BENEFIT LIFE INSURANCE COMPANY
LOAN AGREEMENT
This agreement (herein referred to as the "Loan Agreement") is between
Benefit Life Insurance Company (herein referred to as "Lender" also referred to
variously in documents executed contemporaneously herewith as "Secured Party"
and "Mortgagee"); Gemini Biotech, Ltd., a Texas Limited Partnership (hereinafter
"Gemini"); Delargen Corporation, a Texas Corporation sometimes doing business as
Gemini Biotech, Inc. (hereinafter "Delargen") (Gemini and Delargen are herein
jointly and severally called "Borrower" and variously referred to in documents
executed contemporaneously herewith as "Debtor," or "Maker"); and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (herein sometimes called "Guarantors").
Subject to and upon the terms, conditions, covenants, representations,
warranties and agreements contained herein, and provided further that no Default
(hereinafter defined) exists hereunder or under any term or provision of the
Loan Documents (as defined herein), Lender agrees to lend Borrower One Million
Three Hundred Fifteen Thousand and No/100 U.S. Dollars ($1,315,000.00) (the
"Loan") evidenced by the Note attached hereto as Exhibit "A" and incorporated
herein by reference as if fully set forth at length, in the principal amount of
One Million Three Hundred Fifteen Thousand and No/100 U.S. Dollars
($1,315,000.00), to be executed by Borrower and made payable to the order of
Lender. All renewals, extensions, modifications and rearrangements of the Note,
if any, shall be deemed to have been made pursuant to this Loan Agreement and
accordingly, shall be subject to the terms, conditions and provisions hereof,
and Borrower shall be deemed to have ratified, as of the date of such renewal,
extension, modification or rearrangement, all the terms, conditions, covenants,
representations, warranties, and agreements set forth herein.
Article - Definitions
Throughout this Loan Agreement and throughout all of the Loan
Documents, the terms below shall have the respective meanings set out opposite
each term.
a. "Automatic Default" shall have the meaning set out in
Article 7.2.
b. "Borrower" shall mean, Gemini Biotech, Ltd., a Texas
Limited Partnership, and Delargen Corporation, a Texas
Corporation sometimes doing business as Gemini
Biotech, Inc., jointly and severally.
c. "Collateral" shall have the meaning set out in
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Article 6.1.
d. "Debtor" shall mean Gemini Biotech, Ltd., a Texas
Limited Partnership, and Delargen Corporation, a Texas
Corporation sometimes doing business as Gemini
Biotech, Inc., jointly and severally.
e. "Default" shall have the meaning set out in Article
7.1.
f. "Equipment" shall include machinery and shall have the
broadest meaning of that term under the Texas Business
and Commerce Code and shall further include anything
and everything set out in Article 6.1 D.
g. "General Partner" shall mean , and Delargen
Corporation, a Texas Corporation sometimes doing
business as Gemini Biotech, Inc., which is the sole
general partner of Gemini Biotech, Ltd.
h. "Guarantors" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, individually and jointly.
i. "Holder" shall mean the Lender or any subsequent
holder of the Note including any successors and
assigns.
j. "Indebtedness" shall mean:
i. Any and all sums, including
principal, interest, expenses,
Prepayment Consideration (as defined
in the Note), court costs and
attorneys' fees, called for in the
Note in the principal amount of One
Million Three Hundred Fifteen
Thousand and No/100 U.S. Dollars
($1,315,000.00) bearing a variable
rate of Interest beginning at Ten
and One Half Percent (10.50%) and
being adjusted quarterly to a rate
of Two Percent (2.0%) per annum over
the "Prime Rate" as published by The
Wall Street Journal under the
section entitled "Money Rates,"
subtitled "Prime Rate," adjusted on
a quarterly basis, as more fully set
out in the Note, and being due and
payable as therein stated, at the
address listed therein for Lender or
elsewhere as the Lender or Holder
may direct, containing provisions
for acceleration of maturity and the
collection of
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attorneys' fees, reference to the
Note being here made for all
purposes; the scheduled maturity
date of the Note being Nine (9)
years after date of execution. The
Note shall be amortized so that
Eight Hundred Six Thousand and
No/100 U.S. Dollars ($806,000.00) of
the Loan proceeds dedicated for
working capital will be repaid
within seven (7) years of the date
of the execution of the Note and so
that Five Hundred Nine Thousand and
No/100 U.S. Dollars ($509,000.00) of
the Loan proceeds dedicated for
leasehold improvements, machinery,
equipment, and debt refinancing
shall be fully repaid within nine
(9) years of the date of the
execution of the Note.
ii. All sums, including principal,
interest, expenses, court costs,
reasonable attorneys' fees, and
Prepayment Consideration, if any,
called for in any note or other
instrument representing, in whole or
in part, a renewal, extension,
modification or rearrangement of the
Indebtedness; it being agreed,
however, that Lender is under no
obligation to renew, extend or
rearrange said Indebtedness.
iii. All sums and/or obligations owing by
Borrower to Lender or Holder of any
part of the Indebtedness pursuant to
the terms and provisions of any Loan
Documents.
iv. All other debts of every kind and
character now or hereafter owing by
Borrower to the Lender whether such
debts be evidenced by written
instrument or not and whether they
be direct obligations arising out of
a guaranty, endorsement suretyship
or otherwise, or whether they be
joint, several or indirect, and
whether they were heretofore or are
hereafter purchased or otherwise
acquired.
v. Any and all renewals, extensions, or
rearrangements of the above.
k. "Land" shall have the meaning set out in Article
6.1 A. 1.
l. "Lease" shall have the meaning set out in Article
6.1 A. 1.
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m. "Lender" shall mean Benefit Life Insurance Company and
any successors and assigns.
n. "Limited Partnership Agreement" shall mean the limited
partnership agreement of Gemini Biotech, Inc.
o. "Loan" shall mean the One Million Three Hundred
Fifteen Thousand and No/100 U.S. Dollars
($1,315,000.00) loan made the subject of the Loan
Documents.
p. "Loan Documents" shall mean all instruments of even
date including without limitation: this Loan Agreement
(the "Loan Agreement"); Note in the principal amount
of One Million Three Hundred Fifteen Thousand and
No/100 U.S. Dollars ($1,315,000.00) (Adjustable Rate
Note) (the "Note"); Deed of Trust, Security Agreement
and Fixtures Financing Statement (Commercial) (the
"Deed of Trust"); Security Agreement of Gemini (the
"Gemini Security Agreement"); Security Agreement of
Delargen (the "Delargen Security Agreement"); Guaranty
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Guaranty"); Guaranty of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the
"▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Guaranty"); Affidavit of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ (the "Affidavit"); Certificate of Limited
Partnership (the "Limited Partnership Resolution");
Certificate of Corporate Resolution of Delargen (the
"Certificate of Corporate Resolution"); Document
Correction Agreement (the "Document Correction
Agreement"); Notice of No Oral Agreements (the "Notice
of No Oral Agreements"); Attorney Representation
Notice (the "Attorney Representation Notice"); UCC-1
Financing Statements, and any modifications or
amendments to the Loan Documents as allowed under the
provisions of the Loan Documents, together with all
other security instruments, documents, instruments and
papers of any nature executed in conjunction with the
Loan Agreement and the Note.
q. "Loan Note Guarantee" shall mean a fully executed Form
FmHA 4279-5 wherein RBS guarantees eighty (80%)
percent of the value of the Note.
r. "Maker" shall mean the Borrower.
s. "Mortgagee" shall mean the Lender.
t. "Mortgagor" shall mean Gemini Biotech, Ltd.
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u. "Prepayment Consideration" shall have the meaning
as set out in the Note.
v. "Properties" shall have the meaning as set out in
Article 6.1 A. 3.
w. "RBS" shall mean the United States Department of
Agriculture Rural Business-Cooperative Services, its
successors and assigns.
x. "Secured Party" shall mean the Lender.
y. "Specified Courts" shall have the meaning set out in
Article 8.12.
z. "USDA" shall mean the United States Department of
Agriculture.
aa. "Usurious Interest" shall mean contracting for,
charging or receiving interest, as defined under
the applicable usury laws, in excess of the maximum
nonusurious rate provided by law.
Article - Conditions Precedent for Making Loan
The obligation of Lender to make and/or fund the Loan, or any portion
of the Loan regardless of the time and regardless if a portion of the loan
proceeds has already been funded, is subject to all of the following conditions
precedent being performed to the satisfaction of Lender and Lender's legal
counsel:
bb. Authorization. Gemini furnishing Lender appropriate
written authority of Gemini authorizing the General
Partner to enter into all of the transactions
contemplated in the Loan Documents on behalf of
Gemini. Delargen furnishing Lender a Corporate
Resolution authorizing Delargen to enter into all of
the transactions contemplated in the Loan Documents;
cc. Documents. Borrower furnishing all requested
documents requested and required by Lender or
Lender's Counsel;
dd. Compliance with Covenants. Borrower has performed
or complied with all of the covenants (both
affirmative and negative) and agreements required
in the Loan Documents;
ee. No Default. No Default and no condition or event
which, with the giving of notice or lapse of time
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or both, would become a Default, shall have
occurred or if it has occurred will be continuing;
ff. Accuracy of Representations and Warranties. The
representations and warranties contained in all of
the Loan Documents are true and correct in all
material respects;
gg. Taxes and Tax Returns. All applicable federal,
state and local tax returns and reports as required
have been duly filed by Borrower and Guarantors and
all federal, state and local taxes, assessments and
other governmental charges imposed upon Borrower
and Guarantors or their respective assets, which
are due and payable, have been paid;
hh. Other Agreements of Borrower. The execution and
delivery of the Loan Documents and compliance with
the provisions thereof under the circumstances
contemplated thereby did not, do not and will not
in any material respect conflict with, constitute
default under, or contravene any contract or
agreement or other instrument to which the Borrower
is a party or any existing law, regulation, court
order, or consent decree or device to which the
Borrower is subject;
ii. Consent. All necessary consents, approvals, or
authorizations of any governmental agency or
regulatory authority or of partners, whether
general or limited, which are necessary have been
obtained. The improvements and the use of the
property comply in all respects with all federal,
state, and local laws applicable thereto;
jj. Litigation. There are no actions, suits or
proceedings pending or, to the best of its
knowledge, threatened before any court or
administrative agency against Borrower or
Guarantors which could materially adversely affect
the financial condition and operations of Borrower.
kk. Liens. There are no liens of any nature whatsoever
filed against the property of Borrower or
Guarantors, by any governmental taxing authority
or any third party.
ll. Affidavit. Lender being provided an Affidavit of
even date herewith signed by the President of the
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General Partner stating that the conditions precedent
set forth in paragraphs 2.3 through 2.10 above have
been performed by Borrower and Guarantors.
mm. Opinion of Borrower's Counsel. The opinion of
legal counsel for the Borrower and each Guarantor
addressed to Lender, Lender's counsel and the RBS
stating the opinions as set out in attached
Exhibit "B" and in a form acceptable to Lender and
RBS.
nn. Summary of Claims. Borrower provides Lender a list
and summary of all pending or threatened litigation
against Borrower or the Guarantors certified to by
the President of the General Partner.
oo. No Material Change in Financial Condition.
Evidence, satisfactory to Lender, that there has
been no material deterioration in the Borrower's
financial condition since the issuance of the Form
FmHA 449-14 Conditional Commitment for Guarantee.
pp. Minimum Balance Sheet Equity. Evidence,
satisfactory to Lender, that Gemini has a minimum
of Twenty Percent (20%) tangible balance sheet
equity.
qq. Guarantee Fee. Borrower shall pay a guarantee fee
in the amount of Twenty-One Thousand Forty and
No/100 U.S. Dollars ($21,040.00) to the RBS at or
prior to the Closing.
rr. Guaranty. The absolute and unconditional guaranty
of payment by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇.
ss. Feasibility Study. Gemini agrees to provide a
complete professionally prepared feasibility study
to Lender prior to first disbursement of loan
proceeds if so required by the RBS.
tt. RBS Forms. A fully executed Loan Note Guarantee
(Form 4279-5) in an amount equal to One Million
Fifty-Two Thousand and No/100 Dollars
($1,052,000.00) from the RBS, a fully executed
Assignment Agreement (Form 4279-6), a fully
executed Certificate of Incumbency (Form 4279-7),
and a fully executed Lender's Agreement (Form
4279-4).
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uu. Conditional Commitment for Guarantee Terms Met.
The satisfaction of all terms and conditions in the
Conditional Commitment for Guarantee USDA RBS Form
4279-3.
vv. Appraisals. Prior to loan closing, current
appraisals prepared by general certified appraisers
acceptable to Lender are to be submitted to the
Lender and RBS. Prior to the loan closing,
Borrower shall submit an acceptable appraisal of
Borrower's inventory verifying the inventory
appraisal provided by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D. of
Aronex Pharmaceuticals, Inc., on September 3, 1996.
ww. Environmental Assessment. Borrower shall provide
Lender a Phase I Environmental Assessment on the
Land, Lease, Improvements and Properties dated no
earlier than sixty (60) days prior to the day of
Closing of the Loan if required by Lender and/or
RBS. In the event that the Phase I Environmental
Assessment results in a recommendation of further
environmental assessments (Phase II, Phase III or
other) on the Land, Lease, Improvements and
Properties or in a recommendation of remedial
environmental action on the Land, Lease,
Improvements or Properties, Borrower shall take
such further assessment and remedial action prior
to the Closing of the Loan as required by and to
the full satisfaction of the Lender and RBS.
Gemini shall publish all notices regarding the
environmental impact for Gemini and take all other
action required of it set forth in the letter dated
May 28, 1997 from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. of Rural
Development in Huntsville, Texas to Gemini.
xx. Packaging Fees. Borrower shall pay a packaging fee
in the amount of Thirteen Thousand One Hundred
Fifty and No/100 U.S. Dollars ($13,150.00) to
Lender's Guaranty, Inc. at or prior to the closing
of the Loan.
yy. Citizenship. Proof acceptable to Lender that
Borrower and its General Partner are at least
fifty-one (51%) owned by persons who are either
citizens of the United States or reside in the
United States after being legally admitted for
permanent residence.
Page 8
zz. Landlord's Consent. Borrower shall provide to
Lender a consent from any and all relevant
landlords wherein the landlords subordinate any
Landlords' liens to Lender's lien of Borrower's
property, consent to the assumption of the lease by
Lender, notice of default of lease agreements to
Lender and consent to assignment of Lender.
Article - Affirmative Covenants
During the term of this Loan Agreement, and until payment in full of
the Note and payment in full of and fulfillment of all Indebtedness (unless full
compliance with any of the following provisions has been waived in writing,
signed by both Lender and Borrower or Guarantors, as the case may be), Lender,
Borrower and Guarantors agree as follows:
aaa. Use of Loan Proceeds. The proceeds of the Note shall be
used by Gemini as follows:
i. approximately Seventy Thousand and No/100
U.S. Dollars ($70,000.00) for debt
refinancing;
ii. approximately Ninety Thousand and No/100
U.S. Dollars ($90,000.00) for construction
of leasehold improvements;
iii. approximately Eight Hundred Six Thousand U.
S. Dollars ($806,000.00) for working
capital; and
iv. approximately Three Hundred Forty-Nine
Thousand and No/100 U. S. Dollars
($349,000.00) for machinery and equipment.
No part of the proceeds received by Gemini hereunder will be
used, directly or indirectly, for the purpose of purchasing or
carrying, or the payment in whole or in part, of indebtedness
which was incurred for the purpose of purchasing or carrying,
any margin stock, as such term is defined in Section 221.3 of
Regulation U of the Board of Governors of the Federal Reserve
Systems, 12 C.F.R, Part 221. No part of the proceeds received
by Borrower hereunder will be used for any purpose which
violates Regulation X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Part 224. All loans evidenced by
the Note are and shall be "business loans" as such terms is
used in the Depository Institutions Regulation and Monetary
Control Act of 1980, as amended, and such loans are for
business, commercial, investment or other similar purposes and
not primarily for personal, family, household or agricultural
use, as such terms are used in
Page 9
Chapter One of the Texas Credit Code.
bbb. Documents to Provide Lender. Without request by
Lender, unless otherwise indicated, Borrower and
Guarantors agree to furnish Lender with true,
correct and complete copies of the following
documents and instruments:
i. Annual Financial Statements of Borrower and
Guarantor. Within one hundred twenty (120)
days after the end of each fiscal year of
Gemini, Gemini's annual audited financial
statements with supporting schedules and
written opinion (including the business
balance sheet and income statement and any
supporting documents for the period covered)
that specifically include all accrued
adjustments, and which is prepared in
conformity with generally accepted
accounting principles applied on a
consistent basis and certified by an
independent certified public accountant
satisfactory to Lender. An audited annual
profit and loss statement will also be
provided which will include the year-to-date
profit and loss showing the result of
operations for the fiscal year, a
reconciliation of surplus and the auditor's
notes. Gemini agrees to promptly provide any
other financial information requested by the
RBS or as may be reasonably requested by
Lender. Lender does not require an
unqualified audit opinion as a result of the
audit. An acceptable audit will be performed
in accordance with generally accepted
auditing standards and include such tests of
the accounting records as the auditor
considers necessary in order to express an
opinion on the financial condition of
Gemini. Delargen and Guarantors agree to
furnish the Lender a current annual balance
sheet within ninety (90) days after the end
of each fiscal year of Borrower. The balance
sheets to be provided by Delargen and
Guarantors need not be audited. Delargen
agrees to provide Lender an annual profit
and loss statement showing the result of
operations for the fiscal year and any other
financial information requested by RBS or
the Lender.
ii. Quarterly Financial Statements of Gemini.
Within thirty (30) days after the end of
each
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quarterly period prior to the full payment
of the Note, quarterly year-to-date
financial statements of Gemini (consisting
of at least a consolidated balance sheet and
profit and loss statement for the quarter
then ended, along with aging of accounts
receivable and accounts payable, and any
supporting statements for the period then
ended) internally prepared as of the end of
such applicable month, prepared in
accordance with generally accepted
accounting principles, and certified by the
President of the General Partner.
iii. Income, Franchise, and Payroll Tax Returns.
Within ten (10) days after the filing of
same, Borrower and Guarantors shall furnish
Lender a true, correct and complete copy of
the signed and dated U.S. federal and state
income tax returns, if any, of Borrower and
Guarantors, state franchise tax returns and
sales tax returns of Borrower and quarterly,
state and federal payroll returns for the
immediately preceding fiscal year then
ended.
iv. Other Financial Information. Such other
financial and other information concerning
Borrower and Guarantors as Lender shall
reasonably request from time to time,
including without limitation updated
appraisals on real estate, equipment or
chattel property within ninety (90) days
from the date Lender requests such
appraisals.
v. Proof of Payment of Taxes. Upon request of
Lender evidence of payment and discharge of
all taxes, assessments and governmental
charges or levies imposed on Borrower,
Guarantor, their income or profits, on any
of the Collateral, or on any of their
property prior to the date on which
penalties or liens attach thereto, provided,
however, Borrower shall not be required to
pay any such tax, assessment, charge, levy
or claim the payment of which is being
contested in good faith and by proper
proceedings and against which Borrower, or
Guarantor as the case may be, has set up
adequate reserves in accordance with
generally accepted accounting principles.
vi. Notice of Claims. Prompt notice of all
claims, actions or litigation, including
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without limitation all proceedings before
any governmental or regulatory agencies
affecting Borrower, Guarantors, or the
Collateral except litigation or proceedings
not materially affecting the financial
condition of Borrower or Guarantors and the
occurrence of any Default hereunder.
vii. Current Financial Statements. Prior to
closing, current financial statements of the
Borrower and Guarantor, dated no more than
sixty (60) days prior to the Closing.
ccc. Maintain Debt to Equity Ratio and Stock Ownership. Borrower
expressly covenants and agrees that from the date of this Loan
Agreement until payment in full of the Note and payment in
full and fulfillment of all Indebtedness, unless Lender shall
otherwise consent in writing, of Gemini shall:
i. Maintain at all times a ratio of total debt
to tangible net worth not exceeding four to
one. As used herein, the term "total debt"
shall mean liabilities as determined in
accordance with generally accepted
accounting principles consistently applied
but all debt of Gemini which is expressly
subordinated to Lender shall not be
included.
ii. Continue the same ownership in of Gemini and
continue to be a limited partnership under
the laws of the State of Texas, and continue
to be duly licensed or qualified as a
foreign limited partnership in all
jurisdictions wherein the property owned or
leased by it, or the nature of the business
transacted by it makes licensing or
qualification necessary as a foreign limited
partnership.
iii. Continue the same ownership in the General
Partner, and the General Partner shall
continue to be an active corporation validly
existing and in good standing under the laws
of the State of Texas and continue to be
duly licensed or qualified as a foreign
corporation in all jurisdictions wherein the
property owned or leased by it, or the
nature of the business transacted by it
makes licensing or
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qualification necessary as a foreign
corporation.
ddd. Equal Opportunity Laws. Borrower will comply with all equal
opportunity and nondiscrimination requirements as more fully
set out in FmHA Instruction 1980A Section 1980.41.
eee. Clean Air Act. Borrower will comply with all Clean Air Act and
Water Pollution Control Act requirements as more fully set out
in FmHA Instruction 1980A Section 1980.43.
fff. Special Laws and Regulations. Borrower will comply with all
special laws and regulations as required by FmHA Instruction
1980A Section 1980.45.
ggg. Cultural Materials. If cultural materials are encountered
during any construction, work must cease in the immediate
area. Work can continue in the project area where no cultural
materials are present. The Secretary of Interior, (202)
342-1407 must be contacted in accordance with 36 CFR 8007. The
State Historic Preservation Officer (▇▇▇) ▇▇▇▇▇▇▇ must also be
notified.
hhh. Americans with Disabilities Act. Any improvements will be in
compliance with The Americans with Disabilities Act which
became effective January 26, 1992.
iii. Compliance with Governmental Agencies. Borrower must comply
with all regulations, orders or requirements of city, state
and federal regulatory agencies.
jjj. Worker's Compensation. Borrower will maintain and be covered
by worker's compensation insurance as required by the laws of
the State of Texas.
kkk. Place of Use of Loan Proceeds. All guaranteed loan funds are
to be utilized in connection with the Borrower's facility
located at The Woodlands, Texas.
lll. Prohibition on Disbursement of Loan Proceeds. The Loan
Proceeds will not be disbursed to the owner(s), general
partners, limited partners, stockholders or beneficiaries of
the Borrower or members of their families when such persons
will retain any portion of the equity in the Borrower.
Page 13
mmm. Lender's Right to Defend. If the validity or priority of the
Loan Documents or any rights, security interests or other
interests created or evidenced hereby shall be attacked,
endangered or questioned or if any legal proceedings are
instituted with respect thereto, the Borrower will give prompt
written notice thereof to the Lender and at the Borrower's own
cost and expense will diligently endeavor to cure any defect
that may be developed or claimed, and will take all necessary
and proper steps for the defense of such legal proceedings,
and the Lender (whether or not named as a party to legal
proceedings with respect thereto) is hereby authorized and
empowered to take such additional steps as in its judgment and
discretion may be necessary or proper for the defense of any
such legal proceedings or the protection of the validity or
priority of this Loan Agreement and the rights, security
interests and other interests created or evidenced hereby, and
all expenses so incurred of every kind and character shall be
a demand obligation owing by the Borrower to the Lender and
shall be a part of the Indebtedness.
nnn. Request Additional Collateral. If the Lender should at any
time be of the opinion that the Collateral is not sufficient
or is declined or may decline in value or should the Lender
deem payment of the Indebtedness to be insecure, then the
Lender may call for additional Collateral satisfactory to the
Lender, and the Borrower promises promptly to furnish such
additional security forthwith and in all events within 30 days
of such notice.
ooo. License for Patents. Borrower shall obtain, maintain and
comply with any and all licenses for patents that Borrower
uses in its operations.
Article - Negative Covenants
Borrower covenants and agrees that from the date of this Loan Agreement
until payment in full of the Note and payment in full of and fulfillment of all
Indebtedness, Borrower shall not, without prior express written consent of
Lender first had and obtained:
ppp. No Additional Debt. Create, incur or assume any
Page 14
debt for borrowed money, whether by way of loan, or the
issuance of sale of bonds, debentures, notes or securities,
including deferred debt for the price of property or of
services purchased, except:
i. The Loan hereunder.
ii. Current accounts payable and other current
obligations (other than for borrowed money)
arising out of transactions in the ordinary
course of business.
qqq. No Guaranties for Third Parties. Assume, guarantee, endorse or
otherwise become liable upon, or agree to purchase or
otherwise furnish funds for the payment of, the liability or
obligation, including contingent liabilities or obligations,
of any person, firm or corporation other than Borrower except
for transactions arising out of the ordinary course of
business. Under no circumstances will Borrower obligate itself
without approval of the Lender for contingent liabilities that
exceed, whether individually or collectively, One Hundred
Thousand U.S. Dollars ($100,000.00).
rrr. No Mortgages, Liens, etc. Create, incur, assume or suffer to
exist any mortgage, deed of trust, pledge, encumbrance, lien
or security interest of any kind upon any of its property now
owned or hereafter acquired, except:
i. Liens, mortgages, encumbrances or security
interests to secure payment of the Note
under this Loan Agreement.
ii. Mechanics', carriers', workmen's,
repairmen's or other like liens in the
ordinary course of business in respect of
obligations which are not overdue or are
being contested in good faith.
sss. No Change in Business Activity of Borrower. Engage in any
other kind of business different from which Borrower is
presently engaged or change the nature or method of operation
or its manner of conducting business in any material respect.
ttt. No Loans to Principals. Make any loans or advances to any
general or limited partner of Gemini, to Guarantors, or to any
shareholders of
Page 15
the General Partner.
uuu. No Mergers, Acquisitions or Sales of Stock or Assets. Form any
new subsidiary or merge or consolidate with any corporation,
partnership, or other entity, or sell, lease, assign, transfer
or otherwise dispose of (whether in one transaction or as a
series of related transactions) all or substantially all of
its assets, whether now owned or hereafter acquired; or change
the ownership of Borrower or acquire by purchase or otherwise,
all or substantially all of the assets of any corporation,
partnership or other entity. Gemini and the General Partner
and Limited Partners shall not change the ownership and
partnership structure of Gemini or Delargen without prior
notice and consent of Lender.
vvv. No Excess Acquisitions of Property. Borrower will not during
any fiscal year, without the prior written consent of Lender,
make or incur any expenditures for acquiring or improving any
real property, machinery, equipment, furniture and fixtures by
purchase, lease purchase agreement or option the aggregate
cost or annual rental of which is in excess of One Hundred
Thousand and No/100 U. S. Dollars ($100,000.00) except as may
be acquired by the proceeds of this Loan.
www. No Excess Dispositions of Property. Borrower will not during
any fiscal year, without the prior written consent of Lender,
sell or dispose of in any manner any real property, machinery,
equipment, furniture or fixtures the aggregate value of which
is in excess of One Hundred Thousand and No/100 U. S. Dollars
($100,000.00).
xxx. Current Asset Requirement. Gemini will maintain current assets
at least equal to current liabilities during the life of the
Note.
yyy. Maximum Debt to Equity Ratio. Gemini will at no time during
the life of the note, allow the total liabilities to exceed
five times the total net worth. Total net worth for purposes
of this agreement will be total assets minus total liabilities
plus capital, surplus, paid in capital, retained earnings and
current earnings.
zzz. Limitation on Payment of Dividends. No cash distributions, in
kind distributions or other
Page 16
distributions to investors, general partners, limited
partners, or shareholders of the General Partner shall be
declared or funded by Gemini or Delargen until the Loan is
paid in full without the prior written consent of Lender.
aaaa. No New Management Practice. Borrower agrees to notify Lender
before any new management practices will be implemented.
bbbb. Minimum Working Capital. Gemini agrees to maintain minimum
working capital in the following U. S. Dollar amounts:
Fiscal Year Ending:
1997 $100,000.00
1998 $200,000.00
1999 $300,000.00
All Remaining Years of the Loan $300,000.00
cccc. Limitation of Salaries. Gemini agrees that salaries and
compensation of each of its General Partner and its Limited
Partners shall be limited as follows:
During the first year of the Loan:
$100,000.00
During the second year of the Loan:
$100,000.00
During the third through ninth years of the Loan:
$100,000.00
dddd. Sale of Business Property or Collateral. Any sale or other
disposition of business property or Collateral must be
concurred in by the Lender prior to such sale or disposition.
eeee. Name, Location of Business and Location of Collateral. The
Borrower will not changes its name, identity, federal tax
identification number, partnership structure or corporate
structure in any manner unless it shall have given the Lender
at least 30 days' prior written notice thereof. The Borrower
will not change the location of (i) its chief executive
office, chief place of business or registered address, or (ii)
the locations where it keeps or holds any Collateral or any
records
Page 17
relating thereto, from the applicable location described in
Paragraph 5.12 unless it shall have given the Lender at least
30 days' prior written notice thereof.
Article - Warranties and Representations
In order to induce Lender to extend the credit and financial
accommodations evidenced by the Loan Documents, Borrower warrants and represents
that:
ffff. Limited Partnership Status of Gemini, Corporate Status of
Delargen and Authority. Gemini is a limited partnership duly
formed, validly existing and in good standing under the laws
of the State of Texas, is authorized to do business in the
State of Texas and is duly licensed and qualified to do
business; is in good standing in each jurisdiction in which
the ownership of its properties or the conduct of its business
requires such licensing and qualification; and has all powers
and all permits, consents and authorizations necessary to own
and operate its properties and carry on its business as
presently conducted. The sole General Partner of the Borrower
is Delargen Corporation, a corporation duly formed, validly
existing and in good standing under the laws of the State of
Texas. The execution, delivery and performance of the Loan
Documents by Gemini have been duly authorized as required by
the Limited Partnership Agreement and will not contravene, or
constitute a default under, any provision of applicable law or
regulation or of the Certificate of Limited Partnership
(including any amendments thereto), Limited Partnership
Agreement, or of any mortgage, indenture, contract, agreement
or other instrument, or any judgment, order or decree binding
upon Gemini. No consents of Gemini's limited partners, or any
holder of any indebtedness of Gemini are required as a
condition to the validity of the Loan Documents. Delargen is a
corporation duly formed, validly existing and in good standing
under the laws of the State of Texas and is authorized to do
business in Texas. The execution, delivery and performance of
the Loan Documents by Delargen have been duly authorized by
its Board of Directors. The Loan Documents, when duly
Page 18
authorized, executed and delivered, will constitute the legal,
valid and binding obligations of Borrower enforceable in
accordance with their respective terms.
gggg. Good Title to Collateral. Borrower has and will continue to
have good and indefeasible title, free and clear of all liens,
claims, impositions, security interests and encumbrances, to
all of the Collateral, except as otherwise permitted by this
Loan Agreement.
hhhh. No Governmental Action Required. No approvals or consents of
any government department, administrative agency or
instrumentality having jurisdiction over Borrower are
necessary or required to permit Borrower to enter into the
Loan Documents. The improvements and the use of the Land and
Improvements complies in all respects with all federal, state
and local laws applicable thereto.
iiii. No Litigation. There is no action, suit or proceeding pending
or, to the knowledge of Borrower, threatened, against Borrower
or Guarantors before any court, governmental department,
administrative agency or instrumentality which, if such
action, suit or proceeding were adversely determined would
subject Borrower or Guarantors to any liability not fully
covered by insurance or adversely affect the financial
position or the results of operations of Borrower or any of
its businesses or the ability of Borrower to perform its
obligations, as shall be applicable, under the Loan Documents.
jjjj. Tax Liability. Borrower and Guarantors have filed all United
States tax returns and all state and foreign tax returns
required to be filed by them and have paid, or made provisions
for the payment of, all taxes which have become due pursuant
to said returns or pursuant to any assessment received by
Borrower or Guarantors and other governmental charges imposed
on Borrower and Guarantors or their assets, except such taxes,
if any, as are being contested in good faith and as to which
adequate reserves have been provided in
Page 19
accordance with generally accepted accounting principles
consistently applied, and such returns properly reflect the
United States income, foreign taxes and/or state taxes of
Borrower and Guarantors for the periods covered thereby.
kkkk. No Superior Liens on Collateral. The security interest and
liens attaching to the Collateral will at all times constitute
valid and enforceable first priority perfected security
interests and liens in favor of Lender, subject to no prior
superior lien, security interest or encumbrance, except for
those liens and encumbrances set forth in the Title
Commitments to Lender. Before any funding under the Note,
Borrower and Guarantors will have taken or will have
participated with Lender in taking, all necessary action and
make all necessary filings to provide Lender with perfected,
first priority security interest and liens in the Collateral
under the laws of all applicable jurisdictions.
llll. No Investment Company. Borrower is not an investment company
within the meaning of the Investment Company Act of 1940.
mmmm. Solvency. Borrower is solvent with saleable assets of a value
that exceeds the amount of Borrower's liabilities. Borrower is
able to and anticipates that Borrower shall be able to meet
all debts as they mature and has adequate capital to conduct
the business in which Borrower is engaged.
nnnn. Financial Statements Reflect Financial Condition. Gemini has
furnished to Lender its financial statements, dated June 1,
1997, which financial statements are true and correct and
accurately represent (a) the financial condition of Gemini as
of the date thereof and (b) the results of the operations of
Gemini for the periods indicated. There has been no material
adverse change in the condition, financial or otherwise, of
Gemini since the date of that financial statement. Guarantors
and Delargen have furnished Lender their respective financial
statements, dated
Page 20
April 30, 1997, which are true and correct.
oooo. Limited Partnership Name and Corporate Name. The limited
partnership name of Gemini as it appears in its Certificate of
Limited Partnership is as it appears on page 1 of the Loan
Agreement. Gemini has not used any other limited partnership
name or any other name since its organization. The corporate
name of Delargen as it appears in its Corporate Charter is as
it appears on page 1 of the Loan Agreement. Delargen has not
used any other corporate name or any other name except Gemini
Biotech, Inc. since its organization.
pppp. Federal Identification Number. The federal taxpayer
identification number of Gemini is ▇▇-▇▇▇▇▇▇▇ and of Delargen
is ▇▇-▇▇▇▇▇▇▇.
qqqq. Office of Borrower. The chief executive office and registered
address of the Borrower is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇-▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
rrrr. No Burdensome Agreements. The Borrower has not performed any
acts or signed any agreements which might prevent the Lender
from enforcing any of the terms of this Agreement or which
would limit the Lender in any such enforcement.
ssss. Performance of Covenants. Borrower has performed or complied
with all of Borrower's covenants and agreements required
hereby and under all Loan Documents.
tttt. No Default. No Default and no condition or event which, with
the giving of notice or lapse of time or both, would become a
Default, shall have occurred or if it has occurred will be
continuing.
uuuu. Accurate Representations and Warranties. The representations
and warranties contained in all the Loan Documents are true
and correct in all material respects on the date hereof.
vvvv. RD Instruction Received. Borrower has received a copy of the
RD Instruction 4279-A, 4279-B, and 4287-B pertaining to
Business and Industry Loans.
Page 21
wwww. Review of Loan Documents. Borrower has reviewed the Loan
Documents and notified Lender in writing of all
inconsistencies in the provisions of the Loan Documents.
xxxx. Inventory. All of the peptide reagents, enzymes,
oligonucleotides, monoclonal antibodies and cytokines are held
by Borrower for sale, or to be furnished under contracts of
service or they are held as raw materials, work in process or
materials used or consumed in a business.
Article - Collateral
yyyy. Description of Collateral. Payment of the Note and the
Indebtedness and the performance of the covenants set forth in
this Loan Agreement will be secured, directly or indirectly,
by a first priority perfected security interest or lien, as
the case may be, in and upon all of the following described
property and assets and in and upon those properties and
assets more particularly identified in the Loan Documents
("Collateral") (failure to name any security herein shall not
waive any rights of Lender in security taken now):
i. Real Property Collateral:
(1) All right, title and interest in
and to the leasehold estate of
Gemini under the sublease (the
"Lease") between Houston
Biotechnology Incorporated dated
on or about June 18, 1997 in that
certain real estate (the "Land")
situated in ▇▇▇▇▇▇▇▇▇▇ County,
Texas, more particularly described
on Exhibit "1" to the Note
attached hereto as Exhibit "A" and
made a part hereof for all
purposes, together with all
appurtenances thereto and all
right, title and interest
(including any reversionary
interest) now and/or hereafter
owned, claimed, held or acquired
by Borrower, its successors and
assigns. This conveyance shall
also include and the lien,
security interest and assignment
created hereby shall encumber and
extend to all other, further
Page 22
or additional titles, estates,
interest or rights which may exist
now or at any time be acquired by
Borrower in or to the Land
including Borrower's rights, if
any, to purchase the property
demised under such lease and, if
fee simple title to any of such
property shall ever become vested
in Borrower, such fee simple
interest shall be encumbered by
the Deed of Trust in the same
manner as if Borrower had fee
simple title to such property as
of the date of execution hereof;
including all titles, estates,
interests, or rights in and to:
(a) the whole or any part of the
above described Land (including
all mineral rights and interests
of Borrower relating thereto);
and/or
(b) any easements, rights-of-way,
alleys, rights of ingress and
egress appurtenant to the Land
and/or
(c) any and all strips of land
adjoining, adjacent and/or
contiguous to the Land; and/or
(d) any street or road adjacent and or
contiguous to the Land;
(2) All buildings and other leasehold
improvements now or hereafter placed on
said Lease, as well as all
appurtenances, betterments and additions
thereto; all and singular the rights,
privileges, hereditaments, and
appurtenances in any wise incident or
appertaining to said Lease, and
improvements.
(3) All furniture, fixtures, equipment,
personal property, books, records and
files belonging to Borrower and now or
hereafter or from time to time situated
on or in or used in connection with said
Land, Lease, and improvements, whether
or not affixed to the realty, including,
but not limited to, lighting, heating
ventilating, air conditioning,
sprinkling, mechanical and plumbing
materials, fixtures and equipment, water
and power systems, engines, boilers,
Page 23
furnaces, elevators, motors,
refrigeration, plants, awnings,
shrubbery, ranges, ovens, refrigerators,
dishwashers, disposals, carpeting,
laboratory fixtures and all
after-acquired property in the same
categories including all appurtenances,
additions and accessions thereto and
replacements thereof and articles in
substitution therefore, howsoever
attached or affixed and all products and
proceeds thereof. All of said property
and rights described in Subparagraphs
(1) through and (2) above and in this
Subparagraph (3) are hereinafter
collectively referred to herein as the
"Properties."
ii. Accounts Receivable. All of Borrower's
present and future (hereafter acquired)
accounts, accounts receivable, documents,
instruments, general intangibles, chattel
paper (as such terms are defined in the
Texas Business & Commerce Code), notes
receivable, drafts, acceptances and
contract rights, wherever located and all
replacements thereof and substitutions
therefore and all the products and proceeds
thereof.
iii. Inventory. All of Borrower's inventory,
including all goods, merchandise, raw
materials, goods in process, finished goods
and other tangible personal property now
owned or hereafter acquired and held for
sale or lease or furnished or to be
furnished under contracts for service or
used or consumed in Borrower's business and
all appurtenances, additions and accessions
thereto, and replacements thereof and
articles in substitution therefore,
howsoever attached and affixed, and
contracts with respect thereto and all
documents of title evidencing or
representing any part thereof, and all
products and proceeds thereof, whether in
possession of Borrower, warehouseman,
bailee or other person.
iv. Machinery and Equipment. All of Borrower's
machinery and equipment of every nature and
description whatsoever now owned or
hereafter acquired by Borrower including
without
Page 24
limitation all equipment listed in Exhibit
"2" to the Note attached hereto as Exhibit
"A" and further including all
appurtenances, additions and accessions
thereto and replacements thereof and
substitutions therefor, howsoever attached
and affixed, wheresoever located, including
all tools, parts and accessories used in
connection therewith, and all products and
proceeds thereof, except any and all titled
rolling stock.
v. Furniture and Fixtures. All of Borrower's
furniture, fixtures and appurtenances
thereto, and such other goods, chattels and
personal property of Borrower, now owned or
hereafter acquired, including all
appurtenances, additions and accessions
thereto and replacements thereof and
articles in substitution therefore,
howsoever attached or affixed and all
products and proceeds thereof.
vi. Other Personal Property and General
Intangibles. All of Borrower's other
personal property and general intangibles,
now owned or hereafter acquired by
Borrower, including all appurtenances,
additions and accessions thereto and
replacements thereof and articles in
substitution therefore, howsoever attached
or affixed, and all products and proceeds
thereof.
vii. Guaranty. The absolute and unconditional
guaranty of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and the
absolute and unconditional guaranty of
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
viii. Assignment of Life U.S. Insurance Policy.
Assignment of One Million and No/100
Dollars ($1,000,000.00) life insurance
policy on the life of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
ix. RBS Guaranty. Guaranty of RBS in the
principal amount of One Million Fifty-Two
Thousand and No/100 U.S. Dollars
($1,052,000.00).
zzzz. Security. It is agreed that the Collateral shall secure all
Indebtedness, regardless of how same may arise, and any and
all security or collateral given to secure any of the
Indebtedness shall additionally secure all of
Page 25
the Indebtedness. Any Default under any of the Loan Documents
shall constitute a Default regarding all of the Indebtedness
or Collateral securing the payment of same.
aaaaa. Maintenance of Collateral. Borrower will safeguard and protect
and keep in good repair all Collateral for Lender's general
account and make no disposition thereof without Lender's prior
written permission. Borrower will not use the Collateral, or
permit the same to be used, for any unlawful purpose or in any
manner inconsistent with the provisions or requirements of any
insurance policy required in the Loan Documents.
bbbbb. Right to Inspect Collateral. Lender may at any time after
notice to Borrower take such steps as Lender deems reasonably
necessary to protect Lender's interest in and to preserve the
Collateral. RBS personnel and any person(s) accompanying RBS
personnel shall be authorized to enter upon the Borrower's
premises and into any building thereon, whether permanent or
temporary, jointly or separately, with personnel of the Lender
to carry out the functions involving Lender and RBS's
interests. It is anticipated that scheduled and unscheduled
inspections shall be conducted during normal business hours by
these personnel as well as final acceptance inspections.
Borrower agrees to cooperate fully with all of Lender's
efforts to preserve the Collateral and will take such actions
to preserve the Collateral as Lender may direct. All of
Lender's reasonable expenses of preserving the Collateral
shall be charged to Borrower's account and added to the Note.
ccccc. Insurance Requirements on Collateral. Borrower shall obtain
and maintain at Borrower's sole expense:
i. All Risk Insurance. All risk insurance with
respect to all insurable Collateral against
loss or damage by fire, lightning,
windstorm, explosion, hail, tornado, riot,
civil commotion, aircraft, vehicle, marine,
smoke, builder's risk during construction by
the business, property damage and such
hazards as are presently included in so
called "all risk"
Page 26
coverage and against such other insurable
hazards as Lender may reasonably require, in
an amount not less than 100% of the
depreciated replacement cost, including the
cost of debris removal, and sufficient to
prevent Borrower and Lender from becoming a
coinsurer, or for an amount equal to the
full remaining balance of the Indebtedness,
whichever is less.
ii. Flood Insurance. A flood insurance policy
covering the Properties in an amount not
less than 100% of the full replacement cost,
including cost of debris removal, without
deduction for depreciation and sufficient to
prevent Borrower and Holder from becoming a
coinsurer or in an amount equal to the full
remaining balance of the Indebtedness,
whichever is less.
iii. Comprehensive General Public Liability
Insurance. Comprehensive general public
liability insurance, on an "occurrence"
basis, for the benefit of Borrower and
Lender as named insureds.
iv. Worker's Compensation. Statutory worker's
compensation insurance with respect to any
work on or about the Properties.
v. Other Insurance. Such other insurance on the
Collateral as may from time to time be
reasonably required by Lender (including but
not limited to business interruption
insurance, boiler and machinery insurance,
earthquake insurance, and war risk
insurance) and against other insurable
hazards or casualties which at the time are
commonly insured against in the case of land
and businesses similarly situated, due
regard being given to the height, type,
construction, location, use and occupancy of
buildings and improvements.
Terms of Insurance Policies. All insurance policies shall be
issued and maintained by insurers, in amounts, with
deductibles, and in a form satisfactory to Lender, and shall
require not less than thirty (30) days' prior written notice
to Lender of any cancellation or change of coverage. All
insurance policies maintained, or caused to be maintained, by
Borrower with respect to the
Page 27
Collateral, except for public liability insurance, shall
provide that each such policy shall be primary without right
of contribution from any other insurance that may be carried
by Borrower or Lender and that all of the provisions thereof,
except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each
insured.
Insolvency of Insurer. If any insurer which has issued a
policy of title, hazard, liability or other insurance required
pursuant to the Loan Documents becomes insolvent or the
subject of any liquidation, bankruptcy, receivership or
similar proceeding or if in Lender reasonable opinion the
financial responsibility of such insurer is or becomes
inadequate, Borrower shall, in each instance promptly upon the
request of Lender and at Borrower's expense, obtain and
deliver to Lender a like policy (or, if and to the extent
permitted by Lender, a certificate of insurance) issued by
another insurer, which insurer and policy meet the
requirements of the Loan Documents.
Loss Payee Clause Required. Without limiting the discretion of
Lender with respect to required endorsements to insurance
policies, all such policies for loss of or damage to the
Collateral shall contain a standard loss payee clause (without
contribution) naming Lender as loss payee with loss proceeds
to be payable to Lender notwithstanding:
(1) any act, failure to act or negligence of
or violation of any warranty,
declaration or condition contained in
any such policy by any named insured;
(2) the occupation or use of the Collateral
for purposes more hazardous than
permitted by the terms of any such
policy;
(3) any foreclosure or other action by
Lender under the Loan Documents;
(4) any change in title to or ownership of
the Collateral or any portion thereof,
such proceeds to be held for application
as provided in the Loan Documents.
Delivery of Insurance Policies to lender
and Payment of Premium. The originals of
each initial insurance policy (or to the
extent permitted by Lender, a copy of
the original policy and a satisfactory
certificate of
Page 28
insurance or an insurance binder in a
form satisfactory to Lender) shall be
delivered to Lender at the time of
execution of the Loan Documents, with
premiums fully paid, and each renewal or
substitute policy (or certificate) shall
be delivered to Lender, with premiums
fully paid, at least ten (10) days
before the termination of the policy it
renews or replaces. Borrower shall pay
all premiums on policies required
hereunder as they become due and payable
and promptly deliver to Lender evidence
satisfactory to Lender of the timely
payment thereof. If any loss occurs at
any time when Borrower has failed to
perform Borrower's covenants and
agreements in paragraph 6.4, Lender
shall nevertheless be entitled to the
benefit of all insurance covering the
loss and held by or for Borrower, to the
same extent as if it had been made
payable to Lender. Upon any foreclosure
hereof or transfer of title to the
Collateral in extinguishment of the
whole or any part of the secured
Indebtedness, all of Borrower's right,
title and interest in and to the
insurance policies referred to in this
Section (including unearned premiums)
and all proceeds payable thereunder
shall thereupon vest in the purchaser at
foreclosure or other such transferee, to
the extent permissible under such
policies. Lender shall have the right
(but not the obligation) to make proof
of loss for, settle and adjust any claim
under, and receive the proceeds of all
insurance for loss of or damage to the
Collateral, and the expenses incurred by
Lender in the adjustment and collection
of insurance proceeds shall be a part of
the secured Indebtedness and shall be
due and payable to Lender on demand.
Lender shall not be, under any
circumstances, liable or responsible for
failure to collect or exercise diligence
in the collection of any of such
proceeds or for the obtaining,
maintaining or adequacy of any insurance
or for failure to see to the proper
application of any amount paid over to
Borrower. Any such proceeds received by
Lender shall, after deduction therefrom
of all reasonable expenses actually
incurred by Lender, including attorneys'
fees, at Lender option be:
(a) released to Borrower, or
(b) applied (upon compliance with such
terms and conditions as may be
required by Lender) to the repair
or restoration, either partly or
entirely, of the Collateral so
damaged, or
(c) applied to the payment of the
Page 29
secured Indebtedness in such order
and manner as Lender, in its sole
discretion, may elect, whether or
not due. In any event, the unpaid
portion of the secured
Indebtedness shall remain in full
force and effect, and the payment
thereof shall not be excused.
Borrower shall at all times comply with the requirements of
the insurance policies required hereunder and of the issuers of such policies
and of any board of fire underwriters or similar body as applicable to or
affecting the Collateral.
ddddd. Books and Records Maintained. Borrower shall maintain books
and records pertaining to the Collateral in such detail, form
and scope as Lender or RBS shall reasonably require and in
accordance with generally accepted practices and procedures.
eeeee. Lender's Access to Borrower's Books and Records. Upon
forty-eight hours notice to Borrower, Lender, and any person
appointed by Lender to act for it and on its behalf, shall
have full access to and the right to audit, inspect and
examine and make copies at Borrower's premises of Borrower's
limited partnership, corporate and financial books and records
and other books, records and properties and to discuss its
affairs, finances and accounts with the General Partner of
Gemini and Borrower's independent certified public accountants
at all reasonable times and as often as may be reasonably
requested by the Lender.
fffff. Compliance with Governmental Laws and Regulations. Borrower
shall comply in all material respects with all acts, rules,
regulations and orders of any legislative, administrative or
judicial body or official applicable to the Collateral or any
part thereof, or to the operation of Borrower's business.
Borrower may, however, contest or dispute any acts, rules,
regulations, orders and directions of those bodies or
officials in any manner, provided Lender is satisfied that the
contest or dispute does not affect Lender's lien or security
interest in the
Page 30
Collateral.
ggggg. Lender's Access for Removal Purposes. So long as anything is
owing under the Note or Indebtedness to Lender and upon the
occurrence and continuation of a Default, Lender may use any
of Borrower's owned or leased lifts, hoists, trucks or other
facilities or equipment for handling or removing the
Collateral and Lender shall have, and is hereby granted, a
right of ingress or egress to and through any of Borrower's
owned or leased property.
hhhhh. No Agency. Nothing contained herein shall be construed to
constitute Borrower as Lender's agent for any purpose
whatsoever, and Lender shall not be responsible or liable for
any shortage, discrepancy, damage, loss or destruction of any
part of the Collateral wherever same may be located and
regardless of the cause thereof. Lender does not, by anything
herein or in any assignment or otherwise, assume any of
Borrower's obligations under any contract or agreement
assigned to Lender, and Lender shall not be responsible in any
way for the performance by Borrower of any of the terms and
conditions hereof.
iiiii. Proceeds from Sales of Collateral. Borrower agrees that all
payments of any kind from any sale including but not limited
to public, private or auction of any of the Collateral, will
be made jointly payable to the Lender and the Borrower. These
payments include but are not limited to the sale of any
equipment, accounts receivable, real estate, inventory, bonds
or stocks. All proceeds must be applied to the Indebtedness
upon receipt of such proceeds unless Borrower elects to
deposit the proceeds into an account at his bank and
simultaneously makes a check payable to Lender.
Notwithstanding anything to the contrary, the above paragraph
shall apply only to those sales requiring prior Lender
approval pursuant to Section 4.8.
jjjjj. No Removal of Collateral. Borrower will not, without prior
written consent of Lender, allow any of the tangible
Collateral or any of the
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documents or Borrower's books related to the Collateral be
removed from the State of Texas.
Article - Default
kkkkk. Events of Default. The occurrence of any of the following
events or conditions, provided they are not cured after ten
(10) calendar days written notice by Lender to Borrower
(unless such ten (10) calendar day period would unreasonably
subject Lender to a material loss of its rights as set out in
the Loan Documents, in which case a reasonable opportunity to
cure under the circumstances shall be given) shall constitute
a Default ("Default"):
i. Non-Payment Note. Failure of Borrower to pay
any installment of principal or interest on
the Note when due or declared due; the
failure to pay any portion of the
Indebtedness owed to Lender by Borrower or
Guarantors when due or declared due; or the
failure to pay any installment of principal
or interest of any other indebtedness owed
to Lender by Borrower or Guarantors,
regardless of how such indebtedness may
arise when due or declared due.
ii. Untrue Representation or Warranty. Any
representation or warranty made by Borrower
or Guarantors in any of the Loan Documents,
or in any certificate, financial statement
or other written statement furnished to
Lender by Borrower or Guarantors shall prove
to be untrue in any material respect.
iii. Breach of the Loan Documents. Failure of
Borrower or Guarantors to observe or perform
any of the terms, conditions, covenants, or
agreements contained in the Loan Documents
or the failure of Borrower or Guarantors to
observe or perform any of the terms,
conditions, covenants or agreements
contained in any agreement or instrument
executed in connection with any other
indebtedness owed to Lender by Borrower or
Guarantors.
Page 32
iv. Non-Payment of Debts in General. Borrower or
Guarantors do not pay their debts generally
as they become due or admits in writing its
inability to pay its debts.
v. Assignment for the Benefit of Creditors.
Borrower or Guarantors make an assignment
for the benefit of creditors.
vi. Bankruptcy Filing. Borrower or Guarantors
are the subject of a petition (voluntary or
involuntary) in bankruptcy under Title 11 of
the United States Code and/or other
applicable state bankruptcy laws, as same
may be amended from time to time, or for
corporate reorganization filed by or against
any such party.
vii. Receivership for Collateral. A receiver is
appointed for all or any part of the
Collateral.
viii. Attachment or Sequestration of Collateral.
Borrower or Guarantors fail to have
discharged within a period of thirty (30)
days any attachment, sequestration or
similar writ levied upon any of the
Collateral of such party.
ix. Failure to Pay Judgment. Borrower or
Guarantors fail to pay immediately any final
money judgment against such party.
x. Litigation. Any litigation commences which
hinders or delays the collection of any part
of the Indebtedness or the exercise of any
right or option of Lender.
xi. Death or Termination of Business. Death,
incapacity, dissolution, business failure,
merger, or similar event, adversely affects
the Borrower or any Guarantor of the
Indebtedness.
xii. Prohibited Sale or Pledge of Collateral. Any
sale, conveyance, transfer, pledge or
hypothecation of any interest in the
Collateral or any part thereof, other than
as expressly permitted in any of the Loan
Documents, without prior written consent of
Lender.
Page 33
xiii. Prohibited Use of Loan Proceeds or
Collateral. Borrower uses the Loan proceeds
or Collateral in any manner different from
the manner contemplated in the Loan
Documents.
xiv. Loan Note Guarantee Called. Any act or
failure to act by Borrower that creates an
obligation by RBS to pay all or any part of
the Loan under the terms of the Loan Note
Guarantee.
xv. Performance Impaired. Lender or any holder
of the Note believes in good faith that the
prospect of full payment of the Indebtedness
or performance of any covenants or
obligations by the Borrower is impaired.
xvi. Failure to Maintain Citizenship. Failure by
Gemini or its General Partner to maintain
ownership by at least fifty-one (51%)
percent citizens of the United States or
persons residing in the U.S. after being
legally admitted for permanent residence.
lllll. Automatic Default Without Opportunity to Cure. Any payment by
RBS of all or any part of the Loan under the terms of the Loan
Note Guarantee due in whole or in part to the acts of or
failure to act by the Borrower shall constitute an automatic
default ("Automatic Default") by Borrower. Notwithstanding the
Default provisions in paragraph 7.1 above, in the event of
Automatic Default by Borrower, Lender shall have no obligation
to give Borrower notice of Automatic Default nor give Borrower
an opportunity to cure said Automatic Default. Borrower hereby
expressly waives notice of Automatic Default and further
waives the opportunity to cure in the event of Automatic
Default.
mmmmm. Acceleration Upon Default. It is expressly provided that upon
Default or Automatic Default, Lender may declare the entirety
of the Indebtedness, including the Note, and all principal,
accrued interest, court costs and attorneys' fees hereunder,
immediately due and/or payable. Borrower and all sureties,
endorsers, guarantors and any other party now or hereafter
liable for the payment of the
Page 34
Note, in whole or in part, hereby expressly and severally; (i)
waive demand, presentment for payment, notice of nonpayment,
protest, notice of protest, notice of intent to accelerate,
notice of acceleration and all other notice, filing of suit
and diligence in collecting the Note or enforcing any of the
security herefor; (ii) agree to any substitution,
subordination, exchange or the release of any such security or
the release of any party primarily or secondarily liable
hereon; (iii) agree that Holder shall not be required first to
institute suit or exhaust its remedies hereon against Borrower
or others liable or to become liable hereon or to enforce its
rights against them or any security herefor; and (iv) consent
to any extension or postponement of time of payment of the
Note and to any other indulgence with respect hereto without
notice thereof to any of them.
Article - Miscellaneous
nnnnn. Disbursement of the Loan. Borrower agrees that all of the loan
proceeds will be disbursed for the benefit of Gemini. Borrower
agrees that none of the loan proceeds shall be disbursed for
the benefit of Delargen. Borrower agrees that none of the loan
proceeds shall be disbursed to or for the benefit of Delargen
except to the extent it is for the payment of Delargen
obligations expressly assumed by Gemini. Attached as Exhibit
"C" is a written disbursements schedule signed and agreed to
by the Borrower listing names, addresses, and wiring
instructions of the recipients of the loans proceeds and the
amount to be paid each recipient known as of the date of the
closing of this transaction. Borrower warrants and represents
that the disbursements contemplated in Exhibit "C" comply with
the restrictions on the use of the loan proceeds set forth in
paragraph 3.1 above. Lender, at its sole option, may disburse
the loan proceeds directly to the recipients set forth in
Exhibit "C" as well as directly to any vendors of any of the
Collateral and/or creditors with claims or liens against the
Collateral, or in any other manner necessary to insure
Lender's first lien
Page 35
security position in all of the Collateral and in collateral
acquired by Gemini after the closing of the Loan. Lender has
no obligation to disburse the loan proceeds or any part
thereof if such disbursement would not be in accordance with
the use of loan proceeds limitations set forth in paragraph
3.1, above.
ooooo. Further Documentation. Borrower, at any time and from time to
time, will execute and deliver such further documents and
instruments and take such further action as may be reasonably
requested by Lender, in order to cure any defects in the
execution and delivery of, or to comply with or accomplish the
terms, conditions, covenants, representations, warranties and
agreements contained in the Loan Documents.
ppppp. Notices. In the event any notice or other document is sent to
any party hereto, such notice or other document shall be sent
by hand delivery (including private delivery service) or by
registered or certified mail, return receipt requested, to the
party entitled to receive such notice or other document at the
address specified adjacent to their signature at the end of
this Loan Agreement or any such other address as such party
shall request in a written notice made in compliance herewith
and such notice or document will be deemed received on the
earlier of the date actually received if sent by hand delivery
(including private delivery service) or three (3) calendar
days after the date mailed.
qqqqq. Cumulative Remedies and No Waiver. No failure to exercise and
no delay in exercising or strictly enforcing on the part of
Lender of any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude
any other right, power or privilege. A waiver of Default by
Lender shall not be a waiver of any other or subsequent
Default. A waiver of Lender to require strict performance by
Borrower under the Loan Documents in any instance shall not
constitute a waiver of Lender's right to require strict
performance under the Loan Documents by Borrower in future
Page 36
instances. The rights and remedies provided herein are
cumulative of, and not exclusive of, any rights or remedies
provided by law, in equity, or in any other agreement or Loan
Document, all of which Lender may pursue at any time and from
time to time.
rrrrr. Binding Effect. This Loan Agreement shall be binding upon
Borrower and their successors and permitted assigns and shall
be binding upon Lender and inure to the benefit of Lender, its
successors and assigns.
sssss. Unenforceable Provision. If a court of competent jurisdiction
finds any provision of this Loan Agreement, the Note, or the
Loan Documents to be invalid or unenforceable as to any person
or circumstance, such finding shall not render that provision
invalid or unenforceable as to any other persons or
circumstances. If feasible, any such offending provision shall
be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending
provision cannot be so modified, it shall be stricken and all
of the remaining provisions of this Loan Agreement in all
other respects shall remain valid and enforceable and in no
way affected thereby.
ttttt. Accounting Terms. Accounting terms used but not defined herein
shall have the meanings assigned to them in accordance with
generally accepted accounting principles consistently applied.
uuuuu. Note Participation. Borrower expressly recognizes and agrees
that Lender may sell to other financial institutions one or
more participations in the loans incurred by Borrower pursuant
hereto.
vvvvv. Loan Fees and Attorneys' Fees. Borrower shall pay all
out-of-pocket expenses and fees, including but not limited to,
loan fees, packaging fees, underwriting fees, referral fees,
brokerage fees, attorneys fees and expenses incurred by Lender
or Borrower as a result of making the Loan. Borrower shall pay
all fees and expenses of Lender in connection with the
enforcement, operation and
Page 37
administration of this Loan Agreement, the Note, and all other
Loan Documents, or any waiver or amendment of any provision
hereof, and if a Default occurs, all reasonable fees, expenses
and disbursements of counsel employed in connection with any
and all collection efforts.
wwwww. Non-Usurious Interest. It is the intention of the parties
hereto to comply with applicable usury laws. Accordingly, it
is agreed that, notwithstanding any provision to the contrary
in this Loan Agreement, the Note, or the Loan Documents, in no
contingency or event whatsoever shall this Loan Agreement, the
Note, or any of the Loan Documents require the payment or
permit the collection of interest, as defined under applicable
usury laws, in excess of the maximum nonusurious rate provided
by law ("Usurious Interest"). If any such Usurious Interest is
contracted for, charged or received under this Loan Agreement,
the Note, or the Loan Documents, or if the maturity of the
Note is accelerated in whole or in part, or in the event that
all or part of the principal or interest upon the Note is
accelerated in whole or in part, or in the event that all or
part of the principal or interest upon the Note shall be
prepaid,so that under any of such circumstances, event or
contingency Usurious Interest is contracted for, charged or
received under this Loan Agreement, the Note, or the Loan
Documents then, in any such event, the provisions of this
section shall govern and control, neither Borrower nor
Guarantor, nor any other person or entity now or hereafter
liable under this Loan Agreement or the Loan Documents for the
payment of the Note shall be obligated to pay the amount of
such Usurious Interest to the extent that it is in excess of
the maximum amount of interest permitted under applicable
usury laws to be contracted for, charged to or received from
any person or entity obligated thereon. Any such excess
interest which may have been collected either shall be applied
as a credit against the then unpaid principal amount on the
Note or refunded to the person or entity paying the same, at
holder's option and the effective rate of interest shall be
automatically reduced to the maximum
Page 38
nonusurious rate permitted by law. Determination of the rate
of interest for the purpose of determining whether the Loan
Agreement, the Note or the Loan Documents are usurious under
all applicable Texas laws shall be made by amortizing,
prorating, allocating, and spreading, in equal parts during
the period of the full stated term of the Note, all interest
at any time contracted for, charged, or received from the
Borrower in connection with the Loan Agreement, the Note or
the Loan Documents. However, in the event the Note is paid in
full by the Borrower prior to the end of the full stated term
of the Note and the interest received for the actual period of
the existence of the Note exceeds the maximum lawful rate, the
Lender contracting for, charging, or receiving all such
interest shall refund to the Borrower the amount of the excess
or shall credit the amount of the excess against amounts owing
under the Note and shall not be subject to any of the
penalties provided by law for contracting for, charging, or
receiving interest in excess of the maximum lawful rate.
xxxxx. Conflict in Loan Documents. This Loan Agreement, including the
representations and warranties made herein, shall survive the
delivery of the Note, the Loan Documents and the making of any
renewals thereof. In the event of any actual conflict in the
express terms and provisions of any of the Loan Documents, the
provisions of the Loan Documents requiring the strictest
standard or degree of performance (as permitted by law) by the
Borrower and giving the greatest degree of protection to the
Lender, its successors, assigns and attorneys, will be
applied. In no event will an actual conflict in the express
provisions of any of the Loan Documents permit a more lenient
standard or lesser degree of performance by the Borrower
unless required by law. In the event of any actual conflict
between the express terms and provisions of the Loan Documents
where in the conflicting terms and provisions there is no
difference in the standard of performance required of the
Borrower and the degree of protection for the Lender, then the
provisions of the Loan
Page 39
Documents will take precedence in the order listed in
paragraph 1.16 above.
yyyyy. Venue, Jurisdiction and Governing Law. The Loan Documents and
any other agreement or instrument executed pursuant hereto are
performable in ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ County, Texas, at Lender's
office which shall be the proper place of venue for suit on
any dispute, matter or issue arising out of or related to the
Loan Documents, and Borrower irrevocably agrees that any legal
proceeding between thereon shall be brought in the District
Courts of Dallas County, Texas or the United States District
Court for the Northern District of Texas, Dallas Division
(collectively called the "Specified Courts"). Borrower and
Guarantor agree that a final, nonappealable judgment in any
such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law. The Loan Documents and any
other agreement or instrument executed pursuant hereto shall
be governed by and construed in accordance with the applicable
laws of the State of Texas.
zzzzz. Multiple Originals. This Loan Agreement may be executed in
multiple originals, each of which shall be deemed an original.
aaaaaa. Headings. Headings in this Loan Agreement are for convenience
only and shall not be used to interpret or construe any of its
provisions.
bbbbbb. No Third Party Beneficiary. The Loan Documents are for the
benefit of the Lender and Borrower and their successors and
assigns, and the Borrower, Guarantors, and Lender intend that
no third party shall have any rights or claims by reason of
this contract, including but not limited to those third party
recipients set forth in Exhibit "C."
cccccc. Integration. The Loan Documents constitute the entire
agreement between the parties hereto regarding the Loan, and
any prior agreements between the parties, whether oral or
written, are superseded by the Loan Documents.
dddddd. Modification. The Loan Agreement and other Loan
Page 40
Documents may only be modified or amended in writing signed by
the Lender and the Borrower.
eeeeee. Indemnification. BORROWER HEREBY AGREES TO INDEMNIFY AND HOLD
LENDER AND ANY SUBSEQUENT HOLDERS HARMLESS FROM ANY AND ALL
LOSSES, CLAIMS, EXPENSES, PROFESSIONAL FEES (INCLUDING BUT NOT
LIMITED TO ATTORNEYS FEES) OR LITIGATION INCURRED BY LENDER AS
A RESULT OF THE LOAN TO BORROWER.
ffffff. Documents survive the Closing. This Loan Agreement
and all of the other Loan Documents shall survive
the closing of the Loan.
gggggg. Joint and Several Liability of Gemini and Delargen.
Gemini and Delargen shall both be deemed makers of
the Note, and Gemini and Delargen shall be jointly
and severally liable as makers of the Note.
Page 41
BENEFIT LIFE INSURANCE COMPANY Address for Notice:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Attorney-in-Fact
ACCEPTED AND AGREED TO on this the 24th day of June, 1997.
GEMINI BIOTECH, LTD. Address for Notice:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇-▇
The ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President of Delargen
Corporation, General Partner of Gemini
ACCEPTED AND AGREED TO on this the 24th day of June, 1997.
DELARGEN CORPORATION Address for Notice:
d/b/a Gemini Biotech, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇-▇
The ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
ACCEPTED AND AGREED TO on this the 24th day of June, 1997.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Address for Notice:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇-▇
The ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Limited Partner of Borrower
ACCEPTED AND AGREED TO on this the 24th day of June, 1997.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Address for Notice:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇-▇
The ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Page 42
By: /s/▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇▇▇▇, Limited Partner of Borrower
ACCEPTED AND AGREED TO on this the 24th day of June, 1997.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Address for Notice:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇-▇
The ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Guarantor
ACCEPTED AND AGREED TO on this the 24th day of June, 1997.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Address for Notice:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇-▇
The ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By: /s/▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Shashikal, Guarantor
ACCEPTED AND AGREED TO on this the 24th day of June, 1997.
Page 43