Exhibit 10.19
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of March 30,
2007 (the "Effective Date") between SILICON VALLEY BANK, a California
corporation and with a loan production office located at 0000 Xxxxx Xxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000 ("SVB"), as agent (the "Agent"), and
the Lenders listed on Schedule 1.1 thereof and otherwise party hereto, including
without limitation, SVB and OXFORD FINANCE CORPORATION ("Oxford"), and
PHARMATHENE, INC., a Delaware corporation ("Borrower"), provides the terms on
which Lenders shall lend to Borrower and Borrower shall repay Lenders. The
parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed
following GAAP. Calculations and determinations must be made following GAAP.
Capitalized terms not otherwise defined in this Agreement shall have the
meanings set forth in Section 13. All other terms contained in this Agreement,
unless otherwise indicated, shall have the meaning provided by the Code to the
extent such terms are defined therein.
2 LOAN AND TERMS OF PAYMENT
2.1 Promise to Pay. Borrower hereby unconditionally promises to pay
Lenders the outstanding principal amount of all Credit Extensions and accrued
and unpaid interest thereon as and when due in accordance with this Agreement.
2.1.1 Growth Capital Facility.
(a) Availability. Subject to the terms and conditions of this
Agreement, on the Effective Date, Lenders agree, severally and not jointly, to
make one (1) loan (the "Growth Capital Loan") available to Borrower in an amount
up to the Growth Capital Loan Amount, according to each Lender's pro-rata share
of the Growth Capital Loan Amount (based upon the respective Commitment
Percentage of each Lender). When repaid, the Growth Capital Loan may not be
re-borrowed.
(b) Interest Payments. Commencing on the first Payment Date of the
month following the month in which the Funding Date occurs, Borrower shall make
monthly payments of interest at the rate set forth in Section 2.2(a).
(c) Repayment. Commencing on October 1, 2007 (the first Payment Date
which is six (6) months from the Effective Date) (the "Amortization Date"), and
continuing on the Payment Date of each month thereafter, the Growth Capital Loan
shall be repaid, in advance, in (i) thirty (30) equal monthly installments of
principal, plus (ii) monthly payments of accrued interest at the rate set forth
in Section 2.2(a). The final payment of all unpaid principal and accrued
interest is due and payable in full on the Growth Capital Loan Maturity Date.
2.2 Payment of Interest on the Credit Extensions.
(a) Interest Rate. Subject to Section 2.2(b), the principal amount
outstanding under the Growth Capital Loan shall accrue interest at a fixed per
annum rate equal to the Basic Rate, determined by Agent as of the Effective
Date, which interest shall be payable monthly in accordance with Section
2.2.(e).
(b) Default Rate. Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is five percentage points above the rate that is otherwise
applicable thereto (the "Default Rate"). Payment or acceptance of the increased
interest rate provided in this Section 2.2(b) is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Agent.
(c) 360-Day Year. Interest shall be computed on the basis of a
360-day year for the actual number of days elapsed.
(d) Debit of Accounts. Agent may debit any of Borrower's deposit
accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrower owes Lenders when due. These debits shall
not constitute a set-off.
(e) Payments. Unless otherwise provided, interest is payable monthly
on the Payment Date of each month. Payments of principal and/or interest
received after 12:00 noon Eastern time are considered received at the opening of
business on the next Business Day. When a payment is due on a day that is not a
Business Day, the payment is due the next Business Day and additional fees or
interest, as applicable, shall continue to accrue.
(f) Permitted Prepayment. Borrower may not make any partial
prepayments of principal hereunder at any time prior to the Amortization Date.
At any time after the Amortization Date, so long as no Event of Default has
occurred and is continuing, Borrower shall have the option to prepay all, but
not less than all, of the Growth Capital Loan advanced by Lenders under this
Agreement, provided Borrower (i) delivers written notice to Agent of its
election to prepay the Growth Capital Loan at least five (5) days prior to such
prepayment, and (ii) pays, on the date of such prepayment: (x) all outstanding
principal plus accrued and unpaid interest, (y) the Prepayment Fee, and (z) all
other sums, if any, that shall have become due and payable, including interest
at the Default Rate with respect to any past due amounts.
2.3 Fees. Borrower shall pay to Agent:
(a) Commitment Fee. A fully earned, non-refundable commitment fee of
Fifty Thousand Dollars ($50,000.00) to be shared between the Lenders pursuant to
their respective Commitment Percentages on the Effective Date.
(b) Good Faith Deposit. Borrower has paid to Agent, prior to the
Effective Date, a good faith deposit of Twenty-Five Thousand Dollars
($25,000.00) (the "Good Faith Deposit") to initiate Lenders' due diligence
review process, and such amounts shall be applied towards the Commitment Fee as
set forth in 2.3(a) hereof.
(c) Prepayment Fee. The Prepayment Fee, when due hereunder; and
(d) Lenders' Expenses. All Lenders' Expenses (including reasonable
attorneys' fees and expenses, plus expenses, for documentation and negotiation
of this Agreement) incurred through and after the Effective Date, when due.
2.4 Additional Costs. If any new law or regulation increases Lender's
costs or reduces its income for any loan, Borrower shall pay the increase in
cost or reduction in income or additional expense; provided, however, that
Borrower shall not be liable for any amount attributable to any period before
180 days prior to the date Agent notifies Borrower of such increased costs. Each
Lender agrees that it shall allocate any increased costs among its customers
similarly affected in good faith and in a manner consistent with such Lender's
customary practice.
3 CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Credit Extension. Each Lender's
obligation to make the initial Credit Extension is subject to the condition
precedent that Borrower shall consent to or shall have delivered, in form and
substance satisfactory to Lenders, such documents, and completion of such other
matters, as Lenders may reasonably deem necessary or appropriate, including,
without limitation:
(a) duly executed original signatures to the Loan Documents to which
Borrower is a party;
(b) duly executed original signatures to the Control Agreement[s];
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(c) Operating Documents and a good standing certificate of Borrower
certified by the Secretary of State of the State of Delaware as of a date no
earlier than thirty (30) days prior to the Effective Date;
(d) duly executed original signatures to the completed Borrowing
Resolutions for Borrower;
(e) Agent shall have received certified copies, dated as of a recent
date, of financing statement searches, as Agent shall request, accompanied by
written evidence (including any UCC termination statements) that the Liens
indicated in any such financing statements either constitute Permitted Liens or
have been or, in connection with the initial Credit Extension, will be
terminated or released;
(f) a legal opinion of Borrower's and Guarantor's counsel dated as
of the Effective Date together with the duly executed original signatures
thereto;
(g) Borrower shall have delivered the duly executed original
signatures to the Guaranty, together with the completed Borrowing Resolutions
for Guarantor;
(h) Borrower shall deliver the Guarantor's duly executed original
signatures to the movable Hypothec;
(i) duly executed Subordination Agreements executed by the holders
of Subordinated Debt in favor of Agent, for the ratable benefit of the Lenders;
(j) evidence satisfactory to Agent that the insurance policies
required by Section 6.5 hereof are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured clauses or
endorsements in favor of Agent, for the ratable benefit of the Lenders; and
(k) payment of the fees and Lenders' Expenses then due as specified
in Section 2.3 hereof.
3.2 Conditions Precedent to all Credit Extensions. The obligation of each
Lender to make each Credit Extension, including the initial Credit Extension, is
subject to the following:
(a) timely receipt of an executed Payment/Advance Form;
(b) the representations and warranties in Section 5 shall be true in
all material respects on the date of the Payment/Advance Form and on the Funding
Date of each Credit Extension; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date, and no Default or Event of Default shall have occurred and be
continuing or result from the Credit Extension. Each Credit Extension is
Borrower's representation and warranty on that date that the representations and
warranties in Section 5 remain true in all material respects; provided, however,
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date; and
(c) in such Lender's sole discretion, there has not been any
material impairment in the general affairs, management, results of operation,
financial condition or the prospect of repayment of the Obligations, nor has
there been any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Agent.
3.3 Covenant to Deliver. Borrower agrees to deliver to Agent each item
required to be delivered to Agent under this Agreement as a condition to any
Credit Extension. Borrower expressly agrees that the extension of a Credit
Extension prior to the receipt by Agent of any such item shall not constitute a
waiver by Lenders of Borrower's obligation to deliver such item, and any such
extension in the absence of a required item shall be in Agent's sole discretion.
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4 CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrower hereby grants Agent, for the
ratable benefit of the Lenders, and to each Lender, to secure the payment and
performance in full of all of the Obligations, a continuing security interest
in, and pledges to Agent, for the ratable benefit of the Lenders, and to each
Lender, the Collateral, wherever located, whether now owned or hereafter
acquired or arising, and all proceeds and products thereof. Borrower represents,
warrants, and covenants that the security interest granted herein is and shall
at all times continue to be a first priority perfected security interest in the
Collateral (subject only to Permitted Liens). If Borrower shall acquire a
commercial tort claim (as defined in the Code), Borrower shall promptly notify
Agent in a writing signed by Borrower of the general details thereof (and
further details as may be required by Agent) and grant to Agent, for the ratable
benefit of the Lenders, and to each Lender in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance reasonably satisfactory to Agent.
If this Agreement is terminated, Agent's and each Lender's Lien in the
Collateral shall continue until the Obligations are repaid in full in cash. Upon
payment in full in cash of the Obligations and at such time as the Lenders'
obligation to make Credit Extensions has terminated, the Agent, and if
appropriate, each Lender shall, at Borrower's sole cost and expense, release its
Liens in the Collateral and all rights therein shall revert to Borrower.
4.2 Authorization to File Financing Statements. Borrower hereby authorizes
Agent to file financing statements, without notice to Borrower, with all
appropriate jurisdictions to perfect or protect Agent's and each Lender's
interest or rights hereunder, including a notice that any disposition of the
Collateral, except as permitted hereunder, by either Borrower or any other
Person, shall be deemed to violate the rights of the Agent and the Lenders under
the Code.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization, Authorization: Power and Authority. Borrower and
each of its Subsidiaries, if any, are duly existing and in good standing, as
Registered Organizations in their respective jurisdictions of formation and are
qualified and licensed to do business and are in good standing in any
jurisdiction in which the conduct of their business or their ownership of
property requires that they be qualified except where the failure to do so could
not reasonably be expected to have a material adverse effect on Borrower's
business. In connection with this Agreement, Borrower has delivered to Agent a
completed perfection certificate signed by Borrower (the "Perfection
Certificate"). Borrower represents and warrants that (a) Borrower's exact legal
name is that indicated on the Perfection Certificate and on the signature page
hereof; (b) Borrower is an organization of the type and is organized in the
jurisdiction set forth in the Perfection Certificate; (c) the Perfection
Certificate accurately sets forth Borrower's organizational identification
number or accurately states that Borrower has none; (d) the Perfection
Certificate accurately sets forth Borrower's place of business, or, if more than
one, its chief executive office as well as Borrower's mailing address (if
different than its chief executive office); (e) Borrower (and each of its
predecessors) has not, in the past five (5) years, changed its jurisdiction of
formation, organizational structure or type, or any organizational number
assigned by its jurisdiction; and (f) all other information set forth on the
Perfection Certificate pertaining to Borrower and each of its Subsidiaries is
accurate and complete (it being understood and agreed that Borrower may from
time to time update certain information in the Perfection Certificate after the
Effective Date to the extent permitted by one or more specific provisions in
this Agreement). If Borrower is not now a Registered Organization but later
becomes one, Borrower shall promptly notify Agent of such occurrence and provide
Agent with Borrower's organizational identification number.
The execution, delivery and performance by Borrower of the Loan Documents
to which it is a party have been duly authorized, and do not (i) conflict with
any of Borrower's organizational documents, except to the extent that any such
conflict has been waived or otherwise resolved simultaneous with entering into
this Agreement, (ii) contravene, conflict with, constitute a default under or
violate any Requirement of Law in any material respect, (iii) contravene,
conflict or violate any applicable order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority by which Borrower or any of
its Subsidiaries or any of their property or assets may be bound or affected,
(iv) require any action by, filing, registration, or qualification with, or
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Governmental Approval from, any Governmental Authority (except such Governmental
Approvals which have already been obtained and are in full force and effect) or
are being obtained pursuant to Section 6.1(b), or (v) constitute an event of
default under any material agreement by which Borrower is bound, except to the
extent that any such event of default has been waived or otherwise resolved
simultaneous with entering into this Agreement . Borrower is not in default
under any agreement to which it is a party or by which it is bound in which the
default could reasonably be expected to have a material adverse effect on
Borrower's business.
5.2 Collateral. Borrower has good title to, has rights in, and the power
to transfer each item of the Collateral upon which it purports to xxxxx x Xxxx
hereunder, free and clear of any and all Liens except Permitted Liens. Borrower
has no deposit accounts other than the deposit accounts with Agent, the deposit
accounts, if any, described in the Perfection Certificate, or of which Borrower
has given Agent notice and taken such actions as are necessary to give Agent a
perfected security interest therein.
The Collateral is not in the possession of any third party bailee (such as
a warehouse) except as otherwise provided in the Perfection Certificate. None of
the components of the Collateral shall be maintained at locations other than as
provided in the Perfection Certificate or as Borrower has given Agent notice
pursuant to Section 7.2. In the event that Borrower, after the date hereof,
intends to store or otherwise deliver any portion of the Collateral to a bailee,
then Borrower will first receive the written consent of Agent and such bailee
must execute and deliver a bailee agreement in form and substance satisfactory
to Agent.
Except as noted on the Perfection Certificate, Borrower is not a party to,
nor is bound by, any material license or other agreement with respect to which
Borrower is a licensee that (a) prohibits or otherwise restricts Borrower from
granting a security interest in Borrower's interest in such license or agreement
or any other property, or (b) for which a default under or termination of could
interfere with Agent's right to sell any Collateral. Borrower shall provide
written notice to Agent within ten (10) days of entering or becoming bound by
any such license or agreement which is reasonably likely to have a material
impact on Borrower's business or financial condition (other than
over-the-counter software that is commercially available to the public).
Borrower shall take such steps as Agent requests to obtain the consent of, or
waiver by, any person whose consent or waiver is necessary for (x) all such
licenses or agreements to be deemed "Collateral" and for Agent and each Lender
to have a security interest in it that might otherwise be restricted or
prohibited by law or by the terms of any such license or, whether now existing
or entered into in the future, and (y) Agent shall have the ability in the event
of a liquidation of any Collateral to dispose of such Collateral in accordance
with Agent's rights and remedies under this Agreement and the other Loan
Documents.
5.3 Litigation. There are no actions or proceedings pending or, to the
knowledge of the Responsible Officers, threatened in writing by or against
Borrower or any of its Subsidiaries involving more than One Hundred Thousand
Dollars ($100,000.00).
5.4 No Material Deviation in Financial Statements. All consolidated
financial statements for Borrower and any of its Subsidiaries delivered to Agent
fairly present, in all material respects Borrower's consolidated financial
condition and Borrower's consolidated results of operations. There has not been
any material deterioration in Borrower's consolidated financial condition since
the date of the most recent financial statements submitted to Agent.
5.5 Solvency. Borrower is able to pay its debts (including trade debts) as
they mature.
5.6 Regulatory Compliance. Borrower is not an "investment company" or a
company "controlled" by an "investment company" under the Investment Company Act
of 1940. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
rules, the violation of which could reasonably be expected to have a material
adverse effect on its business. None of Borrower's or any of its Subsidiaries'
properties or assets has been used by Borrower or any Subsidiary or, to the best
of Borrower's knowledge, by previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than legally. Borrower
and each of its Subsidiaries have obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all Governmental Authorities that are necessary to continue their respective
businesses as currently conducted.
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5.7 Subsidiaries; Investments. Borrower does not own any stock,
partnership interest or other equity securities except for Permitted Investments
and its Subsidiary.
5.8 Tax Returns and Payments; Pension Contributions. Borrower has timely
filed all required tax returns and reports, and Borrower and its Subsidiaries
have timely paid all foreign, federal, state and local taxes, assessments,
deposits and contributions owed by Borrower. Borrower may defer payment of any
contested taxes, provided that Borrower (a) in good faith contests its
obligation to pay the taxes by appropriate proceedings promptly and diligently
instituted and conducted, (b) notifies Agent in writing of the commencement of,
and any material development in, the proceedings, (c) posts bonds or takes any
other steps required to prevent the governmental authority levying such
contested taxes from obtaining a Lien upon any of the Collateral that is other
than a "Permitted Lien". Borrower is unaware of any claims or adjustments
proposed for any of Borrower's prior tax years which could result in additional
taxes becoming due and payable by Borrower. Borrower has paid all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not withdrawn from
participation in, and has not permitted partial or complete termination of, or
permitted the occurrence of any other event with respect to, any such plan which
could reasonably be expected to result in any liability of Borrower, including
any liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency.
5.9 Use of Proceeds. Borrower shall use the proceeds of the Credit
Extensions solely to fund its general business requirements and not for
personal, family, household or agricultural purposes.
5.10 Full Disclosure. No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Agent or
any Lender, as of the date such representation, warranty, or other statement was
made, taken together with all such written certificates and written statements
given to Agent or any Lender, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained in
the certificates or statements not misleading (it being recognized that the
projections and forecasts provided by Borrower in good faith and based upon
reasonable assumptions are not viewed as facts and that actual results during
the period or periods covered by such projections and forecasts may differ from
the projected or forecasted results).
6 AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
6.1 Government Compliance.
(a) Maintain its and all its Subsidiaries' legal existence and good
standing in their respective jurisdictions of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on Borrower's business
or operations. Borrower shall comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, the noncompliance with
which could have a material adverse effect on Borrower's business.
(b) Use commercially reasonably efforts to obtain all of the
Governmental Approvals necessary for the performance by Borrower of its
obligations under the Loan Documents to which it is a party and the grant of a
security interest to Agent for the ratable benefit of the Lenders, in all of its
property. Borrower shall promptly provide copies of any such obtained
Governmental Approvals to Agent.
6.2 Financial Statements, Reports, Certificates. Deliver to Agent: (i) as
soon as available, but no later than thirty (30) days after the last day of each
month, a company prepared consolidated balance sheet and income statement
covering Borrower's consolidated operations for such month certified by a
Responsible Officer and in a form acceptable to Agent; (ii) as soon as
available, but no later than one hundred eighty (180) days after the last day of
Borrower's fiscal year, audited consolidated financial statements prepared under
GAAP, consistently applied, together with an unqualified opinion on the
financial statements from an independent certified public accounting firm
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acceptable to Agent in its reasonable discretion; (iii) as soon as available,
but no later than forty-five (45) days after the last day of Borrower's fiscal
year, Borrower's financial projections for current fiscal year as approved by
Borrower's Board of Directors; (iv) within ten (10) days of delivery, copies of
all statements, reports and notices made generally available to Borrower's
security holders or to any holders of Subordinated Debt in such capacity; (v) in
the event that Borrower becomes subject to the reporting requirements under the
Securities Exchange Act of 1934, as amended, within five (5) days of filing, all
reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission or a link thereto on Borrower's or another website on the Internet;
(vi) a prompt report of any legal actions pending or threatened against Borrower
or any of its Subsidiaries that could result in damages or costs to Borrower or
any of its Subsidiaries of Two Hundred Thousand Dollars ($200,000) or more; and
(vii) other financial information reasonably requested by Agent.
6.3 Inventory; Returns. Returns and allowances between Borrower and its
Account Debtors shall follow Borrower's customary practices as they exist at the
Effective Date. Borrower must promptly notify Agent of all returns, recoveries,
disputes and claims that involve more than One Hundred Thousand Dollars
($100,000).
6.4 Taxes; Pensions. Make, and cause each of its Subsidiaries to make,
timely payment of all foreign, federal, state, and local taxes or assessments
(other than taxes and assessments which Borrower is contesting pursuant to the
terms of Section 5.8 hereof) and shall deliver to Agent, on demand, appropriate
certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms.
6.5 Insurance. Keep its business and the Collateral insured for risks and
in amounts standard for companies in Borrower's industry and location and as
Agent may reasonably request. Insurance policies shall be in a form, with
companies, and in amounts that are satisfactory to Agent. All property policies
shall have a lender's loss payable endorsement showing Agent as lender loss
payee and waive subrogation against Agent, and all liability policies shall
show, or have endorsements showing, the Agent, as an additional insured. All
policies (or the loss payable and additional insured endorsements) shall provide
that the insurer must give Agent at least twenty (20) days notice before
canceling, amending, or declining to renew its policy. At Agent's request,
Borrower shall deliver certified copies of policies and evidence of all premium
payments. Proceeds payable under any policy shall, at Agent's option, be payable
to Agent on behalf of the Lenders on account of the Obligations. Notwithstanding
the foregoing, (a) 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 up to $500,000 with respect to any loss, but not exceeding
$500,000, in the aggregate for all losses under all casualty policies in any one
year, toward the replacement or repair of destroyed or damaged property;
provided that any such replaced or repaired property (i) shall be of equal or
like value as the replaced or repaired Collateral and (ii) shall be deemed
Collateral in which Agent and Lenders have been granted a first priority
security interest, and (b) after the occurrence and during the continuance of an
Event of Default, all proceeds payable under such casualty policy shall, at the
option of Agent, be payable to Agent, for the ratable benefit of the Lenders, on
account of the Obligations. If Borrower fails to obtain insurance as required
under this Section 6.5 or to pay any amount or furnish any required proof of
payment to third persons and Agent, Agent may make all or part of such payment
or obtain such insurance policies required in this Section 6.5, and take any
action under the policies Agent deems prudent.
6.6 Operating Accounts.
(a) Maintain its primary operating accounts with Agent and Agent's
affiliates.
(b) Provide Agent five (5) days prior written notice before
establishing any Collateral Account at or with any bank or financial institution
other than Agent or its Affiliates. In addition, for each Collateral Account
that Borrower at any time maintains, Borrower shall cause the applicable bank or
financial institution (other than Agent) at or with which any Collateral Account
is maintained to execute and deliver a Control Agreement or other appropriate
instrument with respect to such Collateral Account to perfect Agent's Lien in
such Collateral Account in accordance with the terms hereunder. The provisions
of the previous sentence shall not apply to deposit accounts exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of Borrower's employees and identified to Agent by Borrower as
such.
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6.7 Protection of Intellectual Property Rights. Borrower shall: (a)
protect, defend and maintain the validity and enforceability of the intellectual
property material to Borrower's business; (b) promptly advise Agent in writing
of material infringements of its intellectual property; and (c) not allow any
intellectual property material to Borrower's business to be abandoned, forfeited
or dedicated to the public without Agent's written consent.
6.8 SPAC Closing. In the event that the SPAC Closing has not occurred
prior to August 3, 2007, the Borrower shall deliver to Agent, on or before
August 31, 2007, the Additional Closing Documents, each in form and substance
acceptable to the Lenders, at Borrower's sole cost and expense.
6.9 Litigation Cooperation. From the date hereof and continuing through
the termination of this Agreement, make available to Agent, without expense to
Agent, Borrower and its officers, employees and agents and Borrower's books and
records, to the extent that Agent may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Agent with respect to any Collateral or relating to Borrower.
6.10 Further Assurances. Execute any further instruments and take further
action as Agent reasonably requests to perfect or continue Agent's and Lenders'
Lien in the Collateral or to effect the purposes of this Agreement. Deliver to
Agent, within five (5) days after the same are sent or received, copies of all
correspondence, reports, documents and other filings with any Governmental
Authority regarding compliance with or maintenance of Governmental Approvals or
Requirements of Law or that could reasonably be expected to have a material
effect on any of the Governmental Approvals or otherwise on the operations of
Borrower or any of its Subsidiaries.
6.10 Notices of Litigation and Default. Borrower will give prompt written
notice to Agent of any litigation or governmental proceedings pending or
threatened (in writing) against Borrower which would reasonably be expected to
have a material adverse effect with respect to Borrower. Without limiting or
contradicting any other more specific provision of this Agreement, promptly (and
in any event within three (3) Business Days) upon Borrower becoming aware of the
existence of any Event of Default or event which, with the giving of notice or
passage of time, or both, would constitute an Event of Default, Borrower shall
give written notice to Agent of such occurrence, which such notice shall include
a reasonably detailed description of such Event of Default or event which, with
the giving of notice or passage of time, or both, would constitute an Event of
Default.
7 NEGATIVE COVENANTS
Borrower shall not do any of the following without Agent's prior written
consent:
7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise
dispose of (collectively, "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, except for Transfers (a)
of Inventory in the ordinary course of business; (b) of worn-out or obsolete
Equipment; and (c) in connection with Permitted Joint Ventures, Permitted Liens
and Permitted Investments; and (d) of non-exclusive licenses for the use of the
property, of Borrower or its Subsidiaries in the ordinary course of business.
7.2 Changes in Business, Management, Ownership, or Business Locations. (a)
Engage in or permit any of its Subsidiaries to engage in any business other than
the businesses currently engaged in by Borrower and such Subsidiary, as
applicable, or reasonably related thereto; (b) liquidate or dissolve; or (c) (i)
if the Key Person ceases to hold such office with Borrower and a replacement
reasonably satisfactory to Lenders is not made within 90 days thereafter, or
(ii) except in connection with the SPAC Closing, enter into any transaction or
series of related transactions in which the stockholders of Borrower who were
not stockholders immediately prior to the first such transaction or immediately
after the SPAC Closing, own more than 40% of the voting stock of Borrower
immediately after giving effect to such transaction or related series of such
transactions (other than by the sale of Borrower's equity securities in a public
offering or to venture capital investors so long as Borrower identifies to Agent
the venture capital investors prior to the closing of the transaction). Borrower
shall not, without at least thirty (30) days prior written notice to Agent: (1)
add any new offices or business locations, including warehouses (unless such new
offices or business locations contain less than Ten Thousand Dollars ($10,000)
in Borrower's assets or property), (2) change its jurisdiction of organization,
(3) change its organizational structure or type, (4) change its legal name, or
(5) change any organizational number (if any) assigned by its jurisdiction of
organization.
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7.3 Mergers or Acquisitions. Except in connection with the SPAC Closing or
a Permitted Acquisition, merge or consolidate, or permit any of its Subsidiaries
to merge or consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person. A Subsidiary may merge or consolidate into another
Subsidiary or into Borrower.
7.4 Indebtedness. Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.
7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein, or enter into any agreement, document, instrument or
other arrangement (except with or in favor of Agent) with any Person which
directly or indirectly prohibits or has the effect of prohibiting Borrower or
any Subsidiary from assigning, mortgaging, pledging, granting a security
interest in or upon, or encumbering any of Borrower's or any Subsidiary's
intellectual property, except as is otherwise permitted in Section 7.1 hereof
and the definition of "Permitted Liens" herein.
7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account
except pursuant to the terms of Section 6.6(b) hereof.
7.7 Distributions; Investments. (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock, or (b)
directly or indirectly make any Investment other than Permitted Investments, or
permit any of its Subsidiaries to do so.
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 non-affiliated Person.
7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated
Debt, except under the terms of the subordination, intercreditor, or other
similar agreement to which such Subordinated Debt is subject, or (b) amend any
provision in any document relating to the Subordinated Debt which would increase
the principal amount thereof or adversely affect the subordination thereof to
Obligations owed to the Lenders.
7.10 Compliance. Become an "investment company" or a company controlled by
an "investment company", under the Investment Company Act of 1940 or undertake
as one of its important activities extending credit to purchase or carry margin
stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System), or use the proceeds of any Credit Extension for that 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 other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower's business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.
8 EVENTS OF DEFAULT
Any one of the following shall constitute an event of default (an "Event
of Default") under this Agreement:
8.1 Payment Default. Borrower fails to make any payment of principal or
interest on any Credit Extension on its due date, or pay any other Obligations
within three (3) Business Days after such Obligations are due and payable (which
three (3) Business Day grace period shall not apply to payments due on the
Growth Capital Loan Maturity Date). During the cure period, the failure to cure
the payment default is not an Event of Default (but no Credit Extension will be
made during the cure period);
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8.2 Covenant Default.
(a) Borrower fails or neglects to perform any obligation in Sections
6.2, 6.4, 6.5, 6.6, 6.7, 6.8, or violates any covenant in Section 7; or
(b) Borrower fails or neglects to perform, keep, or observe any
other term, provision, condition, covenant or agreement contained in this
Agreement or any Loan Documents, and as to any default (other than those
specified in this Section 8) under such other term, provision, condition,
covenant or agreement that can be cured, has failed to cure the default within
ten (10) days after the occurrence 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 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 cure the default shall not be deemed an Event of Default (but no
Credit Extensions shall be made during such cure period). Grace periods provided
under this Section shall not apply, among other things, to financial covenants
or any other covenants set forth in subsection (a) above;
8.3 Material Adverse Change. A Material Adverse Change occurs;
8.4 Attachment. (a) Any material portion of Borrower's assets is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in ten (10) days; (b) the service of
process seeking to attach, by trustee or similar process, any funds of Borrower,
or of any entity under control of Borrower (including a Subsidiary), on deposit
with the Lenders and/or Agent or an Affiliate; (c) Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business; (d) a judgment or other claim in excess of Fifty Thousand Dollars
($50,000.00) becomes a Lien on any of Borrower's assets; or (e) a notice of
lien, levy, or assessment is filed against any of Borrower's assets by any
government agency and not paid within ten (10) days after Borrower receives
notice. These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower (but no Credit Extensions shall be made during the cure
period);
8.5 Insolvency (a) Borrower is unable to pay its debts (including trade
debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within forty-five (45) days (but no Credit
Extensions shall be made while of any of the conditions described in clause (a)
exist and/or until any Insolvency Proceeding is dismissed);
8.6 Other Agreements. There is a default which remains uncured 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 (other than any agreement relating to
the Subordinated Debt), whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars
($250,000) or that could have a material adverse effect on Borrower's or
Guarantor's business.
8.7 Judgments. One or more judgments, orders, or decrees for the payment
of money in an amount, individually or in the aggregate, of at least Fifty
Thousand Dollars ($50,000) (not covered by independent third-party insurance as
to which liability has been accepted by such insurance carrier) shall be
rendered against Borrower and shall remain unsatisfied, unvacated, or unstayed
for a period of ten (10) days after the entry thereof (provided that no Credit
Extensions will be made prior to the satisfaction, vacation, or stay of such
judgment, order, or decree);
8.8 Misrepresentations. Borrower or any Person acting for Borrower makes
any representation, warranty, or other statement now or later in this Agreement,
any Loan Document or in any writing delivered to Agent and/or Lenders or to
induce Agent and/or Lenders to enter this Agreement or any Loan Document, and
such representation, warranty, or other statement is incorrect in any material
respect when made; or
8.9 Intentionally Deleted.
8.10 Governmental Approvals. Any Governmental Approval shall have been
revoked, rescinded, suspended, modified in an adverse manner or not renewed in
the ordinary course for a full term.
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8.11 Guaranty. (a) Any guaranty of any Obligations terminates or ceases
for any reason to be in full force and effect and is not restored within three
(3) Business Days thereafter; (b) any Guarantor does not perform any obligation
or covenant under any guaranty of the Obligations within any applicable period
of grace or cure, if any; (c) any circumstance described in Sections 8.3, 8.4,
8.5, 8.7, or 8.8. occurs with respect to any Guarantor that can be cured, has
failed to be cured within three (3) Business Days after the occurrence thereof;
(d) the liquidation, winding up, or termination of existence of any Guarantor;
or (e) a material impairment in the perfection or priority of Bank's Lien in the
collateral provided by Guarantor or in the value of such collateral.
9 RIGHTS AND REMEDIES
9.1 Rights and Remedies. While an Event of Default occurs and continues
Agent may, without notice or demand, do any or all of the following:
(a) declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Agent or Lenders);
(b) stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and Agent
and/or Lenders;
(c) settle or adjust disputes and claims directly with Account
Debtors for amounts on terms and in any order that Agent considers advisable,
notify any Person owing Borrower money of Agent's and Lenders' security interest
in such funds, and verify the amount of such account;
(d) make any payments and do any acts it considers necessary or
reasonable to protect the Collateral and/or its security interest in the
Collateral. Borrower shall assemble the Collateral if Agent requests and make it
available as Agent designates. Agent may enter premises where the Collateral is
located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Agent a
license to enter and occupy any of its premises, without charge, to exercise any
of Agent's rights or remedies;
(e) apply to the Obligations any (i) balances and deposits of
Borrower it holds, or (ii) any amount held by Agent or Lenders owing to or for
the credit or the account of Borrower;
(f) ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral. Agent is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower's labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Agent's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Agent for the
benefit of the Lenders;
(g) place a "hold" on any account maintained with Agent or Lenders
and/or deliver a notice of exclusive control, any entitlement order, or other
directions or instructions pursuant to any Control Agreement or similar
agreements providing control of any Collateral;
(h) demand and receive possession of Borrower's Books; and
(i) exercise all rights and remedies available to Agent under the
Loan Documents or at law or equity, including all remedies provided under the
Code (including disposal of the Collateral pursuant to the terms thereof).
9.2 Power of Attorney. Borrower hereby irrevocably appoints Agent as its
lawful attorney-in-fact, exercisable only upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower's name on any
checks or other forms of payment or security; (b) sign Borrower's name on any
invoice or xxxx of lading for any Account or drafts against Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Agent determines reasonable; (d) make, settle,
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and adjust all claims under Borrower's insurance policies; (e) pay, contest or
settle any Lien, charge, encumbrance, security interest, and adverse claim in or
to the Collateral, or any judgment based thereon, or otherwise take any action
to terminate or discharge the same; and (f) transfer the Collateral into the
name of Agent or a third party as the Code permits. Borrower hereby appoints
Agent as its lawful attorney-in-fact to sign Borrower's name on any documents
necessary to perfect or continue the perfection of Agent's and Lenders' security
interest in the Collateral regardless of whether an Event of Default has
occurred until all Obligations have been satisfied in full and Agent and Lenders
are under no further obligation to make Credit Extensions hereunder. Agent's
foregoing appointment as Borrower's attorney in fact, and all of Agent's rights
and powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Agent's and Lenders' obligation to provide
Credit Extensions terminates.
9.3 Protective Payments. If Borrower fails to obtain the insurance called
for by Section 6.5 or fails to pay any premium thereon or fails to pay any other
amount which Borrower is obligated to pay under this Agreement or any other Loan
Document, Agent may obtain such insurance or make such payment, and all amounts
so paid by Agent are Lenders' Expenses and immediately due and payable, bearing
interest at the then highest applicable rate, and secured by the Collateral.
Agent will make reasonable efforts to provide Borrower with notice of Agent
obtaining such insurance at the time it is obtained or within a reasonable time
thereafter. No payments by Agent are deemed an agreement to make similar
payments in the future or Agent's waiver of any Event of Default.
9.4 Application of Payments and Proceeds. Borrower shall have no right to
specify the order or the accounts to which Agent shall allocate or apply any
payments required to be made by Borrower to Agent or otherwise received by Agent
under this Agreement when any such allocation or application is not specified
elsewhere in this Agreement. If an Event of Default has occurred and is
continuing, Agent and/or each Lender may apply any funds in its possession,
whether from Borrower account balances, payments, proceeds realized as the
result of any collection of Accounts or other disposition of the Collateral, or
otherwise, to the Obligations in such order as the Lenders shall determine in
their sole discretion. Any surplus shall be paid to Borrower or other Persons
legally entitled thereto; Borrower shall remain liable to Lenders for any
deficiency. If Agent, in its good faith business judgment, directly or
indirectly enters into a deferred payment or other credit transaction with any
purchaser at any sale of Collateral, Agent shall have the option, exercisable at
any time, of either reducing the Obligations by the principal amount of the
purchase price or deferring the reduction of the Obligations until the actual
receipt by Agent of cash therefor.
9.5 Liability for Collateral. So long as the Agent and Lenders comply with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of the Agent and Lenders, the Agent and Lenders
shall not be liable or responsible for: (a) the safekeeping of the Collateral;
(b) any loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other Person. Borrower bears all risk of loss, damage or destruction of the
Collateral.
9.6 No Waiver; Remedies Cumulative. Agent's failure, at any time or times,
to require strict performance by Borrower of any provision of this Agreement or
any other Loan Document shall not waive, affect, or diminish any right of Agent
thereafter to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by Agent and then is only
effective for the specific instance and purpose for which it is given. Agent's
rights and remedies under this Agreement and the other Loan Documents are
cumulative. Agent has all rights and remedies provided under the Code, by law,
or in equity. Agent's exercise of one right or remedy is not an election, and
Agent's waiver of any Event of Default is not a continuing waiver. Agent's delay
in exercising any remedy is not a waiver, election, or acquiescence.
9.7 Demand Waiver. Borrower waives demand, 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 held by Agent on which Borrower is
liable.
9.8 Withholding. In the event any payments are received by Lenders from
Borrower hereunder such payments will be made subject to applicable withholding
for any taxes, levies, fees, deductions, withholding, restrictions or conditions
of any nature whatsoever. Specifically, if at any time any governmental
authority, applicable law, regulation or international agreement requires
Borrower to make any such withholding or deduction from any such payment or
other sum payment hereunder to the Lenders, Borrower hereby covenants and agrees
that the amount due from Borrower with respect to such payment or other sum
payable hereunder will be increased to the extent necessary to ensure that,
12
after the making of such required withholding or deduction, each Lender receives
a net sum equal to the sum which it would have received had no withholding or
deduction been required and Borrower shall pay the full amount withheld or
deducted to the relevant governmental authority. Borrower will, upon request,
furnish Lenders with proof satisfactory to Lenders indicating that Borrower has
made such withholding payment provided, however, that Borrower need not make any
withholding payment if the amount or validity of such withholding payment is
contested in good faith by appropriate and timely proceedings and as to which
payment in full is bonded or reserved against by Borrower. The agreements and
obligations of Borrower contained in this Section shall survive the termination
of this Agreement.
10 NOTICES
All notices, consents, requests, approvals, demands, or other
communication (collectively, "Communication") by any party to this Agreement or
any other Loan Document must be in writing and shall be deemed to have been
validly served, given, or delivered: (a) upon the earlier of actual receipt and
three (3) Business Days after deposit in the U.S. mail, first class, registered
or certified mail return receipt requested, with proper postage prepaid; (b)
upon transmission, when sent by electronic mail or facsimile transmission; (c)
one (1) Business Day after deposit with a reputable overnight courier with all
charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of
which shall be addressed to the party to be notified and sent to the address,
facsimile number, or email address indicated below. Either Agent, Lender or
Borrower may change its address or facsimile number by giving the other party
written notice thereof in accordance with the terms of this Section 10.
If to Borrower: PharmAthene, Inc.
000 Xxxxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn:
Fax:
Email:
If to Agent or SVB: Silicon Valley Bank
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxxxx
Fax: (000) 000-0000
Email: xxxxxxxxx@xxxxxx.xxx
with a copy to: Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esquire
Fax: (000) 000-0000
Email: XXxxxxxx@xxxxxxxxx.xxx
If to Oxford: Oxford Finance Corporation
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Ms. Xxxxxxx Xxxxxx
Fax: 000-000-0000
Email: xxxxxxx@xxxxxxxxxxxxx.xxx
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Massachusetts law governs the Loan Documents (other than the Warrant)
without regard to principles of conflicts of law. Borrower, Lenders and Agent
each submit to the exclusive jurisdiction of the State and Federal courts in
Massachusetts. Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to operate to preclude Agent from bringing suit or taking other legal
action in any other jurisdiction to realize on the Collateral or any other
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security for the Obligations, or to enforce a judgment or other court order in
favor of Agent and Lenders. Borrower expressly submits and consents in advance
to such jurisdiction in any action or suit commenced in any such court, and
Borrower hereby waives any objection that it may have based upon lack of
personal jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed
appropriate by such court. Borrower hereby waives personal service of the
summons, complaints, and other process issued in such action or suit and agrees
that service of such summons, complaints, and other process may be made by
registered or certified mail addressed to Borrower at the address set forth in
Section 10 of this Agreement and that service so made shall be deemed completed
upon the earlier to occur of Borrower's actual receipt thereof or three (3) days
after deposit in the U.S. mails, proper postage prepaid.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER, LENDER AND
AGENT EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 Successors and Assigns. This Agreement binds and is for the benefit
of the successors and permitted assigns of each party. Borrower may not assign
this Agreement or any rights or obligations under it without Agent's prior
written consent (which may be granted or withheld in Agent's discretion).
Lenders and Agent have the right, without the consent of or notice to Borrower,
to sell, transfer, assign, negotiate, or grant participation in all or any part
of, or any interest in, Lenders' obligations, rights, and benefits under this
Agreement and the other Loan Documents, including without limitation, an
assignment to any Affiliate or any related party.
12.2 Indemnification/Expenses. Borrower agrees to indemnify, defend and
hold Agent and the Lenders and their respective directors, officers, employees,
agents, attorneys, or any other Person affiliated with or representing Agent or
the Lenders harmless against: (a) all obligations, demands, claims, and
liabilities (collectively, "Claims") asserted by any other party in connection
with the transactions contemplated by the Loan Documents; and (b) all losses or
Lenders' Expenses incurred, or paid by Lenders and/or Agent from, following, or
arising from transactions between Agent, and/or Lenders and Borrower (including
reasonable attorneys' fees and expenses), except for Claims and/or losses
directly caused by Agent's or Lenders' gross negligence or willful misconduct.
12.3 Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.
12.4 Severability of Provisions. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
12.5 Amendments in Writing; Integration. All amendments to this Agreement
must be in writing signed by Agent, Lenders and Borrower. This Agreement and the
Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
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, are an original, and all taken together, constitute
one Agreement.
12.7 Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been satisfied. The obligation of Borrower in Section 12.2 to
indemnify each Lender and Agent shall survive until the statute of limitations
with respect to such claim or cause of action shall have run.
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12.8 Confidentiality. In handling any confidential information, Lenders
and Agent shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (a) to
Lenders' and Agent's Subsidiaries or Affiliates; (b) to prospective transferees
or purchasers of any interest in the Credit Extensions (provided, however,
Lenders and Agent shall use commercially reasonable efforts to obtain such
prospective transferee's or purchaser's agreement to the terms of this
provision); (c) as required by law, regulation, subpoena, or other order; (d) to
regulators or as otherwise required in connection with an examination or audit;
and (e) as Agent considers appropriate in exercising remedies under this
Agreement. Confidential information does not include information that either:
(i) is in the public domain or in Lenders' and/or Agent's possession when
disclosed to Lenders and/or Agent, or becomes part of the public domain after
disclosure to Lenders and/or Agent; or (ii) is disclosed to Lenders and/or Agent
by a third party, if Lenders and/or Agent does not know that the third party is
prohibited from disclosing the information.
12.9 Right of Set Off. Borrower hereby grants to Agent and to each Lender,
a lien, security interest and right of set off as security for all Obligations
to Agent and each Lender hereunder, whether now existing or hereafter arising
upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Agent or Lenders
or any entity under the control of Agent or Lenders (including an Agent
affiliate) or in transit to any of them. At any time after the occurrence and
during the continuance of an Event of Default, without demand or notice, Agent
or Lenders may set off the same or any part thereof and apply the same to any
liability or obligation of Borrower even though unmatured and regardless of the
adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO
REQUIRE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
13 DEFINITIONS
13.1 Definitions. As used in this Agreement, the following terms have the
following meanings:
"Account" is any "account" as defined in the Code with such additions to
such term as may hereafter be made, and includes, without limitation, all
accounts receivable and other sums owing to Borrower.
"Account Debtor" is any "account debtor" as defined in the Code with such
additions to such term as may hereafter be made.
"Additional Closing Documents" shall mean the following documents, each in
form and substance satisfactory to the Lenders:
(a) Officer's Certificate with respect to incumbency and authorizing
resolution;
(b) Immovable Hypothec covering the real estate located at 000 Xxxxxx Xx
Georges, ST- Telephone (Quebec) J0P IYO and certain livestock;
(c) Mortgage Filings;
(d) Title Insurance;
(e) Legal Opinion as to Authority/Enforceability; and
(f) such other documents as the Lenders may reasonably request.
"Affiliate" of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
00
"Xxxxx" xxxxx, XXX, not in its individual capacity, but solely in its
capacity as agent on behalf of and for the benefit of the Lenders.
"Agreement" is defined in the preamble hereof.
"Amortization Date" is defined in Section 2.1.1(c).
"Basic Rate" is the per annum rate of interest (based on a year of 360
days) equal to the greater of:
(i) 11.53%, and
(ii) the sum of:
(a) U.S. Treasury note yield to maturity for a term equal to the Treasury
Note Maturity as reported in Federal Reserve Statistical Release H.15- Selected
Interest Rates under the heading "U.S. Government Securities/Treasury Constant
Maturities" on November 13, 2006, plus
(b) the Loan Margin. In the event Release H.15 is no longer published,
Agent shall select a comparable publication to determine the U.S. Treasury note
yield to maturity.
"Borrower" is defined in the preamble hereof.
"Borrower's Books" are all Borrower's books and records including ledgers,
federal and state tax returns, records regarding Borrower's assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.
"Borrowing Resolutions" are, with respect to any Person, those resolutions
adopted by such Person's Board of Directors and delivered by such Person to
Agent approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby, together with a certificate executed by its
secretary on behalf of such Person certifying that (a) such Person has the
authority to execute, deliver, and perform its obligations under each of the
Loan Documents to which it is a party, (b) that attached as Exhibit A to such
certificate is a true, correct, and complete copy of the resolutions then in
full force and effect authorizing and ratifying the execution, delivery, and
performance by such Person of the Loan Documents to which it is a party, (c) the
name(s) of the Person(s) authorized to execute the Loan Documents on behalf of
such Person, together with a sample of the true signature(s) of such Person(s),
and (d) that Agent may conclusively rely on such certificate unless and until
such Person shall have delivered to Agent a further certificate canceling or
amending such prior certificate.
"Business Day" is any day that is not a Saturday, Sunday or a day on which
Agent is closed.
"Cash Burn" is the average net reduction in Borrower's operating cash
position for the three (3) prior months.
"Cash Equivalents" are (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor's Ratings
Group or Xxxxx'x Investors Service, Inc., and (c) SVB's certificates of deposit
issued maturing no more than one (1) year after issue.
"Claims" are defined in Section 12.2.
"Code" is the Uniform Commercial Code, as the same may, from time to time,
be enacted and in effect in the Commonwealth of Massachusetts; provided, that,
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
16
of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, or priority of, or
remedies with respect to, Agent's and Lenders' Lien on any Collateral is
governed by the Uniform Commercial Code in effect in a jurisdiction other than
the Commonwealth of Massachusetts, the term "Code" shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes on the provisions thereof relating to such attachment, perfection,
priority, or remedies and for purposes of definitions relating to such
provisions.
"Collateral" is any and all properties, rights and assets of Borrower
described on Exhibit A.
"Collateral Account" is any Deposit Account, Securities Account, or
Commodity Account of the Borrower.
"Commitment Percentage" is set forth in Schedule 1.1, as amended from time
to time.
"Commodity Account" is any "commodity account" as defined in the Code with
such additions to such term as may hereafter be made.
"Communication" is defined in Section 10.
"Compliance Certificate" is that certain certificate in the form attached
hereto as Exhibit C.
"Contingent Obligation" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (a) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.
"Control Agreement" is any control agreement entered into among the
depository institution at which Borrower maintains a Deposit Account or the
securities intermediary or commodity intermediary at which Borrower maintains a
Securities Account or a Commodity Account, Borrower, and Agent pursuant to which
Agent obtains control (within the meaning of the Code) for the benefit of the
Lenders over such Deposit Account, Securities Account, or Commodity Account.
"Credit Extension" is the Growth Capital Loan or any other extension of
credit by Agent or Lenders for Borrower's benefit.
"Default" is any event which with notice or passage of time or both, would
constitute an Event of Default.
"Default Rate" is defined in Section 2.2.(b).
"Deposit Account" is any "deposit account" as defined in the Code with
such additions to such term as may hereafter be made.
"Designated Deposit Account" is Borrower's deposit account, account number
3300413584, maintained with SVB.
"Dollars," "dollars" and "$" each mean lawful money of the United States.
"Effective Date" is defined in the preamble of this Agreement.
17
"Equipment" is all "equipment" as defined in the Code with such additions
to such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.
"ERISA" is the Employee Retirement Income Security Act of 1974, and its
regulations.
"Event of Default" is defined in Section 8.
"Funding Date" is any date on which a Credit Extension is made to or on
account of Borrower which shall be a Business Day.
"GAAP" is generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"General Intangibles" is all "general intangibles" as defined in the Code
in effect on the date hereof with such additions to such term as may hereafter
be made, and includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
trademarks, service marks and, to the extent permitted under applicable law, any
applications therefor, whether registered or not, any trade secret rights,
including any rights to unpatented inventions, payment intangibles, royalties,
contract rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income and other
tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending
(whether in contract, tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption insurance),
payments of insurance and rights to payment of any kind.
"Governmental Approval" is any consent, authorization, approval, order,
license, franchise, permit, certificate, accreditation, registration, filing or
notice, of, issued by, from or to, or other act by or in respect of, any
Governmental Authority.
"Governmental Authority" is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization
"Growth Capital Loan" is a loan made by Lenders pursuant to the terms of
Section 2.1.1(a) hereof.
"Growth Capital Loan Amount" is an amount equal to Ten Million Dollars
($10,000,000.00).
"Growth Capital Loan Maturity Date" is, for the Growth Capital Loan, the
Payment Date which is the twenty-ninth (29) month after the Amortization Date.
"Guarantor" is any present or future guarantor of the Obligations,
including PharmAthene Canada, Inc.
"Indebtedness" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations, and (d)
Contingent Obligations.
"Insolvency Proceeding" is any proceeding by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief..
"Inventory" is all "inventory" as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and
includes without limitation all merchandise, raw materials, parts, supplies,
18
packing and shipping materials, work in process and finished products, including
without limitation such inventory as is temporarily out of Borrower's custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.
"Investment" is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.
"Key Person" is the Borrower's Chief Executive Officer, who is Xxxxx
Xxxxxx, as of the Effective Date.
"Lender" is any one of the Lenders.
"Lenders" shall mean the Persons identified on Schedule 1.1 hereto and
each assignee that becomes a party to this Agreement pursuant to Section 12.1.
"Lenders' Expenses" are all audit fees and expenses, costs, and expenses
(including reasonable attorneys' fees and expenses) for preparing, amending,
negotiating, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency Proceedings)
or otherwise incurred with respect to Borrower.
"Lien" is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.
"Loan Documents" are, collectively, this Agreement, the Warrant, the
Perfection Certificate, any note, or notes or guaranties executed by Borrower or
any Guarantor, and any other present or future agreement between Borrower any
Guarantor and/or for the benefit of Lenders and Agent in connection with this
Agreement, all as amended, restated, or otherwise modified.
"Loan Margin" is 675 basis points.
"Material Adverse Change" is (a) a material impairment in the perfection
or priority of Lenders' Lien in the Collateral or in the value of such
Collateral; (b) a material adverse change in the business, operations, or
condition (financial or otherwise) of Borrower and the Guarantor taken as a
whole; or (c) a material impairment of the prospect of repayment of any portion
of the Obligations.
"Obligations" are Borrower's obligation to pay when due any debts,
principal, interest, Lenders' Expenses, Prepayment Fees, and other amounts
Borrower owes Lenders now or later, whether under this Agreement, the Loan
Documents, or including, without limitation, all obligations relating to letters
of credit (including reimbursement obligations for drawn and undrawn letters of
credit), cash management services, and foreign exchange contracts, if any, and
including interest accruing after Insolvency Proceedings begin (whether or not
allowed) and debts, liabilities, or obligations of Borrower assigned to Lenders
and/or Agent, and the performance of Borrower's duties under the Loan Documents.
"Operating Documents" are, for any Person, such Person's formation
documents, as certified with the Secretary of State of such Person's state of
formation on a date that is no earlier than 30 days prior to the Effective Date,
and (a) if such Person is a corporation, its bylaws in current form, (b) if such
Person is a limited liability company, its limited liability company agreement
(or similar agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current
amendments or modifications thereto.
"Payment/Advance Form" is that certain form attached hereto as Exhibit B.
"Payment Date" is the first day of each calendar month.
"Perfection Certificate" is defined in Section 5.1.
19
"Permitted Acquisitions" are the acquisitions of the stock or assets of a
Person ("Transactions"), where (a) the total cash consideration (inclusive of
the assumption of Indebtedness) for all such Transactions does not exceed: (i)
prior to the occurrence of the SPAC Closing, $500,000.00, in the aggregate
(inclusive of the cash component set forth in the definition of Permitted Joint
Ventures), and (ii) after the occurrence of the SPAC Closing, $5,000,000.00, in
the aggregate, provided that, upon and immediately after the consummation of any
such Transactions, Borrower shall have the lesser of :(x) unrestricted and
unencumbered cash in an amount equal to or greater than $10,000,000, or (y) four
(4) times the amount of Borrower's Cash Burn; (b) no Event of Default has
occurred and is continuing or would exist after giving effect to the
Transactions; and (c) Borrower is the surviving legal entity.
"Permitted Indebtedness" is:
(a) Borrower's Indebtedness to Lenders and Agent under this Agreement and
the other Loan Documents;
(b) Indebtedness existing on the Effective Date and shown on the
Perfection Certificate;
(c) Subordinated Debt;
(d) unsecured Indebtedness to trade creditors incurred in the ordinary
course of business;
(e) Indebtedness secured by Permitted Liens; and
(f) extensions, refinancings, modifications, amendments and restatements
of any items of Permitted Indebtedness (a) through (e) 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 Investments" are:
(a) Investments shown on the Perfection Certificate and existing on the
Effective Date;
(b) Permitted Acquisitions;
(c) Permitted Joint Ventures; and
(d) Cash Equivalents.
"Permitted Joint Ventures" are joint ventures, co-development
arrangements, licensing transactions pursuant to which the Borrower licenses
technology from a third party on an exclusive or non-exclusive basis or other
strategic alliances in the ordinary course of Borrower's business consisting of
the licensing of technology (except that if any technology is licensed out by
the Borrower, it will be on a non-exclusive basis, except for exclusive licenses
for less than all or substantially all of the Borrower's intellectual property,
provided that each such license is in the ordinary course of business, and
further provided such licenses are limited to specific fields of use and/or
products), the development of technology or the providing of technical support,
provided that any cash investments by Borrower in connection with all Permitted
Joint Ventures do not exceed $500,000.00 in the aggregate in any fiscal year
(inclusive of the cash component set forth in the definition of "Permitted
Acquisitions"). Notwithstanding the foregoing, cash investments which are
contractually required to be reimbursed within 30 shall not be included for
purposes of calculation hereunder.
"Permitted Liens" are:
(a) Liens existing on the Effective Date and shown on the Perfection
Certificate or arising under this Agreement and the other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, provided that no notice of
any such Lien has been filed or recorded under the Internal Revenue Code of
1986, as amended , and the Treasury Regulations adopted thereunder;
20
(c) purchase money Liens (i) on Equipment acquired or held by Borrower
incurred for financing the acquisition of the Equipment securing no more than
Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate amount
outstanding, or (ii) existing on Equipment when acquired, if the Lien is
confined to the property and improvements and the proceeds of the Equipment;
(d) pledges or deposits in the ordinary course of business in connection
with workers' compensation, health and safety, employment or unemployment
insurance and other social security legislation, other than any Lien imposed by
ERISA or other applicable Canadian employee benefit or tax legislation;
(e) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase;
(f) leases or subleases of real property granted in the ordinary course of
business, and leases, subleases, non-exclusive licenses or sublicenses of
property (other than real property or intellectual property) granted in the
ordinary course of Borrower's business, if the leases, subleases, licenses and
sublicenses do not prohibit granting Agent a security interest;
(g) non-exclusive license of intellectual property granted to third
parties in the ordinary course of business; and
(h) servitudes, easements, rights of way and similar encumbrances imposed
by applicable law or incurred in the ordinary course of business and
encumbrances consisting of zoning or building restrictions, easements, and
similar restriction.
"Person" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
"Prepayment Fee" shall be an amount equal to :
(i) for a prepayment made after the Amortization Date and on or
prior to March 30, 2008, five percent (5.0%) of the principal
amount of the Growth Capital Loan prepaid; or
(ii) for a prepayment made after March 30, 2008, and on or prior to
March 22, 2009, four percent (4.0%) of the principal amount of
the Growth Capital Loan prepaid; and
(iii) for a prepayment made after March 30, 2009, and on or prior to
the Growth Capital Loan Maturity Date, two percent (2.0%) of
the principal amount of the Growth Capital Loan prepaid.
"Registered Organization" is any "registered organization" as defined in
the Code with such additions to such term as may hereafter be made
"Requirement of Law" is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Responsible Officer" is any of the Chief Executive Officer, President,
Chief Financial Officer of Borrower.
21
"Securities Account" is any "securities account" as defined in the Code
with such additions to such term as may hereafter be made.
"SPAC" means Special Purpose Acquisition Companies.
"SPAC Closing" means the raising of at least Sixty-Five Million
($65,000,000.00) through a SPAC traded on the American Stock Exchange.
"Subordinated Debt" is indebtedness incurred by Borrower subordinated to
Borrower's indebtedness to Lenders in the manner and to the extent set forth in
a subordination, intercreditor, or other similar agreement in form and substance
satisfactory to Agent and Lenders entered into between Agent, the Borrower and
the other creditor, on terms acceptable to Agent and Lenders.
"Subsidiary" means, with respect to any Person, any Person of which more
than 50.0% of the voting stock or other equity interests (in the case of Persons
other than corporations) is owned or controlled, directly or indirectly, by such
Person or one or more of Affiliates of such Person.
"Transfer" is defined in Section 7.1.
"Treasury Note Maturity" is thirty six (36) months.
"Warrant" is that certain Warrants to Purchase Stock dated as of the
Effective Date executed by Borrower in favor of each Lender.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the Effective Date.
BORROWER:
PHARMATHENE, INC.
By /s/ Xxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and CEO
LENDERS:
SILICON VALLEY BANK, as Agent and as a Lender
By /s/ Xxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Director
OXFORD FINANCE CORPORATION, as a Lender
By /s/ N.J. Xxxxxxxxxxx
------------------------------------------
Name: N.J. Xxxxxxxxxxx
Title: CFO
23
SCHEDULE 1.1
LENDERS AND COMMITMENTS
--------------------------------------------------------------------------------
Lender Commitment Commitment Percentage
--------------------------------------------------------------------------------
Silicon Valley Bank $5,000,000.00 50.00%
--------------------------------------------------------------------------------
Oxford Finance Corporation $5,000,000.00 50.00%
--------------------------------------------------------------------------------
TOTAL $10,000,000.00 100.00%
--------------------------------------------------------------------------------
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in and to
the following personal property:
All goods, Accounts (including health-care receivables), Equipment,
Inventory, contract rights or rights to payment of money, leases, license
agreements, franchise agreements, General Intangibles (except as provided
below), commercial tort claims, documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts,
all certificates of deposit, fixtures, letters of credit rights (whether or not
the letter of credit is evidenced by a writing), securities, and all other
investment property, supporting obligations, and financial assets, whether now
owned or hereafter acquired, wherever located; and
All Borrower's Books relating to the foregoing, and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.
Notwithstanding the foregoing, the Collateral does not include any of the
following, whether now owned or hereafter acquired any copyright rights,
copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any
patents, licenses for the use of patent rights of a third party, with respect to
which license Borrower is the licensee, patent applications and like
protections, including improvements, divisions, continuations, renewals,
reissues, extensions, and continuations-in-part of the same, trademarks, service
marks and, to the extent permitted under applicable law, any applications
therefor, whether registered or not, and the goodwill of the business of
Borrower connected with and symbolized thereby, know-how, operating manuals,
trade secret rights, rights to unpatented inventions, and any claims for damage
by way of any past, present, or future infringement of any of the foregoing;
provided, however, the Collateral shall include all Accounts, license and
royalty fees and other revenues, proceeds, or income arising out of or relating
to any of the foregoing.
Pursuant to the terms of a certain negative pledge arrangement with Agent
and Lenders, except as may be permitted hereunder, Borrower has agreed not to
encumber any of its copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, licenses agreements solely
for the use of patent rights of a third party, with respect to which license
Borrower is the licensee, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, service marks and, to the extent
permitted under applicable law, any applications therefor, whether registered or
not, and the goodwill of the business of Borrower connected with and symbolized
thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing, without Agent's prior written consent.
EXHIBIT B
Loan Payment/Advance Request Form
DEADLINE IS NOON E.S.T.*
Fax To: Date: _____________________
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LOAN PAYMENT:
PHARMATHENE, INC.
From Account #________________________________ To Account #_________________________________________________
(Deposit Account #) (Loan Account #)
Principal $____________________________________ and/or Interest $____________________________________________
Authorized Signature: ___________________________ Phone Number: _______________________________________________
Print Name/Title: _______________________________
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----------------------------------------------------------------------------------------------------------------------
LOAN ADVANCE:
Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an
outgoing wire.
From Account #________________________________ To Account #_________________________________________________
(Loan Account #) (Deposit Account #)
Amount of Advance $___________________________
All Borrower's representations and warranties in the Loan and Security Agreement are true, correct and complete in
all material respects on the date of the request for an advance; provided, however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are qualified or modified by materiality
in the text thereof; and provided, further that those representations and warranties expressly referring to a
specific date shall be true, accurate and complete in all material respects as of such date:
Authorized Signature: ___________________________ Phone Number: _______________________________________________
Print Name/Title: _______________________________
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
OUTGOING WIRE REQUEST:
Complete only if all or a portion of funds from the loan advance above is to be wired. Deadline for same day
processing is noon, E.S.T.
Beneficiary Name: ______________________________ Amount of Wire: $ ___________________________________________
Beneficiary Lender: ____________________________ Account Number: _____________________________________________
City and State: ________________________________
Beneficiary Lender Transit (ABA) #: ____________ Beneficiary Lender Code (Swift, Sort, Chip, etc.): __________
(For International Wire Only)
Intermediary Lender: ___________________________ Transit (ABA) #: ____________________________________________
For Further Credit to: ___________________________________________________________________________________________
Special Instruction: _____________________________________________________________________________________________
By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).
Authorized Signature: __________________________ 2nd Signature (if required): ________________________________
Print Name/Title: ______________________________ Print Name/Title: ___________________________________________
Telephone #: ___________________________________ Telephone #: ________________________________________________
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* Unless otherwise provided for an Advance bearing interest at LIBOR.
