1
Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
CREDIT AGREEMENT
Between
CAMBRIDGE NEUROSCIENCE, INC.,
A Delaware Corporation
and
VISION PHARMACEUTICALS L.P.,
A Texas Limited Partnership
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TABLE OF CONTENTS
Page
----
1. Amount and Terms of Credit 1
1.1 The Loan 1
1.2 Note 1
2. Conditions Precedent 1
2.1 Execution of Note 1
2.2 No Default; Representations and Warranties 2
2.3 Corporate Documents; Proceedings 2
2.4 Security Agreement 2
3. Representations, Warranties and Agreements 2
3.1 Corporate Power and Authority 3
3.2 No Violation 3
3.3 Governmental Approvals 3
3.4 Priority 3
4. Affirmative Covenants 3
4.1 Financial Information 3
4.2 Performance of Obligations 4
5. Miscellaneous 4
5.1 Payment of Expenses, etc. 4
5.2 Notices 5
5.3 Benefit of Agreement 5
5.4 No Waiver; Remedies Cumulative 5
5.5 Governing Law, Severability 5
5.6 Counterparts 5
5.7 Effectiveness; Integration 6
5.8 Headings Descriptive 6
5.9 Amendment or Waiver 6
EXHIBITS
Exhibit A Form of Secured Convertible Note
Exhibit B Form of Security Agreement
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Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
CREDIT AGREEMENT
This Credit Agreement (the "Credit Agreement"), is made as of November 20,
1996 (the "Effective Date"), between Cambridge NeuroScience, Inc., a Delaware
corporation ("CNSI"), and Vision Pharmaceuticals L.P., a Texas limited
partnership ("VPLP").
R E C I T A L S :
A. CNSI and VPLP are parties to a Collaborative Research, Development and
Marketing Agreement dated as of November 20, 1996 (the "Collaboration
Agreement") and a Stock Purchase Agreement dated as of November 20, 1996 (the
"Stock Purchase Agreement"). All capitalized terms not defined herein shall have
the meanings set forth in the Collaboration Agreement.
B. Pursuant to the Collaboration Agreement, CNSI and VPLP have agreed to
jointly develop certain pharmaceutical products and pursuant to the Stock
Purchase Agreement CNSI has agreed to sell shares of Common Stock to VPLP.
C. CNSI desires to borrow from VPLP, and VPLP desires to lend to CNSI, Two
Million Dollars ($2,000,000) on the terms and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. Amount and Terms of Credit.
1.1 The Loan. Subject to the terms herein, at any time prior to
************** months from the date hereof, upon not less than fifteen (15) days
notice from CNSI to VPLP, VPLP agrees to loan to CNSI Two Million Dollars
($2,000,000) (the "Loan"). Only one such Loan shall be made hereunder
notwithstanding any prepayment of the Loan by CNSI.
1.2 Note. CNSI's obligation to pay the principal of, and interest
on, the Loan shall be evidenced by a secured convertible note duly executed and
delivered by CNSI in the form of Exhibit A (the "Note"). The Note shall be
entitled to the benefits of this Credit Agreement and be secured by the assets
of CNSI pursuant to a Security Agreement in the form attached as Exhibit B (the
"Security Agreement"). This Credit Agreement, the Note and the Security
Agreement are, collectively, the "Credit Documents."
2. Conditions Precedent. The obligation of VPLP to make the Loan is
subject to the satisfaction of the following conditions:
2.1 Execution of Note. CNSI shall have executed and delivered to
VPLP the Note.
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2.2 No Default; Representations and Warranties. At the time of
making the Loan and also after giving effect thereto (i) there shall have
occurred no Event of Default (as defined in the Note), and (ii) all
representations and warranties contained herein, in the Stock Purchase
Agreement, the Collaboration Agreement, and the Note and Security Agreement
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of such date,
with such changes in the ordinary course of business as reasonably acceptable to
VPLP.
2.3 Corporate Documents; Proceedings.
All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated in the Credit
Documents shall be satisfactory in form and substance to VPLP, and VPLP shall
have received all information and copies of all documents and papers, including
records of corporate proceedings and governmental approvals, if any, which VPLP
reasonably may have requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate or governmental
authorities.
2.4 Security Agreement. CNSI shall have duly authorized, executed
and delivered the Security Agreement covering all of CNSI's present and future
Collateral (as defined in the Security Agreement), together with:
(1) acknowledgement copies of proper Financing Statements (Form
UCC- 1) duly filed under the UCC of each jurisdiction as may be necessary or, in
the reasonable opinion of VPLP, desirable to perfect the security interests
purported to be created by the Security Agreement;
(2) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, listing the Financing Statements referred to in
clause (1) above and all other effective financing statements that name CNSI as
debtor and that are filed in the jurisdictions referred to in clause (1),
together with copies of such other financing statements (none of which shall
cover the Collateral except to the extent evidencing "Permitted Encumbrances" as
defined in the Security Agreement);
(3) evidence of the completion of all other recordings and
filings of, or with respect to, the Security Agreement, including in the Patent
and Trademark Office, as may be necessary or, in the opinion of VPLP, desirable
to perfect the security interests purported to be created by the Security
Agreement; and
(4) evidence that all other actions necessary or, in the opinion
of VPLP, desirable to perfect and protect the security interests purported to be
created by the Security Agreement have been taken.
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3. Representations, Warranties and Agreements. In order to induce VPLP to
enter into this Agreement and to make the Loan, in addition to the
representations, warranties and agreements in the Stock Purchase Agreement and
the Collaboration Agreement, which are incorporated herein, CNSI makes the
following representations, warranties and agreements as of the Effective Date,
which shall survive the execution and delivery of this Agreement and the Note
and the making of the Loan.
3.1 Corporate Power and Authority. CNSI has the corporate power and
has taken all corporate proceedings necessary to execute and deliver, and
perform the terms and provisions of, each of the Credit Documents and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of each of such Credit Documents. CNSI has duly executed and
delivered each of the Credit Documents to which CNSI is party, and each of such
Credit Documents constitutes the legal, valid and binding obligation of CNSI
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting rights of creditors and general equitable principles.
3.2 No Violation. Neither the execution, delivery or performance by
CNSI of the Credit Documents, nor compliance by it with the terms and provisions
thereof, (i) will contravene any provision of any law, statute, rule or
regulation or any order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict or be inconsistent with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any levy, lien, encumbrance or security interest
("Lien"), except pursuant to the Security Agreement and the documents
contemplated thereby (collectively, the "Security Documents") upon any of the
property or assets of CNSI pursuant to the terms of, any indenture, mortgage,
deed of trust, credit agreement, loan agreement or any other material agreement,
contract or instrument to which CNSI is a party or by which it or any of its
property or assets is bound or to which it may be subject or (iii) will violate
any provision of the Certificate of Incorporation or By-Laws of CNSI.
3.3 Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made prior to the Effective Date), or exemption
by, any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any Credit Document.
3.4 Priority. The security interest granted pursuant to the Security
Agreement shall be prior and superior to all other security interests, liens or
encumbrances on the Collateral.
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4. Affirmative Covenants. CNSI covenants and agrees that, from and after
the date on which the Loan is made, and until the Loan and the Note, together
with interest, and all other obligations incurred hereunder and thereunder, are
paid or otherwise satisfied in full:
4.1 Financial Information. CNSI will furnish the following reports
to VPLP:
(1) As soon as practicable after the end of each fiscal year,
and in any event within ninety (90) days thereafter, a consolidated
balance sheet of CNSI, as at the end of such fiscal year, and consolidated
statements of operations, accumulated earnings and cash flows of CNSI for
such year, prepared in accordance with generally accepted accounting
principles consistently applied and setting forth in each case in
comparative form the figures for the previous fiscal year, all in
reasonable detail audited (without scope limitations imposed by CNSI) and
certified by independent public accountants of recognized national
standing;
(2) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year, and in any
event within forty-five (45) days thereafter, a consolidated, unaudited
balance sheet of CNSI as of the end of each such quarterly period, and
consolidated, unaudited statements of operations, accumulated earnings and
cash flows of CNSI for such period and for the current fiscal year to
date, prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in comparative form the figures for
the corresponding periods of the previous fiscal year, except that the
unaudited financial statements need not contain footnotes and shall be
subject to changes resulting from year-end audit adjustments, and setting
forth any events which could reasonably be expected to have an adverse
effect upon CNSI's finances or the results of its operations, all in
reasonable detail and certified by the principal financial or accounting
officer of CNSI;
(3) So long as CNSI is subject to the reporting requirements
of the Exchange Act, in lieu of the documents required by Sections 4.1 (1)
and (2) and within the time periods required in Sections 4.1 (1) and (2)
for the furnishing of financial information or as soon as otherwise
available, whichever is earlier, copies of all documents filed by CNSI
with the SEC, including, but not limited to, its reports filed on Form
10-K, Form 10-Q, Form 8-K or any successor form or forms;
(4) As soon as available information and data on any material
adverse changes in or any event or condition which materially adversely
affects or could materially adversely affect the business, operations,
properties or plans of CNSI;
(5) Immediately upon becoming aware of any condition or event
which constitutes a breach of the Credit Documents, or any agreement
contemplated hereby, written notice specifying the nature and period of
existence thereof an what action CNSI is taking or proposes to take with
respect thereto; and
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Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
(6) With reasonable promptness, such other information and
data with respect to CNSI, as VPLP may from time to time reasonably
request.
4.2 Performance of Obligations. CNSI will perform in all material
respects all of its obligations under the terms of each material agreement,
mortgage, indenture, security agreement and other instrument by which it is
bound.
5. Miscellaneous.
5.1 Payment of Expenses, etc. CNSI shall pay all reasonable
out-of-pocket costs and expenses of VPLP in connection with the enforcement of
this Credit Agreement and the other Credit Documents.
5.2 Notices. Any notice required under this Agreement shall be
sufficient if sent by registered or certified mail postage and charges prepaid,
return receipt requested, or by hand delivery including overnight delivery
service to the following addresses or such address hereinafter specified in
writing:
VPLP: Vision Pharmaceuticals L.P.
c/o Allergan, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
CNSI: Cambridge Neuroscience, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
5.3 Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided that CNSI may not assign or transfer any
of its rights or obligations hereunder, whether by operation of law or
otherwise, without the prior written consent of VPLP, except in the event of an
acquisition or merger of, or the sale of substantially all of its assets by,
CNSI, as a result of which the acquiror, survivor or purchaser of assets has
cash and cash equivalents, as of the effective date of such transaction, of less
than $*********, determined in accordance with generally accepted accounting
principles.
5.4 No Waiver; Remedies Cumulative. No failure or delay on the part
of VPLP exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between CNSI and VPLP or the holder of
the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights, powers and
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remedies expressly provided herein or in any other Credit Documents are
cumulative and not exclusive of any rights, powers or remedies which VPLP or the
holder of the Note would otherwise have. No notice to or demand on CNSI in any
case shall entitle CNSI to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of VPLP or the holder
of any Note to any other or further action in any circumstances without notice
or demand.
5.5 Governing Law, Severability. This Agreement shall be governed
and construed in accordance with the laws of the State of California. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of the Agreement shall be severable and enforceable to
the fullest extent permitted by applicable law.
5.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
5.7 Effectiveness; Integration. This Agreement and the other Credit
Documents, together with all exhibits and schedules, constitutes the entire
agreement of the parties with respect to the subject matter hereof and thereof.
5.8 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
5.9 Amendment or Waiver. Neither this Credit Agreement nor any other
Credit Document nor any terms or hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by VPLP.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.
"CNSI"
CAMBRIDGE NEUROSCIENCE, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Its: President & CEO
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"VPLP"
VISION PHARMACEUTICALS L.P., a Texas limited
partnership, dba Allergan, by Allergan
General, Inc., its general partner
By:/s/ Xxxxxxx X. Xxxxxx, Xx.
--------------------------------------
Name:Xxxxxxx X. Xxxxxx, Xx.
--------------------------------------
Title:Secretary
--------------------------------------
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Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
EXHIBIT A
FORM OF
SECURED CONVERTIBLE PROMISSORY NOTE
$2,000,000 ____________, 199__
FOR VALUE RECEIVED, receipt of which is hereby acknowledged, CAMBRIDGE
NEUROSCIENCE, INC., a Delaware corporation, ("Borrower") hereby promises to pay
to VISION PHARMACEUTICALS L.P., a Texas Limited Partnership, ("Holder"), or
order, the principal sum of Two Million Dollars ($2,000,000), in cash in lawful
money of the United States (or as otherwise permitted pursuant to Section 2
below), together with interest at the rate of **** percent (**%) per annum on
all unpaid principal of this Note, calculated based on the actual number of days
elapsed divided by 360.
This Note has been issued in connection with that certain Collaborative
Research, Development and Marketing Agreement dated as of November 20, 1996 (the
"Collaboration Agreement") and that certain Credit Agreement dated as of
November 20, 1996 (the "Credit Agreement") by and between Borrower and Holder
and all capitalized terms not defined herein shall have the meaning set forth in
the Collaboration Agreement.
Principal and all accrued interest on this Note shall become due and
payable upon the earlier of:
(i) Termination of the Collaboration Agreement;
(ii) ***************************************************************
********************************************************************
********************************************************************
*********************************************************************
*********************************************************************
**e********************************;
(iii) Within five (5) days of the end of any fiscal quarter at which the
cash and cash equivalents of Borrower, determined in accordance with
generally accepted accounting principles, are less than $*****;
(iv) In the event of the acquisition or merger of, or sale of substantially
all of the assets of, CNSI, as a result of which the acquiror, survivor or
purchaser of assets has cash and cash equivalents equal to or greater than
$***** determined in accordance with generally accepted accounting
principles as of the effective date of such transaction; or
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Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
(v) Demand by Holder on an Event of Default as set forth in Section 4
below.
1. Prepayment. Borrower shall be entitled at any time to prepay any
portion or all of the indebtedness owed hereunder without penalty. Borrower
shall also be entitled to prepay in cash any portion of the indebtedness which
Holder elects to convert under Section 2(a) below, prior to such conversion.
Each prepayment hereunder shall be credited first to accrued interest and then
to principal. Interest shall thereupon cease to accrue upon the principal so
paid. Such prepayment will be made by wire transfer of immediately available
funds.
2. Conversion Rights.
(a) Right to Convert. Subject to and in compliance with the provisions
of this Section 2, Holder may, at Holder's option, at such time as the
principal and accrued interest are due under this Note, elect to convert
all or any part of the principal amount of this Note, and accrued interest,
outstanding at the time of such conversion (the "Conversion Rights") into a
number of shares of Common Stock of Borrower (the "Borrower Common Stock")
equal to the result obtained by dividing the principal amount, and accrued
interest, of this Note Holder elects to convert by *** of the fair market
value of a share of Borrower's Common Stock on the date of such election
(the "Conversion Price"). For purposes hereof, such fair market value shall
equal the average closing sale price of Borrower's Common Stock as reported
on the primary exchange on which such shares are traded, or if closing sale
prices are not reported, the closing bid price of such shares, for the five
(5) trading days preceding Holder's election to convert.
(b) Manner of Exercising Conversion Rights. In order to exercise the
Conversion Rights, Holder shall deliver to Borrower during normal business
hours at the Borrower's address as set forth in Section 17 of the Security
Agreement, (i) the original of this Note duly endorsed for transfer to
Borrower and (ii) written notice to Borrower stating that Holder elects to
exercise the Conversion Rights. Unless Borrower exercises its right to
prepay under Section 1 above all of the principal, and accrued interest,
which Holder elects to convert within two (2) days of receipt of Holder's
notice, as soon as practicable (but in no event more than three (3)
business days) after the date on which Borrower receives this Note duly
endorsed and the required notice of exercise, Borrower shall issue and
deliver to Holder (i) a certificate for the number of whole shares of
Borrower Common Stock issuable on such conversion, (ii) in the event this
Note is converted in part, a new Note of like tenor for the remaining
unpaid balance, and (iii) cash, as provided in Subsection 2(c) below, in
respect of any fraction of a share of Borrower Common Stock otherwise
issuable upon such conversion, and as provided in Subsection 2(d) below in
respect of interest on principal so converted. Such conversion shall be
deemed to have been effected on the date the shares of Borrower Common
Stock issuable upon exercise of the Conversion Rights are actually issued
to the Holder, and the Holder shall be deemed to have become the Holder of
record of the shares represented thereby on such date.
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(c) Fraction of a Share. Borrower shall not be required to issue a
fraction of a share or scrip representing fractional shares of Borrower
Common Stock upon conversion of this Note. If any fraction of a share of
Borrower Common Stock would, except for the provisions of this Subsection
2(c), be issuable on the conversion of this Note, Borrower shall pay to
Holder a cash payment equal to the value of such fraction based on the
Conversion Price.
(d) Payment of Interest on Converted Principal. Promptly upon
conversion of all or any portion of the principal, Borrower shall pay to
Holder by wire transfer of immediately available funds, all accrued but
unpaid interest on the principal so converted.
(e) Obligor to Reserve Stock. As long as Holder's Conversion Rights are
in effect, Borrower shall at all times reserve and keep available out of
its authorized but unissued Borrower Common Stock, for the purpose of
effecting the conversion of this Note, such number of its duly authorized
shares of Borrower Common Stock as shall from time to time be sufficient to
effect the conversion of this Note. Borrower covenants that all shares of
Borrower Common Stock which may be issued upon conversion of this Note will
upon issue be fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof.
(f) Reclassification, Reorganization, Consolidation or Merger. In the
event of any reclassification, capital reorganization or other change of
outstanding shares of Borrower Common Stock or in the event of any
consolidation or merger of Borrower with or into another corporation (other
than a merger in which Borrower is the continuing corporation and that does
not result in any reclassification, capital reorganization or other change
of outstanding shares of Borrower Common Stock) or in the event of any
sale, lease, transfer or conveyance to another corporation of the property
and assets of Borrower as an entirety or substantially as an entirety,
Borrower shall, as a condition precedent to such transaction, cause
effective provisions to be made so that Holder shall have the right
thereafter, by converting this Note, to acquire the kind and amount of
shares of stock and other securities and property (including cash)
receivable upon such reclassification, capital reorganization and other
change, consolidation, merger, sale or conveyance by a holder of shares of
Borrower Common Stock. Any such provision shall include provisions for
adjustments in respect of such shares of stock and other securities and
property, and other provisions hereof, to continue and protect the rights
of Holder hereunder. The foregoing provisions shall similarly apply to
successive reclassifications, capital reorganizations and changes of
outstanding shares of Borrower Common Stock and to successive
consolidations, mergers, sales or conveyances.
3. Other Agreements. The obligations of Borrower under this Note are
secured pursuant to that certain Security Agreement dated ________, 199__,
between Borrower and Holder. This Note is entitled to the benefits and subject
to the conditions of the Security Agreement, the Credit Agreement, and that
certain Stock Purchase Agreement dated November 20, 1996 (the "Stock Purchase
Agreement"), as the same may be amended from time to time.
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4. Default. If any of the following events (hereafter called "Events of
Default") shall occur:
(a) If Borrower shall default in the payment of any principal or
interest due under this Note when the same shall become due and payable,
whether at maturity or by acceleration or upon demand or otherwise; or
(b) If Borrower shall make a general assignment for the benefit of
creditors; or
(c) If Borrower shall file a voluntary petition in bankruptcy, or shall
be adjudicated a bankrupt or insolvent, or shall file any petition or
answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or any future
Federal Bankruptcy Act or other applicable federal, state or other statute,
law or regulation, or shall file any answer admitting the material
allegation of a petition filed against Borrower in such proceeding, or
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of Borrower of all or any substantial part of the
properties of Borrower, or Borrower shall commence the winding up or the
dissolution or liquidation of Borrower; or
(d) If, within sixty (60) days after a court of competent jurisdiction
shall have entered an order, judgment or decree approving any complaint or
petition against Borrower seeking reorganization, dissolution or similar
relief under the present or any future Federal Bankruptcy Act or other
applicable federal, state or other statute, law or regulation, such order,
judgment or decree shall not have been dismissed or stayed pending appeal,
or if, within sixty (60) days after the appointment, without the consent or
acquiescence of Borrower, of any trustee, receiver or liquidator of
Borrower or of all or any substantial part of the properties of Borrower,
such appointment shall not have been vacated or stayed pending appeal, or
if, within sixty (60) days after the expiration of any such stay, shall not
have been vacated; or
(e) If Borrower should breach any of the covenants, representations,
warranties, terms or conditions of this Note, the Credit Agreement, the
Stock Purchase Agreement, the Security Agreement or the Collaboration
Agreement, or contained in any statement or certificate at any time given
or made to Holder pursuant thereto or in connection therewith, and in the
case of any breach of any representations, warranties or covenants in the
Stock Purchase Agreement or the Collaboration Agreement capable of cure,
such breach shall continue for thirty (30) days after notice thereof from
the Holder to Borrower;
then, and in each and every such case, Holder may by notice in writing to
Borrower declare all amounts under this Note to be forthwith due and payable and
thereupon the balance shall become so due and payable, without presentation,
protest or further demand or notice of any kind, all of which are hereby
expressly waived.
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5. Borrower and Holder intend to contract in compliance with all state and
federal usury laws governing the loan evidenced by this Note. Borrower and
Holder agree that none of the terms of this Note shall be construed as a
contract for, or requirement to pay interest at a rate in excess of, the maximum
interest rate allowed by any applicable state or federal usury laws. If Holder
receives sums which constitute interest that would otherwise increase the
effective interest rate on this Note to a rate in excess of that permitted by
any applicable law, then all such sums constituting interest in excess of the
maximum lawful rate shall at Holder's option either be credited to the payment
of principal or returned to Borrower. The provisions of this paragraph control
the other provisions of this Note and any other agreement between Holder and
Borrower.
6. Borrower hereby waives presentment, demand, protest and notice of
non-payment or dishonor of this Note. If an action is brought for collection
under this Note, the Holder hereof shall be entitled to receive all costs of
collection, including, without limitation, its reasonable attorneys' fees.
7. No delay or failure on the part of Holder 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 Holder of any right or
remedy preclude any other right or remedy. Holder, at its option, may enforce
its rights against any collateral securing this Note without enforcing its
rights against Borrower or any other indebtedness due or to become due to
Borrower. Borrower agrees that, without releasing or impairing Borrower's
liability hereunder, Holder may at any time release, surrender, substitute or
exchange any collateral securing this Note and may release any party secondarily
liable for the indebtedness evidenced by this Note.
8. This Note shall be construed in accordance with and governed by the
internal laws of the State of California, and where applicable and except as
otherwise defined herein, terms used herein shall have the meanings given them
in the California Uniform Commercial Code.
CAMBRIDGE NEUROSCIENCE, INC.
By:
--------------------------------------
Its:
--------------------------------------
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EXHIBIT B
FORM OF
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made and entered
into this day of ____________, 199__ by and between CAMBRIDGE NEUROSCIENCE,
INC., a Delaware corporation, ("CNSI"), and VISION PHARMACEUTICALS L.P., a Texas
limited partnership, (the "Secured Party").
R E C I T A L S
1. Pursuant to that certain Collaborative, Research, Development and
Marketing Agreement by and between CNSI and Secured Party dated November 20,
1996 (the "Collaboration Agreement") and that certain Credit Agreement by and
between CNSI and Secured Party dated November 20, 1996 (the "Credit Agreement"),
Secured Party has agreed to loan to CNSI Two Million Dollars ($2,000,000) (the
"Loan") as evidenced by a secured promissory note (the "Note").
2. As an inducement to make the Loan, CNSI has agreed to grant for the
benefit of the Secured Party a security interest as set forth herein.
A G R E E M E N T
1. Security Interest. Pursuant to the Uniform Commercial Code, CNSI hereby
grants to Secured Party a security interest in the Collateral, as more fully
described at Paragraph 2 below, to secure payment and performance of the
obligations of CNSI, as defined and described at Paragraph 3 below.
2. Collateral.
The Collateral of CNSI is described as follows:
(a) all rights useful in the field of research, development and
commercialization activities with respect to compounds which block one or more
than one subclass of the glutamate-activated ion channels, including NMDA
channels and, and/or one or more than one subclass of sodium channels, for the
treatment of ophthalmic diseases and disorders (the "Field"), except Excluded
Compounds (as defined in the Collaboration Agreement), under present and future,
foreign and domestic, patents, patent applications, patent extensions,
certificates of invention and applications for certificates of invention,
together with any divisions, continuations or continuations-in-part owned by, or
licensed to CNSI, with the right to sublicense, as of the date hereof and
developed during the term of
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the Collaboration Agreement. Such rights as of the date hereof, are listed in
Schedule 1 hereto; and
(b) all rights useful in the Field in present and future inventions,
trade secrets, copyrights, data, regulatory submissions or other intellectual
property of any kind necessary or useful in the Field (including any proprietary
biological materials, compounds or reagents) and all confidential technical
information in the possession of CNSI as of the date hereof and developed during
the term of the Collaboration Agreement necessary or useful for the development,
manufacture, use or sale of pharmaceutical products in the Field but excluding
any such technology licensed to Boehringer Ingelheim International GmbH ("BI")
pursuant to the License Agreement between CNSI and BI dated as of Xxxxx 00, 0000
(xxx "XX License") (the rights described in Section 2(a) and this Section 2(b)
being collectively, the "Technology Collateral"); and
(c) all proceeds of the foregoing Technology Collateral, for
purposes of this Security Agreement, the term "proceeds" includes whatever is
receivable or received when Collateral or proceeds is sold, collected, exchanged
or otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes, without limitation, all rights to payment, including return
premiums, with respect to any insurance relating thereto.
CNSI represents and warrants that Schedule 1 hereto is a complete and accurate
list of all U.S. and foreign patents and patent applications, rights under which
are included in the Technology Collateral.
3. Obligations Secured. The obligations ("Obligations") secured by this
Security Agreement shall include (a) the performance by CNSI of the obligations
set forth in (i) the Note and (ii) this Security Agreement; (b) all payments
made or expenses incurred by Secured Party, including, but not limited to,
reasonable attorneys' fees and legal expenses in the exercise, preservation or
enforcement of any of the rights, powers or remedies of Secured Party or in the
enforcement of the obligations of CNSI under the Note or this Security
Agreement; and (c) any obligations of CNSI to Secured Party arising from
amendments, modifications, renewals or extensions of any of the foregoing
obligations.
4. Collateral Encumbrances; Covenants of CNSI.
(a) Except as set forth on Schedule 2 hereto (the "Permitted
Encumbrances"), CNSI owns the Collateral free and clear of any lien except for
the lien created by this Security Agreement, and no effective financing
statement, assignment or other instrument similar in effect, which covers all or
any part of the Collateral, is on file in any recording office.
(b) As to the Collateral, CNSI covenants with the Secured Party as
follows:
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(i) CNSI will not create, permit or suffer to exist, and will
defend the Collateral against and take such other action as is necessary
to remove, any lien or encumbrance on the Collateral except the Permitted
Encumbrances, and will defend the right, title and interest of Secured
Party in and to the Collateral and in and to the proceeds thereof against
the claims and demands of all persons.
(ii) CNSI will comply with all laws, statutes and regulations
pertaining to the Collateral.
(iii) CNSI will pay when due all taxes, licenses, charges and
other impositions on or for the Collateral.
(iv) CNSI, at its own expense, will execute, file and record
such assignments, statements, notices and agreements, take such action and
obtain such certificates and documents, in accordance with all applicable
laws, statutes, and regulations (whether state, federal or local), as
requested by Secured Party or as necessary to perfect, evidence and
continue Secured Party' security interest in the Collateral, including,
without limitation, assignments for security in the U.S. Patent and
Trademark Office and corresponding foreign patent offices. CNSI shall
submit all such assignments, statements, notices or agreements to Secured
Party for review prior to filing or recordation.
(v) CNSI will deliver to Secured Party all instruments and
other items of Collateral for which possession is required for perfection.
(vi) CNSI will, upon demand, give Secured Party such
information as reasonably requested concerning the Collateral and CNSI's
business, and permit Secured Party to inspect and copy the records
thereof.
(vii) CNSI will keep or require any goods which are security for
or represented by the Collateral to be insured in amounts, on terms and
with carriers as is customary and appropriate for the business in which
CNSI is engaged.
(viii) CNSI will, as appropriate, properly care for, house, store
and maintain the Collateral in good condition, free of misuse, abuse,
waste and deterioration, and promptly and duly observe and perform any
contract or agreement pertaining to or part of the Collateral.
(ix) CNSI will not, without Secured Party's written consent,
exchange, lease, lend, use, operate, demonstrate, sell or dispose of the
Collateral or CNSI's rights therein other than in the ordinary course of
business
(x) CNSI will not, without Secured Party's written consent,
permit anything to be done that may impair, or fail to do anything
necessary or advisable to preserve, the Collateral's value and the
security.
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(xi) CNSI will advise Secured Party promptly, in reasonable
detail, (A) of any material lien, security interest, encumbrance or claim
made or asserted against any of the Collateral, (B) of any material change
in the composition of the Collateral, and (C) of the occurrence of any
other event that would have a material adverse effect on the aggregate
value of the Collateral or on the security interests created hereunder.
(xii) Upon reasonable notice to CNSI (unless an Event of Default
has occurred and is continuing, in which case no notice is necessary),
Secured Party and its representatives shall also have the right to enter
into and upon any premises where any of the Collateral is located for the
purpose of inspecting the same, observing its use or otherwise protecting
their interests therein.
(xiii) In the event that any of the Technology Collateral is
infringed, misappropriated or diluted by a third party, CNSI shall notify
Secured Party promptly after it learns thereof and shall, unless Secured
Party shall reasonably determine that such Technology Collateral is not
material to the conduct of CNSI's business, promptly xxx, at its own
expense, for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and
take such other actions as Secured Party shall reasonably deem appropriate
under the circumstances to protect such Technology Collateral.
5. Default.
(a) The occurrence of any of the following shall be an event of
default hereunder:
(i) If CNSI shall make a general assignment for the benefit of
creditors; or
(ii) If CNSI shall file a voluntary petition in bankruptcy, or
shall be adjudicated a bankrupt or insolvent, or shall file any petition
or answer seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the present
or any future Federal Bankruptcy Act or other applicable federal, state or
other statute, law or regulation, or shall file any answer admitting the
material allegation of a petition filed against CNSI in such proceeding,
or shall seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator of CNSI of all or any substantial part of
the properties of CNSI, or CNSI shall commence the winding up or the
dissolution or liquidation of CNSI; or
(iii) If, within sixty (60) days after a court of competent
jurisdiction shall have entered an order, judgment or decree approving any
complaint or petition against CNSI seeking reorganization, dissolution or
similar relief under the present or any future Federal Bankruptcy Act or
other applicable federal, state or other statute, law or regulation, such
order, judgment or decree shall not have been dismissed or
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stayed pending appeal, or if, within sixty (60) days after the
appointment, without the consent or acquiescence of CNSI, of any trustee,
receiver or liquidator of CNSI or of all or any substantial part of the
properties of CNSI, such appointment shall not have been vacated or stayed
pending appeal, or if, within sixty (60) days after the expiration of any
such stay, shall not have been vacated; or
(iv) If CNSI should breach any of the covenants,
representations, warranties, terms or conditions of the Note or this
Security Agreement, or contained in any statement or certificate at any
time given or made to Secured Party pursuant thereto or in connection
therewith, and in the case of any breach of any representation, warranty
or covenant capable of cure, such breach shall continue for thirty (30)
days after notice thereof from Secured Party to CNSI.
(b) Upon the occurrence of an event of default pursuant to this
Section 5, Secured Party, in addition to all other rights, powers and privileges
enumerated in Section 6 below, and subject to the rights of the respective
parties contained in Sections 1 and 2 of the Note, may (1) declare the unpaid
balance, in whole or in part, of CNSI's Obligations immediately due and payable,
without demand or notice and proceed to collect same; and (2) waive or remedy
any default without waiving such default or any prior or subsequent default.
6. Remedies.
(a) Upon the occurrence of an event of default pursuant to Section 5
hereof, Secured Party, in addition to any other remedy available under the
Uniform Commercial Code, in its own or CNSI's name, and subject to the rights of
the respective parties contained in Sections 1 and 2 of the Note, without notice
and at CNSI's expense, may, but is not obligated to:
(i) as appropriate take possession of the Collateral with or
without legal process, require CNSI to assemble the Collateral and make it
available to the Secured Party at a reasonably convenient place, or,
whether or not the Collateral is present at the place of sale, sell the
Collateral at a public sale in the county where such Collateral is located
or where this Security Agreement was made, or sell the Collateral at a
private sale and bid at such private sale;
(ii) collect, by legal proceedings or otherwise, and endorse,
receive and receipt for all dividends, interest, payments, proceeds and
other sums and property now or hereafter payable on or on account of
Collateral;
(iii) enter into any extension, reorganization, deposit, merger,
consolidation or other agreement pertaining to, or deposit, surrender,
accept, hold or apply other property in exchange for, the Collateral;
(iv) insure, process and preserve the Collateral; and
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(v) transfer the Collateral to its own or its nominee's name.
(b) CNSI also agrees to pay all costs of Secured Party, including,
without limitation, reasonable attorneys' fees, incurred in connection with the
enforcement of any of their rights and remedies hereunder.
7. Grant of License to Use Technology Collateral. For the purpose of
enabling Secured Party to exercise rights and remedies under Section 6 hereof at
such time as Secured Party, without regard to this Section 7, shall be lawfully
entitled to exercise such rights and remedies, CNSI hereby grants to Secured
Party an irrevocable, exclusive license in the Field (exercisable without
payment of royalty or other compensation to CNSI) to use, license or sublicense
any Technology Collateral, and wherever the same may be located, and including,
without limitation, in such license reasonable access to all media in which any
of the licenses items may be recorded or stored and to all computer and
automatic machinery software and programs used for the compilation or printout
thereof.
8. Secured Party's Appointment as Attorney-in-Fact.
(a) CNSI hereby irrevocably constitutes and appoints Secured Party
and any officer or agent thereof, with full power or substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of CNSI and in the name of CNSI or in its own name, from time to
time in Secured Party's discretion, for the purpose of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to execute
and deliver any and all documents and instruments that may be necessary or
desirable to accomplish the purposes of this Security Agreement.
(b) Secured Party agrees that, except as upon the occurrence and
during the continuation of an Event of Default, it will forebear from exercising
the power of attorney or any rights granted to Secured Party pursuant to this
Section 8. CNSI hereby ratifies, to the extent permitted by law, all that said
attorneys shall lawfully do or cause to be done by virtue hereof. The power of
attorney granted pursuant to this Section 8 is a power coupled with any interest
and shall be irrevocable until the Obligations are indefeasibly paid in full.
(c) CNSI also authorizes Secured Party, at any time and from time to
time upon the occurrence and during the continuation of any Event of Default,
(i) to communicate in its own name with any party to any contract or agreement
which is part of the collateral hereunder with regard to the assignment of the
right, title and interest of CNSI in and under such contracts and agreements and
other matters relating thereto and (ii) to execute, in connection with the sale
provided for in Section 6 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
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9. Termination.
(a) This Security Agreement and the security interest granted to
Secured Party by CNSI hereunder shall terminate upon satisfaction in full of all
of the CNSI's Obligations to Secured Party by payment or otherwise.
(b) If applicable, and promptly upon termination of this Security
Agreement, the Secured Party agrees to execute and file with the Massachusetts
Secretary of State a termination statement on Form UCC-2 and a collateral
assignment for filing in the Patent and Trademark Office terminating Secured
Party' security interest in the Collateral at the expense of the CNSI. This
subparagraph (b) is subject to specific performance and injunctive relief for
the benefit of CNSI in the event of a failure by the Secured Party to duly
comply with a reasonable request for such compliance.
10. General.
(a) Such care as Secured Party give to the safekeeping of its own
property of like kinds shall constitute reasonable care of the Collateral when
in Secured Party' possession, but Secured Party is not required to make
presentment, demand or protest, or give notice and need not take action to
preserve any rights against prior parties in connection with any obligation or
evidence of indebtedness held as Collateral.
(b) CNSI shall give the Secured Party prior written notice of (i)
any change of place of business and address thereof, and (ii) any change in
policies or certificates of insurance required for the Collateral.
(c) This Security Agreement is a continuing agreement and shall
apply to all past, present and future Obligations of CNSI to Secured Party,
whether or not such Obligations continue, increase, decrease or create new
indebtedness after or before payment of any prior indebtedness, notwithstanding
the bankruptcy of, or other event or proceedings affecting the CNSI.
(d) Time is of the essence. Acceptance of partial or delinquent
payments or failure to exercise any right, power or remedy shall not waive any
Obligation of CNSI or modify this Security Agreement. Secured Party, and its
successors and assigns, have all rights, powers and remedies herein and as
provided by law, including the rights, powers and remedies of a secured party
under the Uniform Commercial Code, and may exercise the same and effect any
set-off and proceed against the Collateral or other security for CNSI's
Obligations at any time.
11. Cumulative Rights. The rights, powers and remedies of Secured Party
under this Security Agreement shall be in addition to all rights, powers and
remedies given to Secured Party by virtue of any statute or rule of law, or any
other agreement between CNSI and Secured Party or otherwise, all of which
rights, powers and remedies shall be cumulative
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and may be exercised successively or concurrently without impairing Secured
Party' security interest in the Collateral.
12. Waiver. Any forbearance or failure or delay by Secured Party in
exercising any right, power or remedy shall not preclude the further exercise
thereof, and every right, power or remedy of Secured Party shall continue in
full force and effect until such right, power or remedy is specifically waived
in a writing executed by Secured Party. CNSI waives any right to require Secured
Party to proceed against any person or to exhaust any of the Collateral or to
pursue any remedy in Secured Party' power.
13. Binding Upon Successors. All rights of Secured Party under this
Security Agreement shall inure to the benefit of its successors and assigns, and
all obligations of CNSI shall bind its successors and assigns.
14. Entire Agreement; Severability. This Security Agreement contains the
entire agreement between Secured Party, and CNSI with respect to the subject
matter hereof. If any of the provisions of this Security Agreement shall be held
invalid or unenforceable, this Security Agreement shall be construed as if not
containing those provisions and the rights and obligations of the parties hereto
shall be construed and enforced accordingly.
15. Choice of Law. This Security Agreement shall be construed in
accordance with and governed by the internal laws of the State of California and
where applicable and except as otherwise defined herein, terms used herein shall
have the meanings given them in the California Uniform Commercial Code.
16. Place of Business; Trade Name; Collateral Location; Records. CNSI
represents that its chief place of business is Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000, and that Cambridge Neuroscience, Inc. is the only trade
name or style used by CNSI and that the Collateral described in Paragraph 2
hereof is located at Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, and
that CNSI's records concerning the Collateral are kept at Xxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000.
17. Notice. Any written notice, consent or other communication provided
for in this Security Agreement shall be deemed given if delivered by hand, by
courier against receipt, by certified or registered mail, return receipt
requested, or by overnight delivery service providing evidence of receipt, at
the following addresses, or to such other address with respect to any party as
such party shall notify the other in writing:
Secured Party: Vision Pharmaceuticals L.P.
c/o Allergan, Inc.
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
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CNSI: Cambridge Neuroscience, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
18. Attorneys' Fees. In the event of any controversy, claim or dispute
between the CNSI and the Secured Party arising out of or relating to this
Security Agreement, or the breach hereof, the prevailing party shall be entitled
to recover from the losing party reasonable attorneys' fees, expenses and costs.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CNSI:
CAMBRIDGE NEUROSCIENCE, INC. a
Delaware corporation
By:
--------------------------------------
Its:
--------------------------------------
Secured Party:
VISION PHARMACEUTICALS L.P., a Texas limited
partnership, dba Allergan, by Allergan
General, Inc., its general partner
By:
--------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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Schedule 1
to
Security Agreement
Patents and Patent Applications
26
Schedule 2
to
Security Agreement
Permitted Encumbrances
