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EXHIBIT 10.20
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ABGENIX, INC.
LOAN AND SECURITY AGREEMENT
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TABLE OF CONTENTS
Page
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1. DEFINITIONS AND CONSTRUCTION....................................................... 1
1.1 Definitions................................................................. 1
1.2 Accounting Terms............................................................ 7
2. ADVANCES AND TERMS OF PAYMENT...................................................... 7
2.1 Advances.................................................................... 7
2.2 Interest Rates, Payments, and Calculations.................................. 7
2.3 Crediting Payments.......................................................... 8
2.4 Fees........................................................................ 8
2.5 Additional Costs............................................................ 9
2.6 Term........................................................................ 9
3. CONDITIONS OF LOANS................................................................ 9
3.1 Conditions Precedent to Initial Advance..................................... 9
3.2 Conditions Precedent to all Advances........................................ 10
4. CREATION OF SECURITY INTEREST...................................................... 10
4.1 Grant of Security Interest.................................................. 10
4.2 Delivery of Additional Documentation Required............................... 10
5. REPRESENTATIONS AND WARRANTIES..................................................... 11
5.1 Due Organization and Qualification.......................................... 11
5.2 Due Authorization; No Conflict.............................................. 11
5.3 No Prior Encumbrances....................................................... 11
5.4 Name; Location of Chief Executive Office.................................... 11
5.5 Litigation.................................................................. 11
5.6 No Material Adverse Change in Financial Statements.......................... 11
5.7 Solvency.................................................................... 11
5.8 Regulatory Compliance....................................................... 11
5.9 Environmental Condition..................................................... 12
5.10 Taxes....................................................................... 12
5.11 Subsidiaries................................................................ 12
5.12 Government Consents......................................................... 12
5.13 Full Disclosure............................................................. 12
6. AFFIRMATIVE COVENANTS.............................................................. 12
6.1 Good Standing............................................................... 12
6.2 Government Compliance....................................................... 12
6.3 Financial Statements, Reports, Certificates................................. 13
6.4 Taxes....................................................................... 13
6.5 Insurance................................................................... 13
6.6 Debt-Net Worth Ratio........................................................ 14
6.7 Tangible Net Worth.......................................................... 14
6.8 Minimum Liquidity/Debt Service Coverage..................................... 14
6.9 Right to Inspect............................................................ 14
6.10 Principal Depository........................................................ 14
7. NEGATIVE COVENANTS................................................................. 14
7.1 Dispositions................................................................ 14
7.2 Change in Business.......................................................... 14
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7.3 Mergers or Acquisitions..................................................... 14
7.4 Indebtedness................................................................ 15
7.5 Encumbrances................................................................ 15
7.6 Distributions............................................................... 15
7.7 Investments................................................................. 15
7.8 Transactions with Affiliates................................................ 15
7.9 Subordinated Debt........................................................... 15
7.10 Compliance.................................................................. 15
8. EVENTS OF DEFAULT.................................................................. 15
8.1 Payment Default............................................................. 15
8.2 Covenant Default............................................................ 15
8.3 Attachment.................................................................. 16
8.4 Insolvency.................................................................. 16
8.5 Other Agreements............................................................ 16
8.6 Judgments................................................................... 16
8.7 Guarantor................................................................... 16
8.8 Misrepresentations.......................................................... 16
9. BANK'S RIGHTS AND REMEDIES......................................................... 16
9.1 Rights and Remedies......................................................... 16
9.2 Power of Attorney........................................................... 17
9.3 Bank Expenses............................................................... 17
9.4 Bank's Liability for Collateral............................................. 17
9.5 Remedies Cumulative......................................................... 18
9.6 Demand; Protest............................................................. 18
10. NOTICES............................................................................ 18
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER......................................... 18
12. GENERAL PROVISIONS................................................................. 19
12.1 Successors and Assigns...................................................... 19
12.2 Indemnification............................................................. 20
12.3 Time of Essence............................................................. 20
12.4 Severability of Provisions.................................................. 20
12.5 Amendments in Writing, Integration.......................................... 20
12.6 Counterparts................................................................ 20
12.7 Survival.................................................................... 20
12.8 Confidentiality............................................................. 20
12.9 Guaranty.................................................................... 21
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This LOAN AND SECURITY AGREEMENT is entered into as of January 23, 1997,
by and between SILICON VALLEY BANK ("Bank") and ABGENIX, INC. ("Borrower").
RECITALS
Borrower wishes to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Bank will advance credit to Borrower, and Borrower will repay the amounts
owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. As used in this Agreement, the following terms
shall have the following definitions:
"Advance" or "Advances" have the meaning set forth in
Section 2.1.
"Affiliate" means, with respect to any Person, any Person
that owns or controls directly or indirectly such Person, any Person that
controls or is controlled by or is under common control with such Person, and
each of such Person's senior executive officers, directors, and partners.
"Aggregate Obligations" means the aggregate outstanding
Obligations of Borrower, as defined in this Agreement, and the aggregate
outstanding Obligations of Guarantor, as defined in the Loan and Security
Agreement of even date with Bank.
"Availability Date" has the meaning set forth in Section
2.1.
"Bank Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration (including for example negotiation
of landlord waivers, and amendments and waivers to the Loan Documents, but not
including day to day administration of the Loan Documents) or, and enforcement
of the Loan Documents; and Bank's reasonable attorneys' fees and expenses
incurred in amending, enforcing or defending the Loan Documents, whether or not
suit is brought.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks in the State of California are authorized or
required to close.
"Cash Burn" means, as of the last day of any fiscal quarter
with respect to Borrower and Guarantor on a consolidated basis, the change in
cash balances (excluding changes in debt or equity or corporate milestone
payments) from the last day of the preceding quarter.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means the property described on Exhibit A
attached hereto; provided that "Collateral" shall mean the property described on
Exhibit A-1 attached hereto upon the occurrence of a Conversion Event.
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"Committed Line" means Four Million Three Hundred Thousand
Dollars ($4,300,000).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
"Conversion Event" means the earlier of (i) the date that
the balance of the Liquidity is less than two and one half (2.5) times the
Aggregate Obligations, or (ii) the date that Cash Burn is less than twelve (12)
months.
"Daily Balance" means the amount of the Obligations owed at
the end of a given day.
"Debt Service Coverage" means, as of any date of
determination, with respect to Borrower and its Subsidiaries on a consolidated
basis, a ratio of (a) the sum of (i) earnings after tax plus (ii) interest and
non-cash expense to (b) the sum of (i) current portion of long term debt plus
(ii) interest expense.
"ERISA" means the Employment Retirement Income Security Act
of 1974, as amended, and the regulations thereunder.
"Equipment" means all equipment, machinery, fixtures,
vehicles (including motor vehicles and trailers), and all attachments,
accessories, accessions, replacements, substitutions, additions and improvements
to any of the foregoing, and all proceeds thereof.
"Facility" means the Advances provided to Borrower by Bank
pursuant to Section 2 hereof.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Guarantor" means Cell Genesys, Inc.
"Guaranty" means an unconditional guaranty of Guarantor.
"Indebtedness" means (a) all indebtedness for borrowed money
or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
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compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"Investment" means any beneficial ownership of (including
stock, partnership interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder.
"Lien" means any mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance. It is expressly agreed and
understood that licenses of intellectual property in the ordinary course of
business and licenses or similar arrangement entered into or Liens granted in
connection with joint ventures, collaborations and research and development
limited partnerships shall not be considered "Liens" for purpose of this
Agreement and shall not be restricted by any provision hereof.
"Liquidity" means, at any time of determination, the sum of
Borrower's and Guarantor's (i) cash balance of deposit accounts and investment
accounts, plus (ii) market value of all readily marketable securities
beneficially owned by Borrower or Guarantor, minus (iii) cash value of any
certificates of deposit or securities encumbered and/or restricted by Bank or
other Persons.
"Loan Documents" means, collectively, this Agreement, any
note or notes executed by Borrower, and any other agreement entered into between
Borrower and Bank in connection with this Agreement, all as amended or extended
from time to time.
"Material Adverse Effect" means a material adverse effect on
-(i) the business operations or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay
the Obligations.
"Maturity Date" means January 22, 2001.
"Obligations" means all debt, principal, interest, Bank
Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement
or any other agreement, whether absolute or contingent, due or to become due,
now existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Bank may have obtained by
assignment or otherwise.
"Periodic Payments" means all installments of principal or
interest that Borrower may now or hereafter become obligated to pay to Bank
pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Bank arising under
this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed
in the Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary
course of business;
(e) Contingent Obligations of any Subsidiary with respect to
obligations of Borrower (provided that the primary obligations are not
prohibited hereby); provided that the incurrence of
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such Indebtedness or Contingent Obligations, as the case may be, does not result
in a violation of Section 7.7 as a consequence of the provisos set forth in
paragraph (d) of the definition of "Permitted Investments;"
(f) Indebtedness of Borrower to any Subsidiary and
Contingent Obligations of Borrower with respect to obligations of any Subsidiary
(provided that the primary obligations are not prohibited hereby), and
Indebtedness of any Subsidiary to any other Subsidiary and Contingent
Obligations of any Subsidiary with respect to obligations of any other
Subsidiary (provided that the primary obligations are not prohibited hereby);
(g) Indebtedness secured by Permitted Liens;
(h) Indebtedness by Borrower and its Subsidiaries consisting
of guarantees (and other credit support) of the obligations of vendors and
suppliers of Borrower or its Subsidiaries in respect of transactions entered
into in the ordinary course of business.
(i) Capital leases or indebtedness incurred solely to
purchase Equipment (excluding the Collateral) which is secured in accordance
with clause (c) of the definition of "Permitted Liens" and is not in excess of
the lesser of the purchase price of such Equipment or the fair market value of
such Equipment on the date of acquisition; and
(j) Extensions, refinancings, modifications, amendments and
restatements of any of items of Permitted Indebtedness (a) through (i) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in
the Schedule;
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Corporation or Xxxxx'x Investors Service, Inc., (iii)
certificates of deposit maturing no more than one (1) year from the date of
investment therein issued by Bank, and (iv) other similar short term investments
made in accordance with an investment policy adopted by the Board of Directors
of Borrower, a true and correct copy of which will be delivered to Bank promptly
following the Closing Date and promptly following each change in such policy;
(c) Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business;
(d) Investments (whether consisting of the purchase of
securities, loans, capital contributions, or otherwise) of Subsidiaries in or to
other Subsidiaries or in Borrower;
(e) Investments consisting of receivables owing to Borrower
or its Subsidiaries by Persons and advances to customers or suppliers, in each
case, if created, acquired or made in the ordinary course of business; provided
that this paragraph (f) shall not apply to Investments owing by Subsidiaries to
Borrower;
(f) Investments consisting of (i) compensation of employees,
officers and directors of Borrower or its Subsidiaries so long as the Board of
Directors of Borrower determines that such compensation is in the best interests
of Borrower, (ii) travel advances, employee relocation loans and other employee
loans and advances in the ordinary course of business; (iii) loans to employees,
officers or directors relating to the purchase of equity securities of Borrower
or its Subsidiaries;
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(g) Investments pursuant to or arising under currency
agreements or interest rate agreements entered into in the ordinary course of
business for bona fide hedging purposes and not for speculation;
(h) Investments permitted under Section 7.3;
(i) Investments consisting of deposit accounts of Borrower
in which Bank has a Lien prior to any other Lien;
(j) Investments consisting of deposit accounts of any
Subsidiaries maintained in the ordinary course of business;
(k) Investments accepted in connection with Transfers
permitted by Section 7.1;
(l) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of business; and
(m) Investments consisting of notes receivable of, or
prepaid royalties and other credit extensions to, customers and suppliers who
are not Affiliates in the ordinary course of business.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in
the Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Bank's
security interests;
(c) Liens (i) upon or in any Equipment (other than the
Collateral) acquired or held by Borrower or any of its Subsidiaries to secure
the purchase price of such Equipment or indebtedness incurred solely for the
purpose of financing the acquisition or leasing of such Equipment, or (ii)
existing on such Equipment at the time of its acquisition or lease, provided
that the Lien is confined solely to the Equipment so acquired or leased;
(d) Leases or subleases and license and sublicenses granted
to others in the ordinary course of Borrower's or its Subsidiaries' business not
interfering in any material respect with the business of Borrower and its
Subsidiaries taken as a whole, and any interest or title of a lessor, licensor
or under any lease or license;
(e) Liens on assets (including the proceeds thereof and
accessions thereto) that existed at the time such assets were acquired by
Borrower or any Subsidiary (including Liens on assets of any corporation that
existed at the time it became or becomes a Subsidiary);
(f) Liens on Equipment leased by Borrower or any Subsidiary
pursuant to an operating lease in the ordinary course of business incurred
solely for the purpose of financing the lease of such Equipment;
(g) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8.7;
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(h) Easements, reservations, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances affecting real property not interfering in any material respect
with the ordinary conduct of the business of Borrower and its Subsidiaries,
taken as a whole;
(i) Liens which constitute rights of set-off of a customary
nature or bankers' Liens with respect to amounts on deposit, whether arising by
operation of law or by contract, in connection with arrangements entered into
with banks in the ordinary course of business; provided that with respect to
Liens on amounts on deposit owned by Borrower, such Liens shall not be prior to
the Lien of Bank;
(j) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(k) Liens on insurance proceeds in favor of insurance
companies granted solely as security for financed premiums; and
(l) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum,
most recently announced by Bank, as its "prime rate," whether or not such
announced rate is the lowest rate available from Bank.
"Responsible Officer" means each of the Chief Executive
Officer, the Chief Financial Officer and the Senior Director Finance of
Borrower.
"Schedule" means the schedule of exceptions attached hereto,
if any.
"Subordinated Debt" means any debt incurred by Borrower that
is subordinated to the debt owing by Borrower to Bank on terms acceptable to
Bank (and identified as being such by Borrower and Bank).
"Subsidiary" means any corporation or partnership in which
(i) any general partnership interest or (ii) more than 50% of the stock of which
by the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity shall, at the time as of which any
determination is being made, be owned by Borrower, either directly or through an
Affiliate.
"Tangible Net Worth" means at any date as of which the
amount thereof shall be determined, the consolidated total assets of Borrower
and its Subsidiaries minus, without duplication, (i) the sum of any amounts
attributable to (a) goodwill, (b) intangible items such as unamortized debt
discount and expense, patents, trade and service marks and names, copyrights and
research and development expenses except prepaid expenses, and (c) all reserves
not already deducted from assets, and (ii) Total Liabilities.
"Total Liabilities" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of Borrower,
including in any event all Indebtedness, but specifically excluding Subordinated
Debt.
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the
terms "financial statements" shall include the notes and schedules thereto.
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2. ADVANCES AND TERMS OF PAYMENT
2.1 Advances.
(a) At any time from the date hereof through July 22, 1997
(the "Availability Date"), Borrower may from time to time request advances (each
an "Advance" and, collectively, the "Advances") from Bank in an aggregate
principal amount of up to the Committed Line; provided, however, that there
shall be no more than five (5) Advances permitted hereunder; and provided,
further, that each Advance shall be in a minimum amount of One Hundred Thousand
Dollars ($100,000). The Advances shall be used only to pay up to 100% of the
costs of tenant improvements constructed and equipment acquired by Borrower.
(b) Interest shall accrue from the date of each Advance at
the rate specified in Section 2.2(a), and shall be payable monthly in arrears in
accordance with Section 2(d). The Advance or Advances that are outstanding on
the Availability Date will be payable in forty-two (42) equal monthly
installments of principal, beginning on July 25, 1997. All Advances, and all
other amounts outstanding hereunder, shall be paid in full on the Maturity Date.
(c) When Borrower desires to obtain an Advance, Borrower
shall notify Bank (which notice shall be irrevocable) by facsimile transmission
received no later than 3:00 p.m. California time one (1) Business Day before the
day on which the Advance is to be made. Such notice shall be in substantially
the form of Exhibit B. The notice shall be signed by a Responsible Officer and
include a copy of all documentation required by Bank to evidence the tenant
improvements or equipment to be financed. Bank shall be entitled to rely on any
telephonic notice given by a person who Bank reasonably believes to be a
Responsible Officer, and Borrower shall indemnify and hold Bank harmless for any
damages or losses suffered by Bank as a result of such reliance.
2.2 Interest Rates, Payments, and Calculations.
(a) Interest Rate. Except as set forth in Section 2.2(b) and
subject to the following sentence, all outstanding Advances shall bear interest
at a rate equal to one (1.0) percentage point above the Prime Rate. Except as
set forth in Section 2.2(b), Borrower shall have a one-time option, exercisable
by written notice to Bank on the Equipment Availability Date, to elect that all
outstanding Advances shall bear interest at a rate equal to three and one half
(3.5) percentage points above the forty-two (42) month Treasury Note Yield to
maturity for four (4) year treasury bills, as such rate is quoted by Bank. Such
fixed rate option, once elected, shall continue for the term of the Equipment
Facility.
(b) Default Rate. All Obligations shall bear interest, from
and after the occurrence of an Event of Default, at a rate equal to three (3)
percentage points above the interest rate applicable immediately prior to the
occurrence of the Event of Default.
(c) Payments. Interest hereunder shall be due and payable on
the twenty-second calendar day of each month during the term hereof. After the
occurrence and during the continuance of an Event of Default, Bank shall, at its
option, charge such interest, all Bank Expenses, and all Periodic Payments
against any of Borrower's deposit accounts. Any interest not paid when due shall
be compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.
(d) Prepayment. In the event Borrower prepays, in whole or in
part, any outstanding obligations hereunder, Borrower shall pay to Bank,
concurrently with such payment, a prepayment fee commensurate with interest rate
protection, as assessed by Bank, under the fixed rate option set forth in
Section 2.2(a). Borrower agrees that such fee is compensation to the Bank for
lost profits in connection with such prepayment and does not constitute a
penalty. Bank's determination of such amount shall be made by Bank in good
faith, in its sole discretion, and shall be deemed correct absent manifest
error.
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(e) Computation. All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed. If the Facility at any time bears
interest based on the Prime Rate, then in the event the Prime Rate is changed
from time to time, the applicable rate of interest hereunder shall be increased
or decreased effective as of 12:01 a.m. on the day the Prime Rate is changed, by
an amount equal to such change in the Prime Rate.
2.3 Crediting Payments. Prior to the occurrence of an Event of
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. All
payments hereunder shall be made, without counterclaim or set off, by wire
transfer of immediately available funds or authorized debit of Borrower's
deposit account, prior to 2:00 p.m (California time) on the date when due. After
the occurrence of an Event of Default, the receipt by Bank of any wire transfer
of funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 2:00 p.m. California time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.
2.4 Fees. Borrower shall pay to Bank the following:
(a) Facility Fee. A Facility Fee equal to Forty Three
Thousand Dollars ($43,000), which fee shall be due on the Closing Date and shall
be fully earned and nonrefundable; and
(b) Bank Expenses. Upon the date hereof, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses not to exceed $10,000 for this Agreement and the Loan and Security
Agreement with Guarantor, and, after the date hereof, all Bank Expenses within
thirty (30) days after receiving an invoice therefor.
2.5 Additional Costs. In case any change in any law, regulation,
treaty or official directive or the interpretation or application thereof by any
court or any governmental authority charged with the administration thereof or
the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law), in each case
occurring after the date hereof:
(a) subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof);
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, Bank; or
(c) imposes upon Bank any other condition with respect to its
performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
any loans, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank
the amount of such increase in cost, reduction in income or additional expense
as and when such cost, reduction or expense is incurred or determined, upon
presentation by Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error; provided, however, that the Borrower
shall not be liable for any such amount attributable to any period prior to 180
day prior to the date of such certificate.
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2.6 Term. This Agreement shall become effective on the Closing
Date and, subject to Section 12.7, shall continue in full force and effect for a
term ending on the Maturity Date. Notwithstanding the foregoing, Bank shall have
the right to terminate its obligation to make Advances under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default. Notwithstanding termination, Bank's Lien on the Collateral
shall remain in effect for so long as any Obligations (excluding Obligations
under Sections 2.5 and 12.2 to the extent they remain inchoate at the time
outstanding payment Obligations are paid in full) are outstanding.
3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Advance. The obligation of
Bank to make the initial Advance is subject to the condition precedent that Bank
shall have received, in form and substance satisfactory to Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower attaching
thereto true and correct copies of Borrower's Certificate of Incorporation,
By-laws, board resolutions authorizing the execution and delivery of the Loan
Documents and certifying as to the incumbency of the officers executing the Loan
Documents;
(c) an amendment to financing statement (Form UCC-2);
(d) financing statements (Forms UCC-1) in form to be filed
with the Secretary of State of California and the San Mateo County Recorder;
(e) insurance certificate;
(f) payment of the fees and Bank Expenses then due
specified in Section 2.4 hereof; and
(g) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Advances. The obligation of Bank
to make each Advance, including the initial Advance, is further subject to the
following conditions:
(a) timely receipt by Bank of the Payment/Advance Form and
related documentation as provided in Section 2.1; and
(b) the representations and warranties contained in
Section 5 shall be true and correct in all material respects on and as of the
date of such Payment/Advance Form and on the effective date of each Advance as
though made at and as of each such date (except to the extent they relate
specifically to any earlier date, in which case such representations and
warranties shall continue to have been true and accurate as of such date), and
no Event of Default shall have occurred and be continuing, or would result from
such Advance. The making of each Advance shall be deemed to be a representation
and warranty by Borrower on the date of such Advance as to the accuracy of the
facts referred to in this Section 3.2(b).
4. CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrower grants and pledges to
Bank a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each of
its covenants and
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duties under the Loan Documents. Upon a Conversion Event, Bank may file the Form
UCC-2 with the California Secretary of State. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof,
in each case, to the extent that a security interest in such Collateral can be
perfected by the filing of a financing statement or, in the case of instruments,
documents, chattel paper or certificated securities, to the extent that Bank
takes possession of such Collateral. With respect to the balances in deposit
accounts at Bank, including all investments in such accounts, Borrower shall
have the right to continue to have access to and have the right to use all funds
and investments in such accounts, including having the right to withdraw all
funds in such accounts, subject only to the provisions of Article 9 of this
Agreement.
4.2 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Bank, at the request of Bank, all
financing statements and other documents that Bank may reasonably request, in
form satisfactory to Bank, to perfect and continue perfected Bank's security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and each
Subsidiary is a corporation duly existing and in good standing under the laws of
its state of incorporation and qualified and licensed to do business in, and is
in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified, except for states as to
which any failure so to qualify could not reasonably be expected to have a
Material Adverse Effect.
5.2 Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default could reasonably be expected to have a Material Adverse Effect.
5.3 No Prior Encumbrances. Borrower has good and indefeasible
title to its assets, free and clear of Liens, except for Permitted Liens.
5.4 Name; Location of Chief Executive Office. Except as disclosed
in the Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof.
5.5 Litigation. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower or any Subsidiary before
any court or administrative agency in which an adverse decision could reasonably
be expected to have a Material Adverse Effect or a material adverse effect on
Borrower's interest or Bank's security interest in the Collateral. Borrower does
not have knowledge of any such pending or threatened actions or proceedings.
5.6 No Material Adverse Change in Financial Statements. All
consolidated financial statements related to Borrower and any Subsidiary that
have been delivered by Borrower to Bank fairly present in all material respects
Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrower since the date of the most recent of such financial statements
submitted to Bank.
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5.7 Solvency. Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
5.8 Regulatory Compliance. Borrower and each Subsidiary has met
the minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA. No event has occurred resulting from Borrower's failure
to comply with ERISA that is reasonably likely to result in Borrower's incurring
any liability that could reasonably be expected to have a Material Adverse
Effect. Borrower is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940.
Borrower is not engaged principally, or as one of the important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations G, T and U of the Board of
Governors of the Federal Reserve System). Borrower has complied with all the
provisions of the Federal Fair Labor Standards Act. Borrower has not violated
any statutes, laws, ordinances or rules applicable to it, violation of which
could have a Material Adverse Effect.
5.9 Environmental Condition. None of Borrower's or any
Subsidiary's properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower's knowledge, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.
5.10 Taxes. Borrower and each Subsidiary has filed or caused to
be filed all material tax returns required to be filed, and has paid, or has
made adequate provision for the payment of, all taxes reflected therein.
5.11 Subsidiaries. Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.
5.12 Government Consents. Borrower and each Subsidiary has
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all governmental authorities that are
necessary for the continued operation of Borrower's business as currently
conducted, except where the failure to obtain any such consent, approval or
authorization, to make any such declaration or filing or to given any such
notice would not reasonably be expected to have Material Adverse Effect.
5.13 Full Disclosure. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Bank contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading, (it being recognized by Bank that the
projections and forecasts provided by Borrower are not be viewed as facts and
that actual results during the period or periods covered by any such projections
and forecasts may differ from the projected or forecasted results).
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
an Advance hereunder, Borrower shall do all of the following:
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6.1 Good Standing. Borrower shall maintain or cause to be
maintained its and each of its Subsidiaries' corporate existence and good
standing in its jurisdiction of incorporation and maintain qualification in each
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect. Borrower shall maintain, and shall cause each of
its Subsidiaries to maintain, to the extent consistent with prudent management
of Borrower's business, in force all licenses, approvals and agreements, the
loss of which could reasonably be expected to have a Material Adverse Effect.
6.2 Government Compliance. Borrower shall meet, and shall cause
each Subsidiary to meet, the minimum funding requirements of ERISA with respect
to any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral.
6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to Bank: (a) within forty-five (45) days after the end of each fiscal
quarter, a company prepared consolidated balance sheet and income statement
covering Borrower's consolidated operations during such period, certified by a
Responsible Officer, together with a Compliance Certificate signed by a
Responsible Officer in substantially the form of Exhibit C hereto; (b) within
ninety (90) days after the end of each fiscal year, audited consolidated
financial statements of Borrower prepared in accordance with GAAP, consistently
applied, together with an unqualified opinion on such financial statements of an
independent certified public accounting firm reasonably acceptable to Bank; (c)
within five (5) days of filing, all reports on Form 10-K and Form 10-Q of
Guarantor; (d) if Liquidity is at any time less than the greater of (i) three
(3.0) times the Aggregate Obligations or (ii) Cash Burn of twelve (12) months,
then as soon as available, but in any event within thirty (30) days after the
last day of each month, company-prepared balance sheet and income statement
covering Borrower's and Guarantor's consolidated operations during such period,
certified by a Responsible Officer; (e) promptly upon receipt of notice thereof,
a report of any legal actions pending or threatened against Borrower or any
Subsidiary that could reasonably be expected to result in damages or costs to
Borrower or any Subsidiary of Five Hundred Thousand Dollars ($500,000) or more;
and (f) such other financial information as Bank may reasonably request from
time to time.
6.4 Taxes. Borrower shall make, and shall cause each Subsidiary
to make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law; and Borrower
will make, and will cause each Subsidiary to make, timely payment or deposit of
all material tax payments and withholding taxes required of it by applicable
laws, including, but not limited to, those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes; provided that
Borrower or a Subsidiary need not make any payment if the amount or validity of
such payment is contested in good faith by appropriate proceedings and is
reserved against (to the extent required by GAAP) by Borrower.
6.5 Insurance.
(a) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such form,
with such companies, and in such amounts as reasonably satisfactory to Bank. All
such policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Bank, showing Bank as an additional loss
payee thereof and all liability insurance policies shall show the Bank as an
additional insured, and shall specify that the insurer must give at least twenty
(20) days notice to Bank before canceling its policy for any reason. Upon Bank's
request, Borrower shall deliver to Bank certified copies of such policies of
insurance and evidence of the payments of all premiums therefor. So long as no
Event of Default has occurred and is continuing, Borrower shall have the option
of applying the proceeds of any casualty policy to the replacement or repair of
destroyed or damaged property; provided, that after the occurrence and during
the continuance of an Event of Default, all
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proceeds payable under any such policy shall, at the option of Bank, be payable
to Bank for application to the Obligations.
6.6 Debt-Net Worth Ratio. From and after the termination of the
Guaranty, Borrower shall maintain, as of the last day of each fiscal quarter, a
ratio of Total Liabilities less Subordinated Debt to Tangible Net Worth plus
Subordinated Debt of not more than 1.0 to 1.0.
6.7 Tangible Net Worth. From and after the termination of the
Guaranty, Borrower shall maintain, as of the last day of each fiscal quarter, a
Tangible Net Worth of not less than three (3.0) times the Obligations of
Borrower.
6.8 Minimum Liquidity/Debt Service Coverage. Subject to the
remainder of this Section, Borrower and Guarantor, on a consolidated basis,
shall maintain, as of the last day of each fiscal quarter Liquidity of at least
the greater of (a) two (2.0) times the Aggregate Obligations or (b) two (2.0)
quarters of Cash Burn; provided that from and after the termination of the
Guaranty, Borrower (without consolidation with Guarantor) shall comply with the
terms of this sentence. Notwithstanding the foregoing, from and after the time
Borrower and Guarantor, on a consolidated basis, achieve for four consecutive
fiscal quarters a Debt Service Coverage of at least 1.50 to 1.00, Borrower and
Guarantor shall not be subject to the Minimum Liquidity requirement set forth
above, but instead shall maintain, as of the last day of each fiscal quarter, a
Debt Service Coverage of at least 1.50 to 1.00; provided that from and after the
termination of the Guaranty, Borrower (without consolidation with Guarantor)
shall comply with the terms of this sentence.
6.9 Right to Inspect. Borrower authorizes Bank (through any of
its officers, employees, or agents), upon reasonable prior notice, from time to
time during Borrower's usual business hours, to inspect Borrower's financial
books and records and to make copies thereof and to verify Borrower's financial
condition.
6.10 Principal Depository. Borrower shall maintain its principal
depository and operating accounts with Bank.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Bank may have any commitment to make any Advances,
Borrower will not do any of the following:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than: (i) Transfers
of inventory in the ordinary course of business; (ii) Transfers of non-exclusive
or exclusive licenses and similar arrangements for the use of the property of
Borrower or its Subsidiaries in the ordinary course of business; (iii) Transfers
of worn-out or obsolete Equipment; (iv) Transfers which constitute liquidation
of Investments permitted under Section 7.7; and (v) other Transfers in the
ordinary course of business (it is expressly agreed and understood that the
ordinary course of Borrower's business includes entering into agreements and
arrangements with third parties for research, development, manufacturing, sale
or marketing of products and the licensing of intellectual property in
connection with such agreements and arrangements.
7.2 Change in Business. Engage in any business, or permit any of
its Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and any business substantially similar or related thereto
(or incidental thereto). Borrower will not, without thirty (30) days prior
written notification to Bank, relocate its chief executive office.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit any
of its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person; provided,
however, that this Section 7.3 shall not apply (i) to transactions among
Borrower and its Subsidiaries in which Borrower is the
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surviving entity or (ii) where an Event of Default, or event that with the
giving of notice or passage from time or both would constitute an Event of
Default, exists or would exist before or after the consummation of such
transaction.
7.4 Indebtedness. Create, incur, assume or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 Encumbrances. Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any accounts receivable, or
permit any of its Subsidiaries so to do, except for Permitted Liens.
7.6 Distributions. Declare or pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock.
7.7 Investments. Directly or indirectly acquire or own, or make
any Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
7.8 Transactions with Affiliates. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a nonaffiliated Person and
except for transactions with a Subsidiary that are upon fair and reasonable
terms and transactions constituting Permitted Investments
7.9 Subordinated Debt. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt which
could reasonably be expected to adversely affect Bank or the seniority of Bank's
debt, without Bank's prior written consent.
7.10 Compliance. Become an "investment company" controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose. Fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the
Federal Fair Labor Standards Act or violate any law or regulation, which
violation could have a Material Adverse Effect or a material adverse effect on
the Collateral or the priority of Bank's Lien on the Collateral, or permit any
of its Subsidiaries to do any of the foregoing.
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an Event
of Default by Borrower under this Agreement:
8.1 Payment Default. If Borrower fails to pay the principal of
any Advances when due and payable; or fails to pay any interest on any Advances
within three days of when due and payable; or fails to pay any portion of any
other Obligations not constituting such principal or interest, including without
limitation Bank Expenses, within thirty (30) days of receipt by Borrower of an
invoice for such other Obligations;
8.2 Covenant Default. If Borrower fails to perform any obligation
under Sections 6.6, 6.7 or 6.8 or violates any of the covenants contained in
Article 7 of this Agreement, or fails or neglects to perform, keep, or observe
any other material term, provision, condition, covenant, or agreement contained
in this Agreement, in any of the Loan Documents, or in any other present or
future agreement between Borrower and Bank and as to any default under such
other term, provision, condition, covenant or agreement that can be
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cured, has failed to cure such default within ten (10) days after Borrower
receives notice thereof or any officer of Borrower becomes aware thereof;
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured
within such ten (10) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which
shall not in any case exceed thirty (30) days) to attempt to cure such default,
and within such reasonable time period the failure to have cured such default
shall not be deemed an Event of Default (provided that no Advances will be
required to be made during such cure period);
8.3 Attachment. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Advances will be required to be made during such cure period);
8.4 Insolvency. If Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within thirty (30)
days (provided that no Advances will be made prior to the dismissal of such
Insolvency Proceeding);
8.5 Other Agreements. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Million Dollars
($1,000,000) or that could reasonably be expected have a Material Adverse
Effect;
8.6 Judgments. If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least One Million
Dollars ($1,000,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of thirty (30) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment); or
8.7 Guarantor. If an Event of Default occurs under that certain
Loan and Security Agreement between Guarantor and Bank of even date herewith; or
8.8 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.
9. BANK'S RIGHTS AND REMEDIES
9.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default (and after the expiration of any applicable
cure period), Bank may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.5 all Obligations shall become immediately due and payable without any
action by Bank);
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(b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement or under any other agreement
between Borrower and Bank;
(c) Without notice to or demand upon Borrower, make such
payments and do such acts as Bank considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral available to Bank as
Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Bank's determination appears to be prior or superior to
its security interest and to pay all expenses incurred in connection therewith;
(d) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Bank, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;
(e) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral;
(f) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable;
(g) Bank may credit bid and purchase at any public sale;
and
(h) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 Power of Attorney. Effective only upon the occurrence and
during the continuance of an Event of Default, Borrower hereby irrevocably
appoints Bank (and any of Bank's designated officers, or employees) as
Borrower's true and lawful attorney to make, settle, and adjust all claims under
and decisions with respect to Borrower's policies of insurance insofar as they
relate to the Collateral. The appointment of Bank as Borrower's attorney in
fact, and each and every one of Bank's rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully repaid and
performed and Bank's obligation to provide Advances hereunder is terminated.
9.3 Bank Expenses. If Borrower fails to pay any amounts as
required under the terms of this Agreement, then Bank may do any or all of the
following: (a) make payment of the same or any part thereof; (b) obtain and
maintain insurance policies of the type discussed in Section 6.6 of this
Agreement, and take any action with respect to such policies as Bank deems
prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by Bank
to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.
9.4 Bank's Liability for Collateral. So long as Bank complies
with Section 9207 of the Code and reasonable banking practices, Bank shall not
in any way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner or
fashion from any cause; (c) any diminution in the value thereof; or (d) any act
or default of any carrier, warehouseman, bailee, forwarding agency, or other
person whomsoever. Subject to the foregoing, all risk of loss, damage or
destruction of the Collateral shall be borne by Borrower.
9.5 Remedies Cumulative. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or
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remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
shall be effective unless made in a written document signed on behalf of Bank
and then shall be effective only in the specific instance and for the specific
purpose for which it was given.
9.6 Demand; Protest. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.
10. NOTICES
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrower or to Bank, as the case may be, at
its addresses set forth below:
If to Borrower: Abgenix, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: President
FAX: (510) ___________________
If to Bank: Silicon Valley Bank
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Xx. Xxxx Xxxxxx
FAX: (000) 000-0000
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of California, without regard to principles
of conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Xxxxx, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS
12.1 Successors and Assigns.
17
21
(a) This Agreement shall bind and inure to the benefit of
the respective successors and permitted assigns of each of the parties;
provided, however, that neither this Agreement nor any rights hereunder may be
assigned by Borrower without Bank's prior written consent, which consent may be
granted or withheld in Bank's sole discretion. Bank shall have the right without
the consent of or notice to Borrower to sell, transfer, negotiate, or grant
participations in all or any part of, or any interest in Bank's obligations,
rights and benefits hereunder.
(b) Bank may sell, negotiate or grant participations to
other financial institutions in all or part of the obligations of the Borrower
outstanding under the Loan Agreements, without the approval of Borrower, but
with prompt subsequent notice to Borrower; provided that any such sale,
negotiation or participation shall be in compliance with the applicable federal
and state securities laws and the other requirements of this Section 12.1.
Notwithstanding the sale, negotiation or grant of participations, Bank shall
remain solely responsible for the performance of its obligations under this
Agreement, Bank shall remain the holder of the Note for all purposes under this
Agreement and Borrower shall continue to deal solely and directly with Bank in
connection with this Agreement and the other Loan Documents.
(c) The grant of a participation interest shall be on such
terms as the Bank determines are appropriate, provided only that: (1) the holder
of such a participation interest shall not have any of the rights of Bank under
this Agreement except, if the participation agreement so provides, rights to
demand the payment of costs of the type described in Section 2.7, provided that
the aggregate amount that the Borrower shall be required to pay under Section
2.5 with respect to any ratable share of the Committed Line or any Advance
(including amounts paid to participants) shall not exceed the amount that
Borrower would have had to pay if no participation agreements had been entered
into; (2) the consent of the holder of such a participation interest shall not
be required for amendments or waivers of provisions of the Loan Agreement other
than those which (i) increase the amount of the Committed Line, (ii) extend the
term of this Agreement, (iii) decrease the rate of interest or the amount of any
fee or any other amount payable to Bank under this Agreement, (iv) reduce the
principal amount payable under this Agreement, or (v) extend the date fixed for
the payment of principal or interest or any other amount payable under this
Agreement; and (3) Borrower shall continue to deal solely and directly with Bank
in connection with Bank's rights and obligations under this Agreement.
(d) The Bank may assign, from time to time, all or any
portion of its pro rata share of the Committed Line to an Affiliate of the Bank
or (with prompt subsequent notice to Borrower) to any Federal Reserve Bank, or,
subject to the prior written approval of Borrower (which approval will not be
unreasonably withheld), to any other financial institution; provided, that with
respect to an assignment that is subject to the prior approval of Borrower (i)
the amount the Committed Line being assigned pursuant to each such assignment
shall in no event be less than $2,500,000 and shall be an integral multiple of
$500,000 and (ii) the parties to each such assignment shall execute and deliver
to Borrower an assignment agreement in a form reasonably acceptable to each.
Upon such execution and delivery, from and after the effective date specified in
such assignment agreement (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such assignment agreement, have the rights and obligations of a
Bank hereunder and (y) Bank shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such assignment agreement,
relinquish its rights and be released from its obligations under this Agreement
(other than pursuant to this Section 12.1(d)), and, in the case of an assignment
agreement covering all or the remaining portion of Bank's rights and obligations
under this Agreement, Bank shall cease to be a party hereto. In the event of an
assignment hereunder, the parties agree to amend this Agreement to the extent
necessary to reflect the mechanical changes which are necessary to document such
assignment and which are standard for a multi-bank credit facility. Each party
shall bear its own expenses (including, without limitation, attorneys' fees and
costs) with respect to such an amendment.
12.2 Indemnification. Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrower whether under this Agreement, or
otherwise
18
22
(including without limitation reasonable attorneys fees and expenses), except
for losses caused by Bank's gross negligence or willful misconduct.
12.3 Time of Essence. Time is of the essence for the performance
of all obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.5 Amendments in Writing, Integration. This Agreement cannot be
amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
12.6 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same Agreement.
12.7 Survival. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations (excluding Obligations under Sections 2.5 and 12.2 to the extent
they remain inchoate at the time outstanding payment Obligations are paid in
full) remain outstanding. The obligations of Borrower to indemnify Bank with
respect to the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods
with respect to actions that may be brought against Bank have run, provided that
so long as the obligations set forth in the first sentence of this Section 12.7
have been satisfied, and Bank has no commitment to make any Advances or to make
any other loans to Borrower, Bank shall release all security interests granted
hereunder and redeliver all Collateral held by it in accordance with applicable
law.
12.8 Confidentiality. In handling any confidential information
Bank shall exercise the same degree of care that it exercises with respect to
its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of Bank in connection with their
present or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the Loans, provided that they have
entered into a comparable confidentiality agreement in favor of Borrower and
have delivered a copy to Borrower, (iii) as required by law, regulations, rule
or order, subpoena, judicial order or similar order and (iv) as may be required
in connection with the examination, audit or similar investigation of Bank.
Confidential information hereunder shall not include information that either:
(a) is in the public domain or in the knowledge or possession of Bank when
disclosed to Bank, or becomes part of the public domain after disclosure to Bank
through no fault of Bank; or (b) is disclosed to Bank by a third party, provided
Bank does not have actual knowledge that such third party is prohibited from
disclosing such information. Notwithstanding any provision of this Agreement to
the contrary, prior to the occurrence of an Event of Default neither Borrower
nor any of any of its Subsidiaries will be required to disclose, permit the
inspection, examination, copying or making extracts of, or discussions of, any
document, information or other matter that (i) constitutes non-financial trade
secrets, or (ii) in respect to which disclosure to Bank (or designated
representative) is then prohibited by (a) law, or (b) an agreement binding upon
Borrower or any Subsidiary that was not entered into by Borrower or such
Subsidiary for the primary purpose of concealing information from Bank.
12.9 Guaranty. The Guaranty shall terminate upon the date that
Borrower receives net proceeds of not less than Twenty Million Dollars
($20,000,000) from the sale of its equity securities under a registration
statement filed under the Securities Act of 1933, as amended, provided an Event
of Default does not exist before such date or would not exist after giving
effect to such termination.
19
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ABGENIX, INC.
By: /s/ R. Xxxxx Xxxxx
-------------------------------------
Title: President
----------------------------------
SILICON VALLEY BANK
By: /s/ [unreadable]
-------------------------------------
Title:
----------------------------------
20
24
EXHIBIT A
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All personal property, goods, fixtures, equipment, inventory,
appliances, furniture and furnishings, building service equipment, building
materials, and all replacements thereof (the "Improvements"), which Improvements
resulted from that certain work performed pursuant to the following invoices:
Mo/Yr Vendor Ck No. Ck. Date Cost
----- ------ ------ -------- ----
(b) Any and all proceeds of the foregoing.
21
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EXHIBIT A-1
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower and Borrower's Books
relating to any of the foregoing;
(e) All documents, cash, deposit accounts, securities, letters of
credit, certificates of deposit, instruments and chattel paper now owned or
hereafter acquired and Borrower's Books relating to the foregoing;
(f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
(g) Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof.
22
26
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE:_________________
FAX#: (000) 000-0000 TIME:_________________
================================================================================
FROM:
----------------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
--------------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
------------------------------------------------------------
PHONE NUMBER:
--------------------------------------------------------------------
FROM ACCOUNT # TO ACCOUNT #
---------------------- ------------------------
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
PRINCIPAL INCREASE (ADVANCE) $___________________________________
PRINCIPAL PAYMENT (ONLY) $___________________________________
INTEREST PAYMENT (ONLY) $___________________________________
PRINCIPAL AND INTEREST (PAYMENT) $___________________________________
OTHER INSTRUCTIONS:
--------------------------------------------------------------
--------------------------------------------------------------------------------
All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete in all material respects as of the date
of the telephone request for and Advance confirmed by this Borrowing
Certificate; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.
================================================================================
================================================================================
BANK USE ONLY
TELEPHONE REQUEST:
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
---------------------------------- --------------------------------------
Authorized Requester Phone #
---------------------------------- --------------------------------------
Received By (Bank) Phone #
------------------------------------------
Authorized Signature (Bank)
================================================================================
23
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EXHIBIT C
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ABGENIX, INC.
The undersigned authorized officer of Abgenix, Inc. hereby certifies that
in accordance with the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _______ with all required covenants except as
noted below and (ii) all representations and warranties of Borrower stated in
the Agreement are true and correct in all material respects as of the date
hereof. Attached hereto is a copy of Borrower's financial statements for such
period, which the undersigned officer further certifies are prepared in
accordance with Generally Accepted Accounting Principles as consistently applied
from one period to the next, except as explained in an accompanying letter or
footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
Quarterly Financials Quarterly within 45 days Yes No
Audited Annual Financials FYE within 90 days Yes No
10-Q (Guarantor) Quarterly within 5 days of filing Yes No
10-K (Guarantor) FYE within 5 days of filing Yes No
Monthly Financials See Agreement Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
Maintain:
Minimum Tangible Net Worth 3x Borrower's
Obligations(1) $________ Yes No
Maximum Debt/Tangible Net Worth 1.0:1.0(1) ______:1.0 Yes No
Minimum Liquidity/Minimum Debt Service
Coverage (2) _________ Yes No
1 After Guaranty terminates.
2 Liquidity of greater of (i) 2x Aggregate Obligations or (ii) 2 quarters
of Cash Burn; covenant replaced by Debt Service Coverage when DSC>1.5
for 4 consecutive quarters. Applies to Guarantor and Borrower
(consolidated) before Guaranty terminates, and Borrower alone after
Guaranty terminates.
COMMENTS REGARDING EXCEPTIONS: See Attached. ================================
Sincerely, BANK USE ONLY
Received by:
-------------------------------------------- --------------------
SIGNATURE AUTHORIZED SIGNER
Date:
-------------------------------------------- ---------------------------
TITLE
Verified:
-------------------------------------------- -----------------------
DATE AUTHORIZED SIGNER
Date:
---------------------------
Compliance Status: Yes No
================================
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DISBURSEMENT REQUEST AND AUTHORIZATION
Borrower: Abgenix, Inc. Bank: Silicon Valley Bank
================================================================================
LOAN TYPE. This is a Variable Rate, Term Loan of a principal amount up to
$4,300,000.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: Tenant Improvements and
Equipment Acquisition.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Bank's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
Loan
----
Amount paid to Borrower directly: $___
Undisbursed Funds $___
Principal $___
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as
agreed the following charges:
Prepaid Finance Charges Paid in Cash: $___
$43,000 Loan Fee (Already Paid)
Other Charges Paid in Cash: $___
$___UCC Search Fees
$___UCC Filing Fees
$___Outside Counsel Fees and Expenses (Estimate)
Total Charges Paid in Cash $___
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct from
Borrower's account numbered _________________ the amount of any loan payment. If
the funds in the account are insufficient to cover any payment, Bank shall not
be obligated to advance funds to cover the payment.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
AUTHORIZATION IS DATED AS OF JANUARY 23, 1997.
BORROWER:
--------------------------------------------
--------------------------------------------
Authorized Officer
================================================================================
29
AGREEMENT TO PROVIDE INSURANCE
GRANTOR: Abgenix, Inc. BANK: Silicon Valley Bank
================================================================================
INSURANCE REQUIREMENTS. Abgenix, Inc. ("Grantor") understands that
insurance coverage is required in connection with the extending of a loan or the
providing of other financial accommodations to Grantor by Bank. These
requirements are set forth in the Loan Documents. The following minimum
insurance coverages must be provided on the following described collateral (the
"Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to Bank with stipulation
that coverage will not be cancelled or
diminished without a minimum of twenty (20)
days' prior written notice to Bank.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Bank. Grantor understands
that credit may not be denied solely because insurance was not purchased through
Bank.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on or
before closing, evidence of the required insurance as provided above, with an
effective date of January 23, 1997, or earlier. Grantor acknowledges and agrees
that if Grantor fails to provide any required insurance or fails to continue
such insurance in force, Bank may do so at Grantor's expense as provided in the
Loan and Security Agreement. The cost of such insurance, at the option of Bank,
shall be payable on demand or shall be added to the indebtedness as provided in
the security document. GRANTOR ACKNOWLEDGES THAT IF BANK SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR'S EQUITY IN
THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE
ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Bank to provide to any person (including any insurance agent
or company) all information Bank deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO
PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JANUARY 23,
1997.
GRANTOR:
Abgenix, Inc.
X /s/ R. Xxxxx Xxxxx
---------------------------------
Authorized Officer
================================================================================
FOR BANK USE ONLY
INSURANCE VERIFICATION
DATE: PHONE:
------------------- ---------------------------------
AGENT'S NAME:
--------------------------------------------------------------------
INSURANCE COMPANY:
---------------------------------------------------------------
POLICY NUMBER:
-------------------------------------------------------------------
EFFECTIVE DATES:
-----------------------------------------------------------------
COMMENTS:
------------------------------------------------------------------------
================================================================================
30
CORPORATE RESOLUTIONS TO BORROW
================================================================================
BORROWER: Abgenix, Inc.
================================================================================
I, the undersigned Secretary or Assistant Secretary of Abgenix, Inc.
(the "Corporation"), HEREBY CERTIFY that the Corporation is organized and
existing under and by virtue of the laws of the State of Delaware.
I FURTHER CERTIFY that attached hereto are true, correct and complete
copies of the Corporation's Certificate of Incorporation and By-Laws, which are
in full force and effect as of the date hereof.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation
(or by other duly authorized corporate action in lieu of a meeting), duly called
and held, at which a quorum was present and voting, the following resolutions
were adopted.
BE IT RESOLVED, that ANY ONE (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITIONS ACTUAL SIGNATURES
------------------------------------------------------------------
----------------------------- ------------------------ --------------------
----------------------------- ------------------------ --------------------
----------------------------- ------------------------ --------------------
----------------------------- ------------------------ --------------------
----------------------------- ------------------------ --------------------
acting for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Silicon Valley Bank
("Bank"), on such terms as may be agreed upon between the officers, employees,
or agents and Bank, such sum or sums of money as in their judgment should be
borrowed, without limitation, including such sums as are specified in that
certain Loan and Security Agreement dated as of January 23, 1997 (the "Loan
Agreement").
GRANT SECURITY. To grant a security interest to Bank in the Collateral
described in the Loan Agreement, which security interest shall secure all of the
Corporation's Obligations, as described in the Loan Agreement.
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.
1
31
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on January 23, 1997 and
attest that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED TO AND ATTESTED BY:
X
--------------------------------------------------
================================================================================
2
