MASTER LOAN AND SECURITY AGREEMENT
THIS AGREEMENT dated as of June 18, 1997, is made by GalaGen 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.
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.
Exempt Property shall mean the property covered by those certain financing
statements on file with the Minnesota Secretary of State with file number
1905942, listing Cargill Leasing Corporation ("Cargill") as secured party and
9700264, also listing Cargill as secured party.
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.
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, 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 A.
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; (d) attachment or judgment liens that do not constitute an Event
of Default; (e) any security interest, lien or encumbrance in favor of the
Lender; (f) any purchase money security interest, security interest for lease
payment obligations or other lien or encumbrance incurred in connection with the
acquisition of equipment for use in the business of Borrower; (g) any security
interest, lien or encumbrance on the Exempt Property; (h) liens, charges or
encumbrances permitted under the Side Agreement; and (i) other liens, charges or
encumbrances incidental to the conduct of the Borrower's business or the
ownership of its property which are not incurred in connection with borrowing of
money or obtaining advances or credit.
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.
Side Agreement shall mean the letter agreement dated June 18, 1997 between
Borrower and Lender.
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.
2
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 fixed assets other than the Exempt Property, including,
without limitation, all equipment, goods, tenant improvements, fixtures, and the
specific items of 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, know-how, 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
$50,000, 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 18, 1997
and attached hereto as Exhibit B (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 and except as
permitted by the Side Agreement, 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) 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;
(v) 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
3
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; and
(vi) such other agreements and instruments as the Lender deems
necessary in its sole and absolute discretion in connection with the
transactions contemplated hereby.
(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.
(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.
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
4
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.
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 (including Borrower's reports on Forms 10-K
and 10-Q) previously furnished by the Borrower to
5
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 or contemplated
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. Subject to
the consent of Borrower's landlord, Land O'Lakes, Inc. (which consent Borrower
shall use its best efforts to obtain), the Borrower agrees that the Lender or
its agents may enter upon the Borrower's premises at any time and from time to
time 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 on Equipment shall be made payable to the Lender, in
case of loss, under a 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,
6
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.
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. 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 except in the ordinary course of business. In
the event the
7
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 an 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 under this Agreement
including 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 one Business Day) after its receipt thereof, deliver to the
Lender any documents or certificates of title issued with respect to any
property included in the Collateral, and any promissory notes, letters of credit
or instruments related to or otherwise in connection with any property included
in the Collateral, which in any such case come into the possession of the
Borrower, or shall cause the issuer thereof to deliver any of the same directly
to the Lender, in each case with any necessary endorsements in favor of the
Lender and (b) deliver to the Lender as soon as available copies of any and all
press releases and other similar communications issued by the Borrower.
SECTION 5.14. Solvency. The Borrower shall be and remain Solvent at all
times.
SECTION 5.15. 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
without the Lender's prior written consent which shall not be withheld if (i)
the Borrower is the survivor of such merger or consolidation and remains in
compliance with all the terms and conditions of the Loan Documents or any other
survivor of such merger or consolidation assumes all the Obligations, including,
without limitation, all of the Borrower's payment obligations, pursuant to
assignment documentation acceptable to the Lender in its sole discretion, (ii)
in the reasonable judgment of the Lender, the ability of such surviving entity
to perform its obligations hereunder is no worse than that of the Borrower
immediately before such merger or consolidation, and (iii) such surviving entity
delivers Uniform Commercial Code financing statements (Form UCC-1) duly executed
by the surviving entity (naming the Lender as secured party and the surviving
entity as debtor and in form acceptable for filing in all jurisdictions that the
Lender deems necessary or advisable 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 advisable to
perfect and protect the priority of the security interests granted by the
Borrower hereunder).
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 to carry out the intent and purpose of the Loan
Documents.
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:
8
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 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 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 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 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 material 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;
9
(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; or
(m) there is a change, which change results from a single transaction or
series of related transactions, but not from the sale of newly issued securities
to investors, in more than 50% of the ownership of any equity interests of the
Borrower on the date hereof.
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, except that Lender shall have no rights to take possession of Collateral
consisting of improvements to the premises where the Exempt Property is, or may
be, placed or to take possession of parts, accessories or attachments to Exempt
Property.
(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.
10
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 GalaGen Inc., at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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.
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.
11
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.
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
12
OR PROCEEDING, 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. 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.
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.
GALAGEN INC.
By:
-----------------------------
Name:
Title:
Accepted as of the
____ day of June, 1997
TRANSAMERICA BUSINESS CREDIT CORPORATION
By:
-------------------------------------
Name:
Title:
13
EXHIBIT A
PROMISSORY NOTE
Date: ___________
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 __________________and
00/100 Dollars ($_______.__) 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 _____________00/100
Dollars ($_______.__) payable on _____ __, 19__ and thereafter in 46 consecutive
equal monthly installments of ___________ 00/100 Dollars ($_____.__) commencing
_____ __, 19__ and a final balloon payment on ____ __, 20__ of _______________
($______.__) together with any amounts due and owing the Lender. No amount of
principal paid or prepaid hereunder may be reborrowed.
This Note is one of the Notes referred to in the Master Loan and Security
Agreement dated as of May 1, 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 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, an amount equal to the present value of
the remaining payments (principal and interest) due hereunder (i) if paid prior
to June 1, 1999 discounted at 6% simple interest per annum, or (ii) if paid
after June 1, 1999 discounted at 10% 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 of
eighteen percent (18%) per annum, 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.
14
The Payee, the undersigned and any other parties to the Loan Documents
intend to contract in strict compliance with applicable usury law from time to
time in effect. In furtherance thereof such Persons stipulate and agree that
none of the terms and provisions contained in the Loan Documents shall ever be
construed to create a contract to pay, for the use, forbearance or detention of
money, interest in excess of the maximum amount of interest permitted to be
charged by Applicable Law from time to time in effect. Neither the undersigned
nor any present or future guarantors, endorsers, or other Persons hereafter
becoming liable for payment of any Obligation shall ever be liable for unearned
interest thereon or shall ever be required to pay interest thereon in excess of
the maximum amount that may be lawfully charged under Applicable Law from time
to time in effect, and the provisions of this paragraph shall control over all
other provisions of the Loan Documents which may be in conflict or apparent
conflict herewith. The Payee expressly disavows any intention to charge or
collect excessive unearned interest or finance charges in the event the maturity
of any Obligation is accelerated. If (a) the maturity of any Obligation is
accelerated for any reason, (b) any Obligation is prepaid and as a result any
amounts held to constitute interest are determined to be in excess of the legal
maximum, or (c) the Payee or any other holder of any or all of the Obligations
shall otherwise collect amounts which are determined to constitute interest
which would otherwise increase the interest on any or all of the Obligations to
an amount in excess of that permitted to be charged by Applicable Law then in
effect, then all sums determined to constitute interest in excess of such legal
limit shall, without penalty, be promptly applied to reduce the then outstanding
principal of the related Obligations or, at the Payee's or such holder's option,
promptly returned to the undersigned upon such determination. In determining
whether or not the interest paid or payable, under any specific circumstance,
exceeds the maximum amount permitted under Applicable Law, the Payee and the
undersigned (and any other payors thereof) shall to the greatest extent
permitted under Applicable Law, (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and
spread the total amount of interest through the entire contemplated term of this
Note in accordance with the amount outstanding from time to time thereunder and
the maximum legal rate of interest from time to time in effect under Applicable
Law in order to lawfully charge the maximum amount of interest permitted under
Applicable Law.
This Note may not be changed, modified or terminated orally, but only by an
agreement in writing signed by the undersigned and the Payee or any holder
hereof.
The undersigned shall, upon demand, pay to the Payee all costs and expenses
incurred by the Payee (including the fees and disbursements of counsel and other
professionals) in connection with the preparation, execution and delivery of
this Note and all other Loan Documents, and in connection with the
administration, modification and amendment of the Loan Documents, and pay to the
Payee all costs and expenses (including the fees and disbursements of counsel
and other professionals) paid or incurred by the Payee in (A) enforcing or
defending its rights under or in respect of this Note or any of the other Loan
Documents, (B) collecting any of the liabilities by the undersigned to the Payee
or otherwise administering the Loan Documents, (C) foreclosing or otherwise
collecting upon any collateral and (D) obtaining any legal, accounting or other
advice in connection with any of the foregoing.
This Note shall be binding upon the successors and assigns of the
undersigned and inure to the benefit of the Payee and its successors, endorsees
and assigns. If any term or provision of this Note shall be held invalid,
illegal or unenforceable, the validity of all other terms and provisions hereof
shall in no way be affected thereby.
15
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.
GALAGEN INC.
By:
---------------------------------
Name:
Title:
16
EXHIBIT B
April 18, 1997
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
GalaGen, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇▇▇:
Transamerica Business Credit Corporation-Technology Finance Division ("Lender)
is pleased to offer financing for the Equipment described below to GalaGen, 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: GalaGen, Inc.
Lender: Transamerica Business Credit Corporation-
Technology Finance Division ("TFD") and/or its
affiliates, successors or assigns.
Guarantors: None
Equipment: Laboratory Equipment, Pilot Plant, Computer
Equipment and Tenant Improvements.
Loans: Lender shall make one loan or a series of loans
for new equipment (each a "Loan").
Security: Lender shall be granted a perfected first
priority interest in all fixed assets of the
Borrower now owned or hereafter acquired and
all cash and non-cash proceeds (including
insurance proceeds) of all of the foregoing
(the "Collateral").
Amount of Loan: Not to exceed $2,000,000 (Tenant Improvements
not to exceed $1,111,700).
Equipment Location: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Anticipated Delivery: Through June 30, 1998.
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 making each 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 $50,000,
and shall be no later than June 30, 1998.
17
Term: From each Loan Term Commencement until 48
months from the first day of the month next
following or coincident with that Loan Term
Commencement.
Repayment Terms: Monthly Payments equal to 2.5782% of the Loan
shall be payable monthly in advance. The first
and last month's payment shall be payable upon
each 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 increase the Monthly Payments
as of the date of each Loan Term Commencement
commensurate to the change in the weekly
average of the interest rates of four-year U.S.
Treasury Securities from the week ending
February 28, 1997 to the week preceding the
date of each Loan Term Commencement, as
published in the Wall Street Journal.
Balloon Payment: At the end of each 48 month Loan, the Borrower
shall be obligated to make one final balloon
payment equal to 12.5% of the original
principal amount of such 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 representation and warranties of
the Borrower in the Loan. The representations
shall include that the Equipment 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 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
18
shares of the Borrower's common stock in an
amount determined as follows: The aggregate
exercise price of the warrants shall be
$100,000 (5% of the aggregate loan commitment
of $2,000,000), and the exercise price per
share will be the closing price of the
Borrower's stock on the date of this commitment
by Lender. The warrants will be exercisable
from the date of issuance, and have a term of,
5 years. The warrants will have a "net
exercise" option. Lender may retain or transfer
the warrants or the shares issuable thereunder,
in whole or the part, whether or not the 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 of any Lender's Collateral,
and UCC and other lien releases, as
Lender deems appropriate.
7. A Uniform Commercial Code Fixture Filing.
8. Satisfactory review of Lender's
Scientific Advisory Board prior to
funding.
Fees and Expenses: The Borrower shall be responsible for the
Lender's reasonable expenses (including legal
expenses) 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 and then only on the
basis that it not be further disclosed, which
conditions the Borrower and its agents agree to
be bound by upon acceptance of this letter
without limiting the generality of the
foregoing, name of such persons shall use or
refer to Lender or to any affiliated name in
any disclosures made in connection with any of
the transactions without Lender's prior written
consent.
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 it 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
19
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: A non-refundable Commitment Fee equal to 1% of
the Loan shall be payable to Lender upon
acceptance of this Commitment. The $14,200
Application Fee previously paid by Borrower
shall be applied to the Commitment Fee leaving
an outstanding balance of $5,800. The
Commitment Fee shall be first applied to the
costs and expenses of the Lender in connection
with the transaction, and any remainder shall
be applied to the second month's payment under
the Loan.
Commitment Expiration: This Commitment shall expire on April 25, 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 25, 1997.
Yours truly,
TRANSAMERICA BUSINESS CREDIT
CORPORATION-TECHNOLOGY FINANCE
DIVISION
By
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President
Marketing
Accepted this _____day of _______________, 1997
GalaGen, Inc.
By
---------------------------------
Name:
Title:
20
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
STOCK SUBSCRIPTION WARRANT
To Purchase Common Stock of
GalaGen, Inc. (the "Company")
DATE OF INITIAL ISSUANCE: July 1, 1997
THIS CERTIFIES THAT for value received, TRANSAMERICA BUSINESS CREDIT
CORPORATION or its registered assigns (hereinafter called the "Holder") is
entitled to purchase from the Company, at any time during the Term of this
Warrant, Forty Thousand (40,000) shares of common stock, $.01 par value, of the
Company (the "Common Stock"), at the Warrant Price, payable in lawful money of
the United States of America to be paid upon the exercise hereof. The exercise
of this Warrant shall be subject to the provisions, limitations and restrictions
herein contained, and may be exercised in whole or in part.
SECTION 1. Definitions.
For all purposes of this Warrant, the following terms shall have the
meanings indicated:
Common Stock - shall mean and include the Company's authorized Common
Stock, $.01 par value, as constituted at the date hereof.
Exchange Act - shall mean the Securities Exchange Act of 1934, as amended
from time to time.
Securities Act - the Securities Act of 1933, as amended.
Term of this Warrant - shall mean the period beginning on the date of
initial issuance hereof and ending on June 30, 2002.
Warrant Price - $2.50 per share, subject to adjustment in accordance
with Section 5 hereof.
Warrant Shares - shares of Common Stock purchased or purchasable by the
Holder of this Warrant upon the exercise hereof.
SECTION 2. Exercise of Warrant.
2.1. Procedure for Exercise of Warrant. To exercise this Warrant in whole
or in part (but not as to any fractional share of Common Stock), the Holder
shall deliver to the Company at its office referred to in Section 12 hereof at
any time and from time to time during the Term of this Warrant: (i) the Notice
of Exercise in the form attached hereto, (ii) cash, certified or official bank
check payable to the order of the Company, wire transfer of funds to the
Company's account, or evidence of any indebtedness
21
of the Company to the Holder (or any combination of any of the foregoing) in the
amount of the Warrant Price for each share being purchased, and (iii) this
Warrant. Notwithstanding any provisions herein to the contrary, if the Current
Market Price (as defined in Section 5) is greater than the Warrant Price (at the
date of calculation, as set forth below), in lieu of exercising this Warrant as
hereinabove permitted, the Holder may elect to receive shares of Common Stock
equal to the value (as determined below) of this Warrant (or the portion thereof
being canceled) by surrender of this Warrant at the office of the Company
referred to in Section 12 hereof, together with the Notice of Exercise, in which
event the Company shall issue to the Holder that number of shares of Common
Stock computed using the following formula:
CS = WCS x (CMP-WP)
------------------
CMP
Where
CS equals the number of shares of Common Stock to be issued to the
Holder
WCS equals the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being exercised,
the portion of the Warrant being exercised (at the date of such
calculation)
CMP equals the Current Market Price (at the date of such calculation)
WP equals the Warrant Price (as adjusted to the date of such
calculation)
In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the shares of Common Stock so purchased,
registered in the name of the Holder or such other name or names as may be
designated by the Holder, shall be delivered to the Holder hereof within a
reasonable time, not exceeding fifteen (15) days, after the rights represented
by this Warrant shall have been so exercised; and, unless this Warrant has
expired, a new Warrant representing the number of shares (except a remaining
fractional share), if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the Holder hereof within such time.
The person in whose name any certificate for shares of Common Stock is issued
upon exercise of this Warrant shall for all purposes be deemed to have become
the holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price and any applicable taxes was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
2.2. Transfer Restriction Legend. Each certificate for Warrant Shares shall
bear the following legend (and any additional legend required by (i) any
applicable state securities laws and (ii) any securities exchange upon which
such Warrant Shares may, at the time of such exercise, be listed) on the face
thereof unless at the time of exercise such Warrant Shares shall be registered
under the Securities Act:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold or
transferred in the absence of such registration or an exemption
therefrom under said Act."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution under a registration statement of
22
the securities represented thereby) shall also bear such legend unless, in the
opinion of counsel for the holder thereof (which counsel shall be reasonably
satisfactory to counsel for the Company) the securities represented thereby are
not, at such time, required by law to bear such legend.
SECTION 3. Covenants as to Common Stock. The Company covenants and agrees that
all shares of Common Stock that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issue thereof. The Company further covenants and agrees that it will pay
when due and payable any and all federal and state taxes which may be payable in
respect of the issue of this Warrant or any Common Stock or certificates
therefor issuable upon the exercise of this Warrant, but not capital gains or
other taxes on or measured by the increase or decrease of net income or loss of
the Holder. The Company further covenants and agrees that the Company will at
all times have authorized and reserved, free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of the
rights represented by this Warrant. The Company further covenants and agrees
that if any shares of capital stock to be reserved for the purpose of the
issuance of shares upon the exercise of this Warrant require registration with
or approval of any governmental authority under any federal or state law before
such shares may be validly issued or delivered upon exercise, then the Company
will in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be except that the Company shall not
be required to make any filings because a holder of this warrant is a
non-accredited investor. If and so long as the Common Stock issuable upon the
exercise of this Warrant is listed on any national securities exchange, the
Company will, if permitted by the rules of such exchange, list and keep listed
on such exchange, upon official notice of issuance, all shares of such Common
Stock issuable upon exercise of this Warrant.
SECTION 4. Adjustment of Number of Shares. Upon each adjustment of the Warrant
Price as provided in Section 5, the Holder shall thereafter be entitled to
purchase, at the Warrant Price resulting from such adjustment, the number of
shares (calculated to the nearest tenth of a share) obtained by multiplying the
Warrant Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Warrant Price resulting from such
adjustment.
SECTION 5. Adjustment of Warrant Price. The Warrant Price shall be subject to
adjustment from time to time as follows:
(i) If, at any time during the Term of this Warrant, the number of shares
of Common Stock outstanding is increased by a stock dividend payable in shares
of Common Stock or by a subdivision or split-up of shares of Common Stock, then,
following the record date fixed for the determination of holders of Common Stock
entitled to receive such stock dividend, subdivision or split-up, the Warrant
Price shall be appropriately decreased so that the number of shares of Common
Stock issuable upon the exercise hereof shall be increased in proportion to such
increase in outstanding shares.
(ii) If, at any time during the Term of this Warrant, the number of shares
of Common Stock outstanding is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date for such combination,
the Warrant Price shall appropriately increase so that the number of shares of
Common Stock issuable upon the exercise hereof shall be decreased in proportion
to such decrease in outstanding shares.
(iii) In case, at any time during the Term of this Warrant, the Company
shall declare a cash dividend upon its Common Stock payable otherwise than out
of earnings or earned surplus or shall distribute to holders of its Common Stock
shares of its capital stock (other than Common Stock), stock or other securities
of other persons, evidences of indebtedness issued by the Company or other
persons,
23
assets (excluding cash dividends and distributions) or options or rights
(excluding options to purchase and rights to subscribe for Common Stock or other
securities of the Company convertible into or exchangeable for Common Stock),
then, in each such case, immediately following the record date fixed for the
determination of the holders of Common Stock entitled to receive such dividend
or distribution, the Warrant Price in effect thereafter shall be determined by
multiplying the Warrant Price in effect immediately prior to such record date by
a fraction of which the numerator shall be an amount equal to the difference of
(x) the Current Market Price of one share of Common Stock minus (y) the fair
market value (as determined by the Board of Directors of the Company, whose
determination shall be conclusive) of the stock, securities, evidences of
indebtedness, assets, options or rights so distributed in respect of one share
of Common Stock, and of which the denominator shall be such Current Market
Price.
(iv) All calculations under this Section 5 shall be made to the nearest
cent or to the nearest one-tenth (1/10) of a share, as the case may be.
(v) For the purpose of any computation pursuant to this Section 5, the
Current Market Price at any date of one share of Common Stock shall be deemed to
be the average of the daily closing prices for the 15 consecutive business days
ending no more than 5 business days before the day in question (as adjusted for
any stock dividend, split, combination or reclassification that took effect
during such 15 business day period). The closing price for each day shall be the
last reported sales price regular way or, in case no such reported sales took
place on such day, the average of the last reported bid and asked prices regular
way, in either case on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or as reported by Nasdaq (or if
the Common Stock is not at the time listed or admitted for trading on any such
exchange or if prices of the Common Stock are not reported by Nasdaq then such
price shall be equal to the average of the last reported bid and asked prices on
such day as reported by The National Quotation Bureau Incorporated or any
similar reputable quotation and reporting service, if such quotation is not
reported by The National Quotation Bureau Incorporated); provided, however, that
if the Common Stock is not traded in such manner that the quotations referred to
in this clause (v) are available for the period required hereunder, the Current
Market Price shall be determined in good faith by the Board of Directors of the
Company or, if such determination cannot be made, by a nationally recognized
independent investment banking firm selected by the Board of Directors of the
Company (or if such selection cannot be made, by a nationally recognized
independent investment banking firm selected by the American Arbitration
Association in accordance with its rules).
(vi) Whenever the Warrant Price shall be adjusted as provided in Section 5,
the Company shall prepare a statement showing the facts requiring such
adjustment and the Warrant Price that shall be in effect after such adjustment.
The Company shall cause a copy of such statement to be sent by mail, first class
postage prepaid, to each Holder of this Warrant at its, his or her address
appearing on the Company's records. Where appropriate, such copy may be given in
advance and may be included as part of the notice required to be mailed under
the provisions of subsection (viii) of this Section 5.
(vii) Adjustments made pursuant to clauses (i), (ii) and (iii) above shall
be made on the date such dividend, subdivision, split-up, combination or
distribution, as the case may be, is made, and shall become effective at the
opening of business on the business day next following the record date for the
determination of stockholders entitled to such dividend, subdivision, split-up,
combination or distribution.
(viii) In the event the Company shall propose to take any action of the
types described in clauses (i), (ii), or (iii) of this Section 5, the Company
shall forward, at the same time and in the same manner, to the Holder of this
Warrant such notice, if any, which the Company shall give to the holders of
capital stock of the Company.
24
(ix) In any case in which the provisions of this Section 5 shall require
that an adjustment shall become effective immediately after a record date for an
event, the Company may defer until the occurrence of such event issuing to the
Holder of all or any part of this Warrant which is exercised after such record
date and before the occurrence of such event the additional shares of capital
stock issuable upon such exercise by reason of the adjustment required by such
event over and above the shares of capital stock issuable upon such exercise
before giving effect to such adjustment exercise; provided, however, that the
Company shall deliver to such Holder a due ▇▇▇▇ or other appropriate instrument
evidencing such Holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
25
SECTION 6. Ownership.
6.1. Ownership of This Warrant. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Section 6.
6.2. Transfer and Replacement. This Warrant and all rights hereunder are
transferable in whole or in part upon the books of the Company by the Holder
hereof in person or by duly authorized attorney, and a new Warrant or Warrants,
of the same tenor as this Warrant but registered in the name of the transferee
or transferees (and in the name of the Holder, if a partial transfer is
effected) shall be made and delivered by the Company upon surrender of this
Warrant duly endorsed, at the office of the Company referred to in Section 12
hereof. Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft or destruction, and, in such case, of indemnity or security
reasonably satisfactory to it, and upon surrender of this Warrant if mutilated,
the Company will make and deliver a new Warrant of like tenor, in lieu of this
Warrant; provided that if the Holder hereof is an instrumentality of a state or
local government or an institutional holder or a nominee for such an
instrumentality or institutional holder an irrevocable agreement of indemnity by
such Holder shall be sufficient for all purposes of this Section 6, and no
evidence of loss or theft or destruction shall be necessary. This Warrant shall
be promptly canceled by the Company upon the surrender hereof in connection with
any transfer or replacement. Holder will not transfer this Warrant and the
rights hereunder except in compliance with federal and state securities laws.
SECTION 7. Mergers, Consolidation, Sales. In the case of any proposed
consolidation or merger of the Company with another entity, or the proposed sale
of all or substantially all of its assets to another person or entity, or any
proposed reorganization or reclassification of the capital stock of the Company,
then, as a condition of such consolidation, merger, sale, reorganization or
reclassification, lawful and adequate provision shall be made whereby the Holder
of this Warrant shall thereafter have the right to receive upon the basis and
upon the terms and conditions specified herein, in lieu of the shares of the
Common Stock of the Company immediately theretofore purchasable hereunder, such
shares of stock, securities or assets as may (by virtue of such consolidation,
merger, sale, reorganization or reclassification) be issued or payable with
respect to or in exchange for the number of shares of such Common Stock
purchasable hereunder immediately before such consolidation, merger, sale,
reorganization or reclassification. In any such case appropriate provision shall
be made with respect to the rights and interests of the Holder of this Warrant
to the end that the provisions hereof shall thereafter be applicable as nearly
as may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of this Warrant.
SECTION 8. Notice of Dissolution or Liquidation. In case of any distribution of
the assets of the Company in dissolution or liquidation (except under
circumstances when the foregoing Section 7 shall be applicable), the Company
shall give notice thereof to the Holder hereof and shall make no distribution to
shareholders until the expiration of thirty (30) days from the date of mailing
of the aforesaid notice and, in any case, the Holder hereof may exercise this
Warrant within thirty (30) days from the date of the giving of such notice, and
all rights herein granted not so exercised within such thirty-day period shall
thereafter become null and void.
SECTION 9. Notice of Extraordinary Dividends. If the Board of Directors of the
Company shall declare any dividend or other distribution on its Common Stock
except out of earned surplus or by way of a stock dividend payable in shares of
its Common Stock, the Company shall mail notice thereof to the Holder hereof not
less than thirty (30) days prior to the record date fixed for determining
shareholders
26
entitled to participate in such dividend or other distribution, and the Holder
hereof shall not participate in such dividend or other distribution unless this
Warrant is exercised prior to such record date. The provisions of this Section 9
shall not apply to distributions made in connection with transactions covered by
Section 7.
SECTION 10. Fractional Shares. Fractional shares shall not be issued upon the
exercise of this Warrant but in any case where the Holder would, except for the
provisions of this Section 10, be entitled under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant, the Company shall,
upon the exercise of this Warrant for the largest number of whole shares then
called for, pay a sum in cash equal to the excess of the value of such
fractional share (determined in such reasonable manner as may be prescribed in
good faith by the Board of Directors of the Company) over the Warrant Price for
such fractional share.
SECTION 11. Special Arrangements of the Company. The Company covenants and
agrees that during the Term of this Warrant, unless otherwise approved by the
Holder of this Warrant:
11.1. Will Reserve Shares. The Company will reserve and set apart and have
available for issuance at all times, free from preemptive or other preferential
rights, the number of shares of authorized but unissued Common Stock deliverable
upon the exercise of this Warrant.
11.2. Will Not Amend Certificate. The Company will not amend its
Certificate of Incorporation to eliminate as an authorized class of capital
stock that class denominated as "Common Stock" on the date hereof.
11.3. Will Bind Successors. This Warrant shall be binding upon any
corporation or other person or entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.
SECTION 12. Notices. Any notice or other document required or permitted to be
given or delivered to the Holder shall be delivered at, or sent by certified or
registered mail to, the Holder at Transamerica Technology Finance Division, ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Assistant Vice
President, Lease Administration, with a copy to the Lender at Riverway II, West
Office Tower, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Legal
Department or to such other address as shall have been furnished to the Company
in writing by the Holder. Any notice or other document required or permitted to
be given or delivered to the Company shall be delivered at, or sent by certified
or registered mail to, the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or to such other address as shall have been furnished in writing
to the Holder by the Company. Any notice so addressed and mailed by registered
or certified mail shall be deemed to be given when so mailed. Any notice so
addressed and otherwise delivered shall be deemed to be given when actually
received by the addressee.
SECTION 13. No Rights as Stockholder; Limitation of Liability. This Warrant
shall not entitle the Holder to any of the rights of a shareholder of the
Company. No provision hereof, in the absence of affirmative action by the Holder
to purchase shares of Common Stock, and no mere enumeration herein of the rights
or privileges of the Holder, shall give rise to any liability of the Holder for
the Warrant Price hereunder or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
SECTION 14. Law Governing. THE VALIDITY, INTERPRETATION, AND ENFORCEMENT OF THIS
WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
27
LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.
SECTION 15. Miscellaneous.
(a) This Warrant and any provision hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
(or any predecessor in interest thereof) against which enforcement of the same
is sought. The headings in this Warrant are for purposes of reference only and
shall not affect the meaning or construction of any of the provisions hereof
(b) All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Financing Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this _______ day of June, 1997.
GALAGEN, INC.
By:
--------------------------------
Title:
-----------------------------
28
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of the Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THE WITHIN WARRANT
The undersigned hereby exercises the right to purchase _________ shares of
Common Stock which the undersigned is entitled to purchase by the terms of the
within Warrant according to the conditions thereof, and herewith
[check one]
|_| makes payment of $__________ therefor; or
|_| directs the Company to issue ______ shares, and to
withhold ____ shares in lieu of payment of the Warrant
Price, as described in Section 2.1 of the Warrant.
All shares to be issued pursuant hereto shall be issued in the name of and the
initial address of such person to be entered on the books of the Company shall
be:
The shares are to be issued in certificates of the following denominations:
----------------------------------
[Type Name of Holder]
By:
-------------------------------
Title:
----------------------------
Dated:
-------------------------------
29
FORM OF ASSIGNMENT
(ENTIRE)
[To be signed only upon transfer of entire Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto _______________________________ all rights of the undersigned
under and pursuant to the within Warrant, and the undersigned does hereby
irrevocably constitute and appoint _______________________________ Attorney to
transfer the said Warrant on the books of the Company, with full power of
substitution.
----------------------------------
[Type Name of Holder]
By:
-------------------------------
Title:
----------------------------
Dated:
-------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
30
FORM OF ASSIGNMENT
(PARTIAL)
[To be signed only upon partial transfer of Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO TRANSFER THE WITHIN WARRANT
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto _______________________________ (i) the rights of the undersigned
to purchase ___ shares of Common Stock under and pursuant to the within Warrant,
and (ii) on a non-exclusive basis, all other rights of the undersigned under and
pursuant to the within Warrant, it being understood that the undersigned shall
retain, severally (and not jointly) with the transferee(s) named herein, all
rights assigned on such non-exclusive basis. The undersigned does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said Warrant on the books of the Company, with full power of
substitution.
----------------------------------
[Type Name of Holder]
By:
-------------------------------
Title:
----------------------------
Dated:
----------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
31