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LEASE MANAGEMENT SERVICES, INC. EXHIBIT 10.29
NEGATIVE COVENANT PLEDGE AGREEMENT
Agreement made and entered into as of this 29 day of September 1997, by and
between Aurora Biosciences Corporation, a Delaware Corporation, with its
principal place of business at 0000 X. Xxxxxx Xxxxx Xxxx, Xx Xxxxx, XX 00000
("Pledgor") and LEASE MANAGEMENT SERVICES, INC., a California Corporation, with
its principal place of business at 0000 Xxxx Xxxx Xxxx, Xxxxx #000, Xxxxx Xxxx,
XX 00000 ("Pledgee").
In consideration of, and as an inducement for Pledgee to enter into Master Lease
Agreement Number 10494, Schedules 07 and subsequent, and Equipment Financing
Agreement Number 10794, Schedules 14 and subsequent, (referred to hereinafter as
the "Agreements") with Pledgor, and to secure the payment and performance of all
Pledgor's obligations under the Agreements, Pledgor and Pledgee agree as
follows:
1) If at any point in time from the date of this Agreement, Pledgor's
Unrestricted Cash (as defined below) falls below the greater of
$8,000,000 or 9 months' cash needs (defined as the cash burn for the 3
months just completed, multiplied by a factor of 3.3), or Pledgor is in
default of the Agreements, Pledgor will provide to Pledgee within ten
(10) days of such occurrence a cash security deposit in an amount equal
to fifteen percent (15%) of the total aggregate Equipment cost
(including any soft costs) which are financed under the Agreements
("Collateral Pledge"), but in no event to exceed the remaining gross
receivable.
Unrestricted Cash shall be defined as cash on hand, including
investments in marketable securities with maturities of less than one
(1) year, less all long-term debt which is not subordinated to Pledgee.
The failure to timely provide the Collateral Pledge to Pledgee shall
constitute an event of default under the Agreements.
2) Pledgor agrees to provide quarterly financial statements, including a
balance sheet, statement of operations, and cash flow statement, to
Pledgee within 45 days of each quarter end and an audited annual
statement within 120 days of Pledgor's fiscal year end. All such
statements are to be prepared using generally accepted accounting
principles and are to be in compliance with SEC requirements. Failure to
provide these statements as specified herein will constitute an event of
default under the Agreements.
Additionally, at any time that Pledgor's Unrestricted Cash is several
months from falling below the benchmark above, Pledgor's Chief Financial
Officer or other senior officer will, at Pledgee's request, provide
Pledgee with the monthly closing cash balance by not later than the 10th
business day following each month-end.
3) Pledgor agrees to keep all Unrestricted Cash within the following
financial institutions:
Financial Institution: __________________________
Account Number: __________________________
Officer Contact: __________________________
Phone Number: __________________________
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NEGATIVE COVENANT PLEDGE AGREEMENT
AURORA BIOSCIENCES CORPORATION
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Financial Institution: __________________________
Account Number: __________________________
Officer Contact: __________________________
Phone Number: __________________________
Financial Institution: __________________________
Account Number: __________________________
Officer Contact: __________________________
Phone Number: __________________________
Any change in the above information shall be provided in writing by
Pledgor to Pledgee within five (5) days of such change.
Pledgor hereby authorizes these financial institutions to give specific
account balance information to Pledgee and agrees to execute any other
documents or take any other action required to provide verification of
Unrestricted Cash balances.
4) Pledgor agrees to recognize the Collateral Pledge as a contingent
liability and to establish the appropriate reserves.
5) Upon any default by Pledgor under the Agreements and while the same is
continuing, interest accrual on the Collateral Pledge shall cease and
Pledgee may, at its option, apply the Collateral Pledge toward the
satisfaction of Pledgor's obligations under the Agreements and the
payment of all reasonable costs and expenses incurred by Pledgee as a
result of such default, including reasonable attorney's fees. Pledgee is
liable to Pledgor only for any surplus remaining from said Collateral
Pledge after the full satisfaction of the foregoing obligations, costs
and expenses.
6) Pledgee shall have no duty to first commence an action against or seek
recourse from Pledgor, if an event of default occurs and is continuing
under the Agreements, before enforcing the provisions of, and proceeding
under the provisions of, this Negative Covenant Pledge Agreement. The
obligations of Pledgor under this Negative Covenant Pledge Agreement
shall be absolute and unconditional and shall remain in full force and
effect without regard to, and shall not be released or discharged or in
any way affected by:
a) any amendment or modification of or supplement to the Agreements;
b) any exercise or non-exercise of any right, remedy or privilege
under or in respect to this Negative Covenant Pledge Agreement,
the Agreements, or any other instrument provided for in the
Agreement(s), or any waiver, consent, explanation, indulgency or
actions or inaction with respect to any such instrument; or
c) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding of
Pledgor.
7) The entire Collateral Pledge will be returned to Pledgor when Pledgor's
Unrestricted Cash exceeds the benchmark defined above for a period of at
least one fiscal quarter and continues to remain greater than the
benchmark above and Pledgor is not in default under the Agreements or
under any material financial obligation. (Alternatively, the entire
Collateral Pledge will be returned immediately in the event Pledgor's
new equity or other non-refundable cash is great enough, in Pledgee's
reasonable judgement, to keep Pledgor's Unrestricted Cash above the
benchmark for at least three fiscal quarters and
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NEGATIVE COVENANT PLEDGE AGREEMENT
AURORA BIOSCIENCES CORPORATION
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Pledgor is not in default under the Agreements or under any material
financial obligation).
Alternatively, in the event of an acquisition, if a credit worthy
acquiror executes an assignment or guarantee acceptable to Pledgee, any
deposits held will be returned to Pledgor.
Return of any required Collateral Pledge prior to the Termination of the
Agreements (as defined below) is contingent upon the following
additional conditions: (a) verification of all benchmarks is to be
acceptable to Pledgee; (b) Pledgor is not in default under the
Agreements, and c) Pledgor has not suffered any material adverse change
and is not aware of any prospective material adverse change.
The "Termination of the Agreements" shall be defined as the satisfaction
of all Pledgor's obligations under the Agreements.
If the Collateral Pledge is returned prior to the Termination of the
Agreements, this Negative Covenant Pledge Agreement shall remain in full
force and effect.
8) If the Collateral Pledge has not been previously returned, upon
Termination of the Agreements Pledgee shall deliver the Collateral
Pledge (less any portion of same cashed, sold, assigned or delivered
pursuant to, and under the circumstances specified in, Paragraph 5
hereof) promptly to Pledgor, and this Negative Covenant Pledge Agreement
shall thereupon be without further effect.
IN WITNESS WHEREOF, the parties hereto have caused this Negative Covenant Pledge
to be executed as of the date first written above.
PLEDGOR: PLEDGEE:
AURORA BIOSCIENCES CORPORATION LEASE MANAGEMENT SERVICES, INC.
By: /s/ XXXXXXX X. TOWER By: /s/ XXXXXXX X. XXXXXX
Its: Senior Director, Its: EVP/General Manager
Finance and Administration
