EXHIBIT 10.29
MASTER LOAN AND SECURITY AGREEMENT
THIS MASTER LOAN AND SECURITY AGREEMENT dated as of March 25, 1999, is made by
KeraVision, Inc. (the "Borrower"), a Delaware corporation having its principal
place of business and chief executive office at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, in favor of Transamerica Business Credit Corporation, a
Delaware corporation (the "Lender"), having its principal office at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and having an office at ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Borrower has requested that the Lender make Loans to the
Borrower; and
WHEREAS, the Lender has agreed to make such Loans on the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to extend credit, the Borrower hereby agrees with the Lender as follows:
SECTION 1. DEFINITIONS.
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As used herein, the following terms shall have the following meanings,
and shall be equally applicable to both the singular and plural forms of the
terms defined:
Agreement shall mean this Master Loan and Security Agreement together
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with all schedules and exhibits hereto, as amended, supplemented, or otherwise
modified from time to time.
Applicable Law shall mean the laws of the State of Illinois (or any
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other jurisdiction whose laws are mandatorily applicable notwithstanding the
parties' choice of Illinois law) or the laws of the United States of America,
whichever laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.
Business Day shall mean any day other than a Saturday, Sunday, or
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public holiday or other day that banks in New York City are authorized by law
to be closed.
Cash Equivalents means (i) securities issued or directly and fully guaranteed or
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insured by the United States of America or any agency or instrumentality
thereof having a maturity of not more than one year from the date acquired;
(ii) time deposits and certificates of deposit with maturities of not more than
one year from the date acquired, issued by any U.S. federal or state chartered
commercial bank of recognized standing which has capital and unimpaired surplus
in excess of $100,000,000; (iii) investments in money market funds registered
under the Investment Company Act of 1940; (iv) mutual funds, at least 90% of the
assets of which constitute Cash Equivalents of the kinds described in clauses
(i) (iii) of this definition; (v) commercial paper issued by the parent
corporation of any domestic commercial bank of recognized standing having
capital and surplus in excess of $100,000,000, the parent corporation of any
Bank, and commercial paper of any domestic corporation rated at least A-1 or the
equivalent thereof by S&P or the equivalent thereof by ▇▇▇▇▇'▇ and, in each
case, having a maturity not exceeding ninety (90) days from the date of
acquisition,(vi) fully secured repurchase obligations with a term of not more
than seven (7) days from underlying securities of the types described in clause
(i) above entered into with any bank meeting the qualifications established in
clause (ii) above, (vii) high-grade corporate bonds rated at least AA or the
equivalent thereof by S&P or the equivalent thereof by ▇▇▇▇▇'▇, (viii)
marketable securities, and (ix) other instruments, commercial paper or
investments acceptable to the Lender in its sole discretion.
Closing Date means the date first set forth above.
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Code shall have the meaning specified in Section 8(d).
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Collateral shall have the meaning specified in Section 2.
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Collateral Access Agreement shall mean any landlord waiver, mortgagee
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waiver, bailee letter, or similar acknowledgement of any warehouseman or
processor in possession of any Collateral.
Contingent Obligation means any direct, indirect, contingent or non-
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contingent guaranty or obligation for the indebtedness of another Person, except
endorsements in the ordinary course of business.
Effective Date shall mean the date on which all of the conditions
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specified in Section 3.3 shall have been satisfied.
Event of Default shall mean any event specified in Section 7.
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Financial Statements shall have the meaning specified in Section 6.1.
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GAAP shall mean generally accepted accounting principles in the United
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States of America, as in effect from time to time.
Intellectual Property shall mean all patents, patent applications,
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patent rights, trademarks, trademark applications, trademark rights, trade
names, trade name rights, service marks and copyrights (whether registered or
not) now or in the future owned or possessed by the Borrower.
Loans shall mean the loans and financial accommodations made by the
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Lender to the Borrower in accordance with the terms of this Agreement and any
Note delivered hereunder.
Loan Documents shall mean, collectively, this Agreement, any Note
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delivered hereunder, and all other documents, agreements, certificates and
instruments executed and delivered in connection herewith and therewith, as the
same may be modified, extended, restated, or supplemented from time to time.
Material Adverse Change shall mean, with respect to any Person, a
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material adverse change in the business, operations, results of operations,
assets, liabilities, or financial condition of such Person taken as a whole.
Material Adverse Effect shall mean, with respect to any Person, a
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material adverse effect on the business, operations, results of operations,
assets, liabilities, or financial condition of such Person taken as a whole.
Note shall mean each Promissory Note, in substantially the form
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attached hereto, made by the Borrower in favor of the Lender, as amended,
supplemented, or otherwise modified from time to time.
Obligations shall mean the Loans made hereunder, advances, debts,
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liabilities and obligations, owing by Borrower to Lender of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, which may arise under, out of, or in connection with, this
Agreement, or any other agreement executed in connection herewith.
Other Obligations shall mean advances, debts, liabilities and
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obligations, owing by Borrower to Lender of any kind or nature, present or
future, whether or not evidenced by any note, guaranty or other instrument,
which may arise under, out of, or in connection with, any loan document other
than this Agreement or any other agreement other than this Agreement executed in
connection therewith or otherwise (including a Master Lease Agreement dated as
of November 17, 1998 ("Master Lease")), whether arising by reason of an
extension of credit, opening, guaranteeing or confirming of a letter of credit,
loan, guaranty, indemnification or in any other manner, whether direct or
indirect (including those acquired by assignment, purchase, discount or
otherwise), whether absolute or contingent, due or to become due, now due or
hereafter arising and however acquired, but specifically excluding Obligations.
Notwithstanding the foregoing the Other Obligations shall expressly exclude the
Obligations.
Permitted Indebtedness shall mean: (a) indebtedness incurred under the
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Master Lease Agreement dated as of November 17, 1998 between the Borrower and
the Lender, (b) indebtedness under this Agreement and the other Loan Documents,
(c) trade or other similar indebtedness incurred in the ordinary course of
business (but
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not for borrowed money), (i) not more than 90 days past due, or (ii) being
contested in good faith and by appropriate proceedings, (d) contingent
liabilities permitted pursuant to Section 5.17, (e) indebtedness in an amount up
to $3,000,000.00 for new equipment purchases, to the extent that such
indebtedness is secured by specific items of equipment financed, and (f) other
indebtedness not secured by any assets of the Borrower provided such
indebtedness shall not be paid until any and all indebtedness of Lender has been
paid.
Permitted Liens shall mean such of the following as to which no
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enforcement, collection, execution, levy, or foreclosure proceeding shall have
been commenced: (a) liens for taxes, assessments, and other governmental
charges or levies or the claims or demands of landlords, carriers, warehousemen,
mechanics, laborers, materialmen, and other like Persons arising by operation of
law in the ordinary course of business for sums which are not yet due and
payable, or liens which are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves are
maintained to the extent required by GAAP; (b) deposits or pledges to secure the
payment of worker's compensation, unemployment insurance, or other social
security benefits or obligations, public or statutory obligations, surety or
appeal bonds, bid or performance bonds, or other obligations of a like nature
incurred in the ordinary course of business; (c) licenses, restrictions, or
covenants for or on the use of the Collateral arising in the ordinary course of
business or which do not materially impair either the use of the Collateral in
the operation of the business of the Borrower or the value of the Collateral;
(d) attachment or judgment liens so long as an appeal or proceeding for review
is being diligently prosecuted in good faith and reserves, bonds or other
security established or provided and all such security and efforts of Borrower
are acceptable to Lender and sufficient evidence of such security has been
provided to Lender or are fully covered by insurance; and (e) a lien on any item
of equipment created substantially simultaneously with the acquisition of such
equipment for the purpose of financing such acquisition, provided that such lien
shall attach only to the equipment acquired.
Person shall mean any individual, sole proprietorship, partnership,
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limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
entity, party, or government (including any division, agency, or department
thereof), and the successors, heirs, and assigns of each.
Receivable shall have the meaning set forth in Section 8(e).
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Schedule shall mean schedule A hereto containing certain information
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pertaining to the Borrower.
Solvent means, with respect to any Person, that as of the date as to
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which such Person's solvency is measured:
(a) the fair saleable value of its assets is in excess of the total
amount of its liabilities (including contingent liabilities as valued in
accordance with GAAP) as they become absolute and matured;
(b) it has sufficient capital to conduct its business; and
(c) it is able generally to meet its debts as they mature.
Taxes shall have the meaning specified in Section 5.5.
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SECTION 2. CREATION OF SECURITY INTEREST; COLLATERAL. The Borrower
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hereby assigns and grants to the Lender a continuing general first priority,
first lien on, and security interest in, all the Borrower's right, title, and
interest in and to the collateral described in the next sentence (the
"Collateral") to secure the payment and performance of all the Obligations and
other Obligations. The collateral consists of:
(i) all present and future machinery, equipment, furniture,
fixtures, leasehold improvements, conveyors, tools, materials, storage
and handling equipment, hydraulic presses, cutting equipment, computer
equipment and hardware, including central processing units, terminals,
drives, memory units, printers, keyboards, screens, peripherals and
input or output devices, molds, dies, stamps, and other equipment of
every kind and nature and wherever situated now or hereafter owned and
held for use by the Borrower or in which the Borrower may have any
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interest as lessee (to the extent of such interest as of the date
hereof), together with all additions and accessions thereto, all
replacements and all accessories and parts therefore, all manuals,
blueprints, know-how, warranties and records in connection therewith
(including, without limitation, any computer software, whether on
tape, disc, card, strip or cartridge or in any other form) and all
rights against suppliers, warrantors, manufacturers, and sellers or
others in connection therewith, together with all substitutes for any
of the foregoing;
(ii) all present and future goods intended for sale, lease or
other disposition by the Borrower including, without limitation, all
raw materials, work in process, systems, accessories, spare parts,
finished goods and other retail inventory, goods in the possession of
outside processors or other third parties, consigned goods (to the
extent of the consignee's interest therein), materials, parts and
supplies of any kind, nature or description which are or might be used
in connection with the manufacture, packing, shipping, advertising,
selling or finishing of any such goods, all documents of title or
documents representing the same and all records, files and writings
(including, without limitation, any computer software, whether on
tape, disc, card, strip or cartridge or in any other form) with
respect thereto;
(iii) all investment property of Borrower, including all
securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity contracts and commodity
accounts, and all financial assets held in any securities account or
otherwise, wherever located, and whether now existing or hereafter
acquired or arising;
(iv) all of the Borrower's present and future accounts (including
rights to receive payments for goods sold or services rendered arising
out of the sale or delivery of personal property or work done or labor
performed), instruments, documents, documents of title, contract
rights, agreements, understandings, open purchase and sale orders,
promissory notes, chattel paper, documents, tax refunds, rights to
receive tax refunds, bonds, certificates, insurance policies,
insurance proceeds, royalties, rights to receive fees, royalties and
other payments under license agreements, permits, franchise rights,
authorizations, customer and supplier lists, rights of
indemnification, contribution and subrogation, leases, computer tapes,
programs, discs and software, trade secrets, computer service
contracts, logos, goodwill, deposits, causes of action, choses in
action, judgments, designs, blueprints, quotations and bids, plans,
specifications, sales literature, know-how, all other general
intangibles (other than Intellectual Property) claims against third
parties of every kind or nature, notes, securities, bonds, drafts,
acceptances, letters of credit and rights to receive payments under
letters of credit, deposit accounts, accounts receivable, book
accounts, prepaid expenses, credits and reserves and all forms of
obligations whatsoever owing, now or hereafter owing to Borrower,
instruments, documents of title, leasehold rights, all property of
Borrower at any time in the possession or under the control of Lender,
books, ledgers, files (including credit and project files) and records
(including tax records) with respect to any collateral or security,
together with all right, title, security and guaranties with respect
to thereto, including any right of stoppage in transit;
(v) all additions and accessions thereto and substitutions and
replacements thereof, and improvements thereon, and all proceeds
(whether cash or other property) and products hereof, including,
without limitation, all proceeds of insurance covering the same and
all tort claims in connection therewith, and all records, files,
computer programs and files, data and writings relating to the
foregoing, and all equipment containing the foregoing; and
(vi) any and all proceeds arising out of the sale or other disposition
of Intellectual Property.
Notwithstanding the foregoing provisions of this Section 2, such grant of a
security interest shall not extend to, and the term "Collateral" shall not
include:
(a) any general intangibles of the Borrower consisting of licenses or
similar contracts, to the extent that (i) such general intangibles are not
assignable or capable of being encumbered as a matter of law or under the terms
of the license or other agreement applicable thereto (but solely to the extent
that any such restriction shall be
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enforceable under applicable law), without the consent of the licensor thereof
or other applicable party thereto and (ii) such consent has not been obtained;
provided, however, that the foregoing grant of security interest shall extend
to, and the term "Collateral" shall include, (A) any general intangible which is
a Receivable or a proceed of, or otherwise related to the enforcement or
collection of, any Receivable, or goods which are the subject of any Receivable,
(B) any and all proceeds of any general intangibles which are otherwise excluded
to the extent that the assignment or encumbrance of such proceeds is not so
restricted, and (C) upon obtaining the consent of any such licensor or other
applicable party's consent with respect to any such otherwise excluded general
intangibles, such general intangibles as well as any and all proceeds thereof
that might have been previously excluded from such grant of a security interest
and the term "Collateral"; and
(b) any Intellectual Property.
SECTION 3. THE CREDIT FACILITY.
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SECTION 3.1. Borrowings. The Lender, subject to the terms and
conditions of this Agreement, agrees to make a Loan to Borrower on the Effective
Date, at Borrower's request, in an aggregate principal amount equal to
$5,000,000. . Notwithstanding anything herein to the contrary, the Lender
shall be obligated to make such Loan only after the Lender, in its good faith
business judgement, determines that the applicable conditions for borrowing
contained in Sections 3.3 and 3.4 are satisfied. The Borrower acknowledges and
agrees to pay Lender all amounts pursuant to the terms and conditions of this
Agreement and the Note attached hereto and made a part hereof.
SECTION 3.2. Application of Proceeds. The Borrower shall use the
proceeds of the Loans for its general working capital purposes.
SECTION 3.3. Conditions to Loans.
(a) The obligation of the Lender to make the Loans is subject to the
Lender's receipt of the following, on or before the Closing Date, each dated the
date of the first Loan or as of an earlier date acceptable to the Lender, in
form and substance satisfactory to the Lender and its counsel:
(i) completed requests for information (Form UCC-11) listing all
effective Uniform Commercial Code financing statements naming the
Borrower as debtor and all tax lien, judgment, and litigation searches
for the Borrower as the Lender shall reasonably deem necessary or
desirable;
(ii) acknowledgment copies of Uniform Commercial Code financing
statements (naming the Lender as secured party and the Borrower as
debtor), duly filed in all jurisdictions that the Lender deems
necessary or desirable to perfect and protect the security interests
created hereunder, and evidence that all other filings, registrations
and recordings have been made in the appropriate governmental offices,
and all other action has been taken, which shall be necessary to
create, in favor of the Lender, a perfected Lien on the Collateral;
(iii) a Note duly executed by the Borrower evidencing the amount
of such Loan;
(iv) if requested by the Lender, a Collateral Access Agreement
duly executed by the lessor or mortgagee, as the case may be, of each
premises where the equipment Collateral is located;
(v) a Notice of Security Interest, in form and substance
satisfactory to the Lender and its counsel, to each financial
institution at which any deposit accounts of Borrower are maintained;
(vi) certificates of insurance required under Section 5.4 of this
Agreement together with loss payee endorsements for all such policies
naming the Lender as lender loss payee and as an additional insured;
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(vii) a certificate of the Secretary or an Assistant Secretary of
the Borrower ("Secretary's Certificate") certifying (A) that attached
to the Secretary's Certificate is a true, complete, and accurate copy
of the resolutions of the Board of Directors of the Borrower (or a
unanimous consent of directors in lieu thereof) authorizing the
execution, delivery, and performance of this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and
that such resolutions have not been amended or modified since the date
of such certification and are in full force and effect; (B) the
incumbency, names, and true signatures of the officers of the Borrower
authorized to sign the Loan Documents to which it is a party; (C) that
attached to the Secretary's Certificate is a true and correct copy of
the Articles or Certificate of Incorporation of the Company, as
amended, which Articles or Certificate of Incorporation have not been
further modified, repealed or rescinded and are in full force and
effect; (D) that attached to the Secretary's Certificate of the
Borrower is a true and correct copy of the Bylaws, as amended, which
Bylaws of the Company have not been further modified, repealed or
rescinded and are in full force and effect; and (E) that attached to
the Secretary's Certificate is a valid Certificate of Good Standing
issued by the Secretary of the State of the Borrower's state of
incorporation;
(viii) the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel for the
Borrower covering such matters incident to the transactions
contemplated by this Agreement as the Lender may reasonably require;
(ix) evidence of the consent or authorization of, filing with or
other act by or in respect of any governmental agency or authority or
any other Person required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, or the
other Loan Documents or the consummation of the transactions
contemplated hereby or thereby; and
(x) such other documents, agreements and instruments as the
Lender deems necessary in its sole and absolute discretion in
connection with the transactions contemplated hereby.
(b) The security interests in the Collateral granted in favor of the
Lender under this Agreement shall have been duly perfected and shall constitute
first priority liens, except for Permitted Liens.
SECTION 3.4. Additional Conditions Precedent. The obligation of
the Lender to make each Loan is subject to the satisfaction of the following
additional conditions precedent:
(a) There shall be no pending or, to the knowledge of the Borrower
after due inquiry, threatened litigation, proceeding, inquiry, or other action
(i) seeking an injunction or other restraining order, damages, or other relief
with respect to the transactions contemplated by this Agreement or the other
Loan Documents or (ii) which affects or could affect the business, operations,
results of operations , , assets, liabilities, or financial condition of the
Borrower, except, in the case of clause (ii), where such litigation, proceeding,
inquiry, or other action could not reasonably be expected to have a Material
Adverse Effect in the judgment of the Lender;
(b) all representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the date of such Loan as if then made, other than representations and
warranties that expressly relate solely to an earlier date, in which case they
shall have been true and correct as of such earlier date;
(c) no Event of Default or event which with the giving of notice or
the passage of time, or both, would constitute an Event of Default, shall have
occurred and be continuing or would result from the making of the requested Loan
as of the date of such request; and
(d) the Borrower shall be deemed to have hereby reaffirmed and
ratified all security interests, liens, and other encumbrances heretofore
granted by the Borrower to the Lender.
SECTION 3.5. Interest Rate; Repayment. The interest rate
applicable to each Loan
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made by the Lender hereunder, and the repayment date for such Loan, are as set
forth in the Note evidencing such Loan.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Borrower
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represents and warrants as follows:
SECTION 4.1. Good Standing; Qualified to do Business. The
Borrower (a) is duly organized, validly existing, and in good standing under the
laws of the State of its organization, (b) has the power and authority to own
its properties and assets and to transact the businesses in which it is
presently, or proposes to be, engaged, and (c) is duly qualified and authorized
to do business and is in good standing in every jurisdiction in which the
failure to be so qualified could reasonably be expected to have a Material
Adverse Effect on (i) the Borrower, (ii) the Borrower's ability to perform its
obligations under the Loan Documents, or (iii) the rights of the Lender
hereunder.
SECTION 4.2. Due Execution, etc. The execution, delivery, and
performance by the Borrower of each of the Loan Documents to which it is a party
are within the powers of the Borrower, do not contravene the organizational
documents, if any, of the Borrower, and do not (a) violate any law or
regulation, or any order or decree of any court or governmental authority, (b)
conflict with or result in a breach of, or constitute a default under, any
material indenture, mortgage, or deed of trust or any material lease, agreement,
or other instrument binding on the Borrower or any of its properties, or (c)
require the consent, authorization by, or approval of or notice to or filing or
registration with any governmental authority or other Person, except as may be
set forth in the Schedule. This Agreement is, and each of the other Loan
Documents to which the Borrower is or will be a party, when delivered hereunder
or thereunder, will be, the legal, valid, and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally and by general principles of equity.
SECTION 4.3. Solvency; No Liens. The Borrower is Solvent
and will be Solvent upon the completion of all transactions contemplated to
occur hereunder (including, without limitation, the Loan to be made on the
Effective Date); the security interests granted herein constitute and shall at
all times constitute the first and only liens on the Collateral other than
Permitted Liens; and the Borrower is, or will be at the time additional
Collateral is acquired by it, the absolute owner of the Collateral with full
right to pledge, sell, consign, transfer, and create a security interest
therein, free and clear of any and all claims or liens in favor of any other
Person other than Permitted Liens.
SECTION 4.4. No Judgments, Litigation. No judgments are
outstanding against the Borrower nor is there now pending or, to the best of the
Borrower's knowledge, threatened any litigation, contested claim, or
governmental proceeding by or against the Borrower except judgments and pending
or threatened litigation, contested claims, and governmental proceedings which
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect on the Borrower.
SECTION 4.5. No Defaults. The Borrower is not in default or has
not received a notice of default under any material contract, lease, or
commitment to which it is a party or by which it is bound. The Borrower knows of
no dispute regarding any contract, lease, or commitment which could be expected
to have a Material Adverse Effect on the Borrower.
SECTION 4.6. Collateral Locations. The address of the principal
place of business and chief executive office of Borrower is, and the books and
records of Borrower and all of its chattel paper and records relating to
Collateral are maintained exclusively in the possession of Borrower at, the
address of Borrower specified in the heading of this Agreement. Borrower has
places of business, and tangible Collateral (except Collateral in the possession
of outside processors) is located, only at such address and at the addresses set
forth in the Schedule and at any additional locations reported to the Lender as
provided in Section 5.7.
SECTION 4.7. Corporate and Trade Names; Federal Tax ID. During
the past five years, Borrower has not been known by or used any other corporate,
trade or fictitious name except for its name as set forth on the signature page
of this Agreement and the other names specified in the Schedule. The Borrower's
Federal Tax ID number is as set forth in the Schedule.
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SECTION 4.8. No Events of Default. As of the date of any Loan, no
Event of Default has occurred and is continuing nor has any event occurred
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default.
SECTION 4.9. No Limitation on Lender's Rights. Except as
permitted herein, none of the Collateral is subject to contractual obligations
that may restrict or inhibit the Lender's rights or abilities to sell or dispose
of the Collateral or any part thereof after the occurrence of an Event of
Default, except in connection with contractual obligations constituting
Permitted Liens.
SECTION 4.10. Perfection and Priority of Security Interest. This
Agreement and the Loan Documents create a valid and, upon completion of all
required notice with respect to deposit accounts and filings of financing
statements, perfected, and first priority and exclusive, security interest in
the Collateral to the extent a security interest can be perfected by such notice
or filing, except for Permitted Liens, securing the payment of all the
Obligations.
SECTION 4.11. Intellectual Property. Set forth in the Schedule is
a complete and accurate list of all patents, trademarks, trade names, service
marks and copyrights (registered and unregistered), and all applications
therefor and licenses thereof, of Borrower. Borrower owns or licenses all
material patents, trademarks, service-marks, logos, tradenames, trade secrets,
know-how, copyrights, or licenses and other rights with respect to any of the
foregoing, which are necessary or advisable for the operation of its business as
presently conducted or proposed to be conducted. To the best of its knowledge
after due inquiry, Borrower has not infringed any patent, trademark, service-
▇▇▇▇, tradename, copyright, license or other right owned by any other Person by
the sale or use of any product, process, method, substance, part or other
material presently contemplated to be sold or used, where such sale or use would
reasonably be expected to have a Material Adverse Effect on Borrower and except
as set forth in the Schedule no claim or litigation is pending, or to the best
of Borrower's knowledge, threatened against or affecting Borrower that contests
its right to sell or use any such product, process, method, substance, part or
other material.
SECTION 4.12. Consents and Filings. No consent, authorization or
approval of, or filing with or other act by, any shareholders of Borrower or any
governmental authority or other Person is required in connection with the
execution, delivery, performance, validity or enforceability of this Agreement
or any other Loan Document, the consummation of the transactions contemplated
hereby or thereby or the continuing operations of Borrower following such
consummation, except (i) those that have been obtained or made, (ii) the filing
of financing statements under the Code (iii) any necessary filings with U.S.
Copyright Office and the U.S. Patent and Trademark Office and (iv) in the case
of those required in connection with the continuing operations of Borrower
following consummation of the transactions contemplated hereby, those Borrower
expects to obtain as and when so required without cost, expense or delay which
could reasonably be expected to have a Material Adverse Effect on Borrower.
SECTION 4.13. Year 2000 Compliance. The Borrower reasonably
believes that all computer applications (including those of its suppliers and
vendors) that are material to its business and operations will on a timely basis
be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 compliant"), except to the extent
that a failure to do so could not reasonably be expected to have Material
Adverse Effect.
SECTION 4.14. Taxes. Borrower has properly completed and timely
filed all income tax returns it is required to file, and all Taxes, assessments,
fees and other governmental charges for periods beginning prior to the date of
this Agreement have been timely paid (or, if not yet due or being disputed in
good faith, adequate reserves therefor have been established in accordance with
GAAP) and Borrower has no liability for Taxes in excess of the amounts so paid
or reserves so established. No deficiencies for Taxes have been claimed,
proposed or assessed by any taxing or other governmental agency or authority
against Borrower and no notice of any tax lien (other than Permitted Liens) has
been filed. There are no pending or (to the best knowledge of Borrower)
threatened audits, investigations or claims for or relating to any liability for
Taxes and there are no matters under discussion with any governmental agency or
authority which could result in an additional material liability for Taxes.
8
SECTION 4.15. Financial Statements. Borrower has provided to the
Lender complete and accurate Financial Statements, which have been prepared in
accordance with GAAP (except for the absence of footnotes and subject to normal
year-end adjustments with respect to unaudited financial statements)
consistently applied throughout the periods involved and fairly present the
financial position and results of operations of Borrower for each of the periods
covered, subject, in the case of any quarterly financial statements, to normal
year-end adjustments and the absence of footnotes. Borrower has no Contingent
Obligation or liability for Taxes, unrealized losses, unusual forward or long-
term commitments or long-term leases, which is not reflected in such Financial
Statements or the footnotes thereto and which would be required to be so
reflected by GAAP. Since the last date covered by such Financial Statements,
except as set forth in the Schedule there has been no sale, transfer or other
disposition by Borrower of any material part of its business or property and no
purchase or other acquisition of any business or property (including any capital
stock of any other Person) material in relation to the financial condition of
Borrower at said date. Since said date, (i) there has been no change,
occurrence, development or event which has had or could reasonably be expected
to have a Material Adverse Effect on Borrower and (ii) none of the capital stock
of Borrower has been redeemed, retired, purchased or otherwise acquired for
value by Borrower, other than repurchases of stock from terminated service
providers or employees.
SECTION 4.16. Accuracy and Completeness of Information. All data,
reports, and information heretofore, contemporaneously, or hereafter furnished
by or on behalf of the Borrower in writing to the Lender or for purposes of or
in connection with this Agreement or any other Loan Document, or any transaction
contemplated hereby or thereby, (a) are or will be true and accurate in all
material respects on the date as of which such data, reports, and information
are dated or certified and (b) do not and will not omit to state any material
fact necessary to make such data, reports, and information not misleading as of
the date so dated or certified. There are no facts now known to the Borrower
which individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect on Borrower and which have not been specified herein, in
the Financial Statements, or in any certificate, opinion, or other written
statement previously furnished by the Borrower to the Lender.
SECTION 5. COVENANTS OF THE BORROWER.
-------------------------
SECTION 5.1. Existence, etc. The Borrower shall: (a) retain its
existence and its current yearly accounting cycle, (b) maintain in full force
and effect all licenses, bonds, franchises, leases, trademarks, patents,
contracts, and other rights necessary or desirable to the conduct of its
business unless the failure to do so could not reasonably be expected to have a
Material Adverse Effect on the Borrower, (c) continue in, and limit its
operations to, the same general lines of business as those presently conducted
by it, and (d) comply with all applicable laws and regulations of any federal,
state, or local governmental authority, except for such laws and regulations the
violations of which would not, in the aggregate, have a Material Adverse Effect
on the Borrower.
SECTION 5.2. Notice to the Lender. As soon as possible, and in
any event within five days after the Borrower learns of the following, the
Borrower will give written notice to the Lender of the following:
(a) any proceeding instituted or threatened to be instituted by
or against the Borrower in any federal, state, local, or foreign court or before
any commission or other regulatory body (federal, state, local, or foreign)
involving a sum, together with the sum involved in all other similar
proceedings, in excess of $50,000 in the aggregate,
(b) any contract that is terminated or amended and which
termination or amendment has had or could reasonably be expected to have a
Material Adverse Effect on the Borrower,
(c) the occurrence of any Material Adverse Change with respect to
the Borrower;
(d) the occurrence of any Event of Default or event or condition
which, with notice or lapse of time or both, would constitute an Event of
Default, together with a statement of the action which the Borrower has taken or
proposes to take with respect thereto;
(e) of any discovery or determination by Borrower that any
computer application
9
(including those of its suppliers and vendors) that is material to its business
and operations will not be Year 2000 compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to have a Material
Adverse Effect on the Borrower;
(f) of any material damage to, the destruction of or any other
material loss to any Collateral owned or used by Borrower other than any such
Collateral with a net book value (individually or in the aggregate) less than
$50,000 or any condemnation, confiscation or other taking, in whole or in part,
or any event that otherwise diminishes so as to render impracticable or
unreasonable the use of such Collateral owned or used by Borrower together with
a good faith estimate of the amount of the damage, destruction, loss or
diminution in value;
(g) of any copyright registration made by it, any rights Borrower
may obtain to any copyrightable works, new trademarks or any patentable
inventions, and of any renewal or extension of any trademark registration, or if
it shall otherwise become entitled to the benefit of any patent or patent
application or trademark or trademark application; and
(h) of the opening by the Borrower of any new bank account or
other deposit account, and any new securities account.
SECTION 5.3. Maintenance of Books and Records. Borrower shall (i)
maintain books and records (including computer records) pertaining to the
Collateral in such detail, form and scope as is customary for companies in
similar businesses and (ii) provide the Lender and its agents access to the
premises of Borrower at any time and from time to time, during normal business
hours and upon reasonable notice under the circumstances, and at any time on and
after the occurrence and during the continuation of an Event of Default, or
event or condition which, with notice or lapse of time or both, would constitute
an Event of Default, for the purposes of (A) inspecting and verifying the
Collateral, (B) inspecting and copying (at Borrower's reasonable expense) any
and all records pertaining thereto, and (C) discussing the affairs, finances and
business of Borrower with any officer, employee or director of Borrower or with
Borrower's accountants. Borrower shall reimburse the Lender for the reasonable
travel and related expenses of the Lender's employees or, at the Lender's
option, of such outside accountants or examiners as may be retained by the
Lender to verify or inspect Collateral, records or documents of Borrower once
per annum or for special inspections if an Event of Default has occurred and is
continuing If the Lender's own employees are used, Borrower shall also pay
therefor $600 per person per day (or such other amount as shall represent the
Lender's then current standard charge for the same), or, if outside examiners or
accountants are used, Borrower shall also pay the Lender such reasonable sum as
the Lender may be obligated to pay as fees therefor.
SECTION 5.4. Insurance. Borrower shall maintain public liability
insurance, business interruption insurance, third party property damage
insurance and replacement value insurance on its assets (including the
Collateral) under such policies of insurance, with such insurance companies, in
such amounts and covering such risks as are at all times reasonably satisfactory
to the Lender in its good faith business judgement all of which policies
covering the Collateral shall name the Lender as an additional insured and
lender loss payee in case of loss, and contain other provisions as the Lender
may reasonably require to protect fully the Lender's interest in the Collateral
and any payments to be made under such policies.
SECTION 5.5. Taxes. The Borrower will pay, when due, all taxes,
assessments, claims, and other charges ("Taxes") lawfully levied or assessed
against the Borrower or the Collateral other than taxes that are being
diligently contested in good faith by the Borrower by appropriate proceedings
promptly instituted and for which an adequate reserve is being maintained by the
Borrower in accordance with GAAP. If any Taxes remain unpaid after the date
fixed for the payment thereof, or if any lien shall be claimed therefor (other
than Permitted Liens), then, without notice to the Borrower, but on the
Borrower's behalf, the Lender may pay such Taxes, and the amount thereof shall
be included in the Obligations.
SECTION 5.6. Borrower to Defend Collateral Against Claims; Fees
on Collateral. The Borrower will defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein
adverse to the Borrower or the Lender. The Borrower will not permit any notice
creating or otherwise relating to liens on the Collateral or any portion thereof
to exist or be on file in any
10
public office other than Permitted Liens. The Borrower shall promptly pay, when
payable, all transportation, storage, and warehousing charges and license fees,
registration fees, assessments, charges, permit fees, and taxes (municipal,
state, and federal) which may now or hereafter be imposed upon the ownership,
leasing, renting, possession, sale, or use of the Collateral, other than taxes
on or measured by the Lender's income and fees, assessments, charges, and taxes
which are being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are maintained to the
extent required by GAAP.
SECTION 5.7. Change of Location, Structure, or Identity. The
Borrower will give Lender at least 30 days prior written notice of any change of
Borrower's chief executive office or of the opening of any additional place of
business. The Borrower will not move or permit the movement of any item of
Collateral from the locations specified in the Schedule, except that the
Borrower may keep Collateral at other locations within the United States
provided that the Borrower has delivered to the Lender (i) prior written notice
thereof and (ii) duly executed financing statements and other agreements and
instruments (all in form and substance satisfactory to the Lender) necessary or,
in the reasonable judgment of the Lender, desirable to perfect and maintain in
favor of the Lender a first priority security interest in the Collateral.
Notwithstanding anything to the contrary in the immediately preceding sentence,
the Borrower may keep any Collateral consisting of motor vehicles or rolling
stock at any location in the United States provided that the Lender's security
interest in any such Collateral is conspicuously marked on the certificate of
title thereof and the Borrower has complied with the provisions of Section 5.9.
SECTION 5.8. Use of Collateral; Licenses; Repair. The Collateral
constituting equipment and machines shall be operated by competent, qualified
personnel in connection with the Borrower's business purposes, for the purpose
for which the Collateral was designed and in accordance with applicable
operating instructions, laws, and government regulations, and the Borrower shall
use every reasonable precaution to prevent loss or damage to the Collateral from
fire and other hazards. The Borrower shall procure and maintain in effect all
material orders, licenses, certificates, permits, approvals, and consents
required by federal, state, or local laws or by any governmental body, agency,
or authority in connection with the delivery, installation, use, and operation
of such Collateral.
SECTION 5.9. Further Assurances. The Borrower will, promptly upon
request by the Lender, execute and deliver or use its best efforts to obtain any
document reasonably required by the Lender (including, without limitation,
warehouseman or processor disclaimers, mortgagee waivers, landlord disclaimers,
or subordination agreements with respect to the Obligations and the Collateral),
give any notices, execute and file any financing statements, mortgages, or other
documents (all in form and substance satisfactory to the Lender), ▇▇▇▇ any
chattel paper, deliver any chattel paper or instruments to the Lender, and take
any other actions that are necessary or, in the reasonable judgment of the
Lender, desirable to perfect or continue the perfection and the priority of the
Lender's security interest in the Collateral, to protect the Collateral against
the rights, claims, or interests of any Persons, or to effect the purposes of
this Agreement. The Borrower hereby authorizes the Lender to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of the Borrower where permitted
by law. A carbon, photographic, or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. To the extent
required under this Agreement, the Borrower will pay all costs incurred in
connection with any of the foregoing.
SECTION 5.10. No Disposition of Collateral. The Borrower will not
in any way hypothecate or create or permit to exist any lien, security interest,
charge, or encumbrance on or other interest in any of the Collateral, except for
the lien and security interest granted hereby and Permitted Liens. In the event
the Collateral, or any part thereof, is sold, transferred, assigned, exchanged,
or otherwise disposed of in violation of this Agreement, the security interest
of the Lender shall continue in such Collateral or part thereof notwithstanding
such sale, transfer, assignment, exchange, or other disposition, and the
Borrower will hold the proceeds thereof in a separate account for the benefit of
the Lender. Following such a sale, the Borrower will transfer such proceeds to
the Lender in kind.
SECTION 5.11. No Limitation on Lender's Rights. The Borrower will
not enter into any contractual obligations which may restrict or inhibit the
Lender's rights or ability to sell or otherwise dispose of the Collateral or any
material part thereof.
11
SECTION 5.12. Protection of Collateral. Upon prior written notice
to the Borrower (provided that if an Event of Default has occurred and is
continuing the Lender need not give any prior written notice), the Lender shall
have the right at any time to make any payments and do any other acts the Lender
may deem necessary to protect its security interests in the Collateral,
including, without limitation, the rights to satisfy, purchase, contest, or
compromise any encumbrance, charge, or lien which, in the reasonable judgment of
the Lender, appears to be prior to or superior to the security interests granted
hereunder (other than Permitted Liens), and appear in, and defend any action or
proceeding purporting to affect its security interests in, or the value of, any
of the Collateral. The Borrower hereby agrees to reimburse the Lender for all
payments made and expenses incurred under this Agreement including reasonable
fees, expenses, and disbursements of attorneys and paralegals (including the
reasonable allocated costs of in-house counsel) acting for the Lender, including
any of the foregoing payments under, or acts taken to protect its security
interests in, any of the Collateral, which amounts shall be secured under this
Agreement, and agrees it shall be bound by any payment made or act taken by the
Lender hereunder absent the Lender's gross negligence or willful misconduct. The
Lender shall have no obligation to make any of the foregoing payments or perform
any of the foregoing acts.
SECTION 5.13. Delivery of Items. The Borrower will (a) promptly
(but in no event later than two Business Days) after its receipt thereof,
deliver to the Lender any documents or certificates of title issued with respect
to any property included in the Collateral, and any promissory notes, letters of
credit or instruments related to or otherwise in connection with any property
included in the Collateral, which in any such case come into the possession of
the Borrower, or shall cause the issuer thereof to deliver any of the same
directly to the Lender, in each case with any necessary endorsements in favor of
the Lender and (b) deliver to the Lender as soon as available copies of any and
all press releases and other similar communications issued by the Borrower.
SECTION 5.14. Solvency. The Borrower shall be and remain
Solvent at all times.
SECTION 5.15. Intellectual Property. The Borrower shall do and
cause to be done all things necessary to preserve, maintain and keep in full
force and effect all of its registrations of trademarks, service marks and other
marks, trade names and other trade rights, patents, copyrights and other
intellectual property in accordance with prudent business practices, except to
the extent that the failure to preserve or maintain any of the foregoing would
not reasonably be expected to have a Material Adverse Effect.
SECTION 5.16. Fundamental Changes. The Borrower shall not (a)
amend or modify its name, unless the Borrower delivers to the Lender thirty days
prior to any such proposed amendment or modification written notice of such
amendment or modification and within ten days before such amendment or
modification delivers executed Uniform Commercial Code financing statements or
amendments (in form and substance satisfactory to the Lender) or (b) merge or
consolidate with any other entity or make any material change in its capital
structure, in each case without the Lender's prior written consent which shall
not be unreasonably withheld.
SECTION 5.17. Contingent Obligations. The Borrower will not,
directly or indirectly, incur, assume, or suffer to exist any Contingent
Obligation, excluding indemnities given in connection with this Agreement or the
other Loan Documents in favor of the Lender or in connection with the sale of
inventory or other asset dispositions permitted hereunder, except Contingent
Obligations relating to obligations of vendors and suppliers of Borrower in
respect of transactions entered into in the normal course of business and trade
credit, provided that the aggregate amount of any guarantees and other similar
third party credit support shall not exceed $200,000 at any time outstanding,
and provided further that no Default or Event of Default shall exist either
immediately prior to or after giving effect to the making of the foregoing
guarantees or the entering into any third party credit support transactions.
SECTION 5.18. Change in Nature of Business. The Borrower will not
at any time make any material change in the lines of its business as carried on
at the date of this Agreement or enter into any new line of business; provided
that Borrower may enter businesses reasonably related or incidental to its
current lines of business.
12
SECTION 5.19. Sales of Assets. The Borrower will not, directly or
indirectly, in any fiscal year, sell, transfer or otherwise dispose of any
assets, or grant any option or other right to purchase or otherwise acquire any
assets other than (i) equipment with an aggregate value of less than $200,000
the proceeds of which, shall be paid to the Lender and applied to the
Obligations, (ii) sales of inventory in the ordinary course of business and
(iii) licenses or sublicenses on a non-exclusive basis of intellectual property
in the ordinary course of Borrower's business. Nothing contained herein shall
prohibit the Borrower from disposing of Collateral which in the aggregate is
less than $100,000.00 and which is either obsolete or worn out or otherwise not
necessary for the conduct of the Borrower's business.
SECTION 5.20. Loans to Other Persons. The Borrower will not at
any time make loans or advance any credit in excess of $25,000 in the aggregate
at any time for all such loans to any Person except to trade debtors or
employees, except that Borrower may make cashless advances of credit to senior
members of Borrower's management team to purchase restricted stock of Borrower.
SECTION 5.21. Dividends, Stock Redemptions. Borrower will not,
directly or indirectly, pay any dividends or distributions on, purchase, redeem
or retire any shares of any class of its capital stock or any warrants, options
or rights to purchase any such capital stock, whether now or hereafter
outstanding ("Stock"), or make any payment on account of or set apart assets for
a sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of its Stock, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or property or
in obligations of Borrower, except for dividends paid solely in stock of the
Borrower and repurchases of stock owned by employees, directors and consultants
of Borrower pursuant to terms of employment, consulting or other stock
restrictions agreements at such time as any such employee, director or
consultant terminates his or her affiliations with the Borrower, provided that
no Default or Event of Default shall exist either immediately prior to or after
giving effect to such repurchase and provided further thus the total amount paid
in connection therewith by Borrower shall not exceed $50,000 in any consecutive
12 month period. Nothing in this Section 5.21 or any Section of this Agreement
shall prohibit the Borrower from selling new equity securities to investors
(public or private) at such prices and on such terms as the Borrower elects in
its sole discretion, including without limitation the issuance of equity
securities to employees pursuant to employee stock purchase plans, employee sock
option plans, or other incentives plans for officers, directors or employees of
the Borrower.
SECTION 5.22. Investments in Other Persons. Borrower will not,
directly or indirectly, at any time make or hold any investment in any Person
(whether in cash, securities or other property of any kind) other than
investments in Cash Equivalents, except that if Borrower is not in default under
any Obligations or Other Obligations to Lender and such investment shall not
cause a default or an Event of Default, Borrower may make capital investments in
wholly owned subsidiaries of Borrower.
SECTION 5.23. Acquisition of Stock or Assets. Borrower will not
acquire or commit or agree to acquire all or any stock, securities or assets of
any other Person other than raw materials, supplies, inventory and equipment
acquired in the ordinary course of business, without the prior written consent
of Lender, which consent will not be unreasonably withheld, provided the
Borrower shall be permitted to acquire directly or indirectly all of the capital
stock of Transcend Therapeutics.
SECTION 5.24. Partnerships; Subsidiaries; Joint Ventures;
Management Contracts. Borrower will not at any time create any direct or
indirect Subsidiary, enter into any joint venture or similar arrangement (other
than joint ventures or strategic partnerships consisting of non-exclusive
licensing of technology or the providing of technical support) or become a
partner in any general or limited partnership or enter into any management
contract (other than an employment contract for the employment of an officer or
employee entered into in the regular course of Borrower's business) permitting
third party management rights with respect to Borrower's business.
SECTION 5.25. Limitation on Additional Indebtedness. Borrower
shall not incur additional indebtedness other than Permitted Indebtedness
without the prior consent of the Lender, which will not be unreasonably
withheld. Notwithstanding anything contained in this Agreement to the contrary,
Borrower shall not request and Lender shall have no obligation to advance to
Borrower any additional funds or enter into any lease
13
pursuant to the Master Lease or otherwise until such time as Borrower completes
and raises net proceeds in excess of $10,000,000.00 pursuant to a private
placement acceptable to Lender.
SECTION 5.26 Negative Covenants. The Borrower will not in any way
hypothecate or create or permit to exist any lien, security interest, charge, or
encumbrance on or other interest in any of its Intellectual Property in
connection with any indebtedness of the Borrower, except Permitted Liens.
Notwithstanding the foregoing, Borrower shall not be prohibited from (i)
pledging or otherwise committing its Intellectual Property in order to engage in
a joint venture or in connection with a merger or acquisition which has been
consented to by the Lender or (ii) granting licenses to use its Intellectual
Property to third parties in the ordinary course of business. Notwithstanding
the exclusion of Intellectual Property from Lender's Collateral, Lender's
security interest shall include proceeds from any sale of the Borrower's
Intellectual Property.
SECTION 5.27. Additional Requirements. The Borrower shall take
all such further actions and execute all such further documents and instruments
as the Lender may reasonably request to effect the transactions contemplated by
this Agreement.
SECTION 6. FINANCIAL STATEMENTS. Until the payment and satisfaction
--------------------
in full of all Obligations, the Borrower shall deliver to the Lender the
following financial information:
SECTION 6.1. Annual Financial Statements. As soon as available,
but not later than 90 days after the end of each fiscal year of the Borrower and
its consolidated subsidiaries, (i) the consolidated balance sheet, income
statement, and statements of cash flows and shareholders equity for the Borrower
and its consolidated subsidiaries (the "Financial Statements") for such year,
audited by independent certified public accountants without an adverse
qualification or (ii) a copy of the Borrower's Form 10-K as filed with the
Securities and Exchange Commission; and
SECTION 6.2. Quarterly Financial Statements. As soon as
available, but not later than 30 days after the end of each of the first three
fiscal quarters in any fiscal year of the Borrower and its consolidated
subsidiaries, (i) the Financial Statements for such fiscal quarter, together
with a certification duly executed by a responsible officer of the Borrower that
such Financial Statements have been prepared in accordance with GAAP and are
fairly stated in all material respects (subject to normal year-end audit
adjustments) or (ii) a copy of the Borrower's Form 10-Q as filed with the
Securities and Exchange Commission.
SECTION 7. EVENTS OF DEFAULT. The occurrence of any of the
-----------------
following events shall constitute an Event of Default hereunder:
(a) the Borrower shall fail to pay within three (3) business days
of notice of failure to pay when due any principal or interest, or any other fee
or other amount required to be paid by the Borrower under or in connection with
any Note and this Agreement;
(b) any representation or warranty made or deemed made by the
Borrower under or in connection with any Loan Document or any Financial
Statement shall prove to have been false or incorrect in any material respect
when made or deemed made, provided that , so long as there is no material
Adverse Effect on the Borrower or the rights of Lender hereunder as a result
thereof, Borrower shall have ten (10) Business Days to cure the false or
incorrect statement.;
(c) the Borrower shall fail to perform or observe (i) any of the
terms, covenants or agreements contained in Sections 5.4, 5.7, 5.10, 5.14 or
5.16 through 5.25 hereof or (ii) any other term, covenant, or agreement
contained in any Loan Document (other than the other Events of Default specified
in this Section 7) and such failure remains unremedied for the earlier of ten
business days from (A) the date on which the Lender has given the Borrower
written notice of such failure and (B) the date on which the Borrower knew or
should have known of such failure;
(d) any defined "Event of Default" shall occur under any other
Loan Document; or Borrower or any Person shall deny or disaffirm its obligations
under any of the Loan Documents or any Liens
14
granted in connection therewith or shall otherwise challenge any of its
obligations under any of the Loan Documents; or any Liens granted in any of the
Collateral shall be determined to be void, voidable or invalid, are subordinated
or are not given the priority contemplated by this Agreement; or any Loan
Document shall for any reason cease to create a valid and perfected Lien on the
Collateral purported to be covered thereby, of first priority (except for
Permitted Liens);
(e) dissolution, liquidation, winding up, or cessation of the
Borrower's business, failure of the Borrower generally to pay its debts as they
mature, admission in writing by the Borrower of its inability generally to pay
its debts as they mature, or calling of a meeting of the Borrower's creditors
for purposes of compromising any of the Borrower's debts;
(f) the commencement by or against the Borrower of any
bankruptcy, insolvency, arrangement, reorganization, receivership, or similar
proceedings under any federal or state law and, in the case of any such
involuntary proceeding, such proceeding remains undismissed or unstayed for
thirty days following the commencement thereof, or any action by the Borrower is
taken authorizing any such proceedings;
(g) an assignment for the benefit of creditors is made by the
Borrower, whether voluntary or involuntary, the appointment of a trustee,
custodian, receiver, or similar official for the Borrower or for any substantial
property of the Borrower, or any action by the Borrower authorizing any such
proceeding;
(h) the Borrower shall default in (i) the payment of principal or
interest on any indebtedness in excess of $100,000 (other than the Obligations
but including the Other Obligations) beyond the period of grace, if any,
provided in the instrument or agreement under which such indebtedness was
created, and such payment default has not been cured within any applicable grace
period unless such default has been waived by such Person; or (ii) the
observance or performance of any other agreement or condition relating to any
such indebtedness or contained in any instrument or agreement relating thereto,
or any other event shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit the holder or holders of
such indebtedness to cause, with the giving of notice if required, such
indebtedness to become due prior to its stated maturity, and such default has
not been cured within any applicable grace period unless such default has been
waived by such Person; or (iii) any loan or other agreement under which the
Borrower has received financing from Transamerica Corporation or any of its
affiliates, including, without limitation, the Master Lease Agreement dated
November 17, 1998 and such default has not been cured within any applicable
grace period unless such default has been waived by Lender or its affiliates;
(i) the Borrower suffers or sustains a Material Adverse Change;
(j) any tax lien, other than a Permitted Lien, is filed of record
against the Borrower and is not bonded or discharged within five Business Days;
(k) any judgment or order for the payment of money in excess of
$200,000 and not otherwise covered by applicable insurance shall be rendered
against the Borrower and such judgment or order shall not be stayed, vacated,
bonded, or discharged within thirty days;
(l) any material covenant, agreement, or obligation, as
determined in the good faith business judgment of the Lender, made by the
Borrower and contained in or evidenced by any of the Loan Documents shall cease
to be enforceable, or shall be determined to be unenforceable by a court of
competent jurisdiction, in accordance with its terms; the Borrower shall deny or
disaffirm the Obligations under any of the Loan Documents or any liens granted
in connection therewith; or any liens granted on any of the Collateral in favor
of the Lender shall be determined to be void, voidable, or invalid, or shall not
be given the priority contemplated by this Agreement; or
(m) there is a change, which change results from a single
transaction or series of related transactions, but not from the sale of newly
issued securities to investors, in more than 35% of the ownership of any equity
interests of the Borrower on the date hereof or more than 35% of such interests
become subject to any contractual, judicial, or statutory lien, charge, security
interest, or encumbrance, but not including liens on accounts
15
of holders of stock in connection with margin and other broker liens.
SECTION 8. REMEDIES. If any Event of Default shall have occurred
--------
and be continuing:
(a) The Lender may, without prejudice to any of its other rights
under any Loan Document or Applicable Law, declare all Obligations to be
immediately due and payable (except with respect to any Event of Default set
forth in Section 7(f) hereof, in which case all Obligations shall automatically
become immediately due and payable without necessity of any declaration) without
presentment, representation, demand of payment, or protest, which are hereby
expressly waived.
(b) The Lender may take possession of the Collateral and, for
that purpose may enter, with the aid and assistance of any person or persons,
any premises where the Collateral or any part hereof is, or may be placed, and
remove the same.
(c) The obligation of the Lender, if any, to make additional
Loans or financial accommodations of any kind to the Borrower shall immediately
terminate.
(d) The Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein (or in any Loan
Document) or otherwise available to it, all the rights and remedies of a secured
party under the applicable Uniform Commercial Code (the "Code") whether or not
the Code applies to the affected Collateral and also may (i) require the
Borrower to, and the Borrower hereby agrees that it will at its expense and upon
request of the Lender forthwith, assemble all or part of the Collateral as
directed by the Lender and make it available to the Lender at a place to be
designated by the Lender that is reasonably convenient to both parties and (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Lender's
offices or elsewhere, for cash, on credit, or for future delivery, and upon such
other terms as the Lender may deem commercially reasonable.
(e) The Lender may accelerate or extend the time of payment,
compromise, issue credits, or bring suit on all accounts receivable
("Receivables") and other Collateral (in the name of Borrower or the Lender) and
otherwise administer and collect the Receivables and other Collateral.
(f) The Lender may collect, receive, dispose of and realize upon
any investment property Collateral, including withdrawal of any and all funds
from any securities accounts.
(g) The Lender may (i) settle or adjust disputes or claims
directly with account debtors for amounts and upon terms which it considers
advisable, and (ii) notify account debtors on the Receivables and other
Collateral that the Receivables and Collateral have been assigned to the Lender,
and that payments in respect thereof shall be made directly to the Lender. If an
Event of Default has occurred and is continuing, Borrower hereby irrevocably
authorizes and appoints the Lender, or any Person the Lender may designate, as
its attorney-in-fact, at Borrower's sole cost and expense, to exercise, all of
the following powers, which are coupled with an interest and are irrevocable,
until all of the Obligations have been indefeasibly paid and satisfied in full
in cash: (A) to receive, take, endorse, sign, assign and deliver, all in the
name of the Lender or Borrower, any and all checks, notes, drafts, and other
documents or instruments relating to the Collateral and (B) to take or bring, in
the name of the Lender or Borrower, all steps, actions, suits or proceedings
deemed by the Lender necessary or desirable to enforce or effect collection of
Receivables and other Collateral or file and sign Borrower's name on a proof of
claim in bankruptcy or similar document against any obligor of Borrower.
(h) The Borrower agrees that, to the extent notice of sale shall
be required by law, at least ten days' notice to the Borrower of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Lender shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The
Lender may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Borrower recognizes
that the Lender may be unable to make a public sale of any or all of any
investment property Collateral, by reason of prohibitions contained in
applicable securities laws or otherwise, and expressly agrees that a private
sale to a restricted group of purchasers for
16
investment and not with a view to any distribution thereof shall be considered a
commercially reasonable sale.
(i) Unless expressly prohibited by any licensor thereof, the
Lender is in connection with realizing on the Collateral hereby granted a
license to use all computer software programs, data bases, processes,
trademarks, tradenames and materials used by Borrower in connection with its
businesses or in connection with the Collateral.
(j) All cash proceeds received by the Lender in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Lender, be held by the Lender as
collateral for, or then or at any time thereafter applied in whole or in part by
the Lender against, all or any part of the Obligations in such order as the
Lender shall elect. Any surplus of such cash or cash proceeds held by the Lender
and remaining after the full and final payment of all the Obligations shall be
paid over to the Borrower or to such other Person to which the Lender may be
required under applicable law, or directed by a court of competent jurisdiction,
to make payment of such surplus.
SECTION 9. MISCELLANEOUS PROVISIONS.
------------------------
SECTION 9.1. Notices. Except as otherwise provided herein, all
notices, approvals, consents, correspondence, or other communications required
or desired to be given hereunder shall be given in writing and shall be
delivered by overnight courier, hand delivery, or certified or registered mail,
postage prepaid, if to the Lender, then to at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to the Lender at Riverway II, West
Office Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and if to the
Borrower, then to ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
attention:_________,___________ or such other address as shall be designated by
the Borrower or the Lender to the other party in accordance herewith. All such
notices and correspondence shall be effective when received.
SECTION 9.2. Headings. The headings in this Agreement are for
purposes of reference only and shall not affect the meaning or construction of
any provision of this Agreement.
SECTION 9.3. Assignments and Participations. The Borrower shall
not have the right to assign any Note or this Agreement or any interest therein
unless the Lender shall have given the Borrower prior written consent and the
Borrower and its assignee shall have delivered assignment documentation in form
and substance satisfactory to the Lender in its sole discretion. The Lender may
assign (without the consent of Borrower) to one or more Persons, all or a
portion of its rights and obligations under this Agreement and the other Loan
Documents (provided that such Person shall not be a direct or indirect
competitor of the Borrower). The Lender may sell participations in or to all or
a portion of its rights and obligations under this Agreement, (including,
without limitation, all or a portion of any Loans); provided, however, that the
Lender's obligations under this Agreement shall remain unchanged. The Lender
may, in connection with any permitted assignment or participation or proposed
assignment or participation pursuant to this Agreement, disclose to the assignee
or participant or proposed assignee or participant any information relating to
Borrower furnished to the Lender by or on behalf of Borrower, subject to
reasonable confidentiality restrictions.
SECTION 9.4. Amendments, Waivers, and Consents. Any amendment or
waiver of any provision of this Agreement and any consent to any departure by
the Borrower from any provision of this Agreement shall be effective only by a
writing signed by the Lender and shall bind and benefit the Borrower and the
Lender and their respective successors and assigns, subject, in the case of the
Borrower, to the first sentence of Section 9.3.
SECTION 9.5. Interpretation of Agreement. Time is of the essence
in each provision of this Agreement of which time is an element. All terms not
defined herein or in a Note shall have the meaning set forth in the applicable
Code, except where the context otherwise requires. To the extent a term or
provision of this Agreement conflicts with any Note, or any term or provision
thereof, and is not dealt with herein with more specificity, this Agreement
shall control with respect to the subject matter of such term or provision.
Acceptance of or acquiescence in a course of performance rendered under this
Agreement shall not be relevant in determining the meaning of this Agreement
even though the accepting or acquiescing party had knowledge of the
17
nature of the performance and opportunity for objection.
SECTION 9.6. Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral and shall (i) remain in
full force and effect until the indefeasible payment in full of the Obligations,
(ii) be binding upon the Borrower and its successors and assigns and (iii)
inure, together with the rights and remedies of the Lender hereunder, to the
benefit of the Lender and its successors, transferees, and assigns.
SECTION 9.7. Reinstatement. To the extent permitted by law, this
Agreement and the rights and powers granted to the Lender hereunder and under
the Loan Documents shall continue to be effective or be reinstated if at any
time any amount received by the Lender in respect of the Obligations is
rescinded or must otherwise be restored or returned by the Lender upon the
insolvency, bankruptcy, dissolution, liquidation, or reorganization of the
Borrower or upon the appointment of any receiver, intervenor, conservator,
trustee, or similar official for the Borrower or any substantial part of its
assets, or otherwise, all as though such payments had not been made.
SECTION 9.8. Survival of Provisions. All representations,
warranties, and covenants of the Borrower contained herein shall survive the
execution and delivery of this Agreement, and shall terminate only upon the full
and final payment and performance by the Borrower of the Obligations secured
hereby.
SECTION 9.9. Indemnification. The Borrower agrees to indemnify
and hold harmless the Lender and its directors, officers, agents, employees, and
counsel from and against any and all costs, expenses, claims, or liability
incurred by the Lender or such Person hereunder and under any other Loan
Document or in connection herewith or therewith, unless such claim or liability
shall be due to willful misconduct or gross negligence on the part of the Lender
or such Person. In addition and without limiting the generality of the
foregoing, Borrower shall, upon demand: (i) pay to the Lender all reasonable
costs and expenses incurred by the Lender (including the reasonable fees and
disbursements of counsel and other professionals) in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents, and pay to the Lender all reasonable costs and expenses
(including the reasonable fees and disbursements of counsel and other
professionals) paid or incurred by the Lender in order to enforce or defend any
of its rights under or in respect of this Agreement, any other Loan Document or
any other document or instrument now or hereafter executed and delivered in
connection herewith, (ii) collect the Obligations or otherwise administer this
Agreement, (iii) foreclose or otherwise realize upon the Collateral or any part
thereof, (iv) prosecute actions against, or defend actions by, account debtors;
(v) commence, intervene in, or defend any action or proceeding; initiate any
complaint to be relieved of the automatic stay in bankruptcy; (vi) file or
prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Borrower's books and records; (vii) protect, obtain possession of, lease,
dispose of, or otherwise enforce the Lender's security interest in, the
Collateral; and (viii) otherwise represent the Lender in any litigation relating
to Borrower.
SECTION 9.10. Counterparts; Signatures by Facsimile. This
Agreement may be executed in counterparts, each of which when so executed and
delivered shall be an original, but both of which shall together constitute one
and the same instrument. This Agreement and each of the other Loan Documents
and any notices given in connection herewith or therewith may be executed and
delivered by facsimile transmission all with the same force and effect as if the
same was a fully executed and delivered original manual counterpart.
SECTION 9.11. Severability. In case any provision in or
obligation under this Agreement or any Note or any other Loan Document shall be
invalid, illegal, or unenforceable in any jurisdiction, the validity, legality,
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 9.12. Delays; Partial Exercise of Remedies. No delay or
omission of the Lender to exercise any right or remedy hereunder, whether before
or after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of Default.
No single or partial exercise by the Lender of any right or remedy shall
preclude any other or further exercise thereof, or preclude any other right or
remedy.
18
SECTION 9.13. Entire Agreement. The Borrower and the Lender agree
that this Agreement, and the Schedule hereto, are the complete and exclusive
statement and agreement between the parties with respect to the subject matter
hereof, superseding all proposals and prior agreements, oral or written, and all
other communications between the parties with respect to the subject matter
hereof.
SECTION 9.14. Setoff. In addition to and not in limitation of all
rights of offset that the Lender may have under Applicable Law, and whether or
not the Lender has made any demand or the Obligations of the Borrower have
matured, the Lender shall have the right to appropriate and apply to the payment
of the Obligations of the Borrower all deposits and other obligations then or
thereafter owing by the Lender to or for the credit or the account of the
Borrower.
SECTION 9.15 Joint and Several Liability. Intentionally deleted.
SECTION 9.16 Maximum Rate. Notwithstanding anything to the
contrary contained elsewhere in this Agreement or in any other Loan Document,
the parties hereto hereby agree that all agreements between them under this
Agreement and the other Loan Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
the Lender for the use, forbearance, or detention of the money loaned to
Borrower and evidenced hereby or thereby or for the performance or payment of
any covenant or obligation contained herein or therein, exceed the maximum non-
usurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Obligations, under
the laws of the State of Illinois (or the laws of any other jurisdiction whose
laws may be mandatorily applicable notwithstanding other provisions of this
Agreement and the other Loan Documents), or under applicable federal laws which
may presently or hereafter be in effect and which allow a higher maximum non-
usurious interest rate than under the laws of the State of Illinois (or such
other jurisdiction), in any case after taking into account, to the extent
permitted by applicable law, any and all relevant payments or charges under this
Agreement and the other Loan Documents executed in connection herewith, and any
available exemptions, exceptions and exclusions (the "Highest Lawful Rate"). If
due to any circumstance whatsoever, fulfillment of any provisions of this
Agreement or any of the other Loan Documents at the time performance of such
provision shall be due shall exceed the Highest Lawful Rate, then,
automatically, the obligation to be fulfilled shall be modified or reduced to
the extent necessary to limit such interest to the Highest Lawful Rate, and if
from any such circumstance the Lender should ever receive anything of value
deemed interest by applicable law which would exceed the Highest Lawful Rate,
such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to Borrower. All
sums paid or agreed to be paid to the Lender for the use, forbearance, or
detention of the Obligations and other indebtedness of Borrower to the Lender
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness, until
payment in full thereof, so that the actual rate of interest on account of all
such indebtedness does not exceed the Highest Lawful Rate throughout the entire
term of such indebtedness. The terms and provisions of this Section shall
control every other provision of this Agreement, the other Loan Documents and
all other agreements between the parties hereto.
SECTION 9.17. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.18. GOVERNING LAW. THE VALIDITY, INTERPRETATION, AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF.
SECTION 9.19. Venue; Service of Process. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITUATED IN ▇▇▇▇ COUNTY, OR OF
THE
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ FOR THE NORTHERN DISTRICT OF ILLINOIS, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY WAIVES, IN CONNECTION
WITH ANY SUCH ACTION OR PROCEEDING, (A) ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS, AND (B) THE RIGHT TO
INTERPOSE ANY NONCOMPULSORY SETFALL, COUNTERCLAIM OR CROSSCLAIM. THE BORROWER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT THE ADDRESS
FOR IT SPECIFIED IN SECTION 9.1 HEREOF. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER
JURISDICTION, SUBJECT IN EACH INSTANCE TO THE PROVISIONS HEREOF WITH RESPECT TO
RIGHTS AND REMEDIES.
SECTION 9.20. RELEASE OF LIEN. Upon the payment in full of the
Obligations (other than such unliquidated contingent liabilities as remain in
effect following payment in full of all other Obligations) and provided Borrower
is not in default under the Other Obligations due to Lender the security
interest and the liens granted hereby shall terminate and all rights in the
Collateral shall revert to the Borrower. Upon any such termination, the Lender
will, at the Borrower's expense, execute and deliver to the Borrower such
documents to evidence such termination.
SECTION 9.21. EXPENSES. All costs and reasonable expenses
incurred by Lender in connection with (i) the underwriting, (ii) closing of the
Loans and (iii) this execution and performance of the Borrower in connection
with this Agreement and/or the Note whether or not any Loans are consummated and
funds advance by Lender.
IN WITNESS WHEREOF, the undersigned Parties have caused this
Agreement to be duly executed and delivered by its proper and duly authorized
officer as of the date first set forth above.
KERAVISION, INC.
BY: /S/▇▇▇▇ ▇▇▇▇▇▇▇-COLBRIE
----------------------------------------------
NAME: ▇▇▇▇ ▇▇▇▇▇▇▇-COLBRIE
TITLE: VP FINANCE & ADMINISTRATION
FEDERAL TAX ID: ▇▇-▇▇▇▇▇▇▇
TRANSAMERICA BUSINESS CREDIT CORPORATION
BY:/S/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------------
NAME: ▇▇▇▇ ▇. ▇▇▇▇
TITLE: SENIOR VICE PRESIDENT - MARKETING
20
Schedule A
to
Loan and Security Agreement
Consents and Approvals (Section 4.2):
Other Places of Business and Locations of Collateral (Section 4.16):
Prior Names of Obligor (Section 4.7):
Prior Trade Names of Obligor (Section 4.7):
Existing Trade Names of Obligor (Section 4.7):
Federal Tax ID (Section 4.7):
Registered and Unregistered Patents (Section 4.11):
Registered and Unregistered Trademarks (Section 4.11):
Registered Copyrights (Section 4.11):
21
SENIOR TERM LOAN
PROMISSORY NOTE
---------------
1073-003
Date: March 25, 1999
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
Transamerica Business Credit Corporation or its assigns (the "Payee") at its
office located at Riverway II, West Office Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as the Payee or the holder
hereof may designate in writing, the principal amount of Five Million Dollars
($5,000,000.00) received by the undersigned, plus interest, in lawful money of
the United States and in immediately available funds. This Note shall be
payable commencing with a first installment (interest only) of Twelve Thousand,
Two Hundred Seventy Nine and 19/100 Dollars ($12,279.19) payable on March 25,
1999 and thereafter in 30 consecutive equal monthly installments (interest only)
of Fifty Two Thousand, Six Hundred Twenty Five and 00/100 Dollars ($52,625.00),
commencing April 30, 1999, payable on the thirtieth day of each month, and a
final installment (principal and interest) payable on September 30, 2001 of Five
Million, Fifty Two Thousand, Six Hundred Twenty Five and 00/100 Dollars
($5,052,625.00) together with any unpaid balance of the Note. No amount of
principal paid or prepaid hereunder may be reborrowed.
This Note is one of the Notes referred to in the Master Loan and
Security Agreement dated as of March 25, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Agreement"), between the undersigned
and the Payee and is subject and entitled to all provisions and benefits
thereof. Capitalized terms used but not defined herein shall have the meanings
set forth in the Agreement.
If any installment of this Note is not paid within five days after its
due date, the undersigned agrees to pay on demand, in addition to the amount of
such installment, an amount equal to 4% of such installment, but only to the
extent permitted by Applicable Law.
The undersigned shall have the right to prepay this Note at any time
on thirty days' prior written notice to the Payee. On the date of any such
prepayment, the undersigned will pay an amount equal to 6% of the principal
amount being prepaid, together with all interest, fees and other amounts payable
on the amount so prepaid or in connection therewith to the date of such
prepayment. Any prepayments will be applied to the installments hereof in the
inverse order of maturity.
Upon the maturity of this Note or the acceleration of the maturity of
this Note in accordance with the terms of the Agreement, the entire unpaid
principal amount on this Note, together with all interest, fees and other
amounts payable hereon or in connection herewith, shall be immediately due and
payable without further notice or demand, with interest on all such amounts at a
rate not to exceed the lesser of 18% per annum or the maximum rate allowed by
law, from the date of such maturity or acceleration, as the case may be, until
all such amounts have been paid.
If any payment on this Note becomes payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day.
The undersigned hereby waives diligence, demand, presentment, protest
and notice of any kind, and assents to extensions of the time of payment,
release, surrender or substitution of security, or forbearance or other
indulgence, without notice. The undersigned agrees to pay all amounts under
this Note without offset, deduction, claim, counterclaim, defense or recoupment,
all of which are hereby waived.
The Payee, the undersigned and any other parties to the Loan Documents
intend to contract in strict compliance with applicable usury law from time to
time in effect. In furtherance thereof such Persons stipulate and agree that
none of the terms and provisions contained in the Loan Documents shall ever be
construed to create a contract to pay, for the use, forbearance or detention of
money, interest in excess of the maximum amount of interest permitted to be
charged by Applicable Law from time to time in effect. Neither the undersigned
nor any present or future guarantors, endorsers, or other Persons hereafter
becoming liable for payment of any Obligation shall ever be
22
liable for unearned interest thereon or shall ever be required to pay interest
thereon in excess of the maximum amount that may be lawfully charged under
Applicable Law from time to time in effect, and the provisions of this paragraph
shall control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith. The Payee expressly disavows any
intention to charge or collect excessive unearned interest or finance charges in
the event the maturity of any Obligation is accelerated. If (a) the maturity of
any Obligation is accelerated for any reason, (b) any Obligation is prepaid and
as a result any amounts held to constitute interest are determined to be in
excess of the legal maximum, or (c) the Payee or any other holder of any or all
of the Obligations shall otherwise collect amounts which are determined to
constitute interest which would otherwise increase the interest on any or all of
the Obligations to an amount in excess of that permitted to be charged by
Applicable Law then in effect, then all sums determined to constitute interest
in excess of such legal limit shall, without penalty, be promptly applied to
reduce the then outstanding principal of the related Obligations or, at the
Payee's or such holder's option, promptly returned to the undersigned upon such
determination. In determining whether or not the interest paid or payable, under
any specific circumstance, exceeds the maximum amount permitted under Applicable
Law, the Payee and the undersigned (and any other payors thereof) shall to the
greatest extent permitted under Applicable Law, (i) characterize any non-
principal payment as an expense, fee or premium rather than as interest, (ii)
exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread the total amount of interest through the entire
contemplated term of this Note in accordance with the amount outstanding from
time to time thereunder and the maximum legal rate of interest from time to time
in effect under Applicable Law in order to lawfully charge the maximum amount of
interest permitted under Applicable Law.
This Note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the undersigned and the Payee or any holder
hereof.
The undersigned shall, upon demand, pay to the Payee all costs and
expenses incurred by the Payee (including the reasonable fees and disbursements
of counsel and other professionals) in connection with the preparation,
execution and delivery of this Note and all other Loan Documents (not to exceed
$5,000), and out-of-pocket expenses in connection with the administration,
modification and amendment of the Loan Documents, and pay to the Payee all costs
and expenses (including the fees and disbursements of counsel and other
professionals) paid or incurred by the Payee in (A) enforcing or defending its
rights under or in respect of this Note or any of the other Loan Documents, (B)
collecting any of the liabilities by the undersigned to the Payee or otherwise
administering the Loan Documents, (C) foreclosing or otherwise collecting upon
any collateral and (D) obtaining any legal, accounting or other advice in
connection with any of the foregoing.
This Note shall be binding upon the successors and assigns of the
undersigned and inure to the benefit of the Payee and its successors, endorsees
and assigns. If any term or provision of this Note shall be held invalid,
illegal or unenforceable, the validity of all other terms and provisions hereof
shall in no way be affected thereby.
23
EACH OF THE UNDERSIGNED AND, BY ITS ACCEPTANCE HEREOF, THE PAYEE
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF ANY
DISPUTE ARISING UNDER OR RELATING TO THIS NOTE AND AGREES THAT ANY SUCH DISPUTE
SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAW.
KERAVISION, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇-Colbrie
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇-Colbrie
Title: VP Finance & Administration, CFO
24
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
No. 1
STOCK SUBSCRIPTION WARRANT
To Purchase Common Stock of
KERAVISION, INC. (THE "COMPANY")
DATE OF INITIAL ISSUANCE: MARCH 25, 1999
THIS CERTIFIES THAT for value received, TBCC FUNDING TRUST II or its
registered assigns (hereinafter called the "Holder") is entitled to purchase
from the Company, at any time during the Term of this Warrant, Fifty-Five
Thousand Four Hundred Ninety-Two (55,492) shares of common stock, $0.001 par
value, of the Company (the "Common Stock"), at the Warrant Price, payable as
provided herein. The exercise of this Warrant shall be subject to the
provisions, limitations and restrictions herein contained, and may be exercised
in whole or in part.
SECTION 1. Definitions.
-----------
For all purposes of this Warrant, the following terms shall have the
meanings indicated:
Common Stock - shall mean and include the Company's authorized Common
------------
Stock, $0.001 par value, as constituted at the date hereof.
Exchange Act - shall mean the Securities Exchange Act of 1934, as
------------
amended from time to time.
Securities Act - shall mean the Securities Act of 1933, as amended.
--------------
Term of this Warrant - shall mean the period beginning on the date of
--------------------
initial issuance hereof and ending on March __, 2006.
Warrant Price - shall mean $10.8125 per share, subject to adjustment
-------------
in accordance with Section 5 hereof.
Warrants - shall mean this Warrant and any other Warrant or Warrants
--------
issued in connection with a Commitment Letter dated August 22, 1997 executed by
the Company and Transamerica Business Credit Corporation (the "Commitment
Letter") to the original holder of this Warrant, or any transferees from such
original holder or this Holder.
25
Warrant Shares - shall mean shares of Common Stock purchased or purchasable
--------------
by the Holder of this Warrant upon the exercise hereof.
SECTION 2. Exercise of Warrant.
-------------------
2.1. Procedure for Exercise of Warrant. To exercise this Warrant in whole
---------------------------------
or in part (but not as to any fractional share of Common Stock), the Holder
shall deliver to the Company at its office referred to in Section 12 hereof at
any time and from time to time during the Term of this Warrant: (i) the Notice
of Exercise in the form attached hereto, (ii) cash, certified or official bank
check payable to the order of the Company, wire transfer of funds to the
Company's account, or evidence of any indebtedness of the Company to the Holder
(or any combination of any of the foregoing) in the amount of the Warrant Price
for each share being purchased, and (iii) this Warrant. Notwithstanding any
provisions herein to the contrary, if the Current Market Price (as defined in
Section 5) is greater than the Warrant Price (at the date of calculation, as set
forth below), in lieu of exercising this Warrant as provided above permitted,
the Holder may elect to receive shares of Common Stock equal to the value (as
determined below) of this Warrant (or the portion thereof being canceled) by
surrender of this Warrant at the office of the Company referred to in Section 12
hereof, together with the Notice of Exercise, in which event the Company shall
issue to the Holder that number of shares of Common Stock computed using the
following formula:
CS = WCS x (CMP-WP)
--------------
CMP
Where
CS equals the number of shares of Common Stock to be issued to the
Holder
WCS equals the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being exercised (at
the date of such calculation)
CMP equals the Current Market Price (at the date of such calculation)
WP equals the Warrant Price (as adjusted to the date of such
calculation)
In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the shares of Common Stock so purchased,
registered in the name of the Holder or such other name or names as may be
designated by the Holder, shall be delivered to the Holder hereof within a
reasonable time, not exceeding fifteen (15) days, after the rights represented
by this Warrant shall have been so exercised; and, unless this Warrant has
expired, a new Warrant representing the number of shares (except a remaining
fractional share), if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the Holder hereof within such time.
The person in whose name any certificate for shares of Common Stock is issued
upon exercise of this Warrant shall for all purposes be deemed to have become
the holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price and any applicable taxes was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
26
2.2. Transfer Restriction Legend. Each certificate for Warrant Shares
---------------------------
shall bear the following legend (and any additional legend required by (i) any
applicable state securities laws and (ii) any securities exchange upon which
such Warrant Shares may, at the time of such exercise, be listed) on the face
thereof unless at the time of exercise such Warrant Shares shall be registered
under the Securities Act:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the laws of any
State and may not be sold or transferred in the absence of such
registration or an exemption therefrom under the Securities Act of
1933 and any applicable state securites laws.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution under a registration statement of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the holder thereof (which counsel shall be reasonably satisfactory
to counsel for the Company) the securities represented thereby are not, at such
time, required by law to bear such legend
SECTION 3. Covenants as to Common Stock. The Company covenants and agrees that
----------------------------
all shares of Common Stock that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable, and free from all taxes, liens (except those imposed by the
holder) and charges with respect to the issue thereof. The Company further
covenants and agrees that it will pay when due and payable any and all federal
and state taxes which may be payable in respect of the issue of this Warrant or
any Common Stock or certificates therefor issuable upon the exercise of this
Warrant. The Company further covenants and agrees that the Company will at all
times have authorized and reserved, free from preemptive rights, a sufficient
number of shares of Common Stock to provide for the exercise of the rights
represented by this Warrant. The Company further covenants and agrees that if
any shares of capital stock to be reserved for the purpose of the issuance of
shares upon the exercise of this Warrant require registration with or approval
of any governmental authority under any federal or state law before such shares
may be validly issued or delivered upon exercise, then the Company will in good
faith and as expeditiously as possible endeavor to secure such registration or
approval, as the case may be. If and so long as the Common Stock issuable upon
the exercise of this Warrant is listed on any national securities exchange, the
Company will, if permitted by the rules of such exchange, list and keep listed
on such exchange, upon official notice of issuance, all shares of such Common
Stock issuable upon exercise of this Warrant.
SECTION 4. Adjustment of Number of Shares. Upon each adjustment of the Warrant
------------------------------
Price as provided in Section 5, the Holder shall thereafter be entitled to
purchase, at the Warrant Price resulting from such adjustment, the number of
shares (calculated to the nearest tenth of a share) obtained by multiplying the
Warrant Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Price resulting from such
adjustment.
SECTION 5. Adjustment of Warrant Price. The Warrant Price shall be subject to
---------------------------
adjustment from time to time as follows:
(i) If, at any time during the Term of this Warrant, the number of shares
of Common Stock outstanding is increased by a stock dividend payable in shares
of Common Stock or by a subdivision or split-up of shares of Common Stock, then,
following the record date fixed for the determination of holders of Common Stock
entitled to receive such stock dividend, subdivision or split-up, the Warrant
27
Price shall be appropriately decreased so that the number of shares of Common
Stock issuable upon the exercise hereof shall be increased in proportion to such
increase in outstanding shares.
(ii) If, at any time during the Term of this Warrant, the number of shares
of Common Stock outstanding is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date for such combination,
the Warrant Price shall appropriately increase so that the number of shares of
Common Stock issuable upon the exercise hereof shall be decreased in proportion
to such decrease in outstanding shares.
(iii) In case, at any time during the Term of this Warrant, the Company
shall declare a cash dividend upon its Common Stock payable otherwise than out
of earnings or earned surplus or shall distribute to holders of its Common Stock
shares of its capital stock (other than Common Stock), stock or other securities
of other persons, evidences of indebtedness issued by the Company or other
persons, assets (excluding cash dividends and distributions) or options or
rights (excluding options to purchase and rights to subscribe for Common Stock
or other securities of the Company convertible into or exchangeable for Common
Stock), then, in each such case, immediately following the record date fixed for
the determination of the holders of Common Stock entitled to receive such
dividend or distribution, the Warrant Price in effect thereafter shall be
determined by multiplying the Warrant Price in effect immediately prior to such
record date by a fraction of which the numerator shall be an amount equal to the
difference of (x) the Current Market Price of one share of Common Stock minus
(y) the fair market value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive) of the stock, securities,
evidences of indebtedness, assets, options or rights so distributed in respect
of one share of Common Stock, and of which the denominator shall be such Current
Market Price.
(iv) All calculations under this Section 5 shall be made to the nearest
cent or to the nearest one-tenth (1/10) of a share, as the case may be.
(v) For the purpose of any computation pursuant to this Section 5, the
Current Market Price at any date of one share of Common Stock shall be deemed to
be the average of the daily closing prices for the 10 consecutive business days
ending on the last business day before the day in question (as adjusted for any
stock dividend, split, combination or reclassification that took effect during
such 15 business day period). The closing price for each day shall be the last
reported sales price regular way or, in case no such reported sales took place
on such day, the average of the last reported bid and asked prices regular way,
in either case on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or as reported by Nasdaq (or if the
Common Stock is not at the time listed or admitted for trading on any such
exchange or if prices of the Common Stock are not reported by Nasdaq then such
price shall be equal to the average of the last reported bid and asked prices on
such day as reported by The National Quotation Bureau Incorporated or any
similar reputable quotation and reporting service, if such quotation is not
reported by The National Quotation Bureau Incorporated); provided, however, that
if the Common Stock is not traded in such manner that the quotations referred to
in this clause (v) are available for the period required hereunder, the Current
Market Price shall be determined in good faith by the Board of Directors of the
Company or, if such determination cannot be made, by a nationally recognized
independent investment banking firm selected by the Board of Directors of the
Company (or if such selection cannot be made, by a nationally recognized
independent investment banking firm selected by the American Arbitration
Association in accordance with its rules).
(vi) Whenever the Warrant Price shall be adjusted as provided in Section
5, the Company shall prepare a statement showing the facts requiring such
adjustment and the Warrant Price that shall be in effect after such adjustment.
The Company shall cause a copy of such statement to be sent by mail, first
28
class postage prepaid, to each Holder of this Warrant at its, his or her address
appearing on the Company's records. Where appropriate, such copy may be given in
advance and may be included as part of the notice required to be mailed under
the provisions of subsection (viii) of this Section 5.
(vii) Adjustments made pursuant to clauses (i), (ii) and (iii) above shall
be made on the date such dividend, subdivision, split-up, combination or
distribution, as the case may be, is made, and shall become effective at the
opening of business on the business day next following the record date for the
determination of stockholders entitled to such dividend, subdivision, split-up,
combination or distribution.
(viii) In the event the Company shall propose to take any action of the
types described in clauses (i), (ii), or (iii) of this Section 5, the Company
shall forward, at the same time and in the same manner, to the Holder of this
Warrant such notice, if any, which the Company shall give to the holders of
capital stock of the Company.
(ix) In any case in which the provisions of this Section 5 shall require
that an adjustment shall become effective immediately after a record date for an
event, the Company may defer until the occurrence of such event issuing to the
Holder of all or any part of this Warrant which is exercised after such record
date and before the occurrence of such event the additional shares of capital
stock issuable upon such exercise by reason of the adjustment required by such
event over and above the shares of capital stock issuable upon such exercise
before giving effect to such adjustment exercise; provided, however, that the
Company shall deliver to such Holder a due ▇▇▇▇ or other appropriate instrument
evidencing such Holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
SECTION 6. Ownership.
---------
6.1. Ownership of This Warrant. The Company may deem and treat the person
-------------------------
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Section 6.
6.2. Transfer and Replacement. This Warrant and all rights hereunder are
------------------------
transferable in whole or in part upon the books of the Company by the Holder
hereof in person or by duly authorized attorney, and a new Warrant or Warrants,
of the same tenor as this Warrant but registered in the name of the transferee
or transferees (and in the name of the Holder, if a partial transfer is
effected) shall be made and delivered by the Company upon surrender of this
Warrant duly endorsed, at the office of the Company referred to in Section 12
hereof. Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft or destruction, and, in such case, of indemnity or security
reasonably satisfactory to it, and upon surrender of this Warrant if mutilated,
the Company will make and deliver a new Warrant of like tenor, in lieu of this
Warrant; provided that if the Holder hereof is an instrumentality of a state or
local government or an institutional holder or a nominee for such an
instrumentality or institutional holder an irrevocable agreement of indemnity by
such Holder shall be sufficient for all purposes of this Section 6, and no
evidence of loss or theft or destruction shall be necessary. This Warrant shall
be promptly cancelled by the Company upon the surrender hereof in connection
with any transfer or replacement. Except as otherwise provided above, in the
case of the loss, theft or destruction of a Warrant, the Company shall pay all
expenses, taxes and other charges payable in connection with any transfer or
replacement of this Warrant, other than stock transfer taxes (if any) payable in
connection
29
with a transfer of this Warrant, which shall be payable by the Holder. Holder
will not transfer this Warrant and the rights hereunder except in compliance
with federal and state securities laws.
SECTION 7. Mergers, Consolidation, Sales. In the case of any proposed
-----------------------------
consolidation or merger of the Company with another entity, or the proposed sale
of all or substantially all of its assets to another person or entity, or any
proposed reorganization or reclassification of the capital stock of the Company,
then, as a condition of such consolidation, merger, sale, reorganization or
reclassification, lawful and adequate provision shall be made whereby the Holder
of this Warrant shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein, in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable hereunder, such
shares of stock, securities or assets as may (by virtue of such consolidation,
merger, sale, reorganization or reclassification) be issued or payable with
respect to or in exchange for the number of shares of such Common Stock
purchasable hereunder immediately before such consolidation, merger, sale,
reorganization or reclassification. In any such case appropriate provision
shall be made with respect to the rights and interests of the Holder of this
Warrant to the end that the provisions hereof shall thereafter be applicable as
nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise of this Warrant.
SECTION 8. Notice of Dissolution or Liquidation. In case of any distribution
------------------------------------
of the assets of the Company in dissolution or liquidation (except under
circumstances when the foregoing Section 7 shall be applicable), the Company
shall give notice thereof to the Holder hereof and shall make no distribution to
shareholders until the expiration of thirty (30) days from the date of mailing
of the aforesaid notice and, in any case, the Holder hereof may exercise this
Warrant within thirty (30) days from the date of the giving of such notice, and
all rights herein granted not so exercised within such thirty-day period shall
thereafter become null and void.
SECTION 9. Notice of Extraordinary Dividends. If the Board of Directors of the
---------------------------------
Company shall declare any dividend or other distribution on its Common Stock
except out of earned surplus or by way of a stock dividend payable in shares of
its Common Stock, the Company shall mail notice thereof to the Holder hereof not
less than thirty (30) days prior to the record date fixed for determining
shareholders entitled to participate in such dividend or other distribution, and
the Holder hereof shall not participate in such dividend or other distribution
unless this Warrant is exercised prior to such record date. The provisions of
this Section 9 shall not apply to distributions made in connection with
transactions covered by Section 7.
SECTION 10. Fractional Shares. Fractional shares shall not be issued upon the
-----------------
exercise of this Warrant but in any case where the Holder would, except for the
provisions of this Section 10, be entitled under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant, the Company shall,
upon the exercise of this Warrant for the largest number of whole shares then
called for, pay a sum in cash equal to the excess of the value of such
fractional share (determined in such reasonable manner as may be prescribed in
good faith by the Board of Directors of the Company) over the Warrant Price for
such fractional share.
SECTION 11. Special Arrangements of the Company. The Company covenants and
-----------------------------------
agrees that during the Term of this Warrant, unless otherwise approved by the
Holder of this Warrant:
11.1. Will Reserve Shares. The Company will reserve and set apart and
-------------------
have available for issuance at all times, free from preemptive or other
preferential rights, the number of shares of authorized but unissued Common
Stock deliverable upon the exercise of this Warrant.
30
11.2. Will Not Amend Certificate. The Company will not amend its
--------------------------
Certificate of Incorporation to eliminate as an authorized class of capital
stock that class denominated as "Common Stock" on the date hereof.
11.3. Will Bind Successors. This Warrant shall be binding upon any
--------------------
corporation or other person or entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.
SECTION 12. Notices. Any notice or other document required or permitted to be
-------
given or delivered to the Holder shall be delivered at, or sent by certified or
registered mail to, the Holder at Transamerica Technology Finance Division, ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Assistant Vice
President, Lease Administration, with a copy to the Lender at Riverway II, West
Office Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Legal Department or to such other address as shall have been furnished to the
Company in writing by the Holder. Any notice or other document required or
permitted to be given or delivered to the Company shall be delivered at, or sent
by certified or registered mail to, the Company at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: Chief Financial Officer or to such other address
as shall have been furnished in writing to the Holder by the Company. Any notice
so addressed and mailed by registered or certified mail shall be deemed to be
given when so mailed. Any notice so addressed and otherwise delivered shall be
deemed to be given when actually received by the addressee.
SECTION 13. No Rights as Stockholder; Limitation of Liability. This Warrant
-------------------------------------------------
shall not entitle the Holder to any of the rights of a shareholder of the
Company except upon exercise in accordance with the terms hereof. No provision
hereof, in the absence of affirmative action by the Holder to purchase shares of
Common Stock, and no mere enumeration herein of the rights or privileges of the
Holder, shall give rise to any liability of the Holder for the Warrant Price
hereunder or as a shareholder of the Company, whether such liability is asserted
by the Company or by creditors of the Company.
SECTION 14. Law Governing. THE VALIDITY, INTERPRETATION, AND ENFORCEMENT OF
-------------
THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF.
SECTION 15. Miscellaneous. This Warrant and any provision hereof may be
-------------
changed, waived, discharged or terminated only by an instrument in writing
signed by both parties (or any respective predecessor in interest thereof). The
headings in this Warrant are for purposes of reference only and shall not affect
the meaning or construction of any of the provisions hereof.
31
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 24/th/ day of March, 1999.
KERAVISION, INC.
[CORPORATE SEAL]
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇-Colbrie
------------------------
Title: VP Finance & Administration, CFO
--------------------------------
32
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of the Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THE WITHIN WARRANT
The undersigned hereby exercises the right to purchase _________ shares of
Common Stock which the undersigned is entitled to purchase by the terms of the
within Warrant according to the conditions thereof, and herewith
[check one]
[ ] makes payment of $__________ therefor; or
[ ] directs the Company to issue ______ shares, and to
withhold ____ shares in lieu of payment of the
Warrant Price, as described in Section 2.1 of the
Warrant.
All shares to be issued pursuant hereto shall be issued in the name of and the
initial address of such person to be entered on the books of the Company shall
be:
The shares are to be issued in certificates of the following denominations:
-----------------------------------------------
[Type Name of Holder]
By:
--------------------------------------------
Title:
-----------------------------------------
Dated:
-----------------------------------
33
FORM OF ASSIGNMENT
(ENTIRE)
[To be signed only upon transfer of entire Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto _______________________________ all rights of the undersigned
under and pursuant to the within Warrant, and the undersigned does hereby
irrevocably constitute and appoint _______________________________ Attorney to
transfer the said Warrant on the books of the Company, with full power of
substitution.
-----------------------------------------------
[Type Name of Holder]
By:
--------------------------------------------
Title:
-----------------------------------------
Dated:
-------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
34
FORM OF ASSIGNMENT
(PARTIAL)
[To be signed only upon partial transfer of Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _______________________________ (i) the rights of the undersigned
to purchase ___ shares of Common Stock under and pursuant to the within Warrant,
and (ii) on a non-exclusive basis, all other rights of the undersigned under and
pursuant to the within Warrant, it being understood that the undersigned shall
retain, severally (and not jointly) with the transferee(s) named herein, all
rights assigned on such non-exclusive basis. The undersigned does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said Warrant on the books of the Company, with full power of
substitution.
-----------------------------------------------
[Type Name of Holder]
By:
-------------------------------------------
Title:
-----------------------------------------
Dated:
--------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
35