, relinquish and surrender unto
Lender all its right, power and authority to cancel, surrender, amend,
modify or alter in any material way the terms and provisions of the Ground
Lease and any attempt on the part of Grantor to exercise any such right
without the written authority and consent of Lender thereto being first
had and obtained shall constitute a default under the terms hereof and the
entire Indebtedness shall, at the option of Lender, become due and payable
forthwith; however, Grantor shall duly exercise such option to renew the
Ground Lease in the manner provided in the Ground Lease.
(i) An Event of Default under the Purchase Agreement and under this
Deed shall have occurred if Grantor fails (i) to give Lender immediate
notice of any receipt by it of any notice of default from the landlord
under the Ground Lease; (ii) to furnish to
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Lender within fifteen (15) days any and all information which it may
reasonably request concerning the performance by the Grantor of the
covenants of the Ground Lease; (iii) to permit forthwith Lender or its
representative at all reasonable times to make investigation or
examination concerning such performance; or (iv) within the applicable
notice or grace period (if any) under the Ground Lease, to fully perform
and comply with all agreements, covenants, terms and conditions imposed
upon or assumed by it as tenant under the Ground Lease, or do or permit
anything to be done, the doing of which or refrain from doing will impair
the security of this Deed or will be grounds for declaring a forfeiture of
the Ground Lease. Grantor further covenants and agrees that it will
promptly deposit with Lender an original executed copy of the Ground Lease
or a copy certified by the Grantor as true, complete and correct and any
and all documentary evidence received by it showing compliance by Grantor
with the provisions of the Ground Lease and will also promptly deliver to
Lender following receipt thereof by Grantor an exact copy of any notice,
communication, plan, specification or other Deed or document received or
given by it in any way relating to or affecting the Ground Lease or any
part of the Premises which may concern or affect the estate of the
landlord, the Leasehold Estate or the leasehold premises thereby demised
and upon the Grantor's failure so to do, Lender may, at its option,
declare a default hereunder and an Event of Default under the Purchase
Agreement to have occurred.
(j) So long as any of the Indebtedness shall remain unpaid, unless
Lender shall otherwise in writing consent, the Leasehold Estate and the
fee estate covered by the Ground Lease shall not merge but shall always be
kept separate and distinct, notwithstanding the union of said estates
either in the Ground Lessor or in the lessee, or in a third party, by
purchase or otherwise; and Grantor further covenants and agrees that, in
case it shall acquire the fee title, or any other estate, title or
interest in the leasehold premises covered by the Ground Lease, including,
without limitation, pursuant to the purchase option or right of first
refusal, if any, set forth in the Ground Lease, this Deed shall attach to
or cover and be a lien upon such other estate so
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acquired, and such other estate so acquired by Grantor shall be considered
as granted, assigned or conveyed to the Lender and the lien hereof spread
to cover such estate with the same force and effect as though specifically
herein, granted, assigned or conveyed.
(k) In the event of any default by Grantor in the performance of any
of its obligations under the Ground Lease, including, without limitation,
any default in the payment of rent and other charges and impositions made
payable by Grantor thereunder, which default shall continue beyond the
applicable grace period, if any, then, in each and every case, Lender may,
at its option and without notice, cause the default or defaults to be
remedied and otherwise exercise any and all of the rights of Grantor
thereunder in the name of and on behalf of Grantor. Grantor shall, on
demand, reimburse Lender for all advances made and expenses incurred by
Lender in curing any such default (including, without limitation,
reasonable attorneys' fees), together with interest thereon computed at
the Default Rate from the date that an advance is made or expense is
incurred to and including the date the same is paid. Upon receipt by
Lender from Ground Lessor of any written notice of default on the part of
Grantor under the Ground Lease, Lender may rely thereon and take any
action as Lender shall deem necessary or desirable even though the
existence of such default or the nature thereof be questioned or denied by
or on behalf of Grantor.
(l) Grantor expressly agrees that if there shall be filed by or
against Ground Lessor under the Ground Lease any petition, action and/or
proceeding under the Bankruptcy Code, or any other similar federal and/or
state law now or hereafter in effect (collectively hereinafter referred to
as the "Lessor's Bankruptcy"), Grantor shall not elect to treat the Ground
Lease as terminated, canceled and/or surrendered pursuant to applicable
provisions of the Bankruptcy Code including, but not limited to, Section
365(h)(1), without Lender's prior written consent. In the event of the
Lessor's Bankruptcy, Grantor expressly covenants and agrees, intending
that Lender rely thereon, that it shall reaffirm and ratify the legality,
validity, binding effect and enforceability of the Ground Lease to Lender
and Grantor also covenants and agrees that it shall remain in
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possession of the Premises and the leasehold estate created by the
Ground Lease, notwithstanding any rejection thereof by the Landlord
under the Ground Lease and/or any trustee, custodian, receiver or other
similar official.
(m) The rights of Lender hereunder attach to all of Grantor's
rights and remedies now and hereafter arising under or pursuant to the
Bankruptcy Code, including, but not limited to, Grantor's right to
elect to remain in possession of the Premises and the leasehold estate
created by the Ground Lease in the event of the Lessor's Bankruptcy
pursuant to Section 365(h)(1). Any such election to terminate, cancel
and/or surrender the Ground Lease in the event of the Lessor's
Bankruptcy without Lender's prior written consent shall be null and
void.
(n) Grantor hereby unconditionally assigns, transfers, and
sets over to Lender (i) all of Grantor's claims and rights to damages,
and any other remedies in connection therewith arising from any
rejection of the Ground Lease by the Ground Lessor thereunder pursuant
to the Bankruptcy Code in the event of the Lessor's Bankruptcy, and/or
by any trustee, custodian, receiver or other similar official. Lender
shall have the right, but not the obligation, to proceed in its own
name and/or in the name of Grantor in respect of any claim, suit,
action and/or proceeding relating to such rejection of the Ground
Lease, including, but not limited to, the right to file and prosecute,
to the exclusion of Grantor, any and all proofs of claims, complaints,
notices and other documents in any case in respect of the lessor of the
Ground Lease under and pursuant to the Bankruptcy Code, and (ii)
Grantor's right of election to remain in possession of the Premises in
the event of the Lessor's Bankruptcy under and pursuant to Section
365(h)(1) of the Bankruptcy Code. This assignment constitutes a
present, absolute, irrevocable and unconditional assignment of the
foregoing claims, elections, rights and remedies, and shall continue in
full force and effect until the Note and the Indebtedness have been
paid in full and this Deed has been satisfied and discharged. Any
amounts received by Lender as damages arising out of the rejection of
the Ground Lease by the Ground Lessor
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shall be applied in the manner set forth in Article III of this Deed.
(o) Grantor shall give Lender notice of its intention to
exercise each and every option to extend the term of the Ground Lease
or to exercise any purchase option under the Ground Lease at least
twenty (20) but not more than sixty (60) days prior to the expiration
of the time to exercise such option under the terms of the Ground
Lease. If Grantor intends to extend the term of the Ground Lease or to
exercise any purchase option under the Ground Lease, it shall deliver
to Lender, together with the notice of such decision, a copy of the
notice of extension or exercise delivered to the Lessor. If Lender does
not intend to extend the term of the Ground Lease or to exercise any
purchase option under the Ground Lease, Lender may, at its option,
exercise the option in the name and on behalf of Grantor. In any event,
Grantor hereby appoints Lender as its attorney-in-fact to execute and
deliver, for and in the name of Grantor, all instruments and agreements
necessary under the Ground Lease or otherwise to cause any extension of
the term of the Ground Lease or to exercise any purchase option under
the Ground Lease. This power, being coupled with an interest, shall be
irrevocable as long as the Indebtedness secured hereby remains unpaid.
2.12. REPRESENTATIONS, WARRANTIES AND COVENANTS REGARDING
SUBLEASES AND RENTS.
(a) Grantor hereby transfers, assigns and conveys unto Lender
all of Grantor's right, title and interest in and to any Sublease and
all of the Rents, reserving to Grantor a license to collect the Rents
only so long as there is no Event of Default which shall have occurred
and be continuing, said license to be revoked immediately upon the
occurrence of an Event of Default and Lender's demand for the payment
of the Indebtedness. Grantor agrees to execute and deliver such other
instruments as Lender may require to evidence the assignment of the
Subleases and Rents.
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Nothing contained in this Section shall be deemed a consent by Lender
to any Sublease.
(b) Notwithstanding the right to collect the Rents, Grantor
agrees that Lender, and not Grantor, shall be and shall be deemed to be
the creditor of each tenant with respect to assignments for the benefit
of creditors, and bankruptcy, arrangement, reorganization, insolvency,
dissolution or receivership proceedings affecting each such tenant, but
without obligation on the part of Lender, however, to file or make
timely filings of claims in any such proceedings, or otherwise to
pursue a creditor's rights therein. Lender in its sole discretion may
apply any money received by Lender as such creditor in reduction of the
Indebtedness secured by this Deed, whether or not such Indebtedness is
then due and payable.
(c) Lender shall have the right to assign Grantor's right,
title and interest in the Subleases to any subsequent holder of this
Deed, or to any person acquiring title to any of the Premises through
foreclosure or otherwise. After Grantor shall have been barred and
foreclosed of all right, title, interest, and equity of redemption in
the Premises, no assignee of Grantor's interest in the Ground Leases
shall be liable to account to Grantor for the Rents thereafter
accruing.
(d) Grantor agrees to indemnify and hold Lender harmless, and
hereby releases Lender from and against any and all liability, loss, or
damage which Lender may incur under the Subleases or by reason of this
assignment, and from any and all claims and demands whatsoever which
may be asserted against Lender by reason of any alleged obligation or
undertaking to be performed or discharged by Lender under the Ground
Lease, the Subleases or under this Deed. Nothing contained herein shall
be construed to bind Lender or obligate Lender to perform any of the
terms or provisions contained in the Subleases, or otherwise to impose
any obligation on Lender whatsoever. Prior to actual entry and taking
possession of the Premises by Lender, this assignment shall not operate
to make Lender a "mortgagee in possession" or to place any
responsibility for the control, care, management, or repair of the
Premises upon Lender. Should Lender
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incur any liability by reason of actual entry and taking possession by
Lender, or for any other reason or occurrence relating thereto, or if
Lender should sustain loss or damage under the Ground Lease, or the
Subleases, or under or by reason of this assignment, or in the defense
of any claims or demands relating thereto, then, Grantor shall
immediately upon demand reimburse Lender for the amount of such
liability, loss or damage, together with all costs and expenses and
attorneys' fees incurred by Lender in relation thereto, all of the
foregoing to bear interest until paid at the Default Rate, and Lender
may retain possession and collect the Rents and, from time to time,
apply them in or toward satisfaction of or reimbursement for said
liability, loss or damage, without waiving any other rights and
remedies hereunder.
(e) Grantor shall duly perform and discharge each respective
covenant, condition and obligation under the Subleases and agrees not
to cancel, terminate, modify or otherwise vary any provision of any
Subleases without Lender's prior written consent, or to discount any
Rents or collect any Rents for any period of more than one month in
advance. Grantor will give prompt written notice to Lender of any
default under the Subleases known to Grantor, and shall furnish Lender
with complete copies of all notices with respect thereto given or
received by Grantor. If requested by Lender, Grantor will enforce the
Subleases and remedies available to Grantor thereunder in the event of
a default thereunder, and, if Grantor shall fail to so exercise such
remedies upon request, Lender may, at its sole option and without
obligation to do so, and without waiving any Event of Default of
Grantor hereunder with respect thereto, enforce the same at Grantor's
expense.
(f) Grantor shall, at the request of Lender, execute such
further assignments to Lender of all Subleases and Rents, as Lender
shall require.
ARTICLE III
3.01. EVENT OF DEFAULT. Each of the following shall constitute an
"Event of Default" under this Deed:
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(a) Failure by Grantor to pay any of the Indebtedness
evidenced by the Note on the due date thereof (whether due at stated
maturity, on demand, by acceleration or otherwise);
(b) Failure by Grantor to pay any Indebtedness (other than
that portion evidenced by the Note) when due (whether due on demand, at
stated maturity, by acceleration or otherwise); or
(c) The occurrence of an event of default under the Purchase
Agreement; or
(d) Failure by Grantor duly and punctually to observe, perform
or discharge any covenant or duty in this Deed; or
(e) Any claim of priority to this Deed by title, lien or
otherwise is asserted by Grantor, or is asserted and finally
established as valid by any other Person (other than with respect to
Permitted Liens) in any equitable or legal proceeding, whether as a
claim, counterclaim, defense or otherwise.
3.02. ACCELERATION OF MATURITY. Upon or after an Event of Default,
Lender may, at its option, declare all or any portion of the Indebtedness to be
(and the same shall thereupon become) immediately due and payable without notice
or demand, time being of the essence of this Deed; and no omission or delay on
the part of Lender to exercise such option when entitled so to do shall be
considered as a waiver of such right.
3.03. RIGHT OF LENDER TO ENTER AND TAKE POSSESSION.
(a) Upon or after the occurrence of an Event of Default, Grantor, upon
demand of Lender, shall forthwith surrender to Lender the actual possession of
the Premises and if, and to the extent, permitted by Applicable Law, Lender may
enter and take possession of the Premises and may exclude Grantor and Grantor's
agents and employees wholly therefrom.
(b) Upon every such entering and taking of possession, Lender may hold,
store, use, operate, manage, control, and maintain the Premises and conduct the
business thereof, and, from time to time, (i) make all necessary and proper
repairs, replacements, additions, and improvements thereto and thereon and
purchase or acquire additional
20
<PAGE> 21
fixtures, personalty and other property; (ii) insure or keep the Premises
insured; (iii) manage and operate the Premises and exercise all the rights and
powers of Grantor in its name or otherwise, with respect to the same and (iv)
enter into any and all agreements with respect to the exercise by others of any
of the powers herein granted Lender, all as Lender may from time to time
determine to be to its best advantage; and Lender may collect and receive all of
the income, rents, profits, issues and revenues of the Premises, including the
past due as well as those accruing thereafter and, after deducting (aa) all
expenses of taking, holding, managing and operating the Premises (including
compensation for services of all Persons employed for such purposes); (bb) the
cost of all such maintenance, repairs, replacements, additions, improvements,
purchases, and acquisitions; (cc) the cost of such insurance; (dd) such Taxes
prior to the lien of this Deed as Lender may determine to pay; (ee) other proper
charges upon the Premises or any part thereof and (ff) the fees and expenses of
attorneys and agents of Lender, shall apply the remainder of the money so
received by Lender to any balance of the Indebtedness outstanding.
(c) Grantor irrevocably consents that the tenant(s) under the
Subleases, upon demand and notice from Lender to such tenants(s) of an Event of
Default, shall pay all Rents under the Subleases to Lender, without liability of
the tenant(s) for the determination of the actual occurrence of any Event of
Default claimed by Lender. Grantor hereby irrevocably authorizes and directs the
tenant(s), upon receipt of any notice of Lender stating that an Event of Default
has occurred, to pay to Lender the Rents due and to become due under the Leases.
Grantor agrees that the tenant(s) shall have the right to rely upon any such
notices of Lender, and that tenant(s) shall pay such Rents to Lender, without
any obligation and without any right to inquire as to whether an Event of
Default has actually occurred, and notwithstanding any claim of or notice by
Grantor to the contrary. Grantor shall have no claim against tenant(s) for any
Rents paid by such tenant(s) to Lender. Nothing herein contained shall be
construed to obligate Lender to discharge or perform the duties of a lessor to
any tenant or to impose liability upon Lender as the result of any exercise by
Lender of its rights under this Deed, and Lender shall be liable to account only
for the Rents, incomes and profits actually received by Lender.
21
<PAGE> 22
(d) For the purpose of carrying out the provisions of this Section
3.03, Grantor hereby constitutes and appoints Lender the true and lawful
attorney-in-fact of Grantor to do and perform, from time to time, any and all
actions necessary and incidental to such purpose and does, by these presents,
ratify and confirm any and all actions of said attorney-in-fact in the Premises.
3.04. APPOINTMENT OF A RECEIVER.
(a) Upon or after the occurrence of an Event of Default, Lender, upon
application to a court of competent jurisdiction, shall be entitled, without
notice and without regard to the adequacy of any security for the Indebtedness
or the solvency of any party bound for its payment, to the appointment of a
receiver to take possession of and to operate the Premises and to collect the
rents, profits, issues, and revenues thereof.
(b) Grantor will pay to Lender upon demand all expenses, including
receiver's fees, attorneys' fees, costs and agent's compensation, incurred
pursuant to this Section 3.04; and all such expenses shall constitute part of
the Indebtedness and shall be secured by this Deed.
3.05. POWER OF SALE. Upon or after the occurrence of an Event of
Default, Lender, at its option, may sell the Premises or any part of the
Premises at public sale or sales before the door of the courthouse of the county
in which the Premises or any part of the Premises is situated, to the highest
bidder for cash, in order to pay the Indebtedness and accrued interest thereon
and all expenses of the sale and of all proceedings in connection therewith,
including attorneys' fees, if incurred, after advertising the time, place and
terms of sale once a week for four (4) weeks in a newspaper in which sheriff's
sales are advertised in said county. Lender may bid and purchase at such sale.
At any such public sale, Lender may execute and deliver to the purchaser a
conveyance of the Premises or any part of the Premises in fee simple with full
warranties of title and to this end, Grantor hereby constitutes and appoints
Lender the agent and attorney-in-fact of Grantor to make such sale and
conveyance, and thereby to divest Grantor of all right, title or equity that
Grantor may have in and to the Premises and to vest the same in the purchaser or
purchasers at such sale or sales, and all the acts and doings of said agent and
attorney-in-fact are hereby ratified and confirmed and any recitals in said
22
<PAGE> 23
conveyance or conveyances as to facts essential to a valid sale shall be binding
on Grantor. The aforesaid power of sale and agency hereby granted are coupled
with an interest and are irrevocable by death or otherwise, are granted as
cumulative of the other remedies provided by law for collection of the
Indebtedness and shall not be exhausted by one exercise thereof but may be
exercised until full payment of all sums secured hereby. Upon any such public
sale pursuant to the aforementioned power of sale and agency, the proceeds of
said sale shall be applied first to the costs and expenses of such sale and of
all proceedings in connection therewith, including reasonable attorneys' fees,
and the balance shall be applied to the remainder of the Indebtedness. Any
excess shall be paid to Grantor or to such other Person as may be required by
Applicable Law.
3.06. GRANTOR AS TENANT HOLDING OVER. In the event of any such public
sale pursuant to the aforesaid power of sale and agency, Grantor shall be deemed
a tenant holding over and shall forthwith deliver possession to the purchaser or
purchasers at such sale or be summarily dispossessed according to provisions of
law applicable to tenants holding over.
3.07. DISCONTINUANCE OF PROCEEDINGS AND RESTORATION OF THE PARTIES. In
case Lender shall have proceeded to enforce any right of remedy under this Deed
by receiver, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to Lender, then and in every such case Grantor and Lender shall be restored to
their former positions and rights hereunder, and all rights, powers and remedies
of Lender shall continue as if no such proceeding had been taken.
3.08. REMEDIES CUMULATIVE. No right, power or remedy conferred upon or
reserved to Lender by this Deed is intended to be exclusive of any other right,
power or remedy, but each and every such right, power and remedy shall be
cumulative and concurrent and shall be in addition to any other right, power and
remedy given hereunder or now or hereafter existing at law or in equity or by
statute.
3.09. NON-RESIDENTIAL STATUS OF PREMISES. Grantor represents and
warrants to Lender that neither all of the Premises nor any part thereof is to
be used as a dwelling place by Grantor at the time this Deed is entered into
and, accordingly, the notice requirement of O.C.G.A.
23
<PAGE> 24
Sections 44-14-162.2 and 44-14-162.3 shall not be applicable to any
exercise of the power of sale contained in this Deed.
ARTICLE IV
4.01. SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES. Whenever in this Deed
one of the parties hereto is named or referred to, the legal representatives,
successors and assigns of such parties shall be included and all covenants and
agreements contained in this Deed by or on behalf of Grantor or by or on behalf
of Lender shall bind and inure to the benefit of their respective legal
representatives, successors and assigns. Whenever the singular or plural number,
masculine or feminine or neuter gender is used herein, it shall equally include
the other.
4.02. HEADINGS. The headings of the sections, paragraphs and
subdivisions of this Deed are for the convenience of reference only, are not to
be considered a part hereof and shall not limit or otherwise affect any of the
terms hereof.
4.03. SEVERABILITY. If any clause or provisions herein contained
operates or would prospectively operate to invalidate this Deed in whole or in
part, then such clause or provision shall be ineffective only to the extent of
such invalidity, without invalidating the remaining provisions of this Deed.
4.04. NOTICES. All notices, requests and demands to or upon a party
hereto shall be in writing and shall be sent by certified or registered mail,
return receipt requested, personal delivery against receipt or by telecopier or
other facsimile transmission and, unless otherwise expressly provided herein,
shall be deemed to have been validly served, given or delivered when delivered
against receipt or three Business Days after deposit in the U. S. mail, postage
prepaid, or, in the case of facsimile transmission, when received at the office
of the noticed party, in each case addressed as follows:
(a) To Grantor: c/o IGI, Inc.
Wheat Road and Lincoln Avenue
Buena, NJ 08310
Attention: Chairman
24
<PAGE> 25
Telecopier: 609-697-2259
(b) To Lender: American Capital Strategies, Ltd.
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
Attention: Chairman
Telecopier: 301-654-6714
With a copy to: Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attention: Samuel A. Flax, Esq.
Telecopier: 202-942-5999
Either party may specify a different address for receiving notices,
requests, demands, tenders and other communications hereunder by giving written
notice of the new address to the other party in the manner herein provided.
4.05. NO IMPLIED WAIVERS. No delay or omission by Lender to exercise
any right, power or remedy accruing upon any breach or Event of Default shall
exhaust or impair any such right, power or remedy or shall be construed to be a
waiver of any such breach or Event of Default, or acquiescence therein, and
every right, power and remedy given by this Deed to Lender may be exercised from
time to time and as often as may be deemed expedient by Lender. No consent or
waiver, express or implied, by Lender to or of any breach or Event of Default by
Grantor hereunder shall be deemed or construed to be a consent or waiver to or
of any other breach or Event of Default in the performance of the same or any
other obligations of Grantor hereunder.
4.06. GOVERNING LAW. This Deed shall be governed in all respects by
and construed in accordance with the internal laws of the State of Georgia.
25
<PAGE> 26
4.07. WAIVER OF CERTAIN RIGHTS. GRANTOR HEREBY WAIVES ANY RIGHT GRANTOR
MAY HAVE UNDER THE CONSTITUTION OF THE STATE OF GEORGIA OR THE CONSTITUTION OF
THE UNITED STATES OF AMERICA TO NOTICE OR TO A JUDICIAL HEARING PRIOR TO THE
EXERCISE OF ANY RIGHT OR REMEDY PROVIDED TO LENDER BY THIS DEED, AND GRANTOR
WAIVES GRANTOR'S RIGHTS, IF ANY, TO SET ASIDE OR INVALIDATE ANY SALE UNDER POWER
DULY CONSUMMATED IN ACCORDANCE WITH THE PROVISIONS OF THIS DEED ON THE GROUND
(IF SUCH BE THE CASE) THAT THE SALE WAS CONSUMMATED WITHOUT PRIOR NOTICE OR
JUDICIAL HEARING. THE WAIVERS MADE BY GRANTOR IN THIS SECTION AND ELSEWHERE IN
THIS DEED HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND KNOWINGLY BY GRANTOR
AFTER GRANTOR HAS READ AND UNDERSTOOD THIS DEED AND HAS BEEN AFFORDED AN
OPPORTUNITY TO BE INFORMED BY COUNSEL OF GRANTOR'S POSSIBLE ALTERNATIVE RIGHTS,
AND BY EXECUTING THIS DEED GRANTOR ACKNOWLEDGES SO MAKING SUCH WAIVERS.
- -----------------
Initial
26
<PAGE> 27
IN WITNESS WHEREOF, Grantor has caused this Deed to be signed,
sealed and delivered by a duly authorized officer on the day and year first
written above.
Signed, sealed and delivered IGI INC.
in the presence of: ("Grantor")
/s/ ROCCO J. TEDESCO
- ---------------------------- By: /s/ MANFRED HANUSCHEK
Unofficial Witness ----------------------------
Title: CFO
/s/ CAROLYN ELLIOTT ----------------------------
- ----------------------------
Notary Public Attest: /s/ ROBERT E. McDANIEL
----------------------------
Secretary
My Commission Expires: [CORPORATE SEAL]
1/8/00
- ----------------------------
[NOTARIAL SEAL]
27
<PAGE> 28
EXHIBIT A
LEGAL DESCRIPTION
HALL COUNTY, GEORGIA
28
<PAGE> 29
EXHIBIT 10.48
DESCRIPTION
All that lot, tract or parcel or land, and all improvements thereon, lying,
situate and being in Gainesvile Airport Industrial Park in the City of
Gainesville, Hall County, Georgia and being a part of Lot A-10 and part of Lot
A-11 as shown by a plat entitled "Survey for airport Industrial Park", dated
June 6, 1975, prepared by McGill-Grogan and Associates, Georgia Registered Land
Surveyor, and more particularly described as follows:
BEGINNING at a point N71-202 291.22 feet from USGS Marker BM S-185-Latitude 34
degrees - 16. 16 - Longitude 83 degrees - 48' - 52.5; thence N17-22E 304.08 feet
to an iron pin on the south right-of-way line of Airport Parkway; thence along
said right-of-way of Airport Parkway S72-32E 200.00 feet to an iron pin; thence
S17-21W 303.78 feet to an iron pin, this pin being 300 feet from the center line
of Runway 29; thence N72-38W 200.00 feet to an iron pin and the point of
beginning.
<PAGE> 30
EXHIBIT B
PERMITTED LIENS
1. Ad valorem taxes for 1999 and subsequent years which are a lien but
which are not yet due and payable.
2. Georgia Leasehold Deed to Secure Debt made on October 29, 1999 by
Mortgagor in favor of Fleet Capital Corporation.
29
<PAGE> 1
IGI, INC.
to
AMERICAN CAPITAL STRATEGIES, LTD.
EXHIBIT *(10.49)
OPEN-ENDED MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
Dated: October 29, 1999
Location: County of Cumberland
State of New Jersey
RECORD AND RETURN TO:
Arnold & Porter
399 Park Avenue
New York, New York 10022-4690
Attention: Michael W. Oshima, Esquire
THIS OPEN-ENDED MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS
AND THE OBLIGATIONS SECURED HEREBY ARE
<PAGE> 2
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER 29,
1999, AMONG FLEET CAPITAL CORPORATION, AMERICAN CAPITAL STRATEGIES, LTD., IGI,
INC., IGEN, INC., IMMUNOGENETICS, INC., AND BLOOD CELLS, INC., TO THE
INDEBTEDNESS AND OTHER LIABILITIES OWED BY IGI, INC., IGEN, INC.,
IMMUNOGENETICS, INC., AND BLOOD CELLS, INC. UNDER AND PURSUANT TO THE LOAN AND
SECURITY AGREEMENT DATED AS OF OCTOBER 29, 1999, AND EACH RELATED "LOAN
DOCUMENT" (AS DEFINED THEREIN), AND EACH HOLDER OF THE NOTE SECURED HEREBY, BY
ITS ACCEPTANCE THEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF
THE SUBORDINATION AGREEMENT.
OPEN-ENDED MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
THIS OPEN-ENDED MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES
AND RENTS made the 29th day of October, 1999, between IGI, INC. a
Delaware corporation, having a mailing address at Wheat Road and
Lincoln Avenue, Buena, New Jersey 03104 (the "MORTGAGOR"), and AMERICAN
CAPITAL STRATEGIES, LTD., a Delaware corporation, having an office at 2
Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814 (the
"MORTGAGEE"),
W I T N E S S E T H:
THIS MORTGAGE SECURES FUTURE ADVANCES AND ALL FUTURE OBLIGATIONS
WHATSOEVER OF MORTGAGOR TO MORTGAGEE.
Terms not otherwise defined herein shall have the meanings ascribed
thereto in the Note and Equity Purchase Agreement of even date herewith by and
among Mortgagor, IGEN, Inc., ImmunoGenetics, Inc., Blood Cells, Inc., and
Mortgagee (as the same may be amended, supplemented or modified from time to
time, the "PURCHASE AGREEMENT").
Whereas the Mortgagor is the owner of a fee estate in the premises
described in Exhibit A attached hereto (the "PREMISES");
NOW THEREFORE, to secure the payment of all indebtedness incurred under
the Purchase Agreement, the Mortgagor's Series A Senior Subordinated Notes Due
September 30, 2006 in the original principal amount of $6,650,000 and the
Mortgagor's Series B Senior Subordinated Notes Due September 30, 2006 in the
original principal amount of $350,000 issued pursuant thereto (collectively, as
the same may be amended, supplemented or modified from time to time, the "NOTE")
in the initial aggregate principal amount of $7,000,000, lawful money of the
United States of America, to be paid with interest (said principal indebtedness,
interest and all other sums which may or shall at any time be owing being
hereinafter collectively referred to as the "DEBT"), all other amounts which
Mortgagor and Mortgagee may agree are to be secured hereby, with interest
thereon at the rate or rates agreed upon; all other existing or future
obligations of Mortgagor, its successors or assigns, to Mortgagee, whether oral
or written, secured or unsecured, direct or indirect, primary or secondary,
absolute or contingent, joint or several, which are now due or to become due,
and regardless of their nature, together with any such future obligations; the
Mortgagor has mortgaged, given, granted, bargained, sold, aliened, enfeoffed,
conveyed, confirmed and assigned, and by these presents does mortgage, give,
grant, bargain, sell, alien, enfeoff,
<PAGE> 3
convey, confirm and assign unto the Mortgagee forever all right, title and
interest of the Mortgagor now owned, or hereafter acquired, in and to the
following property, rights and interest (such property, rights and interests
being hereinafter collectively referred to as the "MORTGAGED PROPERTY"):
(a)The Premises;
(b)all buildings and improvements now or hereafter located on the Premises
(the "IMPROVEMENTS");
(c)all of the estate, right, title, claim or demand of any nature
whatsoever of the Mortgagor, either in law or in equity, in possession or
expectancy, in and to the Mortgaged Property or any part thereof;
(d)all easements, rights-of-way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water rights and powers, and all
estates, rights, titles, interests, privileges, liberties, tenements,
hereditaments, and appurtenances of any nature whatsoever, in any way belonging,
relating or pertaining to the Mortgaged Property (including, without limitation,
any and all development rights, air rights or similar or comparable rights of
any nature whatsoever now or hereafter appurtenant to the Premises or now or
hereafter transferred to the Premises) and all land lying in the bed of any
street, road or avenue, opened or proposed, in front of or adjoining the
Premises to the center line thereof;
(e)except as provided in the Purchase Agreement, all machinery, apparatus,
equipment, fittings, fixtures and other property of every kind and nature
whatsoever owned by the Mortgagor, or in which the Mortgagor has or shall have
an interest, now or hereafter located upon the Mortgaged Property, or
appurtenances thereto, and usable in connection with the present or future
operation and occupancy of the Mortgaged Property and all building equipment,
materials and supplies of any nature whatsoever owned by the Mortgagor, or in
which the Mortgagor has or shall have an interest, now or hereafter located upon
the Mortgaged Property (collectively, the "EQUIPMENT"), and the right, title and
interest of the Mortgagor in and to any of the Equipment which may be subject to
any security agreements (as defined in the Uniform Commercial Code of the State
in which the Premises are located), superior in lien to lien of this Mortgage;
(f)all awards or payments, including interest thereon, and the right to
receive the same, which may be made with respect to the Mortgaged Property,
whether from the exercise of the right of eminent domain (including any transfer
made in lieu of the exercise of said right), or for any other injury to or
decrease in the value of the Mortgaged Property;
(g)all leases and other agreements affecting the use or occupancy of the
Mortgaged Property now or hereafter entered into (the "LEASES") and the right to
receive and apply the rents, issues and profits of the Mortgaged Property (the
"RENTS") to the payment of the Debt;
(h)all proceeds of and any unearned premiums on any insurance policies
covering the Mortgaged Property, including, without limitation, the right to
receive and apply the proceeds of any insurance, judgments, or settlements made
in lieu thereof, for damage to the Mortgaged Property; and
(i)the right, in the name and on behalf of the Mortgagor, to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to commence any action or proceeding to protect the interest of the
Mortgagee in the Mortgaged Property.
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the proper use and benefit of the Mortgagee, and the successors and
assigns of the Mortgagee, forever.
<PAGE> 4
AND the Mortgagor covenants and agrees with and represents and warrants to
the Mortgagee as follows:
1. Payment of Debt. The Mortgagor will pay the Debt at the time and in the
manner provided for its payment in the Note.
2. Warranty of Title. Subject only to those exceptions to title
specifically set forth in the title policy issued or to be issued by Chicago
Title Insurance Company, commitment No. BT-9951, to the Mortgagee and insuring
the lien of this Mortgage, the Mortgagor warrants the title to the Premises, the
Improvements, the Equipment and the balance of the Mortgaged Property. the
Mortgagor also represents and warrants that (i) the Mortgagor is now, and after
giving effect to this Mortgage, will be in a solvent condition, (ii) the
execution and delivery of this Mortgage by the Mortgagor does not constitute a
"fraudulent conveyance" within the meaning of Title 11 of the United States Code
as now constituted or under any other applicable statute, and (iii) no
bankruptcy or insolvency proceedings are pending or contemplated by or against
the Mortgagor.
3. Insurance. The Mortgagor shall maintain insurance as required by the
Purchase Agreement, the proceeds of which are to be paid to the Mortgagee for
application as provided by the Purchase Agreement.
4. Payment of Taxes, etc. The Mortgagor shall pay all taxes, assessments,
water rates, sewer rents and other charges, including vault charges and license
fees for the use of vaults, chutes and similar areas adjoining the Premises, now
or hereafter levied or assessed against the Mortgaged Property (the "TAXES")
prior to the date upon which any fine, penalty, interest or cost may be added
thereto or imposed by law for the nonpayment thereof. The Mortgagor shall
deliver to the Mortgagee, upon request, receipted bills, canceled checks and
other evidence satisfactory to the Mortgagee evidencing that the payment of all
taxes is current.
5. Escrow Fund. If an Event of Default is outstanding, the Mortgagor will,
at the option of the Mortgagee, pay to the Mortgagee on the first day of each
calendar month one-twelfth of an amount (the "ESCROW FUND") which would be
sufficient to pay the Taxes payable, or estimated by the Mortgagee to be
payable, during the ensuing twelve (12) months. The Mortgagee will apply the
Escrow Fund to the payment of Taxes which are required to be paid by the
Mortgagor pursuant to the provisions of this Mortgage. If the amount of the
Escrow Fund shall exceed the amount of the Taxes payable by the Mortgagor
pursuant to the provisions of this Mortgage, the Mortgagee shall, in its
discretion, (a) return any excess to the Mortgagor, or (b) credit such excess
against future payments to be made to the Escrow Fund or (c) credit such excess
to the Debt. In allocating such excess, the Mortgagee may deal with the person
shown on the records of the Mortgagee to be the owner of the Mortgaged Property.
If the Escrow Fund is not sufficient to pay the Taxes, as the same become
payable, the Mortgagor shall pay to the Mortgagee, upon request, an amount which
the Mortgagee shall estimate as sufficient to make up the deficiency. Until
expended or applied as above provided, any amounts in the Escrow Fund may be
commingled with the general funds of the Mortgagee and shall constitute
additional security for the Debt and shall not bear interest.
6. Condemnation. Notwithstanding any taking by any public or quasi-public
authority through eminent domain or otherwise, the Mortgagor shall continue to
pay the Debt at the time and in the manner provided for its payment in the Note
and this Mortgage and the Debt shall not be reduced until any award or payment
therefor shall have been actually received and applied by the Mortgagee to the
discharge of the Debt. The Mortgagee shall have the option to apply the entire
amount of any such award or payment to the discharge of the Debt whether or not
then due and payable in such order, priority and proportions as the Mortgagee in
its discretion shall deem proper. If the Mortgaged Property is sold, through
foreclosure or otherwise, prior to the receipt by the Mortgagee of such award or
payment, the Mortgagee shall have the right, whether or not a deficiency
judgment
<PAGE> 5
on the Note shall have been sought, recovered or denied, to receive such award
or payment, or a portion thereof sufficient to pay the Debt, whichever is less.
The Mortgagor shall file and prosecute its claim or claims for any such award or
payment in good faith and with due diligence and cause the same to be collected
and paid over to the Mortgagee. The Mortgagor hereby irrevocably authorizes and
empowers the Mortgagee, in the name of the Mortgagor or otherwise, to collect
and receipt for any such award or payment and to file and prosecute such claim
or claims. Although it is hereby expressly agreed that the same shall not be
necessary in any event, the Mortgagor shall, upon demand of the Mortgagee, make,
execute and deliver any and all assignments and other instruments sufficient for
the purpose of assigning any such award or payment to the Mortgagee, free and
clear of any encumbrances of any kind or nature whatsoever.
7. Leases and Rents. Subject to the terms of this paragraph, the Mortgagee
waives the right to enter the Mortgaged Property for the purpose of collecting
the Rents, and grants the Mortgagor the right to collect the Rents. The
Mortgagor shall hold the Rents, or an amount sufficient to discharge all current
sums due on the Debt, in trust for use in payment of the Debt. The right of the
Mortgagor to collect the Rents may be revoked by the Mortgagee upon an Event of
Default by giving notice of such revocation to the Mortgagor. Following such
notice the Mortgagee may retain and apply the Rents toward payment of the Debt
in such order, priority and proportions as the Mortgagee, in its discretion,
shall deem proper, or to the operation, maintenance and repair of the Mortgaged
Property, and irrespective of whether the Mortgagee shall have commenced a
foreclosure of this Mortgage or shall have applied or arranged for the
appointment of a receiver. The Mortgagor shall not, without the consent of the
Mortgagee, make, or suffer to be made, any Leases or modify or cancel any Leases
or accept prepayments of installments of the Rents for a period of more than one
(1) month in advance or further assign the whole or any part of the Rents. The
Mortgagor shall (a) fulfill or perform each and every provision of the Leases on
the part of the Mortgagor to be fulfilled or performed, (b) promptly send copies
of all notices of default which the Mortgagor shall send or receive under the
Leases to the Mortgagee, and (c) enforce, short of termination of the Leases,
the performance or observance of the provisions thereof by the tenants
thereunder.
8. Maintenance of the Mortgaged Property. The Mortgagor shall cause the
Mortgaged Property to be maintained in good condition and repair and will not
commit or suffer to be committed any waste of the Mortgaged Property. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment), without the consent of
the Mortgagee. The Mortgagor shall promptly comply with all existing and future
governmental laws, orders, ordinances, rules and regulations affecting the
Mortgaged Property, or any portion thereof or the use thereof. The Mortgagor
shall promptly repair, replace or rebuild any part of the Mortgaged Property
which may be damaged or destroyed by fire or other property hazard or casualty
(including any fire or other property hazard or casualty for which insurance was
not obtained or obtainable) or which may be affected by any taking by any public
or quasi-public authority through eminent domain or otherwise, and shall
complete and pay for, within a reasonable time, any structure at any time in the
process of construction or repair on the Premises. The Mortgagor will not,
without obtaining the prior consent of the Mortgagee, initiate, join in or
consent to any private restrictive covenant, zoning ordinance, or other public
or private restrictions, limiting or affecting the uses which may be made of the
Mortgaged Property or any part thereof.
9. Environmental Provisions. For the purposes of this paragraph the
following terms shall have the following meanings: (i) the term "HAZARDOUS
MATERIAL" shall mean any material or substance including petroleum products
that, whether by its nature or use, is subject to regulation under any
Environmental Requirement, (ii) the term "ENVIRONMENTAL REQUIREMENTS" shall
collectively mean the Spill Compensation and Control Act, N.J.S.A. 58:11-23.11,
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
<PAGE> 6
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the Clean Air Act (42
U.S.C. Section 7401 et seq.) and the Federal Water Pollution Control Act (33
U.S.C. Section 1251 et seq.), all as presently in effect and as the same may
hereafter be amended, any regulation pursuant thereto, or any other present or
future law, ordinance, rule, regulation, order or directive addressing
environmental, health or safety issues of or by any Governmental Authority,
(iii) the term "GOVERNMENTAL AUTHORITY" shall mean the Federal government, or
any state or other political subdivision thereof, or any agency, court or body
of the Federal government, any state or other political subdivision thereof,
exercising executive, legislative, judicial, regulatory or administrative
functions, and (iv) the term "DILIGENT INQUIRY" shall mean a level of inquiry at
least equal to an environmental site assessment of the Mortgaged Property
conducted in accordance with the Mortgagee's environmental policies and
procedures. The Mortgagor hereby represents and warrants to the Mortgagee that
to the best of the Mortgagor's knowledge after diligent inquiry (i) except for
Hazardous Material used in the ordinary course of Mortgagor's business in
compliance with all Environmental Requirements, no Hazardous Material has been
or is currently located at, in, on, under or about the Mortgaged Property in a
manner which violates any Environmental Requirement, or which requires cleanup
or corrective action of any kind under any Environmental Requirement, (ii) no
releasing, emitting, discharging, leaching, dumping or disposing of any
Hazardous Material from the Mortgaged Property onto or into any other property
or from any other property onto or into the Mortgaged Property has occurred or
is occurring in violation of any Environmental Requirement, (iii) no notice of
violation, lien, complaint, suit, order or other notice with respect to the
environmental condition of the Mortgaged Property is outstanding, nor has any
such notice been issued which has not been fully satisfied and complied with in
a timely fashion so as to bring the Mortgaged Property into full compliance with
all Environmental Requirements, (iv) no lien has been attached to any revenues
of, or any real or personal property owned by, the Mortgagor and located in the
State of New Jersey under any Environmental Requirement, (v) no Hazardous
Material is currently located at, on, in, under or about any real property owned
or occupied by the Mortgagor and located in the State of New Jersey, in a manner
which violates any Environmental Requirement or which requires cleanup or
corrective action of any kind under any Environmental Requirement, (vi)
Mortgagor has, and will continue to have, all necessary federal, state and local
licenses, certificates, permits and approvals relating to its facilities,
business, premises and equipment at the Mortgaged Property and is in compliance
with all applicable consent orders, judgments, injunctions and Environmental
Requirements, and (vii) all closures, terminations and transfers of operations,
as defined by the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et
seq. and the regulations thereunder ("ISRA"), on or relating to the Mortgaged
Property since December 31, 1983 have been completed only after full compliance
with ISRA, to the extent applicable. The Mortgagor shall comply, and shall cause
all tenants or other occupants of the Mortgaged Property to comply, in all
respects with all Environmental Requirements, and will not generate, store,
handle, process, dispose of or otherwise use, and will not permit any tenant or
other occupant of the Mortgaged Property to generate, store, handle, process,
dispose of or otherwise use, Hazardous Materials at, in, on, under or about the
Mortgaged Property in a manner that could lead or potentially lead to the
imposition on the Mortgagor, the Mortgagee or the Mortgaged Property of any
liability or lien of any nature whatsoever under any Environmental Requirement.
All closures, terminations and transfers of operations, as defined by ISRA, on
or relating to the Mortgaged Property during the term of this Mortgage, shall be
completed only after full compliance with ISRA, to the extent applicable, by the
Mortgagor and all tenants or other occupants of the Mortgaged Property to the
extent Mortgagor believes that ISRA is not applicable to any closures,
terminations or transfers of operations at the Mortgaged Property during the
term of this Mortgage, Mortgagor shall obtain a Letter of Non-Applicability as
provided for in ISRA. The Mortgagor shall notify the Mortgagee promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Mortgaged Property which is required to be reported to a
Governmental Authority under any Environmental Requirement, will promptly
forward to the Mortgagee copies of any notices received by the Mortgagor
relating to alleged violations of any Environmental Requirement and will
promptly pay when due any fine or assessment against the Mortgagee, the
Mortgagor or the Mortgaged
<PAGE> 7
Property relating to any Environmental Requirement. If at any time it is
determined that the past, present or future operation or use of the Mortgaged
Property violates any applicable Environmental Requirement or that there are
Hazardous Materials located at, in, on, under or about the Mortgaged Property
which, under any Environmental Requirement, require special handling in
collection, storage, treatment or disposal, or any other form of cleanup or
corrective action, the Mortgagor shall, within thirty (30) days after receipt of
notice thereof from any Governmental Authority or from the Mortgagee, take, at
its sole cost and expense, such actions as may be necessary to fully comply in
all respects with all Environmental Requirements, provided, however, that if
such compliance cannot reasonably be completed within such thirty (30) day
period, the Mortgagor shall commence such necessary action within such thirty
(30) day period and shall thereafter diligently and expeditiously proceed to
fully comply in all respects and in a timely fashion with all Environmental
Requirements. If the Mortgagor fails to timely take, or to diligently and
expeditiously proceed to complete in a timely fashion, any such action, the
Mortgagee may, in its sole and absolute discretion, make advances or payments
towards the performance or satisfaction of the same, but shall in no event be
under any obligation to do so. All sums so advanced or paid by the Mortgagee
(including, without limitation, counsel and consultant fees and expenses,
investigation and laboratory fees and expenses, and fines or other penalty
payments) and all sums advanced or paid in connection with any judicial or
administrative investigation or proceeding relating thereto, will immediately,
upon demand, become due and payable from the Mortgagor and shall bear interest
at the rate of interest determined in accordance with Section 8.2(c) of the
Purchase Agreement (the "DEFAULT RATE") from the date any such sums are so
advanced or paid by the Mortgagee until the date any such sums are repaid by the
Mortgagor to the Mortgagee. The Mortgagor will execute and deliver, promptly
upon request, such instruments as the Mortgagee may deem useful or necessary to
permit the Mortgagee to take any such action, and such additional notes and
mortgages, as the Mortgagee may require to secure all sums so advanced or paid
by the Mortgagee. If a lien is filed against the Mortgaged Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of the Mortgagor or for which the Mortgagor is responsible,
resulting in the releasing, spilling, leaking, leaching, pumping, emitting,
pouring, emptying or dumping of any Hazardous Material into the waters or onto
land located within or without the State where the Mortgaged Property is
located, then the Mortgagor will, within ten (10) days from the date that the
Mortgagor is first given notice that such lien has been placed against the
Mortgaged Property (or within such shorter period of time as may be specified by
the Mortgagee if such Governmental Authority has commenced steps to cause the
Mortgaged Property to be sold pursuant to such lien) either (a) pay the claim
and remove the lien, or (b) furnish a cash deposit, bond, or such other security
with respect thereto as is satisfactory in all respects to the Mortgagee and is
sufficient to effect a complete discharge of such lien on the Mortgaged
Property. As a condition precedent to any action by Mortgagor, whether in equity
or at law, to seek to rescind its interest in the Mortgaged Property, including,
without limitation, any statutory rights of rescission under either N.J.S.A.
13:1K-13(b) or N.J.S.A. 13:18A-22(c), Mortgagor shall notify Mortgagee and
provide replacement collateral which in Mortgagee's sole discretion is
equivalent to the Mortgaged Premises. The Mortgagee may, at its option, if the
Mortgagee reasonably believes that a Hazardous Material or other environmental
condition violates or threatens to violate any Environmental Requirement, cause
an environmental audit of the Mortgaged Property or portions thereof to be
conducted to confirm the Mortgagor's compliance with the provisions of this
paragraph, and the Mortgagor shall cooperate in all reasonable ways with the
Mortgagee in connection with any such audit and shall pay all costs and expenses
incurred in connection therewith. The Mortgagor will defend, indemnify, and hold
harmless the Mortgagee, its employees, agents, officers, and directors, from and
against any and all claims, demands, penalties, causes of action, fines,
liabilities, settlements, damages, costs, or expenses of whatever kind or
nature, known or unknown, foreseen or unforeseen, contingent or otherwise
(including, without limitation, counsel and consultant fees and expenses,
(including, without limitation, counsel and consultant fees and expenses,
investigation and laboratory fees and expenses, court costs, and litigation
expenses) arising out of, in any way related to, (i) any breach by the Mortgagor
of any of the
<PAGE> 8
provisions of this paragraph, (ii) the presence, disposal, spillage, discharge,
emission, leakage, release, or threatened release of any Hazardous Material
which is at, in, on, under, about, from or affecting the Mortgaged Property,
including, without limitation, any damage or injury resulting from any such
Hazardous Material to or affecting the Mortgaged Property or the soil, water,
air, vegetation, buildings, personal property, persons or animals located on the
mortgaged Property or on any other property or otherwise, (iii) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to any such Hazardous Material, (iv) any lawsuit brought or
threatened, settlement reached, or order or directive of or by any Governmental
Authority relating to such Hazardous Material, or (v) any violation of any
Environmental Requirement or any policy or requirement of the Mortgagee
hereunder. This indemnification shall, notwithstanding any exculpatory or other
provision of any nature whatsoever to the contrary set forth in the Note, this
Mortgage or any other document or instrument now or hereafter executed and
delivered in connection with the loan evidenced by the Note and secured by this
Mortgage, constitute the personal recourse undertakings, obligations and
liabilities of the Mortgagor. If this Mortgage is foreclosed or the Mortgagor
tenders a deed or assignment in lieu of foreclosure, the Mortgagor shall deliver
the Mortgaged Property to the purchaser at foreclosure or to the Mortgagee, its
nominee, or wholly owned subsidiary, as the case may be, in a condition that
complies in all respects with all Environmental Requirements. The obligations
and liabilities of the Mortgagor under this paragraph shall survive and continue
in full force and effect and shall not be terminated, discharged or released, in
whole or in part, irrespective of whether the Debt has been paid in full and
irrespective of any foreclosure of this Mortgage or acceptance by the Mortgagee,
its nominee or wholly owned subsidiary of a deed or assignment in lieu of
foreclosure and irrespective of any other fact or circumstance of any nature
whatsoever.
10.Transfer or Encumbrance of the Mortgaged Property. Except for Permitted
Liens, no part of the Mortgaged Property nor any interest of any nature
whatsoever therein shall in any manner be further encumbered, sold, transferred
or conveyed, or permitted to be further encumbered, sold, transferred, assigned
or conveyed without the prior consent of the Mortgagee, which consent in any and
all circumstances may be withheld in the sole and absolute discretion of the
Mortgagee. The provisions of the foregoing sentence of this paragraph shall
apply to each and every such further encumbrance, sale, transfer, assignment or
conveyance, regardless of whether or not the Mortgagee has consented to, or
waived by its action or inaction its rights hereunder with respect to, any such
previous further encumbrance, sale, transfer, assignment or conveyance, and
irrespective of whether such further encumbrance, sale, transfer, assignment or
conveyance is voluntary, by reason of operation of law or is otherwise made.
11.Notice. Any notice, request, demand, statement, authorization, approval
or consent made hereunder shall be in writing and shall be hand delivered or
sent by Federal Express, or other reputable courier service, or by postage
pre-paid registered or certified mail, return receipt requested, and shall be
deemed given (i) when received at the following addresses if hand delivered or
sent by Federal Express, or other reputable courier service, and (ii) three (3)
business days after being postmarked and addressed as follows if sent by
registered or certified mail, return receipt requested:
If to the Mortgagor: IGI, Inc.
Wheat Road & Lincoln Avenue
Buena, New Jersey 08310
Attn: Paul Woitach, President
Telecopy No.: 609-697-1001
If to the Mortgagee: American Capital Strategies, Ltd.
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
<PAGE> 9
Attn: Chairman
Telecopy No.: 301-654-6714
With a copy to: Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attn.: Samuel A. Flax, Esq.
Telecopy No.: 202-942-5999
Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.
12.Sale of Mortgaged Property. If this Mortgage is foreclosed, the
Mortgaged Property, or any interest therein, may, at the discretion of the
Mortgagee, be sold in one or more parcels or in several interests or portions
and in any order or manner.
13.Changes in Laws Regarding Taxation. In the event of the passage after
the date of this Mortgage of any law of the State in which the Premises are
located deducting from the value of real property for the purpose of taxation
any lien or encumbrance thereon or changing in any way the laws for the taxation
of mortgages or debts secured by mortgages for state or local purposes or the
manner of the collection of any such taxes, and imposing a tax, either directly
or indirectly, on this Mortgage, the Note or the Debt, the Mortgagor shall, if
permitted by law, pay any tax imposed as a result of any such law within the
statutory period or within fifteen (15) days after demand by the Mortgagee,
whichever is less.
14.No Credits on Account of the Debt. The Mortgagor will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes assessed against the Mortgaged Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Mortgaged Property, or any part thereof, by reason of this Mortgage or the
Debt.
15.Other Security for the Debt. The Mortgagor shall observe and perform
all of the terms, covenants and provisions contained in the Note and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Debt, in whole or in part, or otherwise executed and
delivered in connection with the Note, this Mortgage or the loan evidenced and
secured thereby.
16.Documentary Stamps. If at any time the United States of America, any
state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Note or this Mortgage, the
Mortgagor will pay for the same, with interest and penalties thereon, if any.
17.Right of Entry. The Mortgagee and its agents shall have the right to
enter and inspect the Mortgaged Property at all reasonable times upon reasonable
prior notice.
18.Performance of Other Agreements. The Mortgagor shall observe and
perform each and every term to be observed or performed by the Mortgagor
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Mortgaged Property.
19.Events of Defaults. The Debt shall become due at the option of the
Mortgagee upon the occurrence of any one or more of the following events
(collectively, "EVENTS OF DEFAULT"):
<PAGE> 10
(a) the occurrence of an Event of Default under the Purchase Agreement;
(b) if any representation or warranty in this Mortgage is false or
incorrect in any material respect or the Mortgagor fails to perform or fulfill
any covenant, condition or undertaking continued in this Mortgage; or
(c) if the Mortgaged Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice of
intention to file mechanic's or materialman's lien, mechanic's or materialman's
lien or other lien of any nature whatsoever and the same shall not either be
discharged of record or in the alternative insured over to the satisfaction of
the Mortgagee by the title company insuring the lien of this Mortgage within a
period of ten (10) days after the same is filed or recorded, and irrespective of
whether the same is superior or subordinate in lien or other priority to the
lien of this Mortgage and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbered on the Mortgaged Property or is only a
matter of record or notice.
To the extent any of the above provisions conflict with the Purchase Agreement,
the terms of the Purchase Agreement shall control. Upon the occurrence of any
Event of Default, the Mortgagee may commence an action to foreclose this
Mortgage and/or exercise any and all other rights contained in this Mortgage or
otherwise available at law or in equity to enforce its rights.
20.Right to Cure Defaults. If default in the performance of any of the
covenants of the Mortgagor herein occurs, the Mortgagee may, at its discretion,
remedy the same and for such purpose shall have the right to enter upon the
Mortgaged Property or any portion thereof without thereby becoming liable to the
Mortgagor or any person in possession thereof holding under the Mortgagor. If
the Mortgagee shall remedy such a default or appear in, defend, or bring any
action or proceeding to protect its interest in the Mortgaged Property or to
foreclose this Mortgage or collect the Debt, the costs and expenses thereof
(including reasonable attorneys' fees to the extent permitted by law), with
interest as provided in this paragraph, shall be paid by the Mortgagor to the
Mortgagee upon demand and shall constitute part of the Debt secured by this
Mortgage. All such costs and expenses incurred by the Mortgagee in remedying
such default or in appearing in, defending, or bringing any such action or
proceeding shall be paid by the Mortgagor to the Mortgagee upon demand, with
interest (calculated for the actual number of days elapsed on the basis of a
360-day year) at a rate per annum equal to the Default Rate.
21.Appointment of Receiver. The Mortgagee, in any action to foreclose this
Mortgage or upon the actual or threatened waste to any part of the Mortgaged
Property or upon the occurrence of any default hereunder, shall be at liberty,
without notice, to apply for the appointment of a receiver of the Rents, and
shall be entitled to the appointment of such receiver as a matter of right,
without regard to the value of the Mortgaged Property as security for the Debt,
or the solvency or insolvency of any person then liable for the payment of the
Debt.
22.Non-Waiver. The failure of the Mortgagee to insist upon strict
performance of any term of this Mortgage shall not be deemed to be a waiver of
any term of this Mortgage. The Mortgagor shall not be relieved of the
Mortgagor's obligation to pay the Debt at the time and in the manner provided
for its payment in the Note and this Mortgage by reason of (i) failure of the
Mortgagee to comply with any request of the Mortgagor to take any action to
foreclose this Mortgage or otherwise enforce any of the provisions hereof or of
the Note or any other mortgage, instrument or document evidencing, securing or
guaranteeing payment of the Debt or any portion thereof, (ii) the release,
regardless of consideration, of the whole or any part of the Mortgaged Property
or any other security for the Debt, or (iii) any agreement or stipulation
between the Mortgagee and any subsequent owner or owners of the Mortgaged
Property or other person extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Mortgage or any other mortgage,
instrument or document evidencing, securing or guaranteeing
<PAGE> 11
payment of the Debt or any portion thereof, without first having obtained the
consent of the Mortgagor, and in the latter event, the Mortgagor shall continue
to be obligated to pay the Debt at the time and in the manner provided in the
Note and this Mortgage, as so extended, modified and supplemented, unless
expressly released and discharged from such obligation by the Mortgagee in
writing. Regardless of consideration, and without the necessity for any notice
to or consent by the holder of any subordinate lien, encumbrance, right, title
or interest in or to the Mortgaged Property, the Mortgagee may release any
person at any time liable for the payment of the Debt or any portion thereof or
any part of the security held for the Debt and may extend the time of payment or
otherwise modify the terms of the Note or this Mortgage, including, without
limitation, a modification of the interest rate payable on the principal balance
of the Note, without in any manner impairing or affecting this Mortgage or the
lien thereof or the priority of this Mortgage, as so extended and modified, as
security for the Debt over any such subordinate lien, encumbrance, right, title
or interest. The Mortgagee may resort for the payment of the Debt to any other
security held by the Mortgagee in such order and manner as the Mortgagee, in its
discretion, may elect. The Mortgagee may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of the Mortgagee thereafter to foreclose this Mortgage. The Mortgagee
shall not be limited exclusively to the rights and remedies herein stated but
shall be entitled to every additional right and remedy now or hereafter afforded
by law. The rights of the Mortgagee under this Mortgage shall be separate,
distinct and cumulative and none shall be given effect to the exclusion of the
others. No act of the Mortgagee shall be construed as an election to proceed
under any one provision herein to the exclusion of any other provision.
23.Liability. If the Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several.
24.Construction. The terms of this Mortgage shall be construed in
accordance with the laws of the State in which the Premises are located.
25.Security Agreement. This Mortgage constitutes both a real property
mortgage and a "security agreement", within the meaning of the Uniform
Commercial Code, and the Mortgaged Property includes both real and personal
property and all other rights and interest, whether tangible or intangible in
nature, of the Mortgagor in the Mortgaged Property. The Mortgagor by executing
and delivering this Mortgage has granted to the Mortgagee, as security for the
Debt, a security interest in the Equipment. If an Event of Default occurs under
the Purchase Agreement or this Mortgage, the Mortgagee, in addition to any other
rights and remedies which it may have, shall have and may exercise immediately
and without demand, any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing, the right to take possession of the Equipment or
any part thereof, and to take such other measures as the Mortgagee may deem
necessary for the care, protection and preservation of the Equipment. Upon
request or demand of the Mortgagee, the Mortgagor shall at its expense assemble
the Equipment and make it available to the Mortgagee at a convenient place
acceptable to the Mortgagee. The Mortgagor shall pay to the Mortgagee on demand
any and all expenses, including legal expenses and attorneys' fees, incurred or
paid by the Mortgagee in protecting its interest in the Equipment and in
enforcing its rights hereunder with respect to the Equipment. Any notice of
sale, disposition or other intended action by the Mortgagee with respect to the
Equipment sent to the Mortgagor in accordance with the provisions of this
Mortgage at least seven (7) days prior to the date of any such sale, disposition
or other action, shall constitute reasonable notice to the Mortgagor, and the
method of sale or disposition or other intended action set forth or specified in
such notice shall conclusively be deemed to be commercially reasonable within
the meaning of the Uniform Commercial Code unless objected to in writing by the
Mortgagor within five (5) days after receipt by the Mortgagor of such notice.
The proceeds of any sale or disposition of the Equipment, or any part thereof,
may be applied by the Mortgagee to the payment of the Debt in such order,
priority and proportions as the Mortgagee in its discretion shall deem proper.
<PAGE> 12
26.Further Acts, etc. The Mortgagor will, at the cost of the Mortgagor,
and without expense to the Mortgagee, do, execute, acknowledge and deliver all
and every such further acts, deeds, conveyances, mortgages, assignments, notices
of assignments, transfers and assurances as the Mortgagee shall, from time to
time, require for the better assuring, conveying, assigning, transferring and
confirming unto the Mortgagee the property and rights hereby mortgaged or
intended now or hereafter so to be, or which the Mortgagor may be or may
hereafter become bound to convey or assign to the Mortgagee, or for carrying out
the intention or facilitating the performance of the terms of this Mortgage or
for filing, registering or recording this mortgage and, on demand, will execute
and deliver and hereby authorizes the Mortgagee to execute in the name of the
Mortgagor to the extent the Mortgagee may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments, to evidence
more effectively the lien hereof upon the Mortgaged Property.
27.Headings, etc. The headings and captions of various paragraphs of this
Mortgage are for convenience of reference only and are not to be construed as
defined or limiting, in any way, the scope or intent of the provisions hereof.
28.Filing of Mortgage, etc. The Mortgagor forthwith upon the execution and
delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage, and any security instrument creating a lien or evidencing the lien
hereof upon the Mortgaged Property and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect, preserve and perfect the lien hereof upon, and the interest of the
Mortgagee in, the Mortgaged Property. The Mortgagor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property, and any
instrument of further assurance, and all Federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance. The Mortgagor shall hold harmless and indemnify
the Mortgagee, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this
Mortgage.
29.Usury Laws. This Mortgage and the Note are subject to the express
condition that at no time shall the Mortgagor be obligated or required to pay
interest on the principal balance due under the Note at a rate which could
subject the holder of the Note to either civil or criminal liability as a result
of being in excess of the maximum interest rate which the Mortgagor is permitted
by law to contract or agree to pay. If by the terms of this Mortgage or the
Note, the Mortgagor is at any time required or obligated to pay interest on the
principal balance due under the Note at a rate in excess of such maximum rate,
the rate of interest under the Note shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of the Note.
30.Recovery of Sums Required To Be Paid. The Mortgagee shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of the Mortgagee thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by the Mortgagor existing at the time such
earlier action was commenced.
<PAGE> 13
31.Authority. The Mortgagor (and the undersigned representative of the
Mortgagor, if any) has full power, authority and legal right to execute this
Mortgage, and to mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm and assign the Mortgaged Property pursuant to the terms hereof and to
keep and observe all of the terms of this Mortgage on the Mortgagor's part to be
performed.
32.Actions and Proceedings. The Mortgagee shall have the right to appear
in and defend any action or proceeding brought with respect to the Mortgaged
Property and to bring any action or proceeding, in the name and on behalf of the
Mortgagor, which the Mortgagee, in its discretion, feels should be brought to
protect its interest in the Mortgaged Property.
33.Inapplicable Provisions. If any term, covenant or condition of this
Mortgage shall be held to be invalid, illegal or unenforceable in any respect,
this Mortgage shall be construed without such provision.
34.Duplicate Originals. This Mortgage may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute but one and the same instrument.
35.Certain Definitions. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Mortgage shall be used interchangeably in singular or plural form and the word
"Mortgagor" shall mean each the Mortgagor and any subsequent owner or owners of
the Mortgaged Property or any part thereof or interest therein; the word
"Mortgagee" shall mean the Mortgagee or any subsequent holder of the Note; the
word "Note" shall mean Note and any other evidence of indebtedness secured by
this Mortgage; the word "Guarantor" shall mean each person guaranteeing payment
of the Debt or any portion thereof or performance by the Mortgagor of any of the
terms of this Mortgage and their respective heirs, executors, administrators,
legal representatives, successors and assigns; the word "person" shall include
an individual, corporation, partnership, trust, unincorporated association,
government, governmental authority, or other entity; the words "Mortgaged
Property" shall include any portion of the Mortgaged Property or interest
therein; and the word "Debt" shall mean all sums secured by this Mortgage; and
the word "default" shall mean the occurrence of any default by the Mortgagor or
other person in the observance or performance of any of the terms, covenants or
provisions of the Purchase Agreement, the Note or this Mortgage on the part of
the Mortgagor or such other person to be observed or performed without regard to
whether such default constitutes or would constitute upon notice or lapse of
time, or both, an Event of Default under this Mortgage. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa.
36.Waiver of Notice. The Mortgagor shall not be entitled to any notices of
any nature whatsoever from the Mortgagee except with respect to matters for
which this Mortgage specifically and expressly provides for the giving of notice
by the Mortgagee to the Mortgagor, and the Mortgagor hereby expressly waives the
right to receive any notice from the Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by the Mortgagee to the Mortgagor.
37.No Oral Change. This Mortgage may only be modified, amended or changed
by an agreement in writing signed by the Mortgagor and the Mortgagee, and may
only be released, discharged or satisfied of record by an agreement in writing
signed by the Mortgagee. No waiver of any term, covenant or provision of this
Mortgage shall be effective unless given in writing by the Mortgagee and if so
given by the Mortgagee shall only be effective in the specific instance in which
given. The Mortgagor acknowledges that the Note, this Mortgage, the Purchase
Agreement, and the other documents and instruments executed and delivered in
connection therewith or otherwise
<PAGE> 14
in connection with the loan secured hereby set forth the entire agreement and
understanding of the Mortgagor and the Mortgagee with respect to the loan
secured hereby and that no oral or other agreements, understanding,
representation or warranties exist with respect to the loan secured hereby other
than those set forth in the Note, this Mortgage, the Purchase Agreement and such
other executed and delivered documents and instruments.
38.Absolute and Unconditional Obligation. The Mortgagor acknowledges that
the Mortgagor's obligation to pay the Debt in accordance with the provision of
the Note and this Mortgage is and shall at all times continue to be absolute and
unconditional in all respects, and shall at all times be valid and enforceable
irrespective of any other agreements or circumstances of any nature whatsoever
which might otherwise constitute a defense to the Note or this Mortgage or the
obligation of the Mortgagor thereunder to pay the Debt or the obligations of any
other person relating to the Note or this Mortgage or the obligations of the
Mortgagor under the Note or this Mortgage or otherwise with respect to the loan
secured hereby, and the Mortgagor absolutely, unconditionally and irrevocably
waives any and all right to assert any defense, setoff, counterclaim or
crossclaim of any nature whatsoever with respect to the obligation of the
Mortgagor to pay the Debt in accordance with the provisions of the Note and this
Mortgage or the obligations of any other person relating to the Note or this
Mortgage or obligations of the Mortgagor under the Note or this Mortgage or
otherwise with respect to the loan secured hereby in any action or proceeding
brought by the Mortgagee to collect the Debt, or any portion thereof, or to
enforce, foreclose and realize upon the lien and security interest created by
this Mortgage or any other document or instrument securing repayment of the
Debt, in whole or in part.
39.Waiver of Trial by Jury. The Mortgagor hereby irrevocably and
unconditionally waives, and the Mortgagee by its acceptance of the Note and this
Mortgage irrevocably and unconditionally waives, any and all rights to trial by
jury in any action, suit or counterclaim arising in connection with, out of or
otherwise relating to the Note, this Mortgage the Purchase Agreement, any other
document or instrument now or hereafter executed and delivered in connection
therewith or the loan secured by this Mortgage.
40.Waiver of Statutory Rights. The Mortgagor shall not and will not apply
for or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "Moratorium Laws", now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Mortgage, but
hereby waives the benefit of such laws to the full extent that the Mortgagor may
do so under applicable law. The Mortgagor for itself and all who may claim
through or under it waives any and all right to have the property and estates
comprising the Mortgaged Property marshaled upon any foreclosure of the lien of
this Mortgage and agrees that any court having jurisdiction to foreclose such
lien may order the Mortgaged Property sold as an entirety. The Mortgagor hereby
waives for itself and all who may claim through or under it, and to the full
extent the Mortgagor may do so under applicable law, any and all rights of
redemption from sale under any order of decree of foreclosure of this Mortgage
or granted under any statute now existing or hereafter enacted.
41.True Copy. The Mortgagor acknowledges receipt of a true copy of this
Mortgage without charge.
42.Future Disbursements. This Mortgage secures a loan which by its terms
is subject to modification as defined in N.J.S.A. 46:9-8.1 et seq.
43.Relationship. The relationship of the Mortgagee to the Mortgagor
hereunder is strictly and solely that of lender and borrower and nothing
contained in the Note, this Mortgage, the Purchase Agreement or any other
document or instrument now or hereafter executed and delivered in connection
therewith or otherwise in connection with the loan secured hereby is intended to
create, or shall in any event or under any circumstance be construed as
creating, a partnership,
<PAGE> 15
joint venture, tenancy-in-common, joint tenancy or other relationship of any
nature whatsoever between the Mortgagee and the Mortgagor other than as lender
and borrower.
IN WITNESS WHEREOF, the Mortgagor has duly executed this Mortgage the day
and year first above written. Mortgagor acknowledges receipt of a true copy of
this Mortgage.
Attest: IGI, INC.
By: /s/ ROBERT E. McDANIEL By: /s/ MANFRED HANUSCHEK
---------------------------- --------------------------
Name: ROBERT E. McDANIEL Name: MANFRED HANUSCHEK
-------------------------- -----------------------
Title: GENERAL COUNSEL Title: CFO
----------------------- -----------------------
<PAGE> 16
CORPORATE ACKNOWLEDGMENT
STATE OF :
: ss
COUNTY OF :
On this, the 29th day of October, 1999, before me, the subscriber, a
notary public in and for the State and County aforesaid, personally appeared
_________________________, a _______________ of IGI, Inc., a Delaware
corporation, and who acknowledged that _____, as such ___________________, being
authorized to do so, executed the foregoing instrument on behalf of said
corporation for the purposes therein contained.
WITNESS my hand and seal the day and year aforesaid.
Notary Public
My Commission Expires:
<PAGE> 17
EXHIBIT A
(Description of Premises)
<PAGE> 18
EXHIBIT 10.49
DESCRIPTION
ALL that certain tract, lot and parcel of land lying and being in the City of
Vineland, County of Cumberland, and State of New Jersey, being more particularly
described as follows:
BEGINNING at the intersection of the Southeasterly line of Highland Avenue (50
feet wide - Tax Map), with the Southwesterly line of Landis Avenue, County Route
540 (66 feet wide - Tax Map), and extending
1. South 82 degrees 00 minutes 00 seconds East, along the southwesterly
line of Landis Avenue, 196.21 feet to a point in the same, at a corner
to Lot 16, Block 630; thence
2. South 08 degrees 00 minutes 00 seconds West, along the line of Lot 16,
Block 630, 227.43 feet to a corner to same; thence
3. South 82 degrees 00 minutes 00 seconds East, still along the line of
Lot 16, Block 630, 108.50 feet to a corner to same, in the line of Lot
17, Block 630; thence
4. South 8 degrees 00 minutes 00 seconds West, partly along the line of
Lot 17, Block 630, 1062.00 feet to a corner to Lots 2, 3 & 14, block
630; thence
5. North 82 degrees 00 minutes 00 seconds West, along the line of Lot 14,
block 630, 304.71 feet to a point in the Southeasterly line of Highland
Avenue; thence
6. North 8 degrees 00 minutes 00 seconds East, along the Southeasterly
line of Highland Avenue, 1289.43 feet to the point of Beginning.
The above premises are described in accordance with a plan entitled 'ALTA/ASCM
LAND TITLE SURVEY, IMMUNOGENETICS, INC., Block 630 * Lot 15, city of Vineland,
prepared by Millennium Surveying & Mapping, dated October 29, 1999.
NOTE: FOR INFORMATION PURPOSES ONLY: Being Lot 15, block 630, Tax Map City Of
Vineland.
Title of record to Tract No. 1 became vested in Immunogenetics, Inc., a
Corporation of the State of Delaware, by Deed from Medatz, Inc., a Corporation
of the State of Delaware dated 12/31/87 and recorded 2/18/88 in Deed Book 1706,
Page 81.
<PAGE> 19
EXHIBIT 10.49
DESCRIPTION
ALL that certain tract, lot and parcel of land lying and being in the City of
Vineland, County of Cumberland, and State of New Jersey, being more particularly
described as follows:
BEGINNING at a point in the Southwesterly line of East Grant Avenue, (50 feet
wide - Tax map), at a corner to Lot 13, Block 1027, the following two (2)
courses from the intersection of said centerline of East Grant Avenue, with the
centerline of Main Road (66 feet wide - Tax Map);
a) North 82 degrees 00 minutes 00 seconds West along the centerline of
East Grant Avenue, 1949.15 feet to a point in the same;
b) South 08 degrees 00 minutes 00 seconds West, leaving said centerline,
25.00 feet to the point and BEGINNING and extending;
1. South 08 degrees 00 minutes 00 seconds West, along the line of Lot 13,
block 1027, 1132.51 feet to a corner to same, in the line of Lot 14,
Block 1027; thence
2. North 82 degrees 00 minutes 00 seconds West, partly along the line of
Lots 14, 52 & 52, Block 1027, 253.44 feet to a corner to Lot 10, Block
1027; thence
3. North 08 degrees 00 minutes 00 seconds East, partly along the line of
Lot 10, Block 1027, 721.91 feet to a point in the same, at a corner to
Lot 11, Block 1027; thence
4. South 82 degrees 00 minutes 00 seconds East, along the line of Lot 11,
Block 1027, 100.00 feet to a corner to same; thence
5. North 08 degrees 00 minutes 00 seconds East, along the line of Lot 11,
Block 1027, 410.60 feet to a point in the Southwesterly line of Grant
Avenue; thence
6. South 82 degrees 00 minutes 00 seconds East, along the Southwesterly
line of East Grant Avenue, 153.44 feet to a point of BEGINNING.
NOTE: FOR INFORMATION PURPOSES ONLY: Being Lot 12 in block 1027, Tax Map City of
Vineland.
Title of record to Tract No. 2 became vested in Immunogenetics, Inc. a Delaware
Corporation, by Deed from Ezekial Bermudez and Norma Bermudez, his wife, dated
12/18/91 and recorded 12/27/91 in Deed Book 1926, page 109.
<PAGE> 1
IGI, INC.
to
AMERICAN CAPITAL STRATEGIES, LTD.
EXHIBIT *(10.50)
OPEN-ENDED MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
Dated: October 29, 1999
Location: County of Atlantic
State of New Jersey
RECORD AND RETURN TO:
Arnold & Porter
399 Park Avenue
New York, New York 10022-4690
Attention: Michael W. Oshima, Esquire
THIS OPEN-ENDED MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS
AND THE OBLIGATIONS SECURED HEREBY ARE
<PAGE> 2
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF OCTOBER 29,
1999, AMONG FLEET CAPITAL CORPORATION, AMERICAN CAPITAL STRATEGIES, LTD., IGI,
INC., IGEN, INC., IMMUNOGENETICS, INC., AND BLOOD CELLS, INC., TO THE
INDEBTEDNESS AND OTHER LIABILITIES OWED BY IGI, INC., IGEN, INC.,
IMMUNOGENETICS, INC., AND BLOOD CELLS, INC. UNDER AND PURSUANT TO THE LOAN AND
SECURITY AGREEMENT DATED AS OF OCTOBER 29, 1999, AND EACH RELATED "LOAN
DOCUMENT" (AS DEFINED THEREIN), AND EACH HOLDER OF THE NOTE SECURED HEREBY, BY
ITS ACCEPTANCE THEREOF, ACKNOWLEDGES AND AGREES TO BE BOUND BY THE PROVISIONS OF
THE SUBORDINATION AGREEMENT.
OPEN-ENDED MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
THIS OPEN-ENDED MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES
AND RENTS made the 29th day of October, 1999, between IGI, INC. a
Delaware corporation, having a mailing address at Wheat Road and
Lincoln Avenue, Buena, New Jersey 03104 (the "MORTGAGOR"), and AMERICAN
CAPITAL STRATEGIES, LTD., a Delaware corporation, having an office at 2
Bethesda Metro Center, 14th Floor, Bethesda, Maryland 20814 (the
"MORTGAGEE"),
W I T N E S S E T H:
THIS MORTGAGE SECURES FUTURE ADVANCES AND ALL FUTURE OBLIGATIONS
WHATSOEVER OF MORTGAGOR TO MORTGAGEE.
Terms not otherwise defined herein shall have the meanings ascribed
thereto in the Note and Equity Purchase Agreement of even date herewith by and
among Mortgagor, IGEN, Inc., ImmunoGenetics, Inc., Blood Cells, Inc., and
Mortgagee (as the same may be amended, supplemented or modified from time to
time, the "PURCHASE AGREEMENT").
Whereas the Mortgagor is the owner of a fee estate in the premises
described in Exhibit A attached hereto (the "PREMISES");
NOW THEREFORE, to secure the payment of all indebtedness incurred under
the Purchase Agreement, the Mortgagor's Series A Senior Subordinated Notes Due
September 30, 2006 in the original principal amount of $6,650,000 and the
Mortgagor's Series B Senior Subordinated Notes Due September 30, 2006 in the
original principal amount of $350,000 issued pursuant thereto (collectively, as
the same may be amended, supplemented or modified from time to time, the "NOTE")
in the initial aggregate principal amount of $7,000,000, lawful money of the
United States of America, to be paid with interest (said principal indebtedness,
interest and all other sums which may or shall at any time be owing being
hereinafter collectively referred to as the "DEBT"), all other amounts which
Mortgagor and Mortgagee may agree are to be secured hereby, with interest
thereon at the rate or rates agreed upon; all other existing or future
obligations of Mortgagor, its successors or assigns, to Mortgagee, whether oral
or written, secured or unsecured, direct or indirect, primary or secondary,
absolute or contingent, joint or several, which are now due or to become due,
and regardless of their nature, together with any such future obligations; the
Mortgagor has mortgaged, given, granted, bargained, sold, aliened, enfeoffed,
conveyed, confirmed and assigned, and by these presents does mortgage, give,
grant, bargain, sell, alien, enfeoff,
2
<PAGE> 3
convey, confirm and assign unto the Mortgagee forever all right, title and
interest of the Mortgagor now owned, or hereafter acquired, in and to the
following property, rights and interest (such property, rights and interests
being hereinafter collectively referred to as the "MORTGAGED PROPERTY"):
(a) The Premises;
(b) all buildings and improvements now or hereafter located on the
Premises (the "IMPROVEMENTS");
(c) all of the estate, right, title, claim or demand of any nature
whatsoever of the Mortgagor, either in law or in equity, in possession or
expectancy, in and to the Mortgaged Property or any part thereof;
(d) all easements, rights-of-way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water rights and powers, and all
estates, rights, titles, interests, privileges, liberties, tenements,
hereditaments, and appurtenances of any nature whatsoever, in any way belonging,
relating or pertaining to the Mortgaged Property (including, without limitation,
any and all development rights, air rights or similar or comparable rights of
any nature whatsoever now or hereafter appurtenant to the Premises or now or
hereafter transferred to the Premises) and all land lying in the bed of any
street, road or avenue, opened or proposed, in front of or adjoining the
Premises to the center line thereof;
(e) except as provided in the Purchase Agreement, all machinery,
apparatus, equipment, fittings, fixtures and other property of every kind and
nature whatsoever owned by the Mortgagor, or in which the Mortgagor has or shall
have an interest, now or hereafter located upon the Mortgaged Property, or
appurtenances thereto, and usable in connection with the present or future
operation and occupancy of the Mortgaged Property and all building equipment,
materials and supplies of any nature whatsoever owned by the Mortgagor, or in
which the Mortgagor has or shall have an interest, now or hereafter located upon
the Mortgaged Property (collectively, the "EQUIPMENT"), and the right, title and
interest of the Mortgagor in and to any of the Equipment which may be subject to
any security agreements (as defined in the Uniform Commercial Code of the State
in which the Premises are located), superior in lien to lien of this Mortgage;
(f) all awards or payments, including interest thereon, and the right to
receive the same, which may be made with respect to the Mortgaged Property,
whether from the exercise of the right of eminent domain (including any transfer
made in lieu of the exercise of said right), or for any other injury to or
decrease in the value of the Mortgaged Property;
(g) all leases and other agreements affecting the use or occupancy of the
Mortgaged Property now or hereafter entered into (the "LEASES") and the right to
receive and apply the rents, issues and profits of the Mortgaged Property (the
"RENTS") to the payment of the Debt;
(h) all proceeds of and any unearned premiums on any insurance policies
covering the Mortgaged Property, including, without limitation, the right to
receive and apply the proceeds of any insurance, judgments, or settlements made
in lieu thereof, for damage to the Mortgaged Property; and
(i) the right, in the name and on behalf of the Mortgagor, to appear in
and defend any action or proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to protect the interest of the
Mortgagee in the Mortgaged Property.
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the proper use and benefit of the Mortgagee, and the successors and
assigns of the Mortgagee, forever.
3
<PAGE> 4
AND the Mortgagor covenants and agrees with and represents and warrants to
the Mortgagee as follows:
1. Payment of Debt. The Mortgagor will pay the Debt at the time and in the
manner provided for its payment in the Note.
2. Warranty of Title. Subject only to those exceptions to title
specifically set forth in the title policy issued or to be issued by Chicago
Title Insurance Company, commitment No. BT-9951, to the Mortgagee and insuring
the lien of this Mortgage, the Mortgagor warrants the title to the Premises, the
Improvements, the Equipment and the balance of the Mortgaged Property. the
Mortgagor also represents and warrants that (i) the Mortgagor is now, and after
giving effect to this Mortgage, will be in a solvent condition, (ii) the
execution and delivery of this Mortgage by the Mortgagor does not constitute a
"fraudulent conveyance" within the meaning of Title 11 of the United States Code
as now constituted or under any other applicable statute, and (iii) no
bankruptcy or insolvency proceedings are pending or contemplated by or against
the Mortgagor.
3. Insurance. The Mortgagor shall maintain insurance as required by the
Purchase Agreement, the proceeds of which are to be paid to the Mortgagee for
application as provided by the Purchase Agreement.
4. Payment of Taxes, etc. The Mortgagor shall pay all taxes, assessments,
water rates, sewer rents and other charges, including vault charges and license
fees for the use of vaults, chutes and similar areas adjoining the Premises, now
or hereafter levied or assessed against the Mortgaged Property (the "TAXES")
prior to the date upon which any fine, penalty, interest or cost may be added
thereto or imposed by law for the nonpayment thereof. The Mortgagor shall
deliver to the Mortgagee, upon request, receipted bills, canceled checks and
other evidence satisfactory to the Mortgagee evidencing that the payment of all
taxes is current.
5. Escrow Fund. If an Event of Default is outstanding, the Mortgagor will,
at the option of the Mortgagee, pay to the Mortgagee on the first day of each
calendar month one-twelfth of an amount (the "ESCROW FUND") which would be
sufficient to pay the Taxes payable, or estimated by the Mortgagee to be
payable, during the ensuing twelve (12) months. The Mortgagee will apply the
Escrow Fund to the payment of Taxes which are required to be paid by the
Mortgagor pursuant to the provisions of this Mortgage. If the amount of the
Escrow Fund shall exceed the amount of the Taxes payable by the Mortgagor
pursuant to the provisions of this Mortgage, the Mortgagee shall, in its
discretion, (a) return any excess to the Mortgagor, or (b) credit such excess
against future payments to be made to the Escrow Fund or (c) credit such excess
to the Debt. In allocating such excess, the Mortgagee may deal with the person
shown on the records of the Mortgagee to be the owner of the Mortgaged Property.
If the Escrow Fund is not sufficient to pay the Taxes, as the same become
payable, the Mortgagor shall pay to the Mortgagee, upon request, an amount which
the Mortgagee shall estimate as sufficient to make up the deficiency. Until
expended or applied as above provided, any amounts in the Escrow Fund may be
commingled with the general funds of the Mortgagee and shall constitute
additional security for the Debt and shall not bear interest.
6. Condemnation. Notwithstanding any taking by any public or quasi-public
authority through eminent domain or otherwise, the Mortgagor shall continue to
pay the Debt at the time and in the manner provided for its payment in the Note
and this Mortgage and the Debt shall not be reduced until any award or payment
therefor shall have been actually received and applied by the Mortgagee to the
discharge of the Debt. The Mortgagee shall have the option to apply the entire
amount of any such award or payment to the discharge of the Debt whether or not
then due and payable in such order, priority and proportions as the Mortgagee in
its discretion shall deem proper. If the Mortgaged Property is sold, through
foreclosure or otherwise, prior to the receipt by the Mortgagee of such award or
payment, the Mortgagee shall have the right, whether or not a deficiency
judgment
4
<PAGE> 5
on the Note shall have been sought, recovered or denied, to receive such award
or payment, or a portion thereof sufficient to pay the Debt, whichever is less.
The Mortgagor shall file and prosecute its claim or claims for any such award or
payment in good faith and with due diligence and cause the same to be collected
and paid over to the Mortgagee. The Mortgagor hereby irrevocably authorizes and
empowers the Mortgagee, in the name of the Mortgagor or otherwise, to collect
and receipt for any such award or payment and to file and prosecute such claim
or claims. Although it is hereby expressly agreed that the same shall not be
necessary in any event, the Mortgagor shall, upon demand of the Mortgagee, make,
execute and deliver any and all assignments and other instruments sufficient for
the purpose of assigning any such award or payment to the Mortgagee, free and
clear of any encumbrances of any kind or nature whatsoever.
7. Leases and Rents. Subject to the terms of this paragraph, the Mortgagee
waives the right to enter the Mortgaged Property for the purpose of collecting
the Rents, and grants the Mortgagor the right to collect the Rents. The
Mortgagor shall hold the Rents, or an amount sufficient to discharge all current
sums due on the Debt, in trust for use in payment of the Debt. The right of the
Mortgagor to collect the Rents may be revoked by the Mortgagee upon an Event of
Default by giving notice of such revocation to the Mortgagor. Following such
notice the Mortgagee may retain and apply the Rents toward payment of the Debt
in such order, priority and proportions as the Mortgagee, in its discretion,
shall deem proper, or to the operation, maintenance and repair of the Mortgaged
Property, and irrespective of whether the Mortgagee shall have commenced a
foreclosure of this Mortgage or shall have applied or arranged for the
appointment of a receiver. The Mortgagor shall not, without the consent of the
Mortgagee, make, or suffer to be made, any Leases or modify or cancel any Leases
or accept prepayments of installments of the Rents for a period of more than one
(1) month in advance or further assign the whole or any part of the Rents. The
Mortgagor shall (a) fulfill or perform each and every provision of the Leases on
the part of the Mortgagor to be fulfilled or performed, (b) promptly send copies
of all notices of default which the Mortgagor shall send or receive under the
Leases to the Mortgagee, and (c) enforce, short of termination of the Leases,
the performance or observance of the provisions thereof by the tenants
thereunder.
8. Maintenance of the Mortgaged Property. The Mortgagor shall cause the
Mortgaged Property to be maintained in good condition and repair and will not
commit or suffer to be committed any waste of the Mortgaged Property. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment), without the consent of
the Mortgagee. The Mortgagor shall promptly comply with all existing and future
governmental laws, orders, ordinances, rules and regulations affecting the
Mortgaged Property, or any portion thereof or the use thereof. The Mortgagor
shall promptly repair, replace or rebuild any part of the Mortgaged Property
which may be damaged or destroyed by fire or other property hazard or casualty
(including any fire or other property hazard or casualty for which insurance was
not obtained or obtainable) or which may be affected by any taking by any public
or quasi-public authority through eminent domain or otherwise, and shall
complete and pay for, within a reasonable time, any structure at any time in the
process of construction or repair on the Premises. The Mortgagor will not,
without obtaining the prior consent of the Mortgagee, initiate, join in or
consent to any private restrictive covenant, zoning ordinance, or other public
or private restrictions, limiting or affecting the uses which may be made of the
Mortgaged Property or any part thereof.
9. Environmental Provisions. For the purposes of this paragraph the
following terms shall have the following meanings: (i) the term "HAZARDOUS
MATERIAL" shall mean any material or substance including petroleum products
that, whether by its nature or use, is subject to regulation under any
Environmental Requirement, (ii) the term "ENVIRONMENTAL REQUIREMENTS" shall
collectively mean the Spill Compensation and Control Act, N.J.S.A. 58:11-23.11,
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
5
<PAGE> 6
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the Clean Air Act (42
U.S.C. Section 7401 et seq.) and the Federal Water Pollution Control Act (33
U.S.C. Section 1251 et seq.), all as presently in effect and as the same may
hereafter be amended, any regulation pursuant thereto, or any other present or
future law, ordinance, rule, regulation, order or directive addressing
environmental, health or safety issues of or by any Governmental Authority,
(iii) the term "GOVERNMENTAL AUTHORITY" shall mean the Federal government, or
any state or other political subdivision thereof, or any agency, court or body
of the Federal government, any state or other political subdivision thereof,
exercising executive, legislative, judicial, regulatory or administrative
functions, and (iv) the term "DILIGENT INQUIRY" shall mean a level of inquiry at
least equal to an environmental site assessment of the Mortgaged Property
conducted in accordance with the Mortgagee's environmental policies and
procedures. The Mortgagor hereby represents and warrants to the Mortgagee that
to the best of the Mortgagor's knowledge after diligent inquiry (i) except for
Hazardous Material used in the ordinary course of Mortgagor's business in
compliance with all Environmental Requirements, no Hazardous Material has been
or is currently located at, in, on, under or about the Mortgaged Property in a
manner which violates any Environmental Requirement, or which requires cleanup
or corrective action of any kind under any Environmental Requirement, (ii) no
releasing, emitting, discharging, leaching, dumping or disposing of any
Hazardous Material from the Mortgaged Property onto or into any other property
or from any other property onto or into the Mortgaged Property has occurred or
is occurring in violation of any Environmental Requirement, (iii) no notice of
violation, lien, complaint, suit, order or other notice with respect to the
environmental condition of the Mortgaged Property is outstanding, nor has any
such notice been issued which has not been fully satisfied and complied with in
a timely fashion so as to bring the Mortgaged Property into full compliance with
all Environmental Requirements, (iv) no lien has been attached to any revenues
of, or any real or personal property owned by, the Mortgagor and located in the
State of New Jersey under any Environmental Requirement, (v) no Hazardous
Material is currently located at, on, in, under or about any real property owned
or occupied by the Mortgagor and located in the State of New Jersey, in a manner
which violates any Environmental Requirement or which requires cleanup or
corrective action of any kind under any Environmental Requirement, (vi)
Mortgagor has, and will continue to have, all necessary federal, state and local
licenses, certificates, permits and approvals relating to its facilities,
business, premises and equipment at the Mortgaged Property and is in compliance
with all applicable consent orders, judgments, injunctions and Environmental
Requirements, and (vii) all closures, terminations and transfers of operations,
as defined by the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et
seq. and the regulations thereunder ("ISRA"), on or relating to the Mortgaged
Property since December 31, 1983 have been completed only after full compliance
with ISRA, to the extent applicable. The Mortgagor shall comply, and shall cause
all tenants or other occupants of the Mortgaged Property to comply, in all
respects with all Environmental Requirements, and will not generate, store,
handle, process, dispose of or otherwise use, and will not permit any tenant or
other occupant of the Mortgaged Property to generate, store, handle, process,
dispose of or otherwise use, Hazardous Materials at, in, on, under or about the
Mortgaged Property in a manner that could lead or potentially lead to the
imposition on the Mortgagor, the Mortgagee or the Mortgaged Property of any
liability or lien of any nature whatsoever under any Environmental Requirement.
All closures, terminations and transfers of operations, as defined by ISRA, on
or relating to the Mortgaged Property during the term of this Mortgage, shall be
completed only after full compliance with ISRA, to the extent applicable, by the
Mortgagor and all tenants or other occupants of the Mortgaged Property to the
extent Mortgagor believes that ISRA is not applicable to any closures,
terminations or transfers of operations at the Mortgaged Property during the
term of this Mortgage, Mortgagor shall obtain a Letter of Non-Applicability as
provided for in ISRA. The Mortgagor shall notify the Mortgagee promptly in the
event of any spill or other release of any Hazardous Material at, in, on, under
or about the Mortgaged Property which is required to be reported to a
Governmental Authority under any Environmental Requirement, will promptly
forward to the Mortgagee copies of any notices received by the Mortgagor
relating to alleged violations of any Environmental Requirement and will
promptly pay when due any fine or assessment against the Mortgagee, the
Mortgagor or the Mortgaged
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Property relating to any Environmental Requirement. If at any time it is
determined that the past, present or future operation or use of the Mortgaged
Property violates any applicable Environmental Requirement or that there are
Hazardous Materials located at, in, on, under or about the Mortgaged Property
which, under any Environmental Requirement, require special handling in
collection, storage, treatment or disposal, or any other form of cleanup or
corrective action, the Mortgagor shall, within thirty (30) days after receipt of
notice thereof from any Governmental Authority or from the Mortgagee, take, at
its sole cost and expense, such actions as may be necessary to fully comply in
all respects with all Environmental Requirements, provided, however, that if
such compliance cannot reasonably be completed within such thirty (30) day
period, the Mortgagor shall commence such necessary action within such thirty
(30) day period and shall thereafter diligently and expeditiously proceed to
fully comply in all respects and in a timely fashion with all Environmental
Requirements. If the Mortgagor fails to timely take, or to diligently and
expeditiously proceed to complete in a timely fashion, any such action, the
Mortgagee may, in its sole and absolute discretion, make advances or payments
towards the performance or satisfaction of the same, but shall in no event be
under any obligation to do so. All sums so advanced or paid by the Mortgagee
(including, without limitation, counsel and consultant fees and expenses,
investigation and laboratory fees and expenses, and fines or other penalty
payments) and all sums advanced or paid in connection with any judicial or
administrative investigation or proceeding relating thereto, will immediately,
upon demand, become due and payable from the Mortgagor and shall bear interest
at the rate of interest determined in accordance with Section 8.2(c) of the
Purchase Agreement (the "DEFAULT RATE") from the date any such sums are so
advanced or paid by the Mortgagee until the date any such sums are repaid by the
Mortgagor to the Mortgagee. The Mortgagor will execute and deliver, promptly
upon request, such instruments as the Mortgagee may deem useful or necessary to
permit the Mortgagee to take any such action, and such additional notes and
mortgages, as the Mortgagee may require to secure all sums so advanced or paid
by the Mortgagee. If a lien is filed against the Mortgaged Property by any
Governmental Authority resulting from the need to expend or the actual expending
of monies arising from an action or omission, whether intentional or
unintentional, of the Mortgagor or for which the Mortgagor is responsible,
resulting in the releasing, spilling, leaking, leaching, pumping, emitting,
pouring, emptying or dumping of any Hazardous Material into the waters or onto
land located within or without the State where the Mortgaged Property is
located, then the Mortgagor will, within ten (10) days from the date that the
Mortgagor is first given notice that such lien has been placed against the
Mortgaged Property (or within such shorter period of time as may be specified by
the Mortgagee if such Governmental Authority has commenced steps to cause the
Mortgaged Property to be sold pursuant to such lien) either (a) pay the claim
and remove the lien, or (b) furnish a cash deposit, bond, or such other security
with respect thereto as is satisfactory in all respects to the Mortgagee and is
sufficient to effect a complete discharge of such lien on the Mortgaged
Property. As a condition precedent to any action by Mortgagor, whether in equity
or at law, to seek to rescind its interest in the Mortgaged Property, including,
without limitation, any statutory rights of rescission under either N.J.S.A.
13:1K-13(b) or N.J.S.A. 13:18A-22(c), Mortgagor shall notify Mortgagee and
provide replacement collateral which in Mortgagee's sole discretion is
equivalent to the Mortgaged Premises. The Mortgagee may, at its option, if the
Mortgagee reasonably believes that a Hazardous Material or other environmental
condition violates or threatens to violate any Environmental Requirement, cause
an environmental audit of the Mortgaged Property or portions thereof to be
conducted to confirm the Mortgagor's compliance with the provisions of this
paragraph, and the Mortgagor shall cooperate in all reasonable ways with the
Mortgagee in connection with any such audit and shall pay all costs and expenses
incurred in connection therewith. The Mortgagor will defend, indemnify, and hold
harmless the Mortgagee, its employees, agents, officers, and directors, from and
against any and all claims, demands, penalties, causes of action, fines,
liabilities, settlements, damages, costs, or expenses of whatever kind or
nature, known or unknown, foreseen or unforeseen, contingent or otherwise
(including, without limitation, counsel and consultant fees and expenses,
(including, without limitation, counsel and consultant fees and expenses,
investigation and laboratory fees and expenses, court costs, and litigation
expenses) arising out of, in any way related to, (i) any breach by the Mortgagor
of any of the
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provisions of this paragraph, (ii) the presence, disposal, spillage, discharge,
emission, leakage, release, or threatened release of any Hazardous Material
which is at, in, on, under, about, from or affecting the Mortgaged Property,
including, without limitation, any damage or injury resulting from any such
Hazardous Material to or affecting the Mortgaged Property or the soil, water,
air, vegetation, buildings, personal property, persons or animals located on the
mortgaged Property or on any other property or otherwise, (iii) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to any such Hazardous Material, (iv) any lawsuit brought or
threatened, settlement reached, or order or directive of or by any Governmental
Authority relating to such Hazardous Material, or (v) any violation of any
Environmental Requirement or any policy or requirement of the Mortgagee
hereunder. This indemnification shall, notwithstanding any exculpatory or other
provision of any nature whatsoever to the contrary set forth in the Note, this
Mortgage or any other document or instrument now or hereafter executed and
delivered in connection with the loan evidenced by the Note and secured by this
Mortgage, constitute the personal recourse undertakings, obligations and
liabilities of the Mortgagor. If this Mortgage is foreclosed or the Mortgagor
tenders a deed or assignment in lieu of foreclosure, the Mortgagor shall deliver
the Mortgaged Property to the purchaser at foreclosure or to the Mortgagee, its
nominee, or wholly owned subsidiary, as the case may be, in a condition that
complies in all respects with all Environmental Requirements. The obligations
and liabilities of the Mortgagor under this paragraph shall survive and continue
in full force and effect and shall not be terminated, discharged or released, in
whole or in part, irrespective of whether the Debt has been paid in full and
irrespective of any foreclosure of this Mortgage or acceptance by the Mortgagee,
its nominee or wholly owned subsidiary of a deed or assignment in lieu of
foreclosure and irrespective of any other fact or circumstance of any nature
whatsoever.
10. Transfer or Encumbrance of the Mortgaged Property. Except for
Permitted Liens, no part of the Mortgaged Property nor any interest of any
nature whatsoever therein shall in any manner be further encumbered, sold,
transferred or conveyed, or permitted to be further encumbered, sold,
transferred, assigned or conveyed without the prior consent of the Mortgagee,
which consent in any and all circumstances may be withheld in the sole and
absolute discretion of the Mortgagee. The provisions of the foregoing sentence
of this paragraph shall apply to each and every such further encumbrance, sale,
transfer, assignment or conveyance, regardless of whether or not the Mortgagee
has consented to, or waived by its action or inaction its rights hereunder with
respect to, any such previous further encumbrance, sale, transfer, assignment or
conveyance, and irrespective of whether such further encumbrance, sale,
transfer, assignment or conveyance is voluntary, by reason of operation of law
or is otherwise made.
11. Notice. Any notice, request, demand, statement, authorization,
approval or consent made hereunder shall be in writing and shall be hand
delivered or sent by Federal Express, or other reputable courier service, or by
postage pre-paid registered or certified mail, return receipt requested, and
shall be deemed given (i) when received at the following addresses if hand
delivered or sent by Federal Express, or other reputable courier service, and
(ii) three (3) business days after being postmarked and addressed as follows if
sent by registered or certified mail, return receipt requested:
If to the Mortgagor: IGI, Inc.
Wheat Road & Lincoln Avenue
Buena, New Jersey 08310
Attn: Paul Woitach, President
Telecopy No.: 609-697-1001
If to the Mortgagee: American Capital Strategies, Ltd.
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
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Attn: Chairman
Telecopy No.: 301-654-6714
With a copy to: Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attn.: Samuel A. Flax, Esq.
Telecopy No.: 202-942-5999
Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.
12. Sale of Mortgaged Property. If this Mortgage is foreclosed, the
Mortgaged Property, or any interest therein, may, at the discretion of the
Mortgagee, be sold in one or more parcels or in several interests or portions
and in any order or manner.
13. Changes in Laws Regarding Taxation. In the event of the passage after
the date of this Mortgage of any law of the State in which the Premises are
located deducting from the value of real property for the purpose of taxation
any lien or encumbrance thereon or changing in any way the laws for the taxation
of mortgages or debts secured by mortgages for state or local purposes or the
manner of the collection of any such taxes, and imposing a tax, either directly
or indirectly, on this Mortgage, the Note or the Debt, the Mortgagor shall, if
permitted by law, pay any tax imposed as a result of any such law within the
statutory period or within fifteen (15) days after demand by the Mortgagee,
whichever is less.
14. No Credits on Account of the Debt. The Mortgagor will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes assessed against the Mortgaged Property or any part thereof
and no deduction shall otherwise be made or claimed from the taxable value of
the Mortgaged Property, or any part thereof, by reason of this Mortgage or the
Debt.
15. Other Security for the Debt. The Mortgagor shall observe and perform
all of the terms, covenants and provisions contained in the Note and in all
other mortgages and other instruments or documents evidencing, securing or
guaranteeing payment of the Debt, in whole or in part, or otherwise executed and
delivered in connection with the Note, this Mortgage or the loan evidenced and
secured thereby.
16. Documentary Stamps. If at any time the United States of America, any
state thereof, or any governmental subdivision of any such state, shall require
revenue or other stamps to be affixed to the Note or this Mortgage, the
Mortgagor will pay for the same, with interest and penalties thereon, if any.
17. Right of Entry. The Mortgagee and its agents shall have the right to
enter and inspect the Mortgaged Property at all reasonable times upon reasonable
prior notice.
18. Performance of Other Agreements. The Mortgagor shall observe and
perform each and every term to be observed or performed by the Mortgagor
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Mortgaged Property.
19. Events of Defaults. The Debt shall become due at the option of the
Mortgagee upon the occurrence of any one or more of the following events
(collectively, "EVENTS OF DEFAULT"):
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(a) the occurrence of an Event of Default under the Purchase Agreement;
(b) if any representation or warranty in this Mortgage is false or
incorrect in any material respect or the Mortgagor fails to perform or fulfill
any covenant, condition or undertaking continued in this Mortgage; or
(c) if the Mortgaged Property shall become subject (i) to any tax lien,
other than a lien for local real estate taxes and assessments not due and
payable, or (ii) to any lis pendens, notice of pendency, stop order, notice of
intention to file mechanic's or materialman's lien, mechanic's or materialman's
lien or other lien of any nature whatsoever and the same shall not either be
discharged of record or in the alternative insured over to the satisfaction of
the Mortgagee by the title company insuring the lien of this Mortgage within a
period of ten (10) days after the same is filed or recorded, and irrespective of
whether the same is superior or subordinate in lien or other priority to the
lien of this Mortgage and irrespective of whether the same constitutes a
perfected or inchoate lien or encumbered on the Mortgaged Property or is only a
matter of record or notice.
To the extent any of the above provisions conflict with the Purchase Agreement,
the terms of the Purchase Agreement shall control. Upon the occurrence of any
Event of Default, the Mortgagee may commence an action to foreclose this
Mortgage and/or exercise any and all other rights contained in this Mortgage or
otherwise available at law or in equity to enforce its rights.
20. Right to Cure Defaults. If default in the performance of any of the
covenants of the Mortgagor herein occurs, the Mortgagee may, at its discretion,
remedy the same and for such purpose shall have the right to enter upon the
Mortgaged Property or any portion thereof without thereby becoming liable to the
Mortgagor or any person in possession thereof holding under the Mortgagor. If
the Mortgagee shall remedy such a default or appear in, defend, or bring any
action or proceeding to protect its interest in the Mortgaged Property or to
foreclose this Mortgage or collect the Debt, the costs and expenses thereof
(including reasonable attorneys' fees to the extent permitted by law), with
interest as provided in this paragraph, shall be paid by the Mortgagor to the
Mortgagee upon demand and shall constitute part of the Debt secured by this
Mortgage. All such costs and expenses incurred by the Mortgagee in remedying
such default or in appearing in, defending, or bringing any such action or
proceeding shall be paid by the Mortgagor to the Mortgagee upon demand, with
interest (calculated for the actual number of days elapsed on the basis of a
360-day year) at a rate per annum equal to the Default Rate.
21. Appointment of Receiver. The Mortgagee, in any action to foreclose
this Mortgage or upon the actual or threatened waste to any part of the
Mortgaged Property or upon the occurrence of any default hereunder, shall be at
liberty, without notice, to apply for the appointment of a receiver of the
Rents, and shall be entitled to the appointment of such receiver as a matter of
right, without regard to the value of the Mortgaged Property as security for the
Debt, or the solvency or insolvency of any person then liable for the payment of
the Debt.
22. Non-Waiver. The failure of the Mortgagee to insist upon strict
performance of any term of this Mortgage shall not be deemed to be a waiver of
any term of this Mortgage. The Mortgagor shall not be relieved of the
Mortgagor's obligation to pay the Debt at the time and in the manner provided
for its payment in the Note and this Mortgage by reason of (i) failure of the
Mortgagee to comply with any request of the Mortgagor to take any action to
foreclose this Mortgage or otherwise enforce any of the provisions hereof or of
the Note or any other mortgage, instrument or document evidencing, securing or
guaranteeing payment of the Debt or any portion thereof, (ii) the release,
regardless of consideration, of the whole or any part of the Mortgaged Property
or any other security for the Debt, or (iii) any agreement or stipulation
between the Mortgagee and any subsequent owner or owners of the Mortgaged
Property or other person extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Mortgage or any other mortgage,
instrument or document evidencing, securing or guaranteeing
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payment of the Debt or any portion thereof, without first having obtained the
consent of the Mortgagor, and in the latter event, the Mortgagor shall continue
to be obligated to pay the Debt at the time and in the manner provided in the
Note and this Mortgage, as so extended, modified and supplemented, unless
expressly released and discharged from such obligation by the Mortgagee in
writing. Regardless of consideration, and without the necessity for any notice
to or consent by the holder of any subordinate lien, encumbrance, right, title
or interest in or to the Mortgaged Property, the Mortgagee may release any
person at any time liable for the payment of the Debt or any portion thereof or
any part of the security held for the Debt and may extend the time of payment or
otherwise modify the terms of the Note or this Mortgage, including, without
limitation, a modification of the interest rate payable on the principal balance
of the Note, without in any manner impairing or affecting this Mortgage or the
lien thereof or the priority of this Mortgage, as so extended and modified, as
security for the Debt over any such subordinate lien, encumbrance, right, title
or interest. The Mortgagee may resort for the payment of the Debt to any other
security held by the Mortgagee in such order and manner as the Mortgagee, in its
discretion, may elect. The Mortgagee may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of the Mortgagee thereafter to foreclose this Mortgage. The Mortgagee
shall not be limited exclusively to the rights and remedies herein stated but
shall be entitled to every additional right and remedy now or hereafter afforded
by law. The rights of the Mortgagee under this Mortgage shall be separate,
distinct and cumulative and none shall be given effect to the exclusion of the
others. No act of the Mortgagee shall be construed as an election to proceed
under any one provision herein to the exclusion of any other provision.
23. Liability. If the Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several.
24. Construction. The terms of this Mortgage shall be construed in
accordance with the laws of the State in which the Premises are located.
25. Security Agreement. This Mortgage constitutes both a real property
mortgage and a "security agreement", within the meaning of the Uniform
Commercial Code, and the Mortgaged Property includes both real and personal
property and all other rights and interest, whether tangible or intangible in
nature, of the Mortgagor in the Mortgaged Property. The Mortgagor by executing
and delivering this Mortgage has granted to the Mortgagee, as security for the
Debt, a security interest in the Equipment. If an Event of Default occurs under
the Purchase Agreement or this Mortgage, the Mortgagee, in addition to any other
rights and remedies which it may have, shall have and may exercise immediately
and without demand, any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the
generality of the foregoing, the right to take possession of the Equipment or
any part thereof, and to take such other measures as the Mortgagee may deem
necessary for the care, protection and preservation of the Equipment. Upon
request or demand of the Mortgagee, the Mortgagor shall at its expense assemble
the Equipment and make it available to the Mortgagee at a convenient place
acceptable to the Mortgagee. The Mortgagor shall pay to the Mortgagee on demand
any and all expenses, including legal expenses and attorneys' fees, incurred or
paid by the Mortgagee in protecting its interest in the Equipment and in
enforcing its rights hereunder with respect to the Equipment. Any notice of
sale, disposition or other intended action by the Mortgagee with respect to the
Equipment sent to the Mortgagor in accordance with the provisions of this
Mortgage at least seven (7) days prior to the date of any such sale, disposition
or other action, shall constitute reasonable notice to the Mortgagor, and the
method of sale or disposition or other intended action set forth or specified in
such notice shall conclusively be deemed to be commercially reasonable within
the meaning of the Uniform Commercial Code unless objected to in writing by the
Mortgagor within five (5) days after receipt by the Mortgagor of such notice.
The proceeds of any sale or disposition of the Equipment, or any part thereof,
may be applied by the Mortgagee to the payment of the Debt in such order,
priority and proportions as the Mortgagee in its discretion shall deem proper.
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26. Further Acts, etc. The Mortgagor will, at the cost of the Mortgagor,
and without expense to the Mortgagee, do, execute, acknowledge and deliver all
and every such further acts, deeds, conveyances, mortgages, assignments, notices
of assignments, transfers and assurances as the Mortgagee shall, from time to
time, require for the better assuring, conveying, assigning, transferring and
confirming unto the Mortgagee the property and rights hereby mortgaged or
intended now or hereafter so to be, or which the Mortgagor may be or may
hereafter become bound to convey or assign to the Mortgagee, or for carrying out
the intention or facilitating the performance of the terms of this Mortgage or
for filing, registering or recording this mortgage and, on demand, will execute
and deliver and hereby authorizes the Mortgagee to execute in the name of the
Mortgagor to the extent the Mortgagee may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments, to evidence
more effectively the lien hereof upon the Mortgaged Property.
27. Headings, etc. The headings and captions of various paragraphs of this
Mortgage are for convenience of reference only and are not to be construed as
defined or limiting, in any way, the scope or intent of the provisions hereof.
28. Filing of Mortgage, etc. The Mortgagor forthwith upon the execution
and delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage, and any security instrument creating a lien or evidencing the lien
hereof upon the Mortgaged Property and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect, preserve and perfect the lien hereof upon, and the interest of the
Mortgagee in, the Mortgaged Property. The Mortgagor will pay all filing,
registration and recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property, and any
instrument of further assurance, and all Federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance. The Mortgagor shall hold harmless and indemnify
the Mortgagee, its successors and assigns, against any liability incurred by
reason of the imposition of any tax on the making and recording of this
Mortgage.
29. Usury Laws. This Mortgage and the Note are subject to the express
condition that at no time shall the Mortgagor be obligated or required to pay
interest on the principal balance due under the Note at a rate which could
subject the holder of the Note to either civil or criminal liability as a result
of being in excess of the maximum interest rate which the Mortgagor is permitted
by law to contract or agree to pay. If by the terms of this Mortgage or the
Note, the Mortgagor is at any time required or obligated to pay interest on the
principal balance due under the Note at a rate in excess of such maximum rate,
the rate of interest under the Note shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of the Note.
30. Recovery of Sums Required To Be Paid. The Mortgagee shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of the Mortgagee thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by the Mortgagor existing at the time such
earlier action was commenced.
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31. Authority. The Mortgagor (and the undersigned representative of the
Mortgagor, if any) has full power, authority and legal right to execute this
Mortgage, and to mortgage, give, grant, bargain, sell, alien, enfeoff, convey,
confirm and assign the Mortgaged Property pursuant to the terms hereof and to
keep and observe all of the terms of this Mortgage on the Mortgagor's part to be
performed.
32. Actions and Proceedings. The Mortgagee shall have the right to appear
in and defend any action or proceeding brought with respect to the Mortgaged
Property and to bring any action or proceeding, in the name and on behalf of the
Mortgagor, which the Mortgagee, in its discretion, feels should be brought to
protect its interest in the Mortgaged Property.
33. Inapplicable Provisions. If any term, covenant or condition of this
Mortgage shall be held to be invalid, illegal or unenforceable in any respect,
this Mortgage shall be construed without such provision.
34. Duplicate Originals. This Mortgage may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute but one and the same instrument.
35. Certain Definitions. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Mortgage shall be used interchangeably in singular or plural form and the word
"Mortgagor" shall mean each the Mortgagor and any subsequent owner or owners of
the Mortgaged Property or any part thereof or interest therein; the word
"Mortgagee" shall mean the Mortgagee or any subsequent holder of the Note; the
word "Note" shall mean the Note and any other evidence of indebtedness secured
by this Mortgage; the word "Guarantor" shall mean each person guaranteeing
payment of the Debt or any portion thereof or performance by the Mortgagor of
any of the terms of this Mortgage and their respective heirs, executors,
administrators, legal representatives, successors and assigns; the word "person"
shall include an individual, corporation, partnership, trust, unincorporated
association, government, governmental authority, or other entity; the words
"Mortgaged Property" shall include any portion of the Mortgaged Property or
interest therein; and the word "Debt" shall mean all sums secured by this
Mortgage; and the word "default" shall mean the occurrence of any default by the
Mortgagor or other person in the observance or performance of any of the terms,
covenants or provisions of the Purchase Agreement, the Note or this Mortgage on
the part of the Mortgagor or such other person to be observed or performed
without regard to whether such default constitutes or would constitute upon
notice or lapse of time, or both, an Event of Default under this Mortgage.
Whenever the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
36. Waiver of Notice. The Mortgagor shall not be entitled to any notices
of any nature whatsoever from the Mortgagee except with respect to matters for
which this Mortgage specifically and expressly provides for the giving of notice
by the Mortgagee to the Mortgagor, and the Mortgagor hereby expressly waives the
right to receive any notice from the Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by the Mortgagee to the Mortgagor.
37. No Oral Change. This Mortgage may only be modified, amended or changed
by an agreement in writing signed by the Mortgagor and the Mortgagee, and may
only be released, discharged or satisfied of record by an agreement in writing
signed by the Mortgagee. No waiver of any term, covenant or provision of this
Mortgage shall be effective unless given in writing by the Mortgagee and if so
given by the Mortgagee shall only be effective in the specific instance in which
given. The Mortgagor acknowledges that the Note, this Mortgage, the Purchase
Agreement, and the other documents and instruments executed and delivered in
connection therewith or otherwise
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in connection with the loan secured hereby set forth the entire agreement and
understanding of the Mortgagor and the Mortgagee with respect to the loan
secured hereby and that no oral or other agreements, understanding,
representation or warranties exist with respect to the loan secured hereby other
than those set forth in the Note, this Mortgage, the Purchase Agreement and such
other executed and delivered documents and instruments.
38. Absolute and Unconditional Obligation. The Mortgagor acknowledges that
the Mortgagor's obligation to pay the Debt in accordance with the provision of
the Note and this Mortgage is and shall at all times continue to be absolute and
unconditional in all respects, and shall at all times be valid and enforceable
irrespective of any other agreements or circumstances of any nature whatsoever
which might otherwise constitute a defense to the Note or this Mortgage or the
obligation of the Mortgagor thereunder to pay the Debt or the obligations of any
other person relating to the Note or this Mortgage or the obligations of the
Mortgagor under the Note or this Mortgage or otherwise with respect to the loan
secured hereby, and the Mortgagor absolutely, unconditionally and irrevocably
waives any and all right to assert any defense, setoff, counterclaim or
crossclaim of any nature whatsoever with respect to the obligation of the
Mortgagor to pay the Debt in accordance with the provisions of the Note and this
Mortgage or the obligations of any other person relating to the Note or this
Mortgage or obligations of the Mortgagor under the Note or this Mortgage or
otherwise with respect to the loan secured hereby in any action or proceeding
brought by the Mortgagee to collect the Debt, or any portion thereof, or to
enforce, foreclose and realize upon the lien and security interest created by
this Mortgage or any other document or instrument securing repayment of the
Debt, in whole or in part.
39. Waiver of Trial by Jury. The Mortgagor hereby irrevocably and
unconditionally waives, and the Mortgagee by its acceptance of the Note and this
Mortgage irrevocably and unconditionally waives, any and all rights to trial by
jury in any action, suit or counterclaim arising in connection with, out of or
otherwise relating to the Note, this Mortgage the Purchase Agreement, any other
document or instrument now or hereafter executed and delivered in connection
therewith or the loan secured by this Mortgage.
40. Waiver of Statutory Rights. The Mortgagor shall not and will not apply
for or avail itself of any appraisement, valuation, stay, extension or exemption
laws, or any so-called "Moratorium Laws", now existing or hereafter enacted, in
order to prevent or hinder the enforcement or foreclosure of this Mortgage, but
hereby waives the benefit of such laws to the full extent that the Mortgagor may
do so under applicable law. The Mortgagor for itself and all who may claim
through or under it waives any and all right to have the property and estates
comprising the Mortgaged Property marshaled upon any foreclosure of the lien of
this Mortgage and agrees that any court having jurisdiction to foreclose such
lien may order the Mortgaged Property sold as an entirety. The Mortgagor hereby
waives for itself and all who may claim through or under it, and to the full
extent the Mortgagor may do so under applicable law, any and all rights of
redemption from sale under any order of decree of foreclosure of this Mortgage
or granted under any statute now existing or hereafter enacted.
41. True Copy. The Mortgagor acknowledges receipt of a true copy of this
Mortgage without charge.
42. Future Disbursements. This Mortgage secures a loan which by its terms
is subject to modification as defined in N.J.S.A. 46:9-8.1 et seq.
43. Relationship. The relationship of the Mortgagee to the Mortgagor
hereunder is strictly and solely that of lender and borrower and nothing
contained in the Note, this Mortgage, the Purchase Agreement or any other
document or instrument now or hereafter executed and delivered in connection
therewith or otherwise in connection with the loan secured hereby is intended to
create, or shall in any event or under any circumstance be construed as
creating, a partnership,
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joint venture, tenancy-in-common, joint tenancy or other relationship of any
nature whatsoever between the Mortgagee and the Mortgagor other than as lender
and borrower.
IN WITNESS WHEREOF, the Mortgagor has duly executed this Mortgage the day
and year first above written. Mortgagor acknowledges receipt of a true copy of
this Mortgage.
Attest: IGI, INC.
By: /s/ ROBERT E. McDANIEL By: /s/ MANFRED HANUSCHEK
---------------------------- --------------------------
Name: ROBERT E. McDANIEL Name: MANFRED HANUSCHEK
-------------------------- -----------------------
Title: GENERAL COUNSEL Title: CFO
----------------------- -----------------------
15
<PAGE> 16
CORPORATE ACKNOWLEDGMENT
STATE OF :
: ss
COUNTY OF :
On this, the 29th day of October, 1999, before me, the subscriber, a
notary public in and for the State and County aforesaid, personally appeared
_________________________, a _______________ of IGI, Inc., a Delaware
corporation, and who acknowledged that _____, as such ___________________, being
authorized to do so, executed the foregoing instrument on behalf of said
corporation for the purposes therein contained.
WITNESS my hand and seal the day and year aforesaid.
Notary Public
My Commission Expires:
16
<PAGE> 17
EXHIBIT A
(Description of Premises)
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<PAGE> 18
EXHIBIT 10.50
DESCRIPTION
All that certain tract, lot and parcel of land lying and being in the Borough of
Buena, County of Atlantic, and State of New Jersey, being more particularly
described as follows:
BEGINNING at a point in the Northeasterly line of Harding Highway, also known as
N.J.S.H. Route 40, (66 feet wide - Tax Map), at the intersection of the
Southeasterly line of Catherine Avenue (50 feet wide - Tax Map) and extending:
1. North 51 degrees 33 minutes 58 seconds East, along the Southeasterly
line of Catherine Avenue, 550.67 feet to a point in the same, at a
corner to Lot 28, block 205; thence
2. South 37 degrees 41 minutes 02 seconds East, along the lie of Lots 27
and 28, Block 205, 254.30 feet to a corner to Lot 27, Block 205; thence
3. North 52 degrees 08 minutes 58 seconds East, along the line of Lot 27,
Block 205, 79.96 feet to a point in the same, at a corner to Lot 16.01,
Block 205; thence
4. South 38 degrees 05 minutes 37 seconds East, along the line of Lot
16.01, Block 205, 335.24 feet to a point in the same, at a corner to
Lot 3, Block 205; thence
5. South 51 degrees 30 minutes 00 seconds West, along the line of Lot 3,
Block 205, 432.36 feet to a corner to same; thence
6. North 37 degrees 45 minutes 00 seconds West, along the same 96.50 feet
to a point; thence
7. South 51 degrees 30 minutes 00 seconds West, still along the line of
Lot 3, Block 205, 200.00 feet to a corner to same, in the Northeasterly
line of Harding Highway 9N.J.S.H. Route 40); thence
8. North 37 degrees 45 minutes 00 seconds West, along the Northeasterly
line of Harding Highway 9N.J.S.H. Route 40) 494.61 feet to the point of
Beginning.
NOTE: FOR INFORMATION PURPOSES ONLY: Being Lot 1 in Block 205, Tax map of the
Borough of Buena.
Title of record to Tract No. 3, became vested in Immunogenetics, Inc., a
Corporation of the State of Delaware, by Deed from Medatz, Inc., a corporation
of Delaware dated 12/31/87 and recorded 2/18/88 in Deed Book 4630, page 309.
<PAGE> 19
EXHIBIT 10.50
DESCRIPTION
All that certain tract, lot and parcel of land lying and being in the Borough of
Buena, County of Atlantic, and State of New Jersey, being more particularly
described as follows:
BEGINNING at a spike at the intersection of the centerline of Wheat Road and
Lincoln Avenue as widened 35 feet from the centers of both and extending; thence
1. South 46 degrees 40 minutes West along the center of Lincoln Avenue,
444.46 feet to a plug; thence
2. South 43 degrees 20 minutes East, along Lot 22.02, 476.03 feet to a
steel pin; thence
3. South 46 degrees 40 minutes West, along Lot 22.02, 190 feet to a steel
pin; thence
4. South 43 degrees 20 minutes East, along Lot 22, 441.02 feet to a steel
pin; thence
5. North 46 degrees 40 minutes, along Lot 6, 285 feet to a steel pin;
thence
6. North 43 degrees 20 minutes West, along Lot 1, 364.74 feet to a
concrete stone; thence
7. North I degree 20 minutes West, along Lot 1, 644.20 feet to a plug in
the center of Wheat Road; thence
8. South 88 degrees 40 minutes West, along the center of Wheat Road,
109.88 feet to the center of Lincoln Avenue and the point of Beginning.
NOTE: FOR INFORMATION PURPOSES ONLY: Being Lots 22.01, 23.01, 23 and a portion
of Lot 22 in Block 5501, Tax Map of Buena Vista Township.
Title of record to Tract No. 4 became vested in Immunogenetics, Inc., by Deed of
Subdivision from Immunogenetics, Inc., dated 7/6/95 and recorded 7/11/95 in Deed
Book 5828, Page 92.
<PAGE> 20
EXHIBIT 10.50
DESCRIPTION
All that certain tract, lot and parcel of land lying and being in the Borough of
Buena, County of Atlantic, and State of New Jersey, being more particularly
described as follows:
Beginning at a plug in the center of Lincoln Avenue as widened 35 feet from the
center of same, South 46 degrees 40 minutes West, 444.46 feet from the center of
Wheat Road and extending; thence
1. South 46 degrees 40 minutes West along the center of Lincoln Avenue,
190 feet to a plug; thence
2. South 43 degrees 20 minutes East, along Lot 22, 476.03 feet to a point;
thence
3. North 46 degrees 40 minutes East, along same, 190 feet to a point;
thence
4. North 43 degrees 20 minutes West, along Lot 22.01, 476.03 feet to the
center of Lincoln Avenue and the place of Beginning.
NOTE: FOR INFORMATION PURPOSES ONLY: Being Lot 22.02 in Block 5501, Tax map of
Buena Vista Township.
Title of record to Tract No. 5 became vested in Immunogenetics, Inc., by Deed
from Baruffi Associates, a New Jersey partnership dated 11/13/95 and recorded
11/17/95 in Deed Book 5888, Page 113.
<PAGE> 1
EXHIBIT *(10.51)
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT is entered into as of October 29, 1999 (as
from time to time amended, modified, restated, supplemented and in effect, this
"Agreement"), by IGI, INC., a Delaware corporation ("IGI"), IGEN, INC., a
Delaware corporation ("Igen"), and IMMUNOGENETICS, INC., a Delaware corporation
("ImmunoGenetics") (IGI, Igen and ImmunoGenetics are collectively, the
"Grantors"), in favor of AMERICAN CAPITAL STRATEGIES, LTD., a Delaware
corporation (the "Grantee").
RECITALS
A. As of even date herewith, the Grantors, together with Blood
Cells, Inc., and the Grantee entered into a Note and Equity Purchase Agreement
(the "Purchase Agreement"), pursuant to which the Grantee agreed to purchase (i)
Series A Senior Secured Subordinated Notes in the aggregate principal amount of
$6,650,000, (ii) Series B Senior Secured Subordinated Notes in the aggregate
principal amount of $350,000 (collectively, the "Notes") and (iii) warrants to
purchase 1,907,543 shares of Common Stock of IGI (the "Warrants").
B. In order to induce the Grantee to purchase the Notes and the
Warrants and in consideration therefor, each Grantor has agreed to grant to
Grantee a perfected lien on and security interest in certain securities owned by
such Grantor in order to secure (i) the due and punctual payment of (A) the
principal and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Notes, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, and (B) all other monetary obligations, including, but not limited
to, fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding regardless of whether allowed or allowable in such proceeding), of
the Grantors under the Purchase Agreement, the Notes, this Agreement or any of
the other Transaction Documents or otherwise, and (ii) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Grantors under or pursuant to the Purchase Agreement, the Notes, this Agreement,
the Security Agreement or any of the other Transaction Documents (collectively,
the "Obligations").
C. It is a condition precedent to the purchase of the Notes and the
Warrants that the Grantors execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises above and in order
to induce Grantee to purchase the Notes and Warrants and to enter into the
Purchase Agreement, each Grantor hereby agrees as follows:
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1. Defined Terms. Capitalized terms used herein, but not defined,
shall have the same meaning as ascribed to such terms in the Purchase Agreement.
2. Creation of Lien and Security Interest. In order to secure the
full and timely payment in full of the Obligations, each Grantor hereby pledges
and grants, assigns and conveys unto Grantee a lien on and continuing security
interest " (the "Security Interest") in and to, the hereinafter described
"Collateral" effective as of the date hereof without the need to execute any
further instruments, agreements or documents other than as specifically set
forth herein. The Security Interest is subject to the rights of any other
secured party having rights senior to the Grantee.
3. Collateral. The Security Interest covers the following property
(the "Collateral"): (i) all of the shares, equity securities, partnership,
membership or other ownership interests owned by each respective Grantor in or
with regard to the entities set forth on Exhibit A attached hereto and any other
corporation, partnership, limited partnership, limited liability partnership,
limited liability company or other legal entity, and any warrants or other
rights to purchase such shares, equity securities, partnership, membership or
other ownership interests, including, without limitation, any shares, equity
securities, partnership, membership or other ownership interests owned by such
Grantor (the "Equity Securities"); and (ii) and any and all "Rights" as
hereinafter defined. For purposes of this Agreement, "Rights" means: (a) Equity
Securities realized upon exercise of any warrants to purchase Equity Securities,
bonus shares, debentures or other securities; (b) options or rights to take up
shares, debentures or other securities; (c) dividends, distributions, or returns
of capital or other moneys; and (d) other rights, moneys or securities of any
nature (including, without limitation, rights, voting rights, moneys or
securities arising from consolidation or subdivision of capital, redemption or
conversion of shares, reduction of capital, liquidation or a similar plan or
arrangement), all of which at any time (whether now or in the future) are
attributable to or are arising from any Collateral.
4. Continuing Security. This Agreement shall operate as a
continuing security agreement between Grantee and each Grantor:
(i) irrespective of any sum or sums that may be paid to the
credit of any account of Grantors with Grantee;
(ii) notwithstanding the appointment, retirement or removal, at any
time, of a receiver for either of the Grantors;
(iii) notwithstanding the exercise by Grantee or a receiver of any
power conferred by this Agreement, the Purchase Agreement, by any
document or instrument delivered pursuant thereto or by law;
(iv) notwithstanding any settlement of account or any other matter
or thing whatsoever,
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and shall remain in full force and effect and extend to cover all of the
Obligations until this Agreement terminates in accordance with Section 18
hereof.
5. Certificates, Voting, etc. Upon execution and delivery of this
Agreement, each Grantor shall deliver to Grantee or its designated agent
certificates representing all of the Equity Securities with a transfer executed
in blank. If at any time any issuer of Equity Securities shall issue any
additional or substitute shares of stock or stock certificates, or any other
instruments evidencing an interest in such entity or an obligation of such
entity, the applicable Grantor shall promptly pledge, mortgage and deposit (or
cause to be pledged, mortgaged or deposited) in favor of or with Grantee such
additional certificates, instruments or documents as additional security for the
Obligations, all of which additional security shall constitute Collateral (and
shall be included within the definition of "Collateral" hereunder). Grantee or
its designee shall hold the Collateral solely as security for the payment and
performance of the Obligations.
6. Right to Vote and Receive Distributions. Unless an Event of
Default shall have occurred and is continuing (and in such case, all dividends
and distributions described herein shall be Collateral), each Grantor shall have
the right to (a) vote and exercise all rights accruing to the owner of the
Collateral and (b) receive and to retain cash dividends and other cash
distributions that are paid on account of the Collateral. If any such dividends
or other distributions are paid to either Grantor following an Event of Default,
such dividends or other distributions shall be held in trust by such Grantor for
the benefit of the Grantee, and such Grantor shall immediately notify Grantee in
writing, and shall, if Grantee so instructs, immediately pay over such dividends
or other distributions to Grantee as Collateral.
7. Restrictions on Transfer. Neither Grantor shall sell, convey,
hypothecate or otherwise transfer the Collateral or any interest in the
Collateral to any person or other entity during the term of this Agreement
without the advance written consent of Grantee, which consent may be granted or
withheld in Grantee's sole discretion.
8. Representations and Warranties. Each Grantor hereby represents
and warrants to Grantee as follows:
(a) The Grantor has good, valid and marketable title to the
Collateral, free and clear of all liens, claims and other encumbrances (other
than Permitted Liens), and has the requisite corporate power and authority and
legal right to pledge the Collateral to Grantee as provided herein.
(b) The pledge, assignment and delivery of the Collateral
pursuant to Section 2 of this Agreement will create a valid perfected lien on
and a valid perfected security interest in the Collateral in favor of Grantee
under the Uniform Commercial Code of the State of Maryland as in effect from
time to time and the Uniform Commercial Code as in effect from time to time in
any applicable jurisdiction (such codes, together with any other successor or
applicable adoption of the Uniform
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Commercial Code in any applicable jurisdiction, the "UCC"), subject to no prior
lien (whether consensual, nonconsensual, statutory or otherwise) and to no
agreement purporting to grant any third party any security interest or other
interest in any of the Collateral, except Permitted Liens. No additional actions
by any entity are necessary to create or perfect the Security Interest.
9. Events of Default. The following shall constitute "Events of
Default" hereunder:
(a) The occurrence of an "Event of Default" under the Purchase
Agreement; or
(b) breach by either Grantor of, or failure by either Grantor
to perform any of its obligations hereunder, which breach or failure to perform
shall not have been cured within fifteen (15) days after the earlier to occur of
(i) receipt of written notice thereof from Grantee or (ii) actual knowledge of
the breach by either Grantor.
10. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default, after any applicable cure period, and at
any time thereafter, Grantee may (but shall not be required to) take any or all
of the following actions simultaneously or in any order which it may choose:
(a) exercise any remedies with respect to the Collateral (or
any of it), including sale of the Collateral, as may be provided by applicable
law then in effect, or as may be available in equity;
(b) exercise any remedies with respect to the Collateral
available to a secured party under the UCC, regardless of whether or not the UCC
actually applies;
(c) vote or otherwise exercise any rights accruing to the
owner of the Collateral without notice to or consent of the Grantors;
(d) commence and prosecute an action, at law or in equity, in
any court of competent jurisdiction, seeking money damages, injunctive or
declaratory relief or any other relief available under applicable law, and take
all such actions as may be necessary or desirable to enforce any order or
judgment entered in connection with such action;
(e) hold as additional Collateral for the Obligations or apply
in accordance with Section 14 hereof any and all dividends and distributions on
account of the Collateral; and/or
(f) exercise any other remedies afforded to Grantee pursuant
to the terms of this Agreement.
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All of Grantee's rights and remedies hereunder, under the Purchase
Agreement and under any and all other instruments and documents executed in
connection herewith and therewith, shall be cumulative and not exclusive, and
shall be enforceable alternatively, successively or concurrently as Grantee may,
in its sole discretion, deem expedient. Grantee shall have no obligation to
preserve rights in the Collateral or marshal any of the Collateral for the
benefit of any person or entity. The Obligations are recourse obligations.
Accordingly, the exercise of Grantee's remedies hereunder, or any of them,
including, without limitation, foreclosure on the Collateral, shall not result
in a satisfaction or discharge of the Obligations or otherwise limit Grantee's
ability to exercise its other remedies hereunder.
11. Additional Rights of Grantee With Respect to Certain
Collateral. Upon the occurrence of and during the continuation of any Event of
Default:
(a) Grantee, in its discretion, and without notice to either
Grantor, may take any one or more of the following actions without liability
except to account for property actually received by it: (i) transfer to or
register in its name or the name of its nominee any stock certificates or any
other evidence of the Collateral, with or without indication of the security
interest herein created, and whether or not so transferred or registered,
receive the income, dividends and other distributions thereon and hold them as
additional Collateral or apply them to the Obligations in any order of priority;
(ii) exercise or cause to be exercised all voting and corporate powers with
respect to any of the Collateral, including (1) all rights to call or require
shareholders meetings and to remove or elect directors, and (2) all rights of
proxy appointments, conversion, exchange, subscription or any other rights,
privileges or options pertaining to such Collateral, as if the absolute owner
thereof; (iii) exchange any of the Collateral for other property upon a
reorganization, recapitalization, reclassification or other readjustment and, in
connection therewith, deposit any of the Collateral with any depository upon
such terms as Grantee may determine; and (iv) in its name or in the name of
either Grantor, as applicable, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for any
of the Collateral, and Grantee further shall have the right during any time to
sign and endorse the name of either Grantor, as applicable, upon any such stock
certificate, stock power, check, draft, money order, or any other documents of
title or evidence of payment with respect to the Collateral, in the name of such
Grantor, it being the intention of such Grantor to grant to Grantee the right to
sell any portion or all of the Collateral and the proceeds therefrom, upon the
occurrence of an Event of Default hereunder.
(b) If Grantee in good faith believes that the Securities Act
of 1933, as amended from time to time (the "Act"), or any other state or federal
law prohibits or restricts the customary manner of sale or distribution of any
of the Collateral, Grantee may sell such Collateral privately or in any other
manner deemed advisable by Grantee at such price or prices as Grantee determines
in its sole discretion. The Grantors recognize that such prohibition or
restriction may cause the Collateral to have less value than it otherwise would
have and that, consequently, such sale or disposition by Grantee may result in a
lower sales price than if the sale were otherwise held. Grantee may sell the
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Collateral in Bethesda, Maryland or elsewhere, in one or more sales or parcels,
for cash, credit or future delivery, and with or without the use of a
stockbroker, as Grantee may deem advisable. Grantee may be the purchaser of any
or all of the Collateral. In the event that Grantee elects to sell all or any
part of the Collateral in a public sale, each Grantor shall use its best efforts
to register and qualify such of the Collateral which is securities, or the
applicable part thereof, under the Act and all state securities laws, and all
expenses thereof shall be payable by Grantors, including, but not limited to,
all costs of registration or qualification of any Collateral under the Act and
any state securities laws, and the sale of such Collateral, including but not
limited to, brokers' or underwriters' commissions, fees or discounts, accounting
and legal fees and disbursements, and expenses of transfer and sale, all in
accordance with the provisions of the UCC.
12. Grantee Appointed Attorney-in-Fact. Effective upon the
occurrence of and during the continuation of an Event of Default, each Grantor
hereby irrevocably appoints Grantee as its attorney-in-fact, with full authority
in each such Grantor's place and stead and in the name of such Grantor, Grantee
or otherwise, from time to time in Grantee's discretion, to take any action and
to execute any instrument that Grantee may deem necessary or advisable to
accomplish the purposes of this Agreement including, without limitation:
(a) to ask, demand, collect, sue for, recover, compound,
receive and give receipts for moneys due and to become due under or in respect
of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper; and
(c) to file any claims, take any action or institute any
proceedings which Grantee may deem necessary or desirable for the collection of
any of the Collateral (including any proceeds thereof) or otherwise to enforce
the rights of such Grantor and/or Grantee with respect to any of the Collateral.
Each Grantor shall execute appropriate certificates and
instruments, all in blank, as appropriate, as Grantee may request to evidence
such powers of attorney. The powers of attorney granted herein shall be coupled
with an interest and shall be irrevocable.
13. Expenses. The Grantors shall pay, when due, any and all
reasonable fees, taxes or (other than taxes based on the income of Grantee)
other charges imposed in connection with the Security Interests including,
without limitation, any fees imposed in connection with recordation of
instruments necessary or desirable in order to reflect, effectuate or release
the Security Interests.
14. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds from any sale or other
disposition of, or
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other realization upon, all or any part of the Collateral shall be applied by
Grantee in the form, order and manner provided in the Security Agreement dated
of even date herewith between the Company and the Grantee.
15. Release and Indemnity. Each Grantor hereby releases,
indemnifies and holds harmless Grantee and its agents, successors and assigns
for any claims, actions, causes of action, demands, liabilities, debts or suits
arising out of or in any way related to Grantee's possession, disposition,
collection, control or use of the Collateral; provided, however, that this
release and indemnity shall not extend to any actions taken by Grantee which (a)
contravene the express terms of this Agreement, or (b) constitute gross
negligence or willful misconduct.
16. Notices. All notices and other communications given to or made
upon any party hereto in connection with this Agreement shall, except as
otherwise expressly herein provided, be in writing and mailed via certified
mail, sent by Federal Express or other similar express delivery service for next
day delivery, faxed (with a confirming copy sent by such a express delivery
service for next day delivery) or hand delivered to the respective parties, as
follows:
If to the Grantee:
American Capital Strategies, Ltd.
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
Attn: Chairman
Facsimile: 301-654-6714
With a copy (which shall not constitute notice for purposes of this
Agreement) to:
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attention: Samuel A. Flax, Esq.
Facsimile No: 202-942-5999
If to Grantors:
c/o GI, Inc.
Wheat Road and Lincoln Avenue
Buena, New Jersey 08310
Attn: Chairman
Facsimile: 609-697-2259
With a copy (which shall not constitute notice for purposes of this
Agreement) to:
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Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: C. Hall Swaim, Esq.
Paul P. Brountas, Esq.
Facsimile: 617-526-5000
or in accordance with any subsequent written direction delivered in accordance
with this section from the recipient party to the sending party. All such
notices and other communications shall, except as otherwise expressly herein
provided, be effective upon delivery if delivered by hand; in the case of
certified mail, three Business Days after the date sent; in the case of any fax,
when received; or in the case of express delivery service, the day after
delivery of the notice to such service with charges prepaid.
17. Assignability and Parties in Interest. This Agreement shall not
be assignable by either Grantor without the written consent of Grantee. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.
18. Termination. This Agreement shall terminate and the Security
Interest shall be released upon the earliest to occur of (i) the payment and
satisfaction in full of the Obligations; or (ii) the mutual agreement of the
Grantors and Grantee.
19. Governing Law; Submission to Jurisdiction. This Agreement shall
be governed by and construed and interpreted in accordance with the laws of the
State of Maryland, without regard to its conflict of laws principles. All
judicial actions, suits or proceedings brought against the Grantors with respect
to their obligations, liabilities or any other matter under or arising out of or
in connection with this Agreement or any transaction contemplated hereby or for
recognition or enforcement of any judgment rendered in any such proceedings may
be brought in a state or federal court of competent jurisdiction in the State of
Maryland. By execution and delivery of this Agreement, the Grantors accept,
generally and unconditionally, the jurisdiction of the aforesaid courts and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this Agreement or any transaction contemplated hereby from which
no appeal has been taken or is available. The Grantors irrevocably agree that
all process in any proceeding or any court arising out of or in connection with
this Agreement may be effected by mailing a copy thereof by registered or
certified mail or any substantially similar form of mail, postage prepaid, to
the Grantors at the addresses referred to in Section 16 or such other address of
which Grantee shall have been notified pursuant to said paragraph. Such service
shall be effective five (5) days after such mailing. The Grantors hereby
acknowledge that such service will be effective and binding service in every
respect. The Grantors shall not assert that such service did not constitute
effective and binding service within the meaning of any applicable state or
federal law, rule, regulation or the like. The Grantors hereby irrevocably waive
any objections, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens, which it now or hereafter
may have to the bringing of any such action or
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proceeding in any such jurisdiction. The Grantors acknowledge that final
judgment against it in any action, suit or proceeding referred to in this
paragraph shall be conclusive and may be enforced in any other jurisdiction, by
suit on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the fact and of the amount of each Grantor's indebtedness
hereunder.
20. Complete Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the transactions
contemplated herein and, except as provided herein, supersede all previous oral
and written and all contemporaneous oral negotiations, commitments, writings and
understandings.
21. Amendments and Waivers.
(a) This Agreement may be amended only by a writing signed by
the Grantors and Grantee.
(b) No delay or omission on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right hereunder or operate to constrain the rights of any other parties
hereunder. No waiver of any one right shall operate as a waiver of any
subsequent right.
22. Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
23. Severability. If any provision of this Agreement shall be held
to be invalid, illegal or unenforceable in any material respect, such provision
shall be replaced with a provision which is as close as possible in effect to
such invalid, illegal or unenforceable provision, and still be valid, legal and
enforceable, and the validity, legality and enforceability of the remainder of
this Agreement shall not in any way be affected or impaired thereby, unless the
parties otherwise so provide.
24. Further Assurances. The Grantors agree, from time to time, at
their expense, to execute and deliver promptly all further instruments and
documents as Grantee may reasonably require in order to perfect, confirm and
ratify the Security Interest, including, without limitation, the execution and
delivery of such financing statements or continuation statements, and amendments
thereto, as may be necessary or desirable, or as Grantee may request in order to
perfect and preserve the Security Interest. The Grantors hereby authorize
Grantee or its agent to file such financing statements and/or such continuation
statements and amendments thereto relating to all or any part of the Collateral
without its signature, where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
collateral granted hereby or any part thereof shall be sufficient as a financing
statement where permitted by law.
~~ END OF PAGE ~~
[SIGNATURES APPEAR ON FOLLOWING PAGE]
9
<PAGE> 10
SIGNATURE PAGE TO
PLEDGE AGREEMENT
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be
executed as of the date first above written.
IGI, INC.
By: /s/ PAUL WOITACH
------------------------------------------------
Name: Paul Woitach
Title: President
IGEN, INC.
By: /s/ PAUL WOITACH
------------------------------------------------
Name: Paul Woitach
Title: President
IMMUNOGENETICS, INC.
By: /s/ PAUL WOITACH
------------------------------------------------
Name: Paul Woitach
Title: President
10
<PAGE> 11
EXHIBIT A
<TABLE>
<CAPTION>
Number of Shares
Name of Company Owned by IGI Type of Stock
- --------------- ------------ -------------
<S> <C> <C>
IMX Corporation 271,714 Common
Igen, Inc. 100 Common
Microburst Energy, Inc. 2,850 Common
Indovax 20% of the out- Common
standing shares of
Common Stock
</TABLE>
<TABLE>
<CAPTION>
Number of Shares
Name of Company Owned by Igen Type of Stock
- --------------- ------------- -------------
<S> <C> <C>
ImmunoGenetics, Inc. 100 Common
Blood Cells, Inc. 100,000 Common
Marketing Aspects, Inc. 0*
Vista International Sales Co. 0*
Flavorsome, Ltd. 0*
</TABLE>
<TABLE>
<CAPTION>
Number of Shares
Name of Company Owned by ImmunoGenetics Type of Stock
- --------------- ----------------------- -------------
<S> <C>
IGI do Brasil 99 Common
</TABLE>
*IGEN, Inc. organized Marketing Aspects, Inc., Vista International Sales Co.,
and Flavorsome, Ltd., but never issued any stock and such subsidiaries are not
operating and have no material assets.
11
<PAGE> 1
Ex. 10.55
PLEDGE AGREEMENT
This Pledge Agreement ("Pledge Agreement") is made by IGI, INC.
("Pledgor") and delivered to FLEET CAPITAL CORPORATION ("Lender") and is given
and is intended to provide additional security for all Obligations under a
certain Loan and Security Agreement (as it may from time to time be
supplemented, amended or replaced, the "Loan Agreement") dated October 29, 1999
among IGI, INC.; IGEN, INC.; IMMUNOGENETICS, INC.; and BLOOD CELLS, INC.
(collectively, "Borrowers") and Lender. All capitalized terms not otherwise
defined herein shall have the respective meanings ascribed thereto in the Loan
Agreement.
Pledgor, intending to be legally bound hereby, and for other good and
sufficient consideration, the receipt of which is hereby acknowledged, does
hereby assign, pledge, hypothecate, deliver and set over to Lender, its
successors and assigns, for the ratable benefit of the Lenders under the Loan
Agreement, the property described in the Schedule of Collateral attached hereto
and made part hereof, including all additions, exchanges, replacements and
substitutions therefor, dividends and distributions with respect thereto,
interest thereon and the proceeds thereof, (collectively, the "Collateral") and
Pledgor hereby grants to Lender a continuing lien and security interest in the
Collateral as collateral security for the payment and performance of all of the
Obligations of all Borrowers under the Loan Agreement.
(1) Pledgor hereby represents and warrants that:
(a) Except as pledged herein, Pledgor has not sold, assigned,
transferred, pledged or granted any option or security interest in or otherwise
hypothecated the Collateral in any manner whatsoever and the Collateral is
pledged herewith free and clear of any and all liens, security interests,
encumbrances, claims, pledges, restrictions, legends, and options (except for
any security interests or liens granted to American Capital under the
Subordinated Debt Documents, which security interests and liens are subordinate
to those of Lender);
(b) Pledgor has the full power and authority to execute,
deliver, and perform under this Pledge Agreement and to pledge the Collateral
hereunder;
(c) This Pledge Agreement constitutes the valid and binding
obligation of Pledgor, enforceable in accordance with its terms, and the pledge
of the Collateral referred to herein is not in violation of and shall create any
default under any agreement, undertaking or obligation of Pledgor;
(d) The Collateral has been duly and validly authorized and/or
issued by the issuer thereof and such Collateral is fully paid for and
non-assessable, and none of the Collateral is subject to any setoffs, defenses,
offsets, deductions or counterclaims of any kind;
<PAGE> 2
(e) Any capital stock or other equity interests of any Person
being pledged by Pledgor hereunder is one hundred percent (100%) of the issued
and outstanding stock or other equity interests of such Person that is owned by
the Pledgor; and
(f) Pledgor is, contemporaneously with the execution hereof,
delivering to Lender all certificates or instruments representing or evidencing
the Collateral, accompanied by duly executed instruments of transfer or
assignments in blank, to be held by Lender in accordance with the terms hereof.
(2) The pledge described herein shall continue in effect to secure all
Obligations from time to time incurred or arising unless and until all
Obligations have been indefeasibly paid and satisfied in full and any commitment
of Lender in connection therewith has been terminated.
(3) If an Event of Default occurs and is continuing under the Loan
Agreement, then Lender may, at its sole option, exercise from time to time with
respect to the Collateral any and/or all rights and remedies available to it
hereunder, under the Uniform Commercial Code, or otherwise available to it, at
law or in equity, including without limitation the right to dispose of the
Collateral at public or private sale(s) or other proceedings, and Pledgor agrees
that, if permitted by law, Lender or its nominee may become the purchaser at any
such sale(s).
(4)(a) In addition to all other rights granted to Lender herein or
otherwise available at law or in equity, Lender shall have the following rights,
as they may be applicable to the Collateral, each of which may be exercised at
Lender's sole discretion (but without any obligation to do so), at any time
following the occurrence and during the continuance of an Event of Default under
the Loan Agreement, without further consent of Pledgor: (i) to transfer the
whole or any part of the Collateral into the name of itself or its nominee or to
conduct a sale of the Collateral pursuant to the Uniform Commercial Code as
enacted in Pennsylvania or pursuant to any other applicable law; (ii) to vote
the Collateral; (iii) to notify the persons obligated on any of the Collateral
to make payment to Lender of any amounts due or to become due thereon; and (iv)
to release, surrender or exchange any of the Collateral at any time, or to
compromise any dispute with respect to the same. Lender may proceed against the
Collateral, or any other collateral securing the Obligations, in any order, and
against Pledgor and any other obligors, jointly and/or severally, in any order
to satisfy the Obligations. Pledgor waives and releases any right to require
Lender to first collect any of the Obligations secured hereby from any other
collateral of Pledgor or any other party securing the Obligations under any
theory of marshalling of assets, or otherwise. All rights and remedies of Lender
are cumulative, not alternative.
(b) Pledgor hereby appoints Lender its attorney-in-fact to arrange,
at Lender's option, during the continuance of any Event of Default under the
Loan Agreement, (i) to effectuate the transfer of the Collateral on the books of
the issuer thereof to the name of Lender or to the name of Lender's nominee,
designee or assignee; (ii) to endorse the certificates or instruments
representing the Collateral, or to execute separate instruments of transfer and
assignment, in the name of Pledgor for transfer to a third party; (ii) to
endorse and collect checks payable to Pledgor
2-
<PAGE> 3
representing distributions or other payments on the Collateral, and (iii) to
carry out the terms and provisions hereof.
(5) The proceeds of any Collateral received by Lender at any time after
the occurrence and during the continuance of an Event of Default under the Loan
Agreement, whether from the sale of Collateral or otherwise, may be applied to
or on account of the Obligations and in such order as Lender may elect. In
addition, Lender may, in its discretion, apply any such proceeds to or on
account of the payment of all reasonable costs and expenses (including
attorneys' fees and legal expenses) which may be incurred by Lender in the
enforcement, protection, preservation or defense of Lender's rights hereunder,
including without limitation the custody, preservation, use, operation,
preparation for sale or sale of the Collateral.
(6) Pledgor recognizes that Lender may be unable to effect, or may
effect only after such delay which would adversely affect the value that might
be realized from the Collateral, a public sale of all or part of the Collateral
by reason of certain prohibitions contained in the Securities Act of 1933, as
amended, and may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire such securities for their own account, for investment and not with a
view to the distribution or resale thereof. Pledgor agrees that any such private
sale may be at prices and on terms less favorable to Lender or the seller than
if sold at public sales, and therefore recognizes and confirms that such private
sales shall not be deemed to have been made in a commercially unreasonable
manner solely because they were made privately. Pledgor agrees that Lender has
no obligation to delay the sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act of 1933, as amended.
(7) In the event that any stock dividend, reclassification,
readjustment or other change is made or declared in the capital structure of, or
Pledgor acquires or in any other manner receives additional shares of stock in,
any corporation described in the attached Schedule of Collateral, or any option
included within the Collateral is exercised, or both, all new, substituted and
additional shares, or other securities, issued by reason of any such change or
exercise shall be delivered to and held by Lender under the terms hereof in the
same manner as the Collateral originally pledged hereunder.
(8) So long as no Event of Default has occurred and is continuing under
the Loan Agreement, and, until Lender notifies Pledgor in writing of the
exercise of its rights hereunder, Pledgor shall retain the sole right to vote
the Collateral and exercise all rights of ownership with respect to all
corporate questions for all purposes not inconsistent with the terms hereof.
(9) Lender shall have no obligation to take any steps to preserve,
protect or defend the rights of Pledgor or Lender in the Collateral against
other parties. Lender shall have no obligation to sell or otherwise deal with
the Collateral at any time for any reason, whether or not upon request of
Pledgor, and whether or not the value of the Collateral, in the opinion of
Lender or Pledgor, is more or less than the aggregate amount of the Obligations
secured hereby, and any such refusal or inaction by Lender shall not be deemed a
breach of any duty which Lender may
3-
<PAGE> 4
have under law to preserve the Collateral. Unless expressly set forth herein, no
duty, obligation or responsibility of any kind is intended to be delegated to or
assumed by Lender at any time with respect to the Collateral.
(10) To the extent Lender is required by law to give Pledgor prior
notice of any public or private sale, or other disposition of the Collateral,
Pledgor agrees that ten (10) days' prior written notice to Pledgor shall be a
commercially reasonable and sufficient notice of such sale or other intended
disposition. Pledgor further recognizes and agrees that if the Collateral, or a
portion thereof, threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Pledgor shall not be entitled to any
prior notice of sale or other intended disposition.
(11) Pledgor shall indemnify, defend and hold harmless Lender from and
against any and all claims, losses and liabilities resulting from any breach by
Pledgor of Pledgor's representations and covenants under this Pledge Agreement,
other than to the extent such arise from Lender's own gross negligence of
willful misconduct.
(12) Pledgor hereby waives notice of (a) acceptance of this Pledge
Agreement, (b) the existence and incurrence from time to time of any Obligations
under the Loan Agreement, (c) the existence of any Event of Default, the making
of demand, or the taking of any action by Lender under the Loan Agreement, and
(d) demand and default hereunder.
(13) Pledgor hereby consents and agrees that Lender may at any time or
from time to time in its sole discretion (a) settle, compromise or grant
releases for any Obligations and/or any person or persons liable for payment of
any Obligations, (b) exchange, release, surrender, sell, subordinate or
compromise any collateral of any party now or hereafter securing any of the
Obligations and (c) apply any and all payments received from any source by
Lender at any time against the Obligations in any order as Lender may determine;
all of the foregoing in such manner and upon such terms as Lender may determine
and without notice to or further consent from Pledgor and without impairing or
modifying the terms and conditions of this Pledge Agreement which shall remain
in full force and effect.
(14) This Pledge Agreement shall remain in full force and effect and
shall not be limited, impaired or otherwise affected in any way by reason of (a)
any delay in making demand on Borrowers or Pledgor for or delay in enforcing or
failure to enforce, performance or payment of Borrowers' or Pledgor's
obligations, of (b) any failure, neglect or omission on Lender's part to perfect
any lien upon, protect, exercise rights against, or realize on, any property of
Borrowers, Pledgor or any other party securing the Obligations.
(15) Pledgor covenants and agrees that Pledgor shall not, without the
prior written consent of Lender, sell, encumber or grant any lien, security
interest or option on or with respect to any of the Collateral.
4-
<PAGE> 5
(16) Any failure of or delay by Lender to exercise any right or remedy
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right or remedy at any other time.
(17) This Pledge Agreement constitutes the entire agreement between the
parties hereto regarding the subject matter hereof and may be modified only by a
written instrument signed by the party or parties against whom any change is
sought to be enforced.
(18) This Pledge Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, and the provisions
hereof shall be deemed severable in the event of the invalidity of any
provision. PLEDGOR AND LENDER EACH IRREVOCABLY WAIVE ANY AND ALL RIGHT TO A JURY
TRIAL IN ANY ACTION, PROCEEDING OR CONTROVERSY ARISING FROM OR RELATING TO THIS
PLEDGE AGREEMENT.
(19) All communications which Lender may provide to Pledgor herein
shall be sent to Pledgor at its respective address set forth below.
(20) This Pledge Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and assigns.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
5-
<PAGE> 6
This Pledge Agreement is executed this 29th day of October, 1999.
IGI, INC.
BY: /s/ MANFRED HANUSCHEK
________________________________________
Name: MANFRED HANUSCHEK
Title: CFO
Attest: /s/ LINDA HANSON
_____________________________________
Address: IGI, Inc.
Wheat Road and Lincoln Avenue
Buena, NJ 08310
<PAGE> 7
S-1
SCHEDULE OF COLLATERAL
The following Collateral is hereby pledged by Pledgor to Lender
pursuant to the Pledge Agreement to which this Schedule is attached:
CAPITAL STOCK AND EQUITY INTERESTS
<TABLE>
<CAPTION>
% of Shares
Class Number Outstanding
Issuer Certificate(s) No. of Stock of Shares of Issuer
- ------ ------------------ -------- --------- ---------
<S> <C> <C> <C> <C>
</TABLE>
PROMISSORY NOTES AND DEBT INSTRUMENTS
<TABLE>
<CAPTION>
Issuer Date of Issuance Principal Amount
- ------ ---------------- ----------------
<S> <C> <C>
</TABLE>
<PAGE> 1
EXHIBIT *(10.57)
AMENDMENT NO. 1
TO THE
NOTE AND EQUITY PURCHASE AGREEMENT
AMONG
IGI, INC., IGEN, INC., IMMUNOGENETICS, INC.
AND BLOOD CELLS, INC.
AND
AMERICAN CAPITAL STRATEGIES, LTD.
AND
ACS FUNDING TRUST I, AS THE PURCHASERS
AMENDMENT NO. 1 DATED AS OF : MARCH 30, 2000
ORIGINAL DATE: OCTOBER 29, 1999
<PAGE> 2
AMENDMENT NO. 1
TO THE
NOTE AND EQUITY PURCHASE AGREEMENT
$6,650,000 AGGREGATE PRINCIPAL AMOUNT OF
SERIES A SENIOR SUBORDINATED NOTES DUE SEPTEMBER 30, 2006
OF THE LOAN PARTIES
$350,000 AGGREGATE PRINCIPAL AMOUNT OF
SERIES B SENIOR SUBORDINATED NOTES DUE SEPTEMBER 30, 2006
OF THE LOAN PARTIES
THIS AMENDMENT NO. 1 TO THE NOTE AND EQUITY PURCHASE AGREEMENT (this
"Amendment"), entered into as of March 30, 2000, is by and among IGI, INC., a
Delaware corporation ("IGI"), IGEN, INC., a Delaware corporation ("Igen"),
IMMUNOGENETICS, INC., a Delaware corporation ("ImmunoGenetics"), and BLOOD
CELLS, INC., a Delaware corporation ("Blood Cells") (IGI, Igen, ImmunoGenetics
and Blood Cells are collectively referred to herein as the "Loan Parties"), and
AMERICAN CAPITAL STRATEGIES, LTD., a Delaware corporation ("ACAS"), and ACS
FUNDING TRUST I, a Delaware business trust (the "Trust" and with ACAS, the
"Purchaser").
RECITALS
A. The Loan Parties and ACAS entered into a Note and Equity Purchase
Agreement, dated as of October 29, 1999 (the "Agreement"), pursuant to which
ACAS purchased (i) from the Loan Parties certain Series A and Series B Senior
Subordinated Notes Due September 30, 2006 (collectively, the "Notes") and (ii) a
warrant for the purchase of 1,907,543 shares (as adjusted from time to time in
accordance with the terms thereof) of the Common Stock of IGI (the "Warrant").
As of October 29, 1999, ACAS sold or contributed the Notes to the Trust.
B. The Loan Parties have requested that ACAS exercise its rights under the
Warrant, waive certain defaults under the Agreement and amend certain provisions
of the Agreement, and ACAS is willing to do so, on the terms and conditions set
forth herein.
C. Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to such term as set forth in the Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the premises
and their mutual covenants and agreements herein set forth and intending to be
legally bound hereby, covenant and agree as follows:
<PAGE> 3
ARTICLE 1
THE WAIVER
1.1 Waiver of Defaults. Pursuant to Section 12.2 of the Agreement,
and upon satisfaction of the conditions set forth in Article 4 herein:
a. The Purchaser hereby waives any violation of Section 7.3(a)
of the Agreement which may have arisen in connection with the Loan Parties
having a Fixed Charges Coverage Ratio of .14 to 1.0 for the calendar quarter
ending December 31, 1999, and the Purchaser hereby further waives any Event of
Default resulting therefrom.
b. The Purchaser hereby waives any violation of Section
7.3(c) of the Agreement which may have arisen or which may arise in connection
with the Loan Parties having a Maximum Debt to Equity Ratio of greater than 4.25
to 1.0 for the calendar quarters ended December 31, 1999 and March 31, 2000, and
the Purchaser hereby further waives any Event of Default resulting therefrom.
c. The Purchaser hereby waives any Event of Default arising
under Section 8.1(b) of the Agreement in connection with any violation by any
Loan Party of any term, condition or provision of the Senior Credit Agreement to
the extent, but only to the extent, that any such violation has been waived by
the lenders thereunder pursuant to the terms thereof.
ARTICLE 2
THE AMENDMENT
2.1 Amendment to Section 1.1, Definitions. Section 1.1 of the
Agreement is hereby amended as follows:
a. The terms "Put Option", "Put Option Closing", "Put Price"
and "Put Shares" shall be deleted in their entirety from the Agreement.
b. The term "Fixed Charges Coverage Ratio" shall be amended by
deleting it in its entirety and inserting in its place the following:
"Fixed Charges Coverage Ratio" shall mean the ratio of (i)
EBITDA less the unfinanced portion of Capital Expenditures to
(ii) the sum of principal and interest payments made during
the Measurement Period in respect of Indebtedness (other than
any non-cash charges relating to the issuance of the Warrants
pursuant to this Agreement or any requirement that the
Warrants be marked to market).
c. The term "Market Price" shall be amended by deleting
it in its entirety and inserting in its place the following:
"Market Price" of any security shall mean the average of the
closing prices of such security's sales on all securities
exchanges on which such security
-2-
<PAGE> 4
may at the time be listed, or, if there has been no sales on
any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of
each day, or, if on any day such security is not so listed,
the average of the representative bid and asked prices quoted
in the NASDAQ System as of 4:00 P.M., New York time, or, if on
any day such security is not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices on such day
in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a
period of thirty (30) days consisting of the day as of which
"Market Price" is being determined and the twenty-nine (29)
consecutive business days prior to such day.
d. The term "Maximum Debt to Equity Ratio" shall be amended by
deleting it in its entirety and inserting in its place the following:
"Maximum Debt to Equity Ratio" shall mean the ratio of total
liabilities (other than any liabilities relating to the
issuance of Warrants pursuant to this Agreement) to
stockholders equity, provided that the Warrants shall be
treated as equity for the purposes of calculating stockholders
equity.
e. The following terms shall be inserted into Section 1.1 of the
Agreement:
"Make-Whole Amount" shall have the meaning assigned to such term
in Section 9.1 hereof.
"Make-Whole Trigger Event" shall have the meaning assigned to
such term in Section 9.1 hereof.
"Shares" shall mean all shares of Common Stock of IGI received by
ACAS upon the exercise of the Warrant or acquired by ACAS pursuant to Section
3.1 hereof.
"Shelf Registration Statement" shall mean the shelf registration
statement filed by IGI with the SEC with respect to resales of the Shares.
2.2 Amendment to Section 3.1, Interest Rates and Interest Payments.
Section 3.1 of the Agreement is hereby modified and amended by deleting it in
its entirety and inserting in its place the following:
3.1 Interest Rates and Interest Payments. The Notes will bear
interest on the outstanding principal amount thereof at a fixed
rate of fourteen and one-half percent (14.5%) per annum, 12.5% of
which shall be payable in cash by the Loan Parties and 2.0% of
which shall be capitalized on the Interest Payment Date and added
to the principal of the Notes (such capitalized interest being
hereinafter referred to as "Capitalized Interest").
-3-
<PAGE> 5
The Loan Parties shall make payments of interest due hereunder for
the following periods on the following dates (each such date being
an "Interest Payment Date"):
Period Date
------ ----
April 1, 2000 to July 31, 2000 July 31, 2000
August 1, 2000 to October 31, 2000 October 31, 2000
Thereafter At the end of
each three-month
period ending on
January 31, April 30,
July 31 and October 31
On the Interest Payment Date occurring in October of each year,
the Loan Parties shall issue to each holder of a Note a note
substantially in the form attached hereto as Exhibit A in the
amount of the Capitalized Interest accrued in respect of such
Note; provided that the Loan Parties may, on such Interest Payment
Date, at their election, in lieu of issuing such note, pay such
Capitalized Interest in cash or deliver shares of Common Stock
having an aggregate Market Price equal to such Capitalized
Interest; and provided further that all unpaid Capitalized
Interest payable upon the maturity of the Notes, together with all
interest accrued thereon, shall be paid in cash by the Loan
Parties. Notwithstanding the foregoing, during the period from
April 1, 2000 until the earlier of (i) March 31, 2001 and (ii) the
maturity of the Notes (whether as a result of the acceleration
thereof pursuant to Section 8.2 hereof or otherwise), the Notes
will bear interest on the outstanding principal amount thereof at
a fixed rate of fourteen and three-fourths percent (14.75%) per
annum, 12.5% of which shall be payable in cash by the Loan Parties
and 2.25% of which shall constitute Capitalized Interest. Interest
on the Notes will be computed on the basis of a year of 360 days,
composed of twelve 30-day months, and the actual number of days
elapsed.
2.3 Amendment to Section 7.3(a), Financial Covenants, Minimum Fixed
Charges Coverage Ratio. Section 7.3(a) is hereby deleted in its entirety and
replaced with the following:
(a) Minimum Fixed Charges Coverage Ratio. A Minimum Fixed Charges
Coverage Ratio, for the applicable Measurement Date, of not less
than:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
For the six-month period ending on 3-31-2000 .40 to 1.0
For the seven-month period ending on 4-30-2000 .45 to 1.0
For the eight-month period ending on 5-31-2000 .50 to 1.0
For the nine-month period ending on 6-30-2000 .50 to 1.0
</TABLE>
-4-
<PAGE> 6
<TABLE>
<S> <C>
For the ten-month period ending on 7-31-2000 .65 to 1.0
For the eleven-month period ending on 8-31-2000 .65 to 1.0
For the twelve-month period ending on 9-30-2000 .75 to 1.0
For the twelve-month period ending on 10-31-2000
(and thereafter as of the end of each month on a
rolling twelve-month basis) 1.01 to 1.0
</TABLE>
2.4 Amendment to Article 9, PUT OPTION. Article 9 of the Agreement is
hereby deleted in its entirety and replaced with the following:
ARTICLE 9
MAKE-WHOLE FOR SHARES
9.1 Sale of Shares; Make-Whole for Shares. (i) If, at any time after
the earliest to occur of (i) the fifth anniversary of the Closing Date, (ii) the
date of the payment in full of the outstanding principal, interest and fees of
the Notes, (iii) the date of the payment in full of the outstanding principal,
interest and fees of the Senior Debt, or (iv) the sale of IGI or of at least 30%
of its assets as part of a single transaction or series of related transactions
(unless Purchaser has granted IGI a waiver permitting such sale), (collectively,
the "Make-Whole Trigger Events"), Purchaser intends to sell any of the Shares,
it shall provide IGI written notice (the "Purchaser Notice") of such intention
and of the number of Shares proposed to be sold. IGI shall notify Purchaser in
writing, within three (3) Business Days of receipt by IGI of the Purchaser
Notice, of whether IGI intends to purchase such Shares (the "IGI Notice"). If
IGI elects to purchase such Shares from Purchaser, IGI shall exercise such
purchase right by paying Purchaser, within five (5) Business Days after it
provides the IGI Notice, in cash, against receipt of the Shares proposed to be
sold, the product of (x) the number of Shares proposed to be sold, multiplied by
(y) the Market Price per share on the date of the Purchaser Notice. If Purchaser
gives the Purchaser Notice and IGI does not exercise the purchase right
described in this Section 9.1(i), then Purchaser may sell the Shares in a market
transaction, a privately negotiated transaction or otherwise (a) after the
earlier of (I) expiration of the three-day period referred to in this Section
9.1(i) or (II) Purchaser's receipt of notice from IGI that it does not intend to
exercise the purchase right and (b) within 180 days of the date of the Purchaser
Notice.
(ii) If Purchaser sells any Shares pursuant to Section
9.1, IGI shall, within three (3) Business Days of receiving notice of any such
sale, pay the Purchaser an amount (the "Make-Whole Amount") equal to the product
of (x) the number of Shares sold by Purchaser during such 180-day period in
arm's length transactions multiplied by (y) the excess, if any, of (i) the
Market Price on the date of the Purchaser Notice over (ii) the price per share
at which Purchaser actually sold such Shares, plus any and all reasonable
expenses actually incurred by Purchaser in consummating such sale, in cash or
Common Stock of IGI, at IGI's election.
(iii) If Purchaser does not sell any of the Shares pursuant
to this Section 9.1 or if the Purchaser has sold only a portion of its Shares,
the provisions of this Section 9.1
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<PAGE> 7
shall continue to be in force with respect to any remaining Shares held by the
Purchaser as long as the Purchaser reinitiates the process specified in this
Section 9.1.
(iv) Nothing in this Section 9.1 shall restrict Purchaser's
ability to sell Shares at any time or from time to time or retain any proceeds
from any such sale. Purchaser agrees that Purchaser shall not be entitled to
receive from IGI any profit from the resale of Shares purchased by IGI pursuant
to Section 9.1(i).
9.2 Covenant to Maintain Effectiveness. IGI shall keep the Shelf
Registration Statement continuously effective under the Securities Act until the
earlier of (i) the date on which the Shares may be sold pursuant to paragraph
(k) of Rule 144 (or any successor provision) promulgated by the SEC under the
Securities Act and (ii) the date as of which the Shares have been sold pursuant
to the Shelf Registration Statement.
9.3 Covenant to Maintain Stock Exchange Listing. IGI shall take all
actions necessary to comply with the requirements of each securities exchange on
which IGI's Common Stock then trades in order to ensure that all the Shares are
listed or accepted for quotation of each such securities exchange;
9.4 Access to Information. IGI will, as expeditiously as possible,
furnish to Purchaser, as holder of the Shares, such number of copies of the
Shelf Registration Statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as Purchaser may reasonably request in
order to facilitate the disposition of the Shares owned by Purchaser.
9.5 Notification. IGI will, as expeditiously as possible, notify
Purchaser, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in the Shelf Registration Statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, and, at the request of Purchaser, IGI will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to purchasers of
such Shares, such prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
9.6 Indemnification. (i) IGI agrees to indemnify, to the extent
permitted by law, each holder of the Shares, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to IGI by such holder expressly for use therein
or by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after IGI has furnished such
holder with a
-6-
<PAGE> 8
sufficient number of copies of the same. In connection with an underwritten
offering, IGI will indemnify such underwriters, their officers and directors and
each Person who controls such underwriters (within the meaning of the Securities
Act) to the same extent as provided above with respect to the indemnification of
the holders of the Shares.
(ii) In connection with any registration statement in which a
holder of the Shares is participating, each such holder will furnish to IGI in
writing such information and affidavits as IGI reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will indemnify IGI, its directors and officers and each Person
who controls IGI (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading but
only to the extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by such holder;
(iii) Any Person entitled to indemnification hereunder will (a)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (b) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(iv) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and will survive the transfer of securities. IGI also
agrees to make such provisions, as are reasonably requested by any indemnified
party, for contribution to such party in the event IGI's indemnification is
unavailable for any reason.
2.5 Amendment to Annex A. Annex A of the Agreement is hereby modified
and amended in its entirety and replaced with Annex A hereto.
-7-
<PAGE> 9
ARTICLE 3
FURTHER AMENDMENT; REPRESENTATION AND WARRANTIES
3.1 Shelf Registration Statement. The Loan Parties covenant and agree
that, within one hundred eighty (180) days from the date hereof, the Loan
Parties shall file the Shelf Registration Statement with the SEC and cause such
Shelf Registration Statement to be declared effective by the SEC. If, at the end
of such 180-day period, (a) the Company shall have failed to file the Shelf
Registration Statement with the SEC, (b) the SEC shall not have declared the
Shelf Registration Statement effective, (c) the SEC shall have issued a stop
order suspending the effectiveness of the Shelf Registration Statement or (d)
the SEC shall have initiated or threatened to initiate any proceeding for that
purpose, then, in any such event, Article 9 of the Agreement, as in effect
immediately prior to the effective date of this Amendment, shall automatically
and without further action of any Person (including any Loan Party) be
reinstated in full, together with the definitions of "Put Option", "Put Option
Closing", "Put Price" and "Put Shares", and the Agreement shall be deemed
amended to such effect. The Loan Parties agree to execute and deliver such
documents, certificates, agreements and other writings and to take such other
actions as may be necessary or desirable in order to evidence or implement such
reinstatement.
3.2 Representations and Warranties of Loan Parties. The Loan Parties
represent and warrant to the Purchaser that, after giving effect to the waivers
set forth in Article 1 of this Amendment, (a) no Default or Event of Default has
occurred and is continuing under the Agreement, the Notes or the other Purchase
Documents and (b) the representations and warranties of the Loan Parties in each
Purchase Document are true and correct with the same effect as though such
representations and warranties had been made on and as of the date hereof (other
than such representations and warranties which are made as of a specified date).
ARTICLE 4
CONDITIONS TO EFFECTIVENESS
4.1 ACAS Conditions to the Effectiveness of Article 1 of this
Amendment. Article 1 of this Amendment shall be effective upon satisfaction of
the conditions set forth below.
a. Fleet Capital Corporation shall have evidenced, in
form and content reasonably satisfactory to ACAS, its written consent to the
transactions contemplated hereby under the terms of the Subordination Agreement
dated as of October 29, 1999;
b. The Loan Parties shall have delivered to Purchaser
certified copies of the resolutions duly adopted by each of the Loan Parties'
respective board of directors authorizing the execution, delivery and
performance by such Loan Party of this
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<PAGE> 10
Amendment and any other agreement, instrument and document contemplated hereby
and the consummation of transactions contemplated herein; and
c. The Loan Parties shall have delivered or caused to be
delivered to Purchaser (i) an executed copy of an amendment to the Senior Credit
Agreement providing, among other things, that the lenders named therein have
waived all defaults and events of default thereunder (including, without
limitation, any cross-default thereunder resulting from the occurrence of any
Default or Event of Default under the Agreement), and (ii) all such other
documents in form and substance satisfactory to Purchaser relating to the
transactions contemplated by this Amendment as Purchaser or its counsel may
reasonably request.
Any condition specified in this Section 4.1 may be waived by the
Purchasers; provided, however, that no such waiver will be effective against the
Purchasers unless it is set forth in a writing executed by the Purchasers.
4.2 ACAS Conditions to the Effectiveness of Article 2 of this
Amendment. Article 2 of this Amendment shall be effective as of April 12, 2000
upon satisfaction of the conditions set forth below.
a. The Loan Parties shall have delivered or caused to
be delivered to Purchaser all such documents in form and substance satisfactory
to Purchaser relating to the transactions contemplated by this Amendment as
Purchaser or its counsel may reasonably request.
Any condition specified in this Section 4.2 may be waived by the
Purchasers; provided, however, that no such waiver will be effective against the
Purchasers unless it is set forth in a writing executed by the Purchasers.
ARTICLE 5
REFERENCE TO AND EFFECT ON THE AGREEMENT
5.1 References. On and after the date hereof, (i) each reference in
the Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of
like import shall mean and be a reference to the Agreement as amended hereby,
and (ii) each reference to the Agreement in all other Purchase Documents shall
mean and be a reference to the Agreement, as amended hereby.
5.2 Effects. Except as specifically amended above, the Agreement, and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
5.3 No Waiver. The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of the
Purchasers, or constitute a waiver of, or consent to and departure from, any
provision of the Agreement,
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<PAGE> 11
or any other documents, instruments and agreements executed and/or delivered in
connection therewith.
ARTICLE 6
MISCELLANEOUS
6.1 Survival. All representations, warranties, covenants and agreements
of the Loan Parties contained in the Agreement or made in writing in connection
therewith and herewith shall survive the execution and delivery of this
Amendment and the purchase of the Additional Warrants and shall continue in full
force and effect so long as any Note is outstanding and until payment in full of
all of the Loan Parties' obligations hereunder or thereunder.
6.2 Effect; Ratification. The amendments and waivers set forth herein
are effective for the purposes set forth herein and shall be limited precisely
as written, and shall not be deemed to (i) be a consent to any amendment, waiver
or modification of any other term or condition of the Agreement or of any other
Purchase Document or (ii) prejudice any right or rights that the Purchaser or
any holder of a Note may now have or may have in the future under or in
connection with the Agreement or any other Purchase Document. This Amendment
shall be construed in connection with and as a part of the Agreement and all
terms, conditions, representations, warranties, covenants and agreements set
forth in the Agreement and each other Purchase Document, except as herein
amended or waived, are hereby ratified and confirmed and shall remain in full
force and effect.
6.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.
6.4 Severability. Whenever possible, each provision of this Amendment
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Amendment is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Amendment.
6.5 Headings. Article, section and subsection headings in this
Amendment are included for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
6.6 Counterparts. This Amendment may be executed in any number of
counterparts and by either party hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute one and the same instrument.
6.7 Integration. This Amendment, the Agreement and the other Purchase
Documents set forth the entire understanding of the parties hereto with respect
to all matters contemplated hereby and supersede all previous agreements and
understandings
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<PAGE> 12
among them concerning such matters. No statements or agreements, oral or
written, made prior to or at the signing hereof, shall vary, waive or modify the
written terms hereof.
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<PAGE> 13
SIGNATURE PAGES TO
AMENDMENT NO. 1 TO
NOTE AND EQUITY PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
IGI, INC.
By: /s/ Manfred Hanuschek
------------------------------------
Name: Manfred Hanuschek
Title: CFO
IGEN, INC.
By: /s/ Manfred Hanuschek
------------------------------------
Name: Manfred Hanuschek
Title: CFO
IMMUNOGENETICS, INC.
By: /s/ Manfred Hanuschek
------------------------------------
Name: Manfred Hanuschek
Title: CFO
BLOOD CELLS, INC.
By: /s/ Manfred Hanuschek
------------------------------------
Name: Manfred Hanuschek
Title: CFO
-12-
<PAGE> 14
SIGNATURE PAGES TO
AMENDMENT NO. 1 TO
NOTE AND EQUITY PURCHASE AGREEMENT
AMERICAN CAPITAL STRATEGIES,
LTD., a Delaware corporation
By: /s/ John Erickson
------------------------------------
Name: John Erickson
Title: CFO
ACS FUNDING TRUST I, a Delaware
business trust
By: /s/ Malon Wilkus
------------------------------------
Name: Malon Wilkus
Title: Chairman
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<PAGE> 15
ANNEX A
INFORMATION RELATING TO PURCHASER
Principal Amount of
Name and Address of Purchaser Notes to be Purchased
AMERICAN CAPITAL STRATEGIES, LTD. Notes $7,000,000
2 Bethesda Metro Center
14th Floor
Bethesda, MD 20814
Purchaser has assigned all
Notes to:
ACS FUNDING TRUST I
c/o American Capital Strategies, Ltd.,
as Servicer
2 Bethesda Metro Center
14th Floor
Bethesda, MD 20814
(1) All payments:
If by wire:
Account Name: ACS Funding
Trust I
Account #: 8601046967
Bank: LaSalle National Bank, Chicago
ABA #: 071000505
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<PAGE> 16
If by mail:
ACS Funding Trust I
135 South LaSalle Street, Dept 4522
Chicago, Illinois 60674-4522
If by overnight parcel service (e.g., FedEx, UPS, etc):
ACS Funding Trust I
200 West Monroe Street, Suite 200
Chicago, Illinois 60606
Attn: ACS Funding Trust I, Dept. 4522
with sufficient information
to identify the source and
application of such funds.
(2) All notices of payments and written confirmations of such wire
transfers:
American Capital Strategies, Ltd., as Servicer
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
Attn: Comptroller
Telecopier: (301) 654-6714
(3) All other communications:
American Capital Strategies, Ltd., as Servicer
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
Attn: President
Telecopier: (301) 654-6714
-15-
<PAGE> 1
EXHIBIT *(10.58)
AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Amendment to Loan and Security Agreement ("Amendment") is made as
of the 12th day of April, 2000 by and between Fleet Capital Corporation
("Lender") and IGI, Inc., IGEN, Inc., Immunogenetics, Inc. and Blood Cells, Inc.
(each a "Borrower" and collectively the "borrowers").
BACKGROUND
A. Borrowers and Lender are parties to a certain Loan and Security
Agreement dated October 29, 1999 ("Loan Agreement"), pursuant to which Borrowers
established certain financing arrangements with Lender. All capitalized terms
not otherwise defined herein shall have the respective meaning ascribed thereto
in the Loan Agreement.
B. Borrowers have requested Lender, and Lender has agreed, to amend the
Loan Agreement, in accordance with and subject to the terms and conditions
hereof.
NOW, THEREFORE, with the foregoing Background incorporated by reference
and made a part hereof, and intending to be legally bound, the parties agree as
follows:
1. Waiver of Defaults:
(1) Borrowers have informed Lender that covenant violations, each
constituting an Event of Default, have occurred under the Loan Agreement in the
following respects (collectively the "Existing Defaults"): (i) Borrowers have
outstanding accounts payable to trade creditors aged more than sixty (60) days
from their respective due date (in violation of Section 8.2.3); (ii) Borrowers
expended $426,000 for nonfinanced Capital Expenditures during the period from
the Closing Date through December 31, 1999 (in violation of the $150,000 maximum
contained in Section 8.2.7); (iii) Borrowers' Fixed Charge Coverage Ratio as of
December 31, 1999 was .14 to 1 (in violation of the minimum ratio of .80 to 1
contained in Section 8.3.1); and (iv) a cross-default has occurred (under
Section 10.1.6) as a result of defaults or events of default on the Subordinated
Debt.
(2) In consideration of the agreements and understanding set forth
in this Amendment, and expressly conditioned upon the satisfaction of the
Effectiveness Conditions set forth in paragraph 4 below, Lender waives the
Existing Defaults. Such waiver is intended to apply only to the Existing
Defaults and only for the respective periods or dates as to which the underlying
violations have occurred. Such waiver shall not at any time create any duty or
obligation on Lender's part to waive any other Event of Default or waive any
future violation of the covenants whose violation gave rise to the Existing
Defaults.
2. Amendments:
1
<PAGE> 2
(1) The definition of "EBITDA" in Appendix A is hereby deleted in
its entirety and replaced by the following:
EBITDA - Adjusted Net Earnings From Operations plus the sum of
depreciation, amortization and interest expenses and taxes during
the period for which Adjusted Net Earnings From Operations was
calculated and plus or minus any change in Borrowers' LIFO reserve
from the immediately preceding period of measurement, determined
for the Borrowers for the applicable measurement period. The
foregoing calculation shall exclude any non-cash charges relating
to the issuance of warrants pursuant to the Subordinated Debt
Amendment (as defined in the Amendment to Loan and Security
Agreement dated as of April 12, 2000) or any requirement that such
warrants be marked to market.
(2) Section 8.2.3(ii) of the Loan Agreement is hereby amended to
provide that for the period from January 1, 2000 through February 29, 2000,
Borrowers shall be entitled (in the business judgment of Borrowers) to have
accounts payable greater than sixty (60) days past due in an aggregate amount
not exceeding $1,500,000, from March 1, 2000 through June 30, 2000 in an amount
not exceeding $1,400,000, and from July 1, 2000 through December 31, 2000 in an
amount not exceeding $500,000. As of January 1, 2001, no accounts payable to
trade creditors aged more than sixty (60) days from due date shall be
outstanding.
(3) Section 8.3.1 (contained in Schedule 8.3 of the Loan
Agreement) shall, for all periods after December 31, 1999, be deemed deleted in
its entirety and replaced by the following:
8.3.1 Fixed Charge Covenant. Borrowers shall maintain on a
Consolidated basis a Fixed Charge Coverage Ratio of not less than
the ratio shown below for the respective period corresponding
thereto:
<TABLE>
<CAPTION>
Measurement Date Ratio
---------------- -----
<S> <C>
For the 6 month period ending March 31, 2000 .40 to 1
For the 7 month period ending April 30, 2000 .45 to 1
For the 8 month period ending May 31, 2000 .50 to 1
For the 9 month period ending June 30, 2000 .50 to 1
For the 10 month period ending July 31, 2000 .65 to 1
For the 11 month period ending August 31, 2000 .65 to 1
For the 12 month period ending September 30, 2000 .75 to 1
For the 12 month period ending October 31, 2000 (and
thereafter as of the end of each month on a rolling
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
12 month basis) 1.01 to 1
</TABLE>
(4) Section 8 of the Loan Agreement is further modified to add a
new Section 8.2.14 as follows:
8.2.14 Subordinated Debt. Make, or permit or suffer any
Borrower or Subsidiary to make, any payment of any part or all of
any Subordinated Debt or otherwise repurchase, redeem or retire
any instrument evidencing any such Subordinated Debt (except for
(i) reimbursement of reasonable out-of-pocket expenses pursuant to
Section 7.1(i) of the Note and Equity Purchase Agreement dated as
of October 29, 1999, as amended by the Subordinated Debt
Amendment, and (ii) regularly scheduled payments of principal and
interest when due under the Subordinated Debt Agreements, as
amended by the Subordinated Debt Amendment, or by the delivery of
a note as provided by the Subordinated Debt Amendment, so long as
(with reference to any proposed cash payment) no Event of Default
is then outstanding or would exist after giving effect thereto),
or enter into any agreement amending, modifying, altering or
terminating any one or more instruments or agreements evidencing
or relating to any Subordinated Debt.
3. Representations and Warranties. Each Borrower represents and
warrants to Lender that:
(1) All warranties and representations made to Lender under the
Loan Agreement and each of the other Loan Documents are true and correct as of
the date hereof.
(2) The execution and delivery by each Borrower of this Amendment
and the performance by each Borrower of the transactions herein contemplated (i)
are and will be within such Borrower's corporate powers, (ii) have been
authorized by all necessary corporate action and (iii) are not and will not be
in contravention of any law, any order of any court or other agency of
government, or any other indenture, agreement or undertaking to which such
Borrower is a party or by which any property of such Borrower is bound, or be in
conflict with, result in a breach of, or constitute (with due notice and/or
lapse of time) a default under any such indenture, agreement or undertaking or
result in the imposition of any lien, charge or incumbrance of any nature on any
of the Property of such Borrower.
(3) This Amendment is valid, binding and enforceable against each
Borrower in accordance with its terms.
(4) Except for the covenant violations referenced in paragraph
1(a) above, no material adverse change has occurred with respect to the
financial condition, business, prospects, assets or liabilities of any Borrower
since December 31, 1999.
(5) Other than the Existing Defaults, no Default or Event of
Default
3
<PAGE> 4
is outstanding.
4. Effectiveness Conditions. This Amendment shall be effective upon
completion of the following conditions precedent (all documents to be in form
and substance satisfactory to Lender and Lender's counsel):
(1) Execution and delivery by each party of this Amendment;
(2) Execution and delivery, contemporaneously with the execution
and delivery of this Amendment, of an amendment ("Subordinated Debt Amendment")
to the Subordinated Debt Agreements providing, inter alia, that the holder of
the Subordinated Debt waives all defaults and events of default thereunder
(including without limitation any cross-default thereunder resulting from the
occurrence of Events of Default under the Loan Agreement), modifies all
financial covenants therein to be no more restrictive than any similar covenants
contained in the Loan Agreement (as amended hereby), and agrees that its next
interest payment will not be due until July 31, 2000 (covering the period from
April 1 through July 31) and that all succeeding interest payments will be due
on the same basis thereafter quarterly in arrears (i.e., October 31, 2000 (for
the period from August 1 through October 31), January 31, 2001, etc.). Lender
acknowledges and agrees that the execution and delivery by Borrowers and the
holder of the Subordinated Debt of the Subordinated Debt Amendment, in the form
attached hereto, does not violate either the Loan Agreement or the Subordination
Agreement dated October 29, 1999 among Lender, Borrowers and the holder of the
Subordinated Debt (such an agreement by Lender not in any way modifying or
limiting the applicability of the provisions of Section 8.2.6 of the Loan
Agreement relative to any warrants or Securities issued or to be issued to the
holder of the Subordinated Debt).
5. Confirmation of Indebtedness. Borrowers hereby acknowledge and
confirm that as of the close of business on April 7, 2000, they are indebted to
Lender, without defense, setoff, claim, counterclaim or defense of any nature
under the Loan Agreement, in the aggregate principal amount of $7,494,188.39
with respect to Revolving Credit Loans, $6,650,000 with respect to Term Loan A,
$350,000 with respect to Term Loan B, and $257,266 with respect to Capital
Expenditure Loans, plus all fees, costs and expenses (including attorneys' fees)
incurred to date in connection with the Loan Agreement and the other Loan
Documents. Borrowers confirm that they shall pay, on demand, to Lender all
expenses, including without limitation, attorneys' fees, incurred by Lender in
connection with the negotiation, preparation and execution of this Amendment and
any related documents.
6. Ratification of Existing Loan Documents. Except as expressly set
forth herein, all of the terms and conditions of the Loan Agreement and the
other Loan Documents are hereby ratified and confirmed and continue unchanged
and in full force and effect. All references to the Loan Agreement shall mean
the Loan Agreement as modified by this Amendment.
7. Collateral. Borrowers hereby confirm and agree that all security
interests
4
<PAGE> 5
and Liens granted to Lender continue in full force and effect and shall continue
to secure the Obligations. All Collateral remains free and clear of any Liens
other than Permitted Liens or Liens in favor of Lender. Nothing herein contained
is intended to impair or limit in any manner the validity, priority and extent
of Lender's existing security interests in and Liens upon the Collateral.
8. Miscellaneous.
(1) This Amendment shall be governed by, construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania without giving
effect to principles of conflicts of law.
(2) This Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, and such
counterparts together shall constitute one and the same respective agreement.
(3) No modification hereof shall be binding or enforceable upon
Lender unless approved in writing by Lender. No rights are intended to be
created hereunder for the benefit of any party other than Borrowers and Lender.
9. Waiver of Jury Trial. EACH BORROWER AND LENDER EACH WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY
KIND ARISING OUT OF OR RELATED TO THIS AMENDMENT OR THE TRANSACTIONS DESCRIBED
HEREIN.
IN WITNESS WHEREOF, the parties have executed this Amendment to Loan
and Security Agreement the day and year first above written.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
5
<PAGE> 6
IGI, INC.
By: /s/ Manfred Hanuschek
-------------------------------
Name: Manfred Hanuschek
-------------------------------
Title: CFO
-------------------------------
IGEN, INC.
By: /s/ Manfred Hanuschek
-------------------------------
Name: Manfred Hanuschek
-------------------------------
Title: CFO
-------------------------------
IMMUNOGENETICS, INC.
By: /s/ Manfred Hanuschek
-------------------------------
Name: Manfred Hanuschek
-------------------------------
Title: CFO
-------------------------------
BLOOD CELLS, INC.
By: /s/ Manfred Hanuschek
-------------------------------
Name: Manfred Hanuschek
-------------------------------
Title: CFO
-------------------------------
FLEET CAPITAL CORPORATION
By: /s/ Walter Schuppe
-------------------------------
Name: Walter Schuppe
-------------------------------
Title: Senior Vice President
-------------------------------
6
<PAGE> 1
EXHIBIT 21
IGI, INC. AND SUBSIDIARIES
LIST OF SUBSIDIARIES OF IGI, INC.
IGEN, Inc., a Delaware corporation
ImmunoGenetics, Inc., a Delaware corporation
Marketing Aspects, Inc., a Delaware corporation
Blood Cells, Inc., a Delaware corporation
Flavorsome, Ltd., a Delaware corporation
Vista, Inc., a Virgin Island corporation
IGI Do Brasil, a Brazil corporation
Microburst, Inc., a Delaware corporation
41
<PAGE> 1
EXHIBIT *(23)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
IGI, Inc. and its subsidiaries on Form S-8 (No. 2-90713), on Form S-8 and S-3
(No. 33-35047), on Form S-8 and S-3 (No. 33-43212), on Form S-3 (No. 33-47777),
on Form S-3 (No. 33-54920), on Form S-8 (No. 33-63700), on Form S-8 (No.
33-65706), on Form S-8 (No. 33-58479), on Form S-8 (No. 33-65249), on Form S-3
(No. 333-27173), on Form S-8 (No. 333-28183), on Form S-8 (No. 333-65553), on
Form S-8 (No. 333-67565), on Form S-8 (No. 333-79333) and on Form S-8 (No.
333-79341), of our report dated April 12, 2000, on our audits of the
consolidated financial statements and financial statement schedule of IGI, Inc.
and subsidiaries as of December 31, 1999 and 1998, and for the three years in
the period ended December 31, 1999, which report is included in this Annual
Report on Form 10-K.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
April 12, 2000
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