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EXHIBIT 10.25
LOAN AND SECURITY AGREEMENT
by and between
SILICON VALLEY BANK
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Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
ARRAY BIOPHARMA INC.
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Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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TOTAL CREDIT AMOUNT: $4,000,000
Date: May 17, 2000
Repayment Period: 36 months
Treasury Note Maturity: n/a
Final Payment Percentage: n/a Loan Margin: n/a
Minimum Funding Amount: $50,000 Loan Fee: $20,000
Maximum Number of Loans: 6
Commitment Termination Date: May 17, 2001
The terms and information set forth on this cover page are a part of
the attached Loan and Security Agreement, dated as of the date first written
above (this "Agreement"), entered into by and between Silicon Valley Bank
("Bank") and the borrower ("Borrower") set forth above. The terms and conditions
of this Agreement agreed to between Bank and Borrower are as follows:
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THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated May 17, 2000,
between SILICON VALLEY BANK ("Bank") and ARRAY BIOPHARMA INC. ("Borrower"),
provides the terms on which Bank will lend to Borrower and Borrower will repay
Bank. The parties agree as follows:
1. ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation" in this or any Loan Document. Capitalized terms in this Agreement
shall have the meanings set forth in Section 13. This Agreement shall be
construed to impart upon Bank a duty to act reasonably at all times.
2. LOAN AND TERMS OF PAYMENT
2.1 CREDIT EXTENSIONS. Borrower will pay Bank the unpaid principal amount of all
Credit Extensions and interest on the unpaid principal amount of the Credit
Extensions.
2.1.1 EQUIPMENT FACILITY.
(a) Subject to the terms and conditions of this Agreement, Bank agrees
to lend to Borrower, from time to time prior to the Commitment Termination Date,
equipment advances (each an "Equipment Advance" and collectively the "Equipment
Advances") in an aggregate amount not to exceed the Committed Equipment Line.
When repaid, the Equipment Advances may not be re-borrowed. The proceeds of the
Equipment Advances will be used solely to reimburse Borrower for the purchase of
Eligible Equipment purchased within 120 days of the Equipment Advance. Each
Equipment Advance shall be considered a promissory note evidencing the amounts
due hereunder for all purposes. Bank's obligation to lend hereunder shall
terminate on the earlier of (i) the occurrence and continuance of an Event of
Default, or (ii) the Commitment Termination Date. For purposes of this Section,
the minimum amount of each Equipment Advance is $50,000 and the maximum number
of Equipment Advances that will be made is 6. The aggregate amount of the
Equipment Advances lent by Bank to Borrower in any given calendar quarter shall
not exceed $2,000,000.
(b) To obtain an Equipment Advance, Borrower will deliver to Bank a
completed supplement in substantially the form attached as Exhibit D ("Loan
Supplement"), copies of invoices for the Financed Equipment, together with a UCC
Financing Statement covering the Equipment described on the Loan Supplement, and
such additional information as Bank may request at least five (5) Business Days
before the proposed funding date (the "Funding Date"). If Borrower satisfies the
conditions of each Equipment Advance specified herein, Bank will disburse such
Equipment Advance by internal transfer to Borrower's deposit account with Bank.
Each Equipment Advance may not exceed 100% of the Original Stated Cost and the
Soft Costs (as defined below) of Eligible Equipment, provided that in no event
may more than thirty percent (30%) of any Equipment Advance be for leasehold
improvements and Soft Costs. As used herein, "Soft Costs" means software
licenses, invoiced taxes, shipping, warranty charges, freight discounts and
installation expenses incurred by Borrower as a direct result of the purchase of
Eligible Equipment that comply with all of Borrower's representations and
warranties to Bank and which are acceptable to Bank in all respects.
(c) Bank's obligation to lend the undisbursed portion of the Committed
Equipment Line will terminate if, in Bank's sole discretion, there has been a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospects of Borrower,
whether or not arising from transactions in the ordinary course of business, or
there has been any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Bank prior to the
execution of this Agreement.
2.2 INTEREST RATE, PAYMENTS.
2.2.1 EQUIPMENT LINE.
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(a) Principal and Interest Payments On Payment Dates. Borrower will
repay the Equipment Advances on the terms provided in the Loan Supplement.
Borrower will make monthly payments for each Equipment Advance (collectively,
"Scheduled Payments"), on the first Business Day of each calendar month,
beginning with the month following the Funding Date with respect to such
Equipment Advance and continuing thereafter during the Repayment Period on the
first Business Day of each calendar month (each a "Payment Date"), in thirty-six
(36) equal monthly payments of principal, plus all accrued interest. All unpaid
principal and accrued interest is due and payable in full on the last Payment
Date with respect to such Equipment Advance. Payments received after 12:00 noon
Pacific time are considered received at the opening of business on the next
Business Day. An Equipment Advance may only be prepaid in accordance with
Sections 2.2.1(c) and (d).
(b) Interest Rate. Borrower will pay interest on the outstanding
principal balance on the Payment Dates (as described above) at the per annum
rate of interest equal to the Prime Rate plus one and one quarter percent
(1.25%), provided that from and after such times as Borrower achieves EBITDA of
at least One Dollar ($1.00) for two consecutive quarters, Borrower will pay
interest on the outstanding principal balance on the Payment Dates at the per
annum rate of interest equal to the Prime Rate plus one half percent (0.50%).
After an Event of Default, Obligations accrue interest at five (5) percent above
the rate effective immediately before the Event of Default. The interest rate
increases or decreases when the Prime Rate changes. Interest is computed on a
360 day year for the actual number of days elapsed. If any change in the law
increases Bank's expenses or decreases its return from the Equipment Advances,
Borrower will pay Bank upon request the amount of such increase or decrease.
(c) Prepayment Upon an Event of Loss. If any Financed Equipment is
subject to an Event of Loss and Borrower is required to or elects to prepay the
Equipment Advance with respect to such Financed Equipment pursuant to Section
6.8, then such Equipment Advance shall be prepaid to the extent and in the
manner provided in such section.
(d) Permitted Prepayment of Loans. Borrower shall have the option to
prepay all, but not less than all, of the Equipment Advances advanced by Bank
under this Agreement, provided Borrower (i) provides written notice to Bank of
its election to prepay the Equipment Advances at least thirty (30) days prior to
such prepayment, and (ii) pays, on the date of the prepayment, in addition to
all other amounts due under this Agreement, a premium equal to the Make-Whole
Premium.
(e) Mandatory Prepayment Upon an Acceleration. If the Equipment
Advances are accelerated following the occurrence of an Event of Default,
Borrower will immediately pay to Bank all outstanding Obligations as well as a
premium equal to the Make-Whole Premium.
2.2.2 REQUEST TO DEBIT ACCOUNTS.
Bank may debit any of Borrower's deposit accounts including Account
Number 3300128506 for principal and interest payments or any amounts Borrower
owes Bank when due. Bank will notify Borrower when it debits Borrower's
accounts. These debits are not a set-off.
2.3 FEES. Borrower will pay to Bank:
(a) Facility Fee. A fully earned, non-refundable facility fee of
$20,000 due on the Closing Date; and
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys'
fees and expenses not exceeding $3,500 for documentation and negotiation of this
Agreement, provided that any such fees and expenses in excess of $3,500 will be
shared equally between Bank and Borrower) incurred through and after the Closing
Date when due.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. Bank's obligation to make
the initial Credit Extension is subject to the condition precedent that it
receive the agreements, documents and fees it requires including without
limitation this Agreement, a UCC-1 financing statement, and a warrant to
purchase stock.
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3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Bank's obligations to make
each Credit Extension, including the initial Credit Extension, is subject to the
following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Credit Extension and no Event of Default may have occurred and be continuing, or
result from the Credit Extension. Each Credit Extension is Borrower's
representation and warranty on that date that the representations and warranties
in Section 5 remain true.
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower grants Bank a continuing security
interest in all presently existing and later acquired Collateral to secure all
Obligations and performance of each of Borrower's duties under the Loan
Documents. Except for Permitted Liens, any security interest will be a first
priority security interest in the Collateral. After the occurrence of an Event
of Default, Bank may place a "hold" on any deposit account pledged as
Collateral. If the Agreement is terminated, Bank's lien and security interest in
the Collateral will continue until Borrower fully satisfies its Obligations.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION. Borrower and each Subsidiary, if any, is
duly existing and in good standing in its state of formation and qualified and
licensed to do business in, and in good standing in, any state in which the
conduct of its business or its ownership of property requires that it be
qualified.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could cause a Material Adverse Change.
5.2 COLLATERAL. Borrower has good title to the Collateral, free of Liens except
Permitted Liens. The Accounts are bona fide, existing obligations, and the
service or property has been performed or delivered to the account debtor or its
agent for immediate shipment to and unconditional acceptance by the account
debtor. All Inventory is in all material respects of good and marketable
quality, free from material defects.
5.3 LITIGATION. Except as shown in the Schedule, there are no actions or
proceedings pending or, to Borrower's knowledge, threatened by or against
Borrower or any Subsidiary, if any, in which an adverse decision could cause a
Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All consolidated
financial statements for Borrower and any Subsidiary, if any, delivered to Bank
fairly present in all material respects Borrower's consolidated financial
condition and Borrower's consolidated results of operations. There has not been
any material deterioration in Borrower's consolidated financial condition since
the date of the most recent financial statements submitted to Bank.
5.5 SOLVENCY. The fair salable value of Borrower's assets (including goodwill
minus disposition costs) exceeds the fair value of its liabilities; the Borrower
is not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6 REGULATORY COMPLIANCE. Borrower is not an "investment company" or a company
"controlled" by an "investment company" under the Investment Company Act.
Borrower is not engaged as one of its important activities in extending credit
for margin stock (under Regulations T and U of the Federal Reserve Board of
Governors). Borrower has complied with the Federal Fair Labor Standards Act.
Borrower has not violated any
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laws, ordinances or rules, the violation of which could cause a Material Adverse
Change. None of Borrower's or any Subsidiary's, if any, properties or assets has
been used by Borrower or any Subsidiary, if any, or, to the best of Borrower's
knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally. Borrower and each
Subsidiary, if any, has timely filed all required tax returns and paid, or made
adequate provision to pay, all material taxes. Borrower and each Subsidiary, if
any, has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted.
5.7 SUBSIDIARIES. Borrower does not own any stock, partnership interest or other
equity securities except for Permitted Investments.
5.8 FULL DISCLOSURE. No representation, warranty or other statement of Borrower
in any certificate or written statement given to Bank contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading.
6. AFFIRMATIVE COVENANTS
Borrower will do all of the following:
6.1 GOVERNMENT COMPLIANCE. Borrower will maintain its and all Subsidiaries'
corporate existence and good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which the failure to so qualify
could have a material adverse effect on Borrower's business or operations.
Borrower will comply, and have each Subsidiary, if any, comply, with all laws,
ordinances and regulations to which it is subject, noncompliance with which
could have a material adverse effect on Borrower's business or operations or
cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but no
later than 30 days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower's consolidated
operations during the period, in a form acceptable to Bank and certified by a
Responsible Officer; (ii) as soon as available, but no later than 90 days after
the end of Borrower's fiscal year, audited consolidated financial statements
prepared under GAAP, consistently applied, together with an unqualified opinion
on the financial statements from an independent certified public accounting firm
acceptable to Bank; (iii) within 5 days of filing, copies of all statements,
reports and notices made available to Borrower's security holders or to any
holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K filed
with the Securities and Exchange Commission; (iv) a prompt report of any legal
actions pending or threatened against Borrower or any Subsidiary, if any, that
could result in damages or costs to Borrower or any Subsidiary, if any, of
$100,000 or more; and (v) budgets, sales projections, operating plans or other
financial information Bank requests.
(b) Within 30 days after the last day of each month, Borrower will
deliver to Bank with the monthly financial statements a Compliance Certificate
signed by a Responsible Officer in the form of Exhibit C.
6.3 INVENTORY; RETURNS. Borrower will keep all Inventory in good and marketable
condition, free from material defects. Returns and allowances between Borrower
and its account debtors will follow Borrower's customary practices as they exist
at the Closing Date. Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims that involve more than $50,000.
6.4 TAXES. Borrower will make, and cause each Subsidiary, if any, to make,
timely payment of all material federal, state, and local taxes or assessments
and will deliver to Bank, on demand, appropriate certificates attesting to the
payment.
6.5 INSURANCE. Borrower will keep its business and the Collateral insured for
risks and in amounts, as Bank requests. Insurance policies will be in a form,
with companies, and in amounts that are reasonably satisfactory to Bank. All
property policies will have a lender's loss payable endorsement showing Bank as
an additional loss payee
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and all liability policies will show the Bank as an additional insured and all
policies will provide that the insurer must give Bank at least 20 days notice
before canceling its policy. At Bank's request, Borrower will deliver certified
copies of policies and evidence of all premium payments. Subject to Section 6.8
(a) below, so long as no Event of Default has occurred and is continuing,
Borrower shall have the option of applying the proceeds of any casualty policy
to the replacement or repair of destroyed or damaged property; provided that,
after the occurrence and during the continuance of an Event of Default, all
proceeds payable under any such casualty policy shall, at the option of Bank, be
payable to Bank on account of the Obligations.
6.6 PRIMARY ACCOUNTS. Borrower will maintain its primary depository and
operating accounts with Bank.
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month, unless
otherwise noted:
(a) QUICK RATIO ADJUSTED. A ratio of Quick Assets to Current
Liabilities minus Deferred Revenue of at least 1.50 to 1.0. As used herein,
"Deferred Revenue" means customer deposits received in advance of performance
under customer contracts and not yet recognized as revenue.
(b) REVENUE. As of the last day of each calendar quarter,
Borrower will show revenue, measured on a backward rolling four quarter basis
(but looking back no further than the quarter ending June 30, 2000) of at least
eighty-five percent (85%) of the revenue projected by Borrower for such quarters
in its plan, as disclosed to the Bank prior to the Closing Date and attached
hereto as Exhibit E (the "Plan"), provided that any revenue in a given quarter
in excess of one hundred twenty percent (120%) of the amount projected in the
Plan for such quarter will be disregarded in calculating this covenant.
Borrower shall deliver to Bank, as of June 30 of each calendar
year, revenue projections for the following fiscal year which projections have
been approved by Borrower's Board of Directors.
(c) LIQUIDITY COVERAGE; DEBT SERVICE COVERAGE. A ratio of (i)
unrestricted cash (and equivalents) plus net billed accounts receivable
satisfactory to Bank to (ii) the aggregate amount of the outstanding Equipment
Advances which is at least (A) 1.25 to 1.0 before the Equity Event and (B) 1.75
to 1.0 after the Equity Event. Notwithstanding the foregoing, after Borrower has
maintained a ratio of earnings after tax plus depreciation and amortization for
the previous quarter on an annualized basis to current maturities of long term
debt and capitalized leases annualized ("Debt Service Coverage") of at least 2.0
to 1.0, for two consecutive quarters, Borrower thereafter shall maintain such
Debt Service Coverage of at least 2.00 to 1.00 as of the last day of each
quarter in lieu of the liquidity covenant. As used herein, "Equity Event" means
the receipt by Borrower after the Closing Date of cash proceeds from the sale or
issuance of its equity securities in an amount of not less than $5,000,000.
6.8 LOSS, DESTRUCTION, OR DAMAGE. Borrower will bear the risk of the Financed
Equipment being lost, stolen, destroyed, or damaged. If during the term of this
Agreement any item of Financed Equipment is lost, stolen, destroyed, damaged
beyond repair, rendered permanently unfit for use, or seized by a governmental
authority for any reason for a period equal to at least the remainder of the
term of this Agreement (an "Event of Loss"), then in each case, Borrower:
(a) prior to the occurrence of an Event of Default, at Borrower's
option, will (i) pay to Bank on account of the Obligations all accrued interest
to the date of the prepayment, plus all outstanding principal; or (ii) repair or
replace any Financed Equipment subject to an Event of Loss provided the repaired
or replaced Financed Equipment is of equal or like value to the Financed
Equipment subject to an Event of Loss and provided further that Bank has a first
priority perfected security interest in such repaired or replaced Financed
Equipment.
(b) during the continuance of an Event of Default, on or before the
Payment Date after such Event of Loss for each such item of Financed Equipment
subject to such Event of Loss, Borrower will, at Bank's option, pay to Bank an
amount equal to all outstanding principal and accrued interest (with respect to
such Equipment Advance related to the Event of Loss).
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(c) On the date of receipt by Bank of the amount specified above with
respect to each such item of Financed Equipment subject to an Event of Loss,
this Agreement shall terminate as to such Financed Equipment. If any proceeds of
insurance or awards received from governmental authorities are in excess of the
amount owed under this Section, Bank shall promptly remit to Borrower the amount
in excess of the amount owed to Bank.
6.9 FURTHER ASSURANCES. Borrower will execute any further instruments and take
further action as Bank requests to perfect or continue Bank's security interest
in the Collateral or to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS
Borrower will not do any of the following without the Bank's written
consent, which will not be unreasonably withheld:
7.1 EXTRAORDINARY TRANSACTIONS AND DISPOSAL OF ASSETS. Enter into any
transaction for the sale, lease, license or other disposition of, moving,
relocation, or transfer, whether by sale or otherwise, of Borrower's assets
outside of the ordinary course of Borrower's business.
7.2 RESTRUCTURE. Change Borrower's name; cause, permit, or suffer any material
change in Borrower's ownership (provided that raising additional equity in a
financing round or the sale of shares by any venture investor other than Boulder
Ventures or an affiliate thereof shall not be prohibited by this clause); or
suspend operation of Borrower's business.
7.3 CHIEF EXECUTIVE OFFICE; LOCATION OF COLLATERAL. During the continuance of
this Agreement, change the chief executive office or principal place of business
or remove or cause to be removed, except in the ordinary course of Borrower's
business, the Collateral or the records concerning the Collateral from the
premises listed on the first page of this Agreement or add any new offices or
business locations without thirty (30) days prior written notice to Bank.
7.4 ENCUMBRANCE. Create, incur, or allow any Lien on any of the Collateral, or
assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to Bank's first priority
security interest in the Collateral. Sell, transfer, assign, mortgage, pledge,
lease, grant a security interest in, or encumber any of its intellectual
property, except for licenses granted in the ordinary course of business.
7.5 COMPLIANCE. Undertake as one of its important activities extending credit to
purchase or carry margin stock, or use the proceeds of any Advance for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could have a material adverse effect on Borrower's
business or operations or cause a Material Adverse Change, or permit any of its
Subsidiaries to do so.
8. EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT. Borrower fails to pay any of the Obligations within 3 days
after their due date. During the additional period the failure to cure the
default is not an Event of Default (but no Credit Extensions will be made during
the cure period);
8.2 COVENANT DEFAULT. Borrower does not perform any obligation in Section 6 or
violates any covenant in Article 7 or does not perform or observe any other
material term, condition or covenant in this Agreement, any Loan Documents, or
in any agreement between Borrower and Bank and as to any default under a term,
condition or covenant that can be cured, has not cured the default within 10
days after it occurs, or if the default cannot be cured within 10 days or cannot
be cured after Borrower's attempts in the 10 day period, and the default may be
cured within a reasonable time, then Borrower has an additional time, (of not
more than 30 days) to attempt to cure the
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default. During the additional period the failure to cure the default is not an
Event of Default (but no Credit Extensions will be made during the cure period);
8.3 MATERIAL ADVERSE CHANGE. (i) A material impairment in the perfection or
priority of the Bank's security interest in the Collateral or in the value of
such Collateral which is not covered by adequate insurance occurs; (ii) a
material adverse change in the business, operations, or condition (financial or
otherwise) of the Borrower occurs; or (iii) a material impairment of the
prospect of repayment of any portion of the Obligations occurs;
8.4 ATTACHMENT. (i) Any material portion of Borrower's assets is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in 10 days; (ii) Borrower is
enjoined, restrained, or prevented by court order from conducting a material
part of its business; (iii) a judgment or other claim becomes a Lien on a
material portion of Borrower's assets; or (iv) a notice of lien, levy, or
assessment is filed against any of Borrower's assets by any government agency
and not paid within 10 days after Borrower receives notice. These are not Events
of Default if stayed or if a bond is posted pending contest by Borrower (but no
Credit Extensions will be made during the cure period);
8.5 INSOLVENCY. (i) Borrower becomes insolvent; (ii) Borrower begins an
Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun against
Borrower and not dismissed or stayed within 30 days (but no Credit Extensions
will be made before any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to which Borrower
is a party with a third party or parties resulting in a right by such third
party or parties, whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount in excess of Fifty Thousand Dollars ($50,000) or that
could have a Material Adverse Effect;
8.7 MISREPRESENTATIONS. If Borrower or any Person acting for Borrower makes any
material misrepresentation or material misstatement now or later in any warranty
or representation in this Agreement or in any communication delivered to Bank or
to induce Bank to enter this Agreement or any Loan Document.
8.8 JUDGMENTS. If a judgment or judgments for the payment of money in an amount,
individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000)
shall be rendered against Borrower and shall remain unsatisfied and unstayed for
a period of ten (10) days (provided that no Credit Extensions will be made prior
to the satisfaction or stay of such judgment).
9. BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. When an Event of Default occurs and continues Bank may,
without notice or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an
Event of Default described in Section 8.5 occurs all Obligations are immediately
due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit
under this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors
for amounts, on terms and in any order that Bank considers advisable;
(d) Make any payments and do any acts it considers necessary or
reasonable to protect its security interest in the Collateral. Borrower will
assemble the Collateral if Bank requests and make it available as Bank
designates. Bank may enter premises where the Collateral is located, take and
maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Bank a license to enter
and occupy any of its premises, without charge, to exercise any of Bank's rights
or remedies;
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(e) Apply to the Obligations any (i) balances and deposits of Borrower
it holds, or (ii) any amount held by Bank owing to or for the credit or the
account of Borrower;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral; and
(g) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY. When an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or ▇▇▇▇ of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.
9.3 ACCOUNTS COLLECTION. When an Event of Default occurs and continues, Bank may
notify any Person owing Borrower money of Bank's security interest in the funds
and verify the amount of the Account. Borrower must collect all payments in
trust for Bank and, if requested by Bank, immediately deliver the payments to
Bank in the form received from the account debtor, with proper endorsements for
deposit.
9.4 BANK EXPENSES. If Borrower fails to pay any amount or furnish any required
proof of payment to third persons Bank may make all or part of the payment or
obtain insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
9.5 BANK'S LIABILITY FOR COLLATERAL. If Bank complies with reasonable banking
practices, it is not liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the
value of the Collateral; or (d) any act or default of any carrier, warehouseman,
bailee, or other person. If Bank complies with reasonable banking practices,
Borrower bears all risk of loss, damage or destruction of the Collateral.
9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this Agreement, the
Loan Documents, and all other agreements are cumulative. Bank has all rights and
remedies provided under the Code, by law, or in equity. Bank's exercise of one
right or remedy is not an election, and Bank's waiver of any Event of Default is
not a continuing waiver. Bank's delay is not a waiver, election, or
acquiescence. No waiver is effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it was given.
9.7 DEMAND WAIVER. Borrower waives demand, notice of default or dishonor, notice
of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guaranties held by Bank on which Borrower is
liable.
10. NOTICES
All notices or demands by any party to this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile at the addresses listed at the beginning of this
Agreement. A Party may change its notice address by giving the other Party
written notice.
8
10
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
California law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa ▇▇▇▇▇ County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or Obligations under it without Bank's prior written
consent which may be granted or withheld in Bank's discretion. Bank has the
right, without the consent of or notice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits under this Agreement, the Loan Documents
or any related agreement.
12.2 INDEMNIFICATION. Borrower will indemnify, defend and hold harmless Bank and
its officers, employees and agents against: (a) all obligations, demands,
claims, and liabilities asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or Bank
Expenses incurred, or paid by Bank from, following, or consequential to
transactions between Bank and Borrower (including reasonable attorneys' fees and
expenses), except for losses caused by Bank's gross negligence or willful
misconduct.
12.3 TIME OF ESSENCE. Time is of the essence for the performance of all
Obligations in this Agreement.
12.4 SEVERABILITY OF PROVISION. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION. All amendments to this Agreement must
be in writing signed by both Bank and Borrower. This Agreement and the Loan
Documents represent the entire agreement about this subject matter, and
supersedes prior or contemporaneous negotiations or agreements. All prior or
contemporaneous agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of this Agreement and
the Loan Documents merge into this Agreement and the Loan Documents.
12.6 COUNTERPARTS. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, are an original, and all taken together, are one Agreement.
12.7 SURVIVAL. All covenants, representations and warranties made in this
Agreement continue in full force while any Obligations remain outstanding. The
obligations of Borrower in Section 12.2 to indemnify Bank will survive until all
statutes of limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY. In handling any confidential information, Bank will
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Bank's
subsidiaries or affiliates in connection with their present or prospective
business relations with Borrower; (ii) to prospective transferees or purchasers
of any interest in the Loans; (iii) as required by law, regulation, subpoena, or
other order, (iv) as required in connection with Bank's examination or audit;
and (v) as Bank considers appropriate in exercising remedies under this
Agreement. Confidential information does not include information that either:
(a) is in the public domain or in Bank's possession when disclosed to Bank, or
becomes part of the public domain after disclosure to Bank; or (b) is disclosed
to Bank by a third party, if Bank does not know that the third party is
prohibited from disclosing the information.
9
11
12.9 ATTORNEYS' FEES, COSTS AND EXPENSES. In any action or proceeding between
Borrower and Bank arising out of the Loan Documents, the prevailing party will
be entitled to recover its reasonable attorneys' fees and other costs and
expenses incurred, in addition to any other relief to which it may be entitled,
whether or not a lawsuit is filed.
13. DEFINITIONS
13.1 DEFINITIONS.
"ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs or
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the California Uniform Commercial Code.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to $4,000,000.
"COMMITMENT TERMINATION DATE" is May 17, 2001.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"CREDIT EXTENSION" is each Equipment Advance or any other extension of
credit by Bank for Borrower's benefit.
10
12
"CURRENT LIABILITIES" means the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year.
"EBITDA" means, for any period of determination, the net income (or net
loss, expressed as a negative number) of Borrower for such period, plus each of
the following items, without duplication: (i) all federal and state income taxes
(but not ad valorem property taxes, sales taxes or taxes in the nature of an
excise tax) paid by Borrower with respect to such period, and (ii) all
depreciation, amortization, or interest on any Indebtedness paid or accrued
during such period and actually deducted on the books of the Borrower for the
purposes of computation of such net income (or net loss) for the period
involved.
"ELIGIBLE EQUIPMENT" is general purpose computer equipment, office
equipment, test and laboratory equipment, leasehold improvements, and
furnishings, all of which must comply with all of Borrower's representations and
warranties to Bank and be acceptable to Bank in all respects. All Equipment
financed with the proceeds of Equipment Advances shall be new, provided that
Bank, in its sole discretion, may finance used equipment upon request by
Borrower.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.1.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"FINANCED EQUIPMENT" is defined in the Loan Supplement.
"FUNDING DATE" is any date on which an Equipment Advance is made to or
on account of Borrower.
"GAAP" is generally accepted accounting principles.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INSOLVENCY PROCEEDING" is any proceeding by or against any Person
under the United States Bankruptcy Code, or any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, compositions,
extensions generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN AMOUNT" is the aggregate amount of the Equipment Advance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.
11
13
"LOAN SUPPLEMENT" is attached as Exhibit D.
"MAKE-WHOLE PREMIUM" is an amount equal to (i) 2% of the outstanding
Equipment Advances if the prepayment is made on or before the first anniversary
of the date hereof, or (ii) 1% of the outstanding Equipment Advances if the
prepayment is made after the first anniversary of the date hereof but on or
before the second anniversary of the date hereof, or (iii) zero (0) if the
prepayment is made after the second anniversary of the date hereof.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"MATURITY DATE" is, with respect to each Equipment Advance, the last
day of the Repayment Period for such Equipment Advance, or if earlier, the date
of acceleration of such Equipment Advance by Bank following an Event of Default.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit and foreign
exchange contracts, if any, and including interest accruing after Insolvency
Proceedings begin and debts, liabilities, or obligations of Borrower assigned to
Bank.
"ORIGINAL STATED COST" is (i), the original cost to the Borrower of the
item of new Equipment net of any and all freight, installation, tax or (ii) the
fair market value assigned to such item of used Equipment by mutual agreement of
Borrower and Bank at the time of making of the Equipment Advance.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement or the Loan
Documents;
(b) Indebtedness existing on the Closing Date and shown on the
Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary course of
business; and
(e) Indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Closing Date;
and
(b) (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., and (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
12
14
(d) Leases or subleases and licenses or sublicenses granted in the
ordinary course of Borrower's business, if the leases, subleases, licenses and
sublicenses permit granting Bank a security interest; and
(e) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.
"QUICK ASSETS" is, on any date, the Borrower's consolidated,
unrestricted cash, cash equivalents, net billed accounts receivable and
investments with maturities of less than 12 months determined according to GAAP.
"REPAYMENT PERIOD" as to the Equipment Advances, is 36 months.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (and identified as subordinated by Borrower and Bank).
"SUBSIDIARY" is for any Person, joint venture, or any other business
entity of which more than 50% of the voting stock or other equity interests is
owned or controlled, directly or indirectly, by the Person or one or more
Affiliates of the Person.
13
15
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
BORROWER:
ARRAY BIOPHARMA INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------
Title: CFO
------------------
SILICON VALLEY BANK
By: /s/
---------------------
Title: VP
------------------
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EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest
in and to the following:
All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located.
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, leases, license agreements,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, infringements, claims, computer programs, computer discs, computer
tapes, literature, reports, catalogs, design rights, income tax refunds,
payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing; and
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.
Notwithstanding the foregoing, the Collateral shall not be deemed to
include any copyrights, copyright applications, copyright registration and like
protection in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; any patents, patent
applications and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same, trademarks, servicemarks and applications
therefor, whether registered or not, and the goodwill of the business of
Borrower connected with and symbolized by such trademarks, any trade secret
rights, including any rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; or any claims for damage by way of any past, present and
future infringement of any of the foregoing (collectively, the "Intellectual
Property"), except that the Collateral shall include the proceeds of all the
Intellectual Property that are accounts, (i.e. accounts receivable) of Borrower,
or general intangibles consisting of rights to payment, if a judicial authority
(including a U.S. Bankruptcy Court) holds that a security interest in the
underlying Intellectual Property is necessary to have a security interest in
such accounts and general intangibles of Borrower that are proceeds of the
Intellectual Property, then the Collateral shall automatically, and effective as
of the Closing Date, include the Intellectual Property to the extent necessary
to permit perfection of Bank's security interest in such accounts and general
intangibles of Borrower that are proceeds of the Intellectual Property.
15
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EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: CENTRAL CLIENT DIVISION DATE:
--------
FAX #: (▇▇▇) ▇▇▇-▇▇▇▇ TIME:
--------
--------------------------------------------------------------------------------
FROM: Array BioPharma Inc.
--------------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
------------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
----------------------------------------------------------
PHONE NUMBER:
------------------------------------------------------------------
FROM ACCOUNT # TO ACCOUNT #
------------------------- -------------------------
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
$
---------------------------------------------
PRINCIPAL INCREASE (ADVANCE) $
---------------------------------------------
PRINCIPAL PAYMENT (ONLY) $
---------------------------------------------
INTEREST PAYMENT (ONLY) $
---------------------------------------------
PRINCIPAL AND INTEREST (PAYMENT) $
---------------------------------------------
OTHER INSTRUCTIONS:
------------------------------------------------------------
--------------------------------------------------------------------------------
All representations and warranties of Borrower stated in the Loan and
Security Agreement are true, correct and complete in all material respects as of
the date of the telephone request for an Advance confirmed by this Borrowing
Certificate; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BANK USE ONLY
TELEPHONE REQUEST:
------------------
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
------------------------------------------------- -----------------------------
Authorized Requester Phone #
------------------------------------------------- -----------------------------
Received By (Bank) Phone #
------------------------------------
Authorized Signature (Bank)
--------------------------------------------------------------------------------
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EXHIBIT C
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ARRAY BIOPHARMA INC.
The undersigned authorized officer of Array BioPharma Inc. certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for
the period ending _______________ with all required covenants except as noted
below and (ii) all representations and warranties in the Agreement are true and
correct in all material respects on this date. Attached are the required
documents supporting the certification. The Officer certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP)
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The Officer acknowledges that no borrowings
may be requested at any time or date of determination that Borrower is not in
compliance with any of the terms of the Agreement, and that compliance is
determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
Monthly financial statements Monthly within 30 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
10-Q, 10K and 8-K Within 5 days after filing with SEC Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
Maintain on a Monthly Basis:
Minimum Adjusted Quick Ratio 1.5:1.0 _____:1.0 Yes No
Minimum Debt Service* 2.0:1.0 _____:1.0 Yes No
Liquidity **
Quarterly Revenue 85% of Plan*** $________ Yes No
*Debt Service Coverage replaces Liquidity after 2 consecutive quarters of
DSC>.00:1.00
**1.25 before $5MM new equity. 1.75 thereafter.
***As of the last day of each quarter, Borrower will show revenue, measured on a
backward rolling four quarter basis (but looking back no further than the
quarter ending June 30, 2000) of at least eighty-five percent (85%) of the
revenue projected by Borrower for such quarters in its plan, as disclosed to the
Bank prior to the Closing Date and attached hereto as Exhibit E (the "Plan"),
provided that any revenue in a given quarter in excess of one hundred twenty
percent (120%) of the amount projected in the Plan for such quarter will be
disregarded in calculating this covenant.
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
--------------------------------------------
SIGNATURE
--------------------------------------------
TITLE
--------------------------------------------
DATE
--------------------------------------------------------------------------------
BANK USE ONLY
Received by:
-------------------------------
AUTHORIZED SIGNER
Date:
--------------------------------------
Verified:
----------------------------------
AUTHORIZED SIGNER
Date:
--------------------------------------
Compliance Status Yes No
--------------------------------------------------------------------------------
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EXHIBIT D
FORM OF LOAN AGREEMENT SUPPLEMENT
LOAN AGREEMENT SUPPLEMENT No. [__]
LOAN AGREEMENT SUPPLEMENT No. [ ], dated ______________, 200___
("Supplement"), to the Loan and Security Agreement dated as of May 17, 2000 (the
"Loan Agreement) by and between the undersigned ("Borrower"), and Silicon Valley
Bank ("Bank").
Capitalized terms used herein but not otherwise defined herein are used
with the respective meanings given to such terms in the Loan Agreement.
To secure the prompt payment by Borrower of all amounts from time to
time outstanding under the Loan Agreement, and the performance by Borrower of
all the terms contained in the Loan Agreement, Borrower grants Bank, a first
priority security interest in each item of equipment and other property
described in Annex A hereto, which equipment and other property shall be deemed
to be additional Financed Equipment and Collateral. The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are
attached hereto.
The proceeds of the Loan should be transferred to Borrower's account
with Bank set forth below:
Bank Name: Silicon Valley Bank
Account No.:
-------------------
Borrower hereby certifies that (a) the foregoing information is true
and correct and authorizes Bank to endorse in its respective books and records;
(b) the representations and warranties made by Borrower in the Loan Agreement
are true and correct on the date hereof and will be true and correct on such
Funding Date. No Event of Default has occurred and is continuing under the Loan
Agreement. This Supplement may be executed by Borrower and Bank in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
This Supplement is delivered as of this day and year first above
written.
SILICON VALLEY BANK ARRAY BIOPHARMA INC.
By: By:
-------------------------------- ---------------------------------
Name: Name:
------------------------------ -------------------------------
Title: Title:
----------------------------- ------------------------------
Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule
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Annex A to Exhibit D
The Financed Equipment being financed with the Equipment Advance which
this Loan Agreement Supplement is being executed is listed below. Upon the
funding of such Equipment Advance, this schedule automatically shall be deemed
to be a part of the Collateral.
Description of Equipment Make ▇▇▇▇▇ ▇▇▇▇▇▇ # ▇▇▇▇▇▇▇ #
▇▇
▇▇
Annex B to Exhibit D
LOAN TERMS SCHEDULE #
--------
Loan Funding Date: , 200
------------ --
Original Loan Amount: $
------------
Scheduled Principal Payment Dates and Amounts*:
One (1) payment of $ due
------- --------------
payment of $ due monthly in advance from through .
----- ------ ----- -----
One (1) payment of $ due
------- --------------
Maturity Date:
------------
Payment No. Payment Date
1
2
3
4
. . .
35
[36]
. . .
*/ The amount of each Scheduled Principal Payment will change as the Loan Amount
changes.
Please note that this Loan has a floating interest rate.
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22
EXHIBIT E
BORROWER'S PLAN