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Exhibit 10.38
MASTER LOAN AND SECURITY AGREEMENT
THIS AGREEMENT dated as of May 13, 1997, is made by LXR
Biotechnology Inc. (the "Borrower"), a Delaware corporation having its principal
place of business and chief executive office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, in favor of Transamerica Business Credit Corporation, a Delaware
corporation (the "Lender"), having its principal office at Riverway II, West
Office Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Borrower has requested that the Lender make Loans
to it from time to time; and
WHEREAS, the Lender has agreed to make such Loans on the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce
the Lender to extend credit, the Borrower hereby agrees with the Lender as
follows:
SECTION 1. DEFINITIONS.
As used herein, the following terms shall have the following
meanings, and shall be equally applicable to both the singular and plural forms
of the terms defined:
Agreement shall mean this Master Loan and Security Agreement together with all
schedules and exhibits hereto, as amended, supplemented, or otherwise modified
from time to time.
Applicable Law shall mean the laws of the State of Illinois (or any other
jurisdiction whose laws are mandatorily applicable notwithstanding the parties'
choice of Illinois law) or the laws of the United States of America, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.
Business Day shall mean any day other than a Saturday, Sunday, or public holiday
or the equivalent for banks in New York City.
Code shall have the meaning specified in Section 8(d).
Collateral shall have the meaning specified in Section 2.
Collateral Access Agreement shall mean any landlord waiver, mortgagee waiver,
bailee letter, or similar acknowledgment of any warehouseman or processor in
possession of any Equipment, in each case substantially in the form of Exhibit
A.
Effective Date shall mean the date on which all of the conditions specified in
Section 3.3 shall have been satisfied.
Equipment shall have the meaning specified in Section 2.
Event of Default shall mean any event specified in Section 7.
Financial Statements shall have the meaning specified in Section 6.1.
GAAP shall mean generally accepted accounting principles in the United States of
America, as in effect from time to time.
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Loans shall mean the loans and financial accommodations made by the Lender to
the Borrower in accordance with the terms of this Agreement and the Notes.
Loan Documents shall mean, collectively, this Agreement, the Notes, and all
other documents, agreements, certificates, instruments, and opinions executed
and delivered in connection herewith and therewith, as the same may be modified,
extended, restated, or supplemented from time to time.
Material Adverse Change shall mean, with respect to any Person, a material
adverse change in the business, prospects, operations, results of operations,
assets, liabilities, or condition (financial or otherwise) of such Person taken
as a whole.
Material Adverse Effect shall mean, with respect to any Person, a material
adverse effect on the business, prospects, operations, results of operations,
assets, liabilities, or condition (financial or otherwise) of such Person taken
as a whole.
Note shall mean each Promissory Note made by the Borrower in favor of the
Lender, as amended, supplemented, or otherwise modified from time to time, in
each case substantially in the form of Exhibit B.
Obligations shall mean all indebtedness, obligations, and liabilities of the
Borrower under the Notes and under this Agreement, whether on account of
principal, interest, indemnities, fees (including, without limitation,
attorneys' fees, remarketing fees, origination fees, collection fees, and all
other professionals' fees), costs, expenses, taxes, or otherwise.
Permitted Liens shall mean such of the following as to which no enforcement,
collection, execution, levy, or foreclosure proceeding shall have been
commenced: (a) liens for taxes, assessments, and other governmental charges or
levies or the claims or demands of landlords, carriers, warehousemen, mechanics,
laborers, materialmen, and other like Persons arising by operation of law in the
ordinary course of business for sums which are not yet due and payable, or liens
which are being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are maintained to the
extent required by GAAP; (b) deposits or pledges to secure the payment of
workmen's compensation, unemployment insurance, or other social security
benefits or obligations, public or statutory obligations, surety or appeal
bonds, bid or performance bonds, or other obligations of a like nature incurred
in the ordinary course of business; (c) licenses, restrictions, or covenants for
or on the use of the Equipment which do not materially impair either the use of
the Equipment in the operation of the business of the Borrower or the value of
the Equipment; and (d) attachment or judgment liens that do not constitute an
Event of Default.
Person shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party, or government (including any division, agency, or
department thereof), and the successors, heirs, and assigns of each.
Schedule shall mean each Schedule in the form of Schedule A hereto delivered by
the Borrower to the Lender from time to time.
Solvent means, with respect to any Person, that as of the date as to which such
Person's solvency is measured:
(a) the fair saleable value of its assets is in excess of the
total amount of its liabilities (including contingent liabilities as valued in
accordance with GAAP) as they become absolute and matured;
(b) it has sufficient capital to conduct its business; and
(c) it is able generally to meet its debts as they mature.
Taxes shall have the meaning specified in Section 5.5.
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SECTION 2. CREATION OF SECURITY INTEREST; COLLATERAL. The
Borrower hereby assigns and grants to the Lender a continuing general, first
priority lien on, and security interest in, all the Borrower's right, title, and
interest in and to the collateral described in the next sentence (the
"Collateral") to secure the payment and performance of all the Obligations. The
Collateral consists of all of Borrower's equipment, furniture, fixtures and
tenant improvements, including, without limitation, equipment set forth on all
the Schedules delivered from time to time under the terms of this Agreement (the
"Equipment"), together with all present and future additions, parts,
accessories, attachments, substitutions, repairs, improvements, and replacements
thereof or thereto, and any and all proceeds thereof, including, without
limitation, proceeds of insurance and all manuals, blueprints, warranties, and
records in connection therewith, all rights against suppliers, warrantors,
manufacturers, sellers, or others in connection therewith, and together with all
substitutes for any of the foregoing.
SECTION 3. THE CREDIT FACILITY.
SECTION 3.1. BORROWINGS. Each Loan shall be in an amount
not less than $100,000.00, and in no event shall the sum of the aggregate Loans
made exceed the amount of the Lender's written commitment to the Borrower in
effect from time to time. Notwithstanding anything herein to the contrary, the
Lender shall be obligated to make the initial Loan and each other Loan only
after the Lender, in its sole discretion, determines that the applicable
conditions for borrowing contained in Sections 3.3 and 3.4 are satisfied. The
timing and financial scope of Lender's obligation to make Loans hereunder are
limited as set forth in a commitment letter executed by Lender and Borrower,
dated as of April 15, 1997 and attached hereto as Exhibit C (the "Commitment
Letter").
SECTION 3.2. APPLICATION OF PROCEEDS. The Borrower shall
not directly or indirectly use any proceeds of the Loans, or cause, assist,
suffer, or permit the use of any proceeds of the Loans, for any purpose other
than for the purchase, acquisition, installation, or upgrading of Equipment or
the reimbursement of the Borrower for its purchase, acquisition, installation,
or upgrading of Equipment.
SECTION 3.3. CONDITIONS TO INITIAL LOAN.
(a) The obligation of the Lender to make the initial Loan is
subject to the Lender's receipt of the following, each dated the date of the
initial Loan or as of an earlier date acceptable to the Lender, in form and
substance satisfactory to the Lender and its counsel:
(i) completed requests for information (Form UCC-11)
listing all effective Uniform Commercial Code financing
statements naming the Borrower as debtor and all tax lien,
judgment, and litigation searches for the Borrower as the
Lender shall deem necessary or desirable;
(ii) Uniform Commercial Code financing statements
(Form UCC-1) duly executed by the Borrower (naming the Lender
as secured party and the Borrower as debtor and in form
acceptable for filing in all jurisdictions that the Lender
deems necessary or desirable to perfect the security interests
granted to it hereunder) and, if applicable, termination
statements or other releases duly filed in all jurisdictions
that the Lender deems necessary or desirable to perfect and
protect the priority of the security interests granted to it
hereunder in the Equipment related to such initial Loan;
(iii) a Note duly executed by the Borrower evidencing
the amount of such Loan;
(iv) a Collateral Access Agreement duly executed by
the lessor or mortgagee, as the case may be, of each premises
where the Equipment is located;
(v) certificates of insurance required under Section
5.4 of this Agreement together with loss payee endorsements
for all such policies naming the Lender as lender loss payee
and as an additional insured;
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(vi) a copy of the resolutions of the Board of
Directors of the Borrower (or a unanimous consent of directors
in lieu thereof) authorizing the execution, delivery, and
performance of this Agreement, the other Loan Documents, and
the transactions contemplated hereby and thereby, attached to
which is a certificate of the Secretary or an Assistant
Secretary of the Borrower certifying (A) that the copy of the
resolutions is true, complete, and accurate, that such
resolutions have not been amended or modified since the date
of such certification and are in full force and effect and (B)
the incumbency, names, and true signatures of the officers of
the Borrower authorized to sign the Loan Documents to which it
is a party;
(vii) such other agreements and instruments as the
Lender deems necessary in its sole and absolute discretion in
connection with the transactions contemplated hereby; and
(viii) Borrower's audited 1996 financial statements.
(b) There shall be no pending or, to the knowledge of the
Borrower after due inquiry, threatened litigation, proceeding, inquiry, or other
action (i) seeking an injunction or other restraining order, damages, or other
relief with respect to the transactions contemplated by this Agreement or the
other Loan Documents or thereby or (ii) which affects or could affect the
business, prospects, operations, assets, liabilities, or condition (financial or
otherwise) of the Borrower, except, in the case of clause (ii), where such
litigation, proceeding, inquiry, or other action could not be expected to have a
Material Adverse Effect in the judgment of the Lender, other than the securities
litigation disclosed in the Borrower's 12/21/96 audited financial statements.
(c) The Borrower shall have paid all fees and expenses
required to be paid by it to the Lender as of such date.
(d) The security interests in the Equipment related to the
initial Loan granted in favor of the Lender under this Agreement shall have been
duly perfected and shall constitute first priority liens.
SECTION 3.4. CONDITIONS PRECEDENT TO EACH LOAN. The
obligation of the Lender to make each Loan is subject to the satisfaction of the
following conditions precedent:
(a) the Lender shall have received the documents, agreements,
and instruments set forth in Section 3.3(a)(i) through (v) applicable to such
Loan, each in form and substance satisfactory to the Lender and its counsel and
each dated the date of such Loan or as of an earlier date acceptable to the
Lender;
(b) the Lender shall have received a Schedule of the Equipment
related to such Loan, in form and substance satisfactory to the Lender and its
counsel, and the security interests in such Equipment related to such Loan
granted in favor of the Lender under this Agreement shall have been duly
perfected and shall constitute first priority liens;
(c) all representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct on and as of
the date of such Loan as if then made, other than representations and warranties
that expressly relate solely to an earlier date, in which case they shall have
been true and correct as of such earlier date;
(d) no Event of Default or event which with the giving of
notice or the passage of time, or both, would constitute an Event of Default
shall have occurred and be continuing or would result from the making of the
requested Loan as of the date of such request; and
(e) the Borrower shall be deemed to have hereby reaffirmed and
ratified all security interests, liens, and other encumbrances heretofore
granted by the Borrower to the Lender.
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SECTION 4. THE BORROWER'S REPRESENTATIONS AND WARRANTIES.
SECTION 4.1. GOOD STANDING; QUALIFIED TO DO BUSINESS. The
Borrower (a) is duly organized, validly existing, and in good standing under the
laws of the State of its organization, (b) has the power and authority to own
its properties and assets and to transact the businesses in which it is
presently, or proposes to be, engaged, and (c) is duly qualified and authorized
to do business and is in good standing in every jurisdiction in which the
failure to be so qualified could have a Material Adverse Effect on (i) the
Borrower, (ii) the Borrower's ability to perform its obligations under the Loan
Documents, or (iii) the rights of the Lender hereunder.
SECTION 4.2. DUE EXECUTION, ETC. The execution, delivery,
and performance by the Borrower of each of the Loan Documents to which it is a
party are within the powers of the Borrower, do not contravene the
organizational documents, if any, of the Borrower, and do not (a) violate any
law or regulation, or any order or decree of any court or governmental
authority, (b) conflict with or result in a breach of, or constitute a default
under, any material indenture, mortgage, or deed of trust or any material lease,
agreement, or other instrument binding on the Borrower or any of its properties,
or (c) require the consent, authorization by, or approval of or notice to or
filing or registration with any governmental authority or other Person. This
Agreement is, and each of the other Loan Documents to which the Borrower is or
will be a party, when delivered hereunder or thereunder, will be, the legal,
valid, and binding obligation of the Borrower enforceable against the Borrower
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by general principles of equity.
SECTION 4.3. SOLVENCY; NO LIENS. The Borrower is Solvent
and will be Solvent upon the completion of all transactions contemplated to
occur hereunder (including, without limitation, the Loan to be made on the
Effective Date); the security interests granted herein constitute and shall at
all times constitute the first and only liens on the Collateral other than
Permitted Liens; and the Borrower is, or will be at the time additional
Collateral is acquired by it, the absolute owner of the Collateral with full
right to pledge, sell, consign, transfer, and create a security interest
therein, free and clear of any and all claims or liens in favor of any other
Person other than Permitted Liens.
SECTION 4.4. NO JUDGMENTS, LITIGATION. No judgments are
outstanding against the Borrower nor is there now pending or, to the best of the
Borrower's knowledge after diligent inquiry, threatened any litigation,
contested claim, or governmental proceeding by or against the Borrower except
judgments and pending or threatened litigation, contested claims, and
governmental proceedings which would not, in the aggregate, have a Material
Adverse Effect on the Borrower.
SECTION 4.5. NO DEFAULTS. The Borrower is not in default
or has not received a notice of default under any material contract, lease, or
commitment to which it is a party or by which it is bound. The Borrower knows of
no dispute regarding any contract, lease, or commitment which could have a
Material Adverse Effect on the Borrower.
SECTION 4.6. COLLATERAL LOCATIONS. On the date hereof,
each item of the Collateral is located at the place of business specified in the
applicable Schedule.
SECTION 4.7. NO EVENTS OF DEFAULT. No Event of Default has
occurred and is continuing nor has any event occurred which, with the giving of
notice or the passage of time, or both, would constitute an Event of Default.
SECTION 4.8. NO LIMITATION ON LENDER'S RIGHTS. Except as
permitted herein, none of the Collateral is subject to contractual obligations
that may restrict or inhibit the Lender's rights or abilities to sell or dispose
of the Collateral or any part thereof after the occurrence of an Event of
Default.
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SECTION 4.9.PERFECTION AND PRIORITY OF SECURITY INTEREST.
This Agreement creates a valid and, upon completion of all required filings of
financing statements, perfected first priority and exclusive security interest
in the Collateral, securing the payment of all the Obligations.
SECTION 4.10. MODEL AND SERIAL NUMBERS. The Schedules set
forth the true and correct model number and serial number of each item of
Equipment that constitutes Collateral.
SECTION 4.11. ACCURACY AND COMPLETENESS OF INFORMATION.
All data, reports, and information heretofore, contemporaneously, or hereafter
furnished by or on behalf of the Borrower in writing to the Lender or for
purposes of or in connection with this Agreement or any other Loan Document, or
any transaction contemplated hereby or thereby, are or will be true and accurate
in all material respects on the date as of which such data, reports, and
information are dated or certified and not incomplete by omitting to state any
material fact necessary to make such data, reports, and information not
misleading at such time. There are no facts now known to the Borrower which
individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect and which have not been specified herein, in the Financial
Statements, or in any certificate, opinion, or other written statement
previously furnished by the Borrower to the Lender.
SECTION 4.12. PRICE OF EQUIPMENT. The cost of each item of
Equipment does not exceed the fair and usual price for such type of equipment
purchased in like quantity and reflects all discounts, rebates and allowances
for the Equipment (including, without limitation, discounts for advertising,
prompt payment, testing, or other services) given to the Borrower by the
manufacturer, supplier, or any other person.
SECTION 5. COVENANTS OF THE BORROWER.
SECTION 5.1. EXISTENCE, ETC. The Borrower shall: (a)
retain its existence and its current yearly accounting cycle, (b) maintain in
full force and effect all licenses, bonds, franchises, leases, trademarks,
patents, contracts, and other rights necessary or desirable to the profitable
conduct of its business unless the failure to do so could not reasonably be
expected to have a Material Adverse Effect on the Borrower, (c) continue in, and
limit its operations to, the same general lines of business as those presently
conducted by it, and (d) comply with all applicable laws and regulations of any
federal, state, or local governmental authority, except for such laws and
regulations the violations of which would not, in the aggregate, have a Material
Adverse Effect on the Borrower.
SECTION 5.2. NOTICE TO THE LENDER. As soon as possible,
and in any event within five days after the Borrower learns of the following,
the Borrower will give written notice to the Lender of (a) any proceeding
instituted or threatened to be instituted by or against the Borrower in any
federal, state, local, or foreign court or before any commission or other
regulatory body (federal, state, local, or foreign) involving a sum, together
with the sum involved in all other similar proceedings, in excess of $50,000 in
the aggregate, (b) any contract that is terminated or amended and which has had
or could reasonably be expected to have a Material Adverse Effect on the
Borrower, (c) the occurrence of any Material Adverse Change with respect to the
Borrower, and (d) the occurrence of any Event of Default or event or condition
which, with notice or lapse of time or both, would constitute an Event of
Default, together with a statement of the action which the Borrower has taken or
proposes to take with respect thereto.
SECTION 5.3. MAINTENANCE OF BOOKS AND RECORDS. The
Borrower will maintain books and records pertaining to the Collateral in such
detail, form, and scope as the Lender shall require in its commercially
reasonable judgment. The Borrower agrees that the Lender or its agents may enter
upon the Borrower's premises at any time and from time to time, upon reasonable
notice and during normal business hours, and at any time upon the occurrence and
continuance of an Event of Default, for the purpose of inspecting the Collateral
and any and all records pertaining thereto.
SECTION 5.4. INSURANCE. The Borrower will maintain
insurance on the Collateral under such policies of insurance, with such
insurance companies, in such amounts, and covering such risks as are at all
times satisfactory to the Lender. All such policies shall be made payable to the
Lender, in case of loss, under a
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standard non-contributory "lender" or "secured party" clause and are to contain
such other provisions as the Lender may reasonably require to protect the
Lender's interests in the Collateral and to any payments to be made under such
policies. Certificates of insurance policies are to be delivered to the Lender,
premium prepaid, with the loss payable endorsement in the Lender's favor, and
shall provide for not less than thirty days' prior written notice to the Lender,
of any alteration or cancellation of coverage. If the Borrower fails to maintain
such insurance, the Lender may arrange for (at the Borrower's expense and
without any responsibility on the Lender's part for) obtaining the insurance.
Unless the Lender shall otherwise agree with the Borrower in writing, the Lender
shall have the sole right, in the name of the Lender or the Borrower, to file
claims under any insurance policies, to receive and give acquittance for any
payments that may be payable thereunder, and to execute any endorsements,
receipts, releases, assignments, reassignments, or other documents that may be
necessary to effect the collection, compromise, or settlement of any claims
under any such insurance policies.
SECTION 5.5. TAXES. The Borrower will pay, when due, all
taxes, assessments, claims, and other charges ("Taxes") lawfully levied or
assessed against the Borrower or the Collateral other than taxes that are being
diligently contested in good faith by the Borrower by appropriate proceedings
promptly instituted and for which an adequate reserve is being maintained by the
Borrower in accordance with GAAP. If any Taxes remain unpaid after the date
fixed for the payment thereof, or if any lien shall be claimed therefor, then,
without notice to the Borrower, but on the Borrower's behalf, the Lender may pay
such Taxes, and the amount thereof shall be included in the Obligations.
SECTION 5.6. BORROWER TO DEFEND COLLATERAL AGAINST CLAIMS;
FEES ON COLLATERAL. The Borrower will defend the Collateral against all claims
and demands of all Persons at any time claiming the same or any interest
therein. The Borrower will not permit any notice creating or otherwise relating
to liens on the Collateral or any portion thereof to exist or be on file in any
public office other than Permitted Liens. The Borrower shall promptly pay, when
payable, all transportation, storage, and warehousing charges and license fees,
registration fees, assessments, charges, permit fees, and taxes (municipal,
state, and federal) which may now or hereafter be imposed upon the ownership,
leasing, renting, possession, sale, or use of the Collateral, other than taxes
on or measured by the Lender's income and fees, assessments, charges, and taxes
which are being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are maintained to the
extent required by GAAP.
SECTION 5.7. NO CHANGE OF LOCATION, STRUCTURE, OR
IDENTITY. The Borrower will not (a) change the location of its chief executive
office or establish any place of business other than those specified herein or
(b) move or permit the movement of any item of Collateral from the location
specified in the applicable Schedule, except that the Borrower may change its
chief executive office and keep Collateral at other locations within the United
States provided that the Borrower has delivered to the Lender (i) prior written
notice thereof and (ii) duly executed financing statements and other agreements
and instruments (all in form and substance satisfactory to the Lender) necessary
or, in the opinion of the Lender, desirable to perfect and maintain in favor of
the Lender a first priority security interest in the Collateral. Notwithstanding
anything to the contrary in the immediately preceding sentence, the Borrower may
keep any Collateral consisting of motor vehicles or rolling stock at any
location in the United States provided that the Lender's security interest in
any such Collateral is conspicuously marked on the certificate of title thereof
and the Borrower has complied with the provisions of Section 5.9.
SECTION 5.8. USE OF COLLATERAL; LICENSES; REPAIR. The
Collateral shall be operated by competent, qualified personnel in connection
with the Borrower's business purposes, for the purpose for which the Collateral
was designed and in accordance with applicable operating instructions, laws, and
government regulations, and the Borrower shall use every reasonable precaution
to prevent loss or damage to the Collateral from fire and other hazards. The
Collateral shall not be used or operated for personal, family, or household
purposes. The Borrower shall procure and maintain in effect all orders,
licenses, certificates, permits, approvals, and consents required by federal,
state, or local laws or by any governmental body, agency, or authority in
connection with the delivery, installation, use, and operation of the
Collateral. The Borrower shall keep all of the Equipment in a satisfactory state
of repair and satisfactory operating condition in accordance with industry
standards, and will make all repairs and replacements when and where necessary
and practical. The Borrower will not waste or destroy the Equipment or any part
thereof, and will not be negligent in the care or use thereof. The Equipment
shall not be
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annexed or affixed to or become part of any realty without the Lender's prior
written consent.
SECTION 5.9. FURTHER ASSURANCES. The Borrower will,
promptly upon request by the Lender, execute and deliver or use its best efforts
to obtain any document required by the Lender (including, without limitation,
warehouseman or processor disclaimers, mortgagee waivers, landlord disclaimers,
or subordination agreements with respect to the Obligations and the Collateral),
give any notices, execute and file any financing statements, mortgages, or other
documents (all in form and substance satisfactory to the Lender), ▇▇▇▇ any
chattel paper, deliver any chattel paper or instruments to the Lender, and take
any other actions that are necessary or, in the opinion of the Lender, desirable
to perfect or continue the perfection and the first priority of the Lender's
security interest in the Collateral, to protect the Collateral against the
rights, claims, or interests of any Persons, or to effect the purposes of this
Agreement. The Borrower hereby authorizes the Lender to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of the Borrower where permitted
by law. A carbon, photographic, or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. To the extent
required under this Agreement, the Borrower will pay all costs incurred in
connection with any of the foregoing.
SECTION 5.10. NO DISPOSITION OF COLLATERAL. The Borrower
will not in any way hypothecate or create or permit to exist any lien, security
interest, charge, or encumbrance on or other interest in any of the Collateral,
except for the lien and security interest granted hereby and Permitted Liens
which are junior to the lien and security interest of the Lender, and the
Borrower will not sell, transfer, assign, pledge, collaterally assign, exchange,
or otherwise dispose of any of the Collateral other than in a de minimus
transaction in the ordinary course of business. In the event the Collateral, or
any part thereof, is sold, transferred, assigned, exchanged, or otherwise
disposed of in violation of these provisions, the security interest of the
Lender shall continue in such Collateral or part thereof notwithstanding such
sale, transfer, assignment, exchange, or other disposition, and the Borrower
will hold the proceeds thereof in a separate account for the benefit of the
Lender. Following such a sale, the Borrower will transfer such proceeds to the
Lender in kind.
SECTION 5.11. NO LIMITATION ON LENDER'S RIGHTS. The
Borrower will not enter into any contractual obligations which may restrict or
inhibit the Lender's rights or ability to sell or otherwise dispose of the
Collateral or any part thereof.
SECTION 5.12. PROTECTION OF COLLATERAL. Upon notice to the
Borrower (provided that if no Event of Default has occurred and is continuing
the Lender need not give any notice), the Lender shall have the right at any
time to make any payments and do any other acts the Lender may deem necessary to
protect its security interests in the Collateral, including, without limitation,
the rights to satisfy, purchase, contest, or compromise any encumbrance, charge,
or lien which, in the reasonable judgment of the Lender, appears to be prior to
or superior to the security interests granted hereunder, and appear in, and
defend any action or proceeding purporting to affect its security interests in,
or the value of, any of the Collateral. The Borrower hereby agrees to reimburse
the Lender for all payments made and expenses incurred to protect its rights
under this Agreement including reasonable fees, expenses, and disbursements of
attorneys and paralegals (including the allocated costs of in-house counsel)
acting for the Lender, including any of the foregoing payments under, or acts
taken to protect its security interests in, any of the Collateral, which amounts
shall be secured under this Agreement, and agrees it shall be bound by any
payment made or act taken by the Lender hereunder absent the Lender's gross
negligence or willful misconduct. The Lender shall have no obligation to make
any of the foregoing payments or perform any of the foregoing acts.
SECTION 5.13. DELIVERY OF ITEMS. The Borrower will (a)
promptly (but in no event later than three Business Days) after its receipt
thereof, deliver to the Lender any documents or certificates of title issued
with respect to any property included in the Collateral, and any promissory
notes, letters of credit or instruments related to or otherwise in connection
with any property included in the Collateral, which in any such
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case come into the possession of the Borrower, or shall cause the issuer thereof
to deliver any of the same directly to the Lender, in each case with any
necessary endorsements in favor of the Lender and (b) deliver to the Lender as
soon as available copies of any and all press releases and other similar
communications issued by the Borrower.
SECTION 5.14. SOLVENCY. The Borrower shall be and remain
Solvent at all times.
SECTION 5.15. FUNDAMENTAL CHANGES. The Borrower shall not
(a) amend or modify its name, unless the Borrower delivers to the Lender thirty
days prior to any such proposed amendment or modification written notice of such
amendment or modification and within ten days before such amendment or
modification delivers executed Uniform Commercial Code financing statements (in
form and substance satisfactory to the Lender) or (b) merge or consolidate with
any other entity, in each case without the Lender's prior written consent which
shall not be unreasonably withheld.
SECTION 5.16. ADDITIONAL REQUIREMENTS. The Borrower shall
take all such further actions and execute all such further documents and
instruments as the Lender may reasonably request.
SECTION 6. FINANCIAL STATEMENTS. Until the payment and
satisfaction in full of all Obligations, the Borrower shall deliver to the
Lender the following financial information:
SECTION 6.1. ANNUAL FINANCIAL STATEMENTS. As soon as
available, but not later than 120 days after the end of each fiscal year of the
Borrower and its consolidated subsidiaries, the consolidated balance sheet,
income statement, and statements of cash flows and shareholders equity for the
Borrower and its consolidated subsidiaries (the "Financial Statements") for such
year, reported on by independent certified public accountants without an adverse
qualification; and
SECTION 6.2. QUARTERLY FINANCIAL STATEMENTS. As soon as
available, but not later than 60 days after the end of each of the first three
fiscal quarters in any fiscal year of the Borrower and its consolidated
subsidiaries, the Financial Statements for such fiscal quarter, together with a
certification duly executed by a responsible officer of the Borrower that such
Financial Statements have been prepared in accordance with GAAP and are fairly
stated in all material respects (subject to normal year-end audit adjustments).
SECTION 7. EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) the Borrower shall fail to pay within five days of
when due any amount required to be paid by the Borrower under or in connection
with any Note and this Agreement;
(b) any representation or warranty made or deemed made by
the Borrower under or in connection with any Loan Document or any Financial
Statement shall prove to have been false or incorrect in any material respect
when made;
(c) the Borrower shall fail to perform or observe (i) any
of the terms, covenants or agreements contained in Sections 5.4, 5.7, 5.10,
5.14, or 5.15 hereof or (ii) any other material term, covenant, or agreement
contained in any Loan Document (other than the other Events of Default specified
in this Section 7) and such failure remains unremedied for the earlier of
fifteen days from (A) the date on which the Lender has given the Borrower
written notice of such failure and (B) the date on which the Borrower knew or
should have known of such failure;
(d) any material provision of any Loan Document to which
the Borrower is a party shall for any reason cease to be valid and binding on
the Borrower, or the Borrower shall so state;
(e) dissolution, liquidation, winding up, or cessation of
the Borrower's business, failure of the Borrower generally to pay its debts as
they mature, admission in writing by the Borrower of its inability generally to
pay its debts as they mature, or calling of a meeting of the Borrower's
creditors for purposes of
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compromising any of the Borrower's debts;
(f) the commencement by or against the Borrower of any
bankruptcy, insolvency, arrangement, reorganization, receivership, or similar
proceedings under any federal or state law and, in the case of any such
involuntary proceeding, such proceeding remains undismissed or unstayed for
forty-five days following the commencement thereof, or any action by the
Borrower is taken authorizing any such proceedings;
(g) an assignment for the benefit of creditors is made by
the Borrower, whether voluntary or involuntary, the appointment of a trustee,
custodian, receiver, or similar official for the Borrower or for any substantial
property of the Borrower, or any action by the Borrower authorizing any such
proceeding;
(h) the Borrower shall default in (i) the payment of
principal or interest on any indebtedness in excess of $50,000 (other than the
Obligations) beyond the period of grace, if any, provided in the instrument or
agreement under which such indebtedness was created; or (ii) the observance or
performance of any other agreement or condition relating to any such
indebtedness or contained in any instrument or agreement relating thereto, or
any other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of such
indebtedness to cause, with the giving of notice if required, such indebtedness
to become due prior to its stated maturity;
(i) the Borrower suffers or sustains a Material Adverse
Change;
(j) any tax lien, other than a Permitted Lien, is filed of
record against the Borrower and is not bonded or discharged within five Business
Days;
(k) any judgment which has had or could reasonably be
expected to have a Material Adverse Effect on the Borrower and such judgment
shall not be stayed, vacated, bonded, or discharged within sixty days;
(l) any material covenant, agreement, or obligation, as
determined in the sole discretion of the Lender, made by the Borrower and
contained in or evidenced by any of the Loan Documents shall cease to be
enforceable, or shall be determined to be unenforceable, in accordance with its
terms; the Borrower shall deny or disaffirm the Obligations under any of the
Loan Documents or any liens granted in connection therewith; or any liens
granted on any of the Collateral in favor of the Lender shall be determined to
be void, voidable, or invalid, or shall not be given the priority contemplated
by this Agreement.
SECTION 8. REMEDIES. If any Event of Default shall have
occurred and be continuing:
(a) The Lender may, without prejudice to any of its other
rights under any Loan Document or Applicable Law, declare all Obligations to be
immediately due and payable (except with respect to any Event of Default set
forth in Section 7(f) hereof, in which case all Obligations shall automatically
become immediately due and payable without necessity of any declaration) without
presentment, representation, demand of payment, or protest, which are hereby
expressly waived.
(b) The Lender may take possession of the Collateral and,
for that purpose may enter, with the aid and assistance of any person or
persons, any premises where the Collateral or any part hereof is, or may be
placed, and remove the same.
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(c) The obligation of the Lender, if any, to make
additional Loans or financial accommodations of any kind to the Borrower shall
immediately terminate.
(d) The Lender may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein (or in any Loan
Document) or otherwise available to it, all the rights and remedies of a secured
party under the applicable Uniform Commercial Code (the "Code") whether or not
the Code applies to the affected Collateral and also may (i) require the
Borrower to, and the Borrower hereby agrees that it will at its expense and upon
request of the Lender forthwith, assemble all or part of the Collateral as
directed by the Lender and make it available to the Lender at a place to be
designated by the Lender that is reasonably convenient to both parties and (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Lender's
offices or elsewhere, for cash, on credit, or for future delivery, and upon such
other terms as the Lender may deem commercially reasonable. The Borrower agrees
that, to the extent notice of sale shall be required by law, at least ten days'
notice to the Borrower of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(e) All cash proceeds received by the Lender in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Lender, be held by the Lender as
collateral for, or then or at any time thereafter applied in whole or in part by
the Lender against, all or any part of the Obligations in such order as the
Lender shall elect. Any surplus of such cash or cash proceeds held by the Lender
and remaining after the full and final payment of all the Obligations shall be
paid over to the Borrower or to such other Person to which the Lender may be
required under applicable law, or directed by a court of competent jurisdiction,
to make payment of such surplus.
SECTION 9. MISCELLANEOUS PROVISIONS.
SECTION 9.1. NOTICES. Except as otherwise provided herein,
all notices, approvals, consents, correspondence, or other communications
required or desired to be given hereunder shall be given in writing and shall be
delivered by overnight courier, hand delivery, or certified or registered mail,
postage prepaid, if to the Lender, then to Transamerica Technology Finance
Division, ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Assistant Vice President, Lease Administration, with a copy to the Lender at
Riverway II, West Office Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Legal Department, and if to the Borrower, then to LXR
Biotechnology, Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Vice
President Finance and Administration, or such other address as shall be
designated by the Borrower or the Lender to the other party in accordance
herewith. All such notices and correspondence shall be effective when received.
SECTION 9.2. HEADINGS. The headings in this Agreement are
for purposes of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
SECTION 9.3. ASSIGNMENTS. The Borrower shall not have the
right to assign any Note or this Agreement or any interest therein unless the
Lender shall have given the Borrower prior written consent and the Borrower and
its assignee shall have delivered assignment documentation in form and substance
satisfactory to the Lender in its sole discretion. The Lender may assign its
rights and delegate its obligations under any Note or this Agreement.
SECTION 9.4. AMENDMENTS, WAIVERS, AND CONSENTS. Any
amendment or waiver of any provision of this Agreement and any consent to any
departure by the Borrower from any provision of this Agreement shall be
effective only by a writing signed by the Lender and shall bind and benefit the
Borrower and the Lender and their respective successors and assigns, subject, in
the case of the Borrower, to the first sentence of Section 9.3.
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12
SECTION 9.5. INTERPRETATION OF AGREEMENT. Time is of the
essence in each provision of this Agreement of which time is an element. All
terms not defined herein or in a Note shall have the meaning set forth in the
applicable Code, except where the context otherwise requires. To the extent a
term or provision of this Agreement conflicts with any Note, or any term or
provision thereof, and is not dealt with herein with more specificity, this
Agreement shall control with respect to the subject matter of such term or
provision. Acceptance of or acquiescence in a course of performance rendered
under this Agreement shall not be relevant in determining the meaning of this
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
SECTION 9.6. CONTINUING SECURITY INTEREST. This Agreement
shall create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until the indefeasible payment in full of the
Obligations, (ii) be binding upon the Borrower and its successors and assigns
and (iii) inure, together with the rights and remedies of the Lender hereunder,
to the benefit of the Lender and its successors, transferees, and assigns.
SECTION 9.7. REINSTATEMENT. To the extent permitted by
law, this Agreement and the rights and powers granted to the Lender hereunder
and under the Loan Documents shall continue to be effective or be reinstated if
at any time any amount received by the Lender in respect of the Obligations is
rescinded or must otherwise be restored or returned by the Lender upon the
insolvency, bankruptcy, dissolution, liquidation, or reorganization of the
Borrower or upon the appointment of any receiver, intervenor, conservator,
trustee, or similar official for the Borrower or any substantial part of its
assets, or otherwise, all as though such payments had not been made.
SECTION 9.8. SURVIVAL OF PROVISIONS. All representations,
warranties, and covenants of the Borrower contained herein shall survive the
execution and delivery of this Agreement, and shall terminate only upon the full
and final payment and performance by the Borrower of the Obligations secured
hereby.
SECTION 9.9. INDEMNIFICATION. The Borrower agrees to
indemnify and hold harmless the Lender and its directors, officers, agents,
employees, and counsel from and against any and all costs, expenses, claims, or
liability incurred by the Lender or such Person hereunder and under any other
Loan Document or in connection herewith or therewith, unless such claim or
liability shall be due to willful misconduct or gross negligence on the part of
the Lender or such Person.
SECTION 9.10. COUNTERPARTS; TELECOPIED SIGNATURES. This
Agreement may be executed in counterparts, each of which when so executed and
delivered shall be an original, but both of which shall together constitute one
and the same instrument. This Agreement and each of the other Loan Documents and
any notices given in connection herewith or therewith may be executed and
delivered by telecopier or other facsimile transmission all with the same force
and effect as if the same was a fully executed and delivered original manual
counterpart.
SECTION 9.11. SEVERABILITY. In case any provision in or
obligation under this Agreement or any Note or any other Loan Document shall be
invalid, illegal, or unenforceable in any jurisdiction, the validity, legality,
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 9.12. DELAYS; PARTIAL EXERCISE OF REMEDIES. No
delay or omission of the Lender to exercise any right or remedy hereunder,
whether before or after the happening of any Event of Default, shall impair any
such right or shall operate as a waiver thereof or as a waiver of any such Event
of Default. No single or partial exercise by the Lender of any right or remedy
shall preclude any other or further exercise thereof, or preclude any other
right or remedy.
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SECTION 9.13. ENTIRE AGREEMENT. The Borrower and the
Lender agree that this Agreement, the Schedule hereto, and the Commitment Letter
are the complete and exclusive statement and agreement between the parties with
respect to the subject matter hereof, superseding all proposals and prior
agreements, oral or written, and all other communications between the parties
with respect to the subject matter hereof. Should there exist any inconsistency
between the terms of the Commitment Letter and this Agreement, the terms of this
Agreement shall prevail.
SECTION 9.14. SETOFF. In addition to and not in limitation
of all rights of offset that the Lender may have under Applicable Law, and
whether or not the Lender has made any demand or the Obligations of the Borrower
have matured, the Lender shall have the right to appropriate and apply to the
payment of the Obligations of the Borrower all deposits and other obligations
then or thereafter owing by the Lender to or for the credit or the account of
the Borrower.
SECTION 9.15. WAIVER OF JURY TRIAL. THE BORROWER AND THE
LENDER IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 9.16. GOVERNING LAW. THE VALIDITY, INTERPRETATION,
AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 9.17. VENUE; SERVICE OF PROCESS. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITUATED IN ▇▇▇▇ COUNTY, OR OF
THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY WAIVES, IN CONNECTION
WITH ANY SUCH ACTION OR PROCEEDING, (a) ANY OBJECTION, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND (b) THE RIGHT TO
INTERPOSE ANY NONCOMPULSORY SETOFF, COUNTERCLAIM, OR CROSS-CLAIM. THE BORROWER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT THE ADDRESS
FOR IT SPECIFIED IN SECTION 9.1 HEREOF. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER
JURISDICTION, SUBJECT IN EACH INSTANCE TO THE PROVISIONS HEREOF WITH RESPECT TO
RIGHTS AND REMEDIES.
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IN WITNESS WHEREOF, the undersigned Borrower has caused
this Agreement to be duly executed and delivered by its proper and duly
authorized officer as of the date first set forth above.
LXR BIOTECHNOLOGY INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: VP - Finance and Administration
Accepted as of the
16th day of May, 1997
TRANSAMERICA BUSINESS CREDIT CORPORATION
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
14
15
COLLATERAL ACCESS AGREEMENT Exhibit A
TRANSAMERICA BUSINESS CREDIT CORPORATION
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
May 5, 1997
Marina Westshore Partners
c/o Penterra Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: LXR Biotechnology, Inc.
Ladies and Gentlemen:
We have been asked by LXR Biotechnology, Inc., a Delaware
corporation (the "Company") to finance certain equipment (the "Equipment"),
which will be located at the address identified on Schedule A (the "Premises").
The obligations of the Company to us will be secured by, among other things, the
Equipment. We understand that the Company leases the Premises from you pursuant
to a lease or is the owner of the Premises, which is subject to a lien in favor
of you pursuant to a mortgage (such lease or mortgage being referred to as the
"Agreement").
In connection with the extensions of credit to be made to the
Company, Transamerica Business Credit Corporation, ("Transamerica") will be
making customary Uniform Commercial Code filings on behalf of Transamerica with
respect to the Equipment. In addition, we request your acknowledgment and
cooperation for preserving and enforcing Transamerica's security interests. To
expedite the consummation of the proposed financing, we would appreciate your
execution of this letter.
At the Company's request, to enable it to finance the
Equipment, and for other good and valuable consideration, you confirm and
acknowledge the following matters to us:
1. You will allow us, or our auditors or other designees,
reasonable access to the Premises to inspect the Equipment from time to time. In
addition, upon our request, during the term of the Agreement, you will grant us
and our designees access to the Premises for 90 days at reasonable times to show
the Equipment to potential purchasers and to remove the Equipment from the
Premises.
2. In the event that the Company defaults in its obligations
under the Agreement or you desire or elect to terminate or exercise remedies
under the Agreement for any reason, including a default by the Company under the
Agreement, you will notify us in writing of this fact prior to your terminating
or exercising remedies under the Agreement and retaking possession of the
Premises. You hereby confirm and acknowledge to us that you do not and will not
have any claim to or lien on any of the Equipment, whether such Equipment
constitutes fixtures or personal property.
We would appreciate your confirming to us your agreement to
the foregoing provisions of this letter by signing and returning to us this
letter at our address shown above.
Very truly yours,
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
ACKNOWLEDGED AND AGREED:
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: President
16
Exhibit B
PROMISSORY NOTE
Date: May 16, 1997
FOR VALUE RECEIVED, the undersigned promises to pay to the
order of Transamerica Business Credit Corporation or its assigns (the "Payee")
at its office located at Riverway II, West Office Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as the Payee or the holder
hereof may designate in writing, the principal amount of Three Hundred Thirty
Thousand One Hundred Forty Nine and 03/100 Dollars ($330,149.03) received by the
undersigned, plus interest, in lawful money of the United States and in
immediately available funds. This Note shall be payable commencing with a first
installment of Twenty Five Thousand Eight Hundred Fifty Seven and 92/100 Dollars
($25,857.92) payable on June 1, 1997 and thereafter in 34 consecutive equal
monthly installments of Ten Thousand Two Hundred Seventy Six and 88/100 Dollars
($10,276.88) commencing July 1, 1997 and a final balloon payment of Thirty Three
Thousand Fourteen and 90/100 Dollars ($33,014.90) ,equal to ten percent (10%) of
the original principal amount, on May 1, 2000 together with any other amounts
due and owing to Lender. No amount of principal paid or prepaid hereunder may be
reborrowed.
This Note is one of the Notes referred to in the Security
Agreement dated as of May 13, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Agreement"), between the undersigned and the
Payee and is subject and entitled to all provisions and benefits thereof.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Agreement.
If any installment of this Note is not paid within five
business days after its due date, the undersigned agrees to pay on demand, in
addition to the amount of such installment, an amount equal to 5% of such
installment, but only to the extent permitted by Applicable Law.
The undersigned shall have the right to prepay this Note at
any time on thirty days' prior written notice to the Payee. On the date of any
such prepayment, the undersigned shall pay, if such prepayment is made on or
after June 1, 1998 an amount equal to the present value of the remaining
payments (principal and interest) due hereunder discounted at 6% simple interest
per annum, together with all interest, fees and other amounts payable on the
amount so prepaid or in connection therewith to the date of such prepayment. Any
prepayments shall be applied to the installments hereof in the inverse order of
maturity.
Upon the maturity of this Note or the acceleration of the
maturity of this Note in accordance with the terms of the Agreement, the entire
unpaid principal amount on this Note, together with all interest, fees and other
amounts payable hereon or in connection herewith, shall be immediately due and
payable without further notice or demand, with interest on all such amounts at a
rate not to exceed the lawful limit, from the date of such maturity or
acceleration, as the case may be, until all such amounts have been paid.
If any payment on this Note becomes payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day.
The undersigned hereby waives diligence, demand, presentment,
protest and notice of any kind, and assents to extensions of the time of
payment, release, surrender or substitution of security, or forbearance or other
indulgence, without notice. The undersigned agrees to pay all amounts under this
Note without offset, deduction, claim, counterclaim, defense or recoupment, all
of which are hereby waived.
The Payee, the undersigned and any other parties to the Loan
Documents intend to contract in strict compliance with applicable usury law from
time to time in effect. In furtherance thereof such Persons stipulate and agree
that none of the terms and provisions contained in the Loan Documents shall ever
be construed to create a contract to pay, for the use, forbearance or detention
of money, interest in excess of the maximum amount of interest permitted to be
charged by Applicable Law from time to time in effect. Neither the undersigned
nor any present or future guarantors, endorsers, or other Persons hereafter
becoming liable for payment of any
17
Obligation shall ever be liable for unearned interest thereon or shall ever be
required to pay interest thereon in excess of the maximum amount that may be
lawfully charged under Applicable Law from time to time in effect, and the
provisions of this paragraph shall control over all other provisions of the Loan
Documents which may be in conflict or apparent conflict herewith. The Payee
expressly disavows any intention to charge or collect excessive unearned
interest or finance charges in the event the maturity of any Obligation is
accelerated. If (a) the maturity of any Obligation is accelerated for any
reason, (b) any Obligation is prepaid and as a result any amounts held to
constitute interest are determined to be in excess of the legal maximum, or (c)
the Payee or any other holder of any or all of the Obligations shall otherwise
collect amounts which are determined to constitute interest which would
otherwise increase the interest on any or all of the Obligations to an amount in
excess of that permitted to be charged by Applicable Law then in effect, then
all sums determined to constitute interest in excess of such legal limit shall,
without penalty, be promptly applied to reduce the then outstanding principal of
the related Obligations or, at the Payee's or such holder's option, promptly
returned to the undersigned upon such determination. In determining whether or
not the interest paid or payable, under any specific circumstance, exceeds the
maximum amount permitted under Applicable Law, the Payee and the undersigned
(and any other payors thereof) shall to the greatest extent permitted under
Applicable Law, (i) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof, and (iii) amortize, prorate, allocate, and spread the total
amount of interest through the entire contemplated term of this Note in
accordance with the amount outstanding from time to time thereunder and the
maximum legal rate of interest from time to time in effect under Applicable Law
in order to lawfully charge the maximum amount of interest permitted under
Applicable Law.
This Note may not be changed, modified or terminated orally,
but only by an agreement in writing signed by the undersigned and the Payee or
any holder hereof.
The undersigned shall, upon demand, pay to the Payee all costs
and expenses paid or incurred by the Payee in (A) enforcing or defending its
rights under or in respect of this Note or any of the other Loan Documents, (B)
collecting any of the liabilities by the undersigned to the Payee or otherwise
administering the Loan Documents, (C) foreclosing or otherwise collecting upon
any collateral and (D) obtaining any legal, accounting or other advice in
connection with any of the foregoing.
This Note shall be binding upon the successors and assigns of
the undersigned and inure to the benefit of the Payee and its successors,
endorsees and assigns. If any term or provision of this Note shall be held
invalid, illegal or unenforceable, the validity of all other terms and
provisions hereof shall in no way be affected thereby.
EACH OF THE UNDERSIGNED AND, BY ITS ACCEPTANCE HEREOF, THE
PAYEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY OF
ANY DISPUTE ARISING UNDER OR RELATING TO THIS NOTE AND AGREES THAT ANY SUCH
DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW.
LXR BIOTECHNOLOGY, INC.
By:
------------------------------
Name:
Title:
-2-
18
Exhibit C
April 15, 1997
▇▇. ▇▇▇▇▇▇ ▇▇▇▇
Vice President Finance and Administration
LXR Biotechnology, Inc. REVISED
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇▇▇▇:
Transamerica Business Credit Corporation-Technology Finance Division ("Lender)
is pleased to offer financing for the Equipment described below to LXR
Biotechnology Inc. ("Borrower"). This Commitment supersedes all prior
correspondence, proposals, and oral or other communications relating to lending
arrangements between Borrower and Lender.
The outline of this offer is as follows:
Borrower: LXR Biotechnology, Inc.
Lender: Transamerica Business Credit
Corporation-Technology Finance Division ("TFD")
and/or its affiliates, successors or assigns.
Guarantors: None
Equipment: All of Borrower's existing and new Scientific
Laboratory Equipment, Computer Equipment,
Furniture and Fixtures, Tenant Improvements and
all cash and non-cash proceeds (including
insurance proceeds) of all of the foregoing
(the "Collateral").
Loans: Lender shall make one loan for existing
equipment and/or tenant improvements and one or
a series of loans for new equipment, "New
Equipment Loans" (each a "Loan", unless
referred to individually).
Amount of Loan: Not to exceed $200,000 for existing Collateral
and/or tenant improvements and $500,000 for new
Equipment Loans.
Equipment Location: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
Anticipated Delivery: Through December 31, 1997.
Termination of Commitment: This commitment will terminate if the first
delivery of Equipment and funding is not
completed on or before May 15, 1997.
Loan Term
Commencement: Upon funding each Loan and/or New Equipment
Loan, which will occur upon delivery of the
Equipment or upon each completion of deliveries
of items of Equipment with aggregate cost of
not less than $100,000, and shall be no later
than
19
December 31, 1997.
Term: From each Loan Term Commencement until 36
months from the first day of the month next
following or coincident with that Loan Term
Commencement.
Repayment Terms: Monthly Payments equal to 3.10% of the
Loan shall be payable monthly in advance. The
first and last month's payment shall be payable
upon funding each Loan and/or New Equipment
Loan.
As of the date of each Loan Term Commencement,
the Monthly Payments shall be fixed for the
term. A schedule of the actual Monthly Payments
shall be provided by the Lender following each
Loan Term Commencement.
The Lender shall adjust the Monthly Payments as
of the date of each Loan Term Commencement
based on any change in the weekly average of
the interest rates of three-year U.S. Treasury
Notes over 6.16% (the "Base Rate") to the week
preceding the date of each Loan Term
Commencement, as published in the Wall Street
Journal. For each basis point change from the
Base Rate, the rate implicit in the Monthly
Payments will be adjusted by one basis point
and a new Monthly Payment calculated.
Balloon Payment: At the end of the 36 month Loan and each 36
month New Equipment Loan, the Borrower shall be
obligated to make one final balloon payment
equal to 10% of the original principal amount
of such Loan or New Equipment Loan, plus any
other amounts due and owing to Lender.
Interim Payments: In the event that the Loan Term Commencement is
not on the first day of the month, Interim
Payments shall accrue from each Loan Term
Commencement until the next following first day
of a month and shall be payable at the end of
that Month. Interim Payments shall be
calculated at the daily equivalent of the
currently adjusted Monthly Payment.
Documentation: The documentation relating to this transaction
shall implement the transaction contemplated by
this commitment letter to the satisfaction of
Lender and its counsel, shall contain
conditions precedent, representations,
warranties and covenants by Borrower and shall
provide for events of defaults and remedies,
all as required by Lender for transactions of
this type. The documentation shall include, but
not be limited to, the terms and conditions
described in this commitment letter.
Insurance: Prior to any delivery of Equipment, the
Borrower shall furnish a certificate of
insurance acceptable to the Lender in amount,
type and term, covering the Equipment including
primary, all risk, physical damage, property
damage and bodily injury with appropriate loss
payee and additional insured endorsements in
favor of Lender.
Representation and There shall be no actual or threatened conflict
Additional Covenants: with, or violation of, any regulatory statute,
standard or rule relating to the Borrower, its
present or future operations, or the Equipment.
All information supplied by the Borrower shall
be correct and shall not omit any statement
necessary to make the information supplied not
to be misleading. There shall be no material
breach of the representations and warranties of
the Borrower in the Loan. The representations
shall include that the cost of each item of
Equipment does not exceed the fair and usual
price for such type of equipment purchased in
like quantity and reflects all discounts,
rebates and allowances for the Equipment
2
20
given to Borrower by the manufacturer, supplier
or any other person including, without
limitation, discounts for advertising, prompt
payment, testing or other services.
Warrant Coverage: In consideration of the Lender's commitment to
enter into this loan transaction in accordance
with the terms herein, Lender will be granted
warrants to purchase 27,000 shares of the
common stock of the Borrower. The exercise
price will be $2.1875 per share. The warrants
will be exercisable from the date their
issuance and have a term of 7 years. Lender
shall have the option to exercise the Warrants
without payment of the exercise price and
receive only that number of shares which
represents the value of the difference between
the fair market value of the shares and the
exercise price (i.e., "net issuance" or
"cashless exercise"). Each Warrant will be
adjusted for stock splits, combinations, stock
dividends, reclassifications and exchanges, and
will enjoy other rights no less favorable than
the rights of any other holder of the
Borrower's capital stock. The shares issuable
under each Warrant will have piggyback
registration rights, including standard
indemnification and other provisions. Lender
may retain or transfer the Warrants or the
shares issuable thereunder, in whole or in
part, whether or not Lender sells the Loan or
any participation therein.
Conditions Precedent to 1. No material adverse change in the
Lending: financial condition, operations or
prospects of the Borrower prior to
funding.
2. Completion of the documentation and final
terms of the proposed financing
satisfactory to Lender and Lender's
counsel.
3. Results of all due diligence, including
lien, judgment and tax search and other
matters Lender may request shall be
satisfactory to Lender and Lender's
counsel.
4. Receipt by Lender of duly executed loan
documentation in form and substance
satisfactory to Lender and its counsel.
5. Lender shall receive a valid and perfected
first priority lien and security interest
in the Collateral of Borrower and Lender
shall have received satisfactory evidence
that there are no liens on any Collateral
except as expressly permitted herein.
6. Evidence of repayments of existing
indebtedness relating to any of Lender's
Collateral, and UCC and other lien
releases, as Lender deems appropriate.
7. Receipt and satisfactory review (which
will be at the sole discretion of Lender)
of final December 31, 1996 audited
financials for Borrower.
Fees and Expenses: The Borrower and Lender shall each be
responsible for its expenses (including
expenses of counsel and/or accountants) in
connection with the transaction.
Law: This letter and the proposed Loan are intended
to be governed by and construed in accordance
with Illinois law without regard to its
conflict of law provisions.
Indemnity: Borrower agrees to indemnify and to hold
harmless Lender and its officers, directors and
employees against all claims, damages,
liabilities and expenses which may be incurred
by or asserted against any such person in
connection with or arising out of this letter
and the transactions contemplated hereby, other
than for claims, damages, liability, and
expense resulting from such person's gross
negligence or willful misconduct.
Confidentiality: This letter is delivered to you with the
understanding that neither it nor its substance
shall be disclosed publicly or privately to any
third person except those who are in a
confidential relationship to you (such as your
legal counsel and accountants), or where the
same is required by law.
3
21
Upon completion of the initial takedown by
Borrower, the Borrower will no longer be
required to obtain Lender's prior written
consent to disclose the transaction
contemplated hereby.
Conditions of Acceptance: This Commitment Letter is intended to be a
summary of the most important elements of the
agreement to enter into a financing transaction
with Borrower, and is subject to all
requirements and conditions contained in loan
documentation proposed by Lender or its counsel
in the course of closing the financing
described herein. Not every provision that
imposes duties, obligations, burdens, or
limitations on Borrower is contained herein,
but shall be contained in the final loan
documentation satisfactory to Lender and its
counsel.
EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY SUIT, ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATED TO THIS
LETTER OR THE TRANSACTION DESCRIBED IN THIS
LETTER.
Commitment Fee: The $10,000 Application Fee previously paid by
Borrower (all of which is presently held by
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Company, LLC) shall be applied
to the Commitment Fee. The Commitment Fee shall
be applied to the first monthly payments under
the Loan on a prorata basis until it has been
exhausted.
Commitment Expiration: This Commitment shall expire on April 11, 1997,
unless prior thereto either extended in writing
by the Lender or accepted as provided below by
the Borrower.
Should you have any questions, please call me. If you wish to accept this
Commitment, please so indicate by signing and returning the enclosed duplicate
copy of this letter to me by April 11, 1997.
Yours truly,
TRANSAMERICA BUSINESS CREDIT
CORPORATION-TECHNOLOGY FINANCE
DIVISION
By /s/ ▇▇▇▇ ▇▇▇▇
------------------------------
▇▇▇▇ ▇▇▇▇
Vice President
Credit
Accepted this 15th day of April, 1997
LXR BIOTECHNOLOGY, INC.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: VP-Finance and Administration
4